EPS of $-0.03 increased by 55.3% from previous year
Gross margin of 64.8%
Net income of -19.00M
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BlackBerry Limited (BB.TO) QQ2 2025 Results – Technology Infrastructure Software pivots to Cybersecurity and AI with a Modest Revenue Upside but Near-Term Bottom-Line Headwinds
Executive Summary
BlackBerry Limited reported QQ2 2025 revenue of USD 145.0 million, up modestly on a year-over-year basis but remaining loss-making at the net level. Gross margin stood at a robust 64.8%, underpinning the company’s software-centric model, yet operating and net income remained negative (-$21.0 million and -$19.0 million, respectively). The company continues to invest in growth initiatives across its Cybersecurity, IoT, and Licensing segments, including AI-driven security solutions, which supports a path to higher-margin revenue over time but currently weighs on near-term profitability. Cash generation was limited in the quarter, with free cash flow at -$18.0 million and net cash provided by operating activities at -$13.0 million, though the balance sheet remains liquidity-rich with USD 188 million cash and equivalents and a net debt position of USD 79 million after considering total debt of USD 250 million. Management commentary (where available) highlights strategic emphasis on AI-enabled security and expanded enterprise/government cybersecurity offerings as key growth engines, though formal forward guidance was not provided in the supplied data. The stock continues to trade with a negative earnings multiple and a high price-to-sales ratio, reflecting the market’s view of BlackBerry’s long-term repositioning rather than immediate profitability.
Operating Income: USD -21.0 million; Operating Margin -14.48%; YoY improvement in operating losses QoQ, but still negative
EBITDA: USD -8.0 million; EBITDA Margin -5.52%
Net Income: USD -19.0 million; Net Margin -13.10%; EPS (diluted): -0.032
Financial Highlights
Summary of key QQ2 2025 metrics (USD, unless noted):
- Revenue: USD 145.0 million; YoY growth 9.85%; QoQ growth 0.72%
- Gross Profit: USD 94.0 million; Gross Margin 64.83%; YoY Gross Profit growth 10.59%; QoQ 11.94%
- Operating Income: USD -21.0 million; Operating Margin -14.48%; YoY improvement in operating losses QoQ, but still negative
- EBITDA: USD -8.0 million; EBITDA Margin -5.52%
- Net Income: USD -19.0 million; Net Margin -13.10%; EPS (diluted): -0.032
- Key cash flow: Net cash from operating activities USD -13.0 million; Capital expenditures USD -5.0 million; Free cash flow USD -18.0 million
- Balance sheet highlights: Cash & equivalents USD 171.0 million; Total cash & short-term investments USD 211.0 million; Total debt USD 250.0 million; Net debt USD 79.0 million; Total assets USD 1.299 billion; Total stockholders’ equity USD 732.0 million; Retained earnings negative at USD -2.219 billion
- Liquidity/ratios: Current ratio 1.436; Quick ratio 1.436; Cash ratio 0.561; Asset turnover 0.112; Gross margin 64.8%; Operating margin -14.5%; Net margin -13.1%; ROA -1.46%; ROE -2.60%
- Valuation signals (context): Price-to-sales around 9.56x; Price-to-book around 1.89x; Enterprise value multiple reported as negative in dataset, reflecting net cash position as part of capitalization
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
145.00M
9.85%
0.72%
Gross Profit
94.00M
10.59%
11.94%
Operating Income
-21.00M
55.32%
24.98%
Net Income
-19.00M
54.76%
54.75%
EPS
-0.03
55.28%
54.78%
Key Financial Ratios
currentRatio
1.44
grossProfitMargin
64.8%
operatingProfitMargin
-14.5%
netProfitMargin
-13.1%
returnOnAssets
-1.46%
returnOnEquity
-2.6%
debtEquityRatio
0.34
operatingCashFlowPerShare
$-0.02
freeCashFlowPerShare
$-0.03
priceToBookRatio
1.89
priceEarningsRatio
-18.25
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript highlights note: The Earnings Transcript field is not populated in the provided data. Consequently, there are no management quotes available to anchor the commentary. In the absence of transcript content, the following themes are inferred from the reported results and the company’s strategic positioning:
- Strategy and product focus: BlackBerry emphasizes AI-enabled security products and a shift toward enterprise/government cybersecurity solutions within Cybersecurity, IoT, and Licensing segments. The gross margin of 64.8% suggests a software-centric mix with recurring revenue potential, while operating losses indicate continued investment in go-to-market and R&D.
- Market and operations: Modest sequential revenue growth (QoQ +0.72%) amid ongoing investments in Cylance-powered security offerings and platform integrations (e.g., UEVM, EDR, and AI-enhanced threat intelligence). Management commentary would typically frame this as early-stage operating margin improvements as scale accelerates in high-margin software services.
- Financial trajectory: Negative EBITDA and net income reflect transformation costs and continued investment in growth initiatives. The company maintains a solid balance sheet with USD 188 million cash and short-term investments and a manageable net debt position, enabling continued product development and market expansion.
- Outlook and execution risk: Without formal forward guidance in the data, investors would typically watch for progression toward positive operating cash flow and stabilization of adjusted EBITDA through improved product mix, higher-margin ARR/PaaS offerings, and disciplined operating expenses.
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Forward Guidance
No explicit forward guidance for QQ3/Q3 2025 was provided in the supplied data. Based on the QQ2 2025 results and the strategic posture described above, the following-informed assessment can be made:
- Growth trajectory: The company’s gross margin indicates potential for margin expansion as the cybersecurity portfolio scales and ARR contributions grow. If the mix shifts toward higher-value software-as-a-service offerings and managed security services, operating leverage should improve over time.
- Profitability trajectory: Current negative operating income and net income highlight near-term profitability challenges. Achieving positive operating cash flow would likely require a sustained revenue acceleration combined with disciplined cost management and higher recurring revenue contribution.
- Key factors to monitor: (1) progression in cybersecurity/AI product adoption and renewal rates, (2) mix shift toward higher-margin software licensing, (3) moderation of quarterly operating expenses relative to revenue growth, (4) working capital dynamics and receivables collection efficiency, and (5) any capital-raising actions or debt refinancings that could alter the balance sheet.
- Outlook assessment: Given the absence of disclosed guidance, we assign a cautiously constructive view contingent on improved profitability, revenue mix shift to higher-margin software offerings, and sustained cash-flow generation. Investors should monitor quarterly progression in ARR, net retention in enterprise/government segments, and the timing of major contract wins.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
BB.TO Focus
64.83%
-14.50%
-2.60%
-18.25%
AC.TO
31.60%
8.44%
35.20%
3.91%
LSPD.TO
41.20%
-13.70%
-1.27%
-21.50%
SHOP.TO
51.10%
11.80%
1.86%
123.98%
SU.TO
38.20%
17.80%
3.52%
10.67%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Conclusion: BlackBerry faces a transition phase where revenue is growing modestly, but profitability remains pressured by ongoing investment in strategic initiatives. The company’s high gross margin suggests a strong software backbone and the potential for improved margins as the product mix shifts toward higher-margin ARR and managed services. The balance sheet remains solid from a liquidity perspective, enabling continued R&D and market expansion without immediate liquidity concerns. However, the current quarter’s negative EBITDA and net income, along with negative free cash flow, underscore the need for improved operating leverage. Investment thesis hinges on successful scaling of cybersecurity offerings, higher-margin recurring revenue, and defined milestones for profitability and cash generation. Investors should monitor ARR growth, renewal rates, contract wins in government/enterprise segments, and any explicit forward guidance or capital-structure changes that could affect valuation multiples.
Key Investment Factors
Growth Potential
High potential from AI-enabled cybersecurity offerings (Cylance), UE M integration, and government/enterprise cybersecurity contracts. Successful scale of Cybersecurity, IoT, and Licensing segments could yield higher-margin recurring revenue and improved cash conversion.
Profitability Risk
Key risks include reliance on large enterprise/government contracts, competitive pressure from established cybersecurity players, potential delays in product adoption, and ongoing investments depressing near-term profitability. Macro softness could impact IT budgets; regulatory and export controls may influence government sales. The negative near-term free cash flow adds financing risk if working capital does not improve.
Financial Position
Balance sheet remains liquidity-rich with USD 188 million in cash and equivalents and USD 211 million in cash and short-term investments. Total debt USD 250 million and net debt USD 79 million provide flexibility but also a leverage consideration if profitability remains constrained. Retained earnings are negative, indicating accumulated deficits prior to the current quarter.
SWOT Analysis
Strengths
Robust gross margin of 64.8%, indicating a high-margin software mix and scalable platform potential
Diversified product portfolio across Cybersecurity, IoT, and Licensing with AI-powered security solutions (Cylance, Optics, Guard, etc.)
Strong liquidity position: USD 188M cash and equivalents; USD 211M total cash and short-term investments
Established IP portfolio and long-term patent assets supporting defensible market position
Weaknesses
Continued net losses and negative operating cash flow in QQ2 2025 (Operating income -USD 21M; Free cash flow -USD 18M)
Relatively small scale versus top cybersecurity peers, limiting enterprise-scale ARR contribution
Reliance on licensing and government contracts can introduce revenue volatility
Opportunities
Expansion of AI-driven cybersecurity offerings and managed security services to capture higher-margin recurring revenue
Growth in government and enterprise cybersecurity deployments leveraging QNX/BlackBerry Secure platforms