BigBear.ai Holdings, Inc. Q4 FY2024 earnings

BigBear.ai ended fiscal 2024 with fourth-quarter revenue of $43.83 million, up 8.0% from the prior-year quarter. Full-year revenue reached $158.24 million, up 2.0%. The top line benefited from the Pangiam acquisition, which closed on February 29, 2024, while the wind-down of the Air Force EPASS program in the second quarter of 2023 offset some of that growth. Gross profit was $16.40 million in Q4, up 26.0%, and gross margin expanded to 37.4%, up 5.3 percentage points. For the full year, gross profit rose 11.4% to $45.22 million, with gross margin of 28.6%, up 2.4 percentage points.

Profitability remained under pressure. The company reported a fourth-quarter operating loss of $8.14 million, which narrowed from the prior-year quarter. The full-year operating loss widened to $133.42 million. Net loss was $138.18 million in Q4, a wider loss than the prior-year quarter, and $295.55 million for the full year, also a wider loss. Diluted EPS for the full year was a loss of $1.27, wider than the prior year. Operating margin was -18.6% in Q4, an improvement of 2.6 percentage points, but the full-year operating margin fell to -84.3%, down 59.2 percentage points. Adjusted EBITDA was -$2.4 million for 2024 compared with -$3.2 million for 2023.

Cash generation weakened. Operating cash flow was -$14.81 million in Q4, down from the prior-year quarter, and -$38.12 million for the full year, down from the prior year. Capital expenditures were $0.18 million in Q4, up from the prior-year quarter, and $0.48 million for the full year, up from the prior year. Free cash flow was -$49.2 million for 2024 compared with -$22.1 million for 2023. The current portion of deferred revenue was $2.54 million at December 31, 2024, up 189.1% from the prior-year quarter.

Backlog grew to $418.3 million at December 31, 2024 from $167.8 million a year earlier. Funded backlog was $46.6 million, unfunded backlog was $72.5 million, priced unexercised options were $283.3 million, and unpriced unexercised options were $16.0 million. The company completed the Pangiam acquisition on February 29, 2024. It also entered warrant exercises that raised $20.6 million in gross proceeds from the RDO warrants and $33.2 million from the PIPE warrants. On December 19, 2024, BigBear.ai exchanged $182.3 million principal amount of its 2026 Convertible Notes for $182.3 million in aggregate principal amount of new 2029 Convertible Notes. The 2029 notes carry interest at 6.0% if paid in cash and 7.0% if paid in kind, with an initial conversion price of $3.55. The exchange was accounted for as an extinguishment, and the 2029 notes added a covenant requiring liquidity of at least $15 million, measured as an average of the last five business days of any month. The Bank of America Senior Revolver was terminated in connection with the exchange. In February 2025, another warrant exercise raised $21.9 million in gross proceeds, with a new warrant at an exercise price of $9.00.

Risks remain significant. BigBear.ai restated previously issued financial statements for a material error tied to the 2026 Convertible Notes conversion option, which had been incorrectly deemed eligible for a scope exception from derivative bifurcation. The company also recorded a non-cash goodwill impairment charge in 2024, driven by a decline in share price relative to the equity issued for Pangiam, and it warned that the fair value of the reporting unit approximated its carrying value. A negative change in key assumptions or an increase in carrying value could lead to future impairment. Most revenue comes from federal government contracts, so the budget process matters. A continuing resolution funds U.S. government operations through March 14, 2025, and the debt ceiling was set to expire in mid-January 2025. Geopolitical conflicts in Ukraine, the Middle East, Africa, and the Pacific have slowed the pipeline and pace of contract awards, pushing revenue into later periods. The company maintained a full valuation allowance against its deferred tax assets.