Ontario-based software company Blackberry Ltd. (NYSE: BB) posted better-than-expected first-quarter results for Fiscal 2023. Shares reacted rather funnily, falling over 4% and spiking 4.3% during the after-hours trading session. Shares of the cybersecurity provider have lost 42.7% year-to-date.
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Results in Detail
Blackberry reported an adjusted loss of $0.05 per share, similar to the prior-year period and one cent higher than the analysts’ estimates. The quarterly loss was driven by a one-time litigation settlement charge of $165 million.
Notably, total revenue fell 3.4% year-over-year to $168 million but outpaced the Street’s estimates by $8.22 million. The revenue fell 9.2% sequentially from the $185 million recorded in Q4FY22.
Internet of Things (IoT) revenue of $51 million jumped 19% year-over-year and Cybersecurity revenue of $113 million rose 6% compared to the same period last year.
For the quarter, the IoT segment reported an annual recurring revenue (ARR) of $94 million, and the Cybersecurity segment recorded an ARR of $334 million.
For Fiscal 2023, Blackberry expects to achieve revenue of between $200 million and $210 million for the IoT segment. Moreover, revenue from the Cybersecurity segment is expected to remain in line with FY22 with about 8% to 12% growth in billings year-over-year.
Commenting on the results, Executive Chairman and CEO, John Chen, said, “The IoT business maintained its momentum of new design wins in rapidly growing core Auto domains, including Advanced Driver Assistance Systems and Digital Cockpits, and delivered a third consecutive record quarter for pre-production revenues. The Cybersecurity business demonstrated solid traction in the market by recording double-digit year-over-year billings growth.”
Wall Street’s Take
Ahead of Blackberry’s earnings, RBC Capital analyst Paul Treiber reiterated a Hold rating on the BB stock with a price target of $6.50, implying 21% upside potential to current levels.
Treiber had expected the company to post results in line with the consensus, albeit BB slightly outperformed on both accounts. Moreover, the analyst had expected IoT to benefit from recent design wins and Cybersecurity revenue to be soft. The analyst had also expected the pending $600MM patent sale to drive some enthusiasm, but the company has yet to find a suitable buyer.
Overall, BB stock has a Hold consensus rating based on three Holds and one Sell. The average Blackberry price forecast of $6.02 implies 12.1% upside potential to current levels.
Website Traffic
The TipRanks Website Traffic Tool provides insight into Blackberry’s diminishing revenue trends. The total number of estimated global visits to the Blackberry website is consistently declining, similar to the decline reported in the first quarter.
In January 2022, the total global estimated visits across all devices peaked at 3.2 million visits, followed by 1.5 million visits in February, and 1.3 million visits in March. 1.1 million visits in April.
Notably, in May, Blackberry website traffic recorded a 14.08% year-over-year decrease in monthly visits. Similarly, year-to-date website traffic growth decreased by a whopping 48.27% compared to the same period last year.
Conclusion
Blackberry is struggling to make its presence felt in the dynamic and ever-evolving space of IoT and Cybersecurity. The company’s turnaround from focus on its mobile business is taking time. The website visits also hint at slowing growth.
