Summary
BigBear.ai reported fiscal 2025 fourth-quarter revenue of $27.30 million, down 37.7% from the prior-year quarter. Full-year revenue was $127.67 million, down 19.3% from fiscal 2024. The annual report attributes the decline to lower volume on Army programs and significant one-time contracts in 2024 that did not recur. That explanation points to a concentrated, lumpy revenue base tied to government work. The company also closed the Ask Sage acquisition on December 31, 2025, with total purchase consideration of $271.6 million, including $267.6 million paid in cash and $4.0 million held back. Ask Sage is a secure generative AI platform for government and enterprise use. The deal adds scale in generative AI, but it also increases integration and impairment risk.
Margins compressed. Fourth-quarter gross margin was 20.3%, down 17.1 percentage points from the prior-year quarter. Full-year gross margin was 22.3%, down 6.3 percentage points. Operating loss widened to $80.53 million in the fourth quarter, and operating margin was -295.0%, down 276.4 percentage points from the prior-year quarter. For the full year, operating loss widened to $213.90 million, with operating margin at -167.5%, down 83.2 percentage points from fiscal 2024. Those figures reflect heavy operating expenses and non-cash charges, even as revenue fell. Management pointed to downward revisions in short and long-term forecasts tied to certain U.S. government revenue contracts as a driver of those charges.
Net loss narrowed on the bottom line. Fourth-quarter net loss narrowed to $5.83 million from the prior-year quarter, and full-year net loss narrowed to $293.91 million from fiscal 2024. Diluted loss per share for the full year narrowed to $0.82 from the prior year. The improvement came largely from non-cash items, including fair value adjustments on derivatives, while the operating loss widened. Cash generation remained negative. Fourth-quarter operating cash flow was -$21.83 million, down 47.5% from the prior-year quarter. Full-year operating cash flow was -$41.95 million, down 10.1% from fiscal 2024. Capital expenditures were $0.25 million in the fourth quarter, up 40.0% from the prior-year quarter, and $0.52 million for the full year, up 8.5% from fiscal 2024. Deferred revenue, current portion only, rose to $14.76 million, up 480.7% from the prior-year quarter. The rise in deferred revenue suggests some cash collection ahead of revenue recognition, but it is a small base.
Management reported full-year free cash flow of -$46.317 million, compared with -$49.233 million in fiscal 2024. Free cash flow is a non-GAAP measure and is separate from operating cash flow. Adjusted EBITDA was -$35.140 million for fiscal 2025, compared with -$2.397 million in fiscal 2024. During 2025, the company completed ATM sales agreements for total gross proceeds of $637 million and 142 million shares issued. The 2029 Convertible Notes with a par value of $124.6 million were voluntarily converted prior to January 16, 2026, resulting in about 38.1 million shares of common stock. Backlog was $248.060 million at December 31, 2025, down from $418.305 million a year earlier. Funded backlog was $54.859 million, unfunded backlog was $57.509 million, priced unexercised options were $130.564 million, and unpriced unexercised options were $5.128 million. The drop in total backlog, especially priced unexercised options and unfunded backlog, signals a smaller pipeline for future work.
Risks remain tied to federal spending. The annual report cites budget debates, a government shutdown, procurement reforms, and potential cancellation of major defense programs. Management said the U.S. government shutdown that began on September 30, 2025, had an insignificant impact on results, and the January 2026 shutdown did not have a meaningful impact. Goodwill impairment is another risk after the Ask Sage acquisition, because the fair value of the reporting unit approximates its carrying value and negative changes in assumptions could trigger future charges. Management's liquidity outlook says cash from operations should be adequate for the next 12 months to meet anticipated cash needs.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2025 | Q3 FY2025 | QoQ | Q4 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $27.3M | $33.1M | -17.6% | $43.8M | -37.7% |
| Gross profit | $5.5M | $7.4M | -25.3% | $16.4M | -66.2% |
| Gross margin | 20.3% | 22.4% | -2.1 pp | 37.4% | -17.1 pp |
| Research & development | $4.8M | $3.4M | +42.8% | — | — |
| Sales & marketing | $25.7M | $25.3M | +1.6% | $22.2M | +15.4% |
| Operating income (loss) | -$80.5M | -$21.9M | -268.4% | -$8.1M | -889.0% |
| Operating margin | -295.0% | -66.0% | -229.0 pp | -18.6% | -276.4 pp |
| Net income (loss) | -$5.8M | $2.5M | -331.3% | -$146.5M | +96.0% |
| Net margin | -21.4% | 7.6% | -29.0 pp | -334.2% | +312.9 pp |
| Diluted EPS | -$0.02 | -$0.03 | +$0.01 | -$0.63 | +$0.61 |
Risks
A majority of revenue comes from federal government contracts, which are subject to budget authorization, continuing resolutions, shutdowns, and termination for convenience. MD&A says the September 30, 2025 continuing resolution expiration led to a U.S. government shutdown and later funding extensions through January 30, 2026, with management stating impacts were insignificant, but future funding priorities could materially affect defense programs.
Customers contributing more than 10% of consolidated revenues accounted for $65 million, or 51%, of revenue for the twelve months ended December 31, 2025, and about $27 million of the $248 million total backlog as of December 31, 2025 was attributable to those significant customers. Contracts with these customers include termination for convenience provisions.
Revenue decreased 19.3% to $127.67 million for FY2025 year to date and decreased 37.7% to $27.30 million in FY2025 Q4, driven by lower volume on Army programs and 2024 one-time contracts that did not recur. Gross margin also fell to 22.3% for FY2025 year to date and 20.3% in FY2025 Q4.
Total backlog was $248.06 million at December 31, 2025, down from $418.305 million at December 31, 2024. Backlog contracts may not result in actual revenue because they often contain termination for convenience provisions and unexercised options that the U.S. government is not obligated to exercise.
The company recorded a $70.6 million non-cash goodwill impairment and a $53.4 million long-lived asset impairment in FY2025, driven by downward forecast revisions tied to certain U.S. government revenue contracts. After the Ask Sage acquisition added $192.7 million of goodwill, fair value approximates carrying value and future impairment is possible.
BigBear.ai completed the Ask Sage acquisition on December 31, 2025 for total purchase consideration of $271.6 million, including $267.6 million paid in cash at or around closing. Integration, purchase accounting, and achieving expected benefits from the generative AI platform remain uncertain.
For the year ended December 31, 2025, 61% of revenue came from time-and-material contracts and 25% from fixed-price contracts. Fixed-price work exposes the company to cost overruns and unanticipated costs if estimates are inaccurate, especially on U.S. government contracts.
Sales cycles are long and unpredictable, often over twelve months for government customers and six to nine months for commercial customers, and the company has a limited direct sales force with historical dependence on senior management. Pilot deployments at little or no cost may not convert into long-term sales.
The business depends on qualified personnel, senior management, and employees with security clearances; competition for software engineers and data scientists is intense, and equity awards may become less effective if the stock price declines. Delayed or unsuccessful security clearances could impair performance on government contracts.
Previously disclosed material weaknesses in internal control over financial reporting related to the 2026 Convertible Notes, segregation of duties, revenue recognition, and IT general controls were remediated as of the filing, but future deficiencies remain possible. Losing emerging growth company status as of December 31, 2025 adds Section 404 auditor attestation and other compliance costs.
During 2025, ATM programs generated $637 million in gross proceeds and issued 142 million shares, while warrant exercises and convertible note conversions continued to add shares. The public warrants have an $11.50 exercise price and are more likely to expire worthless, but future exercises or settlements could dilute stockholders.
U.S. government spending levels, budget debates, potential tax reform, inflationary pressures, and geopolitical conflicts may shift defense funding priorities. Executive Orders to restructure the Federal Acquisition Regulation and review major defense acquisition programs could alter how the company interacts with the U.S. government.
The company operates in a highly competitive, rapidly changing AI market and must develop or acquire new products that achieve broad market acceptance. The Ask Sage acquisition adds a generative AI platform, but failure of new offerings to gain adoption could slow growth and pressure margins.
SaaS KPIs
All quarters →Total Backlog
Priced, unexercised options
Unpriced, unexercised options
Summary, forecast, risks and KPIs are extracted from BigBear.ai Holdings, Inc.'s SEC filings for Q4 FY2025 (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.