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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 001-39744
C3.ai, Inc.
(Exact name of registrant as specified in its charter)

Delaware26-3999357
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
1300 Seaport Blvd, Suite 500
Redwood City,CA94063
(Address of principal executive offices, including zip code)
(650) 503-2200
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.001 per shareAINew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes     No   
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes        No  
As of February 26, 2021, the registrant had outstanding 97,431,675 shares of Class A common stock and 3,499,992 shares of Class B common stock.
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TABLE OF CONTENTS
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.
2

PART I - FINANCIAL INFORMATION
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, including our statements regarding the benefits and timing of the rollout of new technology, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:
our expectations regarding our revenue, expenses, and other operating results;
our ability to acquire new customers and successfully retain existing customers;
our ability to increase usage our C3 AI Suite and C3 AI Applications;
our ability to achieve or sustain profitability;
future investments in our business, our anticipated capital expenditures, and our estimates regarding our capital requirements;
the costs and success of our sales and marketing efforts, and our ability to promote our brand;
our growth strategies for our C3 AI Suite and C3 AI Applications;
the estimated addressable market opportunity for our C3 AI Suite and C3 AI Applications;
our reliance on key personnel and our ability to identify, recruit, and retain skilled personnel;
our ability to effectively manage our growth, including any international expansion;
our ability to protect our intellectual property rights and any costs associated therewith;
the effects of the coronavirus, or COVID-19, pandemic or other public health crises;
our ability to compete effectively with existing competitors and new market entrants; and
the growth rates of the markets in which we compete.
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that such information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

3

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.
SELECTED RISKS AFFECTING OUR BUSINESS
Investing in our Class A common stock involves numerous risks, including the risks described in “Part II—Other Information, Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q. Below is a summary of some of the risks and uncertainties as of the date of the filing of this Quarterly Report on Form 10-Q, any one of which could materially adversely affect our business, financial condition, results of operations, and prospects. You should read this summary together with the more detailed description of each risk factor contained below.
Risks Related to Our Business and Our Industry
We have a limited operating history, which makes it difficult to evaluate our prospects and future results of operations.
Historically, a limited number of customers have accounted for a substantial portion of our revenue. If existing customers do not renew their contracts with us, or if our relationships with our largest customers are impaired or terminated, our revenue could decline, and our results of operations would be adversely impacted.
Our business depends on our ability to attract new customers and on our existing customers purchasing additional subscriptions from us and renewing their subscriptions.
We have a history of operating losses and may not achieve or sustain profitability in the future.
We face intense competition and could lose market share to our competitors, which could adversely affect our business, financial condition and results of operations.
Our sales cycles can be long and unpredictable, particularly with respect to large subscriptions, and our sales efforts require considerable time and expense.
If the market for our C3 AI Suite and C3 AI Applications fails to grow as we expect, or if businesses fail to adopt our C3 AI Suite and C3 AI Applications, our business, operating results, and financial condition could be adversely affected.
If we fail to respond to rapid technological changes, extend our C3 AI Suite and C3 AI Applications or develop new features and functionality, our ability to remain competitive could be impaired.
If we were to lose the services of our Chief Executive Officer (our “CEO”) or other members of our senior management team, we may not be able to execute our business strategy.
The COVID-19 pandemic had and could continue to have an adverse impact on our business, operations, and the markets and communities in which we, our partners, and customers operate.
Risks Related to Our International Operations
We are continuing to expand our operations outside the United States, where we may be subject to increased business and economic risks that could harm our business.
We are subject to governmental export and import controls that could impair our ability to compete in international markets or subject us to liability if we are not in compliance with applicable laws.
Risks Related to Taxes
4

Our results of operations may be harmed if we are required to collect sales or other related taxes for our subscriptions in jurisdictions where we have not historically done so.
Risks Related to Our Intellectual Property
We are currently, and may be in the future, party to intellectual property rights claims and other litigation matters, which, if resolved adversely, could harm our business.
Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses.
Our failure to protect our intellectual property rights and proprietary information could diminish our brand and other intangible assets.
Our use of third-party open source software could negatively affect our ability to offer and sell subscriptions to our C3 AI Suite and C3 AI Applications and subject us to possible litigation.
Risks Related to Ownership of Our Class A Common Stock
The trading price of our Class A common stock may be volatile, and you could lose all or part of your investment.
The dual class structure of our common stock has the effect of concentrating voting control to our Chairman and CEO, Thomas M. Siebel.
Provisions in our corporate charter documents and under Delaware law may prevent or frustrate attempts by our stockholders to change our management or hinder efforts to acquire a controlling interest in us, and the market price of our Class A common stock may be lower as a result.
General Risks
If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
Our business could be disrupted by catastrophic events.

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
5

C3.AI, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)
(Unaudited)
January 31,April 30,
20212020
Assets
Current assets
Cash and cash equivalents$960,122 $33,104 
Short-term investments162,880 211,874 
Accounts receivable, net of allowance of $762 and $755 as of January 31, 2021 and April 30, 2020, respectively(1)
30,231 30,827 
Prepaid expenses and other current assets13,503 5,400 
Total current assets1,166,736 281,205 
Property and equipment, net6,844 8,723 
Goodwill625 625 
Long-term investments 725 
Other assets, non-current10,369 13,830 
Total assets$1,184,574 $305,108 
Liabilities, redeemable convertible preferred stock, redeemable convertible Class A-1 common stock and stockholders’ equity (deficit)
Current liabilities
Accounts payable$12,608 $4,726 
Accrued compensation and employee benefits17,996 13,693 
Deferred revenue, current(2)
59,950 53,537 
Accrued and other current liabilities13,544 9,083 
Total current liabilities104,098 81,039 
Deferred revenue, non-current2,360 6,758 
Other long-term liabilities4,004 6,001 
Total liabilities110,462 93,798 
Commitments and contingencies (note 6)
Redeemable convertible preferred stock, $0.001 par value. No shares and 233,107,379 shares authorized as of January 31, 2021 and April 30, 2020, respectively; no shares and 37,128,768 shares issued and outstanding as of January 31, 2021 and April 30, 2020, respectively; Liquidation preference of $376,178 as of April 30, 2020
 375,207 
Redeemable convertible class A-1 common stock, $0.001 par value. No shares and 6,666,667 shares authorized as of January 31, 2021 and April 30, 2020, respectively; no shares and 6,666,665 shares issued and outstanding as of January 31, 2021 and April 30, 2020, respectively; Liquidation preference of $18,800 as of April 30, 2020
 18,800 
Stockholders’ (deficit) equity
Class A common stock, $0.001 par value. 1,000,000,000 and 390,000,000 shares authorized as of January 31, 2021 and April 30, 2020, respectively; 97,431,675 and 31,210,159 shares issued and outstanding as of January 31, 2021 and April 30, 2020 respectively
98 31 
Class B common stock, $0.001 par value; 3,500,000 and 21,000,000 shares authorized as of January 31, 2021 and April 30, 2020, respectively; 3,499,992 and no shares issued and outstanding as of January 31, 2021 and April 30, 2020, respectively
3  
Additional paid-in capital1,399,281 110,485 
Accumulated other comprehensive income13 424 
Accumulated deficit(325,283)(293,637)
Total stockholders’ equity (deficit)1,074,112 (182,697)
Total liabilities, redeemable convertible preferred stock, redeemable convertible Class A-1 common stock and stockholders’ equity (deficit)$1,184,574 $305,108 
(1) Including amounts from a related party of $1,030 and $250 as of January 31, 2021 and April 30, 2020, respectively.
(2) Including amounts from a related party of $9,358 and $1,499 as of January 31, 2021 and April 30, 2020, respectively.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7

C3.AI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended January 31,Nine Months Ended January 31,
2021202020212020
Revenue
Subscription(1)
$42,699 $34,629 $114,248 $98,627 
Professional services(2)
6,410 6,654 16,685 16,421 
Total revenue49,109 41,283 130,933 115,048 
Cost of revenue
Subscription7,023 8,862 22,694 23,493 
Professional services5,203 2,069 10,113 5,785 
Total cost of revenue12,226 10,931 32,807 29,278 
Gross profit36,883 30,352 98,126 85,770 
Operating expenses
Sales and marketing28,450 23,162 64,898 60,385 
Research and development18,748 12,331 48,145 47,122 
General and administrative8,184 5,291 21,433 19,541 
Total operating expenses55,382 40,784 134,476 127,048 
Loss from operations(18,499)(10,432)(36,350)(41,278)
Interest income129 1,136 997 3,115 
Other (expense) income, net1,721 (402)4,163 (498)
Net loss before provision for income taxes(16,649)(9,698)(31,190)(38,661)
Provision for income taxes203 98 456 283 
Net loss$(16,852)$(9,796)$(31,646)$(38,944)
Net loss attributable to Class A common shareholders, basic and diluted$(0.23)$(0.27)$(0.64)$(1.11)
Net loss attributable to Class A-1 common shareholders, basic and diluted$(0.10)$(0.27)$(0.52)$(1.11)
Net loss attributable to Class B common shareholders, basic and diluted$(0.13)$ $(0.12)$ 
Weighted-average shares used in computing net loss per share attributable to Class A common stockholders, basic and diluted68,648,229 30,132,463 43,480,533 28,478,395 
Weighted-average shares used in computing net loss per share attributable to Class A-1 common stockholders, basic and diluted6,666,665 6,666,666 6,666,665 6,666,666 
Weighted-average shares used in computing net loss per share attributable to Class B common stockholders, basic and diluted3,499,992  3,499,992  
(1)Including related party revenue of $7,951, $9,865, $21,571 and $30,560 for the three and nine months ended January 31, 2021 and 2020, respectively.
(2)Including related party revenue of $0, $112, $0 and $210 for the three and nine months ended January 31, 2021 and 2020, respectively.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8

C3.AI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
Three Months Ended January 31,Nine Months Ended January 31,
2021202020212020
Net loss$(16,852)$(9,796)$(31,646)$(38,944)
Other comprehensive income
Unrealized gain (loss) on investment securities, net of tax(49)69 (411)136 
Total comprehensive loss$(16,901)$(9,727)$(32,057)$(38,808)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
9

C3.AI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK,
REDEEMABLE CONVERTIBLE CLASS A-1 COMMON STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
(In thousands)
(Unaudited)
Redeemable Convertible Preferred StockRedeemable Convertible A-1 Common StockCommon StockAdditional Paid-In CapitalAccumulated Other Comprehensive (Loss) IncomeAccumulated DeficitTotal Stockholders’
Deficit
SharesAmountSharesAmountSharesAmount
Balance as of October 31, 201937,129 $375,207 6,667 $18,800 30,779 $30 $104,403 $141 $(253,407)$(148,833)
Issuance of Class A common stock— — — — 274 — 446 — — 446 
Vesting of early exercised Class A common stock options— — — — — — 156 — — 156 
Stock-based compensation expense— — — — — — 2,061 — — 2,061 
Other comprehensive income— — — — — — — 69 — 69 
Net loss— — — — — — — — (9,796)(9,796)
Balance as of January 31, 202037,129 $375,207 6,667 $18,800 31,053 $30 $107,066 $210 $(263,203)$(155,897)

Redeemable Convertible Preferred StockRedeemable Convertible A-1 Common StockCommon StockAdditional Paid-In CapitalAccumulated Other Comprehensive (Loss) IncomeAccumulated DeficitTotal Stockholders’
Deficit
SharesAmountSharesAmountSharesAmount
Balance as of October 31, 202037,129 $399,753 6,667 $18,800 32,981 $33 $124,009 $62 $(308,431)$(184,327)
Conversion of redeemable convertible preferred stock to common stock upon initial public offering(37,129)(399,753)(6,667)(18,800)43,796 44 418,509 — — 418,553 
Issuance of common stock upon initial public offering and private placements, net of underwriting discounts— — — — 21,396 21 844,625 — — 844,646 
Issuance of Class A common stock upon exercise of stock options— — — — 2,759 3 4,800 — — 4,803 
Vesting of early exercised Class A common stock options— — — — — — 749 — — 749 
Stock-based compensation expense— — — — — — 6,589 — — 6,589 
Other comprehensive loss— — — — — — — (49)— (49)
Net loss— — — — — — — — (16,852)(16,852)
Balance as of January 31, 2021 $  $ 100,932 $101 $1,399,281 $13 $(325,283)$1,074,112 
10

Redeemable Convertible Preferred StockRedeemable Convertible A-1 Common StockCommon StockAdditional Paid-In CapitalAccumulated Other Comprehensive (Loss) IncomeAccumulated DeficitTotal Stockholders’
Deficit
SharesAmountSharesAmountSharesAmount
Balance as of April 30, 201934,192 $299,965 6,667 $18,800 20,057 $20 $58,731 $74 $(224,259)$(165,434)
Issuance of Series G Preferred Stock, net of issuance costs $34
1,283 25,406 — — — — — — — — 
Issuance of Class A common stock— — — — 9,530 10 44,017 — — 44,027 
Issuance of Series H Preferred Stock, net of issuance costs $164
1,654 49,836 — — — — — — — — 
Issuance of Class A common stock upon exercise of stock options— — — — 1,630 1 2,014 — — 2,015 
Vesting of early exercised Class A common stock options— — — — — — 427 — — 427 
Tender offer repurchases— — — — (164)(1)(3,547)— — (3,548)
Stock-based compensation expense— — — — — — 5,424 — — 5,424 
Other comprehensive income— — — — — — — 136 — 136 
Net loss— — — — — — — — (38,944)(38,944)
Balance as of January 31, 202037,129 $375,207 6,667 $18,800 31,053 $30 $107,066 $210 $(263,203)$(155,897)
Redeemable Convertible Preferred StockRedeemable Convertible A-1 Common StockCommon StockAdditional Paid-In CapitalAccumulated Other Comprehensive (Loss) IncomeAccumulated DeficitTotal Stockholders’
Deficit
SharesAmountSharesAmountSharesAmount
Balance as of April 30, 202037,129 $375,207 6,667 $18,800 31,210 $31 $110,485 $424 $(293,637)$(182,697)
Repayment of shareholder loan— 24,546 — — — — 1,457 — — 1,457 
Conversion of redeemable convertible preferred stock to common stock upon initial public offering(37,129)(399,753)(6,667)(18,800)43,796 44 418,509 — — 418,553 
Issuance of common stock upon initial public offering and private placements, net of underwriting discounts— — — — 21,396 21 844,625 — — 844,646 
Issuance of Class A common stock upon exercise of stock options— — — — 4,530 5 7,862 — — 7,867 
Vesting of early exercised Class A common stock options— — — — — — 2,073 — — 2,073 
Stock-based compensation expense— — — — — — 14,270 — — 14,270 
Other comprehensive loss— — — — — — — (411)— (411)
Net loss— — — — — — — — (31,646)(31,646)
Balance as of January 31, 2021 $  $ 100,932 $101 $1,399,281 $13 $(325,283)$1,074,112 
11


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
12

C3.AI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended January 31,
20212020
Cash flows from operating activities:
Net loss$(31,646)$(38,944)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization3,189 566 
Non-cash operating lease cost2,474 2,267 
Stock-based compensation expense14,270 5,424 
Other(115)(324)
Changes in operating assets and liabilities
Accounts receivable(1)
588 33,744 
Prepaid expenses, other current assets and other assets(6,931)(6,928)
Accounts payable7,447 (917)
Accrued compensation and employee benefits4,303 1,081 
Lease liability(2,636)(2,344)
Other liabilities1,213 (397)
Deferred revenue(2)
2,016 (20,335)
Net cash used in operating activities(5,828)(27,107)
Cash flows from investing activities:
Purchase of property and equipment(1,166)(1,629)
Capitalized software development costs
 (581)
Proceeds from sale of non-marketable equity security725  
Purchase of investments(232,287)(197,067)
Maturity and sale of investments280,997 58,625 
Net cash provided by (used in) investing activities48,269 (140,652)
Cash flows from financing activities:
Proceeds from initial public offering and private placements, net of underwriting discounts851,859  
Proceeds from repayment of shareholder loan26,003  
Proceeds from issuance of Series G, net of issuance costs 25,333 
Proceeds from issuance of Series H, net of issuance costs 49,836 
Repurchase of common stock and options in tender offer (3,548)
Payment of deferred offering costs(6,710) 
Proceeds from issuance of common stock 44,028 
Proceeds from exercise of Class A common stock options13,825 3,846 
Net cash provided by financing activities884,977 119,495 
Net increase (decrease) in cash, cash equivalents and restricted cash927,418 (48,264)
Cash, cash equivalents and restricted cash at beginning of period33,604 99,107 
Cash, cash equivalents and restricted cash at end of period$961,022 $50,843 
Cash and cash equivalents$960,122 $50,343 
Restricted cash included in other assets900 500 
Total cash, cash equivalents and restricted cash$961,022 $50,843 
Supplemental disclosures of cash flow information—cash paid for income taxes$435 $541 
Supplemental disclosure of non-cash investing and financing activities:
Purchases of property and equipment included in accounts payable and accrued liabilities$349 $ 
Deferred offering costs included in accounts payable and accrued liabilities$503 $ 
Vesting of early exercised stock options$2,073 $427 
(1)Including changes in related party balances of $(780) and $19,826 for the nine months ended January 31, 2021 and 2020, respectively.
(2)Including changes in related party balances of $7,859 and $(8,596) for the nine months ended January 31, 2021 and 2020, respectively.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
13

C3.AI, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.Summary of Business and Significant Accounting Policies
Business
C3.ai, Inc. and subsidiaries, or collectively, C3 AI or the Company, is an enterprise artificial intelligence, or AI, software provider. Our C3 AI Suite supports accelerating digital transformation in various industries with prebuilt and configurable C3 AI Applications for business use cases including predictive maintenance, fraud detection, sensor network health, supply network optimization, energy management, anti-money laundering, and customer engagement. The Company supports customers in the United States, Europe, and the rest of the world. The Company was initially formed as a limited liability company in Delaware on January 8, 2009 and converted to a Delaware corporation in June 2012.
Reverse Stock Split
In November 2020, the Company amended and restated its certificate of incorporation to effect a reclassification of the Company’s prior Class B common stock and Class C common stock into Class A common stock and redeemable convertible Class B-1 common stock into a new redeemable convertible Class A-1 common stock. The rights, including the liquidation, dividend, and voting rights, are substantially identical for each class of common stock reclassified. All references to prior Class B common stock and Class C common stock have been recast to Class A common stock, and all references to redeemable convertible Class B-1 common stock have been recast to redeemable convertible Class A-1 common stock in these unaudited condensed consolidated financial statements to give retrospective effect to the reclassification for all periods presented. The Company also authorized a new Class B common stock. The rights, including the liquidation and dividend rights, of the Class A common stock and the new Class B common stock are substantially identical, other than the voting rights and conversion rights upon transfer of the Class B common stock. See Note 9 for more information.
Additionally, the Company effected a 6-for-1 reverse stock split of the Company’s outstanding common stock, preferred stock, and stock option awards. The par value of the common stock and preferred stock was not adjusted as a result of the reverse stock split. The authorized shares of the Class A common stock, new Class A-1 common stock, new Class B common stock and preferred stock were also adjusted to 390,000,000 shares, 6,666,667 shares, 21,000,000 shares, and 233,107,379 shares, respectively. All authorized, issued, and outstanding shares of common stock, preferred stock, stock option awards, and per share data included in these financial statements have been recast to give retrospective effect to the adjusted authorized shares and reverse stock split for all periods presented.
Initial Public Offering and Concurrent Private Placements
In December 2020, the Company completed its initial public offering (“IPO”), in which the Company issued and sold 17,825,000 shares of its Class A common stock at $42.00 per share, which included 2,325,000 shares issued upon the exercise of the underwriters’ over-allotment option to purchase additional shares. The Company received net proceeds of $694.6 million after deducting underwriting discounts and other offering expenses. In connection with the IPO:
all 33,628,776 shares of the Company’s outstanding redeemable convertible preferred stock, except the Series A* preferred stock, automatically converted into an equivalent number of shares of Class A common stock on a one-to-one basis;
all 3,499,992 shares of the Company’s outstanding redeemable convertible Series A* preferred stock automatically converted into an equivalent number of shares of our Class B common stock on a one-to-one basis;
all 6,666,665 shares of the Company’s outstanding redeemable convertible Class A-1 common stock automatically converted into an equivalent number of shares of Class A common stock on a one-to-one basis; and
the Company amended and restated its certificate of incorporation which became effective upon completion of the IPO.
Deferred offering costs consist primarily of direct and incremental accounting, legal and other fees related to the Company’s IPO. Prior to the IPO, all deferred offering costs incurred were capitalized and included in other assets on the condensed consolidated balance sheet. Upon completion of the IPO, $7.2 million of deferred offering costs were reclassified into stockholders’ equity as a reduction of the IPO proceeds.
14

C3.AI, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Company also completed a concurrent private placement immediately subsequent to the closing of the IPO, in which the Company issued and sold 2,380,952 and 1,190,476 shares of its Class A common stock at $42.00 per share to Spring Creek Capital LLC, an affiliate of Koch Industries, Inc., and Microsoft Corporation, respectively (the “Concurrent Private Placement”). The Company received aggregate proceeds of $150.0 million and did not pay underwriting discounts with respect to the shares of Class A common stock that were sold in the Concurrent Private Placement.
Basis of Presentation and Principles of Consolidation
The Company prepares its unaudited condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States, or GAAP, and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with GAAP. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s final prospectus dated December 8, 2020, and filed with the SEC pursuant to Rule 424(b)(4) on December 9, 2020 (the “Final Prospectus”).
In management’s opinion, these unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of January 31, 2021, and the results of operations for the three and nine months ended January 31, 2021. The results of operations for the three and nine months ended January 31, 2021, are not necessarily indicative of the results to be expected for the full year or any other future interim or annual period.
The condensed consolidated financial statements include the accounts of C3.ai, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the accompanying unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenue and expenses. Actual results and outcomes could differ significantly from the Company’s estimates, judgments, and assumptions. Significant estimates include determining standalone selling price for performance obligations in contracts with customers and estimating variable consideration, the estimated expected benefit period for deferred contract acquisition costs, the useful lives of long-lived assets, the value of common stock and other assumptions used to measure stock-based compensation, and the valuation of deferred income tax assets and uncertain tax positions. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods. As future events and their effects cannot be determined with precision, actual results could materially differ from those estimates and assumptions.
Fiscal Year
The Company’s fiscal year ends on April 30.
Summary of Significant Accounting Policies
The Company’s significant accounting policies are discussed in Note 1. Summary of Business and Significant Accounting Policies in the Notes to Consolidated Financial Statements in its Prospectus. There have been no significant changes to these policies during the three months ended January 31, 2021.
Concentration of Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents, investments and accounts receivable. The majority of the Company’s cash and cash equivalents are held by one financial institution. The Company is exposed to that financial institution to the extent that its cash balance with that financial
15

C3.AI, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
institution is in excess of Federal Deposit Insurance Company, or FDIC, insurance limits. The Company’s investment policy is to invest in securities with a minimum rating of P1 by Moody’s, A1 by Standard & Poor’s, F-1 by Fitch’s or higher for short-term investments, and minimum rating of A2 by Moody’s, A by Standard & Poor’s, or A by Fitch’s or higher for long-term investments.
Recent Accounting Pronouncements
The Company currently qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Accordingly, the Company is provided the option to adopt new or revised accounting guidance either (1) within the same periods as those otherwise applicable to public business entities or (2) within the same time periods as private companies, including early adoption when permissible.
The Company has elected to adopt new or revised accounting guidance within the same time period as private companies.
Other than policies noted below, there have been no significant changes to the accounting policies disclosed in Note 1 of the audited consolidated financial statements as of and for the years ended April 30, 2020 and 2019 included in the Final Prospectus.
Recently Adopted Accounting Standards—In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected. Credit losses relating to available-for-sale debt securities should be recorded through an allowance for credit losses. The guidance also limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and requires the reversal of previously recognized credit losses if fair value increases. The guidance is effective for the fiscal year beginning May 1, 2023 with early adoption permitted. The Company early adopted the guidance as of May 1, 2020 using a prospective transition method. Adoption of this guidance did not have a material impact to the Company’s consolidated financial statements and related disclosures.
In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2018-04 simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. The guidance is effective for the fiscal year beginning May 1, 2023 with early adoption permitted. The Company early adopted the guidance as of May 1, 2020 using a prospective transition method. Adoption of this guidance did not have a material impact to the Company’s consolidated financial statements and related disclosures.
In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815) I. Accounting for Certain Financial Instruments with Down Round Features II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I of this standard applies to entities that issue financial instruments such as warrants, convertible debt or redeemable convertible preferred stock that contain down-round features. Part II of this standard replaces the indefinite deferral for certain mandatorily redeemable noncontrolling interests and mandatorily redeemable financial instruments of nonpublic entities contained within ASC Topic 480 with a scope exception and does not impact the accounting for these mandatorily redeemable instruments. The Company adopted the guidance as of May 1, 2020 using a prospective transition method. Adoption of this guidance did not have a material impact to the Company’s consolidated financial statements and related disclosures.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements with respect to Level 3 rollforwards, timing of liquidation of investments in certain entities that calculate net asset value, and measurement uncertainty. The Company adopted the guidance as of May 1, 2020 using a prospective transition method. Adoption of this guidance did not have a material impact to the Company’s consolidated financial statements and related disclosures.
Recently Issued Accounting Standards Not Yet Adopted—In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to defer and recognize as an asset. The guidance is effective for the fiscal year
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C3.AI, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
beginning May 1, 2021. Early adoption is permitted. The Company is currently evaluating the effect that this guidance will have on the consolidated financial statements and related disclosures.

2.Revenue
Disaggregation of Revenue
The following table presents revenue by geographical region (in thousands):
For the three months ended January 31,For the nine months ended January 31,
2021202020212020
North America (1)
$29,488 $33,274 $86,100 $90,392 
Europe, the Middle East and Africa (1)
17,141 7,447 39,922 23,809 
Asia Pacific (1)
1,655 562 4,086 847 
Rest of World (1)825  825  
Total revenue$49,109 $41,283 $130,933 $115,048 
__________________
(1)The United States comprised 60%, 81%, 65% and 79% of the Company’s revenue in the three months ended January 31, 2021 and 2020 and the nine months ended January 31, 2021 and 2020, respectively. France comprised 12%, 10%, 12% and 10% of the Company’s revenue in the three months ended January 31, 2021 and 2020 and the nine months ended January 31, 2021 and 2020, respectively. No other country comprised 10% or greater of the Company’s revenue for each of the three and nine months ended January 31, 2021 and 2020.
Deferred Revenue
The following table reflects the deferred revenue balance (in thousands):
As of January 31,As of April 30,
20212020
Deferred revenue, current$59,950 $53,537 
Deferred revenue, non-current2,360 6,758 
Total deferred revenue$62,310 $60,295 
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C3.AI, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Significant changes in the deferred revenue balances during the nine months ended January 31, 2021 and 2020 were as follows (in thousands):
Deferred Revenue
April 30, 2020$60,295 
Performance obligations satisfied during the period that were included in the deferred revenue balance at the beginning of the year
(53,086)
Increases due to invoicing prior to satisfaction of performance obligations
55,101 
January 31, 2021$62,310 
Deferred Revenue
April 30, 2019$91,225 
Performance obligations satisfied during the period that were included in the deferred revenue balance at the beginning of the year
$(72,677)
Increases due to invoicing prior to satisfaction of performance obligations
$52,345 
January 31, 2020$70,893 
Remaining Performance Obligation
Remaining performance obligations are committed and represent non-cancellable contracted revenue that has not yet been recognized and will be recognized as revenue in future periods. Some contracts allow customers to cancel the contracts without a significant penalty, and the cancellable amount of contract value is not included in the remaining performance obligations.
The Company excludes amounts related to performance obligations and usage-based royalties that are billed and recognized as they are delivered. This primarily consists of monthly usage-based runtime and hosting charges in the duration of some revenue contracts.
Revenue expected to be recognized from remaining performance obligations was approximately $247.5 million as of January 31, 2021 of which $131.1 million is expected to be recognized over the next 12 months and the remainder thereafter.
Customer Concentration and Accounts Receivable
All of the Company’s customers consist of corporate and governmental entities. A limited number of customers have accounted for a large part of the Company’s revenue and accounts receivable to date. Two separate customers accounted for 16% and 12%, respectively, of revenue for the three months ended January 31, 2021. Two separate customers accounted for 24% and 10%, respectively, of revenue for the three months ended January 31, 2020. Two separate customers accounted for 16% and 12%, respectively, of revenue for the nine months ended January 31, 2021. Two separate customers accounted for 27% and 10%, respectively, of revenue for the nine months ended January 31, 2020. Three separate customers accounted for 21%, 13%, and 11% of accounts receivable at January 31, 2021. Three separate customers accounted for 33%, 19%, and 15% of accounts receivable at April 30, 2020.
Accounts receivable includes billed and unbilled receivables, net of allowance of doubtful accounts. Trade accounts receivable are recorded at invoiced amounts and do not bear interest. The expectation of collectability is based on a review of credit profiles of customers, contractual terms and conditions, current economic trends, and historical payment experience. The Company regularly reviews the adequacy of the allowance for doubtful accounts by considering the age of each outstanding invoice and the collection history of each customer to determine the appropriate amount of allowance for doubtful accounts. Accounts receivable included unbilled receivables of as of January 31, 2021 and April 30, 2020 of $0.6 million and $0.5 million, respectively.

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C3.AI, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3.Fair Value Measurements
The Company’s financial instruments consist primarily of cash and cash equivalents, marketable debt securities, accounts receivable, non-marketable equity securities, and accounts payable. Cash and cash equivalents and marketable debt securities are reported at their respective fair values on the consolidated balance sheets. Non-marketable equity securities are reported at cost less impairment. The remaining financial instruments are reported on the consolidated balance sheets at amounts that approximate current fair values.
The following table summarizes the types of assets measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):
As of January 31, 2021As of April 30, 2020