Summary
BigBear.ai reported second quarter 2022 revenue of $37.61 million, up 3.6% from the prior-year quarter. Gross profit was $9.59 million, up 4.7%, and gross margin was 25.5%, up 0.3 percentage points. The top line grew, but the bottom line deteriorated. Operating loss was $55.34 million, and the loss widened from the prior-year quarter. Operating margin was -147.1%, down 138.6 percentage points. Net loss was $56.84 million, and that loss also widened from the prior-year quarter. Diluted loss per share was $0.45, and the per-share loss widened. A non-cash goodwill impairment charge of $35.3 million in the Cyber Engineering segment drove much of the swing. Non-GAAP adjusted EBITDA was -$7.7 million, compared with $0.5 million in the prior-year quarter.
For the first six months of 2022, revenue was $74.00 million, up 3.0%. Gross profit was $19.46 million and was flat. Net loss was $75.67 million, and the loss widened. Diluted loss per share was $0.59, and that per-share loss also widened. Operating cash flow for the six months was -$32.00 million, down from the prior-year period.
In the second quarter, Analytics revenue increased by $2.9 million, or 18%, while Cyber & Engineering revenue declined. The press release ties the Analytics gain to continued expansion of key programs. For the second quarter, segment adjusted gross margin was 39% for Analytics, down from 46%, and 24% for Cyber Engineering, up from 22%. The Analytics margin decline reflects investments in prototype contracts that management expects to yield higher margins after subsequent production awards. Operating expenses climbed. For the second quarter, SG&A was $26,952 thousand, up 159.0%, and equal to 72% of revenue. The increase included $3,063 thousand in commercial start-up costs, $3,897 thousand in equity-based compensation, and $1,153 thousand in D&O insurance. Research and development was $2,535 thousand, up 35.8%. Interest expense was $3,554 thousand, up 92.2%.
Cash generation weakened. Operating cash flow was -$24.47 million for the current quarter, down from the prior-year quarter. Capital expenditures were $0.15 million, up 33.0%. Deferred revenue, current portion, was $3.71 million at June 30, 2022, and remaining performance obligations were $130.00 million at June 30, 2022. Ending backlog at June 30, 2022 was $325 million. MD&A reports total backlog of $324,938 thousand at June 30, 2022, compared with $322,110 thousand at December 31, 2021 under the revised methodology. Available cash and cash equivalents were $29,829 thousand at June 30, 2022, compared with $68,900 thousand at December 31, 2021. Available borrowings were none, compared with $15,000 thousand at December 31, 2021. Total available liquidity was $29,829 thousand at June 30, 2022.
Liquidity and covenant pressure are material risks. The company was not in compliance with the Fixed Charge Coverage ratio covenant as of June 30, 2022. On August 9, 2022, it entered an amendment that waived the requirement for the quarter ended June 30, 2022, but the company remains unable to draw on the Senior Revolver. Management states that it may fail to meet covenant requirements in future periods. Goodwill risk also remains. In the Analytics reporting unit, estimated fair value exceeded carrying value by 8.3%. An increase in WACC of approximately 1% or a reduction in forecasted revenues of approximately 3% would result in an impairment of goodwill in that unit using the Income Approach.
Management revised its full-year 2022 outlook to approximately $150 million to $170 million for the year ended December 31, 2022. For the second half of 2022, it projects single digit negative Adjusted EBITDA. The revision follows delays in federal contract awards tied to the focus on Ukraine, longer commercial sales cycles from economic uncertainty, and a more conservative approach to estimating certain opportunities in backlog. The ProModel acquisition closed on April 7, 2022 for approximately $16.0 million and expands modeling, simulation, and planning applications. In healthcare, BigBear.ai signed an agreement with one of the largest health systems in the Eastern U.S. Management expects a commercial impact in the second half of 2022 and a more significant impact in 2023. The company plans stringent steps to reduce expenses and cash usage and to increase operational efficiency.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $37.6M | $36.4M | +3.4% | — | — |
| Gross profit | $9.6M | $9.9M | -2.8% | — | — |
| Gross margin | 25.5% | 27.1% | -1.6 pp | — | — |
| Research & development | $2.5M | $2.9M | -11.8% | — | — |
| Sales & marketing | $27.0M | $22.0M | +22.4% | — | — |
| Operating income (loss) | -$55.3M | -$16.4M | -236.9% | -$1.5M | -3498.0% |
| Operating margin | -147.1% | -45.1% | -102.0 pp | — | — |
| Net income (loss) | -$56.8M | -$18.8M | -202.0% | -$1.7M | -3164.2% |
| Net margin | -151.1% | -51.7% | -99.4 pp | — | — |
| Diluted EPS | -$0.45 | -$0.14 | -$0.31 | — | — |
Risks
The Company recorded a $35,252 thousand non-cash goodwill impairment in the Cyber & Engineering reporting unit for the three and six months ended June 30, 2022, driven by a shift in the Federal Government's focus to immediate needs in Ukraine that slowed the pace of contract awards and caused future revenue projections to be revised down. The estimated fair value of the Analytics reporting unit exceeded its carrying value by only 8.3%, and an increase in WACC of approximately 1% or a reduction in forecasted revenues of approximately 3% would result in an additional impairment, so future charges remain possible.
The Company was not in compliance with the Fixed Charge Coverage ratio covenant of the Bank of America Credit Agreement as of June 30, 2022, and is currently unable to draw on the $50.0 million Senior Revolver even after the August 9, 2022 First Amendment, which only waived the June 30, 2022 requirement. Management states it is reasonably likely that the Company may fail to meet covenant requirements in future periods, and available liquidity fell to $29,829 thousand at June 30, 2022 from $83,900 thousand at December 31, 2021.
During the second quarter of fiscal 2022 the Company revised its backlog methodology to exclude Anticipated Follow-on Awards and to reduce unpriced unexercised option estimates, cutting recalculated December 31, 2021 total backlog from the previously reported $466 million to $322 million. Funded backlog declined to $68,640 thousand at June 30, 2022 from $78,258 thousand at December 31, 2021, and the methodology change reduces visibility into forward revenue.
For the government customers, focus on addressing immediate needs in Ukraine slowed the pipeline and pace of contract awards, pushing revenue further to the right, and the Company says it does not believe the invasion will have a material impact but that a continuation or worsening could negatively affect results. Cyber & Engineering revenues decreased 8.1% for the three months ended June 30, 2022 and 7.4% for the six months ended June 30, 2022 due to reduced order volume on certain procurement programs.
COVID-19 continued to cause business impacts in the first half of 2022 through supply chain disruptions and delays and labor challenges tied to employee absences, travel restrictions, site access, quarantine restrictions and adjusted schedules. The ultimate effect on customer contract execution timing and on government budgets and funding priorities remains uncertain.
SaaS KPIs
All quarters →Adjusted EBITDA
Backlog
Summary, forecast, risks and KPIs are extracted from BigBear.ai Holdings, Inc.'s SEC filings for Q2 FY2022 (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.