BigBear.ai to Report Q1 2025 Earnings with Mixed Outlook
BigBear.ai Holdings, Inc. (BBAI) will report its first-quarter 2025 earnings results on May 1, following the market close. In the previous quarter, BigBear.ai generated revenues of $43.8 million, falling short of the Zacks Consensus Estimate by 19.1%, though this marked an 8% increase year-over-year. The company’s net loss for Q4 2024 was $108 million, largely due to a significant non-cash charge of $93.3 million from changes in derivative liabilities related to new convertible notes due in 2029.
This AI provider exceeded earnings estimates in three of the last four quarters but missed one occasion. The average negative surprise across these instances was 30.7%. Historical figures can be reviewed in the accompanying chart below. (Find the latest EPS estimates and surprises on Zacks earnings Calendar.)
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Estimates for BigBear.ai’s Upcoming Earnings
The Zacks Consensus Estimate for BigBear.ai’s first-quarter earnings per share has remained constant at a loss of 6 cents over the past 30 days, reflecting an improvement from the 22-cent loss reported a year ago. The revenue estimate stands at $35.9 million, indicating an 8.4% year-over-year rise. For the full year 2025, BBAI is projected to witness a 5.7% improvement compared to 2024.
Additionally, analysts anticipate an 80.9% improvement in the company’s bottom line from the previous year for 2025.
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Analysis of BigBear.ai’s Earnings Outlook
Current predictive models do not indicate a likely earnings beat for BigBear.ai in the upcoming report. To anticipate an earnings beat, a stock must possess both a positive Earnings Surprise Prediction (ESP) and a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold). Unfortunately, BigBear.ai does not meet these criteria at present.
Earnings ESP: BigBear.ai has an earnings ESP of 0.00%. This metric can help investors identify promising stocks before earnings announcements.
Zacks Rank: Currently, the company holds a Zacks Rank of #4 (Sell).
Factors Influencing Q1 Performance
BigBear.ai’s first-quarter results are expected to benefit from a robust backlog and an enhanced technology portfolio. The company operates in sectors such as defense, border security, intelligence, and critical infrastructure, all of which are primed for continued investment both domestically and internationally. The demand for AI solutions in these areas remains strong as governments focus on national security and intelligent infrastructure projects.
Noteworthy partnerships have also aided BigBear.ai’s market standing. Collaborations with major firms such as Amazon (AMZN), Palantir (PLTR), and Autodesk (ADSK) highlight its growing credibility and influence. For example, Amazon Web Services (AWS) has integrated BigBear.ai’s ProModel solution to improve logistics and warehousing with AI-driven insights. Palantir is working with BigBear.ai to enhance its AI offerings in defense and intelligence, while Autodesk’s adoption of BigBear.ai’s technologies showcases its impact on industrial automation.
Despite these advancements, BigBear.ai’s revenue is heavily dependent on government contracts, which poses risks. Delays in initiating new contracts may affect cash flow and funding stability, a challenge common to many government suppliers and a critical factor for revenue consistency.
While no specific guidance for Q1 2025 revenue or profitability has been set, the company’s forecast for 2025 includes anticipated revenue between $160 million and $180 million, along with expected negative adjusted EBITDA in the single-digit millions. This suggests early quarters could face fluctuations in investment and revenue recognition as the firm prioritizes contract delivery and navigates federal funding complexities.
Stock Price Performance of BigBear.ai
BigBear.ai’s stock has surged by 24.9% over the past month, significantly outperforming the Zacks Computers – IT Services industry’s 1.9% increase and the broader Zacks Computer & Technology sector’s 1.2% rise.
As of now, BBAI shares are trading at a 65.5% discount from their 52-week high of $10.36, yet represent a premium of 206.4% compared to their 52-week low of $1.1650.
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Moving Averages for BBAI Stock
Currently, BBAI stock is trading above the 200-day simple moving average (SMA) but below the 50-day SMA, indicating a somewhat bullish long-term momentum without a clear downtrend.
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BigBear.ai Faces Tough Outlook Amid High Valuation Concerns
Valuation Overview
Currently, BigBear.ai (BBAI) shares are considered overvalued, as reflected in its Value Score of F. The stock is trading at a forward 12-month price/sales (P/S) ratio of 5.92X. This figure stands significantly above its median of 2.24X and the Zacks Computer and Technology sector’s average of 5.59X.
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Reasons to Consider Selling BBAI Now
Despite BigBear.ai’s efforts to grow its backlog and form partnerships with major companies such as Amazon, Palantir, and Autodesk, concerns linger about its near-term outlook. The disappointing guidance for 2025, expected negative adjusted EBITDA, and growing reliance on uncertain government contracts pose significant risks for investors.
Moreover, analysts have noted a stretched valuation, which includes expectations for ongoing losses and minimal revenue growth. Although the stock has rallied from its lows and outperformed its sector recently, BigBear.ai continues to face operational challenges, uncertainties surrounding funding, and concerns related to its high valuation. Therefore, investors might find it wise to secure recent gains and consider exiting the stock before potential earnings volatility negatively impacts the share price.
Additional Insights on Semiconductor Stocks
In a different sector, Zacks recently highlighted a top semiconductor stock amid the industry’s robust growth. The global semiconductor market is projected to increase from $452 billion in 2021 to $803 billion by 2028, driven by high demand for Artificial Intelligence, Machine Learning, and Internet of Things applications. This emerging stock presents a profitable opportunity as it captures strong earnings growth and a growing customer base.
This article is based on information from Zacks Investment Research.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
