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C3.ai posted a wider Q2 loss y/y with revenues down 20.3% and margins contracting to 54%.
Results were hit by a 43-day government shutdown and weaker sales execution across segments.
Federal, Defense and Aerospace bookings jumped 89% and made up 45% of total bookings.
C3.ai, Inc. (AI - Free Report) reported decent results for the second quarter of fiscal 2026 (ended Oct. 31, 2025). While earnings and revenues beat the Zacks Consensus Estimate, both metrics fell sharply year over year.
AI stock tumbled 1.7% during yesterday’s after-market trading session, following the earnings release.
The quarterly performance was hurt by the 43-day government shutdown and a significant deterioration in sales execution. Notably, the shutdown disrupted federal workflows and slowed decision cycles across the Department of War, civilian agencies, shipbuilding, health care, manufacturing and industrial markets, directly putting pressure on near-term revenue conversion and elongating sales cycles. This weighed on its year-over-year performance despite sequential improvement.
Softer contributions from the Subscription and Professional Services businesses further added to the pressure. Moreover, elevated operating expenses and reduced top-line leverage weighed on the bottom line.
Despite these challenges, the Federal segment remained a key strength, with Federal, Defense, and Aerospace bookings rising 89% year over year and comprising 45% of total bookings. The company also expanded relationships across key U.S. agencies. Management remains confident that disciplined execution will support a return to growth and a path toward cash generation and non-GAAP profitability.
AI’s Q2 Highlights
The company incurred an adjusted loss per share of 25 cents, narrower than the Zacks Consensus Estimate of a loss per share of 32 cents. In the year-ago quarter, it had reported an adjusted loss per share of 6 cents.
Revenues of $75.15 million beat the consensus mark of $75.14 million by 0.04% but tumbled 20.3% year over year. The reported revenues were within the company’s expected range of $72-$80 million.
Subscription revenues were $70.2 million, down from $81.2 million in the year-ago quarter. Professional services revenues declined 62.8% to $4.9 million. The company continued to grapple with declining professional services revenues, which fell sharply from the prior year as customers shifted away from one-time engineering engagements, reducing a historical revenue contributor.
Adjusted gross profit during the fiscal second quarter declined year over year to $40.9 million from $66.3 million, with adjusted gross margins contracting to 54% from 70% a year ago, as a result of a higher mix of cost-intensive Initial Production Deployments (IPDs)
AI’s Balance Sheet & Cash Flow
At fiscal second quarter-end, C3.ai had cash and cash equivalents of $103.2 million, down from $164.4 million at fiscal 2025-end.
Net cash used in operating activities was $80 million in the first half of fiscal 2026 compared with $30.7 million in the year-ago period. Free cash flow at the end of the quarter was negative $46.9 million compared with a negative $39.5 million in the year-ago quarter.
C3.ai Unveils Gloomy Q3 View
The company expects revenues in the third quarter of fiscal 2026 to be between $72 million and $80 million, down 19% to 27% from $98.8 million reported in the year-ago quarter, as macro uncertainty, elongated sales cycles and a heavier mix of early-stage deployments continue to weigh on top-line growth. The Zacks Consensus Estimate for third-quarter revenues is currently pegged at $76 million.
Adjusted loss from operations is expected to be between $44 million and $52 million, wider than $23.1 million reported a year ago.
Fiscal 2026 Full-Year Guidance
The company expects revenues for fiscal 2026 to be between $289.5 million and $309.5 million, down from $389.1 million reported in fiscal 2025 (indicating a 20%–26% decline from the prior year).
Adjusted loss from operations is expected to be between $180.5 million and $210.5 million, up from $88.1 million reported in fiscal 2025.
Innodata Inc. (INOD - Free Report) reported better-than-expected third-quarter 2025 results with adjusted EPS and revenues topping the Zacks Consensus Estimate. Year over year, the top line grew while the bottom line tumbled.
The quarterly performance of Innodata reflects higher demand volumes for its service offerings. The growth was primarily attributable to increased contributions from the DDS and Agility segments, which were somewhat offset by the weak performance of the Synodex segment. Innodata expects 45% or more of organic revenue growth year over year. Innodata also expects continued transformative growth in 2026, given the new award wins and strong market momentum.
CACI International Inc. (CACI - Free Report) reported better-than-expected results for the first quarter of fiscal 2026. It reported first-quarter non-GAAP earnings of $6.85 per share, which beat the Zacks Consensus Estimate by 10.48%. The bottom line increased 15.5% on a year-over-year basis, primarily driven by higher revenues and efficient cost management.
CACI reported a total backlog of $31.4 billion as of Sept. 30, 2025, up 9.8% from $28.6 billion reported a year ago. The funded backlog was $4.2 billion, up 31.3% from $3.2 billion reported a year ago. In the first quarter of fiscal 2026, contract awards totaled $5 billion, with approximately 60% for new business. For fiscal 2026, CACI continues to anticipate revenues between $9.2 billion and $9.4 billion.
Sabre Corporation (SABR - Free Report) reported mixed results for the third quarter of 2025, wherein the top line surpassed the Zacks Consensus Estimate, while the bottom line missed the same. During the quarter, Distribution revenues increased 4% to $575 million, primarily driven by an increase in air and hotel distribution bookings, a favorable travel supplier mix and rate impacts, while IT Solutions’ revenues were $140 million, flat on a year-over-year basis.
For 2025, Sabre now expects its pro-forma revenues (which excludes the recently divested Hospitality Solutions business) to be flat year over year, down from the earlier prediction of a low single-digit percentage increase. For the fourth quarter, Sabre anticipates pro-forma revenue growth in the low single-digit percentage range.
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C3.ai Q2 Earnings Beat Estimates, Stock Tumbles on Cautious Q3 View
Key Takeaways
C3.ai, Inc. (AI - Free Report) reported decent results for the second quarter of fiscal 2026 (ended Oct. 31, 2025). While earnings and revenues beat the Zacks Consensus Estimate, both metrics fell sharply year over year.
AI stock tumbled 1.7% during yesterday’s after-market trading session, following the earnings release.
The quarterly performance was hurt by the 43-day government shutdown and a significant deterioration in sales execution. Notably, the shutdown disrupted federal workflows and slowed decision cycles across the Department of War, civilian agencies, shipbuilding, health care, manufacturing and industrial markets, directly putting pressure on near-term revenue conversion and elongating sales cycles. This weighed on its year-over-year performance despite sequential improvement.
Softer contributions from the Subscription and Professional Services businesses further added to the pressure. Moreover, elevated operating expenses and reduced top-line leverage weighed on the bottom line.
Despite these challenges, the Federal segment remained a key strength, with Federal, Defense, and Aerospace bookings rising 89% year over year and comprising 45% of total bookings. The company also expanded relationships across key U.S. agencies. Management remains confident that disciplined execution will support a return to growth and a path toward cash generation and non-GAAP profitability.
AI’s Q2 Highlights
The company incurred an adjusted loss per share of 25 cents, narrower than the Zacks Consensus Estimate of a loss per share of 32 cents. In the year-ago quarter, it had reported an adjusted loss per share of 6 cents.
C3.ai, Inc. Price, Consensus and EPS Surprise
C3.ai, Inc. price-consensus-eps-surprise-chart | C3.ai, Inc. Quote
Revenues of $75.15 million beat the consensus mark of $75.14 million by 0.04% but tumbled 20.3% year over year. The reported revenues were within the company’s expected range of $72-$80 million.
Subscription revenues were $70.2 million, down from $81.2 million in the year-ago quarter. Professional services revenues declined 62.8% to $4.9 million. The company continued to grapple with declining professional services revenues, which fell sharply from the prior year as customers shifted away from one-time engineering engagements, reducing a historical revenue contributor.
Adjusted gross profit during the fiscal second quarter declined year over year to $40.9 million from $66.3 million, with adjusted gross margins contracting to 54% from 70% a year ago, as a result of a higher mix of cost-intensive Initial Production Deployments (IPDs)
AI’s Balance Sheet & Cash Flow
At fiscal second quarter-end, C3.ai had cash and cash equivalents of $103.2 million, down from $164.4 million at fiscal 2025-end.
Net cash used in operating activities was $80 million in the first half of fiscal 2026 compared with $30.7 million in the year-ago period. Free cash flow at the end of the quarter was negative $46.9 million compared with a negative $39.5 million in the year-ago quarter.
C3.ai Unveils Gloomy Q3 View
The company expects revenues in the third quarter of fiscal 2026 to be between $72 million and $80 million, down 19% to 27% from $98.8 million reported in the year-ago quarter, as macro uncertainty, elongated sales cycles and a heavier mix of early-stage deployments continue to weigh on top-line growth. The Zacks Consensus Estimate for third-quarter revenues is currently pegged at $76 million.
Adjusted loss from operations is expected to be between $44 million and $52 million, wider than $23.1 million reported a year ago.
Fiscal 2026 Full-Year Guidance
The company expects revenues for fiscal 2026 to be between $289.5 million and $309.5 million, down from $389.1 million reported in fiscal 2025 (indicating a 20%–26% decline from the prior year).
Adjusted loss from operations is expected to be between $180.5 million and $210.5 million, up from $88.1 million reported in fiscal 2025.
AI’s Zacks Rank & Recent Computer & Technology Releases
C3.ai currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Innodata Inc. (INOD - Free Report) reported better-than-expected third-quarter 2025 results with adjusted EPS and revenues topping the Zacks Consensus Estimate. Year over year, the top line grew while the bottom line tumbled.
The quarterly performance of Innodata reflects higher demand volumes for its service offerings. The growth was primarily attributable to increased contributions from the DDS and Agility segments, which were somewhat offset by the weak performance of the Synodex segment. Innodata expects 45% or more of organic revenue growth year over year. Innodata also expects continued transformative growth in 2026, given the new award wins and strong market momentum.
CACI International Inc. (CACI - Free Report) reported better-than-expected results for the first quarter of fiscal 2026. It reported first-quarter non-GAAP earnings of $6.85 per share, which beat the Zacks Consensus Estimate by 10.48%. The bottom line increased 15.5% on a year-over-year basis, primarily driven by higher revenues and efficient cost management.
CACI reported a total backlog of $31.4 billion as of Sept. 30, 2025, up 9.8% from $28.6 billion reported a year ago. The funded backlog was $4.2 billion, up 31.3% from $3.2 billion reported a year ago. In the first quarter of fiscal 2026, contract awards totaled $5 billion, with approximately 60% for new business. For fiscal 2026, CACI continues to anticipate revenues between $9.2 billion and $9.4 billion.
Sabre Corporation (SABR - Free Report) reported mixed results for the third quarter of 2025, wherein the top line surpassed the Zacks Consensus Estimate, while the bottom line missed the same. During the quarter, Distribution revenues increased 4% to $575 million, primarily driven by an increase in air and hotel distribution bookings, a favorable travel supplier mix and rate impacts, while IT Solutions’ revenues were $140 million, flat on a year-over-year basis.
For 2025, Sabre now expects its pro-forma revenues (which excludes the recently divested Hospitality Solutions business) to be flat year over year, down from the earlier prediction of a low single-digit percentage increase. For the fourth quarter, Sabre anticipates pro-forma revenue growth in the low single-digit percentage range.