- Revenue of $37.6 million for the second quarter ended
June 30, 2022
- Gross margin of 25% for the second quarter ended June 30,
2022
- Analytics segment adjusted gross margin of 39% for the second
quarter of 2022
- Expanded enterprise SaaS contracts in key commercial
market
- Ending backlog of $325 million
- Revised 2022 financial outlook
BigBear.ai Holdings, Inc. (NYSE: BBAI) (“BigBear.ai” or
the “Company”), a leader in AI-powered analytics and cyber
engineering solutions, today announced financial results for the
second quarter of 2022.
BigBear.ai CEO Dr. Reggie Brothers said, “We continue to focus
on evolving our business to become a more scalable and profitable
technology-first company. While the second quarter presented
challenges to our 2022 performance and slowed the pace of our
transformation, we remain confident in our ability to capture
larger, higher-margin projects with both federal and commercial
customers to drive long-term growth.”
“Our ProModel acquisition this quarter significantly expanded
our offerings with industry-leading modeling, simulation, and
planning applications used by hundreds of global customers. In
healthcare, hospitals are leveraging our software to predict
patient loads, optimize patient care, and improve financial
performance. We are building a strong pipeline, and in the second
quarter we signed an agreement with one of the largest health
systems in the Eastern U.S. We are seeing similar demand in the
optimization of shipyard operations, a critical part of the current
challenges in the global supply chain. Although commercial sales
cycles are moving more slowly due to economic uncertainty, we are
pleased with the progress of our integration and initial bookings,
and we expect to see a positive impact on revenue in the second
half of 2022 and a more significant impact in 2023.”
“For our government customers, their focus on addressing
immediate needs in Ukraine has slowed the pipeline and pace of
contract awards, pushing revenue further to the right. We continue
to expect the geopolitical climate to drive adoption of our
offerings over the long term, as it has heightened the need for
advanced AI tools that provide enhanced intelligence and full
spectrum cyber operations – areas where we have unmatched
capabilities.”
Dr. Brothers added, “While we still have a healthy backlog and
growing pipeline, the timing of new deals has been difficult to
predict given current market conditions. As such, we are taking a
more conservative approach in estimating certain opportunities in
our forecast and backlog. This change, combined with delays in
federal contract awards and longer sales cycles, has driven us to
revise our outlook for 2022.”
“Looking ahead, our investments in Analytics and our commercial
expansion will help us transition our business to drive revenue and
capture more predictable, higher margin, SaaS-based projects.
However, in light of our second quarter performance and revised
guidance, we are taking stringent steps to reduce our expenses and
cash usage, and to significantly increase our operational
efficiency going forward.”
Financial Highlights
- Revenue of $37.6 million, compared to $36.3 million for the
second quarter of 2021
- Analytics revenue increased $2.9 million, or 18%, as compared
to the same period in 2021, primarily driven by continued expansion
of key programs
- Gross margin of 25%, compared to 25% for the second quarter of
2021
- Segment adjusted gross margin of 39% for the Analytics segment
compared to 46% for the second quarter of 2021. The decrease
reflects investments in prototype contracts that are expected to
yield higher margins upon the award of subsequent production
contracts
- Segment adjusted gross margin of 24% for the Cyber &
Engineering segment, compared to 22% for the second quarter of
2021
- Net loss of $(56.8) million, compared to $(3.2) million for the
second quarter of 2021, primarily driven by a non-cash goodwill
impairment charge of $35.3 million in our Cyber & Engineering
segment. The increase in the net loss was also a result of higher
public company expenses as well as infrastructure and integration
costs
- Non-GAAP adjusted EBITDA* of $(7.7) million, compared to $0.5
million for the second quarter of 2021, primarily driven by
increased investment to support future growth, operate successfully
as a public company, and enhance or develop new capabilities
through increased investment in research and development
- Ending backlog of $325 million as a result of a change to our
methodology in measuring backlog. Under the revised methodology,
backlog does not include Anticipated Follow-on Awards, which were
historically estimated when a customer notified us that a program
we currently support would be continuing under a new contract.
Additionally, we have reassessed our unpriced, unexercised backlog,
and while we have this work under contract with not-to-exceed
limits, we have updated our estimates on what we believe will
actually be funded in the future on these contracts.
Julie Peffer, who joined BigBear.ai in June as the Company’s
CFO, said, “In the second quarter, our top line revenue was
impacted by the focus on the war in Ukraine, which delayed the
timing on some anticipated contract awards in our near-term
pipeline. Along with these revenue delays, our Adjusted EBITDA was
impacted by strategic investments in certain lower margin prototype
contracts. While this prototype work frequently requires
significant up-front investment, it has the potential to lead to
large multi-year contracts with considerably higher margins. We
expect to see conversion soon and continuing through 2023 based on
initial customer responses.”
“Additionally, our second quarter margins and Adjusted EBITDA
were impacted by a higher level of operating expenses linked to
public company governance, transaction and integration costs
related to the ProModel acquisition, and our go-to-market strategy
in our commercial business. We are in the process of conducting a
rigorous and disciplined assessment of our cost structure, and
going forward, we expect to significantly reduce our cash burn
through aggressive cost savings initiatives, streamline operations,
and fully integrate as one business. We believe added rigor around
expense management, coupled with our healthy backlog, strong
customer relationships, and expanding addressable market, position
BigBear.ai for long-term, profitable growth,” added Peffer.
Financial Outlook
The following information 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. For additional factors that may impact the Company’s
actual results, refer to the “Forward-Looking Statements” section
in this release.
The Company now projects:
- Revenue of approximately between $150 million to $170 million
for the year-ended December 31, 2022
- Single digit negative Adjusted EBITDA*, in millions, for the
second half of 2022
Summary of Results for the
Second Quarter and Year to Date Periods Ended
June 30, 2022 and June 30,
2021
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
$ thousands (expect per share amounts)
2022
2021
2022
2021
Revenues
$
37,613
$
36,311
$
74,003
$
71,881
Cost of revenues
28,023
27,148
54,546
52,438
Gross margin
9,590
9,163
19,457
19,443
Operating expenses:
Selling, general and administrative
26,952
10,405
48,972
20,519
Research and development
2,535
1,867
5,409
2,795
Transaction expenses
186
—
1,585
—
Goodwill impairment
35,252
—
35,252
—
Operating loss
(55,335
)
(3,109
)
(71,761
)
(3,871
)
Interest expense
3,554
1,849
7,109
3,709
Net decrease in fair value of
derivatives
(199
)
—
(1,462
)
—
Other (income) expense
(26
)
—
4
(1
)
Loss before taxes
(58,664
)
(4,958
)
(77,412
)
(7,579
)
Income tax benefit
(1,820
)
(1,783
)
(1,743
)
(1,967
)
Net loss
$
(56,844
)
$
(3,175
)
$
(75,669
)
$
(5,612
)
Basic and diluted net loss per
share
$
(0.45
)
$
(0.03
)
$
(0.59
)
$
(0.05
)
EBITDA* and Adjusted EBITDA*
for the Second Quarter and Year to Date Periods Ended
June 30, 2022 and June 30,
2021
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
$ thousands
2022
2021
2022
2021
Net loss
$
(56,844
)
$
(3,175
)
$
(75,669
)
$
(5,612
)
Interest expense
3,554
1,849
7,109
3,709
Income tax benefit
(1,820
)
(1,783
)
(1,743
)
(1,967
)
Depreciation and amortization
1,954
1,752
3,726
3,673
EBITDA
(53,156
)
(1,357
)
(66,577
)
(197
)
Adjustments:
Equity-based compensation
5,080
31
8,938
56
Net decrease in fair value of
derivatives(1)
(199
)
—
(1,462
)
—
Capital market advisory fees(2)
38
906
741
2,446
Management fees(3)
—
454
—
454
Non-recurring integration costs(4)
2,024
505
4,399
505
Commercial start-up costs(5)
3,063
—
6,490
—
Transaction expenses(6)
186
—
1,585
—
Goodwill impairment(7)
35,252
—
35,252
—
Adjusted EBITDA
$
(7,712
)
$
539
$
(10,634
)
$
3,264
(1)
The decrease in fair value of derivatives
primarily relates to the changes in the fair value of certain
Forward Share Purchase Agreements (FPAs) that were entered into
prior to the closing of the Business Combination and were fully
settled during the first quarter of 2022, as well as changes in the
fair value of private warrants.
(2)
The Company incurred capital market and
advisory fees related to advisors assisting with the Business
Combination.
(3)
Management and other related consulting
fees paid to AE Partners. These fees ceased subsequent to the
Business Combination.
(4)
Non-recurring internal integration costs
related to the Business Combination.
(5)
Commercial start-up costs includes certain
non-recurring expenses associated with tailoring the Company’s
software products for commercial customers and use cases.
(6)
Transaction expenses related to the
acquisition of ProModel Corporation, which closed on April 7,
2022.
(7)
During the second quarter of 2022, the
Company recognized a non-cash goodwill impairment charge related to
its Cyber & Engineering business segment.
Consolidated Balance Sheets as
of
June 30, 2022 and December 31,
2021
(Unaudited)
$ in thousands
June 30, 2022
December 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
29,829
$
68,900
Restricted cash
—
101,021
Accounts receivable, less allowance for
doubtful accounts
28,546
28,605
Contract assets
1,252
628
Prepaid expenses and other current
assets
8,097
7,028
Total current assets
67,724
206,182
Non-current assets:
Property and equipment, net
1,433
1,078
Goodwill
67,164
91,636
Intangible assets, net
89,456
83,646
Other non-current assets
727
780
Total assets
$
226,504
$
383,322
Liabilities and equity
Current liabilities:
Accounts payable
$
6,354
$
5,475
Short-term debt, including current portion
of long-term debt
1,921
4,233
Accrued liabilities
15,978
10,735
Contract liabilities
3,714
4,207
Derivative liabilities
—
44,827
Other current liabilities
881
541
Total current liabilities
28,848
70,018
Non-current liabilities:
Long-term debt, net
191,341
190,364
Deferred tax liabilities
390
248
Other non-current liabilities
136
324
Total liabilities
220,715
260,954
Stockholders’ equity:
Common stock
14
14
Additional paid-in capital
270,184
253,744
Treasury stock, at cost 9,952,803 shares
at June 30, 2022 and — shares at December 31, 2021
(57,350
)
—
Accumulated deficit
(207,059
)
(131,390
)
Total stockholders’ equity
5,789
122,368
Total liabilities and stockholders’
equity
$
226,504
$
383,322
Consolidated Statements of
Cash Flows for the Six Months Ended
June 30, 2022 and June 30,
2021
(Unaudited)
Six Months Ended June
30,
$ in thousands
2022
2021
Cash flows from operating
activities:
Net loss
$
(75,669
)
$
(5,612
)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation and amortization expense
3,726
3,673
Amortization of debt issuance costs
1,047
286
Equity-based compensation expense
8,938
56
Goodwill impairment
35,252
—
Provision for doubtful accounts
44
—
Deferred income tax expense (benefit)
(1,594
)
(1,996
)
Net decrease in fair value of
derivatives
(1,462
)
—
Changes in assets and liabilities:
Decrease (increase) in accounts
receivable
758
(1,580
)
(Increase) decrease in contract assets
(226
)
1,557
Decrease (increase) in prepaid expenses
and other assets
535
(4,299
)
Increase in accounts payable
874
2,251
(Decrease) increase in accrued
liabilities
(2,509
)
5,227
(Decrease) increase in contract
liabilities
(2,048
)
494
Increase in other liabilities
338
275
Net cash (used in) provided by
operating activities
(31,996
)
332
Cash flows from investing
activities:
Acquisition of businesses, net of cash
acquired
(4,376
)
(224
)
Purchases of property and equipment
(508
)
(282
)
Net cash used in investing
activities
(4,884
)
(506
)
Cash flows from financing
activities:
Repurchase of shares as a result of
forward share purchase agreements
(100,896
)
—
Repayment of short-term borrowings
(2,312
)
—
Repayment of term loan
—
(550
)
Payments for taxes related to net share
settlement of equity awards
(4
)
—
Net cash used in financing
activities
(103,212
)
(550
)
Net decrease in cash and cash equivalents
and restricted cash
(140,092
)
(724
)
Cash and cash equivalents and restricted
cash at the beginning of period
169,921
9,704
Cash and cash equivalents and
restricted cash at the end of the period
$
29,829
$
8,980
Forward-Looking
Statements
This release contains forward-looking statements within the
meaning of Section 27A of the Securities Act, and Section 21E of
the Exchange Act. Forward-looking statements generally are
accompanied by words such as “believe,” “may,” “will,” “estimate,”
“continue,” “anticipate,” “intend,” “expect,” “should,” “would,”
“plan,” “predict,” “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 BigBear.ai’s industry, future events, and
other statements that are not historical facts. These statements
are based on various assumptions, whether or not identified herein,
and on the current expectations of BigBear.ai’s management and are
not predictions of actual performance. These forward-looking
statements are provided for illustrative purposes only and are not
intended to serve as, and must not be relied on by you or any other
investor as, a guarantee, an assurance, a prediction or a
definitive statement of fact or probability. Actual events and
circumstances are difficult or impossible to predict and will
differ from assumptions. Many actual events and circumstances are
beyond our control. These forward-looking statements are subject to
a number of risks and uncertainties, including changes in domestic
and foreign business, market, financial, political, and legal
conditions; risks related to the uncertainty of the projected
financial information (including on a segment reporting basis);
risks related to delays caused by factors outside of our control,
including changes in fiscal or contracting policies or decreases in
available government funding; changes in government programs or
applicable requirements; budgetary constraints, 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; influence
by, or competition from, third parties with respect to pending,
new, or existing contracts with government customers; potential
delays or changes in the government appropriations or procurement
processes, including as a result of events such as war, incidents
of terrorism, natural disasters, and public health concerns or
epidemics, such as the recent coronavirus outbreak; and increased
or unexpected costs or unanticipated delays caused by other factors
outside of our control, such as performance failures of our
subcontractors; risks related to the rollout of the business and
the timing of expected business milestones; the effects of
competition on our future business; our ability to issue equity or
equity-linked securities in the future, 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 the results implied by these
forward-looking statements. There may be additional risks that
BigBear.ai presently does not know or that BigBear.ai currently
believes are immaterial which could also cause actual results to
differ from those contained in the forward-looking statements. In
addition, forward-looking statements reflect BigBear.ai’s
expectations, plans or forecasts of future events and views as of
the date of this release. BigBear.ai anticipates that subsequent
events and developments will cause BigBear.ai’s assessments to
change. However, while BigBear.ai may elect to update these
forward-looking statements at some point in the future, BigBear.ai
specifically disclaims 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 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.
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
Adjusted EBITDA is defined as of any date of calculation, the
consolidated pro forma earnings of the Company and its
subsidiaries, before finance income and finance cost (including
bank charges), tax, depreciation and amortization calculated from
the audited consolidated financial statements of such party and its
subsidiaries (prepared in accordance with GAAP), transaction fees
and other non-recurring costs. 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.
Non-GAAP financial performance measures are used to supplement
the financial information presented on a GAAP basis. This non-GAAP
financial measure 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.
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 a non-GAAP
performance measure which is defined in the accompanying tables and
is reconciled to earnings (loss) before taxes.
We present reconciliations of these non-GAAP financial measures
to the most directly comparable GAAP measure in the tables
above.
Conference Call / Webcast
Information
BigBear.ai will host its earnings results conference call and
audio webcast (listen-only mode) on Tuesday, August 9, 2022 at 5:00
p.m. ET. The earnings conference call can be accessed by calling
877-485-3107 (toll-free) or 201-689-8427 (toll). The listen-only
audio webcast of the call will be available on the BigBear.ai
Investor Relations website: https://ir.bigbear.ai. For those who
are unable to listen to the live event, a replay will be available
for two weeks following the event by dialing 877-660-6853
(toll-free) or 201-612-7415 (toll) and entering the access code
13730749. To access the webcast replay, visit
https://ir.bigbear.ai.
About BigBear.ai
BigBear.ai delivers AI-powered analytics and cyber engineering
solutions to support mission-critical operations and
decision-making in complex, real-world environments. BigBear.ai’s
customers, which include the US Intelligence Community, Department
of Defense, the US Federal Government, as well as customers in
manufacturing, healthcare, commercial space, and other sectors,
rely on BigBear.ai’s solutions to see and shape their world through
reliable, predictive insights and goal-oriented advice.
Headquartered in Columbia, Maryland, BigBear.ai is a global, public
company traded on the NYSE under the symbol BBAI. For more
information, please visit: http://bigbear.ai/ and follow BigBear.ai
on Twitter: @BigBearai.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220809005972/en/
BigBear.ai Tyler Sigmon 443-430-2622 Tyler.Sigmon@bigbear.ai
Reevemark Paul Caminiti/Delia Cannan/Pam Greene 212-433-4600
bigbear.ai@reevemark.com or investors@bigbear.ai
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