BlackBerry Q3 Beats Estimates, Shares Plunge

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BlackBerry (TSE: BB) swung to a profit in Q3, but revenue fell. BlackBerry provides intelligent security software and services to businesses and governments.

Revenue & Earnings 

Revenue came in at $184 million in Q3 2022, down 15.6% from $218 million in Q3 2021. Analysts expected revenue of $176.58 million.

Demand for cybersecurity software has been robust as more businesses and government organizations migrate to cloud-based solutions to support remote working during the COVID-19 pandemic.

BlackBerry reported $128 million in cybersecurity revenue in Q3, and expects it to be between $125 million and $135 million in Q4.

The company earned a net profit of $74 million compared with a net loss of $130 million per share a year earlier.

Excluding items, BlackBerry broke even on a per-share basis, exceeding analysts’ average estimate of a loss of $0.07 per share.

Management Commentary 

BlackBerry executive chairman and CEO John Chen said, This quarter BlackBerry delivered solid sequential billings and revenue growth for both the IoT and Cybersecurity businesses, beating expectations for the second consecutive quarter.  We also beat expectations on earnings, despite the ongoing investment to drive future top line growth. In IoT our QNX business achieved a quarterly record for design-related revenues, performing stronger than expected despite ongoing industry supply chain headwinds. On the Cybersecurity front we saw further traction for our recent unified endpoint security product launches with additional head-to-head wins against other next-gen players. I am excited about how the current organization is executing to take advantage of the market opportunities.”

Wall Street’s Take 

Following the results, RBC Capital analyst Paul Treiber kept a Sell rating on BB and lowered its price target to $8.50 (C$10.97) price target. This implies 26% downside potential.

Overall, BB scores a Moderate Sell rating among Wall Street analysts based on one Hold and three Sells. The average BlackBerry price target of C$11.38 implies 0.9% upside potential to current levels.

TipRanks’ Smart Score

BB scores a 1 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock returns are likely to underperform the overall market.

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BlackBerry Q3 Earnings Preview: What to Expect
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