C3.ai (AI) Q2 2025 earnings summary

Executive summary

• Revenue grew 29% year-over-year to $94.3 million in Q2 FY25, marking the seventh consecutive quarter of accelerating growth, with subscription revenue at $81.2 million and 58 agreements closed, including major deals and pilots with leading enterprises and government agencies.

• Strategic alliance with Microsoft Azure expanded, making C3.ai a preferred AI provider on Azure through March 2030, enabling global sales and incentivizing Azure sales teams.

• C3 Generative AI pilots converted to production with several enterprise clients; awarded foundational U.S. patent for generative AI agents, reinforcing leadership in enterprise AI.

• Expanded partnerships with Capgemini and Google Cloud, with 20 joint agreements closed, up 180% year-over-year.

• Cash, cash equivalents, and marketable securities totaled $730.4 million at quarter end, supporting ongoing investments in growth and innovation.

Financial highlights

• Total revenue for Q2 FY25 was $94.3 million, up from $73.2 million in the prior year; subscription revenue grew 22% to $81.2 million, accounting for 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; non-GAAP net loss per share was $0.06; GAAP net loss per share was $0.52.

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

• Weighted-average shares outstanding: 127.9 million.

Outlook and guidance

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

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

• Expect to be free cash flow negative in Q3 but positive in Q4; targeting cash flow positivity in FY26.

• No longer targeting full-year FY25 cash flow positivity due to increased investment in Microsoft partnership.

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