C3.AI INC-A (NYSE:AI) Reports Mixed Q2 2026 Results, Beats Loss Estimates Amid Revenue Decline

C3.ai Inc (NYSE:AI) reported financial results for its fiscal second quarter of 2026, delivering a mixed performance against Wall Street expectations. The enterprise AI software firm met revenue estimates but posted a narrower-than-expected loss, leading to a muted initial market reaction.

Quarterly Results vs. Estimates

The company reported total revenue of $75.1 million for the quarter ended October 31, 2025. This figure represents a 20.3% decline compared to the $94.3 million reported in the same quarter last year. The result was essentially in line with analyst consensus estimates, which had anticipated revenue of approximately $74.9 million.

On the profitability front, the company's non-GAAP net loss per share was $0.25. This result was notably better than the $0.33 loss per share that analysts had forecast, beating estimates by roughly 25%. The GAAP net loss per share was significantly wider at $0.75.

Key financial highlights from the quarter include:

• Subscription Revenue: $70.2 million, constituting 93% of total revenue.
• GAAP Gross Margin: 40%.
• Non-GAAP Gross Margin: 54%.
• Cash and Investments: The company ended the quarter with a strong liquidity position of $675.0 million in cash, cash equivalents, and marketable securities.

Market Reaction and Guidance

Following the earnings release, C3.ai's stock traded slightly lower in after-hours activity, down approximately 2.4%. This movement suggests investors are weighing the better-than-feared loss against the ongoing year-over-year revenue contraction.

Management provided guidance for the upcoming third quarter and the full 2026 fiscal year. For Q3, the company expects total revenue between $72.0 million and $80.0 million. The midpoint of this range, $76 million, aligns closely with the current analyst consensus estimate of $77.9 million. For the full 2026 fiscal year, C3.ai anticipates revenue between $289.5 million and $309.5 million, which brackets the analyst sales estimate of $310.2 million.

The outlook for losses remains substantial. The company guided for a non-GAAP operating loss of $180.5 million to $210.5 million for the full year.

Business Highlights and Strategic Focus

The earnings press release emphasized strong momentum in the company's federal government business and its partner ecosystem. CEO Stephen Ehikian stated the quarter was "driven by excellent performance in our Federal business and increased high-value deal activity."

Notable business developments from the quarter include:

• Federal Growth: Bookings across federal, defense, and aerospace grew 89% year-over-year and represented 45% of total bookings. New agreements were signed with entities including the U.S. Department of Health and Human Services and Booz Allen Hamilton.
• Partner Ecosystem: 89% of total bookings were driven through C3.ai's partner network, which includes Microsoft, AWS, and Baker Hughes. The joint pipeline with Microsoft grew 146% year-over-year.
• Generative AI: The company entered into eight new and expanded agreements for its C3 Generative AI product and launched a new "Agentic Process Automation" solution.

Ehikian outlined a refined execution plan aimed at returning to growth and achieving a "pathway to cash generation and non-GAAP profitability," focusing on sectors where the company demonstrates clear leadership.

Conclusion

C3.ai's fiscal Q2 results present a familiar narrative for the high-profile AI software firm: robust underlying business activity, particularly in the government sector, coupled with significant financial losses as it invests for growth. While the company managed to exceed bottom-line expectations this quarter, the market's tepid after-hours reaction reflects persistent concerns over top-line shrinkage and the long runway to profitability. The company's guidance for the coming quarter suggests a stabilization of revenue, but the path to sustained growth and improved margins remains the critical focus for investors.

For a detailed look at upcoming earnings dates and analyst estimate revisions, you can review the earnings and estimates page for C3.ai.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation to buy or sell any security, or an endorsement of any investment strategy.