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Tom Siebel, C3 AI Founder & CEO joins Yahoo Finance Live to break down his company's first quarterly earnings resport after going public.
ZACK GUZMAN: I want to shift over to a mover we're watching play out in today's session. Enterprise artificial intelligence company C3.ai seeing shares take quite the dive today-- off more than 13% after reporting earnings yesterday.
After the bell, we had a total revenue for the quarter coming in at 49.1 million up from 41.3 million one year ago-- an increase of 19% year over year and slightly ahead of expectations. But investors were looking at that wider-than-expected loss-- a reported loss of $0.23 a share adjusted. $0.21 a share wider than the $0.16 or $0.15 that analysts had been bracing for. And that is the focus of the stock move today.
And for more on that, I want to bring on the founder and CEO of C3.ai. Tom Siebel joins us now. And Tom, we had talked about this the last time you were on the show. It was day one you guys were trading. This, of course, is the first earnings report we get from you guys.
What do you make of the stock moves off this, because you had kind of warned us on day one of trading that growth was going to be a little bit slower than what you guys had shown before because of the pandemic. So what happens in the quarter?
TOM SIEBEL: Zack, we had a great quarter. We exceeded our expectations. We exceeded the market expectations. We exceeded all analysts' expectations. And today, come on. Everybody's focused on top-line revenue growth. All of the analysts have raised their expectations for next quarter and for next year and for the year after that. I think things look extraordinarily promising.
Now, there's a lot of market volatility out there. And we're focused on doing our job, which is establishing a leadership position in enterprise AI and growing the business. I think we're doing that quite well. I'm confident that if we continue to do that, that the market will take care of itself.
ZACK GUZMAN: Do you think-- I mean, is it more of the focus here on the net loss? Because it could be growing things, I suppose. We always get into this discussion particularly for tech companies that hadn't necessarily shown profitability yet-- what investors out there seem to be emphasizing more. I mean, how do you look at it in terms of focusing in on growth rather than trying to focus in on profitability right now?
TOM SIEBEL: With all due respect, I mean, the company has almost $1 billion in the bank. That's what this financing was all about. And I don't expect-- no one expects this company to cross over into profitability, I think, into until, say, 2023. So this wasn't a net loss story. That's just noise.
I mean, we did spend more money. We invested in branding. We invested in sales. We invested in marketing. We invested in partnerships-- those investments-- for the purpose of accelerating growth, OK, in the coming two, three fiscal years. So I think that's a little bit of a red herring.
It's just that the markets are volatile. And, you know, it's going to be fine. We're focused on our business of establishing market share, creating a leadership position in enterprise AI. And if we do that, we will build world's great software companies.
AKIKO FUJITA: Tom, let's talk about the growth opportunities because you did point to the diversification in your portfolio when you talk about how many sectors your software is operating across. It's interesting to see the growth that you have really seen in oil and gas-- 38% of your business. And you've alluded to the fact that there's a lot of companies that are turning to AI solutions, particularly as it relates to sustainability goals. Can you speak to the scale of the investments in the use cases the way in which these companies are looking at their operations when you think about adapting C3.ai?
TOM SIEBEL: Well, oil and gas, I think, is down. I think it was about 58% of our business a year ago and was something like 38% of our business last quarter. That's just from memory. So those numbers are off a little bit. But it remains a large and rapidly growing sector of our business, although a smaller component of our overall business, as we see growth in aerospace, manufacturing, travel, transportation, defense, intelligence, what have you.
There is a growing, growing emphasis in oil and gas and in oil industries and in all industries on reaching a zero carbon footprint. We're seeing this from Shell. We're seeing it from BP. We're seeing it from Microsoft. We're seeing it from-- many, many leading companies have announced that within a reasonable period of time, they have a zero carbon footprint.
Hey, for an oil and gas company, that's quite a task. And at C3.ai, we are very, very much in the middle of that. And the work that we're doing with that C3.ai Digital Transformation Institute with Berkeley and Stanford and Illinois and Carnegie Mellon and Princeton and others on sponsoring advanced research and using AI for climate and energy security.
This is very important stuff. We're seeing a resurgence of this interest in energy and climate stability. And we're very, very much at the heart of that across all industries.
ZACK GUZMAN: Yeah, that caught my eye too, not just Akiko's there. And it's something that I would ask based off of you guys's full-year guidance for 2021. Revenue projected to be about 180 million there for the full year.
So when you look out into the future, what are you expecting to be the biggest contributor to growth? Is it going to be energy or those other sectors you're talking about? And what maybe are investors overlooking when they look at what the future looks like for C3.ai?
TOM SIEBEL: The analyst's projections for enterprise AI is this is order of approaching, say, $300 billion software market in 2024. So this will be the most rapidly growing enterprise application software market in history. This is an entire replacement market for everything that's happened in enterprise AI in the last 3 1/2 decades.
So this is across every industry-- retailing, travel, transportation, aerospace, TELCO, pharma, chemicals, oil and gas, utilities, et cetera. And so this is the largest addressable market that I've seen in my professional career. Our objective is to see if we can establish and maintain a market leadership position in that market globally. I believe we are a market leader today. And if we do that, this will be one of the great software companies.
AKIKO FUJITA: Finally, Tom, since we have you, I'd love to get your thoughts on this debate that is playing out over in Washington. Senator Elizabeth Warren unveiling this proposal to tax the ultra-wealthy. We're talking about a 2% tax on the net worth. And, of course, I would imagine you would fall into that category as well.
Is this something that you would support as a source of revenue, especially at a time when, at least, the senator says there are so many other needs for additional funding? Her argument has been just 2% is not a lot for those that are the richest in the country.
TOM SIEBEL: Well, I think we need to think about what the alternatives of where that money will go. So if we look at the alternate worth, then we're going to take-- that 2% of the income would normally go into equities to finance jobs, to finance growth of the public sector, because the alternative is to give that 2% to the federal government, OK, to the public sector to finance jobs in this bureau and that bureau and this agency and that agency that I think-- I think that the marginal productivity of that investment, it's going to be an order of magnitude more productive in the private sector.
AKIKO FUJITA: So the argument or your concern is not necessarily with the tax itself but how it's going to be used.
TOM SIEBEL: I think the money-- if the goal is contribute-- is create jobs, if the control, if the goal is grow the economy, OK, if the goal is to innovate, there's absolutely no question that that money is going to be more effectively invested in the private sector than in some government bureaucracy.
AKIKO FUJITA: Tom Siebel, founder and CEO of C3.ai. Always good to talk to you. Hope to have you back on the show again soon.