Research from Water Tower Research, Water Tower Research

Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Research from Water Tower Research

Equity Research Firm

Equity Bottom-Up

<ul><li>In-line 2QFY26 revenue and EBIT beat on cost controls, but gross margin pressure from IPDs. </li><li>2QFY26 revenue of $75.1 million was essentially on target and cost controls drove a better-than-expected bottom line with EBIT of ($42 million) [Street = ($52 million)]. </li><li>However, non-GAAP gross margin was 54.5%, up 280 bps but more than 300 bps below Street expectations.</li></ul>

In-line 2QFY26 revenue and EBIT beat on cost controls, but gross margin pressure from IPDs. 2QFY26 revenue of $75.1 million was essentially on target and cost controls drove a better-than-expected bottom line with EBIT of ($42 million) [Street = ($52 million)]. However, non-GAAP gross margin was 54.5%, up 280 bps but more than 300 bps below Street expectations.

C3.ai, Inc.  - IPDs and the Gross Margin Squeeze

C3.ai Inc

C3.ai, Inc. - IPDs and the Gross Margin Squeeze