July 20, 2024
Show me the revenue growth

It’s clear that tech minds are working on ways to apply AI to a host of verticals. At Y Combinator’s first day of showing off its Summer 2023 cohort, there were enough companies preparing to use AI in a medical context that we started keeping an internal running tally.

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The focus makes sense; modern AI tools, especially LLMs and all things generative AI, have the potential to make today’s workers faster, perhaps even replacing labor inputs in a number of roles. For companies looking to squeeze their costs while still growing, the ability to use more software to do work that is done by hand today is no small promise.

Startups are not alone. Public tech companies of all sizes are hammering away on the same problem set, albeit from a perch that is already stuffed with existing customer accounts.

Demand is seemingly present. Reading through earnings calls from UiPath (robotic process automation with a growing AI footprint) and C3.AI from this week makes it plain that companies see a lot of enthusiasm from the customer side of the fence.

What keeps hitting me as almost weird is that when we look at growth projections from tech shops with a big AI story to tell, the numbers feel a little modest. Happily, the two recently public tech companies — UiPath went public in April 2021; C3 in December 2020 — provided a bit of context on the growth question that helps make the demand-supply-revenue picture a little bit clearer.

Heading into Q3 2023 earnings, we had our gaze fixed on potential AI results, leading us to ask whether AI-related revenues could help companies reverse net-retention slippage. We also looked at how some tech companies are charging for AI products today, even if a data deficit will wind up making it harder for startups to win the AI race. Let’s extend our investigation by looking at how some AI-forward tech companies on the public markets are forecasting growth and talking about demand as it stands today.

UiPath and C3.ai

Following their earnings reports on Wednesday, shares of UiPath are up 7% as of the time of writing, while shares of C3 are off around 16%. UiPath beat street expectations and announced a $500 million share-buyback effort. (With $102 million worth of share-based compensation in its most recent quarter, that’s five quarters’ worth of antidilution planned, in other words). C3 failed to excite investors as much, forecasting larger losses ahead of itself.

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