“4:16p ET 11/9/2022 - Dow Jones
Press Release: BigBear.ai Announces Third Quarter 2022 Financial Results
BigBear.ai Announces Third Quarter 2022 Financial Results
Company achieves 8% quarter-over-quarter revenue growth driven by key wins and growth within Analytics; cost savings initiatives expected to drive $20 million of annualized expense savings
COLUMBIA, Md.--(BUSINESS WIRE)--November 09, 2022--
BigBear.ai Holdings, Inc. (NYSE: BBAI) ("BigBear.ai" or the "Company"), a leader in AI-powered analytics and cyber engineering solutions, today announced financial results for the third quarter of 2022.
Financial Highlights
-- Revenue of $40.7 million, compared to $40.2 million for the third quarter of 2021 -- Analytics revenue increased $1.7 million, or 8%, as compared to the same period in 2021, primarily driven by the award of the U.S. Army Global Force Information Management (GFIM) contract in the third quarter of 2022 -- Gross margin of 29%, compared to 27% for the third quarter of 2021 -- Segment adjusted gross margin of 43% for the Analytics segment, compared to 49% for the third quarter of 2021, driven primarily by contract mix -- Segment adjusted gross margin of 22% for the Cyber & Engineering segment, compared to 21% for the third quarter of 2021 -- Net loss of $(16.1) million, compared to $(3.1) million for the third quarter of 2021, primarily driven by higher public company expenses as well as infrastructure and integration costs -- Non-GAAP adjusted EBITDA* of $(3.9) million -- Ending backlog of $288 million -- Ending cash balance of $22 million -- On-track with planned cost savings initiatives expected to drive $20 million of annualized operating expense savings -- Affirmed 2022 financial outlook
Mandy Long, who joined BigBear.ai in October as the Company's CEO, said, "In the third quarter, we made significant progress to improve our financial profile, including 8% revenue growth in our analytics business, with a key $14.8 million sole-source contract award from the U.S. Army to implement the Global Force Information Management (GFIM) system. In addition, our ongoing actions to reduce expenses and cash usage are helping move us to a sustainable growth model. Based on our improved operational efficiency and the continued health of our backlog, we are reaffirming our outlook for 2022."
Third Quarter 2022 vs. Second Quarter 2022 Comparative Financial Highlights
-- Analytics revenue increased $3.7 million, or 20%, primarily driven by the award of the U.S. Army GFIM contract in the third quarter of 2022, as well as increased volume on other Analytics programs -- Gross margins expanded from 25% in the second quarter of 2022 to 29% in the third quarter of 2022, primarily driven by reduced volume on low margin contracts -- Net cash used in operating activities was $6.4 million in the third quarter, compared to $24.5 million in the second quarter, driven primarily by lower operational spending and integration costs, investment contracts, and interest payments
BigBear.ai CFO Julie Peffer said, "In the third quarter, we made substantial progress on our initiatives to reduce expenses, manage our working capital, and significantly increase our operational efficiency, including our previously announced reduction in force, largely focused on non-billable headcount reduction. In the fourth quarter, the effects of rightsizing our cost structure will continue, and we expect to realize additional operational efficiencies.
"From a liquidity perspective, we ended the third quarter with $22 million of cash on our balance sheet, and we are amending our credit facility with Bank of America which will give us access to $25 million of additional liquidity, upon meeting the terms of the agreement. Our improved operational discipline coupled with our stabilized liquidity position will enable us to target and pursue the right investments for sustainable growth," concluded Peffer.
Financial Outlook
The following information and other sections of this release contain forward-looking statements, which are based on the Company's current expectations. Actual results may differ materially from those projected. It is the Company's practice not to incorporate adjustments into its financial outlook for proposed acquisitions, divestitures, changes in law, or new accounting standards until such items have been consummated, enacted, or adopted. For additional factors that may impact the Company's actual results, refer to the "Forward-Looking Statements" section in this release.
The Company is affirming the following guidance:
-- Revenue of approximately between $150 million to $170 million for the year-ended December 31, 2022 -- Single-digit negative Adjusted EBITDA*, in millions, for the second half of 2022 Summary of Results for the Third Quarter and Year to Date Periods Ended September 30, 2022 and September 30, 2021 (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------------- ---------------------- $ thousands (expect per share amounts) 2022 2021 2022 2021 ------------------ --------- -------- --------- ----------- Revenues $ 40,651 $40,219 $114,654 $112,100 Cost of revenues 28,900 29,421 83,446 81,859 ------------------ ------- ------ ------- ------- Gross margin 11,751 10,798 31,208 30,241 Operating expenses: Selling, general and administrative 20,233 12,038 69,205 32,557 Research and development 1,785 1,363 7,194 4,158 Restructuring charges 1,562 -- 1,562 -- Transaction expenses 566 -- 2,151 -- Goodwill impairment -- -- 35,252 -- ------------------ ------- ------ ------- ------- Operating loss (12,395) (2,603) (84,156) (6,474) Interest expense 3,557 1,870 10,666 5,579 Net decrease in fair value of derivatives (102) -- (1,564) -- Loss on extinguishment of debt -- -- -- -- Other expense (income) 8 -- 12 (1) ------------------ ------- ------ ------- ------- Loss before taxes (15,858) (4,473) (93,270) (12,052) Income tax expense (benefit) 252 (1,327) (1,491) (3,294) ------------------ ------- ------ ------- ------- Net loss $(16,110) $(3,146) $(91,779) $ (8,758) ------------------ ------- ------ ------- ------- Basic and diluted net loss per share $ (0.13) $ (0.03) $ (0.72) $ (0.08) ------------------ ------- ------ ------- ------- EBITDA* and Adjusted EBITDA* for the Third Quarter and Year to Date Periods Ended September 30, 2022 and September 30, 2021 (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------------- --------------------- $ thousands 2022 2021 2022 2021 ------------------ --------- -------- --------- ---------- Net loss $(16,110) $(3,146) $(91,779) $(8,758) Interest expense 3,557 1,870 10,666 5,579 Income tax benefit 252 (1,327) (1,491) (3,294) Depreciation and amortization 2,038 1,759 5,764 5,432 ------------------ ------- ------ ------- ------ EBITDA (10,263) (844) (76,840) (1,041) Adjustments: Equity-based compensation 2,222 30 11,160 86 Net decrease in fair value of derivatives(1) (102) -- (1,564) -- Restructuring charges(2) 1,562 -- 1,562 -- Capital market advisory fees(3) -- 1,510 741 3,956 Termination of legacy benefits(4) -- 1,482 -- 1,482 Management fees(5) -- 229 -- 683 Integration costs(6) 2,075 740 6,474 1,245 Commercial start-up costs(7) -- 773 6,490 773 Transaction expenses(8) 566 -- 2,151 -- Goodwill impairment(9) -- -- 35,252 -- ------------------ ------- ------ ------- ------ Adjusted EBITDA $ (3,940) $ 3,920 $(14,574) $ 7,184 ------------------ ------- ------ ------- ------ (1) The decrease in fair value of derivatives primarily relates to the changes in the fair value of certain Forward Share Purchase Agreements (FPAs) that were entered into prior to the closing of the Business Combination and were fully settled during the first quarter of 2022, as well as changes in the fair value of private warrants. (2) In the third quarter of 2022, the Company incurred employee separation costs associated with a strategic review of the Company's capacity and future projections to better align the organization and cost structure and improve the affordability of its products and services. (3) The Company incurred capital market and advisory fees related to advisors assisting with the Business Combination. (4) In the third quarter of 2021, the Company elected to terminate certain legacy employee incentive benefits with final payments made in the fourth quarter of 2021. (5) Management and other related consulting fees paid to AE Partners. These fees ceased subsequent to the Business Combination.
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