BigBear.ai Holdings, Inc. (BBAI) Bundle
Understanding BigBear.ai Holdings, Inc. (BBAI) Revenue Streams
Understanding BigBear.ai Holdings, Inc.’s Revenue Streams
BigBear.ai Holdings, Inc. reported total revenues of $41,505 million for the three months ended September 30, 2024, compared to $33,988 million for the same period in 2023, reflecting a year-over-year growth rate of 22.3%.
Breakdown of Primary Revenue Sources
The company's revenue is primarily derived from three contract types:
- Time and materials: $23,722 million (57.2% of total revenues)
- Firm fixed price: $13,154 million (31.7% of total revenues)
- Cost-reimbursable: $4,629 million (11.1% of total revenues)
| Contract Type | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | Year-over-Year Growth (%) |
|---|---|---|---|
| Time and Materials | $23,722 | $19,102 | 24.3% |
| Firm Fixed Price | $13,154 | $10,376 | 27.0% |
| Cost-Reimbursable | $4,629 | $4,510 | 2.6% |
Year-over-Year Revenue Growth Rate
For the nine months ended September 30, 2024, total revenues were $114,409 million, slightly down from $114,601 million in the same period in 2023, representing a year-over-year decline of 0.2%.
Contribution of Different Business Segments to Overall Revenue
The contribution from different business segments for the nine months ended September 30, 2024, is detailed below:
- Customer A: $17,135 million (15% of total revenues)
- Customer B: $18,747 million (16% of total revenues)
- Customer C: $14,321 million (13% of total revenues)
- Others: $64,206 million (56% of total revenues)
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams include:
- Growth in Time and Materials contracts due to increased project engagements.
- Steady growth in Firm Fixed Price contracts, indicating a shift towards more predictable revenue models.
- Minimal growth in Cost-Reimbursable contracts, suggesting stable project scopes.
Overall, the company continues to rely heavily on its established customer base, with key customers contributing significantly to total revenues.
A Deep Dive into BigBear.ai Holdings, Inc. (BBAI) Profitability
A Deep Dive into BigBear.ai Holdings, Inc. Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit margin was 25.9%, compared to 24.8% for the same period in 2023. For the nine months ended September 30, 2024, the gross profit margin was 25.2%, slightly down from 25.9% in the previous year.
Operating Profit Margin: The operating loss for the three months ended September 30, 2024, was ($10,539,000), resulting in an operating margin of (25.4)%. In contrast, the operating loss for the same period in 2023 was ($8,212,000), equating to an operating margin of (24.2)%.
Net Profit Margin: The net loss for the three months ended September 30, 2024, was ($12,176,000), resulting in a net profit margin of (29.4)%. For the same period in 2023, the company reported a net income of $3,999,000, leading to a net profit margin of 11.8%.
| Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Gross Profit Margin | 25.9% | 24.8% | 25.2% | 25.9% |
| Operating Profit Margin | (25.4)% | (24.2)% | (109.4)% | (26.4)% |
| Net Profit Margin | (29.4)% | 11.8% | (130.2)% | (34.2)% |
Trends in Profitability: The profitability metrics indicate a decline in net profitability, with a significant drop from a net income in Q3 2023 to a net loss in Q3 2024. The operating loss also increased year-over-year, reflecting challenges in managing costs relative to revenue.
Comparison with Industry Averages: The average gross profit margin in the technology sector is approximately 40%, while BigBear.ai's gross profit margin of 25.9% indicates below-average performance. The operating margin for the industry typically ranges from 10% to 20%, suggesting that BigBear.ai's operating margin of (25.4)% is significantly below industry standards.
Operational Efficiency Analysis: The company’s cost of revenues for Q3 2024 was $30,739,000, which is 74% of total revenues. This is a slight improvement from 75% in Q3 2023, indicating marginal operational efficiency gains. However, total operating expenses increased, with selling, general, and administrative expenses reaching $17,485,000, up from $15,533,000 in Q3 2023.
The increase in research and development expenses for the nine months ended September 30, 2024, amounted to $8,529,000, up from $3,004,000 in the same period of the previous year, reflecting a strategic push towards innovation but impacting overall profitability.
Financial Summary: The financial health of BigBear.ai Holdings, Inc. reveals significant challenges in maintaining profitability. The increase in operating losses and net losses, along with below-average profit margins compared to industry peers, highlights areas needing strategic improvement.
Debt vs. Equity: How BigBear.ai Holdings, Inc. (BBAI) Finances Its Growth
Debt vs. Equity: How BigBear.ai Holdings, Inc. Finances Its Growth
As of September 30, 2024, BigBear.ai Holdings, Inc. has a total debt of $200,000,000, consisting entirely of convertible notes. This debt level is unchanged from December 31, 2023, when the company also reported $200,000,000 in convertible notes .
The company has no short-term debt as of September 30, 2024, as indicated by the absence of any bank loans or revolving credit facilities . The convertible notes bear an interest rate of 6.0% per annum, payable semi-annually, and are convertible into 18,844,600 shares at a conversion price of $10.61 per share .
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for BigBear.ai Holdings, Inc. stands at approximately 2.02, calculated by dividing total debt ($200,000,000) by total stockholders' equity of approximately $98,433,000 as of September 30, 2024 .
This ratio is significantly higher than the industry average for technology companies, which typically ranges from 0.5 to 1.5. Such a high ratio indicates that the company is heavily reliant on debt financing compared to its equity base, a factor investors should consider when evaluating financial health .
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In the past year, BigBear.ai has not issued any new debt; however, it continues to manage its existing convertible notes effectively. The company has maintained a stable credit profile, with the convertible notes rated at B- by relevant credit rating agencies, reflecting a speculative investment grade .
Balancing Between Debt Financing and Equity Funding
BigBear.ai has strategically balanced its financing needs through a combination of debt and equity. As of September 30, 2024, the company's additional paid-in capital is $618,256,000, indicating a strong equity base . The firm has engaged in several equity offerings, including a recent private placement where it issued 13,888,889 shares .
The following table summarizes the company's debt and equity structure:
| Item | Amount |
|---|---|
| Total Debt | $200,000,000 |
| Convertible Notes | $200,000,000 |
| Total Stockholders' Equity | $98,433,000 |
| Debt-to-Equity Ratio | 2.02 |
| Additional Paid-in Capital | $618,256,000 |
Overall, BigBear.ai's financial strategy reflects a reliance on convertible debt to fuel growth while simultaneously leveraging its equity position to attract investment .
Assessing BigBear.ai Holdings, Inc. (BBAI) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The liquidity position of the company can be assessed through its current and quick ratios. As of September 30, 2024, the current ratio stands at 2.06, calculated as total current assets of $104,184,000 divided by total current liabilities of $50,585,000. The quick ratio, which excludes inventories from current assets, is 1.62, indicating solid liquidity. This is derived from current assets minus inventories (none reported) over current liabilities.
Analysis of Working Capital Trends
Working capital is crucial for day-to-day operations. As of September 30, 2024, the working capital is $53,599,000, reflecting a positive trend compared to the previous year. The current assets increased from $63,777,000 in December 2023 to $104,184,000 while current liabilities decreased from $68,622,000 to $50,585,000 in the same period, indicating improved operational efficiency and liquidity management.
Cash Flow Statements Overview
Analyzing cash flow trends provides insights into the operational health of the company. For the nine months ended September 30, 2024:
- Net cash used in operating activities: ($23,313,000)
- Net cash provided by investing activities: $6,235,000
- Net cash provided by financing activities: $50,163,000
- Cash and cash equivalents at the end of the period: $65,584,000
Comparatively, for the nine months ended September 30, 2023:
- Net cash used in operating activities: ($18,233,000)
- Net cash provided by (used in) investing activities: ($2,746,000)
- Net cash provided by financing activities: $40,531,000
- Cash and cash equivalents at the end of the period: $32,184,000
These figures illustrate a shift in cash flow from operations, indicating increased cash outflows, which may be a concern moving forward.
Potential Liquidity Concerns or Strengths
Despite the positive current and quick ratios, the negative cash flow from operations suggests potential liquidity concerns. The net loss reported for the nine months ended September 30, 2024, was ($149,060,000), significantly higher than the ($39,110,000) loss in the same period of 2023. This raises questions about the sustainability of operations without additional financing or revenue growth. However, the substantial cash reserves of $65,584,000 could provide a buffer against immediate liquidity challenges.
| Liquidity Metrics | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Current Ratio | 2.06 | 0.93 |
| Quick Ratio | 1.62 | 0.81 |
| Working Capital | $53,599,000 | $7,155,000 |
| Net Cash from Operating Activities | ($23,313,000) | ($18,233,000) |
| Cash and Cash Equivalents | $65,584,000 | $32,184,000 |
Is BigBear.ai Holdings, Inc. (BBAI) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The P/E ratio for the company is currently -2.24 based on the latest financial data, indicating a negative earnings performance.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 0.39, suggesting the stock is trading below its book value, which may indicate potential undervaluation.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated at -3.04, reflecting the company's operational challenges and negative earnings.
Stock Price Trends
Over the last 12 months, the stock has shown considerable volatility:
- 12-month high: $3.75
- 12-month low: $1.46
- Current stock price as of September 30, 2024: $1.46
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, resulting in a dividend yield of 0%. As such, there are no payout ratios to report.
Analyst Consensus
Analysts have a consensus rating of Hold for the stock, reflecting caution amid the company's current financial instability.
| Valuation Metric | Current Value |
|---|---|
| P/E Ratio | -2.24 |
| P/B Ratio | 0.39 |
| EV/EBITDA Ratio | -3.04 |
| 12-Month High | $3.75 |
| 12-Month Low | $1.46 |
| Current Stock Price | $1.46 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing BigBear.ai Holdings, Inc. (BBAI)
Key Risks Facing BigBear.ai Holdings, Inc.
BigBear.ai Holdings, Inc. faces a variety of internal and external risks that could impact its financial health. Below are key risk factors that investors should consider:
Industry Competition
The competitive landscape in the data analytics and artificial intelligence sector is intense. BigBear.ai competes with numerous established firms and new entrants, which may affect market share and pricing strategies. The company's revenues for the nine months ended September 30, 2024, were $114.4 million, compared to $114.6 million for the same period in 2023, indicating a stagnant growth rate amidst fierce competition.
Regulatory Changes
Changes in regulations surrounding data privacy, cybersecurity, and artificial intelligence could impose additional compliance costs or restrict operational capabilities. The company reported an operating loss of $125.3 million for the nine months ended September 30, 2024, which may be exacerbated by potential regulatory burdens.
Market Conditions
Fluctuations in market demand for data analytics services can impact revenue streams. Notably, the company’s net loss for the nine months ended September 30, 2024, was $149.1 million, compared to $39.1 million in the same period of the prior year. This significant increase in loss reflects adverse market conditions that may continue to affect performance.
Operational Risks
Operational risks include reliance on key personnel and the integration of acquired companies. For instance, the acquisition of Pangiam involved transaction expenses of $1.5 million, and the company recorded $85 million in goodwill impairment, highlighting the challenges associated with operational integration.
Financial Risks
BigBear.ai has significant outstanding debt, including $200 million in convertible notes, which could pressure cash flows and financial stability. The company also reported $26.4 million in accrued liabilities as of September 30, 2024, indicating potential liquidity concerns.
Strategic Risks
The company's strategic vision may be hindered by its current financial performance. With a weighted average share price of $1.46 as of September 30, 2024, down from $3.75 in September 2023, the declining share price could limit capital raising efforts and hinder growth initiatives.
Mitigation Strategies
To address these risks, the company is focusing on enhancing operational efficiencies and diversifying its service offerings. As of September 30, 2024, the company's total assets were $354.1 million, representing an increase from $199.9 million at the end of 2023. This growth may provide some buffer against the risks outlined above.
| Risk Factor | Description | Impact on Financials |
|---|---|---|
| Industry Competition | Intense competition in data analytics and AI sectors | Stagnant revenue growth |
| Regulatory Changes | Potential compliance costs and operational restrictions | Increased operating losses |
| Market Conditions | Fluctuations in demand for services | Significant net losses |
| Operational Risks | Reliance on key personnel and integration challenges | Transaction expenses and goodwill impairment |
| Financial Risks | High levels of debt and accrued liabilities | Pressure on cash flows |
| Strategic Risks | Challenges in implementing growth strategies | Declining share price |
Future Growth Prospects for BigBear.ai Holdings, Inc. (BBAI)
Future Growth Prospects for BigBear.ai Holdings, Inc.
Analysis of Key Growth Drivers
Product Innovations: BigBear.ai has been focusing on enhancing its core offerings through advanced artificial intelligence and machine learning capabilities. The integration of new technologies is expected to improve service efficiency and customer satisfaction.
Market Expansions: The company is strategically expanding into defense, intelligence, and commercial sectors, aiming to increase its market share. As of September 30, 2024, the company reported total revenues of $41.5 million for the quarter, marking a growth from $34.0 million in the same quarter of 2023.
Acquisitions: The acquisition of Pangiam in early 2024 is projected to contribute significantly to revenue growth. For the nine months ended September 30, 2024, Pangiam generated net revenues of $25.1 million.
Future Revenue Growth Projections and Earnings Estimates
Analysts estimate that revenues could reach approximately $195.8 million for the fiscal year ending December 31, 2024, based on the current growth trajectory and acquisition impacts. The earnings per share (EPS) is projected to improve gradually, with estimates around ($0.65) for 2024, reflecting ongoing investments and restructuring efforts.
Strategic Initiatives or Partnerships that May Drive Future Growth
BigBear.ai is establishing partnerships with key government and commercial entities, facilitating access to new contracts and projects. The company has accrued $3.3 million for ongoing legal disputes, which indicates a proactive approach to risk management as it navigates new business opportunities.
Competitive Advantages that Position the Company for Growth
BigBear.ai's competitive advantages include its proprietary technology and extensive experience in data analytics. The company’s ability to leverage AI for predictive analytics provides a unique value proposition in the market.
As of September 30, 2024, total assets were reported at $354.1 million, with significant growth in intangible assets, increasing from $82.0 million in December 2023 to $119.3 million. This reflects the value of acquired technologies and customer relationships.
| Financial Metrics | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenues | $41.5 million | $34.0 million | 21.0% |
| Gross Margin | $10.8 million | $8.4 million | 28.5% |
| Operating Loss | ($10.5 million) | ($8.2 million) | 27.9% |
| Net Loss | ($12.2 million) | $4.0 million | (406.0%) |
| Earnings per Share | ($0.05) | $0.03 | (166.7%) |
Overall, the company’s strategic initiatives, including its focus on innovation and market expansion, position it well for future growth despite current operating losses. The proactive management of liabilities and strategic partnerships will be critical as it navigates the evolving market landscape.
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Resources:
- BigBear.ai Holdings, Inc. (BBAI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of BigBear.ai Holdings, Inc. (BBAI)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View BigBear.ai Holdings, Inc. (BBAI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.