Good day, and thank you for standing by, and welcome to the C3AI 4th Quarter Fiscal Year 2021 Earnings Call. At this time, all participants are in a listen only mode. After the speakers' remarks, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Paul Phillips. Please go ahead.
Good afternoon, and welcome to C3AI's earnings call for the Q4 and full year fiscal 2021, which ended April 30, This is Paul Phillips, VP of Investor Relations of C3AI. With me on the call today are Tom Sibel, Chairman and Chief Executive Officer and David Barter, Chief Financial Officer. After the market closed today, we issued a press release with details regarding our Q4 and full year fiscal results as well as a supplement to our results, both of which can be accessed on the Investor Relations section of our website at ir.c3.ai. This call is being webcast and a replay will be available on our IR website following the conclusion of the call. During today's call, we will make statements relating to our business that may be considered forward looking under federal securities laws.
These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date. We disclaim any obligation to update any forward looking statements or outlook. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For a further discussion of the material risks And other important factors that could affect our actual results, please refer to our filings with the SEC. 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. Finally, at times in our prepared comments or response to your questions, We may discuss metrics that are incremental to our usual presentation to provide greater insight into the dynamics of our business for our annual results. Please be advised that we may or may not continue to provide this additional detail in the future. With that, let me turn the call over to Tom for his prepared remarks. Tom?
Well, thank you, Paul, and good afternoon, everyone. I am very pleased to give you an update on the state of the business. Bottom line, Q4 was a great quarter and fiscal year 2021 was a great year. I'm pleased to report that C3AI is well positioned to substantially accelerate growth and continue to gain market share in the coming year. Let's talk about our 4th quarter results.
We exceeded our guidance for both revenue and non GAAP operating income. Our bookings grew, believe it or not, Over 500% in Q4 compared to the quarter a year earlier. Our bookings grew 179% quarter to quarter. Revenue in the 4th quarter was $52,300,000 an increase of 20 Compared to $32,100,000 gross profit a year ago, an increase in gross profit of 26% year over year. Our remaining performance obligations were $293,800,000 compared to $239,700,000 a year earlier, an increase of 23% year over year.
Including cancelable orders, Our non GAAP RPO was $345,100,000 compared to $246,900,000 a year ago, an increase of 40% year over year. Our total enterprise AI customer count At the end of the year was 89, representing an 82% growth rate year over year. Now let's take a look at fiscal year 2021 in entirety. Total revenue for the year was $183,200,000 up from $156,700,000 a year ago, an increase of 17% year over year. Subscription revenue for the year was $157,400,000 up from $135,400,000 a year earlier, an increase of 16% year over year.
Subscription revenue importantly, Subscription revenue as a percentage of total revenue remained 86% constant year over year. Gross profit for the year was $138,700,000 a 76% gross margin compared to 1 $117,900,000 gross profit a year ago, an increase of 18% year over year. Most importantly, our average contract value for the year continued to decrease From $16,200,000 in fiscal year 2019 to $12,100,000 in fiscal year 2020 to $7,200,000 in fiscal year 2021 providing smoothing growth in bookings and greater revenue visibility going We experienced continued customer momentum in the course of the year, accelerating in half of the year. Specifically in the Q4, we expanded our enterprise AI footprint in defense and intelligence, Financial Services, Manufacturing, Oil and Gas, Utilities and Energy Sustainability. We had a number of new enterprise production application deployments at the United States Air Force, Bank of America, Standard Chartered Bank, Koch Industries, MEG Energy, Duke Energy and Engie.
C3AI also initiated New enterprise AI projects with 3 ms, Con Ed, FIS, In for, Koch Industries, New York Power Authority and Shell and signed new contracts with Commonwealth Bank, George Washington University School of Medicine and Health Sciences, NCS, One Medical, San Mateo County, Stanford Healthcare Swift and Yokogawa Electric Corporation in Japan. We enjoyed substantially expanded business agreements with Existing customers, including the United States Air Force, the U. S. Military Rapid Sustain Office and the F-thirty 5 Joint Program Office. Importantly, Shell executed a very significant expansion It spans over slightly in excess of 5 years to significantly accelerate the deployment of C3AI and ML applications across Shell Global Assets.
This represents a major expansion of the partnership C3AI and Shell have forged over the past several years. Again, importantly, The total number of C3AI customers at the end of the year was 89, up from 49 at the end of the previous year, an 82% increase year over year. We continue to expand our partner ecosystem To extend our global distribution and service capabilities, during the quarter, C3 expanded its relationship With strategic partner and financial technology leader, FIS, to launch joint solutions for the financial services industry, including FIS Credit Intelligence powered by C3AI. And this builds upon the previously announced launch of FIS AML or Anti Money Laundering Compliance powered by C3AI. The company saw continued success in its partnership with Baker Hughes, exceeding its Fiscal year 2021 revenue target for the Alliance.
The company formed a wide ranging strategic alliance And extend Inforce native machine learning capabilities. Let's talk a little bit about product and Technology. It is difficult to overstate the significance of the rate of innovation in product engineering at C3.ai. Hi. As of the end of Q4, we have released 20 enterprise AI applications into general availability Across 5 vertical markets, this in addition to the C3AI suite itself.
In the course of the Q4 alone, We released 40 updates and upgrades to these applications. And to give you a feel for the complexity of some of these deployments, We update 1 of our larger deployments in excess of 320,000,000 times per day. Operating at now massive scale, as of the end of the year, the C3AI suite and applications were integrated with more than 800 unique enterprise and enterprise data sources and sensor constellations. We manage more than 4.8 1,000,000 concurrent production AI models. We process more than 1,500,000,000 AI predictions per day And we evaluate over 30,000,000,000 machine learning features daily.
Our service levels remain superlative, offering our customers 99.99 percent product availability with exceptional performance characteristics for the C3AI suite over the course of the year. Ladies and gentlemen, this would constitute a gold standard in the software industry. The production release of Ex Machina, And sign up for a free trial of etchmocrona. If you like it, buy it. I am most enthusiastic about the advancements we are making in C3AI CRM.
CRM market, a market segment that I'm confident we will lead. Keep your eye on this You can expect a number of exciting announcements and product releases from C3 in the coming year. With Shell and Microsoft C3AI expanded the OpenAI Energy Initiative, an open marketplace For C3AI applications announced in February, the OpenAI initiative accelerates the deployment Service providers, equipment providers and independent software vendors to offer interoperable solutions powered by the The enterprise AI software market is rapidly growing. We and we see Accelerating interest in enterprise AI solutions across industries, geographies and market segments. We are Aggressively investing to extend our product and technology leadership to expand our market partner eco We are increasingly well positioned to establish a global leadership position in enterprise AI application software.
Bottom line, performance was strong across the board, and we are planning for accelerating growth in the coming year. And with that, I'll turn it over to our CFO, David Barter, for a more complete color on the quarter and the year. David? Thank you, Tom.
We exceeded our guidance for both revenue and profitability in the 4th quarter while also building significant backlog that will help drive future growth in fiscal year 2022 and beyond. Revenue in the Q4 was $52,300,000 up 26% from a year ago due to increasing demand for our enterprise AI applications, With particularly strong deal volume late in the quarter as reflected in our accounts receivable, deferred revenue, calculated billings and Our 4th quarter revenue growth is a meaningful improvement over the 19% growth in Q3 and the 11% growth the first half of the fiscal year, which reflected the impact COVID had on our business. Subscription revenue increased Strong customer implementation activity and engagement with Baker Hughes that will make our virtual data lake and reliability applications even more compelling In Q4, 82 percent of our revenue was from subscriptions and 18% was from professional services. On a full year basis, 86% of our revenue was from subscriptions and 14% was from professional services, consistent with our revenue mix However, there may be some variation in the revenue mix quarter to quarter. Our revenue growth was highlighted by from 8 different industry verticals, including some newer verticals such as high-tech, life sciences, financial services and telco.
Over the course of fiscal year 2021, these newer verticals contributed 17% of revenue compared to 8% in Fiscal year 2020. Geographically, our revenue diversification also increased as activity in EMEA and APAC continue to expand. On a full year basis, ANA Pac drove 34% of our revenue compared to 22% in the prior year. Our sales execution in Q4 also drove a meaningful increase in our contracted backlog. Total remaining performance obligation RPO at the end of the quarter was $293,800,000 an increase of 23% from a year ago and a 19% sequential increase from the 3rd quarter.
Current RPO, which we expect to recognize in the next 12 months, was 145 $2,000,000 an increase of 11% from the prior quarter. In addition, we had $51,300,000 of additional Backlog from contracts with the cancellation right. When combined with our GAAP RPO, this produces a non And this represents a sequential increase of 17% from the 3rd quarter. It's important to note that our non GAAP RPO does not include any backlog Associated with Baker Hughes, it does not have an existing customer contract. This commitment at the end of the Q4 was $219,300,000 And it leads to an adjusted RPO of $564,400,000 an increase of 31% year over year.
Before moving on, I'd like to provide a brief update on our performance in oil and gas. Our revenue related to the Baker Hughes market partner Revenue increased 20% compared to $46,700,000 of revenue generated in fiscal year 2020. In our financials, a portion of the Baker Hughes partner revenue is reported as related party revenue as it is contracted directly with Baker And the balance of the revenue reflects situations where C3AI has the contractual relationship with the end customer, but Baker Hughes assisted with the sales process. In the Q4, the related party revenue was $13,800,000 and the non related party component was 8.7 For full fiscal year 2021, related party revenue was $35,400,000 and the non related party revenue was $20,500,000 Turning to expenses and profitability, I will be referring to non GAAP metrics, which excludes stock based compensation expense and the employer portion of payroll tax expense related to stock transactions. A GAAP to non GAAP reconciliation is provided with our earnings press Gross margin in the 4th quarter was 78.3%, up from 77.5% a year ago.
For full fiscal year 21, our gross margin was 76.4%, up from 75.6%. The margin expansion over the year was driven by subscription gross margin, which increased to 80.6 percent, up from 77% in the prior year. Our operating loss was $15,400,000 in the 4th quarter And favorable to our guidance of a loss of $28,000,000 to $27,000,000 In the 4th quarter, headcount increased by an 11% sequential increase compared to the 3rd quarter. For the full fiscal year, headcount increased by 134, A year over year increase of 30%. We thoughtfully invested throughout the year and we will continue to invest with focus on expanding our market leadership position as we scale our business.
Shifting to our balance sheet and cash flows, we ended the year with $1,090,000,000 in cash and cash equivalents and investments compared to $1,120,000,000 at the end of the 3rd quarter. We had an operating Free cash flow was an outflow of $32,200,000 in the 4th quarter. For full fiscal year 2021, Operating cash flow was an outflow of $37,600,000 and free cash flow was an outflow of 39 point $2,000,000 Reflecting on the deal activity in the 4th quarter, accounts receivable increased to $65,500,000 up 112% over the Q4 in the prior year. Deferred revenue grew to $75,200,000 a healthy 25% increase from the 2 and the Q1. We're beginning the year with a healthy contracted backlog.
As I mentioned earlier, current RPO increased sequentially 11% last quarter and our non GAAP RPO increased 17% sequentially. This level of growth provides us with meaningful revenue coverage. In Q1, we expect subscription revenue will continue to expand and our subscription revenue mix will climb back to prior year levels. We also expect approximately $2,000,000 less of professional services revenue in Q1 when compared to the prior quarter. On a full year basis, we expect our subscription revenue mix to increase slightly year over year given our focus as a software company.
Gross margin will continue to expand. It's important to keep in mind that C3AI has been designed to be a structurally profitable business. We expect gross margin to expand by another point in the coming year, driven by the growth of our subscriptions. And finally, it is worth noting that we will invest Thoughtfully to expand our leadership position in the market. Investment will be higher in Q1 and then it will be more balanced for the remaining quarters of the year.
With that in mind, For full fiscal year 2022, we anticipate revenue to be in the range of $223,000,000 to $247,000,000 non GAAP operating loss in the range of $119,000,000 to $107,000,000 For the Q1 of fiscal year 'twenty two, we expect revenue in the range of $50,000,000 to 50 $2,000,000 and non GAAP operating loss in the range of $35,000,000 to $28,000,000 In summary, We exceeded our guidance for revenue and operating income in the 4th quarter. With our growth initiatives well underway and the increasing demand for our technology, We believe we are in a strong position to deliver an even better performance in fiscal year 2022.
We have our first question coming from the line of Daniel Ives with Wedbush. Your line is open.
Yes, thanks. Can you talk, Tom, just about success that you're having Vertically speaking, when I think about utilities and oil and gas versus financials, are you starting to see You're just more and more penetration across verticals from a customer base?
Well, yes. I mean, we began we had a huge concentration in utilities, as you'll recall. And then a couple of years ago, we went into the oil and gas And now that's a pretty big chunk of our business. We're seeing initial success It's quite significant in our financial services with Bank of America and Standard Chartered Bank. And now with the relationship with FIS And a number of discussions we have going on in the world, we expect to see substantial expansion of financial services As our products are used for anti money laundering, customer churn, cash management, vocal rule We're clearly diversifying across a wide range of industries and I think we'll see increasing diversification both in terms of additional both in terms of additional industry segments and a wider range.
Instead of only doing Very, very large deals like we did 3 4 years ago and now we have a mix of large deals, medium deals and small deals That is resulting in substantial reduction in our average contract value. As this plays out, just like the relational database business did and the minicomputer market did and CRM did, I think that enterprise AI will be adopted across all sectors, And we expect to play in all those sectors.
Great. And just a quick follow-up. Can you just talk about from a conversation that you're having with customers when you're talking to CIOs, CEOs, how it's changed in terms of where C3 stands today versus Even 6 months ago
or a year ago, I
mean is it has it really gone from to just more strategic And it's almost more of a pull versus a push. Can you just compare and contrast especially just given what seen the last 30, 40 years? Thanks.
Well, I think we really hit an inflection point after I mean the first two quarters of this calendar year were it shouldn't have calendar year 2020, okay. We're tough, right? And we're doing these large enterprise transactions And then COVID hit, Paris closed, Rome closed, London closed, New York closed, Chicago closed. And so that did slow us down. Now when we get into May, June, July of Last year, we saw dramatic acceleration.
And this mandate towards digital transformation seems to have made it at More efficiently, plan stuff more efficiently, deliver higher quality products into the hands of More satisfied customers at lower cost. We are clearly more credible today in the market than we ever have been. I think that I think we're doing a pretty good job of demonstrating thought leadership in AI, the work that we're doing with major research institutions like Illinois, Carnegie Mellon, Princeton, MIT, Stanford, Berkeley, KTH is kind of really helping us at the high end. But now we have production use cases in all over the place in utilities, all over the place in Manufacturing and Financial Services in Aerospace. And so the Pipeline has never been larger, okay, and the sales cycles are shorter than they've ever been.
So we're right now, We're pretty optimistic about what the next coming 2 years look like.
Great. Thanks.
We have our next question coming from the line of Brad Sills with Bank of America. Your line is open.
Great. Thanks guys for taking my question. I wanted to ask one just about the general environment for AI and Sales audience, are you seeing a change where now your deals are sponsored more by a data scientist owner, if you will, or is it still very much a CIO sales as a line of business, as AI becomes more at the forefront of Critical capabilities for these companies. Is the sales audience changing and are you seeing that more pervasively through these organizations?
Well, I mean, it's a good question, Brad, and I think it is changing. If you see like the uptake on ex Machina, There we're selling to basically individual data scientists and citizen data scientists to all these organizations like $500 unit time or something. And the uptake there is pretty substantial. But I would say it varies from organization to organization. Someplace it's starting in divisions At other places like Bank of America, it's starting to get the very top or at or near the top.
So It's whether we start at the bottom or we start at the middle, we seem to make it to the top Sooner or later, and for the Bank of America, Standard Chartered Bank or Coke, This is a rapidly growing hot market with a lot of people really interested And they've been I think they're a little bit frustrated with what they've been attempting to accomplish in the last 3, 4, 5 years, but haven't been able to accomplish. So we present the prospect of being able to fix that and business is good.
That's great. Thank you, Tom. And then one more if I may please. As you pivoted towards these smaller deals, smaller land deals, what does that mean For the expansion opportunity, how is that different from some of these larger deals where you land bigger? Should we see a greater velocity of expand deals in some of these Really wins that perhaps are smaller in footprint.
Thank you so much.
Yes. I think it's a really good question and the answer is yes. I mean, As you get into selling to small and medium businesses, selling CRM, selling ex Machina, I mean, there you're selling $500 a $1,000 at a time And it becomes a NRR game. And NRR has been really less important as a metric For us historically, because we're landing contracts that were so long in duration and so large, I mean, You can remember in fiscal year 2018 2019 you were here when we were doing $30,000,000 $40,000,000 $50,000,000 deals all the time. And that's clearly changing now.
So I think it's a healthy mix of large deals, medium deals and de minimis Transactions, I would say $500 a month by our standards is certainly the main list. It certainly looks good in the long run-in terms of evening out, getting the lumpiness out of bookings. So we don't have to deal with that anymore.
That's great. Thanks, Tom.
Thank you. We have our next question coming from the line of Michael Turits with KeyBanc. Your line is open.
Hey, Tom. Can you just give us a little bit more on the Shell deal? Is this an expansion? How does it impact, if it does, revenue going forward?
Well, it is revenue and it's more revenue and it's more revenue. So I think like the existing contract that we And in place with Shell, Michael, and I could be wrong on this. I think it was the 2nd or third contract, Okay. And it was about 4 years in duration. Originally, we did a couple of production trials with them.
I forget what year and those were successful. And then they expanded to kind of a small enterprise deal. Then they expanded to a larger enterprise deal, which was 3 or 4 years Now Shell is very much reinventing itself around all aspects of its business with this initiative they call Shell AI, which is a combination of basically C3 AI sitting on top of Azure And then a number of very, very bright people who are applying AI So basically all aspects of Shell's business upstream, downstream, midstream and really importantly renewables. I think by 2,050, I'm not really privy to all of Shell's company, but it all of Shell's strategy, but at least it would be like it might become an electricity business. Anyhow, they were deploying many, many successful applications.
They decided To renew their application a year before it expired and so they entered into a new 5 year relationship with us To kind of dramatically expand the number of assets To which they can apply the C3 applications and the C3 stack, we work with them independently of that To develop this open AI initiative, which you can think of as a marketplace that's being sponsored by Shell, C3 and Microsoft and it's a marketplace in which all the energy providers can basically put their And they can trade them to one another. So Shell is a strategic It's 5 plus years and it is irrevocable non refundable commitment And it's a very substantial and important transaction that we think We'll serve at something of a bell cow in the oil and gas industry because Shell is perceived of As a technology leader in that space. And so we think that will help fuel our oil and gas business, which is Already quite healthy and I know a lot of people think oil and gas is kind of yucky, but these guys are all reinventing themselves as renewable Two companies that we're very pleased to be able to play a role in that.
Thanks, Tom. And David, if you could, could you talk to us a little bit About the move down market from a couple of aspects. 1 in terms of ex Machina in terms of the progress there and how much might be built into the guide? And then maybe what your CV was like in the quarter if it's really moving down?
Michael, we couldn't quite hear the second part of your question. Could you repeat it please?
So again, I'm sorry about that. So All about the move down market and maybe you could approach from a couple of angles. First of all, how much traction with ex machina? How much Is built into the guide for next year from ex Machina. And on TCV, what was it not just in the year, but In the quarter and how effectively are you moving that down?
Great questions. Michael, in terms of planning, the way We plan our business, we think about our revenue, our subscription revenue accelerating over the course of the year and as you can see in We're looking at a midpoint of 26 going up to 34 ex market and certainly features in that. So we have thought about it in terms of our go to market teams and we And in a detailed level, as we thought about the outlook for the year and how to continue to accelerate our growth. So that's in terms of ex market and then in terms of TCV in the quarter, we were at about $7,500,000 of TCV in the quarter.
Okay. All
right, David and Tom, thanks very much.
Thank you.
We have our next question coming from the line of Patrick Caudrill with Deutsche Bank. Your line is open.
Hey, thank you so much for taking my question. The presentation was fascinating and it was really interesting to kind of hear how you see the AR market Evolving. I just have to understand though just this quarter, and I guess implicit in your guide, it doesn't seem like the This is translating into dollars just yet. Subscription revenue is kind of basically flat sequentially and implicit in the guide is Kind of flat again in the Q1. So just trying to understand just the kind of puts and takes between This fantastic long term potential that you articulated and we can see versus the kind of near term and This translating into kind of dollars now?
I think it was kind of flat last year Q4 to Q1, wasn't it, Patrick, if my memory serves me correct. And I think that the growth projections that you and others had for us and one of you can correct If I'm wrong, for this year was about 9% and I think we came in about 17%. We're seeing part of what's going on in Q1 is we the growth of the year is going to be A very healthy year. Q1 will be a very healthy quarter. We are Raising guidance, okay, for Q1 over what the consensus was.
Part of what's going on in Q1, However, is an artifact of you have to go back and look at bookings, which I'm not going to disclose, okay, for like Q1
and
Q2 of fiscal year 2020, okay? And if you look at 2019 2020, we're kind of thrashing around quarter to quarter in bookings. There's kind of an artifact there. It has some downward pressure on Q1. We're thinking as the revenue kind of water from bookings Water falls out over say 36 months.
And there was a quarter back there that wasn't very big and the term of the revenue was Not very long in the quarter. And as a little bit downward pressure on Q1, but Q1 is going to be a fine quarter and the year is going to be a great year.
Great. That's very helpful. And I guess as we kind of think beyond fiscal Q1 into kind of fiscal second, 3rd and 4th of next year. I mean, just kind of sticking the numbers here, again, the Guys suggest quite a material reacceleration. I mean, I remember at the time of the IPO, we were talking about a number of factors, including the From coronavirus, we're talking about the kind of lapsing of the Baker Hughes contract reset.
Are they still the kind of key reasons for this reacceleration In subscription revenue in the second half of fiscal 'twenty two? Or are there other
Well, I think what we saw was a reacceleration of bookings In the second half of fiscal year 2021 really. Okay. And as we I mean, we came into fiscal year 21 blowing and going, I think. Was it the growth rate in fiscal year 2020 like 91% growth or something? 71%.
71%. Okay. Sorry. It was a big number.
It was a big number.
It was significantly non zero. Okay. It was big and then we got kicked in the teeth with COVID, Okay. And the I think what you're seeing is just what we saw in the second half of the year is just reacceleration of business and COVID is clearly over. Digital transformation is the interest in that is more acute than it ever has been.
Okay. The interest to enter phrase AI is more significant than it ever has been. Okay. And we're perceived of as a kind of more More reliable provider than we ever have been. So I think what we're just seeing is acceleration of business.
It's a good thing.
Great. Thank you so much. Really appreciate taking the time.
We have our next question coming from the line of Jack Andrews With Needham, your line is open.
Good afternoon. Thanks for taking my question. Tom, I was wondering if you could speak to just the hiring environment. It's historically been difficult for applicants to secure opportunities at C3. So could you just speak to are you able to scale the organization the way you want to in terms of finding the right types of people to build out the organization these days?
I reviewed those data today, Jack. It's a great question. Last quarter, I think we had 12,000 applicants, okay, job applicants from all over the world to C3A, count them, 12,000, okay. And this annualizes to roughly 50,000. And what we're in the heart of Silicon Valley.
This is supposed to be a very, very challenging hiring environment. Of those 12,000, I think we had Interviews in one form or another with almost 3,000 and we hired a net of like 56. So we have really the brightest and most highly trained and experienced data scientists In the world and application engineers and sales people and sales leadership, okay, and marketing leadership Who want to join us. And so we're very, very fortunate in that respect. We kind of need to figure what's going on and
You know, get the bottle
of this as we go forward, but the rate of interest in people coming to work with FC3 has not slowed down, okay, and our rate and interest in hiring people has definitely not slowed down. And if you go and I encourage anybody who's interested You get a pretty good feel for what the culture is like and what the morale is like if you go look us up on glassdoor.com. But yes, it was I think 12,050 people or 12,500 people who applied for jobs Quarter. It's really rewarding.
That's great. Thanks for the color around that. And just as a follow-up question, I think in your prepared remarks, you referenced strong deal volume late in the quarter. I was wondering if you could provide some more context around that. Was that something that just happened Organically within your customer base?
Or is that the result of maybe some of your partnerships really coalescing? Any further clarity would be appreciated.
I don't think I can say anything like that.
I think, Jack, you may have heard it in one of my paragraphs.
What? I missed that. I was out of the room.
And so I think all we were highlighting is the correlation, Jack, between our bookings and how that manifested in terms of accounts receivable, deferred revenue and the The strengthening of our performance measures like RPO. And so what we saw, we just saw bookings begin to percolate through the financial results.
Thanks.
We have our next question coming from the line of Mark Murphy with JPMorgan.
Tom, how is the signaling from some of your end markets that benefit from Higher commodity prices like oil and gas or higher inflation and interest rates Such as financial services. I'm just wondering, because that's a pretty good portion of your customer base. Is it safe to assume that's on much firmer footing versus a year ago where you would see that driving Strong pipeline growth for later in this year?
It's the official
Well, oil and gas, I don't know what gas prices were a year ago, but I remember about a year and a half ago, you couldn't give oil away, right? It's like negative $77 a barrel or something? Where is it today? You know better than I have at roughly $67 or something like that. So you're going to
assume it's easier to do business
with oil at $67 a barrel than it is at negative $37 I can assure you of that. And the banks all seem to be printing money around the world. So those segments do look healthier than they have in some time for us. And we expect to see outsized growth in those segments. We're not stopping you there.
I mean, you could expect us to be investing this year in a big way in defense and intelligence, and that's been manifested in some of the hiring that you've seen. Telco, So, we're putting it we've put together a large organization around telco. You'd expect to see a large investment in Precision Health. So, Yes, we will be further penetrating the oil and gas businesses and the banking And those industries today look very healthy.
Okay. As a follow-up, I guess regarding the Shell Partnership extension, are you able to Comment on the dollar amount and it wasn't clear to me whether that is reflected in the RPO balance that we're seeing For Q4 or is that something would that manifest in the Q1 metrics?
That's in RPO. We closed it in Q4 and it's in RPO. And but in terms of the size of it, I could tell you, if you take all of our deals, the size of those some of the deals and divide by the number of deals, it's what I say, dollars 7,200,000 and that But the size of Shali, it's a good one. It's bigger than a bread box. It didn't let's say, it didn't contribute to bringing our average total contract value down.
And then just one final one, David. On the CRPO, I think it grew well sequentially. I think it grew 9% or 10% Year over year, is there any perspective on maybe how to drive that current piece of RPO a bit faster? I think a prior analyst was commenting that we see it in the kind of longer term portions. But can like for instance, do you think that CRPO number could be growing a little faster a couple of quarters down the road?
Yes, is the short answer.
Thank you.
We have our next question coming from the line of David Heinz with Canaccord. Your line is open.
Hey, thanks very much. Tom, you highlighted CRM as kind of the opportunity that excites you the most. I'm just curious, like where do you see the most low hanging fruit In CRM, and what's the home run vision for that market as you kind of reimagine it with AI?
Well, I'm not sure it's Excited me the most, but I'm really excited about it, okay? It's not going to be our biggest market. Our biggest market is going to be enterprise AI writ large, Think precision health, think banking, think oil and gas, travel transportation, what have you. That being said, guys, CRM today is an $80,000,000,000 addressable market, okay. The next generation of CRM is all about AI enabled CRM, Okay.
And AI enabled CRM is basically when you take the data that are in the CRM system And combine it with all sorts of exogenous data, let's take a hypothetical of a manufacturing company, maybe Boeing, okay? So Boeing has all these, so they used to sell $60,000,000,000 worth of commercial aircraft. I have no idea what they sell today. Okay. But they have a CRM system, probably sales Receivable or something, they're all kind of the same, okay.
And they where they have all these sales forecasts that the guys put in And these sales these systems are just like the systems that you guys have at JPMorgan Chase and every place else. The sales guys just put whatever they need to get it to put in there to get the sales manager off the back, okay. And so they put in all these records already have 35,000 Those people at Merck, each of which are putting 100 lines of garbage and so you get 350,000 lines of kind of garbage in your forecasting And you take some of that and it's supposed to be your sales forecast. Well, it really doesn't work that way. Now however, The data really aren't useless.
And if we think about this is a hypothetical because we're not talking with them about this, but let's think about Dave Calhoun at Boeing. And he's got the information that's in our CRM system about contacts, about opportunities, about deals that are supposed to close at Lufthans, at Bank America at Southwest Airlines and it's just the information that the salespeople put in. Now imagine combining that data with Almost 9 times more of that or order of magnitude more exogenous data about the market. Think Commodity prices, jet fuel prices, the equity prices of Boeing's customers, Southwest Airlines, Lufthansa, American Airlines, NLP on social media, okay, NLP on analyst reports, equity prices of all these companies, GDP growth rates, Travel passenger travel miles is the country at war, is the country at peace. Okay.
NLP on media, if Southwest Airlines Is announcing a 15% layoff for whatever reason like airlines do from time to time And their stock just goes down 30%. What's the probability that this order for like 100 and 737 MAXs is going to close this quarter? Oh, that would be 0. Okay. So you can see how we can take all of those data, tens of thousands of signals from the market, analyst reports, news reports, stock prices, Commodity prices, jet fuel prices, GDP growth rates is the country at war, is the country at peace and build very precise Machine learning models that tell them to Calhoun what deals are actually going to close, okay.
Not only is this more let's set Calhoun aside, Let's talk about something like a what would be Procter and Gamble, okay. So Procter and Gamble not only needs to revenue Forecast revenue, they need to forecast products because they need to make the right amount of stuff at the right time to meet the demand function in order to realize their revenue, right? So we can build a we have now demonstrated That we can build these AI models, okay, that are literally in order of magnitude more precise as it relates to revenue Customer forecasting Next Best product, Next Best offer customer churn than what's going on in CRM today and you're going to see us releasing these products this year for banking, okay, for aerospace, Okay. For manufacturing, for healthcare, what have you, and most products will be well perceived. Now we have done extensive market research on the levels of customer satisfaction in the CRM industry today.
And I'm telling you The levels of customer these people hate their vendors, okay. And so the levels of customer dissatisfaction are uniform. It's an $80,000,000,000 market and as it was to that segment that's related to AI, the intersection of AI CRM, I believe we're going to establish a leadership position in that market. We've hired some very key people in CRM Here you'll be seeing some announcements soon or some other very key people who are joining us and That is going to be exciting market. And as you people know, it's a market that I'm not entirely unfamiliar with.
And so we're going to have some fun there. Do I think we're going to put existing CRM companies out of business? No way. You know how they're great companies. They're going to continue to survive.
Will we establish a significant toehold in that segment that is where people are interested in using AI for these things? Don't bet against us.
Yes.
Okay. That's
helpful. And then maybe you could speak to the mix of kind
of direct versus Partner led business and maybe how that differs today versus what it
looked like a year ago?
How do you say partner led? Okay.
So Partner assisted, I guess.
Yes. Well, partner assisted, I think, is right. Okay. I'm not really certain we really have any it's a great question, David. And we're going to work we go to market at massive I'd say with Microsoft, okay, with bigger Hughes and now we're just kind of kicking into gear, okay, with FIS, okay, and In for And I think we're ready to go to market with Singtel in Asia.
Partner
I mean, it's I mean, probably I mean, I think our pipeline today is larger than it has ever been. I think that This is off the record. I'll never say it again, okay? It's probably off by 10%, but I think our pipeline for this year is like $1,600,000,000 or something, okay? And so Give me some slack on that one guys.
I don't have any numbers in front of me, but I think it's pretty directionally it's about right. I would say It would be I would speculate that on 50% of those transactions, we are engaged with a partner, either Microsoft or Bigger News or somebody like that to bring the deal home. Yes.
Okay. That's a helpful data point. Thank you.
This partner ecosystem is an important part of the equation. Can we really rely on the partner to close the deal for us? I'm not so sure. I think we might have to close it ourselves, okay. But the partner assist, Either your partner happens to be Satya or Judson Alsop at Microsoft, they're pretty good sales guys, I'm telling you.
Thank you. We have our next question coming from the line of Sanjit Singh With Morgan Stanley, your line is open.
Thank you for taking the questions. I wanted to follow-up on the previous question Really relating to the customer count, which picked up pretty nicely, I think they're up to like 89 customers from around 64 at the time of IPO. And just wanted to get a sense of what's driving that, just a better sort of spending environment or from a So the go to market sales execution, sales hiring perspective, you're starting to see that sales productivity really start to come through the door to help accelerate That cuts the comp a lot for you.
Well, Sanjay, I think there's 2 things that we're seeing that are influencing that. Number 1, you'll recall that Pre IPO, we were only elephant hunting, okay. We only had a major accounts group, okay. And since then, we've been building kind of a traditional enterprise sales organization, a middle market sales organization And a mass market sales organization. 1 of our we did a pretty large transaction this quarter, I believe, To place on the Microsoft on the Azure Marketplace, did it, Don?
Getting in Asia? It did. Okay.
Okay. And, Ethan, all you guys, I encourage you to go to c3.ai.com, c3.ai now, okay? Put in your name, address, Okay. And credit card number and for 30 days use the ex machina for free. I mean, hundreds and hundreds of people are doing that, okay.
So please do it and please also forget to Dial in 30 days and cancel your subscription, okay? But I think it is 2 things, Sassy. Number 1 is, remember we said a couple of years ago, we're putting we're going to expand the major accounts group. We're going to And the enterprise group, we're going to put a middle market group in place, we'll put a mass market group in place. We're doing all that, including telesales, marketplaces, the Internet sales, And then this is combined with the partner ecosystem, be it Microsoft, AWS, Bigger use or what have you.
So it's resulting in just a much larger diversity of different So the strategy that we said we were going to execute starting in well before the IPO, I mean, I communicated this as early as early 2018. We're executing it and it's working.
It makes total sense. The follow-up question is a topic that we've talked about for a couple of quarters now, Tom, which is around like the competitive environment. So Look at the broader landscape, including C3 and then some of the other vendors that either own parts of the space or kind of do multiple On multiple part of the workloads in data science machine learning, it seems like everybody is going like a weed. And I know your view is That a lot of customers are stuck in proof of concept hell. Going back to that question of, Do customers sort of do the dance with this sort of stitch together approach or they come to sort of a end to end platform like the C3?
Where are we in that journey, do you think?
Well, I think everybody is going to try to build it themselves. And that's what IT people do. And they try to build a relational database system They tried to build ERP systems themselves. They tried to build their own CRM systems themselves. How did that work for Morgan Stanley?
Okay. I mean they tried. Okay. They tried to build all those things themselves, okay. I was there, okay.
How to work for JPMorgan Chase? I mean, they tried to build all the systems themselves. And today, JPMorgan Chase is trying to build their own AI platform. After that comes down to crash, they tried to build their own ERP system, they tried to build their own CRM system, all that came crashing down around them. So they'll spend, I don't know how many 100 of 1,000,000 to 1,000,000,000 of dollars you're trying to build their own AI platform and then Jamie will be gone and they'll bring in some new CEO and he'll fire everybody, he'll buy from a commercial vendor.
That's the way this works. So virtually every one of our customers, Shell, Engie, Koch Industries, United States Air Force, Army Futures Command has tried to build this themselves, A bigger use, that would be GE and it didn't work out so well. And so this is just a phase. We've seen this over and over and over in the industry and it's just a phase that everybody's got to go through. They have to try it themselves and crash and burn
Thank you. We have our next question coming from the line of Arvind Ramnani with Piper Sandler. Your line is open.
Hi, Tom. Most of my questions have been asked, but I did have a couple of questions. I had a question about your overall product. Can you talk about applicability of using the same code base Across different industries or different applications?
Yes. Well, Arvind, I mean, it's a really good question. And you and I have talked about this before, but I really do appreciate you asking it. So we deliver, I think, You have about 21 different AI products today across 5 different industries. And we have a family of products for manufacturing, for gas, for Financial services, for Aerospace and what's counterintuitive Is that whether we're doing object identification for the Space Command, Clearance adjudication for the Defense Intelligence Agency, stochastic optimization of the supply chain at Coking Industries For AI based predictive maintenance for Shell for offshore oil rigs, all of which we do.
Now these are separate products with separate documentation, Separate user interfaces, separate APIs to aggregate data, but 90% of the codes that are running across all those applications, Whether it's Cash Management Bank of America or predictive maintenance for offshore oil rigs at Shell, it's the same code base. And so that's counterintuitive. This is the beauty of this model driven architecture. And we have really broken the code on that, Okay. So we're able everything we do is reusable.
And so that's what people We have broken the code. We all know the intellectual property. The patents have been awarded to It is our invention, okay, this idea of using a model driven architecture for enterprise AI and IoT applications. So it's a 90% of the cost. What changes from customer to customer are the Data sources, the APIs that we use for the data source, trivial problem, okay.
The user interface expression, it differs From say, anti money laundering to predictive maintenance for low pressure compressors and offshore oil rates, but we can all agree, I hope, The user interface is trivial and then the part that differs from the most from installation to installation Are the machine learning models. The machine learning models, we quite hope we can agree these are non trivial, but they constitute Dude, maybe 3% of the code.
Terrific. And I know you You've answered a couple of questions on guidance, but I just maybe wanted to frame it a little bit differently. At the midpoint of the guide, You're really adding $62,000,000 in revenue in fiscal 'twenty 2. And then when I look at like your fiscal 2020, which was a good year before the pandemic hit, you added 65,000,000 So it seems like the guidance has fair bit of conservatism because you have 62,000,000 But you also have some delays and some pent up demand from the delays that you experienced last year That should kind of boost revenue at more than like $62,000,000 So
I just wanted to get
a sense of how conservative your guide may be.
Well, Arvind, you know me a little bit. And I hope that at the end of the day that people will Believe that I was credible and I am credible. So, we're focusing on being credible. And What we want to do is meet and exceed, beat and exceed, beat and exceed. We're I think that I don't know how many enterprise application Salvator companies are growing.
What's the expected growth rate in the milligram, like 33% or something like that? 34%. 34%. I mean, don't know how many enterprise software companies are growing at 34% compound annual growth rates, but I'm sure that would be at the top deck aisle. I expect not I'll check this stuff, but I suspect it's in the top deck aisle.
And right now, we intend to move in the top deck aisle this year. And Hopefully, we can come back to you next year and move up a little higher.
Terrific. Thank you.
We have our next question coming from the line of Pat Walravens with JMP Group. Your line is open.
Great. Thank you and congratulations on the quarter. So Tom, you've got Oil and Gas, Financial Services, CRM, ex Machina, hiring, can you just tell us for this year, For this coming year, what are your top three sort of strategic imperatives? It's a really good question. I see the strategic imperatives, Pat, you'll see a number of announcements coming in this area and there have been some announcements, is making sure that we have the leadership in place To scale this business globally.
And you've seen some of this with Ed Cardone. You've seen some of this in From General Cardone, who's the Chairman of C3 Federal, the new General Manager of C3 Federal. And you can expect that we will be adding a number of you saw this with Jim Snabe, The Co CEO of SAP joining our Board, and we have been really, really focused On bringing senior leadership into the company in the last 9 months. And we're and you're going to see a number of announcements There that I think you'll agree are significant. And I think that is the I mean, we have the technology.
The market is much bigger than we can address and rapidly growing. The technology foundation we have is very rich and it works. We have we're leaving in our wake a string of highly satisfied customers. I think we're doing a pretty good job at building brand equity. The competitive dynamics of this market are not very significant.
I mean, basically, we are selling vehicles and everybody else is selling ball bearings and wheels and carburetors, Okay. And we're selling vehicles, okay. And so there's not much going on in terms of the competitive dynamics. And so we just need to make sure that we have the seasoned leadership in place to scale this business In Federal Systems, in Asia Pacific, in Japan, in Europe, in manufacturing, healthcare, telecommunication, Aerospace, etcetera, I think it's human capital. That is And if you go look on Glassdoor, any of you are interested, I think that this focus on human capital has been consistent for many years and it will continue.
Great. Thank you.
Thank you. There are no further questions at this time. I will now turn the call over back to Tom Siegel for closing remarks.
Okay. Ladies and gentlemen, we thank you for Taking time out of your busy day, okay, to check-in on us. We appreciate your interest And know that we are it is now June of 2021, I am
very pleased to report
that there has been no day in the history of this company when this company has been Better positioned when the market has been when there has been more market opportunity or He has been better positioned to seize the market opportunity. So as we approach the next 2, 3, 4 years, I can tell you we approach it with Great enthusiasm and We'll see how this turns out when it's over, but I think there's some probability that we might build a pretty substantial So thank you for your interest. Thank you for your support and thank you for your questions and we wish you all a great day.