June 10, 2026
C3.ai’s first quarter results were shaped by a steep year-over-year revenue decline, which management attributed primarily to underperformance in sales execution rather than product or market demand issues. CEO Thomas Siebel described recent sales as “unspeakably horrible” and “completely unacceptable,” citing a lack of discipline and focus in the go-to-market strategy. The company responded by overhauling its sales, product, and services organizations and initiating a significant cost-reduction effort, including a 35% workforce reduction. Siebel stated, “This is resulting in market multiples for the company that are candidly well earned,” reflecting management’s self-critical view of recent performance.
Is now the time to buy AI? Find out in our full research report (it’s free for active Edge members).
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Patrick Walravens (Citizens): asked what caused the dramatic revenue decline and if customer churn was a factor. CEO Thomas Siebel answered that sales execution was the main issue and disputed significant customer loss, saying, “I think it really is sales execution.”
Roddy Sultan (UBS): inquired about the ramp of federal contracts and the impact of restructuring on C3 AI Federal. Siebel admitted he was not aware of the latest details but would follow up, signaling some disconnect with federal operations.
Roddy Sultan (UBS): also pressed for details on revenue mix between professional services and demonstration licenses. CFO Hitesh Lath and Siebel said they could not provide specifics, citing ongoing changes in go-to-market strategy.
Matt Calitri (Needham & Company): asked how the company will balance targeting large versus smaller deals going forward. Siebel described a new broad-based approach, with sales teams focused on a wide range of deal sizes and more accounts.
George McGreehn (Bank of America): asked about trends in initial production deployments (IPDs) and which segments offer the most opportunity. Siebel pointed to execution issues but said enterprise AI demand is strong across multiple verticals, including financial services, defense, and consumer goods.
In the next few quarters, our analysts will watch (1) evidence of improved sales execution and broader account penetration as the revamped sales organization matures, (2) realization of targeted cost savings and their impact on non-GAAP operating margins, and (3) progress in federal contract execution, especially in large government and defense projects. Additional focus will remain on management’s ability to stabilize and grow the software revenue mix in a competitive enterprise AI market.
C3.ai currently trades at $10.75, in line with $10.71 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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