C3.ai (AI) Stock Falls 22% After Earnings Miss and Guidance Cut

TLDR

• C3.ai (AI) dropped ~22% in after-hours trading after missing Q3 revenue and earnings estimates
• Revenue came in at $53.3M vs. $77.6M expected; EPS was -$0.40 vs. -$0.29 consensus
• The company cut its Q4 revenue outlook to $48M–$52M, far below the $77.72M consensus
• C3.ai announced a restructuring, cutting $135M in costs including a 26% headcount reduction
• Citizens downgraded the stock to Market Perform following the results

C3.ai posted third-quarter results that fell well short of Wall Street expectations, sending the stock down roughly 22% in after-hours trading on Wednesday.

Revenue for the quarter came in at $53.3 million, missing the consensus estimate of $75.6 million. The company also reported a non-GAAP loss per share of $0.40, worse than the expected $0.29 loss.

That revenue figure represented a 46% decline year-over-year — a steep drop from the 20% decline seen in the prior quarter.

C3.ai, Inc., AI

Subscription revenue, which makes up the bulk of the business, came in at $48.2 million. That was down 44% year-over-year and missed the $68.5 million estimate by a wide margin.

Free cash flow was negative $56.2 million, compared to a consensus estimate of negative $30.8 million.

Restructuring and Cost Cuts

To address the shortfall, C3.ai announced a restructuring plan targeting $135 million in expense reductions. That includes $60 million tied to a 26% reduction in headcount.

The company said workforce changes are largely already complete. CFO Hitesh Lath said cost savings are expected to be fully realized starting in the second half of fiscal year 2027.

The restructuring also includes flattening the sales organization and increasing development velocity by leaning into Agentic AI across business units.

Guidance Comes in Far Below Estimates

For Q4, C3.ai guided revenue of $48 million to $52 million. The Street had been expecting $77.72 million — making this one of the more dramatic guidance misses in recent memory for the company.

Full-year revenue is now expected to land between $246.7 million and $250.7 million, versus the prior consensus of $298.74 million.

One area that held up: federal business. Federal bookings jumped 134% year-over-year and made up 55% of total bookings for the quarter. New customer wins included the U.S. Department of Agriculture, U.S. Department of Energy, NATO, the Royal Navy, GSK, Thales, ExxonMobil, and U.S. Steel.

Ehikian noted that 90% of quarterly revenue came from subscriptions, with no nonrecurring subscription revenue in the mix.

Citizens moved quickly after the print, downgrading C3.ai to Market Perform from Market Outperform. The stock had already fallen 23% year-to-date before earnings, while the Russell 3000 gained 2% over the same stretch.

Over the past year, C3.ai is down 61%. The company’s market cap sits around $1.45 billion. With a beta of 2.0, the stock moves hard in both directions — and Wednesday night was no exception.

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