Can BigBear.ai Solve Its Margin Squeeze While Scaling Up GenAI?

BigBear.ai (BBAI) has been under pressure in 2025 — its gross margin fell by 240 basis points to 22.8% YoY, while its adjusted EBITDA margin plunged to –24.8% in the first nine months of the year (versus –3.8% a year earlier). The decline stems from several headwinds: reduced volume in certain Army contracts, delays in government funding, and a sharp spike in restructuring costs (up 223.2% YoY). On top of that, BigBear.ai’s increased R&D spending — driven by greater hiring and ongoing projects — has further weighed on its profitability. But the company isn’t standing still. Its recent acquisition of Ask Sage — a FedRAMP‑High, model‑agnostic generative‑AI platform — already supports roughly 16,000 government teams. By folding Ask Sage into BigBear.ai’s core mission‑oriented offerings, and cross‑selling the combined platform across federal and commercial clients, the company hopes to build recurring, higher‑margin revenue streams over time. Moreover, BigBear.ai appears to be gaining traction beyond its defense roots: there’s growing momentum in airports, domestic security agencies, international markets, and other sectors — even before Ask Sage contributes its full effect. Still, risks remain. The company’s financial health depends heavily on stable government funding and contract delivery timing, and contract‑mix volatility or a partial government shutdown could derail profitability. In short: BigBear.ai’s margin challenges are real — but management is banking on strategic GenAI investments and expanding commercial reach to turn today’s losses into tomorrow’s durable growth. #BigBearAI #GenAI #AIGrowth #TechStocks #SlimScan #GrowthStocks #CANSLIM