So, BigBear.AI (BBAI) reported earnings after the bell Monday, and it's one of those classic "good news, bad news" situations. The good news is they lost less money than everyone thought they would. The bad news is they also made less money than everyone thought they would, and they're not expecting next year to be as big as Wall Street had hoped.

Let's break it down. For the fourth quarter, the company posted a loss of one cent per share. That's actually a win because analysts were bracing for a loss of six cents per share. So, check that box. On the revenue side, however, they brought in $27.3 million. That missed the Street's target of $33.31 million, according to market data. More concerning is the trend: that revenue figure is down a sharp 38% compared to the same quarter last year. The company says the main culprit was lower volume on its Army programs.

The profitability of that revenue also took a hit. Gross margin—basically, how much money they make on each dollar of sales after accounting for the direct costs—fell to 20.3% this quarter. That's down from a much healthier 37.4% in the fourth quarter of last year. It's a significant compression that suggests either higher costs, less profitable work, or a mix of both.

Now, the CEO, Kevin McAleenan, is framing 2025 as a year of foundational work. "At the start of 2025, we set out to transform our financial foundations to establish a base from which to accelerate in 2026," he said. "We have delivered exactly that." He pointed to the company's aggressive debt reduction (over 90%), its solid cash position, international expansion, and two strategic acquisitions in national security and travel and trade as evidence of this transformation.

Speaking of cash, the company finished the quarter with approximately $92.65 million in total cash, cash equivalents, and restricted cash. That's a war chest that gives them, in McAleenan's words, "the freedom to invest in catalytic technologies."

The real head-scratcher for investors, though, might be the look ahead. For the full year 2026, BigBear.AI expects revenue to land somewhere between $135 million and $165 million. The problem? The consensus estimate among analysts was already sitting at $164.29 million. So, the high end of their guidance just barely meets expectations, and the midpoint is notably lower. It's a soft outlook that suggests the acceleration from this "foundational" year might be more of a gentle slope than a rocket launch.

Investors didn't seem thrilled with the mixed message. After the report, shares of BigBear.AI were trading down about 3.17% in after-hours action, hovering around $3.97. The company's executives will have a chance to provide more color and perhaps soothe some nerves on an earnings call scheduled for later Monday evening.