BlackBerry Stock Rises After Q3 Results As Cybersecurity, IoT Revenue Exceeds Guidance: Retail Cheers Performance

BlackBerry Limited ($BB) shares rose in Thursday’s after-hours session after the Waterloo, Ontario-based company announced fiscal year 2025 third-quarter results that exceeded estimates on a reported basis including contribution from the to-be-divested Cylance business. 

BlackBerry reported third-quarter non-GAAP earnings per share (EPS) of $0.02 compared to the consensus estimate for a loss of $0.01 per share and the guidance in the range of a loss per share of $0.01 to a profit of $0.01.

Revenue, including the Cylance business, which was held as “for sale” as of Nov. 30, came in at $162 million, ahead of the consensus estimate of $144.84 million.

Last week, BlackBerry said it is divesting Cylance, a provider of endpoint security assets, to Arctic Wolf for $160 million, subject to some adjustments, and about 55 million Arctic Wolf stock.

On an adjusted basis, revenue, excluding Cylance’s contribution, was at $143 million.

Among business segments, Internet of Things (IoT) revenue climbed 13% quarter-over-quarter to $62 million, Cybersecurity revenue rose 7% to $93 million and licensing revenue came in at $7 million, all exceeding the guidance.

Gross margin expanded year-over-year from 69.6% to 78.3% as the cost of sales fell over 18%.

“BlackBerry achieved a significant inflection in its results this past quarter,” said John Giamatteo, CEO, BlackBerry.  

“Driven by a combination of strong revenue performance for both our Cybersecurity and IoT divisions, and continued focus on costs and efficiency, the Company delivered stronger than expected profitability and a return to positive cash flow ahead of schedule.”

Looking ahead, BlackBerry guided first-quarter non-GAAP EPS in the range of a loss of $0.01 per share to a profit of $0.01 per share and revenue in the range of $125 million to $135 million.

IoT and Secure communications revenue for the quarter are expected at $60 million to $65 million and $62 million to $66 million, respectively, with licensing revenue likely contributing about $4 million.

The company expects full-year bottom-line result in the range of a loss of $0.02 to break-even, and revenue of $517 million to $526 million. It clarified that the revenue guidance does not include the expected contribution from Cylance as the divestment is due to be completed in the fourth quarter.

BlackBerry sees the Cylance sale as a further transformational step, placing it on a path to accelerating profitability post-close.

BB sentiment and message volume December 19, 2024, as of 9:52 pm ET | Source: Stocktwits

On Stocktwits, sentiment toward the stock improved from ‘bullish’ a day ago to ‘extremely bullish’ (82/100), with retail chatter staying ‘high’ amid the release of the results. 

A retailer watcher on the platform said the muted post-earnings reaction is due to the market’s non-recognition of the fact that the guidance has been adjusted for Cylance divestiture.

Another said he may accumulate the stock if it does not move appreciably higher on earnings.

Since BlackBerry has fallen from grace as a smartphone manufacturer, the company has become an enterprise cybersecurity solutions provider and IoT company for the automotive end market. 

The stock attained meme status amid the retail frenzy in 2021.

BlackBerry shares, which ended Thursday’s regular session down 1% at $2.98, added 2.01% in after-hours trading. The stock has lost about 16% so far this year.

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