BlackBerry Beats Q3 Earnings Expectations; Shares Down

BlackBerry (NYSE: BB) delivered stronger-than-expected fiscal third-quarter results, topping both earnings and revenue estimates. The beat was driven by robust sequential billings and revenue growth in the Internet of Things (IoT) and Cybersecurity business segments.

However, shares of the intelligent security software and services provider to firms and governments globally, lost 1.7% during the extended trading session on December 21, despite the quarterly beat.

Q3 Results

BlackBerry reported break-even earnings on an adjusted basis, beating the analysts’ expectations of a loss of $0.07 per share. Comparatively, Q3 result was much better than the adjusted loss of $0.23 per share reported in the prior-year period.

However, revenues declined 15.6% year-over-year to $184 million but exceeded consensus estimates of $177.25 million. Similarly, gross margin also declined to 63.6% compared to 68.3% reported in the year-ago period.

Segment Details

Despite global supply constraints, IoT business revenues grew 34.4% year-over-year to $43 million; Cyber Security revenue remained almost flat at $128 million; and Licensing & other revenue declined 76.8% to $13 million during the quarter.

CEO Comments

BlackBerry CEO, John Chen, commented, “In IoT our QNX business achieved a quarterly record for design-related revenues, performing stronger than expected despite ongoing industry supply chain headwinds.”

He further added, “On the Cybersecurity front we saw further traction for our recent unified endpoint security product launches with additional head-to-head wins against other next-gen players. I am excited about how the current organization is executing to take advantage of the market opportunities.”

Analysts Recommendation

Overall, BB scores a Moderate Sell rating among Wall Street analysts based on 1 Hold and 3 Sells. The BlackBerry price target of $8.95 implies 3.2% downside potential to current levels.

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