C3.ai shares tumbled 22% in after-hours trading following a disastrous fiscal third quarter that prompted Citizens Financial Group to downgrade the stock to Market Perform from Market Outperform. The artificial intelligence software company reported revenue of $53.3 million, far below the $75.6 million consensus estimate, marking a 46% year-over-year decline. Subscription revenue dropped 44% to $48.2 million, missing expectations of $68.5 million.

Citizens cited multiple concerns including near-term new business challenges, risks around the turnaround, reduced day-to-day involvement of founder Thomas Siebel, and rising competition from vendors including Snowflake, Salesforce, Microsoft, and Palantir Technologies. The company's guidance for fiscal fourth quarter revenue of $48 million to $52 million fell well short of the $77.7 million consensus, while fiscal 2027 revenue projections of $246.7 million to $250.7 million represent a 36% decline at the midpoint. Free cash flow of negative $56.2 million also missed expectations.

With shares trading around $8 after the earnings miss, Citizens noted the stock's 2.3x 2027 enterprise value to revenue multiple reflects weaker growth and deteriorating financials, though it acknowledged $622 million in cash on the balance sheet. The downgrade signals deepening concerns about C3.ai's ability to execute its turnaround strategy amid intensifying competition and structural revenue challenges.