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BlackBerry (BB) Beats on Q3 Earnings Despite Lower Revenues

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BlackBerry Limited (BB - Free Report) reported solid third-quarter fiscal 2021 (ended Nov 30, 2020) results, with the bottom line beating the Zacks Consensus Estimate. QNX design wins and notable cybersecurity partnerships bode well. The company is also witnessing significant traction in the Spark business.

Bottom Line

On a GAAP basis, net loss in the quarter was $130 million or loss of 23 cents per share compared with a net loss of $32 million or loss of 7 cents per share in the prior-year quarter. The wider year-over-year loss was mainly due to top-line contraction and fair value adjustment on the convertible debentures.

Non-GAAP earnings came in at $11 million or 2 cents per share compared with $17 million or 3 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 3 cents.

BlackBerry Limited Price, Consensus and EPS Surprise BlackBerry Limited Price, Consensus and EPS Surprise

BlackBerry Limited price-consensus-eps-surprise-chart | BlackBerry Limited Quote

Revenues

Owing to the challenges from the COVID-19 pandemic, quarterly total GAAP revenues decreased to $218 million from $267 million in the year-ago quarter. While Software and Services revenues aggregated $162 million, Licensing contributed $56 million to total revenues. The company recorded significant progress in both the Government and Financial Services verticals within the Spark business. Non-GAAP revenues for the quarter were $224 million, which matched the consensus estimate.

During the quarter, BlackBerry launched Cyber Suite, which combines industry leading EPP, EDR and MDR product. It delivers continuous authentication and the mobile threat defense capabilities and brings together the best of BlackBerry and Cylance technology.     

Other Details

Gross profit decreased to $149 million from $198 million in the year-ago quarter, primarily due to lower revenues. Total operating expenses increased to $276 million from $227 million driven by $95 million fair value adjustment on the convertible debentures. Operating loss was $127 million compared with a loss of $29 million in the prior-year quarter.

Cash Flow & Liquidity

In the first nine months of fiscal 2021, BlackBerry generated $30 million from operating activities against cash utilization of $8 million in the year-ago period. As of Nov 30, 2020, the company had $223 million in cash and equivalents with $99 million of operating lease liabilities and $459 million of long-term debentures.

Key Picks

BlackBerry currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry are Ceragon Networks Ltd. (CRNT - Free Report) , Vodafone Group PLC (VOD - Free Report) and Clearfield, Inc. (CLFD - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ceragon has a long-term earnings growth expectation of 15%.

Vodafone has a long-term earnings growth expectation of 14.3%.

Clearfield delivered a positive earnings surprise of 44.3%, on average, in the trailing four quarters.

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