Good day, and thank you for standing by. Welcome to the C3.ai First Quarter Fiscal Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your first speaker today, Mr. Paul Phillips, Vice President of Investor Relations. Please go ahead, sir.

Good afternoon, and welcome to C3.ai's earnings call for the first quarter of fiscal year 2022, which ended July 31st, 2021. This is Paul Phillips, Vice President of Investor Relations of C3.ai and with me on the call today are Tom Siebel, Chairman and CEO; and Dave Barter, CFO. After the market closed today, we issued a press release with details regarding our first quarter results as well as a supplement to our results, both of which can be accessed on the IR section of our website at ir.c3.ai. This call is being webcast and a replay will be available on our IR website following the conclusion of the call. During today's call, we will make statements relating to our business that may be considered forward-looking under federal securities laws. These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For a further discussion of the material risks and other important factors that could affect our actual results, please refer to our filings with the SEC. Also during the course of today's call, we will refer to certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our press release. Finally, at times in our prepared comments, in response to your questions, we may discuss metrics that are incremental to our usual presentation to provide greater insight into the dynamics of our business or our quarterly results. Please be advised that we may or may not continue to provide this additional detail in the future. With that, let me turn the call over to Tom for his prepared remarks. Tom?

Okay. Thank you, Paul, and good afternoon, everyone. I am most pleased to provide you an update on our first quarter results and provide some comments on the state of the business as we see it. We posted another set of strong results in the first quarter. We continue to make great progress in solidifying our position as the pure play enterprise AI application software company. Our progress continues as planned on track. Our products are powering some of the world's largest enterprise AI application deployments as we expand our production footprint across industries and regions globally. Our first quarter performance was a strong start to the new fiscal year. Let's look at some of the financial and business highlights. Total revenue for the quarter was $52.4 million, up from $40.5 million a year ago, an increase of 29% year-over-year. Subscription revenue was $46.1 million, up from $35.7 million one year ago, an increase of 29% year-over-year. Non-GAAP gross profit was $40.9 million, a 78% gross margin compared to $30.2 million gross profit, a 75% gross margin a year earlier. This was an increase in gross margin of 35% year-over-year. Our remaining performance obligations or RPO was $290.6 million compared to $275.1 million a year ago, an increase of 6% year-over-year. Non-GAAP RPO was $357.3 million compared to $279.5 million a year ago, an increase of 28% year-over-year. We ended the quarter with 89 enterprise AI customers, an increase of 85% year-over-year. As we have previously discussed, historically, our business has been characterized by quarter-to-quarter lumpiness due to the substantial size of our average order value. Now as application sales become an increasingly large part of our revenue mix, roughly 50% of our subscriptions last quarter in Q1 accrued from application software. We are increasingly offering lower priced, high-value products like C3 AI CRM and Ex Machina. And as we've discussed, we've been diversifying our distribution model to complement enterprise selling with telesales, distributors, market partners and direct marketplace selling. While we have not yet fully eliminated the lumpiness from our business model, we have made great progress with average subscription total contract value shrinking from $16.2 million in fiscal year 2019 to $12.1 million in fiscal year 2020 to $7.2 million in fiscal year 2021 to $4.5 million in the quarter ended July 31. It's my expectation that this average contract value will continue to increase going forward as we continue to add diversity to both our product mix and our distribution model. Our average revenue per customer in the first quarter was $535,000. Let's talk about our market partner ecosystem. We significantly expanded this partner ecosystem in Q1 entering an important highly strategic alliance with Google Cloud to allow the entire Google Cloud global sales and service organization to co-sell and service the entire family of C3 AI applications globally. The two companies will tightly integrate C3 AI and Google Cloud technologies and go-to-market initiatives with the effect of accelerating enterprise AI adoption. The comprehensive alliance includes coordinated software development roadmaps, tight product integration as well as joint selling, joint marketing and joint customer success programs at global scale. C3 AI and Google Cloud will regularly synchronize our software engineering roadmaps and activities to ensure that the Google Cloud, Google Cloud applications and the C3 AI Suite and AI enterprise applications are fully optimized and tightly integrated. The companies will engage in significant ongoing marketing development activities and will coordinate sales and service activities globally to assist small, medium and large enterprise customers to accelerate the adoption and time to value of their enterprise cloud AI applications. We expect this partnership will dramatically accelerate the adoption of enterprise AI applications across all industry segments and will improve an additional growth engine for C3 AI. Microsoft, our partnership, our strategic partnership with Microsoft continues to expand. To-date, we have closed more than $200 million in business with Microsoft. Our joint teams are currently working a pipeline of more than $350 million in specific opportunities. Recent wins with Microsoft include the United States Missile Defense Agency, Cargill, Ball, Cummins, the United States Air Force Rapid Sustainment Office and we continue to make great strides in the market in Europe, in North America, in federal and it is a very, very important relationship. C3 AI CRM, we are seeing increased interest in the C3 AI CRM bandwidth applications that address the currently installed investments of CRM systems. And these investments are estimated to be well in excess of $500 billion. When you think about it, C3 CRM sales and software sales this year will be $120 billion, this year alone. So we put some number of years of investment. So Salesforce, Siebel, SAP, Dynamics, Accenture, PwC, Deloitte, et cetera, this is -- there's no way, you don't get to a number greater than $0.5 billion, so $0.5 trillion installed base. Now with C3 AI CRM, companies can easily upgrade their existing Salesforce deployments, their Dynamics deployments, Siebel deployments, ServiceNow, Viva, SAP CRM and retain those investments, but at the same time make them fully predictive, including now precise AI revenue forecasting, AI product forecasting, next best product, next best offer, customer retention and customer satisfaction management. As you can imagine, we are seeing really substantial interest from the largest integration partners that see this as an opportunity to upgrade and add additional services into their existing CRM installed base. And so you can expect from this to see additional market partner announcements in this area in the coming quarters. Customer momentum, we expanded our enterprise AI footprint in the first quarter in defense, in chemicals, in financial services, manufacturing, oil and gas, energy sustainability and utilities. We have new quite significant enterprise production deployments went live at LyondellBasell, Shell, ENGIE and Con Edison. We initiated new enterprise AI projects with Baker Hughes, Ball Corporation, Cargill, Cummins, ENGIE, FIS, Koch Industries, the Missile Defense Agency, Morsco, and Standard Chartered Bank and we significantly expanded business with Cargill, LyondellBasell and Standard Chartered Bank. In the course of the quarter, we continued to advance our product leadership position in enterprise AI. In the first quarter, we released two major upgrades to the C3 AI Suite and we have now released 40 enterprise AI software applications into production release for banking, for manufacturing, for telecommunications, public sector, energy, utilities, defense and intelligence. We also released a new version of C3 AI energy management, a solution that helps enterprise control and mitigate greenhouse gas emissions and manage energy consumption and energy costs and we launched C3 AI Ex Machina our no-code AI and analytics platform that anyone can use and continue to deliver new features to enhance and simplify the user experience. We gave you know quite a bit of additional industry recognition in the course of the quarter. C3 AI was named the leader in the IDC MarketScape Worldwide for Industrial IoT Applications. The C3 IDC MarketScape positioned C3 AI as the leader for -- as an AI platform provider. Importantly, our customer at the Air Force Rapid Sustainment Office was selected as a finalist for the constellation supernova AI and data award. This is the highest honor in enterprise AI application excellence and this is an award that was won last year by C3 AI customer Shell for its C3 AI enterprise AI accomplishments in production use. We continue to grow our enterprise AI production application footprint through both new customer acquisitions and expanded use by existing customers. We had 101 discrete applications in production at the end of the first quarter, up from 67 a year earlier, operating at massive scale as of the end of the first quarter. The C3 AI Suite and Applications were integrated with roughly 850 unique enterprise and extraprise data sources. We are processing 1.7 billion predictions per day. We are managing 24 in excess of 24 trillion data elements and evaluating in excess of 33 billion machine learning features daily. We've been doing a lot of work, as you have seen in the media and online and brand awareness and we considerably extended our brand leadership for enterprise AI capturing both the number one and number two internet search positions for that category in the first quarter and we achieved in the next closest competitor by a factor of three to one. C3 AI Digital Transformation Institute, I want make a few comments about that important initiative. We continue to invest in our important University Partnerships at UC Berkeley, the University of Illinois Urbana-Champaign, Princeton, MIT, Carnegie-Mellon, Stanford, the University of Chicago and KTH in Sweden with the C3 AI Digital Transformation Institute. In the first quarter we announced and funded $4.4 million of getting initial cash awards to support 21 groundbreaking research projects focusing and using the C3 platform and the developing new AI techniques to advance energy efficiency and lead the way to a lower carbon higher efficiency economy. We have been doing a lot of work really and focusing in leadership and sales leadership in the company. Importantly, with the addition of former VMware and SAP Executive Sam Alkharrat, as President and Chief Revenue Officer to lead the global expansion of C3 AI sales and customer service organizations. Sam is an experienced and proven sales executive with a long track record of building and managing highly effective sales and customer service teams. Sam previously served as a Senior Vice President and Global Head of Sales for VMware, Tanzu portfolio of applications that was roughly a billion dollar software business. And prior to VMware, Sam held a number of Senior Executive positions at SAP. With human capital, we continue to be just extraordinarily fortunate in the quality of human capital that we're able to track from leading universities added from other organizations globally. In the first quarter, believe it or not, we received just shy of 6,200, I'm sorry, 9,200 employment applications, okay. And from that I think we had interviewed 1,500 people and added 54 net new employees and people are as bright and experienced as they get. We ended the quarter with 628 full-time employees. And as you can see on the internet, C3 AI continues to be ranked amongst the best places in the world to work by Glassdoor. So, in summary, the enterprise AI application software market is rapidly growing. We see accelerating interest in our applications across industries, geographies and market segments. We are aggressively investing to extend our product and technology leadership to expand our market partner ecosystem and the associated distribution capacity that comes along with our ecosystem. As we continue to execute in delivering high-value outcomes for our customers, we are increasingly well positioned to establish a global leadership position in enterprise AI application software. Bottom line, our performance in the first quarter was strong across the board and we're planning for continued growth in this year and accelerating growth next year. Overall, I would say, the progress of the company is exactly on track with the plan that we laid out for you during before the IPO and during the IPO and as updated in the past two quarters. I believe the company has never been better positioned to achieve its objective of establishing a clear market leadership position in enterprise AI application software globally. I'll now turn this over to our CFO, David Barter for more color on the quarter. David?

Thank you, Tom. We delivered another strong performance in the first quarter with revenue and profitability that exceeded our guidance. We ended the quarter with a healthy contractual backlog. It provides us with meaningful revenue coverage and it supports our growth ambitions. Revenue was $52.4 million, an increase of 29% year-over-year. Subscription revenue was $46.1 million, an increase of 29% year-over-year. This level of growth represents a substantial increase from the fourth quarter and subscription revenue grew 17% year-over-year. Professional services revenue in Q1 was $6.3 million. Subscription revenue represented 88% of total revenue in the quarter. This is an increase of six percentage points from Q4. We continue to expect our mix of subscription revenue to trend in the high 80% range. Our revenue growth was highlighted by continued diversification and broad-based strength in our industry verticals. Five industry verticals each contributed over 10% of our revenue this quarter. This includes the financial services industry vertical, which grew 45% year-over-year. Geographically, our revenue diversification also improved. During the first quarter, revenue from customers in EMEA and APAC grew 37% year-over-year and represented over 30% of our revenue. From a backlog perspective, total remaining performance obligations were $290.6 million, up 6% year-over-year and current RPO, which we expect to recognize over the next 12 months was $145 million, an increase of 10% from a year ago. We ended the quarter with an additional $66.7 million in backlog from contracts with the cancellation right. When combined with our GAAP RPO, we ended the quarter with non-GAAP RPO of $357.3 million, an increase of 28% from a year ago. As I note in the last quarter our non-GAAP RPO does not include any backlog associated with Baker Hughes, that does not have an existing and customer contract. The Baker Hughes commitment at the end of the first quarter represented an additional $204.4 million of backlog. In the first quarter, total revenue from our partnership with Baker Hughes was $16.1 million, up 69% year-over-year. As a reminder, a portion of this revenue is reported as related party revenue where they end customer contracted directly with Baker Hughes or where the revenue relates to Baker Hughes as a customer. The total amount included in related party revenue was $12.3 million in the first quarter. Turning to expenses and profitability. I will be referring to non-GAAP metrics, which excludes stock-based compensation expense, and the employer portion of payroll tax expense related to stock transactions. A GAAP to non-GAAP reconciliation is provided with our earnings press release. Gross margin in the first quarter was 78%, up 340 basis points from a year ago. The margin expansion reflects the strong growth of our subscriptions. Subscription gross margin in Q1 was 81.8%. This compares favorably to Q4 when margin was 80.7% and a year ago when it was 76.5%. The persistent margin expansion illustrates the leverage generated by our operating model. Operating expenses were $62.6 million compared to $31.1 million a year ago, reflecting planned strategic investments to drive our long-term growth. Operating loss was $21.8 million in the first quarter and better than our guidance of an operating loss of $28 million to $35 million. We continue to invest thoughtfully in headcount and programs to accelerate our revenue growth. Turning to our balance sheet and cash flows. We ended the quarter with $1.09 billion in cash, cash equivalents and investments. We generated positive operating cash flow of $1 million in the first quarter and with capital expenditures of $1 million, free cash flow was breakeven for the quarter. Deferred revenue grew to $99.9 million of a very healthy 33% from the fourth quarter. It's important to note that two deals closed in the first quarter, included a structure and billing terms that led to less deferred revenue than our typical year. All-in-all, Q1 nicely built on a very strong fourth quarter and supports our confidence for the remainder of the year. Turning to our guidance for the second quarter and full fiscal year. In Q2, we expect total revenue in the range of $56 million to $58 million, representing growth of 35% to 40% and an acceleration in top line growth from the first quarter and prior fiscal year. We anticipate subscription revenue mix will continue to trend in the high 80% range. We expect to make growth investments and anticipate a non-GAAP operating loss in the range of $30 million to $37 million. For full fiscal year 2022, we continue to expect revenue in the range of $243 million to $247 million, representing growth of 33% to 35% with the focus on making thoughtful growth oriented investments over the balance of the year. To accelerate our growth, we anticipate a non-GAAP operating loss in the range of $107 million to $119 million. In summary, we delivered first quarter results that were above our guidance coupled with healthy sales activity. We believe we are well positioned to meet the increasing demand for our technology from customers who realize significant economic benefits and deploying our solutions and remain optimistic about our ability to penetrate a very substantial opportunity over the long term. Thank you for joining today's call. Now I'll turn the call over to the operator for questions. Operator?

[Operator Instructions] Your first question comes from the line of Michael Turits from KeyBanc. Your line is open.

Hey, guys. I wanted to ask you, Tom, about the diversification down market and to more of run rate business, but you discussed, sounds like you've made good progress on reducing the TCO and TCV, excuse me. Can you talk a little bit about what you're doing to get yourself there? Are you adding more people? You talked a little bit about partnerships and how much progress you're actually making with Ex Machina to get you there also?

Thank you, Michael. I think a lot of it is really, we're seeing -- we saw a dramatic increase. We're seeing increase in our application software versus platform as a component of our revenue mix and the applications sell for substantially less money easy than the platform does. So that's a big contributor. Ex Machina is making a positive contribution to it, but I really would expect to see that kick in the fourth quarter of this year and next year and getting into big numbers. But I think it's mostly a move towards applications. What is moving the needle on bringing the TCV down and it’s come down substantially. Again a couple of years ago was $16 million average TCV and last quarter, it was $4.5 million. So we're making good progress.

Great. Thanks, Tom. And then, Dave, a couple of comments on the always fascinating RPO calculation. So RPO, the GAAP RPO just declined slightly sequentially. And if I add all the pieces together, the adjusted total did also. But the one that looked like it was up sequentially, was that cancelable piece, which I think it's mostly government. So can you talk about what the puts and takes on those different components of RPO?

Absolutely, Michael, and thank you for your question. You're right. When we think about structuring our deals, we do include that cancelable portion because it is a right and it’s a piece of flexibility that with the literature gets carved out of GAAP. And so we find the GAAP RPO as an incomplete measure, which is why we provide you with a non-GAAP RPO, which increased 28%. In terms of the adjusted RPO, which includes the Baker Hughes component, you might remember that that's a five-year commitment. So when it first signed, you got the step-up and then it amortizes over time, which is why that is not increasing when you think about the adjusted RPO. So the non-GAAP RPO really is the measure you should look at because it's reflective of our commercial activity.

Right. And then the cancelable piece that, I'm sorry to interrupt, I did. This the cancelable piece, they went up really nicely sequentially from 51, it looks like up to 66, if I do the math. But is that expressive of some strong government contracts?

No. Those are - Michael. Hi, it's Tom. No, those are almost all- those are exclusively non-government. So the government contracts are always, by definition, kind of 12 months in duration, okay? Even if it's funded for multi-years, the part here irrevocable, nonrefundable is only 12 months at a time. So the cancelable deals are tend to be where we do three or four or five-year transactions with a large private sector corporation where if it's not going well after the first year, they have the right to cancel. And then so you can be certain that we have every incentive make sure that customers always satisfied at the end of the first year. And so there's almost no public sector I think.

Okay. Thanks, Tom. Thanks, David.

And Michael, you raised a great point. When we're signing multi-year federal contracts, that's over and above this number. So that's not recorded here at all. And so we actually do have quite a few of those where multi-year federal agreements and because the way that the GSA, those contracts were - we don’t report that at all. So that would be on top of anything that we reported.

Got it. Thanks, Tom. Thanks, Dave.

Thanks, Michael.

Your next question comes from the line of Mark Murphy from JPMorgan. Your line is open.

Yes. Thank you very much, and I'll add my congrats. So Tom, I wanted to ask you about the Google Cloud relationship and just whether you're expecting that to appeal to a different type of customer because I think we're aware that the Google Cloud platform has a different architecture. It is more private cable larger pipes, they can absorb more traffic. There is more local points of presence. I'm just wondering if it gets a different need maybe certain verticals or machine learning models that are maybe a little more demanding in some ways?

Well this - Thomas Kurian has really changed the nature of Google Cloud in a big way as you're well aware. I think they've gone from maybe 400 salespeople of couple of years ago who are kind of middleware salespeople to quarter of 4,000 salespeople today and these are kind of experienced enterprise salesmen and women. Their focus is very much on the enterprise. I don't think it's that different. It's just Thomas has made a decision, a very concerted decision to approach the market in a different way. So rather than the other hyperscalers and rather than sell CPU seconds and storage hours, which - and they have an argument that I won't go into and I'm not really qualified. They argued successfully what they do is technically superior to other people, maybe it's too, I don't know, okay? But rather than compete based upon speeds and feeds, they have made a decision. They're going to compete based upon applications. So they're going to be selling stochastic optimization of the supply chain. They're going to be selling supply network risk. They'll be selling anti-money laundering, fraud detection, what have you and that's just how this is how they're positioning their company as a deliver of turnkey solutions and we're very fortunate that they decided to partner with us in that effort. Well, this gives them kind of a unique position in the hyperscale market, okay? We're in the hyperscale market where they're selling turnkey applications and everybody else is selling CPU seconds. Now the net result of these applications is when they're up and running, they do nothing but consume CPU seconds and storage hours. But it's a -- it's - I think we're seeing a changing dynamic in the hyperscale market that you might want to take a look at. I think that's what's going on.

Okay, understood. And then as a quick follow-up. There is a comment regarding the Microsoft relationship that you've closed deals worth over $200 million to date, obviously, a great accomplishment. And I was just wondering maybe David or Tom, you can clarify. Is that a specific reference to the CRM use case that's you mentioned with Dynamics and other systems? Or is that all of the C3 deployments of any product that are running on Azure? And if you could just clarify is that $200 million sitting in the RPO balance?

Some of it is - most of it is. First of all, it is not specifically CRM, Mark, okay? It really - all of our application support Azure, okay? Microsoft has been enormously supportive and where I can support to make sure we take full advantage of all the Azure resources. They are a great partner, a very small component of it is CRM and these are commercial applications, these are federal applications, supply chain, predictive maintenance, this is kind of bread and butter stuff, and most of it is sitting in RPO.

Got it. Thank you.

Your next question comes from the line of Sanjit Singh from Morgan Stanley. Your line is open.

Thank you for taking the questions. Tom with this sort of shift towards an applications focused strategy versus kind of the C3.ai suite as the business shifts more towards application. What does imply in terms of future revenue growth, because if I look at the growth in your, in the number of applications is up really solidly I think 50% plus versus your RPO growth of in the high '20s. Does that mean that over time we should see RPO growth on sort of converge to the growth in sort of on the application sales that you're sort of seeing?

Okay. We're kind of keep there's kind of some analysts asked here that I can't quite keep up with. Okay, but let me so Sanjit first of all this, our emphasis on applications is not new. There is no change here at all, okay. So we've been selling. I mean you will recall during the IPO roadshow. I was leading with applications. Applications for utilities, oil and gas companies, manufacturing companies, financial services companies what have you. And so there's no change in emphasis. We sell both applications and we sell the platform and we kind of sell whatever the market wants this quarter and I wish I could give you guys some guidance, okay. Got to going forward, but we took a hard look at the data yesterday in anticipation of kind of this question of what we're going to expect to be applications versus platform in coming quarters and it's just jumps around sellings from quarter-to-quarter, that we can tell you that. But there is no change in emphasis and applications on our part, okay. We're always led with applications. There is certainly a change in the part of Google's part and it just happens to bode very well for us.

Makes total sense, Tom. Maybe a follow-up question on the Google partnership. How should we think about that as the opportunities. Is this about going for net new customers or is there a certain percentage of the 80 or 98 enterprise customers that you have today that are Google Cloud customers. Any sort of sense of what the overlap is between C3 and Google within your current customer base?

Yeah, I would say, a relatively small, a very small segment of our existing customers are Google customers. Google, as you know, is number three in the market to AWS and Azure, but they are by far the most rapidly growing. And so and they're closing some very large accounts like Walmart and Deutsche Telekom and others and you can say from my perspective this is really a focus on -- this is a focus on net new customers for us. From them it's a focus on both net new customers and provide the customers the applications they want to consume the commitments they've made to Google.

Your next question comes from the line of Brad Sills from Bank of America. Your line is open.

This is Adam on for Brad. Congrats on the quarter too. So just on the eco partnership also can you guys share any expectations you have in terms of the constel. You mentioned that the focus is on net new just now, but within the I guess applications that you guys provide, do you expected to benefit more towards the applications or towards the suite or how should we be thinking about the benefits of the partnership?

We'll be leading, first of all, we've been working on this for the guy who runs sales at Google and the Rob Enslin and the person who runs sales here Sam Alkharrat are colleagues from SAP. So these guys know each other really well and we've been working on aligning of the sales organization across industries, across geographies and focusing on target strategic accounts. So this is pretty well orchestrated and we will most certainly be leading with applications, but where we're getting a large automotive companies or large financial service institutions you will want to license the platform. Absolutely and that will be available in Google's bag to sell it or will sure we sell it with them, but this is -- this might be an inflection point in the hyperscale market.

And then just as a follow-up. Is there any commentary you can provide on some of the [indiscernible] you guys kind of called out financial services in the prepared remarks or the entire to call out?

I think we're having data on our distribution. Hold on Adam. I think I actually have this data right here. Just give me a second. It's pretty highly diverse. So well I can't share by percentages. Yeah, it's pretty highly diversified across telecommunications, high-tech life science, aerospace and defense, manufacturing, financial services, utilities, oil and gas. I don't see what the percentages are here, but it was something used to be 100% utilities, not too long ago, it's got a long way. What do I have here. Okay, so we are looking roughly 40% manufacturing, 7% aerospace, 3% utilities, 3% what it is -- 27% oil and gas, 22% high-tech and then we're just started making inroads now into life sciences, 7% aerospace. So that's what it looks like today.

Your next question comes from the line of DJ Hynes from Canaccord. Your line is open.

Tom, I want to ask about CRM. I mean the commentary this quarter seem to suggest an uptick in activity there, maybe even more interestingly on the SI partner side, can you just talk about what you're seeing with the CRM and I'm curious like is there any installed CRM platform that you're seeing particular traction with, any color there would be helpful?

Well the CRM installed base is quite large, okay and everybody wants to go predictive, okay. There's kind of two ways to do that, you guys doing the math, but it's not, it's no way can be less than $0.5 trillion market. And everybody wants to go into predictive and it had two ways to do it, you can rip and replace or you can add on top of it. So the way that our share on a product works it sits on top of dynamics, on top of sales for us, on top of Siebel, on top of SAP, on top of Viva, and it installs very quickly, it aggregate those data and then it allows you to aggregate any other data you want about the market, okay. And those data that you're going to aggregate are like three or four orders of magnitude more data you have a record in the CRM system econometric data, stock prices, NLP on news, NLP on social media, NLP on analyst reports, NLP on annual reports and financial statements. GDP growth rates, unemployment rates, commodity prices is just running through that industry may be some corn and beans as it relates to ag and there we have weather with rain or it's in oil and gas, it's going to be in transportation, travel and transportation maybe it's Jet A. But when we aggregate all of these data we can build very precise machine learning models that for revenue prediction, revenue forecasting, product forecasting customer churn and what have you. So we are seeing a lot of interest amongst the same partner ecosystem that we put in place that you might recall Siebel Systems, we know these guys pretty well. And they see this as an opportunity to upgrade all of their existing applications. So keep your eye on this space DJ. This is going to be a big business for us. And we're not going to be really I think what we're doing is entirely complementary to Salesforce, Dynamics, Siebel, SAP, and I guess the customers where they want to go quickly and it gives the systems and integrators an opportunity to generate business now in a way that provides and almost an value with their customers. You're going to see also that we have re-invaded and I'm not going to pre-announce it now, okay. But we have fundamentally reinvented, okay, the human computer interaction model as it relates to CRM. And when you see it, I think you'll be quite impressed. And I've been, we've been working on this and I personally have been working on this really hard. And it's, this is going to be a bigger business than I thought.

Yeah, look forward to that, sounds interesting. David as a follow-up to you. Do you have a growth rate for current non-GAAP RPO?

I don't have a breakout of the current non-GAAP RPO.

Okay. It seems like that cancelable backlog portion, which is by nature multi-year is increasingly contributing to non-GAAP RPO. So it would be helpful to get a view of that at some point. So thank you guys. I'll jump back in the queue.

Thank you.

The next question comes from the line of Patrick Colville from Deutsche Bank. Your line is open.

This is Dan on for Patrick. Congrats on the quarter. You guys said earlier in response to a question that the average contract size is declining because you're selling more applications across the platform, and that makes lot of sense. I guess my question would be on that is I guess kind of two-part. One is, is that leading to more traction with smaller customers like actually smaller businesses or is it still primarily very large businesses that are buying enterprise apps or has there been any in that move toward the selling more applications that lead to any more deals kind of down-market at all. And then two I mean I guess can you kind of comment on, you said in response to another question, you mentioned that it's not going to change in strategy. So I wonder if you could comment kind of why you think you're seeing that shift? Thank you.

Where we're seeing what shift?

Smaller customer. A shift toward I guess more application and less of the platform?

Well, that's what we lead with applications. I mean that's always the way, there is always the way the sales cycle begins. We're solving a business problem whether it's anti-money laundering, cash management, cash optimization, the supply chain, customer churn. All was solving a business problem lead with the application. And an application might sell list price for an application might be like $0.5 million a year. Now the - and then what happens is we get involved in a pilot and the other side they want one or two or three applications that they might license. I think our average contract. I think we've disclosed this is by a quarter of 36 months or something, okay, plus or minus something, okay. So then sometimes in the course of finding one or two or three applications they say they want to build 12 and then they license the platform also and they want to license the platform for 25 or 50 developers. So this is multiple years. So with that started out as a transaction that was going to be like a $1.5 million turns into $39. So this is how it happens. So we did let them happen at what, however, the customer wants to buy it. Now there is a customer list here someplace. And yes we are, yes, we are absolutely selling the smaller customers. There's no question about it. We used to only sell to companies like it wasn't rather that Shell, it wasn't Bank of America. We didn't call on them, okay. But here we have relatively small businesses by our standards would be places like Morsco, Ball, Spearstone, Skillion, CerebralEdge, ABC Dust. And so we're absolutely seeing that we're not, we used to be in the business of just elephant hunting, but now we're out elephant hunting and we're deer hunting and we're squirrel hunting and in a pretty big way at global scale.

Your next question comes from the line of Jack Andrews from Needham. Your line is open.

Good afternoon and thanks for taking my question. Just in light of the Google announcement and just other relationships you have with companies like Microsoft and Snowflake. Could you just update us in terms of what type of technology vendors do you feel are natural allies for you versus maybe other types that you view as potentially more competitive?

Well natural allies would certainly be all the hyperscalers. Natural allies would be a lot of people who make componentry like Snowflake makes a platform-independent, storage system, and that's certainly complimentary us. I think companies like who make, we have products that compete with us like AI like auto ML. I mean we partner with H2O, we partner with Data Robot. I think as we partner with Data Robot and Shell and people to get to our auto ML or they can use their robots auto ML. Databricks many of our customers use Databricks. So we partner with them. So I think the component providers are individually potential partners. I don't do they look like distribution channels, no, Okay. I don't think they do. The, you know, the real competitor what we do are all those components in aggregate and Jack where the IT organization decides that they want to build this project themselves in one of these kind of multi-year multi-hundred million dollar science projects. All of which seem to come crashing down after a few years. And so, yeah, I guess the real competitors for CIO who wants to build him or herself and we just have to let that process run its course because it's virtually impossible, they're going to succeed at it and after they get through after the crash and burn like they have done virtually every one of our customers, then we come in and bail them out, it's just -- it's just a natural part of the process and we've got the new technology.

Thanks. I appreciate the context, and just as a quick follow-up, when we think about the cash on your balance sheet. I'm just curious, are you contemplating any sort of in technology-related M&A that could potentially accelerate when you're doing on the product development front or do you feel that it's still important to keep developing things internally?

It's a great question and make no mistake, we are focused on growing the business organically, okay. So if we don't see M&A as a big part of the equation might we buy something if we see that the easy piece of technology there that complements our technology stack that would make sense for us to own it because we see something really unique there. Yes, we might, okay. But M&A there is nobody here in charge of that, the default answer when the bankers send us the actual M&A as you can say no before we even read them and we're focused on growing the business organically because I think for us involved in M&A would really be a distraction. I think we stick to our knitting, okay. We continue to move the product footprint, continue to grow the customer base, continue to make our customers successful. I think everything is going to work out just fine.

Your next question comes from the line of Pat Walravens from JMP. Your line is open.

Great, thank you. I have one for Tom and one for David, if that's okay. Tom for you, first, what's the opportunity look like for C3 in Federal and Department of Defense and as I ask that question I realize but obviously you have to be careful what you say, but all you have to do go on the Department of Defense website and two weeks ago Vice Admiral was talking about the missile defense testing which you had some on your press release that looks similar. And in June the Deputy Defense Secretary Kathleen Hicks had a big thing, where she is talking about the AI and data acceleration initiatives. So it seems like a lot of that is out there publicly already. So whatever you can say about what the opportunity looks like for C3 would be great?

It's staggering, Pat, okay. That's how big it is, it's endless. And you know just from you to me there is a really interesting book out there called The Kill Chain written by name Christian Brose. If you don't like it I will give you 19 bucks back from Amazon about kind of how the whole nature of warfare is changing between us and China and where AI fits into this, but you get to the level of the staff and all of the leaders of all these measures, all are thinking about is AI and how they're going to AI enable everything. So that is almost that is a business opportunity without balance. I wonder this is one of the reasons we brought General Ed Cardon in. Ed Cardon as the Chairman of Federal Systems. He formerly around the U.S. Cyber Command. And so he and so Paul Nakasone, who runs the NSA and the Cyber Command was his Deputy and so Paul knows all of these guys and that we do spend a lot of time in the Pentagon. And I think that to the extent that we have the opportunity to serve the United States government. We're privileged to do so. I think we're involved in about 12 projects today and know that we invest a lot of time there. We recently in addition to Ed Cardon, we brought on Todd Weber as the General Manager of C3 Federal. So we are expanding that business and we think that market is so big and scary. And actually the war is going on between United States and China in AI. If we lose that war, the story is not going to end well, and we think there's an opportunity for us to play a role in that. You had a question for David?

Yeah, thank you for that. And so, David, I think you know, like if you look at the stock in the aftermarket, now it's down 8%, and I think one thing that is confusing is last quarter you grew 26%, this quarter you grew 29%. So generally people like acceleration and then you just guided if I'm doing my math right, the 38% growth the midpoint for next quarter and usually people guide the deceleration then try to beat it, you guys are guiding to acceleration. So normally that would be well received, but the RPO and the billings are bouncing around so much that it's really confusing. So any clarity you can help provide for why revenue is accelerating and yet the bookings metrics this last quarter decelerated and why we should have confidence in that revenue acceleration I think would be really helpful?

There is still lumpiness in the bookings, Pat. This is Tom. We're still doing big deals. While we've got it, but not as big as they used to be, there is still lumpiness and the bottom line is we had some deals in Q1 and into Q2. And so there's still do I believe that we have mechanisms in place to get them lumpiness out of the bookings, I do, but there's still there. David, anything you want to add to that?

I think you've covered it well, Tom.

Okay, thank you.

And there are no further questions over the phone line at this time. I would now like to turn the call back to Mr. Tom Siebel for the closing remarks. Sir?

Okay. Ladies and gentlemen thank you for your time. We appreciate all of your questions and your time and we will look forward to give you an update on the business when we see you next or at the end of the quarter, whichever happens first. So have a great day everybody and thank you.

Ladies and gentlemen this concludes today's conference call and we thank you all for participating. You may now disconnect.