BlackBerry (BB) Q3 Earnings Rise Y/Y, Revenues Miss Estimates
BlackBerry Limited BB reported third-quarter fiscal 2024 (ended Nov 30) adjusted earnings per share (EPS) of 1 cent. In the prior-year quarter, it incurred a non-GAAP loss of 5 cents. The Zacks Consensus Estimate was pegged at a loss of 1 cent.
Quarterly total revenues were $175 million compared with the prior-quarter revenues of $169 million. The company’s revenues missed the Zacks Consensus Estimate by 12.2%. Revenues benefited from solid demand for its solution across the advanced driver assistance systems market.
The company expects fiscal fourth-quarter total revenues in the range of $150-$159 million. For the Cybersecurity business, revenues are estimated to be in the range of $83-$88 million for the fiscal fourth quarter. The company expects revenues to be affected due to the reassessment of the likelihood, size, and timing of some of the large government deals.
BlackBerry Limited Price, Consensus and EPS Surprise
BlackBerry Limited price-consensus-eps-surprise-chart | BlackBerry Limited Quote
For the Internet of Things (IoT) business, revenues are now projected to be in the band of $62-$66 million. The company expects the UAW labor disputes to hamper production volumes for some of its largest customers. Licensing & Other revenues are expected to be approximately $5 million.
Following the announcement, the company’s shares were down 5.7% in the pre-market trading on Dec 21, 2023. The stock has gained 19.5% in the past year compared with the sub-industry’s growth of 56.3%.
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Quarter in Details
Revenues from the Cybersecurity business totaled $114 million, up 8% year over year. Revenues were driven by securing large strategic deals with leading government agencies.
Revenues from the IoT business totaled $55 million, up 8% year over year.
Licensing and Other contributed $6 million, down from $12 million a year ago.
Recently, BlackBerry announced the appointment of John J. Giamatteo as its new chief executive officer and as a member of its board of directors with immediate effect. Also, the company added that it will separate the IoT and Cybersecurity businesses into standalone entities but will no longer pursue an IPO of the IoT business.
BlackBerry announced that the U.S. Department of Homeland Security has granted it a seven-year Indefinite Delivery, Indefinite Quantity contract.
Other Details
Gross profit increased 16.5% from the year-ago quarter to $127 million. Gross margin improved to 72.5% from 64.5% reported in the prior-year quarter.
However, non-GAAP gross margin increased 900 basis points to 73% on a year-over-year basis.
Total non-GAAP operating expenses were $115 million, down 16.1%. Adjusted operating income was $13 million compared with $28 million a year ago.
Adjusted EBITDA came in at $18 million against an adjusted EBITDA loss of $22 million reported in the year-ago quarter.
Cash Flow & Liquidity
For the nine months ended Nov 30, 2023, BlackBerry generated $12 million of net cash in operating activities against $253 million of cash used in the comparable period in fiscal 2023.
As of Nov 30, 2023, BlackBerry had $210 million in cash and cash equivalents.
Zacks Rank & Stocks to Consider
At present, BlackBerry carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology space are Pegasystems PEGA, Flex FLEX and Watts Water Technologies WTS. Pegasystems and Flex presently sport a Zacks Rank #1 (Strong Buy), whereas Watts Water Technologies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Pegasystems’ 2023 EPS has improved 21.2% in the past 60 days to $1.77. PEGA delivered an average earnings surprise of 1,250.2% in the trailing four quarters. Shares of PEGA have soared 51% in the past year.
The Zacks Consensus Estimate for Flex’s fiscal 2024 EPS has increased 3.6% in the past 60 days to $2.56. Flex’s long-term earnings growth rate is 12.4%.
Flex’s earnings outpaced the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 11%. Shares of the company have risen 19.8% in the past year.
The Zacks Consensus Estimate for Watts Water Technologies 2023 EPS has improved 3.9% in the past 60 days to $8.08. Watts Water’s long-term earnings growth rate is 7.8%.
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