$C3.ai, Inc.(AI)$ unveiled its fourth-quarter earnings for the fiscal year 2024 after hours yesterday, corresponding to the three-month period ending April 30th.
And guess what? The results were pretty darn good compared to analysts' expectations!
Before we dive into the numbers, let's get a sense of what C3.AI is all about.
In a nutshell, C3.AI is an enterprise AI software company that offers a suite of integrated products - from a platform to develop, deploy, and operate AI apps to industry-specific SaaS AI apps and even generative AI tools for businesses.
In other words, they use AI models and programs to help enterprises run more efficiently. Unlike OpenAI, which caters to consumers, C3.AI's target audience is the corporate world.
From a business model perspective, C3.AI is similar to the Hong Kong-listed company $FOURTH PARADIGM(06682)$ .
Currently, C3.AI's major clients are in government (military), energy, and manufacturing.
Now, let's talk about the numbers. C3.AI revenue was $86.59 million in the fourth quarter of fiscal 2024, an increase of 19.6%, more than analysts expected $84.4 million:
The company's guidance for the next quarter and fiscal 2025 is also promising, with expected revenue growth of around 20% and 25%, respectively. But there's a catch - C3.AI isn't profitable yet.
On the profitability front, gross margins are sitting at around 60%, but the expense ratios are sky-high, totaling over 154%. Ouch, that's a big loss!
Since profitability is still a distant dream, C3.AI is valued based on its revenue multiple, currently standing at 7.7 times. Given the estimated 25% growth rate for fiscal 2025, this valuation doesn't seem overly exciting.
Looking at $NVIDIA Corp(NVDA)$ as a reference, C3.AI's big breakthrough hinges on high revenue growth.
Currently, while enterprise AI demand is picking up, it's not yet at a tipping point. So, we'll have to keep an eye on this market's progress!
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