The most significant event of the quarter and perhaps the most significant event in the Company's history was the substantial expansion of our strategic alliance with Microsoft Azure. All C3 Enterprise AI and Generative AI solutions are now orderable on the Azure price list, and Azure will subsidize pilots and deployments over the term of the agreement.
— Tom Siebel
03Detailed Report
AI
Company AI
Period
Q2 2025
CurrencyUSD
Report TypeQuarterly Earnings
GeneratedJun 5, 2026
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Executive Summary
C3.ai delivered a strong QQ2 2025 performance, highlighted by 29% year-over-year revenue growth to $94.3 million and a 70% non-GAAP gross margin, supported by a high mix of Subscription and Prioritized Engineering Services (PES). The quarter underscored the strategic inflection created by the expanded Microsoft Azure alliance, positioning C3.ai to scale its enterprise AI platform through Azure’s global sales force and Fortune 500 footprint. Management signaled that a material acceleration in bookings and pilots should follow from the alliance, though near-term profitability will be pressured by deliberate investments in sales, marketing, and the broader pilot-to-production transition. The company remains well-capitalized with a substantial cash and marketable securities balance (~$730 million) and is guiding toward a positive free cash flow in Q4 FY25, after a near-term negative print in Q3. The combination of enterprise AI deployment in production, a broad partner ecosystem, and a patent-backed agentic AI framework positions C3.ai to sustain above-market growth as AI adoption deepens across verticals and geographies.
Key Performance Indicators
Revenue
Increasing
94.34M
QoQ: 8.17% | YoY: 28.83%
Gross Profit
Increasing
57.84M
61.31% margin
QoQ: 10.88% | YoY: 40.69%
Operating Income
Increasing
-75.29M
QoQ: -3.72% | YoY: 5.17%
Net Income
Increasing
-65.97M
QoQ: -5.01% | YoY: 5.46%
EPS
Increasing
-0.52
QoQ: -4.00% | YoY: 11.86%
Revenue Trend
Margin Analysis
Financial Highlights
Revenue: $94.338m in Q2 FY25, up 28.83% YoY and 8.17% QoQ. Gross profit: $66.3m, gross margin 70.0% (Professional Services gross margin >90%). Operating income: GAAP -$75.3m; Non-GAAP operating loss -$17.2m. Net income: GAAP -$65.97m; Non-GAAP net loss -$7.80m; EPS (GAAP) -$0.52; Non-GAAP EPS -$0.06. Cash and equivalents plus marketable securities: ~$730.4m. Net cash provided by/used in operating activities: -$38.7m; Free cash flow: -$39.5m. Accounts receivable: $160m (unbilled $97.5m); current ratio 7.52x; cash ratio ~1.0x. End-quarter cash mix reflects $121.3m in cash and cash equivalents and $609.1m in short-term investments. Pilots: 58 agreements closed, 36 pilots signed; cumulative pilots 260 with 210 active. Microsoft alliance expanded on Sept 30, 2024 to 5.5-year term; Azure price list now includes all C3 AI offerings; Azure is designated as preferred cloud provider; C3 AI as preferred Enterprise AI solution for Microsoft customers.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
94.34M
28.83%
8.17%
Gross Profit
57.84M
40.69%
10.88%
Operating Income
-75.29M
5.17%
-3.72%
Net Income
-65.97M
5.46%
-5.01%
EPS
-0.52
11.86%
-4.00%
Key Financial Ratios
Gross Profit Margin
Excellent
61.30%
Gross profit margin is exceptional, indicating strong pricing power and operational efficiency
Operating Profit Margin
Weak
-0.80%
Operating margin is below industry norms, profitability concerns
Net Profit Margin
Weak
-0.70%
Net profit margin is below industry norms, profitability concerns
Return on Assets
Weak
-0.06%
Return on assets suggests inefficient capital allocation
Return on Equity
Weak
-0.08%
Return on equity suggests inefficient capital allocation
Current Ratio
Strong
7.52
Current ratio indicates excellent liquidity and financial flexibility
Debt to Equity
Conservative
0.00
Debt-to-equity shows conservative leverage and low financial risk
P/E Ratio
Negative
-11.93x
Negative earnings make P/E ratio not meaningful
Price to Book
Premium
3.67x
Trading at premium to book value, reflects strong intangibles or growth
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