Strategic partnership announced with L3Harris
and BigBear.ai to deliver artificial intelligence (AI) and
autonomous surface vessel (ASV) capabilities for current and future
defense programs
Reiterating FY Guidance of Revenue between $155
million and $170 million
BigBear.ai Holdings, Inc. (NYSE: BBAI) (“BigBear.ai” or
the “Company”), a leader in AI-powered decision intelligence
solutions, today announced financial results for the first quarter
of 2023.
Financial Highlights
- Revenue grew 15.8% to $42.2 million for the first quarter of
2023, compared to $36.4 million for the first quarter of 2022.
- Gross margin of 24.2% in the first quarter of 2023, a decrease
from 27.1% in the first quarter of 2022, was primarily driven by
incremental costs on the Global Force Information Management (GFIM)
Phase 2 contract.
- Net loss of $26.2 million for the first quarter of 2023, which
includes $10.6 million of non-cash expense related to the change in
fair value of PIPE warrants that were issued in January 2023, $3.8
million of equity-based compensation expense, and $0.8 million
related to restructuring charges, compared to a net loss of $18.8
million for the first quarter of 2022.
- Non-GAAP Adjusted EBITDA* of $(3.8) million for the first
quarter of 2023 compared to $(2.9) million for the first quarter of
2022.
- Net cash used in operating activities was $12.0 million,
compared to $7.5 million in the first quarter of 2022, due to the
timing of contract awards and vendor payments.
- Universal shelf registration statement filed in April 2023 to
offer up to $500 million of securities, which will help facilitate
our ability to quickly access the capital markets and bolster our
overall financial profile.
- Ending backlog of $197 million.
New Business
Developments
- BigBear.ai + L3Harris Teaming Agreement: Under the agreement,
BigBear.ai will be the exclusive provider to L3Harris of computer
vision, predictive analytics and event alerting analytics
applications for autonomous surface vessels and their associated
shore-based C2 maritime operations systems for the Department of
Defense (DoD).
- International Maritime Exercise 23 (IMX 23): As a continuation
to our support during the U.S. Navy’s Digital Horizon event in
December 2022, BigBear.ai successfully demonstrated its AI/Machine
Learning (ML)-powered decision support solution at IMX 23 with Task
Force 59. BigBear.ai’s solution provides analysts and
decision-makers with real-time situational awareness, predictive
forecasts, and computer vision capabilities using ML-augmented
algorithms and analytics.
- Tradewind: BigBear.ai is announcing the addition of two of our
solutions to the Department of Defense’s Chief Digital and
Artificial Intelligence Office’s Tradewind Initiative. Tradewind is
a marketplace for DoD leaders to rapidly source, fund, and develop
solutions in the AI/ML, digital, and data analytics space. Observe,
a massive, distributed, data collection capability focused on
capturing publicly available information at scale, and our
AI/ML-based forecasting, situational awareness analytics, and
computer vision capabilities originally developed for autonomous
systems will now be widely available for many other DoD use
cases.
- Leadership Updates: As we continue to grow and expand our
impact across key markets, we are excited to announce the
appointment of Norm Laudermilch as Chief Operating Officer and the
promotion of Greg Goldwater to Chief Growth Officer.
BigBear.ai CEO Mandy Long said, “We continue to execute and are
excited by the opportunities that lie ahead. We believe 2023 will
continue to be a foundational year for us as we mature and scale,
not only in our operational rigor, but in the experienced
leadership that we bring to the team following our additions of
Norm and Greg. We are grateful for the opportunity to deepen our
relationship with L3Harris, and together we are well-positioned to
support customers in delivering clarity for the world’s most
complex decisions.”
BigBear.ai CFO Julie Peffer said, “In the first quarter, we
achieved approximately 16% year-over-year revenue growth driven by
key programs with the U.S. Army including GFIM Phase 2. Our
disciplined approach to reducing operating costs helped support
lowered overall expenses for the quarter. Additionally, we filed a
universal shelf registration statement to offer up to $500 million
of securities, which will allow us to more easily access capital
markets moving forward to support organic and inorganic growth. We
expect these key factors will help position us to deliver
sustainable revenue growth in the future.”
Reporting Segments
Changes
Effective for the first quarter of 2023, the Company
consolidated its two legacy reportable segments, Cyber &
Engineering and Analytics, into one reporting segment. The segment
reporting changes reflect a corresponding change in how the
Company’s chief operating decision maker, who is our CEO, manages
our operations for purposes of allocating resources and evaluating
performance.
BigBear.ai CEO Mandy Long said, "Our new reporting structure is
better aligned to our current operational structure and allows for
a more targeted approach for investment decisions and to focus on
our current initiatives to drive results.”
Management will discuss the segment reporting change during the
Company’s first quarter earnings call on Tuesday, May 9, 2023 at
5:00 p.m. ET.
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.
For the year-ended December 31, 2023, the Company continues to
project:
- Revenue between $155 million and $170 million
- Single Digit Negative Adjusted EBITDA*, in millions
Summary of Results for the
Quarters Ended
March 31, 2023 and March 31,
2022
(Unaudited)
Three Months Ended
March 31,
$ thousands (expect per share amounts)
2023
2022
Revenues
$
42,154
$
36,390
Cost of revenues
31,941
26,523
Gross margin
10,213
9,867
Operating expenses:
Selling, general and administrative
20,362
22,020
Research and development
1,128
2,874
Restructuring charges
755
—
Transaction expenses
—
1,399
Operating loss
(12,032
)
(16,426
)
Interest expense
3,556
3,555
Net increase (decrease) in fair value of
derivatives
10,567
(1,263
)
Other expense
—
30
Loss before taxes
(26,155
)
(18,748
)
Income tax expense
59
77
Net loss
$
(26,214
)
$
(18,825
)
Basic and diluted net loss per
share
$
(0.19
)
$
(0.14
)
EBITDA* and Adjusted EBITDA*
for the Quarters Ended
March 31, 2023 and March 31,
2022
(Unaudited)
Three Months Ended
March 31,
$ thousands
2023
2022
Net loss
$
(26,214
)
$
(18,825
)
Interest expense
3,556
3,555
Income tax expense
59
77
Depreciation and amortization
1,986
1,772
EBITDA
(20,613
)
(13,421
)
Adjustments:
Equity-based compensation
3,805
3,858
Employer payroll taxes related to
equity-based compensation(1)
183
—
Net increase (decrease) in fair value of
derivatives(2)
10,567
(1,263
)
Restructuring charges(3)
755
—
Non-recurring strategic initiatives(4)
1,508
—
Non-recurring integration costs(5)
—
2,375
Capital market advisory fees(6)
—
703
Commercial start-up costs(7)
—
3,427
Transaction expenses(8)
—
1,399
Adjusted EBITDA
$
(3,795
)
$
(2,922
)
(1)
Includes employer payroll taxes
due upon the vesting of restricted stock units granted to
employees.
(2)
The increase in fair value of
derivatives in the first quarter of 2023 primarily relates to
changes in the fair value of the PIPE warrants that were issued
during the first quarter of 2023. The decrease in fair value of
derivatives during the first quarter of 2022 primarily relates to
Forward Share Purchase Agreements that were entered into prior to
the closing of our business combination on December 7, 2021 (the
“Business Combination”) and were fully settled during the first
quarter of 2022.
(3)
In the first quarter of 2023, the
Company incurred employee separation costs associated with a
strategic review 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
related to the execution of certain strategic initiatives of the
Company.
(5)
Non-recurring internal
integration costs related to the Business Combination.
(6)
The Company incurred capital
market and advisory fees related to advisors assisting with the
Business Combination.
(7)
Commercial start-up costs include
certain non-recurring expenses associated with tailoring the
Company’s products for commercial customers and use cases.
(8)
The Company incurred transaction
expenses related to the acquisition of ProModel Corporation, which
closed on April 7, 2022.
Consolidated Balance Sheets as
of
March 31, 2023 and December
31, 2022
(Unaudited)
$ in thousands
March 31,
2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents
$
21,827
$
12,632
Accounts receivable, less allowance for
doubtful accounts
32,678
30,091
Contract assets
2,427
1,312
Prepaid expenses and other current
assets
8,775
10,300
Total current assets
65,707
54,335
Non-current assets:
Property and equipment, net
1,308
1,433
Goodwill
48,683
48,683
Intangible assets, net
83,816
85,685
Deferred tax assets
51
51
Right-of-use assets
4,491
4,638
Other non-current assets
509
483
Total assets
$
204,565
$
195,308
Liabilities and equity
Current liabilities:
Accounts payable
$
10,508
$
15,422
Short-term debt, including current portion
of long-term debt
1,296
2,059
Accrued liabilities
18,271
13,366
Contract liabilities
2,347
2,022
Current portion of long-term lease
liability
810
806
Derivative liabilities
25,469
—
Other current liabilities
2,136
2,085
Total current liabilities
60,837
35,760
Non-current liabilities:
Long-term debt, net
192,807
192,318
Long-term lease liability
4,906
5,092
Deferred tax liabilities
54
—
Other non-current liabilities
—
10
Total liabilities
258,604
233,180
Stockholders’ deficit:
Common stock
16
14
Additional paid-in capital
282,573
272,528
Treasury stock, at cost 9,952,803 shares
at March 31, 2023 and December 31, 2022
(57,350
)
(57,350
)
Accumulated deficit
(279,278
)
(253,064
)
Total stockholders’ deficit
(54,039
)
(37,872
)
Total liabilities and stockholders’
deficit
$
204,565
$
195,308
Consolidated Statements of
Cash Flows for the Three Months Ended
March 31, 2023 and March 31,
2022
(Unaudited)
Three Months Ended March
31,
$ in thousands
2023
2022
Cash flows from operating
activities:
Net loss
$
(26,214
)
$
(18,825
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization expense
1,986
1,772
Amortization of debt issuance costs
500
523
Equity-based compensation expense
3,805
3,858
Non-cash lease expense
(35
)
—
Provision for doubtful accounts
882
—
Deferred income tax expense
54
174
Net increase (decrease) in fair value of
derivatives
10,567
(1,263
)
Loss on sale of property and equipment
8
—
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable
(3,469
)
1,981
Increase in contract assets
(1,115
)
(2,306
)
Decrease in prepaid expenses and other
assets
1,488
432
(Decrease) increase in accounts
payable
(4,914
)
1,150
Increase in accrued liabilities
4,066
6,307
Increase (decrease) in contract
liabilities
325
(1,415
)
Increase in other liabilities
49
83
Net cash used in operating
activities
(12,017
)
(7,529
)
Cash flows from investing
activities:
Purchases of property and equipment
—
(359
)
Net cash used in investing
activities
—
(359
)
Cash flows from financing
activities:
Proceeds from issuance of Private
Placement shares, net
21,975
—
Repurchase of shares as a result of
forward share purchase agreements
—
(100,896
)
Repayment of short-term borrowings
(763
)
(1,159
)
Net cash provided by (used in)
financing activities
21,212
(102,055
)
Net increase (decrease) in cash and cash
equivalents
9,195
(109,943
)
Cash and cash equivalents and restricted
cash at the beginning of period
12,632
169,921
Cash and cash equivalents and
restricted cash at the end of the period
$
21,827
$
59,978
*Refer to the “Non-GAAP Financial
Measures” section in this press release.
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 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; 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; 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; 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 coronavirus outbreak; the identified
material weakness in our internal controls over financial reporting
(including the timeline to remediate the material weakness);
increased or unexpected costs or unanticipated delays caused by
other factors outside of our control, such as performance failures
of our subcontractors; the rollout of the business and the timing
of expected business milestones; the effects of competition on our
future business; our ability to obtain and access financing 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 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, income
tax expense, 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 (decrease) in fair value of derivatives, restructuring
charges, non-recurring integration costs, capital market advisory
fees, commercial start-up costs, and transaction expenses. 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 a non-GAAP
performance measure which is defined in the accompanying tables and
is reconciled to net (loss), the most directly comparable GAAP
measure, in the tables above. 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 (loss) income.
We present reconciliations of these non-GAAP financial measures
to the most directly comparable GAAP measures 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, May 9, 2023 at 5:00
p.m. ET. The earnings conference call can be accessed by calling
888-428-7458 (toll-free) or 862-298-0702 (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
13738143. To access the webcast replay, visit
https://ir.bigbear.ai.
About BigBear.ai
BigBear.ai’s mission is to deliver clarity for the world’s most
complex decisions. BigBear.ai’s AI-powered decision intelligence
solutions are leveraged in three core markets, including global
supply chains & logistics, autonomous systems and cyber.
BigBear.ai’s customers, which include the US Intelligence
Community, Department of Defense, the US Federal Government, as
well as complex manufacturing, distribution, and healthcare, rely
on BigBear.ai’s solutions to empower leaders to decide on the best
possible scenario by creating order from complex data, identifying
blind spots, and building predictive outcomes. 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.
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BigBear.ai Investor Contact
investors@bigbear.ai
Media Contact Shane Karp
media@bigbear.ai
FTI Consulting IRBigBearai@fticonsulting.com or
investors@BigBear.ai
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