New York, March 6, 2026, 05:44 EST
BigBear.ai Holdings, Inc. climbed roughly 5.5% to $4.04 in premarket trading Friday. The defense-oriented AI software player drew a fresh look from investors after a pair of brokerages trimmed their price targets in response to this week’s earnings.
This shift is key for BigBear.ai, which has been urging investors to buy into its turnaround—lowering debt, boosting cash, plus making two acquisitions aimed at broadening its defense and trade software reach. But here’s the snag: Army-related revenue took a steep drop, leaving BigBear.ai vulnerable to fluctuations in U.S. government budgets.
Fourth-quarter revenue at the company dropped 38% to $27.3 million, with Army program volumes taking a hit. Gross margin narrowed sharply, down to 20.3% from last year’s 37.4%. Adjusted EBITDA flipped, posting a $10.3 million loss after showing a $2 million gain a year ago. BigBear.ai projects revenue for 2026 between $135 million and $165 million, up from $127.7 million expected in 2025.
Chief Executive Kevin McAleenan said BigBear.ai wrapped up 2025 with its “strongest financial position” ever, pointing to the U.S. government’s AI Acceleration Strategy as something that “plays directly to our strengths.” H.C. Wainwright’s Scott Buck acknowledged the bolstered balance sheet, calling it “greater flexibility to fund growth,” although he trimmed his price target to $6 from $8. Over at Cantor Fitzgerald, Jonathan Ruykhaver cut his own target to $5 from $6 but stuck with a Neutral rating. BigBear.ai Holdings, Inc.
BigBear.ai wrapped up 2025 holding $462 million in cash and investments, after clearing the last $125 million of its 2029 convertible notes back in January. The company finalized the Ask Sage buyout in December, then closed the CargoSeer asset purchase a month later. Cantor Fitzgerald puts possible 2025 revenue from Ask Sage around $25 million.
BigBear.ai is trying to carve out space in a market where larger players aren’t slowing down. Palantir projected 2026 revenue would top estimates last month as U.S. defense business picked up, according to . C3.ai, meanwhile, announced plans late last month to lay off 26% of its global workforce after a stretch of disappointing sales. With BigBear.ai still running at a loss, its margin for error is slim.
The risk stands out. BigBear.ai’s filing put U.S. government sales at $114.7 million out of $127.7 million in expected 2025 revenue. Backlog at year-end was roughly $248 million—work awarded but not yet recognized as sales. Still, the filing makes it clear: many of those contracts can be cancelled for convenience or just left idle. Meanwhile, the debt overhaul diluted shareholders, as noteholders swapped all 2029 notes for about 38.1 million shares ahead of redemption.
One issue the company now claims to have put behind it: the annual report shows management fixed a material weakness in technical accounting, saying internal controls were effective as of Dec. 31. The focus shifts to whether the lighter debt load, new cash, and the Ask Sage and CargoSeer acquisitions will actually help deliver more consistent contract wins going into 2026.
