C3.AI 1Q25:BH Contract Renewal Eases Investor Concerns, but Underlying Business Quality Remains Murky

In our prior note, we highlighted several key items we expected C3.ai to clarify this quarter:

• Renewal status with Baker Hughes (BH)

• Conversion of demo/trial revenues into paid contracts

• Progress in expanding partnerships with cloud service providers (CSPs)

• Any potential management changes

BH Renewal: Announcement Provides Relief , but Lacks Detail

The most notable positive from the quarter is confirmation that C3.ai will renew its contract with BH through mid-2028(We hadn’t confirmed through previous channel checks that the company would announce this in the current quarter.）. This announcement helped alleviate some investor anxiety. That said, the company did not disclose details on the contract’s structure or value. This aligns with our prior channel checks indicating the details of the deal was still under negotiation

Notably, unlike previous BH renewals, this time C3 did not provide specifics on deal size. Information from the callback implied the value may be smaller — potentially as low as 25% of the previous agreement, based on remaining performance obligations (RPO). C3 reported RPO of $235M as of Q4FY25, up 35% QoQ. Oil & Gas bookings totaled $47M in the quarter, and even assuming all of this came from BH, it would imply annualized revenue of ~$15M, implying the deal was renewed at ~20- 25% of the prior run rate

Trial-to-Contract Conversion Still Unconvincing