Investing.com — C3.ai shares plunged more than 31% premarket Monday after the software maker posted preliminary fiscal first-quarter results that DA Davidson called “catastrophic,” prompting the firm to cut its rating to Underperform from Neutral and slash its price target to $13 from $25.
Late Friday, C3.ai (NYSE:AI) reported preliminary revenue of $70.3 million at the midpoint, roughly $34 million, or 33%, below guidance, “the largest in its history,” DA Davidson wrote.
The shortfall’s cause is unclear, but “given the sheer size of the miss it is clear the business has a long road ahead to get back on track.”
Profitability metrics also deteriorated sharply. Preliminary non-GAAP operating loss of $57.8 million missed guidance by $29 million, with margins plunging to -82% from -29% last quarter. GAAP operating loss was about $124.8 million.
DA Davidson lowered its FY26 revenue growth forecast to -26% year-over-year, assuming “minimal sequential net new revenue for the rest of the fiscal year beyond 1Q.”
Non-GAAP operating margin is now projected at -81% for FY26. The firm noted C3.ai still holds about $711 million in cash, giving it an estimated four-year runway at the current burn rate.
The revenue miss was “partially attributed to disruption from the sales restructuring,” DA Davidson said.
But with a CEO succession underway after Tom Siebel’s planned departure, the firm expects “more disruption… and business trends as likely to get worse before they get better.”
“We see a takeout as unlikely, at least until financials stabilize for a few quarters,” DA Davidson added, maintaining that C3.ai’s valuation remains rich relative to peers.
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