$AI Inc Q2 2023 Earnings Revealed!

$AI Inc Q2 2023 Earnings Revealed!

Table of Contents

1. Introduction
2. Earnings Performance
3. Customer Engagements
4. Federal Business Strengths
5. Generative AI
6. Quality of Pilots and Customer Conversion
7. Investments in Engineering and Lead Generation
8. Subscription Revenue vs. Services Revenue
9. Partner Impact
10. Federal Use Cases for Generative AI
11. Conclusion

Article

Introduction

Good day and thank You for standing by. Welcome to the C3 AI Second quarter, fiscal year 24 conference call. In this article, we will discuss the earnings performance, customer engagements, federal business strengths, generative AI, investments in engineering and lead generation, subscription revenue vs. services revenue, the impact of partners, and Federal use cases for generative AI.

Earnings Performance

In the second quarter, C3 AI showed strong revenue growth, with a total revenue of $73.2 million, representing a 177% increase compared to the same period last year. The total number of customer engagements reached 404, an 81% increase from the previous quarter. North American revenue increased by 28% year-over-year, while Mia revenue decreased by 11%. Subscription revenue accounted for 91% of total revenue, amounting to $66.4 million.

Customer Engagements

C3 AI continues to gain traction with its customer engagements, with an increase of 81% compared to the previous quarter. The company closed 40 agreements through its partner network, including AWS, Booze Allen, Bigger Hughes, Google Cloud, and Microsoft. The qualified opportunity pipeline with partners has increased by 75% in the past year. C3 AI signed new and expanded agreements with various organizations, such as Newcore Corporation, Ro Con Edison, H Peckard Enterprise, GSK, the United States Navy, the Administration for Children and Families, and more.

Federal Business Strengths

C3 AI's federal business continues to Show significant strength, with bookings up by 187% year-over-year. The company closed new and expanded deals with the United States Navy, the Intelligence Community, the Defense Logistics Agency, and the Administration for Children and Families. C3 AI is now helping various federal agencies monetize and modernize their operations. Partnerships with AWS, Bedrock, and other initiatives are driving growth in this sector.

Generative AI

Generative AI is a game-changer for C3 AI, significantly expanding its addressable market. By combining its extensive commercial supply chain experience with its Enterprise AI platform, C3 AI has developed a unique solution that overcomes the challenges associated with large language models. The company's generative AI suite offers reliability, flexibility, adaptability, accuracy, and security, addressing the limitations of Current solutions. Bloomberg predicts a $1.3 trillion market for generative AI by 2032, indicating the immense potential of this technology.

Investments in Engineering and Lead Generation

C3 AI is doubling down on investments in engineering, data scientists, and lead generation to capitalize on the generative AI opportunity. The company plans to offer advanced generative AI solutions combined with initiatives from AWS and Bedrock to serve customers in multiple verticals. The expansion of its partner network and investments in marketing and customer success will play a crucial role in seizing market share.

Subscription Revenue vs. Services Revenue

In the second quarter, subscription revenue accounted for 91% of total revenue, while services revenue represented 9%. C3 AI aims to maintain a range of 10% to 20% for professional services revenue. The company's consumption-Based pricing model has enabled customers to acquire solutions more easily, increasing customer engagement and reducing average selling prices. The new self-service C3 generative AI on the AWS Marketplace has expanded C3 AI's addressable customer pool.

Partner Impact

Partnerships have been integral to C3 AI's growth, with agreements closed through partner networks, including AWS, Booze Allen, Bigger Hughes, Google Cloud, and Microsoft. C3 AI's joint qualified pipeline with AWS has more than doubled year-over-year, driven by interest in the C3 generative AI suite. The expanded collaboration agreement with AWS focuses on offering advanced generative AI solutions combined with initiatives for customers in manufacturing, power and utilities, consumer packaged goods, state and local government, and the federal government.

Federal Use Cases for Generative AI

C3 AI's generative AI technology has found significant use cases in the federal sector. One of the largest use cases is predictive maintenance for the United States Air Force. The system, known as the panda system, leverages C3 AI's generative AI capabilities to provide a system of Record for predictive maintenance across all air force assets. The system uses 100 terabytes of data, including maintenance, storage, inventory, and flight data, to offer reliable predictions. This use case showcases the power of generative AI in optimizing operations in complex organizations.

Conclusion

C3 AI's second quarter earnings performance demonstrates continued revenue growth and customer engagement. The company's investment in generative AI has positioned it as a leader in the market, addressing the limitations of large language models and unlocking significant potential. With its strong partner ecosystem and focus on engineering, data scientists, and lead generation, C3 AI is well-positioned to capitalize on the generative AI opportunity. As the market expands, the company remains committed to delivering value to its customers and shareholders.