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01/11 03:35
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The company exceeded revenue and EBITDA guidance, indicating strong financial performance. QNX and Secure Communications showed growth, with positive outlooks and strategic investments. The Q&A highlighted potential in the Chinese market and robotics, despite some uncertainties. Raised guidance and increased cash flow further support a positive sentiment. Given the small-cap nature, the stock is likely to react positively, with a 2% to 8% increase expected.
Total company revenue $141.8 million, above the high end of guidance range. Reasons: Strong execution and disciplined cost management.
Adjusted EBITDA $28.7 million, representing a 20% margin. Reasons: Strong profitability and cost optimization.
GAAP net income $13.7 million, improved by $24.2 million year-over-year. Reasons: Consistent profitability and operational improvements.
Operating cash flow $17.9 million, up 3x year-over-year. Reasons: Strong execution and disciplined cost management.
QNX revenue $68.7 million, 10% year-over-year growth. Reasons: Growth in royalties, development seat, and professional services revenue.
Secure Communications revenue $67 million, beating the top end of guidance. Reasons: Better-than-expected renewals of UEM and navigation of U.S. government shutdown.
Annual recurring revenue (ARR) for Secure Communications $216 million, increased $3 million sequentially. Reasons: Improved renewal rates and new business.
Adjusted gross margins 78%, relatively flat year-over-year, increased 3 percentage points sequentially. Reasons: Favorable revenue mix and cost optimization.
Adjusted operating expenses $85.4 million, up 7% year-over-year. Reasons: Strategic investment in QNX business.
Free cash flow $17 million, significant improvement from $3.4 million in Q2 and up over 200% year-over-year. Reasons: Strong profitability conversion into cash.
Total cash and investments $377.5 million, up $111 million year-over-year and $14 million sequentially. Reasons: Positive operating and free cash flow.
QNX SDP 8: Secured major automotive design wins with top European and Asian OEMs for ADAS and cockpit domains. The number of customers using SDP 8 continues to grow each quarter.
QNX Sound and QNX Cabin: Secured new wins for both products, including a second consecutive quarter win for QNX Sound with a leading Chinese OEM and a multiyear contract for QNX Cabin with a top 5 global automaker.
Vehicle Software Platform: Codeveloping with Vector, targeting significantly higher pricing per vehicle compared to the core RTOS. Early access version scheduled for release by January.
QNX General Embedded Development Platform (GEDP): Launched as a subscription-based solution for OEMs in GEM verticals. Positive feedback and new design wins reported.
Automotive Market: QNX now powers over 275 million vehicles, a $20 million increase year-over-year. Secured wins with European and Asian OEMs for ADAS and cockpit domains.
Non-Automotive Embedded Market: Secured wins in industrial automation, medical instrumentation, and robotics. Notable customers include Bently Nevada and NASA.
Secure Communications: Expanded in U.S. government sectors with FedRAMP high certification, securing deals with the U.S. Navy and Department of Justice. International wins include the National University of Malaysia and Australia's Department of Foreign Affairs.
Revenue Growth: Total company revenue reached $141.8 million, exceeding guidance. QNX achieved record revenue of $68.7 million, and Secure Communications delivered $67 million.
Profitability: Adjusted EBITDA was $28.7 million (20% margin). GAAP net income improved to $13.7 million, and operating cash flow increased 3x year-over-year to $17.9 million.
Cost Management: Disciplined cost management contributed to strong cash flow and profitability.
Investment in QNX: Increased investment to support deeper penetration into automotive and wider reach in target verticals.
Certifications for Secure Communications: Achieved FedRAMP high certification and Germany's BSI certification, strengthening position in government secure communication strategies.
Share Buyback Program: Repurchased $5 million worth of shares, offsetting potential dilution from employee share plans.
U.S. government shutdown impact: The Secure Communications division faced challenges due to the U.S. government shutdown, which affected operations and revenue generation.
Secusmart revenue decline: Secusmart revenue was lower year-over-year due to a tough comparison with the prior fiscal year, which had a strong upgrade cycle from the German government.
Exposure to U.S. federal government: AtHoc, a product within Secure Communications, has significant exposure to the U.S. federal government, making it vulnerable to disruptions like government shutdowns.
QNX gross margin decline: QNX gross margins were down 2 percentage points year-over-year, partly due to the absence of grant funding from Canada's Strategic Innovation Fund in Q3.
Increased operating expenses: Adjusted operating expenses increased by 7% year-over-year as the company continues to invest in growth, particularly in the QNX business.
QNX Revenue Projections: Revenue for QNX in Q4 is expected to be in the range of $71 million to $77 million. For the full fiscal year, revenue guidance is maintained at $260 million to $266 million.
QNX Adjusted EBITDA: Adjusted EBITDA for QNX in Q4 is projected to be between $17 million and $23 million. Full-year adjusted EBITDA guidance is raised to $67 million to $73 million.
Secure Communications Revenue Projections: Revenue for Secure Communications in Q4 is expected to be between $61 million and $65 million. Full-year revenue guidance is raised to $247 million to $251 million.
Secure Communications Adjusted EBITDA: Adjusted EBITDA for Secure Communications in Q4 is projected to be between $11 million and $15 million. Full-year adjusted EBITDA guidance is raised to $47 million to $51 million.
Licensing Revenue and EBITDA: Licensing revenue is expected to be approximately $6 million per quarter, with adjusted EBITDA of approximately $5 million per quarter. Full-year revenue guidance is $24 million, and adjusted EBITDA is $20 million.
Total Company Revenue Projections: Total company revenue for Q4 is expected to be in the range of $138 million to $148 million. Full-year revenue guidance is raised to $531 million to $541 million.
Total Company Adjusted EBITDA: Adjusted EBITDA for Q4 is projected to be between $22 million and $32 million. Full-year adjusted EBITDA guidance is raised to $94 million to $104 million.
Non-GAAP EPS: Non-GAAP EPS for Q4 is expected to be between $0.03 and $0.05. Full-year non-GAAP EPS guidance is raised to $0.14 to $0.16.
Operating Cash Flow: Operating cash flow for Q4 is expected to be between $40 million and $45 million. Full-year operating cash flow guidance is raised to $43 million to $48 million.
Share Buyback Program: In Q3, BlackBerry repurchased $5 million worth of shares, equivalent to 1.2 million shares, at an average price of $4.13 per share. These shares have been canceled. This brings the total number of shares bought back in the fiscal year to $8.8 million, offsetting potential dilution from long-term incentive and employee share purchase plans.
The company exceeded revenue and EBITDA guidance, indicating strong financial performance. QNX and Secure Communications showed growth, with positive outlooks and strategic investments. The Q&A highlighted potential in the Chinese market and robotics, despite some uncertainties. Raised guidance and increased cash flow further support a positive sentiment. Given the small-cap nature, the stock is likely to react positively, with a 2% to 8% increase expected.
The earnings call shows positive financial performance with increased revenue, profitability, and a significant turnaround in net income. The company has a strong growth outlook with a focus on diversifying QNX, expanding secure communications, and maintaining strong margins. The share repurchase plan also supports a positive sentiment. Despite some risks, such as geopolitical dependencies and supply chain issues, the overall sentiment is positive due to strong financial metrics, optimistic guidance, and strategic initiatives. Given the market cap, a 2% to 8% positive stock price movement is expected over the next two weeks.
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