Business Overview

BlackBerry is a Canadian company that provides intelligent security software and services to enterprises and governments around the world. The company secures over 235 million vehicles globally and is a leader in areas like endpoint security, encryption, and embedded systems.

BlackBerry has two main divisions - Cybersecurity and IoT (Internet of Things). The Cybersecurity division uses artificial intelligence and machine learning to deliver innovative cybersecurity and data privacy solutions. The IoT division provides embedded software solutions, particularly for the automotive industry, where it is the world’s leading automotive foundational software supplier.

BlackBerry generates most of its revenue from licensing enterprise software and associated services, including endpoint management, cybersecurity, and embedded software for industries like automotive, healthcare, and transportation. The company focuses on regulated and critical infrastructure markets where security and reliability are paramount.

Financial Highlights

In the second quarter of fiscal 2025, BlackBerry reported revenue of $145 million and a net loss of $19 million ($0.03 per share). This compares to revenue of $132 million and a net loss of $42 million ($0.07 per share) in the same period a year earlier.

The company had $265 million in cash, cash equivalents and investments as of August 31, 2024, down from $298 million at the end of the prior fiscal year. BlackBerry recognized an adjusted net loss of $2 million ($0.00 per share) on a non-GAAP basis in Q2 2025, compared to an adjusted net loss of $23 million ($0.04 per share) in Q2 2024.

Segment Performance

BlackBerry has three operating segments: Cybersecurity, IoT, and Licensing.

Cybersecurity Cybersecurity revenue grew 10% year-over-year to $87 million, driven by increases in Secusmart product revenue, BlackBerry AtHoc, and professional services, partially offset by a decline in Cylance cybersecurity solutions. Cybersecurity gross margin improved to 55% from 54% a year earlier.

IoT IoT revenue increased 12% to $55 million, primarily due to higher BlackBerry QNX royalty revenue and BlackBerry Radar sales, partially offset by lower BlackBerry QNX development seat revenue. IoT gross margin decreased slightly to 82% from 84%.

Licensing Licensing revenue declined to $3 million from $4 million a year earlier. Licensing gross margin increased to 67% from 50%.

Overall, BlackBerry’s consolidated gross margin improved to 64.8% from 64.4% in the prior year quarter, driven by the higher-margin Cybersecurity and IoT businesses.

Operating Expenses

BlackBerry’s operating expenses decreased 12.9% year-over-year to $115 million, primarily due to lower salaries and benefits, stock compensation, amortization, consulting, and legal costs. The company also benefited from a $17 million accrual release related to its legacy mobile device business in the prior year quarter.

On an adjusted non-GAAP basis, operating expenses decreased 13.2% to $99 million.

Cash Flow and Liquidity

BlackBerry used $13 million in operating cash flow in Q2 2025, an improvement from $56 million used in the prior year quarter. The company ended the quarter with $265 million in cash, cash equivalents and investments, down from $298 million at the end of fiscal 2024.

Outlook

For the third quarter of fiscal 2025, BlackBerry expects:

• Cybersecurity revenue of $86-$90 million
• IoT revenue of $56-$60 million
• Total revenue of $146-$154 million
• Non-GAAP EPS of ($0.01) to $0.01
• Adjusted EBITDA of breakeven to $10 million

For the full fiscal year 2025, the company now expects:

• IoT revenue of $225-$235 million (previously $220-$235 million)
• Total revenue of $591-$616 million (previously $586-$616 million)
• Non-GAAP EPS of ($0.05) to ($0.02) (previously ($0.07) to ($0.03))

Analysis

BlackBerry’s Q2 2025 results showed continued progress in its transition to a software and services-focused business model. The Cybersecurity and IoT divisions both delivered solid revenue growth and maintained healthy gross margins, offsetting a decline in the lower-margin Licensing segment.

The company’s focus on cost discipline was evident, with operating expenses declining significantly year-over-year on both a GAAP and non-GAAP basis. This, combined with the revenue growth, helped BlackBerry narrow its net loss and improve its adjusted profitability.

One area of concern is the decline in cash and investments, which fell by $33 million during the quarter. This was primarily due to changes in working capital, as the company collected fewer receivables. However, BlackBerry still maintains a strong cash position, which should provide ample liquidity to fund operations and strategic initiatives.

Looking ahead, BlackBerry’s guidance suggests continued momentum, with sequential revenue growth expected in the second half of the fiscal year. The company also raised its full-year revenue and earnings outlook, reflecting confidence in its ability to execute on its software and services strategy.

The key risks facing BlackBerry include potential softness in demand for its products, particularly in the automotive and cybersecurity markets, as well as ongoing competition from larger technology firms. The company will also need to carefully manage its operating expenses to maintain profitability and cash flow generation.

Overall, BlackBerry’s Q2 2025 results demonstrate that the company’s transformation is progressing well. The Cybersecurity and IoT divisions are driving growth, while the company’s focus on cost discipline is improving profitability. If BlackBerry can continue executing on its strategic priorities, the company appears well-positioned to deliver long-term value for shareholders.