A：The highlights of C 3 Ai's second quarter fiscal year 2026 earnings include solid revenue growth, increased bookings, high-value deal activity, and the closure of several significant agreements. Specifically, the company closed 13 agreements, including six over $5 million and one over $10 million. Despite challenges from a 43-day government shutdown, which created headwinds across the federal business, the company still delivered strong results. Total bookings across federal defense and aerospace increased by 80% year over year and accounted for 40% of total bookings. Notable new and expansion agreements were signed with various departments and agencies such as the US Department of Health and Human Services, the US Department of War, the US intelligence community, the US Army, and the Naval Sea Systems Command, among others.

A：The government shutdown had an adverse effect on C 3 Ai's business, extending for 43 days which was far worse than anticipated. It created significant headwinds across the company's federal business in both the department of defense and civilian sectors. The impact was felt in related markets including shipbuilding, healthcare, manufacturing, and industrials. Nevertheless, the company was able to deliver a strong quarter, showing significant traction in the federal business with total bookings across federal defense and aerospace still increasing substantially.

A：C 3 Ai significantly expanded its contracts with the US intelligence community, addressing the need for a unified approach to process fragmented intelligence information. These new agreements facilitate the integration and analysis of various intelligence types from different sources, providing a common operational picture for analysts. The contracts involve the use of C 3 AI's platform to aggregate all types of intelligence into a single application, enhancing communication and coordination among intelligence analysts. This development supports the federal government's mandate requiring solutions based on commercial off-the-shelf technology and helps partners like Booz Allen meet the cost requirements by enabling them to develop and sublicense applications using the C 3 AI platform.

A：In the private sector, C 3 Ai made encouraging progress with significant customer wins across various industries. These include AMD, GSK, Signature Aviation, Air Products, U.S. Steel, Duke Energy, Cargill, and BAE Systems. These organizations are looking to operationalize AI across their core businesses from finance and R&D to production and supply chain. Notable successes include GSK standardizing on the C 3 AI platform as their enterprise AI operating system to drive critical decisions and improve vaccine demand forecasting accuracy. Signature Aviation has also scaled the use of the platform across their facilities to optimize operations and increase revenue and EBITDA.

A：C 3 AI launched C 3 AI Genic Cross Automation, which enables enterprises to run their operations through autonomous AI agents. This allows customers to describe complex workflows in natural language and have the system build and deploy the resultant AI agents in minutes. This innovation substantially increases the addressable market opportunity, serving the entire robotic process automation market with C 3 AI software agents instead of deterministic routines, significantly expanding the scope of tasks that customers can accomplish with the platform.

A：The management team at C 3 AI has crafted a detailed execution plan to return the company to rapid growth and achieve non GAAP profitability and positive free cash flow. This plan focuses on two primary objectives: driving sales execution with relentless discipline to deliver rapid economic value to customers and double down on products and industries where the company has demonstrable leadership and success. Key strategies include enhanced qualification of leads, rigorous deal reviews, and leveraging integrated product demonstrations (IPDs) as the primary landing zone. The company has also established an execution model to ensure successful IPDs and is concentrating on delivering economic value in every engagement.

A：C 3 AI will prioritize expansions of its strategic Lighthouse accounts, with a focus on areas where it has demonstrable leadership, clear customer success, and a strong competitive position, including industrial asset performance, supply chain optimization, supply and network risk, demand forecasting, production optimization, and generative AI in vertical markets. The company will concentrate its efforts on its fastest-growing sectors, which include federal, state, and local energy, healthcare, manufacturing, and other select commercial markets where it excels.

A：C 3 AI is preparing for the full scale deployment of Enterprise AI by aligning its product roadmap with customer needs to move faster and embed AI as a core operating capability that delivers measurable economic value. The company's platform is designed for this moment and will dramatically increase the speed with which customers can develop and deploy applications, as well as the rate of broad deployment across the enterprise.

A：C 3 AI has completed an exhaustive planning process for Q3, crafting a detailed financial model that measures every dollar expense, allocates human resources, and details revenue sources. The model is designed to facilitate growth and provide a clear pathway to cash generation and non GAAP profitability. The company has set clear operational objectives, tied performance incentives and compensation to these objectives, and assigned them across every department. This framework aims for assertive execution with clear accountability.

A：For the quarter, C 3 AI reported total revenue of $75.1 million, with subscription revenue accounting for 93% at $70.2 million and a quarter-over-quarter increase of 16.5%. The company reduced non GAAP expenses by $10.7 million quarter over quarter, and free cash flow was negative $40.9 million. Non GAAP gross profit was $40.9 million with a margin of 54%, and the non GAAP operating loss was $40.9 million. C 3 AI remains focused on expense management and improving operational efficiency while making strategic investments, as evidenced by the reduction in expenses and overall financial performance.

A：The decline in business growth and increase in losses are attributed to poor sales execution, with a specific mention that the last quarter's performance was unacceptable due to various contributing factors including Tom's health issues.

A：To address the decline, the company is focusing on the robust demand for C and enterprise AI, delivering real economic value, and pursuing a disciplined approach to business execution with an emphasis on high-value opportunities and operational rigor.

A：The revenue mix shifted primarily because of lower professional services (PS) revenue due to low demand in the current quarter. However, the company expects the professional services mix to return to a range of 10% to 20% going forward.

A：The company views the federal business as a durable growth engine for C, with tailwinds from government shifts towards commercial off-the-shelf solutions, a push to adopt AI, and reindustrialization efforts that are expected to result in multi-year generational changes.

A：To ensure better execution and accountability, the speaker is focusing on the successful implementation of integrated product development (IPD) methods. This includes rigorous evaluation, setting clear milestones, and working closely with customers to deliver value quickly. Bookings and IPD production revenue growth will be leading indicators to evaluate progress.