Shares of BlackBerry Ltd. experienced a significant boost in extended trading on Wednesday, rising by more than 6%.
This surge came after the tech company posted an adjusted profit in its most recent quarter, exceeding investor expectations. The positive results were driven by substantial sales growth in BlackBerry’s cybersecurity and Internet of Things (IoT) divisions.
A Record Quarter for IoT
The fiscal fourth quarter marked a milestone for BlackBerry, with the company’s IoT division experiencing its “strongest-ever quarter,” according to Chief Executive John J. Giamatteo. This achievement underscores BlackBerry’s successful pivot from hardware to focusing on the burgeoning IoT and cybersecurity markets.
While the IoT division stole the spotlight, BlackBerry’s cybersecurity segment also saw noteworthy developments. Giamatteo highlighted “small, but important steps forward” for this division, signaling a steady trajectory towards strengthening its position in the cybersecurity landscape.
Towards Profitability and Reduced Cash Burn
Amid these advancements, BlackBerry is diligently working to separate its divisions and steer them towards profitability. A significant reduction in operating cash burn, more than halving compared to the fiscal third quarter, exemplifies the company’s effective management and strategic planning.
Financial Highlights
In the quarter, BlackBerry reported a loss of $56 million (10 cents a share). This represents a marked improvement compared to the $495 million (85 cents a share) loss seen during the same period the previous year.
On an adjusted basis, excluding one-time items, the company earned 3 cents a share. This surpassed the FactSet analyst consensus, which had anticipated an adjusted loss of 4 cents per share.
Overall revenue increased to $173 million, up from $151 million a year earlier. Analysts polled by FactSet had forecast sales of $150 million.
Breaking down the revenue further:
- Internet of Things: $66 million (25% year-over-year increase)
- Cybersecurity: $92 million (5% year-over-year increase)
Looking Ahead
Despite its achievements, BlackBerry remains cautious in its outlook. The company has projected a per-share loss of between 4 and 6 cents on sales of between $130 million and $138 million for the fiscal first quarter. This guidance is somewhat conservative compared to FactSet expectations of a 3 cent per-share adjusted loss on sales of $148 million.
For fiscal 2025, BlackBerry anticipates a per-share adjusted loss between 3 cents and 7 cents, with sales ranging from $586 million to $616 million. This forecast falls slightly short of the FactSet consensus, which projected an adjusted loss of 6 cents per share on sales of $624 million.
Market Performance
The recent surge in BlackBerry’s shares provides a stark contrast to the approximately 38% decline over the past 12 months. This performance diverges from the S&P 500’s advance of about 26% over the same period, reflecting the volatile nature of tech investments and the challenges of transitioning business models. Yet, the latest earnings report could signal a turning point for BlackBerry, as it continues to evolve and capitalize on the opportunities within the IoT and cybersecurity sectors.
BlackBerry Reports
- Record Performance: BlackBerry’s IoT division achieved its highest quarterly revenue ever at $66 million, marking a 25% year-over-year increase. The fiscal year also set a new record for QNX royalty backlog growth, surging 27% to approximately $815 million.
- Cybersecurity Division Growth: The Cybersecurity division reported a 5% year-over-year revenue increase to $92 million, with a sequential 3% increase in ARR (Annual Recurring Revenue) to $280 million.
- Gross Margins: Total company non-GAAP and GAAP gross margin increased to 75%. IoT gross margin remained strong at 85%, while Cybersecurity gross margin was at 65%.
- Profitability and Losses: For the fourth quarter, non-GAAP operating profit was $16 million, with a GAAP operating loss of $56 million. Non-GAAP basic earnings per share was $0.03, and GAAP basic loss per share was $0.10.
- Annual Financials: Total company revenue for the fiscal year was $853 million, with non-GAAP operating profit at $36 million and GAAP operating loss at $125 million. Non-GAAP basic earnings per share reached $0.05, with GAAP basic loss per share at $0.22.
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