Good afternoon. And welcome to C3.ai, Inc.'s earnings call for the 2026Q1, which ended on July 31, 2025. My name is Amit Berry, and I lead investor relations at C3.ai, Inc. With me on the call today are Tom Siebel, Executive Chairman, Stephen Ehigian, Chief Executive Officer, and Hitesh Lath, Chief Financial Officer. After the market closed today, we issued a press release with details regarding our first quarter results, as well as a supplemental to our results. Both of which can be accessed through the Investor Relations section of our website at ir.c3.ai. This call is being webcast and a replay will be available 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. These 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 most recent annual report on Form 10-K filed with the SEC, as it may be supplemented by other filings and reports we make with the SEC from time to time, including our quarterly report on Form 10-Q that will be filed for the fiscal quarter ended July 31, 2025. All financial results will be discussed on a non-GAAP basis unless otherwise noted. A reconciliation of GAAP to non-GAAP financial measures to the extent reasonably available is included in our press release. Finally, at times in our prepared remarks, 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 and 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 Hitesh.

Good afternoon, everyone, and thank you for joining our call today. I will share our financial results and provide additional color on our business. All figures are non-GAAP unless otherwise noted. Total revenue for the quarter was $70.3 million, a decrease of 19% year-over-year. Subscription revenue for the quarter was $60.3 million, representing 86% of total revenue. Revenue from the sale of software licenses that are demonstration versions of C3.ai, Inc. applications was $17.9 million during the quarter, which was sequentially lower by $15.9 million. We sell these licenses at the request of our distribution partners to enable them to demonstrate our software effectively to their customers and at the request of our large strategic customers to enable them to accelerate C3.ai, Inc. application adoption across their companies. Professional services revenue was $10 million, of which $8.7 million was revenue from engineering services, or PES. Professional services represent 14% of total revenue during the quarter. Our subscription and PES revenue combined was $69 million and accounted for 98% of total revenue. I'll now walk you through some of our strategic customer wins this quarter. Nucor has expanded its commitment with C3.ai, Inc. in a multiyear partnership to build an enterprise-wide AI program across their facilities. We are supporting and optimizing day-to-day planning, inventory, and scheduling decisions, and now expanding to additional plants and use cases. Comerica, a global leader in chemicals, launched its first enterprise-scale AI program with C3.ai, Inc. After initial success improving yield in its salt business, Comerica is now scaling to 100 assets and multiple use cases, the start of a company-wide AI transformation. HII, America's largest military shipbuilder, is expanding its partnership with C3.ai, Inc. to accelerate throughput at Ingalls and Newport News. Initial deployments cut complex shipbuilding timelines, and we are now scaling these AI…

Thank you, Hitesh. And good afternoon, everyone. As Hitesh reported, the financial results of the first quarter were completely unacceptable. And completely unacceptable in virtually every respect. I've given this a lot of thought as to, you know, what the root cause of this is. Okay? Is there a market? The market is huge. Is there some new competitor that changed the competitive dynamics of the space? There is not. Is there some secular change in the market that we haven't seen before? There is not. The fact of the matter is that it boiled down to poor sales execution and poor resource coordination. It's clear that the new leadership that we brought into the organization in the guy globally in sales and service in the service organization, in EMEA, in federal, in North America, kind of mid-quarter, and it caused confusion in the sales process. As I have previously announced, I ran into some unanticipated health issues, and as a result of these health issues, I was unable to participate as actively as I used to in the sales processes and the coordination of resources necessary to make these sales processes successful and come to closure. In hindsight, it's clear that my active involvement in that sales process had a greater impact than any of us knew. The good news is that we have completely restructured our sales and service organizations globally. We have brought in new, highly experienced leadership across the board, okay, to drive growth, to drive customer satisfaction. Even better, consistent with our announcement last July, we have completed the search, and we have appointed a new Chief Executive Officer in the person of Stephen Ehigian, who is highly experienced and well-equipped to drive the details of this business, to coordinate resources, and to accelerate growth.…

Thank you, Tom. Operator, could you please open the line for questions?

Thank you. And our first question will come from the line of Roddy Sultan with UBS. Your line is open.

Awesome. Thank you. First for Tom, you know, your involvement in the sales process has obviously been very critical here. I mean, is there any way to more concretely understand how involved you're planning on being in the sales process going forward? And what you're doing to ensure a smooth handoff to Stephen and the new sales leadership?

I am here to do everything I can to ensure that Stephen is successful. Okay? And so now do we have a new, you know, an entire new layer of senior leadership in the company who are tried, tested, and proven at selling enterprise AI globally. And I suspect with Stephen's leadership, they're gonna be enormously successful. That being said, okay, I will continue to be involved as necessary, okay, in monitoring that process and assisting that process to ensure that this transition goes very smoothly. And we dramatically ramp up the sales and service capacity globally.

Awesome. And then second for Hitesh. Obviously, a lot of moving parts in the quarter. What are you seeing that's giving you confidence in the Q2 guide? And then as about Q3 and Q4, like what is the right starting point to think about that sort of back half outlook? Any sort of building blocks would be helpful as we calibrate numbers.

Yeah. Sure, Roddy. Q2 guidance is based on the sales activity we've seen in the month of August, as well as our review of sales pipeline for the rest of the quarter with the new sales leadership. As it relates to periods beyond Q2, while we're not providing any guidance at this point, we note that most analysts who have updated their revenue forecast for the year are forecasting fiscal 2026 revenue ranging from $290 million to $300 million. And at this point, I would not argue against any number within that range. As it relates to profitability, we acknowledge our performance in Q1 has put us behind. But we remain committed to achieving non-GAAP profitability and free cash flow. We are still bullish about the business, as Tom said, and we will get to profitability and free cash flow, with the right scale, and that is a matter of time.

Awesome. Thank you.

Thank you. One moment for our next question. And that will come from the line of Patrick Walravens with Citizens. Your line is open.

Hey, guys. Thank you so much for taking my question. This is Nick on for Pat. Tom, one quick one for you. You guys closed 40 partner-led deals this quarter. How do you see the mix of partner-led versus direct sales evolving?

That's a great question. I think something like Amit, correct me. Is it 80% or 90%? 90 this quarter. The 90% of the business that we closed this quarter was with partners. Particularly Azure and AWS and GCP. And McKinsey Quantum Black, and you can expect that our investment in those partnerships going forward is gonna be big time. I think there are, you know, what certainly, without quoting a number, there are certainly tens of thousands of salespeople at Azure alone, and we are amping up our go-to-market activities with Microsoft, with AWS, GCP in a big way globally, and so we would hope we're going from, say, hundreds of that we're involved in today where we're joint selling and we hope that will go to soon to thousands. So that is a major, major advantage that we have, this partner ecosystem. And we fully intend to exploit that advantage.

Great. Thank you. And then as a follow-up, I heard Stephen was in the room. If I could ask him a quick one, that would be fantastic. You know, how did Stephen, great to meet you. Looking forward to working with you. How did you choose C3.ai, Inc., and why was it a compelling opportunity?

Yeah. Well, first, the market opportunity here for enterprise AI is enormous. Every company, every government is exploring how to transition away from testing and experimenting with AI to actually rolling out across their core operations and workflows. Exciting for me is C3.ai, Inc. has the technology platform and applications that customers need today. Their technology is being deployed across some of the most valuable customers in the world into the most challenging environments. So for me, on top of all that, the ability to learn from Tom Siebel, who invented this entire enterprise AI market, as well as with the extraordinary team here, was, honestly, an easy decision to say yes to.

Awesome. Thank you very much. Looking forward to working with you.

Likewise. Thank you.

And one moment for our next question. And that will come from the line of Matthew Calitri with Needham and Co. Your line is open.

Hi, guys. This is Matt Calitri on for Mike Cikos over at Needham. Thanks for taking our questions. Tom, how would you weight the underperformance this quarter between sales disruption and your impact on the sales process?

I think it was a combination of both, but I would put it, you know, probably 70% sales disruption and 30% my not being as involved in the details as I have previously been. And, you know, I think that, you know? So those are the facts. And, you know, the quarter is the quarter was dreadful. Okay? And now we need to pick ourselves up, dust ourselves off, and get on business, which is exactly what we're gonna do.

Understood. And then looking at the execution steps, how would you categorize them as far as assigning pilots or converting them in contracts? What exactly were you seeing there?

It's all of the above, Matt. I mean, there are a lot of new people involved. There is new leadership involved. I think, you know, when you do that, you know, sometimes channels could cross a little bit and these things get confused. And, you know, we were, you know, we were, you know, driving the car down the road and replacing the engine, the transmission, and the wheels at the same time. And, you know, the guy who used to drive the car wasn't there. So it was a bad quarter. It happens. I mean, come on. I was at Oracle in 1989 when Oracle had its first miss. I think that the stock went from 27 to 3 as I recall. And it was the end of the world. Well, since then, as you know, Oracle has missed 34 quarters since, still not the end of the world. And, NVIDIA has missed 10. Amazon has missed 23. Salesforce has missed a few, certainly six months ago and twelve months ago. And today, nobody remembers any of that. Six months from now, nobody will remember this because we're gonna be rocking.

Understood. Thanks so much.

Thank you. That is all the time we have for Q&A today. I would now like to turn the call back over to Mr. Siebel for any closing remarks.

Ladies and gentlemen, thank you for your time this afternoon. We really appreciate your attention. You know, keep your eye on the screen. There's gonna be a lot of things happening at C3.ai, Inc., and it's exciting. We're encouraged, and we are going for it, people. So stay tuned. And thank you. Thank you. Thank you.

Ladies and gentlemen, this concludes today's program. Thank you all for participating. You may now disconnect.