C3 AI's Growth Driven by Microsoft Partnership and Strategy

C3's strategic alliance with Microsoft positions it for significant growth in enterprise AI solutions.

### C3 AI's Growth Strategy: Strategic Alliances and Market Leadership
* 📈 C3 AI has seen a remarkable **60% increase in shares** within a month, driven by strong optimism following a great quarterly performance with a **29% year-over-year revenue growth**.
* 🤝 A significant factor in raising forecasts is the **strategic alliance with Microsoft**, which will enable **thousands of Microsoft's salespeople** to sell C3's enterprise AI software solutions **globally**.
* 💰 In the short term, C3 AI is prioritizing **growth over profitability**, leveraging its substantial cash reserves of nearly **$1 billion** to invest in **market share and leadership**.
* 💡 The partnership with Microsoft allows C3 to **retain virtually 100% of the revenue** from its sales, while Microsoft benefits from selling its cloud services, creating a **dramatic revenue accelerator**.
* 🛡 C3 AI differentiates itself by offering **over 100 turnkey enterprise applications** across various sectors, making it **unique in the market**.
* 🏛 The company anticipates **continued strong sales** in the defense and intelligence sectors, particularly under a potential Trump administration, which may prioritize **air applications and cyber efficiency**.
* 🚀 Overall, C3 AI's strategic initiatives and partnerships position it well for **future growth and market dominance**, despite concerns about **competition and profitability**.

Your shares are down a little bit, but boy, they've ramped up 60% in less than a month. So, a lot of optimism going into these numbers. What drove you to raise the forecast? Well, it was a great quarter. The year to date has been great.

I think our revenue growth year-over-year last quarter was 29%, which is huge. I think most importantly, we formed this massive strategic alliance with Microsoft, the largest software company in the world, and all of Microsoft's salespeople

worldwide will be selling C3 as enterprise AI software solutions, you know, on their price list. Getting poor credit, being compensated. And so we see three AI guys from over 100 salespeople in September to perhaps tens of thousands of salespeople in November.

So that is a very strong tailwind that bodes extraordinarily well for C3. There is this slight worry about profitability, saying that basically, you're prioritizing revenue growth rather than profitability. What do you say to that, Tom?

In the short term, we're prioritizing growth. You know, I have this huge enterprise sales engine in the form of Microsoft that now we need to enable. And we really did not invest in that channel to get thousands of people productive selling and servicing our product; not investing in that is

crazy. Goodness, Caroline, we have roughly three quarters of $1,000,000,000 in cash in the bank. And what am I going to do with that if not invest in growth, and not invest in market share, and not invest in market leadership?

And I assure you, the cash flow and profitability follow. Okay. So how profitable, for example, would a deal like the Microsoft extension be? Because you are obviously digging in on that partnership. They help distribute your offerings, but how much revenue do you have to give up

for that?
Virtually 100% of the revenue from C3 sales accrues to C3. So, Microsoft gets the benefit of selling their infrastructure and cloud services. C3 gets the benefit of selling the C3 applications.

But a very small portion of the revenue is given up. And this is just a dramatic revenue accelerator. This is the largest software company in the world, and they have chosen C3 AI as their preferred enterprise solutions provider.

Strategic partnerships just don't get bigger than this. They don't. And certainly, Piper and the analysts are saying this potentially drives material upside. There are, though, and I hate to keep going back to some of the flies in the

ointment, but I keep worrying about the differentiation here, Tom, of your offering. How do you make clear your USP versus rivals out there?

There is one company on the planet Earth, Caroline, that offers over 100 turnkey enterprise applications for utilities, oil and gas, defense, intelligence, pharmaceuticals, and child fatality. One company on the planet Earth that offers these kinds of solutions, and that is our differentiation and federal strength. You listed a lot within defense and

With ultimately, you've got a government focused, in many ways, that has seen a lot of selling into federal. Will it continue? Any issues about the administration coming on in 2025? Under Trump, the business and the defense intelligence and federal community has

been very strong. I expect that to accelerate in a Trump administration, with people like Elon getting involved. I think their priorities, if we listen to their conferences and we go to, for example, the Reagan Defense Forum that took place last week, there is one topic

on the agenda, and that is air applications, air applications, air applications. And then they also talk about cyber. But this is clearly going to be a huge priority for making government more efficient, and it is the future of our defense and intelligence

community. So this bodes extraordinarily well for the commercial software providers like CCI and perhaps bodes well for the traditional kind of Beltway systems integrators. I think that, you know, the tide might be going out for those guys.

C3 AI: Microsoft Partnership a 'Revenue Accelerator'

Welcome to the Bloomberg Technology YouTube channel. Subscribe for original series and mini-docs on game-changing technologies, profiles on innovators, live conversations with experts, and breaking technology news & analysis from Bloomberg TV.

Bloomberg Technology

Strong Qtr Results and Microsoft Partnership

Stock price increase and positive outlook due to strong quarterly and year-to-date performance.

Significant revenue growth (29% YoY last quarter).

Strategic alliance with Microsoft for selling C3 AI software.

Concerns raised about prioritizing revenue growth over profitability.

Justification for prioritizing growth due to the Microsoft partnership and available cash reserves.

Microsoft Partnership Details and Revenue Sharing

C3 retains almost all revenue from C3 sales; Microsoft benefits from selling infrastructure and cloud services.

Partnership described as a significant revenue accelerator and a strong strategic move.

Analysts see potential for significant upside.

Differentiation lies in offering over 100 turnkey enterprise applications across various sectors.

Discussion on continued government focus and potential impact of the 2025 administration change.

Expectation of accelerated growth under a Trump administration, focusing on air applications and cyber.

Positive outlook for commercial software providers due to government priorities.