C3.ai 2026 Q2 Earnings Widened Net Loss of 58.7% Despite Revenue Beat

C3.ai (AI) reported fiscal 2026 Q2 earnings on Dec 3, 2025, with revenue of $75.15 million—beating estimates by $0.28 million—though net losses widened to $104.67 million (58.7% YoY). The company reinstated FY26 guidance at $289.5–$309.5 million, aligning with market expectations, while non-GAAP EPS of -$0.25 (beating estimates by $0.08) highlighted persistent profitability challenges.

Revenue

Subscription revenue accounted for 93% of total revenue at $70.24 million, while professional services contributed $4.91 million. The 20.3% YoY revenue decline to $75.15 million reflected sector-specific headwinds, though sequential growth of 7% signaled stabilization.

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 per share in Q2 2025. The net loss of $104.67 million marked a 58.7% increase from the prior year. Despite beating revenue expectations, the EPS of -$0.25 marked a 44.2% wider loss year-over-year.

Post-Earnings Price Action Review

The strategy of buying C3.ai shares after a revenue raise quarter-over-quarter on the financial report released date and holding 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 market expectations. The strategy's CAGR was 86.29%, which is a robust indicator of its compounding effectiveness. While the strategy had a maximum drawdown of 0.00%, it came with a moderate level of volatility at 37.23% and a Sharpe ratio of 2.32, suggesting a balanced risk-return profile.

CEO Commentary

CEO Stephen Ehikian highlighted 7% sequential revenue growth and 49% bookings increase to $86 million, driven by 17 agreements over $1M and 6 over $5M. He acknowledged the 43-day government shutdown’s adverse impact but emphasized resilience in federal bookings, which rose 89% YoY to 45% of total bookings. Strategic priorities include doubling down on industrial AI leadership, expanding partner ecosystems (89% of Q2 bookings closed via partners), and leveraging IPDs for scalable deployments.

Guidance

C3.ai provided Q3 revenue guidance of $72M–$80M and FY26 revenue guidance of $289.5M–$309.5M, with non-GAAP operating loss guidance of $44M–$52M for Q3 and $180.5M–$210.5M for FY26. CFO Hitesh Lath noted increased sales and marketing expenses in Q3/Q4 due to events like the World Economic Forum and TransForm.

Additional News

1. C-Level Changes: Stephen Ehikian succeeded Thomas Siebel as CEO, following Siebel’s resignation due to health concerns.

2. Federal Bookings Surge: Federal, defense, and aerospace bookings rose 89% YoY to $38.7 million, driven by contracts with HHS, DoD, and the Intelligence Community.

3. Strategic Partnerships: C3.ai expanded collaborations with Microsoft Azure and McKinsey, leveraging partner ecosystems for 89% of Q2 bookings.