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BigBear.ai Holdings, Inc. (BBAI - Free Report) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended September 2026. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.

The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on October 27. On the other hand, if they miss, the stock may move lower.

While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise.

Zacks Consensus EstimateThis company is expected to post quarterly loss of $0.06 per share in its upcoming report, which represents a year-over-year change of +14.3%.

Revenues are expected to be $38.94 million, up 17.5% from the year-ago quarter.

Estimate Revisions TrendThe consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.

Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts.

Price, Consensus and EPS Surprise

Earnings WhisperEstimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction).

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only.

A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP.

Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell).

How Have the Numbers Shaped Up for BigBear.ai?For BigBear.ai, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects. This has resulted in an Earnings ESP of -9.09%.

On the other hand, the stock currently carries a Zacks Rank of #3.

So, this combination makes it difficult to conclusively predict that BigBear.ai will beat the consensus EPS estimate.

Does Earnings Surprise History Hold Any Clue?While calculating estimates for a company's future earnings, analysts often consider to what extent it has been able to match past consensus estimates. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number.

For the last reported quarter, it was expected that BigBear.ai would post a loss of$0.05 per share when it actually produced a loss of -$0.04, delivering a surprise of +20.00%.

Over the last four quarters, the company has beaten consensus EPS estimates two times.

Bottom LineAn earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss.

That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

BigBear.ai doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Bouncing back from an inauspicious start to the week that saw the stock finish 3.8% lower from Friday's close, BigBear.ai (BBAI +3.04%) stock is rising today after the artificial intelligence (AI) company announced it has received several new awards.

As of 12:47 p.m. ET, BigBear.ai stock was up 4.6%, retreating from an earlier rise of 11.7%.

Image source: Getty Images.

BigBear.ai has secured more than 25 contract awards totaling $225 millionHaving achieved numerous successes over the past three months, BigBear.ai announced today that it has won more than 25 contract awards valued at more than $225 million since July. In addition to homeland security, the contract awards stem from defense, intelligence, and federal civilian customers.

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In the press release addressing the contract awards, Kevin McAleenan, BigBear.ai's CEO, stated, "Technology does not translate into capability without operational insight, and these awards come from customers who understand both the depth of our experience and our differentiated technology."

Is BigBear.ai stock a buy on the bullish news?Unsurprisingly, shares rocketed higher on this morning's news -- especially when appreciating the significance of the contract awards. To put it in perspective, it's helpful to note that, in its second-quarter 2026 financial results presentation, BigBear.ai reported a backlog of $269.6 million as of June 30.

While the news is certainly positive, AI investors shouldn't rush in and start a position solely based on the new contract awards. Since the company is unprofitable and fails to generate positive operating cash flow, and these contract awards don't guarantee significant improvement in either metric, BigBear.ai stock is best left to those with higher risk tolerances.

Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

BigBear.ai Today

$2.48 -0.04 (-1.39%)

As of 09:39 AM Eastern

This is a fair market value price provided by Massive. Learn more.

$2.48▼

$9.39$5.00

BigBear.ai Holdings NASDAQ: BBAI is among the most shorted stocks on Wall Street, highlighting its potential to deliver significant gains in the coming months. As counterintuitive as it sounds, high short interest is offset by technical signals, fundamental improvements, and potential catalysts that could drive short covering and, more specifically, a short squeeze.

While not technically a low-float stock, the 31% short interest paints a different picture; nearly one-third of all shares have been sold short, a massive load to cover in a short time. Time is of the essence, as the days-to-cover is also quite high, about 10 days as of early October, which means any sudden liquidity event can lead to rapid covering and a massive surge in the share price.

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The technical signals suggest this market has been pushed to its tipping point. While downward pressure may continue, MACD and stochastic reveal deeply oversold conditions and divergences pointing to an exhausted market. Bad news is a risk, as it may trigger full retail capitulation, but the trends suggest good news is on the way. As it stands, the market is still above critical support, set in early 2025, ready to rebound at the drop of a headline.

BigBear.ai Has Big Catalysts AheadBigBear.ai catalysts include deeper penetration into government markets and integration with defense, intelligence, and border security agencies. Upcoming results are expected to reflect the monetization of last year’s acquisitions, including AskSage, which positioned it with over 150 generative AI models geared for defense applications. Recent highlights include 20 new contract wins, a 9% H1 backlog increase, and expanding margins driven by operational optimization and scale leverage. Gross margin expanded by 780 basis points in Q2 and is expected to continue expanding, underpinned by AskSage.

Investors shouldn’t misinterpret the threat of dilution. While dilution remains a threat, the company has no immediate capital need, a large backlog, and improving profitability to help sustain its balance sheet. The $410 million in cash and marketable investments reported at the end of Q2 is sufficient to sustain operations for nearly four years at the Q2 burn pace, and there is another factor to consider. Last year’s nearly 60% share count increase resulted in nearly zero debt, alongside strategic acquisitions that have driven growth today. The worst-case scenario is that the company utilizes another funding round to pay for another strategic acquisition.

In this scenario, the timeline to profitability is accelerating. The transition to profitability is currently expected before the decade ends, potentially as soon as early 2028, but may come sooner, as the company aggressively invests in market share. Investments include expanding go-to-market teams and channels: scaling high-margin AI services such as AskSage and CargoSeer, computer vision for port analytics, and acquisitions. AskSage, for example, brought a secure ecosystem with high-level government clearances, thousands of active contracts, and an equally large number of cross-selling opportunities.

Analyst and Institutional Flows Are a Signal to Watch ForBigBear.ai Stock Forecast Today12-Month Stock Price Forecast:
$5.00
99.60% Upside

Hold
Based on 3 Analyst Ratings

Current Price$2.51High Forecast$6.00Average Forecast$5.00Low Forecast$4.00BigBear.ai Stock Forecast Details

Analysts and institutions will be the signal that longer-term traders and investors should watch. The group shows little interest today, with only three analysts covering and less than 8% institutional ownership, but that can change quickly with good news. Signs of sustainability, including more contracts, clients, and penetration, will improve revenue visibility in what is otherwise an attractive sector. Institutions can easily overlook the lumpiness of government-derived revenue in favor of visibility and cash flow, the ultimate trigger for this market.

Some market participants get BBAI wrong: it is not a traditional software-as-a-service vendor like Palantir NASDAQ: PLTR, its most common comparison. BigBear.ai is instead a government infrastructure provider undergoing a multi-year transition. The transition includes a quality shift, with the company actively shedding its legacy business in favor of newer, higher-margin contracts tied to recurring software revenue, as reflected in the Q2 results. With the backlog growing and the balance sheet well-funded, it has a clear runway to convert contracts into revenue and cash flow in the coming year and to sustain growth the year after.

The sleeper catalyst is BBAI’s ConductorOS, an AI-based orchestration and sensor-fusion platform. It acts as an orchestration layer, enabling real-time communication between disparate compute hardware, such as drones and unmanned tactical devices. It places BBAI firmly in the realm of scalable platforms with the power to capture high-margin wins with negligible increases in underlying costs. Tailwinds include the One Big Beautiful Bill, which includes funding for border security and autonomous technology, the Pentagon’s push to accelerate AI adoption, and accelerating global drone demand, all of which tie into BBAI’s core technologies.

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Key Takeaways BigBear.ai lifted gross margin 781 basis points to 32.8% as generative AI gains drove growth.Adjusted EBITDA fell to negative $11.6 million as sales, go-to-market and R&D spending increased.BigBear.ai ended Q2 with $410 million in cash and investments to support continued investment. BigBear.ai Holdings, Inc. (BBAI - Free Report) is showing improvement in gross profitability, creating a potential path toward better operating leverage. The company is also investing in sales, go-to-market capabilities and research and development, which is keeping pressure on adjusted EBITDA. The relationship between margin expansion and operating spending will shape the company’s path toward improved profitability.

In the second quarter of 2026, revenues increased 13% year over year to $36.7 million, while gross margin rose 781 basis points to 32.8%. The expansion was driven by a higher contribution from generative AI platforms and products. This improvement provides more gross profit from each dollar of revenues and could create greater operating leverage as the business scales.

However, higher gross margins have not yet translated into improved adjusted EBITDA. Adjusted EBITDA was negative $11.6 million, compared with negative $8.5 million in the year-ago quarter. The decline was primarily due to increased investment in sales and go-to-market capabilities and research and development, which partially offset the benefit from higher gross margins.

The spending reflects BigBear.ai’s effort to build capabilities while pursuing growth. The company ended the quarter with $410 million in cash and investments, providing resources for continued investment. As these investments develop, the relationship between revenue growth, gross-margin expansion and operating expenses will become increasingly important.

Going forward, sustained margin improvement could provide greater flexibility to absorb operating investments. At the same time, continued spending on sales, go-to-market activities and R&D could limit near-term operating leverage. The balance between these factors will determine whether BigBear.ai can turn its improving gross-margin profile into stronger adjusted EBITDA performance.

BBAI Faces Competition From Palantir and C3.aiBigBear.ai operates in a competitive AI market, with Palantir Technologies (PLTR - Free Report) and C3.ai (AI - Free Report) standing out as relevant peers.

Palantir has a strong presence in defense, national security and commercial AI applications. It focuses on combining AI, data and workflow capabilities to support customers operating in complex and sensitive environments. Palantir’s secure AI and platform capabilities overlap with areas targeted by BigBear.ai, particularly mission-focused applications and government use cases.

C3.ai provides AI solutions across enterprise and government markets, with exposure to defense, intelligence and aerospace. The company is also focused on improving product development and customer deployments across its target markets. C3.ai’s broad enterprise AI offering creates overlap with BigBear.ai’s focus on applied AI, while it remains positioned across a wider range of enterprise and government applications.

Key Takeaways BigBear.ai lifted Q2 revenues 13% and backlog to $270 million as it won over 20 new contracts.CargoSeer and ConductorOS are broadening BigBear.ai's reach into commercial and autonomous-system markets.BigBear.ai posted a wider adjusted EBITDA loss as it increased spending on sales, go-to-market and R&D. BigBear.ai Holdings, Inc. (BBAI - Free Report) is seeking to expand its position in mission-critical artificial intelligence as demand rises for secure, specialized AI across defense, security, trade and travel.

In the second quarter of 2026, revenues increased 13% year over year to $36.7 million, while gross margin expanded 781 basis points to 32.8%. The company won more than 20 new contracts during the quarter, with individual awards valued at up to $5 million. Backlog reached $270 million, up about $22 million from the beginning of the year. Management maintained its 2026 revenue target of $135-$165 million.

BigBear.ai is attempting to broaden its addressable market through products that can serve commercial as well as government customers. CargoSeer, for example, uses computer vision and AI to analyze cargo scans alongside customs and trade data. The company secured a five-year commercial deployment agreement in El Salvador following a 12-month pilot contract, potentially providing a model for international expansion.

The company is also expanding Ask Sage into disconnected and air-gapped environments, while ConductorOS is designed to coordinate drones, sensors and other autonomous systems from multiple vendors. These offerings could extend BigBear.ai's reach beyond traditional defense contracts.

However, profitability remains a challenge. Adjusted EBITDA was negative $11.6 million, compared with negative $8.5 million a year earlier, reflecting increased investments in sales, go-to-market activities and R&D.

With $410 million in cash and investments, BigBear.ai has resources to pursue product development and acquisitions. The key question is whether the company can convert its specialized defense expertise into repeatable commercial deployments and sustained revenue growth.

BBAI Faces Broader AI CompetitionBigBear.ai’s strategy places it alongside AI companies seeking to serve both government and commercial customers. Two relevant competitors are Palantir Technologies (PLTR - Free Report) and C3.ai (AI - Free Report) .

Palantir has a substantially broader commercial footprint while maintaining a strong government business. In the second quarter of 2026, Palantir’s revenues jumped 93% year over year to $1.94 billion, with U.S. commercial revenues rising 149% and U.S. government revenues increasing 90%. The company also closed 220 deals worth at least $1 million.

C3.ai similarly combines enterprise and government AI applications. Its fiscal 2026 results included agreements with defense and government agencies as well as companies across energy, manufacturing and other industries. In first-quarter fiscal 2027, C3.ai reported $52.4 million in revenues and continued winning federal and commercial contracts.

For BBAI, the competitive landscape highlights the opportunity — and challenge — of taking specialized, mission-ready AI into larger commercial markets while maintaining its defense and security expertise.

BBAI’s Price Performance, Valuation & EPS Estimate TrendShares of BBAI have plunged 20.2% over the past six months, underperforming the Zacks Computers - IT Services industry, as shown below.

BBAI’s 6-Month Price Performance
Image Source: Zacks Investment Research

BBAI stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-sales (P/S) ratio of 8.55, as evidenced by the chart below.

P/S Ratio (F12M)
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for BBAI’s 2026 loss per share has widened in the past 60 days, as shown below. However, the estimated figure indicates a narrower loss than the year-ago loss of 82 cents per share.

EPS Trend of BBAI
Image Source: Zacks Investment Research

BBAI’s Zacks RankBigBear.ai currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Takeaways BigBear.ai's Q2 revenue rose 13% to $36.7 million, driven by stronger generative AI performance.BigBear.ai secured 20 contracts and grew backlog to $270 million, up about $22 million since year-end.CargoSeer, Ask Sage and ConductorOS expand BigBear.ai's AI reach across trade, security and defense. BigBear.ai Holdings, Inc. (BBAI - Free Report) is gaining traction as it expands the deployment of its applied AI solutions across defense, security, trade and travel. In the second quarter of 2026, revenue increased 13% year over year to $36.7 million, driven by stronger performance from its generative AI platforms and products. Gross margin soared to 32.8%, up 781 basis points from the prior-year quarter.

New customer wins and product deployments are providing additional avenues for growth. BigBear.ai secured more than 20 contracts during the quarter, with individual values of up to $5 million, while backlog reached $270 million, up about $22 million from the start of the year. The company also highlighted a five-year CargoSeer deployment agreement in El Salvador following a successful 12-month pilot, potentially providing a template for expansion into other customs markets.

The company is also broadening its AI offerings beyond connected environments. Ask Sage now supports local and air-gapped deployments, allowing customers in highly secure settings to use generative AI without relying on external networks. Meanwhile, ConductorOS demonstrated its ability to coordinate multi-vendor drone systems, addressing the growing need for interoperability across autonomous platforms.

Still, broader growth will depend on converting these deployments and contract wins into sustained revenue. Adjusted EBITDA remained negative at $11.6 million as the company increased spending on sales, go-to-market initiatives and R&D. With $410 million in cash and investments, BigBear.ai has resources to pursue additional capabilities and acquisitions, but execution will remain key to widening its growth base.

Competitors Expand Their AI and Defense CapabilitiesBigBear.ai competes with technology providers that combine AI, data analytics and defense-focused solutions. Palantir Technologies (PLTR - Free Report) is a key competitor, with its platforms helping government and commercial customers integrate data, AI and decision-making capabilities. Its growing focus on deploying AI directly into operational environments overlaps with BigBear.ai’s strategy of providing mission-ready solutions.

C3.ai (AI - Free Report) is another relevant competitor, offering enterprise AI applications designed to address operational and analytics needs across industries. Its AI capabilities span areas such as defense, manufacturing and supply-chain management, creating some overlap with BigBear.ai’s efforts to expand applied AI beyond its traditional customer base.

BigBear.ai’s differentiation centers on specialized applications for national security and trade and travel, including CargoSeer, Ask Sage and ConductorOS. The company’s recent deployments demonstrate an emphasis on solving specific mission-critical problems, while competitors pursue broader AI platforms and enterprise applications.

BBAI’s Price Performance, Valuation & EPS Estimate TrendShares of BBAI have plunged 22.2% over the past six months, underperforming the Zacks Computers - IT Services industry, as shown below.

BBAI’s 6-Month Price Performance
Image Source: Zacks Investment Research

BBAI stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-sales (P/S) ratio of 9.67, as evidenced by the chart below.

P/S Ratio (F12M)
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for BBAI’s 2026 loss per share has widened in the past 30 days, as shown below. However, the estimated figure indicates a narrower loss than the year-ago loss of 82 cents per share.

EPS Trend of BBAI
Image Source: Zacks Investment Research

BBAI’s Zacks RankBigBear.ai currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Takeaways BigBear.ai won more than 20 Q2 contracts, while backlog grew 9% from year-end to $270 million.Revenues rose 13% to $36.7 million, but adjusted EBITDA remained negative at $11.6 million.Secure Ask Sage and ConductorOS could help BigBear.ai win more defense deals and expand applied AI adoption. BigBear.ai Holdings, Inc. (BBAI - Free Report) is making applied AI central to its growth strategy. The company sees rising demand for AI across defense and security. BBAI believes its mission expertise can help win new opportunities.

The company is gaining traction with customers. BigBear.ai won more than 20 new contracts in the second quarter. Individual awards were worth up to $5 million. Its backlog also grew 9% from year-end.

BigBear.ai is expanding its AI offerings. Ask Sage now supports secure, air-gapped environments. This allows customers to use generative AI without an external network connection.

ConductorOS is another growth opportunity. The platform connects drones, sensors and autonomous systems from different vendors. This could become increasingly important as defense agencies expand their use of autonomous technologies.

Financial results also showed progress. Second-quarter 2026 revenues rose 13% year over year to $36.7 million. Gross margin increased to 32.8%. However, adjusted EBITDA remained negative at $11.6 million. Higher sales and R&D spending weighed on the metric.

BigBear.ai ended the quarter with $410 million in cash and investments. Backlog stood at $270 million. The opportunity is significant. However, the company must turn contract wins into sustained revenue growth. Improving profitability will also be crucial. If it succeeds, the applied AI focus could help BigBear.ai secure more defense deals.

BBAI Faces Competition From Palantir and C3.aiBigBear.ai operates in a competitive AI market, with Palantir Technologies (PLTR - Free Report) and C3.ai (AI - Free Report) standing out as relevant peers.

Palantir has a strong presence in defense and national security. Its Artificial Intelligence Platform allows defense customers to deploy AI across classified networks and tactical environments. Palantir’s focus on secure AI and interoperability directly overlaps with areas targeted by BigBear.ai.

C3.ai is another notable competitor. The company provides AI solutions for federal agencies, defense organizations and other industries. Its federal, defense and aerospace bookings rose 134% year over year in the fiscal third quarter. C3.ai also secured agreements with several U.S. government and defense organizations.
BigBear.ai is smaller but is pursuing a focused strategy around mission-specific AI. The company’s growing contract wins, defense applications and specialized platforms could help it carve out a niche. However, competing with larger AI players will require strong execution and continued innovation.

BBAI’s Price Performance, Valuation & EPS Estimate TrendShares of BBAI have declined 18.4% over the past six months, underperforming the Zacks Computers - IT Services industry, as shown below.

BBAI’s 6-Month Price Performance
Image Source: Zacks Investment Research

BBAI stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-sales (P/S) ratio of 10.15, as evidenced by the chart below.

P/S Ratio (F12M)
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for BBAI’s 2026 loss per share has widened in the past 30 days, as shown below. However, the estimated figure indicates a narrower loss than the year-ago loss of 82 cents per share.

EPS Trend of BBAI
Image Source: Zacks Investment Research

BBAI’s Zacks RankBigBear.ai currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MCLEAN, Va.--(BUSINESS WIRE)--BigBear.ai Holdings, Inc. (NYSE: BBAI) (“BigBear.ai” or the “Company”), a specialized defense & security technology company providing mission-ready AI, today announced financial results for the second quarter of 2026 and issued an investor presentation that has been posted to the Investor Relations section of the Company’s website.

“It has been another strong quarter. Double-digit growth, significant margin expansion and more than 20 new contracts show that the BigBear.ai leadership team is following through on our commitments. We are in a strong financial position with $410 million of cash and investments, we’re on track for our target of 17% revenue growth, and we intend to accelerate. The second half of 2026 is all about execution discipline and positioning ourselves for accretive, catalytic M&A and building momentum for even stronger topline growth in 2027,” said Kevin McAleenan, CEO of BigBear.ai.

“BigBear.ai is in an excellent position to take advantage of the rapid expansion of investment and innovation in defense technology, which shows no signs of slowing down, given the macro environment. We have steadily been maturing the underlying financial discipline of the company and have significant cash in reserve so that when the right opportunity presents itself, we can move fast,” said Sean Ricker, CFO of BigBear.ai.

Financial Highlights

Revenue increased 13% to $36.7 million for the second quarter of 2026, compared to $32.5 million for the second quarter of 2025 due to revenue from Ask Sage’s GenAI Platforms and Products. Gross margin was 32.8% in the second quarter of 2026, compared to 25.0% in the second quarter of 2025, due to increased volume from Ask Sage’s higher margin GenAI Platforms and Products in the second quarter of 2026 as compared to the second quarter of 2025. Selling, general, and administrative expenses increased $10.4 million from $21.5 million in the second quarter of 2025 to $31.8 million in the second quarter of 2026. The increase was primarily driven by increased intangible asset amortization from the Ask Sage acquisition, increased legal and proxy expenses related to our special stockholder meeting and establishing our new Retail Voting Program, and increased sales and marketing expenses resulting from partnerships and expanding our growth team. Net loss in the second quarter of 2026 was $25.7 million, compared to a net loss of $228.6 million for the second quarter of 2025. The decrease in net loss was primarily driven by a decrease in the loss due to non-cash changes in the fair value of derivatives of $135.3 million, a decrease of goodwill impairment of $70.6 million, a decrease in interest expense of $4.1 million, higher gross margin of $3.9 million and increased interest income of $2.1 million. These were partially offset by higher SG&A expenses of $10.4 million, described above, as well as an increase in research and development costs of $3.2 million. Non-GAAP Adjusted EBITDA* of $(11.6) million for the second quarter of 2026 compared to $(8.5) million for the second quarter of 2025 is primarily driven by an increase in SG&A expenses of $10.4 million, partially offset by higher gross margin of $3.9 million. The above information on financial outlook, 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, as the case may be. For additional factors that may impact the Company’s actual results, refer to the “Forward-Looking Statements” section in this release.

Summary of Results for the Second Quarter Ended

June 30, 2026 and June 30, 2025

(Unaudited)

Three Months Ended June 30,

Six Months Ended
June 30,

$ thousands (expect per share amounts)

2026

2025

2026

2025

Revenues

$

36,749

$

32,472

$

71,184

$

67,229

Cost of revenues

24,698

24,359

47,412

51,728

Gross margin

12,051

8,113

23,772

15,501

Operating expenses:

Selling, general and administrative

31,848

21,487

61,073

44,219

Research and development

7,562

4,393

13,095

8,559

Restructuring charges

384

1,899

384

3,597

Transaction expenses

815

—

2,033

—

Goodwill impairment

—

70,636

—

70,636

Operating loss

(28,558

)

(90,302

)

(52,813

)

(111,510

)

Interest expense

307

4,419

624

9,535

Interest income

(3,817

)

(1,704

)

(7,602

)

(2,260

)

Net increase in fair value of derivatives

471

135,751

20,596

169,087

Loss on extinguishment of debt

—

—

15,826

2,577

Other expense (income)

225

(163

)

236

117

Loss before taxes

(25,744

)

(228,605

)

(82,493

)

(290,566

)

Income tax expense

5

14

19

39

Net loss

$

(25,749

)

$

(228,619

)

$

(82,512

)

$

(290,605

)

Basic and diluted net loss per share

$

(0.05

)

$

(0.71

)

$

(0.17

)

$

(0.97

)

Weighted-average shares outstanding:

Basic

479,119,921

320,591,204

476,079,687

299,666,133

Diluted

479,119,921

320,591,204

476,079,687

299,666,133

Consolidated Balance Sheets as of

June 30, 2026 and December 31, 2025

(Unaudited)

$ in thousands (except per share amounts)

June 30,
2026

December 31, 2025

Assets

Current assets:

Cash and cash equivalents

$

36,278

$

87,126

Restricted cash

1,787

5,521

Available for sale investments

282,913

200,461

Accounts receivable, less allowance for credit losses

30,975

22,703

Contract assets

—

218

Prepaid expenses and other current assets

20,926

14,514

Total current assets

372,879

330,543

Non-current assets:

Property and equipment, net

1,891

1,562

Goodwill

238,570

241,100

Intangible assets, net

130,844

139,470

Available for sale investments

90,612

173,949

Right-of-use assets

5,657

7,063

Other non-current assets

859

860

Total assets

$

841,312

$

894,547

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

11,219

$

6,088

Current portion of long-term debt, net

16,643

16,560

Accrued liabilities

15,690

19,649

Contract liabilities

10,180

14,756

Current portion of long-term lease liability

846

1,095

Derivative liabilities

10,455

116,906

Other current liabilities

694

10,466

Total current liabilities

65,727

185,520

Non-current liabilities:

Long-term debt, net

—

90,484

Long-term lease liability

5,261

6,673

Total liabilities

70,988

282,677

Stockholders’ equity

Common stock, par value $0.0001; 1,000,000,000 shares authorized and 479,494,493 shares issued and outstanding at June 30, 2026 and 500,000,000 shares authorized and 436,955,655 shares issued and outstanding at December 31, 2025

49

46

Additional paid-in capital

1,719,285

1,534,792

Treasury stock, at cost; zero shares at June 30, 2026 and 9,952,803 shares at December 31, 2025

—

(57,350

)

Accumulated deficit

(948,067

)

(865,555

)

Accumulated other comprehensive loss

(943

)

(63

)

Total stockholders’ equity

770,324

611,870

Total liabilities and stockholders’ equity

$

841,312

$

894,547

Consolidated Statements of Cash Flows for the Second Quarter Ended

June 30, 2026 and June 30, 2025

(Unaudited)

  Three Months Ended June 30,

Six Months Ended
June 30,

$ in thousands

2026

2025

2026

2025

Cash flows from operating activities:

Net loss

$

(25,749

)

$

(228,619

)

$

(82,512

)

$

(290,605

)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization expense

6,806

3,451

13,887

6,921

Amortization of debt discount and issuance costs

41

2,026

82

4,790

Accretion of discount on investments in debt securities

(257

)

—

(638

)

—

Equity-based compensation expense

4,743

4,319

8,166

11,719

Goodwill impairment

—

70,636

—

70,636

Non-cash lease expense

196

254

429

624

Provision for doubtful accounts

42

311

42

351

Loss on extinguishment of debt

—

—

15,826

2,577

Increase in fair value of derivatives

471

135,751

20,596

169,087

Changes in assets and liabilities:

(Increase) decrease in accounts receivable

(8,208

)

5,919

(8,868

)

10,267

Decrease (increase) in contract assets

874

(189

)

218

194

(Increase) decrease in prepaid expenses and other assets

(5,664

)

1,203

(6,003

)

(592

)

Increase (decrease) in accounts payable

6,986

(876

)

5,002

(5,039

)

(Decrease) increase in accrued expenses

(50

)

319

(584

)

4,765

(Decrease) increase in contracts liabilities

(1,092

)

1,449

(4,542

)

1,925

(Decrease) increase in other liabilities

(1,346

)

178

(1,309

)

1,848

Net cash used in operating activities

(22,207

)

(3,868

)

(40,208

)

(10,532

)

Cash flows from investing activities:

Purchases of investments in debt securities

(78,986

)

—

(78,986

)

—

Proceeds from maturities and sales of investments in debt securities

36,261

—

79,486

—

Acquisition of businesses, net of cash acquired

—

—

(10,183

)

—

Purchases of property and equipment

(316

)

(5

)

(635

)

(85

)

Capitalized software development costs

—

(1,159

)

—

(2,699

)

Net cash used in investing activities

(43,041

)

(1,164

)

(10,318

)

(2,784

)

Cash flows from financing activities:

Proceeds from issuance of shares for exercised RDO and PIPE warrants

—

—

—

64,673

Payment of Private Placement and Registered Direct Offering transaction costs

—

—

—

(551

)

Proceeds from at-the-market offering

—

293,431

—

300,000

Payment of transaction costs for at-the-market offering

—

(5,135

)

—

(5,250

)

Repayment of short-term borrowings

—

(85

)

—

(451

)

Payment of debt issuance costs to third parties

—

(337

)

—

(4,679

)

Payment of deferred purchase consideration

(4,523

)

—

(4,523

)

—

Proceeds from exercise of options

13

240

80

1,633

Issuance of common stock upon ESPP purchase

1,590

1,069

1,590

1,069

Payments of tax withholding from the issuance of common stock

(497

)

(361

)

(1,347

)

(1,679

)

Net cash (used in) provided by financing activities

(3,417

)

288,822

(4,200

)

354,765

Effect of foreign currency rate changes on cash, cash equivalents, and restricted cash

24

(555

)

144

(745

)

Net (decrease) increase in cash, cash equivalents and restricted cash

(68,641

)

283,235

(54,582

)

340,704

Cash, cash equivalents, and restricted cash at the beginning of the period

106,706

107,610

92,647

50,141

Cash, cash equivalents, and restricted cash at the end of the period

$

38,065

$

390,845

$

38,065

$

390,845

EBITDA* and Adjusted EBITDA* for the Second Quarter

June 30, 2026 and June 30, 2025

(Unaudited)

  Three Months Ended
June 30,

Six Months Ended
June 30,

$ thousands

2026

2025

2026

2025

Net loss

$

(25,749

)

$

(228,619

)

$

(82,512

)

$

(290,605

)

Interest expense

307

4,419

624

9,535

Interest income

(3,817

)

(1,704

)

(7,602

)

(2,260

)

Income tax expense

5

14

19

39

Depreciation and amortization

6,806

3,451

13,887

6,921

EBITDA

(22,448

)

(222,439

)

(75,584

)

(276,370

)

Adjustments:

Equity-based compensation

4,743

4,319

8,166

11,719

Employer payroll taxes related to equity-based compensation(1)

1,188

611

2,024

1,626

Net increase in fair value of derivatives(2)

471

135,751

20,596

169,087

Restructuring charges(3)

384

1,899

384

3,597

Non-recurring strategic initiatives(4)

2,758

717

4,220

1,611

Non-recurring litigation(5)

423

8

669

30

Transaction expenses(6)

815

—

2,033

—

Non-recurring integration costs(7)

94

—

158

—

Goodwill impairment(8)

—

70,636

—

70,636

Loss on extinguishment of debt(9)

—

—

15,826

2,577

Adjusted EBITDA

$

(11,572

)

$

(8,498

)

$

(21,508

)

$

(15,487

)

(1)

Includes employer payroll taxes due upon the vesting of equity awards granted to employees.

(2)

The change in fair value of derivatives during the three months ended June 30, 2026 consists of net losses related to the fair market value adjustments on the 2025 RDO Warrants, IPO private warrants, and 2026 Notes Conversion Option. The change in fair value of derivatives during the six months ended June 30, 2026 primarily relates to a $28.3 million mark-to-market loss for the 2029 Notes Conversion Options immediately prior to conversion. This was offset by net gains related to the fair market value adjustments on the 2025 RDO Warrants, IPO private warrants, and 2026 Notes Conversion Option of $7.7 million.

The change in fair value of derivatives during the three months ended June 30, 2025 relates to the remeasurement of the 2025 warrants, IPO warrants and the 2026 and 2029 Notes Conversion Options derivative liabilities. The change during the six months ended June 30, 2025, relates to the $14.0 million loss recorded upon the exercise of the 2024 RDO and 2024 PIPE Warrants and issuance of the warrants in 2025 in connection with the warrant exercise agreements entered into on February 5, 2025. During the six months ended June 30, 2025,loss related to a mark-to-market adjustment of $59.9M adjustment for the debt to equity conversions during the period was reported. There was an offsetting gain related to the fair market value adjustment on the 2025 warrants and the private warrants of $2.6 million. Additionally, there was an loss of $7.0 million fair market value adjustment of the 2026 and 2029 Notes Conversion Option, during the six months ended June 30, 2025.

(3)

Includes employee separation costs which are associated with strategic reviews 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 incurred in connection with discrete, non-recurring strategic initiatives, including business transformation and strategy realignment consulting services which management does not consider part of the Company’s ongoing operating expenses.

(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 six months ended June 30, 2026 consist primarily of diligence, legal and other related expenses incurred associated with the Ask Sage and CargoSeer acquisitions.

(7)

Non-recurring internal integration costs related to the Ask Sage acquisition.

(8)

During the six months ended June 30, 2025, the company recognized a non-cash goodwill impairment charge primarily driven by a change in forecast during the second quarter of 2025.

(9)

Loss on extinguishment of debt is related to voluntary conversions of the 2029 Notes to common stock and the related extinguishment of unamortized debt discount and debt costs.

Forward-Looking Statements

This release contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933 (the “Securities Act”), the Securities Exchange Act of 1934 (the “Exchange Act”) and the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “project,” “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 our industry, future events, and other statements that are not historical facts. These statements are based on current expectations and beliefs concerning future developments and their potential effects on us and should not be relied upon as representing BigBear.ai’s assessment as of any date subsequent to the date of this release. There can be no assurance that future developments affecting us will be those that we have anticipated. 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, including as a result of events such as war, incidents of terrorism, natural disasters, and public health concerns or epidemics; changes in government programs or applicable requirements; budgetary constraints, including any potential constraints as a result of recent or future federal government layoffs, 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, including government shutdowns or the ability of the U.S. federal government to unilaterally cancel a contract with or without cause, and more specifically, the potential impact of the U.S. DOGE Service Temporary Organization on government spending and terminating contracts for convenience; the failure of contracts comprising backlog to result in revenue due to changes in funding, terminations for convenience, or option periods going unexercised; the impact of tariffs or other restrictive trade measures; implementation of spending limits or changes in budgetary constraints; 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; risks regarding the market and our customers accepting and adopting our products, including future new product offerings; the high degree of uncertainty of the level of demand for, and market utilization of, our solutions and products; our ability to successfully execute and realize the benefits of joint ventures, channel sales relationships, partnerships, strategic alliances, subcontracting opportunities, customer contracts and other commercial agreements to which we are a party; 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 those projected by these forward-looking statements. There may be additional risks that we presently do not know or that we currently believe are immaterial which could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect our expectations, plans or forecasts of future events and views as of the date of this release. We anticipate that subsequent events and developments will cause our assessments to change. However, we specifically disclaim 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 and Adjusted EBITDA, 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 expense (benefit) 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 integration costs, non-recurring litigation, transaction expenses, goodwill impairment, and loss on extinguishment of debt.

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 and Adjusted EBITDA as non-GAAP performance measures which are reconciled to the most directly comparable GAAP measure, in the tables included in this release. 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 income (loss).

About BigBear.ai

BigBear.ai is a specialized defense technology company, developing and deploying mission-ready AI solutions and services. Customers and partners rely on BigBear.ai’s predictive analytics capabilities in highly complex, distributed, mission-based operating environments. Headquartered in McLean, Virginia, 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.

Key Takeaways BigBear.ai eliminated $124.6 million of 2029 convertible notes, leaving $16.5 million of debt.BBAI ended Q1 with $431.5 million in cash and investments and backed 2026 revenue guidance.BBAI's backlog rose 14% sequentially to $281.9 million, helped by a $53 million intelligence contract. BigBear.ai (BBAI - Free Report) has taken a meaningful step toward strengthening its financial profile by aggressively reducing debt, a move that could improve investor confidence even though the company remains unprofitable.

The biggest milestone came in January 2026, when BigBear.ai eliminated the remaining $124.6 million of its 2029 convertible notes, primarily through debt-to-equity conversions. As a result, only about $16.5 million of debt remained at the end of the first quarter, with management expecting that balance to be settled before the end of 2026. The transaction also reduced first-quarter interest expense by $4.8 million year over year, freeing up resources for growth initiatives.

The healthier balance sheet gives BigBear.ai greater financial flexibility as it pursues opportunities in national security and trade and travel. Management ended the first quarter with $431.5 million in cash and investments, while affirming its 2026 revenue guidance of $135-$165 million. The company also reported a 14% sequential increase in backlog to $281.9 million, supported by a $53 million classified intelligence contract and expanding demand for its Ask Sage generative AI platform.

Operationally, the company is shifting toward higher-margin software and AI platforms. Ask Sage is helping improve revenue mix, contributing to a sharp expansion in gross margin to 34% from 21.3% a year earlier. Management is also integrating recent acquisitions, reorganizing sales teams around growth markets and targeting additional government AI contracts.

While the deleveraging effort marks a positive turning point, it is not a complete investment thesis. BigBear.ai continues to post net losses and negative adjusted EBITDA, while operating cash flow remained negative in the first quarter. For the stock to sustain a re-rating, the company must convert its stronger balance sheet, expanding backlog and AI-driven product portfolio into consistent revenue growth and profitability.

BBAI’s Price Performance, Valuation & EstimatesShares of BBAI have plunged 39.4% so far this year, lagging the Zacks Computers - IT Services industry, as shown below. At the same time frame, other industry players, including C3.ai, Inc. (AI - Free Report) and Palantir Technologies (PLTR - Free Report) , have lost 33.6% and 28.7%, respectively.

BBAI Stock’s YTD Price Performance

Image Source: Zacks Investment Research

BBAI stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-sales (P/S) ratio of 10.05, as evidenced by the chart below. Other industry peers, such as C3.ai and Palantir, have P/S ratios of 6.17 and 32.33, respectively.

BBAI’s P/S Ratio (Forward 12-Month) vs. Industry

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for BBAI’s 2026 loss per share has remained unchanged in the past 60 days, as shown below. The estimated figure indicates a narrower loss from the year-ago loss of 82 cents per share.

EPS Trend of BBAI Stock

Image Source: Zacks Investment Research

BigBear.ai currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Takeaways BigBear.ai added industrial AI contracts and expanded its digital twin and simulation platform.BBAI strengthened its AI portfolio through the Ask Sage and CargoSeer acquisitions.Growing backlog, higher margins and reaffirmed 2026 guidance reflect continued execution. BigBear.ai Holdings, Inc. (BBAI - Free Report) is steadily evolving from a pure-play AI software provider into a broader industrial technology company. While its core strength remains mission-ready artificial intelligence for defense and security, recent initiatives suggest the company is building a more diversified business by applying AI to manufacturing, logistics and critical infrastructure.

During the first quarter of 2026, BigBear.ai secured new contracts for its Shipyard AI platform with Canada's Chantier Davie and U.S.-based Bollinger Shipyards. The company also highlighted growing demand for its ProModel simulation platform, which enables digital twins for manufacturing, warehousing, healthcare and defense operations. These industrial applications move the company beyond traditional AI analytics into operational optimization, where customers use predictive modeling to improve productivity and resource planning.

The expansion is further supported by acquisitions. Ask Sage strengthens BigBear.ai's generative AI capabilities, while CargoSeer extends its reach into cargo inspection and supply-chain intelligence. CargoSeer recently introduced AI tools to detect invoice fraud and match shipping documents with cargo contents, broadening the company's addressable market beyond government agencies. Ask Sage has also launched a commercial version, opening its secure AI platform to enterprises in defense, security and critical infrastructure.

Financially, the strategy is beginning to gain traction. First-quarter backlog climbed 14% to $281.9 million, supported by more than $60 million of national security awards, while gross margin expanded to 34% as higher-margin AI platforms contributed a larger share of revenues. Management also reaffirmed its 2026 revenue guidance of $135-$165 million, indicating confidence in continued execution.

Although BigBear.ai still relies heavily on government spending, the growing portfolio of industrial AI, digital twins and supply-chain solutions positions it to diversify revenue sources and expand well beyond traditional AI software over the long term.

Industrial AI Rivals to Watch: Palantir and C3.aiBigBear.ai's push into industrial AI and mission-critical solutions places it in competition with Palantir Technologies (PLTR - Free Report) and C3.ai (AI - Free Report) , both of which are expanding AI adoption across government and commercial markets. Palantir has built a strong presence in defense, manufacturing and supply-chain optimization through its AI Platform, enabling customers to deploy AI-driven decision-making across complex operations. Its deep relationships with government agencies and growing commercial customer base make Palantir a formidable rival in industrial and national security applications.

C3.ai is another key competitor, offering enterprise AI applications for manufacturing, energy, defense and logistics. Its predictive maintenance, supply-chain optimization and digital transformation solutions help industrial customers improve operational efficiency and reduce costs. While BigBear.ai differentiates itself with mission-focused AI, secure generative AI platforms and digital twin capabilities, Palantir's scale and C3.ai's broad enterprise reach underscore the competitive landscape as demand for industrial AI solutions continues to expand.

BBAI’s Price Performance, Valuation & EPS Estimate TrendShares of BBAI have dropped 38.1% over the past six months, underperforming the Zacks Computers - IT Services industry, as shown below.

BBAI’s 6-Month Price Performance
Image Source: Zacks Investment Research

BBAI stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-sales (P/S) ratio of 11.31, as evidenced by the chart below.

BBAI’s P/S Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for BBAI’s 2026 loss per share has narrowed in the past 60 days, as shown below. The estimated figure indicates a narrower loss from the year-ago level of 82 cents per share.

EPS Trend of BBAI
Image Source: Zacks Investment Research

BBAI’s Zacks RankBigBear.ai currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Takeaways BBAI trades at a forward P/S of 12.11X, above the industry's 11.89X, despite weak stock performance.BBAI's contract wins, 14% backlog growth and software shift are strengthening its AI growth outlook.BBAI remains unprofitable, with government spending dependence and integration risks weighing on sentiment. BigBear.ai Holdings, Inc. (BBAI - Free Report) currently trades at a forward 12-month price-to-sales (P/S) ratio of 12.11X, modestly above the Zacks Computers – IT Services industry's 11.89X. Although the premium is not excessive, it reflects expectations that the company can deliver faster growth than many of its peers.

BBAI Stock’s Valuation (P/S F12M)

Image Source: Zacks Investment Research

BigBear.ai remains one of the more closely followed pure-play artificial intelligence stocks, thanks to its growing presence in defense, homeland security and border protection. The company is benefiting from rising demand for AI-powered decision intelligence, generative AI and computer vision solutions across government agencies. However, investors continue to debate whether the company's long-term growth potential justifies its premium valuation.

The challenge is that operating performance has yet to fully match those expectations. Shares have plunged 28.1% year to date, underperforming the broader Zacks Computer and Technology sector's 18.2% gain and the S&P 500's 10% increase, although they have held up better than the industry's 21.7% decline. Investors are weighing BigBear.ai's improving business fundamentals against execution risks, persistent losses and a valuation that still leaves little room for disappointment.

BBAI’s Price Performance

Image Source: Zacks Investment Research

BBAI’s AI Strategy Is Gaining TractionBigBear.ai's first-quarter 2026 results showed encouraging progress despite essentially flat revenues. Sales slipped 1% year over year to $34.4 million as lower activity on certain Army programs offset contributions from the Ask Sage acquisition. More importantly, profitability at the gross margin level improved significantly, with gross margin expanding to 34% from 21.3% a year earlier, reflecting a richer mix of higher-margin generative AI software products. The company also reaffirmed its 2026 revenue outlook of $135-$165 million, signaling confidence that growth will strengthen during the rest of the year.

Management continues to focus on two attractive markets—national security and trade & travel—where AI adoption remains in its early stages. Instead of pursuing every enterprise AI opportunity, BigBear.ai is concentrating on mission-critical applications where operational expertise creates a competitive advantage.

Contract Wins Strengthen Growth Outlook for BBAI StockThe company's recent contract momentum supports management's confidence. During the first quarter, BigBear.ai secured a $53 million classified intelligence community contract, won airport security projects at Chicago O'Hare and Dallas-Fort Worth airports, expanded Shipyard AI deployments through contracts with Chantier Davie and Bollinger Shipyards, and added new Ask Sage customers, including NASA, the Army Intelligence and Security Command, and the Naval Research Laboratory. These wins demonstrate growing acceptance of the company's AI technologies across defense and government agencies.

Backlog also increased 14% sequentially to $281.9 million, providing better revenue visibility over the next several quarters. Management expects additional opportunities as procurement activity improves within the Department of Homeland Security following recent budget approvals and organizational changes.

Software Mix Is Improving Margins for BigBear.aiOne of BigBear.ai's biggest positives is its ongoing shift toward software and AI platforms.

Ask Sage has become an important driver of this transition. The platform provides secure generative AI capabilities for government agencies while allowing customers to use multiple AI models without vendor lock-in. During the quarter, Ask Sage introduced a simplified interface and expanded agent-building capabilities to improve customer adoption.

CargoSeer is also broadening BigBear.ai's product portfolio through AI-powered cargo inspection and fraud detection solutions for customs agencies. Combined with Shipyard AI and ProModel, these products should gradually increase recurring software revenue while supporting higher margins than traditional services. Management also completed an organizational restructuring designed to align engineering, sales and customer teams more closely with its highest-priority markets.

BBAI Stock’s Premium Valuation Leaves Limited Margin for ErrorDespite these positives, BigBear.ai's valuation continues to demand strong execution. A forward sales multiple above the industry average suggests investors expect sustained double-digit growth and continued margin expansion. However, current financial results still fall short of that expectation. Revenue growth remains modest, and profitability has not yet reached the level typically associated with premium software companies.

As a result, even relatively small operational disappointments can lead to meaningful stock volatility. This partly explains why BBAI shares have struggled despite positive contract announcements and improving margins.

Losses and Execution Risks Remain Key Concerns for BBAISeveral fundamental challenges continue to weigh on investor sentiment. Although gross margin improved substantially, the company remains unprofitable. Adjusted EBITDA stayed negative during the first quarter as higher selling expenses, acquisition-related amortization and integration costs offset much of the margin improvement. While debt reduction has lowered interest expense, management still needs to demonstrate that revenue growth can outpace operating costs over time.

The business also remains highly dependent on government spending. Contract awards can be delayed by procurement cycles, budget negotiations or administrative approvals, creating uneven quarterly results. Even with a growing backlog, the timing of revenue recognition remains difficult to predict.

Integration risk also deserves attention. BigBear.ai continues integrating Ask Sage and CargoSeer while simultaneously expanding its go-to-market strategy. Successfully converting these acquisitions into faster revenue growth will be critical over the next several quarters.

These uncertainties help explain why the stock has declined sharply this year despite improving operational metrics.

Stronger Balance Sheet Supports Long-Term Growth for BBAIThe company's financial position has improved considerably. BigBear.ai ended the first quarter with approximately $431.5 million in cash and investments after eliminating most of its convertible debt earlier this year. Lower debt reduces future interest expense while giving management greater flexibility to invest in product development, pursue acquisitions and support long-term growth initiatives.

Analysts also expect gradual improvement. During the past 60 days, the Zacks Consensus Estimate for the company's 2026 loss has narrowed to 25 cents per share from 35 cents. Revenues are projected to increase roughly 13% this year and another 13.7% in 2027, while losses are expected to continue narrowing.

BBAI’s Earnings Estimate Revision Trend

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Comparing BigBear.ai With Industry PeersBigBear.ai competes with Palantir Technologies (PLTR - Free Report) , C3.ai (AI - Free Report) and Booz Allen Hamilton (BAH - Free Report) , although each company serves the AI market differently.

Palantir continues to lead the government AI market with stronger revenue growth, expanding profitability and significantly larger commercial operations. Its execution has been superior, although its valuation is considerably higher than BigBear.ai's.

C3.ai remains focused on enterprise AI software across both commercial and government customers. It offers broader industry exposure than BigBear.ai but continues to work toward consistent profitability.

Booz Allen Hamilton combines decades of government relationships with expanding AI consulting capabilities. It generates far more stable earnings and cash flows than BigBear.ai, making it a lower-risk alternative for investors seeking exposure to government AI spending.

Buy, Hold or Sell for BBAI Stock?BigBear.ai is making meaningful progress. Contract wins are increasing, backlog continues to expand, software products are becoming a larger part of the business and the balance sheet is significantly stronger than it was a year ago. The improving earnings outlook also reflects better operating momentum.

Nevertheless, investors should recognize that much of the long-term opportunity remains forward-looking. Revenue growth has not yet accelerated meaningfully, profitability remains elusive and dependence on government procurement continues to create execution risk. Given these challenges, the stock's premium valuation appears difficult to justify today.

These factors support the current Zacks Rank #4 (Sell). While BigBear.ai possesses attractive long-term AI assets, investors may be better served waiting for stronger revenue growth, clearer progress toward profitability and a more attractive valuation before becoming more constructive on the stock.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.