For investors looking at C3 AI’s upcoming earnings report, here are some key points to consider:
1. **Revenue Growth**: C3 AI has shown a consistent increase in revenue in past quarters. For instance, in the second quarter of fiscal 2024, they reported a revenue of $73.2 million, which was up 17.3% from the previous year. The third quarter saw an 18% increase to $78.4 million. Investors should look at whether this growth trend continues, particularly in subscription revenue, which forms the bulk of their income.
2. **Subscription Revenue**: This is a critical metric for C3 AI, as it indicates the health of their recurring revenue model. In recent quarters, subscription revenue has grown, with a noted increase in Q3 FY2024 to $70.4 million from $57.0 million the year before. The sustainability and growth rate of this revenue stream will be crucial for long-term profitability.
3. **Earnings Per Share (EPS)**: Although C3 AI reported a negative EPS in recent reports (e.g., -$0.13 in Q2 FY2024), the focus should be on how this figure compares to expectations and previous periods. Improvement or deterioration here can significantly affect investor sentiment.
4. **Gross Margins**: Pay attention to both overall and specifically for professional services. High gross margins can indicate good operational efficiency. For example, their professional services gross margin was notably high, which could be a point of interest if this trend holds or improves.
5. **Customer Expansion and New Deals**: C3 AI has been expanding its customer base, including deals with significant government agencies and other enterprises. The earnings report might detail new partnerships or expansions, which could signal future revenue growth.
6. **Market Sentiment and Legal Issues**: There have been concerns raised in the past by short sellers regarding accounting practices, which led to volatility in the stock price. Any updates or clarifications on these issues or ongoing audits could impact investor confidence.
7. **AI Market Trends**: Given the broader interest in AI technologies, how C3 AI positions its offerings, especially its generative AI solutions, in response to market trends could influence its growth prospects.
8. **Forward Guidance**: Often, the guidance provided by the company for the upcoming quarters can be more telling than the current earnings themselves. Look for any changes in their investment in AI, operational strategy, or market expansion plans.
9. **Operational Costs and Profitability**: While growth is essential, the path to profitability for tech companies like C3 AI often involves managing operational costs effectively. Investors should monitor any commentary on cost management, especially in relation to stock-based compensation, which impacts non-GAAP financials.
10. **Stock Performance and Analyst Expectations**: Before the earnings release, consider how the stock has performed recently and what analysts are expecting. Any significant deviation from these expectations could lead to immediate stock price movements.
Remember, while past performance and current expectations set the stage, earnings calls often bring new information to light, potentially shifting market perceptions and stock value. Always be prepared for volatility around earnings announcements.
