BlackBerry Ltd (BB, Financial) recently held its second quarter fiscal year 2024 results conference call, revealing a mixed bag of results. Despite some volatility in reported revenue due to deal slippage, the company remains confident in its pipeline of opportunities, particularly for its cyber business. The company also expressed optimism about the fundamentals of its IoT business, although it is taking a prudent view given delays in the start of some development programs and auto industry labor actions.
IoT Business Unit Performance
BB's IoT business unit saw a 9% sequential increase in revenue to $49 million for the quarter, with gross margin increasing by 400 basis points to 84%. The company secured 20 new design wins in auto and seven in general embedded market verticals, with the largest being an eight-figure estimated lifetime revenue ADAS win. Despite some challenges in the auto industry, BB expects the IoT unit to deliver solid year-over-year growth this fiscal year.
Cyber Business Unit Performance
The cyber business unit reported revenue of $79 million for the quarter, with total contract value billings at $74 million. Gross margin was 54%, and ARR came in at $279 million. Despite revenue being lower than expected due to deal slippage, BB remains confident in the progression of these deals and expects them to close this fiscal year. The company also highlighted a well-defined pipeline of significant deals, primarily in the government vertical, where BB is well known and trusted.
Product Updates and Developments
BB announced the upcoming launch of its new generation QNX real-time operating system, QNX 8.0, targeted for December. This release is expected to further cement QNX's leadership position in automotive and beyond. The company also released an updated version of IVY with significant enhancements to cloud features and increased hardware and software support. BB's cybersecurity product, Cylance, also received a major update, providing an increased level of protection to customers.
Financial Overview
BB reported total company revenue for the quarter at $132 million, with software product revenue making up 85% to 90% of total revenue. The company's gross margin was 65%, and operating expenses were $114 million. The non-GAAP operating loss was $28 million, and non-GAAP net loss for the second quarter was $23 million. Despite these losses, BB remains focused on maximizing efficiency and expanding margins, and expects both positive operating cash flow and non-GAAP EPS in the fourth quarter and for the fiscal year as a whole.
Looking Ahead
Despite some challenges in the second quarter, BB remains confident in its future prospects. The company expects a stronger second half for both its cyber and IoT businesses and is actively engaged in Project Imperium, which is expected to have a significant impact on future needs. BB reassured stakeholders that it will provide an update on this project as soon as possible.
