C3.ai (AI), an enterprise artificial intelligence (AI) firm, is increasingly reliant on a key customer for much of its revenue. In its latest 10-Q, C3.ai revealed a significant increase in customer concentration. Specifically, revenue from C3.ai’s top customer more than doubled in the latest quarter and now accounts for more than one third of sales:

“Two separate Customer-Entities accounted for 36% and 10%, respectively, of revenue for the three months ended January 31, 2022. Two separate Customer-Entities accounted for 16% and 12%, respectively, of revenue for the three months ended January 31, 2021.”

The company’s top customer— oil field services firm Baker Hughes— is more than a customer though. The firm is actually a reference customer for C3.ai and acts as a marketing partner, reselling C3.ai’s platform to other companies. In return, C3.ai pays Baker Hughes— its top customer— sales commissions.

This fiscal year, C3.ai will pay Baker Hughes $16 million in sales commissions, or 6.37% of 2022 consensus revenue estimates.

The deal with Baker Hughes runs through 2025. While Baker Hughes annual purchase commitments scale from $85 million in 2023 to $125 million in 2025, C3.ai has sweetened the deal separate from sales commissions. C3.ai has agreed to reduce Baker’s purchase commitments by any revenue Baker generates from “certain customers” C3.ai does not name.

In essence, C3.ai is offering its platform to Baker Hughes for free if the firm can land C3.ai large new target customers. In its latest quarterly filing, C3.ai also inserted the following new language:

“We purchase services from Baker Hughes from time to time to support our end customers in relation to our contracts with those customers. These costs are recorded as cost of subscription revenue in the condensed consolidated statement of operations.”

The company also has sales alliances with Microsoft (MSFT), Amazon (AMZN), FIS Financial Services (FIS), and Intel (INTC).

Separately, C3.ai revised its definition of a customer this quarter. If multiple departments within a customer’s organization use C3.ai’s suite of products, C3.ai now counts each department as a customer. Likewise, if a customer uses the C3 platform to create software that is then sold to another entity, that entity is also counted as a customer.

Not surprisingly, the revised calculation has significantly increased C3.ai’s customer count.

Under the revised methodology, C3.ai reports 218 customers as of January 31, 2022, up 81.6% from 120 the prior year. Under the old calculation method, C3.ai’s customer count would have totaled 110 as of January 31, 2022, up 46.6% from 75 the prior year. Later, C3.ai had this to say about its new calculation:

“Our performance metrics, including data regarding customer counts, and other operational data may not reflect our actual performance, and investors should consider these metrics in light of the assumptions used in calculating such metrics and limitations as a result thereof.”

The company also said it may again change how it counts customers in the future.