C3.ai, Inc. (NYSE:AI) Q2 2023 Earnings Call Transcript

Juho Parkkinen : It’s just the related party is relating to Baker Hughes. So Baker Hughes is our, of course, still a significant shareholder of C3 AI, and any revenues that we interact with Baker Hughes is direct purchases. We call them out in the financials.

Patrick Walravens : Yes. And so Tom, the bear case would be that in some way is a lower quality revenue, what would your response be to that?

Tom Siebel : Oh, boy…

Patrick Walravens : I’m not sure you have one, but…

Tom Siebel : I don’t know how to respond, Pat. We’re going to be doing a lot more deals, a lot more customers. We’re going to convert a lot more of them into production, and they’re going to grow just like Shell, Baker Hughes, Koch and everybody else has grown. And there’s — so right now, things are looking pretty promising. I think we’re right on track.

Patrick Walravens : Okay. Great. Last one, and this one is probably for you, Tom. So you signed — it’s been a year since you signed that $500 million production, other transaction agreement with the Department of Defense. How would you say it’s going so far versus your original expectations?

Tom Siebel : DoD is really big. So I think that year-over-year, DoD grew by what percent?

Juho Parkkinen : 100%.

Tom Siebel : Roughly 100%. 100% in terms of bookings. DoD is a real bright point, Pat, and you’re talking specifically on MDA, the MDA agreement applies to all of DoD, by the way, okay? And then we have agreement with RSO, and you will announce not in this release, but tomorrow morning as the announcement about a big partnership that we’re doing with Booz Allen Hamilton, okay, in all of the Federal, particularly DoD. But that business is looking strong.

Operator: And our next question, Sanjit Singh with Morgan Stanley.

Unidentified Analyst: Excellent. This is for Sanjit. I really just want to touch on sort of the consumption growth that you’re seeing, especially with the Ex Machina product. Just if you can sort of provide any color on, one, how you see consumption trending with those customers? And then how you expect that going forward? And maybe sort of related to this environment, how are customers using it maybe differently than they have before?

Tom Siebel : Okay. Great. This is Tom. And I would say, of the various products that we have in the marketplace today, okay, of which we have, I think, 42 production products, Ex Machina being one of them, okay? We are underperforming on the execution of Ex Machina sales. It is a dramatically superior product to other products that are out there in the marketplace. That big set, it’s kind of order of $1,000 thing, okay, in terms of the unit, okay? And we really haven’t put the sales motion together to do that at scale. Now we’ve taken the objectives to get after it, but I cannot look you in the eye and say, that we’re hitting that ball over the left field fast, because we’re not, okay? And it’s a great product. Our customers love it. We have somebody — we have three customers that have much greater consumption whether…

Juho Parkkinen : Baker Hughes and Con Edison almost 300% increase.

Tom Siebel : 300% increase there. But can I look you in and tell you that we’re killing, that we’re realizing the potential of that product, that product could be an entire separate company, okay? Our CRM product could be an entire separate company, our ESG product could be an entire separate company, stand-alone company. And in all three of those, I think we really need to get full it going, and we haven’t done that yet.

Unidentified Analyst: Okay. That’s helpful. I mean, your commentary sounds worse than the 270% consumption increase that you’re seeing there. Any color sort of on what’s enabling that increase in consumption? And then two, how are you — in your other products, like trying to enable similar consumption rates, is there anything sort of to highlight that you’re doing differently there to get to those kind of trends that you’re seeing in this product, although you’re not highlighting it specifically?

Tom Siebel : Do you want to focus on Ex Machina — or is it about Ex Machina or is this about overall products?

Unidentified analyst: This is more broadly.

Tom Siebel : More broadly. Go ahead, Juho.