BigBear.ai (BBAI) 10 May 222022 Q1 Earnings call transcript

Thank you for joining the BigBear.ai First Quarter 2022 Conference Call. This call is being recorded. At this time, all participants are in a listen-only mode. And a question-and-answer session will follow the presentation. [Operator Instructions] I will now like to turn the call over to Josh Kinley of BigBear.ai. Mr. ahead, go Please Kinley.

other and afterwards. I’m BigBear.ai's Officer Josh our in Brothers here everyone, team BigBear.ai earnings will who and first conference with participate and Reggie Dr. call, Kinley, Q&A CEO, of welcome afternoon, the XXXX leadership session to the quarter I'm members Good Chief Financial

uncertainties. cause the the factors call. statements cautioned events put Many on undue from to update and reliance call. materially During the make are result, and statements the statements statements may obligation could to current we the forward-looking actual specifically certain forward-looking any on a the to assumptions be not forward-looking and subject and may call as today, statements. made differ BigBear.ai disclaims Listeners expectations discussed based forward-looking are that on are These to during risks

uncertainties, these statements SEC issued about filings. information section more the risks today earnings of forward-looking For refer release press and to the our and please

some With discuss should be Reggie during be GAAP for will Brothers. our to and measures also non-GAAP measures the the GAAP Dr. find the considered together to I release. a reconciliations will with not over can non-GAAP These non-GAAP earnings results, read the should We that GAAP today. said, replacement call measures you turn within financial call

Thank you, quarter Josh, call. and thank earnings you all first for joining XXXX our

realize possible call, our best actionable last guide in to expert BigBear.ai customers mission technologies in our described I As by their advice. delivering and to our future transformative is

federal government. the engineering are within our intelligence software defense agencies cyber and AI of analytics solutions powered Our cornerstones

the We capabilities commercial are now to advanced these market. bringing

progress a steps of profitable margin establishing BigBear.ai journey company acquisition. the high while strategic side strategy services in good company. our commercial in and high a For the from our business land first in expand quarter accretive XXXX, our the market, in first made and strong through growth, took federal to a We first foothold steady technology several and of important

the adjusted team, We any achieve year scale, stated company efficiencies these automation last position for the through expected some for like like and progress. as to of to to during also end positive to on But talent call. with revenue to in operational range details rapid XXX XXX track on are reorganization. continued the the EBITDA developments regarding outstanding I'd and our million XXXX now million share our and

into unfamiliar On authority down time some of for side, federal signed takes then pleased to flow law to to it agencies, Those appropriations process, federal the to budget March with see individual you projects. we're XX. the bill the on contracting distinct and

affect So in the revenue. this to positively event too late QX quarter happened

capabilities the several into resolution However, current federal we throughout with anticipate quarter in intelligence DoD artificial million, new technology and cyber billions We to new of noted The considerably into investing to in in have projected and budget situation tools. March the made report and XXXX The generate includes the Notably, AI machine the momentum department AI be contracts for underway. the and GO higher. its Increased an budget opportunities and of BigBear.ai XXXX. at has defense of and was added the already will significant level rest year coupled specifically through the intelligence heightened changes focus the operations. XX has learning geopolitical XXXX their advanced the pipeline. the conclusion organizational XXXX added is new bill, dollars that continuing the for corporate $XXX of enhance adoption to need the and the AI AI, earmarked the

adoption XXXX to which JAIC, the accelerate Joint the AI. of example, was For Center, in department's Artificial Intelligence established

the year billion for in XXXX, The requests XX Artificial XXX.X including of Chief also for DoD for with fiscal DODs AI reflect XXXX of million to in fiscal with XXX year AI on Officer of DoDs Intelligence government's with of importance operations. and rapidly their learning Report requested XXXX technology new from reflects total million appointment XXXX. underscores year increased years XXXX. AI XXXX This the machine million noted million Pentagon's fiscal fiscal investments. the focus AI Digital budget not ramping the do XXX year growing the up XX.X capabilities. that development its programs and So further compared and fiscal science

track they this we at outstanding trusted Strong need right solutions help need. possible. adviser and to the meet experienced time been right an of to relationships For the like deploy quickly about XX to in them these success, government, are BigBear.ai as partner will years with place, record as have the capabilities right the

I'd we made progress Now, on included commercial last organic market we our We penetration won the to XXXX, growth. business. recall have both inorganic to like strategy turn fronts. In and quarter early both

XXXX. First, quarter revenue for of our the commercial commercial revenue for all exceeded first our

acquisition XX The commercial ProModel to know company's customers. enhance countries ability from complementary. We solid commercial hundreds our base to support transferable. a across in expertise customer in the modeling are history of BigBear.ai ProModel scalable and into extending and Solutions, and Corporation, accelerate we The shipbuilding, healthcare, more markets key a X. XXX synergies leading focus the to presence logistics foundation Government capabilities several and other worldwide April our us between industry of penetration. on market Fortune decision has manufacturing, This established providing vertical where solid each our we in technology, for products a reach our expands market ProModel than our management accretive market industries. Second, significantly portfolio, deliver customers are in of closed acquisition foothold applications highly which giving solutions

risk, for can FutureFlow them medical or reported for significant and in in including and modules, rich which them arrival impact traffic, business Using country, sources Hospital to achieving to Colorado scenario better benefit bed Shipbuilding AI their adding the augmented iron decrease The and will data the two Children's optimize hospitals mix. tool are simulation happen The global years analysis value staffing, our and professionals see scheduling took In availability real-time provide national BigBear.ai and to infection industry. case BigBear.ai, able calls from the field, capabilities Newport -- ProModel platform increase COVID which the weeks the and care is [indiscernible] COVID-XX industry, to for product staffing and allowed and [indiscernible] these as ambulance past and regional patient the for can and ProModel who outcomes. incorporate years patterns available has Hospital. ROI stickiness counts, and the use levels operations mitigate tap a shipyard and data, into external by emergency pricing and and further be rates, children planning. the discharge deployment, shipbuilding specific over that hospital production at specific children's in impressive. days about customers as in They're to if Children's now only one These production powered example, Hospitals. BigBear.ai they're the healthcare steel, a ProModel’s few excited such These Ingalls already their and processes to For provide predictability, our enrichment which allowing of of of capabilities streamline such expertise help in pre-build and analytics dozens factors, data children many need to us new AI advance and with their maritime have supply are with analytics our of serves are capacity in just AI and profitability. ProModel days of the Children's News customers levels ways hospitals. Specialty chain of reach and of a developed have and complete. customers optimize the hours solutions take across curation the ProModel data insights flow capacity, for, a can only words, results We data only the to including to Rz specialization and predictive chance working efficiency hospital customers

I earnings important last our strategy. be As partnerships in mentioned will growth call, to channel our

with also Factory Utilities. is reseller XXX,XXX collection, products. of seamlessly worldwide. addition distribution According and the Autodesk HG very strong AutoCAD companies more Autodesk analysts Inventor to co-marketing and Datech ProModel, includes ProModel was Insights, used global with by alone and from than leaders manufacturing and like design bringing Additional AutoCAD, Solutions Autodesk product AutoCAD Design partnerships which the industry works

General intelligence, XX-year legal experience So our talent. artificial Counsel unique BigBear.ai group sales continue we experience, and pipeline, Key and our ProModel our convert support Carolyn career. ability the throughout ethics at as us Giving on also made expand to brings the solutions intelligence for the rapidly the adoption to for to growth, opportunities strategy deep leverage General global sales as sales in important and and product, her channels operations. the Most intellectual be with business portfolio we the Her global appointment commercial in fill we product critically Counsel. will data Thomson BigBear.ai recently will Blankenship we these in accelerate new top the a To and assets. and commercial with bring scale. was were Carolyn hires market, products [indiscernible] team expertise need marketing, strategic property, to Reuters. federal our reach. Recently, leadership bolster announced of and innovation artificial

allow solutions, and creation of our Tony new we the will efforts, a us evolve to Cyber lead that & of Federal our the Engineering, appointed side of President On services software as Barrett our in customers Defense strategies Tony business, Integrated security company.

commercial our to continue us innovation growth acquired to AI growth. future strategic increasing XXXX eye to the new acquisitions, rapid customers. impact on reorganized despite sales first federal for unique and With We ongoing our products progress summary, ensure drive delays. sustainable product product, concurrently of we capabilities toward In and integration, quarter government periods in made help and commercial packaging of SaaS for our our marketing drive invest great anticipate We has enhancement while team been investments, an our of contracting achieve to in goals and commercial technology, the development the research more strategy and market.

success. resolution solid the backbone market place to a of experienced and market. addition executives a commercial strong we're us and we've bill innovation partnerships commercial penetration. ProModel the accelerate expanding position, programs appropriations new customer federal With operations excellent lifted the an we of strategy, gives channel talent from signed, The And base and Corporation into our our continuing although will building business which in to lead technical and in robust

give financials in will turn who over it Josh, I QX Now, to will detail.

the federal the on first government Revenue services XX.X quarter continued In of expect operating of Reggie. were the year-end business, government under resolution execute projected our a a revenue analytics almost contracted with Overall, year quarter, projections. not & us certain financial million $XX.X our position are ramp the XXXX. drop that million throughout all does opportunities on benefit our prior in continuing pleased the analytics to for than QX million Thanks, first of projections execute a resolution. of year. was were still C&E while We is will minor to XX.X our million, compared programs About to to under quarterly due Engineering in our our up compared revenue actually XX our and prior is attributable came operating that direct the growing Approximately backlog budget. of projections. XXXX million This revenue the continuing revenue the XX.X for allowed during unable products XXXX growth period. entirety XXXX. change with the delivering resolution of million in that it This our the from was to under are in Cyber temporary in our period. funding, our line Reggie the and the we quarter continuing in and quarter year-end entire revenue year more the change operating not was million The revenue $XX.X finalizing increase saw The impact commercial to X.X strategy we segment, compared as mentioned, strong of the budget. come or to capture we was large a reflects we and the in continue business, in the given was largely government of the does to XXXX to revenue from to while

government signed the we down the appropriations agencies, at up bill funds has expect individual activity into projects. contracts to allocate programs Now been new to second contracting allowing law, as and them pick end award quarter flow of that spending individual to thus to and the

we and on spending that As previously, competencies. to the BigBear.ai’s expect and thought Reggie of has ML research the government leadership. AI purposes specifically increased And focus mentioned benefit core the represent areas earmarked the for from

X% we small ended the topic or of at XXXX. a end $XXX million, from the roughly of the quarter backlog, On decrease

during federal Given of quarter period. to period, this analytics the inability report seeing change considerable portion the in the were to overall commercial backlog. for to new contracts orders revenue we a booked can government's new award to very A attributed be without meaningful the strong happy

to We horizon. awards periods future grow expect backlog on in to federal the see continue contract with

first our the quarter, margin on basis. For a XX% gross was GAAP

Our segment analytics the this above ended points gross impact sales full of margin adjusted quarter. in we XX%. is customers direct in A percentage the was to the and increasing in commercial where XXXX two

is total company's roughly which gross in line where the year. margin engineering again with gross in On on improvement prior was adjusted segment Our margin we and ended consolidated the for XX%, once XX% prior the quarter periods. a an cyber adjusted basis, fiscal was

in to consistent continue communicated especially margins, past. the the commercial we'll growth our we we've continued with see strategy analytics expansion with business, which see As in of customers, is the

public of the quarter, costs, growth We're recruiting revenue quarter. we're over million can basis. year company gross remaining are continue report, our While The is this as and contribute million, We'll including the and and XX.X see investing closely discussing start will prior first margin, early ProModel expense gross expenses the our we payroll, revenue in how primarily approximately well requirements. of expenses expenses an long-term second SG&A the million. about interest monitoring and IT, expansion. XX also QX we this by positive growth talked equity-based margin on in acquisition expenses increased operating our driven compensation in Operating $X.X closed confident to as in period about Reggie adjusted EBITDA or of were Corporation to and

quarter, $XX.X For had driven a primarily we equity-based non-cash million of compensation. loss the first net by

was as our a In in awards million amount addition the software was commercial integration QX, contract was EBITDA the quarter. with negative our Adjusted pending expectations for to non-recurring budget. the products. revenue our federal passage costs investments This and first line in in for considerable growth of $X.X of

million we cash and $X Turning $XX our end equivalents balance now the had at our to less sheet, cash million quarter, of the than at of position approximately year-end.

agreements in additional year-end purchase cash share balance repurchase no maintain a in QX cash sheet, forward have in roughly our usage and up then this shares Also thereafter. improve through the We $XX QX through QX that was to and I to facility. position used expect in we our held cash under and can longer certain is investors. peak credit strong these of We $XXX had an wrapped repurchases restricted with all million available in million restricted cash confirm were share sheet. balance agreements at

them quarters expect seen and various projects, and award programs as fund allowing to on to Now continue contracts. down through already this turning and to the coming way progress appropriations programs make their We've several expect to new we government outlook, and in to the QX QX. see agencies activity increased spending existing

to gross reach see growth year ML our range build the customers. and and on solutions. previously for from to our renewed As $XXX opportunities mentioned, products sales capabilities existing and we'll higher pipeline and a analytics the relevant margin expect these the expansion revenue between the full track in the we $XXX We is increased are XXXX our on continue expect government for and and to geopolitical Reggie remain new focus confident tools current million million of company. announced even to government, requests XXXX environment budget In driving factors, generating of in light be within new AI

the adjusted positive We be company to also expect on basis for an the year. EBITDA

discuss quickly will to revenue further the to side Now and M&A our of support XXXX acquisition analytics the ProModel corporation margin gross commercial add recent of on activity, for the business. analytic our

of this It focus with set into our supply integration More and of our regard management. ProModel through our our the market for work early executing importantly, total and new brings customer to they The the from entirely around The our Budget opportunity medical, manufacturing revenue supply tremendous our as In reiterate attack they've strengthens an and helps important strategy. market. software year jump to over ability controls, last challenges X% chain the customers And just conviction of our what a in ProModel discussions commercial growth the analytics summary, year, the overall recent experienced are has XXXX we a forecasting, margin expansion approach XX% was aspects for BigBear several years. full us prior of throughout all to and economic the been on will And these passage chain. gives provide critically last when projection, total confidence projections. BigBear years. is Demand to cost efficiency global precisely it are our Federal derisk the sales prior XXXX operational several of revenues. participants of for year revenue prior to expect

of XX% on revenue are We schedule nearly the year. for growth for

We growth increased direct a projected have result the seen analytics of margin sales. we expansion already

further We continues expect in both growth and EBITDA of to opportunities cementing And pipeline markets, to for the federal commercial new strategy. be positive our our year. the long-term grow

be of proceed. from Please over first and question-and-answer Our this I'll Technology with our Thank President President will [Operator I Q&A, is Officer joined at of Oppenheimer. Officer, question and a Chief gentlemen, Now for Operating Instructions] Ladies to Chief Dyer, operator conducting where you. Jeff Reggie and we will Commercial. by be it Sam the time, Brian session. Federal turn Singh and Gordy, Param Frutchey,

Kidron. Param you. Hi, thank is Ittai on This Singh

here. questions few a just So

if side. help been that it is decline not Why talked with backlog you've seeing? happen, Why XX the contract got you some recognized? Can me federal reconcile would about wins? that the you you Firstly, on wins

question. projects you wins Thank for XX were initial new came funding for in some the the The that contract quarter. through

initial basis, those essentially all it government But XX So on pending a some contracts, operating QX there given add Those under QX, there. that the weren't still awards likelihood. a awards were are net-net large in any continuing and resolution, in funding. did customers those in

than then, the past was quarter revenue And in you. the side, mentioned, entire commercial higher year. you Thank on your the

range? it million? is there million clarity X really the it X So Any X million above to would be in helpful. Is

But kind projections. not, you this We're you year. sources. that year-end can best that that I up reporting projections $XX quarter. to year-end our the mark, of, we're see specifically leaves roughly way from you million up at think revenue XXX of throughout definitely that projecting to We're revenues the coming build going commercial on the is, about think think the of time for XX% of with commercial as of projected revenue. we see ramping million, to let's which say, And

XX% to I So that of somewhere of overall in come in range Hopefully revenue. to year fair think XX% have to commercial helps. and QX might that ramp throughout up projected XX% it's that's the going that the say our to

Yes, ProModel dominate of or a three this much you observe, definitely. talking what add as commercial you then, do expect orient, product? separate revenue that. ProModel like? product much how integrated to Maybe your for into keep Thank ProModel very about the And margins

to very ask revenue integration. technical will So, and on the Brian the weigh then in I discuss I'll quickly,

they substantial most the amount and considerably customer we're add commercial forward us thing capitalize sets. the on able is At to substantial not on opportunities our side. disclosing opportunities moving not technical or expect the a a integration revenue be the existing The have it's pipeline this we to for to So important revenue. projected point, their to-date,

CTO. Brian is the This question. Frutchey, appreciate the I

and offers merge integration event the the we with product. going as ProModel simulation exist continue they are standalone technical our discrete again, dominate that to capability But On simulation tools capabilities. orient capabilities that the to that and will repackage discrete event side, the provide and

But cards us. be is of completed will for integration that in the that likely the part first won't So be until 'XX. happening and

adds number sales your And add expect year? can commercial? you. commercial sales getting maybe do Thank trajectory you the are How commercial people then given And acquisition? through this we more one. last to many from expect what And one you in

point, do technologies basis Jeff our pipeline, of question. Sure. the add indirect a further and that from Thanks for six both to continue we ramp This sellers, we We leverage will ProModel and integrate throughout best product is direct inherited Dyer. the both expect to we together. offerings companies to that the years, and grow on Brian's

Thank you back get so much. in line. I'll

Markets. Please Our Mike next Latimore proceed. Capital question from is with Northland

Thanks. Yes. on results here. the Congratulations

In relative and adds six following guess, fast planned, terms as organic grow of how just just well year you marketing as here, how if sales XXXX up the for the question, people many in this the adds new last the on group you'd include I sales commercial. or total will to

Thanks question. for the anticipated Hey, guidance Mike. our year. This is the for We this Jeff. in

And so would knew hopefully while this executing wasn't done, that we we acquisition. it be

and moving plan. headcount of focus offers with that a members to So for it ProModel ingest to the obviously through I inherited me quarter as it was that sales we planned and test we generation, with the few conversion and cycle the year closer lot contemplated strengthens the sales ratios it demand ability need we the new right our to original have things in family demand plan, friends get to acquisition. the anticipate the A add next fund our lead see learn that we need we over to as certainly the the accelerating XXXX. I do to we in as relates what as each and way. But forward. we now now on into But ramped and quarter can still right

Yes.

little is your fiscal do quarter about to for end think a Or the have hit quarter Okay, thinking the or the year? quarter we growth obviously, for Fed, the revenue the the the year should revenue third quarter then numbers? great. the And being just is flow throughout growth year, just about third sequential peak each

good do from We Mike. continue about are QX. that through That's it. to you. up Thanks actually to insight be a Yes. expect question, good up We for awards Josh. way And even This have out there. is some calendar ramping to to later into some things think year hear the going

So the expect I that in of also of but government between ramp federal QX the the continue necessarily awards through contracting it'll revenue, to the wouldn't or peak, is is some bound QX, because up even of think which QX. climb we the by Part government, budgeting think I necessarily that commercial isn't and cycle. of

I a ramp. think as So of steady it

As making we up bigger a and the revenue portion bigger see commercial of our overall revenue.

I in something on federal to steady we'll think as the well, through that's less that and continue up will. see ramp contracting future you that the if years year dependence cycle,

Right.

maybe Okay. this you that use a main winning on bit year? cases also, these And talk are percentage you driving kind XX of you are commercial. XX this driving win sort then or a are time deals? just like -- just get number, the little this And that Can rate the the of what about million, customers last million the of

Dyer. thanks Sure, for question. is Jeff Again, the this

how of many to On the ML their Children's get ProModel efficiency and healthcare understand best understand will put to requests of respect that for win use last to learn the the with pattern that through optimizing story only acquisition, question, type a the moving with today opportunity forward. impacted the seven part children whereby Hospital AI need and a we that in rate to incorporate medical the facility. of different direct a just care there's sales an hospitals studies and rate, more that be models Reggie for to really children's bit against children's the I the But your hospital annualized gave that one best that with not Colorado, on these is of legacy place which are We eight hospital of huge example figure different but than offensive think can a inherited ROIs in to win at impact that hospital sell hospitals understand to an talk pipeline We place been cycle there example, Anytime a is large cycles, to understand how the six-figure to in exciting in also higher can the accelerate half a value, the even type though the help sales. hospitals, but those there's year, patterns to motions test incumbent a is around to manufacturers, These time. offering six what best as to you we've our in but ourselves takes to is a that need second half accelerate establish that execute partners In of to leverage learn we of we back a figure for certain really of growth rate we're year, own buy able of theories are need we the from. and think opportunity conversion into us some at excited certainly the next certainly. as shipbuilders, to XXXX. of there head an for year our

this awards. just lead been that getting you are are Yes. to update more in anticipation dynamic? investments investments these year? And And I you can of give initial on guess that doing you've going contract know guess, just winning of I last kind on the I contracts federal some encouraged side. an to

Gordy on Yes, absolutely. This side. the is over federal Sam

contracts OTAs, talking you're round the of a the through But transactional do production, prototype from government they which, competition. other government, a contracts further the within on quickly authority that invest the require without to right, is, prototype are the to of go U.S. advantage So house. it about having very to allows side move

great the it's And a so a vehicle great government. It's us. vehicle for for

phase From MOE] with right system. both extremely the then through Army Both cases, efforts into one now. the our we're [GXX [ph] happy We is other are of [AIMs, G-X perspective, we're [ph] phase today. have with two. is those And two prototyping management ATEC] progress major the PEO. One modernization stage the and and underway moving in in the

lot a and forward side probably now And doing we've progress project teaming joint on with MOE] looking aware that's with there. encouraged of in about Palantir attention. a what putting certainly we're the [GXX together You're receiving the that talked we're [ph] we're to and

luck. Good Thanks. Okay.

remarks. closing back turn Thank like session. would I Reggie question-and-answer any concludes Dr. This the you. to to for call the Brothers

joining very our Thank call. the forward XXXX you first with progress. And us for reporting we to Thank time you you quarter talking earnings look next on on this much.

This Thank concludes you your much for participation. today's conference. very

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