BigBear.ai Holdings, Inc. Q2 FY2025 earnings

BigBear.ai reported second quarter 2025 revenue of $32.5 million, down 18.4% from $39.8 million in the second quarter of 2024. The decline came primarily from lower volume on certain Army programs. Gross profit fell to $8.1 million from $11.1 million, and gross margin slipped to 25.0% from 27.8%. The operating loss widened to $90.3 million from $16.7 million. Operating margin was -278.1%, compared with -41.9%. Net loss was $228.6 million, or -$0.71 per diluted share, compared with a net loss of $14.4 million, or -$0.06 per diluted share, in the prior-year quarter. The larger net loss included non-cash charges tied to derivative liabilities and a goodwill impairment.

For the six months ended June 30, 2025, revenue was $67.2 million, down 7.8% from $72.9 million in the prior-year period. Gross profit was $15.5 million, down 14.1% from $18.0 million. Gross margin was 23.1%, down 1.7 percentage points from 24.8%. Operating loss was $111.5 million, compared with $114.7 million in the prior-year period, so the loss narrowed. Operating margin was -165.9%, compared with -157.4%. Net loss was $290.6 million, or -$0.97 per diluted share, compared with a net loss of $142.2 million, or -$0.66 per diluted share. The year-to-date net loss widened.

The company's cash generation improved. Net cash used in operating activities was $3.9 million in the second quarter of 2025, compared with $7.1 million in the second quarter of 2024. For the six months ended June 30, 2025, net cash used in operating activities was $10.5 million, compared with $21.4 million in the prior-year period. Capital expenditures were $5 thousand in the quarter, down from $129 thousand. Deferred revenue, current portion only, rose to $4.5 million from $3.5 million. Free cash flow, which the company defines as net cash used in operating activities less capital expenditures, was negative $13.3 million for the six months ended June 30, 2025, compared with negative $10.9 million in the prior-year period. The company also reported a record cash balance as of June 30, 2025, and backlog of $380 million, compared with $418.3 million at December 31, 2024.

Adjusted EBITDA, a non-GAAP measure, was negative $8.5 million compared with negative $3.7 million. Management said the decline was primarily driven by lower gross margin and higher research and development expenses. The company updated its full-year 2025 revenue outlook this quarter and withdrew its previously provided Adjusted EBITDA guidance for the year ended December 31, 2025, citing uncertainty on certain Army programs and new growth investment spending in the second half. Management noted that federal efficiency efforts disrupted contracts this quarter, especially programs supporting the U.S. Army as it consolidates and modernizes data architecture.

On the opportunity side, the company highlighted over $170 billion in supplemental funding for the Department of Homeland Security and $150 billion for the Department of Defense from the One Big Beautiful Bill. It also signed a partnership with companies in the UAE under the IHC umbrella. Risks remain concentrated in the federal government. Most revenue comes from federal contracts, and funding is subject to appropriations, budget constraints, procurement changes, and termination for convenience. The MD&A notes potential impacts from the U.S. DOGE Service Temporary Organization on government spending and contract terminations. A review of major defense programs could lead to cancellations. The goodwill impairment was driven by a change in forecast during the second quarter.