Summary
BigBear.ai reported revenue of $36.75 million for the fiscal 2026 second quarter, up 13.2% from $32.47 million in the prior-year quarter. Management credits the gain to the inclusion of Ask Sage, the generative AI platform acquired on December 31, 2025 for total consideration of $272.1 million, of which $267.6 million was paid in cash at or around closing. Gross profit rose 48.5% to $12.05 million from $8.11 million a year earlier, and gross margin reached 32.8%, an increase of 7.8 percentage points from 25.0%. Mix drives that result. Higher-margin Ask Sage revenue lifted the margin even though total revenue grew 13.2%. Year to date, revenue was $71.18 million, up 5.9%, and gross margin was 33.4% against 23.1%. The six-month revenue comparison is softer than the quarter because the company lapped significant one-time contracts that did not recur and saw lower volume on Army programs.
The bottom line improved sharply, but the business still lost money at every level. Operating loss was $28.56 million, a 68.4% narrowing from the $90.30 million loss in the prior-year quarter, and operating margin improved to -77.7% from -278.1%. Net loss narrowed 88.7% to $25.75 million from $228.62 million a year earlier, and diluted earnings per share was -$0.05 against -$0.71. Much of the swing is non-cash. The prior-year quarter carried a $70.6 million goodwill impairment tied to a change in forecast, and the net increase in fair value of derivatives fell to $0.5 million from $135.8 million. Interest expense also dropped after the 2029 Convertible Notes were converted. Year to date, net loss was $82.51 million versus $290.60 million in the first half of 2025, and diluted earnings per share was -$0.17 against -$0.97.
Cash generation is the weak spot. Operating cash flow was negative $22.21 million for the quarter, down 474.1% from negative $3.87 million a year earlier, and the six-month figure was negative $40.21 million against negative $10.53 million. Free cash flow for the first six months was negative $40.84 million, compared with negative $13.32 million. The MD&A attributes the six-month operating outflow to a $24.1 million net loss before non-cash items and an unfavorable $16.1 million working capital swing, which included an $8.9 million increase in accounts receivable, a $5.0 million increase in accounts payable and a $4.5 million decrease in contract liabilities. Adjusted EBITDA, the non-GAAP measure management uses to judge operating performance, was negative $11.6 million for the quarter versus negative $8.5 million a year ago, and negative $21.5 million for the six months versus negative $15.5 million. Capital expenditures were $0.32 million in the quarter.
The balance sheet changed a great deal. Available cash and cash equivalents were $36.28 million at June 30, 2026, down from $87.13 million at December 31, 2025, and total available liquidity, which includes $373.53 million of available-for-sale investments, was $409.80 million against $461.54 million. Total debt fell to $17.67 million from $142.27 million after all $124.6 million of the 2029 Convertible Notes were voluntarily converted into roughly 38.1 million shares. The remaining 2026 Convertible Notes, $17.67 million outstanding, mature on December 15, 2026, and no capacity remained under the ATM programs as of June 30, 2026. Deferred revenue was $10.18 million, up 127.9% from $4.47 million, and remaining performance obligations were $9.21 million. Total backlog was $269.60 million at June 30, 2026 compared with $248.06 million at December 31, 2025, with funded backlog up to $79.42 million from $54.86 million and unfunded backlog down to $31.71 million from $57.51 million.
Customer concentration is the central risk. Most revenue comes from federal government contracts, so budget authorization, debt ceiling debates and procurement reform shape the pipeline. Executive orders aimed at restructuring the Federal Acquisition Regulation and modernizing defense acquisitions include a review of major programs that are behind schedule or over budget, and management warns that a cancellation of a program the company supports would hurt results. Contracts are generally not fully funded at award and carry termination for convenience provisions, so funded backlog may not convert on schedule or at all. Management says cash from operations and the existing cash balance should cover anticipated uses over the next 12 months. With the six-month operating cash outflow at negative $40.21 million and convertible notes due in December 2026, that runway depends on Ask Sage continuing to lift gross margin.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $36.7M | $34.4M | +6.7% | $32.5M | +13.2% |
| Gross profit | $12.1M | $11.7M | +2.8% | $8.1M | +48.5% |
| Gross margin | 32.8% | 34.0% | -1.3 pp | 25.0% | +7.8 pp |
| Research & development | $7.6M | $5.5M | +36.7% | $4.4M | +72.1% |
| Sales & marketing | $31.8M | $29.2M | +9.0% | $21.5M | +48.2% |
| Operating income (loss) | -$28.6M | -$24.3M | -17.7% | -$90.3M | +68.4% |
| Operating margin | -77.7% | -70.4% | -7.3 pp | -278.1% | +200.4 pp |
| Net income (loss) | -$25.7M | -$56.8M | +54.6% | -$228.6M | +88.7% |
| Net margin | -70.1% | -164.8% | +94.8 pp | -704.0% | +634.0 pp |
| Diluted EPS | -$0.05 | -$0.12 | +$0.07 | -$0.71 | +$0.66 |
Risks
Historically the majority of revenue is derived from federal government contracts, and funding is subject to administration budget requests, congressional authorization and appropriation processes, debt ceiling debates and shifting defense priorities. The filing states that a review or cancellation of a major defense program in which the company provides solutions or services could adversely affect business, financial condition, results of operations and cash flows.
Ask Sage was acquired for total purchase consideration of $272.1 million, with $267.6 million paid in cash, and CargoSeer was acquired for $5.0 million. The quarter revenue increase of 13.2% was primarily due to the inclusion of Ask Sage, while SG&A rose 48.2% for the quarter and 38.1% for the six months due in part to Ask Sage headcount, operating expenses and asset amortization.
Operating cash flow worsened to -$40.21 million for the six months ended June 30, 2026 from -$10.53 million for the six months ended June 30, 2025, a decline of $29.68 million or 281.8%. Cash, cash equivalents and restricted cash fell to $38.065 million at period end from $92.647 million at the beginning of the period, though total available liquidity was $409.803 million.
Executive Orders are directed at restructuring the Federal Acquisition Regulation and modernizing defense acquisitions, including a review of major defense acquisition programs that are behind schedule or over budget for potential cancellation. Changes to how the U.S. Government procures commercial solutions could alter the company's contracting approach and program pipeline.
The 2026 Convertible Notes mature on December 15, 2026 and $16.643 million was classified as current portion of total debt at June 30, 2026. The company must meet financial and other covenants under the 2026 Convertible Notes, and it was in compliance as of June 30, 2026.
Six-month revenue increased 5.9% to $71.18 million, but growth was offset by lower volume on Army programs and significant one-time contracts that contributed revenue in the six months ended June 30, 2025 and did not recur in the six months ended June 30, 2026. This concentration and contract timing can make period-to-period revenue volatile.
SaaS KPIs
All quarters →Total Backlog
Adjusted EBITDA
Summary, forecast, risks and KPIs are extracted from BigBear.ai Holdings, Inc.'s SEC filings for Q2 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.