Q1 2025 BigBear.ai Holdings Inc Earnings Call

Operator: Greetings and welcome to the BigBearAI Holdings Incorporated first quarter 25 earnings call and webcast. At this time, all participants are in a listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Greetings and welcome to the Big Bear AI Holdings incorporated first quarter 25 earnings call and webcast.

At this time all participants are in a listen only mode.

If anyone should require operator assistance. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.

David Cronlow: It is now my pleasure to introduce David Cronlow.

Speaker Change: My pleasure to introduce David Frontload. Thank you David you may begin.

Kevin McAleenan: Thank you, David. You may begin.

Kevin McAleenan: Thank you all for joining today for our first quarter 2025 earnings call.

Speaker Change: Thank you for joining state cross first quarter 'twenty 'twenty earnings call.

Kevin McAleenan: I'm joined today by our CEO, Kevin McAleenan, and our CEO, Tuvia Pfeiffer. During the call today, we may make certain forward-looking statements. Listeners are cautioned not to put undue reliance on forward-looking statements, and Big Bear specifically disclaims any obligation to update the forward-looking statements that may be discussed during this call. Many factors could cause actual events to differ materially from those forward-looking statements. Statements that are based on current expectations and assumptions. As a result, subject to risk and uncertain.

Speaker Change: I'm joined today by our CEO, Kevin Michaelina I don't see it.

Yeah.

Speaker Change: Uh huh.

Speaker Change: During the call today, we may make certain.

Speaker Change: Forward looking statements listeners are cautioned not to put you.

Speaker Change: Some forward looking statements and big bat, specifically disclaims any obligation to update the forward looking statements that may be discussed during this call.

Speaker Change: Many factors could cause actual events to differ materially from those forward looking statements statements that are based on the context spectation.

Speaker Change: And assumptions.

Speaker Change: And as a result are subject to risks and uncertain.

Speaker Change: Okay.

Kevin McAleenan: For more information about these risks and uncertainties, please refer to the forward-looking statements section of the Earnings Press. today on RSEC5. also discussed some non-GAAP financial measures during the course. on Gap Financial Measures should not be considered a replacement for, and should be read together with, Gap Results.

Speaker Change: Good morning information about these risks and uncertainties. Please refer to the forward looking statement section at the earnings press release issued today all of our SEC filings.

Speaker Change: Also discuss some non-GAAP financial measures during the cold.

Speaker Change: These non-GAAP financial measures should not be considered a replacement for him.

Speaker Change: It should be read together with GAAP results.

Kevin McAleenan: You can find the Gap and OnGap Reconciliations within our earnings report.

Speaker Change: You can find the GAAP GAAP reconciliations.

Speaker Change: That makes release.

Kevin McAleenan: Let me now turn this over to...

Kevin: That'd be enough to understand with Kevin.

Kevin McAleenan: Thank you, David, and good afternoon, everyone. It's a privilege to be speaking with you for the first time as CEO of BigBear.ai. I'm honored to be leading this company at such a pivotal time and excited to share with you how we are positioning BigBear.ai for sustainable growth and long-term performance and value.

Kevin: Thank you David and good afternoon, everyone.

Speaker Change: It's a privilege to be speaking with you for the first time as CEO of Big Barry I am honored to be leading this company at such a pivotal time and excited to share with you. How we are positioning big Barry I for sustainable growth and long term performance and value.

Kevin McAleenan: Today, I'll start by introducing myself and sharing my perspective on the market and our company. I'll walk through our strategic priorities for 2025, and I'll highlight our progress so far this year, both in terms of growth and key operational improvement.

Speaker Change: Today, I'll start by introducing myself and sharing my perspective on the market and our company.

Speaker Change: Walk through our strategic priorities for 2025, and I'll highlight our progress so far this year, both in terms of growth and key operational improvements.

Kevin McAleenan: Julie will then review our financial results for the first quarter, and I'll provide some brief closing thoughts.

Speaker Change: Julie will then review our financial results for the first quarter and I'll provide some brief closing thoughts.

Kevin McAleenan: Before we begin, a note on our new format for our earnings process. As we begin this next chapter in BigBearAI's growth, you will notice an evolution in the way we communicate. We are committed to providing more context, greater transparency, and a sharper focus on aligning with all of our stakeholders, our shareholders, our employees, our customers, and our partners. This approach reflects our sense of accountability to the missions we serve, our excitement to share how we are tackling opportunities, and our desire to involve our stakeholders in the path to the long-term success of BigBear AI.

Speaker Change: Before we begin note on our new format for our earnings process.

Speaker Change: We begin this next chapter and big very Ais grows you will notice an evolution in the way we communicate.

Speaker Change: We are committed to providing more context, greater transparency and a sharper focus on aligning with all of our stakeholders our shareholders our employees our customers and our partners.

Speaker Change: This approach reflects our sense of accountability to the missions. We serve are excitement to share how we are tackling opportunities at.

Speaker Change: Our desire to involve our stakeholders and the path to the long term success of big very high.

Kevin McAleenan: Let me start by sharing a bit about my background and how it shapes my leadership philosophy at BigBear AI. During my time leading operational government organizations at U.S. Customs and Border Protection and later the Department of Homeland Security, I saw firsthand the power of equipping teams with the right tools and technology, clear direction, and strong support to succeed in a complex, high-stakes environment. Those experiences taught me that technological innovation is critical, but alone, it is not enough. Success comes when technology is fused with operational expertise and a deep understanding of the problem at hand. That belief in the right approach to innovation is what drew me to this critical area of the private sector.

Speaker Change: Let me start by sharing a bit about my background and how it changed my leadership philosophy, a big very high.

Speaker Change: During my time, leading operational government organization that U S coffee and border protection and later the department of Homeland Security.

Speaker Change: I saw firsthand the power of equipping teams with the right tools and technology clear direction and strong support to succeed in a complex high stakes environments.

Speaker Change: Those experience has taught me that technological innovation is critical but alone it is not enough.

Speaker Change: Success comes when technology is fused with operational expertise and a deep understanding of the problem at hand.

Speaker Change: That belief and the right approach to innovation is what drew me to this critical area of the private sector.

Kevin McAleenan: I'm convinced that sustaining American economic dynamism and security requires a unique blend of deep subject matter expertise and cutting edge innovation. applying artificial intelligence and advanced technologies in areas as important as national security and critical infrastructure. It was with that conviction that I co-founded Pangeum, a company dedicated to solving real-world problems at the intersection of AI and security. When Pangeum was acquired by BigBear.ai, I had the opportunity to continue that mission at a larger scale. Over the past year as president of BigBear.ai, I worked closely with our teams, customers, and partners, and that experience has only deepened my belief in the company's potential and purpose.

Speaker Change: I am convinced that sustaining American economic dynamism in security requires a unique blend of deep subject matter expertise and cutting edge innovation applying artificial intelligence and advanced technologies in areas that are important as national security and critical infrastructure.

It was with that conviction that I co founded pain, Jim a company dedicated to solving real world problems at the intersection of AI and security when Tien Tsin was acquired by Big Barry I've had the opportunity to continue that in Michigan at a larger scale over.

Speaker Change: Over the past year as president of Big Barry I I worked closely with our teams customers and partners and that experience has only deepened my belief in the company's potential and purpose.

Kevin McAleenan: That same commitment to mission-driven innovation will guide my approach as I now lead the company as CEO.

Speaker Change: That same commitment and mission driven innovation will guide my approach is I now leave the company as CEO.

Kevin McAleenan: At BigBear AI, we are uniquely positioned at the convergence of artificial intelligence, national security, and critical infrastructure. We have a strong foundation of trust with some of the most demanding customers in the world. Our team of over 600 professionals combines exceptional technical capabilities with a deep shared sense of mission and purpose. I could not be more excited to serve along our outstanding team.

Speaker Change: A big barrier, we are uniquely positioned at the convergence of artificial intelligence National security and critical infrastructure. We have a strong foundation of trust with some of the most demanding customers in the world. Our team of over 600 professionals combined exceptional technical capabilities with a deep shared sense of mission and purpose I cannot be.

Speaker Change: We're excited to serve along our outstanding team.

Kevin McAleenan: Turning to the broader market environment, we are operating at a time of profound change. change that is creating significant new opportunities, but also challenges and transitions for. First, the global security environment is driving a renewed focus and investment in defense technology, creating opportunities to capitalize on American AI innovation to safeguard our security and national interests and those of our allies and partners. Second, there are fundamental transitions underway in global trade, creating demand for smarter, more resilient supply chains, powered by automation and dynamic decision-making tools to support the reshoring of key manufacturing sectors, modernization of critical infrastructure, and new trading relationships.

Speaker Change: Turning to the broader market environment, we are operating at a time of profound change change that is creating significant new opportunities, but also challenges in transitioning turbulence.

Speaker Change: First the global security environment is driving a renewed focus and investment in defense technology, creating opportunities to capitalize on American AI innovation to safeguard our security and national interests and those of our allies and partners.

Speaker Change: Second there are fundamental changes underway in global trade, creating demand for smarter more resilient supply chains powered by automation and dynamic decision, making tools to support the re shoring of key manufacturing sectors modernization of critical infrastructure and new trading relationships.

Kevin McAleenan: Third, the imperative to increase efficiency of operations through technological modernization is being approached with growing urgency across both government and industry, setting the stage for rapid development of new commercial solutions and accelerated technology deployment and implementation of both interoperable and secure open architecture solutions. And importantly, we are starting to see a shift in federal procurement practices with an increased emphasis on efficiency and the adoption of advanced commercial technology. Across all of these trends, one thing is clear, government and enterprise customers are no longer simply buying software. They are seeking to solve their critical problems with tailored solutions.

Speaker Change: Third imperative to increase efficiency of operations through technological modernization is being approached with growing urgency across both government and industry setting the stage for rapid development of new commercial solutions and accelerated technology deployment and implementation of both interoperable and secure open at arc.

Speaker Change: Texture solutions.

Speaker Change: And importantly, we are starting to see a shift in federal procurement practices with an increased emphasis on efficiency and the adoption of advanced commercial technologies.

Speaker Change: All of these trends one thing Thats clear government and enterprise customers are no longer simply buying software.

Speaker Change: They are seeking to solve their critical problems with tailored solutions that is precisely the space, where big bear AI itself.

Kevin McAleenan: That is precisely the space where BigBearAI excels. One of the reasons I'm excited about our path forward is that BigBear.ai is positioned with intention to support and capitalize on these trends. These beliefs about the structural shifts in the market inform the values and principles that shape how we operate, where we invest, and how we lead. At BigBear AI, we are responding to the macro dynamics with deliberate strategic focus.

Speaker Change: One of the reasons I'm excited about our path forward is it bigger AI is positioned with intention to support and capitalize on these trends.

Speaker Change: These beliefs about the structural shifts in the market informed the values and principles that shape, how we operate where we invest and how we have.

Speaker Change: A big very high we are responding to the macro dynamics with deliberate strategic focus.

Kevin McAleenan: That's why, as I stepped into this role, I've been centered on a few core tenets that reflect both the demands of the current environment and the opportunities we say ahead. First, mission expertise. We believe our deep experience embedded with the supporting national security and critical infrastructure customers we serve is our true competitive edge. We recruit professionals who have lived the missions we serve and equip them with the technology and tools to help enhance them. By bringing operators and technologists together, we are building flexible, mission-driven solutions that can adapt and scale at the pace of technology innovation.

Speaker Change: Why as I stepped into this role I have been centered on a few core tenants that reflect both the demands of the current environment and the opportunities we see ahead.

Speaker Change: First mission expertise.

Speaker Change: We believe our deep experience embedded with the supporting National security and critical infrastructure customers. We serve is our true competitive edge we.

Speaker Change: We recruit professionals, who have lived the missions, we serve and equip them with the technology and tools to help enhance them.

Speaker Change: By bringing operators and technologists together, we are building flexible mission driven solutions that can adapt and scale at the pace of technology innovation.

Kevin McAleenan: Second, international growth. We see a vital opportunity to extend American innovation to our allies and partners around the world. In an era of intensifying technological competition, we have the opportunity and responsibility to ensure American-developed AI technologies are deployed where they can strengthen global stability and shared security. Third, Business Alliances and Partnerships. We will pursue collaborations and remain open to strategic acquisitions that enable us to innovate faster, grow into new areas, and deliver greater value to our customers. And finally, Relentless Innovation in AI. We're focused on delivering mission-ready AI, operationalizing artificial intelligence in the real world to enable human-machine teaming and bring cutting-edge technologies to the point of decision in ways that are timely, adaptable, and integrated.

Speaker Change: Second international growth.

Speaker Change: We see a vital opportunity to extend American innovation to our allies and partners around the world.

Speaker Change: In an era of intensifying technological competition, we have the opportunity and responsibility to ensure American developed AI technologies are deployed where they can strengthen global stability is shared security.

Speaker Change: Third business alliances and partnerships we.

Speaker Change: We'll pursue collaborations and remain open to strategic acquisitions that enable us to innovate faster grow into new areas and deliver greater value to our customers.

Speaker Change: And finally relentless innovation and AI.

Speaker Change: Focused on delivering mission ready AI operationalize, the artificial intelligence in the real world to enable human machine teaming and bring cutting edge technologies to the point of decision in ways that are timely adaptable and integrating.

Kevin McAleenan: Building on these anchors, our growth strategy for 2025 is focused on a clear dual mandate. strengthen within our core markets where we have proven success while expanding selectively into high potential adjacencies where our expertise and technology provide a competitive edge. In our core markets, we are continuing to deepen our leadership. In border security, travel, and trade, we continue to support border security missions at the Department of Homeland Security, and we are expanding AI infrastructure at major U.S. and partner nation gateways. Our ability to integrate federal and commercial solutions through the Pangean portfolio gives us a powerful advantage, creating better, faster solutions for both mission sets.

Speaker Change: Building on these anchors our growth strategy for 2025 is focused on a clear dual mandate strengthen within our core markets, where we have proven success, while expanding selectively into high potential adjacencies, where our expertise and technology provide a competitive edge.

Speaker Change: At our core markets, we are continuing to deepen our leadership.

Speaker Change: In border security travel and trade, we continue to support border security mission that the department of Homeland Security and we are expanding AI infrastructure at major U S and partner nation gateways.

Speaker Change: Our ability to integrate federal and commercial solutions through the <unk> portfolio gives us a powerful advantage, creating better faster solutions for both mission sets.

Kevin McAleenan: In defense and intelligence, we are orchestrating AI at the mission edge, sourcing and fusing critical data and delivering actionable insights directly to the point of need, integrating with emerging AI operating systems and connecting diverse sensor types to fuse operational data. In manufacturing and supply chain, we are well-positioned to help modernize the American industrial base and streamline global supply chains. Our goal is to improve visibility into challenges, accelerate decision-making, and unlock efficiency gains, particularly in critical sectors like shipbuilding.

Speaker Change: In defense and intelligence, we are orchestrating AI at the mission edge sourcing infusing critical data and delivering actionable insights directly to the point of need integrating with emerging AI operating systems and connecting diverse sensor types diffuse operational data.

Speaker Change: In manufacturing and supply chain, we are well positioned to help modernize the American industrial base and streamline global supply chain. Our goal is to improve visibility into challenges accelerate decision, making and unlock efficiency gains.

Speaker Change: Particularly in critical sectors like shipbuilding.

Kevin McAleenan: At the same time, we are strategically expanding into new markets. Internationally, we are focused on converting successful pilots into enduring programs, monetizing R&D where export of American innovation is in our national interest, and where our national partnerships are strongest, and starting to build regional go-to-market partnerships with leading companies. Domestically, we are pursuing adjacencies that leverage our core competencies, for example, adapting technologies built for one federal agency's needs to address similar challenges in another, or introducing innovations developed for the commercial sector into government and vice versa. Our growth is accelerated by a portfolio of technologies, including commercial and software solutions like Pangeum Threat Detection, VeriScan, TruFace, ProModel AI, Conductor OS, and Shipyard AI, and a suite of underlying assets from computer vision models to data pipelines.

Speaker Change: At the same time, we are strategically expanding into new markets.

Speaker Change: Internationally, we are focused on converting successful pilots into enduring programs monetizing R&D, where export of American innovation is in our national interest and where our national partnerships are strongest and starting to build regional go to market partnerships with leading companies.

Speaker Change: Domestically, we are pursuing adjacencies that leverage our core competencies for example of that.

Speaker Change: Thing technologies built for one federal agencies needs to address similar challenges in another.

Speaker Change: Or introducing innovations developed for the commercial sector into government and vice versa.

Speaker Change: Our growth has accelerated by a portfolio of technologies, including commercial and software solutions like <unk> and threat detection bear skin true face pro model AI conductor OS and shipyard AI and a suite of underlying assets from computer vision models to data pipelines.

Kevin McAleenan: Additionally, we believe that a collaborative approach is critical, given the pace of innovation and the variety of mission sets we seek to serve. We are focused on working with strategic partners through alliances and joint ventures, and will also consider strategic acquisitions, giving us the ability to move swiftly, precisely, and with a shared risk in a complex, dynamic market.

Speaker Change: Additionally, we believe that a collaborative approach is critical given the pace of innovation and the variety of mission sets. We seek to serve we are focused on working with strategic partners through alliances and joint ventures.

Speaker Change: We will also consider strategic acquisitions, giving us the ability to move swiftly precisely and with a shared risk and a complex dynamic market.

Kevin McAleenan: As we enter the second quarter, we are seeing early and encouraging signs that our strategic focus is resonating, particularly in sectors where we've built deep relationships, have a clear understanding of the mission, and are deploying proven technology.

Speaker Change: As we entered the second quarter, we are seeing early and encouraging signs that our strategic focus is resonating, particularly in sectors, where we built deep relationships have a clear understanding of the mission and are deploying proven technologies.

Kevin McAleenan: The National Security was secured a significant new contract to deliver and maintain the Department of Defense Joint Staff J35's Orion Decision Support Platform. This award is a powerful validation of our AI capabilities and their direct alignment with mission-critical needs at the highest levels of defense decision-making. In manufacturing and chip building, we are deepening our partnerships with key industry players like AustalUSA, demonstrating our solutions can drive meaningful impact in industries that are most critical to American industry. On the border and travel security front, we successfully deployed advanced AI solutions at major points of entry and exit, including U.S.

Speaker Change: National Security, we secured a significant new contract to deliver and maintain the department of defense Joint staff J F 30, Fives O'brien decision support platform. This award is a powerful validation of our AI capabilities and their direct alignment with mission critical needs at the highest levels of defense decision, making.

Speaker Change: In manufacturing in shipbuilding, we're deepening our partnerships with key industry players like also USA, demonstrating how our solutions can drive meaningful impact in industries that are most critical to American interests.

Speaker Change: On the border and travel security front, we successfully deployed advanced AI solutions at major points of entry and exit including U S airports like Dallas Fort Worth and Denver International Airport, enhancing operational efficiency and traveler experience, while strengthening security postures.

Kevin McAleenan: airports like Dallas-Fort Worth and Denver International Airport, enhancing operational efficiency and traveler experience while strengthening security posture. We are also proud to support enhanced primary processing for arrivals at Los Angeles International Airport and the Port of Seattle.

Speaker Change: We're also proud to support enhanced primary processing for rivals at Los Angeles International Airport in the Port of Seattle.

Kevin McAleenan: Internationally, we are beginning to see results from our increased focus. Our collaboration with Smith Detection on applying BigBear.ai automated prohibited item detection using advanced algorithms and integrated with computed tomography scanners is a prime example. Unlocking new international distribution channels for our threat detection technologies and helping us accelerate our reach in the global security market.

Speaker Change: Internationally, we are beginning to see results from our increased focus.

Speaker Change: Our collaboration with Smiths detection on applying big bear AI automated prohibited item detection using advanced algorithms and integrated with computed tomography scanners.

Speaker Change: I'm example, unlocking new international distribution channel for our threat detection technologies, and helping us accelerate our reach in the global security markets.

Kevin McAleenan: Given the progress we are seeing across these areas, we are confident in our strategy and we are reaffirming our 2025 full-year guidance. We recognize that we are operating in an exceptionally dynamic business and macroeconomic environment, which creates opportunity, but also potential short-term risk. Among these, changes in federal procurement processes and government efficiency efforts are creating temporary variability, including delays in funding and award timing. We remain focused on capitalizing on this dynamic market and driving disciplined, sustained execution.

Speaker Change: Given the progress we're seeing across these areas. We are confident in our strategy and we are reaffirming our 2025 full year guidance.

We recognize that we are operating in an exceptionally dynamic business and macroeconomic environment.

Speaker Change: Which creates opportunity, but also potential short term risks among these changes in federal procurement processes and government efficiency efforts are creating temporary variability, including delays in funding and award timing.

Speaker Change: We remain focused on capitalizing on this dynamic market and driving disciplined and sustained execution.

Julie: Now let me turn it over to Julie to share our financial results for this quarter.

Speaker Change: Now, let me turn it over to Julie to share our financial results for this quarter.

Julie: Thank you, Kevin.

Julie: Now let's turn to our first quarter results. As we have stated in the past, it's important to reemphasize that our revenue can be lumpy and can fluctuate meaningfully depending on the quarter in which contracts are awarded, milestones achieved, or contracts complete. Revenue for the quarter was $34.8 million, up 5% year-on-year. compared to $33.1 million in the first quarter of 2024. This is primarily driven by additional revenue from the Department of Homeland Security and Digital Identity Awards, including products such as Bear Scan and TruePay. Gross profit for the quarter is up 6% from $7 million in first quarter of 2024 to $7.4 million in first quarter of 2025.

Julie: Thank you Kevin now, let's turn to our first quarter results.

Julie: We have stated in the past it's important to reemphasize that our revenues can be lumpy and can fluctuate meaningfully depending on the quarter in which contracts are awarded milestones achieved a contract is complete.

Julie: Revenue for the quarter was $34 8 million up 5% year on year.

Julie: Compared to $33 1 million in the first quarter of 2024.

Julie: This is primarily driven by additional revenue from the department of Homeland Security.

Julie: And digital identity awards, including products, such as first scan entry fee.

Julie: Gross profit for the quarter is up 6% from $7 million in first quarter of 2024 to $7 4 million in first quarter of 2025.

Julie: Growth margin was 21.3% this quarter, which is a slight improvement from 21.1 in Q1 2024. Lower reported gross margin in both periods are impacted by higher annual incentive compensation that was settled in the form of stock awards issued in the first quarter, resulting in higher stock-based compensation non-cash expense. If you look at adjusted gross margin, which removes the impact of equity compensation, it shows 28.6% in the first quarter of 2025 versus 29.1% in Q1 of 2025. Year over year, our R&D spend is up $3 million as we continue to invest in innovation and technology as you have seen over the last few quarters.

Julie: Gross margin was 21, 3% this quarter, which is a slight improvement from 21, one in Q1 2024.

Julie: Lower reported gross margin in both periods are impacted by higher annual incentive compensation and was settled in the form of stock awards issued in the first quarter.

Julie: Resulting in higher stock based compensation noncash expense.

Julie: If you look at adjusted gross margin, which removes the impact of equity compensation.

Julie: 28, 6% in the first quarter of 2025 versus 29, 1% in Q1 of 2024.

Julie: Year over year, our R&D spend is up $3 million as we continue to invest in innovation and technology as you've seen over the last few quarters.

Julie: We have recently progressed some R&D projects into general availability. Therefore, we have fewer projects being capitalized as part of the development cycle in Q1 of 2025. Net loss in the first quarter of 2025 was $62 million compared to the net loss of $127.8 million in the first quarter of 2024. The primary drivers of change in net loss were all non-cash items. In the first quarter of 2024, we booked goodwill impairment charges of $85 million, and this was not repeated in the first quarter of 2025. This is partially offset by higher non-cash losses on the increase in the fair value of derivatives of $9.5 million from $23.8 million in Q1 of 2024 to $33.3 million in Q1 of 2025.

Julie: We have recently progressive R&D projects into general availability. Therefore, we have fewer projects being capitalized as part of the development cycle in Q1 of 2025.

Julie: Net loss in the first quarter of 2025 with $62 million compared to the net loss of $127 8 million in the first quarter of 2024.

Julie: Primary drivers that change in net loss were all noncash items.

Julie: In the first quarter of 2020 for me, but goodwill impairment charges of 85 million and this was not repeated in the first quarter of 2025.

Julie: This is partially offset by higher noncash losses on the increase in the fair value of derivatives of $9 $5 million from $23 8 million in Q1 of 2024 to $33 3 million in Q went up from 25.

Julie: It also recognized non-cash losses on debt extinguishment of $2.6 million during the first quarter of 2025 related to voluntary conversions by holders of the convertible notes due in 2029. And finally, non-cash stock-based compensation expense was higher in Q1 of 2025 versus Q1 of 2024 by $2.2 million.

Julie: We were also recognized non cash losses on debt extinguishment of $2 6 million during the first quarter of 2025 related to voluntary conversions by holders of the convertible notes due in 2029.

Julie: And finally noncash stock based compensation expense was higher in Q1 of 2025 versus Q1 of 'twenty 'twenty, four and by $2 $2 million.

Julie: Now turning to Adjusted EBITDA. This was negative $7 million for the first quarter of 2025, compared to negative $1.6 million in the first quarter of 2024, primarily driven by increased R&D expense and recurring SG&A due to the government funding delays creating excess resource capacity.

Julie: Now turning to adjusted EBITDA.

Julie: There was a negative this was negative $7 million for the first quarter of 2025 compared to negative one 6 million in the first quarter of 2024, primarily driven by increased R&D expense and recurring SG&A due to the government funding delays, creating excess resource capacity.

Julie: Our backlog was $385 million at the end of the first quarter, which is up 30% in $89 million compared to Q1 of 2024, indicating continued customer confidence in our solutions and long-term value.

Julie: Our backlog was $385 million at the end of the first quarter, which is up 30% and $89 million compared to Q1 of 2024, indicating continued customer confidence in our solutions and long term value proposition.

Julie: And finally, I want to reinforce the renewed strength of our balance sheet and improved depth. As shared last quarter, we made significant progress during Q1 to improve our cash position. We ended Q1 with $108 million in cash, in cash equivalents, up from $81 million in Q1 of 2024 and $50 million at the end of 2024. The cash position provides us with increased financial flexibility to strategically invest, navigate market uncertainties, and drive long-term value for our shareholders. Our debt position has materially reduced during Q1 as several of our 2029 note holders opted to convert into equity during Q1, resulting in a reduction of $58 million of debt in the period.

Julie: And finally, I want to reinforce the renewed strength of our balance sheet and improve that position.

Julie: As shared last quarter, we made significant progress during Q1 to improve our cash position.

Julie: Q1, with $108 million in cash and cash equivalents up from $81 million in Q1 of 2024 and $50 million at the end of 2024.

Julie: The cash position provides us with increased financial flexibility to strategically invest navigate market uncertainties and drive long term value for our shareholders.

Julie: Our debt position has materially reduced during Q1 as several of our 2029 note holders opted to convert into equity during Q1, resulting in a reduction of $58 million of debt in the period.

Julie: The outstanding principal on our convertible notes is $142 million at the end of this quarter, down from $200 million at the end of 2020. These new 2029 notes also provide us with the optionality to settle future interest payments in stock or in cash at our election. This gives us improved financial flexibility and gives us the ability to execute with confidence and discipline as we look ahead. As we mentioned last quarter, we will continue to be responsible with our Strengthen Ballot Sheet, and we will look to allocate capital only towards projects that aim to provide material improvement to our shareholder returns.

Julie: The outstanding principal on our convertible notes is $142 million at the end of this quarter down from $200 million at the end of 2024.

Julie: These new 2029 notes also provide us with the optionality to settle future interest payments in stock or cash at our election.

Julie: This gives us increased financial flexibility and gives us the ability to execute with confidence and discipline as we look ahead.

Julie: As we mentioned last quarter, we will continue to be responsible with our strengthened balance sheet and we will look to allocate capital only towards projects that aim to provide material improvement to our shareholder return.

Kevin McAleenan: And now back to Kevin for a few closing remarks. Thank you, Julie. As we've shown today, we are positioning Big Bear for the long term. And as we reaffirm our guidance for the full year, I'd like to remind everyone of three key building blocks of the business today. I'd like to highlight our financial foundation, as we did in last quarter's CEO letter. We closed the quarter with $108 million in cash and cash equivalents. This is a result of deliberate steps taken to strengthen our balance sheet, enhance liquidity, and preserve the strategic flexibility we need to navigate near-term uncertainty while still investing decisively in our future growth.

Kevin: And now back to Kevin for a few closing remarks.

Kevin: Thank you Julie we've shown today, we are positioning big there for the long term.

Kevin: We reaffirm our guidance for the full year I'd like to remind everyone of three key building blocks of the business today.

Kevin: I'd like to highlight our financial foundation as we did in last quarter's CEO letter.

Kevin: We closed the quarter with $108 million in cash and cash equivalents. This is the result of deliberate steps taken to strengthen our balance sheet enhance liquidity and preserve the strategic flexibility, we need to navigate near term uncertainty, while still investing decisively in our future growth with strong financial footing allows us to be selective patient and opportunistic.

Kevin McAleenan: The strong financial footing allows us to be selective, patient, and opportunistic. Second, our backlog and pipeline remain healthy. Closing the first quarter with a backlog of $385 million. We're taking a long view with our backlog and pipeline and focusing on building a portfolio of large, multi-year programs and deep commercial relationships that provide stable, compounding value over time. Third, innovation remains at the core of our identity. We are continuing to blend internal R&D with customer-funded development while expanding our innovation ecosystem through partnerships that allow us to access cutting-edge technologies and talent across that. At BigBear.ai, we are building a durable, high-impact company at the forefront of AI-enabled national security and critical infrastructure modernization.

Kevin: Rick.

Rick: Second our backlog and pipeline remained healthy closing the first quarter with a backlog of $385 million.

Rick: We're taking a long view with our backlog and pipeline and focusing on building a portfolio of large multiyear programs and deep commercial relationships that provide stable compounding value over time.

Rick: Third innovation remains at the core of our identity, we are continuing to blend internal R&D with customer funded development, while expanding our innovation ecosystem through partnerships that allow us to access cutting edge technologies and talent across sectors.

Rick: A big barrier, we are building a durable high impact company at the forefront of AI enabled national security and critical infrastructure modernization.

Kevin McAleenan: We are doing so with focus, with urgency, and with a foundation that is designed to deliver lasting value for our customers, our partners, our employees, and our shareholders.

Rick: We're doing so with focus with urgency and with the foundation that is designed to deliver lasting value for our customers our partners our employees and our shareholders. Thank you for your time today on our first quarter call.

Kevin McAleenan: Thank you for your time today on our first quarter call. Thank you.

Operator: This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.

Rick: Thank you. This does conclude today's teleconference. We thank you for your participation you may disconnect your lines at this time.

Rick: [music].

Rick:

Rick: Mhm.

Rick: Hmm.

Rick: Hum.

Rick: Mhm.

Rick: Hum.

Operator: Thank you for making the subscriber! www.mytrendyphone.co.uk

Rick:

Rick: Mhm mhm.

Rick: [music].

Rick: Mhm.

Rick: [music].

Rick: Hum.

Rick: [music].

Rick: Hum.

Rick: Okay.

Rick: Yeah.

Rick: Hum.

Rick: [music].

Rick: Yeah.

Rick: Yeah.