C3.AI's subscription revenue for the last quarter fell short of expectations, the timing of profitability remains unknown, and the stock fell nearly 20% after hours | Financial Report Insights

C3.ai, a concept stock in AI software for enterprise management, reported a loss in the latest quarter that was lower than Wall Street's expectations, but its main revenue source performed poorly, leaving the prospect of turning losses into profits uncertain. After the U.S. stock market closed on Wednesday, September 4, C3.ai announced the financial data for the first quarter of the 2025 fiscal year ending on July 31, 2024, and provided performance guidance for the second quarter and full year. 1) Key Financial Data: Revenue: Total revenue in the first quarter was $87.2 million, a 21% year-on-year increase, higher than FactSet analysts' expectation of $86.9 million. Subscription revenue in the first quarter increased by 20% year-on-year to approximately $73.5 million, with analysts expecting $79.2 million. Professional services revenue in the first quarter was nearly $13.8 million, a year-on-year increase of nearly 25%. The GAAP EPS for the first quarter was a net loss of $0.5 per share, a 10.7% narrowing year-on-year, while the non-GAAP adjusted EPS was a net loss of $0.05 per share, a 44.4% narrowing year-on-year. 2) Performance Guidance: Revenue: The revenue for the second quarter is expected to be between $88.6 million and $93.6 million, with analysts expecting $91.3 million. The full-year revenue is projected to be between $370 million and $395 million, with analysts expecting $383.9 million. Operating Loss: The non-GAAP operating loss for the second quarter is estimated to be between $26.7 million and $34.7 million, and the full-year operating loss is projected to be between $95 million and $125 million. After the financial report was released, C3.ai's stock price fell nearly 1.9% in after-hours trading, with a post-market decline of nearly 20%. Subscription revenue in the first quarter exceeded expectations but slowed down, expected to continue to incur losses this fiscal year after canceling profit targets last year In the first quarter, C3.ai's revenue exceeded the midpoint of the company's guidance range of $84 million to $89 million, maintaining double-digit rapid growth slightly higher than the previous quarter, while analysts' expected growth rate remained the same as the previous quarter. The first-quarter loss continued to narrow significantly, outperforming expectations, with analysts expecting a 44.4% expansion in losses. Thomas M. Siebel, CEO of C3.ai, stated that the company had a solid start to the 2025 fiscal year, with demand for enterprise AI driving six consecutive quarters of accelerated revenue growth. However, the growth of subscription revenue, C3.ai's main source of income in the first quarter, slowed down more than expected, with a 20% increase, only half of the previous quarter's growth, while analysts expected an increase of about 29%. This was seen as one of the reasons for the significant post-market stock price drop In terms of guidance, C3.AI's revenue roughly meets expectations. Although there was no upward revision of the full-year operating loss guidance, analysts believe that the company has yet to answer a key question for investors: when will it become profitable. Wall Street News previously mentioned that a year ago, when announcing the financial results for the first quarter of the 2024 fiscal year, C3.AI withdrew its expectation of profitability by the fourth quarter of that fiscal year. At that time, C3.AI stated that due to increased investment in sales and marketing for its generative AI products, they changed their expectations and anticipated that profitability on a non-GAAP basis would not be achieved by the fourth quarter. The management team at the time indicated that they decided to invest in "potential customer development, brand building, and market visibility." The guidance provided in this financial report indicates that C3.AI is still unable to turn losses into profits this fiscal year, with an expected maximum loss of $125 million