TenQ

The C3.ai story

C3.ai makes enterprise AI software, and its turnaround depends on converting industrial and government deployments into recurring revenue while reducing persistent losses.

C3.ai stock reportTenQ Score 10/36 · every chart and check from its filings
  • $11.32share price, last close
  • $1.8Bmarket value
  • 10/36TenQ Score checks passed

The story in brief

  • Bookings need conversion. Bookings increased 73% quarter over quarter in the quarter to July 2026, but revenue growth over the last twelve months was -37.5%.
  • Cash improved, losses remain. In the quarter to July 2026, free cash flow reached $2.1 million and the non-GAAP operating loss narrowed 33% quarter over quarter to $36.2 million.
  • Liquidity exceeds profitability. C3.ai passes 5 of 6 TenQ financial health checks but 0 of 6 quality checks, reflecting its debt-free balance sheet alongside continuing losses.

What drives the business

  • C3.ai builds relationships with large industrial companies and government agencies through paid initial production deployments, followed by consumption-based arrangements or commitments spanning multiple periods, with additional applications and usage expanding revenue.
  • The C3 Agentic AI Platform underpins its software family, including industry-specific C3 AI Applications, C3 AI Studio for development, C3 Generative AI for information retrieval and workflows, and C3 Code for generating applications from natural language instructions.
  • Its multiyear Microsoft alliance and Amazon Web Services strategic collaboration support customer acquisition and expansion, while federal customers include the U.S. Air Force and the Missile Defense Agency.
  • In the quarter to July 2026, C3.ai closed 22 agreements with customers including Ford Motor Company, Johnson & Johnson, the U.S. Department of Agriculture, and the Defense Logistics Agency.
  • Subscription revenue was $49.2 million, or 94% of total revenue of $52.4 million, in the quarter to July 2026.

What the price assumes

The reverse DCF cannot measure the growth embedded in the $11.26 share price because free cash flow and operating earnings are both negative, leaving the valuation dependent on future profits.

The $1.8 billion market value represents 7.8x revenue, against $232 million of revenue and -$156 million of free cash flow over the last twelve months.

C3.ai passes TenQ's comparison with its own historical sales valuation, but fails the sales multiple check requiring under 2.5x and the free cash flow yield check requiring above 3%.

What could change the story

  • Dependence on a limited number of customers and lengthy, unpredictable sales cycles mean stronger bookings may not translate promptly into revenue.
  • The restructured sales organization must regain productivity through leadership changes, including Tom Siebel's return as chief executive after Stephen Ehikian's appointment in September 2025.
  • The operating margin of -203.1% over the last twelve months shows the distance from profitability, while non-GAAP results exclude stock-based compensation, related payroll taxes, and restructuring expenses.
  • Stock-based pay of $258 million exceeded revenue over the last twelve months, and the share count rose 27.9% over the last three years.
  • Cash, cash equivalents, and marketable securities rose $76 million quarter over quarter to $651.1 million in the quarter to July 2026, but stock option exercises supplied substantial financing and operating cash flow benefited from working capital movements.

What to watch next

  • For the second quarter of fiscal 2027, C3.ai expects revenue between $51.0 million and $55.0 million and a non-GAAP loss from operations between $(34.5) million and $(42.5) million.
  • For fiscal 2027, its guidance calls for revenue between $210.0 million and $240.0 million and a non-GAAP loss from operations between $(123.0) million and $(155.0) million.
  • The next releases will show whether stronger bookings convert into subscription revenue, whether the 32% GAAP gross margin reported for the quarter to July 2026 improves, and whether positive free cash flow persists without favorable working capital movements.

Sources

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