C3.AI: Fundamentals Should Be Approached With Caution

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