Investors eyeing BlackBerry (TSX:BB) stock on the TSX need to keep a few critical points in mind before jumping in. With the shares recently soaring 15.5% after an upbeat earnings report, it’s worth diving into the nitty-gritty of what makes BlackBerry tick. Today, let’s get a good look at those earnings as well as what investors might want to consider for the future of their investment strategy.
1. Strong IoT and cybersecurity growth
BlackBerry’s strategic focus on the Internet of Things (IoT) and cybersecurity is paying off handsomely. In the first quarter of fiscal 2025, IoT revenue jumped 18% year over year to $53 million, surpassing previous guidance.
The IoT division’s gross margin is also impressive at 81%, indicating robust profitability potential. On the cybersecurity front, revenue hit $85 million, beating expectations and showing a sequential increase in annual recurring revenue (ARR).
BlackBerry’s cybersecurity division also posted a solid gross margin of 59%, highlighting its strong market position. This growth is underscored by strategic moves like the partnership with ETAS for software-defined vehicles and collaborations with AMD for robotics industry advancements.
2. Financial performance and future outlook
BlackBerry stock reported a total revenue of $144 million for the quarter, with a non-generally accepted accounting principles (GAAP) gross margin of 67%. Despite a non-GAAP operating loss of $12 million, the company is steadily marching towards profitability. Chief Executive Officer (CEO) John J. Giamatteo emphasized that BlackBerry is on track to be profitable on a non-GAAP basis and generate positive cash flow by the fourth quarter.
“Both our IoT and Cybersecurity businesses beat revenue expectations. QNX recorded solid royalty revenue while our Cybersecurity division delivered a second consecutive quarter of ARR growth, as well as further enhancing dollar-based net retention.”
CEO John Giamatteo
The company’s guidance for the next quarter and the full fiscal year 2025 is promising. For Q2 FY25, revenue is projected between $136 million and $144 million, while the full fiscal year is expected to see revenue in the range of $586 million to $616 million. Investors should be encouraged by these targets, which reflect BlackBerry’s confidence in its growth trajectory.
3. Recent news and strategic moves
BlackBerry stock made significant strides in enhancing its product offerings and market reach. The launch of CylanceMDR, an artificial intelligence (AI)-powered managed detection and response solution, and the introduction of Cylance Assistant, a generative AI cybersecurity advisor, are a testament to BlackBerry stock’s innovative capabilities.
Furthermore, BlackBerry’s UEM was recognized as a 2024 Gartner Peer Insights Customers’ Choice for Unified Endpoint Management tools for the second consecutive year. These awards and innovations demonstrate BlackBerry’s commitment to staying ahead in the cybersecurity game.
Bottom line
BlackBerry stock’s recent performance and strategic initiatives signal a company on the rise. With strong growth in its IoT and cybersecurity divisions, a clear path to profitability, and innovative product developments, BlackBerry stock presents a compelling case for investors.
As always, potential investors should consider these factors in the context of their investment strategies and risk tolerance. But if you’re looking for a tech stock with a robust growth story and a clear vision for the future, BlackBerry stock is certainly worth a closer look.
