C3.ai's Q3 2025: Contradictory Signals on Microsoft Partnership, Revenue Growth, and Strategic Alliances

These are the key contradictions discussed in C3.ai, Inc.'s latest 2025 Q3 earnings call, specifically including: C3 AI Sales and Partnership with Microsoft, Revenue Growth Expectations, and Strategic Partnership Dynamics:



Revenue Growth and Strategic Partnerships:
- C3.ai reported $98.8 million in total revenue for Q3, up 26% year-over-year, with subscription revenue increasing by 22% to $85.7 million.
- The growth was driven by strategic alliances, particularly with Microsoft, AWS, and McKinsey QuantumBlack, which expanded sales reach and shortened sales cycles.

Microsoft Partnership Impact:
- Since the announcement at Microsoft Ignite, C3.ai closed 28 agreements across nine different industries, marking a 460% increase quarter-over-quarter, and shortened sales cycles by nearly 20%.
- The significant results were due to effective co-sell motion and integration with Microsoft's global sales infrastructure.

Generative AI and Agentic AI Innovations:
- C3.ai's Generative AI and Agentic AI advancements, including high-quality agentic planning and orchestration, enhanced autonomous, accuracy, and efficiency of AI models.
- These innovations, combined with the emergence of efficient models like DeepSeek, accelerated AI adoption across enterprises.

Customer Success and Pipeline Expansion:
- C3.ai secured new and expanded agreements with clients including Flex, Worley, New York Power Authority, among others, and closed 50 pilots during the quarter.
- The focus on customer success and expanding the distribution network led to a growing pipeline and increased revenue.

Financial Performance and Investment in Growth:
- C3.ai's non-GAAP operating loss improved to $23.1 million, better than guidance, and the company is expected to be free cash flow positive in Q4.
- The investment in sales force, partner ecosystem, customer support, and research and development is aimed at supporting sustainable growth and market expansion.