Ademi LLP released a short‑seller report on February 26, 2026 that accuses C3.ai of possible securities fraud, alleging that the company’s public statements about its financial condition, business operations and future prospects are misleading. The report focuses on the company’s projected growth and sales in the commercial sector, where it claims the disclosures do not reflect the true financial condition.
C3.ai reported fiscal Q3 2026 revenue of $53.26 million, a 46.1% decline from $98.78 million in the same quarter a year earlier. The adjusted loss per share widened from $0.12 to $0.40. The revenue miss is attributed to the commercial sector’s “pilot purgatory,” where customers are hesitant to commit to AI solutions, while federal, defense and aerospace bookings grew 134% year‑over‑year and now account for 55% of total bookings.
Management guidance for fiscal Q4 2026 projects revenue of $48–$52 million, far below the consensus estimate of $77.7 million. The lower guidance signals management’s concern about continued weakness in the commercial segment. In addition, C3.ai announced a 26% workforce reduction and a $135 million cost‑cutting plan, with CFO Hitesh Lath noting that the projected cost savings are expected to be fully realized starting the second half of fiscal year 2027.
The federal, defense and aerospace segment remains a tailwind, with bookings increasing 134% year‑over‑year, but the commercial segment’s stagnation and the company’s high operating losses indicate that the strong federal demand is not yet sufficient to offset the broader revenue decline. The company’s operating income has slipped, and the negative margin profile underscores the pressure on profitability.
CEO Stephen Ehikian said, “It was clear to me that we were not organized appropriately.” He added, “I was going to say simply sales execution, full stop. And we’re going to fix that… So I think sales execution, first and foremost, that falls on me full stop. I own that, and I’m going to fix that.” CFO Hitesh Lath noted that “projected cost savings are expected to be fully realized starting the second half of fiscal year ‘27.”
The market reacted negatively to the report, reflecting concerns about potential securities fraud and the company’s weakened financial outlook. The allegations raise questions about the accuracy of C3.ai’s disclosures and could impact investor confidence.
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