Wear Your Cowboy Hat for C3.AI, and prepare to ride that bull for years.

Recommendation: Buy & Hold 3-5 Years Company Summary C3.ai Inc is an A.I software as a service company that provides enterprise AI software as a service to solve an organization's cost, efficiency, and revenue optimization problems.  Author's Opinion Being a winner/front runner in A.I is never about the most novel A.I algorithm or method for prediction. Rather, it is about who can make and package predictions at scale for customers. Predictions are only valuable when they can be packaged and consumed for the end-user's decision-making process. C3.AI has certainly demonstrated this. C3.ai has solved this problem by actually building an A.I as a service platform for running standard A.I predictions at scale.  My expectation is C3.ai is currently undervalued. Buying @ 57 ~ 58 could give you a strong return base this year. Financials https://s26.q4cdn.com/925837691/files/doc_financials/2021/q4/C3-AI-4Q21-Presentation.pdf  Q4 2021: Revenue Makeup: 35% Oil Gas 23% Utilities 14 % Industrial 12% Banking 11 % Aerospace Performance Total Revenue of $49.1 million, increased 19% year over year; Revenue $52.3 million +26% Subscription Revenue $43.1 million +17% Gross Profit $40.6 million +26% Remaining Performance Obligations (“RPO”) $293.8 million +23% Non-GAAP Remaining Performance Obligations (“RPO”) $345.1 million +40% Customer Count 89 +82% Market Analysis | C3 A.I already have a foot in the following markets: Revenue Breakdown: Banking (Credit Worthiness, Lending Analysis, and Risk Management). Manufacturing (Defect, Volume, and Operational Monitoring Applications) Energy (C3.AI solves a tough problem of efficiency balancing and routing for Smart Grid Technologies) Carbon Sequestration ( C3.Ai is used for material discovery to optimize carbon-capturing). Agriculture (Monitoring & Yield Optimization). Notable Partnerships Public-Private Partnership R &D Strategy: awarded a $4.4 million grant for research partnerships with universities. To keep R&D costs down, they opt for an open-source R&D with research powerhouses. Also, a very strong play in entering other markets via R&D. The R &D develops key use cases for C3.AI for which to iterate and improve. https://c3.ai/customers/ai-for-aircraft-readiness/  OIL & GAS (Open AI Energy Inititiative with Shell & Microsoft) U.S Airforce USAF implemented C3 AI Readiness, an AI-based solution to effectively predict subsystem failure, identify necessary spare parts, and proactively highlight opportunities to increase mission capability. For the initial project, C3.ai and the USAF worked to aggregate 7 to 10 years of operational data from 10 to 12 sources and then applied AI to identify when aircraft subsystems would fail. Results of the Pilot Implementation  35% reduction in mission impairment issues related to waiting for spare parts. 40% reduction of unscheduled maintenance costs 6% increase in aircraft mission capability Multinational Bank With C3 AI® Smart Lending, a SaaS application built with the C3 AI Suite, the bank can re-engineer its lending process using machine learning to reduce average approval cycle time by 30%. Having formerly worked in Commercial Lending Process (CLP), a 30% reduction in the average approval cycle means banks reduce their opportunity cost of selling, and increase the lifetime value of their customers (cross-selling, renewals, etc). Notable Headlines https://c3.ai/c3-ai-digital-transformation-institute-announces-ai-for-energy-and-climate-security-grantees/  https://www.techrepublic.com/article/researchers-win-4-4-million-in-grants-for-projects-using-ai-to-solve-climate-change/  This isn't a 10x company overnight, so keep an eye out for their customer growth and partnership news. There is a strong expectation that C3.Ai will continue announcing new public and private partnerships in Q3 & Q4. 

back
default-avatar-7

TaiPanda96

Jun 16, 2021

-20.02%

Change % Since Posting

57.90

Price When Posted

-11.59

Change Since Posting

AI

C3.ai Inc - Class A

46.31

-3.13
-6.33%
Current Price

Wear Your Cowboy Hat for C3.AI, and prepare to ride that bull for years.

bullish

Recommendation: Buy & Hold 3-5 Years

 

Company Summary

C3.ai Inc is an A.I software as a service company that provides enterprise AI software as a service to solve an organization's cost, efficiency, and revenue optimization problems. 

Author's Opinion

Being a winner/front runner in A.I is never about the most novel A.I algorithm or method for prediction. Rather, it is about who can make and package predictions at scale for customers. Predictions are only valuable when they can be packaged and consumed for the end-user's decision-making process. C3.AI has certainly demonstrated this.

C3.ai has solved this problem by actually building an A.I as a service platform for running standard A.I predictions at scale. 

My expectation is C3.ai is currently undervalued. Buying @ 57 ~ 58 could give you a strong return base this year.

 

Financials

Q4 2021:

  • Revenue Makeup:
    • 35% Oil Gas
    • 23% Utilities
    • 14 % Industrial
    • 12% Banking
    • 11 % Aerospace
  • Performance
    • Total Revenue of $49.1 million, increased 19% year over year;
    • Revenue $52.3 million +26%
    • Subscription Revenue $43.1 million +17%
    • Gross Profit $40.6 million +26%
    • Remaining Performance Obligations (“RPO”) $293.8 million +23%
    • Non-GAAP Remaining Performance Obligations (“RPO”) $345.1 million +40%
    • Customer Count 89 +82%

Market Analysis | C3 A.I already have a foot in the following markets:

Revenue Breakdown:

  • Banking (Credit Worthiness, Lending Analysis, and Risk Management).
  • Manufacturing (Defect, Volume, and Operational Monitoring Applications)
  • Energy (C3.AI solves a tough problem of efficiency balancing and routing for Smart Grid Technologies)
  • Carbon Sequestration ( C3.Ai is used for material discovery to optimize carbon-capturing).
  • Agriculture (Monitoring & Yield Optimization).

Notable Partnerships

  • Public-Private Partnership R &D Strategy:
    • awarded a $4.4 million grant for research partnerships with universities. To keep R&D costs down, they opt for an open-source R&D with research powerhouses.
    • Also, a very strong play in entering other markets via R&D. The R &D develops key use cases for C3.AI for which to iterate and improve.

OIL & GAS (Open AI Energy Inititiative with Shell & Microsoft)

 

U.S Airforce

    • USAF implemented C3 AI Readiness, an AI-based solution to effectively predict subsystem failure, identify necessary spare parts, and proactively highlight opportunities to increase mission capability. For the initial project, C3.ai and the USAF worked to aggregate 7 to 10 years of operational data from 10 to 12 sources and then applied AI to identify when aircraft subsystems would fail.
    • Results of the Pilot Implementation 
      • 35% reduction in mission impairment issues related to waiting for spare parts.
      • 40% reduction of unscheduled maintenance costs
      • 6% increase in aircraft mission capability

Multinational Bank

    • With C3 AI® Smart Lending, a SaaS application built with the C3 AI Suite, the bank can re-engineer its lending process using machine learning to reduce average approval cycle time by 30%.
      • Having formerly worked in Commercial Lending Process (CLP), a 30% reduction in the average approval cycle means banks reduce their opportunity cost of selling, and increase the lifetime value of their customers (cross-selling, renewals, etc).

Notable Headlines

This isn't a 10x company overnight, so keep an eye out for their customer growth and partnership news. There is a strong expectation that C3.Ai will continue announcing new public and private partnerships in Q3 & Q4. 

 

Comments

Write your comment....

Sign in to comment

read-time
3 min

72.38

Target Price

7/ 10

Confidence

3+ Years

Timeframe
catalyst icon
Earnings Per Share
catalyst icon
Financials
catalyst icon
Management
catalyst icon
Price to Earnings Ratio
catalyst icon
Dividend
catalyst icon
Other Catalyst

AI Channel

Start new chat
aiodd-ad
next