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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 001-39744
C3.ai, Inc.
(Exact name of registrant as specified in its charter)

Delaware26-3999357
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
1300 Seaport Blvd,Suite 500
Redwood City,CA94063
(Address of principal executive offices)(Zip code)
Registrant's telephone number, including area code: (650) 503-2200
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.001 per shareAINew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes     No   
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes        No  
As of February 28, 2022, the registrant had outstanding 102,871,811 shares of Class A common stock and 3,499,992 shares of Class B common stock.
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TABLE OF CONTENTS
Page
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations or financial condition, business strategy, plans and objectives of management for future operations, and the benefits and timing of the rollout of new technology, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:
our expectations regarding our revenue, expenses, and other operating results, including statements relating to the portion of our remaining performance obligations that we expect to be recognized as revenue in future periods;
our ability to acquire new customers and successfully retain existing customers;
our ability to increase usage of our C3 AI Software, which includes our C3 AI Suite, C3 AI Applications, C3 AI Ex Machina, C3 AI CRM and C3 AI Data Vision;
our ability to achieve or sustain profitability;
future investments in our business, our anticipated capital expenditures, and our estimates regarding our capital requirements;
the costs and success of our sales and marketing efforts, and our ability to promote our brand;
our growth strategies for our C3 AI Software;
our expectations regarding our C3 AI Software;
the estimated addressable market opportunity for our C3 AI Software;
our reliance on key personnel and our ability to identify, recruit, and retain skilled personnel;
our ability to effectively manage our growth, including any international expansion;
our ability to protect our intellectual property rights and any costs associated therewith;
the effects of the ongoing coronavirus, or COVID-19, pandemic or other public health crises;
our ability to compete effectively with existing competitors and new market entrants; and
the growth rates of the markets in which we compete.
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” contained in Part II, Item 1A of this Quarterly Report on Form 10-Q and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that such information provides a reasonable basis for these statements, that information may be limited or incomplete.
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Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.

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SELECTED RISKS AFFECTING OUR BUSINESS
Investing in our Class A common stock involves numerous risks, including the risks described in the section titled “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. Below is a summary of some of the risks and uncertainties as of the date of the filing of this Quarterly Report on Form 10-Q, any one of which could materially adversely affect our business, financial condition, operating results, and prospects. You should read this summary together with the more detailed description of each risk factor contained below.
Risks Related to Our Business and Our Industry
We have a limited operating history, which makes it difficult to evaluate our prospects and future results of operations.
Historically, a limited number of customers have accounted for a substantial portion of our revenue. If existing customers do not renew their contracts with us, or if our relationships with our largest customers are impaired or terminated, our revenue could decline, and our results of operations would be adversely impacted.
Our business depends on our ability to attract new customers and on our existing customers purchasing additional subscriptions from us and renewing their existing subscriptions.
We have a history of operating losses and may not achieve or sustain profitability in the future.
We face intense competition and could lose market share to our competitors, which could adversely affect our business, financial condition and results of operations.
Our sales cycles can be long and unpredictable, particularly with respect to large subscriptions, and our sales efforts require considerable time and expense.
If the market for our C3 AI Software fails to grow as we expect, or if businesses fail to adopt our C3 AI Software, our business, operating results, and financial condition could be adversely affected.
If we fail to respond to rapid technological changes, extend our C3 AI Software, or develop new features and functionality, our ability to remain competitive could be impaired.
If we were to lose the services of our Chief Executive Officer, or CEO, or other members of our senior management team, we may not be able to execute our business strategy.
The COVID-19 pandemic had and could continue to have an adverse impact on our business, our operations, and the markets and communities in which we, our partners, and our customers operate.
Our actual or perceived failure to comply with privacy or data protection laws, regulations, or obligations could harm our business.
If we or our service providers experience a security breach or unauthorized parties otherwise obtain access to our customers’ data, our data, or our C3 AI Software, our C3 AI Software may be perceived as not being secure, our reputation may be harmed, demand for our software may be reduced, and we may incur significant liabilities.
Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could adversely affect our financial results or financial condition.
Risks Related to Our International Operations
We are continuing to expand our operations outside the United States, where we may be subject to increased business and economic risks that could harm our business.
We are subject to governmental export and import controls that could impair our ability to compete in international markets or subject us to liability if we are not in compliance with applicable laws.
5

Risks Related to Taxes
Our results of operations may be harmed if we are required to collect sales or other related taxes for our subscriptions in jurisdictions where we have not historically done so.
Risks Related to Our Intellectual Property
We are currently, and may be in the future, party to intellectual property rights claims and other litigation matters, which, if resolved adversely, could harm our business.
Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses.
Our failure to protect our intellectual property rights and proprietary information could diminish our brand and other intangible assets.
Our use of third-party open source software could negatively affect our ability to offer and sell subscriptions to our C3 AI Software and subject us to possible litigation.
Risks Related to Ownership of Our Class A Common Stock
The trading price of our Class A common stock may be volatile, and you could lose all or part of your investment.
The dual class structure of our common stock has the effect of concentrating voting control to our Chairman and CEO, Thomas M. Siebel.
Provisions in our corporate charter documents and under Delaware law may prevent or frustrate attempts by our stockholders to change our management or hinder efforts to acquire a controlling interest in us, and the market price of our Class A common stock may be lower as a result.
General Risks
If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
Our business could be disrupted by catastrophic events.
6

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
C3.AI, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)
(Unaudited)
January 31, 2022April 30, 2021
Assets
Current assets
Cash and cash equivalents$204,531 $115,355 
Short-term investments764,104 978,020 
Accounts receivable, net of allowance of $57 and $812 as of January 31, 2022 and April 30, 2021, respectively(1)
68,178 65,460 
Prepaid expenses and other current assets(2)
25,754 14,302 
Total current assets1,062,567 1,173,137 
Property and equipment, net5,297 6,133 
Goodwill625 625 
Long-term investments54,012  
Other assets, non-current(3)
65,006 16,582 
Total assets$1,187,507 $1,196,477 
Liabilities and stockholders’ equity
Current liabilities
Accounts payable(4)
$14,478 $12,075 
Accrued compensation and employee benefits22,588 21,829 
Deferred revenue, current(5)
58,524 72,263 
Accrued and other current liabilities(6)
33,598 18,318 
Total current liabilities129,188 124,485 
Deferred revenue, non-current924 2,964 
Other long-term liabilities(7)
30,720 7,853 
Total liabilities160,832 135,302 
Commitments and contingencies (note 6)
Stockholders’ equity
Class A common stock, $0.001 par value. 1,000,000,000 shares authorized as of January 31, 2022 and April 30, 2021; 102,784,741 and 98,667,121 shares issued and outstanding as of January 31, 2022 and April 30, 2021, respectively
103 99 
Class B common stock, $0.001 par value; 3,500,000 shares authorized as of January 31, 2022 and April 30, 2021; 3,499,992 and 3,499,992 shares issued and outstanding as of January 31, 2022 and April 30, 2021, respectively
3 3 
Additional paid-in capital1,510,343 1,410,325 
Accumulated other comprehensive (loss) income(796)81 
Accumulated deficit(482,978)(349,333)
Total stockholders’ equity1,026,675 1,061,175 
Total liabilities and stockholders’ equity$1,187,507 $1,196,477 
(1)     Including amounts from a related party of $15,727 and $15,180 as of January 31, 2022 and April 30, 2021, respectively.
(2)     Including amounts from a related party of $5,010 and $1,662 as of January 31, 2022 and April 30, 2021, respectively.
(3)     Including amounts from a related party of $17,356 and $6,602 as of January 31, 2022 and April 30, 2021, respectively.
(4)     Including amounts from a related party of $2,415 and $56 as of January 31, 2022 and April 30, 2021, respectively.
(5)     Including amounts from a related party of $575 and $7,697 as of January 31, 2022 and April 30, 2021, respectively.
(6)     Including amounts from a related party of $18,534 and $3,413 as of January 31, 2022 and April 30, 2021, respectively.
(7)     Including amounts from a related party of $2,448 and $4,895 as of January 31, 2022 and April 30, 2021, respectively.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7

C3.AI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended January 31,Nine Months Ended January 31,
2022202120222021
Revenue
Subscription(1)
$57,084 $42,699 $150,614 $114,248 
Professional services(2)
12,689 6,410 29,828 16,685 
Total revenue69,773 49,109 180,442 130,933 
Cost of revenue
Subscription(3)
12,275 7,023 32,880 22,694 
Professional services5,079 5,203 13,470 10,113 
Total cost of revenue17,354 12,226 46,350 32,807 
Gross profit52,419 36,883 134,092 98,126 
Operating expenses
Sales and marketing(4)
43,146 28,450 126,134 64,898 
Research and development40,931 18,748 104,166 48,145 
General and administrative15,748 8,184 43,391 21,433 
Total operating expenses99,825 55,382 273,691 134,476 
Loss from operations(47,406)(18,499)(139,599)(36,350)
Interest income410 129 1,077 997 
Other income (expense), net7,742 1,721 5,471 4,163 
Net loss before provision for income taxes(39,254)(16,649)(133,051)(31,190)
Provision for income taxes193 203 594 456 
Net loss$(39,447)$(16,852)$(133,645)$(31,646)
Net loss per share attributable to Class A common shareholders, basic and diluted$(0.38)$(0.23)$(1.29)$(0.64)
Net loss per share attributable to Class A-1 common shareholders, basic and diluted$ $(0.10)$ $(0.52)
Net loss per share attributable to Class B common shareholders, basic and diluted$(0.38)$(0.13)$(1.29)$(0.12)
Weighted-average shares used in computing net loss per share attributable to Class A common stockholders, basic and diluted101,593 68,648 100,341 43,481 
Weighted-average shares used in computing net loss per share attributable to Class A-1 common stockholders, basic and diluted 6,667  6,667 
Weighted-average shares used in computing net loss per share attributable to Class B common stockholders, basic and diluted3,500 3,500 3,500 3,500 
(1)     Including related party revenue of $19,740 and $7,951 for the three months ended January 31, 2022 and 2021, respectively, and $39,960 and $21,571 for the nine months ended January 31, 2022 and 2021, respectively.
(2)     Including related party revenue of $4,892 and nil for the three months ended January 31, 2022 and 2021, respectively, and $12,890 and nil for the nine months ended January 31, 2022 and 2021, respectively.
(3)     Including related party cost of revenue of $191 and nil for the three months ended January 31, 2022 and 2021, respectively, and $388 and nil for the nine months ended January 31, 2022 and 2021, respectively.
(4)     Including related party sales and marketing expense of $2,398 and nil for the three months ended January 31, 2022 and 2021, respectively, and $2,590 and nil for the nine months ended January 31, 2022 and 2021, respectively.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
9

C3.AI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
Three Months Ended January 31,Nine Months Ended January 31,
2022202120222021
Net loss$(39,447)$(16,852)$(133,645)$(31,646)
Other comprehensive loss
Unrealized loss on available-for-sale marketable securities, net of tax(556)(49)(877)(411)
Total comprehensive loss$(40,003)$(16,901)$(134,522)$(32,057)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
10

C3.AI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK,
REDEEMABLE CONVERTIBLE CLASS A-1 COMMON STOCK AND STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
Three Months Ended January 31, 2022
Redeemable Convertible Preferred StockRedeemable Convertible A-1 Common StockCommon StockAdditional Paid-In CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’
Equity
SharesAmountSharesAmountSharesAmount
Balance as of October 31, 2021 $  $ 104,871 $105 $1,470,176 $(240)$(443,531)$1,026,510 
Issuance of Class A common stock upon exercise of stock options, net of repurchases— — — — 1,397 1 8,323 — — 8,324 
Vesting of early exercised Class A common stock options— — — — — — 483 — — 483 
Vesting of restricted stock units— — — — 17 — — — — — 
Stock-based compensation expense— — — — — — 31,361 — — 31,361 
Other comprehensive loss— — — — — — — (556)— (556)
Net loss— — — — — — — — (39,447)(39,447)
Balance as of January 31, 2022 $  $ 106,285 $106 $1,510,343 $(796)$(482,978)$1,026,675 

Nine Months Ended January 31, 2022
Redeemable Convertible Preferred StockRedeemable Convertible A-1 Common StockCommon StockAdditional Paid-In CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’
Equity
SharesAmountSharesAmountSharesAmount
Balance as of April 30, 2021 $  $ 102,167 $102 $1,410,325 $81 $(349,333)$1,061,175 
Issuance of Class A common stock upon exercise of stock options, net of repurchases— — — — 4,064 4 19,814 — — 19,818 
Vesting of early exercised Class A common stock options— — — — — — 2,391 — — 2,391 
Vesting of restricted stock units— — — — 54 — — — — — 
Stock-based compensation expense— — — — — — 77,813 — — 77,813 
Other comprehensive loss— — — — — — — (877)— (877)
Net loss— — — — — — — — (133,645)(133,645)
Balance as of January 31, 2022 $  $ 106,285 $106 $1,510,343 $(796)$(482,978)$1,026,675 
11

Three Months Ended January 31, 2021
Redeemable Convertible Preferred StockRedeemable Convertible A-1 Common StockCommon StockAdditional Paid-In CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTotal Stockholders’
Deficit
SharesAmountSharesAmountSharesAmount
Balance as of October 31, 202037,129 $399,753 6,667 $18,800 32,981 $33 $124,009 $62 $(308,431)$(184,327)
Conversion of redeemable convertible preferred stock to common stock upon initial public offering(37,129)(399,753)(6,667)(18,800)43,796 44 418,509 — — 418,553 
Issuance of common stock upon initial public offering and private placements, net of underwriting discounts— — — — 21,396 21 844,625 — — 844,646 
Issuance of Class A common stock upon exercise of stock options— — — — 2,759 3 4,800 — — 4,803 
Vesting of early exercised Class A common stock options— — — — — — 749 — — 749 
Stock-based compensation expense— — — — — — 6,589 — — 6,589 
Other comprehensive loss— — — — — — — (49)— (49)
Net loss— — — — — — — — (16,852)(16,852)
Balance as of January 31, 2021 $  $ 100,932 $101 $1,399,281 $13 $(325,283)$1,074,112 

Nine Months Ended January 31, 2021
Redeemable Convertible Preferred StockRedeemable Convertible A-1 Common StockCommon StockAdditional Paid-In CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTotal Stockholders’
Deficit
SharesAmountSharesAmountSharesAmount
Balance as of April 30, 202037,129 $375,207 6,667 $18,800 31,210 $31 $110,485 $424 $(293,637)$(182,697)
Repayment of shareholder loan— 24,546 — — — — 1,457 — — 1,457 
Conversion of redeemable convertible preferred stock to common stock upon initial public offering(37,129)(399,753)(6,667)(18,800)43,796 44 418,509 — — 418,553 
Issuance of common stock upon initial public offering and private placements, net of underwriting discounts— — — — 21,396 21 844,625 — — 844,646 
Issuance of Class A common stock upon exercise of stock options— — — — 4,530 5 7,862 — — 7,867 
Vesting of early exercised Class A common stock options— — — — — — 2,073 — — 2,073 
Stock-based compensation expense— — — — — — 14,270 — — 14,270 
Other comprehensive loss— — — — — — — (411)— (411)
Net loss— — — — — — — — (31,646)(31,646)
Balance as of January 31, 2021 $  $ 100,932 $101 $1,399,281 $13 $(325,283)$1,074,112 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
12

C3.AI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended January 31,
20222021
Cash flows from operating activities:
Net loss$(133,645)$(31,646)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization3,761 3,189 
Non-cash operating lease cost2,369 2,474 
Stock-based compensation expense77,813 14,270 
Other255 (115)
Changes in operating assets and liabilities
Accounts receivable(1)
(1,963)588 
Prepaid expenses, other current assets and other assets(2)
(21,108)(6,931)
Accounts payable(3)
2,237 7,447 
Accrued compensation and employee benefits759 4,303 
Operating lease liabilities(2,303)(2,636)
Other liabilities(4)
14,304 1,213 
Deferred revenue(5)
(15,779)2,016 
Net cash used in operating activities(73,300)(5,828)
Cash flows from investing activities:
Purchases of property and equipment(2,183)(1,166)
Capitalized software development costs
(500) 
Proceeds from sale of non-marketable equity security
 725 
Purchases of investments(540,290)(232,287)
Maturities and sales of investments698,312 280,997 
Net cash provided by investing activities155,339 48,269 
Cash flows from financing activities:
Proceeds from initial public offering and private placements, net of underwriting discounts 851,859 
Proceeds from repayment of shareholder loan 26,003 
Payment of deferred offering costs(105)(6,710)
Proceeds from exercise of Class A common stock options19,334 13,825 
Net cash provided by financing activities19,229 884,977 
Net increase in cash, cash equivalents and restricted cash101,268 927,418 
Cash, cash equivalents and restricted cash at beginning of period116,255 33,604 
Cash, cash equivalents and restricted cash at end of period$217,523 $961,022 
Cash and cash equivalents$204,531 $960,122 
Restricted cash included in other assets12,992 900 
Total cash, cash equivalents and restricted cash$217,523 $961,022 
Supplemental disclosure of cash flow information—cash paid for income taxes$677 $435 
Supplemental disclosures of non-cash investing and financing activities:
Purchases of property and equipment included in accounts payable and accrued liabilities$483 $349 
Right-of-use assets obtained in exchange for lease obligations$26,529 $ 
Unpaid liabilities related to intangible purchases$2,500 $ 
Receivable from exercise of stock options included in prepaid expenses, other current assets and other assets$45 $ 
Deferred offering costs included in accounts payable and accrued liabilities$ $503 
Vesting of early exercised stock options$2,391 $2,073 
(1)Including changes in related party balances of $547 and $(780) for the nine months ended January 31, 2022 and 2021, respectively.
(2)Including changes in related party balances of $14,102 and nil for the nine months ended January 31, 2022 and 2021, respectively.
(3)Including changes in related party balances of $2,359 and nil for the nine months ended January 31, 2022 and 2021, respectively.
(4)Including changes in related party balances of $12,674 and nil for the nine months ended January 31, 2022 and 2021, respectively.
(5)Including changes in related party balances of $(7,122) and $7,859 for the nine months ended January 31, 2022 and 2021, respectively.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
13

C3.AI, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.Summary of Business and Significant Accounting Policies
Business
C3.ai, Inc. (including its subsidiaries, “C3 AI” or “the Company”) is an enterprise artificial intelligence (“AI”) software provider. C3 AI supports accelerating digital transformation in various industries with its C3 AI Suite, its C3 AI Ex Machina, C3 AI CRM and C3 AI Data Vision solutions, and its prebuilt and configurable C3 AI Applications for a variety of business use cases including predictive maintenance, fraud detection, sensor network health, supply network optimization, energy management, anti-money laundering, and customer engagement. The Company supports customers in the United States, Europe, and the rest of the world. The Company was initially formed as a limited liability company in Delaware on January 8, 2009 and converted to a Delaware corporation in June 2012.
Reclassification and Reverse Stock Split
In November 2020, the Company amended and restated its certificate of incorporation to effect a reclassification of the Company’s prior Class B common stock and Class C common stock into Class A common stock, and redeemable convertible Class B-1 common stock into a new redeemable convertible Class A-1 common stock. The rights, including the liquidation, dividend, and voting rights, are substantially identical for each class of common stock reclassified. All references to prior Class B common stock and Class C common stock have been recast to Class A common stock, and all references to redeemable convertible Class B-1 common stock have been recast to redeemable convertible Class A-1 common stock in these condensed consolidated financial statements to give retrospective effect to the reclassification for all periods presented. The Company also authorized a new Class B common stock. The rights, including the liquidation and dividend rights, of the Class A common stock and the new Class B common stock are substantially identical, other than the voting rights and conversion rights upon transfer of the Class B common stock. See Note 8. Stockholders’ Equity for more information.
Additionally, the Company effected a 6-for-1 reverse stock split of the Company’s outstanding common stock, preferred stock, and stock option awards. The par value of the common stock and preferred stock was not adjusted as a result of the reverse stock split. The authorized shares of the Class A common stock, new Class A-1 common stock, new Class B common stock and preferred stock were also adjusted to 390,000,000 shares, 6,666,667 shares, 21,000,000 shares, and 233,107,379 shares, respectively. All authorized, issued, and outstanding shares of common stock, preferred stock, stock option awards, and per share data included in these condensed consolidated financial statements have been recast to give retrospective effect to the adjusted authorized shares and reverse stock split for all periods presented.
Initial Public Offering and Concurrent Private Placements
In December 2020, the Company completed its initial public offering (“IPO”), in which the Company issued and sold 17,825,000 shares of its Class A common stock at $42.00 per share, which included 2,325,000 shares issued upon the exercise of the underwriters’ over-allotment option to purchase additional shares. The Company received net proceeds of $694.6 million after deducting underwriting discounts and other offering expenses. In connection with the IPO:
all 33,628,776 shares of the Company’s outstanding redeemable convertible preferred stock, except the Series A* preferred stock, automatically converted into an equivalent number of shares of Class A common stock on a one-to-one basis;
all 3,499,992 shares of the Company’s outstanding redeemable convertible Series A* preferred stock automatically converted into an equivalent number of shares of Class B common stock on a one-to-one basis;
all 6,666,665 shares of the Company’s outstanding redeemable convertible Class A-1 common stock automatically converted into an equivalent number of shares of Class A common stock on a one-to-one basis; and
the Company amended and restated its certificate of incorporation which became effective upon completion of the IPO.
14

C3.AI, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Deferred offering costs consist primarily of direct and incremental accounting, legal and other fees related to the Company’s IPO. Prior to the IPO, all deferred offering costs incurred were capitalized and included in other assets on the condensed consolidated balance sheet. Upon completion of the IPO, $7.2 million of deferred offering costs were reclassified into stockholders’ equity as a reduction of the IPO proceeds.
The Company also completed a concurrent private placement immediately subsequent to the closing of the IPO, in which the Company issued and sold 2,380,952 and 1,190,476 shares, respectively, of its Class A common stock at $42.00 per share to Spring Creek Capital LLC, an affiliate of Koch Industries, Inc., and Microsoft Corporation (the “Concurrent Private Placement”). The Company received aggregate proceeds of $150.0 million and did not pay underwriting discounts with respect to the shares of Class A common stock that were sold in the Concurrent Private Placement.
Basis of Presentation and Principles of Consolidation
The Company prepares its unaudited condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with U.S. GAAP. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2021, which was filed with the SEC on June 25, 2021.
In management’s opinion, these unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of January 31, 2022, and the results of operations for the three and nine months ended January 31, 2022. The results of operations for the three and nine months ended January 31, 2022, are not necessarily indicative of the results to be expected for the full year or any other future interim or annual period.
The condensed consolidated financial statements include the accounts of C3.ai, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the accompanying unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenue and expenses. Actual results and outcomes could differ significantly from the Company’s estimates, judgments, and assumptions. Significant estimates include determining standalone selling price for performance obligations in contracts with customers and estimating variable consideration, the estimated expected benefit period for deferred contract acquisition costs, the useful lives of long-lived assets and other assumptions used to measure stock-based compensation, and the valuation of deferred income tax assets and uncertain tax positions. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods. As future events and their effects cannot be determined with precision, actual results could materially differ from those estimates and assumptions.
Fiscal Year
The Company’s fiscal year ends on April 30.
Summary of Significant Accounting Policies
The Company’s significant accounting policies are discussed in Note 1. Summary of Business and Significant Accounting Policies in the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K for the fiscal year ended April 30, 2021, which was filed with the SEC on June 25, 2021. There have been no significant changes to these policies during the three and nine months ended January 31, 2022.
15

C3.AI, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Recent Accounting Pronouncements
The Company currently qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Accordingly, the Company is provided the option to adopt new or revised accounting guidance either (1) within the same periods as those otherwise applicable to public business entities or (2) within the same time periods as private companies, including early adoption when permissible. The Company has elected to adopt new or revised accounting guidance within the same time period as private companies.
Based on the market value of the Company’s Class A common stock held by non-affiliates as of the last business day of the Company’s fiscal second quarter ended October 31, 2021, the Company will cease to be an emerging growth company as of April 30, 2022.
Recently Adopted Accounting Standards
In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to defer and recognize as an asset. The guidance is effective for the fiscal year beginning May 1, 2021. Early adoption is permitted. The Company adopted this guidance effective May 1, 2021 on a prospective basis, and the adoption did not have a material impact on its condensed consolidated financial statements and related disclosures.
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. The amendments in this update simplify various aspects of the accounting for income tax by eliminating certain exceptions to the general approach under existing accounting guidance provided by ASC 740, Income Taxes, and clarifies certain aspects of the existing guidance to promote more consistent application. The amendments in this new standard include, the elimination of exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill and that single-member limited liability companies and similar disregarded entities that are not subject to income tax are not required to recognize an allocation of consolidated income tax expense in their separate financial statements, but could elect to do so. The guidance is effective for the Company beginning May 1, 2022. Early adoption is permitted. The Company adopted this guidance effective May 1, 2021, and the adoption did not have a material impact on its condensed consolidated financial statements and related disclosures.
2.Revenue
Disaggregation of Revenue
The following table presents revenue by geographical region (in thousands):
Three Months Ended January 31,Nine Months Ended January 31,
2022202120222021
North America (1)
$56,846 $29,488 $136,995 $86,100 
Europe, the Middle East and Africa (1)
11,108 17,141 36,116 39,922 
Asia Pacific (1)
1,819 1,655 7,331 4,086 
Rest of World (1)
 825  825 
Total revenue$69,773 $49,109 $180,442 $130,933 
__________________
(1)The United States comprised 81% and 60% of the Company’s revenue for the three months ended January 31, 2022 and 2021, respectively, and 76% and 65% of the Company’s revenue in the nine months ended January 31, 2022 and 2021, respectively. France comprised 8% and 12% of the Company’s revenue for the three months ended January 31, 2022 and 2021, respectively, and 11% and 12% of the Company’s revenue for the nine months ended January 31, 2022 and 2021, respectively. No other country comprised 10% or greater of the Company’s revenue for each of the three and nine months ended January 31, 2022 and 2021.
16

C3.AI, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Deferred Revenue
The following table reflects the deferred revenue balance (in thousands):
As of January 31,As of April 30,
20222021
Deferred revenue, current$58,524 $72,263 
Deferred revenue, non-current924 2,964 
Total deferred revenue$59,448 $75,227 
Significant changes in the deferred revenue balances during the nine months ended January 31, 2022 and 2021 were as follows (in thousands):
Deferred Revenue
April 30, 2021$75,227 
Performance obligations satisfied during the period that were included in the deferred revenue balance at the beginning of the year
(68,787)
Increases due to invoicing prior to satisfaction of performance obligations
53,008 
January 31, 2022$59,448 
Deferred Revenue
April 30, 2020$60,295 
Performance obligations satisfied during the period that were included in the deferred revenue balance at the beginning of the year
(53,086)
Increases due to invoicing prior to satisfaction of performance obligations
55,101 
January 31, 2021$62,310 
Remaining Performance Obligation
Remaining performance obligations are committed and represent non-cancellable contracted revenue that has not yet been recognized and will be recognized as revenue in future periods. Some contracts allow customers to cancel the contracts without a significant penalty, and the cancellable amount of contract value is not included in the remaining performance obligations.
The Company excludes amounts related to performance obligations and usage-based royalties that are billed and recognized as they are delivered or billed and recognized in the same period. This primarily consists of monthly usage-based runtime and hosting charges in the duration of some revenue contracts.
Revenue expected to be recognized from remaining performance obligations was approximately $469.3 million and $293.8 million as of January 31, 2022 and April 30, 2021, respectively, of which $171.6 million and $145.2 million is expected to be recognized over the next 12 months and the remainder thereafter, respectively.
17

C3.AI, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Customer Concentration and Accounts Receivable
All of the Company’s Customer-Entities (as defined below) consist of corporate and governmental entities. A limited number of Customer-Entities have accounted for a large part of the Company’s revenue and accounts receivable to date. For the purpo