UBS Reaffirms PT and Rating on C3.AI

“We spent an hour with the company addressing key investor questions following the +21% post earnings move (now +13% since reporting).

Following our meeting, we feel incrementally better about what’s driving the decline in non-license sub revs but we still don’t have a great handle on the revs mix dynamic embedded in the FY26 guide.

If we assume flat license+pro serve revs from 4Q25, to hit the FY26 revs guide midpoint implies non-license sub revs averaging $61m/quarter (+15% vs the 4Q run-rate).

We still have questions given this has been down ~$4m q/q in each of the past two quarters and the pending step-down in Baker Hughes revs this year (unclear how much in non-license sub revs).

One potential explanation for the implied FY26 non-license sub revs ramp that we picked up was the revs lift opportunity from the pilots that have been completed but have not yet moved to a production contract.

There are ~150+ of these “latent” pilots that are still “active” but not currently generating any revs and the company noted the gap between pilot completion and the signing of a production contract can be “many months”.

On Federal, the $350m 4-year expansion of the Air Force contract is an intriguing y/y growth driver but our takeaway was that the associated revs in FY26 are likely going to be modest (we’d estimate ~$25m).

Net, given our lack of visibility into the revs mix dynamic and the stock trading at ~7x CY26 revs we prefer to remain on the sidelines in the near-term.”