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BlackBerry (BB) Outlines Long Term Goals: Key Highlights

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·4 min read
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BlackBerry BB recently outlined its long-term financial targets, which include achieving revenues of $1.213 billion by fiscal 2027 at a five-year CAGR of 13%. The company had reported revenues of $718 million in fiscal 2022 ended Feb 28, down 19.6% year over year.

For its IoT (excluding IVY) and Cybersecurity segment, BlackBerry expects to achieve $443 million and $770 million in revenues by fiscal 2027 at a five five-year CAGR of 20% and 10%, respectively.

IoT revenues will be driven by a robust multi-year design win backlog and a strong pipeline. BlackBerry anticipates the IoT Serviceable Addressable Market (“SAM”) to witness growth in the range of 8-12% per year from fiscal 2023 to fiscal 2026.

The company expects to achieve its first IVY design wins in fiscal 2023.  BlackBerry IVY is a scalable and cloud-connected software platform designed mainly for developers and automakers to share vehicle data securely. BlackBerry expects SAM for IVY to be nearly $800 million in fiscal 2025.

BlackBerry Limited Price and Consensus

 

BlackBerry Limited Price and Consensus
BlackBerry Limited Price and Consensus

BlackBerry Limited price-consensus-chart | BlackBerry Limited Quote

 

For Cybersecurity, the top-line performance is likely to benefit from large upsell and new logo opportunities and product enhancements and increasing SAMs.

The company forecasts the SAMs for endpoint security and managed cybersecurity services to increase by 15% and 14% annually until fiscal 2027.

However, churn in the unified endpoint management or UEM customer base is expected to affect revenue and annual recurring revenue in fiscal 2023. The impact is expected to become less pronounced thereafter, noted the company.

BlackBerry expects revenue for the Cybersecurity business segment (excluding UEM) to grow at a 5-year CAGR of 16% to fiscal 2027.

Other Financial Targets

Non-GAAP gross margin per year is expected to increase by 100 basis points (bps), while non-GAAP operating margin is expected to reach 20% by fiscal 2027.

BlackBerry expects to approach breakeven non-GAAP earnings per share and cash flow in fiscal 2024 and thereafter generate positive non-GAAP earnings per share and cash flow.

In fiscal 2023, the company targets to invest 30% of revenues towards research and development.

Headquartered in Waterloo, Canada, BlackBerry provides intelligent security software and services to enterprises and governments worldwide. It offers devices and software platforms for managing security, mobility and communications among hardware, programs, mobile apps and the Internet of Things.

At present, BlackBerry carries a Zacks Rank #3 (Hold). Shares of BB have lost 33% of their value against the industry’s decline of 7.4% in the past year.

Key Picks

A few better-ranked stocks from the broader technology sector worth consideration are InterDigital IDCC, Flex FLEX and Pure Storage PSTG. InterDigital and Flex sport a Zacks Rank #1 (Strong Buy), while Pure Storage carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Flex’s fiscal 2023 earnings is pegged at $2.16 per share, up 6.9% in the past 60 days. The long-term earnings growth rate is pegged at 14.9%.

Flex’s earnings beat the Zacks Consensus Estimate all last four quarters, with the average being 21.1%. Shares of FLEX have declined 9.4% in the past year.

The Zacks Consensus Estimate for Pure Storage fiscal 2023 earnings is pegged at 86 cents per share, unchanged in the past 60 days. The long-term earnings growth rate is 30.9%.

Pure Storage’s earnings beat the Zacks Consensus Estimate all last four quarters, with the average being 99.2%. Shares of PSTG have gained 39.3% in the past year.

The Zacks Consensus Estimate for InterDigital 2022 earnings is pegged at $3.28 per share, up 5.1% in the past 60 days. IDCC’s long-term earnings growth rate is pegged at 15%.

InterDigital’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, with the average being 141.1%. Shares of IDCC have lost 15.6% of their value in the past year.


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