C3.ai Q3 Earnings Preview: Earnings Estimates, Analysts Thoughts On Underwhelming Growth, Looking Ahead To C3 Transform

Enterprise application software company C3.ai Inc AI reports third-quarter financial results after market close Wednesday.

Here are the key earnings estimates, what analysts are saying and key items to watch.

Earnings Estimates: Analysts expect C3.ai to report third-quarter revenue of $76.15 million according to data from Benzinga Pro.

The company reported revenue of $66.67 million in last year's third quarter. The revenue estimate would mark a company record after C3.ai reported revenue of $72.36 million and $73.23 million in the first and second quarters of the current fiscal year, respectively.

The company has beaten revenue estimates from analysts in eight of the last 10 quarters.

Analysts expect C3.ai to report a loss of 28 cents per share in the third quarter. This would be a decline from the loss of 6 cents posted in the prior year's period. The company posted a loss of 9 cents per share and 13 cents per share in the first and second quarters, respectively.

The company has beaten earnings per share estimates from analysts in the last 10 straight quarters.

Guidance from the company calls for third-quarter revenue to be in a range of $74 million to $78 million.

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What Analysts Are Saying: Analysts were mostly underwhelmed by the company's second-quarter results and could need to see progress in the third quarter for any ratings upgrades or price target increases.

JMP Securities analyst Patrick Walravens said the second quarter results were "slightly disappointing" and said the company was showing "slow adoption of generative AI."

Morgan Stanley analyst Sanjit Singh said the second quarter results showed new deals that were mostly "in pilot stages."

"The company is now beginning to lean more into investments again in order to grow engineering headcount and to invest in lead generation to secure continued momentum on the Generative AI opportunity," Singh said.

Here's a look at recent analyst activity in C3.ai:

Piper Sandler: Neutral rating, lowered price target from $28 to $27

DA Davidson: Neutral rating, lowered price target from $30 to $28

Canaccord Genuity: Hold rating, $27 price target

Key Items to Watch: The artificial intelligence sector has seen huge growth in use cases and from investors looking for ways to get exposure to the sector.

Investors will be looking to C3.ai's quarterly report to see if it is gaining new customers and growing its backlog.

"We saw unprecedented interest and traction in our generative AI offerings. Importantly, we are seeing a return to accelerating revenue growth as we continue our transition to a consumption-based pricing model," C3.ai CEO Thomas Siebel said after second-quarter financial results.

The third quarter financial results from the company come ahead of its fifth annual AI conference called C3 Transform, which is March 5 through March 7.

Earnings results, analyst reactions and the AI event all happening in close proximity could make shares volatile over the next two weeks.

AI Price Action: C3.ai shares trade at $30.10 versus a 52-week trading range of $16.79 to $48.87. Shares of the AI company are up 30% over the past year.

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