Shares in C3ai Inc. dropped slightly in late trading today despite the artificial intelligence software provider reporting better-than-expected earnings results.

For the quarter ended Jan. 31, C3 AI reported a loss before costs such as stock compensation of seven cents per share, down from a loss of 13 cents per share in the same quarter last year. Revenue rose 42%, to $69.8 million.

Analysts had expected an adjusted loss of 25 cents per share on revenue of $67.2 million.

Subscription revenue in the quarter came in at $52.4 million, with a 75% gross margin, compared with $36.9 million a year ago.

Highlights in the quarter included Shell plc continuing to expand its C3 AI application footprint to more than 10,000 devices. C3 machine learning models are monitoring those devices. The U.S. Department of Defense awarded C3 AI a five-year, $500 million transaction agreement, accelerating the ability for defense department agencies to acquire the company’s suite of enterprise artificial intelligence products and services.

Other achievements in the quarter included new production deployments with the Defense Counterintelligence and Security Agency and additional business with the U.S. Space Force.

“These results were driven by substantially increased sales momentum due to the successful refocusing of our sales organizations, expanded customer count, increased industry diversification for our AI products and the further recognition of our technology leadership in this industry,” Tom Siebel, chief executive officer of C3 AI, said in a statement. “We believe C3 AI is on track to establish a global leading market position in enterprise AI.”

Looking forward, C3 AI predicted an adjusted loss of $90 million to $94 million for the company’s full fiscal year 2022 on revenue of $251 million to $252 million. Analysts had forecast $249.6 million in revenue.

The numbers reported by C3 AI came in ahead of expectations, both in the quarter gone and the annual outlook, but they didn’t impress investors. Notably, the company didn’t specifically break out its current-quarter outlook, although those figures can be easily ascertained by taking away previous quarterly results, an omission that might have spooked investors.

Whatever the reason, C3 AI shares fell almost 3% after the bell.

Image: C3 AI