C3 AI is an Enterprise AI application software company.

•C3 AI Applications, built using the C3 AI Application Platform, include a large and growing family of industry-specific and application-specific turnkey AI solutions, ready for installation and deployment.

These solutions, and our patented model-driven architecture, enable organizations to simplify and accelerate Enterprise AI application development, deployment, and administration. We significantly reduce the effort and complexity of the AI software engineering problem.

•Industry Partners. We have developed an alliance program to partner with recognized leaders in their respective industries, such as Baker Hughes, Fidelity National Information Services, or FIS, and Raytheon, to develop, market, and sell solutions that are natively built on or tightly integrated with the C3 AI Application Platform.

•Consulting and Services Partners. We partner with a number of systems integrators specializing in Enterprise AI implementations.

Customer Acquisition, Retention, and Expansion

Grow Our Go-to-Market and Partnership Ecosystem

As of July 31, 2022 and April 30, 2022, the total estimated amount of Baker Hughes' commitments not yet contracted under the direct subscription fee or reseller arrangement under the entire arrangement was $46.8 million and $49.3 million, respectively.

Impact of Ongoing COVID-19 Pandemic

Components of Results of Operations

Gross Profit and Gross Margin

The following tables set forth our condensed consolidated statements of operations for the periods presented:

(1)Includes stock-based compensation expense as follows:

Comparison of the Three Months Ended July 31, 2022 and 2021

The increase in interest income for the three months ended July 31, 2022 compared to the same period last year was primarily due to investments in securities with higher expected returns, such as corporate debt securities.

The change in provision for the three months ended July 31, 2022 compared with the same period last year was primarily related to foreign and state tax expense.

The following table summarizes our cash flows for the periods presented:

Net cash provided by financing activities of $5.0 million during the three months ended July 31, 2021 was due to $5.0 million of proceeds from the exercise of stock options for Class A common stock.

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates discussed in the Annual Report on Form 10-K for the fiscal year ended April 30, 2022, which was filed with the SEC on June 23, 2022.

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