BlackBerry Exceeds Q2 Revenue Expectations and Aims for Growth

On [date], BlackBerry Limited reported its financial results for the second quarter of fiscal year 2025, with total revenue reaching $145 million, exceeding the guidance of $144 million. CEO John Giamatteo and newly appointed CFO Tim Foote discussed strong performances in both the IoT and Cybersecurity divisions, with the IoT division achieving 12% year-over-year growth and the Cybersecurity sector growing by 10%.

The company emphasized its commitment to cost management and operational efficiency, resulting in a 24% reduction in operating expenses. BlackBerry also announced plans for an upcoming Investor Day on October 16th, during which it will share detailed financial insights and growth strategies.

Key Takeaways:

• BlackBerry’s Q2 revenue surpassed expectations at $145 million.
• The IoT division brought in $55 million, reflecting a 12% year-over-year growth.
• Cybersecurity revenue totaled $87 million, a 10% growth from the previous year.
• Operating expenses were reduced by 24% to $99 million.
• Non-GAAP EPS and adjusted EBITDA achieved break-even.
• New design wins in automotive advanced driver assistance systems (ADAS) and advancements in QNX products were highlighted.
• The company launched an XDR-focused MDR Pro offering to help mitigate customer churn.
• Annual Recurring Revenue (ARR) remained stable at $279 million.
• The Dollar-Based Net Retention Rate (DBNRR) increased to 88%, up 7 percentage points year-over-year.
• Gross margins remained steady at 67%.
• The financial outlook for Q3 includes expected IoT revenue of $56 to $60 million and Cyber revenue of $86 to $90 million.
• BlackBerry aims to achieve positive cash flow and EBITDA in Q4.

Company Outlook:
BlackBerry anticipates IoT revenue of $56 to $60 million and Cyber revenue of $86 to $90 million for Q3. The company expects adjusted EBITDA to range from break-even to a positive $10 million in Q3, with goals set for positive cash flow and EBITDA in Q4.

Bearish Highlights:

• Delays in automotive software development have affected the IVY program.
• Cylance revenue has declined due to customer churn.

Bullish Highlights:

• New design wins in automotive ADAS and advancements in QNX products.
• Growth in UEM, AtHoc, and Secusmart in the Cybersecurity segment.
• Managed services within the Cybersecurity division are gaining traction.

Misses:

• The company reported a non-GAAP operating loss of $4 million.

Q&A Highlights:

• Discussion on the strategic integration of the IVY platform with QNX teams and overall progress on the separation process, including alignment of IT systems and organizational structures.
• Acknowledgment of the potential impact of proposed bans on Chinese automotive software.
• Emphasis on the transition to managed detection and response (MDR) services as a positive trend.

During the call, BlackBerry executives underlined the importance of innovation and operational efficiency in driving growth. The upcoming Investor Day is expected to provide further details on BlackBerry’s capital allocation strategy and performance across divisions. As the company navigates the evolving tech landscape, it remains focused on delivering shareholder value and positioning itself for sustainable growth in global markets.