Summary
BigBear.ai reported first quarter 2026 revenue of $34.4 million, down 0.9% from the prior-year quarter. Gross profit rose to $11.7 million, up 58.6%. Gross margin expanded to 34.0%, an increase of 12.8 percentage points, or 1,278 basis points as the press release described it. The top line reflected lower volume on Army programs and significant one-time contracts in the prior-year quarter, largely offset by Ask Sage revenue. Operating loss widened to $24.3 million, down 14.4%, while net loss narrowed to $56.8 million, up 8.4%. Diluted loss per share improved to -$0.12, up 52.0%.
Operating margin was -70.4%, down 9.4 percentage points. Management credited the gross margin gain to higher-margin GenAI Platforms and Products from Ask Sage. Cost pressure remained visible. Selling, general, and administrative expenses increased, driven by intangible asset amortization from Ask Sage, legal and proxy expenses, and sales and marketing investments. Research and development expenses also rose. The company recorded transaction expenses tied to the Ask Sage and CargoSeer acquisitions. Operating cash flow was -$18.0 million, down 170.1% from the prior-year quarter. Capital expenditures were $0.3 million, up 298.8%, a cash outflow shown as a positive amount. Deferred revenue rose 273.6% to $11.3 million on a current-portion basis. Remaining performance obligations stood at $7.8 million.
Backlog increased 14% from the fourth quarter to $281.9 million. The gain was driven primarily by a sole-source prime classified award for $53 million. BigBear.ai also cited more than $60 million in national security contracts and close to $75 million in total first-quarter wins. Management said the wins keep the company on track to meet its 2026 revenue target and pointed to a strengthening pipeline. The company launched an internal realignment so sales, technology, delivery and customer success teams line up against priority growth areas. It also started a retail shareholder voting program to broaden participation ahead of its Annual General Meeting on June 9, 2026.
BigBear.ai affirmed full-year 2026 revenue guidance of $135 million to $165 million. The company settled the remaining 2029 Convertible Notes through debt-to-equity conversion features in January 2026. Only the 2026 Notes remained, which management said would be settled before the end of 2026. The redemption was part of a broader effort to improve liquidity and deleverage the balance sheet. Adjusted EBITDA was -$9.9 million, compared with -$7.0 million in the prior-year quarter. The adjusted figure excludes items such as equity-based compensation, fair value changes on derivatives, and the loss on extinguishment of debt.
Risks remain concentrated in the federal budget and procurement cycle. The company noted that most revenue comes from federal government contracts and that funding can be affected by appropriations, continuing resolutions, and government shutdowns. It flagged the potential impact of the U.S. DOGE Service Temporary Organization on government spending and contract terminations for convenience. Backlog may not convert to revenue if funding changes, options go unexercised, or customers terminate for convenience. Integration of Ask Sage and CargoSeer and a material weakness in internal control over financial reporting also remain watch items. The global economic and geopolitical environment could drive demand for AI tools, but the timing and scale of federal awards are uncertain.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2026 | Q4 FY2025 | QoQ | Q1 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $34.4M | $27.3M | +26.1% | $34.8M | -0.9% |
| Gross profit | $11.7M | $5.5M | +111.3% | $7.4M | +58.6% |
| Gross margin | 34.0% | 20.3% | +13.7 pp | 21.3% | +12.8 pp |
| Research & development | $5.5M | $4.8M | +14.8% | — | — |
| Sales & marketing | $29.2M | $25.7M | +13.9% | $22.7M | +28.6% |
| Operating income (loss) | -$24.3M | -$80.5M | +69.9% | -$21.2M | -14.4% |
| Operating margin | -70.4% | -295.0% | +224.5 pp | -61.0% | -9.4 pp |
| Net income (loss) | -$56.8M | -$5.8M | -873.6% | -$62.0M | +8.4% |
| Net margin | -164.8% | -21.4% | -143.5 pp | -178.3% | +13.5 pp |
| Diluted EPS | -$0.12 | -$0.02 | -$0.10 | -$0.25 | +$0.13 |
Risks
The majority of revenue is derived from federal government contracts, exposing results to budget authorization, appropriations timing, and procurement policy shifts. The MD&A notes the 2025 government shutdown and a January 2026 partial shutdown, with the Department of Homeland Security remaining unfunded, and warns that Executive Orders reviewing the FAR and major defense programs could lead to cancellation of programs in which the company provides solutions.
First quarter fiscal 2026 revenue decreased 0.9% to $34.4 million, primarily due to lower volume on Army programs and significant one-time contracts in the first quarter of 2025 that did not recur, partially offset by the inclusion of Ask Sage. This dependence on a limited set of government programs creates risk of revenue volatility if those programs are delayed, reduced, or not renewed.
Operating loss widened 14.4% to $24.3 million in the first quarter of fiscal 2026, and operating margin declined 9.4 percentage points to -70.4%. SG&A increased 28.6% to $29.2 million and represented 85% of revenues, up from 65%, driven by Ask Sage headcount and significant investments in sales, marketing, and other initiatives.
Operating cash flow decreased 170.1% to -$18.0 million in the first quarter of fiscal 2026, and free cash flow was -$18.3 million compared to -$8.3 million in the prior-year quarter. Total available liquidity declined to $431.5 million at March 31, 2026 from $461.5 million at December 31, 2025, increasing reliance on cash reserves to fund operations.
The company completed the Ask Sage acquisition for $272.1 million and the CargoSeer acquisition for $5.0 million, incurring $1.2 million of transaction expenses in the first quarter of fiscal 2026. Integrating these businesses and realizing expected benefits may divert management attention and require additional costs.
Loss on extinguishment of debt increased 514.1% to $15.8 million in the first quarter of fiscal 2026 related to the voluntary conversion of the 2029 Convertible Notes, which resulted in the issuance of approximately 38.1 million shares of common stock. The 2026 Convertible Notes had a $17.7 million outstanding balance as of March 31, 2026 and are classified as current, creating potential dilution and near-term refinancing or repayment risk.
Total backlog increased to $281.9 million at March 31, 2026 from $248.1 million at December 31, 2025, but the MD&A cautions that contracts may be terminated for convenience and that unfunded backlog and unexercised options may not result in actual revenue. This creates uncertainty around converting backlog into future revenues.
SaaS KPIs
All quarters →Adjusted EBITDA
Backlog
Summary, forecast, risks and KPIs are extracted from BigBear.ai Holdings, Inc.'s SEC filings for Q1 FY2026 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.