(May 5th, 2023)
By (Driss Sijelmassi, Equity Analyst)
Edited by (Ascanio Cicogna, Head of Research)
C3.AI a new AI leader
These days, we see an increase in the use of artificial intelligence. In fact, AI is constantly developing in fields such as finance, the automotive industry, and healthcare. C3.AI, founded by Tom Siebel in 2009, sells and produces software that solves company problems in various fields, using data to draw predictions for companies and their performance. The different software and applications developed have allowed the company to collaborate with large multinationals such as 3M, Shell, Engie, and the US Department of Defense. C3.AI’s significant investment in research and development, as well as its strong existing software tools, have put it well on its way to building the future of many industries through innovation and technology.
Future of AI
The future of artificial intelligence is promising, with infinite possibilities for improving productivity, efficiency and production quality in several areas. Companies are active in this field, but C3.AI stands out. The company develops software to solve complex problems and thus predict and optimize processes in various fields ranging from energy and finance through to health. For example, in agriculture, autonomous machines are revolutionizing the way in which crops are organized, allowing for more efficient and sustainable production.
With its strategic partnerships and investments in research and development amounting to nearly 40% of total revenues, C3.AI is well positioned to become a leader in artificial intelligence.
Figure 1: Worldwide AI Software Revenue
Source: ir.C3.ai
How C3.AI will lead AI technology?
According to the International Data Corporation, the artificial intelligence industry will be worth around $600 billion by 2025 (Figure 1). C3.AI has many competitors, but what makes it unique is that it’s ability to offer all solutions to develop a software or application on a single interface (Figure 2), allowing customers to save lots of money. Furthermore, C3.AI allows its customers to use their software in combination with any third-party software, a trait that is unique to them.
Figure 2: Portfolio of C3.AI Applications
Source: ir.C3.ai
Figure 3: Example in the banking system
Source: ir.C3.ai
Despite the 2.6$ bn market cap, C3.AI has only just begun its journey, with the number of customers growing very quickly, up 82% between 2021 and 2022. This growth is reflected in the total quarterly revenue, which increased by 42% between the third quarter of 2021 and the third quarter of 2022, from 49 to 70 million dollars. (Figure 4) These revenues are recurring as 83% of C3.AI's revenues are subscription-based. Research and development are an important focus at C3.AI as they allow the company to develop new applications and win over new customers. (Figure 5)
Figure 4: Quarterly Total Revenue Q3 2022
Source: ir.C3.ai
Figure 5: Reinvesting in Growth of the Company
Source: ir.C3.ai
Conclusion: Summary
C3.AI's financial and technological analyses have shown us that it is a reliable company with lots of potential, and a motivated founder, with Thomas Siebel being an experienced entrepreneur and having already created a company that generated $1.3 billion a year before being acquired by Oracle.
in our opinion, there are interesting investment opportunities in the purchase of stocks related to artificial intelligence given their future potential, however, we must be wary, and focus on projects that have strong management teams and realistic missions.
Citations:
Investor relations (2023) C3.ai, Inc. Available at: https://ir.c3.ai/
C3AI investor update spring 2022 (2023) Vimeo. C3.AI. Available at: https://vimeo.com/694158218?embedded=true&source=vimeo=15213134
Simply Wall St (2023) We're not very worried about c3.ai's (NYSE:AI) cash burn rate, Yahoo! Finance. Yahoo! Available at: https://finance.yahoo.com/news/were-not-very-worried-c3-132336386.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAADv3RJ4sVaMfiMkn5pG9d23ZjIi3SPT9GOAf_57YP1SdOyn-eKIc0tBVjSnVqHWXGGWa8M2NqfbtLSYR0kqp3swIsEqP4HH6HlIhFtEfZFjDmbWDrgVhiGaQauaEdl4pBkvSaGAQLUXFUsfPY0ZdeiT2SRiToIHwEwfN7WCdC8yy
New Technology Stack - C3 AI (no date) C3.AI. C3. Available at: https://c3.ai/wp-content/uploads/2019/12/C3.ai-A-New-Technology-Stack.pdf
Legal disclosure:
The projections or other information generated by BSTA regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. As such, BSTA does not assume any legal responsibility for actions that may have been taken by readers associated with any investment projections made by the members of BSTA. There are risks associated with investing in securities. Investing in stocks, bonds, exchange traded funds, mutual funds, and money market funds involve risk of loss. Loss of principal is possible.
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