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BlackBerry's Q2 Earnings Beat Estimates, Revenues Up Y/Y, Stock Down
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BlackBerry Limited (BB - Free Report) reported breakeven second-quarter fiscal 2025 earnings, better than the company’s estimate of a loss per share of 2-4 cents. In the year-ago quarter, it reported a non-GAAP loss per share of 4 cents. The Zacks Consensus Estimate was pegged at a loss of 3 cents per share. Strong revenue growth and cost discipline aided the bottom-line performance.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Quarterly revenues of $145 million increased 9.9% year over year and also surpassed the company’s guidance of $136-$144 million. The top-line expansion was driven by strong growth across the Internet of Things (IoT) and Cybersecurity businesses.
BlackBerry Limited Price, Consensus and EPS Surprise
The company raised the lower end of its fiscal 2025 revenue projection. Revenues are now expected to be in the band of $591-$616 million compared with the previously expected range of $586-$616 million. For the Cybersecurity business, revenues were reiterated to be in the range of $350-$365 million.
Revenues are now estimated to be in the band of $225-$235 million for the IoT business. Earlier, revenues from this segment were expected to be in the band of $220-$235 million. Licensing & Other revenues are expected to be $16 million. Non-GAAP loss per share is now expected to be in the band of 2-5 cents compared with the earlier projected range of a loss of 3-7 cents.
Following the announcement, the company’s shares are down 2% in the pre-market trading on Sept. 27, 2024. The stock has lost 46.7% in the past year against the sub-industry’s growth of 35%.
Image Source: Zacks Investment Research
BB’s Second-Quarter Results in Details
Revenues from the Cybersecurity business totaled $87 million, up 10% year over year and exceeded the company’s revenue guidance of $82-$86 million. Revenues were driven by strength in the SecuSmart, UEM endpoint management and AtHoc critical events management solutions. BlackBerry noted that all three solutions registered year-over-year growth and combined revenues increased 24%. Cybersecurity ARR was flat year over year at $279 million.
Revenues from the IoT business totaled $55 million, which was up 12% year over year and surpassed the company’s guidance of $50-$54 million. The uptick was attributed to strong revenues from royalties, especially production-based royalties. The rapid adoption of the QNX platform in the Auto and General Embedded market is a positive factor.
However, development seat revenues remained muted in the quarter under review. Management expects significant delays in the ramp-up of automaker software development programs to continue to remain an overhang on the development seat revenues in the near term. BB also added that these delays have extended QNX development cycles and will have an “even greater impact” on IVY.
Licensing and Other contributed $3 million, which was down from $4 million a year ago. BB projected the segment to deliver revenues of approximately $4 million in the fiscal second quarter.
BB’s Margin Performance
Gross profit increased 10.6% from the year-ago quarter’s actual to $94 million. Gross margin improved to 64.8% from 64.4% in the prior-year quarter.
However, non-GAAP gross margin was 65.5% compared with 65.2% on a year-over-year basis.
Total non-GAAP operating expenses were $99 million, which was down 13%. Adjusted operating loss was $4 million compared with the prior year’s loss of $28 million.
Adjusted EBITDA was breakeven compared with the loss of $22 million in the year-ago quarter. The company had projected adjusted EBITDA loss to be $5-$15 million.
Cash Flow & Liquidity
For the quarter that ended on Aug. 31, 2024, BlackBerry used $13 million of net cash in operating activities compared with $56 million in the prior-year quarter.
As of Aug. 31, 2024, BlackBerry had $265 million in cash, cash equivalents, short and long-term investments.
BB's Q3 Guidance
The company expects fiscal third-quarter revenues to be in the $146-$154 million range. For the cybersecurity business, revenues are estimated to be in the range of $86-$90 million.
For the IoT business, revenues are expected to be in the range of $56-$60 million. The company's top line is likely to gain from continued strength in royalties. Licensing & Other revenues are expected to be $4 million.
BB’s Zacks Rank & Stocks to Consider
At present, BlackBerry carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for STX’s fiscal 2025 EPS is pegged at $7.41, unchanged in the past 30 days. STX’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing in the remaining quarter, with the average surprise being 80.9%. The stock has surged 68.6% in the past year.
The Zacks Consensus Estimate for American Software’s 2024 EPS is pegged at 38 cents, unchanged in the past seven days. AMSWA’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while matching in the remaining quarter, with the average surprise being 84.5%. Its shares have declined 4.6% in the past year.
The Zacks Consensus Estimate for ANSS’ 2024 earnings is pegged at $9.96, unchanged in the past 30 days. ANSS’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing the mark once, with the average surprise being 4.8%. Its shares have gained 9% in the past year.
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BlackBerry's Q2 Earnings Beat Estimates, Revenues Up Y/Y, Stock Down
BlackBerry Limited (BB - Free Report) reported breakeven second-quarter fiscal 2025 earnings, better than the company’s estimate of a loss per share of 2-4 cents. In the year-ago quarter, it reported a non-GAAP loss per share of 4 cents. The Zacks Consensus Estimate was pegged at a loss of 3 cents per share. Strong revenue growth and cost discipline aided the bottom-line performance.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Quarterly revenues of $145 million increased 9.9% year over year and also surpassed the company’s guidance of $136-$144 million. The top-line expansion was driven by strong growth across the Internet of Things (IoT) and Cybersecurity businesses.
BlackBerry Limited Price, Consensus and EPS Surprise
BlackBerry Limited price-consensus-eps-surprise-chart | BlackBerry Limited Quote
The company raised the lower end of its fiscal 2025 revenue projection. Revenues are now expected to be in the band of $591-$616 million compared with the previously expected range of $586-$616 million. For the Cybersecurity business, revenues were reiterated to be in the range of $350-$365 million.
Revenues are now estimated to be in the band of $225-$235 million for the IoT business. Earlier, revenues from this segment were expected to be in the band of $220-$235 million. Licensing & Other revenues are expected to be $16 million. Non-GAAP loss per share is now expected to be in the band of 2-5 cents compared with the earlier projected range of a loss of 3-7 cents.
Following the announcement, the company’s shares are down 2% in the pre-market trading on Sept. 27, 2024. The stock has lost 46.7% in the past year against the sub-industry’s growth of 35%.
Image Source: Zacks Investment Research
BB’s Second-Quarter Results in Details
Revenues from the Cybersecurity business totaled $87 million, up 10% year over year and exceeded the company’s revenue guidance of $82-$86 million. Revenues were driven by strength in the SecuSmart, UEM endpoint management and AtHoc critical events management solutions. BlackBerry noted that all three solutions registered year-over-year growth and combined revenues increased 24%. Cybersecurity ARR was flat year over year at $279 million.
Revenues from the IoT business totaled $55 million, which was up 12% year over year and surpassed the company’s guidance of $50-$54 million. The uptick was attributed to strong revenues from royalties, especially production-based royalties. The rapid adoption of the QNX platform in the Auto and General Embedded market is a positive factor.
However, development seat revenues remained muted in the quarter under review. Management expects significant delays in the ramp-up of automaker software development programs to continue to remain an overhang on the development seat revenues in the near term. BB also added that these delays have extended QNX development cycles and will have an “even greater impact” on IVY.
Licensing and Other contributed $3 million, which was down from $4 million a year ago. BB projected the segment to deliver revenues of approximately $4 million in the fiscal second quarter.
BB’s Margin Performance
Gross profit increased 10.6% from the year-ago quarter’s actual to $94 million. Gross margin improved to 64.8% from 64.4% in the prior-year quarter.
However, non-GAAP gross margin was 65.5% compared with 65.2% on a year-over-year basis.
Total non-GAAP operating expenses were $99 million, which was down 13%. Adjusted operating loss was $4 million compared with the prior year’s loss of $28 million.
Adjusted EBITDA was breakeven compared with the loss of $22 million in the year-ago quarter. The company had projected adjusted EBITDA loss to be $5-$15 million.
Cash Flow & Liquidity
For the quarter that ended on Aug. 31, 2024, BlackBerry used $13 million of net cash in operating activities compared with $56 million in the prior-year quarter.
As of Aug. 31, 2024, BlackBerry had $265 million in cash, cash equivalents, short and long-term investments.
BB's Q3 Guidance
The company expects fiscal third-quarter revenues to be in the $146-$154 million range. For the cybersecurity business, revenues are estimated to be in the range of $86-$90 million.
For the IoT business, revenues are expected to be in the range of $56-$60 million. The company's top line is likely to gain from continued strength in royalties. Licensing & Other revenues are expected to be $4 million.
BB’s Zacks Rank & Stocks to Consider
At present, BlackBerry carries a Zacks Rank #3 (Hold).
Some better-ranked stocks worth consideration in the broader technology space are Seagate Technology Holdings plc (STX - Free Report) , American Software, Inc. (AMSWA - Free Report) and ANSYS (ANSS - Free Report) . While Seagate sports a Zacks Rank #1 (Strong Buy), AMSWA and ANSYS carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for STX’s fiscal 2025 EPS is pegged at $7.41, unchanged in the past 30 days. STX’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing in the remaining quarter, with the average surprise being 80.9%. The stock has surged 68.6% in the past year.
The Zacks Consensus Estimate for American Software’s 2024 EPS is pegged at 38 cents, unchanged in the past seven days. AMSWA’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while matching in the remaining quarter, with the average surprise being 84.5%. Its shares have declined 4.6% in the past year.
The Zacks Consensus Estimate for ANSS’ 2024 earnings is pegged at $9.96, unchanged in the past 30 days. ANSS’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing the mark once, with the average surprise being 4.8%. Its shares have gained 9% in the past year.