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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission file number 001-40031

BigBear.ai Holdings, Inc.

(Exact name of registrant as specified in its charter)


Delaware						85-4164597
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)
7950 Jones Branch Drive, 1st Floor North Tower, McLean, VA						22102
(Address of Principal Executive Offices)						(Zip Code)
(410) 312-0885
Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $0.0001 par value

BBAI

New York Stock Exchange

Redeemable warrants, each full warrant exercisable for one share of common stock at an exercise price of $11.50 per share

BBAI.WS

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	o
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

There were 478,949,450 shares of our common stock, $0.0001 par value per share, outstanding as of May 1, 2026.

Table of Contents

BIGBEAR.AI HOLDINGS, INC.

Quarterly Report on Form 10-Q

March 31, 2026

TABLE OF CONTENTS


Item						Page
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)						3





Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations						34
Item 3. Quantitative and Qualitative Disclosures About Market Risk						46
Item 4. Controls and Procedures						47

PART II—OTHER INFORMATION						48
Item 1. Legal Proceedings						48
Item 1A Risk Factors						48
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.						48
Item 3. Defaults Upon Senior Securities.						48

Item 5. Other Information						48
Item 6. Exhibits						49

SIGNATURES						50

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

BigBear.ai Holdings, Inc. and Subsidiaries

Index to Condensed Consolidated Financial Statements


			Page Number


Condensed Consolidated Balance Sheets as of March 31, 2026, and December 31, 2025			4
Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2026 and 2025			5
Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Three Months Ended March 31, 2026 and 2025			6
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025			7
Notes to Condensed Consolidated Financial Statements
Note 1—Description of the Business			9
Note 2—Summary of Significant Accounting Policies			9
Note 3—Restructuring Charges			10
Note 4—Business Combinations			10
Note 5—Fair Value of Financial Instruments			12
Note 6—Investments in Debt Securities			14

Note 7—Goodwill			15
Note 8—Intangible Assets, net			15
Note 9—Prepaid Expenses and Other Current Assets			16
Note 10—Accrued Liabilities			16
Note 11—Debt			17
Note 12—Leases			19
Note 13—Income Taxes			20

Note 14—Commitments and Contingencies			20
Note 15—Stockholders’ Equity			21
Note 16—At-the-Money Offering			22
Note 17—Derivatives			22
Note 18—Equity-Based Compensation			26
Note 19—Net Loss Per Share			29
Note 20—Revenues			30
Note 21—Segments			32

Table of Contents

BIGBEAR.AI HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share and per share data)


	March 31, 2026		December 31, 2025
Assets
Current assets:
Cash and cash equivalents	$	100,704	$	87,126
Restricted cash	6,002		5,521
Available for sale investments, at fair value (amortized cost of $249,050 at March 31, 2026 and $200,468 at December 31, 2025)	248,682		200,461
Accounts receivable, less allowance for credit losses of $438 as of March 31, 2026 and $438 as of December 31, 2025	22,807		22,703
Contract assets	874		218
Prepaid expenses and other current assets	14,946		14,514
Total current assets	394,015		330,543
Non-current assets:
Property and equipment, net	1,736		1,562
Goodwill	238,737		241,100
Intangible assets, net	137,421		139,470
Available for sale investments, at fair value (amortized cost of $82,363 at March 31, 2026 and $173,789 at December 31, 2025)	82,066		173,949
Right-of-use assets	6,830		7,063

Other non-current assets	859		860
Total assets	$	861,664	$	894,547

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	4,234	$	6,088
Current portion of long-term debt, net	16,601		16,560
Accrued liabilities	15,568		19,649
Contract liabilities	11,272		14,756
Current portion of long-term lease liability	1,013		1,095
Derivative liabilities	9,982		116,906
Other current liabilities	6,094		10,466
Total current liabilities	64,764		185,520
Non-current liabilities:
Long-term debt, net	—		90,484
Long-term lease liability	6,495		6,673


Total liabilities	71,259		282,677

Commitments and contingencies (Note 14)

Stockholders’ equity
Common stock, par value $0.0001; 500,000,000 shares authorized and 477,014,064 shares issued and outstanding at March 31, 2026 and 446,908,458 shares issued and 436,955,655 shares outstanding at December 31, 2025	49		46
Additional paid-in capital	1,713,437		1,534,792

Treasury stock, at cost; zero shares at March 31, 2026 and 9,952,803 shares at December 31, 2025	—		(57,350)
Accumulated deficit	(922,318)		(865,555)
Accumulated other comprehensive loss	(763)		(63)
Total stockholders’ equity	790,405		611,870
Total liabilities and stockholders’ equity	$	861,664	$	894,547

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

BIGBEAR.AI HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited, in thousands, except share and per share data)


	Three Months Ended March 31,
		2026		2025
Revenues		$	34,435	$	34,757
Cost of revenues		22,714		27,369
Gross margin		11,721		7,388
Operating expenses:
Selling, general and administrative		29,225		22,732
Research and development		5,533		4,166
Restructuring charges		—		1,698
Transaction expenses		1,218		—


Operating loss		(24,255)		(21,208)
Interest expense		317		5,116
Interest income		(3,785)		(556)
Net increase in fair value of derivatives		20,125		33,336
Loss on extinguishment of debt		15,826		2,577
Other expense, net		11		280
Loss before taxes		(56,749)		(61,961)
Income tax expense		14		25
Net loss		$	(56,763)	$	(61,986)

Basic net loss per share		$	(0.12)	$	(0.25)
Diluted net loss per share		$	(0.12)	$	(0.25)

Weighted-average shares outstanding:
Basic		473,059,547		252,341,401
Diluted		473,059,547		252,341,401

Other comprehensive (loss) income
Change in unrealized gains and losses on available-for-sale securities
Unrealized losses on AFS investments, net of tax expense		(818)		—

Foreign currency translation		118		12
Total other comprehensive (loss) income		(700)		12
Total comprehensive loss		$	(57,463)	$	(61,974)

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

BIGBEAR.AI HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(unaudited, in thousands, except share data)


	Three Months Ended March 31, 2026
	Common stock			Additional		Acc. other		Treasury		Accumulated		Total stockholders’
	Shares	Amount		paid in capital		comprehensive loss		stock		deficit		equity
As of December 31, 2025	436,955,655	$	46	$	1,534,792	$	(63)	$	(57,350)	$	(865,555)	$	611,870
Net loss	—	—		—		—		—		(56,763)		(56,763)
Foreign currency translation adjustments, net of tax	—	—		—		118		—		—		118
Unrealized losses on available for sale investments, net	—	—		—		(818)		—		—		(818)
Equity-based compensation expense	—	—		3,423		—		—		—		3,423
Exercise of options	36,489	—		67		—		—		—		67

Issuance of shares for equity-based compensation awards, net	1,951,933	—		(850)		—		—		—		(850)

Issuance of shares upon conversion of 2029 Notes	38,069,987	3		233,355		—		—		—		233,358
Retirement of treasury stock	—	—		(57,350)		—		57,350		—		—



As of March 31, 2026	477,014,064	$	49	$	1,713,437	$	(763)	$	—	$	(922,318)	$	790,405



	Three Months Ended March 31, 2025
	Common stock			Additional		Acc. other		Treasury		Accumulated		Total stockholders’
	Shares	Amount		paid in capital		comprehensive Income		stock		deficit		(deficit) equity
As of December 31, 2024	251,554,378	$	26	$	625,130	$	121	$	(57,350)	$	(571,641)	$	(3,714)
Net loss	—	—		—		—		—		(61,986)		(61,986)
Foreign currency translation adjustments, net of tax	—	—		—		12		—		—		12
Equity-based compensation expense	—	—		7,400		—		—		—		7,400
Exercise of options	983,434	—		1,393		—		—		—		1,393
Issuance of shares for equity-based compensation awards, net	3,120,222	2		(1,318)		—		—		—		(1,316)
Proceeds from the exercise of the 2024 warrants	14,800,000	1		113,952		—		—		—		113,953
Issuance of shares upon conversion of 2029 Notes	16,658,335	2		135,597		—		—		—		135,599
Issuance of shares from at-the-market offering	1,936,000	—		6,454		—		—		—		6,454

As of March 31, 2025	289,052,369	$	31	$	888,608	$	133	$	(57,350)	$	(633,627)	$	197,795

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

BIGBEAR.AI HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Three Months Ended March 31,
	2026		2025
Cash flows from operating activities:
Net loss	$	(56,763)	$	(61,986)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense	7,081		3,470
Amortization of debt discount and issuance costs	41		2,764
Accretion of discount on investments in debt securities	(381)		—
Equity-based compensation expense	3,423		7,400



Non-cash lease expense	233		370
Provision for doubtful accounts	—		40

Loss on extinguishment of debt	15,826		2,577
Increase in fair value of derivatives	20,125		33,336

Changes in assets and liabilities:
(Increase) decrease in accounts receivable	(660)		4,348
(Increase) decrease in contract assets	(656)		383
(Increase) in prepaid expenses and other assets	(339)		(1,795)
Decrease in accounts payable	(1,984)		(4,163)
(Decrease) increase in accrued expenses	(534)		4,446
(Decrease) increase in contract liabilities	(3,450)		476
Increase in other liabilities	37		1,670
Net cash used in operating activities	(18,001)		(6,664)
Cash flows from investing activities:

Proceeds from maturities of investments in debt securities	43,225		—
Acquisition of businesses, net of cash acquired	(10,183)		—
Purchases of property and equipment	(319)		(80)
Capitalized software development costs	—		(1,540)
Net cash provided by (used in) investing activities	32,723		(1,620)
Cash flows from financing activities:

Proceeds from issuance of shares for exercised RDO and PIPE warrants	—		64,673

Payment of Private Placement and Registered Direct Offering transaction costs	—		(551)





Repayment of short-term borrowings	—		(366)
Proceeds from at-the-market offering	—		6,569
Payment of transaction costs for at-the-market offering	—		(115)

Payment of debt issuance costs to third parties	—		(4,342)


Proceeds from exercise of options	67		1,393
Payments of tax withholding from the issuance of common stock	(850)		(1,318)


Net cash (used in) provided by financing activities	(783)		65,943
Effect of foreign currency rate changes on cash, cash equivalents, and restricted cash	120		(190)
Net increase in cash, cash equivalents, and restricted cash	14,059		57,469
Cash, cash equivalents, and restricted cash at the beginning of the period	92,647		50,141
Cash, cash equivalents, and restricted cash at the end of the period	$	106,706	$	107,610











Supplemental schedule of non-cash investing and financing activities:
Issuance of common stock upon conversion of 2029 Notes	$	233,358	$	135,599
Issuance of common stock for paid-in-kind interest on 2029 Convertible Notes	$	—	$	4,095

Issuance of common stock for exercise of RDO and PIPE warrants, net of cash received	$	—	$	49,832





Reconciliation of cash, cash equivalents, and restricted cash:	March 31, 2026		December 31, 2025
Cash and cash equivalents	$	100,704	$	87,126
Restricted cash	6,002		5,521

BIGBEAR.AI HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Three Months Ended March 31,
	2026		2025
Cash, cash equivalents, and restricted cash at end of the period	$	106,706	$	92,647

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

Note 1—Description of the Business

BigBear.ai Holdings, Inc.’s (“BigBear.ai”, “BigBear.ai Holdings”, “BigBear” or the “Company”) mission is to help deliver clarity for the world’s most complex decisions. BigBear.ai is a leading provider of Edge AI-powered decision intelligence solutions for national security, supply chain management and digital identity. Customers and partners rely on BigBear.ai’s predictive analytics capabilities in highly complex, distributed, mission-based operating environments. We are a technology-led solutions organization, providing both software and services to our customers. Unless otherwise indicated, references to “we”, “us” and “our” refer collectively to BigBear.ai Holdings, Inc. and its consolidated subsidiaries.

Note 2—Summary of Significant Accounting Policies

Basis of Presentation

We prepared these accompanying unaudited condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of SEC Regulation S-X. Accordingly, they do not include all information and notes required by GAAP for complete financial statements. Amounts presented within the condensed consolidated financial statements and accompanying notes are presented in thousands of U.S. dollars unless stated otherwise, except for percentages, units, shares, per unit and per share amounts.

In the opinion of management, these condensed consolidated financial statements reflect all adjustments that are of a normal recurring nature necessary for a fair presentation of our results of operations, financial condition and cash flows for the interim periods presented. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We base these estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources.

Our actual results may differ materially from these estimates. Significant estimates inherent in the preparation of our condensed consolidated financial statements include, but are not limited to, accounting for revenue and cost recognition; evaluation of goodwill; intangible assets; and other assets for impairment; income taxes; equity-based compensation; fair value measurements; and contingencies. We eliminate intercompany balances and transactions in consolidation.

The results of operations for the interim periods presented are not necessarily indicative of results to be expected for the full year or future periods. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Recent Accounting Pronouncements

Recent Accounting Pronouncements Adopted

In July 2025, the FASB issued Accounting Standards Update 2025-05, Financial Instruments - Credit Losses - Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). ASU 2025-05 provides a practical expedient that all entities can use when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue from Contracts with Customers. Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable and current contract assets remain unchanged for the remaining life of those assets. The Company adopted ASU 2025-05 prospectively for interim and annual periods on January 1, 2026. The adoption of ASU 2025-05 did not have a material impact on the Company’s financial statements and disclosures.

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

Note 3—Restructuring Charges

The following table presents the employee separation costs, net of tax, associated with the Company’s organizational restructuring for the following periods, as well as the unpaid employee separation costs remaining related to the organizational restructurings at the end of each period:


	Three Months Ended March 31,
		2026		2025
Employee separation costs		$	—	$	1,698

		As of
		March 31, 2026		March 31, 2025
Unpaid employee separation costs		$	250	$	1,105

The table below presents the activity in accrued restructuring charges for the three months ended March 31, 2026:


	Total












As of December 31, 2025	$	619
Additions	—
Settlements	(369)
As of March 31, 2026	$	250

The restructuring expenses for all periods presented are recorded in the restructuring charges line on the condensed consolidated statements of operations and comprehensive loss. The restructuring accrual is included in the other current liabilities line in the condensed consolidated balance sheets.

Note 4—Business Combinations

Ask Sage Acquisition

On December 31, 2025, pursuant to the agreement and plan of merger (“Ask Sage Merger Agreement”), dated November 10, 2025, by and among Atlas 2025 Merger Sub, Inc., a Delaware corporation and a direct wholly-owned subsidiary of the Company (“Ask Sage Merger Sub”) and Ask Sage, Inc., a Delaware corporation (“Ask Sage” or “Seller”) and Shareholder Representative Services LLC, a Colorado limited liability company solely in its capacity as the representative of the Ask Sage securityholders, pursuant to which, among other matters, Ask Sage Merger Sub merged with and into Ask Sage with Ask Sage Merger Sub ceasing to exist and Ask Sage surviving as a wholly-owned subsidiary of the Company (“Ask Sage Merger”).

Purchase consideration for the Ask Sage Merger and the related transactions as contemplated by the Ask Sage Merger Agreement of $272.1 million, which was subject to customary adjustments for indebtedness, cash, working capital and transaction expenses, was comprised of $262.4 million of cash paid at closing of the Ask Sage Merger, $5.2 million of cash paid shortly after closing, and $4.5 million withheld under the terms of the Ask Sage Merger Agreement at the time of the closing to cover any post-closing adjustments to the purchase price (“Adjustment Escrow Amount”). The Company is required to segregate the Adjustment Escrow Amount from its corporate funds and is restricted from using it for operating expenses or any other corporate purposes. The cash withheld for the Adjustment Escrow Amount is presented in restricted cash on the Company’s condensed consolidated balance sheets at March 31, 2026. The Adjustment Escrow Amount is presented in other current liabilities on the Company’s condensed consolidated balance sheets at March 31, 2026.

The following table summarizes the fair value of the consideration transferred and the fair values of the major classes of assets acquired and liabilities assumed as of the acquisition date. These fair values were based on management’s estimates and assumptions; however, certain working capital amounts, income taxes, and residual goodwill remain preliminary and are subject to adjustment as additional information is obtained about the facts and circumstances that existed as of the acquisition date. The final determination of the fair values, related income tax impacts and residual goodwill will be completed as soon as practicable, and within the measurement period of up to one year from the acquisition date as permitted under GAAP. Any adjustments to provisional amounts that are identified during the measurement period will be recorded in the reporting period in which the

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

adjustment is determined.


	December 31, 2025		Measurement period adjustments(1)		December 31, 2025, as reported at March 31, 2026
Cash paid at closing	$	262,443	$	—	$	262,443
Deferred consideration	5,183		—		5,183
Adjustment Escrow Amount	4,000		515		4,515
Purchase consideration	$	271,626	$	515	$	272,141
Assets:
Cash	$	33,418	$	—	$	33,418
Accounts receivable	1,331		(553)		778
Prepaid expenses and other current assets	256		92		348


Intangible assets	84,290		—		84,290

Total assets acquired	$	119,295	$	(461)	$	118,834
Liabilities:
Accounts payable	3,354		105		3,459

Accrued expenses	3,675		(3,410)		265
Contract liabilities	11,622		(34)		11,588
Other current liabilities	13		—		13


Deferred tax liabilities	21,660		—		21,660
Total liabilities acquired	$	40,324	$	(3,339)	$	36,985
Fair value of net identifiable assets acquired	78,971		2,878		81,849
Goodwill	$	192,655	$	(2,363)	$	190,292

(1) Includes adjustments to net working capital and the estimated income tax provision.

The following table summarizes the intangible assets acquired by class and the weighted-average estimated useful lives:


	December 31 2025		Weighted-average estimated useful lives
Technology	$	65,220	7 years
Licenses and certifications	5,990		7 years
Customer relationships	12,785		3 years
Trade names	295		1 year
Total intangible assets	$	84,290

The fair value of the acquired technology and trade name was determined using the relief from royalty (“RFR”) method. The fair value of the acquired customer relationships was determined using the excess earnings method. The fair value of the acquired licenses and certifications was determined using the cost replacement method.

The acquisition was accounted for as a business combination, whereby the excess of the purchase consideration over the fair value of identifiable net assets was allocated to goodwill. The goodwill reflects the potential synergies and expansion of the Company’s offerings across product lines and markets complementary to its existing products and markets. For tax purposes, the goodwill related to the acquisition is not deductible.

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

The following table presents the net revenues, net loss and transaction expenses related to the Ask Sage Merger included in the results of operations for the following period:



	Three Months Ended March 31, 2026

Revenues		$	6,144
Net loss		(551)

Transaction expenses related to the Ask Sage Merger		388

Pro Forma Financial Data (Unaudited)

The following table presents the pro forma consolidated results of operations of BigBear.ai for the three months ended March 31, 2025, as though the acquisition of Ask Sage had been completed as of January 1, 2024.


	Three Months Ended March 31, 2025

Revenues		$	36,320
Net loss		(66,685)

The amounts included in the pro forma information are based on the historical results and do not necessarily represent what would have occurred if the Ask Sage business combination had taken place as of January 1, 2024, nor do they represent the results that may occur in the future. Accordingly, the pro forma financial information should not be relied upon as being indicative of the results that would have been realized had the acquisition occurred as of the date indicated or that may be achieved in the future.

Transaction expenses of $2.2 million attributable to the acquisition of Ask Sage have been recorded in the pro forma results for the three months ended March 31, 2025.

Acquisition of CargoSeer

On January 16, 2026, the Company acquired certain assets and liabilities of CargoSeer Ltd (“CargoSeer”), an Israel-based leader in unified AI decision support technology for customs and border operations. Purchase consideration for the acquisition of CargoSeer of $5.0 million, which was subject to net working capital adjustments for indebtedness, was paid in cash during the three months ended March 31, 2026. The acquisition was accounted for as a business combination, whereby the excess of the purchase consideration over the fair value of identifiable net assets was allocated to goodwill. The preliminary fair value of the assets acquired and liabilities assumed is primarily comprised of acquired technology intangible assets of $4.5 million with an estimated useful life of seven years and customer relationships intangible assets of $0.5 million with an estimated useful life of four years. The acquired net working capital balances and goodwill are immaterial.

The net revenues and net loss included in the results of operations are immaterial for the three months ended March 31, 2026. The pro forma results of operations of the Company would not be materially different as a result of the acquisition of CargoSeer and therefore are not presented. Transaction expenses of $0.6 million attributable to the acquisition of CargoSeer have been recorded in the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2026.

Note 5—Fair Value of Financial Instruments

Cash and cash equivalents, restricted cash, accounts receivable, prepaid expenses and other current assets, accounts payable, short-term debt, accrued liabilities and other current liabilities are reflected on the condensed consolidated balance sheets at amounts that approximate fair value because of the short-term nature of these financial assets and liabilities.

Certain warrants that were issued at BigBear.ai’s initial public offering (“IPO Private Warrants”), warrants issued in BigBear.ai’s 2023 and 2024 private placement warrants (“PIPE Warrants”), and warrants issued in BigBear.ai’s 2023, 2024 and 2025 registered direct offering warrants (“RDO Warrants”) are valued using a modified Black-Scholes option pricing model (“OPM”). The conversion options of the 2026 Convertible Notes (“2026 Notes Conversion Option”) and 2029 Convertible Notes (“2029 Notes Conversion Option”) are valued using a binomial lattice convertible bond model and discounted cash flow method,

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

considering the traded price of the 2026 Convertible Notes and 2029 Convertible Notes, respectively, and other unobservable input assumptions. The 2026 Notes Conversion Option, 2029 Notes Conversion Option, IPO Private Warrants, PIPE Warrants and RDO Warrants are considered to be Level 3 fair value measurements. See Note 17—Derivatives for information on the Level 3 inputs used to value the IPO Private Warrants, PIPE Warrants, RDO Warrants, 2026 Notes Conversion Option, and the 2029 Notes Conversion Option.

Valuations of available for sale investments are provided by independent pricing service providers who have experience in valuing these securities and are compared to the average of quoted market prices obtained from independent brokers. These fair value measurements based on quoted prices in markets that are not active or for which all significant inputs are observable, directly or indirectly, and are considered to be Level 2 fair value measurements.

The table below presents the financial assets and liabilities measured at fair value:


		March 31, 2026
	Balance Sheet Caption	Level 1		Level 2		Level 3		Total
Recurring fair value measurements:
Available for sale investments	Available for sale investments	$	—	$	330,748	$	—	$	330,748


2025 RDO Warrants	Derivative liabilities	—		—		9,612		9,612
IPO Private Warrants	Derivative liabilities	—		—		37		37
2026 Notes Conversion Option	Derivative liabilities	—		—		333		333
2029 Notes Conversion Option	Derivative liabilities	—		—		—		—
Total recurring fair value measurements:		$	—	$	330,748	$	9,982	$	340,730

Nonrecurring fair value measurement:
Goodwill	Goodwill	$	—	$	—	$	238,737	$	238,737


		December 31, 2025
	Balance Sheet Caption	Level 1		Level 2		Level 3		Total


Recurring fair value measurements:

Available for sale investments	Available for sale investments	$	—	$	374,410	$	—	$	374,410


2025 RDO Warrants	Derivative liabilities	—		—		16,437		16,437
IPO Private Warrants	Derivative liabilities	—		—		128		128
2026 Notes Conversion Option	Derivative liabilities	—		—		1,585		1,585
2029 Notes Conversion Option	Derivative liabilities	—		—		98,756		98,756
Total recurring fair value measurements:		$	—	$	374,410	$	116,906	$	491,316

Nonrecurring fair value measurement:
Goodwill	Goodwill	$	—	$	—	$	241,100	$	241,100

The changes in the fair value of the Level 3 liabilities are as follows:



	2025 RDO warrants		IPO private warrants		2026 Notes Conversion Option		2029 Notes Conversion Option




















December 31, 2025	$	16,437	$	128	$	1,585	$	98,756
Additions	—		—		—		—
Changes in fair value	(6,825)		(91)		(1,252)		28,293
Settlements	—		—		—		(127,049)
March 31, 2026	$	9,612	$	37	$	333	$	—

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

Note 6—Investments in Debt Securities

The Company’s investments in debt securities comprise U.S. Treasury securities and corporate bonds and are classified as available for sale (“AFS”), and recorded at fair value. Unrealized gains and losses on AFS investments, net of applicable taxes, are reported in other comprehensive (loss) income.

The table below summarizes the Company’s AFS investments:


	March 31, 2026
	Amortized cost		Allowance for credit losses		Gross unrealized gains		Gross unrealized losses			Fair value
U.S. Treasury securities	$	113,202	$	—	$	—	$	(156)		$	113,046
Corporate bonds	218,211		—		6		(515)			217,702

Total	$	331,413	$	—	$	6	$	(671)		$	330,748

	December 31, 2025
	Amortized cost		Allowance for credit losses		Gross unrealized gains		Gross unrealized losses			Fair value
U.S. Treasury securities	$	131,229	$	—	$	123	$	(2)		$	131,350
Corporate bonds	243,028		—		129		(97)			243,060

Total	$	374,257	$	—	$	252	$	(99)		$	374,410


							March 31, 2026			December 31, 2025
Weighted-average yield of AFS investments							4.13		%	3.85		%

Interest income on the AFS investments of $3.4 million was recognized during the three months ended March 31, 2026, and is presented in interest income on the condensed consolidated statements of operations and comprehensive loss. There were no sales of AFS investments during the three months ended March 31, 2026.

The Company had no investments in debt securities during the three months ended March 31, 2025.

The table below presents the contractual maturity by major class of AFS investments. In some cases, the issuers may have the right to call obligations without penalties prior to the contractual maturity date.


	March 31, 2026
	Within 1 year				1 to 5 years				Total
Balance sheet caption:	Available for sale investments (current assets)					Available for sale investments (non-current assets)
	Amortized cost		Fair value				Amortized cost		Fair value		Amortized cost		Fair value
U.S. Treasury securities	$	72,054	$	72,017			$	41,148	$	41,029	$	113,202	$	113,046
Corporate bonds	176,996		176,665				41,215		41,037		218,211		217,702

Total	$	249,050	$	248,682			$	82,363	$	82,066	$	331,413	$	330,748

	December 31, 2025
	Within 1 year				1 to 5 years				Total
Balance sheet caption:	Available for sale investments (current assets)					Available for sale investments (non-current assets)
	Amortized cost		Fair value				Amortized cost		Fair value		Amortized cost		Fair value
U.S. Treasury securities	$	72,075	$	72,116			$	59,154	$	59,234	$	131,229	$	131,350
Corporate bonds	128,393		128,345				114,635		114,715		243,028		243,060

Total	$	200,468	$	200,461			$	173,789	$	173,949	$	374,257	$	374,410

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

Note 7—Goodwill

There were no goodwill impairment charges recorded during the three months ended March 31, 2026 and March 31, 2025. Accumulated impairment losses to goodwill were $209.2 million as of March 31, 2026.

The table below presents the changes in carrying amount of goodwill:








As of December 31, 2025	$	241,100
Measurement period adjustments to goodwill arising from the acquisition of Ask Sage(1)	(2,363)


As of March 31, 2026	$	238,737

(1) Refer to Note 4—Business Combinations for details on the measurement period adjustments to goodwill.

Note 8—Intangible Assets, net

The intangible asset balances, accumulated amortization, and accumulated impairment are as follows:



	March 31, 2026
	Gross carrying amount		Accumulated amortization		Accumulated impairment		Impact of foreign currency translation		Net carrying amount		Weighted average useful life in years
Customer relationships	$	109,555	$	(22,232)	$	(43,264)	$	—	$	44,059	15.3
Licenses and certifications	5,990		(214)		—		—		5,776		7.0
Technology	110,755		(25,471)		(9,547)		—		75,737		7.0
Software for sale	18,381		(7,101)		—		(109)		11,171		3.0
Trade name	1,855		(585)		(592)		—		678		3.7
Total	$	246,536	$	(55,603)	$	(53,403)	$	(109)	$	137,421


	December 31, 2025
	Gross carrying amount		Accumulated amortization		Accumulated impairment		Impact of foreign currency translation		Net carrying amount		Weighted average useful life in years
Customer relationships	$	109,055	$	(20,650)	$	(43,264)	$	—	$	45,141	15.2
Licenses and certifications	5,990		—		—		—		5,990		7.0
Technology	106,255		(22,282)		(9,547)		—		74,426		7.0
Software for sale	18,020		(5,258)		—		361		13,123		3.0
Trade name	1,855		(473)		(592)		—		790		3.5
Total	$	241,175	$	(48,663)	$	(53,403)	$	361	$	139,470

The table below presents all amortization and impairment expense related to all intangible assets as well as amortization expense related to capitalized software for the following periods:


	Three Months Ended March 31,
		2026		2025
Amortization expense related to intangible assets		$	6,940	$	3,350


Amortization expense related to capitalized software		$	1,844	$	625

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

The table below presents the estimated amortization expense on intangible assets for the next five years and thereafter as of March 31, 2026:


Remainder of 2026	$	20,743
2027	24,492
2028	20,862
2029	14,161
2030	13,882
Thereafter	43,281
Total estimated amortization expense	$	137,421

Note 9—Prepaid Expenses and Other Current Assets

The table below presents details on prepaid expenses and other current assets:



	March 31, 2026		December 31, 2025
Pre-contract costs(1)	$	4,633	$	3,274
Accrued interest receivable	2,552		4,125
Prepaid insurance	2,141		2,270
Prepaid marketing	2,069		1,697
Prepaid software and subscriptions	1,973		2,322

Other prepaid expenses	1,578		826
Total prepaid expenses and other current assets	$	14,946	$	14,514

(1) Costs incurred to fulfill a contract in advance of the contract being awarded are included in prepaid expenses and other current assets if we determine that those costs relate directly to a contract or to an anticipated contract that we can specifically identify and contract award is probable, the costs generate or enhance resources that will be used in satisfying performance obligations, and the costs are recoverable (referred to as pre-contract costs).

Note 10—Accrued Liabilities

The table below presents details on accrued liabilities:



	March 31 2026		December 31 2025
Payroll accruals(1)	$	13,959	$	12,090
Accrued interest	621		356
Legal accruals	250		275
Other accrued expenses	738		6,928

Total accrued liabilities	$	15,568	$	19,649

(1) Inclusive of employer portion of taxes related to the vesting of equity awards and accrued subcontractor labor.

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

Note 11—Debt

The table below presents the Company’s debt balances:



	March 31 2026		December 31, 2025
2026 Convertible Notes	$	17,668	$	17,668
2029 Convertible Notes	—		124,605




Total debt	17,668		142,273


Less: unamortized debt issuance discount and costs	1,067		35,229
Total debt, net	16,601		107,044
Less: current portion	16,601		16,560
Long-term debt, net	$	—	$	90,484

2026 Convertible Notes

On December 7, 2021, the Company issued $200.0 million of unsecured convertible notes (the “2026 Convertible Notes”) to certain investors. The 2026 Convertible Notes bear interest at a rate of 6.0% per annum, payable semi-annually, and not including any interest payments that are settled with the issuance of shares, were initially convertible into 17,391,304 shares of the Company’s common stock at an initial conversion price of $11.50 (the “Conversion Price”). The Conversion Price is subject to adjustments. On May 29, 2022, pursuant to the 2026 Convertible Notes indenture, the conversion rate applicable to the 2026 Convertible Notes was adjusted to 94.2230 (previously 86.9565) shares of common stock per $1,000 principal amount of 2026 Convertible Notes because the average of the daily volume-weighted average price of the common stock during the preceding 30 trading days was less than $10.00 (the “Conversion Rate Reset”). After giving effect to the Conversion Rate Reset, the Conversion Price is $10.61 and the 2026 Convertible Notes are convertible into 18,844,600 shares, not including any interest payments that are settled with the issuance of shares. The 2026 Convertible Note financing matures on December 15, 2026.

The Company may, at its election and subject to certain conditions, force conversion of the 2026 Convertible Notes after December 15, 2022 and prior to October 7, 2026 if the trading price of the Company’s common stock exceeds 130% of the conversion price for 20 out of the preceding 30 trading days and the 30-day average daily trading volume ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to $3.0 million for the first two years after the initial issuance of the 2026 Convertible Notes and $2.0 million thereafter. In connection with such forced conversion, the conversion rate for the 2026 Convertible Notes will be increased but no Interest Make-Whole Payment (as defined below) will be made in connection with such forced conversion. In the event that a holder of the 2026 Convertible Notes elects to convert the 2026 Convertible Notes (a) prior to December 15, 2024, the Company will be obligated to pay an amount equal to twelve months of interest or (b) on or after December 15, 2024 but prior to December 15, 2025, any accrued and unpaid interest plus any remaining amounts that would be owed up to, but excluding, December 15, 2025 (such interest payments, “Interest Make-Whole Payments”). The Interest Make-Whole Payments will be payable in cash or shares of the common stock, depending on the average of the daily volume-weighted average price per share of the Company’s common stock for a specified period immediately prior to such conversion, as set forth in the Indenture.

Following certain corporate events that occur prior to the maturity date or if the Company exercises its mandatory conversion right, the conversion rate will be increased in certain circumstances for a holder who elects, or has been forced, to convert its 2026 Convertible Notes in connection with such corporate events or such mandatory conversion.

If a Fundamental Change (as defined in the 2026 Convertible Notes indenture) occurs prior to the maturity date, holders of the 2026 Convertible Notes will have the right to require the Company to repurchase all or any portion of their 2026 Convertible Notes in principal amounts of one thousand dollars or an integral multiple thereof, at a repurchase price equal to the principal amount of the 2026 Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date.

On May 29, 2022, pursuant to the conversion rate adjustment provisions in the indenture, governing the 2026 Convertible Notes, the Conversion Price was adjusted to $10.61 (or 94.2230 shares of common stock per one thousand dollars of principal amount of Convertible Notes). Subsequent to the adjustment, the 2026 Convertible Notes are convertible into 18,844,600 shares, not including any interest payments that are settled with the issuance of shares.

The 2026 Convertible Notes require the Company to meet certain financial and other covenants. As of March 31, 2026, the

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

Company was in compliance with all covenants related to the 2026 Convertible Notes.

The 2026 Convertible Notes contain conversion features that meet the definition of a derivative and require separate accounting treatment from the debt host. Refer to Note 17—Derivatives for more information on the 2026 Notes Conversion Option.

The following table presents the carrying amounts and fair values associated with the 2026 Convertible Notes as of March 31, 2026. The fair value of the 2026 Convertible Notes is considered to be a Level 3 fair value measurement.


	Outstanding balance		Unamortized issuance costs and debt discount		Carrying value		Fair value
2026 Convertible Notes	$	17,668	$	(1,067)	$	16,601	$	17,194

2029 Convertible Notes

On December 19, 2024, the Company entered into privately negotiated exchange agreements (each, an “Exchange Agreement”) with a limited number of holders of the Company’s 2026 Convertible Notes, to exchange the 2026 Convertible Notes for new senior secured convertible notes due 2029 (the “2029 Convertible Notes”, together with the 2026 Convertible Notes, the “Convertible Notes”). The Company exchanged (the “Exchange Transaction”) approximately $124.6 million principal amount of the 2026 Convertible Notes for $182.3 million in aggregate principal amount of the Company’s 2029 Convertible Notes and approximately $0.4 million in cash, with such cash payment representing the accrued and unpaid interest on the 2026 Convertible Notes at the time of the Exchange Transaction. The 2029 Convertible Notes bear interest at a rate of (i) 6.0% per annum, if interest is paid in cash and (ii) 7.0% per annum, if the Company elects, subject to certain conditions, to pay interest in kind with shares of its common stock. To the extent that the certain liquidity conditions of the Company and its subsidiaries are not satisfied as of the last business day of any calendar month, then with respect to the period applicable to the interest payment date immediately following the month in which such liquidity condition is not satisfied, the interest rate will be (i) 9.00% per annum, if interest is paid in cash and (ii) 10.00% per annum, if the Company elects, subject to certain conditions, to pay interest in kind with shares of its common stock (it being understood that such increased rate shall apply solely for such six-month period applicable to such interest payment date). Interest is payable semi-annually. The conversion rate is 281.4491 shares of common stock per $1,000 principal amount of 2029 Convertible Notes, which represents an initial conversion price of $3.55 per share of the Company’s common stock. The conversion rate and the conversion price are subject to adjustments. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the 2029 Convertible Notes Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time.

The exchange was accounted for as an extinguishment of the 2026 Convertible Notes and the 2029 Convertible Notes were recognized at fair value, which approximated the carrying amount of the principal balances exchanged. For the year ended December 31, 2024, the Company recognized a loss on extinguishment of $31.3 million on the consolidated statements of operations related to the unamortized debt issuance costs of the exchanged 2026 Convertible Notes. The Company was in compliance with all covenants through the extinguishment of the exchanged 2026 Convertible Notes.

The 2029 Convertible Notes were issued pursuant to, and are governed by, an indenture (the “2029 Convertible Notes Indenture”), dated as of December 27, 2024. The 2029 Convertible Notes will be fully and unconditionally guaranteed, on a senior, secured basis, by the Company and certain of its existing and future direct and indirect subsidiaries, subject to certain exceptions (the “Guarantors”), and will initially be secured on a first-priority basis by substantially all assets of the Company and such Guarantors, subject to certain exceptions.

Upon completion of the Exchange Transaction, the aggregate principal amount of the 2026 Convertible Notes outstanding was $17.7 million. The Company did not receive any cash proceeds from the issuance of the 2029 Convertible Notes pursuant to the Exchange Transactions.

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

interest, as provided by the terms of the Exchange Agreement. All of the 2029 Convertible Notes, with a par value of $124.6 million, were voluntarily converted by noteholders prior to the Redemption Date. These conversions resulted in the issuance of approximately 38.1 million shares of common stock in exchange for the retirement of the respective notes.

Holders who converted their 2029 Convertible Notes were also entitled to an interest make-whole payment of up to 7.5% of the aggregate principal amount of notes converted, subject to reduction as further described in the 2029 Convertible Notes Indenture. Interest make-whole payments were paid in cash and shares of common stock, depending on the average of the daily volume-weighted average price per share of the Company’s common stock for a specified period immediately prior to the conversion. Payment of the interest make-whole in shares was at a price equal to 95% of such average of the daily volume-weighted average price.

The 2029 Convertible Notes contained conversion features that met the definition of a derivative and required separate accounting treatment from the debt host. Refer to Note 17—Derivatives for more information on the 2029 Notes Conversion Option.

The table below summarizes the components of interest expense for the following periods:


	Three Months Ended March 31,
		2026		2025
Contractual interest expense		$	276	$	2,352
Amortization of debt discount and deferred financing costs		41		2,764
Total interest expense		$	317	$	5,116

Note 12—Leases

The Company is obligated under operating leases for certain real estate and office equipment assets. The Company’s finance leases are not material. Certain leases contained predetermined fixed escalation of minimum rents at rates ranging from 2.5% to 10.0% per annum and remaining lease terms of up to ten years, some of which include renewal options that could extend certain leases to up to an additional five years.

The following table presents supplemental information related to leases:


	March 31, 2026		March 31, 2025
Weighted average remaining lease term (years)	6.97		7.93
Weighted average discount rate	14.66	%	13.58	%

The table below summarizes total lease costs for the following periods:


	Three Months Ended March 31,
		2026		2025



Operating lease expense		$	504	$	677
Variable lease expense		78		95
Short-term lease expense		15		—
Lease expense		$	597	$	772

	Three Months Ended March 31,
		2026		2025
Sublease income (1)		$	118	$	27

(1) As of March 31, 2026 and March 31, 2025, the Company has subleased three and three of its real estate leases, respectively.

The following table presents supplemental cash flow and non-cash information related to leases:


	Three Months Ended March 31,
		2026		2025
Cash paid for amounts included in the measurement of lease liabilities - operating cash flows from leases		$	532	$	605
Right-of-use assets obtained in exchange for lease obligations - non-cash activity		$	—	$	—

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

As of March 31, 2026, the future annual minimum lease payments for operating leases are as follows:


Remainder of 2026	$	1,638
2027	1,556
2028	1,523
2029	1,553
2030	1,773
Thereafter	4,219
Total future minimum lease payments	$	12,262
Less: amounts related to imputed interest	4,754
Present value of future minimum lease payments	7,508
Less: current portion of long-term lease liability	1,013
Long-term lease liability	$	6,495

Note 13—Income Taxes

The table below presents the effective income tax rate for the following periods:


	Three Months Ended March 31,
		2026		2025









Effective tax rate		—	%	—	%

The Company was taxed as a corporation for federal, state and local income tax purposes for the three months ended March 31, 2026 and March 31, 2025. The effective tax rate for the three month periods ended March 31, 2026 and March 31, 2025 differ from the U.S. federal income tax rate of 21.0% primarily due to foreign, state, and local income taxes, permanent differences between book and taxable income, certain discrete items, and the change in valuation allowance.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. We have assessed its impact on our financial statements and OBBBA did not have a material impact on our financial statements.

Note 14—Commitments and Contingencies

Contingencies in the Normal Course of Business

Under certain contracts with the U.S. government and certain governmental entities, contract costs, including indirect costs, are subject to audit by and adjustment through negotiation with governmental representatives. Revenue is recorded in amounts expected to be realized on final settlement of any such audits.

Legal Proceedings

The Company is subject to litigation, claims, investigations and audits arising from time to time in the ordinary course of business. Although legal proceedings are inherently unpredictable, the Company intends to defend itself vigorously with respect to any matters currently pending against it. The outcome of these matters, individually and in the aggregate, is not expected to have a material impact on the Company’s consolidated balance sheets, consolidated statements of operations, or cash flows. As of March 31, 2026, the Company has accrued $0.3 million related to various ongoing legal disputes. The $0.3 million balance as of March 31, 2026, reflects management’s best estimate as of that date and is net of any anticipated amounts recoverable through insurance.

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

Note 15—Stockholders’ Equity

Common Stock

The table below presents the details of the Company’s authorized common stock as of the following periods:



	March 31, 2026		December 31, 2025
Common stock:
Authorized shares of common stock	500,000,000		500,000,000
Common stock par value per share	$	0.0001	$	0.0001
Common stock outstanding at the period end	477,014,064		436,955,655

Treasury Stock

These shares are measured at cost and presented as treasury stock on the condensed consolidated balance sheets and condensed consolidated statements of stockholders’ equity (deficit).

During the three months ended March 31, 2026, we retired 9,952,803 shares of treasury stock. As a result of this retirement, we reclassified a total of $57.4 million from treasury stock to additional paid-in capital, on the condensed consolidated balance sheets and condensed consolidated statements of stockholders’ equity (deficit).

Dividend Rights

Subject to applicable law and the rights, if any, of the holders of any outstanding series of the Company’s preferred stock or any class or series of stock having a preference over or the right to participate with the Company’s common stock with respect to the payment of dividends, dividends may be declared and paid ratably on the Company’s common stock out of the assets of the Company that are legally available for this purpose at such times and in such amounts as the Company’s Board of Directors (the “Board”) in its discretion shall determine.

Voting Rights

Each outstanding share of the Company’s common stock is entitled to one vote on all matters submitted to a vote of stockholders. Holders of shares of common stock do not have cumulative voting rights.

Conversion or Redemption Rights

The Company’s common stock is neither convertible nor redeemable.

Liquidation Rights

Upon the Company’s liquidation, the holders of the Company’s common stock are entitled to receive pro rata the Company’s assets that are legally available for distribution, after payment of all debts and other liabilities and subject to the prior rights of any holders of the Company’s preferred stock then outstanding.

Preferred Stock

The table below presents the details of the Company’s authorized preferred stock as of the following periods:



	March 31, 2026		December 31, 2025
Preferred stock:
Authorized shares of preferred stock	1,000,000		1,000,000
Preferred stock par value per share	$	0.0001	$	0.0001
Preferred stock outstanding at the period end	—		—

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

The Company’s Board may, without further action by the Company’s stockholders, from time to time, direct the issuance of shares of preferred stock in series and may, at the time of issuance, determine the designations, powers, preferences, privileges and relative participating, optional or special rights as well as the qualifications, limitations or restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights of the Company’s common stock. Satisfaction of any dividend preferences of outstanding shares of the Company’s preferred stock would reduce the amount of funds available for the payment of dividends on shares of the Company’s common stock. Upon the affirmative vote of a majority of the total number of directors then in office, the Company’s Board may issue shares of the Company’s preferred stock with voting and conversion rights which could adversely affect the holders of shares of the Company’s common stock.

Note 16—At-the-Market Offering

In April 2023, the Company filed an automatic shelf registration statement on Form S-3 (the “2023 Shelf Registration Statement”) with the SEC registering an indeterminate amount of its common stock, preferred stock, warrants, rights, and units (collectively, “Company securities”), which the SEC declared effective on April 21, 2023. Pursuant to the Company’s controlled equity offering agreement (the “Controlled Equity Offering Agreement”) dated as of May 10, 2024, with Cantor Fitzgerald & Co. (“Cantor”), as sales agent, under an “at the market” offering program (the “ATM Program”), the Company agreed to pay commissions to Cantor as its sales agent for their service with respect to the sales of common stock through the ATM Program.

Pursuant to the Controlled Equity Offering Agreement, the Company may offer and sell common stock having an aggregate offering price of up to $150.0 million from time to time to or through Cantor, subject to the Company’s compliance with applicable laws and the applicable requirements of the Controlled Equity Offering Agreement. The Controlled Equity Offering Agreement stipulates that the Company will pay Cantor a commission of up to 3.0% of the gross offering proceeds of any shares of common stock sold to or through Cantor pursuant to the Controlled Equity Offering Agreement. The Company intends to use the net proceeds from sales of common stock issued under the ATM Program for general corporate and working capital purposes. The timing of any sales and the number of shares sold will depend on a variety of factors to be determined and considered by the Company. The Company is not obligated to sell any shares under the Controlled Equity Offering Agreement.

During the three months ended March 31, 2025, the Company sold 1,936,000 shares of common stock under the ATM Program for an aggregate offering price of $6.6 million. Total issuance costs related to the ATM Program were approximately $0.1 million, resulting in aggregate net proceeds of approximately $6.5 million during the three months ended March 31, 2025.

During the remainder of the year ended December 31, 2025, the Company filed various prospectus supplements to the 2023 Shelf Registration Statement which allowed the Company to sell, from time to time and at its discretion, Company securities having an aggregate offering price of up to $487.1 million including shares of common stock that may be sold pursuant to the Company’s Controlled Equity Offering Agreement (the “Sales Agreements”). During the remainder of the year ended December 31, 2025, the Company sold 140,317,313 shares of common stock under the Sales Agreements for an aggregate offering price of $630.5 million. Total issuance costs related to the ATM Program were approximately $8.2 million, resulting in aggregate net proceeds of approximately $622.3 million.

The sales commissions and expenses related to each of the above Common Stock ATM Offerings are considered direct and incremental costs and are charged against additional paid-in capital on the condensed consolidated balance sheets in the period in which the corresponding shares are issued and sold.

As of March 31, 2026, no capacity remained available under the 2023 Shelf Registration Statement.

Note 17—Derivatives

2026 Notes Conversion Option

On December 7, 2021, the Company issued $200 million of unsecured convertible notes (the “2026 Convertible Notes”) to certain investors. The 2026 Convertible Notes contain conversion features that meet the definition of a derivative and require separate accounting treatment from the debt host (the “2026 Notes Conversion Option”).

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

The table below presents the value of the 2026 Notes Conversion Option under the Binomial Lattice Model using the following assumptions as of the following dates:


	March 31, 2026		December 31, 2025
Value of 2026 Notes Conversion Option ($ thousands)	$	333	$	1,585
Conversion price (dollars)	$	10.61	$	10.61
Common stock price (dollars)	$	3.52	$	5.40
Expected option term (years)	0.7		0.9
Expected volatility	100.00%		110.00%
Risk-free rate of return	3.70%		3.50%
Expected annual dividend yield	—%		—%

As of March 31, 2026, the 2026 Notes Conversion Option had a fair value of $0.3 million and is presented on the condensed consolidated balance sheets within derivative liabilities. The following was recognized as a result of the change in fair value and is presented in net increase in fair value of derivatives on the condensed consolidated statements of operations and comprehensive loss:


	Three Months Ended March 31,
		2026		2025
Gain on change in fair value of 2026 Notes Conversion Option		$	1,252	$	322

As of March 31, 2026, the remaining principal of the 2026 Convertible Notes outstanding was $17.7 million.

2029 Notes Conversion Option

On December 19, 2024, the Company entered into privately negotiated Exchange Agreements with a limited number of holders of the Company’s 2026 Convertible Notes, to exchange the 2026 Convertible Notes for 2029 Convertible Notes (the “2029 Notes Conversion Option”). The 2029 Convertible Notes contain conversion features that meet the definition of a derivative and require separate accounting treatment from the debt host.

The table below presents the value of the 2029 Notes Conversion Option under the as-converted basis using the following assumptions as of the following dates:


	December 31, 2025
Value of 2029 Notes Conversion Option ($ thousands)	$	98,756
Conversion price (dollars)	$	3.55
Common stock price (dollars)	$	5.40
Expected option term (years)	4.0
Expected volatility	N/A
Risk-free rate of return	3.60%
Expected annual dividend yield	—%

During the three months ended March 31, 2025, $57.7 million of the 2029 Convertible Notes were voluntarily converted by noteholders following the Exchange Transaction. These conversions resulted in the issuance of approximately 16.7 million shares of common stock in exchange for the retirement of the respective notes. Upon conversion of the notes, there was a mark-to-market adjustment to increase the debt conversion option derivative liability, resulting in a loss of $59.9 million, which is presented in net increase in fair value of derivatives on the condensed consolidated statements of operations and comprehensive loss. In conjunction with the conversion, a loss of $2.6 million was recognized related to the convertible debt discount and unamortized deferred financing costs, and is presented in loss on extinguishment of debt on the condensed consolidated statements of operations and comprehensive loss

During the three months ended March 31, 2026, $124.6 million of the 2029 Convertible Notes were voluntarily converted by

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

noteholders following the Exchange Transaction. These conversions resulted in the issuance of approximately 38.1 million shares of common stock in exchange for the retirement of the respective notes. Upon conversion of the notes, there was a mark-to-market adjustment to increase the debt conversion option derivative liability, resulting in a loss of $28.3 million, which is presented in net increase in fair value of derivatives on the condensed consolidated statements of operations and comprehensive loss. In conjunction with the conversion, a loss of $15.8 million was recognized related to the convertible debt discount and unamortized deferred financing costs, and is presented in loss on extinguishment of debt on the consolidated statements of operations.

The following was recognized as a result of the change in fair value and is presented in net increase in fair value of derivatives on the condensed consolidated statements of operations and comprehensive loss:


	Three Months Ended March 31,
		2026		2025
Loss on change in fair value of 2029 Notes Conversion Option		$	(28,293)	$	(29,560)

2024 RDO Warrants

In consideration for the immediate and full exercise of the RDO warrants, on February 28, 2024, the RDO Investor received a new unregistered common stock purchase warrant to purchase up to an aggregate of 5,800,000 of the Company’s common stock (the “2024 RDO warrants”) in a private placement. The 2024 RDO warrants became exercisable six months after issuance and had a five-year term, with an exercise price per share equal to $3.78.

On February 5, 2025, the Company entered into a warrant exercise agreement (the “RDO Warrant Exercise Agreement”) with an existing accredited investor (the “RDO Investor”) to exercise in full the outstanding 2024 RDO warrants to purchase up to an aggregate of 5,800,000 shares of the Company’s common stock for gross proceeds of $21.9 million. Upon settlement of the RDO warrants, a loss of $14.3 million was recognized for the year ended March 31, 2025 and is presented in net increase in fair value of derivatives on the condensed consolidated statements of operations and comprehensive loss.


	Three Months Ended March 31,
		2026		2025
Loss on change in fair value of 2024 RDO Warrants		$	—	$	(14,294)

2025 RDO Warrants

In consideration for the immediate and full exercise of the 2024 RDO warrants, on February 5, 2025, the RDO Investor received a new unregistered common stock purchase warrant to purchase up to an aggregate of 3,770,000 of the Company’s common stock (the “2025 RDO warrants”) in a private placement. The 2025 RDO warrants will become exercisable six months after issuance and have a five-year term, with an exercise price per share equal to $9.00.

The table below presents the value of the 2025 RDO warrants under the Black-Scholes OPM using the following assumptions as of the following dates:


	March 31, 2026		December 31, 2025
Value of each 2025 RDO warrant (dollars)	$	2.55	$	4.36
Exercise price (dollars)	$	9.00	$	9.00
Common stock price (dollars)	$	3.52	$	5.40
Expected option term (years)	4.4		4.6
Expected volatility	125.00%		130.00%
Risk-free rate of return	3.85%		3.66%
Expected annual dividend yield	—%		—%

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

As of March 31, 2026, the 2025 RDO warrants had a fair value of $9.6 million and is presented on the condensed consolidated balance sheets within derivative liabilities. The following was recognized as a result of the change in fair value and is presented in net increase in fair value of derivatives on the condensed consolidated statements of operations and comprehensive loss:


	Three Months Ended March 31,
		2026		2025
Gain on change in fair value of 2025 RDO Warrants		$	6,825	$	10,028

As of March 31, 2026 there were 3,770,000 2025 RDO warrants issued and outstanding.

2024 PIPE Warrants

In consideration for the immediate and full exercise of the 2023 PIPE warrants, on March 5, 2024, the PIPE Investor received a new unregistered common stock purchase warrant to purchase up to an aggregate of 9,000,000 shares of the Company’s common stock (the “2024 PIPE warrant”) in a private placement. The 2024 PIPE warrants became exercisable six months after issuance and had a five-year term, with an exercise price per share equal to $4.75.

On February 10, 2025, the Company entered into a warrant exercise agreement (the “PIPE Warrant Exercise Agreement”) with an existing accredited investor (the “PIPE Investor”) to exercise 4,500,000 of the outstanding PIPE warrants to purchase up to an aggregate of 9,000,000 shares of the Company’s common stock for gross proceeds of $21.4 million. Upon settlement of the PIPE warrants, a gain of $0.3 million was recognized as a result of the change in fair value for the three months ended March 31, 2025 and is presented in net increase in fair value of derivatives on the condensed consolidated statements of operations and comprehensive loss.

On February 11, 2025, the Company entered into an additional PIPE Warrant Exercise Agreement with the same PIPE Investor to exercise the remaining 4,500,000 of the outstanding PIPE warrants to purchase up to an aggregate of 9,000,000 shares of the Company’s common stock for gross proceeds of $21.4 million. Upon settlement of the PIPE warrants, a gain of $0.1 million was recognized as a result of the change in fair value for three months ended March 31, 2025 and is presented in net increase in fair value of derivatives on the condensed consolidated statements of operations and comprehensive loss.


	Three Months Ended March 31,
		2026		2025
Gain on change in fair value of 2024 PIPE Warrants		$	—	$	270

IPO Public Warrants

Each warrant issued in connection with the Company’s initial public offering (the “IPO public warrants”) entitles the registered holder to purchase one share of common stock at a price of $11.50 per share, subject to adjustment. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares of common stock. This means only a whole warrant may be exercised at a given time by a warrant holder. The warrants will expire on December 7, 2026, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

The Company may call the IPO public warrants for redemption as follows: (1) in whole and not in part; (2) at a price of $0.01 per warrant; (3) upon a minimum of 30 days’ prior written notice of redemption; (4) if there is an effective registration statement covering the shares of common stock issuable upon exercise of the warrants and a current prospectus available throughout the 30-day notice period; and (5) only if the last reported closing price of the common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.

If the Company calls the IPO public warrants for redemption, management will have the option to require all holders that wish to exercise the Company IPO public warrants to do so on a “cashless basis.”

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

The exercise price and number of shares of common stock issuable upon exercise of the IPO public warrants may be adjusted in certain circumstances including stock dividends, stock splits, extraordinary dividends, consolidation, combination, reverse stock split or reclassification of shares of the Company’s common stock or other similar event. In no event will the Company be required to net cash settle the warrant shares.

The table below presents the Company’s IPO public warrants issued and outstanding as of the following periods:


	March 31, 2026	December 31, 2025
IPO public warrants issued	12,252,439	12,252,439
IPO public warrants outstanding	12,252,439	12,252,439

IPO Private Warrants

The terms and provisions of the IPO public warrants above also apply to the private warrants issued by the Company (“IPO private warrants”). If the IPO private warrants are held by holders other than GigAcquisitions4, LLC (“Sponsor”), Oppenheimer & Co. Inc. and Nomura Securities International, Inc. (together, the “Underwriters”), or any respective permitted transferees, the IPO private warrants will be redeemable by the Company and exercisable by the holders on the same basis as the IPO public warrants. The Sponsor, the Underwriters and any respective permitted transferees have the option to exercise the IPO private warrants on a cashless basis.

The table below presents the value of the IPO private warrants under the Black-Scholes OPM using the following assumptions as of the following dates:


	March 31, 2026		December 31, 2025
Fair value of each IPO private warrant (dollars)	$	0.50	$	1.75
Exercise price (dollars)	$	11.50	$	11.50
Common stock price (dollars)	$	3.52	$	5.40
Expected option term (years)	0.7		0.9
Expected volatility	135.00%		140.00%
Risk-free rate of return	3.70%		3.46%
Expected annual dividend yield	—%		—%

As of March 31, 2026, the IPO private warrants had a fair value of $— million and is presented on the condensed consolidated balance sheets within derivative liabilities. The following was recognized as a result of the change in fair value and is presented in net increase in fair value of derivatives on the condensed consolidated statements of operations and comprehensive loss:


	Three Months Ended March 31,
		2026		2025
Gain on change in fair value of IPO private warrants		$	91	$	220

The table below presents the Company’s IPO private warrants issued and outstanding as of the following periods:


	March 31, 2026	December 31, 2025
IPO private warrants issued	73,333	73,333
IPO private warrants outstanding	73,333	73,333

Note 18—Equity-Based Compensation

Class B Unit Incentive Plan

In February 2021, the Company’s former parent, BBAI Ultimate Holdings, LLC (“Former Parent”) adopted a compensatory

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

benefit plan (the “Class B Unit Incentive Plan”) to provide incentives to directors, managers, officers, employees, consultants, advisors and/or other service providers of the Company’s Former Parent or its subsidiaries in the form of the Former Parent’s Class B Units (“Incentive Units”). Incentive Units have a participation threshold of $1.00 and are divided into three tranches (“Tranche I,” “Tranche II,” and “Tranche III”). Tranche I Incentive Units are subject to performance-based, service-based and market-based conditions. The grant date fair value for the Incentive Units was $5.19 per unit.

On July 29, 2021, the Company’s Former Parent amended the Class B Unit Incentive Plan so that the Tranche I and the Tranche III Incentive Units immediately became fully vested, subject to continued employment or provision of services, upon the closing of the transaction stipulated in the Agreement and Plan of Merger (the “Gig Business Combination Agreement”) dated June 4, 2021. The Company’s Former Parent also amended the Class B Unit Incentive Plan so that the Tranche II Incentive Units will vest on any liquidation event, as defined in the Class B Unit Incentive Plan, rather than only upon the occurrence of an Exit Sale (as defined therein), subject to the market-based condition stipulated in the Class B Unit Incentive Plan prior to its amendment. The modification date fair value of the Incentive Units was $9.06 per unit.

During the three months ended March 31, 2025, the Company’s Former Parent disposed of its interest in BigBear. The liquidity event triggered the measurement of the market-related conditions of the unvested Tranche II Incentive Units. The market conditions were not met, and as a result, all unvested Incentive Units were forfeited.

Stock Options

On December 7, 2021, the Company adopted the BigBear.ai Holdings, Inc. 2021 Long-Term Incentive Plan (the “Plan”). The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by providing eligible employees, prospective employees, consultants and non-employee directors of the Company the opportunity to receive stock- and cash-based incentive awards.

Pursuant to the Plan, the Company’s Board of Directors grants certain grantees stock options (“Stock Options”) to purchase shares of the Company’s common stock. The Stock Options vest over four years with 25% vesting on the one year anniversary of the grant date and 6.25% vesting on the last day of each calendar quarter thereafter until the grant is fully vested. Vesting is contingent upon continued employment or service to the Company and is accelerated in the event of death, disability, or a change in control, subject to certain conditions; both the vested and unvested portion of a grantee’s Stock Options will be immediately forfeited and cancelled if the grantee ceases employment or service to the Company. The Stock Options expire on the 10th anniversary of the grant date.

No Stock Options were granted during the three months ended March 31, 2026.

The table below presents the activity and other information on the outstanding stock options:


	Stock Options Outstanding	Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value





























Outstanding as of December 31, 2025	1,735,338	$	2.80	7.56	$	4,684


Exercised	(36,489)	1.84

Expired	(156,415)	2.09
Outstanding as of March 31, 2026	1,542,434	$	2.86	7.60	$	1,628

Vested and exercisable as of March 31, 2026	1,052,505	$	2.74	7.10	$	1,423

					As of
					March 31, 2026
Unrecognized compensation costs related to the stock options					$	1,436
Weighted average recognition period for unrecognized compensation costs					2.63 years

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

Restricted Stock Units

During the three months ended March 31, 2026, pursuant to the Plan, the Company’s Board communicated the key terms and committed to grant Restricted Stock Units (“RSUs”) to certain employees and certain nonemployee directors and consultants. The Company granted 6,262,159 RSUs to employees and zero RSUs to nonemployee directors during the three months ended March 31, 2026. RSUs granted to employees generally vest over four years, with 25% vesting on the one year anniversary of the grant date and then 6.25% per each quarter thereafter on the two, three and four year anniversary of the grant date. RSUs granted to nonemployee directors vest 25% each quarter following the grant date or 100% upon the first anniversary of the grant date. Vesting of RSUs is accelerated in the event of death, disability, or a change in control, subject to certain conditions.

The table below presents the activity and other information on the outstanding RSUs:


	RSUs Outstanding	Weighted-Average Grant Date Fair Value Per Share




















Unvested as of December 31, 2025	11,832,102	$	2.73
Granted	6,262,159	3.58
Vested	(1,017,849)	2.28
Forfeited	(221,334)	2.50
Unvested as of March 31, 2026	16,855,078	$	3.08

		As of
		March 31, 2026
Unrecognized compensation costs related to the RSUs		$	46,268
Weighted average recognition period for unrecognized compensation costs		2.45 years

Performance Stock Units

Pursuant to the Plan, the Company’s Board communicated the key terms and granted Performance Stock Units (“PSUs”) to certain employees. The Company grants PSUs to certain employees with performance measures specific to the role of that employee or as a retention incentive (“Discretionary PSUs”). During the three months ended March 31, 2026, the Company granted no Discretionary PSUs. The Company granted zero Short-Term Incentive PSUs (“STI PSUs”) to employees, which contain performance measures based on a combination of the Company’s financial performance as well as the individual’s personal performance. The number of STI PSUs that will vest is based on the achievement of the performance criteria during each respective annual measurement period, provided that the employees remain in continuous service on each vesting date. Vesting will not occur unless a minimum performance criteria threshold is achieved.

The table below presents the activity and other information on the outstanding PSUs:


	PSUs Outstanding	Weighted-Average Grant Date Fair Value Per Share




















Unvested as of December 31, 2025	2,830,998	$	3.37

Vested	(1,040,410)	3.84
Forfeited	(1,790,588)	3.68
Unvested as of March 31, 2026	—	$	—

There is no unrecognized compensation costs related to the PSUs as of March 31, 2026.

Employee Share Purchase Plan (“ESPP”)

Concurrently with the adoption of the Plan, the Company’s Board adopted the 2021 Employee Stock Purchase Plan (the “ESPP”), which authorizes the grant of rights to purchase common stock of the Company to employees, officers and directors (if they are otherwise employees) of the Company. As of March 31, 2026, the Company reserved an aggregate of 9,240,007 common shares (subject to annual increases on January 1 of each year and ending in 2031) of the Company’s common stock for grants under the ESPP. During the three months ended March 31, 2026, zero shares were sold under the ESPP. As of March 31, 2026, the

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

Company has withheld employee contributions of $0.9 million for future ESPP purchases, which are presented on the condensed consolidated balance sheets within other current liabilities.

Equity-based compensation expense related to purchase rights issued under the ESPP is based on the Black-Scholes OPM fair value of the estimated number of awards as of the beginning of the offering period. Equity-based compensation expense is recognized using the straight-line method over the offering period.

The table below presents the assumptions used to estimate the grant date fair value of the purchase rights under the ESPP:


	December 1, 2025

Price of common stock on the grant date	$	6.05
Expected term (in years)	0.5
Expected volatility(1)	110%
Risk-free rate of return	3.75%
Expected annual dividend yield	—%

Fair value of the award on the grant date	$	2.76

(1) Expected volatility is based on a combination of implied and historical equity volatility of selected reasonably similar publicly traded companies.

As of March 31, 2026, there was approximately $0.3 million of unrecognized compensation costs related to the ESPP, which is expected to be recognized over the remaining weighted average period of 0.17 years.

Equity-based Compensation Expense

The table below presents the total equity-based compensation expense recognized for Class B Units, Stock Options, RSUs, PSUs, and ESPP in selling, general and administrative expense, cost of revenues, and research and development for the following periods:


	Three Months Ended March 31,
		2026		2025
Equity-based compensation expense in selling, general and administrative		$	1,997	$	4,087
Equity-based compensation expense in cost of revenues		1,179		2,536
Equity-based compensation expense in research and development		247		777
Total equity-based compensation expense		$	3,423	$	7,400

Note 19—Net Loss Per Share

The numerators and denominators of the basic and diluted net loss per share are computed as follows (in thousands, except per share, unit and per unit data):


	Three Months Ended March 31,
Basic and diluted net loss per share		2026		2025
Numerator:
Net loss		$	(56,763)	$	(61,986)
Denominator:
Basic		473,059,547		252,341,401
Diluted		473,059,547		252,341,401

Basic net loss per share		$	(0.12)	$	(0.25)
Diluted net loss per share		$	(0.12)	$	(0.25)

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

The following securities were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive:


	Three Months Ended March 31,
		2026	2025
Stock options		795,368	2,918,494
Private warrants		73,333	74,166
Public warrants		12,252,439	12,251,606




2025 RDO warrants		3,770,000	3,770,000
2026 Convertible notes		1,664,732	1,664,939
2029 Convertible notes		—	35,100,000
PSUs		—	2,752,613
RSUs		16,855,078	12,191,127
ESPP		570,670	575,303
Total		35,981,620	71,298,248

Although certain convertible notes were converted during the three months ended March 31, 2026 and March 31, 2025, application of the if-converted method would have been anti-dilutive due to the Company’s net loss for the period; accordingly, such instruments were excluded from diluted earnings per share.

Note 20—Revenues

Substantially all revenues were generated within the United States of America.

The table below presents total revenues by contract type for the following periods:



	Three Months Ended March 31,
		2026		2025
Time and materials		$	17,133	$	23,232
Firm fixed price		13,135		7,102
Cost-reimbursable		4,167		4,423
Total revenues		$	34,435	$	34,757

The table below presents the revenue recognition pattern for the following periods:


	Three Months Ended March 31, 2026						Three Months Ended March 31, 2025
	Point in Time		Over Time		Total Revenue		Point in Time		Over Time		Total Revenue


All revenue streams	$	1,746	$	32,689	$	34,435	$	1,318	$	33,439	$	34,757

The table below presents total revenues by major customer type for the following periods:



	Three Months Ended March 31,
		2026		2025
U.S. government		$	29,934	$	32,154
Non-U.S. government and commercial		4,501		2,603
Total revenues		$	34,435	$	34,757

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

The table below summarizes the activity in the allowance for expected credit losses:



	Three Months Ended March 31,
		2026		2025
Beginning balance		$	438	$	127
Additions		—		—
Write-offs		—		—
Recoveries		—		—
Ending balance		$	438	$	127

Concentration of Risk

Revenue earned from customers contributing in excess of 10% of total revenues are presented in the tables below for the following periods:


	Three Months Ended March 31, 2026
		Total		Percent of total revenues
Customer A(1)		$	—	—	%
Customer B		3,676		11	%
Customer C		3,459		10	%
Customer D		5,685		17	%
Customer E		3,547		10	%
All others		18,068		52	%
Total revenues		$	34,435	100	%



	Three Months Ended March 31, 2025
		Total		Percent of total revenues
Customer A		$	6,537	19	%
Customer B		4,341		12	%
Customer C (1)		3,399		10	%
Customer D		4,890		14	%
Customer E		3,563		10	%
All others		12,027		35	%
Total revenues		$	34,757	100	%

(1) Customers that contributed in excess of 10% of consolidated revenues in any period presented have been included in all periods presented for comparability.

As of March 31, 2026 and March 31, 2025, the Company had no customers with accounts receivable balances that exceeded 10% of total accounts receivable.

Contract Balances

The table below presents the contract assets and contract liabilities included on the condensed consolidated balance sheets for the following periods:



	March 31, 2026		December 31, 2025
Accounts receivable, net of allowance for credit losses	$	22,807	$	22,703
Contract assets	$	874	$	218
Contract liabilities	$	11,272	$	14,756

We receive payments from customers based on a billing schedule as established in our contracts. Contract assets relate to our

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

conditional right to consideration for our completed performance under the contract. Accounts receivables are recorded when the right to consideration becomes unconditional. Contract liabilities relates to payments received in advance of performance under a contract. Contract liabilities are recognized as revenue as (or when) we perform under the contract. Included in the contract liabilities balance as of March 31, 2026 are $11.6 million of contract liabilities from our acquisition of Ask Sage. Refer to Note 4—Business Combinations. Revenue recognized in the three months ended March 31, 2026 that was included in the contract liability balance as of December 31, 2025 was $7.1 million. Revenue recognized in the three months ended March, 31, 2025 that was included in the contract liability balance as of December 31, 2024 was $0.9 million.

When the Company’s estimate of total costs to be incurred to satisfy a performance obligation exceeds the expected revenue, the Company recognizes the loss immediately. When the Company determines that a change in estimate has an impact on the associated profit of a performance obligation, the Company records the cumulative positive or negative adjustment in the condensed consolidated statements of operations and comprehensive loss. Changes in estimates and assumptions related to the status of certain long-term contracts may have a material effect on the Company’s operating results.

The following table summarizes the impact of the net estimates at completion (“EAC”) adjustments on the Company’s operating results:



	Three Months Ended March 31,
		2026		2025
Net EAC Adjustments, before income taxes		$	(382)	$	410
Net EAC Adjustments, net of income taxes(1)		$	(382)	$	324
Net EAC Adjustments, net of income taxes, per diluted share		$	—	$	—

(1) Due to the Company being in a net taxable loss position for all periods presented, the impact of income taxes is insignificant.

Remaining Performance Obligations

The Company includes in its computation of remaining performance obligations customer orders for which it has accepted signed sales orders and generally includes the funded and unfunded components of contracts that have been awarded. As of March 31, 2026, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied, or partially unsatisfied, was approximately $7.8 million. As of March 31, 2026, the estimated revenue expected to be recognized in the future related to remaining performance obligations is presented in the table below.


	March 31, 2026
Next 12 months	$	5,133
13 to 24 months	1,593
25 to 36 months	757
Thereafter	360
Total remaining performance obligations	$	7,843

Note 21—Segments

The Company has determined that it operates in a single operating and reportable segment as the Chief Operating Decision Maker (“CODM”) reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. The Company’s segment provides predictive analytics capabilities in highly complex, distributed, mission-based operating environments. It is a technology-led solutions organization, providing both software and services to our customers. The Company’s CODM is its Chief Executive Officer.

Consolidated net loss, as reported on the condensed consolidated statements of operations and comprehensive loss as consolidated net loss, is the primary measure of segment profitability used by the CODM to assess performance and to allocate resources to the segment. Consolidated net loss is used to monitor budget versus actual results. The monitoring of budgeted versus actual results is used in assessing performance of the segment and in establishing management’s compensation. All expense categories on the condensed consolidated statements of operations and comprehensive loss are significant and there are no other significant segment expenses that would require disclosure or are regularly provided to the CODM.

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BIGBEAR.AI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, thousands of U.S. dollars unless stated otherwise)

The measure of segment assets is reported on the condensed consolidated balance sheets as total consolidated assets. Assets provided to the CODM are consistent with those reported on the condensed consolidated balance sheets.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis provides information that BigBear.ai Holdings, Inc. (“BigBear.ai”, “BigBear.ai Holdings”, or the “Company”) management believes is relevant to an assessment and understanding of BigBear.ai’s audited consolidated results of operations and financial condition. The following discussion and analysis should be read in conjunction with BigBear.ai’s condensed consolidated financial statements and notes to those statements included elsewhere in this Quarterly Report on Form 10-Q. Certain information contained in this management discussion and analysis includes forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors. Please see “Cautionary Note Regarding Forward-Looking Statements,” and “Risk Factors” in our Annual Report on Form 10-K. Unless the context otherwise requires, all references in this section to the “Company,” “BigBear.ai,” “we,” “us,” or “our” refer to BigBear.ai Holdings, Inc.

The following discussion and analysis of financial condition and results of operations of BigBear.ai is provided to supplement the unaudited condensed consolidated financial statements and the accompanying notes of BigBear.ai included elsewhere in this Quarterly Report on Form 10-Q. We intend for this discussion to provide the reader with information to assist in understanding BigBear.ai’s condensed consolidated financial statements and the accompanying notes, the changes in those financial statements and the accompanying notes from period to period, along with the primary factors that accounted for those changes. All amounts presented below are in thousands of U.S. dollars unless stated otherwise.

The discussion and analysis of financial condition and results of operations of BigBear.ai is organized as follows:

•Business Overview: This section provides a general description of BigBear.ai’s business, our priorities and the trends affecting our industry in order to provide context for management’s discussion and analysis of our financial condition and results of operations.

•Recent Developments: This section provides recent developments that we believe are necessary to understand our financial condition and results of operations.

•Results of Operations: This section provides a discussion of our results of operations for the three months ended March 31, 2026 and March 31, 2025.

•Liquidity and Capital Resources: This section provides an analysis of our ability to generate cash and to meet existing or reasonably likely future cash requirements.

•Critical Accounting Policies and Estimates: This section discusses the accounting policies and estimates that we consider important to our financial condition and results of operations and that require significant judgment and estimates on the part of management in their application. In addition, our significant accounting policies, including critical accounting policies, are summarized in Note 2—Summary of Significant Accounting Policies to the accompanying condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Business Overview

Our mission is to help deliver clarity for the world’s most complex decisions. BigBear.ai is a leading provider of Edge AI-powered decision intelligence solutions for national security, supply chain management and digital identity. Customers and partners rely on BigBear.ai’s predictive analytics capabilities in highly complex, distributed, mission-based operating environments. We are a technology-led solutions organization, providing both software and services to our customers.

Recent Developments

Acquisition of CargoSeer

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Ask Sage Acquisition

On December 31, 2025, the Company completed the acquisition of Ask Sage, Inc. (“Ask Sage” or the “Ask Sage Acquisition”), a secure, multi-modal generative AI platform designed for government and enterprise use. Of the total purchase consideration of $272.1 million, $267.6 million was paid in cash at or around the time of closing and $4.5 million was held back to cover any post-closing downward adjustments to the purchase price.

2029 Convertible Notes

On January 2, 2026, the Company announced that all 2029 Convertible Notes outstanding as of January 16, 2026 (the “Redemption Date”), would be redeemed for cash at a price equal to the principal amount of such notes plus accrued and unpaid interest, as provided by the terms of the Exchange Agreement. All of the 2029 Convertible Notes, with a par value of $124.6 million, were voluntarily converted by noteholders prior to the Redemption Date. These conversions resulted in the issuance of approximately 38.1 million shares of common stock in exchange for the retirement of the respective notes.

Global Economic and Geopolitical Environment

The majority of our revenue is derived from federal government contracts. Funding for U.S. Government programs is subject to a variety of factors that can affect our business, including the administration’s budget requests and procurement priorities and policies, annual congressional budget authorization and appropriation processes, and other U.S. Government domestic and international priorities. U.S. Government spending levels, particularly defense spending, and timely funding thereof can affect our financial performance over the short and long term.

On September 30, 2025, the continuing resolution (“CR”) allowing U.S. government departments and agencies to operate through the end of the government fiscal year expired and the U.S. government shut down. As a result of the U.S. government shutdown, our business and results of operations were insignificantly impacted by the disruptions to federal government offices, workers and operations, including funding of certain programs, stop work orders, delay in contract awards, new program starts, payments for work performed, and other actions. On November 12, 2025, Congress passed a funding extension through January 30, 2026 for nine of the twelve bills and full-year appropriations for three bills. On February 3, 2026, the President signed into law a bill to end the partial government shutdown that began on January 31. The bill provides full-year appropriations for several programs, including the Pentagon and State departments; however, the Department of Homeland Security continues to remain unfunded. The impact of the January shutdown did not have a meaningful impact on our results.

We anticipate the federal budget, debt ceiling, regulatory environment, and potential tax reform will continue to be subject to debate and compromise shaped by, among other things, the current Administration and Congress, heightened political tensions, the global security environment, inflationary pressures, and macroeconomic conditions. The result may be shifting funding priorities, which could have material impacts on defense spending broadly and our programs. Additionally, the administration continues to take steps to evaluate government-wide and defense-specific staffing and procurement, which includes assessing mission priorities, procurement methods, program performance, and other factors and then potentially taking action based on those assessments. Those actions remain uncertain and could result in impacts to both our current and future business prospects and financial performance.

Additionally, the President of the United States has issued multiple Executive Orders, including two that are intended to (i) simplify and accelerate the procurement process through a review and restructuring of the Federal Acquisition Regulation (FAR), and its supplements and (ii) modernize defense acquisitions by promoting commercial solutions, innovative acquisition authorities, and other existing streamlined processes. Among the actions directed by the President is a review of major defense acquisition programs that are behind schedule or over budget, including identifying any programs for potential cancellation.

While the impact of these reforms on our business is uncertain, they could potentially lead to changes in the way we interact with the U.S. Government. We will continue to monitor and assess their effects on our business and financial results. Should the U.S. Government review one or more major defense programs in which we provide solutions or services, and this review leads to a full or partial cancellation of one of these programs, this could have an adverse effect on our business, financial condition, results of operations and cash flows.

We continue to expect the global economic and geopolitical environment to drive adoption of our offerings over the long term, as it has heightened the need for advanced AI tools that provide enhanced intelligence and full spectrum cyber operations – areas where we believe we have unmatched capabilities. While these challenges are still evolving and the eventual outcome remains highly uncertain, we do not believe that these events will have a material impact on our business and results of operations.

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However, if these challenges worsen, leading to greater disruptions and uncertainty within the technology industry or global economy, our business and results of operations could be negatively impacted.

Components of Results of Operations

Revenues

We generate revenue by providing our customers with Edge AI-powered decision intelligence solutions and services for data ingestion, data enrichment, data processing, artificial intelligence, machine learning, predictive analytics and predictive visualization. We have a diverse base of customers, including government defense, government intelligence, as well as various commercial enterprises. We generate revenue from providing both software and services to our customers.

Cost of revenues

Cost of revenues primarily includes salaries, stock-based compensation expense, and benefits for personnel involved in performing the services described above, as well as allocated overhead and other direct costs.

Selling, general and administrative (“SG&A”)

SG&A expenses include salaries, equity-based compensation expense, and benefits for personnel involved in our executive, finance, accounting, legal, human resources, and administrative functions, as well as third-party professional services and fees, and allocated overhead.

Research and development

Research and development expenses primarily consist of salaries, equity-based compensation expense, and benefits for personnel involved in research and development activities as well as allocated overhead. Certain research and development expenses relate to software developed for sale, lease, or that will otherwise be marketed. Costs incurred subsequent to the establishment of technological feasibility and prior to the general availability of the software, are capitalized when they are expected to become significant. All other research and development expenses are expensed in the period incurred.

Restructuring charges

Restructuring charges consist of employee separation costs related to strategic cost saving initiatives to better align our organization and cost structure and improve the affordability of our products and services as well as employee separation costs associated with strategic changes in certain key leadership roles.

Transaction expenses

Transaction expenses consist of diligence, legal and other related expenses associated with recent acquisitions, as well as costs associated with evaluating other acquisition opportunities.

Interest expense

Interest expense consists primarily of interest expense, commitment fees, debt issuance discount amortization, and debt issuance cost amortization under our debt agreements.

Interest income

Interest income consists primarily of interest income earned on our money market accounts and investments in debt securities.

Net increase in fair value of derivatives

Net increase in fair value of derivatives consists of fair value remeasurements of the 2029 Convertible Notes Conversion Option, 2026 Convertible Notes Conversion Option, PIPE warrants, RDO warrants, and IPO private warrants.

Loss on extinguishment of debt

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Loss on extinguishment of debt consists of the derecognition of the unamortized debt issuance costs and discount related to the 2029 Convertible Notes upon conversion.

Other expense, net

Other expense (income), net consists primarily of realized gains and losses on the sale of available for sale investments, foreign exchange gains and losses, and other non-operating expenses.

Income tax expense

Income tax expense consists of income taxes related to federal and state jurisdictions in which we conduct business.

Results of Operations

The table below presents our condensed consolidated statements of operations for the following periods:


	Three Months Ended March 31,
		2026		2025
Revenues		$	34,435	$	34,757
Cost of revenues		22,714		27,369
Gross margin		11,721		7,388
Operating expenses:
Selling, general and administrative		29,225		22,732
Research and development		5,533		4,166
Restructuring charges		—		1,698
Transaction expenses		1,218		—


Operating loss		(24,255)		(21,208)
Interest expense		317		5,116
Interest income		(3,785)		(556)
Net increase in fair value of derivatives		20,125		33,336
Loss on extinguishment of debt		15,826		2,577
Other expense, net		11		280
Loss before taxes		(56,749)		(61,961)
Income tax expense		14		25
Net loss		$	(56,763)	$	(61,986)

Comparison of the Three Months Ended March 31, 2026 and 2025

Revenues


	Three Months Ended March 31,				Year-Over-Year Change
	2026		2025			2026 vs 2025
Revenues	$	34,435	$	34,757		$	(322)	(0.9)	%

Revenues decreased by $0.3 million during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 primarily due to lower volume on the Army programs and significant one time contracts during the three months ended March 31, 2025, that did not recur during the three months ended March 31, 2026, which was substantially offset by the inclusion of Ask Sage during the three months ended March 31, 2026.

Cost of revenues


	Three Months Ended March 31,						Year-Over-Year Change
	2026			2025				2026 vs 2025
Cost of revenues	$	22,714		$	27,369			$	(4,655)	(17.0)	%




Cost of revenues as a percentage of revenues	66		%	79		%

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Cost of revenues as a percentage of total revenues was 66% and 79% for the three months ended March 31, 2026 and 2025, respectively. The decrease in cost of revenue as a percentage of total revenue was driven by the inclusion of higher margin Ask Sage revenues during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The decrease in total dollars of cost of revenues was primarily due to lower volume on Army programs during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

SG&A


	Three Months Ended March 31,						Year-Over-Year Change
	2026			2025				2026 vs 2025
SG&A	$	29,225		$	22,732			$	6,493	28.6	%
SG&A as a percentage of revenues	85		%	65		%

SG&A expenses as a percentage of total revenues for the three months ended March 31, 2026 increased to 85% as compared to 65% for the three months ended March 31, 2025. The year-over-year increases include Ask Sage’s headcount and operating expenses not present in the first quarter of 2025, as well as significant investments in sales, marketing and other initiatives during the three months ended March 31, 2026.

Research and development


	Three Months Ended March 31,				Year-Over-Year Change
	2026		2025			2026 vs 2025
Research and development	$	5,533	$	4,166		$	1,367	32.8	%

Research and development expenses increased by $1.4 million during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase in research and development expenses was driven by fewer projects qualifying for software capitalization compared to the three months ended March 31, 2025.

Restructuring charges


	Three Months Ended March 31,				Year-Over-Year Change
	2026		2025			2026 vs 2025
Restructuring charges	$	—	$	1,698		$	(1,698)	(100.0)	%

Restructuring charges decreased by $1.7 million during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. Restructuring charges consist of employee separation costs related to strategic cost saving initiatives to better align our organization and cost structure and improve the affordability of our products and services as well as employee separation costs associated with strategic changes in certain key leadership roles.

Transaction expenses


	Three Months Ended March 31,			Year-Over-Year Change
	2026		2025		2026 vs 2025
Transaction expenses	$	1,218

BigBear.ai Holdings, Inc. 10-Q