C3.ai Faces a Tough Quarter Amid Workforce Reductions and Slower Guidance

C3.ai Inc., a New York‑listed software firm headquartered in Redwood City, announced a significant restructuring that will trim roughly a quarter of its workforce. The company’s current employee count was about 1,200 as of April 2025, and the planned layoff of roughly 26 % is expected to cut the number of staff to roughly 880. The reduction comes as the firm grapples with a challenging financial outlook for the remainder of its fiscal year.

Earnings Miss and Share Decline

In the most recent earnings report released on February 25, 2026, C3.ai reported a non‑GAAP earnings per share (EPS) of ‑$0.40, missing analysts’ expectations by $0.11. Total revenue came in at $53.26 million, short of forecasts by $22.38 million. The company’s loss widened beyond what investors had anticipated, prompting a double‑digit drop in its stock price. Market observers noted that the company’s price‑to‑earnings ratio was ‑3.41, underscoring the negative earnings environment.

Following the earnings release, shares fell more than 20 % in after‑hours trading, reflecting the sharp downgrade in the company’s fiscal guidance. The decline is consistent with broader market sentiment, which has been cautious ahead of major earnings from peers such as Nvidia, whose own Q4 results were highly anticipated.

Market Context and Investor Sentiment

U.S. stock futures were on the rise earlier in the week, buoyed by expectations of Nvidia’s earnings. Nasdaq 100 futures rose 0.46 %, the S&P 500 gained 0.33 %, and the Dow Jones Industrial Average increased 0.32 % at 8:35 a.m. EST on February 25. Investors were, however, wary of AI‑focused stocks like C3.ai and SoundHound AI, which were under close scrutiny as they approached their earnings announcements. Analysts noted that, despite the sector’s growth potential, companies were still navigating high operating costs and competitive pressure.

Strategic Implications

C3.ai’s focus remains on developing, deploying, and operating enterprise AI applications for customers worldwide. Its core offering—software that enables data analysis and AI deployment—has positioned it as a key player in the growing AI ecosystem. However, the recent workforce cut signals that the company is taking aggressive measures to align its operating expenses with revenue realities. The reduction is expected to help streamline operations, potentially improving cost efficiency and supporting longer‑term profitability.

The company’s market capitalization stands at $1.42 billion, and its most recent closing price on February 23 was $10.12, far below its 52‑week high of $30.24 recorded on May 28, 2025. The stock’s recent slide to a 52‑week low of $9.53 on February 22 underscores the volatility investors face amid earnings uncertainty.

Outlook

Analysts expect C3.ai to continue focusing on core AI solutions while pursuing cost‑saving initiatives. The company’s upcoming earnings for fiscal Q3 are closely watched; market participants will assess whether the workforce reduction translates into improved revenue performance and a narrowing loss. While the immediate outlook remains cautious, C3.ai’s position in the AI software market may provide a foundation for future resilience should the company successfully balance its cost structure with growth opportunities.