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C3.AI: Fundamentals Should Be Approached With Caution

FUNDA·November 26, 2024

Attempt an options play each quarter, either lose 1% or gain 50%

Background

Baker Hughes is currently the most important strategic partner contributing to C3's revenue (the partnership started in 2019, and Baker Hughes serves as both a customer and a channel). In C3's recent quarters, there is a minimum of $18.1M in revenue coming from Baker Hughes (this is the amount guaranteed by Baker Hughes to C3 under their agreement). In FY25Q1, this accounted for 21% of C3's revenue, and in the following quarters, it still accounted for at least 15% of the revenue. However, this agreement will expire in the middle of next year, and there is a high likelihood that it will not be renewed.

C3's partnership with Shell (which began in 2018) will also expire sometime in CY25H2-26. Currently, Shell contributes around $6M in revenue each quarter. There is also a possibility that the agreement will not be renewed upon expiration, but the probability is not as high as with Baker Hughes.

Together, these two companies account for 28% of C3's revenue in FY25Q1.

Why we believe the partnership will not be renewed

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