Shares of BlackBerry were down 13.5 per cent after the company released its latest quarterly results and its new chief executive said he has his eye on cutting costs.
For fiscal Q3, BlackBerry reported revenues of $175 million. This number was up $6 million year-over-year and soared dramatically on a sequential basis from the more than a decade low of $132 million that was reported in Q2. Unfortunately, the total top line number missed street estimates by nearly $6 million.
The Cybersecurity segment showed revenues rising by $8 million over the prior year period to $114 million. The IoT business continued its longer term growth trend by adding $4 million to $55 million.
Some of these gains were offset by the Licensing segment, which can be very volatile quarter to quarter, and this time showed a 50% year-over-year drop to $6 million in revenue.
“This was a good quarter for BlackBerry. Our IoT business delivered solid revenue growth and continued its impressive design win momentum. We showed particular strength in Automotive, especially in ADAS where we continue to expand our market position,” said John J. Giamatteo, CEO, BlackBerry.
“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. “
Earlier in December, BlackBerry confirmed that it will no longer be pursuing an initial public offering of the internet-of-things segment but still plans to separate the business along with the cybersecurity division.
Giamatteo added
“Work has commenced to fully separate and significantly right size our businesses, and we expect to further reduce operating cashflow usage in Q4”
Third Quarter Fiscal 2024 Financial Highlights
- Total company revenue was $175 million.
- Total company non-GAAP and GAAP gross margin increased to 73%.
- IoT revenue was $55 million, a 12% sequential and 8% year-over-year increase; IoT gross margin was 84%.
- Cybersecurity revenue was $114 million, a 44% sequential and 8% year-over-year increase; Cyber gross margin improved by 14 percentage points sequentially to 68%.
- Cybersecurity ARR was $273 million.
- Cybersecurity billings were $109 million.
- Licensing and Other revenue was $6 million.
- Non-GAAP operating profit was $13 million and GAAP operating loss was $11 million.
- Total cash, cash equivalents, short-term and long-term investments was $271 million.
Business Highlights & Strategic Announcements
- BlackBerry appoints cybersecurity industry veteran, and President of BlackBerry’s Cybersecurity division, John Giamatteo as CEO
- Process underway to establish fully standalone IoT and Cybersecurity divisions, separating centralized functions and right-sizing cost structures to increase options for maximizing shareholder value
- BlackBerry announces partial extension of convertible debentures, fully repaying $365 million of the 2020 debentures and issuing $150 million of short-term debentures on substantially identical terms
- BlackBerry secures significant, multi-year deal to provide full suite of cybersecurity solutions to the Government of Malaysia
- United States Department of Homeland Security awards new PENS contract to BlackBerry, utilizing BlackBerry AtHoc critical event management (CEM) solution
- BlackBerry launches Generative AI-powered cybersecurity assistant to increase efficiency and reduce fatigue for CISO teams
- BlackBerry announces enhancements to BlackBerry SecuSUITE for Government, including encrypted video and group audio calls
Outlook
BlackBerry is providing the following guidance for the fourth quarter of fiscal 2024 (ending February 29, 2024).
| Total BlackBerry revenue: | $150 – $159 million |
| IoT revenue: | $62 – $66 million |
| Cyber revenue: | $83 – $88 million |
| Licensing & Other revenue: | Approximately $5 million |
