To The Moon

Readers who have been reading my posts for a while would have realized that I am holding $BigBear.ai Holdings(BBAI)$ that has been listed in the Russell 2000 Value Index since mid-2024.

Click here ! if interested in my BBAI historical posts.

Despite reporting a weaker-than-expected Q2 2025 earnings, I am still convinced that it is a sleeper stock waiting for its breakout moments.

Below are some new facts that I have unearthed recently, while refreshing my knowledge-base on this stock, have to right - Warren says so.

History.

This company:

• Is a developer of artificial intelligence (AI) modules for edge networks.

• It went public by merging with a special purpose acquisition company (SPAC) in December 2021.

• Started trading at $9.84, and rallied as high as $12.69 in April 2022.

• It then plummeted to an all-time low of $0.63 by December 2022; after it broadly missed its own ambitious forecasts.

Incidentally, it was around 2022 that SPAC-related companies mostly have fallen out of favour with investors.

[Click here ! to know the history on SPACs stocks - it will be an interesting read - promised!]

Broken Promises !

Prior to going public, BBAI has predicted its annual revenue would surge from $182 million (2021) to $550 million (by 2024).

Unfortunately in reality, its revenue fell very short of projections.

It was just $146 million (2021) to $158 million (2024) as it grappled with:

• Bankruptcy of its top customer Virgin Orbit.

• Competition from similar AI companies.

• Macro headwinds for the enterprise software market.

As a result, CEO Reggie Brothers, who helmed the top job in 2020, stepped down in late 2022.

Recovery Path.

BBAI’s recovery commenced after incoming CEO Mandy Long orchestrated its all-stock acquisition of the AI vision company Pangiam, that was completed on 29 Feb 2024. (see below)

The inorganic move proved to be the ‘right’ move and boosted (a) BBAI’s revenue and (b) increased its exposure to the government sector through Pangiam's biometric identity tools.

Juicy Gossip.

It definitely helped that Pangiam CEO Kevin McAleenan was also the ex-Acting Secretary of the Department of Homeland Security (DHS) during the first Trump administration.

Cue to 2025.

On 15 Jan 2025, McAleenan succeeded Long as BBAI’s next CEO. (see below)

When news broke, so did BBAI’s stock price - on hopes for new government contracts. (see below)

BBAI quickly secured new digital ID and biometrics initiatives for the DHS, a modernization project for the US military's Orion Decision Support Platform (DSP), and new supply chain projects.

In Q2 2025, BBAI’s backlog grew +43% YoY to $380 million.

The swelling demand, along with the growing usage of Pangiam's biometric tools at airports, drove away the bears.

Airports where the biometric tools have been deployed:

• Charlotte Douglas International (CLT).

• Chicago O’Hare (ORD).

• Dallas Fort Worth (DFW).

• Denver International (DEN).

• Port of Seattle (SEA).

• Nashville International Airport (BNA)

• John F. Kennedy International (JFK, Terminals 4 & 8).

• Los Angeles International (LAX, Tom Bradley International Terminal and Terminal 7).

• Seattle-Tacoma International (SEA).

Land Crossing.

• It is also deployed at the Cross Border Xpress facility connecting San Diego to Tijuana.

Canadian & Other North American Locations.

• Montreal-Trudeau International Airport (YUL).

• Vancouver Fraser Port Authority.

Earnings Challenges.

With all headwind news coming out of BBAI, why hasn’t the company turnaround ?

This is because there are some glaring weaknesses are holding it back:

• Its backlog is growing, but it will only slowly realize those revenues over the next few years.

• Also, many of its government contracts are fixed-price contracts, that cannot be renegotiated if its costs climb at a faster-than-expected rate.

Q2 2025 Earnings Surprise.

When BBAI announced its Q2 earnings, it came in weaker than Wall Street’s forecast.

• Revenue was $32.472 million vs Q2 2024’s $40.578 million; that’s a decrease of -19.98% YoY.

• The bigger surprise was BBAI has reduced its full-year revenue guidance from 1% to 14% growth to a decline of 11% to 21%.

• As a result, analysts expect its revenue to drop by -16% for FY 2025.

BBAI’s socialization attributed guidance cut due to some disruptions in its government contracts, particularly for its programs supporting the US Army, as the federal government attempts to consolidate its data infrastructure.

As revenue declined,

• Its gross margin plummeted -170 basis points YoY to 23.1% in the first six months of 2025.

• Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin also dropped from -7.3% to -23%.

Profit margins were also:

• Squeezed by its slowing revenue growth.

• Dependence on lower-margin customized modules (as opposed to higher-margin recurring subscriptions).

• Rising R&D expenses.

Analysts expect its adjusted EBITDA to stay negative for foreseeable future.

Remedial Action.

BBAI is losing money and is raising cash by selling more shares, including those for the Pangiam acquisition and stock-based pay.

Since going public (April 2022), its shares have increased by +173%.

Analysts suspect shares dilution will persists as losses grow.

As of 20 Sep 2025, BBAI’s market capitalization is approximately $2.54 billion, with stock price at $6.85 (as of 19 Sep 2025’s closing).

Latest reported price-to-earnings (P/E) ratio is about -4.34, reflecting ongoing losses as its earnings per share (EPS) is -$1.58.

Levered free cash flow (ttm) is at $165.73M, coupled with a record cash balance of $390.8 million (as of 30 Jun 2025) position BBAI to operate well into 2026, not unless losses accelerate beyond current expectations or major adverse events occur.

Silver Lining.

Amidst despair, BBAI still ‘holds’ 2 trump cards?

(1) Backlogs.

In its Q2 2025 earnings filing, BBAI still have a ‘substantial’ baclog. (see below)

• Could this be a game-changer?

• Mmm… maybe not in the near term.

• This is because the funded portion of the backlog (contracts that have been authorized & secured, accounted for just over 4% of the total backlog,

• Majority of the contracts are from the federal government, that may lead to prolonged approval procedures.

(2) Buy-ins from Bank, Investment management & Advisory firms.

On 16 Sep 2025, it was reported that $Goldman Sachs(GS)$ has bought up a 5% stake of BBAI. (see below)

GS boosted their stake by almost +570%. It now holds over 2.3 million BBAI shares.

A few other institutions piled in BBAI too.

These included:

• Rhumbline Advisers – boosted holdings by over +18%.

• NewEdge Advisors – increased their stake by more than +440%.

• Mirae Asset Global ETFs – added +160,000 shares, bringing their total close to half a million.

• AQR Capital Management – opened a brand-new position.

Together with Goldman Sachs’ +570% increase, these moves pushed institutional ownership to over 7.5% of BBAI’s float.

It is not a trivial number for what many still call an “AI penny stock.” It shows there’s serious money starting to pile in.

The significant increase in financial commitment prompted a much more serious approach to the situation. If Q3 earnings better estimates, optimism may just return, pushing BBAI higher.

Remember to check out my other posts. (See below). Help to Repost ok, Thanks.

Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks.

• Fed's Cut Started, Here's 3 Stocks to Buy ! Tue, 23 September. Pick post.

• Rate Cut Spurs US Stocks Rally & US Economy ? Mon, 22 September. Pick post.

• Will NVDA Fall With China's "Ban" ? Fri, 19 September. Pick post.

• Do you think it is a ‘good’ sign that GS and other investment firms are loading up on BBAI?

• Do you think BBAI’s foray into government agencies projects will continue to grow amidst intense jostling for a piece of the Defense agency pie ?

If you find this post interesting, give it wings! ️ Repost and share the insights ?

Do consider “Follow me” and get firsthand read of my daily new post. Thank you.

@Daily_Discussion

@TigerPM

@TigerStars

@Tiger_SG

@TigerEvents