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BlackBerry revenue falls 4% due to poor Cybersecurity demand

BlackBerry's Q2 2023 Total company revenue was $168 million

For its second quarter ended August 31, BlackBerry reported a loss before costs such as stock compensation of $29 million, or five cents per share, compared with a loss of $33 million, or six cents per share, in the same quarter of last year.

BlackBerry reported a Q2 EPS of ($0.05), which was $0.02 higher than analyst estimates of ($0.07). And the revenue for the quarter was $168 million compared to the consensus estimate of $161.45 million.

Total revenue fell 4% to $168 million for the quarter ended Aug. 31, compared with a consensus estimate of $166.7 million, according to IBES data from Refinitiv.

The cybersecurity revenue for the second quarter fell during the quarter. Specifically, cybersecurity revenue was $111 million, an 8% decrease year-over-year, with a gross margin of 55% and an ARR of $321 million.

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BlackBerry said in an earnings call that cybersecurity segment revenue in the third quarter is expected to be flat year-on-year.

Internet of Things revenue in the quarter came in at $51 million, up 28% year-over-year, and cybersecurity revenue dropped 8%, to $111 million. Software and services revenue, which includes IoT and cybersecurity, came in at $162 million, with licensing and other revenue rounding out total revenue at $6 million.

Total cash, cash equivalents and investments sat at $669 million as of the end of the quarter, with net cash used by operating activities during the quarter coming to $23 million.

“This was a solid second quarter for BlackBerry, where we delivered both revenue in line with, and EPS ahead of, expectations,” said John Chen, Executive Chairman & CEO, BlackBerry.

“Our IoT business continues to gain market share, and design-phase revenue remained at near-record levels. A major design win in the quarter was with Volkswagen, who chose QNX for their new VW.OS, to be deployed across all Volkswagen group brands. IVY remains firmly on track, with the latest product release in August, proof of concept trials progressing well and the IVY fund continuing to invest in exciting ecosystem partners.

In our Cybersecurity business we delivered double-digit sequential billings growth, including securing significant business in both government and financial services, as well as in the middle market. We’re executing on our plan and we’re seeing the decisions made in recent quarters starting to pay off, with Cybersecurity ARR expected to resume growth early next fiscal year.”

Second Quarter Fiscal 2023 Financial Highlights

  • Total company revenue was $168 million.
  • Total company non-GAAP gross margin was 64% and GAAP gross margin was 63%.
  • IoT revenue was $51 million, a 28% increase year-over-year, with gross margin of 82%.
  • Cybersecurity revenue was $111 million, an 8% decrease year-over-year, with gross margin of 55% and ARR of $321 million.
  • Cybersecurity billings increased 15% sequentially to $102 million and grew 6% year-over-year in the first half of the fiscal year.
  • Software and Services revenue in total was $162 million.
  • Licensing and Other revenue was $6 million, with gross margin of 67%.
  • Non-GAAP operating loss was $22 million. GAAP operating loss was $47 million.
  • Total cash, cash equivalents, short-term and long-term investments were $699 million.
  • Net cash used by operating activities was $23 million.

Business Highlights & Strategic Announcements

  • Volkswagen Group’s software powerhouse, Cariad, selects BlackBerry QNX for its VW.OS, part of a unified software platform to be deployed in all Volkswagen Group brands
  • PATEO, a leading Chinese Tier 1, selects BlackBerry QNX for its intelligent cockpit, Pateo Connect+, to be mass produced in more than ten individual models across five automakers
  • NETA Auto (Hozon’s EV brand) selects BlackBerry QNX for the digital cockpit and ADAS sockets in the NETA S, next generation EV Sedan aimed at the Chinese market
  • MotorTrend and BlackBerry announce inaugural Software-Defined Vehicle Innovator Awards to celebrate innovators and pioneers leading the auto industry’s transformation to software
  • BlackBerry QNX extends support for the Aerospace & Defense market by achieving conformance with the global open standard “Future Airborne Capability Environment” (FACE) certification
  • BlackBerry and L-SPARK announce four smart mobility start-ups for their BlackBerry IVY connected car accelerator program
  • BlackBerry and LeapXpert collaborate to enable the BlackBerry Dynamics platform to provide secure communications through leading messaging applications such as iMessage, WhatsApp and SMS
  • University of California, Irvine and BlackBerry awarded grant funding from the National Science Foundation (NSF) Convergence Accelerator program to develop secure 5G infrastructure solutions
  • Frost and Sullivan, a leading industry analyst, awards BlackBerry its 2022 Global Market Leadership Award for its Mobile Threat Defense (MTD) solution, CylancePROTECT Mobile

Supplemental Financial Information 

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