Shares of BigBear.ai (BBAI) plummeted over 29% in the after-hours trading after reporting a challenging second quarter, with revenue down 18% year-over-year and a sharp increase in net loss. Also, the AI software firm missed analysts’ estimates by a wide margin. In addition, BBAI pulled back its full-year adjusted EBITDA guidance and lowered its revenue outlook, citing disruptions in federal contracts.
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BBAI’s Disappointing Q2 Financials
The company’s Q2 revenue came in at $32.5 million, down from $39.8 million a year ago, largely due to lower volume on certain U.S. Army programs. Also, it fell short of analyst expectations of $40.59 million.
Similarly, the company posted an adjusted loss of $0.71 per share, which reflects a huge miss from the consensus estimate of a loss of $0.06. Further, the loss widened from the previous year’s $0.06 per share.
Moreover, adjusted EBITDA stood negative at $8.5 million, reflecting softer margins and higher R&D spending.
2025 Outlook
Looking ahead, BigBear.ai now expects to report revenue of $125 million to $140 million in 2025, compared with $160 million to $180 million previously expected. The company attributed the new guidance to delays in federal contracts as government agencies upgrade their data systems.
Also, BBAI removed its full-year adjusted EBITDA forecast for 2025, due to uncertainty around some Army programs and new growth investments planned later this year.
BBAI CEO Sees Silver Lining Ahead
Despite the short-term headwinds, CEO Kevin McAleenan said BigBear.ai is at a turning point thanks to a new law, One Big Beautiful Bill, that provides $170 billion for Homeland Security and $150 billion for Defense tech, areas that match the company’s focus on national and border security.
Further, during the quarter, BigBear.ai signed a major AI partnership in the UAE with top IHC-backed firms, which McAleenan called the first step in the company’s global growth plans.
Is BBAI Stock a Good Buy?
Turning to Wall Street, BBAI stock has a Moderate Buy consensus rating based on one Buy and one Hold assigned in the last three months. At $8.00, the average BigBear.ai price target implies 12.83% upside potential.
However, it’s worth noting that estimates will likely change following today’s earnings report.
