BigBear.ai’s Shares Tumble Nearly 22% as Revenue Growth Fails to Meet Expectations
BigBear.ai stock dropped by 22% after the company's financial results confounded market expectations. l Source: Hameem Sarwar/Find.co
Key Takeaways
- BigBear.ai’s latest financial results fell short of analyst expectations.
- Following the disappointing earnings report, BigBear.ai’s stock price dropped significantly.
- The company predicts revenue growth for 2024 but the market awaits updates on earnings estimates.
BigBear.ai Holdings is one of several smaller companies experiencing a surge in stock performance as investors seek opportunities in the artificial intelligence (AI) sector.
However, despite this momentum, the company’s latest financial results failed to meet Wall Street’s expectations. Despite finishing Thursday’s regular session with a market capitalization just above $800 million, BigBear.ai shares plummeted nearly 22% in after-hours trading. This was due to the company’s revenue and loss figures that disappointed investors.
BigBear.ai’s Turnover Misses Market Estimate
BigBear.ai, a company specializing in AI solutions for national security and supply chain decision-making, experienced minimal revenue growth in the fourth quarter. Its top-line revenue reached $40.6 million, up only 0.5% from the previous year. The turnover fell short of the FactSet analyst consensus of $42.8 million.
While the company managed to narrow its losses in the December quarter, the improvement was not as significant as analysts had anticipated. BigBear.ai reported a net loss of $21.3 million, or 14 cents per share, compared to a loss of $29.9 million, or 23 cents per share, in the same quarter the year before. Analysts had expected a loss of 5 cents per share, according to FactSet.
The net-loss figure for the latest quarter included $9.4 million in non-cash expenses. It relates to a change in the fair value of warrants issued the previous year, as well as $6.1 million in expenses from stock-based compensation. In comparison, the year-prior quarter’s figures included $18.3 million in noncash impairment charges and $2.6 million in restructuring charges.
Despite these challenges, BigBear.ai posted adjusted earnings before interest, taxes, depreciation, and amortization – Ebitda – of $3.7 million, a significant improvement from a loss of $2.5 million by that metric the year before. However, the FactSet consensus had anticipated adjusted Ebitda of approximately half a million dollars
Market Reacted Negatively
What’s Ahead For BigBear.ai?
Looking ahead, BigBear.ai has forecasted revenue of $195 million to $215 million for the upcoming year. This figure surpasses analysts’ expectations of $173.7 million. This projection includes anticipated results from the recent acquisition of Pangiam, completed in late February.
For the future, BigBear.ai CEO, Mandy Long, stated : “With the completion of the Pangiam acquisition and incremental cash proceeds of $54 million from warrants exercised in Q1 2024, we are well positioned for healthy growth in the year ahead.”
As the market awaits updates on estimates for the upcoming quarters and the current fiscal year, the current consensus EPS estimate stands at minus $0.07 on $42.43 million in revenues for the next quarter and minus $0.27 on $174.48 million in revenues for the current fiscal year.
The recent surge in AI stocks can be attributed to the overall bullish sentiment in the AI sector. Although there hasn’t been any specific news driving the company’s stock price higher, the enthusiasm surrounding AI, coupled with strong business performance from industry leaders such as Nvidia, Palantir, and C3.ai, has contributed to remarkable gains for BigBear.ai. Despite recent dips due to disappointing results, similar trends may continue in the future.
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