C3 AI fiscal 2022 outlook in line with expectations as it builds out partnerships

C3 AI ended the quarter with 98 customers, up 85% from a year ago.

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C3 AI reported mixed fiscal first quarter results as it builds out its partner and go-to-market ecosystem.

The earnings landed shortly after C3 AI outlined a strategic alliance with Google Cloud to co-sell and service the company's AI applications.

C3 AI reported first quarter revenue of $52.4 million, up 29% from a year ago, with a net loss of $37.46 million, or 37 cents a share. C3 AI ended the quarter with 98 customers, up 85% from a year ago.

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Wall Street was expecting fiscal first quarter revenue of $51.16 million, a non-GAAP loss of 28 cents a share and GAAP loss of 35 cents a share.

As for the outlook, C3 projected second quarter revenue of $56 million to $58 million. Wall Street was looking for second quarter revenue of $56.1 million. For fiscal 2022, C3 said revenue will be between $243 million to $247 million. Wall Street was expecting revenue of $245.4 million for fiscal 2022.

C3 AI said its partnership with Microsoft was paying off with deals worth more than $200 million to date. C3 AI also expanded its footprint in various industries.

On a conference call with analysts, C3 AI CEO Thomas Siebel said:

Historically, our business has been characterized by quarter-to-quarter lumpiness due to the substantial size of our average order value. Now as application sales become an increasingly large part of our revenue mix, roughly 50% of our subscriptions last quarter in Q1 accrued from application software. We are increasingly offering lower-priced high-value products like C3 AI CRM and Ex Machina. We've been diversifying our distribution model to complement enterprise selling with telesales, distributors, market partners and direct marketplace selling.

Bottom line, our performance in the first quarter was strong across the board, and we're planning for continued growth in this year and accelerated growth next year. 

Later in the call, Siebel also noted that Google Cloud will be a big help accelerating growth for C3 AI. Siebel said:

(Google Cloud CEO) Thomas Kurian has really changed the nature of Google Cloud in a big way. I think they've gone from maybe 400 sales people of a couple of years ago who were kind of middleware salespeople to the order of 4,000 salespeople today, and these are kind of experienced enterprise sales men and women.

Their focus is very much on the enterprise. Rather than compete based upon speeds and feeds, they've made decisions they're going to compete based on applications. So they're going to be selling stochastic optimization of the supply chain. They're going to be selling supply network risk. They're going to be selling anti-money laundering, fraud detection, what-have-you, and this is how they're positioning the company to deliver turnkey solutions. We're very fortunate that they've decided to partner with us in that effort.