A "completely unacceptable in virtually every respect" quarter brings Tom Siebel's time as CEO of C3.ai to a close. But this isn't a retirement story by any manner of means...

The quarter was dreadful, okay? Now we need to pick ourselves up, dust ourselves off and get on with business.

Typical candor from Tom Siebel as C3.ai turns in what, as he says, was an awful set of quarterly numbers. Total revenue was $70.3 million, a decrease of 19% year-over-year, while the firm reported a net loss of $116.769 million vs $62.555 million for the same period last year.

That’s not good enough, declared Siebel, and there’s no excuse to fall back on:

The financial results of the first quarter were completely unacceptable and completely unacceptable in virtually every respect. I've given this a lot of thought as to what the root cause of this is. Is there a market? The market is huge. Is there some new competitor that changed the competitive dynamics of the space? There is not. Is there some secular change in the market that we haven't seen before? There is not.

The fact of the matter is this boiled down to poor sales execution and poor resource coordination. It's clear that the new leadership that we brought into the organization and globally in sales and service, in the service organization in EMEA, in federal, in North America kind of mid-quarter caused confusion in the sales process.

Q1 was the firm’s 19th quarter operating as a public company and was the first to miss revenue guidance.  For Siebel himself it must have been a bitter end to his time as CEO of the enterprise AI company he founded when today’s generation of challengers hadn’t even been thought of. But the autoimmune system related illness that he disclosed last year has meant that it’s time to hand over the leadership baton to another, although he’s making it perfectly clear that this is not the end of his involvement by any means.

His illness has been a factor in the problems the firm has run into, reckons Siebel:

As a result of these health issues, I was unable to participate as effectively as I used to in the sales processes and the coordination of resources necessary to make these sales processes successful and come to closure.

Successor

This is not the end of Siebel’s active involvement in the firm though by any means as he made clear:

Going forward, I will continue to remain actively engaged in the business, now in the role as Executive Chairman. In that role, I will particularly focus on strategic partner relationships, strategic customer relationships and keep an eye on direction and product strategy going forward.

But day-to-day, there is a new CEO stepping up - and it’s a savvy-looking appointment in the form of Stephen Ehikian who comes in from the lucrative US public sector, where he was responsible for reforming the General Services Administration, performing the acquisition activities of all the divisions of the Federal Government and was responsible for implementing the President’s AI Action Plan.

The public sector has been a happy hunting ground for C3.ai in the past. Ehikian says of his new role:

The market opportunity here for enterprise AI is enormous. Every company, every government is exploring how to transition away from testing, and experimenting with AI to actually rolling out across their core operations and workflow. What's exciting for me is C3 has the technology platform and applications that customers need today. Their technology is being deployed across some of the most viable customers in the world, in some of the most challenging environments.

So for me and on top of all that, the ability to learn from Tom Siebel, who invented this entire Enterprise AI market as well as with the extraordinary team here was, honestly, an easy decision say yes to.

As Q2 gets underway, there’s new leadership across the board at the firm, as well as a combined sales and service organization under a Chief Commercial Officer. Siebel says the company is well-placed to pick up and solve its problems, although he admits that the amount of change that’s been happening hasn’t helped:

There are a lot of new people involved. There's new leadership involved. I think when you do that, sometimes channels get crossed a little bit and things get confused. And we were driving the car down the road and replacing the transmission and the wheels at the same time. And the guy used to drive the car wasn't there.

But ultimately he clearly wants to minimize the importance of the poor quarter. These things happen, he argues:

When I was at Oracle in 1989 when Oracle had its first miss, I think that the stock went from $27 to $3, as I recall, and it was the end of the world. Well, since then, Oracle has missed 34 quarters, and it's still not the end of the world. And NVIDIA has missed 10. Amazon has missed 23. Salesforce has missed a few, certainly six months ago and 12 months ago. And today, nobody remembers any of that. Six months from now, nobody will remember this because we're going to be rocking.

My take

I am here to do everything I can to ensure that Stephen is successful, okay?

This is certainly not the stepping into the shadows of Tom Siebel. It was interesting on the post results analyst call to see that the new Exec Chairman dominated the conversation, in much the same way that Oracle’s CTO continues to play a huge part in his own firm’s calls in the same way he did when he was CEO. So let’s take him seriously when he declares:

We have an entire new layer of senior leadership in the company who are tried and tested and proven at selling enterprise AI globally. And I suspect with Stephen's leadership, they're going to be enormously successful. That being said, I will continue to be involved as necessary in monitoring that process and assisting that process to ensure that this transition goes very smoothly and we dramatically ramp up the sales and service capacity globally.

Onwards!