BlackBerry Ltd. Surprises with Unexpected Profit, Shares Rise 6%

BlackBerry reports unexpected profit with strong sales in IoT and cybersecurity, shares rise over 6% in after-hours trading.

By Bill Bullington

4/3, 18:15 EDT

Key Takeaway

  • BlackBerry Ltd. reported an unexpected adjusted profit in Q4, with shares rising over 6%, driven by growth in IoT and cybersecurity.
  • Q4 earnings of 3 cents per share beat analysts' expectations of a 4-cent loss, with revenue at $173 million surpassing the $150 million forecast.
  • Despite positive earnings, future guidance falls short of expectations, with projected sales below FactSet consensus for fiscal 2025.

Surprising Profit Announcement

BlackBerry Ltd. experienced a notable increase in its stock value, rising over 6% in after-hours trading, following the announcement of an unexpected adjusted profit in its fiscal fourth quarter. This development was bolstered by significant sales growth in the company's cybersecurity and internet-of-things (IoT) divisions. John J. Giamatteo, BlackBerry's Chief Executive, highlighted this period as the "strongest-ever quarter" for the IoT division, while also noting incremental progress in the cybersecurity division. The company's efforts towards divisional separation and profitability are reportedly making good strides, with a notable reduction in operating cash burn by more than half compared to the fiscal third quarter.

Financial Performance and Analysts' Expectations

For the fiscal fourth quarter, BlackBerry reported a loss of $56 million, or 10 cents per share, an improvement from a loss of $495 million, or 85 cents per share, in the same period the previous year. When adjusted for one-time items, the company posted earnings of 3 cents per share, defying analysts' expectations of a 4-cent loss per share as polled by FactSet. Revenue increased to $173 million from $151 million a year ago, surpassing the FactSet consensus of $150 million. This revenue includes $66 million from the IoT business, marking a 25% year-over-year increase, and $92 million from the cybersecurity business, a 5% increase from the previous year.

Future Outlook and Market Reaction

Looking ahead, BlackBerry provided guidance for the fiscal first quarter, projecting a per-share loss between 4 cents and 6 cents on sales ranging from $130 million to $138 million. This forecast falls short of FactSet expectations, which anticipated a per-share adjusted loss of 3 cents on sales of $148 million. For fiscal 2025, the company expects an adjusted per-share loss between 3 cents and 7 cents, with sales projected between $586 million and $616 million, slightly below the FactSet consensus of a 6-cent loss per share on sales of $624 million. Despite the positive earnings surprise, BlackBerry's shares have declined approximately 38% over the past 12 months, contrasting with a 26% advance in the S&P 500.

Management Quotes

  • John J. Giamatteo, CEO of BlackBerry:

    "The fiscal fourth quarter was the strongest-ever quarter for the company’s internet-of-things division, and BlackBerry also took small, but important steps forward for the cybersecurity division." "The company is making good progress with efforts to both separate the divisions and drive towards profitability." "Its operating cash burn more than halved in the quarter as compared with fiscal third quarter."