BigBear.ai's Q1 2025: Contradictory Signals on Headcount, Revenue, and Macro Trends

Changes in company strategy, macro trends and business impact, federal procurement practices and revenue impact, and commercial revenue growth are the key contradictions discussed in BigBear.ai's latest earnings calls.



Revenue and Gross Profit Growth:
- BigBear.ai Holdings reported revenue of $34.8 million for the first quarter of 2025, up 5% year-on-year compared to $33.1 million in Q1 2024.
- The growth was primarily driven by additional revenue from the Department of Homeland Security and digital identity awards, including products like veriScan and Trueface.

Gross Margin Improvement:
- Gross profit for the quarter increased to $7.4 million, up 6% from $7 billion in Q1 2024. Gross margin was 21.3% this quarter, slightly improving from 21.1% in Q1 2024.
- The improvement was attributed to higher annual incentive compensation settled in the form of stock awards, reducing stock-based compensation noncash expense.

Backlog Increase:
- BigBear.ai's backlog reached $385 million at the end of the first quarter, up 30% and $89 million compared to Q1 2024.
- The increase in backlog is indicative of customer confidence in the company's solutions and long-term value proposition, supported by new strategic wins and international collaborations.

Strong Financial Position:
- The company ended Q1 with $108 million in cash and cash equivalents, up from $81 million in Q1 2024 and $50 million at the end of 2024.
- This improvement was due to a reduction in debt by $58 million during Q1, as several noteholders converted into equity, enhancing financial flexibility and strategic investment capabilities.