BlackBerry earnings preview: How will Q2 turn out?

BlackBerry Limited (NYSE: BB) is slated to report second quarter 2020 earnings results on Tuesday, September 24, before the opening bell. Analysts expect the company to report a loss of $0.01 per share for the quarter. This compares to earnings of $0.04 per share last year. Revenue is expected to grow 24% year-over-year to $265.7 million.

In the current environment, where privacy and security are key issues, the rising demand for cybersecurity solutions is likely to help drive growth for BlackBerry. The cybersecurity market is estimated to grow to a value of $300 billion by 2024.

BlackBerry’s acquisition of Cylance, a leader in the areas of artificial intelligence and cybersecurity, is expected to benefit the company and aid revenue growth. In July, BlackBerry launched CylanceGUARD, a managed detection and response solution that helps in continuous threat-hunting and monitoring.

The company is also expected to benefit from its partnerships in various areas. BlackBerry has partnered with LG for the development of autonomous vehicle technology and also with Jaguar Land Rover for intelligent vehicles. The company has also partnered with Geotab for asset management.

BlackBerry saw growth in the Internet of Things and Licensing segments last quarter and this trend can be expected to continue in the second quarter. However, negative foreign currency impacts and pricing challenges in key markets could pressure results in the period.

Also read: Oracle Q1 2020 Earnings Report

In the first quarter of 2020, BlackBerry beat earnings estimates but revenues missed expectations. Revenue grew 16% year-over-year to $247 million but fell short of estimates of $264 million. Adjusted EPS fell 66% to $0.01.

For fiscal 2020, on a non-GAAP basis, BlackBerry expects total revenue to grow 23-27% year-over-year, driven by a double-digit percentage increase in billings. Within this, IoT revenue is expected to grow 12-16% year-over-year while BlackBerry Cylance revenue is expected to grow 25-30%. Licensing revenue is projected to decrease by 5% year-over-year. 

BlackBerry’s shares have gained 6% year-to-date and 9% in the past one month. The majority of analysts have given the stock a Hold rating and the average price target is $7.95.

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