February 27, 2024

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Redefining Vigilance

Despite earnings and revenue beats, BlackBerry shares drop on outlook miss

3 min read

Shares in BlackBerry Ltd. dropped nearly 2% in late trading today after the company missed estimates for its outlook, even though it reported earnings and revenue beats in its fiscal third quarter.

For the quarter that ended Nov. 30, BlackBerry reported adjusted earnings per share of one cent, up from a loss of one cent per share in the same quarter of last year, on revenue of $175 million, up 3.5% year-over-year. Analysts had expected a loss of four cents per share on revenue of $165.15 million.

By sector, BlackBerry saw Internet of Things revenue of $55 million in the quarter, up 12% sequentially and 8% year-over-year and cybersecurity revenue came in at $114 million, up 44% and 8%, respectively. Cybersecurity billings in the quarter were $109 million and annual recurring revenue sat at $273 million as of the end of November. Licensing and other revenue accounted for $6 million in BlackBerry’s top-line figure.

The company reported an operating loss of $11 million, with $271 million in cash, cash equivalents and short-term investments on hand as of the end of the quarter.

The recent few months were colorful for BlackBerry, but more so in terms of gymnasts doing backflips at a circus. In October, the company announced that it planned to split its business in two — one company for its cybersecurity business and another for its IoT business, with plans to take the IoT business public separately.

Those plans lasted just over two months. BlackBerry appointed John Giamatteo, the president of its cybersecurity business, as chief executive on Dec. 11 and scrapped plans to float the IoT business. Instead of splitting the company in two, BlackBerry is now separating the businesses into standalone divisions that will remain part of the BlackBerry family.

“Our IoT business delivered solid revenue growth and continued its impressive design win momentum,” Giamatteo said in the company’s earnings release. “We also saw a strong quarter for the Cybersecurity business, securing large strategic deals with leading government agencies that helped drive strong sequential revenue growth and margin expansion.”

For the quarter ahead — the reason BlackBerry stock is down after-hours — the company said it expects revenue of $150 million to $159 million in its fiscal fourth quarter, whereas analysts were expecting $200 million.

Photo: BlackBerry

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