BigBear.ai Holdings Inc

BigBear.ai Holdings, Inc. (NYSE: BBAI) is a provider of artificial intelligence (AI)-powered decision intelligence solutions for national security, supply chain management and digital identity. The Company is a technology-led solutions organization, providing both software and services to its customers. The Company operates through two segments: Cyber & Engineering, Analytics.

Recent Business and Financial Updates

• Revenue and Gross Margin: Revenue for the first quarter of 2024 decreased by 21.4% to USD 33.1 million, compared to USD 42.2 million for the same period in 2023. This decline was primarily due to the planned wind-down of the Air Force EPASS program in mid-2023 (USD 6.8 million) and the loss of revenue from Virgin Orbit following their bankruptcy announcement in April 2023 (USD 1.5 million). Additionally, delays in contract awards due to continuing resolutions contributed to this decrease. The gross margin also declined to 21.1% in the first quarter of 2024 from 24.2% in the first quarter of 2023, mainly driven by an increase in equity-based compensation expense of USD 1.8 million and the loss of revenue and gross margin from Virgin Orbit.
• Net Loss: The net loss for the first quarter of 2024 amounted to USD 125.1 million, which included a non-cash goodwill impairment charge of USD 85.0 million, and USD 24.0 million of non-cash expenses. This loss was partially offset by gains of USD 10.6 million related to the issuance of 2024 Warrants and an USD 18.3 million gain related to the decrease in fair value of these warrants from the date of issuance to the end of the quarter. Additional factors included USD 5.2 million of equity-based compensation expense and USD 0.9 million related to restructuring charges. For the first quarter of 2023, the net loss was USD 26.2 million, which included USD 10.6 million of non-cash expenses related to the change in fair value of PIPE warrants issued in January 2023, USD 3.8 million of equity-based compensation expense, and USD 0.8 million related to restructuring charges.
• Adjusted EBITDA and SG&A: Non-GAAP Adjusted EBITDA improved to (USD 1.6) million for the first quarter of 2024 from (USD 3.8) million in the first quarter of 2023, driven by a continued focus on reducing operating expenses, including the recent acquisition of Pangiam. SG&A expenses decreased to USD 16.9 million for the first quarter of 2024 from USD 20.4 million for the same period in 2023, primarily due to continued focus on operating expense reductions and synergies from the business combination. Recurring SG&A expenses were reduced from USD 15.3 million in the first quarter of 2023 to USD 13.6 million in the first quarter of 2024, reflecting a net improvement of USD 1.7 million.
• Cash Balance and Backlog: The ending cash balance as of March 31, 2024, was USD 81.4 million, up from USD 32.6 million as of December 31, 2023. This increase was primarily driven by USD 53.8 million of proceeds from the 2023 Warrants exercised in the first quarter of 2024 and USD 13.9 million related to cash acquired from the acquisition of Pangiam. The ending backlog was USD 296 million as of March 31, 2024. The consolidated results include contributions from Pangiam from the acquisition date of February 29, 2024, through the end of the quarter.
• S. Army Extension: BigBear.ai recently received an USD 8.3 million extension from the U.S. Army G-3/5/7 to continue leading the sustainment and modernization of mission-critical force generation and analytics capabilities. This commitment, along with the previous GFIM-OE extension, underscores BigBear.ai's leadership in providing essential enterprise IT capabilities to the Army.
• Contract Awards for VeriScan™: Pangiam, a BigBear.ai company, was awarded contracts for the implementation of veriScan™ at various airports. The Metropolitan Washington Airports Authority selected Pangiam for the provision of veriScan™ at 127 gates following a competitive solicitation. Additionally, Denver International Airport awarded a contract to Pangiam for implementing veriScan™ to facilitate passenger processing for Biometric International Exit at 24 gates. Furthermore, Pangiam secured a contract with a key port authority in Canada to deploy a biometric-enabled passenger processing application for U.S. entry.
• Project Dartmouth Trial in Australia: ai’s Pangiam signed an agreement with Melbourne Airport in Australia to trial Project Dartmouth, an AI/ML threat detection capability designed to assist officers in detecting prohibited items in carry-on baggage. This trial marks BigBear.ai’s first Project Dartmouth initiative in Australia, potentially paving the way for broader deployment of this technology.
• Designation as "Awardable" Vendor: ai has been designated as an “Awardable” vendor for the Chief Digital and Artificial Intelligence Office’s (CDAO) Tradewinds Solutions Marketplace. Five of BigBear.ai’s products, including ConductorOS, VANE, AURORA, Arcas, and Observe, have been added to the Marketplace, facilitating the acceleration of their procurement across the Department of Defense.
• Teaming Agreement with Spinnaker SCA: ai formed a teaming agreement with Spinnaker SCA, a supply chain-focused consulting firm, to enhance consulting services for manufacturing and warehouse operations. This collaboration combines BigBear.ai's ProModel® simulation software with Spinnaker SCA's consulting expertise, offering clients strategic guidance, simulation-based validation, and data-driven optimization to reduce costs and increase efficiency.
• Revenue Projections: For the year ending December 31, 2024, the Company projects revenue between USD 195 million and USD 215 million. These projections include the results of Pangiam from the acquisition date of February 29, 2024.

Technical Observation (on the daily chart):

The Relative Strength Index (RSI) over a 14-day period stands at a value of 36.19, with expectations of a consolidation or an upward momentum from oversold levels. Additionally, the stock's current positioning is below both the 50-period SMA and 200-period SMA, which may serve as dynamic short to medium-term resistance levels.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Speculative Buy’ rating has been given to BigBear.ai Holdings, Inc. (NYSE: BBAI) at the closing market price of USD 1.36 as of June 06, 2024.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is June 06, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.