How BBAI (BigBear.ai Holdings) Makes Money in 2026: A Deep-Dive With Income Statement

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Understanding how a AI-driven decision intelligence company like BigBear.ai makes money is essential for investors and anyone interested in the business of AI and analytics. In this post, we break down BigBear.ai's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

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Quick BigBear.ai Overview

BigBear.ai operates as a provider of AI-powered decision intelligence solutions, primarily serving government and commercial clients in defense, manufacturing, and logistics. Revenue comes from software licenses, professional services, and managed analytics platforms focused on data fusion and predictive analytics. No detailed revenue segments are broken out in the Q3 2025 filing, indicating a streamlined model centered on AI platforms.

Revenue Breakdown

• Total Revenue (Q3 2025): $33.1M (-20.1% YoY)
  • Core AI solutions and services: $33.1M (100% of total)
  • Growth is powered by expanding government contracts, though offset by a YoY revenue contraction amid market challenges in defense spending.

BigBear.ai's revenue reflects its focus on high-value AI applications, but the -20.1% YoY decline signals near-term headwinds in contract timing and sector demand. Despite this, the company maintains traction in mission-critical AI deployments.

Gross Profit and Margins

• Gross Profit: $7.4M (22.4% gross margin)
  • Cost of Revenue: $25.7M (-16.3% YoY)
  • BigBear.ai maintains moderate margins due to a mix of scalable software delivery and service-intensive implementations, with cost efficiencies from prior periods.
• Most costs come from personnel, cloud infrastructure, and data processing tied to AI platform operations.

The gross margin of 22.4% highlights BigBear.ai's ability to control direct costs even as revenue dipped, benefiting from a -16.3% YoY reduction in cost of revenue. This positions the company for margin expansion if revenue stabilizes.

Operating Income and Expenses

• Operating Income: Not specified (negative implied from expense levels)
• Operating Expenses: $28.6M (+34.4% YoY)
  • R&D: $3.4M (-11.6% YoY, 10.2% of revenue) — Investments in AI model enhancements, edge computing, and autonomous systems for defense applications.
  • SG&A: $25.3M (+44.4% YoY, 76.2% of revenue) — Driven by sales team expansion, marketing for commercial wins, and administrative scaling.
  • BigBear.ai continues to prioritize innovation while expanding operations to capture larger contracts, despite elevated SG&A pressures.

Operating expenses surged 34.4% YoY, outpacing revenue and pressuring profitability. R&D discipline (down 11.6% YoY) contrasts with aggressive SG&A growth, reflecting a push for market share in competitive AI sectors.

Net Income

• Pre-Tax Income: Not specified
• Income Tax: Not specified (N/A effective tax rate)
• Net Income: $2.5M (0.0% YoY, 7.6% net margin)
• BigBear.ai converts a moderate portion of sales into profit due to operational efficiencies and non-operating adjustments amid high fixed costs.

Achieving positive net income of $2.5M at a 7.6% margin despite revenue decline and rising opex demonstrates resilience, likely aided by cost controls and other income items.

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What Drives BigBear.ai's Money Machine?

• AI Decision Intelligence Platforms: 100% of revenue from core offerings like Veriato, Conductive AI, and Pangaea for real-time analytics.
• Contract Win Rate and Backlog: Key metric with government deals providing visibility, though Q3 revenue dip suggests lumpiness in bookings.
• R&D Investments: Focus on next-gen AI for autonomy and cybersecurity, comprising 10.2% of revenue to fuel differentiation.
• Commercial Expansion: Push into non-defense sectors like manufacturing, though not yet profitable at scale.

BigBear.ai's model hinges on recurring AI software revenue, with upside from federal contracts. "Other" expenses of $2.5M appear to offset losses, contributing to net profitability.

Visualizing BigBear.ai's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A) taking the largest chunk.
• Even after significant costs, 7.6% of revenue drops to the bottom line.

The visualization reveals heavy SG&A drag (76.2% of revenue) but positive net flow, underscoring BigBear.ai's path to profitability through cost discipline.

Key Takeaways

• BigBear.ai's money comes overwhelmingly from AI platforms and services
• High gross and net margins illustrate the power of BigBear.ai's scalable AI software model
• Heavy investment in R&D and sales, balanced by efficiency in cost of revenue
• Ongoing growth is driven by government contracts and commercial AI adoption

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FAQ About BigBear.ai's Income Statement

1. What is the main source of BigBear.ai's revenue in 2025?

BigBear.ai generates over 100% of its revenue from AI-powered decision intelligence platforms and services. No segmented breakdowns were provided, emphasizing a unified AI solutions model.

2. How profitable is BigBear.ai in Q3 2025?

BigBear.ai reported net income of $2.5M in Q3 2025, with a net margin of approximately 7.6%, reflecting moderate profitability driven by gross margin stability and non-operating offsets despite opex growth.

3. What are the largest expense categories for BigBear.ai?

The biggest expenses on BigBear.ai's income statement are operating expenses, particularly Research & Development (R&D) and Sales, General & Administrative (SG&A) costs. R&D investment reached $3.4M in Q3 2025, as BigBear.ai prioritizes AI enhancements for defense and autonomy.

4. Why does the core business operate under expense pressure?

The overall operations, despite generating $33.1M in revenue, faced high SG&A of $25.3M in Q3 2025. This is because BigBear.ai aggressively invests in sales expansion and commercial growth, believing these will drive long-term revenue—even if margins are pressured today.

5. How does BigBear.ai's effective tax rate compare to previous years?

BigBear.ai's effective tax rate in Q3 2025 was N/A (not specified). This reflects limited disclosure, potentially due to net operating loss carryforwards or minimal taxable income in the period.