C3.ai Inc (AI) 2023 Q2 法說會逐字稿

Hello, and thank you for standing by. Welcome to the C3 AI Second Quarter Fiscal Year Earnings Conference Call. (Operator Instructions)

你好，謝謝你的支持。歡迎來到 C3 AI 第二季度財年收益電話會議。 （操作員說明）

It is now my pleasure to introduce Vice President, Investor relations, Mr. Reuben Gallegos.

現在我很高興介紹投資者關係副總裁 Reuben Gallegos 先生。

Thank you, Andrew, and good afternoon, and welcome to C3 AI's earnings call for the second quarter of fiscal year 2023, which ended on October 31, 2022. My name is Reuben Gallegos, and I'm the Vice President of Investor Relations.

謝謝安德魯，下午好，歡迎來到 C3 AI 2022 年 10 月 31 日結束的 2023 財年第二季度財報電話會議。我叫 Reuben Gallegos，是投資者關係副總裁。

With me on the call today is Tom Siebel, Chairman and Chief Executive Officer; and Juho Parkkinen, Chief Financial Officer. After the market close today, we issued a press release with details regarding our second 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.

今天與我通話的是董事長兼首席執行官 Tom Siebel；首席財務官 Juho Parkkinen。今天收市後，我們發布了一份新聞稿，其中包含有關我們第二季度業績的詳細信息以及對我們業績的補充，兩者都可以通過我們網站 ir.c3.ai 的投資者關係部分訪問。此電話會議正在進行網絡直播，電話會議結束後將在我們的 IR 網站上提供重播。

During today's call, we will make statements related to our business that may be considered forward-looking under federal securities laws that 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 our 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.

在今天的電話會議上，我們將發表與我們的業務相關的聲明，這些聲明根據聯邦證券法可能被視為前瞻性聲明，這些聲明僅反映我們截至今天的觀點，不應被視為代表我們在任何後續日期的觀點。我們不承擔任何更新任何前瞻性陳述或我們的展望的義務。這些陳述受各種風險和不確定性的影響，這些風險和不確定性可能導致實際結果與預期存在重大差異。有關可能影響我們實際結果的重大風險和其他重要因素的進一步討論，請參閱我們向美國證券交易委員會提交的文件。

All figures will be discussed on a non-GAAP basis unless otherwise noted. 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.

除非另有說明，否則所有數據都將在非 GAAP 基礎上進行討論。同樣在今天的電話會議中，我們將參考某些非 GAAP 財務指標。我們的新聞稿中包含 GAAP 與非 GAAP 措施的對賬。

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 to the dynamics of our business or quarterly results. Please be advised that we may or may not continue to provide this additional detail in the future.

最後，有時在我們準備好的評論中，為了回答您的問題，我們可能會討論對我們通常的演示文稿增加的指標，以便更深入地了解我們的業務動態或季度業績。請注意，我們將來可能會或可能不會繼續提供此額外詳細信息。

And with that, let me turn the call over to Tom.

就這樣，讓我把電話轉給湯姆。

Thank you, Reuben, and hello, everyone. Thank you for joining us. I'm here with Juho Parkkinen, our Chief Financial Officer, and we are most pleased to share our results for the second quarter for fiscal year '23.

謝謝你，魯本，大家好。感謝您加入我們。我和我們的首席財務官 Juho Parkkinen 在這裡，我們很高興分享我們 23 財年第二季度的業績。

Bottom line, it was a solid quarter in which we delivered our stated objectives and met expectations despite the rocky economic situation and the generally morose condition of the markets. In the last earnings call, we described 2 strategic initiatives to spur faster growth. One was to recompose our sales team with an emphasis on technical and domain expertise. The second was to shift our pricing model from a subscription-based pricing model to a consumption-based pricing model. I'm happy to report these initiatives have been successfully completed in the second quarter. I will explain these actions in some detail, but first, I'll comment on the financial results and some of the successes that we achieved during the quarter.

總而言之，這是一個穩健的季度，儘管經濟形勢動盪，市場普遍低迷，但我們實現了既定目標並達到了預期。在上次財報電話會議中，我們描述了 2 項刺激更快增長的戰略舉措。一是重組我們的銷售團隊，重點放在技術和領域專業知識上。第二個是將我們的定價模型從基於訂閱的定價模型轉變為基於消費的定價模型。我很高興地報告這些舉措已在第二季度成功完成。我將詳細解釋這些行動，但首先，我將評論財務結果和我們在本季度取得的一些成功。

[Written] large, the quarter was quite solid. Subscription revenue for the quarter was $59.5 million, an increase of 26% year-over-year. Operating loss improved 15 points year-over-year to 24%. We continue to maintain a healthy gross margin of 77%. Customer comp grew 16% year-over-year to 236. Current RPO of $164.5 million was down slightly and consistent with our expectations as we transitioned to a consumption-based pricing model. We ended the quarter with cash reserves of approximately $860 million.

[書面] 大，季度相當穩固。本季度訂閱收入為 5950 萬美元，同比增長 26%。營業虧損同比改善 15 個百分點至 24%。我們繼續保持 77% 的健康毛利率。客戶收入同比增長 16% 至 236。當前的 RPO 為 1.645 億美元，略有下降，與我們過渡到基於消費的定價模型時的預期一致。本季度結束時，我們的現金儲備約為 8.6 億美元。

The number of completed contracts in the quarter increased to 25, approximately 100% increase year-over-year. Our average contract value in the second quarter was just over $800,000, down from $19 million a year earlier. This reduction in contract value was a direct result of our new pricing model. We believe the new pricing model will result in a substantially increased number of smaller transactions, providing greater forward visibility in both revenue and bookings.

本季度完成的合同數量增加到 25 個，同比增長約 100%。我們第二季度的平均合同價值略高於 800,000 美元，低於去年同期的 1900 萬美元。合同價值的減少是我們新定價模型的直接結果。我們相信，新的定價模式將導緻小額交易的數量大幅增加，從而在收入和預訂方面提供更大的前瞻性可見性。

Our new consumption-based pricing model was well-received by our customers, our prospects, our partners and by our sales organization. We expect this new model to increase the number of customers with which we engage in any given quarter by an order of magnitude. As these customers continually increase their usage over time, we expect the compound effect on revenue growth to be quite significant.

我們新的基於消費的定價模型受到了我們的客戶、我們的潛在客戶、我們的合作夥伴和我們的銷售組織的歡迎。我們希望這種新模式能夠將我們在任何給定季度接觸的客戶數量增加一個數量級。隨著這些客戶隨著時間的推移不斷增加他們的使用，我們預計對收入增長的複合影響將非常顯著。

Our customers and prospects find our new consumption-based pricing easier to understand and easier to contract. Our market partners find this new pricing model well-aligned with how they price their own services and one that facilitates their successfully selling C3 AI products. I'm happy to report that our transition to this new consumption-based pricing model is now complete.

我們的客戶和潛在客戶發現我們新的基於消費的定價更容易理解和簽訂合同。我們的市場合作夥伴發現這種新的定價模式與他們為自己的服務定價的方式非常一致，並且有助於他們成功銷售 C3 AI 產品。我很高興地向大家報告，我們向這種基於消費的新定價模式的過渡現已完成。

Simultaneously, last quarter, we completed a transition of similar magnitude with the recomposition of our global sales team. We are now growing a team of highly qualified, well-trained technologically expert sales professionals who are engaging with prospective customers in selling pilots and expanding production usage with existing customers. There is no question that there is pervasive economic uncertainty in the global business community that continue to provide bookings headwinds. This has been especially significant in the tech markets that are experiencing a blood bath in equity prices, with significant layoffs at companies, including Amazon, Meta, Salesforce, Google, Snap and many others.

同時，上個季度，我們完成了類似規模的轉型，重組了我們的全球銷售團隊。我們現在正在培養一支由高素質、訓練有素的技術專家銷售專業人員組成的團隊，他們與潛在客戶合作銷售試點產品，並擴大與現有客戶的生產使用。毫無疑問，全球商業界普遍存在經濟不確定性，這繼續給預訂帶來阻力。這對於正在經歷股價大跌的科技市場尤其重要，亞馬遜、Meta、Salesforce、谷歌、Snap 等公司都在裁員。

I believe this is just the start of what will be a significant tech market correction. Layoffs at established companies will accelerate. The many Series A, B, C and D companies that are hemorrhaging cash will simply not survive. Just like every other tech recession that we're seeing, the human capital at the piece parts companies will be redistributed to those companies that survive. We are confident in our business outlook, especially with the nearly $600 billion addressable market opportunity that we have before us. We continue to invest in our products and in the talent required to meet our goal of building a cash-positive profitable business that will return to a growth rate of greater than 30% year-over-year within the next 18 months.

我相信這只是重大科技市場調整的開始。老牌公司的裁員將加速。許多正在流失現金的 A、B、C 和 D 系列公司根本無法生存。就像我們看到的所有其他技術衰退一樣，零部件公司的人力資本將重新分配給那些倖存下來的公司。我們對我們的業務前景充滿信心，尤其是面對我們面前近 6000 億美元的潛在市場機會。我們將繼續投資於我們的產品和所需的人才，以實現我們的目標，即建立現金盈利業務，該業務將在未來 18 個月內恢復超過 30% 的同比增長率。

Our employee base grew last quarter to over 850, a sequential increase of 83, and we continue to hire key engineers, data scientists, sales professionals and other key roles across the organization.

上個季度，我們的員工人數增加到 850 多人，環比增加了 83 人，我們繼續在整個組織中招聘關鍵工程師、數據科學家、銷售專業人員和其他關鍵角色。

Turning to some of our customer successes in the quarter. Shell has continued to expand their use of our solutions in new areas, and have successfully implemented C3 AI sustainability for manufacturing at 2 of their key offshore platforms in the Gulf of Mexico. We also have successfully concluded an ESG trial with Shell, with focus on leveraging NLP to generate targeted insights on the rapidly evolving ESG priorities of Shell's key stakeholders. Shell has already addressed and communicated that they are realizing massive economic value annually by deploying our C3 AI applications across the enterprise, upstream, downstream, midstream renewables.

轉向本季度我們的一些客戶成功案例。殼牌繼續在新領域擴大對我們解決方案的使用，並成功在墨西哥灣的 2 個主要海上平台上實施了 C3 AI 可持續性製造。我們還成功完成了與殼牌的 ESG 試驗，重點是利用 NLP 對殼牌主要利益相關者快速發展的 ESG 優先事項產生有針對性的見解。殼牌已經解決並傳達了通過在企業、上游、下游和中游可再生能源中部署我們的 C3 AI 應用程序，他們每年都在實現巨大的經濟價值。

We're just getting started. There's a large and growing pipeline of enterprise AI applications that Shell is building, testing and deploying using the C3 AI platform, realizing the strategic value of our partnership and the fulfillment of the digital transformation of one of the largest and most iconic companies in the world.

我們才剛剛開始。殼牌正在使用 C3 AI 平台構建、測試和部署大量且不斷增長的企業 AI 應用程序，實現我們合作夥伴關係的戰略價值，並實現世界上最大和最具標誌性的公司之一的數字化轉型.

Cargill has continued to expand their use of our solutions and optimizing food production and distribution to meet the dynamic needs of the market and ensuring sustained food value chains in North America, Latin America, Europe, Africa and Asia. This is a critical mission that has enormous humanitarian ramifications, and we are proud to participate with Cargill in this important mission.

嘉吉繼續擴大對我們解決方案的使用，優化食品生產和分銷，以滿足市場的動態需求，並確保北美、拉丁美洲、歐洲、非洲和亞洲持續的食品價值鏈。這是一項具有巨大人道主義影響的關鍵任務，我們很自豪能與嘉吉一起參與這項重要任務。

Lastly, we are proud to say that we've continued to expand our relationship with the United States Air Force, working closely with them to improve aircraft availability and efficiency of readiness programs of the entire fleet of over 3,700 aircraft. The AI capabilities that we are putting into operation today offers the potential to improve readiness rates by up to 20% and reduce the cost of maintenance for up to $4 billion per year.

最後，我們可以自豪地說，我們繼續擴大與美國空軍的關係，與他們密切合作，以提高整個機隊 3,700 多架飛機的飛機可用性和戰備計劃的效率。我們今天投入使用的人工智能功能有可能將準備率提高多達 20%，並將每年的維護成本降低多達 40 億美元。

Let me address our partner ecosystem. In recent weeks, there's been something of a seismic shift in the enterprise AI software space. Traditionally, the primary competition to purchasing C3 AI enterprise applications was the license -- was for a company to -- the alternative of C3 AI was for a company to license a large number of tools from the hyperscalers, piece parts from providers like Cloudera, Pivotal, Databricks, DataRobot and the many of the scores of other point solution providers, and then engage in a long and expensive science experiment in an attempt to build a custom enterprise AI platform. No one to our knowledge ever succeeded with that.

讓我談談我們的合作夥伴生態系統。最近幾週，企業人工智能軟件領域發生了翻天覆地的變化。傳統上，購買 C3 AI 企業應用程序的主要競爭是許可證——對於公司來說——C3 AI 的替代方案是公司從超大規模應用程序中獲得大量工具的許可，這些工具來自 Cloudera 等提供商， Pivotal、Databricks、DataRobot 和許多其他點解決方案提供商，然後進行長期且昂貴的科學實驗，試圖構建定制的企業 AI 平台。據我們所知，沒有人成功過。

Now the market is truly changing due to -- changing and demonstrating an increased desire for production tried, tested, proven enterprise AI solutions. All of the hyperscalers have acknowledged this within the last few months.

現在，市場正在真正發生變化，因為——變化並表明人們對經過生產檢驗、測試和驗證的企業 AI 解決方案的需求增加。在過去的幾個月裡，所有超大規模企業都承認了這一點。

Thomas Kurian at Google Cloud was the leader, announcing the TCT would lead in the market, okay, not with piece parts, but with turnkey production enterprise applications from C3 AI. Then last week, Adam Selipsky, CEO of AWS, announced that their customers were now demanding turnkey applications, not toolkits. This was followed the next day by Scott Guthrie, EVP of Microsoft Azure, all announced that the customers were telling them they no longer wanted toolkits to build applications, they now want functional turnkey AI applications that accrue immediate value.

谷歌云的 Thomas Kurian 是領導者，他宣布 TCT 將引領市場，好吧，不是通過零件，而是通過 C3 AI 的交鑰匙生產企業應用程序。上週，AWS 首席執行官 Adam Selipsky 宣布他們的客戶現在需要交鑰匙應用程序，而不是工具包。第二天，微軟 Azure 的執行副總裁 Scott Guthrie 宣布，客戶告訴他們，他們不再需要工具包來構建應用程序，他們現在想要能夠立即產生價值的功能性交鑰匙 AI 應用程序。

With a growing family of 42 production enterprise C3 AI applications in the market that serve the needs of financial services, utilities, health, manufacturing, defense, intelligence and other industries, C3 AI is well positioned to capitalize on this now clearly recognized market requirement. We sell with TCT, we sell with Azure, we sell with AWS, we sell with Baker Hughes, we sell with Booz Allen Hamilton, and we are well positioned to help our partners to deliver to their customers the solutions they are demanding.

隨著市場上越來越多的 42 個生產企業 C3 AI 應用程序滿足金融服務、公用事業、健康、製造、國防、情報和其他行業的需求，C3 AI 已做好充分準備，可以利用這一現已明確認可的市場需求。我們與 TCT 一起銷售，我們與 Azure 一起銷售，我們與 AWS 一起銷售，我們與 Baker Hughes 一起銷售，我們與 Booz Allen Hamilton 一起銷售，我們有能力幫助我們的合作夥伴向他們的客戶提供他們需要的解決方案。

C3 AI and Google Cloud are continuing to jointly invest in industry applications with the launch of 2 new enterprise AI applications last quarter optimized on GCP. Our sales teams are actively co-selling today to over 300 accounts around the world. Last quarter, we closed an expansion with a large transportation company, jointly signed one of the top 50 retailers in the world to license our supply chain applications, and signed several new deals in the financial services in oil and gas industries. Our GCP joint selling activity is quite brisk, and as a result, GCP is our fastest growing install base.

C3 AI 和 Google Cloud 繼續聯合投資行業應用程序，上個季度推出了 2 個在 GCP 上優化的新企業 AI 應用程序。今天，我們的銷售團隊正在積極向全球 300 多個客戶進行聯合銷售。上個季度，我們完成了與一家大型運輸公司的擴張，聯合簽署了世界 50 強零售商之一的供應鏈應用許可協議，並簽署了幾項石油和天然氣行業金融服務的新交易。我們的 GCP 聯合銷售活動非常活躍，因此，GCP 是我們增長最快的安裝基礎。

That being said, AWS remains C3 AI's largest installed base, constituting about 56% of our customer base. C3 AI and Microsoft continue to close deals, particularly in the energy and manufacturing sectors. Azure remains our second largest installed base, constituting approximately 27% of our customer base.

話雖如此，AWS 仍然是 C3 AI 最大的安裝基礎，約占我們客戶群的 56%。 C3 AI 和微軟繼續完成交易，特別是在能源和製造業領域。 Azure 仍然是我們第二大安裝基礎，約占我們客戶群的 27%。

We announced a number of new product enhancements here in the course of the quarter that I'm not going to review in this call, but we continue to invest in technology leadership. We continue to invest in R&D and we'll continue to add to our industry-leading portfolio of enterprise AI applications and add clear depth and increased performance to these existing applications.

我們在本季度期間在這裡宣布了許多新產品增強功能，我不會在本次電話會議中進行審查，但我們將繼續投資於技術領先地位。我們將繼續投資於研發，我們將繼續增加我們行業領先的企業 AI 應用程序組合，並為這些現有應用程序增加清晰的深度和更高的性能。

Let me talk for a minute about human capital. C3 AI continues to be recognized as a Great Place To Work. In the second quarter, we received over 23,000 job applications. We interviewed over 2,200 of these applicants, and we hired 90. One of the secular changes of this tech downturn is the increased availability of highly trained professionals who are willing to come into the office, roll up their sleeves and get to work. We have never been more confident with the team that we have and with their ability to execute our strategy.

讓我談談人力資本。 C3 AI 繼續被公認為工作的好地方。第二季度，我們收到了超過 23,000 份求職申請。我們採訪了 2,200 多名應聘者，並僱用了 90 人。這次技術衰退的長期變化之一是訓練有素的專業人士的可用性增加，他們願意走進辦公室，捲起袖子開始工作。我們對我們擁有的團隊以及他們執行我們戰略的能力充滿信心。

Turning to guidance. Our Q3 revenue is expected to be between $63 million and $65 million, and we are reaffirming our full year fiscal year '23 revenue guidance of $255 million to $270 million. For non-GAAP operating loss, we expect in Q3 between $25 million and $29 million. And for the full year, we expect an operating loss between $85 million and $98 million. We continue to operate at roughly an 80% non-GAAP gross profit margin. We have a clear path to top line growth, non-GAAP profitability at a cash positive operations by the end of fiscal year '24. At this time, we did not see our cash balances below -- we did not see our cash balances falling below $700 million before that inflection.

轉向指導。我們第三季度的收入預計在 6300 萬美元到 6500 萬美元之間，我們重申我們的 23 財年全年收入指引為 2.55 億美元到 2.7 億美元。對於非 GAAP 運營虧損，我們預計第三季度將在 2500 萬美元至 2900 萬美元之間。對於全年，我們預計運營虧損在 8500 萬至 9800 萬美元之間。我們繼續以大約 80% 的非 GAAP 毛利率運營。我們有一條清晰的道路，可以在 24 財年末實現收入增長、非 GAAP 盈利能力和現金正運營。此時，我們沒有看到我們的現金餘額低於 - 在那個拐點之前我們沒有看到我們的現金餘額低於 7 億美元。

Final comment on the big picture. C3 AI is addressing a $600 billion addressable AI software market. If not the largest, we are one of the largest providers of these applications globally. Our business is exactly on track with what we have communicated to you. Our goal remains to establish and maintain a global leadership position in enterprise AI software.

最後評論大圖。 C3 AI 正在解決價值 6000 億美元的可尋址人工智能軟件市場。即使不是最大的，我們也是全球最大的這些應用程序供應商之一。我們的業務完全符合我們向您傳達的信息。我們的目標仍然是在企業人工智能軟件領域建立並保持全球領先地位。

In the short run, we believe tech companies and tech equities will continue to face headwinds, as long as the Fed keeps its foot on the brake. The collateral damage, I think, is going to be more significant than people think. That being said, when the Fed takes its foot off the brake, be that in 2023 or 2024, C3 AI will be bigger, stronger, cash positive, profitable, a clear market leader and well positioned to benefit from the inevitable equity market surge that will ensue.

短期內，我們認為只要美聯儲繼續踩剎車，科技公司和科技股票將繼續面臨逆風。我認為，附帶損害將比人們想像的更嚴重。話雖這麼說，當美聯儲鬆開剎車時，無論是在 2023 年還是 2024 年，C3 AI 都將變得更大、更強、現金充裕、有利可圖，成為明確的市場領導者，並有能力從不可避免的股市飆升中受益將隨之而來。

Now let me turn the call over to our CFO, Juho Parkkinen, for a summary of our financials and additional commentary. Juho?

現在讓我將電話轉給我們的首席財務官 Juho Parkkinen，以獲取我們的財務摘要和其他評論。巨虎？

Thank you, Tom. Now I will provide a recap of our financial results, add some color to the drivers of our financials for the back half of the year and conclude with some additional color related through the consumption-based revenue model we introduced on our last call.

謝謝你，湯姆。現在我將回顧一下我們的財務業績，為我們下半年的財務驅動因素添加一些顏色，並通過我們在上次電話會議上介紹的基於消費的收入模型來總結一些額外的顏色。

As Tom mentioned, we ended the quarter with revenue of $62.4 million, which represents 7% year-over-year growth. Subscription revenue increased by a solid 26% and was 95% of total revenues. Gross profit increased 5% to $47.8 million, and gross margin decreased 122 basis points to 76.6%. The decline is primarily due to a higher mix of trials and pilots, which carry a higher cost required to ensure customer success during this early phase of engagement.

正如湯姆所提到的，我們在本季度結束時的收入為 6240 萬美元，同比增長 7%。訂閱收入穩步增長 26%，佔總收入的 95%。毛利潤增長 5% 至 4780 萬美元，毛利率下降 122 個基點至 76.6%。下降的主要原因是更多的試驗和試點組合，在早期參與階段確保客戶成功所需的成本更高。

Operating loss of $15 million improved $7.6 million year-over-year, and operating loss margin also improved from 39% in the prior year to 24% in Q2. Our customer count increased by 16% year-over-year to 236, and we closed 25 deals during the quarter. It's noteworthy that deals under $1 million grew 167% year-over-year in Q2.

營業虧損 1500 萬美元，同比減少 760 萬美元，營業虧損率也從去年的 39% 提高到第二季度的 24%。我們的客戶數量同比增長 16% 至 236 家，本季度我們完成了 25 筆交易。值得注意的是，第二季度 100 萬美元以下的交易同比增長 167%。

Now turning to RPO and bookings. We reported RPO of $417.3 million, which met our expectations as we continue to convert -- as we convert to consumption-based deals. Current RPO was $164.5 million, down 8% from last year. We continue to see positive trends in bookings diversity outside of oil and gas, particularly in the federal, aero and defense sectors, which grew sequentially and year-over-year.

現在轉向 RPO 和預訂。我們報告的 RPO 為 4.173 億美元，這符合我們繼續轉換的預期——因為我們轉換為基於消費的交易。目前的 RPO 為 1.645 億美元，比去年下降 8%。我們繼續看到石油和天然氣以外的預訂多樣性呈積極趨勢，特別是在聯邦、航空和國防部門，這些部門連續和同比增長。

Turning to cash flow. Free cash flow for the quarter was an outflow of $77 million. Breaking this down, $23.7 million was for the build-out of our new headquarters. As I have mentioned previously, this will be amortized over the term of the lease and will not have a meaningful impact on our path to profitability. Normalizing for this payment, our adjusted free cash flow was an outflow of $54.3 million.

轉向現金流。該季度的自由現金流流出 7700 萬美元。細分下來，2370 萬美元用於建設我們的新總部。正如我之前提到的，這將在租賃期限內攤銷，不會對我們的盈利之路產生重大影響。將這筆付款標準化後，我們調整後的自由現金流為 5430 萬美元的流出。

Turning to guidance-related assumptions. As Tom mentioned, we have completed our transition from a subscription-based pricing model to a consumption-based pricing model and are now focused on ramping revenue from consumption-based deals.

轉向與指導相關的假設。正如湯姆提到的，我們已經完成了從基於訂閱的定價模式到基於消費的定價模式的轉變，現在專注於增加基於消費的交易的收入。

With respect to gross margin. As the number of pilots ramp in the coming quarters and as the proportion of period revenue is more weighted towards pilots, we expect gross margin percentage to decline. However, consistent with the financial model we shared with you as part of the prior quarter earnings call, we expect the gross margin to increase to historical levels by the same time we expect to reach our initial non-GAAP profitability. Operating margin model and guidance includes our expectations for revenue growth and gross margin impact.

關於毛利率。隨著未來幾個季度飛行員數量的增加以及期間收入的比例更加偏重於飛行員，我們預計毛利率將下降。然而，根據我們在上一季度財報電話會議上與您分享的財務模型，我們預計毛利率將在我們預計達到初始非 GAAP 盈利能力的同時增加到歷史水平。營業利潤率模型和指導包括我們對收入增長和毛利率影響的預期。

Looking at our cash reserves, we have sufficient capacity to execute our plan to invest for growth in the coming quarters. We are well capitalized, having approximately $860 million available. With the planned expenditures related to the build-out of our new headquarters and investments in our business, we expect our cash investment balance to bottom out in fiscal '24 before we see improving free cash flow and improving cash balances thereafter.

從我們的現金儲備來看，我們有足夠的能力執行我們的計劃，以在未來幾個季度實現增長。我們資本充足，擁有大約 8.6 億美元的可用資金。通過與我們新總部的擴建和業務投資相關的計劃支出，我們預計我們的現金投資餘額將在 24 財年觸底，然後我們才能看到自由現金流的改善和現金餘額的改善。

As a reminder, one of our most significant cash usages has been for the build-out of our new headquarters, which unlike many high-tech companies, we actually occupy. We are on track to achieve positive non-GAAP operating margin in the fourth quarter of the next fiscal year, driven by accelerating revenue growth and improving gross margin.

提醒一下，我們最重要的現金用途之一是建設我們的新總部，與許多高科技公司不同，我們實際上佔據了這裡。在收入加速增長和毛利率提高的推動下，我們有望在下一財年第四季度實現正的非美國通用會計準則營業利潤率。

Regarding the transition to consumption-based pricing, as a reminder, we do not require existing customers to move to a consumption-based arrangement. Our customers have been satisfied and are expected to remain in their current contract terms. As such, we expect RPO to decline as our new deals will not require a significant upfront noncancelable arrangement, but rather a consumption-based usage arrangement. The assumptions we provided last quarter for modeling the consumption-based business remain unchanged.

關於向基於消費的定價過渡，提醒一下，我們不要求現有客戶轉向基於消費的安排。我們的客戶很滿意，並希望繼續遵守他們目前的合同條款。因此，我們預計 RPO 會下降，因為我們的新交易不需要大量的前期不可取消安排，而是基於消費的使用安排。我們上個季度為基於消費的業務建模提供的假設保持不變。

In summary, we are focused on delivering profitable growth to our shareholders, and we continue to expect achieving non-GAAP profitability in the fourth quarter of fiscal '24, while growing the top line in excess of 30%.

總而言之，我們專注於為股東帶來盈利增長，我們繼續期望在 24 財年第四季度實現非 GAAP 盈利，同時使收入增長超過 30%。

With these remarks, I would like to open the call up for questions. Operator?

有了這些評論，我想開始提問。操作員？

(Operator Instructions) And our first question comes from the line of Brad Zelnick with Deutsche Bank.

（操作員說明）我們的第一個問題來自德意志銀行的 Brad Zelnick。

My first one is either for you, Tom, or for Juho. Just as we think about the plan that you've laid out, and it's nice to see the progress relative to what you told us last quarter, but traditional metrics obviously don't tell the full story. So what's the right metric for us to track the progress quarter-to-quarter that you're making? What are the milestones that we should be looking for? And maybe can you tell us what metrics do you measure yourselves against internally and hold the sales force accountable to and incentivize them on so we can just get a sense quarter-to-quarter. In addition to customers, obviously, they eventually translate to dollars, but any insight there is helpful. And then I've got a follow-up.

我的第一個不是給你，湯姆，就是給 Juho。正如我們考慮您制定的計劃一樣，很高興看到與您上個季度告訴我們的內容相關的進展，但傳統指標顯然不能說明全部情況。那麼，我們跟踪您每季度取得的進展的正確指標是什麼？我們應該尋找哪些里程碑？也許你能告訴我們你在內部衡量自己的指標是什麼，讓銷售人員對他們負責並激勵他們，這樣我們就可以了解每個季度的情況。顯然，除了客戶之外，他們最終會轉化為美元，但任何洞察力都是有幫助的。然後我有一個後續行動。

Brad, it's Tom. I mean I think the bottom line is when we go to this model, we're looking at a number of customers, okay? So how many new pilots are or closing every quarter? We'd expect in the other quarters, I mean, this should be in order of magnitude larger than we're doing now. I think we did, what, 13 or 15 last quarter in roughly half a quarter. Because we announced the transition to this model about halfway through the quarter, and we did 15 about half a quarter.

布拉德，是湯姆。我的意思是，我認為最重要的是，當我們採用這種模式時，我們正在尋找大量客戶，好嗎？那麼每個季度有多少新飛行員正在或關閉？我們預計在其他季度，我的意思是，這應該比我們現在做的大一個數量級。我認為我們上個季度在大約半個季度內做了 13 或 15 次。因為我們在本季度中途宣布了向該模型的過渡，並且我們在半個季度左右做了 15 個。

So basically, it's really number -- we're really looking at a number of customers, Brad, and then we're looking at how far we -- how rapidly they grow the use of the products. If in fact, we get an order of magnitude more customers, and they continue to grow their use as our customers have in the past, and you know we've modeled this very carefully, I mean, we get out there 3, 4, 5 quarters. This revenue line should accelerate pretty dramatically.

所以基本上，它真的是數字——我們真的在看一些客戶，布拉德，然後我們在看我們有多遠——他們增加產品使用的速度有多快。事實上，如果我們的客戶數量增加了一個數量級，並且他們繼續像我們過去的客戶一樣增加他們的使用量，而且你知道我們已經非常仔細地模擬了這一點，我的意思是，我們會推出 3、4、 5 個季度。這條收入線應該會大幅加速。

Right. Brad, just one thing to add to that. So we guided in our original model for the analyst community to expect 5 pilots for the quarter. We actually closed 13, which was a combination of trials and pilots. So we're quite excited about how this started -- this kicked off.

正確的。布拉德，只需添加一件事。因此，我們在分析師社區的原始模型中進行了指導，預計本季度將有 5 個試點。我們實際上關閉了 13 個，這是試驗和試點的結合。所以我們對這是如何開始的感到非常興奮——這開始了。

That's helpful. And maybe just one follow-up. Appreciating the accelerated path to profitability and naturally, just given what's going on in the world, you guys are in a pretty interesting position, for sure. But what would need to happen to get you to positive free cash flow ahead of the fiscal '24 expectation? And maybe can you just clarify for us, is that an exit rate? Is that for the full year? How do we measure that? And what circumstances would maybe cause you to accelerate that? Not that you need to, you've got plenty of cash, but I mean, this is clearly the discipline that the world wants to see.

這很有幫助。也許只有一次跟進。欣賞加速盈利的道路，自然地，考慮到世界上正在發生的事情，你們肯定處於一個非常有趣的位置。但是，需要發生什麼才能讓您在 24 財年預期之前獲得正的自由現金流？也許你能為我們澄清一下，這是退出率嗎？那是全年嗎？我們如何衡量？什麼情況下可能會導致你加速？不是說你需要，你有很多現金，但我的意思是，這顯然是世界希望看到的紀律。

Brad, it's simple. We can turn this to be cash positive and profitable honestly within 90 days. All I got to do is layoff about 40% of the workforce, okay? Now I don't think -- I mean that might make some analysts happy, it might make some shareholder happy, but it's absolutely not in the best interest of the shareholders, employees or the customers. But I mean, it's all we have to do is basically stop our marketing expenses and layoff 40% of the people, and I don't know whether it's 40% or 50% or 35%. But I mean, hard stop, it's cash positive and profitable like next quarter. But I don't think that would be responsible, and I don't think it's anybody's interest, but you asked the question, we gave you the answer. Juho, do you have any further light on that?

布拉德，這很簡單。我們可以在 90 天內將其轉變為現金正數並誠實地盈利。我要做的就是解僱大約 40% 的員工，好嗎？現在我不認為——我的意思是這可能會讓一些分析師高興，可能會讓一些股東高興，但這絕對不符合股東、員工或客戶的最佳利益。但我的意思是，我們所要做的就是基本上停止我們的營銷費用並裁員 40%，我不知道是 40%、50% 還是 35%。但我的意思是，硬停止，它是現金正數並且像下個季度一樣有利可圖。但我不認為這是負責任的，我認為這不符合任何人的利益，但你提出了問題，我們給了你答案。 Juho，你對此有進一步的了解嗎？

Only thing, Brad, that we -- the way that we've modeled our path to profitability, we feel confident on that and we stick to that.

唯一的事情，布拉德，我們 - 我們已經模擬了盈利之路的方式，我們對此充滿信心並堅持下去。

Got it. So just to clarify the expectation though, it's for the full year. Is it an exit rate when you say fiscal '24...

知道了。所以只是為了澄清期望，這是全年的。當你說 24 財年時，它是退出率嗎？

(inaudible) that's Q4, FY '24.

（聽不清）那是 24 財年第四季度。

And our next question comes from the line of Mike Cikos with Needham & Company.

我們的下一個問題來自 Needham & Company 的 Mike Cikos。

I did want to circle up on some of the customer count dynamics just because I know that is going to be one of the metrics we're looking at while you guys are going through this transition. I think you guys had cited 236, up from 228 last quarter, right? And I just wanted to see what has the customer behavior been like since you guys announced this transition. And what I really would be interested in hearing I know you guys are not forcing your customers to migrate down to the consumption model. But curious to hear, have you seen customers trade down to the consumption model since you announced this transition? And then the second question there is, have you seen any changes in customer behavior from a churn perspective?

我確實想圍繞一些客戶計數動態進行討論，因為我知道這將是你們正在經歷這一轉變時我們正在關注的指標之一。我想你們引用了 236，高於上一季度的 228，對嗎？我只是想看看自你們宣布這一轉變以來客戶的行為是什麼樣的。我真正感興趣的是，我知道你們並沒有強迫您的客戶轉向消費模式。但很想听聽，自從您宣布這一轉變以來，您是否看到客戶轉向消費模式？然後是第二個問題，從流失的角度來看，您是否看到了客戶行為的任何變化？

Mike, it's Tom. No customer, just-in customer, has requested to convert to the conversion base pricing -- consumption-based pricing model. Understand that these customers are huge. I mean you get into Shell, you get into Coke, Baker Hughes. I mean these are very, very large relationships now. And you can imagine their licensing terms are pretty favorable and unique to them. Have we seen any significant change in customer churn? No.

邁克，是湯姆。沒有客戶，即剛入駐的客戶，要求轉換為轉換基礎定價——基於消費的定價模型。了解這些客戶是巨大的。我的意思是你進入殼牌，你進入可口可樂，貝克休斯。我的意思是現在這些關係非常非常大。你可以想像他們的許可條款非常有利並且對他們來說是獨一無二的。我們是否看到客戶流失有任何重大變化？不。

I appreciate the color there. And then for the follow-up, I did want to, I guess, look back at what we had spoken about last quarter with deals getting pushed out, just given the current environment. So specifically, you guys had called out 66 deals last quarter getting pushed. Have you closed any of those deals in the interim? And do we still see a similar order of magnitude for deals getting pushed given that you guys have made this transition? Are you helping streamline the adoption process for those customers and accelerating those sales cycles?

我欣賞那裡的顏色。然後對於後續行動，我想，我確實想回顧一下我們上個季度談到的交易被推遲的情況，只是考慮到當前的環境。具體來說，你們上個季度已經完成了 66 筆交易。您是否在此期間完成了任何這些交易？鑑於你們已經完成了這種轉變，我們是否仍然看到類似數量級的交易被推動？您是否正在幫助簡化這些客戶的採用流程並加快這些銷售週期？

Mike, this is Juho. Yes, so we did close some of those deals that were pushed out of last quarter. And like we expected from our revenue guidance, the macroeconomic climate was tougher for the second -- after Q1, but it has stabilized, and in particular, with our new consumption-based pricing, I think our customers and potential new customers are reacting well to that strategy.

邁克，這是 Juho。是的，所以我們確實完成了一些在上個季度被推遲的交易。正如我們從收入指引中預期的那樣，宏觀經濟環境在第二季度變得更加艱難——在第一季度之後，但它已經穩定下來，特別是我們基於消費的新定價，我認為我們的客戶和潛在的新客戶反應良好那個策略。

Got it. It makes a ton of sense, especially when I think about that average contract value declining from, call it, $19 million to less than $1 million this quarter.

知道了。這很有道理，尤其是當我想到本季度平均合同價值從 1900 萬美元下降到不到 100 萬美元時。

And our next question comes from the line of Pinjalim Bora with JPMorgan.

我們的下一個問題來自摩根大通的 Pinjalim Bora 系列。

I want to ask about the subscription revenue outperformance. It seems like a big outperformance in the quarter. Was that largely because of the outperformance in the number of pilots that you're doing? Because even if you have closed some of the deals that got pushed, I wouldn't have thought that you would recognize a ton of revenue from those. So help me understand that.

我想問一下訂閱收入的表現。這似乎是本季度的一個很大的表現。這在很大程度上是因為你在做的飛行員數量上表現出色嗎？因為即使你已經完成了一些被推動的交易，我也不會認為你會從這些交易中獲得大量收入。所以幫助我理解這一點。

Well, I think you kind of got it. There were some previous transactions that were not based on consumption-based pricing but did close in the quarter that did contribute to that. So I think you called it accurately, Pinjalim.

好吧，我想你有點明白了。之前有一些交易不是基於基於消費的定價，但確實在本季度完成，這確實促成了這一點。所以我認為你準確地稱呼它，Pinjalim。

Okay. So it was because of the deals that closed. Okay. Tom, on a high level, maybe help us understand what are you hearing from CIOs in terms of IT budgets for next year. Are people -- you kind have called out, obviously, the headwinds on macro, but are you hearing people kind of resetting their budgets for next year, next calendar year? What are you hearing?

好的。所以這是因為交易結束了。好的。湯姆，在高層次上，也許可以幫助我們了解您從首席信息官那裡聽到的關於明年 IT 預算的內容。人們 - 顯然，你們已經大聲疾呼宏觀方面的不利因素，但你們是否聽到人們在某種程度上重置明年、下一個日曆年的預算？你在聽什麼？

I think it's a really good question, and it varies from company to company. I mean there are a lot of companies that see this as an organization in the federal government. And by the way, I didn't comment on our federal business, but our federal business is really strong, okay, particularly in the defense sector. And if you saw the defense budget, when he's flying through today, he increased, I think, almost over -- I'm sorry, $200 billion over last year, if I'm not mistaken. So that's a big business.

我認為這是一個非常好的問題，並且因公司而異。我的意思是有很多公司將其視為聯邦政府中的一個組織。順便說一句，我沒有對我們的聯邦業務發表評論，但我們的聯邦業務確實很強大，特別是在國防部門。如果你看到國防預算，當他飛過今天時，我想他增加了，幾乎超過了——對不起，如果我沒記錯的話，比去年增加了 2000 億美元。所以這是一項大生意。

I think there's kind of 2 categories. There's companies that are like bearing down and using these technologies to figure out how to save money. That would include Shell. That would include the Air Force, okay? And then there's companies that whose name I will not mention, that are just absolutely going to the mat and slashing expenses on everything. They're going into the bunkers and they're going into recession mode, and we will see some customer churn from that, okay? Hard stop. Okay. And they're just cutting to the bone. And so there's like 2 classes of companies out there, those who are investing in savings and those who are just kind of going into a knee jerk, perfectly rational response to an impending significant recession and then just slashing all costs.

我認為有兩類。有些公司喜歡承受並使用這些技術來弄清楚如何省錢。那將包括殼牌。那將包括空軍，好嗎？還有一些公司，我不會提到它們的名字，它們絕對會全力以赴並削減一切開支。他們正在進入地堡，他們正在進入衰退模式，我們會看到一些客戶流失，好嗎？硬停。好的。他們只是在切入骨頭。因此，那裡有兩類公司，一種是投資於儲蓄，另一種是對即將到來的嚴重衰退做出完全理性的反應，然後削減所有成本。

And so we see both. And I don't know how long this lasts. You guys are the pros of this, whether it's 12 or 24 months. But when it's over, we're going to still be here if you don't plug it away at it. And -- but it's -- you cannot deny it. I mean it is rocky out there.

所以我們看到了兩者。而且我不知道這會持續多久。你們是這方面的專家，無論是 12 個月還是 24 個月。但當它結束時，如果你不把它關掉，我們還會在這裡。而且 - 但它是 - 你不能否認它。我的意思是那裡很崎嶇。

And our next question comes from the line of Patrick Walravens with JMP Securities.

我們的下一個問題來自 JMP Securities 的 Patrick Walravens。

I want to do a couple of sort of financial ones to start with, if that's okay. So gross margin, if I'm looking at it right, non-GAAP was 77%, down from 81% last quarter. Is there anything worth noting there?

如果可以的話，我想先做一些財務方面的事情。所以毛利率，如果我沒看錯的話，非 GAAP 為 77%，低於上一季度的 81%。那裡有什麼值得注意的地方嗎？

Pat, it's Juho. The only thing to call out there is the trials and pilots, as Tom mentioned in the opening remarks, there is more higher cost than those than in the ongoing subscriptions. So as we see increase of pilots and trials, even in the coming quarters, we are expecting some pressure on gross margin before it climbs back up to historical levels.

帕特，我是朱霍。唯一需要指出的是試驗和試點，正如湯姆在開場白中提到的那樣，與持續訂閱相比，成本要高得多。因此，隨著我們看到試點和試驗的增加，即使在未來幾個季度，我們預計毛利率在回升至歷史水平之前會面臨一些壓力。

Okay. So as I look forward, should I be around this 77 level?

好的。所以當我向前看時，我應該在這個 77 級左右嗎？

I think you should expect a little bit more of a pressure as we increase the pilot as a proportion of total deals. And by the time we are back at Q4, FY '24, we should be back at these rates and higher.

我認為隨著我們增加試點佔總交易的比例，您應該預料到會有更多的壓力。當我們回到 24 財年第四季度時，我們應該回到這些甚至更高的利率。

Okay. And then the subscription fee, but services missed at least my number by a lot and went down sequentially by a lot. What's to note there?

好的。然後是訂閱費，但服務至少錯過了我的號碼很多，而且連續下降了很多。那裡有什麼要注意的？

Only thing to say, it's -- the services is a direct result of our transition to these pilots in our new consumption-based pricing model. There are minimal upfront big professional services deals associated with these. So as we -- as the pilots convert to ongoing license arrangements, we do expect the services component to increase as well. And in the second half of this fiscal year, we actually are expecting services to return back to the 10% to 20% of our total revenues.

唯一要說的是，這些服務是我們在新的基於消費的定價模型中向這些試點過渡的直接結果。與這些相關的前期大型專業服務交易很少。因此，當我們 - 隨著飛行員轉換為正在進行的許可安排，我們確實希望服務部分也會增加。在本財年下半年，我們實際上預計服務收入將恢復到我們總收入的 10% 至 20%。

For Q3, it would be 10% to 20% of total revenue?

Q3 是總收入的 10% 到 20%？

I'm saying full back half of the year. So it could be somewhere in the range for Q3 and higher or lower in Q4.

我說的是整整半年。所以它可能在第三季度的範圍內，第四季度可能更高或更低。

Okay. And then if you look at the subscription revenue of $59 million and change, the footnote is 32% of that is from related parties. Do you mind just explaining that for people, because I do get that question quite a bit?

好的。然後，如果您查看 5900 萬美元的訂閱收入並進行更改，腳註是其中 32% 來自關聯方。你介意只是為人們解釋一下嗎，因為我確實經常聽到這個問題？

It's just the related party is relating to Baker Hughes. So Baker Hughes is our, of course, still a significant shareholder of C3 AI, and any revenues that we interact with Baker Hughes is direct purchases. We call them out in the financials.

只是關聯方與貝克休斯有關。所以貝克休斯當然是我們的，仍然是 C3 AI 的重要股東，我們與貝克休斯互動的任何收入都是直接購買的。我們在財務報表中稱呼他們。

Yes. And so Tom, the bear case would be that in some way is a lower quality revenue. What would your response be to that?

是的。所以湯姆，熊案例是在某種程度上是較低質量的收入。你對此有何反應？

Oh boy, it sure...

哦，男孩，這肯定...

Yes. I'm sure you have one, but...

是的。我確定你有一個，但是......

I don't how to respond, Pat. I mean we're going to be doing a lot more deals with a lot more customers. We're going to convert a lot more of them into production, and they're going to grow just like Shell, Baker Hughes, Coke and everybody else has grown. And there's -- so right now, things are looking pretty promising. I think we're right on track.

我不知道如何回應，帕特。我的意思是我們將與更多客戶進行更多交易。我們將把它們中的更多轉化為生產，它們將像殼牌、貝克休斯、可口可樂和其他所有人一樣成長。還有——所以現在，事情看起來很有希望。我認為我們走上了正軌。

Okay. Great. Last one, and this one is probably for you, Tom. So you signed -- it's been a year since you signed that $500 million production, other transaction agreement with the Department of Defense. How would you say it's going so far versus your original expectations?

好的。偉大的。最後一個，這一個可能是給你的，湯姆。所以你簽署了——你與國防部簽署了價值 5 億美元的生產和其他交易協議已經一年了。與您最初的預期相比，您認為進展如何？

DoD is really big. So I think that year-over-year, DoD grew by what percent?

國防部真的很大。所以我認為國防部同比增長了多少百分比？

100%.

100%。

Roughly 100%. 100% in terms of bookings. DoD is a real bright point, Pat. And you're talking specifically on MDA, the MDA agreement applies to all of DoD, by the way, okay? And then we have $100 million agreement with RSO, and you -- we'll announce not in this release, but tomorrow morning as the announcement about a big partnership that we're doing with Booz Allen Hamilton, okay, in all of federal government, particularly DoD. But that business is looking strong.

大約 100%。 100% 的預訂率。國防部是一個真正的亮點，帕特。順便說一下，你是在專門談論 MDA，MDA 協議適用於整個國防部，好嗎？然後我們與 RSO 達成了 1 億美元的協議，你 - 我們不會在本新聞稿中宣布，但明天早上宣布我們正在與 Booz Allen Hamilton 建立大型合作夥伴關係，好吧，在所有聯邦政府中，特別是國防部。但該業務看起來很強勁。

And our next question Sanjit Singh with Morgan Stanley.

我們的下一個問題是摩根士丹利的 Sanjit Singh。

Excellent. This is [Stuart], on for Sanjit. I really just want to touch on sort of the consumption growth that you're seeing, especially with the Ex Machina product. Just if you can sort of provide any color on, one, how you see consumption trending with those customers and then how you expect that going forward? And maybe sort of related to this environment, how are customers using it maybe differently than they have before?

出色的。我是 [Stuart]，代表 Sanjit。我真的只想談談你所看到的消費增長，尤其是 Ex Machina 產品。只要你能提供任何顏色，一個，你如何看待這些客戶的消費趨勢，然後你對未來有何期望？也許與這種環境有關，客戶如何使用它可能與以前不同？

Okay. Great. This is Tom. And I would say, of the various products that we have in the marketplace today, okay, of which we have, I think, 42 production products, Ex Machina being one of them, okay? We are underperforming on the execution of Ex Machina sales. It is a dramatically superior product to other products that are out there in the marketplace. That being said, it's kind of order of $1,000 thing, okay?

好的。偉大的。這是湯姆。我想說，在我們今天市場上的各種產品中，好吧，我認為我們有 42 種生產產品，Ex Machina 就是其中之一，好嗎？我們在執行 Ex Machina 銷售方面表現不佳。與市場上的其他產品相比，它是一種非常出色的產品。話雖這麼說，這是一種 1,000 美元的訂單，好嗎？

And in terms of the unit, okay? And we really haven't put the sales motion together to do that at scale. Now we've taken the objectives to get after it, but I cannot look you in the eye and say that we're hitting that ball over the left field fence, because we're not, okay? And it's a great product. Our customers love it. We have somebody -- we have 3 customers that have much greater consumption. Who are we talking about?

就單位而言，好嗎？而且我們真的還沒有將銷售動議放在一起來大規模地做到這一點。現在我們已經設定了追球的目標，但我不能看著你的眼睛說我們把球打過左外野圍欄，因為我們沒有，好嗎？這是一個很棒的產品。我們的客戶喜歡它。我們有一個人——我們有 3 個消費量更大的客戶。我們在說誰？

Baker Hughes and (inaudible) almost 300% increase.

Baker Hughes 和（聽不清）增長了近 300%。

300% increase there. But can I look you in the eye and tell you that we're killing -- that we're realizing the potential of that product. That product could be an entire separate company, okay? Our CRM product could be an entire separate company, our ESG product could be an entire separate company, stand-alone company. And in all 3 of those, I think we really need to get full and see it going, and we haven't done that yet.

那裡增加了 300%。但是我可以看著你的眼睛告訴你我們正在殺戮——我們正在實現該產品的潛力。該產品可以是一個完全獨立的公司，好嗎？我們的 CRM 產品可以是一個完全獨立的公司，我們的 ESG 產品可以是一個完全獨立的公司，獨立的公司。在所有這三個方面，我認為我們真的需要充實並看到它繼續進行，而我們還沒有做到這一點。

Okay. That's helpful. That's helpful. I mean your commentary sounds worse than the 270% consumption increase that you're seeing there. Any color sort of on what's enabling that increase in consumption? And then two, how are you -- in your other products like trying to enable similar consumption rates? Is there anything sort of to highlight that you're doing differently there to get to those kind of trends that you're seeing in this product, although you're not highlighting it specifically?

好的。這很有幫助。這很有幫助。我的意思是你的評論聽起來比你在那裡看到的 270% 的消費增長更糟糕。是什麼導致了消費量的增加？然後兩個，你怎麼樣 - 在你的其他產品中，比如試圖實現類似的消費率？有沒有什麼可以強調的是，儘管您沒有特別強調，但您正在做不同的事情來實現您在該產品中看到的那些趨勢？

Do you want to focus on Ex Machina? Or do you want -- is it about Ex Machina or is this about our overall products?

您想專注於 Ex Machina 嗎？或者你想要 - 是關於 Ex Machina 還是關於我們的整體產品？

This is more broadly.

這更廣泛。

More broadly. Go ahead, Juho.

更廣泛地。去吧，朱霍。

No, I think, let me just kind of add on to that. So for Ex Machina, just what Tom said, we're still very early stages on that. So yes, we see those key customers that started early with us massive increase in consumption. Yes, we're excited about that. But that entire product is completely in its infancy, and we have high expectations on it.

不，我想，讓我補充一點。因此，對於 Ex Machina，正如 Tom 所說，我們仍處於非常早期的階段。所以是的，我們看到那些早期開始與我們一起大量增加消費的主要客戶。是的，我們對此很興奮。但整個產品還處於起步階段，我們對它抱有很高的期望。

The other point on other consumption. So remember, again, we start these pilots, the consumption deals start with a 6-month pilot and then it moves into consumption. We started this quarter. So we're not really seeing any consumption until the initial 6-month phases are complete. That question, and as we start talking about consumption under all the other deals that we do, we'll start reporting and discussing that more detail probably in Q1 next year.

其他點就其他消費。所以請再次記住，我們開始這些試點，消費交易從 6 個月的試點開始，然後進入消費。我們從這個季度開始。因此，在最初的 6 個月階段完成之前，我們並沒有真正看到任何消費。這個問題，當我們開始談論我們所做的所有其他交易下的消費時，我們可能會在明年第一季度開始報告和討論更多細節。

And our next question comes from the line of Kingsley Crane with Canaccord Genuity.

我們的下一個問題來自 Kingsley Crane 與 Canaccord Genuity 的合作。

So for Tom, it looks like there's strong traction in Department of Defense, new and expanded deals with numerous agencies. Imagine the AI Defense Forum with a helpful touch point to close these through. So how would you characterize momentum in this sector? And then are these companies embracing the new consumption model? Or are they preferring to commit more upfront in the legacy model?

因此，對於湯姆來說，國防部似乎有很強的吸引力，與眾多機構達成了新的和擴大的交易。想像一下 AI 防禦論壇有一個有用的接觸點來關閉這些。那麼，您如何描述該行業的發展勢頭？那麼這些公司是否擁抱了新的消費模式？還是他們更願意在遺留模型中提前做出更多承諾？

(technical difficulty)

（技術難度）

I'm showing our next question comes from the line of Kingsley Crane.

我正在展示我們的下一個問題來自 Kingsley Crane。

Yes. Could you hear me?

是的。你能聽見我？

No. One more time, please.

不，請再來一次。

Okay. Right. So for Tom, looks like there was really strong traction in Department of Defense, expanded deals with numerous agencies. How would you characterize momentum in this sector compared to a few years ago? And then are these companies looking in the consumption model? Or are they primarily sticking to the current model?

好的。正確的。所以對於湯姆來說，看起來國防部確實有很強的吸引力，擴大了與眾多機構的交易。與幾年前相比，您如何看待該行業的發展勢頭？那麼這些公司是否在尋找消費模式？還是他們主要堅持當前的模式？

Great question. It takes some time to really get traction in DoD, okay? And we've been working on that since 2014. Okay, at the level of the Secretary of the Army and the Secretary of the Air Force and the joint chiefs and the -- and I mean we've really been working it hard. I think we have 12 projects, all delivered on time, on budget to spec. And really, what we're finding is the consumption model there is really, really well received. They like it, okay?

很好的問題。真正獲得國防部的支持需要一些時間，好嗎？自 2014 年以來，我們一直致力於此。好吧，在陸軍部長和空軍部長以及聯合參謀長和 - 我的意思是我們一直在努力工作。我想我們有 12 個項目，都按時交付，預算符合規格。實際上，我們發現那裡的消費模式真的非常受歡迎。他們喜歡它，好嗎？

And they're kind of used to seeing these multibillion dollar juggernaut projects from the Lockheed Martins of the world or these -- or other providers, and we're coming in where, hey, we bring the project live for $0.5 million. And after that, $0.55 per CPU hour. So they're like where do I sign? So there, it's been very well received in that market.

他們已經習慣於看到來自世界洛克希德馬丁公司或這些 - 或其他供應商的這些數十億美元的主宰項目，而我們正在進來，嘿，我們以 50 萬美元的價格推出該項目。之後，每 CPU 小時 0.55 美元。所以他們就像我在哪裡簽名？所以在那裡，它在那個市場上很受歡迎。

Okay. That's really great to hear. And then for Juho, I just want to touch again on the services revenue, understandable that it would be lower given some of the trial-like activity. So since we expect trials to continue in the new consumption model, just trying to get a better handle on how quickly services should ramp back up to that 10% to 20%.

好的。這真是太好了。然後對於 Juho，我只想再次談談服務收入，可以理解的是，考慮到一些類似試驗的活動，它會更低。因此，由於我們希望在新的消費模式中繼續進行試驗，只是想更好地了解服務應該以多快的速度回升到 10% 到 20%。

Well, again, there's a component of the ongoing gradations with our existing customers and potential services engagements with them. And then our expectation of services engagements as these pilot deals convert to consumption deals. So what I was alluding to earlier to Pat's question, we are expecting services activity in the second half of this year. And then separately, in the long-term models, you should expect that as the pilots convert to consumption, there are services deals associated with those as well.

好吧，再一次，我們現有客戶的持續分級和與他們的潛在服務接觸是一個組成部分。然後，隨著這些試點交易轉化為消費交易，我們對服務參與的期望。所以我之前提到的帕特的問題是，我們預計今年下半年會出現服務活動。然後單獨地，在長期模型中，你應該期望隨著試點轉變為消費，也有與之相關的服務交易。

And our next question comes from the line of Arsenije Matovic with Wolfe Research.

我們的下一個問題來自 Arsenije Matovic 與 Wolfe Research 的合作。

This is Arsenije, on for Gal. And I think on the call, you said there were 13 consumption pilot wins in the quarter, and maybe that was maybe better than you initially expected. Is that a run rate you're comfortable with going into the end of the fiscal year, the back half? And any particular call-outs for sectors where the consumption model is maybe getting better traction than you initially expected?

這是 Arsenije，代表 Gal。我認為在電話會議上，你說本季度有 13 次消費試點獲勝，這可能比你最初預期的要好。進入財政年度末，即後半部分，您是否願意接受這個運行率？對於消費模式可能比您最初預期的牽引力更好的行業，有什麼特別的呼籲嗎？

So sorry, the second half of your question, it was a bit unclear, but let me address the first one. Yes, while we're excited on the beginning of this, so we did 13 pilots and trials. So there's still a combination of some of the trials in there, but we do expect them to convert to a consumption-based arrangement at the end of the trial period. I do not -- we would not want to increase any of our assumptions in the model we shared with you last quarter. So even though we said 5 this quarter and we came in at 13, I want to keep the model as it was that we provided last quarter.

很抱歉，你的問題的後半部分有點不清楚，但讓我解決第一個問題。是的，雖然我們一開始就很興奮，但我們進行了 13 次試點和試驗。所以那裡仍然有一些試驗的組合，但我們確實希望它們在試驗期結束時轉變為基於消費的安排。我不 - 我們不想增加我們上個季度與您分享的模型中的任何假設。因此，即使我們在本季度說了 5 個，而我們在 13 個進入，我還是想保留我們上個季度提供的模型。

Great. And then just a brief follow-up. In terms of stock-based compensation, I think it's the second consecutive quarter where stock-based compensation as a percentage of sales is above 85%. I think in Q1, we talked about maybe that was a lot to do with share refreshers. And I wanted to see what dynamic was that happened in Q2. And what level of stock-based compensation should investors become comfortable with moving forward?

偉大的。然後只是一個簡短的跟進。在股票薪酬方面，我認為這是連續第二個季度股票薪酬佔銷售額的百分比超過 85%。我認為在第一季度，我們討論過這可能與分享更新有很大關係。我想看看第二季度發生了什麼動態。投資者應該對什麼水平的股票薪酬感到滿意？

Yes. I think broadly speaking, you see this across the industry. But stock-based compensation under GAAP is stuck with the grant-date fair value of the underlying equity instrument. And as you obviously know, the history of the entire tech sector on C3 AI in the last 1.5 years, we are carrying significant stock-based compensation cost for awards that were granted when the share price was much higher than it is today.

是的。我認為從廣義上講，你會在整個行業看到這一點。但 GAAP 下的股票薪酬受制於標的權益工具授予日的公允價值。你顯然知道，在過去 1.5 年的整個科技行業 C3 AI 的歷史中，我們為在股價遠高於今天的情況下授予的獎勵承擔了大量基於股票的補償成本。

So unfortunately, there's nothing we can do about that unless the underlying employee decides to seek for other opportunities. So for now, until the end of these vesting terms for these awards, we are going to be carrying these pretty high stock-based compensation costs.

所以不幸的是，除非底層員工決定尋找其他機會，否則我們對此無能為力。因此，就目前而言，在這些獎勵的歸屬條款結束之前，我們將承擔這些相當高的基於股票的補償成本。

In fact, it will never be realized by the person who was granted the stock option. Not never, but no time soon.

事實上，被授予股票期權的人永遠不會實現。不是永遠不會，但不會很快。

(Operator Instructions) And our next question comes from the line of Adam Bergere, Bank of America.

（操作員說明）我們的下一個問題來自美國銀行的 Adam Bergere。

Great. This is Adam, on for Brad. You have free -- can you talk a bit about the shape of the revenue curve for next year? I guess, naturally, we expect it to kind of increase sequentially every quarter given the new sequential -- given the new consumption model. But is there a chance there's still some lumpiness in that, as you know, certain larger customers may renew on kind of like the nonconsumption license?

偉大的。這是亞當，為布拉德。你有自由——你能談談明年收入曲線的形狀嗎？我想，自然地，我們預計它會在每個季度連續增加，因為新的順序 - 考慮到新的消費模式。但是，如您所知，某些較大的客戶可能會續簽非消費許可證之類的東西，這是否仍然存在一些問題？

Yes, I think the short answer to that is yes. And what we guided last quarter, we beat it for this quarter. Our guidance for next quarter, you see sequential increase and it does have the Q4 as an increase to that with respect to the implied guidance. The revenue curve is flattening as a result of the consumption-based pricing business model. But as we enter into -- in the short term, and as we enter into FY '24 and especially the second half of FY '24, you should start seeing the graph to get steeper and steeper in line with the presentation we shared last quarter.

是的，我認為簡短的回答是肯定的。我們上個季度的指導，我們在本季度擊敗了它。我們對下一季度的指導，你會看到連續增長，而且第四季度確實比隱含指導有所增加。由於基於消費的定價業務模型，收入曲線正在變平。但隨著我們進入 - 在短期內，當我們進入 24 財年，尤其是 24 財年的下半年時，你應該開始看到圖表變得越來越陡峭，與我們上個季度分享的演示文稿一致.

That's helpful. And then, again, just like the gross margin, could you kind of call out when that might trough out and what kind of like the level of that might be? I think it was at like 77% for this quarter. So is it fair to assume that that's kind of like a trough level for that?

這很有幫助。然後，再一次，就像毛利率一樣，你能不能說說它什麼時候會觸底，它的水平是什麼樣的？我認為本季度大約為 77%。那麼假設這有點像谷底水平是否公平？

Well, thank you for the question. I think the more important thing is that we assume there would be a pressure in the gross margin when we provided the operating margin and operating profit guide and our path to profitability. So we are expecting pressure on it, but it doesn't change our path to profitability in one bit.

嗯，謝謝你的問題。我認為更重要的是，當我們提供營業利潤率和營業利潤指南以及我們的盈利路徑時，我們假設毛利率會有壓力。所以我們預計它會受到壓力，但這並沒有改變我們的盈利之路。

So I cannot tell you exactly where I think it will dip down to, but I think in your models as you prepare the business back in FY '20 -- sorry, back when we hit FY '24, Q4, we should be back at 77-plus gross margin. So it may go down in the interim and then it comes back up as we enter profitability.

所以我無法確切地告訴你我認為它會下降到哪裡，但我認為在你的模型中，當你在 20 財年準備業務時——抱歉，當我們到達 24 財年第四季度時，我們應該回到毛利率超過 77。因此，它可能會在此期間下降，然後在我們進入盈利狀態時回升。

And our next question comes from the line of Arvind Ramnani with Piper Sandler.

我們的下一個問題來自 Arvind Ramnani 和 Piper Sandler 的台詞。

I had a question on some of your kind of partnerships or alliances to help drive sales. Are you able to kind of dimension how much of your new sales or bookings come from in-house sales teams versus your partners? I'm sure it's probably pretty difficult to kind of bifurcate the two. But if you're able to do that, that would be great. And on the same topic of partnerships, are the margins higher or lower on sales that are brought in by some of your partners?

我對您的一些合作夥伴關係或聯盟有疑問，以幫助推動銷售。您是否能夠衡量您的新銷售或預訂中有多少來自內部銷售團隊與您的合作夥伴？我敢肯定，將兩者分開可能相當困難。但如果你能做到這一點，那就太好了。關於合作夥伴關係的同一主題，您的一些合作夥伴帶來的銷售利潤率是更高還是更低？

Arvind, it's Tom. Virtually all of our sales today, we're selling with a partner, not through a partner, okay? And so that would be 100%, where we're selling with them. Now they may introduce us to the account. They may bring the executive team over here, as Google has, as Booz Allen -- I'm sorry, as Baker Hughes has, as Microsoft has in the past like many, many times. But we're actively engaged, okay, in the sales process.

阿文德，是湯姆。事實上，我們今天所有的銷售都是與合作夥伴一起銷售，而不是通過合作夥伴，好嗎？所以這將是 100%，我們與他們一起銷售。現在他們可能會向我們介紹該帳戶。他們可能會把管理團隊帶到這裡來，就像谷歌、博思艾倫——我很抱歉，就像貝克休斯和微軟過去很多次一樣。但我們積極參與，好吧，在銷售過程中。

Now we are just now putting our products on the marketplaces of the various hyperscalers. And so that dynamic might change going forward. But there's no margin difference because there is virtually no case where they're selling independently of us.

現在，我們剛剛將我們的產品投放到各種超大規模用戶的市場上。因此，這種動態可能會在未來發生變化。但是沒有利潤差異，因為幾乎沒有他們獨立於我們銷售的情況。

And our last question comes from the line of Michael Turits with Keybanc.

我們的最後一個問題來自 Michael Turits 與 Keybanc 的合作。

This is Michael Vidovic, on for Michael Turits. Could you just talk about linearity in the quarter and then trends you're seeing to start out November for fiscal 3Q?

我是 Michael Vidovic，代表 Michael Turits。你能談談本季度的線性度，然後是你看到的從 11 月開始的第三財季的趨勢嗎？

So linearity, are you talking about that deal velocity in the quarter? Or what are you asking about?

那麼線性，你是在談論本季度的交易速度嗎？或者你在問什麼？

Yes. And just was it month-to-month, how do deals trend? Was it a constant uptick to reach throughout the quarter? Or was it stronger back end of the quarter or the beginning of the quarter?

是的。只是每個月，交易趨勢如何？整個季度是否持續上升？還是本季度末或本季度初更強勁？

We see activity all throughout the quarter, but it's not unusual in this business where as you approach quarter end, you have slightly more activity.

我們在整個季度都看到了活動，但在這個業務中並不罕見，當您接近季度末時，您的活動會稍微多一些。

Okay. And then just a quick follow-up on the vertical standpoint, particularly energy, have you seen like an uptick in deals in that area? And I guess, which areas besides federal are you seeing particular strength in at this time?

好的。然後快速跟進垂直觀點，特別是能源，你是否看到該領域的交易有所增加？我想，除了聯邦之外，您目前在哪些領域看到了特別的優勢？

So if your question is relating to the diversification of industries, we see continued diversification, which we're very excited about. Yes, there's deals in energy, but defense, as we discussed, is really exciting for us as many other industries as well. And we continue to expect more diversification with the consumption-based pricing and scores of new customers.

因此，如果您的問題與行業多元化有關，我們會看到持續的多元化，我們對此感到非常興奮。是的，有能源方面的交易，但正如我們所討論的那樣，國防對我們來說真的很令人興奮，就像許多其他行業一樣。我們繼續期待基於消費的定價和大量新客戶的多樣化。

Okay. I guess that was our last question. And gentlemen, thank you for your thoughtful questions. And we appreciate the courtesy of you participating in our call. And we thank you all very much for your time.

好的。我想那是我們的最後一個問題。先生們，謝謝你們深思熟慮的問題。我們感謝您參與我們的電話會議。我們非常感謝大家的寶貴時間。

Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.

女士們，先生們，今天的電話會議到此結束。感謝您的參與，您現在可以斷開連接。