It's been a tough start to the year for BigBear.ai's (BBAI 2.54%) stock, and things did not get any better after the company reported its fourth-quarter results on Monday. Following its retreat, the stock is now down nearly 28% on the year, as of this writing.
With the stock down and some recent acquisitions in tow, let's see if now is a good time to buy shares of the beaten-up artificial intelligence (AI) analytics company.
Image source: Getty Images.
BigBear.ai is looking for a turnaround
BigBear.ai ended 2025 on a down note, with its Q4 revenue sinking 38% year over year to $27.3 million. The company said the decline stemmed from lower volumes related to contracts it has with the U.S. Army. That was well below the $33.3 million analyst consensus.
On top of the big decline in revenue, the company's gross margins plunged to 20.3% from 37.4% a year ago. It said the margin compression was the result of one-time high-margin contracts not repeating this year. This is a low margin for a company that bills itself as an artificial intelligence (AI) analytics company, as it is much more of a government systems integrator whose engineers and data scientists need to be on-premise for most of the government projects it is involved in.
BigBear.ai saw its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) turn negative, falling to a loss of $10.3 million versus a gain of $2 million a year ago. The company had cash flow from operations of negative $21.8 million in the quarter and negative $42 million for the year. Free cash flow was negative $42.5 million for the year. The company ended 2025 with cash and investments of $87.1 million and $107 million in debt after issuing over $693 million in equity in 2025.
Looking ahead, management forecasted full-year revenue to fall between $135 million and $165 million, representing 17% growth at the midpoint. Meanwhile, it recently closed on the acquisitions of both Ask Sage and CargoSeer.
NYSE: BBAI
Key Data Points
Is the stock a buy?
Given its gross margins and lumpy revenue, BigBear.ai isn't exactly the AI analytics software-as-a-service (SaaS) company that one might expect from its name. However, with the acquisitions of Ask Sage and CargoSeer, it is certainly trying to head more in that direction. The company has also raised cash through equity offerings and looks well-positioned to continue to buy more AI-software-oriented companies.
While I like the Ask Sage acquisition in particular, the company's core business remains under pressure, and at around $25 million in annual recurring revenue, it isn't big enough to truly move the needle yet. Meanwhile, with the stock trading at a forward price-to-sales ratio (P/S) multiple of just under 11 times 2026 analyst estimates, the stock is expensive for a low-margin business. As such, I'd stay on the sidelines with this stock.
