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Can big data firm BigBear.ai (BBAI) take on Palantir (PLTR)?

By Joyanta Acharjee

16:14, 10 February 2022

A stream of data captured on a monitor
BigBear.ai is a data analytics company that offers subscription-based software products and services – Photo: Shutterstock

Market appetite for big data looks set to continue as one firm with US government clients is planning to issue more stock for investors.

Analysts at one US investment bank also calculate this firm could even take on one of the big data sector’s biggest names: Palantir (PLTR).

BigBear.ai is a data analytics company that offers subscription-based software products and services that collect and process enormous volumes of data, help customers read between the lines and convert that data into action. It splits this process into three discrete data products known as Observe, Orient and Dominate.

Large customers

Chart showing BigBear.ai products known as Observe, Orient and Dominate – Credit: BigBear.aiBigBear.ai splits its offerings into three discrete data products known as Observe, Orient and Dominate – Credit: BigBear.ai

It supports more than 15 large customers in the defence, intelligence and commercial markets through more than 60 unique engagements.

Last December, BigBear completed its merger with GigCapital4 – a special purpose acquisition vehicle – listing on the New York Stock Exchange under the “BBAI” ticker.

The company is planning to issue 12.3 million shares, and a number of shareholders are selling up to 11.7 million shares. There is also a planned issue of convertible notes to coincide with the stock offering, according to a regulatory filing.

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‘Potential alternative to Palantir’

“BigBear has the potential to emerge as an alternative to Palantir with a $4.5bn (£3.3bn, €3.9bn) near-term pipeline of opportunities across government and commercial verticals,” William Blair analysts Bhavan Suri and Louie DiPalma wrote in research note obtained by Capital.com.

William Blair recently began coverage on BigBear with a “Market Perform” rating and stock price target of $5.20. As at 10:20 am EDT (UTC-5), the stock was up 0.6% at $4.96.

"We estimate there is a $26bn total addressable market for US government data analytics growing at 7% per year. A potential win for BigBear over Palantir for the Global Force Management programme could act as a springboard for other significant deals, with a $4.5bn near-term pipeline of opportunities across government and commercial verticals.”

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US Army contract

A slide showing future growth factors for BigBear.aiA slide showing future growth factors – Credit: BigBear.ai

The US Army is in the process of upgrading part of its information management systems and the final two candidates for the project are BigBear.ai and Palantir.

“We estimate that the production contract will be awarded in late 2022 and will be worth $30m per year. If BigBear is able to secure the win over Palantir, we believe that the programme may act as a springboard to accelerate adoption of BigBear’s software from other DoD and federal civilian agencies,” the William Blair analysts wrote.

Two key executives at BigBear have considerable US government experience, which may prove useful for future contracts.

CEO Dr Reggie Brothers held positions at the US Department of Homeland Security and US Department of Defence while CTO Brian Frutchey, a former US Army officer, worked at the US Department of Defence’s National Geospatial-Intelligence Agency.

Order backlog

In terms of financials, BigBear has an estimated fiscal year 2022 total revenue of $277m with over half of that already in backlog, according to the filing.

The company’s order backlog, as of 30 September 2021, was approximately $485m plus an additional $4.5bn in pipeline opportunities.

Denver, Colorado-headquartered Palantir Technologies (PLTR) makes data analysis software for the US defence and intelligence sector as well as a data aggregation platform for commercial companies.

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