Good afternoon. And welcome to C3.ai, Inc.'s earnings call for the 2026Q1, which ended on July 31, 2025. My name is Amit Berry, and I lead investor relations at C3.ai, Inc. With me on the call today are Tom Siebel, Executive Chairman, Stephen Ehigian, Chief Executive Officer, and Hitesh Lath, Chief Financial Officer. After the market closed today, we issued a press release with details regarding our first quarter results, as well as a supplemental to our results, both of which can be accessed through 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 related 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 most recent annual report on Form 10-K filed with the SEC, as it may be supplemented by other filings and reports we make with the SEC from time to time, including our quarterly report on Form 10-Q that will be filed for the fiscal quarter ended July 31, 2025. All financial results will be discussed on a non-GAAP basis unless otherwise noted. A reconciliation of GAAP to non-GAAP financial measures, to the extent reasonably available, is included in our press release. Finally, at times in our prepared remarks, in response to your questions, we may discuss metrics that are incremental to our usual presentation to give greater insight into the dynamics of our business and our quarterly results. Please be advised that we may or may not continue to provide this additional detail in the future. And with that, let me turn the call over to Hitesh.

Good afternoon, everyone, and thank you for joining our call today. I will share our financial results and provide additional color on our business. All figures are non-GAAP unless otherwise noted. Total revenue for the quarter was $70.3 million, a decrease of 19% year-over-year. Subscription revenue for the quarter was $60.3 million, representing 86% of total revenue. Revenue from the sale of software licenses, which are demonstration versions of C3.ai, Inc. applications, was $17.9 million during the quarter, which was sequentially lower by $15.9 million. We sell these licenses at the request of our distribution partners to enable them to demonstrate our software effectively to their customers and at the request of our large strategic customers to accelerate C3.ai, Inc. application adoption across their companies. Professional services revenue was $10 million, of which $8.7 million was revenue from engineering services. Professional services represent 14% of total revenue during the quarter. Our subscription and PES revenue combined was $69 million and accounted for 98% of total revenue. I'll now walk you through some of our strategic customer wins this quarter. Nucor has expanded its commitment with C3.ai, Inc. in a multiyear partnership to build an enterprise-wide AI program across their facilities. We are supporting and optimizing day-to-day planning, inventory, and scheduling decisions, and now expanding to additional plants and use cases. Comerica, a global leader in chemicals, launched its first enterprise-scale AI program with C3.ai, Inc. After initial success in improving yield in its salt business, Comerica is now scaling to 100 assets and multiple use cases, marking the start of a company-wide AI transformation. HII, America's largest military shipbuilder, is expanding its partnership with C3.ai, Inc. to accelerate throughput at Ingalls and Newport News. Initial deployments have cut complex shipbuilding timelines, and we are now scaling these AI capabilities across HII shipyards to strengthen US Navy fleet readiness. The US Army Rapid Capabilities and Critical Technologies Office is deploying a contested logistics application built on the C3 Agentic AI platform to support frontline vehicles in high-risk environments. This system applies agentic and generative AI to enhance sustainment, readiness, and decision speed in contested environments. I'll now move on to the rest of the financial results. Non-GAAP gross profit for the quarter was $36.3 million, and non-GAAP gross margin was 52%. Non-GAAP gross margin for professional services remained high at over 80%. Non-GAAP operating loss for the quarter was $57.8 million. Non-GAAP net loss for the quarter was $49.8 million, and non-GAAP net loss per share was $0.37. Our net cash used in operating activities was $33.5 million. Free cash flow for the quarter was negative $34.3 million. We continue to be well-capitalized and closed the quarter with $711.9 million in cash, cash equivalents, and marketable securities. During the first quarter, we signed 28 initial production deployments or IPDs. At the end of the quarter, we had cumulatively signed 374 IPDs, of which 266 are still active. This means they are either in their original three to six-month term, extended for some duration, converted to ongoing subscription or consumption contracts, or are currently being negotiated for conversion to ongoing subscription or consumption contracts. Non-GAAP gross margin declined this quarter to 52% primarily due to a higher mix of IPD-related costs, a lower mix of demonstration license revenue and PES revenue, and lower economies of scale. As compared to fiscal 2025, we expect to continue to see moderated gross margins in the near term due to a higher mix of IPDs, which carry a greater cost of revenue during the initial production phase of the customer lifecycle owing to our investments in expanding our support capacity and lower economies of scale. Now I'll move on to our guidance for the next quarter. Our revenue guidance for 2026Q2 is $72 million to $80 million. Our guidance for non-GAAP loss from operations for 2026Q2 is $49.5 million to $57.5 million. Given the appointment of our new Chief Executive Officer and the recent restructuring of the sales and services organizations, we are withdrawing our previous guidance. We plan to provide guidance for the 2026Q3 and full-year fiscal 2026 when we announce our financial results for the 2026Q2.

Thank you, Hitesh. And good afternoon, everyone. As Hitesh reported, the financial results of the first quarter were completely unacceptable—completely unacceptable in virtually every respect. I've given this a lot of thought about what the root cause of this is. Okay? Is there a market? The market is huge. Is there some new competitor that changed the competitive dynamics of the space? There is not. Is there some secular change in the market that we haven't seen before? There is not. The fact of the matter is that it boils down to poor sales execution and poor resource coordination. It's clear that the new leadership we brought into the organization in global sales and service, particularly in EMEA, federal, and North America, mid-quarter, caused confusion in the sales process. As I have previously announced, I ran into some unanticipated health issues, and as a result of these health issues, I was unable to participate as actively as I used to in the sales processes and the coordination of resources necessary to make these sales processes successful and arrive at closure. In hindsight, it's clear that my active involvement in that sales process had a greater impact than any of us knew. The good news is that we have completely restructured our sales and service organizations globally. We have brought in new, highly experienced leadership across the board to drive growth and customer satisfaction. Even better, consistent with our announcement last July, we have completed the search, and we have appointed a new Chief Executive Officer in Stephen Ehigian, who is highly experienced and well-equipped to drive the details of this business, coordinate resources, and accelerate growth. In the sales and service organizations, we have combined these organizations under a new leader in the person of a Chief Commercial Officer to ensure a more seamless experience focused on delivering value for each and every one of our customers. In addition, we've brought in a new General Manager of EMEA, a new Group Vice President for North American operations, and we have brought significant leadership into the federal business operations. By uniting the sales and service organizations into a cohesive unit, we are assuring a focus on delivering rapid economic benefits to each and every one of our customer engagements to guarantee their continued success. As we entered Q2, we have installed new leadership across the board. We have reorganized our sales and service organizations with a tightly integrated execution plan going forward where everyone knows where they sit, what their responsibilities are, and we've ensured that everybody has the resources to do their job. We have a product that is unmatched in technical sophistication and functionality. We have over 131 enterprise AI applications in the market. I believe we have the highest levels of customer satisfaction as measured by net promoter scores in the application software industry. We have a huge and rapidly growing addressable market opportunity. We have the leadership in place, and we are positioned to grow. We are in a position to gain market share, and we are well positioned to ensure the success of all our customer engagements. An important development in Q1 was the introduction of our strategic integrator program. This is a software OEM program whereby we are licensing the C3 Agentic AI platform to others, enabling them to design, develop, provision, and operate the industry and domain-specific applications for their markets. We're finding that the strategic integrator program is being well-received by OEMs and systems integrators in the defense, intelligence, and civilian government sectors. We expect this to be a large and rapidly growing line of business for C3.ai, Inc. going forward. The use of the Agentic AI platform allows others to leverage all the assets they've developed in recent decades. Be these machine learning models, and so it's an entirely open model that enables them to use any of the capabilities they have, any new capabilities that the market may bring going forward, thanks to its entirely open model-driven architecture. It's difficult to overestimate the scale of the generative AI and agentic AI opportunity that is before us. As of the end of the first quarter, we are involved in approximately 60 large-scale customer engagements across state and local government, manufacturing, and defense, intelligence, and more. Many of you are familiar with the MIT report indicating that around 95% of LLM projects encounter dead ends and tend to be unsuccessful. Our experience is that most of our LLM deployments are successful across various industries and use cases. The reason for our success is the combination of these generative free chain transformers with the C3 Agentic AI platform, solving numerous challenges associated with generative AI such as data exfiltration, cybersecurity risk, hallucination, inability to enforce data access controls, and lack of omni-modal integration—all of which are resolved by C3 generative AI, resulting in a very high success rate for our projects. Q1 2025 marks our nineteenth quarter operating as a public company. This is the first quarter into which we have missed our revenue guidance. Know that we take that very seriously, and we will address it accordingly. Candidly, there is no excuse for the economic results that we delivered in the first quarter. That being said, our objective remains the same: to establish and maintain a market leadership position globally in enterprise AI applications. Not in infrastructure, not in semiconductors, not in machine learning models, nor in professional services implementations. Our aim is to secure a market leadership position in enterprise AI software, both with the C3 Agentic AI platform and with the enterprise AI application footprint we have and will expand. We possess tried, tested, and proven products. We have an incredibly sophisticated architecture within the Agentic AI platform. We are establishing clear leadership in Agentic AI, a concept for which we hold the patents. We have proven executive leadership in place. We have highly satisfied customers. And we have a large and expansive addressable market opportunity ahead of us that some estimate approaches $2 trillion a year. We are poised to grow our product footprint, expand our market share, increase market penetration, and operate a rapidly growing cash-positive profitable business. I will continue to remain deeply engaged in the business in my role as Executive Chairman. In that role, I will focus particularly on strategic partner relationships, strategic customer relationships, and maintaining a clear direction on product strategy moving forward. I am very enthusiastic to announce the appointment of Stephen Ehigian as the new Chief Executive Officer of C3.ai, Inc. Stephen brings a superlative educational background and a wealth of industry experience, having started and built two successful AI companies that he sold to Salesforce. Stephen is also an experienced public sector leader, having served as President Trump's appointee as the Acting Administrator of the General Services Administration, where he was responsible for managing acquisition activities across all divisions of the federal government, and driving President Trump's AI strategy across the federal government. On behalf of the board of directors of C3.ai, Inc., the executive leadership of C3.ai, Inc., and the 1,200 employees of C3.ai, Inc., I can assure you that we are all enthusiastic about working closely with Stephen in his new leadership role. To ensure his success in bringing more creativity, energy, and drive to the process as we accelerate growth, market penetration, and market leadership in enterprise AI. Ladies and gentlemen, thank you so much for your time. And now I'll turn this back to Hitesh to field your questions.

Thank you, Tom. Operator, could you please open the line for questions?

Thank you. And our first question will come from the line of Roddy Sultan with UBS. Your line is open.

Awesome. Thank you. First for Tom, you know, your involvement in the sales process has obviously been very critical here. I mean, is there any way to more concretely understand how involved you're planning on being in the sales process going forward? And what you're doing to ensure a smooth handoff to Stephen and the new sales leadership?

I am here to do everything I can to ensure that Stephen is successful. Okay? And so now, we have a brand new layer of senior leadership in the company who are tried, tested, and proven at selling enterprise AI globally. With Stephen's leadership, I expect them to be enormously successful. That being said, I will continue to be involved as necessary in monitoring that process and assisting to ensure a smooth transition that ramps up the sales and service capacity globally.

Awesome. And then second for Hitesh. Obviously, a lot of moving parts in the quarter. What are you seeing that's giving you confidence in the Q2 guide? And then as about Q3 and Q4, what would be the right starting point to think about that sort of back-half outlook? Any sort of building blocks would be helpful as we calibrate numbers.

Sure, Roddy. Q2 guidance is based on the sales activity we've seen in August, as well as our review of the sales pipeline for the rest of the quarter with the new sales leadership. Regarding periods beyond Q2, while we're not providing any guidance at this point, we note that most analysts who have updated their revenue forecast for the year are forecasting fiscal 2026 revenue ranging from $290 million to $300 million. At this point, I would not argue against any number within that range. Regarding profitability, we acknowledge our performance in Q1 has put us behind, but we remain committed to achieving non-GAAP profitability and free cash flow. We are still optimistic about the business, as Tom mentioned, and we will get to profitability and free cash flow with the right scale; it’s just a matter of time.

Thank you. One moment for our next question, and that will come from the line of Patrick Walravens with Citizens. Your line is open.

Hey, guys. Thank you so much for taking my question. This is Nick on for Pat. Tom, one quick one for you. You guys closed 40 partner-led deals this quarter. How do you see the mix of partner-led versus direct sales evolving?

That's a great question. I think something like Amit, correct me—was it 80% or 90%? 90% of the business that we closed this quarter was with partners, particularly Azure and AWS and GCP, and McKinsey Quantum Black. You can expect that our investment in those partnerships going forward is going to be substantial. There are certainly tens of thousands of salespeople at Azure alone, and we are ramping up our go-to-market activities with Microsoft, AWS, and GCP globally. We hope to expand from the hundreds that we are currently engaged with to thousands soon. So that is a major advantage we have in our partner ecosystem, and we fully intend to leverage that advantage.

Great. Thank you. And as a follow-up, I heard Stephen was in the room. If I could ask him a quick one, that would be fantastic. You know, how did Stephen, great to meet you. Looking forward to working with you. How did you choose C3.ai, Inc., and why was it a compelling opportunity?

Yeah. Well, first, the market opportunity here for enterprise AI is enormous. Every company, every government is exploring how to transition away from testing and experimenting with AI to actually rolling it out across their core operations and workflows. What excites me is that C3.ai, Inc. has the technology platform and applications that customers need today. Their technology is being deployed across some of the most valuable customers in the world in some of the most challenging environments. So for me, on top of that, the ability to learn from Tom Siebel, who invented this entire enterprise AI market, as well as the extraordinary team here, made it an easy decision to say yes.

Awesome. Thank you very much. Looking forward to working with you.

Likewise. Thank you.

And one moment for our next question. And that will come from the line of Matthew Calitri with Needham and Co. Your line is open.

Hi, guys. This is Matt Calitri on for Mike Cikos over at Needham. Thanks for taking our questions. Tom, how would you weigh the underperformance this quarter between sales disruption and your impact on the sales process?

I think it was a combination of both, but I would put it at probably 70% sales disruption and 30% my not being as involved in the details as I previously was. So those are the facts. The quarter was dreadful, and now we need to pick ourselves up, dust ourselves off, and get back to business, which is exactly what we're going to do.

Understood. And then looking at the execution steps, how would you categorize them as far as assigning pilots or converting them into contracts? What exactly were you seeing there?

It's all of the above, Matt. There are a lot of new people involved, and new leadership has stepped in. When you make such transitions, it can lead to confusion. We were effectively driving the car down the road while replacing the engine, transmission, and wheels simultaneously. The person who used to drive the car wasn't there. So it was a bad quarter, and it happens. I remember when I was at Oracle in 1989 during its first miss; the stock dropped significantly, but it was not the end of the world. Today, nobody remembers that. Six months from now, nobody will remember this because we're going to rebound strongly.

Thank you. That is all the time we have for Q&A today. I would now like to turn the call back over to Mr. Siebel for any closing remarks.

Ladies and gentlemen, thank you for your time this afternoon. We really appreciate your attention. Keep your eye on the screen. There are going to be a lot of developments at C3.ai, Inc., and it’s exciting. We are encouraged, and we are going for it. So stay tuned, and thank you, thank you, thank you.

Ladies and gentlemen, this concludes today's program. Thank you all for participating. You may now disconnect.