C3.AI Unable to Deliver

[View in browser]( [The Spill Logo] Proprietary Data Insights Financial Pros’ Top AI Software Stock Searches in the Last Month Rank Name Searches #1 'Microsoft Corp 681 #2 'Palantir Technologies Inc Cl A 520 #3 'C3.Ai Inc Cl A 181 #4 'International Business Machines 150 #5 'Salesforce.com Inc 113 #ad [Investing made easy with a daily quick read]( Brought to you by [Widemoat Research]( [The “Amazon Secret Royalty Program” Can Help Anyone Retire Like Royalty]( [Widemoat Research - The “Amazon Secret Royalty Program” Can Help Anyone Retire Like Royalty]( A unique type of investment could help you make more money than you will need for the rest of your life. It’s what we call the “Amazon secret royalty program.” It’s an income stream that allows you to collect $1,000s… $10,000s… or more every year! In fact, Business Insider says this type of investment could provide “enough money to live off of each year, without having any other retirement plan...” [Learn how to collect your first payout before June 13th.]( Financial Pros Not Impressed With AI [Back in February,]( we covered c3.AI (AI), one of the hottest stocks this year. The company’s stock had an incredible run. Yet, we didn’t see a pathway to profitability. Management tried to address that in its latest conference call. [Profitability] [Source: C3.AI Q4 ‘22 Slide Deck]( Usually, that would be a cause for celebration. However, there’s a growing problem that could put this lofty goal out of reach. C3.ai’s Business C3.ai offers robust enterprise AI software solutions tailored to various industries. Customers across fields such as defense, utilities, agriculture, aerospace, and manufacturing utilize the company’s platform to rapidly design, develop, and deploy AI applications. [AI Applications] [Source: C3.AI Q4 ‘22 Slide Deck]( To give you an idea of what they can do, the company’s software can connect data from different sources, replacing cumbersome Extract Transform Load coding needed to visualize big data. However, it can then suggest what you should look at as well as make predictions. Think of it like replacing your typical IT backhouse programming and then layering on predictive capabilities. Oil & Gas companies currently represent over half the bookings, primarily due to the partnership formed between c3.AI and Baker Hughes in 2022. The partnership focuses on predictive maintenance, product optimization, and asset integrity. While the company’s seen bookings and total customer count improve, revenue growth has slowed dramatically. As we’ll discuss later, the company’s forecasts rely on double-digit growth near 20%. That’s far from certain. Financials [Financials] Source: Stock Analysis Revenue growth from 2022 to 2023 was abysmal. For a stock to sustain its huge gains, the company needs better than 5.6% revenue growth. It may be that the AI craze has simply run its course. Still, there’s good news in the latest quarterly results. AI-generated $27.1 million in cash from operations, its first positive cash flow quarter over any meaningful amount. That’s a big milestone and can help the company invest where it needs since it holds more than $700 million in cash than its debt. Valuation [Valuation] Source: Stock Analysis Without profitability, AI can only be measured on a price-to-sales or similar ratio. To that end, it’s only slightly more expensive than Microsoft (MSFT), but cheaper than recent high-growth achiever Palantir (PLTR). However, AI is cheaper than those two on an enterprise value to sales ratio. It’s worth noting all three are more expensive either IBM (IBM) or Salesforce (CRM), two established companies, the latter with decent growth as well. Growth [Growth] Source: Seeking Alpha AI’s revenue growth is abysmal. CRM does better sales growth and is already profitable, and has a cheaper valuation. In fact, AI, doesn’t show much better growth than MSFT, which is concerning given AI is much smaller. Profitability [Profit] Source: Seeking Alpha AI needs to improve its margins, even gross margin if it wants to remain competitive. Ideally, as a software-only company, they can achieve a gross margin similar to PLTR. [Are Alternative Investments a gray area? The Alt can add some color.]( The most profitable investors stay informed and up to date. Stay on top of Alternative Investment trends with credible articles and videos directly to your inbox with our hand-curated newsletter The Alt. [Subscribe now.]( Our Opinion 2/10 Since our last writeup, Kerrisdale Capital issued a short-seller report making several claims against c3.AI, including: - Recognizing revenues before delivering services (true). - Manipulating margins by reclassifying some costs as R&D to capitalize them (true, but not relevant) - Overstating customer and retention rate by counting trial and inactive accounts (true). - Misleading investors about its competitive position and growth prospects by exaggerating claims about its technology (discussed below). C3.AI certainly did things that aren’t totally on the up and up but aren’t illegal, just crappy ideas. The last accusation is the one everyone wants to know. Will the company live up to its hype? Long-term, we don’t know. But for now, we can’t get behind an unprofitable company that doesn’t have growth at minimum. [-facebook-share]( [-twitter-share]( [-linkedin-share]( [-email-share](mailto:?body= %3Cbr+%2F%3E%0A%3Cb%3EFatal+error%3C%2Fb%3E%3A++Uncaught+Error%3A+Cannot+use+object+of+type+stdClass+as+array+in+%2Fvar%2Fwww%2Fhtml%2Fnl_forms%2Fsrc%2FICTheSpill%2Fautomate-ic-article.php%3A45%0AStack+trace%3A%0A%230+%2Fvar%2Fwww%2Fhtml%2Fnl_forms%2Fsrc%2FICTheSpill%2Fautomate-ic-article.php%28142%29%3A+get_duplicate_article_id%28%29%0A%231+%7Bmain%7D%0A++thrown+in+%3Cb%3E%2Fvar%2Fwww%2Fhtml%2Fnl_forms%2Fsrc%2FICTheSpill%2Fautomate-ic-article.php%3C%2Fb%3E+on+line+%3Cb%3E45%3C%2Fb%3E%3Cbr+%2F%3E?utm_medium=ic-nl&utm_source=112054 ) News & Insights Just Spilled - [Financial Pros Top Stock Search]( - [Tickers Trending Among FinPros & Retail Investors]( - [The Surprising Bank Financial Pros Picked]( - [TWLO – Fin Pros Might Be On To Something]( [News & Insights-facebook-share]( [News & Insights-twitter-share]( [News & Insights-linkedin-share]( [News & Insights-email-share](mailto:?body= %3Cbr+%2F%3E%0A%3Cb%3EFatal+error%3C%2Fb%3E%3A++Uncaught+Error%3A+Cannot+use+object+of+type+stdClass+as+array+in+%2Fvar%2Fwww%2Fhtml%2Fnl_forms%2Fsrc%2FICTheSpill%2Fautomate-ic-article.php%3A45%0AStack+trace%3A%0A%230+%2Fvar%2Fwww%2Fhtml%2Fnl_forms%2Fsrc%2FICTheSpill%2Fautomate-ic-article.php%28142%29%3A+get_duplicate_article_id%28%29%0A%231+%7Bmain%7D%0A++thrown+in+%3Cb%3E%2Fvar%2Fwww%2Fhtml%2Fnl_forms%2Fsrc%2FICTheSpill%2Fautomate-ic-article.php%3C%2Fb%3E+on+line+%3Cb%3E45%3C%2Fb%3E%3Cbr+%2F%3E?utm_medium=ic-nl&utm_source=112054 ) [We want to hear from you. Let us know your thoughts by clicking here]( [Ads] [InvestingChannel Logo](#) Follow us on: [Facebook Logo]( [LinkedIn Logo]( [Twitter Logo]( [Instagram Logo]( To ensure delivery of all emails, [allow us on your list](. Manage your subscriptions with our [preference center](. [Unsubscribe here.]( View our privacy policy [here](. Copyright ©2023 InvestingChannel. All rights reserved. 1325 Avenue of the Americas, Floor 27 & 28 New York, New York 10019 Disclaimer: This is not investment advice. This InvestingChannel, Inc., newsletter is for information purposes only and is based on opinion. Futures, forex, stock, and options trading are not appropriate for all investors. There is a substantial risk of loss associated with trading these markets. Losses can and will occur. No system or methodology has ever been developed that can ensure returns or eliminate losses. InvestingChannel, Inc., makes no representation or implication that using any of the methodologies or systems in this newsletter will generate returns or insure against losses. Investors should be cautious about any and all investments and are advised to conduct their own due diligence prior to making any investment decisions. [Link](