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Share Name | Share Symbol | Market | Type |
---|---|---|---|
BigBear ai Holdings Inc | NYSE:BBAI | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.075 | 5.40% | 1.465 | 1.48 | 1.36 | 1.36 | 1,335,446 | 15:55:39 |
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 first quarter of 2024 and issued an investor letter that has been posted to the Investor Relations section of the Company’s website.
BigBear.ai CEO Mandy Long said, “Today’s results reflect BigBear.ai’s steady progress in the first quarter of 2024 as we continue to operationalize AI at the edge for our customers in National Security, Digital Identity, and Supply Chain Management.”
“I am proud of the positive momentum and spirit within the business, driven by a relentless focus on delivering our solutions in operational readiness, autonomy at the edge, contested logistics, modeling & simulation, and digital identity for our customers,” she continued.
Financial Highlights
Momentum
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, 2024, the Company continues to project:
Summary of Results for the First Quarter Ended March 31, 2024 and March 31, 2023 (Unaudited)
Three Months Ended
March 31,
$ thousands (expect per share amounts)
2024
2023
Revenues
$
33,121
$
42,154
Cost of revenues
26,135
31,941
Gross margin
6,986
10,213
Operating expenses:
Selling, general and administrative
16,948
20,362
Research and development
1,144
1,128
Restructuring charges
860
755
Transaction expenses
1,103
—
Goodwill impairment
85,000
—
Operating loss
(98,069
)
(12,032
)
Interest expense
3,555
3,556
Net increase in fair value of derivatives
23,992
10,567
Other income
(455
)
—
Loss before taxes
(125,161
)
(26,155
)
Income tax (benefit) expense
(14
)
59
Net loss
$
(125,147
)
$
(26,214
)
Basic and diluted net loss per share
$
(0.67
)
$
(0.19
)
Weighted-average shares outstanding:
Basic
187,279,204
138,548,599
Diluted
187,279,204
138,548,599
EBITDA* and Adjusted EBITDA* for the First Quarter Ended March 31, 2024 and March 31, 2023 (Unaudited)
Three Months Ended
March 31,
$ thousands
2024
2023
Net loss
$
(125,147
)
$
(26,214
)
Interest expense
3,555
3,556
Interest income
(447
)
—
Income tax (benefit) expense
(14
)
59
Depreciation and amortization
2,439
1,986
EBITDA
(119,614
)
(20,613
)
Adjustments:
Equity-based compensation
5,156
3,805
Employer payroll taxes related to equity-based compensation(1)
664
183
Net increase in fair value of derivatives(2)
23,992
10,567
Restructuring charges(3)
860
755
Non-recurring strategic initiatives(4)
1,334
1,508
Non-recurring litigation(5)
(121
)
—
Transaction expenses(6)
1,103
—
Goodwill impairment(7)
85,000
—
Adjusted EBITDA
$
(1,626
)
$
(3,795
)
(1)
Includes employer payroll taxes due upon the vesting of equity awards granted to employees.
(2)
The increase in fair value of derivatives during the quarter ended March 31, 2024, relates to the $52.9 million loss recorded upon the exercise of the 2023 RDO and 2023 PIPE Warrants (the “2023 Warrants”) in connection with the warrant exercise agreements entered into effect February 27, 2024 and March 4, 2024. This loss was offset by gains of $10.6 million, net of cash proceeds received, related to the issuance of warrants in 2024 (the “2024 Warrants”), In addition, an $18.3 million reduction in fair value was recorded on the 2024 Warrants issued in connection with the warrant exercise agreements as the fair value decreased from the issue date to quarter end.
(3)
In the first quarter of 2024 and first quarter of 2023, the Company incurred employee separation costs associated with a strategic review of the Company’s capacity and future projections to better align the organization and cost structure and improve the affordability of its products and services.
(4)
Non-recurring professional fees related to the execution of certain strategic initiatives of the Company.
(5)
Non-recurring litigation consists primarily of legal settlements and related fees for specific proceedings that we have determined arise outside of the ordinary course of business based on the following considerations which we assess regularly: (1) the frequency of similar cases that have been brought to date, or are expected to be brought within two years; (2) the complexity of the case; (3) the nature of the remedy(ies) sought, including the size of any monetary damages sought; (4) offensive versus defensive posture of us; (5) the counterparty involved; and (6) our overall litigation strategy.
(6)
Transaction expenses during the quarter ended March 31, 2024 consist primarily of diligence, legal, and other related expenses incurred associated with the Pangiam Acquisition.
(7)
During the quarter ended March 31, 2024, the Company recognized a non-cash goodwill impairment charge primarily driven by a decrease in share price during the quarter compared to the share price of the equity issued as consideration for the purchase of Pangiam.
*Refer to the “Non-GAAP Financial Measures” section in this press release.
Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 (Unaudited)
$ in thousands
March 31,
2024
December 31,
2023
Assets
Current assets:
Cash and cash equivalents
$
81,412
$
32,557
Accounts receivable, less allowance for credit losses
36,584
21,949
Contract assets
2,379
4,822
Prepaid expenses and other current assets
4,661
4,449
Total current assets
125,036
63,777
Non-current assets:
Property and equipment, net
1,570
997
Goodwill
119,769
48,683
Intangible assets, net
120,444
82,040
Deferred tax assets
—
—
Right-of-use assets
9,701
4,041
Other non-current assets
1,107
372
Total assets
$
377,627
$
199,910
Liabilities and stockholders’ deficit
Current liabilities:
Accounts payable
$
6,215
$
11,038
Short-term debt, including current portion of long-term debt
826
1,229
Accrued liabilities
21,515
16,233
Contract liabilities
3,853
879
Current portion of long-term lease liability
848
779
Derivative liabilities
24,956
37,862
Other current liabilities
4,857
602
Total current liabilities
63,070
68,622
Non-current liabilities:
Long-term debt, net
194,761
194,273
Long-term lease liability
11,300
4,313
Deferred tax liabilities
14
37
Other non-current liabilities
—
—
Total liabilities
269,145
267,245
Stockholders’ deficit:
Common stock
25
17
Additional paid-in capital
604,384
303,428
Treasury stock, at cost 9,952,803 shares at March 31, 2024 and December 31, 2023
(57,350
)
(57,350
)
Accumulated deficit
(438,577
)
(313,430
)
Total stockholders’ deficit
108,482
(67,335
)
Total liabilities and stockholders’ deficit
$
377,627
$
199,910
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and March 31, 2023 (Unaudited)
Three Months Ended
March 31,
$ in thousands
2024
2023
Cash flows from operating activities:
Net loss
$
(125,147
)
$
(26,214
)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense
2,439
1,986
Amortization of debt issuance costs
506
500
Equity-based compensation expense
5,157
3,805
Goodwill impairment
85,000
—
Non-cash lease expense
94
(35
)
Provision for doubtful accounts
171
882
Deferred income tax (benefit) expense
(23
)
54
Net increase in fair value of derivatives
23,992
10,567
Loss on sale of property and equipment
—
8
Changes in assets and liabilities:
(Increase) in accounts receivable
(8,957
)
(3,469
)
Decrease (increase) in contract assets
2,443
(1,115
)
Decrease in prepaid expenses and other assets
950
1,488
(Decrease) in accounts payable
(5,960
)
(4,914
)
Increase in accrued liabilities
2,598
4,066
Increase in contract liabilities
1,826
325
Increase in other liabilities
552
49
Net cash used in operating activities
(14,359
)
(12,017
)
Cash flows from investing activities:
Acquisition of business, net of cash acquired
13,935
—
Purchases of property and equipment
(38
)
—
Capitalized software development costs
(1,643
)
—
Net cash provided by investing activities
12,254
—
Cash flows from financing activities:
Proceeds from issuance of shares for exercised RDO and PIPE warrants
53,809
—
Proceeds from issuance of Private Placement shares
—
25,000
Payment of Private Placement transaction costs
—
(3,025
)
Repayment of short-term borrowings
(403
)
(763
)
Payments of tax withholding from the issuance of common stock
(2,532
)
—
Net cash provided by financing activities
50,960
21,212
Net increase in cash and cash equivalents
48,855
9,195
Cash and cash equivalents at the beginning of period
32,557
12,632
Cash and cash equivalents at the end of the period
$
81,412
$
21,827
Forward-Looking Statements
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding BigBear.ai’s industry, future events, and other statements that are not historical facts. These statements are based on various assumptions, whether or not identified herein, and on the current expectations of BigBear.ai’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by you or any other investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond our control. These forward-looking statements are subject to a number of risks and uncertainties, including those relating to: changes in domestic and foreign business, market, financial, political, and legal conditions; the uncertainty of projected financial information; delays caused by factors outside of our control, including changes in fiscal or contracting policies or decreases in available government funding; changes in government programs or applicable requirements; budgetary constraints, including automatic reductions as a result of “sequestration” or similar measures and constraints imposed by any lapses in appropriations for the federal government or certain of its departments and agencies; influence by, or competition from, third parties with respect to pending, new, or existing contracts with government customers; changes in our ability to successfully compete for and receive task orders and generate revenue under Indefinite Delivery/Indefinite Quantity contracts; our ability to realize the benefits of the strategic partnerships; risks that the new businesses will not be integrated successfully or that the combined companies will not realize estimated cost savings; failure to realize anticipated benefits of the combined operations; potential delays or changes in the government appropriations or procurement processes, including as a result of events such as war, incidents of terrorism, natural disasters, and public health concerns or epidemics, such as the coronavirus outbreak; the identified material weakness in our internal controls over financial reporting (including the timeline to remediate the material weakness); increased or unexpected costs or unanticipated delays caused by other factors outside of our control, such as performance failures of our subcontractors; the rollout of the business and the timing of expected business milestones; the effects of competition on our future business; our ability to obtain and access financing in the future; and those factors discussed in the Company’s reports and other documents filed with the SEC, including under the heading “Risk Factors.” If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that BigBear.ai presently does not know or that BigBear.ai currently believes are immaterial which could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect BigBear.ai’s expectations, plans or forecasts of future events and views as of the date of this release. BigBear.ai anticipates that subsequent events and developments will cause BigBear.ai’s assessments to change. However, while BigBear.ai may elect to update these forward-looking statements at some point in the future, BigBear.ai specifically disclaims any obligation to do so. Accordingly, undue reliance should not be placed upon the forward-looking statements.
Non-GAAP Financial Measures
The financial information and data contained in this press release is unaudited. Some of the financial information and data contained in this press release, such as EBITDA, Adjusted EBITDA, and Recurring SG&A have not been prepared in accordance with United States generally accepted accounting principles (“GAAP”). To supplement our unaudited condensed consolidated financial statements, which are prepared and presented in accordance with GAAP in our press release, we also report certain non-GAAP financial measures. A “non-GAAP financial measure” refers to a numerical measure of a company’s historical or future financial performance, financial position, or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in such company’s financial statements. Non-GAAP financial measures should not be considered in isolation or as a substitute for the relevant GAAP measures and should be read in conjunction with information presented on a GAAP basis. Because not all companies use identical calculations, our presentation of non-GAAP measures may not be comparable to other similarly titled measures of other companies.
The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP and should not be considered measures of BigBear.ai’s liquidity. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, many of the adjustments to our GAAP financial measures reflect the exclusion of certain items, as defined in our non-GAAP definitions below, which are recurring and will be reflected in our financial results for the foreseeable future. In addition, these measures may be different from non-GAAP financial measures used by other companies, even where similarly titled, limiting their usefulness for comparison purposes and therefore should not be used to compare BigBear.ai’s performance to that of other companies. We endeavor to compensate for the limitation of the non-GAAP financial measures presented by also providing the most directly comparable GAAP measures and descriptions of the reconciling items and adjustments to derive the non-GAAP financial measures.
We believe these non-GAAP financial measures provide investors and analysts with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key measures used by management to operate and analyze our business over different periods of time.
EBITDA is defined as net loss before interest expense, interest income, income tax (benefit) expense and depreciation and amortization. Adjusted EBITDA is defined as EBITDA further adjusted for equity-based compensation, employer payroll taxes related to equity-based compensation, net increase in fair value of derivatives, restructuring charges, non-recurring strategic initiatives, non-recurring litigation, transaction expenses and goodwill impairment.
Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of Revenue.
Recurring SG&A is defined as selling, general and administrative expense further adjusted for equity-based compensation allocated to selling, general and administrative expense, non-recurring strategic integration costs and strategic initiatives, non-recurring litigation, and reserves on Virgin Orbit receivables.
Similar excluded expenses may be incurred in future periods when calculating these measures. BigBear.ai believes these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to the Company’s financial condition and results of operations. BigBear.ai believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating projected operating results and trends and in comparing BigBear.ai’s financial measures with other similar companies, many of which present similar non-GAAP financial measures to investors.
Management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expense and income items are excluded or included in determining these non-GAAP financial measures.
Management uses EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and Recurring SG&A as non-GAAP performance measures which are reconciled to the most directly comparable GAAP measure, in the tables below. The Company does not reconcile forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measure (or otherwise describe such forward-looking GAAP measure) because it is not able to forecast the most directly comparable measure calculated and presented in accordance with GAAP without unreasonable effort. Certain elements of the composition of the GAAP amounts are not predictable, making it impracticable for the Company to forecast. As a result, no guidance for the Company’s net (loss) income or reconciliation of the Company’s Adjusted EBITDA guidance is provided. For the same reasons, the Company is unable to assess the probable significance of the unavailable information, which could have a potentially significant impact on its future net (loss) income.
We present reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures in the tables below.
Adjusted EBITDA Reconciliation* for the First Quarter Ended March 31, 2024 and March 31, 2023 (Unaudited)
Quarters Ended
$ in thousands
1Q 24
1Q 23
Revenue
$
33,121
$
42,154
Net loss
(125,147
)
(26,214
)
Interest expense
3,555
3,556
Interest income
(447
)
—
Income tax (benefit) expense
(14
)
59
Depreciation & amortization
2,439
1,986
EBITDA
$
(119,614
)
$
(20,613
)
Adjustments:
Equity-based compensation
5,156
3,805
Employer payroll taxes related to equity-based compensation
664
183
Net increase in fair value of derivatives
23,992
10,567
Restructuring charges
860
755
Non-recurring integration costs and strategic initiatives
1,334
1,508
Non-recurring litigation
(121
)
—
Transaction expenses
1,103
—
Goodwill impairment
85,000
—
Adjusted EBITDA
$
(1,626
)
(3,795
)
Gross Margin
21.1
%
24.2
%
Net Loss Margin
(377.8
)%
(62.2
)%
Adjusted EBITDA Margin
(4.9
)%
(9.0
)%
Recurring SG&A Reconciliation* for the First Quarter Ended March 31, 2024 and March 31, 2023 (Unaudited)
Quarters Ended
$ in thousands
1Q 24
1Q 23
Selling, general and administrative
$
16,948
$
20,362
Equity-based compensation allocated to selling, general and administrative expense
(2,171
)
(2,803
)
Non-recurring integration costs and strategic initiatives
(1,334
)
(1,508
)
Non-recurring litigation
121
—
Virgin Orbit AR Reserve
-
(750
)
Adjusted (recurring) selling, general and administrative expense
$
13,564
$
15,301
About BigBear.ai
BigBear.ai is a leading provider of AI-powered decision intelligence solutions for national security, digital identity, and supply chain management. Customers and partners rely on BigBear.ai’s predictive analytics capabilities in highly complex, distributed, mission-based operating environments. Headquartered in Columbia, Maryland, BigBear.ai is a public company traded on the NYSE under the symbol BBAI. For more information, visit https://bigbear.ai/ and follow BigBear.ai on LinkedIn: @BigBear.ai and X: @BigBearai.
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BigBear.ai investors@bigbear.ai
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