C3.ai, Inc. AI reported a narrower-than-expected loss for the fourth quarter of fiscal 2026 (ended April 30, 2026), while revenues topped estimates. On a year-over-year basis, both metrics fell sharply.
AI stock gained 3.6% during yesterday’s after-market trading session, following the earnings release.
The quarterly performance reflected a sharp year-over-year decline in total revenues, caused by weaker contributions from both the subscription and professional services businesses. Operating results were also pressured by the cost structure relative to the reduced revenue base, even as the company worked to lower expenses.
Despite these challenges, C3.ai continued to advance its customer deployment activity, including signing new initial production deployments and expanding its footprint across both federal and commercial customers. Management emphasized ongoing restructuring actions designed to improve operating efficiency, reduce cash burn and position the business to return to growth and sustained non-GAAP profitability.
AI’s Q4 Highlights
The company incurred an adjusted loss per share of 33 cents for the fourth quarter of fiscal 2026, narrower than the Zacks Consensus Estimate of a loss of 38 cents. The result represented an earnings surprise of 13.2%. In the year-ago quarter, it reported an adjusted loss per share of 16 cents.
C3.ai, Inc. Price, Consensus and EPS Surprise
C3.ai, Inc. price-consensus-eps-surprise-chart | C3.ai, Inc. Quote
Quarterly revenues came in at $51.6 million, down 52.5% year over year, but beat the consensus mark of $50 million by 3.2%. Management pointed to a broad restructuring and operating reset, while the company signed nine initial production deployments (IPDs) during the quarter.
AI Shows Subscription-Led Quarterly Mix
Subscription revenues were $48.4 million, down 44.6% from $87.3 million in the year-ago quarter. Professional services revenues fell 85% year over year to $3.2 million. Professional services revenues included prioritized engineering services and service fees, both of which declined from the prior-year period.
Within services, prioritized engineering services (PES) represented a meaningful portion of professional services revenues. The company noted that subscription revenue plus PES combined represented nearly all quarterly revenues, underscoring management’s stated emphasis on software-led monetization.
AI’s Profitability Picture Reflects Lower Scale
Adjusted gross profit in the fiscal fourth quarter declined year over year to $19.3 million from $75.2 million, with adjusted gross margins contracted to 37% from 69% a year ago, reflecting the sharp reduction in revenues versus the prior-year period.
Operating leverage remained unfavorable at the current revenue base. On a non-GAAP basis, AI posted an operating loss of $54.4 million and reported operating expenses of $106 million, which management said reflected a sizable reduction from the prior-year quarter’s expense level.
AI’s Balance Sheet & Cash Flow
At the end of the fourth quarter of fiscal 2026, C3.ai had cash and cash equivalents of $66.2 million, down from $164.4 million at fiscal 2025-end. Total cash, cash equivalents and marketable securities were $575.4 million, down from $742.7 million a year earlier.
Net cash used in operating activities was $54.4 million in the fiscal fourth quarter compared with net cash provided by operating activities of $11.3 million in the year-ago quarter. Free cash flow was negative $54.8 million versus positive $10.3 million a year earlier.
AI Provides Q1 & FY27 Outlook
For the first quarter of fiscal 2027, AI expects total revenues of $50-$54 million. The company also projected a non-GAAP loss from operations of $40.5-$48.5 million for the quarter.
For fiscal 2027, AI guided total revenues to $210-$240 million and forecast a non-GAAP loss from operations of $128-$160 million.
AI’s Zacks Rank & Key Picks
C3.ai currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks have been discussed below:
Roper Technologies, Inc. ROP carries a Zacks Rank #2 (Buy) at present. It has a trailing four-quarter earnings surprise of 1.7% on average. Shares of ROP have lost 25.5% year to date (YTD). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Roper’s fiscal 2027 EPS indicates 8.1% growth, while revenues are projected to decline 9.7% from the year-ago level.
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The Zacks Consensus Estimate for Taboola’s 2026 sales and EPS indicates 7.3% and 13.5% growth, respectively, from the year-ago levels.
Vertiv Holdings Co VRT currently carries a Zacks Rank of 2. It has a trailing four-quarter earnings surprise of 14.7%, on average. VRT stock has climbed 104.8% YTD.
The Zacks Consensus Estimate for Vertiv’s 2026 sales and EPS indicates 34.4% and 51.4% growth, respectively, from the year-ago levels.
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This article originally published on Zacks Investment Research (zacks.com).