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BlackBerry Q2 Revenue Falls 32%; Shares Gain 10%

Shares of BlackBerry (BB) gained 10% in early trading Thursday after the company posted lower revenue in the second quarter of 2022 as compared to a year ago, but not by as much as analysts anticipated. BlackBerry provides intelligent security software and services to businesses and governments.

Revenue came in at $175 million in Q2 2022, down 32% from $259 million in Q1 2021. Analysts expected revenue of $163.5 million. Demand for cybersecurity and IoT products has increased as more businesses and government organizations move operations to the cloud to support hybrid work.

Meanwhile, net loss widened to $144 million ($0.25 per share), from $23 million ($0.04 per share), a year earlier. (See BlackBerry stock charts on TipRanks)

Excluding one-time items, the company posted an adjusted loss of $33 million ($0.06 per share) in the quarter ended August 31, compared to an adjusted profit of $58 million ($0.10 per share) in the prior-year quarter. Analysts expected an adjusted loss of $0.07.

BlackBerry executive chairman and CEO John Chen said, “Revenue for all businesses beat expectations this quarter. The Cyber Security business unit delivered robust sequential billings and revenue growth and the IoT business unit performed well in the face of global chip shortage pressures.”

Following the results, RBC Capital analyst Paul Treiber kept a Sell rating on BB with a C$9.59 price target. This implies 28.4% downside potential.

Treiber stated that while BlackBerry’s main revenue was slightly above expectations on non-recurring components, recurring revenue was below expectations.

The analyst added that the price of Blackberry’s soon-to-be-sold patents (expected to be worth $1 billion) should have a big impact on the stock. He further noted that Blackberry management sees an 80% chance of closing the deal within a quarter.

Overall, BB scores a Moderate Sell rating among Wall Street analysts, based on one Hold and three Sells. The average BlackBerry price target of C$12 implies 9.9% downside potential to current levels.

TipRanks’ Smart Score

BB scores a 4 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock returns are likely to be in line with the overall market.

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