BigBear.ai Holdings will release its third-quarter financial report for fiscal year 2025 after the U.S. stock market closes on November 10. The market is focused on the progress of revenue and profit recovery, and the impact of AI project delivery pace and order structure on profit margins. According to data sources from Tiger International APP, BigBear.ai's third-quarter revenue is expected to be $31.82 million, a year-on-year decline of over 23%; adjusted loss per share is expected to be $0.07, a year-on-year decline of more than 46%.
Review of Last Quarter
Last quarter, BigBear.ai achieved revenue of $32.472 million, a year-on-year decline of 18.377%; gross margin was 24.98%; net loss attributable to parent company was $229 million, a quarter-on-quarter decline of 268.82%; net profit margin data was not disclosed; adjusted EPS was -$0.49, indicating a significant year-on-year decline. Last quarter, the company made slow progress in adjusting contract proportions and project structures, putting pressure on revenue scale and profit margins, with actual EBIT at -$19,666,000, lower than market estimates. In terms of main business, time and materials revenue was $20.615 million, fixed-price revenue was $6.685 million, and reimbursable costs revenue was $5.172 million. The project-based revenue structure led to short-term performance fluctuations, hindering profit recovery.
Outlook for This Quarter
Impact of Order Delivery Pace and Revenue Structure
The market expects revenue to decline year-on-year to approximately $31.82 million this quarter, indicating that the order conversion pace is still in the adjustment period. Time and material contracts account for over 60%, bringing predictable revenue recognition, but the slow decline in labor and outsourcing costs limits gross margin improvement. If the proportion of fixed-price contracts further increases, project economies of scale and delivery efficiency are expected to drive gross margin upward. Combining last quarter's 24.98% gross margin and negative EBIT, profit recovery needs to rely on higher value-added project combinations and cost-side optimization. Otherwise, even if revenue stabilizes, EBIT and EPS may remain in negative territory. For investors, it’s crucial to watch whether management provides clearer project management and expense rhythm arrangements to determine the profit margin path.
Potential for Cost Management and EBIT Inflection Point
EBIT this quarter is expected to be -$20.24 million, still in the loss range compared to last quarter's -$19.67 million, showing that cost compression is not enough to offset the revenue scale decline. If the company can reduce low-margin outsourcing and improve delivery efficiency for fixed-price projects, there is theoretically room for gross margin improvement, thus pushing EBIT towards breakeven. Last quarter's adjusted EPS of -$0.49 highlights the cost pressure, and with the market expecting -$0.073 this quarter, the improvement in EPS depends on the contraction of non-recurring expenses and enhancement in contract quality. Watch closely if there is a structural optimization in R&D and sales expenses to avoid excessive pressure on short-term profits.
Structural Drivers of Gross Margin
Last quarter's gross margin was 24.98%, with the level being greatly influenced by contract terms and labor costs given the project-based and government/corporate contract proportions. If this quarter sees an increase in the proportion of fixed-price and reimbursable contracts, and higher resource utilization during delivery, there is moderate potential for gross margin improvement. Although time and material contracts improve revenue certainty, their boost to gross margins is limited. Therefore, management's pricing strategy at the contract acquisition stage and scope control during execution will directly affect net profit margin and EPS recovery pace. If the gross margin does not rise, there is a high probability that net profit will remain negative this quarter, corresponding to market expectations of negative EBIT and EPS.
Analysts' Opinions
According to collected analyst opinions from public channels, the recent market sentiment towards BigBear.ai is cautious, with a higher proportion of bearish views. Analysts generally point out that the company's revenue scale is affected by project delivery and contract structure, making it difficult to achieve significant profit improvement in the short term. Combining market expectations of negative revenue and EPS for this quarter, they believe profit recovery still requires several quarters of contract quality and cost structure improvement. Several institutions emphasized that the high proportion of time and material contracts puts pressure on gross margins. While fixed-price projects have improvement potential, delivery efficiency and scope management are key. Many views suggest that if management provides more explicit expense control paths and order reserve quality information this quarter, it could become a catalyst for improved expectations. However, cautions dominate the overall judgment before the earnings announcement.
The content is generated based on tiger AI data and is for reference only.