BigBear.ai, Inc.

Thank you for joining the Big Bear AI third quarter 2022 conference call. This call is being recorded, and at this time, all participants are in a listen-only mode, and a question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. And I will now turn the call over to Josh Kinley, Chief Corporate Development Officer of Big Bear AI. Thank you, sir. Please go ahead, Mr. Kinley.

Good afternoon, everyone, and welcome to Big Bear AI's 2022 Third Quarter Earnings Conference Call. I'm here with Mandy Long, our new CEO, and Julie Pfeffer, our Chief Financial Officer. During the call today, we may make certain forward-looking statements. Listeners are cautioned not to put undue reliance on the forward-looking statements. Big Bear AI specifically disclaims any obligation to update the forward-looking statements that may be discussed during this call. Many factors could cause actual events to differ materially from the forward-looking statements made on the call. These statements are based on current expectations and assumptions, and as a result, are subject to risks and uncertainties. For more information about these risks and uncertainties, please refer to the forward-looking statement section of the earnings press release issued today and our SEC filings. We will also discuss some non-GAAP financial measures during the call today. These non-GAAP financial measures should not be considered a replacement for and should be read together with GAAP results. You can find the GAAP and non-GAAP reconciliations within our earnings release. Now I'd like to turn the call over to Mandy.

Thank you, Josh, and thank you all for joining today's call. I'm thrilled to be here for the first time as CEO, and 30 days into the job, I can see very clearly that we have the right investment thesis, talent, and technology to thrive as a software and services business. We have a solid third quarter with total revenue of $40.7 million, our highest quarterly revenue to date, representing 8% quarter-over-quarter growth. We also made significant progress on our cost savings initiatives and expect these initiatives to result in more than $20 million in annualized savings as we move into Q4. We made some mistakes earlier in the year around how we were managing spend and we lacked the necessary operational rigor. I'm committed to addressing these and my new role in collaboration with my leadership team. Big Bear AI is building a better world through better choices. and our superpower is working with some of the most complex information to find and reveal what really matters. We support decisions, often in incredibly dynamic and high-stakes environments, and our customers depend on our technology and expertise to achieve critical missions, from shipyards to hospitals to battlefields. I'm focused on a comprehensive review of our talent and our portfolio, and on defining the path to unlock the value that exists here through focused, disciplined growth to drive shareholder value over the long term. The three main objectives that we're rolling out this week to guide our path forward are as follows. Repeatable patterns, good housekeeping, and find rare earth. Let's talk a little bit about what each of these means. Repeatable patterns refers to how we'll leverage the assets we have today to continue to solve real customer problems. With the challenging macroeconomic environment and the geopolitical factors we face as a global society, we're going to prioritize an area of core strength, earning and maintaining the trust of our clients and partners as we solve difficult information challenges and provide decision-making support in highly complex environments. We're going to be more methodical about identifying what works and replicating that with our robust prospects. We have a strong backlog, and we are going to lean in on the areas where we have established skill to drive engagement forward to success. Our new Global Force Information Management, or GFIM, is a perfect example of our ability to deliver value to a customer by deriving actionable insights from complex, highly divergent data to drive operational decisions based on force readiness worldwide. The GFIM award began generating revenue in September and will be a primary driver of our fourth quarter growth. Additionally, we're seeing opportunities with children's hospitals to provide digital twin simulation solutions to enhance decision making. For example, an early 4Q win successfully led to an implementation of our first emergency room customer in October, and we will discuss this in more detail in our next earnings call. We're also continuing to build our pipeline in the discrete manufacturing space, focused on use cases such as optimizing process performance via increased product throughput, reducing cycle times, and right-sizing inventory levels. With existing customers, we're looking to grow our relationships by bringing additional capabilities to the table through land and expand motions. We're establishing repeatable patterns based on lessons learned, experimenting with new concepts, and putting those that validate into scale. The second objective we're focused on is good housekeeping. This refers to comprehensively improving how we operate and adopting a no shortcuts mentality. We will continue to integrate and drive efficiencies in our core business functions. These opportunities will allow us to more closely monitor the business and pivot if necessary, and will also empower our team members and create a culture of pervasive excellence and accountability. So we're going back to the beginning, and we're doing a full review of the systems, tools, and methods we're using. This includes rigorous cost and expense controls, as well as financial contingency planning. It includes how we communicate and create transparency throughout the organization so that team members have the information they need to make decisions quickly and effectively. And it includes how we build and deliver technology, ensuring that we're leveraging best practices and continuously learning from our community as new methods emerge. This work never stops and will be a part of our DNA from here on out. I'd like to note that we've made progress and that I'm grateful for the team's hard work over the third quarter in moving the ball forward. As one example, this quarter we held a two and a half day finance transformation summit with leaders from each of our departments, as well as outside advisors. The outcome of this exercise was a roadmap of objectives and actions that are designed to accelerate our close process, eliminate unnecessary redundancies, ensure that we're maximizing the value of our IT infrastructure, and shorten the cycle time for our leaders to receive critical information to guide strategic decisions. We'll make future improvements to our operating efficiency in the coming quarters, and we will communicate those as we harden plans. The third objective we're focused on is Find Rare Earth. This refers to the implementation of a continuous discovery process across the organization to encourage thoughtful experimentation by all of our creators at Big Bear AI. and to establish the way we'll uncover and validate potential software and services solutions to foster a forever innovation pipeline. This isn't just about new things. Innovation also represents the application of existing things in new areas. And we're all tilting our heads and looking at the amazing portfolio we have with new eyes as we think about servicing our markets. I'll have more information to share on our progress here as we complete an atomic-level technology assessment, and gets work. By framing the work that needs to be done into these three objectives, we're organizing ourselves and our path forward. And as I shared at the beginning of my comments, our investment thesis is sound, and we have the right technology, the right people, and the support of our extraordinary customers and partners. I'm confident we'll achieve meaningful, sustainable growth at Big Bear AI, and I will continue to share our progress openly and transparently. We won't be perfect, but we will learn, we will listen, and we will get better every day. Today, we are reaffirming our financial outlook for 2022 and plan to provide outlook for 2023 when we report our 4Q and year-end financials. We're grateful for the continued support and confidence from our investors and look forward to keeping you updated as we drive towards profitable and sustainable growth. With that, I'll turn the call over to Julie for a detailed review of our financials and specifics on our cost savings initiatives.