BigBear.ai Faces Critical Test as Revenue Plummets and Losses Mount

BigBear.ai finds itself navigating turbulent financial waters as the company’s latest quarterly performance reveals severe operational challenges. With revenue collapsing and losses accelerating at an alarming rate, investors are questioning whether the artificial intelligence specialist’s substantial cash reserves can fund a successful turnaround.

Financial Performance Deteriorates Rapidly

The company’s second quarter 2025 results painted a concerning picture, with revenue declining by 18.3% year-over-year to just $32.5 million. This substantial contraction was primarily driven by reduced volumes in certain U.S. Army programs, prompting management to slash their full-year 2025 revenue guidance significantly. The updated forecast now stands at $125 to $140 million, representing a dramatic reduction from previously higher expectations.

The damage extended well beyond the top line, with profitability metrics showing even more severe deterioration:

Should investors sell immediately? Or is it worth buying BigBearai Holdings?

• EBITDA Performance: Adjusted EBITDA losses more than doubled, reaching $8.5 million compared to $3.7 million in the prior year period
• Net Loss Position: The company reported a staggering net loss of $228.6 million
• Margin Compression: Both net and operating margins remained deeply negative
• Guidance Withdrawal: Management has withdrawn its full-year EBITDA forecast entirely

Contract Backlog Reveals Underlying Vulnerabilities

While BigBear.ai reports an impressive $380 million contract backlog, a closer examination reveals significant uncertainty. Only 4% of this backlog is currently funded, with the substantial remainder consisting of unfunded or unexercised contract options that provide no guarantee of future revenue.

Cash Position Offers Potential Lifeline

Despite these operational headwinds, BigBear.ai maintains a substantial liquidity position of approximately $391 million. This robust cash reserve could provide the necessary runway for strategic investments or potential acquisitions aimed at revitalizing growth.

A recent partnership with SMX to provide AI technology for the U.S. Navy’s maritime UNITAS 2025 exercise offers a potential bright spot, suggesting the company may still secure future government contracts despite current challenges. Whether this combination of financial resources and new opportunities can stabilize the business remains the critical question facing investors.