Executive Summary

Q3 revenue modestly beat consensus while margins compressed and adjusted EBITDA turned negative; management attributed the shortfall to lower volume on Army programs and the absence of prior-year higher-margin work . Consensus detail in Estimates Context.
Liquidity remains a differentiator: cash and held-to-maturity investments totaled roughly $715M at quarter-end, underpinned by $337M raised via the ATM program; management framed this as fuel for organic investments and M&A .
Strategic catalyst: definitive agreement to acquire Ask Sage (purchase price up to $250M) to create a secure, model-agnostic GenAI platform for national security and regulated industries; closing expected late Q4’25 or early Q1’26 .
2025 revenue guidance maintained at $125–$140M; management highlighted shutdown-related pauses on certain intelligence contracts but emphasized mission-essential continuity on >80% of work and a robust pipeline tied to the One Big Beautiful Bill .

What Went Well and What Went Wrong

What Went Well
- Strategic M&A accelerant: “By integrating Ask Sage with BigBear.ai, we are creating…a secure, integrated AI platform that connects software, data, and mission services in one place.” — CEO Kevin McAleenan .
- Balance sheet optionality: CFO cited ~$715M cash and investments and successful ATM execution enabling further M&A and growth investment .
- Execution momentum in travel/trade and edge AI: deployments of VeriScan for CBP EPP at major airports (including O’Hare), and new tactical-edge AI partnership with Tsecond .
What Went Wrong
- Revenue mix and margin pressure: YoY revenue declined 20% and gross margin fell due to lower Army volumes and lack of repeat higher-margin programs from Q3’24 .
- Profitability deterioration: adjusted EBITDA swung negative, driven by lower gross profit and higher SG&A (labor/fringe, strategic initiatives, and marketing) .
- Backlog trend: backlog stepped down sequentially across 2025 amid funding disruptions and program timing (see KPI table) .

Financial Results

Headline performance vs consensus (Q3 2025)

Metric	Actual	S&P Global Consensus*	Notes
Revenue ($USD)	$33,143,000	$31,820,670*	Beat
GAAP Diluted EPS ($)	$(0.03)	$(0.0733)*	Beat

Quarterly trend (oldest → newest)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD)	$34,757,000	$32,472,000	$33,143,000
Gross Margin (%)	21.3%	25.0%	22.4%
Net Income (Loss) ($USD)	$(61,986,000)	$(228,619,000)	$2,521,000
GAAP Diluted EPS ($)	$(0.25)	$(0.71)	$(0.03)
Adjusted EBITDA ($USD)	$(6,989,000)	$(8,498,000)	$(9,401,000)
Backlog ($USD)	$385,000,000	$380,000,000	$376,000,000

Year-over-year comparison

Metric	Q3 2024	Q3 2025
Revenue ($USD)	$41,505,000	$33,143,000
Gross Margin (%)	25.9%	22.4%
Net Income (Loss) ($USD)	$(15,135,000)	$2,521,000
GAAP Diluted EPS ($)	$(0.06)	$(0.03)
Adjusted EBITDA ($USD)	$948,000	$(9,401,000)

KPIs and operating efficiency

KPI	Q1 2025	Q2 2025	Q3 2025
Cash & Equivalents ($USD)	$107,610,000	$390,845,000	$456,580,000
Held-to-Maturity Investments ($USD)	—	—	$258,864,000 (130,084 + 128,780)
Total Cash + Investments ($USD)	—	—	~$715,000,000 (management commentary)
SG&A ($USD)	$22,732,000	$21,487,000	$25,255,000
R&D ($USD)	$4,166,000	$4,393,000	$3,375,000
Weighted Avg. Basic Shares (000s)	252,341	320,591	396,589

Notes: Adjusted EBITDA and margin are non-GAAP as defined and reconciled by the company .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD)	FY 2025	$160–$180M (Q1)	$125–$140M (Q2 updated; reaffirmed Q3)	Lowered in Q2; maintained Q3
Adjusted EBITDA	FY 2025	Negative single-digit millions (Q1)	Withdrawn in Q2; no update Q3	Withdrawn
M&A impact	FY 2025	N/A	Ask Sage expected to close late Q4’25/early Q1’26; no material impact to 2025 results	Clarified timing/2025 impact

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025)	Q2 2025	Current Period (Q3 2025)	Trend
AI/technology platforms	Focus on mission-ready AI; affirmed strategy	Highlighted ConductorOS, international AI expansion (UAE)	Ask Sage acquisition to deliver secure, model-agnostic GenAI at FedRAMP High; CTO hire (Nicholas “Nick” Chaillan)	Accelerating platformization
Federal funding/macro	Early tailwinds; outlook affirmed	One Big Beautiful Bill called “transformative”; Army program disruption lowered guidance	Shutdown paused parts of intel contracts; >80% of work deemed mission essential	Funding/logistics volatility, pipeline expanding
Travel & trade biometrics	N/A	Continued portfolio execution	VeriScan at ORD; faster EPP processing; positive airport momentum	Expanding deployments
Edge AI / tactical capability	N/A	Defcon/partnerships noted [19, not cited separately]	Tsecond partnership for AI at the edge; data processing in D-DIL environments	Strengthening edge stack
International	N/A	UAE partnership “transformative”	Ongoing UAE momentum; U.K. trials at Edinburgh Airport	Broadening reach
M&A strategy	N/A	“Offense” with capital	Thesis-driven M&A culminating in Ask Sage agreement	Execution underway

Management Commentary

“By integrating Ask Sage with BigBear.ai, we are creating what the market has been asking for: a secure, integrated AI platform that connects software, data, and mission services in one place.” — Kevin McAleenan, CEO .
“At the end of the third quarter, we have total cash and investments of $715 million…our ability to access the capital markets…will allow us to continue to execute on the M&A strategy….” — Sean Ricker, CFO .
“Ask Sage…enabling agencies to deploy and operate AI models anywhere, from the tactical edge to classified clouds, within secure, accredited environments….” — Kevin McAleenan .

Q&A Highlights

The call concluded after prepared remarks; no Q&A session was conducted .

Estimates Context

Q3 2025: Revenue beat S&P Global consensus ($33.14M vs $31.82M)* and GAAP diluted EPS was better than consensus loss ($(0.03) vs $(0.0733)*) .
FY 2025: Consensus revenue ~$133.68M* aligns within maintained guidance range; Primary EPS consensus mean of $(0.9267)* underscores ongoing investment phase and margin pressure.
Given maintained revenue guidance and negative adjusted EBITDA, mix/margin and SG&A cadence remain focal points for estimate revisions.
Note: *Values retrieved from S&P Global.

Other Q3 2025 Company Updates (Press Releases)

VeriScan biometric identity platform deployed to support CBP’s Enhanced Passenger Processing at Chicago O’Hare, contributing to materially faster processing times per CBP benchmarks .
Strategic partnership with Tsecond to deliver AI-enabled edge infrastructure (ConductorOS orchestration + BRYCK hardware) for D-DIL environments .

Key Takeaways for Investors

Revenue beat but margin and adjusted EBITDA deterioration reflect mix and investment; near-term profitability hinges on Army program normalization, shutdown resolution, and cost discipline .
Ask Sage acquisition is the core strategic catalyst to drive software/platform mix shift, cross-sell, and margin uplift in 2026–2027; watch closing, integration pace, and early cross-sell wins .
Liquidity (~$715M) enables continued M&A and organic R&D without financing pressure; dilution and capital allocation discipline remain monitoring points .
Backlog drifted lower in 2025 as program timing/funding shifted; trajectory should improve with contracting tied to One Big Beautiful Bill and DHS/DoD opportunities .
Near-term trading catalysts: shareholder vote on authorized shares, Ask Sage closing, shutdown resolution, and any DHS/DoD award announcements tied to “One Big Beautiful Bill” .

Citations: Press release and 8-K financials and transaction details . Q1/Q2 results, guidance shifts . Earnings call commentary . Additional Q3 announcements .

S&P Global estimates used: Primary EPS Consensus Mean, Revenue Consensus Mean, number of estimates (Q3 2025, FY 2025). Values retrieved from S&P Global.

BigBear.ai Holdings, Inc. (BBAI)·Q3 2025 Earnings Summary