Enterprise-focused artificial intelligence software firm C3 AI Inc. reported mixed fiscal first-quarter results today and was punished in after-hours trading as its stock lost more than 8% of its value.

The earnings report comes at a time when C3 AI is working hard to build out its partner and go-to-market ecosystem, and a key part of that is a new strategic alliance that will see Google Cloud co-sell and service its AI applications.

The company reported a loss of 37 cents per share on revenue of $52.4 million, up 29% from a year ago. Wall Street had been looking for a smaller loss of just 28 cents per share on revenue of $51.16 million.

C3 AI Chief Executive Thomas Siebel (pictured) said the company delivered strong results, highlighting a 31% increase in its gross profit. “We significantly expanded our market-partner ecosystem in Q1, entering into a strategic alliance with Google Cloud to allow the entire Google Cloud global sales and service organization to co-sell and service the entire family of C3 AI applications,” he said.

The company sells a set of AI products used by large companies and public sector organizations. They include tools such as Ex Machina for building machine learning models, which doesn’t require much experience, and the AI Suite, which has more advanced features for skilled practitioners.

The company also sells packaged AI applications that enterprises can deploy without doing any in-house software development. And it has a customer relationship management platform developed in partnership with Microsoft Corp. and Adobe Systems Inc. that uses machine learning to automate sales-related tasks such as finding upselling opportunities.

The company is still fairly new on the enterprise scene, though, as its customer count of 98 shows. However, that’s up 85% from where it was a year ago.

C3 AI said its partnership with Microsoft was paying off, with deals worth more than $200 million to date. The company also expanded its footprint in various industries.

On a conference call, Siebel said that C3 AI’s business has historically been characterized by quarter-to-quarter lumpiness because of the substantial size of its average order value. But that’s changing, he said, as application sales account for more of its revenue mix.

“Roughly 50% of our subscriptions last quarter in Q1 accrued from application software,” he said on the call. “We are increasingly offering lower-priced high-value products like C3 AI CRM and Ex Machina. We’ve been diversifying our distribution model to complement enterprise selling with telesales, distributors, market partners and direct marketplace selling.”

Siebel said he has high hopes for the partnership with Google Cloud too.

“Their focus is very much on the enterprise,” he said. “Rather than compete based upon speeds and feeds, they’ve made decisions they’re going to compete based on applications. So they’re going to be selling stochastic optimization of the supply chain. They’re going to be selling supply network risk. They’re going to be selling anti-money-laundering, fraud detection, what-have-you, and this is how they’re positioning the company to deliver turnkey solutions.”

Looking forward, C3 AI said it expects sales of $56 million to $58 million in its second quarter, while its full-year guidance calls for revenue of $243 million to $247 million. Wall Street is looking for second-quarter revenue of $56.12 million and full-year revenue of $245.4 million.

Photo: SiliconANGLE