C3 AI lays off 26% of workforce as losses widen and stock plunges 17%

C3 AI is under pressure after a bruising earnings report sent its stock tumbling and forced the company into a major reset.

Shares of the enterprise AI software firm fell 17% Thursday, hitting a new low after the company posted weaker-than-expected third-quarter results and revealed plans to cut more than a quarter of its workforce. The move marks one of the most aggressive cost restructurings in the company’s recent history and signals mounting strain inside a business that once rode the early AI hype wave.

C3 AI stock plunges 17% to a record low after earnings miss and 26% workforce cuts

For the quarter, C3 AI reported revenue of $53 million, far short of the $76 million analysts had expected, according to LSEG data. Losses widened, too. The company posted a loss of 40 cents per share, missing forecasts that called for a 29-cent loss.

“C3 AI stock plunged 17% Thursday morning after the company missed third-quarter expectations and announced widespread layoffs,” CNBC reported.

CEO Stephen Ehikian, who stepped into the role in September, struck a candid tone on the earnings call.

“What I consistently hear is that every CEO is making AI a top strategic priority, and they want to realize measurable economic value from it. That is exactly what our products deliver,” Ehikian said. “That said, it became clear to me that our cost structure was simply too high, and we were not organized correctly for the opportunity.”

The restructuring plan aims to reset that cost base. In a regulatory filing, C3 AI said it will eliminate 26% of its global workforce. The company is pairing the layoffs with a 30% reduction in non-employee expenses, part of a broader push to improve operating efficiency.

Leadership changes have already been underway. Ehikian took over in September after longtime CEO Thomas Siebel stepped down following vision impairment linked to an autoimmune condition. The transition put a new executive team in charge at a moment when growth was already under scrutiny.

The near-term outlook did little to calm investors. C3 AI expects fourth-quarter revenue to land between $48 million and $52 million, well below the $78 million analysts had projected. The company guided for an operating loss between $56 million and $64 million, wider than the $48 million loss Wall Street had modeled.

Analysts are growing more cautious. Citizens downgraded the stock from market outperform to market perform on Thursday. In a note to clients, analyst Patrick Walravens said the firm is “stepping to the sidelines,” citing near-term pressure on new business and tougher competition.

The latest slide adds to a long fall from C3 AI’s early public-market highs. The company went public in December 2020, opening at $100 per share. The stock soon traded near $180 at its peak. It now changes hands at roughly $10, underscoring how sharply sentiment has shifted as investors demand clearer proof of sustainable growth in enterprise AI.

For Ehikian, the workforce cuts and cost reset mark the opening phase of a turnaround effort. Whether that plan can stabilize the business — and restore confidence on Wall Street — is now the central question hanging over C3 AI.