BlackBerry Ltd (NYSE:BB) is advancing towards achieving a positive cash flow, announcing significant steps in this direction.
It aims for $100 million in annualized net profit improvements through cost reductions and margin expansion, building on the $50 million annualized cost savings disclosed in the previous quarter.
About $55 million of the $100 million annualized target has already been identified and implemented in the current quarter.
BlackBerry anticipates sequential improvements in operating cash flow usage and expects to be operating cash flow positive by the fourth quarter of fiscal year 2025.
The company has made notable progress in creating independent divisions for its IoT and Cybersecurity businesses, including forming leadership teams and beginning the separation process with the help of leading management consultancy firm Alvarez & Marsal.
Following a $200 million convertible debenture debt raise, BlackBerry has significantly reduced its debt by 45% compared to November 2023 and bolstered its long-term liquidity and stability, the WSJ wrote.
BlackBerry remains committed to its revenue outlook of $150 – $159 million for the company and expects Cybersecurity Annual Recurring Revenue (ARR) to stabilize sequentially in the current quarter. An investor briefing call is scheduled for February 13, 2024.
To streamline its cost structure further, BlackBerry is reducing additional positions within its cybersecurity business, which will likely save about $27 million annually, alongside $8 million from other non-headcount actions.
These measures aim to maintain industry-standard levels of R&D investment while executing an efficient product roadmap. Additional actions within general and administrative functions will likely achieve annual savings of about $20 million, including exiting six global office locations.
BlackBerry has withdrawn from six of its 36 worldwide office sites to decrease general and administrative expenses, including one in San Ramon, California.
This announcement follows a previous declaration from the last quarter regarding eliminating around 200 positions, predominantly within the cybersecurity sector.
With these strategic actions, BlackBerry is on track to reducing operating cash usage significantly, maintaining a favorable net cash position throughout the next fiscal year, and achieving operating cash flow positivity by Q4 FY25.
The company said its solid balance sheet, enhanced by recent financing activities and strategic cost-reduction initiatives, positions BlackBerry favorably for future profitability and growth.
The stock lost 33% last year. In December, BlackBerry reported third-quarter revenue of $175 million, which beat the consensus of $173.53 million. The company reported an EPS loss of $(0.05) versus a loss of $(0.09) in the prior year’s quarter. BlackBerry expects fourth-quarter revenue of $150 million – $159 million versus estimates of $200.37 million.
BB Price Action: BlackBerry shares are trading higher by 1.78% at $2.86 premarket on the last check Tuesday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo Courtesy of BlackBerry
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