BlackBerry is forecasting that revenues will nearly double over the next five years with growth from IoT outpacing cybersecurity.
BlackBerry today provided its long-term financial targets at its annual analyst summit event.
The company, which reports in U.S. dollars, provided its long-term financial targets and said it expects revenues excluding contributions from licensing should reach US$1.2 billion in fiscal 2027 and US$886 million in 2025, up from US$655 million last year.
The projected revenues outlined during its annual analyst summit represent a 13 per cent compounded annual growth rate over five years.
Cybersecurity is expected to be the largest component, increasing to US$770 million in five years from US$477 million in fiscal 2022.
However, its compounded annual growth is forecast to be half of the 20 per cent CAGR for IoT. IoT revenues, excluding potential contributions from BlackBerry IVY, are expected to reach US$443 million, from US$178 million last year.
BlackBerry is also targeting an average increase of at least 100 basis points in adjusted (non-GAAP) gross margin annually to fiscal 2027, investing about 30 per cent of revenue on research and development in 2023, and generating positive adjusted earnings per share and cash flow beginning in 2025.
The Company is targeting:
- An average 100+ basis points increase in non-GAAP gross margin per year to FY27.
- Non-GAAP operating margin of approximately 20% by FY27.
- Investing approximately 30% of revenue on Research & Development in FY23.
- To be modestly non-GAAP EPS and cashflow negative in FY23 due to investment plans.
- To be approaching breakeven non-GAAP EPS and cashflow in FY24.
- To generate positive non-GAAP EPS and cashflow beginning in FY25.
IoT:
- IoT Serviceable Addressable Market (SAM) is expected to grow at approximately 8-12% per year from FY23 to FY26.
- Revenue growth for the IoT business unit is expected to exceed the market growth rate resulting in an increase in market share above the current level of 26% in core automotive domains.
- Revenue from production-based royalties is expected to grow faster than revenue from the pre-production design phase, increasing the portion of total revenue from royalties.
- The SAM for BlackBerry IVY is expected to be approximately $800 million in FY25.
- BlackBerry is targeting its first IVY design wins in FY23.
Cybersecurity:
- The SAMs for endpoint security and managed cybersecurity services are expected to grow at 15% and 14%, respectively, per year to FY27.
- Revenue for the Cybersecurity business unit, excluding UEM, is expected to grow with a 5-year CAGR of approximately 16% to FY27.
- Churn in the UEM customer base is expected to negatively impact revenue and Annual Recurring Revenue (ARR) in FY23, but the impact is expected to become less significant from FY24 onwards.
- Approximately 20% of the UEM customer base is in non-core verticals, and those customers, representing annual revenue in the region of $40 million, are exhibiting higher than average churn.
- Approximately 64% of the Cylance customer base currently buys 1 Cylance module, and approximately 27% buy 2 modules. Management is targeting selling additional modules to these customers.
The presentation used during the financial session of the analyst summit, held at 4pm ET today, can be found on the BlackBerry Investors website here, while a replay of the financial session is available here.
