10-K: C3.ai Reports Robust Revenue Growth in Fiscal 2025 Driven by AI Adoption, Despite Persistent Net Losses

C3.ai, Inc. announced a 25.3% increase in total revenue for fiscal year 2025, reaching $389.1 million, fueled by strong demand for its Enterprise AI solutions and strategic partnerships, even as the company continues to incur significant net losses.

Summary

• Total revenue for the fiscal year ended April 30, 2025, increased by 25.3% to $389.1 million, up from $310.6 million in the prior fiscal year.
• Subscription revenue grew 18% to $327.6 million in FY2025, while professional services revenue saw an 89% increase to $61.4 million.
• The company reported a net loss of $288.7 million for FY2025, an increase from $279.7 million in FY2024, resulting in an accumulated deficit of $1.4 billion as of April 30, 2025.
• Gross profit increased by 32% to $235.9 million, with the total gross margin improving to 61% in FY2025 from 57% in FY2024.
• Operating expenses rose 13% to $560.3 million in FY2025, primarily due to increased investments in sales and marketing, and research and development.
• Cash used in operating activities improved to $41.4 million in FY2025 from $62.4 million in FY2024, and non-GAAP free cash flow improved to $(44.4) million from $(90.4) million.
• C3.ai executed 174 initial production deployment agreements in FY2025, a significant increase from 123 in FY2024 and 49 in FY2023, indicating strong customer acquisition momentum.
• Remaining Performance Obligations (RPO) decreased slightly to $235.1 million as of April 30, 2025, from $244.3 million in the prior year, with approximately $129.2 million expected to be recognized over the next 12 months.
• The company continues to heavily invest in generative AI, having launched over 60 domain-specific generative AI applications and securing a foundational U.S. patent (No. 12,111,859) for its generative AI agentic technology in October 2024.

Sentiment

Score: 6

Explanation: While C3.ai demonstrates strong revenue growth and significant advancements in AI technology and partnerships, the persistent and increasing net losses, coupled with a declining RPO, temper the overall positive sentiment. The company's strategic positioning in a high-growth market is strong, but its path to profitability remains uncertain, and the CEO's health disclosure adds a layer of concern regarding key personnel risk.

Positives

• Achieved robust total revenue growth of 25.3% year-over-year, reaching $389.1 million, demonstrating strong market demand for its Enterprise AI solutions.
• Professional services revenue surged by 89% to $61.4 million, indicating successful implementation and consulting engagements that complement software subscriptions.
• Improved overall gross margin to 61% in FY2025 from 57% in FY2024, reflecting better cost management relative to revenue growth.
• Significant improvement in cash flow from operating activities, reducing cash outflow from $(62.4) million in FY2024 to $(41.4) million in FY2025.
• Non-GAAP free cash flow also showed substantial improvement, moving from $(90.4) million to $(44.4) million, indicating a more efficient use of capital.
• A notable increase in Initial Production Deployment agreements to 174 in FY2025, signaling strong customer acquisition and market penetration.
• Continued leadership and innovation in the Enterprise AI space, particularly with the expansion of C3 Generative AI offerings and the granting of a foundational U.S. patent for its agentic AI technology.
• Strengthened and expanded strategic partnerships with major cloud providers (Microsoft Azure, AWS, Google Cloud) and consulting firms (McKinsey & Company, PwC, Capgemini, Cognizant), enhancing global market reach and distribution channels.
• Demonstrated rapid time-to-value with Enterprise AI applications deployed into production in as little as four weeks, a key competitive differentiator.

Negatives

• The company continues to incur significant net losses, with a net loss of $288.7 million in FY2025, and has an accumulated deficit of $1.4 billion, indicating a prolonged period without profitability.
• Anticipates continued net losses and negative cash flows from operations in the next few quarters due to ongoing investments, raising concerns about the timeline to profitability.
• Remaining Performance Obligations (RPO) decreased slightly from $244.3 million in FY2024 to $235.1 million in FY2025, which could suggest a deceleration in future committed revenue growth.
• The business remains dependent on a limited number of large customers, with two customers accounting for 19% and 12% of revenue in FY2025, posing a concentration risk if these relationships are impaired or terminated.
• The average total subscription contract value is decreasing as the company expands its customer base to include smaller and mid-size customers, which may impact the overall rate of revenue growth.
• CEO Thomas M. Siebel disclosed contracting an autoimmune disease with significant vision impairment, introducing a health-related risk to key personnel, despite his statement that it is not impacting his management ability.

Risks

• The company has a history of losses and anticipates operating expenses will continue to increase, and may not be able to achieve or maintain profitability in the future.
• Historically, a limited number of customers have accounted for a substantial portion of revenue, and if existing customers do not renew or if relationships with largest customers are impaired or terminated, revenue and remaining performance obligations could decline.
• The business depends on its ability to attract new customers and on existing customers purchasing additional subscriptions and renewing existing subscriptions, which is challenging in a competitive market.
• If the market for C3 AI Software fails to grow as expected, or if businesses fail to adopt the software, the business, operating results, and financial condition could be adversely affected.
• Failure to respond to rapid technological changes, extend C3 AI Software, or develop new features and functionality could impair the company's ability to remain competitive.
• The loss of the Chief Executive Officer or other members of the senior management team could hinder the execution of the business strategy.
• Macroeconomic uncertainties, including labor shortages, supply chain disruptions, inflation, interest rate fluctuations, and recession risks, could adversely impact demand for C3 AI Software and lengthen sales cycles.
• The company is subject to stringent and evolving U.S. and foreign laws, regulations, and rules related to data privacy and security, with actual or perceived failure to comply leading to investigations, litigation, fines, and reputational harm.
• If information technology systems or data, or those of third parties, are compromised, the company could experience adverse consequences including regulatory actions, litigation, and reputational harm.
• Issues raised by the use of artificial intelligence (AI), including machine learning (ML), in the C3 Agentic AI Platform may result in reputational harm or liability, or otherwise adversely affect the business.
• Changes in accounting standards and subjective assumptions, estimates, and judgments by management related to complex accounting matters could adversely affect financial results.
• Expanding international operations subjects the company to increased business and economic risks, including compliance with foreign laws, political instability, and foreign currency exchange rate fluctuations.
• The company is subject to governmental export and import controls that could impair its ability to compete in international markets or subject it to liability if not in compliance.
• Exposure to greater than anticipated tax liabilities, including sales and use tax, VAT, GST, and income taxes, could harm the business.
• The ability to use net operating losses (NOLs) and certain other tax attributes to offset future taxable income or taxes may be subject to limitations.
• The company is currently, and may be in the future, party to intellectual property rights claims and other litigation matters, which, if resolved adversely, could harm the business.
• Indemnity provisions in various agreements potentially expose the company to substantial liability for intellectual property infringement and other losses.
• Failure to protect intellectual property rights and proprietary information could diminish the brand and other intangible assets.
• The use of third-party open source software could negatively affect the ability to offer and sell subscriptions and subject the company to possible litigation.
• The trading price of Class A common stock may be volatile, and investors could lose all or part of their investment.
• The dual-class structure of common stock concentrates voting control with the holders of Class B common stock, limiting the ability of Class A stockholders to influence corporate matters.
• Substantial future sales of shares of Class A common stock and Class B common stock by existing holders in the public market could cause the market price of Class A common stock to decline.
• Provisions in constituent documents and Delaware law may prevent or frustrate attempts by stockholders to change management or hinder efforts to acquire a controlling interest.
• The company will continue to incur costs and demands upon management as a result of complying with laws and regulations affecting public companies in the United States.
• Failure to maintain an effective system of disclosure controls and internal control over financial reporting could impair the ability to produce timely and accurate financial statements or comply with applicable regulations.
• The business could be disrupted by catastrophic events, including natural disasters, power loss, cyberattacks, or geopolitical instability.

Future Outlook

C3.ai anticipates continued operating losses and negative cash flows from operations in the next few quarters due to planned investments in business growth. The company expects to maintain high levels of investment in product innovation, particularly in generative AI, and aims to expand its customer base by moving down-market to small and medium businesses in the coming years. Sales and marketing expenses are expected to remain high in the near-term but decline as a percentage of total revenue over time as the business scales and brand awareness increases. The company believes its existing cash, cash equivalents, and marketable securities will be sufficient to meet cash needs for at least the next 12 months, but may require additional financing in the future.

Management Comments

• "Our strongest asset is unquestionably the human capital that we have been able to attract, retain, and motivate."
• "We are dedicated to achieving our mission to accelerate digital transformation of organizations globally by enabling the deployment of Enterprise AI at scale."
• "Our people are domain experts in their respective fields. We are individuals with exceptional education and professional backgrounds. We are uncompromising in the quality of our work product."
• "We build relationships with our customers grounded upon the highest levels of business ethics and professionalism, with a laser focus on customer success."
• "We execute with precision."
• CEO Thomas M. Siebel stated that his autoimmune disease and significant vision impairment were not impacting his ability to manage the business in a hands-on manner.

Industry Context

C3.ai operates in the rapidly expanding Enterprise AI market, which is experiencing explosive growth, with the AI software market expected to exceed $450 billion this year. The company positions itself as a leader in providing end-to-end AI application development platforms, differentiating from competitors who offer only component parts or rely on costly, time-consuming 'do-it-yourself' internal solutions. The increasing focus on digital transformation across industries, coupled with advancements in generative AI and large language models, creates a significant market opportunity that C3.ai is actively pursuing through its product innovations and strategic partnerships with major cloud providers and consulting firms. The company's consumption-based pricing model aligns with broader industry trends in enterprise software.

Comparison to Industry Standards

• C3 AI's patented model-driven architecture is claimed to accelerate development by a factor of 26 and reduce code by up to 99% compared to traditional structured programming, offering a significant efficiency advantage over typical enterprise software development.
• The company's ability to deploy Enterprise AI applications into production in as little as four weeks demonstrates a rapid time-to-value, which contrasts favorably with the often multi-year, high-cost, and frequently unsuccessful bespoke AI development efforts undertaken by internal IT organizations.
• C3 AI's strategic partnerships with hyperscale cloud providers (Microsoft Azure, AWS, Google Cloud) and leading consulting firms (McKinsey & Company, PwC, Capgemini, Cognizant) are indicative of its strong position within the enterprise software ecosystem, leveraging established channels for broader market penetration.
• The adoption of a consumption-based pricing model aligns C3 AI with the evolving standards of major cloud and enterprise software providers, offering flexibility that is becoming common in the industry.
• The company's foundational U.S. patent (No. 12,111,859) for generative AI agents positions it as a pioneer in a critical and rapidly advancing area of AI, potentially providing a competitive edge over companies with less differentiated or proprietary generative AI capabilities.
• Customer recognition, such as Georgia-Pacific winning an IDC award for improving reliability with C3 AI Reliability, Roche for operational risk management, Baker Hughes for ESG assessment, and San Mateo County Sheriff's Office for data-driven policing, highlights the tangible, high-value outcomes delivered by C3 AI's applications, demonstrating real-world impact comparable to or exceeding industry benchmarks for AI adoption.

Management Changes

Corporate Governance

Legal Proceedings

• A putative securities class action complaint (The Reckstin Family Trust v. C3.ai, Inc. et al.) was filed, alleging material misstatements or omissions about the company's partnership with Baker Hughes and its salesforce, and insider trading. Portions of the alleged violations of Section 11 and Section 15 remain after a motion to dismiss, with briefing for a revised motion to dismiss expected in June 2025.
• Six putative shareholder derivative actions (e.g., Suri v. Siebel et al.) have been filed, asserting claims on the company's behalf against certain current and former officers and directors for breach of fiduciary duty, gross mismanagement, corporate waste, abuse of control, unjust enrichment, and violations of the Securities Exchange Act of 1934, based on allegations similar to the securities class action. Most of these actions have been stayed pending the resolution of the Reckstin case.
• C3 AI filed a lawsuit in the Court of Rome, Italy, against Enel Global Services S.r.l. and its affiliates, claiming misappropriation of trade secrets and breach of contract, seeking €2.1 billion in compensatory damages. A report of criminal misconduct was also filed with Italian law enforcement.
• Enel initiated two lawsuits against C3 AI in Rome, claiming ownership of two of C3 AI's patent applications filed in the European Patent Office. Motions to stay these lawsuits were granted.

Related Party Transactions

• **Baker Hughes Company**: Previously operated as C3 AI's exclusive channel partner and reseller in the oil and gas industry. Agreements were revised multiple times, most recently in April 2025, and Baker Hughes ceased to qualify as a related party as of June 30, 2023.
• **First Virtual Group, Inc. (Subtenant)**: C3 AI entered into a sublease agreement on February 21, 2023, to sublease approximately 3,130 square feet of office space in Redwood City, California. Thomas M. Siebel, C3 AI's Chief Executive Officer and Chairman, serves as Chairman of the Subtenant. The monthly base rent for the sublease was approximately $8,608 through September 30, 2023, and increases annually thereafter.

Stakeholder Impact

• **Shareholders**: Face potential for dilution from future equity issuances, stock price volatility influenced by market factors and short-seller reports, and the financial and reputational impact of ongoing legal proceedings. The dual-class stock structure concentrates voting power with Class B holders, limiting the influence of Class A shareholders.
• **Employees**: Benefit from continued investment in research and development and sales/marketing, suggesting ongoing job opportunities. However, the intense competition for talent and the challenge of maintaining company culture amidst rapid growth pose risks. Stock-based compensation is a significant component of remuneration, making employees sensitive to stock price performance.
• **Customers**: Stand to benefit from rapid deployment of AI applications, continuous software updates, and enhanced functionality, particularly with new Generative AI offerings. The consumption-based pricing model offers flexibility. However, the company's dependence on a small number of large customers means changes in their spending or relationships could significantly impact C3 AI's ability to serve them.
• **Partners**: Strategic alliances are expanding, offering partners opportunities for joint sales, marketing, and solution delivery, which strengthens the overall ecosystem and provides broader market coverage for C3 AI's solutions.
• **Creditors**: The company's history of losses and anticipated future losses, along with negative cash flows from operations, could be a concern, although current cash and marketable securities are deemed sufficient to cover operational needs for at least the next 12 months.

Next Steps

• Continue to invest in research and development to extend C3 AI Software and introduce new products and features.
• Focus on expanding customer usage of C3 AI Software by addressing new use cases across multiple departments and divisions, adding users, and developing and deploying additional applications.
• Expand the ecosystem of strategic partners and the number of industry verticals that they serve.
• Grow the direct sales team in international markets and supplement the direct sales effort with strategic partners.
• Monitor and evaluate the nature and extent of the impact of general macroeconomic conditions on the business.
• Invest aggressively to support the distribution channel established with Microsoft Azure.
• Continue to invest heavily in generative AI to enhance existing offerings and create new, innovative applications.
• Complete briefing for the revised motion to dismiss in the securities litigation, expected in June 2025.
• File Rob Schilling's offer letter as an exhibit to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ending July 31, 2025.
• Grant Rob Schilling RSUs equivalent to 29,004 shares of Oracle Corporation common stock on September 30, 2025.

Key Dates

Recommendation

Keywords

Enterprise AI, Artificial Intelligence, Machine Learning, Generative AI, C3 Agentic AI Platform, SaaS, Cloud Computing, Digital Transformation, SEC Filing, 10-K, Financial Results, Software Subscriptions, Professional Services, Risk Factors, Corporate Governance, Intellectual Property, Strategic Partnerships, Thomas Siebel, AI Applications, Consumption-based Pricing, Net Loss, Revenue Growth