BigBear.ai Holdings, Inc. (NYSE: BBAI) (“BigBear.ai” or the “Company”), a leader in AI-powered decision intelligence solutions, today announced financial results for the second quarter of 2023.
BigBear.ai CEO Mandy Long said, “We continue to accomplish our goals in this foundational year for BigBear.ai. Our recent Army Test and Evaluation Command Integrated Mission Management System (AIMMS) win and Global Force Information Management (GFIM) Phase II system extension are evidence that we have momentum in the markets we serve.”
Financial Highlights
- Revenue grew 2.2% to $38.5 million for the second quarter of 2023, compared to $37.6 million for the second quarter of 2022.
- Gross margin of 23.3% in the second quarter of 2023, a decrease from 25.5% in the second quarter of 2022, primarily driven by the elimination of revenue and gross margin from Virgin Orbit due to their bankruptcy announcement in the second quarter of 2023.
- Net loss of $16.9 million for the second quarter of 2023, which includes $3.1 million of non-cash expense related to the change in fair value of warrants that were issued in 2023, and $4.0 million of equity-based compensation expense, compared to a net loss of $56.8 million for the second quarter of 2022 which included $35.3 million of non-cash goodwill impairment charges and equity-based compensation expense of $5.1 million.
- Non-GAAP Adjusted EBITDA* of $(3.2) million for the second quarter of 2023 compared to $(7.7) million for the second quarter of 2022, primarily driven by reduced operating expenses including a 37% reduction in SG&A expenses compared to second quarter of 2022.
- Ending backlog of $206 million, growing 5% compared to Q1 2023.
New Developments
- U.S. Army AIMMS: An exciting win from the quarter was being selected as the single provider by the U.S. Army to implement Phase 2 of the U.S. Army Test and Evaluation Command (ATEC) Integrated Mission Management System (AIMMS) in a single award contract worth over $7.7 million dollars over seven months. BigBear.ai was selected to be the single provider for Phase 2 after a competition following Phase 1. This Other Transaction Agreement (OTA) or prototype contract has the potential to result in a follow-on production, sole-source, contract.
- U.S. Army GFIM OE Extension: We received a 6-month extension from the U.S. Army as the prime contractor for continuing work on the Global Force Information Management (GFIM) Objective Environment (OE) system, in a 6-month contract valued at just over $8.5M. The extension builds on BigBear.ai’s previous work in Phase 1 and Phase 2 and continues to show the strength of our relationship with the U.S. Army. The Government’s current planning approach for GFIM OE is to demonstrate prototypes in two overarching Phases, culminating with a production release.
- Leadership Updates: We continue to attract top talent following the onboarding of Theodore Tanner Jr. as our new Chief Technology Officer (CTO). Tanner’s extensive experience and expertise, most recently serving as CTO and Chief Architect at IBM Watson Health, now Merative, will be instrumental in delivering technology-led solutions for leaders in government and defense, manufacturing and warehouse operations, and healthcare and life sciences. His decades of experience working in AI architecture across some of the world’s largest organizations will only fuel further growth.
- Registered Direct Offering: Successfully completed a registered direct offering of common stock and warrants for aggregate gross proceeds of approximately $25M, further solidifying our financial foundation and bolstering our cash position.
Financial Outlook
The following information and other sections of this release contain forward-looking statements, which are based on the Company’s current expectations. Actual results may differ materially from those projected. It is the Company’s practice not to incorporate adjustments into its financial outlook for proposed acquisitions, divestitures, changes in law, or new accounting standards until such items have been consummated, enacted, or adopted. For additional factors that may impact the Company’s actual results, refer to the “Forward-Looking Statements” section in this release.
For the year-ended December 31, 2023, the Company continues to project:
- Revenue between $155 million and $170 million
- Single Digit Negative Adjusted EBITDA*, in millions
Summary of Results for the Second Quarter and Year to Date Periods Ended June 30, 2023 and June 30, 2022 (Unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended
| ||||||||||||||
$ thousands (expect per share amounts) | 2023 | 2022 | 2023 | 2022 | |||||||||||
Revenues | $ | 38,459 | $ | 37,613 | $ | 80,613 | $ | 74,003 | |||||||
Cost of revenues | 29,496 | 28,023 | 61,437 | 54,546 | |||||||||||
Gross margin | 8,963 | 9,590 | 19,176 | 19,457 | |||||||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative | 16,930 | 26,952 | 37,292 | 48,972 | |||||||||||
Research and development | 2,225 | 2,535 | 3,353 | 5,409 | |||||||||||
Restructuring charges | 25 | — | 780 | — | |||||||||||
Transaction expenses | — | 186 | — | 1,585 | |||||||||||
Goodwill impairment | — | 35,252 | — | 35,252 | |||||||||||
Operating loss | (10,217 | ) | (55,335 | ) | (22,249 | ) | (71,761 | ) | |||||||
Interest expense | 3,560 | 3,554 | 7,116 | 7,109 | |||||||||||
Net increase (decrease) in fair value of derivatives | 3,121 | (199 | ) | 13,688 | (1,462 | ) | |||||||||
Other (income) expense | — | (26 | ) | — | 4 | ||||||||||
Loss before taxes | (16,898 | ) | (58,664 | ) | (43,053 | ) | (77,412 | ) | |||||||
Income tax (benefit) expense | (3 | ) | (1,820 | ) | 56 | (1,743 | ) | ||||||||
Net loss | $ | (16,895 | ) | $ | (56,844 | ) | $ | (43,109 | ) | $ | (75,669 | ) | |||
Basic and diluted net loss per share | $ | (0.12 | ) | $ | (0.45 | ) | $ | (0.30 | ) | $ | (0.59 | ) | |||
EBITDA* and Adjusted EBITDA* for the Second Quarter and Year to Date Periods Ended June 30, 2023 and June 30, 2022 (Unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended
| ||||||||||||||
$ thousands | 2023 | 2022 | 2023 | 2022 | |||||||||||
Net loss | $ | (16,895 | ) | $ | (56,844 | ) | $ | (43,109 | ) | $ | (75,669 | ) | |||
Interest expense | 3,560 | 3,554 | 7,116 | 7,109 | |||||||||||
Income tax (benefit) expense | (3 | ) | (1,820 | ) | 56 | (1,743 | ) | ||||||||
Depreciation and amortization | 1,979 | 1,954 | 3,965 | 3,726 | |||||||||||
EBITDA | (11,359 | ) | (53,156 | ) | (31,972 | ) | (66,577 | ) | |||||||
Adjustments: | |||||||||||||||
Equity-based compensation | 3,994 | 5,080 | 7,799 | 8,938 | |||||||||||
Employer payroll taxes related to equity-based compensation(1) | 174 | — | 357 | — | |||||||||||
Net increase (decrease) in fair value of derivatives(2) | 3,121 | (199 | ) | 13,688 | (1,462 | ) | |||||||||
Restructuring charges(3) | 25 | — | 780 | — | |||||||||||
Non-recurring strategic initiatives(4) | 813 | — | 2,321 | — | |||||||||||
Non-recurring integration costs(5) | — | 2,024 | — | 4,399 | |||||||||||
Capital market advisory fees(6) | — | 38 | — | 741 | |||||||||||
Commercial start-up costs(7) | — | 3,063 | — | 6,490 | |||||||||||
Transaction expenses(8) | — | 186 | — | 1,585 | |||||||||||
Goodwill impairment(9) | — | 35,252 | — | 35,252 | |||||||||||
Adjusted EBITDA | $ | (3,232 | ) | $ | (7,712 | ) | $ | (7,027 | ) | $ | (10,634 | ) | |||
(1) | Includes employer payroll taxes due upon the vesting of restricted stock units granted to employees. | |
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