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BigBear.ai Holdings, Inc. (BBAI)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $34.8M (+5% YoY) but down sequentially from $43.8M in Q4 2024, reflecting contract timing and government funding delays; management reaffirmed FY 2025 guidance of $160–$180M revenue and negative single-digit Adjusted EBITDA.
  • GAAP net loss improved materially to $(62.0)M versus $(127.8)M in Q1 2024 due to the absence of prior-year goodwill impairment, but Adjusted EBITDA deteriorated to $(7.0)M on higher R&D and recurring SG&A from excess capacity.
  • Against S&P Global consensus, BBAI missed on revenue ($34.8M vs $36.3M) and EPS (−$0.25 vs −$0.057), and EBITDA (−$16.0M vs −$3.8M), driven by non-cash derivative impacts and cost carry from delayed awards; the company emphasized a strong backlog of $385M and cash of $107.6M.
  • Strategic wins included a $13.2M DoD ORION contract award and continued deployments in airport biometrics and threat detection; management tone was confident but realistic on procurement variability.

What Went Well and What Went Wrong

What Went Well

  • Reaffirmed FY 2025 guidance ($160–$180M revenue; negative single-digit Adjusted EBITDA), signaling confidence in pipeline and backlog.
  • Strengthened balance sheet: cash rose to $107.6M (from $50.1M at FY-end) and long-term debt reduced by $58M via voluntary note conversions.
  • Strategic contract momentum: 3.5-year, $13.2M sole-source DoD contract to deliver the Joint Staff J-35 ORION decision support platform.
  • CEO framing of focus areas and market positioning: “We remain focused on capitalizing on this dynamic market and driving disciplined, sustained execution.”

What Went Wrong

  • Missed consensus: revenue ($34.8M vs $36.3M), EPS (−$0.25 vs −$0.057), EBITDA (−$16.0M vs −$3.8M), with Adjusted EBITDA down to −$7.0M versus −$1.6M last year on higher R&D and recurring SG&A given funding delays.
  • Gross margin fell sharply versus Q4 2024 (21.3% vs 37.4%), as year-end true-up benefits did not repeat; sequential revenue also declined due to lumpiness in awards and milestones.
  • Non-cash volatility persisted: $33.3M net increase in fair value of derivatives, $2.6M loss on debt extinguishment, and higher equity-based comp (+$2.2M YoY) weighed on GAAP results.

Financial Results

Quarterly Actuals

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$41.5 $43.8 $34.8
Gross Margin (%)25.9% 37.4% 21.3%
Net Income ($USD Millions)$(12.2) $(108.0) $(62.0)
Diluted EPS ($USD)$(0.05) $(0.43) $(0.25)
Adjusted EBITDA ($USD Millions)$0.9 $2.0 $(7.0)
Cash and Equivalents ($USD Millions)$65.6 $50.1 $107.6

Q1 2025 vs S&P Global Consensus

MetricActualConsensusSurprise
Revenue ($USD)$34,757,000 $36,262,000*Miss (−$1.505M)
Primary EPS ($USD)−$0.25 −$0.05667*Miss (more negative)
EBITDA ($USD)−$16,040,000 −$3,816,330*Miss (worse)

Values marked with * retrieved from S&P Global.

Year-over-Year and Sequential Changes (Q1 2025)

MetricYoY Change vs Q1 2024QoQ Change vs Q4 2024
Revenue ($USD)+$1.6M to $34.8M (+5.0%) −$9.0M to $34.8M (−20.7%)
Gross Margin (%)+20 bps to 21.3% −1,610 bps vs 37.4%
Diluted EPS ($USD)Improved to −$0.25 from −$0.68 Improved to −$0.25 from −$0.43
Adjusted EBITDA ($USD)Worsened to −$7.0M from −$1.6M Worsened to −$7.0M from $2.0M

KPIs

KPIQ3 2024Q4 2024Q1 2025
Ending Backlog ($USD Millions)$437 $418 $385
Convertible Notes Principal ($USD Millions)—$182.3 exchanged; $142.3 remaining post conversions $142 remaining; −$58M in Q1 conversions
Cash and Equivalents ($USD Millions)$65.6 $50.1 $107.6

Segment breakdown: Not disclosed in Q1 materials; company reports consolidated figures.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$160–$180M $160–$180M Maintained
Adjusted EBITDAFY 2025Negative single-digit millions Negative single-digit millions Maintained

Management reiterated it does not reconcile forward-looking non-GAAP metrics due to unpredictability of GAAP components.

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
AI/technology initiatives (ConductorOS, threat detection, biometrics)ConductorOS demo at RDER; FAA ITIPSS subcontract; DEN biometric deployments Continued deployments at major airports; collaboration with Smiths Detection to integrate CT scanners; mission-ready AI emphasis Expanding deployments and partnerships
Defense programsGFIM-OE $165M production contract; pipeline strength DoD Joint Staff J-35 ORION $13.2M award; high-level defense decision support Positive contract momentum
Supply chain/manufacturingShipbuilding and industrial base modernization commentary emerging Deepening partnerships (e.g., Austal USA); Shipyard AI referenced Building commercial adjacencies
Procurement/fundingLumpy revenue; cautious government adoption of AI; variability in awards Funding delays created excess capacity; reaffirmed guidance despite timing variability Variability persists; disciplined execution
International expansionMarketplace/awardable statuses enabling DoD adoption; limited explicit international detail International distribution channels via Smiths Detection; airport deployments Growing international reach
R&D executionIncreased R&D YoY in 2024 R&D up ~$3M YoY; fewer projects capitalized as products reach GA Investment intensity elevated
Regulatory/legalGeneral risk disclosures; none acute Numerous external law firm notices; standard risk language maintained No direct operational impact disclosed

Management Commentary

  • CEO Kevin McAleenan: “We remain focused on capitalizing on this dynamic market and driving disciplined, sustained execution.”
  • CFO Julie Peffer on revenue and margin dynamics: “Our revenue can be lumpy… Gross margin was 21.3%… adjusted gross margin… 28.6%… R&D spend is up $3,000,000… government funding delays creating excess resource capacity.”
  • CEO on strategy: “We are uniquely positioned at the convergence of artificial intelligence, national security, and critical infrastructure… mission-ready AI… human-machine teaming.”
  • Contract validation: “Winning this [ORION] contract demonstrates BigBear.ai’s ability to deliver modern, AI-powered solutions… at the highest levels of defense leadership.”

Q&A Highlights

  • The call format comprised prepared remarks from the CEO and CFO; the transcript did not include an open Q&A segment.
  • Guidance reaffirmation and procurement variability were reiterated; no additional quantitative guidance granularity beyond FY 2025 was disclosed.

Estimates Context

  • Q1 2025 results missed consensus across revenue ($34.8M vs $36.3M*), EPS (−$0.25 vs −$0.05667*), and EBITDA (−$16.0M vs −$3.8M*), reflecting non-cash derivative valuation effects and higher recurring SG&A due to funding delays and headcount.
  • With FY 2025 guidance maintained, revenue estimates likely remain anchored to $160–$180M; however, near-term Adjusted EBITDA expectations may need to reflect elevated recurring SG&A and slower award timing until procurement normalizes.

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Reaffirmed FY 2025 top-line guidance despite Q1 miss supports backlog visibility, but near-term earnings power is constrained by cost carry and award timing; watch procurement cadence and recurring SG&A run-rate.
  • Non-cash derivative swings continue to drive GAAP volatility; focus on Adjusted EBITDA and cash trajectory for operational signal.
  • Balance sheet flexibility improved materially (cash $107.6M; debt reduced by $58M), providing capacity to invest and bridge funding delays.
  • Strategic execution is progressing (DoD ORION award; airport deployments; threat detection partnerships), which should compound backlog and international channels.
  • Near-term estimate revisions: Expect potential downward adjustments to EBITDA/adj. EBITDA while revenue stays within guidance bands; upside hinges on timing of DHS/DoD awards and commercial ramp.
  • Trading lens: The miss vs consensus and margin compression could pressure shares near term; contract wins, cash strength, and guidance affirmation are counter-catalysts.
  • Medium-term thesis: If procurement variability eases and recurring SG&A normalizes, backlog conversion plus strategic programs (ORION, airport biometrics, shipbuilding AI) can support scaling and margin recovery.