C3.ai reported fiscal first-quarter revenue of $52.4 million for the period ended July 31, exceeding the Wall Street consensus of $52.3 million by approximately $70,000. Subscription revenue accounted for $49.2 million, or 94% of total revenue, while professional services contributed $3.2 million, including $1.8 million from prioritized engineering services.
The company posted a non-GAAP net loss of $30.7 million, or $0.20 per share, improving from the expected loss of $0.25 per share and narrowing from a year-earlier loss of $0.29 per share. Non-GAAP gross margin expanded to 50%, up from 37% in the prior quarter, while gross profit reached $26.1 million. Operating expenses fell to $88.5 million on a non-GAAP basis, down from $128.1 million a year earlier and $105.5 million in the preceding quarter, resulting in a non-GAAP operating loss of $36.2 million.
Free cash flow turned positive at $2.1 million, compared with negative $34.3 million in the same period last year and negative $54.8 million in the prior quarter. Cash, cash equivalents and marketable securities totaled $651.1 million at quarter-end, with a current ratio of 6.64. Management also highlighted annualized cost savings of approximately $135 million, driven by a roughly 40% reduction in headcount and lower non-employee expenses.
Shares rose 1.74% to close at $10.52 in regular trading but fell 2.85% in after-hours sessions to $10.22. The stock has gained 8.45% over the past week and 21.62% over six months, with a 52-week range of $7.68 to $20.22.
For the current quarter, C3.ai guided revenue between $51 million and $55 million, with a non-GAAP operating loss of $34.5 million to $42.5 million. Gross margins are expected to moderate to the mid-40% range due to increased investments in forward-deployed engineering. For the full fiscal year 2027, the company forecast revenue of $210 million to $240 million and a non-GAAP operating loss of $123 million to $155 million, with free cash flow broadly tracking the operating loss range.
Federal contract bookings surged 138% year-over-year, driven by increased government spending on AI applications in defense and intelligence sectors. Management noted dissatisfaction with an incumbent provider as a contributing factor. The company also closed 22 enterprise agreements during the quarter.
C3.ai highlighted its C3 Agentic AI Platform, C3 Generative AI, C3 AI Studio and C3 Code, an agentic AI application builder that converts natural language prompts into working enterprise AI applications without manual coding.
