BigBear.ai Holdings, Inc. — FY 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; filed March 15, 2024. BigBear.ai provides AI-powered decision intelligence software and services, primarily to government and national-security customers. Financial amounts below are in U.S. dollars; figures are rounded to millions unless stated otherwise.
Financial performance and position
| Metric | FY 2023 | FY 2022 | Change / context |
|---|---|---|---|
| Revenue | $155.2 million | $155.0 million | Up 0.1% |
| Gross profit / margin | $40.6 million / 26.2% | $43.0 million / 27.7% | Margin declined about 1.5 percentage points |
| Operating loss | $(39.0) million | $(110.5) million | Improved; FY 2022 included $53.5 million goodwill impairment |
| Net loss | $(60.4) million | $(121.7) million | Loss narrowed; FY 2023 included a $7.4 million derivative fair-value gain |
| Adjusted EBITDA (non-GAAP) | $(3.2) million | $(17.1) million | Improved, but remained negative |
| Operating cash flow / free cash flow | $(18.3) million / $(22.1) million | $(48.9) million / $(49.7) million | Cash use improved year over year |
| Cash and cash equivalents | $32.6 million | $12.6 million | Up $19.9 million |
| Total debt, principal | $201.2 million | $202.1 million | Includes $200 million of 6% convertible notes due December 2026 |
| Total backlog | $167.8 million | $218.5 million | Down about 23%; funded backlog was $30.1 million versus $57.2 million |
Revenue by contract type was $85.7 million time-and-materials, $50.1 million firm-fixed-price, and $19.3 million cost-reimbursable. Three customers represented 49% of FY 2023 revenue. Remaining performance obligations were $79 million, with approximately 99% expected to be recognized within 12 months. The company reported a $37.9 million current derivative liability, primarily related to warrants, and a stockholders’ deficit of $67.3 million.
Material changes and unusual items
- Revenue was essentially flat as increased Army program work was offset by Air Force program wind-downs and lower Virgin Orbit activity following its bankruptcy announcement.
- Gross margin weakened, with cost of revenue rising to 74% of revenue from 72%; management cited the loss of higher-margin Virgin Orbit activity as a principal factor.
- SG&A fell 16% to $71.1 million, reflecting restructuring and fewer prior-year integration and start-up costs, partly offset by strategic initiative and litigation expenses and Virgin Orbit-related bad-debt reserves.
- FY 2023 included $18.7 million of equity-based compensation, $2.7 million of transaction expenses related primarily to Pangiam, and a $7.4 million gain from derivative remeasurement. FY 2022 included $53.5 million of goodwill impairment.
- Backlog declined from $218.5 million to $167.8 million. Backlog includes unfunded contracts and customer options, which may not be funded or exercised.
- The company raised approximately $50 million gross in 2023 through a private placement and registered direct offering, contributing to increased shares outstanding.
Outlook, risks and contingencies
- No specific full-year 2024 revenue or profit guidance is provided in the supplied filing text. Management expects continuing investment in foundational software and growth across national security, supply chain and digital identity.
- BigBear.ai completed its Pangiam acquisition on February 29, 2024, after year-end. Consideration included 61.8 million shares, at a stated purchase price of approximately $70 million before customary adjustments. Management expects the combination to expand its vision AI, biometrics and digital identity capabilities; integration, retention, customer continuity and realizing benefits remain risks.
- After year-end, warrant exercises generated approximately $53.8 million of gross proceeds ($33.2 million PIPE and $20.6 million RDO), before expenses. The investors received replacement warrants covering up to 14.8 million shares in total, creating potential future dilution.
- At year-end, the $25 million secured revolving facility had not been drawn and was not included in available liquidity. The company had met the Adjusted EBITDA threshold for the first time, but borrowing remained subject to a field exam and required certifications; management expected potential access in Q1 2024.
- Management said key contracts were expected to remain funded under the federal continuing resolution, while warning that continuing resolutions can delay new awards. The filing also identifies customer concentration, contract termination rights, government budget and procurement uncertainty, long sales cycles, fixed-price cost overruns, competition, cybersecurity and AI-related risks.
- Management reported that previously identified material weaknesses in financial reporting controls were remediated as of December 31, 2023. The auditor gave an unqualified opinion on the financial statements but did not attest to internal-control effectiveness. The company accrued $2.25 million for ongoing legal disputes; management said pending matters were not expected to have a material financial impact.
Most important facts for investors to verify
- Whether operating cash use and negative adjusted EBITDA improve, and how much usable liquidity remains after acquisition and integration costs.
- Whether the company can access the revolver, and its ability to service or refinance the $200 million convertible notes due in 2026.
- Whether backlog converts to funded work and revenue, particularly given the $30.1 million funded backlog and high customer concentration.
- The final Pangiam purchase accounting, integration costs, operating contribution and realized synergies; also the share-count impact of acquisition consideration and warrant transactions.
- Whether margins recover and the company sustains effective financial controls following remediation.