AI-driven analytics and cyber solutions provider BigBear.ai (BBAI) is set to report fourth-quarter earnings after the market closes on Thursday, March 6. Investors are eager to see if the company can maintain its growth trajectory amidst a challenging landscape.
Despite winning new contracts and expanding its business scope, BigBear is still a money-losing operation burning through cash. Let’s see what investors can expect tomorrow.
Wall Street estimates quarterly revenue of $44 million, an 8% increase from the $40.8 million it generated in the year-ago period, reflecting Wall Street’s optimism over the steady growth in its government-focused AI solutions.
Earnings, though, are actually expected to be losses of $0.07, but that is a significant improvement from the $0.14 per share loss in last year’s fourth quarter. For the full year, revenue is forecast at $165.2 million, up 6.4% from 2023, but EPS losses are projected at $0.38, slightly worse than last year’s $0.35.
Analysts have a consensus buy rating on the stock and a $5.25 per share one-year price target on BBAI shares, implying 15% upside from current trading levels.
The company is winning new contracts that could significantly bolster its Q4 results. In December, BigBear won a five-year, $165 million contract with the U.S. Army to deliver a Global Force Information Management system, integrating 15 systems into a single platform. This deal is its largest ever and signals strong demand for its AI-driven decision-making tools, especially in defense.
Additionally, BigBear’s Pangiam division, which it acquired last year, allowed it to expand into commercial markets, securing deals with airlines for facial recognition tech that could drive revenue higher.
However, there are notable headwinds, too. Last quarter’s results were worse than expected as net losses of $0.10 per share widely missed projections of just $0.03. BigBear said delays in government contract awards were the culprit, a not uncommon issue with government contractors,
Yet BigBear.ai faces increased competition from larger players like Palantir Technologies (PLTR), which has a $1 billion contract backlog and broader commercial exposure. BigBear.ai’s heavy reliance on government contracts – they account for 85% of revenue – makes it vulnerable to budget cuts under President Trump, which is scrutinizing defense spending. Coupled with rising R&D costs, and further margin pressure is going to be evident.
More concerning is the potential for a global trade war to slow government spending on non-essential AI projects.
Investors can expect BigBear.ai to likely meet or slightly exceed revenue estimates, driven by new contracts, though profitability is still likely to be a ways off. The Army contract and commercial expansion are positive, but delays, bigger and better-financed competition, and potential budget constraints could weigh on results.
BBAI stock goes for $4.50 per share, a greater than 56% decline from the all-time high hit just last month. The AI shop has a lot to prove tomorrow, but I wouldn’t be getting in ahead of the results until it can consistently show it is heading in the right direction.
