In a recent CNBC interview, Thomas Siebel, Chairman and CEO of C3.AI, illuminated the company’s current trajectory, highlighting significant advancements in artificial intelligence (AI) innovation, revenue growth, and a burgeoning pipeline of new deals. Siebel emphasized the vast potential for AI to transform various sectors, signaling a promising future for C3.AI.

Broadening Horizons: Sectors Embracing AI

The conversation with Thomas Siebel revealed AI’s expansive reach, with various sectors eagerly adopting these technologies to revolutionize their operations. “The Public sector is huge,” Siebel emphasized, pointing to the significant demand from state and local governments. We see substantial opportunities in manufacturing, aerospace, telecommunications, and consumer packaged goods. It’s really across the board.”

Siebel provided an illustrative example from the construction materials sector in Europe, where a significant transaction is underway. “This is all about digital transformation and optimizing processes,” he said. “We are focusing on energy efficiency and decarbonization, which are critical components of our clients’ sustainability goals.” The European deal is just one among many, demonstrating the widespread application of AI in enhancing operational efficiency and sustainability.

AI Helping To Streamline Production Lines

The manufacturing sector has particularly shown keen interest in AI-driven solutions. “In manufacturing, AI is helping to streamline production lines, reduce waste, and improve overall efficiency,” Siebel noted. “We are seeing companies leverage AI to predict equipment failures before they happen, saving millions in downtime and maintenance costs.” This predictive capability is transforming how industries manage their operations, leading to significant cost savings and increased productivity.

In the aerospace sector, AI is being used to enhance safety and efficiency. “Aerospace companies are using AI to optimize flight paths, improve fuel efficiency, and conduct predictive maintenance on aircraft,” Siebel explained. “The ability to anticipate and address issues before they occur is a game-changer for the industry.” This proactive approach enhances safety and reduces operational costs and downtime.

Telecommunications is another sector experiencing the transformative effects of AI. “Telecom companies are using AI to manage their networks more efficiently, improve customer service, and develop new revenue streams,” Siebel said. “By leveraging AI, they can offer personalized services and quickly resolve network issues, leading to higher customer satisfaction.” This shift towards AI-driven operations is helping telecom companies stay competitive in a rapidly evolving market.

AI Used To Enhance Customer Engagement

Consumer packaged goods companies also embrace AI to optimize their supply chains and enhance customer engagement. “In consumer packaged goods, AI is helping companies better understand consumer preferences, manage inventory, and streamline their supply chains,” Siebel noted. “By analyzing vast amounts of data, these companies can make more informed decisions and respond more quickly to market changes.” This data-driven approach is enabling companies to stay agile and responsive in a highly competitive landscape.

Siebel’s insights underscore the transformative potential of AI across various sectors. As industries continue to adopt AI-driven solutions, the benefits in terms of efficiency, cost savings, and sustainability are becoming increasingly evident. “AI is not just a tool for the future; it’s a critical component of today’s business strategy,” Siebel concluded. “We are only scratching the surface of what’s possible with AI, and the opportunities are immense.”

Federal Government: A Major Growth Driver

Thomas Siebel highlighted the federal government as a significant source of growth for C3.AI, noting a remarkable 100% increase in federal government revenue last quarter. “The federal government is undergoing a massive digital transformation,” Siebel explained. “Defense and intelligence sectors are leading the charge, leveraging AI for everything from aircraft maintenance and asset management to logistics and supply chain optimization.”

Siebel emphasized AI’s strategic importance in national security. “AI is at the heart of modern defense strategies,” he said. The intelligence community is transforming to take advantage of what we call the ‘kill chain’ of the future—hypersonic swarms, sub-surface vehicles, and cyber warfare.” This transformation involves integrating AI to enhance the efficiency and effectiveness of military operations, making it a critical component of national defense.

AI Helping To Safeguard National Security

The integration of AI into defense operations is not just about enhancing current capabilities but also about preparing for future challenges. “We are seeing significant investments in AI to predict and mitigate threats before they materialize,” Siebel noted. “This includes everything from analyzing signals from satellites to improving cybersecurity measures.” The proactive use of AI in these areas is helping to safeguard national security and ensure the country remains ahead of emerging threats.

Beyond defense, the federal government also uses AI to optimize various administrative functions. “AI is being utilized to improve the efficiency of government operations,” Siebel said. “This includes everything from streamlining administrative processes to enhancing public service delivery.” By leveraging AI, government agencies can better manage resources, reduce costs, and provide more effective services to the public.

Government’s Scale Illustrates AI’s Transformative Power

Siebel pointed out that the public sector’s adoption of AI sets a precedent for other industries. “The federal government’s commitment to AI showcases its potential and encourages other sectors to follow suit,” he explained. “As public sector entities demonstrate the benefits of AI, it creates a ripple effect, prompting private companies to adopt similar technologies.” This trend is accelerating the overall adoption of AI across various sectors, driving further innovation and growth.

The federal government’s role as a major growth driver for C3.AI underscores AI’s broader potential to transform large organizations. “The scale at which the federal government operates provides a unique opportunity to showcase AI’s capabilities,” Siebel concluded. The lessons learned and successes achieved in the public sector can serve as a blueprint for other industries, illustrating AI’s transformative power.”

Enterprise Software and AI: A Synergistic Relationship

The enterprise software market, a $600 billion global industry, is undergoing a significant transformation as it begins to integrate artificial intelligence (AI) into its offerings. Thomas Siebel, CEO of C3.AI, explained how AI revolutionizes traditional enterprise software, creating a synergistic relationship that enhances capabilities rather than replaces existing systems. “The enterprise software stacks were built in the 20th century and, while sophisticated, do not incorporate AI,” Siebel noted. “Our approach is not to replace these systems but to augment them with predictive capabilities that drive greater efficiency and innovation.”

AI’s role in enterprise software is multifaceted, providing predictive analytics that enables businesses to address issues before they escalate preemptively. “We allow companies to predict customer churn, machinery breakdowns, and supply chain disruptions,” Siebel said. “For instance, if we can predict which customers are likely to leave, businesses can take proactive steps to retain them.” This predictive power transforms how companies manage their operations, shifting from reactive to proactive strategies that save time and resources.

AI Driving Digital Transformation

One of the key advantages of integrating AI with enterprise software is the ability to handle large and complex infrastructures. “AI can predict failures in large-scale systems like the power grid or oil and gas infrastructure,” Siebel explained. “This capability is crucial for maintaining continuous operations and preventing costly downtime.” By leveraging AI, companies can enhance the reliability and resilience of their critical infrastructure, ensuring smoother and more efficient operations.

The shift towards AI-enhanced enterprise software also aligns with broader trends in digital transformation and data utilization. “Data is at the core of AI, and the ability to harness this data effectively is what sets successful companies apart,” Siebel emphasized. “We are seeing organizations across all sectors investing heavily in AI to unlock new insights and drive performance improvements.” This investment is about keeping pace with technological advancements and gaining a competitive edge in an increasingly data-driven world.

Despite the clear benefits, the transition to AI-integrated enterprise software is challenging. Siebel acknowledged that changing the pricing model from subscription to pay-as-you-go has impacted some metrics but emphasized the long-term advantages. “We changed our pricing model to align better with our customers’ needs and to drive sustainable revenue growth,” he said. “While this has caused a dip in certain metrics, it positions us for stronger, more consistent growth in the future.”

As businesses navigate digital transformation’s complexities, integrating AI into enterprise software represents a significant leap forward. “AI is not just an add-on; it’s a fundamental shift in how we approach business operations,” Siebel concluded. “The synergy between enterprise software and AI is creating unprecedented opportunities for innovation, efficiency, and growth. As we continue to develop and deploy these technologies, we are laying the groundwork for a new era of intelligent enterprise solutions.”

Adapting to New Pricing Models

As C3.AI continues to evolve, a significant shift has transitioned from a subscription-based pricing model to a pay-as-you-go structure. This change, while impactful, is designed to better align with customer needs and drive sustainable revenue growth. Thomas Siebel, CEO of C3.AI, explained the rationale behind this strategic move, emphasizing its benefits despite some initial challenges. “We shifted our pricing model to a pay-as-you-go structure to provide greater flexibility and scalability for our customers,” Siebel stated. “This approach allows them to pay for what they use, making it more cost-effective and accessible.”

The new pricing model has had a noticeable impact on certain financial metrics, notably the remaining performance obligation (RPO), which saw a year-over-year decline of 36%. However, Siebel remains confident that this shift is beneficial in the long run. “While the RPO metric reflects a decrease, it’s important to understand that this is part of our strategic adaptation to market demands,” he explained. “Our focus is on driving revenue growth through increased usage and customer satisfaction, which we believe will lead to stronger financial performance over time.”

Customers Embracing Pay-As-You-Go-Model

Customers have responded positively to the increased flexibility provided by the pay-as-you-go model. This adaptability is particularly valuable for organizations navigating uncertain economic conditions and fluctuating demand. “Our customers appreciate the ability to scale their usage up or down based on their immediate needs without being locked into long-term contracts,” Siebel noted. “This flexibility is crucial in today’s fast-paced business environment, where agility and responsiveness are key competitive advantages.”

The pay-as-you-go model also aligns with the broader trend toward consumption-based pricing in the technology sector. Companies can better manage their budgets and allocate resources more efficiently by only paying for what they use. “This model encourages efficient use of resources and ensures that customers get maximum value from their investment,” Siebel said. “It also allows us to build stronger, more dynamic relationships with our clients, as their success directly translates into our success.”

Looking ahead, Siebel sees the new pricing model as a cornerstone of C3.AI’s growth strategy. “We believe that this approach will enhance our competitive position and drive long-term growth and profitability,” he asserted. “As more organizations recognize the benefits of AI and digital transformation, the demand for flexible, scalable solutions will continue to rise. Our pay-as-you-go model positions us well to capitalize on this trend and deliver exceptional value to our customers.”

The transition to a pay-as-you-go model is more than just a pricing change; it’s a strategic pivot that reflects C3.AI’s commitment to innovation and customer-centricity. “We’re not just adapting to the market; we’re shaping it,” Siebel concluded. “By offering flexible, scalable solutions, we’re enabling our customers to harness the full potential of AI and drive their digital transformation initiatives forward. This is the future of enterprise technology, and we’re excited to lead the way.”

Navigating a Transformative Landscape

As C3.AI continues to navigate the dynamic landscape of artificial intelligence and enterprise software, its strategic initiatives underscore its commitment to innovation and adaptability. The transition to a pay-as-you-go pricing model, the expansion into diverse sectors, and the significant growth within the federal government sector all highlight C3.AI’s agility in responding to market demands and technological advancements.

Thomas Siebel, CEO of C3.AI, encapsulates the company’s forward-looking vision: “We are at the forefront of a technological revolution that is reshaping industries and redefining the possibilities of enterprise AI. Our focus remains on delivering scalable, flexible solutions that empower our customers to achieve their digital transformation goals.” This vision is supported by the company’s robust pipeline of new deals and its strategic partnerships across various sectors, which position C3.AI as a leader in the AI-driven digital transformation space.

Innovation at the Heart of Everything We Do

The company’s success is also driven by its ability to innovate continuously. “Innovation is at the heart of everything we do,” Siebel emphasized. “From enhancing our AI models to optimizing our pricing strategies, we are committed to pushing the boundaries of what is possible and delivering unparalleled value to our customers.” This commitment to innovation is evident in the company’s ability to attract and retain a diverse range of clients, from state and local governments to manufacturing and telecommunications firms.

Moreover, C3.AI’s growth in the federal government sector underscores its role in advancing critical national interests. “Our work with the federal government, particularly in defense and intelligence, highlights the strategic importance of AI in modern warfare and national security,” Siebel noted. “We are proud to support these initiatives and contribute to the development of the ‘kill chain’ of the future, encompassing hypersonic swarms, sub-surface vehicles, and cyberwarfare capabilities.”

As C3.AI continues to expand its footprint, the company remains focused on its core mission of driving digital transformation and optimizing client processes. “We are dedicated to helping our customers achieve greater efficiency, reduce costs, and enhance their overall performance,” Siebel said. “By leveraging the power of AI, we are enabling organizations to make smarter, data-driven decisions and stay ahead in an increasingly competitive landscape.”

Just Scratching the Surface of What AI Can Achieve

Looking ahead, Siebel is optimistic about the future of C3.AI and the broader AI industry. “We are just scratching the surface of what AI can achieve,” he asserted. “As technology continues to evolve, we will see even greater integration of AI into all aspects of business and society. C3.AI is well-positioned to lead this transformation and deliver cutting-edge solutions that drive real-world impact.”

In conclusion, C3.AI’s journey is a testament to its resilience, innovation, and strategic vision. By navigating the complexities of the AI landscape and adapting to changing market conditions, the company is poised for continued growth and success. As Siebel aptly stated, “The future of AI is bright, and we are excited to be at the forefront of this transformative journey, driving innovation and delivering value for our customers and stakeholders.”