C3.ai 2026 Q2 Earnings Beats Estimates Despite 58.7% Wider Net Loss

C3.ai (AI) reported fiscal 2026 Q2 earnings on Dec 3, 2025, with non-GAAP EPS of -$0.25, beating estimates by $0.08, and revenue of $75.15M, exceeding estimates by $0.28M. Guidance for Q3 and FY2026 was provided, aligning with analyst expectations.

Revenue

Subscription revenue, which constitutes 93% of total revenue, amounted to $70.24 million, while professional services contributed $4.91 million, bringing the total revenue to $75.15 million. This marked a 20.3% decline year-over-year from $94.34 million in 2025 Q2, driven by weaker performance in federal and commercial segments amid a 43-day government shutdown.

Earnings/Net Income

C3.ai’s losses deepened to $0.75 per share in Q2 2026, a 44.2% wider loss compared to $0.52 in 2025 Q2. The company’s net loss widened to $-104.67 million, a 58.7% increase from $-65.97 million in the prior year. The EPS of -$0.75 and a 58.7% increase in net loss indicate a deteriorating financial performance.

Post-Earnings Price Action Review

The strategy of buying C3.ai shares after a revenue raise was released in the financial report and holding them for 30 days delivered impressive returns over the past three years. The strategy achieved a total return of 537.04%, vastly outperforming the benchmark return of 70.56%. The excess return generated by the strategy was 466.48%, indicating that it not only achieved strong absolute returns but also significantly surpassed the benchmark. With a CAGR of 86.29%, the strategy demonstrated robust growth over the 30-day holding period. Although the strategy had a maximum drawdown of 0.00%, it had a relatively high volatility of 37.23% and a Sharpe ratio of 2.32, suggesting that while the strategy minimized losses, it came with moderate risk and volatility.

CEO Commentary

Stephen Ehikian, CEO, highlighted Q2’s “solid” performance despite a 43-day government shutdown disrupting federal business. He noted 7% sequential revenue growth and 49% bookings growth ($86M), driven by 17 agreements over $1M and 89% YoY federal bookings growth. Strategic priorities include sharpening sales execution via rigorous IPD (Initial Production Deployment) reviews, expanding partnerships (89% Q2 bookings via ecosystem), and doubling down on AI-native applications in industrial, federal, and healthcare sectors.

Guidance

C3.ai provided Q3 revenue guidance of $72M–$80M and FY2026 revenue of $289.5M–$309.5M. Non-GAAP operating loss guidance for Q3: $44M–$52M; FY2026: $180.5M–$210.5M. Hitesh Lath, CFO, cited higher Q3/Q4 sales and marketing expenses due to major events. Free cash flow remains negative ($-46.9M Q2), with $675M in cash reserves.

Additional News

Recent non-earnings developments include CEO Stephen Ehikian’s leadership amid a prolonged government shutdown, which impacted federal operations. The company also launched its Agentic Process Automation platform, aiming to redefine enterprise operations with AI-driven robotic process automation. Additionally, C3.ai expanded partnerships with Microsoft and McKinsey, with 89% of Q2 bookings attributed to ecosystem collaborations.