Blackberry ((TSE:BB)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for BlackBerry presented a generally positive outlook, highlighting strong financial performance and strategic successes, despite some challenges. The company showcased its ability to navigate through difficulties, such as automotive sector tariffs and a slight decline in Secure Communications revenue, with significant achievements like the Cylance transaction and cost reductions taking center stage.
Revenue and Profitability Beat Expectations
BlackBerry’s total revenue exceeded the top-end of guidance, reaching $141.7 million. The QNX division contributed $65.8 million, Secure Communications $67.3 million, and Licensing $8.6 million. The company reported an adjusted EBITDA of $21.1 million, with earnings per share (EPS) surpassing expectations at $0.03 for Q4 and $0.02 for the full fiscal year.
Strong Cash Position
The company reported a robust cash position, with total cash and investments increasing by $144 million. This was driven by a significant increase in operating cash flow to $42 million and the collection of the initial tranche of cash from the Cylance deal, amounting to approximately $80 million.
QNX’s Growth and Strategic Wins
The QNX division demonstrated impressive growth, with its royalty backlog expanding to approximately $865 million. This growth reflects the addition of future expected royalty revenue and strategic design wins with leading OEMs and Tier 1 suppliers in the automotive sector, particularly in ADAS and cockpit domain controllers.
Successful Cylance Transaction
BlackBerry successfully closed the Cylance transaction with Arctic Wolf, receiving approximately $80 million in cash and 5.5 million common shares. The company retained AI/ML endpoint security patents and anticipates a significant tax shield for future profits.
Cost Reduction Achievements
The company exceeded its target of removing approximately $150 million of costs from the run rate, significantly enhancing profitability. BlackBerry reported a total company adjusted EBITDA of $39.3 million for the year, showcasing its effective cost management strategies.
Challenges in Automotive Sector
Despite the positive outlook, BlackBerry faces challenges in the automotive sector due to uncertainty from recent tariffs. These tariffs could potentially impact BlackBerry’s business indirectly through effects on customers, including supply chains and macroeconomic demand.
Secure Communications Revenue Decline
The Secure Communications segment experienced a slight year-over-year revenue decline, attributed to a tough comparison with the previous year. This was partially due to the upfront revenue portion of a large deal with the Malaysian government.
Secure Communications ARR and DBNRR Decline
Annual recurring revenue for Secure Communications decreased by $7 million or 3% sequentially to $208 million. Additionally, the dollar-based net retention rate decreased by 2 percentage points sequentially to 93%.
Forward-Looking Guidance
Looking ahead to fiscal year 2026, BlackBerry expects QNX revenue to range between $250 million and $270 million, Secure Communications between $230 million and $240 million, and Licensing division revenue to be approximately $6 million per quarter. The company anticipates positive operating cash flow around $35 million for the full fiscal year.
In summary, BlackBerry’s earnings call painted a picture of a company on a positive trajectory, with strong financials and strategic maneuvers outweighing the challenges. The company’s forward-looking guidance suggests continued growth and resilience in the face of industry challenges.