Since becoming BlackBerry CEO, John Giamatteo has achieved positive operating cash flows and refocused the company on its car software business.Andrew Ryan/The Canadian Press
BlackBerry Ltd’s BB-N stock soared Wednesday after the company reported it delivered stronger-than-expected revenues and operating profits in its fiscal first quarter and first net profit in more than three years.
But analysts – and management – cautioned the company faces uncertainty from its car software business in the second quarter due to the impact of U.S. President Donald Trump’s tariffs on auto sales, and that overall revenue growth remains muted despite BlackBerry’s recent resurgence under CEO John Giamatteo.
“A material upward re-rating in the shares requires improved growth, which seems less likely at the moment,” RBC Capital Markets analyst Paul Treiber said in a note Wednesday. He kept his sector perform rating on the stock unchanged, but increased his price target on the stock to US$4 from $3.75.
BlackBerry stock was up 15 per cent in heavy trading at noon Wednesday exchanging hands for just under US$5 a share on the New York Stock Exchange.
The company reported Tuesday after the close of markets that it generated revenue of US$121.7-million in its fiscal first quarter ending May 31, down 1.4 per cent year over year but nearly US$10-million above consensus estimates. Both of its operating divisions, which make software for vehicles and for secure communications users such as government agencies, exceeded the company’s prior forecasts and analyst estimates.
BlackBerry also eked out a quarterly net income of US$1.9-million, its first bottom-line profit since the fourth quarter of its fiscal year ended Feb. 28, 2022. Adjusted operating earnings, which are more closely watched by analysts, were US$16.4-million, or US2¢ per share, also above its prior guidance and 55 per cent higher than the same period a year earlier. BlackBerry also started a US$100-million share buyback program in the quarter, repurchasing US$10-million worth of stock.
“BlackBerry made a strong start to the new fiscal year, building on the solid foundation we as a company have laid over the past year,” Mr. Giamatteo said in a statement. He said both divisions delivered operating earnings ahead of expectations as they “continue to execute effectively against their strategies.”
But chief financial officer Tim Foote cautioned on a conference call with analysts Tuesday that the company is keeping many of its financial forecasts for the year unchanged given ongoing economic uncertainty, particularly in the automotive market, which has been hit by Trump’s tariffs. “Overall, we’re not getting carried away with what was a better-than-expected first quarter,” Mr. Foote said.
CIBC analyst Todd Coupland said in a note he expected revenue this fiscal year to “inflect to double-digit revenue growth,” adding the first quarter results “again demonstrated the material benefits” of restructuring efforts and the decision to split the company into its two distinct units.
The Canadian technology stalwart and one-time smartphone leader has been on a roll under Mr. Giamatteo, a veteran tech executive from Long Island, N.Y., who started his career at Nortel Networks and became BlackBerry’s CEO in late 2023 after serving as the head of its cybersecurity division. On the Dallas-based CEO’s watch the company, based in Waterloo, Ont. has slashed costs, sold a money-sucking cybersecurity unit for a fraction of the price his predecessor John Chen had paid for it, achieved positive operating cash flows in several recent quarters and refocused the company on its car software business.
That unit, known as QNX, is a dominant supplier of embedded systems used to manage “software defined vehicles,” a market that is expected to grow as more new cars roll off the line with autonomous and driver-assistance functionality such as lanekeeping. It is expected to deliver brisk growth for BlackBerry in the years ahead, and the company is increasingly selling QNX’s embedded software into new markets such as robotics, industrial automation and medical devices and equipment.
Meanwhile, BlackBerry has seen increased demand for some of its secure communications products and “didn’t see any material impact” from the DOGE cost-cutting efforts by the Trump administration, Mr. Giamatteo said on the conference call.