BigBear.ai ( BBAI ) is an AI and software company, specializing in something called “decision intelligence”. What caught my attention about BigBear is that they offer services for a wider range of industries compared to aI’m a retired Wall Street PM specializing in TMT; since kickstarting my career, I’ve spent over two decades in the market navigating the technology landscape, focusing on risk mitigation through the dot com bubble, credit default of ‘08, and, more recently, with the AI boom. In one word, wh ...

Lots of investors are wondering how they can tap into the growth of artificial intelligence (AI), and one company many are likely considering right now is BigBear.ai (BBAI -2.35%). The company's core service is AI data analytics, which has become important as companies look for better ways to sift through data and make decisions.The company's AI services can be used for anything from predictive analytics for national security to forecasting patient inflows for the healthcare industry. All this gives BigBear ...

Core Viewpoint - BigBear.ai, an AI software company, has struggled to meet investor expectations since its public debut, with its stock price declining significantly from its initial offering [1][2] Financial Performance - BigBear.ai's revenue growth has been disappointing, with actual revenue increasing from $146 million in 2021 to only $158 million in 2024, far below its pre-merger projection of $550 million [2][6] - The company's net loss more than doubled from $124 million in 2021 to $257 million in 2024, indicating significant financial challenges [2][6] - The gross margin improved slightly from 23% in 2021 to 28.6% in 2024, but the overall financial outlook remains concerning [6] Leadership Changes - The company has experienced instability in leadership, with three different CEOs in three years, impacting strategic direction and execution [7][8] - Mandy Long, the former CEO, focused on cost-cutting and expansion through acquisitions, while Kevin McAleenan, the current CEO, is expected to continue this trend [7][8] Market Position and Challenges - BigBear.ai's slowdown has been attributed to the bankruptcy of its major customer, Virgin Orbit, increased competition, macroeconomic headwinds, and reliance on fixed-price contracts [5][9] - The company has tightened its relationship with the U.S. government, securing contracts with the Department of Defense and other agencies, which may provide future growth opportunities [9][10] Future Outlook - Analysts project a compound annual growth rate (CAGR) of 9% for BigBear.ai's revenue from 2024 to 2026, with adjusted EBITDA expected to turn positive by the end of this period [11] - Despite potential growth, the company's performance is expected to lag behind larger competitors like Palantir, which are achieving faster growth and higher profits [11][12] - If BigBear.ai meets Wall Street's expectations and achieves a CAGR of 10% over the next four years, its market cap could rise to $1.4 billion, but this would still likely underperform compared to the S&P 500 index [13]

Core Insights - BigBear.ai Holdings, Inc. (BBAI) is focusing on the intersection of artificial intelligence and national security, reporting $34.8 million in revenues for Q1 2025, a 5% increase year over year, driven by defense and homeland security contracts [1][9] - The company faces challenges with profitability, posting a net loss of $62 million in the same quarter, while adjusted EBITDA was negative at $7 million [2] - BigBear's backlog has grown to $385 million, a 30% increase from the previous year, indicating strong future potential [2] Financial Performance - The company ended Q1 2025 with $108 million in cash and reduced its convertible debt from $200 million to $142 million [2] - The Zacks Consensus Estimate for 2025 loss per share is projected at 41 cents, widening from 21 cents in the past 60 days, but still indicating an improvement from a loss of $1.10 per share a year ago [10] Competitive Landscape - BigBear.ai competes with established players like Palantir Technologies and Booz Allen Hamilton in the national security AI sector [5] - Palantir leads the government AI software market with strong federal relationships and profitability, setting a high competitive bar for BigBear [6] - Booz Allen provides robust consulting-led AI deployment, leveraging its scale and existing contracts to deliver AI-powered defense solutions [7] Stock Performance and Valuation - BigBear.ai shares have declined by 13.9% year to date, compared to a 6.7% decline in the Zacks Computers - IT Services industry [8] - The stock currently trades at a 6.33X forward 12-month price-to-sales (P/S) ratio, which is lower than its industry average [13]

Core Insights - The article discusses the significant growth opportunities in the artificial intelligence (AI) sector, emphasizing the importance of selecting the right AI stocks for investment [1][2] Company Comparison - C3.ai and BigBear.ai are highlighted as two popular AI stocks among retail investors, both presenting unique risks and opportunities [2] - C3.ai has demonstrated more consistent and accelerating growth over the past three years, while BigBear.ai has experienced more volatility in its growth metrics [6] - C3.ai's financial metrics suggest it is a stronger growth business compared to BigBear.ai, which faces challenges in converting its backlog into revenue [4][6] Cash Flow Analysis - Operating cash flow is a critical metric for growth investors, especially for unprofitable companies like C3.ai and BigBear.ai [7] - As of the end of March, BigBear.ai had cash and cash equivalents of $107.6 million, with a burn rate exceeding $30 million annually, indicating it can remain funded for multiple years [10] - C3.ai reported cash and cash equivalents of $164.4 million and marketable securities of $578.3 million, totaling $742.7 million in liquidity, allowing it to sustain a higher cash burn rate longer than BigBear.ai [11] Investment Recommendation - Based on growth rates and cash positions, C3.ai is identified as the more promising investment option compared to BigBear.ai, despite both companies being unprofitable and burning cash [12]

Core Viewpoint - Bragar Eagel & Squire, P.C. is investigating potential claims against BigBear.ai Holdings, Inc. due to a class action complaint alleging breaches of fiduciary duties by the board of directors [1][2]. Group 1: Allegations and Issues - The lawsuit claims that BigBear made materially false and misleading statements regarding its business operations and financial prospects [2]. - Specific allegations include deficient accounting review policies related to unusual transactions and improper accounting for the 2026 Convertible Notes [2]. - The errors in accounting led to misstated financial statements, which may require restatement, increasing the risk of delayed filings with the SEC [2]. Group 2: Legal Representation - Bragar Eagel & Squire, P.C. represents individual and institutional investors in complex litigation, including securities and derivative cases [4]. - Long-term stockholders of BigBear are encouraged to contact the firm for more information regarding their rights and the ongoing investigation [3][6].

Core Viewpoint - Kuehn Law, PLLC is investigating potential breaches of fiduciary duties by officers and directors of BigBear.ai Holdings, Inc. (NYSE: BBAI) towards shareholders [1] Group 1: Legal Investigation - A federal securities lawsuit alleges that insiders at BigBear.ai misrepresented or failed to disclose critical accounting issues, including deficient accounting review policies [2] - The lawsuit claims that BigBear incorrectly accounted for the 2026 Convertible Notes, failing to bifurcate the conversion option as required by accounting standards [2] - Due to these errors, BigBear's financial statements were inaccurate and may need to be restated, increasing the risk of delays in filing financial reports with the U.S. Securities and Exchange Commission [2] Group 2: Shareholder Action - Shareholders who purchased BBAI shares prior to March 31, 2022, are encouraged to contact Kuehn Law for potential legal action, as there may be limited time to enforce their rights [3] - Kuehn Law offers to cover all case costs and does not charge investor clients, emphasizing the importance of shareholder participation in maintaining market integrity [4]

Core Viewpoint - BigBear.ai (BBAI) is currently trading at a forward 12-month price-to-sales (P/S) ratio of 6.45X, which is higher than its three-year median of 1.9X and slightly above the sector's average of 6.38X, indicating a premium valuation despite recent stock performance [1][8]. Valuation and Performance - Over the past three months, BBAI shares have increased by 22.7%, outperforming the industry average gain of 5.3%, driven by optimism around defense spending and AI-driven government services [3]. - The company has a backlog of $385 million, reflecting a 30% year-over-year increase, which indicates strong customer demand and revenue visibility [13]. - Despite the positive backlog, the company reported a wider loss of $7 million in Q1 2025 compared to a loss of $1.6 million in the same period last year, highlighting operational challenges [15][18]. Strengths and Growth Opportunities - BigBear.ai operates at the intersection of AI, national security, and critical infrastructure, benefiting from long-term trends in defense spending [7]. - The company has secured significant contracts, including a recent agreement with the U.S. Department of Defense, validating its relevance in critical AI solutions [7]. - Strategic partnerships with major technology firms like Amazon, Palantir, and Autodesk enhance the credibility and effectiveness of its AI solutions, indicating increasing enterprise adoption [12]. Challenges and Risks - Variability in federal procurement processes has led to delays in funding and contract awards, impacting operational efficiency and increasing SG&A expenses [15]. - Revenue growth has been modest at 5% year-over-year, with total revenue reported at $34.8 million, which missed expectations by 3.2% [16]. - Increased R&D spending has pressured margins, with adjusted gross margin dipping to 28.6% from 29.1% year-over-year [17]. Financial Position - The company's cash position improved significantly, reporting $108 million at the end of Q1 2025, more than doubling from year-end 2024, while also reducing debt by converting $58 million in convertible notes into equity [14]. - Despite the improved liquidity, the company faces a substantial net loss of $62 million, although this is an improvement from a loss of $127.8 million a year earlier [18]. Market Sentiment and Future Outlook - The Zacks Consensus Estimate for 2025 loss per share has widened to 41 cents from 21 cents over the past 60 days, indicating declining investor confidence [19]. - The stock's current valuation appears to price in more progress than the company has delivered, raising concerns about profitability visibility and operational execution [21].

Core Viewpoint - A class action securities lawsuit has been filed against BigBear.ai Holdings, alleging securities fraud that affected investors between March 31, 2022, and March 25, 2025 [1]. Group 1: Allegations of Fraud - The lawsuit claims that BigBear.ai Holdings made false statements and concealed deficiencies in accounting review policies related to unusual or complex transactions [2]. - It is alleged that the company incorrectly determined the treatment of the conversion option within the 2026 Convertible Notes, failing to bifurcate it as required by accounting standards [2]. - The misstatements in financial statements are said to require restatement, increasing the risk of delays in filing reports with the SEC [2]. Group 2: Legal Process and Participation - Investors who suffered losses during the specified timeframe have until June 10, 2025, to request appointment as lead plaintiff, although participation in any recovery does not require this [3]. - Class members may be entitled to compensation without any out-of-pocket costs or fees [3]. Group 3: Firm Background - Levi & Korsinsky has a history of securing significant settlements for shareholders and is recognized as one of the top securities litigation firms in the United States [4].

Core Viewpoint - A class action securities lawsuit has been filed against BigBear.ai Holdings, alleging securities fraud that affected investors between March 31, 2022, and March 25, 2025 [1]. Group 1: Lawsuit Details - The complaint claims that BigBear.ai Holdings had inadequate accounting review policies for reporting and disclosing certain complex transactions [2]. - It is alleged that the company incorrectly accounted for the 2026 Convertible Notes, failing to separate the conversion option as required by accounting standards [2]. - The errors led to misstatements in previously issued financial statements, which may need to be restated, increasing the risk of delayed filings with the SEC [2]. Group 2: Investor Information - Investors who suffered losses during the specified timeframe have until June 10, 2025, to request appointment as lead plaintiff, although participation does not require this role [3]. - Class members may be entitled to compensation without any out-of-pocket costs or fees [3]. Group 3: Legal Firm Background - Levi & Korsinsky has a history of securing significant settlements for shareholders and is recognized as one of the top securities litigation firms in the U.S. [4].