Enterprise artificial intelligence provider C3.ai, Inc. (AI.US) released its first quarter fiscal 2026 investor report after market close on Wednesday, highlighting leadership changes and complex financial performance. The company officially appointed Stephen Ehikian as its new Chief Executive Officer, a technology executive with experience in enterprise software and public sector roles who previously worked at RelateIQ and Airkit.ai, both companies acquired by Salesforce.com, officially taking office on September 1st. C3.ai, Inc. emphasized that Ehikian, as a seasoned technology executive who founded two companies both acquired by Salesforce.com, brings enterprise software expertise and M&A experience that makes him a key candidate to lead the company through its financial challenges.
Financially, this quarter's performance showed "mixed" characteristics: revenue reached $70.3 million, down from $87.2 million in the same period last year; cash flow remained strong at $711.9 million, providing sufficient funding for the company's transformation. However, multiple financial metrics raised concerns - operating losses expanded significantly, free cash flow plummeted from positive $7.1 million in Q1 fiscal 2025 to negative $34.3 million, and non-GAAP operating loss reached $57.8 million, contrasting sharply with the near-profitable performance of the previous quarter. While revenue structure remained subscription-focused (86%, slightly higher than 84% in the same period last year), growth was insufficient to cover increased operating costs, leading to significant year-over-year performance decline - compared to $108.7 million in revenue for Q4 fiscal 2025, this quarter's revenue contracted noticeably.
Customer distribution showed industry diversification progress: manufacturing became the largest industry with 46% of bookings, while federal, defense and aerospace accounted for 28%, down from 31% last year, while manufacturing surged from 5.2% to 46%. Customer acquisition strategy focused on large enterprises, with most initial production deployments coming from companies with annual revenues between $1 billion and $100 billion. In generative AI deployment, federal, defense and aerospace sectors had the highest adoption rate (33.3%), while oil and gas, manufacturing, telecommunications, and construction each accounted for 16.7%.
The partner ecosystem remains a strategic core, with 40 agreements reached through the partner network and joint 12-month qualified opportunity pipeline growing 54% year-over-year. The collaboration with Microsoft continued to be highly effective, reaching 24 agreements this quarter; strategic alliance advancement and the launch of the C3 AI Strategic Integrator program further strengthened the partner-led market strategy.
Looking ahead, C3.ai, Inc. expects second quarter fiscal 2026 revenue between $72 million and $80 million, representing a 15% to 24% year-over-year decline, contrasting with the growth expectations from the previous quarter. Due to the new CEO's appointment and ongoing restructuring work, the company withdrew its previously issued full-year fiscal 2026 guidance, with management stating they will provide updated guidance when announcing second quarter results.
Multiple factors contributed to this performance volatility: former Chief Executive Officer Thomas Siebel was diagnosed with an autoimmune disease earlier this year causing "severe vision impairment," prompting the company to begin CEO search in July. In August, disappointing preliminary financial results and global sales service organization restructuring led to significant stock price decline. Siebel stated in an August announcement that this quarter's sales performance was "completely unacceptable," attributing it to the "disruptive impact" of restructuring and his health issues.
Despite facing challenges, the company continues to emphasize its investment value based on enormous potential market, first-mover advantage, and proprietary AI application platform. New CEO Ehikian stated: "C3.ai, Inc. is one of the most important companies in artificial intelligence and enterprise software, with an unparalleled platform and applications. I believe we can capture a larger share of the enormous market opportunity in enterprise artificial intelligence." Investors will closely watch whether he can implement effective strategies to drive the company's return to growth and improve profitability pathways.
As of press time, C3.ai, Inc. fell nearly 12% in after-hours trading to $14.69.