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BigBear.ai Holdings Inc. reported its third-quarter earnings for 2025, surprising analysts with an earnings per share (EPS) of -$0.03 against a forecast of -$0.05, marking a 40% positive surprise. Revenue also surpassed expectations at $33.1 million, compared to the anticipated $31.82 million. Following the announcement, BigBear.ai’s stock saw a notable increase of 4.05% in after-hours trading, reflecting investor optimism.
Key Takeaways
- BigBear.ai reported a narrower-than-expected loss in Q3 2025.
- Revenue exceeded expectations despite a year-over-year decline.
- The stock price increased by 4.05% in after-hours trading.
- The company raised $337 million through a stock offering.
- BigBear.ai is focusing on AI adoption in government sectors.
Company Performance
BigBear.ai demonstrated resilience in the third quarter of 2025 despite facing a challenging environment. The company reported a net income of $2.5 million, an improvement in its bottom line, even as revenue decreased by $8.4 million year-over-year. This performance reflects the company’s strategic focus on expanding its AI capabilities and securing essential government contracts.
Financial Highlights
- Revenue: $33.1 million, down $8.4 million year-over-year
- Earnings per share: -$0.03, beating the forecast of -$0.05
- Gross margin: 22.4%, down from 25.9% the previous year
- Adjusted EBITDA: Negative $9.4 million
- Total cash and investments: $715 million
Earnings vs. Forecast
BigBear.ai’s Q3 2025 earnings per share of -$0.03 significantly outperformed the forecast of -$0.05, resulting in a 40% positive surprise. Revenue also exceeded expectations by 4.15%, coming in at $33.1 million compared to the projected $31.82 million. This marks a positive deviation from previous quarters, where the company often struggled to meet market expectations.
Market Reaction
Following the earnings announcement, BigBear.ai’s stock rose by 4.05% in after-hours trading, reaching $5.91. This increase is notable given the stock’s previous close at $5.68. The stock remains well below its 52-week high of $10.36 but significantly above its low of $1.65, indicating a recovery trend. The market’s positive reaction underscores investor confidence in the company’s strategic direction and financial health.
Outlook & Guidance
BigBear.ai provided a full-year revenue projection for 2025 between $125 million and $140 million. The company is optimistic about its future, with plans to expand internationally, particularly in the UK and Middle East. The acquisition of AskSage is expected to close by Q4 2025 or Q1 2026, positioning BigBear.ai to capitalize on anticipated government AI investments in 2026 and 2027.
Executive Commentary
CEO Kevin McAleenan highlighted the strategic importance of the AskSage acquisition, stating, "We are acquiring not just technology, but the foundation of an ecosystem that positions us to support the AI revolution in government and regulated industries." He further emphasized the competitive advantage provided by AskSage’s existing accreditations and operational platform.
Risks and Challenges
- Declining gross margins could impact profitability.
- The reliance on government contracts exposes the company to political and funding risks.
- The integration of new acquisitions, like AskSage, presents potential operational challenges.
- Economic volatility could affect the company’s international expansion plans.
- Competition in the AI sector remains intense, requiring continuous innovation.
BigBear.ai’s performance in Q3 2025 reflects a strategic pivot towards strengthening its AI capabilities and expanding its market reach, particularly in government sectors. The company’s ability to beat earnings expectations and the positive market reaction underscore investor confidence in its growth trajectory.
Full transcript - BigBearai Holdings Inc (BBAI) Q3 2025:
Conference Operator: Greetings, and welcome to BigBear.ai Holdings Q3 2025 earnings call and webcast. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the webcast, please press star then zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chief Financial Officer, Sean Ricker. Thank you, sir. Please go ahead.
Sean Ricker, CFO, BigBear.ai: Good afternoon, and thank you all for joining us today for our Q3 2025 earnings call. I’m Sean Ricker, CFO of BigBear.ai, and I’m joined today by our CEO, Kevin McAleenan. Statements made in today’s call that are not historical fact are considered forward-looking statements and are made pursuant to the safe harbor provisions of the federal securities laws. Actual results may differ materially from those projected in the forward-looking statements. Please see today’s press release and our SEC filings for a description of some of the factors that may cause actual results to differ materially from those in the forward-looking statements. We have posted charts on our website today that we plan to address during the call to supplement our comments. These charts also include information regarding non-GAAP measures that may be used in today’s call.
Please access our website at www.bigbear.ai and click on the investor relations link to view and follow the charts. With that, I’d like to turn the call over to Kevin.
Kevin McAleenan, CEO, BigBear.ai: Good afternoon. It’s good to be back speaking with our shareholders and analysts about our progress today. Three months ago, I told you BigBear.ai was going on offense, taking advantage of our positioning in the market and our increased capital to grow organically and to strengthen our position through disciplined M&A. Since then, we’ve moved with purpose, assessing markets where we can lead, evaluating strategic opportunities, and engaging across our industry to identify the right targets. We’ve been intentional in every step of the process, scouting the market, evaluating AI technology developments, and aligning around a clear thesis for value creation. That deliberate approach has led us to a significant step forward for the company, one intended to advance our vision, accelerate growth, and position BigBear.ai for leadership in our core national security market by capitalizing on the increasing adoption of generative AI for defense capabilities.
Today, I’m excited to announce that BigBear.ai has signed a definitive agreement to acquire AskSage, a cutting-edge and fast-growing generative AI platform for secure distribution of AI models and agentic capabilities built specifically for defense and national security agencies and other highly regulated sectors. In plain terms, AskSage lets organizations safely use the best AI models and AI agents to get real work done with sensitive or classified data. AskSage is cloud and model agnostic, integrates with both current frontier and emerging AI technologies, and delivers those rapidly expanding capabilities directly for use by warfighters, coders, contracting professionals, analysts, and administrators at all levels of security and at the speed of model development through platform-level cybersecurity certification. AskSage already supports more than 16,000 government teams across 27 agencies and hundreds of commercial companies, and annual recurring revenue is on track to grow over six times from 2024 to 2025.
We will dig deeper into the investment rationale in a few moments, but this is a big development that we expect to accelerate our growth and further advance our position as a technology catalyst for both government and commercial customers. On our agenda for the call, I will share why this acquisition is such an important step for BigBear.ai, how it fits squarely within our M&A framework, and why it strengthens our leadership in this rapidly expanding market segment. I will turn to our broader market outlook and business performance and ask Sean to walk through our financial results, and I will close with a look at where we go from here. I would like to start off by congratulating Sean for his official appointment to the role of Chief Financial Officer as of October 14, having held the interim position since June.
Sean has done an excellent job in his expanded role at BigBear.ai. He has been a true strategic partner for me while delivering rigor, transparency, and discipline in our financial operations. He maintains the respect of our board and our team, and I could not be more excited to work with him to execute this next phase of BigBear.ai’s evolution. To frame today’s discussion, I will explain our corporate development strategy because M&A plays a central role in our plans to accelerate BigBear.ai’s growth. Over the past several months, we have built and refined a disciplined, thesis-driven approach to M&A, one where every investment is structured to advance our mission, strengthen our differentiation, and build long-term value. Our acquisition framework focuses on three areas where we believe that BigBear.ai is best positioned to combine our mission expertise with cutting-edge technology and achieve greater impact for our performance and investors.
First, disruptive AI mission solutions for national security. Unlocking the power of AI for the defense mission is essential to America’s continued leadership in global security and to maintaining our edge in strategic competition with potential adversaries. We’re evaluating high-growth companies that have built secure, scalable, mission-tailored AI solutions with products solving real problems for operators, not solely developing enabling technologies. The opportunity here is significant. AI adoption across defense, intelligence, and homeland security is still in the early stages, and the companies that can deliver tangible outcomes are well-positioned for outsized growth. Second, smart, secure travel and trade. While BigBear.ai’s mission is grounded in national security, that mission continues to evolve as global dynamics shift and the secure and transparent movement of people and goods becomes increasingly essential to maintaining economic advantage and safeguarding the prosperity of the United States and our allies.
Accordingly, a second core area for our potential investment is on technology that enhances security and efficiency in travel and trade, particularly computer vision capabilities like biometrics, threat detection, and monitoring. With our deep expertise and proven success through our digital identity portfolio, we believe we are well-positioned to lead in an attractive market with growing investment and attention that is still fragmented and primed for disruption. Third, platform-level AI technologies. Our mission expertise is key to what sets BigBear.ai apart, but to translate that expertise into real-world impact, we must operate on platforms built for the world’s most demanding use cases. The missions we serve in security, travel, and trade do not operate under typical timelines or tolerances.
As a result, we are also targeting companies developing foundational AI tooling, orchestration, and data infrastructure to enable us to build and deliver the world’s most advanced solutions at speed and ahead of accelerating innovation and competition. Our national security operators must have immediate access to the cutting-edge commercial models and technologies being advanced globally. To ensure deterrence and readiness, the United States and its allies must maintain their advantage in AI innovation. We intend to help make sure they do. As the market accelerates toward generative, agentic, and real-time AI, those same platform capabilities will position us not just to keep pace with our competition, but to lead, driving sustained growth and margin expansion. Our M&A framework is designed so that the decisions we make sharpen our competitive edge, deepen our mission impact, and position us for scalable and durable growth.
The acquisition of AskSage is a clear example of this framework in action. With AskSage, we have found a critical platform-level AI technology, purpose-built, proven in the most secure and demanding mission environments, and positioned to accelerate everything we’re building at BigBear.ai. AskSage is impressive. It is a secure, model-agnostic GenAI platform built specifically for government and other highly regulated industries. In these environments, agencies often face challenges leveraging openly available commercial AI models due to data sensitivity, compliance mandates, and classified operations. This constraint slows the adoption of AI and limits mission speed. AskSage removes that barrier by enabling agencies to deploy and operate AI models anywhere, from the tactical edge to classified clouds, within secure, accredited environments, so partners can innovate safely, quickly, and at scale. It is already available in the Microsoft and AWS marketplaces. AskSage stands out in this area.
It is currently one of the only model-agnostic GenAI platforms holding FedRAMP high accreditation, with over 30 frontier models deployed across DOD and national security customers. It orchestrates the leading open-source and government-approved models, pulls in enterprise and mission data under strict governance, and makes it easy to stand up production-ready AI agents for real, high-value use cases like acquisition, cybersecurity, coding, compliance, intelligence and operational analysis, and ultimately, mission automation. One of the primary elements that makes this so valuable to us is the installed base and accreditation posture we’re acquiring. AskSage already supports more than 100,000 users on 16,000 government teams and hundreds of commercial companies, which means we’re not only buying an idea, we’re buying a turnkey platform that’s in production today, at scale, in the environments that matter most.
Because the platform was designed to be agnostic to LLMs and deployment models, we can meet each customer where their security, classification, and data residency requirements are without locking them or us into a single model or cloud. Further, with out-of-the-box support for 150-plus open-source and commercial AI models, customers can select the specific model best suited to their mission and even build multi-model agents that combine the strengths of different systems to achieve superior outcomes. AskSage also provides a framework to build and ship vertical, mission-specific agents quickly. With AskSage, we are positioning ourselves to deliver secure AI agents that actually act on mission data and drive outcomes at the highest classification levels and do it repeatedly across defense, security agencies, and the defense industrial base.
From a business standpoint, this capability not only accelerates delivery and differentiation, but also creates meaningful operating leverage and sustained margin uplift as we scale. In addition to its capabilities, the market backdrop for AskSage is compelling. According to the U.S. Government Accountability Office, the number of federal GenAI use cases has grown over eight times since 2023. AskSage is already capturing the wave. It has grown ARR sixfold over the last year and is tracking toward $25 million in ARR in 2025. This growth is powered by real deployments, including the U.S. Space Force, Defense Health Agency, Office of the Secretary of Defense, Chief Digital AI Office, 11 combatant commands, NAVAIR, and the U.S. Army’s Enterprise LLM workspace, which all run on AskSage today.
This rapid momentum is a clear sign of first-mover advantage and the speed at which AskSage has achieved a high-level security posture and the delivery of tangible value. Finally, AskSage is led by its founder, an exceptional talent in Nicholas Shalan. Nick is one of the most respected voices in secure mission-grade AI, having served as the former Chief Software Officer for both the U.S. Air Force and Space Force and founded multiple companies over the past 25 years. He has proven that he can build technology the Pentagon actually uses rapidly and iteratively to support critical missions.
I am thrilled to announce that Nick will be joining BigBear.ai at the closing of the transaction to lead our technology teams as Chief Technology Officer, where he will focus on enhancing our broader portfolio and increasing the efficiency and velocity of our product development and innovation while powering us forward as an AI-first company across all of our functions. By integrating AskSage with BigBear.ai, we are creating an offering the market has been asking for: a secure, integrated AI platform that connects software, data, and mission services in one place. I’d like to touch on a few important synergies. First, we plan to cross-sell the AskSage platform into BigBear.ai’s existing federal and commercial accounts, opening up a new group of DHS, intelligence community, and travel mobility customers that need secure AI for speed processing and threat detection.
Second, we plan to introduce BigBear.ai products into the large and growing AskSage user base. These customers are already operating in a secure AI environment. We can now offer them more mission apps, more data sources, and more automation. Third, we plan to wrap our integration and mission services around the applications and agents deployed on AskSage, giving customers not only the AI capability, but also the deployment, tuning, and change management support to ensure that they maximize the value potential of the offering. Fourth, AskSage application marketplace gives us a faster route to market for future offerings, whether built organically, through partnerships, or via acquisition. It’s become a distribution channel for innovation. In sum, this acquisition represents a watershed moment for BigBear.ai and our shareholders.
We are acquiring not just technology, but the foundation of an ecosystem that positions us to support the AI revolution in government and regulated industries. With unprecedented government AI investments expected in 2026 and 2027, AskSage’s existing accreditations and operational platform will give us a key competitive advantage. While others are still building and working through certification, we will be deploying and scaling. We intend to move quickly and integrate AskSage after closing, and we’re looking forward to executing on this shared vision together. Now turning to the broader market environment, over the past several months, we’ve strengthened our momentum across core markets in national security and travel and trade while expanding into international arenas. We said we plan to diversify our pipeline, deepen partnerships, and demonstrate execution at scale, and we’ve delivered.
Our capture campaigns under the One Big Beautiful Bill are well underway, broadening our pipeline across DHS and defense and positioning BigBear.ai to compete successfully for the key investments in security that this generational funding source will bring. Across our growth apparatus, we’ve demonstrated real measurable progress. Our Veriscan biometric platform continues to expand to additional airports and is now live at Chicago O’Hare, Seattle-Tacoma International Airport, and Nashville in support of CBP’s Enhanced Passenger Processing Program. These deployments are improving security, accelerating processing times, and enhancing traveler experience at some of the country’s busiest airports of interest. In the national security space, we advance our core platforms, integrating Conductor OS and Vane to deliver real-time situational awareness and decision support for multi-domain operations. New partnerships with T-Second and Defcon.ai extend our capabilities at the tactical edge, processing data in disconnected environments and strengthening joint force logistics and readiness.
Our participation in Unitus 2025, alongside the U.S. Navy and SMX, further demonstrated the scalability of our AI solutions in complex real-world missions. Internationally, we’re proving the reach and reliability of our technology. In the U.K., our Pangean threat detection software completed successful trials at Edinburgh Airport, validating performance under operational conditions. In the Middle East, we continue to build momentum in the UAE, where we serve as title sponsor of the Global AI Show in Abu Dhabi, a premier venue for advancing trusted, mission-driven AI with global partners and allies. We also entered the sports and entertainment arena through our landmark partnership with the Washington Commanders, securing naming rights for the BigBear.ai Performance Center.
By stepping onto the national stage alongside one of the NFL’s most storied franchises, we’re extending our visibility beyond the defense and government sectors, connecting our brand to performance, precision, and innovation, the very attributes that define our technology. All that said, like all federal contractors, we are actively navigating the government shutdown. Importantly, over 80% of our government contract work has been deemed accepted and mission essential, including our work for the Department of War and the Department of Homeland Security. We are proud to have the opportunity to continue to support our government customers during the lapse and appropriations. That said, parts of several contracts, mostly for the intelligence community, have been temporarily paused and have resulted in some revenue and personnel disruption. We look forward to a resolution of the shutdown and getting our team back to full strength in support of our mission customers.
Throughout the quarter, we’ve executed with rigor, staying disciplined in capital deployment, while expanding our customer base, diversifying our pipeline, and strengthening our international presence. With that, I’ll turn it over to Sean to walk through our financial performance in more detail. Thanks, Kevin. This quarter, we have continued to make sequential improvements to our balance sheet in terms of our liquidity and net debt position. At the end of the third quarter, we have total cash and investments of $715 million, which includes $457 million of cash and $258 million of held maturity securities. During the third quarter, through our at-the-market facilities, we raised gross proceeds of approximately $337 million in exchange for the sale of 65 million shares of our common stock, which equates to an average gross selling price of $5.18 per share.
Our ability to access the capital markets at relatively low cost and at attractive prices will allow us to continue to execute on the M&A strategy that Kevin outlined and to make other investments to accelerate growth in the future. Now let’s turn to our operating results for the quarter. Third quarter revenue was $33.1 million, a decrease of $8.4 million year over year, which was primarily driven by lower volume on army programs. Gross margins decreased year over year. Gross margin for the third quarter of 2025 was 22.4% versus 25.9% for the comparable period, primarily due to certain higher margin programs in the third quarter of 2024 that were not repeated in the third quarter of 2025. SG&A expenses increased from $17.5 million in the third quarter of 2024 to $25.3 million in the third quarter of 2025.
The increase in SG&A was primarily related to increased SG&A labor and fringe costs of $4.3 million to support growth and other initiatives, increased non-recurring strategic initiatives of $2 million, and an increase in marketing and other growth investments of $1.4 million. Our net income for the third quarter was $2.5 million, driven by a decrease in the fair value of derivatives of about $26 million, primarily associated with the quarterly remeasurement of the convertible features of our convertible notes, which was partially offset by the increased SG&A spending previously mentioned. Adjusted EBITDA for the third quarter was negative $9.4 million versus positive $900,000 in the comparable period. The decrease in adjusted EBITDA was driven by increased SG&A spending as well as the lower gross profit due to contract mix.
While there are still risks related to the ultimate resolution and timing of the ongoing government shutdown, for the full year 2025, we continue to project revenue between $125 million and $140 million. The anticipated acquisition of AskSage is expected to close late in the fourth quarter of 2025 or early in the first quarter of 2026, and therefore, we do not expect the financial results of the acquisition to have material impact on our consolidated 2025 financial results. I’ll now turn it back to Kevin to discuss our priorities and to give a few closing remarks. Thanks. As Sean presented, our financial position remains strong, with cash and investments totaling $715 million. This foundation has allowed us to move quickly and strategically, investing in organic growth, targeted partnerships, and the infrastructure necessary to scale. As we scale, another major focus area is talent.
We are continuing to develop a world-class team. That includes substantially expanding the size of our growth team, bringing on experienced sales leaders who can expand our reach, deepen customer relationships, and translate our technical differentiation into market share gains and long-term revenue growth. We look to our acquisition of AskSage to support accelerating our growth into 2026 and beyond, driving our ability to deliver platform-level AI technologies built for the world’s most demanding missions. By combining BigBear.ai’s mission expertise with AskSage’s world-class GenAI capabilities, we’ll strengthen our capacity to build and deploy secure, scalable, and agile solutions at the speed that our industry’s innovation demands. This acquisition will advance our vision of providing U.S. operators with immediate access to cutting-edge AI, reinforcing deterrence, readiness, and leadership across the national security, travel, and trade spaces. Before we close, I want to remind our shareholders that your voice matters.
Participating in the upcoming special meeting of stockholders is one of the most important ways you can help shape BigBear.ai’s future. To this end, we are asking our shareholders to approve at our December 1 special meeting an increase in our authorized capital to support these growth initiatives. Looking ahead, the foundations we’ve built this year set the stage for accelerated growth in 2026 and beyond. We are building a stronger, more resilient BigBear.ai, one positioned to lead in national security and travel and trade modernization worldwide. Thank you, as always, to our BigBear.ai team and to our shareholders for continued support. I look forward to speaking with all of you next quarter to update you on our progress. Thank you, sir. Ladies and gentlemen, that then concludes today’s conference. Thank you for joining us. You may now disconnect your lines.
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