BigBear.ai Holdings, Inc. Q1 FY2025 earnings

BigBear.ai's first quarter of 2025 delivered modest top-line growth and a much smaller loss, though the company remains unprofitable and tied to federal spending. Revenue rose 4.9% to $34.8 million from $33.1 million in the prior-year quarter. Management tied the increase to additional revenue from Department of Homeland Security and Digital Identity awards. Gross profit increased 5.8% to $7.39 million, and gross margin edged up to 21.3% from 21.1%. The operating loss narrowed to $21.2 million from $98.1 million, and operating margin improved to negative 61.0% from negative 296.1%. Net loss narrowed to $62.0 million from $127.8 million. Diluted EPS loss narrowed to $0.25 from $0.68. A large non-cash goodwill impairment in the prior-year quarter did not repeat, which flattered the comparison.

The current quarter still carried non-cash derivative losses and debt extinguishment costs. BigBear.ai attributed the smaller net loss mainly to the prior-year goodwill charge not repeating, partly offset by higher non-cash derivative losses plus debt extinguishment costs tied to voluntary conversions of the 2029 Notes. Adjusted EBITDA, a non-GAAP measure, was negative $7.0 million, compared with negative $1.6 million a year earlier. Management pointed to higher research and development expense and recurring SG&A, along with government funding delays that left excess resource capacity. Restructuring charges also rose as the company realigned its cost structure and leadership. Revenue growth is not yet translating into profit, and the gap between the top line and the bottom line is the central issue.

Cash generation improved but stayed negative. Operating cash flow was negative $6.7 million, up from negative $14.4 million a year earlier. Capital expenditures were $0.08 million, up from $0.04 million. Free cash flow, a non-GAAP measure, was negative $8.3 million, compared with negative $16.0 million. Deferred revenue, current portion, was $3.02 million, down 21.7% from $3.85 million. Cash and cash equivalents were $107.6 million as of March 31, 2025, compared with $50.1 million at December 31, 2024. The company reduced long-term debt by $58 million through voluntary conversions of the 2029 Notes. It also raised $64.7 million in gross proceeds from the exercise of 2024 warrants and issued 3.77 million new warrants at a per share exercise price of $9.00.

Backlog was $385 million as of March 31, 2025. The MD&A puts total backlog at $384.9 million, down from $418.3 million at December 31, 2024. Funded backlog fell to $19.8 million from $46.6 million. That drop in funded work is a warning sign for near-term revenue.

Guidance for the full fiscal year 2025 is unchanged. The company projects Adjusted EBITDA in the negative single digit millions, and the outlook depends on federal budgets and procurement timelines. Named risks include government funding delays, budget constraints, potential shutdowns, and the DOGE Service Temporary Organization's review of government spending and contract terminations for convenience. Tariffs and restrictive trade measures also appear on the risk list. The 2029 Notes require the company to maintain liquidity of at least $15 million, and it was in compliance as of March 31, 2025. Management also flagged a material weakness in internal control over financial reporting and integration risk from the Pangiam acquisition. The CEO said the company is seeing early encouraging signs in the second quarter, particularly in sectors where it has deep customer relationships and proven technologies. Turning $34.8 million of quarterly revenue into durable profit still depends on converting backlog and holding costs down while federal spending stays uncertain.