C3.ai slashes 26% of staff as CEO admits failure to deliver and ‘burning too much money’

Francisco Velasquez

Fri, February 27, 2026 at 2:21 AM GMT+9 3 min read

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C3.ai (AI) is learning the hard way that “conviction” doesn’t pay the bills.

“We did not deliver this quarter, full stop,” CEO Stephen Ehikian told Yahoo Finance’s Opening Bid. “I’m not going to sugarcoat that … that’s on me.”

In a remarkably blunt post-earnings admission, Ehikian stated that “the reality is we were just burning too much money.”

To stop that burn, the company slashed 26% of its workforce, a calculated bid to “restructure our cost basis” and find the “maximum flexibility” that Ehikian said is required to capture AI scaling and survive the very market he claims is stronger than ever.

The market’s verdict was swift and unforgiving. C3.ai stock cratered nearly 20% following the release as investors looked past the rhetoric and focused on a revenue miss that underscored a complete departure from previous guidance.

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Revenue for the fiscal third quarter came in at $53.3 million, about a 50% year-over-year decline and far below the $75.9 million analysts were expecting, according to Bloomberg data. The bottom line was equally grim, with adjusted EPS showing a net loss of $0.40 per share, significantly wider than the $0.29 loss Wall Street had penciled in.

Investors appear to be particularly concerned by the sheer scale of the retreat. C3.ai has effectively slashed its full-year revenue guidance nearly in half, moving from a previous high of $484 million down to a range of $246 million to $250 million. This shift signals more than just a “tough quarter.” It suggests a fundamental reevaluation of the company’s growth trajectory.

While Ehikian pointed to a 134% surge in federal and defense bookings as a “playbook that’s working,” those wins have yet to translate into the commercial scale required to support the company’s previous valuation.

A C3.ai store is seen at Promenade Street in Davos, Switzerland, on Jan. 21, 2025. The world’s leading companies temporarily took over cafés, shops, and restaurants and organized them as meeting and event spaces. (Ömer Sercan Karku/Anadolu via Getty Images) · Anadolu via Getty Images

In response to the crisis, Ehikian has flattened the organization and is taking the fight to the front lines himself. He has removed layers of management, with top sales personnel now reporting directly to him.

He described a commercial sector stuck in “pilot purgatory,” where companies are interested in AI but hesitant to commit to the large-scale, transformational deals C3.ai needs to survive. By eliminating organization layers, Ehikian aims to “replicate” the strategy used to attract federal accounts, betting he can personally convince skeptical CEOs to move faster.

However, skepticism remains the dominant mood on the Street. While cutting 26% of staff may help manage the burn, it also raises questions about the company’s ability to execute on its remaining pipeline. Ehikian argues the company is being “proactive” with the layoffs, but the move may feel more like a Band-Aid to stop the bleeding.

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Francisco Velasquez_ is a Reporter at Yahoo Finance. Follow him on LinkedIn, X, and Instagram. Story tips? Email him at francisco.velasquez@yahooinc.com._

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