BigBear AI (BBAI) Falls 15.8% After Disappointing Q2 Earnings and Lower Full-Year Guidance

BigBear AI (BBAI) fell 15.8% on Tuesday after releasing disappointing Q2 earnings and lowering its FY22 revenue outlook to $125-140 million. Net loss widened 1,487% to $228.6 million and revenues fell 18% to $32.47 million. CEO Kevin McAleenan cited disruptions in federal contracts from efficiency efforts as the reason for the adjustments. The company's stock price has been impacted by a lack of growth and uncertainty in its contracts.

BigBear AI Holdings, Inc. (BBAI) reported its second-quarter (Q2) earnings on July 2, 2025, revealing a net loss and a significant downward revision in its 2025 revenue guidance. The company's stock tumbled 31.2% following the earnings release.

BigBear.ai reported a net loss of $0.71 per share, compared to the average Wall Street analyst estimate of a per-share loss of $0.06. Revenue for the quarter came in at $32.5 million, down 18% year over year, which was significantly below the consensus estimate of $40.6 million [1].

The company attributed the underperformance to missed government contracts and issued a large downward revision for its annual sales guidance. BigBear.ai previously guided for sales this year to come in between $160 million and $170 million. However, with the latest update, management now expects that sales will actually wind up being between $125 million and $140 million, suggesting an annual decline of roughly 16% at the midpoint [1].

The company's stock, which had seen gains in recent months due to its exposure to the defense industry, saw a strong bearish reaction to the disappointing numbers. The stock was down 26.9% as of 10:30 a.m. ET today and had been off as much as 32.9% shortly after the market opened [1].

BigBear.ai closed the quarter with a record cash position of $390.8 million, positioning the company to accelerate growth. However, the big government contract misses are concerning, especially as competitors like Palantir Technologies have seen strong momentum with government contracts [1].

The company's CEO, Kevin McAleenan, noted the significant opportunities coming from the One Big Beautiful Bill, particularly in the Department of Homeland Security, and several of which are uniquely aligned to the company's core capabilities. The legislation provides over $170 billion in supplemental funding to the Department of Homeland Security and $150 billion to the Department of Defense for disruptive defense technology [3].

BigBear.ai also signed a transformative partnership with leading companies in the UAE under the IHC umbrella, focused on accelerating the development and adoption of AI across several domains and applications. This partnership is seen as a significant step in the company's international expansion [3].

While BigBear.ai has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? The company's earnings outlook will be a key factor in determining the stock's future performance. The current consensus EPS estimate is -$0.06 on $44.14 million in revenues for the coming quarter and -$0.41 on $166.85 million in revenues for the current fiscal year [2].

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Computers - IT Services is currently in the top 41% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [2].

References:
[1] https://finance.yahoo.com/news/why-bigbear-ai-stock-plummeting-150240359.html
[2] https://www.nasdaq.com/articles/bigbearai-holdings-inc-bbai-reports-q2-loss-lags-revenue-estimates
[3] https://ir.bigbear.ai/news-events/press-releases/detail/116/bigbear-ai-announces-second-quarter-2025-results-updates