Shares of C3.ai (AI) are soaring on Thursday after the company reported fourth-quarter results, reporting 20% year-over-year revenue growth and better-than-expected revenue guidance for fiscal 2025. The results are the latest sign of robust demand in the AI space.
Tom Siebel, Chairman and CEO of C3.ai, appears on Morning Brief to discuss balancing the demand for AI software with the need for energy.
“This is the largest market in the history of enterprise application software. Our commitment at C3.ai is to establish and sustain our position as the market leader globally. That's what we're doing. We're investing in growth. We're investing in technology. We're investing in sales. We're investing in customer service. And that's showing up in the form of a 41% year-over-year increase in subscription revenue last quarter,” Siebel told Yahoo Finance.
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Video Transcript
There is more evidence of the strength of AI trading, with C three AI being the latest company to further join the frenzy.
The company's full-year 2025 guidance beat expectations, and fourth-quarter revenue grew 20% year over year, helped by subscription revenue.
All of this is driving the stock price higher this morning, with shares up 12% along with the earnings details.
Behind the curtain is the man himself.
Tom Siebel, chairman and CEO of C three AI, always, and I mean every single time, he ignites the goals in the office here, Tom.
Well, I have to talk about this quarter.
Demand for AI products, and C3 AI in particular, has been one of the broader thematic deals over the last year or so, but how do you see it currently stacking up against the industry as a whole?
Well, the demand for AI infrastructure, AI applications is growing, it's phenomenal.
I mean, look at what's going on with NVIDIA.
Well, these chips, the reason people buy these chips is to run enterprise AI applications, which is what we do.
So I think there is some pressure on the software market.
While AI may be a headwind for the software market in many ways, I think it will definitely be a tailwind for our jobs.
There is a huge demand for generative AI applications, defense intelligence, manufacturing, and financial services. As one of the leading companies in this space, can you tell us a bit more about the growth in demand and your ability to expand your market share?
And ultimately, what does that do to drive subscription growth? That's really important to look at in terms of the three AIs.
Well, this is a game of market share.
We are in the very early stages of a software market that is expected to be worth over $1 trillion.
By the time generative AI becomes a reality, that number may be in the trillions.
This is the largest market in the history of enterprise application software.
Our challenge at C three AI is to determine whether we can establish and sustain a market leadership position globally.
And that's what we're doing.
We're investing in growth, we're investing in technology, we're investing in sales, we're investing in customer service, and that's paying off with top-line growth in subscription revenue last quarter.
This is 41% compared to the previous year.
Tom, that's a pretty good result. I know I'm reading too much into it, but I would say it's pretty good, especially on the operational side of the business, given the amount of additional space that companies like yours have to secure in their data centers to keep up with demand.
I realize that's an increase in costs.
How are you managing expenses as demand increases?
Well, you know, we've found that Hyperscalar is responding to customer demand.
So I don't think there's a silicon shortage.
I don't think there is a shortage of infrastructure.
Well, there is a real possibility that we may run into a power shortage.
Believe it or not, as this market grows over the next decade, I think not having enough electricity to power these data centers is going to be a significant issue right now.
So we need to think about that.
Tom, before we leave you, talk about where some of the demand is coming from.
And my particular focus here is on the federal side, 50% of the bookings are from the federal defense and aerospace sector.
So, you've been asked a couple of times on this call, what are the opportunities for growth and opportunity specifically within the federal government?
So what would that look like for C3 AI? It's amazing, you know, as you get into the defense intelligence community, we're at war with China on applying AI to hypersonics, contested logistics, predictive maintenance readiness, and so on.
And we have the privilege of serving in the Air Force, the Marines, and the intelligence community.
And we're, we're, we're happy to be able to do that.
So the market has grown.
I think revenue will be more than 100% compared to last year.
And we believe these investments will continue.
Now, looking at the private sector of the federal government, let's look at the Department of Health and Human Services, Social Security and Veterans Affairs.
And therein lies a huge opportunity for generative AI to help these people improve services and benefit programs for Americans.
So, you know, the defense budget might be something like $800 billion.
When you take into account Health and Human Services, Social Security, etc., the annual budget exceeds $2 trillion.
So, they're making huge investments in these technologies going forward, and we hope to be able to join them to better serve the American people.
Tom, it's always a pleasure talking to you.
I really appreciate your insight here.
He made time for us this morning.
C three AI shares rose nearly 12% in early trading.
Tom Zell.
thanks so much.
thank you.
