2024-05-20 20:56:36 ET
Summary
- C3.ai's management spends a large portion of its revenue on customer acquisition, which is concerning. At last count, every dollar of its revenue was spent on SG&A expenses.
- As the company switched to consumption-based pricing, management has abandoned most of its operational metrics such as RPO and ASP. No clear path on forward tracking is mentioned.
- C3.ai's customer mix and revenue growth are not as strong as projected, indicating potential issues with its sales model.
- My models suggest at least 10% downside in the base case.
Investment Thesis
AI has had, no doubt, a prolific impact on enterprises, influencing the decisions of the enterprise’s CIO office and how they allocate their IT budgets. Per Bloomberg Intelligence estimates, the impact on IT budgets, which was estimated to be under 1% in FY23, will grow to a reported 5% in FY26 and possibly to 12% in FY32....
Read the full article on Seeking Alpha
For further details see:
C3.ai Q4 Earnings Preview: Still Bleeding Money To Acquire Customers