Good afternoon and thank you for attending today’s C3.ai Earnings Call for the Fourth Quarter of the Fiscal Year 2022. My name is Jason and I will be the moderator for today’s call. I would now like to pass the conference over to our host, Paul Phillips, Vice President of Investor Relations.

Good afternoon and welcome to C3.ai’s earnings call for the fourth quarter of fiscal year 2022 which ended April 30, 2022. This is Paul Phillips, VP of Investor Relations. With me on the call today are Tom Siebel, Chairman and CEO, and Juho Parkkinen, Chief Financial Officer. After the market closed today, we issued a press release with details regarding our fourth quarter and full year results as well as a supplement to our results, both of which can be accessed on the Investor Relations section of our website at ir.c3.ai. This call is being webcast and a replay will be available on our IR website following the conclusion of the call. During today’s call, we will make statements relating to our business that may be considered forward-looking under federal securities laws. These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For a further discussion of the material risks and other important factors that could affect our actual results, please refer to our filings with the SEC. Also during the course of today’s call, we will refer to certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our press release. Finally, at times in our prepared comments in response to your questions, we may discuss metrics that are incremental to our usual presentation to provide greater insights into the dynamics of our business or our quarterly results. Please be advised that we may or may not continue to provide this additional detail in the future. With that, let me turn the call over to Tom for his prepared remarks.

Thank you, Paul and good afternoon everyone. Thank you for joining us. I am pleased to be here with Juho Parkkinen, our Chief Financial Officer. I am pleased to share with you our results for the fourth quarter and for the entire fiscal year of 2022. Bottom line, it was a great quarter. We finished the quarter with $72.3 million in revenue, up 38% year-over-year, exceeding our guidance and exceeding, I believe, all analysts’ expectations. I haven’t really looked lately at the metrics of high-growth software companies, but I expect that would be in the top decile of growth rates. Subscription revenue was $56.3 million, up 31% year-over-year. Our non-GAAP gross profit was $58.5 million, a 43% improvement over the previous year. We ended Q4 of fiscal year ‘22 with GAAP RPO of $477.4 million, a 62% increase year-over-year. Non-GAAP RPO is $516 million, a 50% increase year-over-year. We continue to sustain healthy non-GAAP gross margins of 81%. Our free cash flow for the quarter was a negative $14.8 million, a 46% improvement year-over-year. We finished the quarter with $992 million in cash and cash equivalents, so we have roughly $1 billion in the bank. At this rate, it will take quite a few quarters to deplete our cash reserves. Looking at the results for the year, they were quite good, exceeding our guidance and exceeding analyst expectations, finishing the year at $252.7 million in revenue, a 30% growth rate over the previous year. Subscription revenue was $206.9 million, a 31% increase year-over-year and our non-GAAP gross margin increased a little over 5 points to $81.7 million. Now, I want to talk a little about the addressable market opportunity, which is really quite staggering. Enterprise AI software is predicted to be almost a $600 billion market by 2025. We spent the better part of a decade building what we call, actually more than a decade now, building what we call the C3.ai Suite. That is a software platform that provides all of the services necessary and sufficient to design, develop, provision, operate even in the most complex enterprise applications. And on top of that, we have to develop and deliver to the market now 42 enterprise AI applications that meet the needs of manufacturing, utilities, oil and gas, chemicals, aerospace, state and local government, and other industries. Now, enterprise AI is a very complex market and it has a lot of players who do a lot of things and it is confusing to investors, it is confusing to customers, and it is confusing to the market at large. Because we have all of these kinds of bright shiny objects out there that are provided by hyperscalers and are available as open source solutions. They provide things like machine learning libraries, virtualization, data persistence, or machine learning pipelines. Many of these are great products. Many of these are great companies. But again, this is really very confusing to investors and to customers, and it makes it complicated in the market. C3.ai is frequently lumped into this category. So, I want to take a minute and talk about how we fit into enterprise AI, because it’s quite different from all this and it’s quite different from the way that these companies fit into the market. These organizations generally make piecemeal components that do interesting things, such as platform-independent data persistence or AutoML. The way that we think about enterprise AI applications is the way the market has thought about enterprise application software for decades. We began developing enterprise application software in the early ‘80s at companies like Oracle and SAP. We built these applications on top of relational database systems, and on top of that, we built a set of development tools to create reports and forms to build families of applications that solve business problems like CRM and ERP and manufacturing automation. This grew to be roughly a $500 billion software market that everybody understands, and these applications are used to report inventory balances and manage supply chains. Now, at C3.ai, we spent a decade and almost $1 billion building a software technology stack that consists of a platform as a service, an application development platform and low-code development tools, which now includes 42 turnkey enterprise applications. We make existing enterprise applications predictive in nature. We are using existing ERP systems and CRM systems, like SAP, Salesforce, and Oracle. We built an AI application layer that makes these applications predictive in nature so they can tell us what’s going to happen in the future. The beauty of enterprise AI is when we apply AI to the market of enterprise applications, they become predictive in nature that we can predict the future and change the future. This promises to be a $600 billion market shortly. C3.ai provides out-of-the-box solutions that include all of the services necessary to design, develop, provision, and operate an AI application. Many customers, if not all, will have experience working with AI tools and they want to use many of these third-party products. We need to think of all these solutions as partners rather than competitors. Our customer count has been growing quite substantially in recent years, from 151 customers to 223 customers last year. Our diversification by industry is becoming increasingly broad, including oil and gas, manufacturing, and beyond. We are very focused on landing new customers, but also deeply penetrating our existing large global customers, such as Shell and the Department of Defense. Our strategy is to generate significant economic benefits for our customers, as evidenced by Shell’s expected economic benefit of $2 billion this year from our investments. We continue to grow geographically while building vertical market sales organizations that align with partners specific to each vertical. We have made significant investments that are now paying off well, targeting sustainable positive free cash flow within eight to twelve quarters, and I remain optimistic about our potential despite current market conditions.

Thank you, Tom. First off, I want to quickly recap on the summary financial results. As Tom mentioned, we ended the quarter with revenue of $72.3 million or a 38% growth. Subscription revenue increased by a healthy 31% year-over-year growth. I would also like to highlight the remaining performance obligations of $477.4 million, a 62% year-over-year increase. Further, during the quarter, we repurchased approximately 720,000 shares for $15 million under our share repurchase program announced in Q3. With respect to the full year, we are roughly a $0.25 billion business, as Tom mentioned, with a 38% year-over-year increase, and we’ve been able to maintain excellent gross margin rates of 79%, which is a 3-point increase from the prior year. Overall, our path towards a lower average total contract value continues to improve. Our subscription revenue was 78% of Q4 revenue and professional services accounted for 22%. We generally see expansions in subscription as a result of successful professional services engagements. We have been able to improve our gross margins and our non-GAAP operating margin during the period as well. We believe we are structurally profitable and can maintain our gross margin on a prospective basis. We expect our sales team to continue expanding on a global level, and we are excited about our Q4 results and are looking forward to the upcoming fiscal year.

Our first question is from Arvind Ramnani with Piper Sandler. Please proceed.

Hi, thanks for taking my question. Just really want to ask about guidance. On the last earnings call, although you didn’t provide formal guidance, you had talked about being comfortable with consensus, which was about 33% growth. Now this year’s number seems to be more in line with mid-20%. Can you talk about the change in environment that’s caused this revision of guidance?

Hi, Arvind, it’s Tom. Thanks for the question. I haven’t seen a lot of enthusiasm in any market activity in the last 2 months since our last call. What we’re seeing from the market is quite dire. Given everything that is going on in the market, it seemed prudent for us to set expectations conservatively, and that’s what we did.

Perfect. That’s great. And just in terms of bookings growth, it seems healthy. Can you provide a bit of granularity on which particular industries or clients you’re seeing strong booking growth from?

Yes. In Q4, 42% of our bookings were in manufacturing, 18% in financial services, 15% in defense and aerospace, and 13% in oil and gas. Our diversification strategy is playing out well.

Thank you for your question. Our next question comes from Patrick Walravens with JMP Securities.

Great. Thank you. Hey, Tom, can you tell us a little bit about the deals that slipped in Q4?

We had a number of deals that we were expecting to close in Q4 that moved into Q1 and Q2. They haven’t disappeared, they just moved out of the quarter. We did close 27 deals during the quarter, which is high, but the total bookings number was not as high as we’d like it to be. That said, the revenue growth exceeded our expectations for the quarter and the year.

Is it fair to say that Baker Hughes was softer this quarter compared to last quarter, given the last call you mentioned significant contribution from them?

Oil and gas was 13% of our business in bookings. It was strong, and bookings in oil and gas last year grew by 95%. While some oil and gas deals moved out of the quarter, overall, business is quite healthy.

Yes, it was $15 million for 720,000 shares.

What should we expect for free cash flow for this coming year if the operating loss is in the range indicated?

There will be some lumpiness. We are hopeful for more consistent positive cash flow, but there will be challenges as we continue to develop.

Thank you for your question. Our next question comes from Brad Sills with Bank of America.

This is Adam on for Brad. I wanted to ask you how we should think about the mix between subscription and professional services revenue in Q1?

We think a long-term target for this mix is probably in the 10% to 15% range, but we expect mid-teens for now with some potential variability.

Can you talk a bit about One Medical and how it ultimately evolves into becoming a customer?

One Medical began as a customer and has continued to expand with us. The professional services we invest are important to secure long-term engagement.

Thank you for your question. Our next question comes from Michael Turits with KeyBanc.

On the deals that pushed out of the quarter, was there any commonality across geography or vertical?

Some deals were pushed due to budget approvals and senior executive sign-offs across various industries. It was not a matter of sales capacity; these deals just operated on their timeline.

What’s your outlook on the Department of Defense and other federal opportunities?

The DoD business looks good. We're optimistic about U.S. Defense, Intelligence, and Civilian businesses with planned penetration and opportunities.

Thank you for your question. Our next question comes from Bob Huang with Morgan Stanley.

Can we talk about the billings for the next quarter and the full year? Should we expect seasonality for billings to impact the upcoming quarters?

We might see some lumpiness with calculated billings in individual quarters, and payment terms will impact the metrics you’re focusing on.

With success in the energy sector, what verticals are you feeling confident about going forward?

Energy, utilities, chemicals, manufacturing, and the agricultural space all look promising, with ongoing interest in agribusiness and consulting opportunities.

Thank you for your question. Our next question comes from Pinjalim Bora with JPMorgan.

Were the deals pushed out driven entirely by macro considerations, or were there sales organization changes influencing this?

Sales capacity has grown significantly, and the delays were more about customer timelines than any issues on our side.

Do you see the large initial outlay impacting adoption rates of AI solutions?

Initial outlays vary, and many are lower, with the potential for significant future business growth. It’s a different context compared to other AI market solutions.

There are no further questions for you at this time. So, I will pass the call back over.

Right. Thanks, everybody, for your time. We will wrap up the call now and appreciate everyone’s interest. Have a good rest of your day.

Thanks, everybody.

That concludes the C3.ai earnings call of the fourth quarter fiscal year 2022. Thank you for your participation. You may now disconnect your lines.