EPS of $-0.01 increased by 87.5% from previous year
Gross margin of 73.6%
Net income of -7.00M
""We expect revenue for QNX in Q1 to be in the range of $51 million to $55 million, and for EBITDA to be in the range of $2 million to $6 million."" - Tim Foote
BlackBerry Limited reported its fourth quarter and fiscal year 2025 results with a substantial focus on transformation following the divestiture of its Cylance cybersecurity business. Revenue for Q4 came in at $143.9 million, exceeding guidance, with significant contributions from its QNX and Secure Communications divisions generating $65.8 million and $67.3 million respectively. Despite facing challenges, including a decline in year-over-year revenues, management highlighted robust cash flow improvements, achieving $144 million in cash growth primarily from operating cash flows of $42 million and proceeds from the Cylance deal. This analysis demonstrates BlackBerry's shift towards a profitable and cash-flow-positive model as it moves into fiscal year 2026, led by strong performance and strategic focus on its core offerings in safety-critical software solutions and secure communications.
Key Performance Indicators
Revenue
143.90M
QoQ: 0.63% | YoY:-15.99%
Gross Profit
105.90M
73.59% margin
QoQ: -5.45% | YoY:-8.58%
Operating Income
-6.20M
QoQ: -132.63% | YoY:-308.73%
Net Income
-7.00M
QoQ: 36.36% | YoY:87.37%
EPS
-0.01
QoQ: 36.56% | YoY:87.50%
Revenue Trend
Margin Analysis
Key Insights
**Revenue:** $143.9 million (up 0.63% QoQ, down 15.99% YoY)
### Key Highlights
- Adjusted EBITDA: $21.1 million, exceeding guidance.
- Cash Flow from Operations: $42 million, significantly exceeding prior year performance by $57 million.
- Ending Cash Position: $280.3 million, bolstered by strong operating cash flow and cash proceeds from the Cylance sale.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
143.90M
-15.99%
0.63%
Gross Profit
105.90M
-8.58%
-5.45%
Operating Income
-6.20M
-308.73%
-132.63%
Net Income
-7.00M
87.37%
36.36%
EPS
-0.01
87.50%
36.56%
Key Financial Ratios
currentRatio
1.72
grossProfitMargin
73.6%
operatingProfitMargin
-4.31%
netProfitMargin
-4.86%
returnOnAssets
-0.54%
returnOnEquity
-0.97%
debtEquityRatio
0.33
operatingCashFlowPerShare
$0.07
freeCashFlowPerShare
$0.07
priceToBookRatio
3.87
priceEarningsRatio
-99.46
Net Income vs. Revenue
Expense Breakdown
Management Commentary
### Management Insights and Key Themes
- Transformation Strategy:
- John Giamatteo noted: "This past quarter marked another significant step forward in what was a transformative year for BlackBerry...We closed the win-win transaction with Arctic Wolf for the sale of Cylance..."
- Cost Structure Optimization:
- Giamatteo remarked, "When we began this process, we said our target was to remove approximately $150 million of costs from our run rate, and I'm delighted to report that we've now exceeded that goal."
- Future Outlook:
- Tim Foote observed, "For the full fiscal year, we see an uncertain backdrop within automotive...we’re currently uncertain of the impact this could have on our business."
- Revenue Projections:
- Management provided guidance for future quarters, indicating expected revenue for QNX in Q1 to be between $51 million to $55 million, highlighting the anticipated seasonal fluctuations inherent in the automotive industry.
"We expect revenue for QNX in Q1 to be in the range of $51 million to $55 million, and for EBITDA to be in the range of $2 million to $6 million."
— Tim Foote
"As we move into fiscal year 2026, I am confident that the team will continue to deliver results."
— John Giamatteo
Forward Guidance
Based on current market conditions, BlackBerry anticipates modest revenue growth in FY2026, despite facing headwinds from automotive tariffs and uncertain federal contract renewals. Management projects revenue for QNX to be in the range of $250 - $270 million. The Secure Communications division prioritizes profitability amid evolving market dynamics. Performance in the upcoming quarters will be heavily monitored as they navigate potential impacts from governmental changes and macroeconomic factors affecting demand.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
BB Focus
73.59%
-4.31%
-0.97%
-99.46%
AFRM
86.50%
10.50%
-1.65%
-52.12%
SQ
38.60%
0.22%
9.15%
6.97%
PATH
84.80%
7.93%
2.81%
37.82%
TOST
24.90%
2.39%
2.07%
162.03%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
BlackBerry appears set for a cautiously optimistic investment outlook for the coming year. With a strategic shift towards a focus on Software Infrastructure and increased operational efficiency, there are opportunities for upside as market demand for QNX platform solutions continues to rise. However, investors should remain cognizant of the inherent risks associated with government contracts and macroeconomic volatility, particularly affecting the automotive sector.
Key Investment Factors
Growth Potential
1. **QNX Market Position:** BlackBerry has established a robust foothold within automotive software solutions, capitalizing on the increasing demand for safety-critical embedded software.
2. **Emerging Markets:** The expansion into general embedded systems (GEM) and non-automotive sectors presents substantial growth opportunities.
Profitability Risk
1. **Dependence on Government Contracts:** Approximately 20-25% of Secure Communications revenue stems from U.S. federal business, exposing the company to policy changes and funding uncertainties.
2. **Volatile Automotive Sector:** Fluctuating demand within the automotive industry can impact revenue predictability and performance.
Financial Position
1. **Cash Reserves:** A strong cash position of $280.3 million provides BlackBerry with operational flexibility and the ability to invest in growth opportunities.
2. **Debt Management:** Moderate debt levels with a debt/equity ratio at 0.332 suggest manageable leverage.
SWOT Analysis
Strengths
Established reputation in cybersecurity and safety-critical software solutions
Strong cash position allowing for flexibility and growth investments
Recent divestiture of Cylance allows focus on core competencies
Weaknesses
Dependence on fluctuating segments like automotive and government contracts
Need for continued operational restructuring to improve margins
Opportunities
Expansion into adjacent markets like medical and industrial applications
Growing global demand for software-defined vehicles and IoT solutions
Threats
Economic downturn impacting customer spending
Regulatory changes affecting government contracts and funding