By Anita Hamilton

The artificial-intelligence software from C3.ai, which specializes in subscription-based applications used by everyone from the Department of Defense to Coca-Cola, is set to report earnings after the market closes Wednesday.

Analysts surveyed by FactSet expect it to report a loss per share of 20 cents on revenue of $107.8 million for the quarter ending in April. While revenue estimates are up some 24% from the same period last year, per-share earnings forecasts are nearly twice as low.

A selloff of AI stocks earlier in the year over worries of cheap knockoffs from China, coupled with C3.ai's continued losses basis, have made investors wary. Founded in 2009 by former Oracle executive Thomas Siebel, C3.ai has yet to turn a profit.

There are other reasons to worry. Despite steady revenue growth in recent quarters, a growing share of the company's revenue comes from one-time licenses of demo versions of C3.ai software to potential customers, D.A. Davidson's Lucky Schreiner pointed out in a recent note. Such nonrecurring revenue -- coupled with a potential for slowing sales to the federal government amid recent cost-cutting effort -- could weigh on growth.

"We question the company's ability to meet guidance this quarter," Schreiner wrote. When C3.ai reported earnings in February, the company said it expected revenue between $103.6 million and $113.6 million for the quarter ending in April.

D.A. Davidson analysts, who have a Neutral rating on the stock, aren't the only ones cautious about C3.ai. Only two of the 12 analysts who cover the firm and are tracked by FactSet rate it a Buy. While shares are down less than 1% over the past year, they have fallen 30% in 2025. The stock tumbled in December after Siebel warned of an AI bubble.

Despite the near-term worries, C3.ai has an impressive roster of customers and partners. In addition to Coca-Cola and the Defense Department, it has agreements with energy firms Shell and Exxon Mobil, several state and local governments, as well as health industry players GSK, Quest Diagnostics, and Sanofi, among others.

Wednesday's report could also shed light on how a recent deal with Microsoft is panning out. Announced in December, the global alliance would make C3.ai solutions available from the Microsoft Azure sales force. It has a similar deal in place with Amazon's AWS cloud-computing division.

Write to Anita Hamilton at anita.hamilton@barrons.com

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May 28, 2025 11:01 ET (15:01 GMT)

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