Thank you for standing by, and welcome to C3.ai, Inc.'s fourth quarter fiscal year 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the call over to Amit Berry. Please go ahead.

Good afternoon. And welcome to C3.ai, Inc.'s earnings call for the fourth quarter of fiscal year 2025, which ended on April 30, 2025. My name is Amit Berry, and I lead investor relations for C3.ai, Inc. With me on the call today are Tom Siebel, chairman and chief executive officer, and Hitesh Lath, chief financial officer. After the market closed today, we issued a press release with details regarding our fourth quarter and full fiscal 2025 year results, as well as a supplemental to our results, both of which can be accessed through the Investor Relations section on our website at ir.c3.ai. This call is being webcast, and a replay will be available on our earnings web on our IR website following the conclusion of the call. During today's call, we will make statements related to our business that may be considered forward-looking under federal securities laws. These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. Statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For a further discussion of the material risks and other important factors that could affect our actual results, please refer to our filings with the SEC. All figures will be discussed on a non-GAAP basis unless otherwise noted. Also during today's call, we will refer to certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is included in our press release. Finally, at times in our prepared remarks and in response to your questions, we may discuss metrics that are incremental to our usual presentation to give greater insight into the dynamics of our business or our quarterly results. Please be advised that we may or may not continue to provide this additional detail in the future. And with that, let me turn the call over to Tom.

Thank you, Amit, and thank you everyone. I'm very pleased to announce that we had a spectacular fiscal year 2025 that we wrapped up in a spectacular fourth quarter. Our growth rates for the last three years have grown from 6% two years ago to 16% last year, to 25% this year. We have most certainly, with the new pricing model, the new product mix, and the new partner ecosystem, returned to very rapid growth by any standards, achieving 26% top-line growth in the fourth quarter. If we look at the facts of the enterprise AI market, it is generally acknowledged today that this is an extraordinarily large and rapidly growing addressable market opportunity that is expected to accrue to trillions of dollars in annual economic benefit or annual economic value in terms of the addressable market. In fact, the largest market in the history of enterprise application software. We were the first to enter this market in 2009, and we've been talking about enterprise AI since 2014. Now let's look at where we are in May of 2025. We have a generally acknowledged large and rapidly growing market. We look at the AI stack and the companies that are playing at the bottom of the stack. We have the silicon providers, the Intels, the AMDs, the NVIDIAs. Above that, we have the infrastructure providers, the Microsoft Azure, AWS, GCP, etc. On top of that, we have the people providing the foundation models like OpenAI, Anthropic, Facebook, etc. On top of that, we have the providers of many thousands of utilities that are out there that do things like platform-independent relational database persistence or key-value stores or AutoML or virtualization or whatever it may be. For the last ten years, going back to about 2014, people have been trying to…

Thank you. Here is the analysis summarizing the major themes across Q4 and the full fiscal year 2025. As we reflect on the past year, it's clear that C3.ai, Inc. has achieved remarkable progress, delivering strong financial results, deepening strategic alliances, and solidifying our leadership in enterprise AI. Fiscal 2025 has been defined by consistent execution, accelerating growth, innovation, and an unwavering focus on delivering value to our customers and shareholders. Let's begin with a detailed overview of our financial results for the fourth quarter and the full fiscal year 2025. All figures are non-GAAP unless otherwise noted. For Q4, total revenue reached $108.7 million, reflecting a 26% increase compared to $86.6 million in the same quarter of the prior year. Subscription revenue for the quarter was $87.3 million, up 9% from $79.9 million a year ago. Combined subscription and prioritized engineering services revenue totaled $104.4 million, representing 96% of total revenue and a 22% increase from $85.7 million in Q4 of the previous year. Non-GAAP gross profit for the quarter was $75.2 million, equating to a gross margin of approximately 69%. Our non-GAAP operating loss was $31.2 million, which was within the guidance range of $30 million to $40 million. Non-GAAP net loss per share was $0.16. We generated free cash flow of $10.3 million in the quarter and closed Q4 with $742.7 million in cash, cash equivalents, and investments. Please note that our balance for cash, cash equivalents, and investments remains largely unchanged from a year ago at nearly three-quarters of a billion dollars. For the full fiscal year 2025, total revenue was $389.1 million, a 25% increase compared to $310.6 million in fiscal 2024. Note that we have seen accelerating growth for the last three consecutive years, going from 6% in fiscal 2023 to 16% in fiscal 2024, to now 25% in fiscal 2025. Subscription revenue for the year was $327.6 million, accounting for 84% of total revenue and reflecting an 18% increase from $278.1 million in the prior year. This marks the eighteenth consecutive quarter as a public company in which we have met or exceeded our revenue guidance. With these results as our foundation, let's turn to the strategic and operational highlights that have shaped our performance and positioned us for the future.

Fiscal 2025 has been a transformative year for C3.ai, Inc., marked by significant milestones in our partnerships and accelerating growth across diverse industries. One of the most notable achievements in Q4 was the renewal and expansion of our strategic partnership with Baker Hughes. This alliance, which began in 2019, has been a cornerstone of our success in the oil and gas sector, generating over half a billion dollars in revenue from this vertical and the chemical market. The renewed agreement underscores the proven value we deliver through our joint efforts in enhancing efficiency, safety, reliability, and sustainability across upstream, midstream, and downstream operations. Together with Baker Hughes, we serve some of the world's largest operators, including E and I, Qatar Energy LNG, Shell, LyondellBasell, ExxonMobil, Coke, Braskem, Qatar Fertilizer Company, and Petronas. This partnership continues to provide us with substantial credibility and market access globally, and we are confident that this renewed collaboration will further drive innovation and opportunity in the energy sector. While oil and gas remains a foundational vertical for us, our growth beyond this sector has gained significant momentum. In fiscal 2025, non-oil and gas revenue increased by 48% year over year, reflecting our successful expansion into nineteen different industries. This acceleration is particularly evident in manufacturing, state and local government, and life sciences. In manufacturing, we have established a strong track record delivering measurable impact through predictive maintenance, energy efficiency, quality optimization, and supply chain visibility. Key customers like Wholesome, Coke, Nucor, and Flex have expanded their engagements with us, while new relationships with iconic companies such as US Steel, CEMEX, Rolls Royce, and Ingersoll Rand signal the vast potential ahead. In state and local government, we have seen remarkable progress, with revenue growing over 100% in fiscal 2025. We closed seventy-one agreements across organizations in…

In the past year, 73% of our agreements were delivered in collaboration with our partners, with 193 agreements closed through this network, a 68% increase from the prior year. In Q4 alone, partner-supported bookings grew by 419%, and we closed fifty-nine agreements through these collaborations. Our partnership with Microsoft continues to be a driving force in expanding our market reach. In Q4, we closed twenty-eight new agreements together, with a particular focus on manufacturing and chemicals. Microsoft's executive team has shown strong advocacy, and their on-the-ground presence at events like C3 Transform, where they participated in over one hundred customer meetings, has been instrumental. Joint marketing initiatives, including virtual fireside chats, executive roundtables, and participation in high-impact conferences, have further amplified our visibility. Our alliance with AWS continues to strengthen, enhancing our ability to deliver advanced enterprise AI solutions globally. This collaboration has been pivotal in broadening our reach and ensuring seamless execution across diverse customer environments. Similarly, our relationship with Google Cloud remains robust, providing additional avenues to connect with enterprises seeking scalable AI solutions. Our partnership with McKinsey Quantum Black has also progressed meaningfully. In Q4, we jointly closed our first agreement, a significant milestone. We have aligned on priority target accounts and conducted five enablement and training sessions attended by hundreds of Quantum Black engineers. This initial success is a testament to the complementary strengths of McKinsey Quantum Black's expertise in business transformation and our leadership in enterprise AI. We are focused on replicating this achievement at scale. Additionally, our new strategic alliance with PwC, formed in Q4, targets key industries such as financial services, manufacturing, and utilities. By combining our Agentic AI capabilities with PwC's advisory expertise, we are well-positioned to accelerate AI-driven transformation for enterprises in these sectors. These alliances with Microsoft, AWS, Google Cloud,…

Thank you, C3 Agentic AI. I will now provide a recap of our financial results and additional color on our business. All figures are non-GAAP unless otherwise noted. Total revenue for the quarter increased 26% year over year to $108.7 million. Subscription revenue increased 9% year over year to $87.3 million, representing 80% of total revenue. Revenue from the sale of software licenses that are demonstration versions of C3 AI applications was $33.8 million during the quarter. We sell these licenses to our distribution partners and enable them to demonstrate our software effectively to their customers and to large strategic customers to enable them to accelerate AI adoption across their companies. This was a strong bookings quarter. We had bookings of $135.4 million during the quarter, which increased from $42 million in the fourth quarter of last year. Our non-Baker Hughes revenue grew by 37% year over year during the quarter and by 40% during the year. Professional services revenue was $21.4 million, of which $17 million was revenue from prioritized engineering services or PES. Professional services represent 20% of total revenue during the quarter, and our subscription and PES revenue combined was $104.4 million and accounted for 96% of our total revenue. This was an increase of 22% compared to $85.7 million one year ago. As a reminder, prioritized engineering services are undertaken when a customer requests that we accelerate the design, development, and delivery of software features and functions that are planned in a future product roadmap. When the software feature is delivered, it becomes integrated into our core product offering. It's available to all subscribers of the underlying software product and enhances the operation of that product going forward. Such PES results in a production-level computer software compiled code that enhances the functionality of our production products,…

Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone. To remove yourself from the queue, you may press. Our first question comes from the line of Patrick Walravens of Citizens. Please go ahead, Patrick.

Oh, great. Thank you. And congratulations across a number of fronts, including the renewal of Baker Hughes, but also Tom adding Ken Goldman to your board. So I guess my first question would be, just in terms of this Microsoft partnership, how do you go about activating tens of thousands of Azure sales reps to actually deliver C3.ai, Inc.?

Great question, Pat. Because I would say at the level of the senior executives of Microsoft, be it Judson, or the people who run Europe, the people who run federal, the people who run North America, they're totally bought in. But the people who are really important are the tens of thousands of Azure reps in Munich, Moline, Madrid, and elsewhere. What we are doing is we are charting our order of a hundred salespeople to each reach out and form partnerships with ten Azure salespeople. Each of those guys focuses on two accounts. That's the leverage. Our sales guys reaching out to their sales guys who are motivated to work with us. We have solutions for them. We make joint sales calls with them. But if we can get roughly a hundred C3.ai, Inc. salespeople focused with ten partner people, all of a sudden, we've gone from a hundred people to a thousand people working together around the world. Today, in May of 2025, I think we're jointly tracking over six hundred accounts together just with Microsoft. But that's the key to this leverage. It's not going to be at the executive level, where the relationships are intimate. We really need to engage with the feet on the street, and that's what we're focused on doing. We've done a lot of focus in the last two quarters on providing the Azure sales reps, AWS sales reps, and GCP sales reps the tools they need to go in and do a demo to their customer on the first call. But that is the challenge that's before us. That's what we've been focusing the bulk of the last two quarters on, and that's what we'll focus the bulk of the next two quarters on is really realizing the potential of these partnerships with the tens of thousands of Azure reps that feed on the street because we can help them retire their quota, and we can help them make their customers successful.

Wonderful. And if I could ask a follow-up. With your permission, Tom, I hope this is okay. But in February, you informed us that you'd suffered a health setback, and it was limiting your ability to travel, and then you were going to have Jim Snobby help out. But I was delighted to hear on this call that you're, I mean, probably not delighted to get on a red-eye, but I was delighted to hear that you're getting on a red-eye because that sounds like some positive developments. So I don't know. Any comments that you're okay sharing with us on that, I'm sure would be greatly appreciated.

I did get slowed down for a little bit. There's no question about it, and I had to, you know, it's very unlikely to work from home. You know that. And I had to work from home for a little while, take it easy, and recover, but I will catch a red-eye to Washington DC tonight. I will be in Washington DC again for three days, I think ten days from now, after attending a wedding in Cabo. So just when you thought it was safe, Pat. I'm back.

Okay. Alright. Thanks, and congratulations again.

Thank you. Our next question comes from the line of Mike Cikos of Needham and Company. Please go ahead, Mike.

Hey, guys. This is Matt Calitri on for Mike Cikos over at Needham. Thanks for taking our questions, and congratulations on the expanded relationship with Baker Hughes. Can you provide some color there on what the economics of the new deal look like and how they might differ compared to your prior engagements?

It's, you know, Matt, given it's covered under NDA, I don't want to get into the specifics of it. But, you know, it's broadened significantly. We're continuing to provide solutions to Baker Hughes, continuing to develop solutions with Baker Hughes, continuing to enable Baker Hughes to develop derivative works on top of the C3 applications, and we're continuing to serve customers together all around the world. We've expanded it for another three years. I think this, if I'm not mistaken, is the fifth such expansion. It's a great partnership. It's a great relationship. I continue to be on speed dial with Lorenzo Simonelli, the CEO of Baker Hughes. We are and always have been close friends. The speculation that somehow the relationship between C3.ai, Inc. and Baker Hughes was rocky was simply, candidly, delusional. I can't imagine a stronger partnership, and we're continuing to kick it together in Abu Dhabi, Qatar, or the Netherlands.

Understood. That's great. Thank you for that. And then looking at your FY 2026 revenue guidance, the band of outcomes is considerably larger than what you've given in past quarters. How did you think through guidance construction this quarter, and what needs to happen to achieve the high end of that band versus the low end?

Well, we read the same newspaper that you guys read. We did talk to the president, and I had dinner with the speaker of the house last night. I spoke with the leader of the senate last week, and I'll meet them. We do know these people, and we do read the newspaper. We all know there is risk. There is risk in Europe. We have kinetic risk. We have geopolitical risk. We have budget risk of, in fact, the government even shutting down. These are real, and we have companies out there withdrawing guidance altogether. We thought in the interest of being, we have to acknowledge that these risks are real. As a result, we have a broader range than usual to accommodate the unanticipated. When we deal with these guys who are making America great again, they seem to hit us with the unanticipated quite frequently. So, you know, that's it. We're just acknowledging real market risk that's out there. Should it go bad, it's going to have an adverse effect on our business as it will General Motors and everybody else in the world.

That's great. Makes a lot. Thanks. Thanks, Tom.

Thank you. I would now like to turn the conference back to Mr. Siebel for closing remarks. Sir?

Ladies and gentlemen, we thank you for your time and the courtesy of tracking us. We're very pleased with the direction the business is going. If you listen to our last ten conference calls, the plan we are executing is exactly the plan we said we're executing. We are right on track. We are growing apace. We expect the future is very bright. We thank you for the courtesy of following us. We look forward to keeping you posted as we power ahead in fiscal years 2026, 2027, and 2028. Thank you all very much.

This concludes today's conference call. Thank you for participating, and you may now disconnect.