Summary
BigBear.ai reported second-quarter revenue of $38.5 million, up 2.2% from a year earlier. Gross margin fell to 23.3%. The operating loss narrowed to $10.2 million from the prior-year quarter. The net loss narrowed to $16.9 million, or $0.12 per diluted share. First-half revenue rose 8.9% to $80.6 million. First-half gross margin was 23.8%, down from the prior-year period. Operating margin for the quarter was -26.6%, up from the prior-year quarter. The top line grew, yet gross margin compressed and the company still posted a GAAP operating loss and net loss. The gross margin decline came mainly from the elimination of Virgin Orbit revenue and gross margin after that customer's bankruptcy announcement in the second quarter. For the six-month period, cost of revenues as a percentage of revenue increased, partly on higher volume from lower margin IT procurement contracts.
Army contract activity offered a counterweight. BigBear.ai was selected as the single provider for Phase 2 of the Army Test and Evaluation Command Integrated Mission Management System, a single award contract worth over $7.7 million over seven months. That award followed a competition after Phase 1 and could lead to a follow-on production, sole-source contract. The company also won a six-month extension as prime contractor for the Global Force Information Management Objective Environment system, a contract valued at just over $8.5 million. Ending backlog was $206 million, up 5% from Q1 2023. BigBear.ai closed a registered direct offering with gross proceeds of approximately $25 million. It named Theodore Tanner Jr. as chief technology officer, and it now reports as a single operating and reportable segment.
Cash generation stayed negative. Operating cash flow was negative $12.8 million in the quarter. For the first six months, operating cash flow was negative $24.8 million, an improvement from the prior-year period. Deferred revenue was $2.0 million, down 46.1% from a year earlier. Remaining performance obligations were $77.0 million, down 40.8%. Those two declines point to a smaller near-term contracted base even as new awards land. Total backlog was $205.6 million at June 30, 2023, compared with $218.5 million at December 31, 2022.
Several risks sit alongside the contract wins. Government customers focused on Ukraine have slowed the pipeline and pace of contract awards, pushing revenue into later periods. BigBear.ai also carries a material weakness in internal controls over financial reporting. It did not meet the Adjusted EBITDA requirement under its Bank of America Senior Revolver during the six months ended June 30, 2023, and it could not draw on the facility as of that date. Management says it may fail that test in future periods, though it believes cash from operating activities will cover the next 12 months. The company keeps a full valuation allowance against its deferred tax assets. Guidance covers the full fiscal year 2023, with the top line held at $155 million to $170 million and single digit negative Adjusted EBITDA. Cost of revenues and selling, general and administrative expenses are expected to rise in absolute dollars as revenue grows.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2023 | Q1 FY2023 | QoQ | Q2 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $38.5M | $42.2M | -8.8% | $37.6M | +2.2% |
| Gross profit | $9.0M | $10.2M | -12.2% | $9.6M | -6.5% |
| Gross margin | 23.3% | 24.2% | -0.9 pp | 25.5% | -2.2 pp |
| Research & development | $2.2M | $1.1M | +97.3% | $2.5M | -12.2% |
| Sales & marketing | $16.9M | $20.4M | -16.9% | $27.0M | -37.2% |
| Operating income (loss) | -$10.2M | -$12.0M | +15.1% | -$55.3M | +81.5% |
| Operating margin | -26.6% | -28.5% | +2.0 pp | -147.1% | +120.6 pp |
| Net income (loss) | -$16.9M | -$26.2M | +35.5% | -$56.8M | +70.3% |
| Net margin | -43.9% | -62.2% | +18.3 pp | -151.1% | +107.2 pp |
| Diluted EPS | -$0.12 | -$0.19 | +$0.07 | -$0.45 | +$0.33 |
Risks
BigBear.ai did not meet the Adjusted EBITDA requirement under the Bank of America Senior Revolver during the six months ended June 30, 2023 and was unable to draw on the facility as of June 30, 2023. Management believes it is reasonably likely the company may fail to meet the minimum Adjusted EBITDA requirements in future periods, which could limit access to the credit facility.
Virgin Orbit's Chapter 11 bankruptcy filing in the second quarter of 2023 reduced revenue and gross margin from that customer, and the company recorded a $675 thousand bad debt reserve against Virgin Orbit receivables in the quarter and $1,425 thousand year to date. Deferred revenue declined 46.1% and RPO declined 40.8% in the current quarter versus the prior-year quarter.
The Russian invasion of Ukraine has slowed the pipeline and pace of contract awards from government customers, pushing revenue into subsequent periods. Most federal contracts are not fully funded at award and options do not create enforceable rights until exercised, creating timing uncertainty for future revenue.
Total backlog decreased to $205.6 million at June 30, 2023 from $218.5 million at December 31, 2022, with priced unexercised options declining from $112.1 million to $93.5 million. A lower backlog may pressure future revenue growth.
SaaS KPIs
All quarters →Total Backlog
Adjusted EBITDA
Priced, unexercised options
Unpriced, unexercised options
Funded
Unfunded
Summary, forecast, risks and KPIs are extracted from BigBear.ai Holdings, Inc.'s SEC filings for Q2 FY2023 (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.