C3.ai (AI) Q2 2025 earnings summary

Executive summary

• Achieved seventh consecutive quarter of accelerating revenue growth, with Q2 FY25 revenue up 29% year-over-year to $94.3 million, driven by strong subscription and professional services growth.

• Signed a transformative five-and-a-half-year strategic alliance with Microsoft, making all solutions available on Azure Marketplace and expanding global sales reach through March 2030.

• Closed 58 agreements in Q2, including 36 pilots, with 62% through partner channels, and expanded relationships with major enterprises and government agencies.

• Awarded foundational U.S. patent for generative AI agentic technology, reinforcing leadership in enterprise AI.

• Continued heavy investment in generative AI, R&D, and go-to-market strategies to expand customer base and product offerings.

Financial highlights

• Total revenue for Q2 FY25 was $94.3 million, up 29% year-over-year; subscription revenue was $81.2 million, up 22% and representing 86% of total revenue.

• Non-GAAP gross profit was $66.3 million (70% margin); GAAP gross profit was $57.8 million (61% margin).

• Non-GAAP operating loss was $17.2 million; GAAP net loss for the quarter was $66.0 million, with non-GAAP net loss per share at $0.06 and GAAP net loss per share at $0.52.

• Free cash flow for the quarter was negative $39.5 million, improved from negative $55.1 million year-over-year.

• Cash, cash equivalents, and marketable securities totaled $730.4 million at quarter end.

Outlook and guidance

• Q3 FY25 revenue guidance: $95.5–$100.5 million; FY25 revenue guidance raised to $378–$398 million.

• Q3 FY25 non-GAAP operating loss guidance: $38.6–$46.6 million; FY25 non-GAAP operating loss guidance: $105–$135 million.

• No longer targeting full-year FY25 cash flow positivity due to increased investment; expect to be cash flow positive in Q4 FY25.

• Management believes existing cash and equivalents are sufficient to support operations for at least the next 12 months.

• Transition to a consumption-based pricing model continues to impact revenue visibility and RPO, but is expected to drive long-term growth.