C3 AI Posts $52.4 Million Fiscal Q1 Revenue With Positive Free Cash Flow

C3.ai, Inc. (AI ) reported total revenue of $52.4 million for its fiscal first quarter ended July 31, 2026, along with positive free cash flow of $2.1 million and a cash, cash equivalents, and marketable securities balance of $651.1 million, according to the company’s earnings release published September 2, 2026.

The Redwood City, California-based enterprise AI application software company said subscription revenue was $49.2 million, constituting 94% of total revenue. GAAP gross profit was $16.7 million, representing a 32% gross margin, while non-GAAP gross profit was $26.1 million, representing a 50% non-GAAP gross margin. GAAP net loss per share was $(0.60), and non-GAAP net loss per share was $(0.20). Net cash provided by operating activities was $2.1 million, equal to the reported free cash flow figure after minimal purchases of property and equipment.

Chairman and Chief Executive Officer Thomas M. Siebel characterized the quarter as a turnaround proceeding on plan. “The Company has done exactly what a disciplined, focused turnaround should do. We restructured Sales. We aligned cash outflows with cash inflows. We instituted rigorous expense control. We installed experienced leadership across the board, and we implemented rigorous management discipline across every line of business,” Siebel said. He added that revenue has stabilized and that the company remains on track to grow revenue, generate cash, attain non-GAAP profitability, maintain technology leadership, and increase customer satisfaction.

Quarter Results and Customer Agreements

C3 AI reported that bookings increased 73% quarter over quarter, and that its non-GAAP operating loss of $36.2 million represented a 33% improvement over the prior quarter. The cash balance rose $76 million quarter over quarter, a period during which the cash flow statement shows $72.8 million in proceeds from the exercise of Class A common stock options.

The company closed 22 agreements during the quarter, including with Heidelberg Materials (HEI.DE ), Ford Motor Company (F ), Johnson & Johnson (JNJ ), Holcim, Seaspan, the U.S. Department of Agriculture, the Defense Logistics Agency, the U.S. Department of War, and the U.S. Marine Corps, among others. Siebel also noted that Forrester Research (FORR ) named C3 AI a leader in Enterprise AI.

On a GAAP basis, the condensed consolidated statements show total revenue of $52.4 million for the three months ended July 31, 2026, compared with $70.3 million in the same period a year earlier. Subscription revenue was $49.2 million against $60.3 million a year ago, and professional services revenue was $3.2 million against $10.0 million. Within professional services, prioritized engineering services contributed $1.8 million, down from $8.7 million a year earlier, while service fees were $1.4 million, up from $1.3 million.

Total operating expenses were $114.9 million, down from $151.3 million in the year-ago quarter. Sales and marketing expense was $41.6 million versus $62.5 million, and research and development expense was $46.5 million versus $64.7 million. General and administrative expense was $26.1 million versus $24.1 million, and the quarter included $0.7 million of restructuring charges, which the company said primarily consist of vendor consolidation costs. GAAP loss from operations was $98.3 million, compared with $124.8 million a year earlier, and GAAP net loss was $92.8 million, compared with $116.8 million. Interest income was $6.0 million.

Balance Sheet, Cash Flow, and Guidance

On the balance sheet, cash and cash equivalents stood at $136.4 million as of July 31, 2026, up from $66.2 million as of April 30, 2026, with marketable securities of $514.6 million. Total assets were $874.8 million, total liabilities were $179.9 million, and total stockholders’ equity was $694.9 million. Current deferred revenue was $52.6 million, up from $34.9 million at fiscal year end. The company’s fiscal year ends April 30.

The operating cash flow of $2.1 million compares with net cash used in operating activities of $33.5 million in the year-ago quarter, and free cash flow of $2.1 million compares with negative $34.3 million a year earlier. Stock-based compensation expense was $59.2 million for the quarter, down from $64.8 million a year earlier. The company’s non-GAAP measures exclude restructuring expenses, stock-based compensation expense-related charges, and employer payroll tax expense related to employee stock-based compensation; C3 AI defines free cash flow as net cash provided by operating activities less purchases of property and equipment and capitalized software development costs.

For the second quarter of fiscal 2027, C3 AI guided total revenue of $51.0 million to $55.0 million and a non-GAAP loss from operations of $34.5 million to $42.5 million. For the full fiscal year 2027, the company guided total revenue of $210.0 million to $240.0 million and a non-GAAP loss from operations of $123.0 million to $155.0 million. The company stated that a reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort, citing uncertainty regarding expenses including stock-based compensation-related charges.

C3 AI scheduled its earnings conference call for September 2, 2026, at 2:00 p.m. Pacific Time. The company said it will file its Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2026 with the Securities and Exchange Commission. C3 AI describes itself as the Enterprise AI application software company, delivering the C3 Agentic AI Platform, a portfolio of industry-specific SaaS enterprise AI applications, and C3 Generative AI, a suite of domain-specific generative AI offerings for the enterprise.