C3.AI Inc. (NYSE:AI) Stock Plummets 13.7% After Q1 Earnings and Guidance Miss

C3.ai Inc. (NYSE:AI) reported fiscal first-quarter 2026 results that fell significantly short of analyst expectations, triggering a sharp negative market reaction with shares declining approximately 13.7% in after-hours trading. The enterprise AI software provider posted both revenue and earnings below consensus estimates, while also providing conservative guidance for the upcoming quarter.

Financial Performance Versus Estimates

The company reported revenue of $70.3 million for the quarter ended July 31, 2025, representing a 19.4% decline year-over-year and substantially missing analyst expectations of $97.4 million. This performance marks a notable deviation from market projections and reflects challenges in the company's sales execution during the quarter.

Key financial metrics from the quarter include:

• Subscription revenue: $60.3 million (86% of total revenue)
• GAAP gross margin: 38%
• Non-GAAP gross margin: 52%
• Cash and marketable securities: $711.9 million

On the profitability front, the company reported a non-GAAP loss per share of $0.37, which was 75.3% worse than the analyst estimate of a $0.20 loss per share. The GAAP net loss per share came in at $0.86.

Market Reaction and Guidance

The market's negative response appears driven by both the earnings miss and the company's outlook for the second quarter. Management provided revenue guidance of $72-80 million for Q2 FY2026, with the midpoint of $76 million falling 24.6% below analyst expectations of $103.7 million.

The company also withdrew its full-year fiscal 2026 guidance, citing recent leadership changes and organizational restructuring. This decision adds uncertainty around the company's full-year performance and likely contributed to investor concerns.

Strategic Developments and Business Highlights

Despite the financial shortcomings, the company announced several significant developments during the quarter. Most notably, C3.ai appointed Stephen Ehikian as Chief Executive Officer effective September 1, 2025, with founder Thomas Siebel transitioning to Executive Chairman. Siebel acknowledged the quarter's disappointing results, attributing them to disruptive effects from sales reorganization and his reduced involvement due to health issues.

The company also launched the C3 AI Strategic Integrator Program, an OEM initiative that enables partners to license the C3 Agentic AI Platform to build and commercialize enterprise AI applications. This new program represents a potential growth channel for the company.

Business development highlights include:

• 46 agreements closed, including 28 initial production deployments
• Expanded relationships with major clients including Nucor Corporation, HII, and various U.S. government agencies
• 40 agreements closed through partner network
• 12 federal sector agreements accounting for 28% of total bookings

Operational Challenges and Forward Outlook

The quarterly results reflect transitional challenges as the company restructured its global sales and services organization with new leadership across all business units. While these changes aim to position the company for accelerated growth, they clearly impacted short-term performance.

The company maintains a strong liquidity position with $711.9 million in cash and marketable securities, providing runway to navigate this transitional period. Management expressed confidence that the reorganization, combined with new leadership and continued product innovation, positions the company for improved performance going forward.

For more detailed earnings information and analyst estimates, view the complete earnings and estimates data.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. The content should not be interpreted as a recommendation to buy or sell any security. Readers should conduct their own research and consult with a qualified financial advisor before making investment decisions.