Shares in C3.ai Inc. fell more than 5% in late trading today after the artificial intelligence software maker was weighed down by a weak earnings outlook and despite reporting fiscal third-quarter revenue and earnings beats.

For the quarter that ended on Jan. 31, C3 AI reported an adjusted loss per share of 12 cents, down from a loss of 13 cents per share in the same quarter of the previous year, on revenue of $98.8 million, up 26% year-over-year. Both figures were beats, as analysts had been expecting a loss of 24 cents per share on revenue of $98.01 million.

C3 AI saw subscription revenue in the quarter of $85.7 million, up 22% year-over-year, with subscription and prioritized engineering service combined revenue of $91.4 million, up 18% year-over-year. The company reported an adjusted gross profit in the quarter of $68.2 million and was sitting on $724.3 million in cash, cash equivalents and marketable securities as of the end of January.

Business highlights in the quarter included C3 AI’s strengthening collaboration with Microsoft Corp. to drive increased pilot activity and a new strategic partnership with McKinsey & Co. QuantumBlack LLC AI consulting arm to expand its global distribution network. The company closed 66 agreements, including 50 pilots, up 72% year-over-year.

C3 AI also secured new and expanded agreements with major organizations, including the New York Power Authority, Shell plc, Exxon Mobil Corp. and GSK plc, along with 21 state and local government deals across multiple U.S. states. Additionally, its federal business saw strong execution, with new and expanded contracts involving the U.S. Department of Defense, the U.S. Air Force, the U.S. Navy, CAE USA and the Missile Defense Agency.

“In the third quarter, C3 AI achieved significant milestones — expanding our global distribution network, advancing our leadership in agentic and generative AI, and delivering total revenue reaching $98.8 million, up 26% year-over-year,” Chief Executive Thomas M. Siebel said in the company’s earnings release. “We have the technology, the management team and the global partner ecosystem — through our dramatically expanded strategic partnerships with Microsoft, AWS and McKinsey QuantumBlack — we believe we have all the elements in place to indelibly change the face of enterprise AI.”

For its fiscal fourth quarter, C3 AI expects revenue of $103.6 million to $113.6 and an adjusted loss of 30 to 40 cents per share. Analysts had been expecting $108.6 million and a loss of 26 cents per share.

For the full fiscal year, the company expects revenue of $383.9 million to $393.9 million and an adjusted loss of 87 to 97 cents per share. Analysts had expected $388.3 million and a loss of 63 cents per share.

Image: C3 AI