Why C3.ai Q2 Revenue Beat Impresses Analysts

Benzinga · 1d ago

C3.ai Inc (NYSE:AI) shares rose in early trading on Thursday, after the company on Wednesday reported upbeat fiscal second-quarter results.

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Here are some key analyst takeaways:

Wedbush analyst Dan Ives reaffirmed an Outperform rating and price target of $20.
Canaccord Genuity analyst Kingsley Crane reiterated a Hold rating and price target of $16.
DA Davidson analyst Lucky Schreiner reaffirmed an Underperform rating and price target of $13.
Needham analyst Mike Cikos maintained a Hold rating on the stock.

Check out other analyst stock ratings.

Wedbush: C3.ai reported total revenue of $75.1 million, missing the midpoint of its guidance range but coming in above consensus of $74.9 million, Ives said in a note. Under the leadership of new CEO Stephen Ehikian, the company is looking to "turn the ship around following its disastrous execution last quarter," he wrote.

There was momentum in C3.ai's federal business in the third quarter, despite the prolonged government shutdown, the analyst stated.

"The company's hyperscaler partnerships remain key," as it jointly closed 24 agreements and expanded Microsoft Corp (NASDAQ:MSFT) deal activity by 146% year-on-year and closed nine agreements and expanding its joint qualified pipeline with Amazon.com Inc's (NASDAQ:AMZN) AWS by 172%, he added.

Canaccord Genuity: C3.ai's performance in the latest quarter marked a sequential improvement, after the previous quarter's 30% contraction in subscription revenues, Crane said. Still, total revenue declined 20% year-on-year and non-GAAP gross margins remained under pressure at 55%, he added.

C3.ai recorded 89% growth in federal bookings, despite the 43-day government shutdown, the analyst stated. "Microsoft, AWS, McKinsey, Baker Hughes and Booz Allen are playing a larger role in pipeline generation," he further wrote.

DA Davidson: C3.ai reported net new revenue of around $4 million, driven in part by growth of license demonstration revenue from partners, Schreiner said. Subscription revenue declined by 22% year-on-year, representing an improvement from the 30% contraction in the previous quarter, he added.

Management reintroduced the revenue guidance for fiscal 2026, at $289.5-$309.5 million, which implies a 23% decline, the analyst stated. "C3.ai is still playing catch up from last quarter’s large miss but was able to avoid any negative impact from the federal shutdown during the quarter," he further wrote.

Needham: Despite the government shutdown, C3.ai recorded bookings from Federal, Defense and Aerospace, Cikos said. He added that management expects the Federal business to remain "a durable growth engine" due to the government’s initiatives to:

Buy more commercial solutions instead of building them
Drive AI adoption
Reindustrialize efforts such as the Maritime Industrial Base

The company guided to third quarter revenue of $72-$80 million and fiscal 2026 revenue of $289.5-$309.5 million, versus estimates of $75.6 million and $298.7 million, respectively, the analyst stated.

AI Price Action: Shares of C3.ai had risen by 2.33% to $15.36 at the time of publication on Thursday.

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