Shares of BlackBerry (BB 0.90%) were down 13.3% as of 3:20 p.m. ET Thursday after the cybersecurity software and services company announced mixed quarterly results.
For its fiscal third quarter ended Nov. 30, 2023, BlackBerry's revenue grew 3.6% year over year to $175 million, translating to adjusted (non-GAAP) earnings of $0.01 per share. Most analysts were modeling an adjusted net loss of $0.02 per share, but on revenue closer to $181 million.
NYSE: BB
Key Data Points
On BlackBerry's contracting cybersecurity revenue stream
Within BlackBerry's top line, cybersecurity segment revenue grew 8% year over year to $114 million, while Internet of Things (IoT) revenue rose 8% to $55 million. Growth in the two core segments was partially offset by a 50% decline in licensing and other revenue, to $6 million.
BlackBerry CEO John Giamatteo called it a "good quarter" for the company with "impressive design win momentum." Giamatteo added that BlackBerry enjoyed relative strength in the automotive sector, including expanded market share in Advanced Driver Assistance Systems (ADAS) products.
On a more concerning note, BlackBerry saw its cybersecurity annual recurring revenue (ARR) contract slightly on a sequential basis to $273 million, from $279 million in the previous quarter. The company's dollar-based net retention rate (DBNRR) in the cybersecurity segment was roughly 82% -- indicating existing customers spent an average of 18% less on BlackBerry's cybersecurity solutions after their first year as clients.
What's next for BlackBerry stock?
Moving forward, BlackBerry says it's currently in the process of "right-sizing cost structures" and separating centralized functions as part of its previously announced spinoff of the IoT segment from its cybersecurity business.
In the meantime, for the current fiscal fourth quarter ending Feb. 29, 2024, BlackBerry expects total revenue of $150 million to $159 million, including IoT revenue of $62 million to $66 million and cybersecurity revenue of $83 million to $88 million. Still, that consolidated guidance is well below analysts' consensus estimates for fiscal Q4 revenue of $200 million.
In the end, BlackBerry might be pleased with its quarter. But it obviously left investors wanting more. BlackBerry stock is simply responding in kind today.
