Health Check: How Prudently Does BigBear.ai Holdings (NYSE:BBAI) Use Debt?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. We can see that BigBear.ai Holdings, Inc. (NYSE:BBAI) does use debt in its business. But is this debt a concern to shareholders?

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What Risk Does Debt Bring?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. If things get really bad, the lenders can take control of the business. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does BigBear.ai Holdings Carry?

As you can see below, BigBear.ai Holdings had US$101.4m of debt at March 2025, down from US$195.6m a year prior. However, it does have US$107.6m in cash offsetting this, leading to net cash of US$6.20m.

How Strong Is BigBear.ai Holdings' Balance Sheet?

According to the last reported balance sheet, BigBear.ai Holdings had liabilities of US$89.1m due within 12 months, and liabilities of US$109.4m due beyond 12 months. On the other hand, it had cash of US$107.6m and US$35.1m worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$55.8m.

Given BigBear.ai Holdings has a market capitalization of US$1.21b, it's hard to believe these liabilities pose much threat. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. Despite its noteworthy liabilities, BigBear.ai Holdings boasts net cash, so it's fair to say it does not have a heavy debt load! The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if BigBear.ai Holdings can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Check out our latest analysis for BigBear.ai Holdings

Over 12 months, BigBear.ai Holdings reported revenue of US$160m, which is a gain of 9.4%, although it did not report any earnings before interest and tax. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

So How Risky Is BigBear.ai Holdings?

Statistically speaking companies that lose money are riskier than those that make money. And the fact is that over the last twelve months BigBear.ai Holdings lost money at the earnings before interest and tax (EBIT) line. And over the same period it saw negative free cash outflow of US$41m and booked a US$230m accounting loss. But at least it has US$6.20m on the balance sheet to spend on growth, near-term. Summing up, we're a little skeptical of this one, as it seems fairly risky in the absence of free cashflow. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. For instance, we've identified 4 warning signs for BigBear.ai Holdings that you should be aware of.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.