C3.ai CEO: AI's impact 'is not ephemeral'

Shares of C3.ai (AI) are rising as the company posted its third-quarter earnings, with revenue increasing 18% to $78.4 million, beating Wall Street estimates of $76.1 million. The company recently named Hitesh Lath as its new CFO; joining in December, he is the tenth person to hold the position within a decade.

C3.ai Chairman and CEO Tom Siebel joins the Live show alongside Yahoo Finance Executive Editor Brian Sozzi to discuss the company's performance and the excitement surrounding artificial intelligence.

Siebel specifies that while federal demand for C3.ai's services is high, there is traction from other industries: "I think [demand] covers every aspect of the economy. Consumer packaged goods, financial services, travel, transportation, entertainment, food distribution, manufacturing, oil and gas, utilities. I mean, this is a fundamental change in the nature of the way we're applying information technology to deliver higher quality products at lower costs and government services into the hands of more satisfied customers and constituents at lower environmental impact. This is a genuine big deal."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Video Transcript

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SEANA SMITH: Shares of C3 AI soaring this morning after reporting a revenue beat and a narrower than expected loss in its fiscal third quarter. Now, subscription revenue are rising. That was up 23% from just a year ago. The report overall another boon to the recent tech rally that we've seen driven by excitement surrounding AI.

We want to bring in Tom Siebel. He's the chairman and CEO of C3 AI. Also, Yahoo Finance executive editor Brian Sozzi joining us here on set.

So Tom, it's great to see you again. Congratulations on another strong quarter here for the company. Sales up 18% from just a year ago. Talk to us a little bit more about what you're seeing demand wise for AI adoption and what your growth prospects look like going forward.

TOM SIEBEL: Well, I think if we look at the enterprise AI opportunity writ large, I'm not certain we've ever seen a market opportunity this substantial. This might be the largest opportunity in the history of enterprise application software. And C3 AI has been kind of developing the platform and applications now for 15 years to address these opportunities in financial services, and consumer packaged goods, and defense, intelligence, oil and gas, what have you. So we're very well positioned to take advantage of this market opportunity and business is good.

BRIAN SOZZI: Tom, it's Brian. Good to see you again. Thanks for hopping on after earnings.

I think investors still may not understand the progress you're making in terms of the federal business. I really enjoyed what you said on the call last night about the military, how you're expanding with our country's military. Walk investors through exactly what you're doing with federal business even specifically within the military.

TOM SIEBEL: Well, AI is clearly a strategic mandate in defense and intelligence. And while they've spent much of the last decade trying to build these applications themselves, today, they're relying on the private sector. So the projects that we're engaged in are, for example, predictive maintenance for assets and aircraft for the United States Air Force. That might be one of the largest enterprise AI applications in deployment on the planet.

Contested logistics for Transcom, multi-domain command and control, common view of the battlefield. We're fusing data from high-orbit sat, low-orbit sat, drones, AIS, ground-based intel, show that you know the various combatant commands can get a common view of the battlefield. So these are examples of applications that we're involved in, in the Department of Defense. And they're strategic, they're important, and it's essential to the security of the free world.

BRAD SMITH: Tom, it's very clear that customers of yours and some of your other industry competitors are trying to figure out how long a term of a contract it makes sense to sign on to while they're trying to discover the value that they're getting out of some of the either generative AI or just broader advanced AI solutions that are being marketed to them right now. What are you hearing from your team? And how are you kind of extracting the most value out of those potential and portfolio clients right now?

TOM SIEBEL: We're in the business of serving customers and delivering our customers with the pricing structures that they want. So our customers have the alternative of licensing our products like month to month in which case they just pay a monthly consumption fee for their usage based upon CPU utilization. Or many customers who are making kind of more strategic investments in C3 AI, multiple applications in multiple business units elect for subscription based pricing where they'll agree to multiyear pricing agreements to basically-- what this enables them is kind of more certainty in their cost structure going forward. So we're basically in the business of you know serving our customers and structuring our pricing models to meet each individual customer's needs.

BRIAN SOZZI: Tom, the last time I saw you physically was at the World Economic Forum in Davos. That was just in early January and the AI trade was hot then. Since then it has been ratcheted up several gears.

I look what NVIDIA reported a couple of weeks ago, I look what even you guys reported here, the investor enthusiasm seems to have reached a new level. As someone that has managed and led through cycles like this, where are we in this cycle and investors just making too much of this moment?

TOM SIEBEL: This is a secular change in the structure of the information technology business. It's difficult to overestimate the power and the impact of AI. You know I think we're in the first half of the first inning and the first batter is on his way to the plate.

This is a-- this is not ephemeral. This is very significant. It's a very important and it's going to be huge.

SEANA SMITH: Tom, when it comes to-- you talked a lot about the traction that you're seeing, demand that you're seeing on the federal side of things. You also have a large presence in manufacturing, state, and local government, agriculture. I'm Curious what you're seeing demand wise from those other industries and where you see the most growth opportunity then going forward.

TOM SIEBEL: I think this covers every aspect of the economy, consumer packaged goods, financial services, travel, transportation, entertainment, food distribution, manufacturing, oil and gas utilities. I mean this is a fundamental change, OK, in the nature of the way that we're applying information technology to deliver higher-quality products at lower cost and government services into the hands of more satisfied customers and constituents at lower environmental impact. This is a genuine big deal. And there is no aspect of the economy that is not fundamentally structured by the application of artificial intelligence.

BRAD SMITH: Tom, I think you gave a master class and really depth-full answer to the Morgan Stanley analysts yesterday on the call. I urge all of our viewers to go check that out. You did lose me at one of the big hobgoblins associated with large language models is data exfiltration though. So I got to go back and wrap my head around that. Tom, thanks so much for taking the time here today. Appreciate it, C3 chairman and CEO, and our own Brian Sozzi.