TLDR
- BigBear.ai stock climbed 8.2% on January 2 after revealing plans to cut debt by over $100 million
- The company will redeem its 6% Convertible Senior Secured Notes, lowering debt from $125 million to $17 million
- Ask Sage acquisition closed for $250 million, bringing platform serving 16,000 government teams
- 2025 revenue forecast shows 11-21% decline to $125-$140 million due to government contract issues
- Wall Street remains split with Moderate Buy rating and $6.50 average price target
BigBear.ai kicked off 2026 with an 8.2% gain on January 2. The jump followed a rough December that saw shares drop 23%, though the stock still finished 2025 up 30%.
BigBear.ai Holdings, Inc., BBAI
The catalyst was news of a major balance sheet cleanup. BigBear.ai announced it’s redeeming all outstanding 6% Convertible Senior Secured Notes maturing in 2029.
This wipes out roughly $125 million in debt. By January 16, 2026, the company’s total debt load will sit at just $17 million.
The company already converted $58 million in principal during 2025. The remaining amount will be handled through conversions and cash redemption without draining the treasury.
BigBear.ai will issue common stock shares that were previously set aside for this purpose. More shares in circulation means dilution, but it clears debt and interest payments off the books.
CEO Kevin McAleenan framed the move as creating room to grow. He mentioned pursuing both acquisitions and organic expansion once the debt burden lifts.
Rough Year Ahead for Revenue
The company is staring down an 11-21% revenue drop in 2025. Guidance points to $125-$140 million as federal agencies restructure their data systems.
BigBear.ai’s backlog tells a similar story. It fell from $385 million in the first quarter to $376 million by the third quarter of 2025.
Margins are getting squeezed too. Gross margin dropped 240 basis points to 22.8% in the first nine months of 2025.
The adjusted EBITDA margin went from negative 3.8% to negative 24.8% year-over-year. Full-year 2025 is expected to show negative $33 million in adjusted EBITDA versus negative $2 million in 2024.
Ask Sage Deal and International Push
BigBear.ai wrapped up its $250 million purchase of Ask Sage last month. The platform handles secure generative AI deployments for defense and intelligence work.
Ask Sage already works with more than 16,000 government teams. It connects with AI models from major providers including Anthropic, OpenAI, Amazon Web Services, and Google.
The deal should add $25 million in annual recurring revenue for 2025. That’s six times what Ask Sage brought in during 2024.
Beyond acquisitions, BigBear.ai launched a partnership with C Speed. The collaboration integrates AI with radar systems for better threat detection in defense applications.
The company also planted a flag in Abu Dhabi. It’s the first office outside U.S. markets, targeting Middle East customers as national security spending rises.
Looking forward, analysts project 23% revenue growth to $164 million in 2026. Most of that bump comes from Ask Sage joining the mix.
The 2027 outlook shows a 2% dip to $162 million once that acquisition gets fully absorbed. Adjusted EBITDA should improve but may still stay negative.
BigBear.ai battles tough competition from Palantir Technologies and C3.ai. Both rivals have stronger government connections and can deploy faster.
The company went public via SPAC merger four years ago at $9.84 per share. It crashed to $0.63 before climbing back to current levels around $5.84.
Share count has more than tripled since the SPAC deal. Additional stock issuances keep diluting existing shareholders as the company funds operations and acquisitions.
At a $2.4 billion enterprise value, BigBear.ai trades at 14 times projected 2026 sales. Analysts maintain one Buy rating and one Hold rating on the stock.
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