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BlackBerry (BB) Q4 Earnings Top Estimates, Revenues Fall Y/Y

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BlackBerry Limited (BB - Free Report) reported fourth-quarter fiscal 2022 (ended Feb 28, 2022) results, with year-over-year top-line contraction. Nonetheless, accretive design wins and partnerships with major players bode well for the Canada-based company. Sustained demand for cybersecurity and IoT products acted as a significant tailwind.

The company reported adjusted earnings per share of 1 cent compared with 2 cents in the prior-year quarter. The Zacks Consensus Estimate was a loss of 3 cents per share. Quarterly total revenues declined 11.9% year over year to $185 million.

For fiscal 2022, the company reported a adjusted loss of 10 cents per share compared with earnings of 16 cents in fiscal 2021. Total revenues were $718 million, down 19.6% year over year.

Following the earnings announcement, shares of BlackBerry declined 4.8% in pre-market trading on Apr 1. In the past year, the stock has lost 13.2% compared with the industry’s growth of 16%.

BlackBerry Limited Price, Consensus and EPS Surprise

BlackBerry Limited Price, Consensus and EPS Surprise

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

Quarter in Details

While revenues from Cyber Security aggregated $122 million, the same from IoT totaled $52 million. Licensing and Other contributed $11 million.
In the IoT business unit, the company’s QNX platform secured 17 new design wins in Auto and 28 in the General Embedded Market.

Within the auto sector, increasing consolidation of digital cockpits augurs well for BlackBerry.  In the fiscal fourth quarter, BlackBerry teamed up with a leading China-based connected car company PATEO to incorporate the BlackBerry IVY platform into the latter’s intelligent Digital Cockpit solution. The incorporation will help the companies in delivering Service-Oriented Architecture solutions.

Yet, the company noted that the auto industry is facing headwinds related to the global chip shortage owing to supply chain disruptions and the Ukraine crisis.

In Cyber Security, the company witnessed solid traction for the latest security product launches. The segment also delivered solid sequential billings and revenue growth.

Other Details

Gross profit decreased 18.4% from the year-ago quarter to $124 million. Gross margin contracted 540 basis points (bps) to 67%. Non-GAAP gross margin contracted 530 bps to 67.6%.

Total operating expenses plunged to $22 million from $465 million reported in the prior-year quarter. This was primarily due to a loss in the fair value adjustment of the convertible debentures. Operating income was $146 million against an operating loss of $313 million a year ago.

Cash Flow & Liquidity

For fiscal 2022, BlackBerry utilized $28 million of net cash in operating activities against $82 million generated in the prior fiscal year. The company had a net free cash outflow of $36 million compared with free cash flow of $74 million in the prior fiscal year.

As of Feb 28, 2022, BB had $378 million in cash and cash equivalents with $507 million of long-term debentures.

Outlook

For fiscal 2023, BlackBerry expects revenues in the range of $200-$210 million, indicating 12-18% growth year over year. Cyber business billings growth is expected within 8-12% due to increased uptake of security products. For the IoT business, BlackBerry expects strong growth despite the auto industry headwinds.

Zacks Rank & Stocks to Consider

BlackBerry currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader technology sector include Broadcom (AVGO - Free Report) , Apple (AAPL - Free Report) and Arrow Electronics (ARW - Free Report) . Arrow Electronics sports a Zacks Rank #1 (Strong Buy), while Broadcom and Apple carry a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Broadcom’s fiscal 2022 earnings has increased 7.4% over the past 60 days to $35.49 per share. The long-term earnings growth rate of AVGO is pegged at 14.5%.

Broadcom’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, with the average being 1.9%. Shares of AVGO have increased 32.3% in the past year.

The Zacks Consensus Estimate for Apple’s fiscal 2022 earnings has jumped 0.8% in the past 60 days to $6.16 per share. The long-term earnings growth rate is pegged at 12.5%.

Apple’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, with the average being 20.3%. Shares of AAPL have rallied 42% in the past year.

The Zacks Consensus Estimate for Arrow Electronics 2022 earnings has appreciated 18.8% over the past 60 days to $18.48 per share. The long-term earnings growth rate is 3.1%.

Arrow Electronics’ earnings beat the Zacks Consensus Estimate in each of the last four quarters, with the average being 19.1%. Shares of ARW have gained 5.8% in the past year.


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