BigBear.ai Returns to Revenue Growth as Costs Keep Rising
BigBear.ai Holdings posted its first year-over-year revenue increase in at least four quarters, with sales up 13% to $36.7 million even as losses from rising overhead widened.
BigBear.ai Holdings (BBAI), the artificial-intelligence and analytics contractor, reported second-quarter revenue of $36.7 million, up 13% from $32.5 million a year earlier and the first year-over-year gain after three straight quarters of decline.
The reversal follows a stretch in which revenue fell 20% in the third quarter of 2025, 38% in the fourth quarter, and 1% in the first quarter of 2026. Growth in the latest quarter was driven by the company's Ask Sage GenAI Platforms business, which also lifted gross margin to 32.8% from 25.0% a year earlier, a 781-basis-point improvement and the third consecutive quarter of year-over-year margin expansion. Margin still slipped 120 basis points from the 34.0% recorded in the first quarter, since Ask Sage's growth has not been enough to offset other cost pressures building beneath the surface.
Those pressures showed up in SG&A, which rose $10.4 million year over year to $31.8 million, compared with a $6.5 million increase in the prior quarter, indicating the cost run-up is accelerating in dollar terms. The increase was due to Ask Sage intangible amortization, legal costs tied to a proxy contest and special meeting, and expanded sales and marketing spending. Adjusted EBITDA loss widened to $11.6 million from $8.5 million a year earlier, extending a run of year-over-year deterioration that has now lasted at least four consecutive quarters.
Net loss narrowed to $25.7 million from $228.6 million a year earlier, but the improvement stemmed largely from accounting items rather than operations: a $135.3 million swing in derivative fair-value losses and the absence of a $70.6 million goodwill impairment taken in the year-earlier quarter. By contrast, the first quarter's year-over-year loss narrowing was modest, from $62.0 million to $56.8 million, underscoring how much of the second-quarter improvement was tied to one-time items rather than a durable operating trend.
Backlog rose 9% to $269.6 million from $246.9 million at the end of December, but that pace decelerated from the 14% sequential jump reported in the first quarter, when a $53 million sole-source classified award pushed backlog to $281.9 million. Backlog has since declined sequentially from that first-quarter level.
BigBear.ai affirmed full-year 2026 revenue guidance of $135 million to $165 million for a third consecutive release, unchanged despite the first-quarter revenue decline that preceded the current rebound.
Cash and investments fell to $409.8 million as of June 30 from $431.5 million at the end of March and $462 million at year-end 2025, a roughly $52 million drawdown over two quarters. The company also disclosed a new transaction-expense line of $0.8 million tied to merger-and-acquisition activity, a cost that first appeared in the first quarter and was absent from prior-year releases. BigBear.ai had more than 20 new contract wins during the quarter, a metric not featured as a headline figure in its previous four earnings releases.