Leo Sun, The Motley Fool
5 min read
In This Article:
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BigBear.ai has struggled to grow since its SPAC-backed market debut.
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It blamed its sluggish growth on the macro and competitive challenges.
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A few green shoots are appearing, but its future still looks murky.
BigBear.ai (NYSE: BBAI) hasn't impressed too many investors since its public debut. The artificial intelligence (AI) software company went public by merging with a special purpose acquisition company (SPAC) on Dec. 7, 2021. Its stock opened at $9.84 on its first day, but it now trades at less than $4.
Like many other SPAC-backed start-ups, BigBear.ai overpromised and underdelivered. In the company's pre-merger presentation, it claimed it would triple annual revenue from $182 million in 2021 to $550 million in 2024. But from 2021 to 2024, its revenue only rose from $146 million to $158 million in 2024, while its net loss more than doubled from $124 million to $257 million.
Those numbers were grim, but could this unloved AI stock still bounce back over the next five years?
BigBear.ai provides three main AI modules (Observe, Orient, and Dominate) that ingest data, identify trends, and predict future outcomes. It plugs its modules into edge networks that intercept and process data before it reaches an organization's origin servers. It also builds customized apps for certain markets and shares its data with bigger AI-driven data mining firms, like Palantir.
BigBear.ai blamed its slowdown on the bankruptcy of its major customer Virgin Orbit in 2023, competition from bigger cloud and AI companies, macro headwinds for software spending, and its dependence on fixed-price contracts, which restrict the company from adjusting prices if its costs keep rising.
|
2021 |
2022 |
2023 |
2024 | |
|---|---|---|---|---|
|
Revenue |
$145.6 million |
$155.0 million |
$155.2 million |
$158.2 million |
|
Gross Margin |
23% |
27.7% |
26.2% |
28.6% |
|
Adjusted EBITDA |
$4.9 million |
($17.1 million) |
($3.2 million) |
($2.4 million) |
Data source: BigBear.ai. EBITDA = earnings before interest, taxes, depreciation, and amortization.
BigBear.ai was led by three different CEOs in as many years. Reggie Brothers, who oversaw its public debut, resigned in 2022 and handed the reins to Mandy Long, a former IBM executive. Long focused on cutting costs and expanding the company's platform through its all-stock acquisition of the AI vision firm Pangiam in early 2024.
This January, Pangiam's co-founder and CEO Kevin McAleenan, who had previously served as the acting secretary of the Department of Homeland Security (DHS) during the first Trump administration, succeeded Long as BigBear.ai's new CEO.
