Artificial intelligence software company C3.ai slashed its revenue outlook and said it would overhaul its business model while acknowledging an economic downturn.
Shares of the firm were down 15% in late trading Wednesday.
C3.ai (ticker: AI) reported revenue of $65.3 million for the fiscal first quarter, up 25% from a year ago and toward the low end of the company's target range of $65 million to $67 million. On an adjusted basis, the company lost 12 cents a share in the quarter; Wall Street analysts expected a loss of 24 cents. Under generally accepted accounting principles the company lost 67 cents a share, widening from a loss of 37 cents in the year-ago quarter.
The company slashed its revenue outlook going forward. For the second quarter, the company sees revenue of $60 million to $62 million, below the consensus of $71.7 million, with a non-GAAP loss of $15 million to $20 million. C3.ai now sees revenue for the full fiscal year ending in April 2023 of $255 million to $275 million, down from a previous range of $308 million to $316 million. The company sees a full-year non-GAAP loss from operations of $90 million to $98 million.
C3.ai said it will shift its business to a consumption-based pricing model and away from a subscription model. As C3.ai said, consumption-based pricing is used by cloud computing companies like Amazon Web Services, Microsoft Azure, Google Cloud, and Snowflake. It's basically a utility model, like water or electricity. The more computing power used, the more paid.
Founder and CEO Tom Siebel said that the new model is intended to accelerate sales, speed product acceptance, boost market share, and to improve revenue and profitability in the medium- and long-term. He said that the company now expects to be non-GAAP profitable in fiscal 2024.
"The economic downturn is real," Siebel said. "Our customers are scrutinizing big deals as never before, which also makes this a smart time to launch consumption pricing."
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