BlackBerry reports $42 million loss in fiscal second quarter

BlackBerry reported a loss of $42 million in its fiscal second quarter, a decreased from last year but missing Street estimates.

Quarterly total revenues were $132 million compared with the prior-quarter’s revenues of $168 million.

Revenues from the Cybersecurity business totaled $79 million, down 28.8% year over year. Revenues were impacted primarily due to elongated sale cycles especially in the government sector.

Revenues from the Internet of Things business (IoT) totaled $49 million, down 3.9% year over year.

Licensing and Other contributed $4 million, down from $6 million a year ago.

Gross profit declined 19.8% from the year-ago quarter to $85 million. Gross margin improved to 64.4% from 63.1% reported in the prior-year quarter. However, non-GAAP gross margin increased 100 basis points to 65% on a year-over-year basis.

Total non-GAAP operating expenses were $114 million, down 11.6%. Adjusted operating loss was $28 million compared with $22 million a year ago.

Adjusted EBITDA loss came in at $22 million compared with $16 million reported in the year-ago quarter.

“Our IoT business continues to win new designs and add royalty backlog at a strong rate, illustrating how well-positioned this business is in the medium to long term. We expect a strong finish for IoT revenue this fiscal year, with the fourth quarter forecasted to be the strongest ever. Further, we are excited by the response from beta customers to our next generation QNX Software Development Platform 8.0, and its potential to enable embedded Generative AI applications,” said John Chen, Executive Chair & CEO, BlackBerry.

“We also expect a strong second half for revenue in our Cyber business, with a pipeline of deals that include large, mainly perpetual government opportunities that can deliver meaningful in-year revenue. Therefore, we are reiterating our full-year Cyber revenue outlook.”

Second Quarter Fiscal 2024 Financial Highlights

Total company revenue was $132 million.
Total company non-GAAP gross margin was 65% and GAAP gross margin was 64%.
IoT revenue was $49 million, a 9% sequential increase; IoT gross margin was 84%, increasing by 400 basis points sequentially.
Cybersecurity revenue was $79 million, with gross margin of 54%.
Cybersecurity ARR was $279 million.
Cybersecurity billings were $74 million.
Licensing and Other revenue was $4 million.
Non-GAAP operating loss was $28 million and GAAP operating loss was $47 million.
Total cash, cash equivalents, short-term and long-term investments decreased by $59 million to $519 million.

Business Highlights & Strategic Announcements

Foxconn-initiated group, Mobility in Harmony (MIH) consortium, selects safety-certified BlackBerry® QNX® and BlackBerry IVY® for its next-generation electric vehicle platform
Mitsubishi Electric selects BlackBerry IVY to power its new automotive in-cabin system, FlexConnect.X, helping enhance road safety and enabling new customer experiences by leveraging IVY’s sensor insights
BlackBerry IVY innovation fund invests in Israeli start-up, CorrActions, whose AI-powered application will leverage IVY sensor insights to detect potential driver awareness issues
BlackBerry introduces major update to its patented Cylance® AI engine, further improving protection from zero-day threats
CylanceENDPOINT™ receives Gartner Peer Insights, Customers’ Choice designation for Endpoint Protection Platforms, based on customer feedback, placing in the upper-right quadrant
BlackBerry releases its latest Quarterly Global Threat Intelligence Report, highlighting that the company’s AI-driven cybersecurity solutions stopped 55,000 individual cyber-attacks between March and May 2023

BlackBerry also announced that Timothy Dattels has decided to resign from the BlackBerry Board of Directors, effective today.

Mr. Dattels joined the Board in 2012. He chaired a special committee of the Board through a review of strategic alternatives in 2013 and also served on the Audit and Risk Management Committee from 2013 to 2019.

Chen said,

“We thank Tim for his longstanding contributions as BlackBerry transformed itself from a device-centric company to a Cybersecurity and IoT software and services company, and we wish him the best in his future endeavours.”

Dattels noted,