C3.ai reported a smaller-than-expected fiscal fourth-quarter loss while revenue topped estimates. Full-year fiscal 2025 guidance for C3.ai stock came in above expectations amid strength in its federal government business.
The maker of artificial intelligence software reported April-quarter earnings after the market close on Wednesday. AI stock surged on the news.
C3.ai Earnings Top Estimates
In fiscal Q4, C3.ai said it lost 11 cents per share on an adjusted basis. That compared with a 13-cent loss a year earlier.
Also, revenue rose 20% to $86.6 million. Wall Street analysts polled by FactSet had predicted a loss of 30 cents a share on revenue of $84.4 million.
For the current quarter ending in July, the company predicted revenue of $86.5 million at the midpoint of guidance. Further, analysts projected revenue of $85.9 million.
For fiscal 2025, C3.ai forecast revenue of $382.5 million at the midpoint of guidance. Analysts had predicted revenue growth of 19% to $367.7 million, up from 14.6%.
"The federal sector continues to see strength with federal revenue up over 100% year-over-year," said Wedbush analyst Daniel Ives in a report. He added: "Federal bookings made up 50% of total bookings in fiscal 2024. The company continues to see strong traction with a substantial federal opportunity seen with C3.ai closing 65 federal agreements in fiscal 2024, up 48%."
The software maker helps companies build artificial intelligence applications, and targets the energy, financial services and defense markets. But it hasn't disclosed pricing for new generative AI products.
On the stock market today, C3.ai stock popped 19.4% to close at 28.57. AI stock had retreated about 16% in 2024 ahead of the C3.ai earnings report.
C3.ai Stock: Heavily Shorted
Heading into the C3.ai earnings report, nearly 30% of company shares were shorted.
If traders think a stock's price is going lower, they can short the stock. They borrow shares and sell them, with the intent of buying them back at lower prices. This is often done by hedge funds, given the risks and the margin required.
In a short squeeze, the stock surges on better-than-expected results. Short sellers either have to put more money up to secure their position or close their positions. That usually sends the stock higher.
MarketSurge users can go to the top left-hand corner of a weekly chart and find short interest data for all stocks in the IBD database.
Waiting For AI Commercial Deployment
C3.ai has told analysts it expects revenue growth to reaccelerate as more AI pilot projects ramp up into commercial production.
Meanwhile, C3.ai stock is one of many AI names to watch.
The company projected a higher-than-expected operating income loss for fiscal 2025.
C3.ai backed off its target to turn profitable on an adjusted basis amid growing investments in artificial intelligence. Also, C3.ai is transitioning to consumption priced services, pressuring profit margins in the short term.
Also, C3.ai stock had a Relative Strength Rating of 12 out of a best-possible 99 heading into the earnings report, according to IBD Stock Checkup.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
