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What changed in C3.ai, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of C3.ai, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+407 added−402 removedSource: 10-K (2025-06-23) vs 10-K (2024-06-18)

Top changes in C3.ai, Inc.'s 2025 10-K

407 paragraphs added · 402 removed · 293 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

88 edited+62 added−18 removed96 unchanged
Biggest changeWe believe C3 Generative AI is unique in the market, offering: • Streamlined omni-modal data integration through a visual administrative interface, allowing queries across multiple sources such as Snowflake, Oracle, Databricks, and others, and documents in Amazon S3, Google Cloud, and others. • Proprietary, fine-tuned foundation models for more capable, accurate, and faster structured data queries. • Automatic support for questions and answers in over 130 languages. • Dynamic configuration of LLMs and retrievers with no code, including automatic updates to related retrieval configurations, baseline prompts, and orchestration parameters. • Advanced support for querying images and data tables embedded in documents. • Enhanced accuracy with automated topic modeling and extraction of metadata from data contained in documents. • Availability of all core product features in air-gapped environments. 11 Table of Contents • Advanced orchestration for complex queries involving multiple LLMs and retrieval tools. • Improved C3 Generative AI co-pilot LLM to accelerate the productivity of developers and data scientists on the C3 AI Platform. • Full extensibility to meet the unique requirement of the enterprise.
Biggest changeWe believe C3 Generative AI is unique in the market, offering: • Omni-Modal Parsing, extracts high-quality content and metadata from wide array of unstructured formats — including presentations, spreadsheets, rich text, audio, and video — transforming them into a structured knowledge graph. • Dynamic Planning Agent with Multi-Agent Collaboration allows the C3 AI’s planning agent to perform multi-step reasoning across all data types, coordinate with other agents to solve complex tasks and workflows. • Easy Agent and Tool Authoring streamlines developer experience, enables users to rapidly create or enhance agents by integrating new tools in minutes, without the need for system upgrades. • On-the-Fly Custom Visualizations generates context specific visualizations from natural language queries. • Streamlined omni-modal data integration through a visual administrative interface, allowing queries across multiple sources such as Snowflake, Oracle, Databricks, and others, and documents in Amazon S3, Google Cloud, and others. • Proprietary, fine-tuned foundation models for more capable, accurate, and faster structured data queries. • Automatic support for questions and answers in over 130 languages. • Dynamic configuration of LLMs and retrievers with no code, including automatic updates to related retrieval configurations, baseline prompts, and orchestration parameters. • Advanced support for querying images and data tables embedded in documents. • Enhanced accuracy with automated topic modeling and extraction of metadata from data contained in documents. • Availability of all core product features in air-gapped environments. • Advanced orchestration for complex queries involving multiple LLMs and retrieval tools. 12 Table of Contents • Improved C3 Generative AI co-pilot LLM to accelerate the productivity of developers and data scientists on the C3 Agentic AI Platform. • Full extensibility to meet the unique requirement of the enterprise.
In the third quarter of fiscal year 2023, AWS funded C3 AI to enhance C3 AI Law Enforcement optimized for AWS, integrating Amazon OpenSearch and AWS ML services to enhance the speed and quality of analysis for state and local agencies using the application on AWS.
In the third quarter of fiscal year 2023, AWS funded C3 AI to enhance C3 Law Enforcement optimized for AWS, integrating Amazon OpenSearch and AWS ML services to enhance the speed and quality of analysis for state and local agencies using the application on AWS.
These insights help the team transition time spent from manually monitoring reams of data sources to driving strategic initiatives that improve ESG performance. • The San Mateo County Sheriff’s Office was named a winner in the IDC Government Insights’ sixth annual Smart Cities North America Awards (2023) in the category of data-driven policing for implementing C3 AI Law Enforcement for analytics-powered public safety. • Con Edison’s work with C3 AI was recognized in the IDC Future Enterprise Best in Future of Intelligence North America Awards (2022). • The U.S.
These insights help the team transition time spent from manually monitoring reams of data sources to driving strategic initiatives that improve ESG performance. • The San Mateo County Sheriff’s Office was named a winner in the IDC Government Insights’ sixth annual Smart Cities North America Awards (2023) in the category of data-driven policing for implementing C3 Law Enforcement for analytics-powered public safety. • Con Edison’s work with C3 AI was recognized in the IDC Future Enterprise Best in Future of Intelligence North America Awards (2022). • The U.S.
For state, county and municipal law enforcement agencies: • C3 AI Law Enforcement provides a single view for all relevant systems (e.g., jail records, license plate readers, record management, historical investigations), a natural language search interface to query for keywords across those sources, and an investigative visual graph network to explore connections, lowering the cost and time of criminal investigation.
For state, county and municipal law enforcement agencies: • C3 Law Enforcement provides a single view for all relevant systems (e.g., jail records, license plate readers, record management, historical investigations), a natural language search interface to query for keywords across those sources, and an investigative visual graph network to explore connections, lowering the cost and time of criminal investigation.
The C3 AI Platform enables us and our customers to develop Enterprise AI applications by using conceptual models of all the elements required by the application — including data objects (e.g., customer, order, contract), computing resources (e.g., database, storage, messaging), data processing services (e.g., stream processing, batch processing), AI and ML services e.g., (model training, model pipeline management) — instead of having to write complex, lengthy code.
The C3 Agentic AI Platform enables us and our customers to develop Enterprise AI applications by using conceptual models of all the elements required by the application — including data objects (e.g., customer, order, contract), computing resources (e.g., database, storage, messaging), data processing services (e.g., stream processing, batch processing), AI and ML services (e.g., model training, model pipeline management) — instead of having to write complex, lengthy code.
After we help our customers solve their initial use cases, they frequently identify incremental opportunities within their operations and expand their use of our products. The increased engagement is measured by a combination of increased vCPU/vGPU usage, increased C3 AI Software subscriptions and subscriptions to the C3 AI Platform for in-house AI application development.
After we help our customers solve their initial use cases, they frequently identify incremental opportunities within their operations and expand their use of our products. The increased engagement is measured by a combination of increased vCPU/vGPU usage, increased C3 AI Software subscriptions and subscriptions to the C3 Agentic AI Platform for in-house AI application development.
Over time, our customers typically expand usage by adding users, expanding their use of the initial application to another use cases, purchasing additional C3 AI Applications for a subscription fee and by developing their own AI applications on the C3 AI Platform, which increases consumption-based fees as usage scales.
Over time, our customers typically expand usage by adding users, expanding their use of the initial application to another use cases, purchasing additional C3 AI Applications for a subscription fee and by developing their own AI applications on the C3 Agentic AI Platform, which increases consumption-based fees as usage scales.
An AI application built with the C3 AI Platform might include a model called relational database, that in turn serves as a placeholder that might incorporate any relational database system like Oracle, Postgres, Aurora, Spanner, or SQL Server. A key-value store model might contain Cassandra, HBase, Cosmos DB, or DynamoDB.
An AI application built with the C3 Agentic AI Platform might include a model called relational database, that in turn serves as a placeholder that might incorporate any relational database system like Oracle, Postgres, Aurora, Spanner, or SQL Server. A key-value store model might contain Cassandra, HBase, Cosmos DB, or DynamoDB.
They want to deploy different applications in clouds from different vendors, and they want to be free to move applications from one cloud vendor to another. Multi-cloud deployment is therefore an additional requirement of a modern model-driven software platform that is fully supported by the C3 AI Platform.
They want to deploy different applications in clouds from different vendors, and they want to be free to move applications from one cloud vendor to another. Multi-cloud deployment is therefore an additional requirement of a modern model-driven software platform that is fully supported by the C3 Agentic AI Platform.
By combining state-of-the-art foundational large language models (LLMs), deep learning retrieval models, and the C3 AI Platform, C3 Generative AI for Enterprise provides deep domain support for information retrieval and reasoning across disparate datasets to improve decision-making. C3 Generative AI is built to support demanding enterprise requirements.
By combining state-of-the-art foundational large language models (LLMs), deep learning retrieval models, and the C3 Agentic AI Platform, C3 Generative AI provides deep domain support for information retrieval and reasoning across disparate datasets to improve decision making. C3 Generative AI is built to support demanding enterprise requirements.
This approach vastly reduces technical complexity for developers and the amount of code they need to write. The C3 AI Platform provides comprehensive capabilities to rapidly develop, deploy, and operate Enterprise AI applications at scale, including: • Data Integration and Management Services .
This approach vastly reduces technical complexity for developers and the amount of code they need to write. The C3 Agentic AI Platform provides comprehensive capabilities to rapidly develop, deploy, and operate Enterprise AI applications at scale, including: • Data Integration and Management Services .
With C3 AI Applications, organizations can typically deploy enterprise-scale production AI applications in one to six months. Each of these applications is extensible and customizable to meet customer requirements. C3 AI Reliability Suite The C3 AI Reliability Suite drives enterprise asset performance, reduces downtime, and improves process efficiency.
With C3 AI Applications, organizations can typically deploy enterprise-scale production AI applications in one to six months. Each of these applications is extensible and customizable to meet customer requirements. C3 AI Asset Performance Suite The C3 AI Asset Performance Suite drives enterprise asset performance, reduces downtime, and improves process efficiency.
Using the C3 AI Platform and its model-driven architecture, virtually anything can be represented as a model - even, for example, applications, including databases, natural language processing engines, and image recognition systems. Models also support a concept called inheritance.
Using the C3 Agentic AI Platform and its model-driven architecture, virtually anything can be represented as a model - even, for example, applications, including databases, natural language processing engines, and image recognition systems. Models also support a concept called inheritance.
Another important capability of the C3 AI Platform enabled by its model-driven architecture is that the applications developed on the platform are future-proofed: due to the modular nature of the model-driven architecture, new, upgraded, or enhanced services can be easily integrated with the C3 AI Platform.
Another important capability of the C3 Agentic AI Platform enabled by its model-driven architecture is that the applications developed on the platform are future-proofed: due to the modular nature of the model-driven architecture, new, upgraded, or enhanced services can be easily integrated with the C3 Agentic AI Platform.
Rapid Time to Value The key to our market success and our primary competitive differentiator is our ability to leverage the C3 AI Platform and C3 AI Applications to bring high-value Enterprise AI applications into production use rapidly. We have deployed Enterprise AI applications into production use in as little as four weeks.
Rapid Time to Value The key to our market success and our primary competitive differentiator is our ability to leverage the C3 Agentic AI Platform and C3 AI Applications to bring high-value Enterprise AI applications into production use rapidly. We have deployed Enterprise AI applications into production use in as little as four weeks.
C3 AI and Booz Allen established a strategic partnership in fiscal year 2023 focused on providing strategic solutions into the Government, Defense, and Intelligence sectors. C3 AI and Booz Allen are jointly going to market with the C3 AI Platform and suite of pre-built C3 AI Applications.
C3 AI and Booz Allen established a strategic partnership in fiscal year 2023 focused on providing strategic solutions into the government, defense, and intelligence sectors. C3 AI and Booz Allen are jointly going to market with the C3 Agentic AI Platform and suite of pre-built C3 AI Applications.
C3 Generative AI can be extended using the capabilities of the C3 AI Platform to meet complex enterprise requirements, allowing for the use of the natural language to perform tasks like invoking external APIs, running smaller AI/ML models, and initiating complex workflows.
C3 Generative AI can be extended using the capabilities of the C3 Agentic AI Platform to meet complex enterprise requirements, allowing for the use of the natural language to perform tasks like invoking external APIs, running smaller AI/ML models, and initiating complex workflows.
C3 AI and Google Cloud initially partnered in 2021 and we expanded the partnership agreement in September 2022. The three-year agreement expands global joint selling activities and provides tighter integrations between C3 AI Applications and Google Cloud services.
C3 AI and Google Cloud initially partnered with C3 AI in 2021, and we expanded the partnership agreement in September 2022. The three-year agreement expands global joint selling activities and provides tighter integrations between C3 AI Applications and Google Cloud services.
C3 AI customers use the C3 AI Reliability Suite to identify and predict asset performance risks, intervene before downtime occurs, and maximize asset performance. The C3 AI Reliability Suite offers a flexible and scalable AI approach with better precision than alternatives.
C3 AI customers use the C3 AI Asset Performance Suite to identify and predict asset performance risks, intervene before downtime occurs, and maximize asset performance. The C3 AI Asset Performance Suite offers a flexible and scalable AI approach with better precision than alternatives.
The C3 AI Platform is designed and built with a model-driven architecture. Central to a model-driven architecture is the concept of a “model” that serves as an abstraction layer to simplify the programming problem.
The C3 Agentic AI Platform is designed and built with a model-driven architecture. Central to a model-driven architecture is the concept of a “model” that serves as an abstraction layer to simplify the programming problem.
The C3 AI Platform and C3 AI Applications — built with our patented model-driven architecture — enable organizations to simplify and accelerate Enterprise AI application development, deployment, and administration.
The C3 Agentic AI Platform and C3 AI Applications — built with our patented model-driven architecture — enable organizations to simplify and accelerate Enterprise AI application development, deployment, and administration.
Recognized Enterprise AI Industry Leadership We believe we are broadly recognized as a leader in Enterprise AI with many other industry recognitions, including Fortune 50 AI Innovators (2023), CNBC Disruptor 50 (2020, 2019, 2018), BloombergNEF Pioneer (2020), Forbes Cloud 100 (2020, 2019, 2018, 2017), The Financial Times’ The Americas’ Fastest Growing Companies (2024, 2023, 2022, 2021), Deloitte Technology Fast 500 (2019), and EY Entrepreneur of the Year (2018, 2017) and have been named to the Constellation ShortList TM for Cloud-Based Data Science & Machine Learning Platforms (2024), Constellation ShortList™ for Artificial Intelligence & Machine Learning Cloud Platforms (2023, 2022, 2020), a leader by Forrester Wave: AI/ML Platforms (Q3 2022), and Forrester Wave: Industrial IoT Software Platforms (2019, 2018), and IDC MarketScape: Solutions for Industrial Platforms and Applications in Energy (2021).
Recognized Enterprise AI Industry Leadership We believe we are broadly recognized as a leader in Enterprise AI with many other industry recognitions, including Fortune 50 AI Innovators (2023), CNBC Disruptor 50 (2020, 2019, 2018), BloombergNEF Pioneer (2020), Forbes Cloud 100 (2020, 2019, 2018, 2017), The Financial Times’ The Americas’ Fastest Growing Companies (2025, 2024, 2023, 2022, 2021), Deloitte Technology Fast 500 (2019), and EY Entrepreneur of the Year (2018, 2017) and have been named to the Constellation ShortList TM for Cloud-Based Data Science & Machine Learning Platforms (2025), the Constellation ShortList TM for Cloud-Based Data Science & Machine Learning Platforms (2024), Constellation ShortList™ for Artificial Intelligence & Machine Learning Cloud Platforms (2024, 2023, 2022, 2020), Constellation ShortList™ for Artificial Intelligence & Machine Learning best-of-Breed Platforms (2024), a Leader in the Forrester Wave TM : AI/ML Platforms (Q3 2024 and Q3 2022), and Forrester Wave: Industrial IoT Software Platforms (2019, 2018), and IDC MarketScape: Solutions for Industrial Platforms and Applications in Energy (2021).
The Fortune 500 is littered with such disaster stories. 19 Table of Contents The C3 AI Platform: Model-Driven Architecture The notion of a model-driven architecture was developed at the beginning of the 21 st century in response to the growing complexity of enterprise application development requirements.
The Fortune 500 is littered with such disaster stories. 21 Table of Contents The C3 Agentic AI Platform: Model-Driven Architecture The notion of a model-driven architecture was developed at the beginning of the 21 st century in response to the growing complexity of enterprise application development requirements.
We are focusing on certain markets and verticals that provide us substantial growth opportunities and demand for our products, such as the federal, defense and aerospace industry and the state and local industry. 21 Table of Contents Our release of the C3 Generative AI solutions in March 2023 is receiving considerable interest, and is a key part of our growth strategy.
We are focusing on certain markets and verticals that provide us substantial growth opportunities and demand for our products, such as the federal, defense and aerospace industry and the state and local industry. Our release of the C3 Generative AI solutions in March 2023 is receiving considerable interest, and is a key part of our growth strategy.
For more information on the potential impacts of government regulations affecting our business, see the section titled “Risk Factors” contained in Part I, Item 1A of this Annual Report on Form 10-K. Available Information Our website address is located at www.c3.ai, and our investor relations website is located at ir.c3.ai.
For more information on the potential impacts of government regulations affecting our business, see the section titled “Risk Factors” contained in Part I, Item 1A of this Annual Report on Form 10-K. 26 Table of Contents Available Information Our website address is located at www.c3.ai, and our investor relations website is located at ir.c3.ai.
Additionally, our customers have been recognized for their leadership in innovation across multiple industries: • Georgia-Pacific was named the overall winner in the IDC’s Future Enterprise Best in Future of Operations North America Awards (2023) for its enterprise AI program to improve reliability for its manufacturing operations.
Additionally, our customers have been recognized for their leadership in innovation across multiple industries: 17 Table of Contents • Georgia-Pacific was named the overall winner in the IDC’s Future Enterprise Best in Future of Operations North America Awards (2023) for its enterprise AI program to improve reliability for its manufacturing operations.
Most of our customers have tried and failed at one or more such bespoke development efforts, sometimes at great expense, before turning to C3 AI for their AI solution. We are unaware of any end-to-end Enterprise AI development platforms that are directly competitive with the C3 AI Platform.
Most of our customers have tried and failed at one or more such bespoke development efforts, sometimes at great expense, before turning to C3 AI for their AI solution. 23 Table of Contents We are unaware of any end-to-end Enterprise AI development platforms that are directly competitive with the C3 Agentic AI Platform.
Two applications comprise the C3 AI Sustainability Suite: • C3 AI ESG lets companies measure, monitor, report, and improve their ESG performance, including scope 1, 2, and 3 emissions data. • C3 AI Energy Management helps operations teams achieve targets for energy cost, GHG emissions, water consumption, and waste reduction.
Two applications comprise the C3 AI Sustainability Suite: • C3 AI ESG lets companies measure, monitor, report, and improve their ESG performance, including scope 1, 2, and 3 emissions data. 10 Table of Contents • C3 AI Energy Management helps operations teams achieve targets for energy cost, GHG emissions, water consumption, and waste reduction.
This enables us to maintain high gross margins and allows us the flexibility to rapidly deploy trained professional services personnel at large scale any place on the planet. Marketing Our multichannel marketing function is focused on market education, thought leadership, account-based marketing, and demand generation.
This enables us to maintain high gross margins and allows us the flexibility to rapidly deploy trained professional services personnel at large scale any place on the planet. 16 Table of Contents Marketing Our multichannel marketing function is focused on market education, thought leadership, account-based marketing, and demand generation.
We have since expanded into state and local governments, agriculture, food processing and consumer packaged goods, professional services, telecommunications, and hospitals and healthcare and are seeing increased industry diversity in our sales pipeline and pilot customer engagements. Our goal is to rapidly move down-market in the coming years to serve the small and medium business segments of each industry.
We have since expanded into state and local governments, agriculture, food processing and consumer packaged goods, professional services, telecommunications, and hospitals and healthcare and are seeing increased industry diversity in our sales pipeline and initial production deployment engagements. Our goal is to rapidly move down-market in the coming years to serve the small and medium business segments of each industry.
Under the terms of the partnership, the two companies are scaling their joint go-to-market strategy and expanding their joint customer pilot programs with Fortune 2000 companies. Through this partnership, the team has identified a significant number of opportunities in the commercial and public sectors.
Under the terms of the partnership, the two companies are scaling their joint go-to-market strategy and expanding their joint customer initial production deployment programs with Fortune 2000 companies. Through this partnership, the team has identified a significant number of opportunities in the commercial and public sectors.
Sales of our software licenses grant our customers the right to use our software, either on their own cloud instance or their internal hardware infrastructure, over the contractual term. We offer a premium stand-ready service through our COE. Sales of our software-as-a-service offerings include a right to use our software over the contractual term.
Licensing of our software grants our customers the right to use our software, either on their own cloud instance or their internal hardware infrastructure, over the contractual term. We offer a premium stand-ready service through our COE. Sales of our software-as-a-service offerings include a right to use our software over the contractual term.
The core of this strategy has been to rapidly deliver high-value outcomes at large scale, across multiple industries, including banking, manufacturing, defense, oil and gas, and utilities. We then use these use cases and outcomes to initiate discussions at numerous leading companies in each sector.
The core of this strategy has been to rapidly deliver high-value outcomes at large scale, across multiple industries, including financial services, manufacturing, defense, oil and gas, utilities, healthcare, and life sciences. We then use these use cases and outcomes to initiate discussions at numerous leading companies in each sector.
Consumption Pricing Model In the first quarter of fiscal year 2023, we announced our transition to a consumption-based pricing model to adapt to more challenging macro-economic conditions, and better meet the needs of customers.
Consumption Pricing Model In the first quarter of fiscal year 2023, we introduced a consumption-based pricing model to adapt to more challenging macro-economic conditions, and better meet the needs of customers.
After completing a successful pilot, our customers may continue to license the C3 AI Application and the C3 AI Platform for a consumption-based fee or enter into a time-certain multi-period commitment that may include consumption charges.
After completing a successful initial production deployment, our customers may continue to license the C3 AI Application and the C3 Agentic AI Platform for a consumption-based fee or enter into a time-certain multi-period commitment that may include consumption charges.
Our people are domain experts in their respective fields. We are individuals with exceptional education and professional backgrounds. We are uncompromising in the quality of our work product. We build relationships with our customers grounded upon the highest levels of business ethics and professionalism, with a laser focus on customer success. We execute with precision.
We are individuals with exceptional education and professional backgrounds. We are uncompromising in the quality of our work product. We build relationships with our customers grounded upon the highest levels of business ethics and professionalism, with a laser focus on customer success. We execute with precision.
The companies have collaborated to support customer service engagements, co-marketing campaigns, and co-selling activities. Fractal has committed to building a C3 AI practice deployment of C3-trained engineers and data scientists. The companies have already collaborated on several successful customer engagements including implementing Advanced Metering Infrastructure (AMI) at a Fortune 500 Utilities provider.
Fractal has committed to building a C3 AI practice deployment of C3 AI–trained engineers and data scientists. The companies have already collaborated on several successful customer engagements including implementing advanced metering infrastructure (AMI) at a Fortune 500 Utilities provider.
We attract exceptionally talented, highly educated, experienced, motivated employees. We have built a culture of high performance based on four core values: • Drive and Innovation Propelling Growth. We self-select for people who love to work hard, think with rigor, speak with purpose, and act to achieve great things. • Natural Curiosity to Solve the Impossible.
We have built a culture of high performance based on four core values: • Drive and Innovation Propelling Growth. We self-select for people who love to work hard, think with rigor, speak with purpose, and act to achieve great things. • Natural Curiosity to Solve the Impossible.
Our customers can use the C3 AI Platform to build and operate their own custom Enterprise AI applications and to customize, operate, and manage C3 AI applications. 7 Table of Contents The C3 AI Platform uses a unique model-driven architecture to accelerate delivery and reduce the complexities of developing Enterprise AI applications.
Our customers can use the C3 Agentic AI Platform to build and operate their own custom Enterprise AI applications and to customize, operate, and manage C3 AI Applications. The C3 Agentic AI Platform uses a patented model-driven architecture to accelerate delivery and reduce the complexities of developing Enterprise AI applications.
Additionally, C3 AI can continue to support our customers as needed with our software and COE support services. 12 Table of Contents Partner Model C3 AI’s Enterprise AI expertise and technology combined with our partners’ deep domain expertise enhances our solutions to joint customers. In fiscal year 2024, we made significant progress establishing and extending productive partnerships.
Additionally, C3 AI can continue to support our customers as needed with our software and COE support services. Partner Ecosystem C3 AI’s Enterprise AI expertise and technology combined with our partners’ deep domain expertise enhances our solutions to joint customers. In fiscal year 2025, we made significant progress establishing and extending productive partnerships.
Customers pay a usage-based runtime fee for our C3 AI Software for specified levels of capacity. Our subscriptions also include our maintenance and support services, which include critical and continuous updates to the software that are integral to maintaining the intended utility of the software over the contractual term. Within subscription revenue, we include revenue from our consumption-based pricing model.
Customers pay a usage-based runtime fee for our C3 AI Software for specified levels of capacity. Our subscriptions also include our maintenance and support services, which include critical and continuous updates to the software that are integral to maintaining the intended utility of the software over the contractual term.
With the consumption-based pricing model, customers start with pilots which are subscription for unlimited developers access to the C3 AI Platform, one C3 AI Application or C3 Generative AI and COE support services of up to six-months.
With the consumption-based pricing model, customers start with initial production deployments which are subscription for developers access to the C3 Agentic AI Platform and/or C3 AI Application or C3 Generative AI and COE support services of up to six-months.
Moreover, the platform must enable the incorporation of any new open source or proprietary software innovations without adversely affecting the functionality or performance of an organization’s existing applications.
Moreover, the platform must enable the incorporation of any new open source or proprietary software innovations without adversely affecting the functionality or performance of an organization’s existing applications. This is a level-zero requirement.
We maintain a professional services organization that offers resources, methodologies, and experience to help customers develop and deploy enterprise-scale AI applications. Our services are complemented by those of our partners.
Professional Services Our professional services primarily include prioritized engineering services, paid implementation services, consulting and training. We maintain a professional services organization that offers resources, methodologies, and experience to help customers develop and deploy enterprise-scale AI applications. Our services are complemented by those of our partners.
Applications built with the C3 AI Platform are flexible, easily upgraded, and can be ported across different cloud platforms with little or no modification, providing a solution that future-proofs customers’ investment in Enterprise AI and IoT application development.
Applications built with the C3 Agentic AI Platform are flexible, easily upgraded, and can be ported across different cloud platforms with little or no modification, providing a solution that future-proofs customers’ investment in Enterprise AI and IoT application development. C3 AI was the first to file and receive a core patent for Agentic AI and its orchestration in enterprise applications.
Revenue Model Our revenue consists of software subscription and professional services revenue. The substantial majority of our revenue is generated from subscriptions to our software. Subscriptions Our subscription revenue is primarily comprised of software licenses, software-as-a-service offerings, stand-ready COE support services, trials and pilots of our C3 AI Applications or Generative AI, and consumption-based pricing.
Revenue Model Our revenue consists of software subscription and professional services revenue. The substantial majority of our revenue is generated from subscriptions to our software. Subscriptions Our subscription revenue is primarily comprised of software licenses, software-as-a-service offerings, stand-ready COE support services, initial production deployments of our C3 AI Applications or Generative AI, and runtime and hosting fees.
Finance . Rich Human Capital Our strongest asset is unquestionably the human capital that we have been able to attract, retain, and motivate. We have won the Glassdoor Best Place to Work award, were named a Battery Ventures/Glassdoor Highest-Rated Cloud Companies to Work For, and are consistently ranked among the best places to work.
Finance . Rich Human Capital Our strongest asset is unquestionably the human capital that we have been able to attract, retain, and motivate. We have won the Glassdoor Best Place to Work award, were named a Battery Ventures/Glassdoor Highest-Rated Cloud Companies to Work For. We attract exceptionally talented, highly educated, experienced, motivated employees.
As of April 30, 2024, our technology is protected by a broad patent portfolio, with 23 issued patents in the United States, 15 issued counterpart patents in a number of international jurisdictions, over 45 patent applications pending in the United States, and 85 patent applications pending internationally. Our issued patents expire beginning in 2033 through 2039.
As of April 30, 2025, our technology is protected by a broad patent portfolio, with 35 issued patents in the United States, 30 issued counterpart patents in a number of international jurisdictions, over 60 patent applications pending in the United States, and 104 patent applications pending internationally. Our issued patents expire beginning in 2033 through 2043.
After completing a successful pilot, our customers will commonly continue to license the C3 AI Application and the C3 AI Platform for a consumption-based fee or enter into a time-certain multi-period commitment that may include consumption charges.
During that period, we work with the customer to deploy a production-level C3 AI Application. After completing a successful initial production deployment, our customers will commonly continue to license the C3 AI Application and the C3 Agentic AI Platform for a consumption-based fee or enter into a time-certain multi-period commitment that may include consumption charges.
Compliance with these laws, rules, and regulations has not had, and is not expected to have, a material effect on our capital expenditures, results of operations and competitive position as compared to prior periods.
Government Regulation Our business activities are subject to various federal, state, local, and foreign laws, rules, and regulations. Compliance with these laws, rules, and regulations has not had, and is not expected to have, a material effect on our capital expenditures, results of operations and competitive position as compared to prior periods.
With flexible deployment options across public/private cloud or on-premise, its secure architecture, and open ML and AI framework, the C3 AI Financial Services Suite is uniquely positioned to drive significant business value for customers. 10 Table of Contents Three discrete applications comprise the C3 AI Financial Services Suite: • C3 AI Anti-Money Laundering helps detect suspicious financial activity, identify fraudulent transactions, and flag bad actors with superior detection accuracy while reducing the false alerts for AML investigators. • C3 AI Smart Lending drives productivity and customer satisfaction within the credit application and approval process, providing credit officers with contextualized insights that reduce processing timelines and increase approval precision. • C3 AI Cash Management proactively monitors client treasury activity and preemptively predicts potential deposit churn to prevent balance attrition, helping increase customer retention and grow deposit balances.
Three discrete applications comprise the C3 AI Financial Services Suite: • C3 AI Anti-Money Laundering helps detect suspicious financial activity, identify fraudulent transactions, and flag bad actors with superior detection accuracy while reducing the false alerts for AML investigators. • C3 AI Smart Lending drives productivity and customer satisfaction within the credit application and approval process, providing credit officers with contextualized insights that reduce processing timelines and increase approval precision. • C3 AI Cash Management proactively monitors client treasury activity and preemptively predicts potential deposit churn to prevent balance attrition, helping increase customer retention and grow deposit balances.
The C3 AI Platform unifies omni-modal data – text, images telemetry, structured tables, etc. and offers all of the platform services necessary and sufficient for enterprise-class generative AI applications, including the services and pipelines to run, train, and host, and manage transformer AI models (or invoke externally managed models), and associated retriever models and other agents, tools, and pipelines.
C3 AI is in a unique position to apply and augment these technologies to solve enterprise problems at scale. 11 Table of Contents The C3 Agentic AI Platform unifies omni-modal data — text, images telemetry, structured tables, etc. and offers all of the platform services necessary and sufficient for enterprise-class generative AI applications, including the services and pipelines to run, train, and host, and manage transformer AI models (or invoke externally managed models), and associated retriever models and other agents, tools, and pipelines.
As of April 30, 2024, we had 891 full-time employees, with 710 based in the United States and 181 in our international locations. 15 Table of Contents Our Culture of High Performance We are dedicated to achieving our mission to accelerate digital transformation of organizations globally by enabling the deployment of Enterprise AI at scale.
As of April 30, 2025, we had 1,181 full-time employees, with 933 based in the United States and 248 in our international locations. Our Culture of High Performance We are dedicated to achieving our mission to accelerate digital transformation of organizations globally by enabling the deployment of Enterprise AI at scale. Our people are domain experts in their respective fields.
After mapping our capabilities to customer use cases, we typically sign a paid pilot for the C3 AI Platform, a C3 AI Application, and C3 AI Center of Excellence (COE) including support services that lasts up to six months. During that period, we work with the customer to deploy a production-level C3 AI Application.
After mapping our capabilities to customer use cases, we typically sign a paid initial production deployment agreement (formerly referred to as “Pilots”) for the C3 Agentic AI Platform, a C3 AI Application, and C3 AI Center of Excellence (COE) including support services that lasts up to six months.
A powerful feature of a model-driven architecture is that as new open source or proprietary solutions become available, the object model library can simply be extended to incorporate that new feature.
The relational database model might link to Postgres. A report writer model might link to MicroStrategy. A data visualization model might link to Tableau. And so on. A powerful feature of a model-driven architecture is that as new open source or proprietary solutions become available, the object model library can simply be extended to incorporate that new feature.
Three core applications comprise the C3 AI Defense & Intelligence Suite: • C3 AI Readiness , today configured across over 15 aircraft platforms, applies AI and advanced ML to help reduce unscheduled maintenance, preposition spare parts, and increase mission capability. • C3 AI Intelligence Analysis accelerates investigative timelines with encrypted, obfuscated, federated search on people and relationships leveraging near real time, configurable machine learning pipelines for entities and sentiments. • C3 AI Decision Advantage improves domain awareness and force management by synthesizing multiple intelligence sources in near real-time and enabling commanders and other decision makers with AI insights. 9 Table of Contents C3 AI State and Local Government Suite C3 AI State and Local Government Suite brings the power of Enterprise AI to state and local governments and law enforcement agencies, helping maximize tax revenues by providing highly precise property appraisals and enhancing public safety with AI-powered intelligence analysis.
Four core applications comprise the C3 AI Defense & Intelligence Suite: • C3 AI Readiness , today configured across over 15 aircraft platforms, applies AI and advanced ML to help reduce unscheduled maintenance, preposition spare parts, and increase mission capability. 9 Table of Contents • C3 AI Intelligence Analysis accelerates investigative timelines with encrypted, obfuscated, federated search on people and relationships leveraging near real time, configurable machine learning pipelines for entities and sentiments. • C3 AI Decision Advantage improves domain awareness and force management by synthesizing multiple intelligence sources in near real-time and enabling commanders and other decision makers with AI insights. • C3 AI Contested Logistics ensures supply network resilience and availability in contested environments with extensive planning tools, near real-time monitoring and mission support, and AI assisted risk mitigation and contingency planning.
Further, corporate governance information, including our corporate governance guidelines, code of business conduct and ethics, and committee charters, is also available on our investor relations website. 22 Table of Contents The content of or accessible through our websites or our social media channels are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our websites or social media channels are inactive textual references only.
The content of or accessible through our websites or our social media channels are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our websites or social media channels are inactive textual references only.
This is a level-zero requirement. 18 Table of Contents The C3 AI Platform — built with model-driven architecture — has been refined, tested, and proven in some of the most demanding industries and production environments from electric utilities and manufacturing to oil and gas and defense, comprising petabyte-scale datasets from thousands of vastly disparate source systems, massive volumes of high-frequency time series data from millions of devices, and hundreds of thousands of ML models.
The C3 Agentic AI Platform — built with model-driven architecture — has been refined, tested, and proven in some of the most demanding industries and production environments from electric utilities and manufacturing to oil and gas and defense, comprising petabyte-scale datasets from thousands of vastly disparate source systems, massive volumes of high-frequency time series data from millions of devices, and hundreds of thousands of ML models. 20 Table of Contents Awash in “AI Platforms” Today the market is awash in AI solutions that provide component parts to design, develop, provision, and operate Enterprise AI applications, including Cassandra, Cloudera, DataStax, AWS IoT, and Hadoop.
C3 AI Platform: A Tested, Proven, and Patented AI Suite The model-driven approach to developing Enterprise AI applications using the C3 AI Platform has been tested and proven in dozens of large-scale, real-world deployments at some of the world’s largest organizations. 20 Table of Contents C3 AI provides a powerful platform enabling these and other leading organizations to develop and operate Enterprise AI applications at scale, with a fraction of the effort and resources required by other approaches.
C3 Agentic AI Platform: A Tested, Proven, and Patented AI Suite The model-driven approach to developing Enterprise AI applications using the C3 Agentic AI Platform has been tested and proven in dozens of large-scale, real-world deployments at some of the world’s largest organizations.
C3 AI and Microsoft Azure first partnered in 2018 to co-develop products and services for enterprise customers running on the Azure Infrastructure. The companies have collaborated to conduct co-marketing and co-selling strategies that rapidly scale distribution globally for their joint customers. In the third quarter of fiscal year 2023, the companies collaborated to close a global U.S.
The companies have collaborated to conduct co-marketing and co-selling strategies that rapidly scale distribution globally for their joint customers. For example, in the third quarter of fiscal year 2023, the companies collaborated to work with a global U.S.
C3 AI and Baker Hughes , a leading oilfield industrial services, equipment, and digital services company, entered into a strategic collaboration in June 2019 to operate as the exclusive channel partner and reseller of C3 AI Software in the oil and gas industry and a non-exclusive reseller in other industries.
Together the companies have trained employees on the C3 Agentic AI Platform and have closed multiple deals with the DoD’s Chief Digital and Artificial Intelligence Office and other organizations. 14 Table of Contents C3 AI and Baker Hughes , a leading oilfield industrial services, equipment, and digital services company, entered into a strategic collaboration in June 2019 to operate as the exclusive channel partner and reseller of C3 AI Software in the oil and gas industry and a non-exclusive reseller in other industries.
As a result of our partnership with Baker Hughes, joint selling, and the credibility it has brought us in the market, C3 AI has closed several deals in the oil and gas and Chemical industry, including LyondellBasell, Shell, ExxonMobil, Petronas, ENI, Aramco, Qatar Gas, ADNOC, PTTGC, Yokogawa, Braskem, and others. 13 Table of Contents C3 AI and Fractal first partnered in 2019, through the now-acquired Neal Analytics, and during the second quarter of fiscal year 2023, we significantly expanded our services and go-to-market partnership.
As a result of our partnership with Baker Hughes, joint selling, and the credibility it has brought us in the market, C3 AI has closed several deals in the oil and gas and chemical industry, including LyondellBasell, Shell, ExxonMobil, Petronas, ENI, Aramco, LNG, ADNOC, PTTGC, Yokogawa, Braskem, and others.
This often results in overwhelming complexity and highly brittle applications that can break any time an underlying element is changed or updated - we believe this is a primary reason why the vast majority of AI efforts have not been deployed into production at enterprise scale.
This often results in overwhelming complexity and highly brittle applications that can break any time an underlying element is changed or updated — we believe this is a primary reason why the vast majority of AI efforts have not been deployed into production at enterprise scale. 18 Table of Contents By contrast, our model-driven architecture provides an abstraction layer, that allows our partners and our customers, as well as our internal C3 AI developers, to build or customize Enterprise AI applications by using conceptual models of all the elements an application requires.
A requirement for the new AI technology stack — that the C3 AI Platform delivers — is polyglot cloud deployment capability: the ability to mix various services from multiple cloud providers and to easily swap and replace those services.
Applications developed with the C3 Agentic AI Platform can run without modification on any cloud and on bare metal behind the firewall in a hybrid cloud environment. 22 Table of Contents A requirement for the new AI technology stack — that the C3 Agentic AI Platform delivers — is polyglot cloud deployment capability: the ability to mix various services from multiple cloud providers and to easily swap and replace those services.
Each of our strategic partners-including AWS, Baker Hughes, Google Cloud, and Microsoft - has a large installed customer base with strong, established relationships, and a large global sales force that vastly extends our market coverage. We form specific sales targets and goals with each partner, enabling us to quickly and efficiently engage in customer accounts.
We have a highly leveraged go-to-market model comprised of a global field sales force combined with significant alliance partnerships. Each of our strategic partners — including Microsoft, AWS, Google Cloud, McKinsey & Company, and Baker Hughes — has a large installed customer base with strong, established relationships, and a large global sales force that vastly extends our market coverage.
Early on, we focused on the oil and gas, federal, aerospace and defense, energy and utilities, manufacturing, and financial services sectors, as those industries were early adopters in Enterprise AI.
We form specific sales targets and goals with each partner, enabling us to quickly and efficiently engage in customer accounts. 15 Table of Contents Early on, we focused on the oil and gas, federal, aerospace and defense, energy and utilities, manufacturing, and financial services sectors, as those industries were early adopters in Enterprise AI.
Following the pilot period, customers either pay a monthly fee and consumption charges using vCPU and vGPU hours as the metric to calculate payment or enter into a time-certain multi-period commitment that may include consumption charges. Professional Services Our professional services primarily include implementation services, training and prioritized engineering services.
Following the initial production deployment period, customers either pay a monthly fee and consumption charges using vCPU and vGPU hours as the metric to calculate payment or enter into a time-certain multi-period commitment that may include consumption charges. We also charge the customer any hosting fees incurred by us for hosting in our own cloud instance.
Three discrete applications comprise the C3 AI Reliability Suite: • C3 AI Reliability increases operations, process, and equipment uptime by anticipating equipment risks and failures. • C3 AI Process Optimization improves production rate and product quality with AI-optimized process control parameters in complex batch, semi-batch, or process manufacturing. 8 Table of Contents • C3 AI Energy Management helps operations teams achieve targets for energy cost, GHG emissions, water consumption, and waste reduction.
C3 AI’s value proposition within reliability emphasizes its (1) complementary approach to existing asset management and data historian systems, (2) detailed asset hierarchy modeling, including asset templates and failure mode libraries, (3) flexible AI pipelines that leverage best-in-class ML frameworks with AI explainability, and (4) comprehensive user workflows to action AI recommendations, with bidirectional integrations to work management and operations systems. 8 Table of Contents Three discrete applications comprise the C3 AI Asset Performance Suite: • C3 AI Reliability increases operations, process, and equipment uptime by anticipating equipment risks and failures. • C3 AI Process Optimization improves production rate and product quality with AI-optimized process control parameters in complex batch, semi-batch, or process manufacturing. • C3 AI Energy Management helps operations teams achieve targets for energy cost, GHG emissions, water consumption, and waste reduction.
Our patent portfolio covers the key capabilities of our model-driven architecture that are the foundation of our highly differentiated technology. This includes methods, systems, and devices for data aggregation and unification, times-series data processing, data abstraction, ML implementation, generative AI and much more.
This includes methods, systems, and devices for data aggregation and unification, times-series data processing, data abstraction, ML implementation, generative AI and much more.
The challenges that must be addressed to enable today’s Enterprise AI applications are nontrivial, as are the array of capabilities and services necessary for building and operating these applications at scale.
The software industry has transitioned from custom applications based on mainframe standards to applications developed on a relational database foundation, to enterprise application software, to SaaS and mobile apps, and now to the AI-enabled enterprise. 19 Table of Contents The challenges that must be addressed to enable today’s Enterprise AI applications are nontrivial, as are the array of capabilities and services necessary for building and operating these applications at scale.
We offer three primary families of software solutions, which we collectively refer to as our C3 AI software: • The C3 AI Platform , our core technology, is a comprehensive, end-to-end application development and runtime environment that is designed to allow our customers to rapidly design, develop, and deploy Enterprise AI applications of any type. • C3 AI Applications , built using the C3 AI Platform, is a portfolio of pre-built, extensible, industry-specific and application-specific SaaS Enterprise AI applications that can be rapidly installed and deployed. • C3 Generative AI , combines the utility of large language models, generative AI, reinforcement learning, natural language processing, and the C3 AI Platform to rapidly locate, retrieve, and present information, disparate data stores, applications, and enterprise information systems.
We offer three primary families of software solutions, which we collectively refer to as our “C3 AI software”: • The C3 Agentic AI Platform , our core technology, is a comprehensive, end-to-end application development and runtime environment that is designed to allow our customers to rapidly design, develop, and deploy Enterprise AI applications.
See the section titled “Risk Factors - Risks Related to Our Intellectual Property” in Part I, Item 1A in this Annual Report on Form 10-K for a discussion of the risks associated with our intellectual property. 17 Table of Contents The C3 AI Model-Driven Architecture Over the last four decades, the information technology industry has grown from about $120 billion globally in 1980 to almost $8.0 trillion today.
See the section titled “Risk Factors - Risks Related to Our Intellectual Property” in Part I, Item 1A in this Annual Report on Form 10-K for a discussion of the risks associated with our intellectual property.
With a traditional structured programming approach, developers spend significant time and effort to write extensive code to define, manage, connect, and control each element.
These include enterprise data, extraprise data, sensor data, data persistence services, data streaming services, messaging services, analytics services, ML services, security services, data visualization, application development services, application monitoring services, and scores to hundreds more. With a traditional structured programming approach, developers spend significant time and effort to write extensive code to define, manage, connect, and control each element.
In November 2023, C3 AI expanded its Strategic Collaboration Agreement with AWS to deliver artificial intelligence solutions designed to solve customers’ critical business challenges across a variety of industries. C3 AI also offers its C3 Generative AI: AWS Marketplace Edition, its no-code, self-service generative AI application, on AWS Marketplace.
In November 2023, C3 AI expanded its strategic collaboration agreement with AWS to deliver artificial intelligence solutions designed to solve customers’ critical business challenges across a variety of industries. In January 2025, C3 AI and AWS entered into a new multi-year strategic collaboration agreement with AWS to accelerate solution delivery and enhance go-to-market efforts.
C3 AI delivers a family of fully integrated products including the C3 AI Platform, an end-to-end platform for developing, deploying, and operating Enterprise AI Applications; C3 AI Applications, a portfolio of industry-specific SaaS Enterprise AI applications that enable the digital transformation of organizations globally; and C3 Generative AI - a unified knowledge source that combines the power of foundational large language models (LLMs), retrieval models, and the C3 AI Platform, to enable enterprise users to rapidly locate, retrieve, reason, and act on enterprise data and insights through an intuitive search and chat interface.
C3 AI delivers a family of fully integrated products including the C3 Agentic AI Platform, an end-to-end platform for developing, deploying, and operating Enterprise AI applications; C3 AI Applications, a portfolio of industry-specific Enterprise AI applications that enable the digital transformation of organizations globally; and C3 Generative AI — library of agentic AI applications to retrieve data, analyze information, surface insights, and orchestrate workflows to drive business value.
This model typically begins with a pilot phase which includes unlimited developer access to C3 AI Platform, one C3 AI Application or C3 Generative AI and COE support services.
This model typically begins with a paid “Initial Production Deployment” phase of generally up-to six months that may include developer access to the C3 Agentic AI Platform, one or more C3 AI Applications or C3 Generative AI and COE support services with typically unlimited runtime.
AI applications developed with the C3 AI Platform can leverage any open source software solutions and all of the cloud services of AWS, Microsoft Azure, Google Cloud, and can operate on any of these cloud platforms, on-premises, or in a hybrid cloud. 16 Table of Contents Compared to the structured programming approach that most organizations typically attempt, our model-driven architecture with declarative programming accelerates development by a factor of 26, while reducing the amount of code that must be written by up to 99%.
AI applications developed with the C3 Agentic AI Platform can leverage any open-source software solutions and all of the cloud services of AWS, Microsoft Azure, Google Cloud, and can operate on any of these cloud platforms, on-premises, or in a hybrid cloud.
C3 AI and Paradyme first partnered in 2021 and we expanded the partnership during the third quarter of fiscal year 2024. The companies have collaborated to accelerate the delivery of AI applications for the US Intelligence Community. The new agreement expands the number of dedicated Paradyme staff to accelerate joint selling and delivery efforts.
In April 2025, C3 AI and Fractal expanded their agreement, continuing work with customers to implement, extend, and scale C3 AI solutions. C3 AI and Paradyme first partnered in 2021, expanding the partnership during the third quarter of fiscal year 2024, and again in early 2025. The companies have collaborated to accelerate the delivery of AI applications for the U.S.
Energy company and a European technology company serving the construction and mining sectors. We cooperated to deliver a highly successful pilot engagement to a large U.S. Defense Agency. All C3 AI Applications are available in the Azure Marketplace.
Energy company and a European technology company serving the construction and mining sectors and delivered a highly successful initial production deployment engagement to a large U.S. Defense Agency. In September 2024, C3 AI and Microsoft Azure signed a new, multi-year global alliance agreement to accelerate growth in Enterprise AI.
C3 Generative AI is built natively into the C3 AI Platform and available with every C3 AI Application. C3 Generative AI is also available as a standalone capability deployable against customer datasets and software applications enabling customers to leverage large language models (LLMs) and pretrained generative transformers (GPTs) to transform enterprise search.
C3 Generative AI is also available as a standalone capability deployable against customer datasets and software applications enabling customers to leverage large language models (LLMs) and domain-specific agents to retrieve data, analyze information, surface insights, and orchestrate workflows to drive business value.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSiebel, is critical to our overall management, sales strategy, culture, strategic direction, engineering, and operations. In addition, Mr. Siebel is a recognized leader in information technology and is critical to the continued development of our C3 AI Software. All of our executive officers are at-will employees, and we do not maintain any key person life insurance policies.
Biggest changeIn addition, all of our executive officers are at-will employees, and we do not maintain any key person life insurance policies. The loss of any member of our senior management team could make it more difficult to execute our business strategy and, therefore, harm our business.
Our agreements with certain customers may require us to use industry-standard, reasonable, or other specified measures to safeguard sensitive personal information or confidential information, and any actual or perceived breach of such measures may increase the likelihood and frequency of customer audits under our agreements, which is likely to increase the costs of doing business.
Our agreements with certain customers require us to use industry-standard, reasonable, or other specified measures to safeguard sensitive personal information or confidential information, and any actual or perceived breach of such measures may increase the likelihood and frequency of customer audits under our agreements, which is likely to increase the costs of doing business.
While we and a number of our vendors and business partners have implemented security measures and designed to protect against security incidents, there can be no assurance that these measures will be effective.
While we and a number of our vendors and business partners have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective.
We have experienced, and may in the future experience, disruptions, outages, defects, and other performance and quality problems with our C3 AI Software. We have also experienced, and may in the future experience, disruptions, outages, defects, and other performance and quality problems with the public cloud and internet infrastructure on which our C3 AI Software relies.
We have also experienced, and may in the future experience, disruptions, outages, defects, and other performance and quality problems with the public cloud and internet infrastructure on which our C3 AI Software relies.
Factors that could cause fluctuations in the trading price of our Class A common stock include the risk factors set forth in this section as well as the following: • price and volume fluctuations in the overall stock market from time to time; • high volume retail trading by participants connected in a social network; • volatility in the trading prices and trading volumes of technology stocks; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; • sales of shares of our Class A common stock by us or our stockholders; 54 Table of Contents • failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors, particularly in light of the significant portion of our revenue derived from a limited number of customers; • changes in our financial, operating or other metrics, regardless of whether we consider those metrics as reflective of the current state or long-term prospects of our business, and how those results compare to securities analyst expectations, including whether those results fail to meet, exceed, or significantly exceed securities analyst expectations, particularly in light of the significant portion of our revenue derived from a limited number of customers; • announcements by us or our competitors of new products, applications, features, or services; • the public’s reaction to our press releases, other public announcements, and filings with the SEC; • rumors and market speculation involving us or other companies in our industry, which may include short seller reports; • actual or anticipated changes in our results of operations or fluctuations in our results of operations; • actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; • litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors; • actual or perceived privacy or data security incidents; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses, applications, products, services, or technologies by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations, or principles; • any significant change in our management; • general political and economic conditions and slow or negative growth of our markets; and • technical factors in the public trading market for our stock that may produce price movements that may or may not comport with macro, industry or company-specific fundamentals, including, without limitation, the sentiment of retail investors (including as may be expressed on financial trading and other social media sites), the amount and status of short interest in our securities, access to margin debt, trading in options and other derivatives on our common stock and other technical trading factors.
Factors that could cause fluctuations in the trading price of our Class A common stock include the risk factors set forth in this section as well as the following: • price and volume fluctuations in the overall stock market from time to time; • high volume retail trading by participants connected in a social network; • volatility in the trading prices and trading volumes of technology stocks; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; • sales of shares of our Class A common stock by us or our stockholders; 59 Table of Contents • failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors, particularly in light of the significant portion of our revenue derived from a limited number of customers; • changes in our financial, operating or other metrics, regardless of whether we consider those metrics as reflective of the current state or long-term prospects of our business, and how those results compare to securities analyst expectations, including whether those results fail to meet, exceed, or significantly exceed securities analyst expectations, particularly in light of the significant portion of our revenue derived from a limited number of customers; • announcements by us or our competitors of new products, applications, features, or services; • the public’s reaction to our press releases, other public announcements, and filings with the SEC; • rumors and market speculation involving us or other companies in our industry, which may include short seller reports; • actual or anticipated changes in our results of operations or fluctuations in our results of operations; • actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; • litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors; • actual or perceived privacy or data security incidents; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses, applications, products, services, or technologies by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations, or principles; • any significant change in our management; • general political and economic conditions and slow or negative growth of our markets; and • technical factors in the public trading market for our stock that may produce price movements that may or may not comport with macro, industry or company-specific fundamentals, including, without limitation, the sentiment of retail investors (including as may be expressed on financial trading and other social media sites), the amount and status of short interest in our securities, access to margin debt, trading in options and other derivatives on our common stock and other technical trading factors.
Operating internationally subjects us to new risks and may increase risks that we currently face, including risks associated with: • recruiting and retaining talented and capable employees outside the United States and maintaining our company culture across all of our offices; • potentially different pricing environments, longer sales cycles, and longer accounts receivable payment cycles and collections issues; • compliance with applicable international laws and regulations, including laws and regulations with respect to privacy, data protection, and consumer protection, and the risk of penalties to us and individual members of management or employees if our practices are deemed to be out of compliance; • management of an employee base in jurisdictions that may not give us the same employment and retention flexibility as does the United States; • operating in jurisdictions that do not protect intellectual property rights to the same extent as does the United States and the practical enforcement of such intellectual property rights outside of the United States; • foreign government interference with our intellectual property that resides outside of the United States, such as the risk of changes in foreign laws that could restrict our ability to use our intellectual property; • working with partners outside of the United States; • securing our locally operated systems and our data and the data of our customers and partners accessible from such jurisdictions; • compliance by us and our business partners with anti-corruption laws, import and export control laws, tariffs, trade barriers, economic sanctions, anti-money laundering laws and other regulatory limitations on our ability to provide our C3 AI Software in certain international markets; • foreign exchange controls that might require significant lead time in setting up operations in certain geographic territories and might prevent us from repatriating cash earned outside the United States; • political and economic instability, including military actions affecting the Middle East, Russia, Ukraine and/or surrounding regions; • pandemics or epidemics that could result in decreased economic activity in certain markets, decreased use of our C3 AI Software, or in our decreased ability to import, export, or sell our C3 AI Software to existing or new customers in international markets; • changes in diplomatic and trade relationships, including the imposition of new trade restrictions, trade protection measures, import or export requirements, trade embargoes, and other trade barriers; 47 Table of Contents • generally longer payment cycles and greater difficulty in collecting accounts receivable; • double taxation of our international earnings and potentially adverse tax consequences due to changes in the income and other tax laws of the United States or the international jurisdictions in which we operate; and • higher costs of doing business internationally, including increased accounting, travel, infrastructure, and legal compliance costs.
Operating internationally subjects us to new risks and may increase risks that we currently face, including risks associated with: • recruiting and retaining talented and capable employees outside the United States and maintaining our company culture across all of our offices; • potentially different pricing environments, longer sales cycles, and longer accounts receivable payment cycles and collections issues; • compliance with applicable international laws and regulations, including laws and regulations with respect to privacy, data protection, and consumer protection, and the risk of penalties to us and individual members of management or employees if our practices are deemed to be out of compliance; • management of an employee base in jurisdictions that may not give us the same employment and retention flexibility as does the United States; • operating in jurisdictions that do not protect intellectual property rights to the same extent as does the United States and the practical enforcement of such intellectual property rights outside of the United States; • foreign government interference with our intellectual property that resides outside of the United States, such as the risk of changes in foreign laws that could restrict our ability to use our intellectual property; • working with partners outside of the United States; • securing our locally operated systems and our data and the data of our customers and partners accessible from such jurisdictions; • compliance by us and our business partners with anti-corruption laws, import and export control laws, tariffs, trade barriers, economic sanctions, anti-money laundering laws and other regulatory limitations on our ability to provide our C3 AI Software in certain international markets; • foreign exchange controls that might require significant lead time in setting up operations in certain geographic territories and might prevent us from repatriating cash earned outside the United States; • political and economic instability, including military actions affecting the Middle East, Russia, Ukraine and/or surrounding regions; • pandemics or epidemics that could result in decreased economic activity in certain markets, decreased use of our C3 AI Software, or in our decreased ability to import, export, or sell our C3 AI Software to existing or new customers in international markets; • changes in diplomatic and trade relationships, including the imposition of new trade restrictions, trade protection measures, import or export requirements, trade embargoes, and other trade barriers; 52 Table of Contents • generally longer payment cycles and greater difficulty in collecting accounts receivable; • double taxation of our international earnings and potentially adverse tax consequences due to changes in the income and other tax laws of the United States or the international jurisdictions in which we operate; and • higher costs of doing business internationally, including increased accounting, travel, infrastructure, and legal compliance costs.
We take steps to detect and remediate vulnerabilities in our information security systems (such as our hardware and/ or software, including that of third parties with whom we work), and ensure the security, privacy, integrity, confidentiality, availability, and authenticity of our information technology networks and systems, processing and information, but we may not be able to anticipate or to implement effective preventive and remedial measures against all data security and privacy threats or detect, mitigate and remediate all vulnerabilities on a timely basis.
We take steps designed to detect and remediate vulnerabilities in our information security systems (such as our hardware and/ or software, including that of third parties with whom we work), and ensure the security, privacy, integrity, confidentiality, availability, and authenticity of our information technology networks and systems, processing and information, but we may not be able to anticipate or to implement effective preventive and remedial measures against all data security and privacy threats or detect, mitigate and remediate all vulnerabilities on a timely basis.
Any actual or potential security breach of our C3 AI Software, our operational systems, our physical facilities, or the systems or facilities of our partners, or the perception that one has occurred, could result in adverse consequences, such as litigation, indemnity obligations, regulatory enforcement actions, investigations, fines, penalties, mitigation and remediation costs, disputes, reputational harm, diversion of management’s attention, and other liabilities and damage to our business.
Any actual or potential security breach of our C3 AI Software, our operational systems, our physical facilities, or the systems or facilities of our partners, or the perception that one has occurred, could result in material adverse consequences, such as litigation, indemnity obligations, regulatory enforcement actions, investigations, fines, penalties, mitigation and remediation costs, disputes, reputational harm, diversion of management’s attention, and other liabilities and damage to our business.
Our business will be harmed if any provider of such software systems: • discontinues or limits our access to its software; • modifies its terms of service or other policies, including fees charged to, or other restrictions on us, or other platform and application developers; • changes how information is accessed by us or our customers; • establishes more favorable relationships with one or more of our competitors; or • develops or otherwise favors its own competitive offerings over our C3 AI Software. 32 Table of Contents Third-party services and products are constantly evolving, and we may not be able to modify our C3 AI Software to assure their compatibility with that of other third parties as they continue to develop or emerge in the future or we may not be able to make such modifications in a timely and cost-effective manner.
Our business will be harmed if any provider of such software systems: • discontinues or limits our access to its software; • modifies its terms of service or other policies, including fees charged to, or other restrictions on us, or other platform and application developers; • changes how information is accessed by us or our customers; • establishes more favorable relationships with one or more of our competitors; or • develops or otherwise favors its own competitive offerings over our C3 AI Software. 37 Table of Contents Third-party services and products are constantly evolving, and we may not be able to modify our C3 AI Software to assure their compatibility with that of other third parties as they continue to develop or emerge in the future or we may not be able to make such modifications in a timely and cost-effective manner.
AI is enabled by or integrated into some of the C3 AI Platform, including C3 Generative AI, and is a significant and growing element of our business. As with many developing technologies, AI presents risks and challenges that could affect its further development, adoption, and use, and therefore our business. AI algorithms may be flawed.
AI is enabled by or integrated into some of the C3 Agentic AI Platform, including C3 Generative AI, and is a significant and growing element of our business. As with many developing technologies, AI presents risks and challenges that could affect its further development, adoption, and use, and therefore our business. AI algorithms may be flawed.
Any provision in our certificate of incorporation or our bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our Class A common stock and could also affect the price that some investors are willing to pay for our Class A common stock. 57 Table of Contents Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware and, to the extent enforceable, the federal district courts of the United States of America as the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers or employees.
Any provision in our certificate of incorporation or our bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our Class A common stock and could also affect the price that some investors are willing to pay for our Class A common stock. 62 Table of Contents Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware and, to the extent enforceable, the federal district courts of the United States of America as the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers or employees.
In addition, various countries regulate the import of certain items, including through import permitting and licensing requirements and have enacted or could enact laws that could limit our ability to distribute our C3 AI Software or could limit our customers’ ability to implement our C3 AI Software in those countries. 48 Table of Contents Changes in our C3 AI Software and, if required, obtaining the necessary export license or other authorization for a particular sale, or changes in export, sanctions, and import laws, may result in the delay or loss of sales opportunities, delay the introduction and sale of subscriptions to our C3 AI Software in international markets, prevent our customers with international operations from using our C3 AI Software or, in some cases, prevent the access or use of our C3 AI Software to and from certain countries, governments, persons, or entities altogether.
In addition, various countries regulate the import of certain items, including through import permitting and licensing requirements and have enacted or could enact laws that could limit our ability to distribute our C3 AI Software or could limit our customers’ ability to implement our C3 AI Software in those countries. 53 Table of Contents Changes in our C3 AI Software and, if required, obtaining the necessary export license or other authorization for a particular sale, or changes in export, sanctions, and import laws, may result in the delay or loss of sales opportunities, delay the introduction and sale of subscriptions to our C3 AI Software in international markets, prevent our customers with international operations from using our C3 AI Software or, in some cases, prevent the access or use of our C3 AI Software to and from certain countries, governments, persons, or entities altogether.
Factors that may cause fluctuations in our annual or quarterly results of operations and key metrics include, without limitation, the risk factors listed elsewhere in this section and the factors listed below: • our ability to generate significant revenue from new offerings; • our ability to expand our number of partners and distribution of our C3 AI Software; • our ability to hire and retain employees, in particular those responsible for the selling or marketing of our C3 AI Software; • our ability to develop and retain talented sales personnel who are able to achieve desired productivity levels in a reasonable period of time and provide sales leadership in areas in which we are expanding our sales and marketing efforts; • changes in the way we organize and compensate our sales teams; • the timing of expenses and recognition of revenue; • our ability to increase sales to large organizations as well as increase sales to a larger number of smaller customers; • the length of sales cycles and seasonal purchasing or consumption patterns of our customers; • the amount and timing of operating expenses related to the maintenance and expansion of our business, operations, and infrastructure, as well as international expansion and entry into operating leases; • timing and effectiveness of new sales and marketing initiatives; • changes in our pricing policies or those of our competitors; • the timing and success of new platforms, applications, features, and functionality by us or our competitors; • failures or breaches of security or privacy by us or our suppliers and business partners, and the costs associated with remediating any such failures or breaches; • changes in the competitive dynamics of our industry, including consolidation among competitors; • changes in laws and regulations that impact our business; • any large indemnification payments to our users or other third parties; • the timing of expenses related to any future acquisitions; • the impact of any applicable changes in accounting standards or management assumptions, estimates or judgments on complex accounting matters; • civil unrest and geopolitical instability; and • general political, economic, and market conditions. 34 Table of Contents Our performance metrics, data regarding customer engagement and certain other operational data in this report are subject to assumptions and limitations and may not provide an accurate indication of our future or expected results.
Factors that may cause fluctuations in our annual or quarterly results of operations and key metrics include, without limitation, the risk factors listed elsewhere in this section and the factors listed below: • our ability to generate significant revenue from new offerings; • our ability to expand our number of partners and distribution of our C3 AI Software; • our ability to hire and retain employees, in particular those responsible for the selling or marketing of our C3 AI Software; • our ability to develop and retain talented sales personnel who are able to achieve desired productivity levels in a reasonable period of time and provide sales leadership in areas in which we are expanding our sales and marketing efforts; • changes in the way we organize and compensate our sales teams; • the timing of expenses and recognition of revenue; • our ability to increase sales to large organizations as well as increase sales to a larger number of smaller customers; • the length of sales cycles and seasonal purchasing or consumption patterns of our customers; • the amount and timing of operating expenses related to the maintenance and expansion of our business, operations, and infrastructure, as well as international expansion and entry into operating leases; • timing and effectiveness of new sales and marketing initiatives; • changes in our pricing policies or those of our competitors; • the timing and success of new platforms, applications, features, and functionality by us or our competitors; • failures or breaches of security or privacy by us or our suppliers and business partners, and the costs associated with remediating any such failures or breaches; • changes in the competitive dynamics of our industry, including consolidation among competitors; • changes in laws and regulations that impact our business; • any large indemnification payments to our users or other third parties; • the timing of expenses related to any future acquisitions; • the impact of any applicable changes in accounting standards or management assumptions, estimates or judgments on complex accounting matters; • civil unrest and geopolitical instability; and • general political, economic, and market conditions. 39 Table of Contents Our performance metrics and certain other operational data in this report are subject to assumptions and limitations and may not provide an accurate indication of our future or expected results.
We may also be subject to additional tax liabilities due to changes in non-income based taxes resulting from changes in federal, state, local, or international tax laws, changes in taxing jurisdictions’ administrative interpretations, decisions, policies, and positions, results of tax examinations, settlements, or judicial decisions, changes in accounting principles, changes to our business operations, including acquisitions, as well as the evaluation of new information that results in a change to a tax position taken in a prior period. 50 Table of Contents Our ability to use our net operating losses and certain other tax attributes to offset future taxable income or taxes may be subject to certain limitations.
We may also be subject to additional tax liabilities due to changes in non-income based taxes resulting from changes in federal, state, local, or international tax laws, changes in taxing jurisdictions’ administrative interpretations, decisions, policies, and positions, results of tax examinations, settlements, or judicial decisions, changes in accounting principles, changes to our business operations, including acquisitions, as well as the evaluation of new information that results in a change to a tax position taken in a prior period. 55 Table of Contents Our ability to use our net operating losses and certain other tax attributes to offset future taxable income or taxes may be subject to certain limitations.
It is possible that new laws and regulations will be adopted in the United States and other jurisdictions, or existing laws and regulations may be interpreted in new ways, that would affect the operation of our C3 AI Platform and the way in which we use AI and ML.
It is possible that new laws and regulations will be adopted in the United States and other jurisdictions, or existing laws and regulations may be interpreted in new ways, that would affect the operation of our C3 Agentic AI Platform and the way in which we use AI and ML.
In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position. 40 Table of Contents The costs to respond to a security breach and/or to mitigate any security vulnerabilities that may be identified could be significant, our efforts to address these problems may not be successful, and these problems could result in unexpected interruptions, delays, cessation of service, negative publicity, and other harm to our business and our competitive position.
In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position. 45 Table of Contents The costs to respond to a security breach and/or to mitigate any security vulnerabilities that may be identified could be significant, our efforts to address these problems may not be successful, and these problems could result in unexpected interruptions, delays, cessation of service, negative publicity, and other harm to our business and our competitive position.
We cannot guarantee that we will be able to compete successfully against current and future competitors or that competitive pressure and/or the availability of open source software will not result in price reductions, reduced operating margins and loss of market share, any one of which could seriously harm our business. 53 Table of Contents If open source software programmers, many of whom we do not employ, or our own internal programmers do not continue to develop and enhance open source technologies, we may be unable to develop new technologies, adequately enhance our existing technologies or meet customer requirements for innovation, quality and price.
We cannot guarantee that we will be able to compete successfully against current and future competitors or that competitive pressure and/or the availability of open source software will not result in price reductions, reduced operating margins and loss of market share, any one of which could seriously harm our business. 58 Table of Contents If open source software programmers, many of whom we do not employ, or our own internal programmers do not continue to develop and enhance open source technologies, we may be unable to develop new technologies, adequately enhance our existing technologies or meet customer requirements for innovation, quality and price.
Unless otherwise indicated, references to our business being harmed in these risk factors will include harm to our business, C3 AI Software (which includes our C3 AI Platform, C3 AI Applications and C3 Generative AI), reputation, brand, financial condition, results of operations, and prospects.
Unless otherwise indicated, references to our business being harmed in these risk factors will include harm to our business, C3 AI Software (which includes our C3 Agentic AI Platform, C3 AI Applications and C3 Generative AI), reputation, brand, financial condition, results of operations, and prospects.
If few securities analysts commence coverage of us, or if one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our securities could decrease, which might cause the price and trading volume of our Class A common stock to decline. 58 Table of Contents We will continue to incur costs and demands upon management as a result of complying with the laws and regulations affecting public companies in the United States, which may harm our business.
If few securities analysts commence coverage of us, or if one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our securities could decrease, which might cause the price and trading volume of our Class A common stock to decline. 63 Table of Contents We will continue to incur costs and demands upon management as a result of complying with the laws and regulations affecting public companies in the United States, which may harm our business.
Further, if our contractual and other business relationships with our public cloud providers are terminated, suspended, or suffer a material change to which we are unable to adapt, such as the elimination of services or features on which we depend, we could be unable to provide our C3 AI Software and could experience significant delays and incur additional expense in transitioning customers to a different public cloud provider. 42 Table of Contents Any disruptions, outages, defects, and other security performance and quality problems with our C3 AI Software or with the public cloud and internet infrastructure on which it relies, or any material change in our contractual and other business relationships with our public cloud providers, could result in reduced use of our C3 AI Software, increased expenses, including significant, unplanned capital investments and/or service credit obligations, and harm to our brand and reputation, any of which could have a material adverse effect on our business, financial condition, reputation and results of operations.
Further, if our contractual and other business relationships with our public cloud providers are terminated, suspended, or suffer a material change to which we are unable to adapt, such as the elimination of services or features on which we depend, we could be unable to provide our C3 AI Software and could experience significant delays and incur additional expense in transitioning customers to a different public cloud provider. 47 Table of Contents Any disruptions, outages, defects, and other security performance and quality problems with our C3 AI Software or with the public cloud, internet infrastructure, or other technology on which it relies, or any material change in our contractual and other business relationships with our public cloud providers, could result in reduced use of our C3 AI Software, increased expenses, including significant, unplanned capital investments and/or service credit obligations, and harm to our brand and reputation, any of which could have a material adverse effect on our business, financial condition, reputation and results of operations.
Further, we may experience delays in developing and deploying remedial measures designed to address any such identified vulnerabilities. 41 Table of Contents If we (or a third party with whom we work) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive information (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; diversion of management attention; interruptions in our operations (including availability of data); financial loss; and other similar harms.
Further, we may experience delays in developing and deploying remedial measures designed to address any such identified vulnerabilities. 46 Table of Contents If we (or a third party with whom we work) experience a security incident or are perceived to have experienced a security incident, we may experience material adverse consequences such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive information (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; diversion of management attention; interruptions in our operations (including availability of data); financial loss; and other similar harms.
Many of our existing competitors have, and some of our potential competitors could have, substantial competitive advantages such as: • greater name recognition, longer operating histories, and larger customer bases; • larger sales and marketing budgets and resources and the capacity to leverage their sales efforts and marketing expenditures across a broader portfolio of products; • broader, deeper, or otherwise more established relationships with technology, channel, and distribution partners and customers; • wider geographic presence or greater access to larger customer bases; • greater focus in specific geographies or industries; • lower labor and research and development costs; • larger and more mature intellectual property portfolios; and • substantially greater financial, technical, and other resources to provide support, make acquisitions, hire talent, and develop and introduce new products.
Many of our existing competitors have, and some of our potential competitors could have, substantial competitive advantages such as: • greater name recognition, longer operating histories, and larger customer bases; • larger sales and marketing budgets and resources and the capacity to leverage their sales efforts and marketing expenditures across a broader portfolio of products; 30 Table of Contents • broader, deeper, or otherwise more established relationships with technology, channel, and distribution partners and customers; • wider geographic presence or greater access to larger customer bases; • greater focus in specific geographies or industries; • lower labor and research and development costs; • larger and more mature intellectual property portfolios; and • substantially greater financial, technical, and other resources to provide support, make acquisitions, hire talent, and develop and introduce new products.
To the extent we are not able to obtain or maintain a facility security clearance, we may not be able to bid on or win new classified contracts, and our existing contract (and any future contracts we may subsequently obtain) requiring a facility security clearance could be terminated. 44 Table of Contents If we are unable to achieve and sustain a level of liquidity sufficient to support our operations and fulfill our obligations, our business, operating results and financial position could be adversely affected.
To the extent we are not able to obtain or maintain a facility security clearance, we may not be able to bid on or win new classified contracts, and our existing contract (and any future contracts we may subsequently obtain) requiring a facility security clearance could be terminated. 49 Table of Contents If we are unable to achieve and sustain a level of liquidity sufficient to support our operations and fulfill our obligations, our business, operating results and financial position could be adversely affected.
If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal proceeding, our reputation, business, stock price, financial condition, prospects and results of operations could be harmed. 49 Table of Contents Risks Related to Taxes We may be subject to liabilities on past sales for taxes, surcharges, and fees.
If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal proceeding, our reputation, business, stock price, financial condition, prospects and results of operations could be harmed. 54 Table of Contents Risks Related to Taxes We may be subject to liabilities on past sales for taxes, surcharges, and fees.
We may share or receive sensitive information with or from third parties. 39 Table of Contents Cyber-attacks, denial-of-service attacks, ransomware attacks, business email compromises, computer malware, viruses, social engineering (including phishing), online and offline fraud and other malicious internet-based activity are prevalent in our industry and our customers’ industries and such attacks continue to increase.
We may share or receive sensitive information with or from third parties. 44 Table of Contents Cyber-attacks, denial-of-service attacks, ransomware attacks, business email compromises, computer malware, viruses, social engineering (including phishing), online and offline fraud and other malicious internet-based activity are prevalent in our industry and our customers’ industries and such attacks continue to increase.
These problems can be caused by a variety of factors, including introductions of new functionality, vulnerabilities and defects in proprietary and open source software, human error or misconduct, capacity constraints, design limitations, as well as from internal and external security breaches, malware and viruses, ransomware, cyber events, denial or degradation of service attacks or other security-related incidents.
These problems can be caused by a variety of factors, including introductions of new functionality, vulnerabilities, coding errors, software defects, and defects in proprietary and open source software, human error or misconduct, capacity constraints, design limitations, as well as from internal and external security breaches, malware and viruses, ransomware, cyber events, denial or degradation of service attacks or other security-related incidents.
If we fail to satisfy the expectations of investors, employees and other stakeholders or our initiatives are not executed as planned, our business, financial condition, results of operations, and prospects could be materially and adversely affected. 46 Table of Contents Risks Related to Our International Operations We are continuing to expand our operations outside the United States, where we may be subject to increased business and economic risks that could harm our business.
If we fail to satisfy the expectations of investors, employees and other stakeholders or our initiatives are not executed as planned, our business, financial condition, results of operations, and prospects could be materially and adversely affected. 51 Table of Contents Risks Related to Our International Operations We are continuing to expand our operations outside the United States, where we may be subject to increased business and economic risks that could harm our business.
Any failure to maintain high-quality maintenance and support services, a failure of channel parties to maintain high-quality maintenance and support services or a market perception that we do not maintain high-quality maintenance and support services for our customers, would harm our business. 35 Table of Contents Macroeconomic uncertainties have had, and could continue to have, an adverse impact on our business, our operations, and the markets and communities in which we, our partners, and users operate.
Any failure to maintain high-quality maintenance and support services, a failure of channel parties to maintain high-quality maintenance and support services or a market perception that we do not maintain high-quality maintenance and support services for our customers, would harm our business. 40 Table of Contents Macroeconomic uncertainties have had, and could continue to have, an adverse impact on our business, our operations, and the markets and communities in which we, our partners, and users operate.
Government demand and payment for our C3 AI Software is affected by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our C3 AI Software. 43 Table of Contents Further, governmental and highly regulated entities may demand contract terms that differ from our standard arrangements and may be less favorable than terms agreed with other customers.
Government demand and payment for our C3 AI Software is affected by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our C3 AI Software. 48 Table of Contents Further, governmental and highly regulated entities may demand contract terms that differ from our standard arrangements and may be less favorable than terms agreed with other customers.
We may be the target of additional litigation of this type in the future as well. 55 Table of Contents Short sellers may engage in manipulative activity intended to drive down the market price of our Class A common stock, which could also result in related regulatory and governmental scrutiny, among other effects.
We may be the target of additional litigation of this type in the future as well. 60 Table of Contents Short sellers may engage in manipulative activity intended to drive down the market price of our Class A common stock, which could also result in related regulatory and governmental scrutiny, among other effects.
Moreover, our business may be harmed if we experience problems with any new systems and controls that result in delays in their implementation or increased costs to correct any post-implementation issues that may arise. 59 Table of Contents Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future.
Moreover, our business may be harmed if we experience problems with any new systems and controls that result in delays in their implementation or increased costs to correct any post-implementation issues that may arise. 64 Table of Contents Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future.
These new laws could further complicate compliance efforts and increase legal risk and compliance costs for us, the third parties with whom we work, and our customers. 36 Table of Contents Outside the United States, an increasing number of laws, regulations, and industry standards apply to data privacy and security.
These new laws could further complicate compliance efforts and increase legal risk and compliance costs for us, the third parties with whom we work, and our customers. 41 Table of Contents Outside the United States, an increasing number of laws, regulations, and industry standards apply to data privacy and security.
If we are unable to develop adequate plans to ensure that our business functions continue to operate during and after a disaster and to execute successfully on those plans in the event of a disaster or emergency, our business would be harmed. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 60 Table of Contents
If we are unable to develop adequate plans to ensure that our business functions continue to operate during and after a disaster and to execute successfully on those plans in the event of a disaster or emergency, our business would be harmed. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 65 Table of Contents
If our marketing and sales efforts are not effective, our sales and revenue may grow more slowly than expected or materially decline, and our business may be significantly harmed. 31 Table of Contents If we fail to develop, maintain, and enhance our brand and reputation cost-effectively, our business and financial condition may be adversely affected.
If our marketing and sales efforts are not effective, our sales and revenue may grow more slowly than expected or materially decline, and our business may be significantly harmed. 36 Table of Contents If we fail to develop, maintain, and enhance our brand and reputation cost-effectively, our business and financial condition may be adversely affected.
Moreover, the proceeds from our recent initial public offering could create disparities in wealth among our employees, which may harm our culture and relations among employees and our business. 33 Table of Contents If we fail to attract new personnel or to retain our current personnel, our business would be harmed.
Moreover, the proceeds from our recent initial public offering could create disparities in wealth among our employees, which may harm our culture and relations among employees and our business. 38 Table of Contents If we fail to attract new personnel or to retain our current personnel, our business would be harmed.
If we incur debt, it would result in increased fixed obligations and could also subject us to covenants or other restrictions that would impede our ability to flexibly operate our business. 45 Table of Contents Issues raised by the use of AI, including ML, in our C3 AI Platform may result in reputational harm or liability or otherwise adversely affect our business, financial condition and results of operations.
If we incur debt, it would result in increased fixed obligations and could also subject us to covenants or other restrictions that would impede our ability to flexibly operate our business. 50 Table of Contents Issues raised by the use of AI, including ML, in our C3 Agentic AI Platform may result in reputational harm or liability or otherwise adversely affect our business, financial condition and results of operations.
In particular, we intend to continue to expend significant funds to further develop our C3 AI Software and business, including: • investments in our research and development team and in the development of new features and enhancements of our C3 AI Software, including the hiring of additional development staff, and fees paid to third parties for related enhancements; • investments in sales, marketing, and services, including expanding our sales force and our customer service team, increasing our customer base, increasing market awareness of our C3 AI Software, and development of new technologies; • expanding our operations and infrastructure; and • hiring additional employees.
In particular, we intend to continue to expend significant funds to further develop our C3 AI Software and business, including: • investments in our research and development team and in the development of new features and enhancements of our C3 AI Software, including the hiring of additional development staff, and fees paid to third parties for related enhancements; • investments in sales, marketing, and services, including expanding our sales force and our customer service team, increasing our customer base, increasing market awareness of our C3 AI Software, and development of new technologies; 27 Table of Contents • expanding our operations and infrastructure; and • hiring additional employees.
Any of these events would harm our business. 52 Table of Contents Our use of third-party open source software could negatively affect our ability to offer and sell subscriptions to our C3 AI Software and subject us to possible litigation.
Any of these events would harm our business. 57 Table of Contents Our use of third-party open source software could negatively affect our ability to offer and sell subscriptions to our C3 AI Software and subject us to possible litigation.
If we are not able to attract new customers, it will have an adverse effect on our business, financial condition and results of operations. In addition, our future success depends on our ability to sell additional subscriptions for our C3 AI Software to our existing customers, and our customers renewing their subscriptions when the contract term expires.
If we are not able to attract new customers, it will have an adverse effect on our business, financial condition and results of operations. 28 Table of Contents In addition, our future success depends on our ability to sell additional subscriptions for our C3 AI Software to our existing customers, and our customers renewing their subscriptions when the contract term expires.
Therefore, if expectations for our business are not accurate, we may not be able to adjust our cost structure on a timely basis, and our margins and cash flows may differ from expectations. 27 Table of Contents Certain revenue metrics such as net dollar-based retention rate or annual recurring revenue may not be accurate indicators of our future financial results.
Therefore, if expectations for our business are not accurate, we may not be able to adjust our cost structure on a timely basis, and our margins and cash flows may differ from expectations. Certain revenue metrics such as net dollar-based retention rate or annual recurring revenue may not be accurate indicators of our future financial results.
Our business could be harmed as a result. 51 Table of Contents Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses.
Our business could be harmed as a result. 56 Table of Contents Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses.
For example, in May 2023, the Irish Data Protection Commission determined that a major social media company’s use of the standard contractual clauses to transfer personal data from Europe to the United States was insufficient and levied a 1.2 billion Euro fine against the company and prohibited the company from transferring personal data to the United States.
For example, in May 2023, the Irish Data Protection Commission determined that a major social media company’s use of the standard contractual clauses to transfer personal data from Europe to the United States was insufficient and levied a 1.2 billion Euro fine against the company and prohibited the company from transferring personal data to the United States. Additionally, the U.S.
As a result, we may be required to reduce our prices, offer shorter contract durations or offer alternative pricing models, any of which could adversely affect our business. We have limited experience with respect to determining the optimal prices for subscriptions for our C3 AI Software.
As a result, we may be required to reduce our prices, offer shorter contract durations or offer alternative pricing models, any of which could adversely affect our business. 32 Table of Contents We have limited experience with respect to determining the optimal prices for subscriptions for our C3 AI Software.
Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions; litigation (including class claims) and mass arbitration demands; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse business consequences.
Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions, litigation (including class claims) and mass arbitration demands, as well as potential fines and penalties, disruptions of our business operations, reputational harm; loss of revenue or profits, loss of customers or sales, and other adverse business consequences.
Our current and potential competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their resources. 26 Table of Contents Some of our competitors have made or could make acquisitions of businesses that allow them to offer more competitive and comprehensive solutions.
Our current and potential competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their resources. Some of our competitors have made or could make acquisitions of businesses that allow them to offer more competitive and comprehensive solutions.
This could result in a temporary or permanent revenue shortfall and adversely affect our business. 30 Table of Contents Any failure of our C3 AI Software to operate effectively with future infrastructure platforms and technologies could reduce the demand for our C3 AI Software.
This could result in a temporary or permanent revenue shortfall and adversely affect our business. Any failure of our C3 AI Software to operate effectively with future infrastructure platforms and technologies could reduce the demand for our C3 AI Software.
If we do not succeed in identifying suitable strategic partners or maintain our relationships with such partners, our business, operating results, and financial condition may be adversely affected. Moreover, we cannot guarantee that the partners with whom we have strategic relationships will continue to devote the resources necessary to expand our reach and increase our distribution.
If we do not succeed in identifying suitable strategic partners or maintain our relationships with such partners, our business, operating results, and financial condition may be adversely affected. 33 Table of Contents Moreover, we cannot guarantee that the partners with whom we have strategic relationships will continue to devote the resources necessary to expand our reach and increase our distribution.
We have Customer-Entities in more than 15 countries, and 14% of our revenue for the fiscal year ended April 30, 2024 was generated from customers outside of North America. As of April 30, 2024, we had ten international sales locations, and we plan to add local sales support in further select international markets over time.
We have Customer-Entities in more than 15 countries, and 11% of our revenue for the fiscal year ended April 30, 2025 was generated from customers outside of North America. As of April 30, 2025, we had ten international sales locations, and we plan to add local sales support in further select international markets over time.
As a result, the trading price and volume of our Class A common stock could be adversely affected. 56 Table of Contents Substantial future sales of shares of our Class A common stock and Class B common stock by existing holders in the public market could cause the market price of our Class A common stock to decline.
As a result, the trading price and volume of our Class A common stock could be adversely affected. Substantial future sales of shares of our Class A common stock and Class B common stock by existing holders in the public market could cause the market price of our Class A common stock to decline.
Further, under privacy laws and other obligations, we may be required to obtain certain consents to process personal data and our inability or failure to do so could result in adverse consequences.
Further, under privacy and data security laws as well as other obligations, we may be required to obtain certain consents to process personal data and our inability or failure to do so could result in adverse consequences.
Similarly, after completing a pilot or trial, customers do not have an obligation to continue to license our products, and we may not be able to convert pilot or trial customers into customers purchasing ongoing subscriptions or continue with a monthly consumption-based fee. In addition, our customers may opt to decrease their usage of our C3 AI Software.
Similarly, after completing an initial production deployment, customers do not have an obligation to continue to license our products, and we may not be able to convert initial production deployment customers into customers purchasing ongoing subscriptions or continue with a monthly consumption-based fee. In addition, our customers may opt to decrease their usage of our C3 AI Software.
Our performance metrics, including data regarding customer engagement, and other operational data may involve judgment and therefore may not reflect our actual performance, and investors should consider these metrics in light of the assumptions used in calculating such metrics and limitations as a result thereof.
Our performance metrics and other operational data may involve judgment and therefore may not reflect our actual performance, and investors should consider these metrics in light of the assumptions used in calculating such metrics and limitations as a result thereof.
If one or more of our customers elect not to renew their subscriptions with us, or if our customers renew their subscriptions with us for shorter time periods, or if our customers decrease their usage of our C3 AI Software, or if our customers otherwise seek to renegotiate terms of their existing agreements on terms less favorable to us, our business and results of operations would be adversely affected.
If one or more of our customers elect not to renew their subscriptions with us, or if our customers renew their subscriptions with us for shorter time periods, or if our customers decrease their usage of our C3 AI Software, or if our customers otherwise seek to renegotiate terms of their existing agreements on terms less favorable to us, our business and results of operations would be adversely affected and our revenue and remaining performance obligations could decline.
Global economic and business activities continue to face widespread macroeconomic uncertainties, including labor shortages and supply chain disruptions, inflation, interest rate fluctuations, bank failures and monetary supply shifts, as well as recession risks, which may continue for an extended period and which could result in our customer prospects and our existing customers experiencing slowdowns in their businesses, which in turn may result in reduced demand for our C3 AI Software, lengthening of sales cycles, loss of customers, and difficulties in collections.
Global economic and business activities continue to face widespread macroeconomic uncertainties, including labor shortages and supply chain disruptions, inflation, interest rate fluctuations, bank failures, monetary supply shifts, and the imposition of tariffs or other impacts on trade relations, as well as recession risks, which may continue for an extended period and which could result in our customer prospects and our existing customers experiencing slowdowns in their businesses, which in turn may result in reduced demand for our C3 AI Software, lengthening of sales cycles, loss of customers, and difficulties in collections.
For the fiscal years ended April 30, 2024 and 2023, 6% and 8% of our revenue, respectively, were denominated in currencies other than U.S. dollars. For the fiscal years ended April 30, 2024 and 2023, 7% and 5% of our expenses, respectively, were denominated in currencies other than U.S. dollars.
For the fiscal years ended April 30, 2025 and 2024, 6% and 6% of our revenue, respectively, were denominated in currencies other than U.S. dollars. For the fiscal years ended April 30, 2025 and 2024, 7% and 7% of our expenses, respectively, were denominated in currencies other than U.S. dollars.
Siebel and related entities beneficially owned approximately 87.8% of our Class B common stock and approximately 21.3% of our outstanding Class A common stock, resulting in beneficial ownership of capital stock representing approximately 54.4% of the voting power of our outstanding capital stock. Therefore, Mr.
Siebel and related entities beneficially owned approximately 87.8% of our Class B common stock and approximately 19.4% of our outstanding Class A common stock, resulting in beneficial ownership of capital stock representing approximately 52.4% of the voting power of our outstanding capital stock. Therefore, Mr.
Sensitive information of the Company or our customers could be leaked, disclosed, or revealed as a result of or in connection with our employees’, personnel’s, or vendors’ use of generative AI technologies.
Our or our customers’ sensitive information could be leaked, disclosed, or revealed as a result of or in connection with our employees’, personnel’s, or vendors’ use of generative AI technologies.
In the United States, several states and localities have enacted measures related to the use of AI and ML in products and services. We may have to change our business practices to comply with such obligations. For example, our employees and personnel use generative AI technologies to perform their work.
We expect other jurisdictions will adopt similar laws. In the United States, several states and localities have enacted measures related to the use of AI and ML in products and services. We may have to change our business practices to comply with such obligations. For example, our employees and personnel use generative AI technologies to perform their work.
We also target customers in Asia and have operations in Japan and Singapore and may be subject to new and emerging data privacy regimes in Asia, including Singapore’s Personal Data Protection Act.
We also target customers in Asia and have operations in Japan and Singapore and may be subject to new and emerging data privacy regimes in Asia, including Japan’s Act on the Protection of Personal Information and Singapore’s Personal Data Protection Act.
As of April 30, 2024, we had net operating loss carryforwards, or NOLs, for U.S. federal and state purposes of $599.3 million and $249.3 million, respectively, which may be available to offset taxable income in the future, and portions of which expire in various years beginning in 2029.
As of April 30, 2025, we had net operating loss carryforwards, or NOLs, for U.S. federal and state purposes of $764.7 million and $310.7 million, respectively, which may be available to offset taxable income in the future, and portions of which expire in various years beginning in 2029.
We generated net losses of approximately $279.7 million, $268.8 million, and $192.1 million for the fiscal years ended April 30, 2024, 2023, and 2022 respectively. As a result, we had an accumulated deficit of $1,089.9 million as of April 30, 2024. We expect to continue to incur net losses for the foreseeable future.
We generated net losses of approximately $288.7 million, $279.7 million, and $268.8 million for the fiscal years ended April 30, 2025, 2024, and 2023 respectively. As a result, we had an accumulated deficit of $1.4 billion as of April 30, 2025. We expect to continue to incur net losses for the foreseeable future.
For example, certain privacy laws, such as the GDPR and the CCPA, require our customers to impose specific contractual restrictions on their service providers. Our use of artificial intelligence, or AI, and machine learning, or ML, technologies (collectively, “AI/ML technologies”) may also subject us to certain privacy obligations.
For example, certain privacy laws, such as the GDPR and the CCPA, require our customers to impose specific contractual restrictions on their service providers. Our use of artificial intelligence, or AI, and machine learning, or ML, technologies, collectively, AI/ML technologies, may also subject us to certain privacy and data security laws, as well as increasing regulation and scrutiny.
We have limited historical experience with supporting or selling to smaller, non-enterprise customers. We intend to grow our customer base and further contribute to our overall growth by introducing product offerings with a lower entry price point, such as our no-code offering C3 AI Ex Machina.
We have limited historical experience with supporting or selling to smaller, non-enterprise customers. We intend to grow our customer base and further contribute to our overall growth by introducing product offerings with a lower entry price point.
The CCPA provides for statutory fines for noncompliance (up to $7,500 per intentional violation) and allows private litigants affected by certain data breaches to recover significant statutory damages.
The CCPA provides for statutory fines for noncompliance and allows private litigants affected by certain data breaches to recover significant statutory damages.
Further, laws in certain jurisdictions may afford little or no trade secret protection, and any changes in, or unexpected interpretations of, the intellectual property laws in any country in which we operate may compromise our ability to enforce our intellectual property rights. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights.
Further, laws in certain jurisdictions may afford little or no trade secret protection, and any changes in, or unexpected interpretations of, the intellectual property laws in any country in which we operate may compromise our ability to enforce our intellectual property rights.
As of April 30, 2024, our technology is protected by a broad patent portfolio, with 23 issued patents in the United States, 15 issued counterpart patents in a number of international jurisdictions, over 45 patent applications pending in the United States, and 85 patent applications pending internationally. Our issued patents expire beginning in 2033 through 2040.
As of April 30, 2025, our technology is protected by a broad patent portfolio, with 35 issued patents in the United States, 30 issued counterpart patents in a number of international jurisdictions, over 60 patent applications pending in the United States, and 104 patent applications pending internationally. Our issued patents expire beginning in 2033 through 2043.
We also have strategic relationships with AWS, FIS, Google Cloud, Microsoft, and Raytheon. 28 Table of Contents We plan to continue to establish and maintain similar strategic relationships in certain industry verticals and otherwise, and we expect our channel partners to become an increasingly important aspect of our business.
Baker Hughes is no longer C3 AI’s exclusive reseller. We also have strategic relationships with AWS, FIS, Google Cloud, Microsoft, and Raytheon. We plan to continue to establish and maintain similar strategic relationships in certain industry verticals and otherwise, and we expect our channel partners to become an increasingly important aspect of our business.
For example, in June 2019, we entered into a strategic collaboration with Baker Hughes whereby Baker Hughes operates as the exclusive channel partner and reseller of our C3 AI Software in the oil and gas industry and a non-exclusive reseller in other industries.
For example, in June 2019, we entered into a strategic collaboration with Baker Hughes whereby Baker Hughes operates as the exclusive channel partner and reseller of our C3 AI Software in the oil and gas industry and a non-exclusive reseller in other industries. This arrangement was most recently revised in January 2023 and again in April 30, 2025.
If we are unable to anticipate or effectively react to these competitive challenges, our competitive position could weaken, and we could experience a decline in our growth rate and revenue that could adversely affect our business and results of operations. 25 Table of Contents Our main sources of current and potential competition fall into several categories: • internal IT organizations that develop internal solutions and provide self‑support for their enterprises; • commercial enterprise and point solution software providers; • open source software providers with data management, ML, and analytics offerings; • public cloud providers offering discrete tools and micro-services with data management, ML, and analytics functionality; • system integrators that develop and provide custom software solutions; • legacy data management product providers; and • strategic and technology partners who may also offer our competitors’ technology or otherwise partner with them, including our strategic partners who may offer a substantially similar solution based on a competitor’s technology or internally developed technology that is competitive with ours.
Our main sources of current and potential competition fall into several categories: • internal IT organizations that develop internal solutions and provide self‑support for their enterprises; • commercial enterprise and point solution software providers; • open source software providers with data management, ML, and analytics offerings; • public cloud providers offering discrete tools and micro-services with data management, ML, and analytics functionality; • system integrators that develop and provide custom software solutions; • legacy data management product providers; and • strategic and technology partners who may also offer our competitors’ technology or otherwise partner with them, including our strategic partners who may offer a substantially similar solution based on a competitor’s technology or internally developed technology that is competitive with ours.
The introduction of platforms and applications embodying new technologies can quickly make existing platforms and applications obsolete and unmarketable. Data management, ML, and analytics platforms and applications are inherently complex, and it can take a long time and require significant research and development expenditures to develop and test new or enhanced platforms and applications.
Data management, ML, and analytics platforms and applications are inherently complex, and it can take a long time and require significant research and development expenditures to develop and test new or enhanced platforms and applications.
We may face increased compliance burdens regarding such requirements from regulators and customers regarding our products and services and also incur additional costs for oversight and monitoring of security risks relating to our own supply chain. For example, we have contractual and legal obligations to notify relevant stakeholders, including affected individuals, customers, regulators, and investors, of security breaches.
We may face increased compliance burdens regarding such requirements from regulators and customers regarding our products and services and also incur additional costs for oversight and monitoring of security risks relating to our own supply chain.
If existing customers do not renew their contracts with us, or if our relationships with our largest customers are impaired or terminated, our revenue could decline, and our results of operations would be adversely impacted.
Historically, a limited number of customers have accounted for a substantial portion of our revenue. If existing customers do not renew their contracts with us, or if our relationships with our largest customers are impaired or terminated, our revenue and remaining performance obligations could decline, and our results of operations would be adversely impacted.
It is difficult to predict customer adoption rates and demand for our C3 AI Software, the entry of competitive platforms, or the future growth rate and size of the cloud-based software and software-as-a-service, or SaaS, business software markets.
It is difficult to predict customer adoption rates and demand for our C3 AI Software, the entry of competitive platforms, or the future growth rate and size of the cloud-based software and software-as-a-service business software markets. A substantial majority of our revenue has come from sales of our subscription-based software products, which we expect to continue for the foreseeable future.
For example, the FTC has required other companies to turn over (or disgorge) valuable insights or trainings generated through the use of AI/ML where they allege the company has violated privacy and consumer protection laws. If we cannot use AI/ML or that use is restricted, our business may be less efficient, or we may be at a competitive disadvantage.
For example, the FTC has required other companies to turn over (or disgorge) valuable insights or trainings generated through the use of AI/ML where they allege the company has violated privacy and consumer protection laws.
Other states are considering and may adopt similar laws. 38 Table of Contents Obligations related to data privacy and security (and consumers’ data privacy expectations) are quickly changing in an increasingly stringent fashion, creating some uncertainty as to the effective future legal framework.
Other states are considering and may adopt similar laws. Obligations related to data privacy and security (and consumers’ data privacy expectations) are quickly changing in an increasingly stringent fashion, creating some uncertainty as to the effective future legal framework. Additionally, these obligations may be subject to differing applications and interpretations, which may be inconsistent or conflict among jurisdictions.
If we are unable to develop, license, or acquire new features and capabilities to our C3 AI Software on a timely and cost-effective basis, or if such enhancements do not achieve market acceptance, our business could be harmed.
If we are unable to develop, license, or acquire new features and capabilities to our C3 AI Software on a timely and cost-effective basis, or if such enhancements do not achieve market acceptance, our business could be harmed. 35 Table of Contents If we were to lose the services of our CEO or other members of our senior management team, we may not be able to execute our business strategy.
Government entities routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in the government entity refusing to renew its subscription to our C3 AI Software, a reduction of revenue, or fines or civil or criminal liability if the audit uncovers improper or illegal activities. 29 Table of Contents If the market for our C3 AI Software fails to grow as we expect, or if businesses fail to adopt our C3 AI Software, our business, operating results, and financial condition could be adversely affected.
Government entities routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in the government entity refusing to renew its subscription to our C3 AI Software, a reduction of revenue, or fines or civil or criminal liability if the audit uncovers improper or illegal activities.
The loss of any member of our senior management team could make it more difficult to execute our business strategy and, therefore, harm our business. The failure to effectively develop and expand our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our C3 AI Software.
The failure to effectively develop and expand our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our C3 AI Software.
Most jurisdictions have enacted laws requiring companies to notify individuals, regulatory authorities, and others of security breaches involving certain types of data, and implement other requirements, such as providing credit monitoring. Such disclosures and compliance with such requirements are costly, and the disclosures or the failure to comply with such requirements could lead to adverse consequences.
Most jurisdictions have enacted laws requiring companies to notify individuals, regulatory authorities, and others of security breaches involving certain types of data, and implement other requirements, such as providing credit monitoring and identifying theft protection services.
Further, we may be required to make substantial additional investments in research, development, marketing, and sales in order to respond to such competitive threats, and we cannot assure you that we will be able to compete successfully in the future.
Further, we may be required to make substantial additional investments in research, development, marketing, and sales in order to respond to such competitive threats, and we cannot assure you that we will be able to compete successfully in the future. 31 Table of Contents Our sales cycles can be long and unpredictable, particularly with respect to large subscriptions, and our sales efforts require considerable time and expense.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWhile the nature of cyber threats makes it impossible to predict all future incidents, some currently identified material cybersecurity risks include: • Ransomware attacks that could disrupt business operations and lead to data breaches. • Phishing attacks that could compromise employee credentials and provide unauthorized access to sensitive data. 61 Table of Contents • Supply chain attacks targeting third-party vendors with access to our systems or data.
Biggest changeWhile the nature of cyber threats makes it impossible to predict all future incidents, some currently identified material cybersecurity risks include: • Ransomware attacks that could disrupt business operations and lead to data breaches. • Phishing attacks that could compromise employee credentials and provide unauthorized access to sensitive data. 66 Table of Contents • Supply chain attacks targeting third-party vendors with access to our systems or data.
There were no material cybersecurity incidents experienced by C3 AI during the fiscal year ended April 30, 2024.
There were no material cybersecurity incidents experienced by C3 AI during the fiscal year ended April 30, 2025.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our current principal executive office is located in Redwood City, California, which consists of approximately 283,015 square feet of space under a lease that expires in March 2033. As of April 30, 2024, we have acquired 262,276 square feet of space under this lease in several phases.
Biggest changeITEM 2. PROPERTIES Our current principal executive office is located in Redwood City, California, which consists of approximately 283,015 square feet of space under a lease that expires in March 2033.
We lease 17 other offices around the world for our employees, including in Tysons, Virginia; Houston, Texas; New York City, New York; Atlanta, Georgia; Chicago, Illinois; Huntsville, Alabama; Boston, Massachusetts; Minneapolis, Minnesota; London, UK; Sydney, Australia; Paris, France; Bengaluru, India; Singapore, Amsterdam, Netherlands; Rome, Italy; Guadalajara, Mexico; and Munich, Germany.
We lease 16 other offices around the world for our employees, including in Tysons, Virginia; Houston, Texas; New York City, New York; Atlanta, Georgia; Chicago, Illinois; Huntsville, Alabama; Minneapolis, Minnesota; London, UK; Sydney, Australia; Paris, France; Bengaluru, India; Singapore; Amsterdam, Netherlands; Rome, Italy; Guadalajara, Mexico; and Munich, Germany.
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The lease commencement date of other phases of this lease will be determined when the landlord delivers the additional leased space to us.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeCommitments and Contingencies - Legal Proceedings in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, the Company is not presently a party to any other such litigation the outcome of which, the Company believes, if determined adversely to the Company, would individually, or taken together, have a material adverse effect on the Company’s business, operating results, cash flows, or financial condition.
Biggest changeCommitments and Contingencies - Legal Proceedings in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we are not presently a party to any other such litigation the outcome of which, we believe, if determined adversely to us, would individually, or taken together, have a material adverse effect on our business, operating results, cash flows, or financial condition.
ITEM 4. MINE SAFETY DISCLOSURES None. 62 Table of Contents PART II
ITEM 4. MINE SAFETY DISCLOSURES None. 67 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe initial public offering price of our Class A common stock, which had a closing stock price of $92.49 on December 9, 2020, was $42.00 per share. The returns shown are based on historical results and are not intended to suggest future performance. 63 Table of Contents Unregistered Sales of Equity Securities None.
Biggest changeThe initial public offering price of our Class A common stock, which had a closing stock price of $92.49 on December 9, 2020, was $42.00 per share. The returns shown are based on historical results and are not intended to suggest future performance. 68 Table of Contents Unregistered Sales of Equity Securities None. ITEM 6. [RESERVED] 69 Table of Contents
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our Class A common stock and in each index at the market close on December 9, 2020, and its relative performance is tracked through April 30, 2024.
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our Class A common stock and in each index at the market close on December 9, 2020, and its relative performance is tracked through April 30, 2025.
Stockholders’ Equity , in the Notes to Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” , of this Form 10-K for a discussion of our conversion of Class B common stock. Holders of Record As of June 12, 2024, there were 123 stockholders of record of our Class A common stock.
Stockholders’ Equity , in the Notes to Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” , of this Form 10-K for a discussion of our conversion of Class B common stock. Holders of Record As of June 2, 2025, there were 106 stockholders of record of our Class A common stock.
Removed
Issuer Purchases of Equity Securities The following table contains information relating to the repurchases of our Class A common stock made by us in the three months ended April 30, 2024 (in thousands, except for share and per share amounts).
Removed
Total Number of Shares Purchased (1) Average Price Paid per Share February 1 - February 28, 2024 3,321 $ 4.56 March 1 - March 31, 2024 — — April 1 - April 30, 2024 — — Total 3,321 $ 4.56 (1) Includes shares of unvested Class A common stock that were repurchased by us from former employees upon termination of employment in accordance with the terms of the employees’ stock option agreements.
Removed
We purchased the shares from the former employees at the respective original exercise prices. ITEM 6. [RESERVED] 64 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations The following tables set forth our consolidated statements of operations for the periods presented: Fiscal Year Ended April 30, 2024 2023 2022 (in thousands) Revenue Subscription $ 278,104 $ 230,443 $ 206,916 Professional services 32,478 36,352 45,843 Total revenue 310,582 266,795 252,759 Cost of revenue Subscription (1) 128,469 78,423 45,838 Professional services (1) 3,553 7,914 17,875 Total cost of revenue 132,022 86,337 63,713 Gross profit 178,560 180,458 189,046 Operating expenses Sales and marketing (1) 214,167 183,121 173,584 Research and development (1) 201,365 210,660 150,544 General and administrative (1) 81,370 77,170 61,040 Total operating expenses 496,902 470,951 385,168 Loss from operations (318,342) (290,493) (196,122) Interest income 40,079 21,979 1,827 Other (expense) income, net (641) 350 3,019 Net loss before provision for income taxes (278,904) (268,164) (191,276) Provision for income taxes 792 675 789 Net loss $ (279,696) $ (268,839) $ (192,065) __________________ (1) Includes stock-based compensation expense as follows: Fiscal Year Ended April 30, 2024 2023 2022 (in thousands) Cost of subscription $ 34,032 $ 21,417 $ 8,638 Cost of professional services 1,288 2,220 2,710 Sales and marketing 71,751 71,389 40,344 Research and development 72,036 90,217 39,200 General and administrative 36,654 31,299 22,549 Total stock-based compensation expense $ 215,761 $ 216,542 $ 113,441 77 Table of Contents The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue for the periods presented: Fiscal Year Ended April 30, 2024 2023 2022 Revenue Subscription 90 % 86 % 82 % Professional services 10 14 18 Total revenue 100 100 100 Cost of revenue Subscription 41 29 18 Professional services 1 3 7 Total cost of revenue 43 32 25 Gross profit 57 68 75 Operating expenses Sales and marketing 69 69 69 Research and development 65 79 60 General and administrative 26 29 24 Total operating expenses 160 177 153 Loss from operations (102) (109) (78) Interest income 13 8 1 Other (expense) income, net — — 1 Net loss before provision for income taxes (90) (101) (76) Provision for income taxes — — — Net loss (90) % (101) % (76) % Comparison of the Fiscal Years Ended April 30, 2024 and 2023 Revenue Fiscal Year Ended April 30, $ Change % Change 2024 2023 (in thousands) Revenue Subscription $ 278,104 $ 230,443 $ 47,661 21 % Professional services 32,478 36,352 (3,874) (11) % Total revenue $ 310,582 $ 266,795 $ 43,787 16 % Subscription revenue accounted for 90% and 86% of our total revenue for the fiscal years ended April 30, 2024 and 2023, respectively.
Biggest changeResults of Operations The following tables set forth our consolidated statements of operations for the periods presented: Fiscal Year Ended April 30, 2025 2024 2023 (in thousands) Revenue Subscription $ 327,630 $ 278,104 $ 230,443 Professional services 61,426 32,478 36,352 Total revenue 389,056 310,582 266,795 Cost of revenue Subscription (1) 143,841 128,469 78,423 Professional services (1) 9,352 3,553 7,914 Total cost of revenue 153,193 132,022 86,337 Gross profit 235,863 178,560 180,458 Operating expenses Sales and marketing (1) 239,659 214,167 183,121 Research and development (1) 226,391 201,365 210,660 General and administrative (1) 94,237 81,370 77,170 Total operating expenses 560,287 496,902 470,951 Loss from operations (324,424) (318,342) (290,493) Interest income 36,189 40,079 21,979 Other income (expense), net 509 (641) 350 Loss before provision for income taxes (287,726) (278,904) (268,164) Provision for income taxes 976 792 675 Net loss $ (288,702) $ (279,696) $ (268,839) __________________ (1) Includes stock-based compensation expense as follows: Fiscal Year Ended April 30, 2025 2024 2023 (in thousands) Cost of subscription $ 30,480 $ 34,032 $ 21,417 Cost of professional services 3,180 1,288 2,220 Sales and marketing 83,960 71,751 71,389 Research and development 71,629 72,036 90,217 General and administrative 41,739 36,654 31,299 Total stock-based compensation expense $ 230,988 $ 215,761 $ 216,542 79 Table of Contents The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue for the periods indicated: Fiscal Year Ended April 30, 2025 2024 2023 Revenue Subscription 84 % 90 % 86 % Professional services 16 10 14 Total revenue 100 100 100 Cost of revenue Subscription 37 41 29 Professional services 2 1 3 Total cost of revenue 39 43 32 Gross profit 61 57 68 Operating expenses Sales and marketing 62 69 69 Research and development 58 65 79 General and administrative 24 26 29 Total operating expenses 144 160 177 Loss from operations (83) (102) (109) Interest income 9 13 8 Other income (expense), net — — — Loss before provision for income taxes (74) (90) (101) Provision for income taxes — — — Net loss (74) % (90) % (101) % Comparison of the Fiscal Years Ended April 30, 2025 and 2024 Revenue Fiscal Year Ended April 30, $ Change % Change 2025 2024 (in thousands) Revenue Subscription $ 327,630 $ 278,104 $ 49,526 18 % Professional services 61,426 32,478 28,948 89 % Total revenue $ 389,056 $ 310,582 $ 78,474 25 % Subscription revenue accounted for 84% and 90% of our total revenue for the fiscal years ended April 30, 2025 and 2024, respectively.
In addition, customers typically pay a usage-based runtime fee for production use of our C3 AI Software for specified levels of capacity. We also recognize revenue upon delivery to the customer for software licenses that do not require maintenance and support services.
We also recognize revenue upon delivery to the customer for software licenses that do not require maintenance and support services. In addition, customers typically pay a usage-based runtime fee for production use of our C3 AI Software for specified levels of capacity.
Our research and development efforts are aimed at continuing to develop and refine our solutions, including adding new features and modules, increasing functionality and speed, and enhancing the usability of our C3 AI Software. Research and development expenses consist primarily of employee-related costs, including salaries, bonuses, benefits, and stock-based compensation for our employees associated with research and development related activities.
Our research and development efforts are aimed at continuing to develop and refine our solutions, including adding new features and modules, increasing functionality and speed, and enhancing the usability of C3 AI Software. Research and development expenses consist primarily of employee-related costs, including salaries, bonuses, benefits, and stock-based compensation for our employees associated with research and development related activities.
Other (Expense) Income, Net Other (expense) income, net consists primarily of foreign currency exchange gains and losses, losses from impairment of marketable securities, and realized gains and losses on sales of available-for-sale marketable securities. Our foreign currency exchange gains and losses relate to transactions and asset and liability balances denominated in currencies other than the U.S. dollar.
Other Income (Expense), Net Other income (expense), net consists primarily of foreign currency exchange gains and losses, losses from impairment of marketable securities, and realized gains and losses on sales of available-for-sale marketable securities. Our foreign currency exchange gains and losses relate to transactions and asset and liability balances denominated in currencies other than the U.S. dollar.
Revenue from software licenses that do not require maintenance and support services is recognized when the control of the software is transferred to the customer. We generate additional runtime subscription fees for the use of our C3 AI Platform, a type of consumption billing based on computing and storage resources required to run our software.
Revenue from software licenses that do not require maintenance and support services is recognized when the control of the software is transferred to the customer. We generate additional runtime subscription fees for the use of our C3 Agentic AI Platform, a type of consumption billing based on computing and storage resources required to run our software.
For example, as part of our subscription offerings, we provide our customers with the ability to establish a COE utilizing our experienced and specialized resources in key technical areas like application development, data integration, and data science to accelerate and ensure our customers’ success developing applications on our C3 AI Platform.
For example, as part of our subscription offerings, we provide our customers with the ability to establish a COE utilizing our experienced and specialized resources in key technical areas like application development, data integration, and data science to accelerate and ensure our customers’ success developing applications on our C3 Agentic AI Platform.
The increased engagement is measured by a combination of increased vCPU/vGPU usage, increased C3 AI Software subscriptions and subscriptions to the C3 AI Platform for in-house AI application development. The size and sophistication of our customers’ businesses demonstrate the flexibility, speed, and scale of our products, and maximize the potential value to our customers.
The increased engagement is measured by a combination of increased vCPU/vGPU usage, increased C3 AI Software subscriptions and subscriptions to the C3 Agentic AI Platform for in-house AI application development. The size and sophistication of our customers’ businesses demonstrate the flexibility, speed, and scale of our products, and maximize the potential value to our customers.
Using our C3 AI Platform as the development suite, we leverage our model-driven architecture to efficiently build new cross-industry and industry-specific applications based on identifying requirements across our customer base of industry leaders and through our industry partners.
Using our C3 Agentic AI Platform as the development suite, we leverage our model-driven architecture to efficiently build new cross-industry and industry-specific applications based on identifying requirements across our customer base of industry leaders and through our industry partners.
With our support, our customers have developed and deployed almost two-thirds of the applications currently in production and running on the C3 AI Platform. Research and development spending has fueled enhancements to our existing C3 AI Platform.
With our support, our customers have developed and deployed almost two-thirds of the applications currently in production and running on the C3 Agentic AI Platform. Research and development spending has fueled enhancements to our existing C3 Agentic AI Platform.
We provide three primary families of software solutions, which we collectively refer to as our C3 AI software: • The C3 AI Platform, our core technology, is a comprehensive, end-to-end application development and runtime environment that is designed to allow our customers to rapidly design, develop, and deploy Enterprise AI applications. • C3 AI Applications, built using the C3 AI Platform, is a portfolio of pre-built, extensible, industry-specific and application-specific Enterprise AI applications that can be rapidly installed and deployed. • C3 Generative AI, combines the utility of large language models, or LLMs, generative AI, reinforcement learning, natural language processing, and the C3 AI Platform to rapidly locate, retrieve, and present information, disparate data stores, applications, and enterprise information systems.
We provide three primary families of software solutions, which we collectively refer to as our “C3 AI Software”: • C3 Agentic AI Platform, our core technology, is a comprehensive, end-to-end application development and runtime environment that is designed to allow our customers to rapidly design, develop, and deploy Enterprise AI applications. • C3 AI Applications, built using the C3 Agentic AI Platform, is a portfolio of pre-built, extensible, industry-specific and application-specific Enterprise AI applications that can be rapidly installed and deployed. • C3 Generative AI combines the utility of large language models, or LLMs, generative AI, reinforcement learning, natural language processing, and the C3 Agentic AI Platform to rapidly locate, retrieve, and present information, disparate data stores, applications, and enterprise information systems.
We expect our foreign currency gains and losses to continue to fluctuate in the future due to changes in foreign currency exchange rates. 76 Table of Contents Provision for Income Taxes Our income tax provision consists of an estimate of federal, state, and foreign income taxes based on enacted federal, state, and foreign tax rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in the valuation of our deferred tax assets and liabilities, and changes in tax laws.
We expect our foreign currency gains and losses to continue to fluctuate in the future due to changes in foreign currency exchange rates. 78 Table of Contents Provision for Income Taxes Our income tax provision consists of an estimate of federal, state, and foreign income taxes based on enacted federal, state, and foreign tax rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in the valuation of our deferred tax assets and liabilities, and changes in tax laws.
Net cash used in investing activities of $66.6 million for the fiscal year ended April 30, 2024 was primarily attributable to purchases of marketable securities of $827.9 million and capital expenditures of $28.0 million mainly related to the leasehold improvements associated with leased space, partially offset by maturities and sales of marketable securities of $789.3 million.
Net cash used in investing activities of $66.6 million for the fiscal year ended April 30, 2024 was primarily attributable to purchases of marketable securities of $827.9 million and capital expenditures of $28.0 million mainly related to the leasehold improvements associated with leased space, offset by maturities and sales of marketable securities of $789.3 million. Financing Activities.
We will continue to evaluate the nature and extent of the impact of general macroeconomic conditions on our business. For further discussion, see the section titled “Risk Factors” included in Part I, Item 1A of this Annual Report on Form 10-K. 74 Table of Contents Components of Results of Operations Revenue Subscription Revenue.
We will continue to evaluate the nature and extent of the impact of general macroeconomic conditions on our business. For further discussion, see the section titled “Risk Factors” included in Part I, Item 1A of this Annual Report on Form 10-K. 76 Table of Contents Components of Results of Operations Revenue Subscription Revenue.
We have developed an alliance program to partner with recognized leaders in their respective industries, such as Baker Hughes, and Booz Allen, to develop, market, and sell solutions that are natively built on or tightly integrated with the C3 AI Platform. • Hyperscale Cloud and Infrastructure.
We have developed an alliance program to partner with recognized leaders in their respective industries, such as Baker Hughes and, Booz Allen Hamilton; to develop, market, and sell solutions that are natively built on or tightly integrated with the C3 Agentic AI Platform. • Hyperscale Cloud and Infrastructure.
We currently have a small number of customers that license our offerings under a perpetual license model, and we expect that may continue for the foreseeable future for certain customers due to their specific contracting requirements. Professional Services Revenue. Our professional services revenue primarily includes implementation services, training and prioritized engineering services.
We currently have a small number of customers that license our offerings under a perpetual license model, and we expect that may continue for the foreseeable future for certain customers due to their specific contracting requirements. Professional Services Revenue. Our professional services revenue primarily includes consulting, training, paid implementation services and prioritized engineering services.
Cost of professional services revenue consists primarily of compensation, including salaries, bonuses, benefits, stock-based compensation and other related costs associated with our professional service personnel, third-party system integration partners, and allocated overhead and depreciation for facilities. Gross Profit and Gross Margin Gross profit is total revenue less total cost of revenue.
Cost of professional services revenue consists primarily of compensation, including salaries, bonuses, benefits, stock-based compensation and other related costs associated with our professional service personnel, prioritized engineering personnel, third-party system integration partners, and allocated overhead and depreciation for facilities. Gross Profit and Gross Margin Gross profit is total revenue less total cost of revenue.
Customers may purchase blocks of runtime in advance. We typically recognize the consumption or usage-based revenue in excess of committed purchased runtime upon occurrence. Professional Services Revenue. Professional services revenue primarily consists of implementation services, training and prioritized engineering services. These services are distinct from our subscription revenue.
Customers may purchase blocks of runtime in advance. We typically recognize the consumption or usage-based revenue in excess of committed purchased runtime upon occurrence. Professional Services Revenue. Professional services revenue primarily consists of consulting, training, paid implementation services and prioritized engineering services. These services are distinct from our subscription revenue.
It also includes amortization of premiums and accretion of discount related to our available-for-sale marketable securities. Interest income varies each reporting period based on our average balance of cash, cash equivalents, and available-for-sale marketable securities during the period and market interest rates.
It also includes amortization of premiums and accretion of discount related to our available-for-sale marketable securities. Interest income varies each reporting period based on our average balance of cash, cash equivalents, and available-for-sale marketable securities during the fiscal year and market interest rates.
If applying the residual approach results in zero or very little consideration being allocated to a performance obligation, we consider all reasonably available data to determine an appropriate allocation of the transaction price. 84 Table of Contents
If applying the residual approach results in zero or very little consideration being allocated to a performance obligation, we consider all reasonably available data to determine an appropriate allocation of the transaction price. 86 Table of Contents
Our strategy with strategic partners is to establish a significant use case and prove the value of our C3 AI Platform, C3 Enterprise AI Applications, and C3 Generative AI with a flagship customer in each industry in which we participate.
Our strategy with strategic partners is to establish a significant use case and prove the value of our C3 Agentic AI Platform, C3 AI Applications, and C3 Generative AI with a flagship customer in each industry in which we participate.
General and administrative expense consists primarily of employee-related costs, including salaries, bonuses, benefits, stock-based compensation and other related costs associated with administrative services such as executive management and administration, legal, human resources, accounting, and finance.
General and administrative expenses consists primarily of employee-related costs, including salaries, bonuses, benefits, stock-based compensation and other related costs associated with administrative services such as executive management and administration, legal, human resources, accounting, and finance.
In certain cases, customers seeking increased utility from their C3 AI Suite or C3 AI Application subscriptions can procure prioritized engineering services to develop and modify software features, which are typically part of our product roadmap, but on an accelerated basis. Cost of Revenue Cost of Subscription Revenue.
In certain cases, customers seeking increased utility from their C3 Agentic AI Platform or C3 AI Application subscriptions can procure prioritized engineering services to develop and modify software features, which are typically part of our product roadmap, but on an accelerated basis. Cost of Revenue Cost of Subscription Revenue.
We engage the market through digital, radio, outdoor, airport, and print advertising; virtual and physical events, including our C3 Transform annual user conference; and C3 AI Live, a series of livestreamed events featuring C3 AI customers, C3 AI partners, and C3 AI experts in AI, Machine Learning, or ML, and data science.
We engage the market through digital, radio, outdoor, airport, and print advertising; virtual and physical events, including our C3 Transform annual user conference; and C3 AI Webinars, a series of events featuring C3 AI customers, C3 AI partners, and C3 AI experts in AI, Machine Learning, or ML, and data science.
Our cloud-native software offerings allow us to manage, update, and monitor the software regardless of whether the software is deployed in our public cloud environment, in our customers’ self-managed private or public cloud environments, or in a hybrid environment. 2 Unaudited 67 Table of Contents We primarily recognize revenue from subscriptions on a ratable basis over the contract term or on a usage basis for consumption-based arrangements.
Our cloud-native software offerings allow us to manage, update, and monitor the software regardless of whether the software is deployed in our public cloud environment, in our customers’ self-managed private or public cloud environments, or in a hybrid environment. 70 Table of Contents We primarily recognize revenue from subscriptions on a ratable basis over the contract term or on a usage basis for consumption-based arrangements.
A discussion regarding our financial condition and results of operations for the fiscal year ended April 30, 2024 compared to the fiscal year ended April 30, 2023 is presented below.
A discussion regarding our financial condition and results of operations for the fiscal year ended April 30, 2025 compared to the fiscal year ended April 30, 2024 is presented below.
A discussion regarding our financial condition and results of operations for the fiscal year ended April 30, 2023 compared to the fiscal year ended April 30, 2022 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended April 30, 2023, filed with the Securities and Exchange Commission, or SEC, on June 22, 2023.
A discussion regarding our financial condition and results of operations for the fiscal year ended April 30, 2024 compared to the fiscal year ended April 30, 2023 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended April 30, 2024, filed with the Securities and Exchange Commission, or SEC, on June 18, 2024.
Additionally, we offer premium stand-ready support services through our C3 AI COE which is included as part of the subscription when purchased. We also generate revenue from professional services, which primarily include implementation services, training and prioritized engineering services.
Additionally, we offer premium stand-ready support services through our C3 AI COE which is included as part of the subscription when purchased. We also generate revenue from professional services, which primarily include prioritized engineering services and services fees.
We intend to attract new customers across multiple industries where we have limited meaningful presence today, yet represent very large market opportunities such as telecommunications, pharmaceuticals, state and local government, smart cities, transportation, and healthcare, among others. Historically, we have had a relatively small number of customers with large total subscription contract values.
We intend to attract new customers across multiple industries where we have limited meaningful presence today, yet represent very large market opportunities such as telecommunications, smart cities, transportation, and healthcare, among others. Historically, we have had a relatively small number of customers with large total subscription contract values.
We determine revenue recognition through the following steps: • identification of the contract, or contracts, with a customer; • identification of the performance obligations in the contract; 83 Table of Contents • determination of the transaction price; • allocation of the transaction price to the performance obligations in the contract; and • recognition of revenue when, or as, we satisfy a performance obligation.
We determine revenue recognition through the following steps: • identification of the contract, or contracts, with a customer; • identification of the performance obligations in the contract; • determination of the transaction price; • allocation of the transaction price to the performance obligations in the contract; and • recognition of revenue when, or as, we satisfy a performance obligation.
Our model-driven architecture enables us and our customers to rapidly address new use cases by building new applications and extending and enhancing the features and functionality of current C3 AI Software. By investing to make it easier to develop applications on our C3 AI Platform, our customers have become active developers.
Our model-driven architecture and generative AI agents framework enables us and our customers to rapidly address new use cases by building new applications and extending and enhancing the features and functionality of current C3 AI Software. By investing to make it easier to develop applications on our C3 Agentic AI Platform, our customers have become active developers.
Following the pilot period, customers either pay a monthly fee and consumption charges using vCPU and vGPU hours as the metric to calculate payment or enter into a time-certain multi-period commitment that may include consumption charges. Our subscriptions also include our maintenance and support services.
Following the initial production deployment period, customers either pay a monthly fee and consumption charges using vCPU and vGPU hours as the metric to calculate payment or enter into a time-certain multi-period commitment that may include consumption charges. Our subscriptions also include our maintenance and support services.
Our subscription revenue is primarily comprised of software licenses, software-as-a-service offerings, stand-ready COE support services, pilots and trials of our C3 AI Applications or Generative AI, and hosting charges. Sales of our software licenses grant our customers the right to use our software, either on their own cloud instances or their internal hardware infrastructures, during the contractual term.
Our subscription revenue is primarily comprised of software licenses, software-as-a-service offerings, stand-ready COE support services, initial production deployments of our C3 AI Applications or Generative AI, and hosting charges. Sales of our software licenses grant our customers the right to use our software, either on their own cloud instances or their internal hardware infrastructures, during the contractual term.
Net cash provided by financing activities of $11.3 million for the fiscal year ended April 30, 2024 was due to $13.8 million of proceeds from the exercise of stock options for Class A common stock and $10.8 million of proceeds from the issuance of Class A common stock under the Employee Stock Purchase Plan, or ESPP, partially offset by $13.2 million of taxes paid related to net share settlement of equity awards.
Net cash provided by financing activities of $11.3 million for the fiscal year ended April 30, 2024 was due to $13.8 million of proceeds from the exercise of stock options for Class A common stock and $10.8 million of proceeds from the issuance of Class A common stock under the ESPP, offset by $13.2 million of taxes paid related to net share settlement of equity awards.
Our transition to a consumption-based pricing model for new customers helps us to better meet the needs of customers and align us with the model that is becoming common for enterprise software companies.
Our introduction of consumption-based pricing model for new customers helps us to better meet the needs of customers and align us with the model that is becoming common for enterprise software companies.
Cost of subscription revenue consists primarily of costs related to compensation, including salaries, bonuses, benefits, stock-based compensation and other related expenses for the production environment, support and COE staff, hosting of our C3 AI Software, including payments to outside cloud service providers, and allocated overhead and depreciation for facilities. Cost of Professional Services Revenue.
Cost of subscription revenue consists primarily of costs related to compensation, including salaries, bonuses, benefits, stock-based compensation and other related expenses for the production environment, support and COE staff, third-party system integration partners, hosting of our C3 AI Software, including payments to outside cloud service providers, and allocated overhead and depreciation for facilities. Cost of Professional Services Revenue.
We derived approximately 14%, 21% and 22% of our total revenue for the fiscal years ended April 30, 2024, 2023 and 2022, respectively, from international customers.
We derived approximately 14%, 14% and 21% of our total revenue for the fiscal years ended April 30, 2025, 2024 and 2023, respectively, from international customers.
Following the pilot and trial periods, customers either pay a monthly fee and consumption charges using vCPU and vGPU hours as the metric to calculate payment or enter into a time-certain multi-period commitment that may include consumption charges. We consider the Pilot and trial count as a key business metric, as it reflects trends in market penetration and customer acquisition.
Following the initial production deployment period, customers either pay a monthly fee and consumption charges using vCPU and vGPU hours as the metric to calculate payment or enter into a time-certain multi-period commitment that may include consumption charges. We consider the initial production deployment count as a key business metric, as it reflects trends in market penetration and customer acquisition.
Research and development expenses also include cloud infrastructure costs related to our research and development efforts, and allocated overhead and depreciation for facilities. Research and development costs are expensed as incurred. We expect research and development expense to increase in absolute dollars as we continue to invest in our existing and future product offerings.
Research and development expenses also include cloud infrastructure costs related to our research and development efforts, third-party system integration partners and allocated overhead and depreciation for facilities. Research and development costs are expensed as incurred. We expect research and development expense to increase in absolute dollars as we continue to invest in our existing and future product offerings.
Subscription Revenue. Our subscription revenue is primarily comprised of software licenses, software-as-a-service offerings, stand-ready COE support services, pilots and trials of our C3 AI Applications or Generative AI, and consumption-based pricing. Sales of our software licenses grant customers the right to use our functional intellectual property, either on their own cloud instance or internal hardware infrastructure, over the contractual term.
Subscription Revenue. Our subscription revenue is primarily comprised of software licenses, software-as-a-service offerings, stand-ready COE support services, initial production deployments of our C3 AI Applications or Generative AI, and consumption-based pricing. Sale of our software licenses grant customers the right to use our functional intellectual property, either on their own cloud instance or internal hardware infrastructure, over the contractual term.
How We Generate Revenue We generate revenue primarily from the sale of subscriptions, which accounted for 90%, 86% and 82% of our total revenue in the fiscal years ended April 30, 2024, 2023 and 2022, respectively.
How We Generate Revenue We generate revenue primarily from the sale of subscriptions, which accounted for 84%, 90% and 86% of our total revenue in the fiscal years ended April 30, 2025, 2024 and 2023, respectively.
Customers generally begin with a one to two-quarter-long pilot which includes the necessary resources required to deploy the C3 AI Platform and/or C3 AI Applications and receive necessary training to operate and maintain the software in production use.
Customers generally begin with a one to two-quarter-long initial production deployment agreements which includes the necessary resources required to deploy the C3 Agentic AI Platform and/or C3 AI Applications and receive necessary training to operate and maintain the software in production use.
We also expect to hire additional sales personnel to increase sales coverage of target industry vertical and geographic markets. Consequently, sales and marketing expense as a percent of total revenue will remain high in the near-term.
We expect our sales and marketing expenses will increase in absolute dollar amounts as we to hire additional sales personnel to increase sales coverage of target industry vertical and geographic markets. Consequently, sales and marketing expense as a percent of total revenue will remain high in the near-term.
As part of our customer acquisition strategy, we also sell premium stand-ready COE support services, hosting services, pilots and trials of our applications, and software licenses that are prototype versions of C3 AI Applications configured for a customer that do not require maintenance and support services.
As part of our customer acquisition strategy, we also sell premium stand-ready COE support services, hosting services, initial production deployments of our applications, and software licenses that are demonstration versions of C3 AI Applications configured for a customer that do not require maintenance and support services.
Some of our most notable partners include Baker Hughes, AWS, Microsoft, and GCP. Each strategic partner is a leader in its industry, with a substantial installed customer base and extensive marketing, sales, and services resources that we can leverage to engage and serve customers anywhere in the world.
Our strategic go-to-market alliances vastly extend our reach globally. Some of our most notable partners include Microsoft, Baker Hughes, AWS, and Google. Each strategic partner is a leader in its industry, with a substantial installed customer base and extensive marketing, sales, and services resources that we can leverage to engage and serve customers anywhere in the world.
As of April 30, 2024 and 2023, we had $167.1 million and $284.8 million of cash and cash equivalents and $583.2 million and $527.6 million of marketable securities, respectively, which are available for use in current operations. Our marketable securities generally consist of high-grade U.S. treasury securities, certificates of deposit, U.S. government agency securities, commercial paper and corporate debt securities.
As of April 30, 2025 and 2024, we had $164.4 million and $167.1 million of cash and cash equivalents and $578.3 million and $583.2 million of marketable securities, respectively, which are available for use in current operations. Our marketable securities generally consist of high-grade U.S. treasury securities, certificates of deposit, U.S. government agency securities, commercial paper and corporate debt securities.
Approximately 13% and 9%, respectively, of the total subscription revenue for the fiscal year ended April 30, 2024 and 2023, respectively, was attributable to revenue from new customers, and the remaining 87% and 91%, respectively, was attributable to revenue from existing customers.
Approximately 16% and 13%, respectively, of the total subscription revenue for the fiscal year ended April 30, 2025 and 2024, respectively, was attributable to revenue from new customers, and the remaining 84% and 87%, respectively, was attributable to revenue from existing customers.
In the first quarter of fiscal year 2023, we announced a consumption-based pricing model, beginning with a pilot phase which may include access to the C3 AI Platform, one C3 AI Application or C3 Generative AI, and C3 AI Center of Excellence, or COE, support services.
In the first quarter of fiscal year 2023, we introduced a consumption-based pricing model, beginning with an initial production deployment phase which may include access to the C3 Agentic AI Platform, one or more C3 AI Application or C3 Generative AI, and C3 AI Center of Excellence, or COE support services.
The following table below provides a reconciliation of free cash flow to the GAAP measure of net cash used in operating activities for the periods presented: Fiscal Year Ended April 30, 2024 2023 (in thousands) Net cash used in operating activities $ (62,362) $ (115,691) Less: Purchases of property and equipment (25,256) (70,518) Capitalized software development costs (2,750) (1,000) Free cash flow $ (90,368) $ (187,209) Net cash (used in) provided by investing activities $ (66,615) $ 59,946 Net cash provided by financing activities $ 11,294 $ 621 Liquidity and Capital Resources Since inception, we have financed operations primarily through sales generated from our customers and sales of equity securities.
The following table below provides a reconciliation of free cash flow to the GAAP measure of net cash used in operating activities for the periods presented: Fiscal Year Ended April 30, 2025 2024 (in thousands) Net cash used in operating activities $ (41,407) $ (62,362) Less: Purchases of property and equipment (3,039) (25,256) Capitalized software development costs — (2,750) Free cash flow $ (44,446) $ (90,368) Net cash provided by (used in) investing activities $ 16,396 $ (66,615) Net cash provided by financing activities $ 22,223 $ 11,294 Liquidity and Capital Resources Since inception, we have financed operations primarily through sales generated from our customers and sales of equity securities.
Operating Expenses Our operating expenses consist of sales and marketing, research and development, and general and administrative expenses. We expect our operating expenses as a percentage of total revenue to increase as we continue to invest to grow our business.
Operating Expenses Our operating expenses consist of sales and marketing, research and development, and general and administrative expenses. We expect our operating expenses to increase as we continue to invest to grow our business. 77 Table of Contents Sales and Marketing.
Making new and existing customers successful is critical to our long-term success. After we help our customers solve their initial use cases, they frequently identify incremental opportunities within their operations and expand their use of our products.
Acquiring new customers and expanding our business with our existing customers is the purpose of our go-to-market effort and drives our growth. Making new and existing customers successful is critical to our long-term success. After we help our customers solve their initial use cases, they frequently identify incremental opportunities within their operations and expand their use of our products.
Since we announced the transition to consumption-based pricing model, we have executed 123 and 49 pilots and trials in fiscal year 2024 and 2023, respectively. 71 Table of Contents Factors Affecting Our Performance We believe that our future success and financial performance depend on a number of factors that present significant opportunities for our business but also pose risks and challenges, including those discussed below and in the section of this Annual Report on Form 10-K in Part I, Item 1A titled “Risk Factors”, that we must successfully address to sustain our growth, improve our results of operations, and establish and maintain profitability.
Factors Affecting Our Performance We believe that our future success and financial performance depend on a number of factors that present significant opportunities for our business but also pose risks and challenges, including those discussed below and in the section of this Annual Report on Form 10-K in Part I, Item 1A titled “Risk Factors”, that we must successfully address to sustain our growth, improve our results of operations, and establish and maintain profitability.
Net cash provided by financing activities of $0.6 million for the fiscal year ended April 30, 2023 was primarily due to $4.5 million of proceeds from the exercise of stock options for Class A common stock and $3.1 million of proceeds from the issuance of Class A common stock under the ESPP, partially offset by $6.9 million of taxes paid related to net share settlement of equity awards.
Net cash provided by financing activities of $22.2 million for the fiscal year ended April 30, 2025 was due to $20.4 million of proceeds from the exercise of stock options for Class A common stock and $10.9 million of proceeds from the issuance of Class A common stock under the Employee Stock Purchase Plan, or ESPP, offset by $9.1 million of taxes paid related to net share settlement of equity awards.
The increase in sales and marketing expense for the fiscal year ended April 30, 2024 compared to the prior fiscal year was primarily due to higher advertising spend of $9.0 million, higher marketing costs of $8.9 million, higher personnel-related costs of $5.8 million as a result of increased headcount and overall costs to support the growth in our business, and increased stock-based compensation primarily related to additional equity awards granted to current and new employees, higher marketing events costs of $5.1 million, and higher data center costs of $0.9 million.
The increase in sales and marketing expense for the fiscal year ended April 30, 2025 compared to the prior fiscal year was primarily due to higher payroll costs of $26.4 million as a result of additional headcount and overall costs to support the growth in our business, and increased stock-based compensation primarily related to additional equity awards granted to current and new employees and higher advertising costs of $2.5 million, partially offset by lower other marketing costs.
Go-to-Market Strategy Our go-to-market strategy has been historically focused on large organizations recognized as leaders in their respective industries or public sectors that are attempting to solve complicated business problems by digitally transforming their operations.
RPO excludes amounts related to monthly usage-based runtime and hosting charges. 71 Table of Contents Go-to-Market Strategy Our go-to-market strategy has been historically focused on large organizations recognized as leaders in their respective industries or public sectors that are attempting to solve complicated business problems by digitally transforming their operations.
Our subscriptions also include our maintenance and support services, which include critical and continuous updates to the software that are integral to maintaining the intended utility of the software over the contractual term. Our software subscriptions and maintenance and support services are highly interdependent and interrelated and represent a single distinct performance obligation within the context of the contract.
Our subscriptions also include our maintenance and support services, which include critical and continuous updates to the software that are integral to maintaining the intended utility of the software over the contractual term.
RPO represents the amount of our contracted future revenue that has not yet been recognized, including both deferred revenue and non-cancellable contracted amounts that will be invoiced and recognized as revenue in future periods. Our RPO as of April 30, 2024 is comprised of $39.0 million related to deferred revenue and $205.3 million of commitments from non-cancellable contracts.
RPO was $235.1 million and $244.3 million as of April 30, 2025 and 2024, respectively. RPO represents the amount of our contracted future revenue that has not yet been recognized, including both deferred revenue and non-cancellable contracted amounts that will be invoiced and recognized as revenue in future periods.
Our total revenue was $310.6 million for the fiscal year ended April 30, 2024, representing a 16% increase compared to the prior fiscal year. Our subscription revenue grew to $278.1 million for the fiscal year ended April 30, 2024, representing a 21% increase compared to the prior fiscal year.
Our total revenue was $389.1 million for the fiscal year ended April 30, 2025, representing a 25.3% increase compared to the prior fiscal year. Our subscription revenue grew to $327.6 million for the fiscal year ended April 30, 2025, representing a 18% increase compared to the prior fiscal year.
Subscription revenue increased by $47.7 million, or 21%, for the fiscal year ended April 30, 2024, compared to the prior fiscal year.
Subscription revenue increased by $49.5 million, or 18%, for the fiscal year ended April 30, 2025, compared to the prior fiscal year.
The subscription margin for the fiscal year ended April 30, 2024 decreased due to higher personnel-related costs as a result of increased headcount and overall costs to support the growth in our business, and increased stock-based compensation primarily related to additional equity awards granted to current and new employees, compared to the prior fiscal year.
The increase in general and administrative expense for the fiscal year ended April 30, 2025 compared to the prior fiscal year was primarily due to higher payroll costs of $6.5 million as a result of additional headcount and overall costs to support the growth in our business, and increased stock-based compensation primarily related to additional equity awards granted to current and new employees, and higher professional services costs of $4.0 million.
As our C3 AI Platform and much of our other C3 AI Software are industry agnostic, we also expect to expand into other industries. 69 Table of Contents In the first quarter of fiscal year 2023, we announced a change to our go-to-market strategy including a way for new customers to subscribe for our products at smaller initial contract sizes and pay for services based on their monthly consumption of vCPU and vGPU hours.
In the first quarter of fiscal year 2023, we introduced a change to our go-to-market strategy including a way for new customers to subscribe for our products at smaller initial contract sizes and pay for services based on their monthly consumption of vCPU and vGPU hours.
Net cash provided by investing activities of $59.9 million for the fiscal year ended April 30, 2023 was primarily attributable to the maturities and sales of marketable securities of $876.7 million, partially offset by purchases of investments of $745.2 million and capital expenditures of $71.5 million mainly related to the leasehold improvements associated with the new leased space. Financing Activities.
Net cash provided by investing activities of $16.4 million for the fiscal year ended April 30, 2025 was primarily attributable to maturities and sales of marketable securities of $666.5 million, offset by purchases of marketable securities of $647.0 million and capital expenditures of $3.0 million mainly related to the leasehold improvements associated with leased space.
Contractual Obligations and Commitments Our contractual obligations and commitments primarily consist of operating lease commitments for our facilities and non-cancellable purchase commitments related to third-party cloud hosting services. For additional information, refer to Note 6. Leases and Note 7. Commitments and Contingencies to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Contractual Obligations and Commitments Our contractual obligations and commitments primarily consist of operating lease commitments for our facilities and non-cancellable purchase commitments related to third-party cloud hosting and associated services, and professional services. For additional information, refer to Note 6. Leases and Note 7.
Gross Profit and Gross Margin Fiscal Year Ended April 30, $ Change % Change 2024 2023 (in thousands) Gross profit $ 178,560 $ 180,458 $ (1,898) (1) % Gross margin Subscription 54 % 66 % Professional services 89 % 78 % Total gross margin 57 % 68 % The decrease in gross profit in the fiscal year ended April 30, 2024 was primarily driven by a decline in subscription margin, offset by an increase in professional services margin.
Gross Profit and Gross Margin Fiscal Year Ended April 30, $ Change % Change 2025 2024 (in thousands) Gross profit $ 235,863 $ 178,560 $ 57,303 32 % Gross margin Subscription 56 % 54 % Professional services 85 % 89 % Total gross margin 61 % 57 % The increase in total gross margin in the fiscal year ended April 30, 2025 was primarily driven by an increase in subscription margin, offset by decline in professional services margin.
Following the pilot period, customers either pay a monthly fee and consumption charges using vCPU and vGPU hours utilized as the metric to calculate payment or enter into a time-certain multi-period commitment that may include consumption charges. Acquiring new customers and expanding our business with our existing customers is the purpose of our go-to-market effort and drives our growth.
Following the initial production deployment period, customers either pay a monthly fee and consumption charges using vCPU and vGPU hours utilized as the metric to calculate payment or enter into a time-certain multi-period commitment that may include consumption charges.
We have generated operating losses from our operations as reflected in our accumulated deficit of $1,089.9 million as of April 30, 2024.
We have generated operating losses as reflected in our accumulated deficit of $1.4 billion as of April 30, 2025.
We expect to continue to incur operating losses and generate negative cash flows from operations in the next few quarters due to the investments we intend to make in our business, and as a result we may require additional capital to execute on our strategic initiatives to grow the business. 81 Table of Contents We believe that existing cash and cash equivalents and marketable securities alone will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months.
We expect to continue to incur operating losses and generate negative cash flows from operations in the next few quarters due to the investments we intend to make in our business, and as a result we may require additional capital to execute on our strategic initiatives to grow the business.
Other Income (Expense), Net Fiscal Year Ended April 30, $ Change % Change 2024 2023 (in thousands) Other (expense) income, net $ (641) $ 350 $ (991) (283) % The decrease in other (expense) income, net for the fiscal year ended April 30, 2024 compared to the prior fiscal year was due to foreign currency losses on the remeasurement of Euro-denominated cash and accounts receivable balances. 80 Table of Contents Provision for Income Taxes Fiscal Year Ended April 30, $ Change % Change 2024 2023 (in thousands) Provision for income taxes $ 792 $ 675 $ 117 17 % The increase in provision for income taxes was primarily related to foreign and state tax expense.
Other Income (Expense), Net Fiscal Year Ended April 30, $ Change % Change 2025 2024 (in thousands) Other income (expense), net $ 509 $ (641) $ 1,150 179 % The increase in other income, net for the fiscal year ended April 30, 2025 compared to the prior fiscal year was primarily due to higher foreign currency losses on the remeasurement of Euro-denominated cash and accounts receivable balances in the prior fiscal year.
Interest Income Fiscal Year Ended April 30, $ Change % Change 2024 2023 (in thousands) Interest income $ 40,079 $ 21,979 $ 18,100 82 % The increase in interest income for the fiscal year ended April 30, 2024 compared to the prior fiscal year was primarily the result of higher prevailing interest rates on our marketable securities portfolio.
Interest Income Fiscal Year Ended April 30, $ Change % Change 2025 2024 (in thousands) Interest income $ 36,189 $ 40,079 $ (3,890) (10) % The decrease in interest income for the fiscal year ended April 30, 2025 compared to the prior fiscal year was primarily due to higher prevailing interest rates on our marketable securities portfolio and higher volume of investments in prior fiscal year.
Critical Accounting Policies and Estimates Our consolidated financial statements and the accompanying notes thereto included elsewhere in this Annual Report on Form 10-K are prepared in accordance with GAAP. The preparation of consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures.
Commitments and Contingencies to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Critical Accounting Policies and Estimates Our consolidated financial statements and the accompanying notes thereto included elsewhere in this Annual Report on Form 10-K are prepared in accordance with GAAP.
Non-GAAP Financial Measure In addition to our financial results determined in accordance with generally accepted accounting principles in the United States, or GAAP, we believe free cash flow, a non-GAAP financial measure, is useful in evaluating liquidity and provides information to management and investors about our ability to fund future operating needs and strategic initiatives.
Provision for Income Taxes Fiscal Year Ended April 30, $ Change % Change 2025 2024 (in thousands) Provision for income taxes $ 976 $ 792 $ 184 23 % The increase in provision for income taxes was primarily related to foreign and state tax expense. 82 Table of Contents Non-GAAP Financial Measure In addition to our financial results determined in accordance with generally accepted accounting principles in the United States, or GAAP, we believe free cash flow, a non-GAAP financial measure, is useful in evaluating liquidity and provides information to management and investors about our ability to fund future operating needs and strategic initiatives.
We partner with Independent Software Vendors who develop, market, and sell application solutions that are natively built on or tightly integrated with the C3 AI Platform. Customer Engagement and Product Adoption We define a Customer-Entity as each entity that is the ultimate parent of a party contracting with us.
We partner with independent software vendors who develop, market, and sell application solutions that are natively built on or tightly integrated with the C3 Agentic AI Platform.
Our best estimate of Customer Engagement was 487 and 287 as of April 30, 2024 and 2023, respectively. Key Business Metric Pilot and trial count Historically, our go to market strategy has focused on enterprise-wide, multi-period, large-value subscription contracts that entailed a long sales cycle, considerable sales effort and protracted negotiations.
Key Business Metric Initial Production Deployment (formerly referred to as Pilots and Trials) Historically, our go to market strategy has focused on enterprise-wide, multi-period, large-value subscription contracts that entailed a long sales cycle, considerable sales effort and protracted negotiations.
Summary of Business and Significant Accounting Policies to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for a description of our other significant accounting policies. The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect the amounts reported in those financial statements and accompanying notes.
The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect the amounts reported in those financial statements and accompanying notes.
We believe that the following accounting policies involve a high degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of our operations. See Note 1.
Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of our operations. See Note 1. Summary of Business and Significant Accounting Policies to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for a description of our other significant accounting policies.
The decrease in cost of professional services revenue for the fiscal year ended April 30, 2024 compared to the prior fiscal year was primarily due to lower personnel-related costs of $2.9 million as a result of a decrease in the number of service projects, lower facilities costs of $0.5 million and lower overhead costs of $0.4 million, and lower third-party outsourcing costs of $0.1 million.
The increase in cost of professional services revenue for the fiscal year ended April 30, 2025 compared to the prior fiscal year was primarily due to higher payroll and contractor costs of $4.8 million as a result of an increase in the number of prioritized engineering service projects.
A consumption-based pricing model begins with a paid “Pilot” phase of up-to six months that may include developer access to the C3 AI Platform, one C3 AI Application or C3 Generative AI and COE support services.
Our consumption-based pricing model is designed to increase the number of customers and accelerate growth by making it easier and less costly to adopt C3 AI solutions. 72 Table of Contents A consumption-based pricing model begins with a paid “Initial Production Deployment” phase (formerly known as “Pilot” phase) of generally up-to six months that may include developer access to the C3 Agentic AI Platform, one C3 AI Application or C3 Generative AI and COE support services.
Sales and marketing expenses also include employee-related costs, including salaries, bonuses, benefits, stock-based compensation, and commissions for our employees engaged in sales and marketing activities, and allocated overhead and depreciation for facilities. We expect our sales and marketing expenses will increase in absolute dollar amounts as we continue to invest in brand awareness and programmatic spend to generate demand.
Sales and marketing expenses consist of expenditures related to advertising, media, marketing, promotional events, brand awareness activities, business development, customer success and corporate partnerships. Sales and marketing expenses also include employee-related costs, including salaries, bonuses, benefits, stock-based compensation, and commissions for our employees engaged in sales and marketing activities, and allocated overhead and depreciation for facilities.
Grow Our Go-to-Market and Partnership Ecosystem In addition to the activities of our field sales organization, our success in attracting new customers will depend on our ability to expand our ecosystem of strategic partners and the number of industry verticals that they serve. Our strategic go-to-market alliances vastly extend our reach globally.
Over the long term, we expect marketing spend to decline as a percent of total revenue as we make ongoing progress establishing C3 AI’s brand and reputation and as our business scales. 75 Table of Contents Grow Our Go-to-Market and Partnership Ecosystem In addition to the activities of our field sales organization, our success in attracting new customers will depend on our ability to expand our ecosystem of strategic partners and the number of industry verticals that they serve.
Research and Development. The decrease in research and development expense for the fiscal year ended April 30, 2024 compared to the prior fiscal year was primarily due to lower personnel-related costs of $20.5 million, partially offset by higher cloud computing costs of $10.5 million. General and Administrative.
Research and Development. The increase in research and development expense for the fiscal year ended April 30, 2025 compared to the prior fiscal year was primarily due to higher payroll and contractor costs of $22.0 million and higher data center costs of $1.9 million. General and Administrative.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected.
To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected. 84 Table of Contents We believe that the following accounting policies involve a high degree of judgment and complexity.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInflation Risk We do not believe that inflation has had a material effect on our business, results of operations, or financial condition. If our costs were to become subject to significant inflationary pressures, including higher employee compensation costs, we may not be able to fully offset such higher costs through price increases.
Biggest changeIf our costs were to become subject to significant inflationary pressures, including higher employee compensation costs, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition, or results of operations. 87 Table of Contents
As of April 30, 2024, a hypothetical 10% relative change in interest rates would not have had a material impact on the value of our cash equivalents or marketable securities portfolio. Any realized gains or losses resulting from such interest rate changes would only occur if we sold the marketable securities prior to maturity.
As of April 30, 2025, a hypothetical 10% relative change in interest rates would not have had a material impact on the value of our cash equivalents or marketable securities portfolio. Any realized gains or losses resulting from such interest rate changes would only occur if we sold the marketable securities prior to maturity.
As of April 30, 2023, we had cash, cash equivalents, and marketable securities of $812.4 million. Interest-earning instruments carry a degree of interest rate risk. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure.
As of April 30, 2024, we had cash, cash equivalents, and marketable securities of $750.4 million. Interest-earning instruments carry a degree of interest rate risk. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure.
Foreign Currency Exchange Risk Our functional currency is the U.S. dollar. For the fiscal years ended April 30, 2024, 2023 and 2022, approximately 5%, 8%, and 13% of our sales were denominated in euros, respectively, and therefore our revenue, accounts receivable, and cash deposits are subject to foreign currency risk.
Foreign Currency Exchange Risk Our functional currency is the U.S. dollar. For the fiscal years ended April 30, 2025, 2024 and 2023, approximately 4%, 5%, and 8% of our sales were denominated in euros, respectively, and therefore our revenue, accounts receivable, and cash deposits are subject to foreign currency risk.
Our market risk exposure is primarily the result of fluctuations in interest rates and foreign currency exchange rates. We do not hold or issue financial instruments for trading purposes. Interest Rate Risk As of April 30, 2024, we had cash, cash equivalents, and marketable securities of $750.4 million.
Our market risk exposure is primarily the result of fluctuations in interest rates and foreign currency exchange rates. We do not hold or issue financial instruments for trading purposes. Interest Rate Risk As of April 30, 2025, we had cash, cash equivalents, and marketable securities of $742.7 million.
A hypothetical 10% change in foreign currency exchange rates may result in a material impact on our consolidated financial statements. As our international operations grow, we will continue to reassess our approach to manage our risk relating to fluctuations in currency rates.
A hypothetical 10% change in foreign currency exchange rates may result in a material impact on our consolidated financial statements. These foreign currency forward contracts are intended to reduce foreign exchange impact on our forecasted expenses. Inflation Risk We do not believe that inflation has had a material effect on our business, results of operations, or financial condition.
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Our inability or failure to do so could harm our business, financial condition, or results of operations. 85 Table of Contents

Other AI 10-K year-over-year comparisons