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BlackBerry posts surprise profit for Q1 2024

BlackBerry beats non-GAAP earnings expectations and delivers sequential revenue and billings growth for Cybersecurity business unit

BlackBerry posted a surprise profit for the first quarter on Wednesday as the company came out with quarterly earnings of $0.06 per share, compared to a loss of $0.05 per share a year ago. These figures are adjusted for non-recurring items.

For its fiscal first quarter that ended May 31, BlackBerry reported earnings before costs such as stock compensation of six cents per share on revenue of $373 million, the latter up 122% year-over-year. Analysts were expecting an adjusted loss, as opposed to a profit of six cents on revenue of $156.93 million.

By sector, BlackBerry saw its Internet of Thing revenue come in at $45 million, cybersecurity revenue of $122 million and licensing and other revenue of $235 million. The “other revenue” figure was high thanks to BlackBerry raising $218 million through the sale of some of its patents.

The patent aside, BlackBerry’s fundamentals were still solid, with a non-GAAP operating profit of $35 million in the quarter and the company had $579 million in cash, cash equivalents and long-term investments on hand as of the end of May.

Highlights in the quarter included the integration of CylanceGUARD with secure critical event management powered by BlackBerry AtHoc. The integration allows those with limited information technology resources and a CylanceGUARD subscription to gain access to services previously available only to large, well-resourced entities.

BlackBerry also launched an artificial intelligence-based version of its Cylance cybersecurity solutions portfolio. The addition of AI is said to reduce alert fatigue and offers faster incident response and expand cloud defence coverage.

“This quarter we delivered sequential revenue growth in our Cybersecurity business unit. Revenue growth was driven by a year-over-year increase in billings and pipeline, anchored on strength in our core verticals, particularly government,” said John Chen, Executive Chair & CEO, BlackBerry.

“In our IoT business unit we saw some temporary delays to the start of new programs as a number of customers review their plans to capitalize on the software-defined vehicle (SDV) trend, impacting revenue this quarter. However, we see no change to the strong secular trends that are a multi-year tailwind for QNX and BlackBerry IVY.

We continue to expect to achieve revenue consensus for both our IoT and Cybersecurity business units this fiscal year.”

First Quarter Fiscal 2024 Financial Highlights

  • Total company revenue was $373 million.
  • Total company GAAP and non-GAAP gross margin was 48%, both lower due to completion of the significant sale of the non-core portion of the patent portfolio in the quarter. Excluding the patent sale, the non-GAAP gross margin was 22 percentage points higher.
  • IoT revenue was $45 million, with gross margin of 80%.
  • Cybersecurity revenue was $93 million, with gross margin of 60% and ARR of $289 million.
  • Cybersecurity billings were $122 million, increasing for the 4th consecutive quarter, with 14% sequential and 37% year-over-year growth.
  • Licensing and Other revenue was $235 million, including $218 million relating to the patent sale.
  • Non-GAAP operating profit was $35 million and GAAP operating loss was $11 million.
  • Total cash, cash equivalents, short-term and long-term investments increased by $91 million to $578 million, with the first instalment of $170 million received from the patent sale.
  • Net cash generated from operating activities in the quarter was $99 million.

Business Highlights & Strategic Announcements

  • BlackBerry completes patent sale transaction of substantially all of its non-core patents and patent applications to Malikie Innovations Limited, a wholly-owned subsidiary of Key Patent Innovations Limited
  • BlackBerry QNX releases ultra-scalable, high-performance compute ready operating system to advance software development efforts for next generation vehicles and IoT systems
  • BlackBerry QNX software is now embedded in over 235 million vehicles worldwide: a year-over-year net increase of 20 million vehicles
  • BlackBerry launches enhanced AI-based Cylance cybersecurity solutions portfolio, reducing alert fatigue, offering faster incident response and expanding cloud defence coverage
  • BlackBerry introduces integration of CylanceGUARD managed detection and response (MDR) and BlackBerry AtHoc critical event management (CEM) technologies for secure bi-directional response communications during cyber incidents
  • BlackBerry extends partnership with leading managed security services provider (MSSP), Solutions Granted, enabling better scale to address small and medium-sized businesses (SMBs)
  • McKinsey names BlackBerry a cybersecurity and IoT convergence leader, well positioned in an addressable market of up to $750 billion by 2030

Supplemental Financial Information

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