TLDR
- C3.ai reports Q1 FY27 earnings on September 2, with Wall Street expecting $52 million in revenue and an adjusted loss of $0.26 per share.
- DA Davidson analyst Lucky Schreiner has a Sell rating and $7 price target, implying 35.3% downside from current levels.
- AI stock is down about 20% year-to-date, though it has gained 11% over the past month.
- C3.ai’s average analyst price target on TipRanks is $9.29, implying 14.2% downside; consensus rating is Moderate Sell.
- The company cut headcount by 35% this year and expects roughly $1 million in net new revenue for Q1 FY27.
C3.ai (AI) is set to report its Q1 FY27 earnings after the bell on Wednesday, September 2. The stock is currently trading around $10.90, down roughly 20% year-to-date.
Wall Street expects the company to post revenue of $52 million and an adjusted loss of $0.26 per share. That would represent a year-on-year revenue decline of around 25.7%.
At least one analyst isn’t feeling optimistic heading into the print. DA Davidson’s Lucky Schreiner reiterated a Sell rating with a $7 price target, which implies 35.3% downside from where the stock trades now.
Schreiner points to continued execution risks and limited near-term profitability as reasons for his bearish stance. He also believes the valuation remains stretched, despite C3.ai cutting its headcount by 35% this year.
The stock has picked up some momentum recently, gaining 11% over the past month as sentiment around C3.ai’s SaaS narrative improved. The broader data and analytics software sector is up 14.7% over the same period, so C3.ai has slightly lagged its peers.
What the Numbers Show
C3.ai’s last quarterly report was a mixed bag. Revenue came in at $51.6 million, beating analyst expectations but still down 52.5% year on year. The company beat on adjusted operating income but missed on billings.
Subscription revenue has stayed mostly flat over the past two quarters. The company has generated no revenue from demonstration licenses, and net new revenue remains thin.
C3.ai gave initial FY27 guidance last quarter, projecting a 10% year-on-year revenue decline. The current consensus sits at roughly $225 million, near the midpoint of that range. Schreiner expects the company to raise the low end of its FY27 guidance following this report.
What Could Change the Outlook
Tom Siebel returned to the CEO role, and Schreiner views that as a potential positive. Better sales execution and higher professional services revenue are two areas where Siebel’s return could make a difference.
C3.ai has also been targeting larger customers and more complex AI projects. The company said during its pre-quiet period check-in that demand for AI solutions remains strong and customers are getting a clearer picture of how C3.ai differs from rivals.
Public-sector demand is another area Schreiner flagged as a potential growth driver going forward.
Peers in the segment have had a mixed earnings season. Elastic reported 15.1% revenue growth and beat estimates by 1.7%, sending its stock up 21.8%. Teradata reported flat revenue, beat estimates by 3.5%, and still fell 23.7%.
On TipRanks, AI carries a Moderate Sell consensus based on one Buy, three Holds, and five Sells. The average price target of $9.29 implies 14.2% downside from current levels.
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