C3.ai (NYSE:AI) – C3.ai is moving from subscription to consumption model,…

C3.ai (NYSE:AI) – C3.ai is moving from subscription to consumption model,…


Analysts spoke up last week C3.ai, Inc AI Management at the AI ​​Defense Forum. They listened to speakers from the US Department of Defense and industry advisers that the use of AI must be accelerated to better position the US against its adversaries.

Needham Analyst Mike Cikos repeated a hold following the company’s announcement of moving from a subscription model to a consumption model. In the past, these transitions were difficult to navigate from an execution standpoint.

Sales are squeezed in the short term as new customers come on board and it typically takes 3-4 quarters to ramp up consumption levels. Meanwhile, profitability suffers as the operating spend base continues to build customer success initiatives. The net impact is a bleak look at how C3 AI emerges from the transition.

Cikos writes that “thawing the frozen center” best describes the current situation of the Ministry of Defense. Top executives are “enlightened” and understand the need to embrace AI, while recruits are “digital-native” and “data-literate.”

The obstacle has been the process orientation of mid-level leadership, which has resisted AI – although this stance is becoming less and less tenable in the current geopolitical environment. Cikos believes that C3 has made progress in breaking the Beltway deadlock on several fronts, but more work remains to be done.

JMP Securities Analyst Patrick Walravens maintained a buy rating and set a price target of $25.00. While the road has been bumpy for C3, Walravens likes the long-term opportunity at C3 for a number of reasons.

C3 has built an effective, scalable enterprise AI solution that solves problems with significant economic impact across multiple industries. The addressable market opportunity is huge and is estimated at $191 billion in 2021.

CEO Tom Siebel is a veteran technology executive and will likely lead C3 to a good outcome for investors, as was the case with Siebel Systems. Walravens stressed that steps to adapt to…


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