The projected 40% CAGR reflects an acceleration through 2025 as a result of our investments in
sales & marketing, and penetration into additional markets.
The percentage of analytics and software sales mix is certainly impacting our gross
margins as well. This change toward software sales, isnt a wholly new projection as much as it is a continuation of a multi-year trend. A few years ago, less than 10% of our sales were from software analytics sales; in 2020 it was north of
50%. As software sales increase, it will be north of 75% by 2025. This, in turn, is expanding our Gross Margins as youll see in a few slides.
And
lastly, on EBITDA: BigBear.ai has always been EBITDA positive, and its accelerated through 2020. In fact, we ended 2020 north of 18%. The 13% projection you see for 2021 reflects our sales & marketing and R&D spends that Reggie
just spoke about and is really driving our expansion into new markets. By 2025, well see EBITDA rebound and will be north of 20%.
REVENUE BY TYPE AND END MARKET: SLIDE 30
So as I said previously, more than 50% of our revenue in 2020 was from analytics and software sales, up from 10% just a few years prior to that. The balance is
coming from service-based contracts in our cyber and engineering sector. So its clear that we are in the midst of a significant change in terms of how our products are sold to both government and commercial customers, and this will continue
through 2025.
The Cyber & Engineering component, which is largely services-based, wont disappear entirely. Its really shaped our
R&D, and our innovation, and our customer intimacy, but it will make up a smaller component moving forward. The increased growth here is really just a simple projection of our historical growth rates for this sector but it could easily
exceed these projections.
And note that by 2025, we are still very early in the move into commercial markets with only about a third of our revenue
coming from commercial sources. That means there is still considerable upside beyond 2025.
GROSS PROFIT BY
SEGMENT: SLIDE 31
So I hit on this already, a significant portion of our historical revenue has come through Government
contracts where theyve requested our data scientists and software engineers to sit with them, assess their needs, and design and develop the technical solutions, etc. So, on the downside, that labor component has historically impacted our
Gross Margins. On the plus side, however, it means that nearly all of our historical R&D spend was informed by and funded through these government contracts.
That means new government engagements have considerably higher gross margins due to the fact that a majority of the
non-recurring engineering (or R&D) expense has already been incurred. We are focused on deploying now a fully mature software capabilities that require minimal tweaking for deployment.
So now that weve seen this change, many of our software sales, even the government customers, are achieving gross margins north of 60%. And while
thats a great margin on the government side, on the commercial side, were seeing gross margins that can exceed 80% and getting up to 90%.
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