Is Stock a buy it now?

C3.aiit is (NYSE:IA) the stock plunged nearly 25% in after-hours trading on June 1 following the release of its fourth-quarter results. The artificial intelligence (AI) software company’s revenue rose 38% year-on-year to $72.3 million, beating analysts’ expectations by about $1 million.

Its adjusted net loss fell from $33 million to $76.7 million, or $0.21 per share, but still topped consensus guidance by $0.08. But according to generally accepted accounting principles (GAAP), its net loss fell from $55.7 million to $192.1 million. The company’s guidance for the current quarter and the full year also disappointed investors.

The stock plunged immediately after the report, but as of Friday’s close, it was trading higher than before the quarterly report was released. However, the stock is down 36% so far this year. Should investors hoard shares of after its latest report, or does this former high-flying stock have a lot more downside?

Image source: Getty Images.

What happened to mainly develops AI algorithms for large enterprises (especially in the energy and industrial sectors) and government agencies. Its algorithms can be integrated into an organization’s existing software infrastructure or accessed as stand-alone services, and can be used to optimize operations, improve employee safety, reduce costs and detect fraud.’s revenue jumped 71% in fiscal 2020, which ended in April this calendar year, but only increased 17% to $183.2 million during in fiscal 2021 as the pandemic disrupted energy and industrial markets. This slowdown also revealed’s heavy reliance on a joint venture with hugue baker (NASDAQ: BKR)the energy giant which accounted for nearly 31% of its revenue in fiscal 2021.’s slowing growth, customer concentration problem and lack of profits have all spooked the bulls, and its stock plunged from an all-time high of $177.47 in December 2020 amid the adolescence at the time of this writing.

A brief recovery followed by gloomy prospects revenue grew 38% to $252.8 million in fiscal 2022 as pandemic headwinds eased. It ended the year with 223 customers, up 48% from the previous year, and its remaining performance obligations (RPO) – the remaining value of an existing contract that has not yet been invoiced and recognized as turnover – and income has steadily increased. over the past year:


Q4 2021 growth (YOY)

Q1 2022 growth (YOY)

Q2 2022 growth (YOY)

Q3 2022 growth (YOY)

Q4 2022 growth (YOY)

RPO (non-GAAP)












Data source: YOY = year after year.

This recovery was encouraging, but the company said it expects revenue to grow only 24% to 28% year-over-year in the first quarter of fiscal 2023 and 22 % to 25% for the whole year. Analysts had expected its full-year revenue to rise about 34%.

During the conference call with analysts, CEO Tom Siebel attributed the slowdown to “economic and political” uncertainties, “widespread market passivity”, delayed deals and “too big” in its pipeline. Nevertheless, Siebel has always predicted that the company will return to “stable revenue growth” of 30-35% after “market conditions stabilize”.

We won’t know if’s customer concentration problem improved in the fourth quarter until it provides more details in its 10-K annual report, but we do know that its joint venture with Baker Hughes accounted for 39% of its turnover. during the first nine months of fiscal year 2022.

No clear path to profitability’s non-GAAP gross profit increased 43% to $200.5 million in fiscal 2022, increasing its non-GAAP gross margin from 76% to 79%.

However, its non-GAAP operating loss still fell from $37.5 million to $80.7 million. In fiscal 2023, it expects to post another non-GAAP operating loss of between $76 million and $80 million.

All of this red ink contradicts Siebel’s statement on the last conference call that is a “structurally profitable business.” Siebel also said the business can generate a “lasting positive effect free movement of capital eight to 12 quarters” – but that’s a long way off, and its actual free cash flow was $14.8 million in the fourth quarter.

On the bright side, won’t run out of cash anytime soon. It ended the fourth quarter with $960 million in cash, cash equivalents and short-term investments, and its low debt-to-equity ratio of 0.2 gives it leeway to raise additional cash through new offerings. of debt.

Is it a good time to buy

At $14 per share at the time of this writing, is valued at $1.5 billion, about five times its estimated sales for fiscal year 2023. selling price The ratio is reasonable for a company that aims to generate revenue growth of more than 20% this year, but its customer concentration problem and its large losses are impossible to ignore.

Investors can easily find more stable tech stocks trading at comparable valuations in this market. Selling powerwhich is bigger, better diversified and more profitable than, expects to generate revenue growth of around 20% this year, but is trading at 6x forecast.

Simply put,’s downsides might be limited to those levels, but I expect him to stay in the penalty area until he fixes his biggest issues.

10 stocks we like better than, Inc.
When our award-winning team of analysts have stock advice, it can pay to listen. After all, the newsletter they’ve been putting out for over a decade, Motley Fool Equity Advisortripled the market.*

They have just revealed what they believe to be the ten best stocks for investors to buy now…and, Inc. was not one of them! That’s right – they think these 10 stocks are even better buys.

View all 10 stocks

* Equity Advisor Returns as of April 27, 2022

Leo Sun has positions in, Inc. and Salesforce, Inc. The Motley Fool has positions in and recommends Salesforce, Inc. The Motley Fool recommends, Inc. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

About Barbara J. Ross

Check Also

ADI Stock: Is Analog Devices a Good Buy Before Earnings?

Analog Devices, Inc. (NASDAQ: ADI) is on a mission to bridge the physical and digital …