BigBear.ai(US:BBAI)2025-11-10 21:29Mergers and Acquisitions - BigBear.ai entered into a merger agreement to acquire Ask Sage for a total purchase price of $250 million, consisting of $140 million in cash and an option for $110 million in either cash or stock [197]. Financial Performance - Revenues for the three months ended September 30, 2025, were $33.1 million, a decrease of $8.4 million or 20.1% compared to $41.5 million in the same period of 2024 [227]. - For the nine months ended September 30, 2025, revenues were $100.4 million, a decrease of $14.0 million or 12.3% compared to $114.4 million in 2024 [237]. - The company reported a net loss before depreciation and amortization of $34.7 million for the nine months ended September 30, 2025, compared to a net loss of $22.2 million for the same period in 2024 [293][294]. Expenses - Cost of revenues decreased by $5.0 million or 16.3% to $25.7 million for the three months ended September 30, 2025, with cost of revenues as a percentage of total revenues increasing to 78% from 74% [228]. - SG&A expenses increased by $7.8 million or 44.4% to $25.3 million for the three months ended September 30, 2025, representing 76% of total revenues compared to 42% in 2024 [229]. - Research and development expenses decreased by $0.4 million or 11.6% to $3.4 million for the three months ended September 30, 2025, driven by reduced headcount and project timing [230]. - Research and development expenses increased by $3.4 million or 39.9% to $11.9 million for the nine months ended September 30, 2025, driven by increased headcount and project timing [240]. - The company reported restructuring charges related to strategic cost-saving initiatives aimed at improving product affordability [218]. - Restructuring charges of $0.7 million were recognized in the three months ended September 30, 2025, compared to none in 2024, reflecting strategic cost-saving initiatives [231]. Debt and Financing - Approximately $182.3 million of 2026 Convertible Notes were exchanged for new 2029 Convertible Notes, which bear interest rates of 6.0% per annum in cash or 7.0% if paid in kind [201]. - Interest expense includes costs associated with debt agreements, impacting overall financial condition [222]. - Interest expense decreased by 27.1% to $14.1 million for the nine months ended September 30, 2025, down from $19.4 million in 2024 [247]. - Total debt decreased to $142.3 million as of September 30, 2025, from $200.8 million as of December 31, 2024, reflecting a reduction of approximately 29% [278]. - The Company issued $200 million of 2026 Convertible Notes, which are convertible into approximately 18.8 million shares at an adjusted conversion price of $10.61 [279][280]. - The 2029 Convertible Notes, issued in exchange for the 2026 Convertible Notes, have an initial conversion price of $3.55 per share and bear interest rates of 6.0% to 10.0% depending on liquidity conditions [281][284]. Cash Flow and Liquidity - Available cash and cash equivalents increased significantly to $456.6 million as of September 30, 2025, compared to $50.1 million as of December 31, 2024 [277]. - Free cash flow for the nine months ended September 30, 2025, was $(24.2) million, an improvement from $(31.0) million in 2024 [256]. - For the nine months ended September 30, 2025, net cash used in operating activities was $20.1 million, compared to $23.3 million for the same period in 2024, reflecting a decrease of approximately 13.5% [293][294]. - The net cash provided by financing activities for the nine months ended September 30, 2025, was $690.1 million, significantly higher than $50.2 million in 2024, indicating a substantial increase of approximately 1273.5% [297][298]. - Net cash used in investing activities for the nine months ended September 30, 2025, was $262.9 million, primarily due to purchases of held-to-maturity investments of $258.7 million [295]. Backlog and Future Revenue - The backlog represents the estimated dollar value of contracts awarded but not yet performed, indicating potential future revenue [257]. - Funded backlog includes remaining contract value for which funding is appropriated, while unfunded backlog represents contract value without appropriated funding [261]. - Total backlog as of September 30, 2025, is $376.4 million, down from $418.3 million as of December 31, 2024, representing a decrease of approximately 10% [262]. Other Financial Metrics - The net increase in fair value of derivatives for the nine months ended September 30, 2025, was $143.0 million, a significant increase of 893.1% compared to $14.4 million in 2024 [246]. - The net decrease in fair value of derivatives was $(26.1) million for the three months ended September 30, 2025, a significant increase of 1864.3% compared to $(1.3) million in 2024 [232]. - Other income, net, showed a loss of $5.0 million for the nine months ended September 30, 2025, compared to a loss of $1.7 million in 2024, reflecting a year-over-year change of 192.1% [249]. - Income tax expense increased by 154.5% to $56,000 for the nine months ended September 30, 2025, from $22,000 in 2024 [250]. - The company recognized a non-cash goodwill impairment charge of $70.6 million during the six months ended June 30, 2025, primarily due to a change in forecast [254].