BigBear.ai Holdings (BBAI) risk factors, FY2025 10-K

Risks Related to Our Business and Industry

1. 01We have a limited operating history, which makes it difficult to evaluate our prospects and future results of operations
2. 02We have incurred operating losses in the past, may incur operating losses in the future, and may not achieve or maintain profitability in the futureNew
3. 03Our results of operations and cash flows are substantially affected by our mix of fixed-price and time-and-material type contracts. Our profits may decrease and/or we may incur significant unanticipated costs if we do not accurately estimate the costs of these engagementsNew
4. 04Our sales efforts involve considerable time and expense and our sales cycle is often long and unpredictable57% rewritten
5. 05adversely affected. This adverse impact would be even more pronounced for customers that represent a material portion of our revenue or business operationsNew
6. 06As of December 31, 2025, the total remaining deal value of the contracts that we had been awarded by, or entered into with, commercial and government customers, including existing contractual obligations and contract options available to those customers was approximately $248 millionNew
7. 07Indemnity provisions in various agreements to which we are a party potentially expose us to substantial liability for infringement, misappropriation or other violation of intellectual property rights, data protection and other losses
8. 08Our results of operations and earnings may not meet guidance or expectations
9. 09Our software is complex and may have a lengthy implementation process, and any failure of our software to satisfy our customers or perform as desired could harm our business, results of operations, and financial condition
10. 10If we do not successfully develop and deploy new technologies to address the needs of our customers, our business and results of operations could suffer85% rewritten
11. 11Because we derive, and expect to continue to derive, a substantial percentage of our revenue from customers purchasing our software, market acceptance of these products, and any enhancements or changes thereto, is critical to our success
12. 12If we fail to manage future growth effectively, our business could be harmed
13. 13If we are unable to hire, retain, train, and motivate qualified personnel and senior management and deploy our personnel and resources to meet customer demand around the world, our business could suffer
14. 14If we are unable to successfully deploy our marketing and sales organization in a timely manner, or at all, or to successfully hire, retain, train, and motivate our sales personnel, our growth and long-term success could be adversely impacted
15. 15Our ability to sell our software and services to customers is dependent on the quality of our offerings, and our failure to maintain the quality of our offerings could have a material adverse effect on our sales and results of operationsNew
16. 16If we are not able to grow, maintain, and enhance our brand and reputation, our relationships with our customers, partners, and employees may be harmed, and our business and results of operations may be adversely affected
17. 17Our reputation and business may be harmed by news or social media coverage of BigBear.ai including but not limited to coverage that presents, or relies on, inaccurate, misleading, incomplete, or otherwise damaging information
18. 18Our pricing for our software and services may change to address market conditions
19. 19If our government customers are not able or willing to accept our software-based business model, instead of a labor-based business model, our business and results of operations could be negatively impacted
20. 20We face intense competition in our markets, and we may lack sufficient financial or other resources to maintain or improve our competitive position
21. 21Our culture emphasizes rapid innovation and advancement of successful hires who may, in some cases, have limited prior industry expertise and prioritizes customer outcomes over short-term financial results, and if we cannot maintain or properly manage our culture as we grow, our business may be harmed
22. 22We may not enter into relationships in select countries or with potential customers if their activities or objectives are inconsistent with our mission or values
23. 23Joint ventures, channel sales relationships, platform partnerships, strategic alliances, or subcontracting opportunities may have a material adverse effect on our business, results of operations and prospects85% rewritten
24. 24we may choose a partner that does not cooperate as we expect them to and that fails to meet its obligations or that has economic, business, or legal interests or goals that are inconsistent with oursNew
25. 25If we are not successful in executing our strategy to increase our sales to larger customers, our results of operations may suffer
26. 26our business and negatively affect our results of operationsNew
27. 27If the market for our software and services develops more slowly than we expect, our growth may slow or stall, and our business, financial condition, and results of operations could be harmed
28. 28We will face risks associated with the growth of our business in new commercial markets and with new customer verticals, and we may neither be able to continue our organic growth nor have the necessary resources to dedicate to the overall growth of our business
29. 29In the future, we may not be able to secure the financing necessary to operate and grow our business as planned, or to make acquisitions
30. 30We may need to raise additional capital, which may not be available on favorable terms, if at all, and which may cause dilution to stockholders, restrict our operations or adversely affect our ability to operate our business
31. 31Our ability to make scheduled payments on, or to refinance our obligations under, any indebtedness depends on our financial and operating performance and prevailing economic and competitive conditions. Certain of these financial and business factors, many of which may be beyond our control, are described above
32. 32Our debt agreements contain restrictions that may limit our flexibility in operating our business
33. 33We may acquire or invest in companies and technologies, which may divert our management’s attention, and result in additional dilution to our stockholders. We may be unable to integrate acquired businesses and technologies successfully or achieve the expected benefits of such acquisitions or investments
34. 34Certain revenue metrics such as net dollar-based retention rate or annual recurring revenue may not be accurate indicators of our future financial results

Risks Related to Intellectual Property, Information Technology, Data Privacy and Security

1. 35Issues in the use of artificial intelligence (“AI”) and machine learning (“ML”) in our software may result in reputational harm or liability85% rewritten
2. 36With the acquisition of Pangiam, a portion of our growth strategy is the market for biometrics activity. A significant commercial market for biometrics technology may not develop, and, even if it does, there can be no assurance our biometrics technology will be successfulNew
3. 37For these reasons, we are uncertain whether there will be significant demand for biometrics technology from commercial markets. Moreover, even if there is significant demand, there can be no assurance that our biometrics products will achieve market acceptanceNew
4. 38required to transfer to other cloud providers or invest in a private cloud, we could incur significant costs and experience possible service interruption in connection with doing so, or risk loss of customer contracts if they are unwilling to accept such a changeNew
5. 39Our policies regarding customer confidential information and support for individual privacy and civil liberties could cause us to experience adverse business and reputational consequences
6. 40Failure to adequately obtain, maintain, protect and enforce our intellectual property and other proprietary rights could adversely affect our business
7. 41We may in the future be subject to intellectual property rights claims, which are extremely costly to defend, could require us to pay significant damages and could limit our ability to use certain technologies
8. 42Real or perceived errors, failures, defects, or bugs in our software could adversely affect our results of operations and growth prospects
9. 43We rely on the availability of licenses to third-party technology that may be difficult to replace or that may cause errors or delay implementation of our software and services should we not be able to continue or obtain a commercially reasonable license to such technology
10. 44Our software contains “open source” software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect our business

Risks Related to Legal, Regulatory and Accounting

1. 45Our estimates and projections may prove to be inaccurate and certain of our assets may be at risk of future impairment
2. 46Failure to comply with governmental laws and regulations could harm our business, and we may be the subject of legal and regulatory inquiries, which may result in monetary payments or may otherwise negatively impact our reputation, business, and results of operations
3. 47We may become involved in legal, regulatory, and administrative inquiries and proceedings, and unfavorable outcomes in litigation or other matters could negatively impact our business, financial conditions, and results of operations
4. 48Failure to comply with anti-bribery and anti-corruption laws could subject us to penalties and other adverse consequences
5. 49Governmental trade controls, including export and import controls, sanctions, customs requirements, and related regimes, could subject us to liability or loss of contracting privileges or limit our ability to compete in certain markets
6. 50Changes in accounting principles or their application to us could result in unfavorable accounting charges or effects, which could adversely affect our results of operations and growth prospects
7. 51If our judgments or estimates relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below expectations of securities analysts and investors, resulting in a decline in our stock price
8. 52We could be subject to additional tax liabilities
9. 53Our ability to use our net operating loss carryforwards may be limited
10. 54Certain U.S. state tax authorities may assert that we have a state nexus and seek to impose state and local income taxes which could harm our results of operations
11. 55Our results of operations may be harmed if we are required to collect sales or other related taxes for our license arrangements in jurisdictions where we have not historically done so

Risks Related to Our Relationships and Business with the Public Sector

1. 56A significant portion of our business depends on sales to the public/government sector, and our failure to receive and maintain government contracts or changes in the contracting or fiscal policies of the public sector could have a material adverse effect on our business78% rewritten
2. 57performance of contracts, which provide public sector customers rights, many of which are not typically found in commercial contractsNew
3. 58We have government customers, which subjects us to risks including early termination, audits, investigations, sanctions and penalties
4. 59We have contracts with government agencies that involve classified programs, which may limit investor insight into portions of our business
5. 60Our business could be adversely affected if our employees cannot obtain and maintain required personnel security clearances, or we cannot establish and maintain a required facility security clearance
6. 61Failure to comply with laws, regulations, or contractual provisions applicable to our business could cause us to lose government customers or our ability to contract with the U.S. and other governments
7. 62Evolving government procurement policies and increased emphasis on cost over performance could adversely affect our business
8. 63Increased competition and bid protests in a budget-constrained environment may make it more difficult to maintain our financial performance and customer relationships86% rewritten
9. 64A decline in the U.S. and other government budgets, changes in spending or budgetary priorities, or delays in contract awards may significantly and adversely affect our future revenue and limit our growth prospects

Risks Related to the Convertible Notes

1. 65Our indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under the Convertible Notes
2. 66In addition, it is possible that we may need to incur additional indebtedness in the future in the ordinary course of business
3. 67We may be able to incur substantial indebtedness. This could exacerbate the risks to our financial condition described above and prevent us from fulfilling our obligations under the Convertible Notes
4. 68Our obligation to offer to redeem the Convertible Notes upon the occurrence of a fundamental change will be triggered only by certain specified transactions, and may discourage a transaction that could be beneficial to the holders of our Common Stock and the Convertible Notes21% rewritten
5. 69We may not be able to generate sufficient cash to service all of our indebtedness, including the Convertible Notes, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful22% rewritten
6. 70Further, our Indenture that governs the 2029 Convertible Notes contains provisions will restrict our ability to dispose of assets andNew
7. 71Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our financial position and results of operations and our ability to satisfy our obligations under the Convertible Notes
8. 72The Indentures contain terms which restrict our current and future operations, particularly our ability to respond to changes or to take certain actions41% rewritten
9. 73These covenants may limit our ability to optimally operate our business. In addition, our Credit Agreement requires that we meet certain financial tests, including a leverage ratio testNew
10. 74These restrictions may affect our ability to expand our business, which could have a material adverse effect on our business, financial condition and results of operations
11. 75The Indentures contain cross-default provisions that could result in the acceleration of all of our indebtedness
12. 76The 2029 Convertible Notes are effectively subordinated to our indebtedness under the 2026 Convertible Notes and our other secured indebtedness to the extent of the value of the assets securing that indebtedness
13. 77The Convertible Notes are structurally subordinated to all obligations of our existing and future subsidiaries that are not and do not become guarantors of the Convertible Notes
14. 78Federal and state fraudulent transfer laws may permit a court to void the Convertible Notes or the guarantees and, if that occurs, the noteholders may not receive any payments on the Convertible Notes
15. 79There is limited trading and liquidity for the Convertible Notes, and holders’ ability to sell the Convertible Notes could be limited
16. 80Even though the Convertible Notes are convertible into shares of our Common Stock, the terms of the Convertible Notes will not provide protection against some types of important corporate events60% rewritten
17. 81A lowering or withdrawal of the ratings assigned to our debt securities by rating agencies may increase our future borrowing costs and reduce our access to capitalNew

Risks Related to Our Common Stock

1. 82We have convertible debt that may be converted into Common Stock in the future, which would cause immediate and substantial dilution to our stockholders89% rewritten
2. 83(previously 86.9565) shares of Common Stock per $1,000 principal amount of notes, as a result of the conversion rate reset provisions thereinNew
3. 84Our only significant asset is our ownership interest in our subsidiaries and such ownership may not be sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on our Common Stock or satisfy our other financial obligations
4. 85Because we have no current plans to pay cash dividends on shares of common stock for the foreseeable future, you may not receive any return on investment unless you sell shares of Common Stock for a price greater than that which you paid for it
5. 86The estimated fair value of our derivative liabilities related to our warrants, including the 2024 RDO Warrants, the 2024 PIPE Warrants, and the IPO Private Warrants was $0.1 million as of December 31, 2025. The 2024 RDO Warrants and 2024 PIPE Warrants were fully exercised during the first quarter of 202544% rewritten
6. 87The price of our Common Stock has been and could remain volatile and a market for our securities may not continue, which would adversely affect the liquidity and price of our securities30% rewritten
7. 88In the past, we have not satisfied certain continued listing requirements of the NYSE and could fail to satisfy those requirements again in the future, which could materially adversely affect our business, financial condition or results of operations

Risk Related to the Acquisition of Ask Sage

1. 89If we are unable to realize the full strategic and financial benefits currently anticipated from the Ask Sage Acquisition, BigBear.aiNew
2. 90BigBear.ai may not achieve the benefits it expects from the Ask Sage Acquisition, which may have an adverse effect on both BigBear.ai’s and Ask Sage’s business, financial condition and operating results25% rewritten
3. 91The combined company may be unable to integrate successfully the businesses of BigBear.ai and Ask Sage and realize the anticipated benefits of the Ask Sage Acquisition22% rewritten
4. 92Ask Sage’s potential products and technologies are in early stages of development
5. 93Increasing attention to, and evolving expectations for, environmental, social, and governance (“ESG”) initiatives could increase our costs, harm our reputation, or otherwise adversely impact our business
6. 94Adverse economic conditions or reduced technology spending may adversely impact our business31% rewritten
7. 95We have and will incur increased costs and demands upon management as a result of complying with the laws and regulations affecting public companies, which could adversely affect our business, results of operations, and financial condition39% rewritten
8. 96The Company is subject to risks relating to evaluations of internal control over financial reporting required by Section 404 of the Sarbanes-Oxley Act of 2002New
9. 97Natural disasters and other events beyond our control could harm our business
10. 98Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our financial condition and results of operations
11. 99We may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment
12. 100We will incur significant increased expenses and administrative burdens as a public company, which could have an adverse effect on our business, financial condition and results of operations
13. 101The exercise price for the IPO warrants is $11.50 per share of Common Stock. There is no guarantee that the warrants will ever be in the money prior to their expiration, and as such, the warrants may expire worthless
14. 102The exercise price for our public warrants is higher than in many similar blank check company offerings in the past, and, accordingly, the public warrants are more likely to expire worthless
15. 103Our warrants will become exercisable for our Common Stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders33% rewritten
16. 104We have no obligation to net cash settle the warrants
17. 105If we fail to introduce or acquire new products or services that achieve broad market acceptance on a timely basis, or if our products or services are not adopted as expected, we will not be able to compete effectively
18. 106If our products fail to achieve and sustain sufficient market acceptance, our revenue will be adversely affected
19. 107If securities or industry analysts cease publishing research or reports about the Company, its business, or its market, or if they change their recommendations regarding the Company’s securities adversely, the price and trading volume of the Company’s securities could decline
20. 108We may redeem the unexpired IPO warrants prior to their exercise at a time that is disadvantageous to warrant holders, thereby making their warrants worthless
21. 109Anti-takeover provisions contained in our Second Amended and Restated Certificate of Incorporation as well as provisions of Delaware law, could impair a takeover attempt
22. 110These provisions, alone or together, could delay hostile takeovers and changes in control of BigBear.ai or changes in our Board and our management54% rewritten
23. 111Our internal controls over financial reporting may not be effective and our independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation34% rewritten
24. 112public company under Section 404 of the Sarbanes-Oxley Act are significantly more stringent than those required of BigBear.ai as a privately held companyNew
25. 113Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect the Company’s business, investments and results of operations82% rewritten
26. 114If we fail to maintain an effective system of internal controls over financial reporting, there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis46% rewritten