Shares of C3.ai (NYSE: AI), the software-as-a-service company that provides artificial intelligence (AI) for the enterprise, were taking a dive today after the company offered disappointing guidance in its fiscal first-quarter earnings report. As a result, the stock was down 11% on the news as of 10:06 a.m. ET.
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C3.ai is still struggling
C3.ai stock caught fire in the initial stages of the generative AI boom. However, it has cooled off since then because its results haven't matched the blowout growth one would expect from an AI company in this era.
In the first quarter, the company reported revenue up 21% to $87.2 million, which topped estimates at $86.9 million. The company also built momentum in its customer base as it closed 71 agreements in the quarter, up 122% year over year, and reported its sixth straight quarter of accelerating revenue.
However, the business is still far from turning a profit as its generally accepted accounting principles (GAAP) operating loss improved modestly from $74.1 million to $72.6 million. Due to a stock-based compensation expense of $54.7 million, it finished with an adjusted per-share loss of $0.05, an improvement from a loss of $0.09 and better than the consensus at a per-share loss of $0.13.
CEO Thomas Siebel called the quarter a "solid start to the fiscal year" and said the company has "what we believe are the highest levels of customer satisfaction in the industry."
What's next for C3.ai
Looking ahead to the second quarter, the company expects revenue of $88.6 million-$93.6 million, a 24.4% increase at the midpoint and in line with the consensus. It also expects its adjusted operating loss to expand from $25 million to $26.7 million-$34.7 million, showing that profitability will remain elusive.
While the earnings report was mostly on trend with the company's results so far, investors seem to be getting impatient with the lack of profits and share dilution, even as revenue growth continues to improve.
At this point, the business still looks unproven.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends C3.ai. The Motley Fool has a disclosure policy.
