By Adriano Marchese
Canadian cybersecurity company BlackBerry is expected to reported a narrowed loss and flat revenue in its third quarter of fiscal 2024. Following the company’s decision to no longer launch an IPO of its IoT business, analysts are expecting the company to provide more details on how well it closed on its deals, as well as liquidity and cost-restructuring plans. The company is expected to release its third-quarter results on Wednesday after markets close. Here’s what you need to know.
EARNINGS PER SHARE: For the period ended Nov. 30, loss per share is expected to narrow to 4 U.S. cents a share from a loss of 5 U.S. cents a share a year earlier, according to analysts polled on FactSet.
REVENUE: Revenue is expected to be virtually flat at US$169.1 million in the third quarter, according to analyst consensus estimates. Last year at this time, the company reported revenue of US$169 million.
ADJUSTED EPS: Excluding one-off and exceptional items, analysts are expecting an adjusted loss of 4 U.S. cents.
In the quarter, the BlackBerry’s stock fell nearly 34%. Since then, the stock has regained some ground, rising by 13% and currently trading in Toronto at 5.62 Canadian dollars (US$4.20).
WHAT TO WATCH
–Investors will be watching how well BlackBerry was able to close its pipeline of deals in the quarter, a big driver of revenue growth. According to RBC’s Paul Treiber, a sequential rebound in revenue reflects management’s comments and assumes the close of postponed Cybersecurity deals and a ramp in internet-of-things revenue. “If slipped Cybersecurity deals do not close or IoT does not ramp as expected, 3Q could fall short of our estimates and consensus,” he says.
–RBC forecast IoT revenue up 14% quarter-over-quarter, to US$56 million, in the period. However, several OEMs such as Ford, GM, and Volkswagen have deferred new EV and software investments, which could result in IoT revenue ramping up at a slower pace.
–Following the decision to separate the IoT and Cybersecurity businesses into two standalone divisions, investors will be keen to know more about restructuring plans it has and when the company expects to break even on cash flow. “With BlackBerry no longer considering an IPO of its IoT business, we believe the company may need to consider other alternative sources of financing,” Treiber says.
Write to Adriano Marchese at [email protected]
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