C3.ai Stock Tumbles on Wider-Than-Expected Q3 Loss, Revenues Down Y/Y

C3.ai, Inc. AI reported lower than expected results for the third quarter of fiscal 2026 (ended Jan. 31, 2026), with earnings and revenues missing the Zacks Consensus Estimate. On a year-over-year basis, both metrics fell sharply.

AI stock tumbled 21.7% during yesterday’s after-market trading session, following the earnings release.

The quarterly performance reflected a sharp year-over-year decline in total revenues, due to lower contributions from the Subscription and Professional Services businesses. Elevated operating expenses relative to the reduced revenue base weighed on operating results during the quarter, despite the company continuing to sign new and expanded agreements across federal and commercial customers.

Despite these challenges, the Federal segment remained a key strength, with Federal, Defense and Aerospace bookings increasing 134% year over year and representing 55% of total bookings. The company entered into new and expansion agreements with several U.S. government agencies and international defense organizations during the quarter. Management highlighted restructuring actions aimed at improving operating efficiency, reducing cash burn and positioning the company for a return to growth and non-GAAP profitability.

AI’s Q3 Highlights

The company incurred an adjusted loss per share of 40 cents, wider than the Zacks Consensus Estimate of a loss of 29 cents. In the year-ago quarter, it reported an adjusted loss per share of 12 cents.

Revenues of $53.26 million missed the consensus mark of $75.82 million by 29.8% and tumbled 46.1% year over year. The reported revenues were also lower than the company’s expected range of $72-$80 million.

C3.ai, Inc. Price, Consensus and EPS Surprise

C3.ai, Inc. price-consensus-eps-surprise-chart | C3.ai, Inc. Quote

Subscription revenues were $48.2 million, down from $85.7 million in the year-ago quarter. Professional services revenues declined 61.1% to $5.1 million. Professional services revenues included prioritized engineering services and service fees, both of which declined year over year.

Adjusted gross profit during the fiscal third quarter declined year over year to $19.6 million from $68.2 million, with adjusted gross margins contracting to 37% from 69% a year ago, reflecting a heavier mix of early-stage and initial production deployments.

AI’s Balance Sheet & Cash Flow

At fiscal third quarter-end, C3.ai had cash and cash equivalents of $88.8 million, down from $164.4 million at fiscal 2025-end. Total cash, cash equivalents and marketable securities stood at $621.9 million.

Net cash used in operating activities was $135.8 million in the first nine months of fiscal 2026 compared with $52.7 million in the year-ago period. Free cash flow at the end of the quarter was negative $56.2 million compared with a negative $22.4 million in the year-ago quarter.

C3.ai Unveils Gloomy Q4 View

The company expects revenues in the fourth quarter of fiscal 2026 to be between $48 million and $52 million compared with $108.7 million reported in the year-ago quarter.

Adjusted loss from operations is expected to be between $56 million and $64 million compared with $31.2 million reported a year ago.

Fiscal 2026 Full-Year Guidance

The company expects revenues for fiscal 2026 to be between $246.7 million and $250.7 million (lower than the band of $289.5-$309.5 million expected earlier), down from $389.1 million reported in fiscal 2025.

Adjusted loss from operations is expected to be between $219.5 million and $227.5 million (wider than $180.5-$210.5 million expected earlier), wider than a loss of $88.1 million reported in fiscal 2025.

AI’s Zacks Rank & Recent Computer & Technology Releases

C3.ai currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Workday, Inc. WDAY reported strong fourth-quarter fiscal 2026 results, with both bottom and top lines beating the Zacks Consensus Estimate. 

The company reported year-over-year revenue growth, driven by strong subscription demand, new customer wins and rising adoption of AI solutions. Workday’s focus on innovation, product growth and international expansion remains positive.

Cisco Systems CSCO reported second-quarter fiscal 2026 non-GAAP earnings of $1.04 per share, beating the Zacks Consensus Estimate by 1.96%. The figure increased 10.6% year over year. 

Revenues of $15.35 billion surpassed the Zacks Consensus Estimate by 1.49%. The top line increased 9.7% year over year. Total Annual Recurring Revenues ("ARR") were $31 billion, up 3% with product ARR growth of 6%. Total subscription revenues were $7.83 billion and represented 51% of Cisco’s total revenues. Total software revenues increased 36.9% year over year to $5.6 billion.

Chegg, Inc. CHGG reported fourth-quarter 2025 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Meanwhile, on a year-over-year basis, both top and bottom lines declined.

The quarterly results were pressured by a sharp year-over-year revenue decline, continued traffic headwinds from changes in search interfaces, negative free cash flow due to restructuring-related severance payments and a NYSE compliance notice, underscoring the challenges associated with Chegg’s transition toward a skilling-focused business model.

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