C3.ai stock jumps on revenue growth acceleration, annual guidance lift

Investing.com -- C3.ai on Monday lifted its full-year revenue guidance following fiscal second-quarter results that topped Wall Street estimates., 

C3.ai Inc (NYSE:AI ) climbed around 7% in premarket trading Tuesday. 

The company reported fiscal Q2 adjusted loss of $0.06 on revenue of $94.6 million, topping estimates for a loss of $0.14 on revenue of $91M. 

Importantly, subscription revenue growth reaccelerated to 22% year-over-year, up from 20% previously.

"Given the large opportunity management sees with its Microsoft (NASDAQ:MSFT ) relationship, C3.ai is investing more aggressively around marketing, customer support, and sales headcount," D.A. Davidson analysts commented, raising the target price to $40.

"Expectations are for sales cycles to accelerate, and management made references about the potential for C3.ai to leverage Microsoft's entire Azure sales organization."

For Q3, C3.ai guided adjusted operating loss in a range of $38.6M to $46.6M on revenue in the range of $95.5B to $100.5M. Analysts were expecting revenue of $97.6M.

Looking to fiscal 2025, the company sees an adjusted operating loss in the range of $105M to $135M on revenue in the range of $378B to $398M, compared with prior guidance for an adjusted operating loss in a range of $95M to $125M on revenue in the range of $370B to $395M.

Analysts at Wolfe Research voiced a cautious stance on C3.ai, noting that while the company is excited about its agreement with Microsoft, there is reason for caution about its growth and profitability outlook, "especially as subscription revenue excluding demonstration licenses increased 5% last quarter, and AI has pushed out FCF targets."

Yasin Ebrahim contributed to this report. 

Source: Investing.com