C3.ai dips as BofA says Q3 was 'mixed,' company needs more customers
C3.ai (NYSE:AI) shares were down slightly in premarket trading after the artificial intelligence software reported third-quarter results that Bank of America said were "mixed."
Analyst Brad Sills reiterated the underperform rating and $30 price target, noting that revenue of $69.8 million topped the firm's expectations and there is a "more diversified" customer base, but customer entities fell to 50 down from 53 last quarter.
The company did raise revenue guidance for 2023, saying it now expects sales to be between $250 million and $252 million, above the firm's $249.5 million estimate.
"We are encouraged by solid professional services upside, which is perhaps a leading indicator for upcoming project go lives and billings," Sills wrote in a note to clients, adding that customers in different industries were also positive.
"However, 1% [quarter-over-quarter] [remaining performance obligations] growth and customer count decline to 50 from 53 suggests that sales execution is not back on track as of yet," Sills added.
C3.ai (AI) shares fell slightly less than 0.5% to $22.59 in premarket trading.
In addition, Sills said he would like to see "meaningful upside to subscription revenue and RPO as an indication of healthy business momentum."
On Wednesday, the Thomas Siebel-led company said it lost $0.07 a share on $69.8 million in revenue, compared to estimates of a loss of $0.26 per share on revenue of $67.16 million for the fiscal third quarter.
Subscription revenue for the quarter was $57.1 million, an increase of 34% from the $42.7 million the company reported a year ago.
J.P. Morgan recently upgraded C3.ai (AI) to neutral, though the firm lowered its price target and noted that there could be some volatility going into earnings.
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