BlackBerry (NYSE:BB) shares plummeted by over 5% in the early session today after the technology major announced a mixed set of results for the third quarter. Despite a 3.6% year-over-year increase, revenue of $175 million lagged expectations by $5.8 million. EPS of $0.01, on the other hand, fared better than estimates by $0.05.
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The quarter was marked by robust design win momentum in IoT and large deal wins in Cybersecurity. Further, the company’s gross margin expanded to 72.6% from 64.4% in the year-ago period. Revenue in both IoT and Cybersecurity verticals increased by 8% compared to the prior year. Cybersecurity ARR (Annualized Recurring Revenue) for the quarter stood at $273 million.
For the upcoming quarter, BlackBerry expects total revenue to hover between $150 million and $159 million. In addition, the company is taking steps to substantially right-size its businesses and expects to lower its operating cashflow usage in the fourth quarter.
At the same time, BlackBerry expects lower production volumes at some of its largest customers and extended timelines at OEMs to adversely impact its IoT business in Q4. Recently, BlackBerry scrapped plans to list its IoT business. Instead, its IoT and Cybersecurity businesses will function as fully standalone units.
Is BB Stock a Good Buy?
Overall, the Street has a Hold consensus rating on BlackBerry, and the average BB price target of $4.69 implies a 14.4% potential upside in the stock. That’s on top of a 10% rise in BB shares over the past month.
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