C3.ai Reports 20% Revenue Decline and $104.7 Million Net Loss in Q2 Fiscal 2026

C3.ai, Inc. reported a significant decline in its financial performance for the second quarter of fiscal 2026, ending October 31, 2025. The company generated total revenue of $75.1 million, a decrease of 20% compared to $94.3 million in the same quarter of the previous year. Subscription revenue, which constitutes the majority of the company's income, fell by 13% to $70.2 million, down from $81.2 million. Professional services revenue also saw a substantial drop, decreasing by 63% to $4.9 million from $13.2 million. The net loss for the quarter was $104.7 million, compared to a loss of $66.0 million in the prior year, reflecting ongoing challenges in customer retention and engagement.

The company's operational metrics indicate a shift in customer dynamics, with existing customers contributing a larger share of revenue compared to new customers. For the three months ended October 31, 2025, approximately 63% of subscription revenue came from existing customers, a notable increase from 76% in the same period last year. This trend highlights the challenges C3.ai faces in acquiring new clients amid a competitive landscape. The total number of initial production deployment agreements also declined, with 20 agreements executed in the latest quarter compared to 36 in the same quarter last year.

C3.ai's cost structure has also been impacted, with total operating expenses rising to $142.5 million, up 7% from $133.1 million a year earlier. This increase was driven by higher payroll costs associated with additional headcount and stock-based compensation, particularly in sales and marketing, which rose by 5% to $58.3 million. The company's gross profit margin fell sharply to 40% from 61% in the previous year, primarily due to the decline in subscription revenue and increased costs.

Strategically, C3.ai has undergone significant organizational changes, including the appointment of Stephen Ehikian as CEO, succeeding Thomas Siebel, who remains as Executive Chairman. The transition aims to enhance leadership and operational effectiveness as the company navigates its restructuring efforts. Additionally, C3.ai has introduced new product offerings, including C3 Generative AI and C3 AI Agentic Process Automation, to expand its market presence and address evolving customer needs. The company continues to invest in research and development, with a focus on enhancing its AI capabilities and expanding its customer base across various industries.

Looking ahead, C3.ai anticipates ongoing challenges in achieving profitability and sustaining revenue growth. The company expects to continue incurring operating losses in the near term as it invests in its business and adapts to changing market conditions. C3.ai's remaining performance obligations stood at approximately $232.5 million as of October 31, 2025, indicating a pipeline of future revenue, although the company acknowledges that actual revenue growth may be influenced by customer adoption rates and macroeconomic factors.