BlackBerry (TSX:BB) finally gave its suffering shareholders some good news: it reported a Q3 beat. It also raised FY20 earnings.
BlackBerry reported revenue growing 23%. Software and services revenue grew 26% to $275 million. For FY20, it forecast revenue growing 20.2%, compared to a 23-25% guidance previously provided. EPS will be $0.08. The company’s strategy is slowly paying off. It expanded from EoT to IoT (Enterprise of Things and Internet of Things) and added artificial intelligence and machine learning in its cyber security solution.
Cylance also has AI/ML incorporated in its solution. Its offering is cloud and on-premise, giving customers choice. In 2020, AI/ML will be added along with its UEM (unified endpoint management) solution. Later in the year, the AI/ML functionality will be added along with QNX. This should result in meaningful growth in the Cylance business.
For FY20, billings Y/Y will grow in the double digits. And as it achieves non-GAAP profitability, the company should sustain operating income growing 20-25% annually, up from 13% in FY19. Adjusted EBITDA will grow at 25-30%, helped by IoT. This is up from 20% in FY19.
Design wins for QNX on the auto side will adding meaningfully to results over the next two to three years. As the design win goes into production, BlackBerry’s future earnings in the next few years are not so dire.
The downside in BB stock is now over. Wait another quarter of improving results before buying this stock.
