On September 22, BlackBerry Limited (TSX: BB) reported their second quarter financial results for the period ending August 31. BlackBerry reported revenues of $175 million, down 15.5% year over year, cyber security revenue of $120 million, internet of things revenue was $40 million, while licensing and another revenue was $15 million for the quarter.
This is the second quarter BlackBerry has negative year-over-year top line revenue. Gross margins slipped to 64%, down from 65.5% last quarter, SG&A almost doubled from last quarter to $150, reporting in at an (80.6%) operating profit and ($0.25) earnings per share. The stock closed green on the day following the results.
BlackBerry currently has 7 analysts covering the stock with an average 12-month price target of $8.29, or a downside of 14%. Out of the 7 analysts, 2 have hold ratings, 4 have sell ratings and 1 analyst has a strong sell. The street high sits at $10 from 2 analysts while the lowest comes in at $4.50.
Canaccord reiterated their Hold rating and $10 price target on the stock, and headlines that the results came in better than expected with higher expectations for the second half of 2022 in terms of revenue. Management has guided that they will reach a deal to sell their licensing business during the third quarter of this year, which Canaccord says, “could help unlock value and provide a capital infusion to drive accelerated software and services growth.”
They additionally believe that the business is turning the corner towards stronger trends, while they are waiting for additional proof in execution on their new product. Additionally, they call the appointment of John Giamatteo, “a key positive in driving growth in this business as investments ramp.”
BlackBerry beat Canaccord’s revenue estimate of $167 million, thanks to a $5 million beat on licensing revenue and a $3 million beat on software. Total ARR increased by $3 million to $453 million from $450 million last quarter.
Canaccord says that BlackBerry, “highlighted security had strong sequential billings and revenue growth and contributed to a growing pipeline.” They believe that BlackBerry’s Spark suite can become a strong up-sell opportunity through the next few years and say that BlackBerry has the right tools in place to achieve double-digit longer term growth.
Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
