Seeking AlphaSeeking Alpha stock rises despite concerns around transition to consumption-based pricing model (NYSE:AI) shares gained 12% on Thursday after the AI software firm reported fiscal second quarter results that surpassed analysts expectations.

The company generated adjusted EPS of -$0.11 on revenue of $62.41M that grew 7.1% Y/Y. Subscription revenue increased by a solid 26%, accounting for 95% of total revenues.

Gross margin fell 122 basis points to 76.6% primarily due to a higher mix of trials and pilots, which carry a higher cost required to ensure customer success during this early phase of engagement. The company expects to be operating profitably on a adjusted basis and be cash positive by the end of fiscal 2024.

Adjusted remaining performance obligations of $453.5M was down from $529.3M one year ago. RPO of $417.3M met the firm's expectations as it continues to convert to consumption-based deals.

Analysts raised concerns over the company’s transition to consumption-based pricing model, with Deutsche Bank stating that "while the results included some encouraging signs, we remain concerned by a transition story with few tangible guideposts to measure progress along the way."

Vital Knowledge added, "The transition to a consumption- based pricing model caused RPO to fall short of expectation."

For Q3, (AI) guided revenue in the range of $63M-65M vs. consensus of $64.82M and non-GAAP loss from operations ($25)M - ($29.0)M.