Good afternoon and welcome to C3.ai's earnings call for the fourth quarter and full fiscal year 2026 which ended on April 30, 2026. My name is Amit Berry and I lead Investor Relations at C3.ai. With me on the call today are Tom Siebel, Chairman and Chief Executive Officer, Stephen Ehikian, President and Hitesh Lott, Chief Financial Officer. After the market closed today, we issued a press release with details regarding our fourth quarter results which can be accessed through the Investor Relations SECtion on our website at IR C3.ai.

This call is being webcast and a replay will be available on our IR website following the conclusion of the call. During today's call, we will make statements related to our business that may be considered forward looking under federal SECurities laws. These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date. We disclaim any obligation to update any forward looking statements or outlook.

These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For a further discussion of the material risks and other important factors that could affect our actual results, please refer to our filings with the SEC. All figures will be discussed on a non Generally Accepted Accounting Principles (GAAP) basis unless otherwise noted. Also, during today's call we will refer to certain non Generally Accepted Accounting Principles (GAAP) financial measures.

A reconciliation of Generally Accepted Accounting Principles (GAAP) to non Generally Accepted Accounting Principles (GAAP) financial measures to the extent reasonably available is included in our press release. Finally, at times in our prepared remarks in response to your questions, we may discuss metrics that are incremental to our usual presentation to give greater insight into the dynamics of our business or our quarterly results. Please be advised that we may or may not continue to provide this additional detail in the future.

Good afternoon everybody. This is Tom. And just when he thought it was safe, I'm back. We have an enormous opportunity before us and the opportunity is to create enormous value for our shareholders. The performance of this company has been staggeringly Disappointing. We're looking at a turnaround opportunity. And the fundamental nature of this turnaround opportunity is to change everything about the way we manage this business. In the process, we're going to create enormous financial returns for our shareholders.

Along these lines, I've been working with the senior executive leadership and the board for the last couple of months. We have restructured the company. We have restructured sales, we have restructured products, we have restructured services. We have put together a strategic plan, we have put together the objectives and we have a clear plan in place to turn this company around and create value for our shareholders. The restructuring of the company, first introduced by Stephen Ehikian in February has been expanded and accelerated by my return.

Headcount has been reduced from 1075 to roughly 700. We have taken almost $135 million in annual operating cost. The business structure, C3.ai Federal has been entirely reorganized for a new and highly experienced leader. The sales organization has been completely restructured globally under again a very highly experienced seasoned chief revenue officer. In the past weeks we have reorganized the company top to bottom. We have new leadership throughout the organization.

We have restructured the company. We have restructured C3 federal under new leadership. We have restructured C3 sales under new leadership. We have restructured products under new leadership. We have brought together end products, the platform group, the applications group, the product marketing group. Okay. And the customer services group all in one organization. Under senior seasoned leadership, we have restructured the service team. The objectives in place, the strategy is written and we are now going to talent just like the company.

Just like sales, the products group has been completely redesigned and re engineered. We've brought together under one senior leader who's been with the company for 14 years. Four functions including the platform team, the applications team, the product marketing team and the services team in one place. So we have one organization basically responsible for designing the product, coding the product quality, assuring the product and delivering the product to make sure that customers are successful.

The services organization has also been completely re engineered and completely designed under a new senior leader who's been with the company for more than seven years. We've taken four layers out of that org structure from seven to three. The organization has been redesigned so that for every one of our customers where we're working on pilots or production deployments, we have a dedicated team assigned to the customer. They move in with the customer and they stay with the customer until the project is done and the customer is successful.

I am absolutely satisfied that the new structure is going to result in Higher levels of customer satisfaction, more successful customer deployments and more rapid expansion of our customer deployments into large enterprise. Expanding contract relationships As I look at the performance of the company in recent quarters and particularly the sales performance, it is just unspeakably horrible and it's surreal. This is resulting in market multiples for the company that are candidly well earned and scathing analysis from analysts and sell side analysts that are candidly well deserved.

I am here to fix that as it relates to enterprise sales. This is not an area which I'm entirely unfamiliar with. I think just to return to fundamental hygiene and fundamental sales protocol, just the basics will take this company a long long way for its increasing their holder value and the company is sufficiently well capitalized to basically obviate any question of any need for financing, as we have enough capital there to meet the mission that is before us.

I want to give you an update on the restructuring that Stephen introduced last quarter. We have expanded those objectives and we have accelerated those objectives. We have reduced headcount by approximately 35% across all organizations. The workforce actions are in place, they are done. The cost controls are in place, the budget is in place, the plans are in place, the cost have been reduced by order of $135 million a year and we are well on our way to becoming a fully agentic enterprise.

Adopting these agent tools to fundamentally change the way we do business across the enterprise and to dramatically increase productivity in every aspect of our business. The products organizations today are largely leveraging AI tools for all programming activities. These agency tools have been adopted across the organization legal, finance, sales, marketing wherever it may be, to increase productivity really dramatically across the enterprise. Sales in particular are leveraging the agentic tool to focus on market development, business development and strategies to increase their penetration of existing customers and large global new customers

across every function. Our people in the organization are operating with an agentic AI first mindset increasing productivity across all business functions. This is now all about execution and we're going to have our heads down every hour, every day, every month, every quarter and the early indications are that this is moving in the right direction. Our priorities are clear, they are well understood, they are articulated, the objectives are distributed and they're understood.

If we look at sales for example, our go to market activities have changed significantly. We're focusing on using technologies and agentic technologies focused on penetrating territories, penetrating large accounts with campaigns that will develop over multiple quarters and multiple years rather than the narrow focus that was in place before, focused on relatively small opportunities that might be in place for any given quarter. The executive team, all of the employees at C3.ai are laser focused on doing whatever it takes with the objectives in place.

To turn the company through significant quarter to quarter top line revenue growth, to establish the company as one that generates free cash flow every quarter, and to establish the company as a company that generates non GAAP profitability quarter after quarter after quarter. The opportunity to increase shareholder value at C3.ai is enormous and that is exactly what we're going to do. Talk is cheap and rather than rain forth with idle promises that everybody will largely ignore, we're going to accept the challenge to deliver acceptable financial results, to deliver growth, to deliver cash generation, non GAAP profitability generation, and let

Thank you, Tom. Total revenue for the quarter was $51.6 million. Subscription revenue was $48.4 million, representing 94% of total revenue. Professional services revenue was $3.2 million, of which $2.1 million was revenue from prioritized engineering services, or PEs. Professional services represented 6% of total revenue during the quarter. Our subscription and PES revenue combined was $50.5 million and accounted for 98% of total revenue. Non Generally Accepted Accounting Principles (GAAP) gross profit for the quarter was $19.3 million and non Generally Accepted Accounting Principles (GAAP) gross margin was 37%.

Non Generally Accepted Accounting Principles (GAAP) gross margin for professional services was 78%. Non Generally Accepted Accounting Principles (GAAP) operating loss for the quarter was $54.4 million. Non Generally Accepted Accounting Principles (GAAP) net loss for the quarter was $48.8 million $0.33 per share. Our non Generally Accepted Accounting Principles (GAAP) operating expenses for the quarter were $106 million. This reflects a reduction of $33.9 million as compared to the actual non Generally Accepted Accounting Principles (GAAP) operating expenses of $139.9 million same quarter last year.

Free cash flow for the quarter was negative $54.8 million. We continue to be well capitalized and close the quarter with $575.4 million in cash, cash equivalents and marketable securities. During the quarter, we signed nine initial production deployments for IPDs. At the end of the quarter, we had cumulatively signed 417 IPDs of which 251 are still active. This means they are either in their original three to six month terms or extended for some duration or converted to ongoing subscription or consumption contracts or are currently being negotiated for conversion to ongoing subscription or consumption contract.

Last quarter we launched a restructuring plan which included expense reductions across our business to produce full year cost savings of approximately $135 million. As Tom said, our headcount has been reduced from roughly 1075 in January of 2026 to about 700 today and we have already completed actions to realize almost 130 million of total planned savings. We are on track to meet or exceed our original cost savings target. As we said on the last quarter's earnings call, some of the cost savings associated with the non employee expenses will be fully realized starting with the second half of fiscal year 2027.

With these actions, we are well positioned to materially improve our operating efficiency, free cash flow and position the company for long term success. Our founder and CEO Tom Siebel purchased 6.17 million shares of C3.ai stock at a price of $11.16 per share for net cash proceeds of approximately $69 million. The company has received the cash and as of today, our total cash, cash equivalents and marketable securities balance is $673 million. Now I'll move on to our guidance for Q1 and fiscal year 27.

Our revenue guidance for Q1 of fiscal year 27 is $50 million to $54 million. Our guidance for non Generally Accepted Accounting Principles (GAAP) loss from operations for Q1 is $40.5 million to $48.5 million. Please note that the midpoint of this guidance is based on non Generally Accepted Accounting Principles (GAAP) operating expenses of $96.5 million, which is $31.6 million lower than the actual non Generally Accepted Accounting Principles (GAAP) operating expenses of $128.1 million same quarter last year.

Oh great. Thank you. And Tom, it's good to see you back. And it's good to see the insider buying. Can you just start very big picture and help us? You know, you can't fix something until you understand what went wrong. And you've spent a lot of time figuring out what went wrong. So in fiscal 25, this company was doing, you know, 389 million in revenue. And this year you're guiding to, around 235, 230 at the midpoint. So just fundamentally what happened?

I've been Talking about Enterprise AI since 2010, and I was the only person in the world talking about it until probably 2022, when. Till November 2022. And we had a little inflection point there. And now Tom's not the only person in the world who thinks there's a market in enterprise AI. So we have a great product, we have a huge market, we have satisfied customers. And, and the sales discipline has just been surreal, Pat. I mean, this is in. That's, you know, that's where the revenue numbers come from.

That's where the RPO comes from. That's where the profitability or the lack thereof comes from. It's basically sales execution. It's been miserable. It's reflected in all the operating results. It is completely unacceptable. And it's not that hard to fix. It is a. You know, I accept all the criticism the company has received. I think it's well deserved. Okay. I really do. I think the revenue multiple is well earned. It is. But the good news, not that hard to turn around.

And so I think we fixed the sales problem. It fixes revenue growth, it fixes rpo, it fixes, you know, cash generation. It fixes everything. And so, you know, for those, Pat, you know me a little bit and, you know, I'm not entirely unfamiliar with enterprise sales. Maybe I have a little experience in that. So, you know, I think this is definitely a turnaround situation. We know how to fix it. The plan's in place and standby. Great, thank you. And as a follow up, so totally hear you on the sales side, but you know, for the company, Churn must have been bigger than you wanted too.

But yeah, we have not experienced significant loss of production customers. I'm not sure that's true, but I think it really is sales execution. Market's huge, product's great, customers are happy. This, I think this is pretty fundamental. No question we see this as a turnaround situation and that's what we're focused on. We're coming off of coming off of performance that is just completely unacceptable, laughably unacceptable. And we're going to take a bat in the teeth for that.

Wasn't the RSO a hundred million dollar contract? Celie, you know, the honest answer is I am not. You know, I have not been that in touch with the operating details of the business in the last four quarters and you know, I haven't looked into that. I think the RSO (Rapid Sustainment Office) contract was $100 million. But honestly, I'm sorry it got increased after. Oh, did it? Okay. I'm sorry. It's a legitimate question and I don't know and I'll find out and we'll get back to you.

Including PEs. Including PEs. And as it relates to revenue from demo licenses, let me try this. It's a very legitimate question, ladies and gentlemen. I think it's a. Don't know. I mean we have changed everything about the sales organization. We have changed everything about go to market. And I think that while it's a very legitimate question, how much is going to be professional services, how much was demo license, how much is going to be pes? I don't think we really know.

Okay. We have a plan to grow revenue, but we really. And I'm sorry that this doesn't work in helping you fill out your spreadsheet. But we don't know. All we can assure you is that it's going to be the revenue will be properly accounted for. And we can't really tell you what that mix. He is a. Make no mistake. We are focused on software revenue, guys, not services, ladies and gentlemen, software revenue. We understand the difference and that's what we're focused on.

How do I describe this? There was kind of a funny issue. I'm sorry, your first name one more time. Matt. Matt. This is kind of a funny issue, Matt. Okay. When we looked into it in the way that territory assignments have worked okay. In the last year, and the truth of the matter is they had a focus on a limited number of major accounts rather than looking at the entire market opportunity. So I would say if you look at Europe or North America, they might have been only focused on really, I know this is hard to believe, but the sales organization might have been focused on total of 100 to 150 accounts in each of those organizations.

And so I know it's hard to believe, but it really is true. And so now you will see those North American and federal and European sales organizations focused on order of 1000 account opportunities rather than maybe even more than that, rather than order of 100. So it's hard to believe that's the way it was set up. But it really was set up that way and we fixed it. Now, within that, they'll be focused on large deals. What's a large deal? I would say, you know, 50 million to a couple of billion.

But the opportunity going forward looks the pure enterprise AI market, which enterprise AI application market, which we are most certainly in, looks like a $10 billion market growing at a 50% compound growth rate. We're not even growing. We're not growing off a small base number, and we're growing at a level, you know, smaller than the market at large. I mean, that's just unacceptable. Do we think we know how to fix it? Yeah. Where's the market opportunity?

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