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BlackBerry (BB) Q4 Earnings in Sync, Shares Fall on Lower Revenues

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BlackBerry Limited (BB - Free Report) reported lackluster fourth-quarter fiscal 2021 (ended Feb 28, 2021) results, with the bottom line matching the Zacks Consensus Estimate despite lower revenues year over year owing to a challenging macroeconomic environment. Post the earnings release, shares fell significantly in pre-market trading as investors probably expected healthy top-line figure. However, 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 $315 million or loss of 56 cents per share compared with a net loss of $41 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 $16 million or 3 cents per share compared with $51 million or 9 cents per share in the year-ago quarter. The bottom line matched the Zacks Consensus Estimate.

In fiscal 2021, net loss (GAAP) was $1,104 million or loss of $1.97 per share compared with a net loss (GAAP) of $152 million or loss of 32 cents per share in fiscal 2020. Non-GAAP earnings came in at $101 million or 18 cents per share compared with $74 million or 13 cents per share in fiscal 2020.

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 $210 million from $282 million in the year-ago quarter. Non-GAAP revenues in the quarter were $215 million. While Software and Services revenues aggregated $165 million, Licensing contributed $50 million to total non-GAAP revenues. The company recorded significant progress in both the Government and Financial Services verticals within the Spark business.

In fiscal 2021, GAAP revenues were $893 million, down from $1,040 million in fiscal 2020.     

Other Details

Gross profit (GAAP) decreased to $152 million from $212 million in the year-ago quarter, primarily due to lower revenues. Total operating expenses increased to $465 million from $253 million driven by $258 million fair value adjustment on convertible debentures. Operating loss (GAAP) was $313 million compared with a loss of $41 million in the prior-year quarter.

Notable Developments in the Quarter

During the quarter, BlackBerry entered into an exclusive negotiation process with an undisclosed North American firm for the divestment of part of its patent portfolio, primarily related to mobile devices, messaging and wireless networking. However, patents associated with Spark, QNX, IVY, secure communication and critical event management businesses will continue to be owned and managed by the company. The ongoing negotiations are yet to culminate into a deal. During the quarter, QNX strengthened its leading position in the safety critical software with 25 design wins. Currently, QNX has design wins from 23 of the world's top 25 electrical vehicle (EV) OEMs, which together represent 68% of the global EV production.

Cash Flow & Liquidity

In fiscal 2021, BlackBerry generated $82 million from operating activities compared with $26 million a year ago. As of Feb 28, 2021, the company had $214 million in cash and equivalents with $90 million of operating lease liabilities compared with respective tallies of $377 million and $120 million in the prior-year period.

Outlook

For fiscal 2022, BlackBerry expects GAAP revenues from Cybersecurity business, which include UEM, UES, ATHOC and Secusmart, in the range of $495 million to $515 million. Revenues from BTS (BlackBerry Technology Solutions) business, which include QNX, Certicom and Paratek, is expected in the range of $180 million to $200 million. The company has not provided any revenue outlook for its Licensing business due to the ongoing negotiation process.

Key Picks

BlackBerry currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry are ASGN Incorporated (ASGN - Free Report) , CDW Corporation (CDW - Free Report) and Cerence Inc. (CRNC - 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.

ASGN has a long-term earnings growth expectation of 9.5%. It delivered a positive earnings surprise of 22.3%, on average, in the trailing four quarters.

CDW has a long-term earnings growth expectation of 13.1%. It delivered a positive earnings surprise of 14.1%, on average, in the trailing four quarters.

Cerence delivered a positive earnings surprise of 287%, on average, in the trailing four quarters.

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