C3.ai, Inc. Q2 FY2026 earnings call

• Revenue grew 7% sequentially and bookings increased 49% sequentially to $86 million. High-value deal activity was strong with 17 agreements over $1 million and 6 over $5 million.
• Federal business saw significant traction with total bookings across federal, defense, and aerospace up 89% YOY, accounting for 45% of total bookings. Notable deals with HHS, DoW, and intelligence community.
• Private sector had big customer wins like AMD, GSK, etc. Partner ecosystem is key with 89% of Q2 bookings closed through partners, joint pipeline growing 108% YOY with Microsoft and AWS.
• Launched C3.ai, Inc. Genetic cross automation, recognized as leading AI software platform in industrial AI by Verdantex.
• Focus on sales execution with rigorous deal reviews, prioritizing IPDs and expanding lighthouse accounts. Double down on products and vertical markets with demonstrable leadership.

Total revenue for the quarter was $75.1 million, a 7% quarter-over-quarter increase. Subscription revenue was $70.2 million (93% of total revenue), and professional services revenue was $4.9 million (7% of total revenue). Bookings were $86.4 million, a 49% increase from the previous quarter. Federal business bookings increased 89% year over year and accounted for 45% of total bookings. Non-GAAP gross profit was $40.9 million with a gross margin of 54%, and non-GAAP operating loss was $42.2 million.

• Revenue guidance for 2026 is $289.5 million to $309.5 million.
• Q3 revenue guidance is $72 million to $80 million.
• Non-GAAP loss from operations for Q3 is $44 million to $52 million.
• Non-GAAP loss from operations for FY2026 is $180.5 million to $210.5 million. Guidance reflects higher sales and marketing expenses in Q3 and Q4 due to major events.

• Government shutdown had adverse effect on federal business, creating headwinds across federal, defense, aerospace, shipbuilding, healthcare, manufacturing, and industrials.

Q: Patrick Walravens asked about why the business fell off and steps to bring it back.

A: Stephen Ehigian attributed earlier poor performance to sales execution, emphasized strong demand for C3.ai, Inc. and enterprise AI, focus on delivering real value like GSK example, and having a strong team and plan.

Q: Matt Calitri asked about revenue mix and public sector outlook.

A: Hitesh Lath said professional services mix should stay 10%-20%, lower PES revenue this quarter was due to low demand. Stephen Ehigian said federal business is a durable growth engine with tailwinds from COTS focus, AI action plan, and reindustrialization.

Q: Brian Esses asked about north stars for accountability.

A: Stephen Ehigian said bookings and IPD growth are leading indicators, focus on rigorous evaluation and delivering economic value quickly to drive growth.