Summary
BigBear.ai ended fiscal 2023 with fourth-quarter revenue of $40.6 million, up 0.5% from the prior-year quarter. Full-year revenue was $155.2 million, essentially flat versus fiscal 2022. The top line showed little momentum, but profitability metrics improved sharply. Fourth-quarter gross profit rose 10.4% to $13.0 million, and gross margin expanded to 32.1%, up 2.9 percentage points from the prior-year quarter. For the full year, gross profit slipped 5.6% to $40.6 million, and gross margin fell 1.6 percentage points to 26.2%. The quarterly margin gain came against a full-year decline, a split that suggests mix or cost timing shifted in the final three months.
Operating losses narrowed on both a quarterly and annual basis. The fourth-quarter operating loss was $8.6 million, and the operating margin was negative 21.1%, an improvement of 44.2 percentage points from the prior-year quarter. For the full year, the operating loss was $39.0 million, with an operating margin of negative 25.2%, up 46.1 percentage points from fiscal 2022. Net loss narrowed to $23.5 million in the fourth quarter, a 21.3% improvement, and to $60.4 million for the full year, a 50.4% improvement. Full-year diluted EPS was negative $0.40. The company also generated less cash burn. Fourth-quarter operating cash flow was negative $0.07 million, and full-year operating cash flow was negative $18.3 million. Capital expenditures were $0.00 million in the quarter and $0.00 million for the full year.
Backlog and remaining performance obligations tell a mixed story. Remaining performance obligations rose 5.3% to $79.0 million. Deferred revenue, current portion, fell 56.5% to $0.88 million. Total backlog was $167.8 million at December 31, 2023, compared with $218.5 million at December 31, 2022. Within that total, funded backlog was $30.1 million versus $57.2 million, unfunded backlog was $49.4 million versus $18.2 million, priced unexercised options were $63.9 million versus $112.1 million, and unpriced unexercised options were $24.4 million versus $30.9 million. The shift toward unfunded backlog and the drop in funded backlog point to a slower path from awards to revenue, even as RPO grew.
Strategic moves kept the capital structure in focus. BigBear.ai completed the acquisition of Pangiam on February 29, 2024, adding vision AI and biometrics capabilities. In March 2024, an existing investor exercised PIPE warrants for gross proceeds of approximately $33.2 million. A separate RDO warrant exercise in February 2024 generated gross proceeds of approximately $20.6 million. During 2023, the company raised approximately $25 million in a private placement and approximately $25 million in a registered direct offering. The company also met the Adjusted EBITDA requirement for its senior secured revolving credit facility for the first time as of December 31, 2023, and expects to be able to borrow under that facility in the first quarter of 2024, subject to completing a field exam and submitting required certifications. It had not drawn on the facility as of December 31, 2023. Non-GAAP Adjusted EBITDA was negative $3.2 million for fiscal 2023, compared with negative $17.1 million for fiscal 2022.
Risks remain tied to the federal budget and geopolitics. The majority of revenue comes from federal government contracts. A continuing resolution signed on January 19, 2024 extends funding to March 2024, and the FY 2024 National Defense cap is $886 billion. Under the continuing resolution, new contract and program starts are not authorized, which can delay awards. Conflicts in Ukraine, Israel, and Gaza have slowed the pipeline and pace of contract awards, pushing revenue into later periods. Goodwill is another area to watch. The company performed a quantitative assessment in the fourth quarter of 2023 and determined that no goodwill impairment would be recognized for the year, after recording a goodwill impairment in 2022. The company also maintains a full valuation allowance against its deferred tax assets. These factors leave the equity story dependent on converting backlog into funded work and continuing to reduce cash burn.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $40.6M | $34.0M | +19.3% | $40.4M | +0.5% |
| Gross profit | $13.0M | $8.4M | +54.8% | $11.8M | +10.4% |
| Gross margin | 32.1% | 24.7% | +7.4 pp | 29.2% | +2.9 pp |
| Research & development | $2.0M | -$349.0K | +681.9% | $1.2M | +69.4% |
| Sales & marketing | $18.2M | $15.5M | +17.4% | $15.6M | +17.1% |
| Operating income (loss) | -$8.6M | -$8.2M | -4.4% | -$26.4M | +67.5% |
| Operating margin | -21.1% | -24.2% | +3.0 pp | -65.3% | +44.2 pp |
| Net income (loss) | -$21.3M | $4.0M | -631.5% | -$29.9M | +28.9% |
| Net margin | -52.4% | 11.8% | -64.2 pp | -74.1% | +21.7 pp |
| Diluted EPS | -$0.14 | $0.03 | -$0.17 | -$0.23 | +$0.09 |
Risks
Three customers accounted for 49% of revenue for the twelve months ended December 31, 2023, and about $89 million of the approximately $168 million backlog as of December 31, 2023 is tied to these customers. Their contracts permit termination for convenience, so any loss or delay could disproportionately reduce revenue.
The majority of revenue comes from federal government contracts. A continuing resolution through March 2024 restricts new contract and program starts and may delay awards, while conflicts in Ukraine, Israel, and Gaza slowed the pipeline and pushed revenue into later periods.
The Convertible Notes mature December 15, 2026, and the company previously violated Senior Revolver covenants. It met the Senior Revolver Adjusted EBITDA requirement as of December 31, 2023 but still must complete a field exam and certifications before borrowing.
Government sales cycles often exceed twelve months and commercial cycles can last six to nine months or longer. The company often provides low-cost Minimally Viable Product deployments before conversion, creating expense and timing risk if engagements do not become long-term sales.
For the year ended December 31, 2023, 32% of revenue came from fixed-price contracts and 55% from time-and-material contracts. Fixed-price work assumes cost overruns, and U.S. government contracts can make the company responsible for replacement costs if projects fail.
The company completed the Pangiam acquisition on February 29, 2024 and expects additional transaction and integration costs. It may fail to realize the anticipated benefits or cost savings from combining the businesses.
Total remaining deal value was approximately $168 million at December 31, 2023 versus $218 million at December 31, 2022. Most contracts contain termination for convenience provisions, and the U.S. federal government cannot exercise options more than one year in advance.
FY2023 year-to-date revenue was flat (+$0.15 million, +0.1%) versus FY2022 year to date. The company warns that prior growth is not indicative of future performance and revenue could decline from contract wind-downs, competition, or failure to convert backlog.
FY2023 year-to-date gross margin declined 1.6 percentage points to 26.2% from 27.7% in FY2022 year to date, partly due to Virgin Orbit's bankruptcy and lower margin work. Continued adverse mix could pressure profitability.
Previously identified material weaknesses in internal controls over financial reporting were considered remediated as of December 31, 2023. The company cannot be certain that future significant deficiencies or material weaknesses will not occur.
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 Q4 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.