Shares of data analytics stock BigBear.ai (NYSE:BBAI), which some investors see as potentially being the next Palantir Technologies (NASDAQ:PLTR), nosedived on Tuesday after the company released its latest earnings numbers. What has gotten investors so bearish on the stock? Here are the 5 most important numbers from BigBear’s earnings report.
$32.5 million in sales.
Revenue declined by 18% year over year. The company says this is due to lower volume related to Army programs. A big drop in sales is never a good sign for a company that investors expect to see a ton of growth from. Analysts were expecting revenue of $40.6 million, making this a big miss for BigBear on the top line.
$90.3 million operating loss
The company posted a big net loss of nearly $230 million but there’s a lot of noise on BigBear’s financials and you can stop at the operating income level to see it’s already in the red. The company did have a goodwill impairment charge, again, of over $70 million. But even if you take that out, the operating loss would have been around $20 million, which is still deeper than the nearly $16.7 million loss it posted a year ago.
$8.1 million in gross margin
The company’s gross margin was just 25% of revenue, which means cost of sales are eating up a big chunk of its top line, leaving little to cover operating expenses. A year ago, its gross margin percentage was 28%. It’s going in the wrong direction and if BigBear isn’t charging enough for its software, it’s going to be doubtful if it’s ever going to get out of the red.
$125 to $140 million
That’s the company’s updated guidance for revenue for the full year, versus its previous forecast of $160 to $180 million. That’s a big reduction since May, when it last issued its guidance. When you factor in an earnings miss and also reduce the guidance, that’s a surefire way to crush a stock quickly.
$380 million in backlog
This is down from $418 million a year ago. But keep in mind, the vast majority of this includes unexercised options, and they are at the customer’s discretion. This means all of this backlog is by no means a guarantee to flow through to revenue.
BigBear’s business looks to be highly dependent on government spending, and when there’s a pullback, you can see how crippling the effects are for its business. While it still sees opportunities for more growth, investors were clearly taken aback by these dreadful results. Although the stock dropped 16% on Tuesday on the news, on a year-to-date basis it’s still up around 34%.
Given the choppiness in its numbers, this is a volatile and highly speculative stock to own – it comes with a lot of risk.