It’s been a while now since BlackBerry (BlackBerry Stock Quote, Charts, News, Analysts, Financials TSX:BB) made the headlines, and for dubious reasons at that, as the Canadian software and security company got roped into the meme stock trend in early 2021. Since then it’s been mostly crickets, as the market has turned to more pressing problems, while BB’s share price has continued to slide.
This week the company released its third quarter fiscal 2023 earnings, which arrived in-line with analysts’ estimates for revenue but kept with a worrying trend of stagnant and even declining revenue growth. BlackBerry’s Q3 included $169 million in total revenue compared to $168 million for the third quarter a year earlier. That was after a second quarter fiscal 2023 which also had a $168 million topline but was down from $175 million a year earlier. (All figures in US dollars.)
By division, BlackBerry generated $51 million from its IoT segment, $106 million from Cybersecurity and $12 million from its Licensing business, with the company saying continuing challenges in the auto sector, where the company’s QNX platform business is concentrated, have been a factor in slowing growth.
Management also spoke of macro headwinds prevailing in the software market, which are impacting its cybersecurity business. CEO John Chen said he’s expecting flat year-over-year growth in Cybersecurity over the first half of calendar 2023, followed by growth over the second half.
“This quarter we saw good progress in both of BlackBerry’s business units,” said John Chen, in the quarterly press release. “Our IoT business has strong momentum and delivered a record quarter for design-phase revenue, driven largely by design wins in core safety-critical auto and general embedded domains. It was also a strong quarter for product development, including a significant announcement with AWS for QNX to be made available in the cloud.”
CIBC Capital Markets analyst Todd Coupland questioned Chen about BB’s cybersecurity during the Q3 earnings call, asking the CEO to talk about the growth in sales and marketing and any new product bundles that will be needed to get to that level of business growth over the second half of the year.
Chen said BB’s sales team is “increasing modestly,” but in general, Chen didn’t point to any specific new initiatives on the horizon that would boost growth.
“[B]y and large, we have a road map of technology,” said Chen in the December 20 conference call. “I think the products are in pretty good shape. We do need to continue to drive the channel, continue to increase the professional services, particularly the MSP. I think those are the two things that need to happen.”
BlackBerry shares dropped about nine per cent on Wednesday after the third quarter release.