Is Blackberry About to Rebound Following its Q4 Earnings Call?

Is Blackberry About to Rebound Following its Q4 Earnings Call?

Blackberry’s stock slides following a mixed Q4 earnings call, but is this an opportunity for investors to buy the dip on a recovering firm?

Blackberry (NYSE: BB) announced its fourth-quarter earnings last night after the bell and failed to impress shareholders in general. The phone manufacturer turned cybersecurity firm missed estimates for revenue which has seen its stock trade lower in pre-market trading today. Significant headwinds remain in place for the company but there were some positives unearthed from an otherwise challenging quarter.

How did Blackberry’s earnings call go?

Adjusted earnings per share (EPS) came in at $0.01 against analyst expectations of a $0.05 loss. Blackberry missed on revenue, however, posting $185 million against a forecast of $187 million. Cybersecurity revenue saw no growth year-over-year (YoY), coming in at $122 million, but revenue generated from the firm’s Internet of Things (IoT) segment grew by a substantial 37% to $52 million.

CEO John Chen outlined that this was the first time that segment had broken the $50 million barrier since the beginning of the pandemic “despite the ongoing challenges for the auto industry,” where many of its IoT partnerships lie.

What does this mean for Blackberry investors?

Overall, Blackberry delivered quite a mixed earnings call. Stagnant cybersecurity revenue and a decline in total revenue are undoubtedly cause for concern, but some solace can be taken from the unexpected positive performance of the company’s IoT arm. In response to the stall in cybersecurity growth, Chen remained relatively optimistic, stating,

“We’re also excited about the prospects for the Cybersecurity business given another quarter of billings growth and further strengthening of the team with industry expertise in both sales and product development. The key components are in place, and we expect continued billings momentum this year.”

Considering the myriad of global and industry-wide challenges faced by Blackberry over the past quarter, perhaps a sense of optimism is warranted. An outperformance on earnings and some positive signs in key areas through a troubling period could signal the potential for growth once those headwinds subside.

That’s the key though — when will those headwinds finally give way? Cybersecurity is a hypercompetitive industry and Blackberry can’t afford to rest on its laurels hoping that things get better soon. The securing of a number of proof-of-concept trials is a promising start, but the company still needs to do more to offset the current global climate and start growing again.

So, should I invest in Blackberry?

Down over 20% this year already, Blackberry doesn’t look poised for a resounding bounceback anytime soon. Yes, there were certainly some positives to take from this earnings call going forward, and I’ll certainly be keeping my eye on any major developments from the firm. Right now, however, there are simply better and safer companies to invest your money in than Blackberry — both within the cybersecurity industry and outside of it.

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