BlackBerry's QNX, Secure Comms Growth Weighed Down By Tariff Uncertainties, Government Election Shifts: Analyst

Core Viewpoint - RBC Capital Markets analyst Paul Treiber maintained a Sector Perform rating for BlackBerry Ltd. and lowered the price target from $4 to $3.75, reflecting concerns over fiscal 2026 revenue guidance and performance metrics [1] Group 1: Financial Performance - BlackBerry reported fourth-quarter revenue of $142 million, a decrease of 7% year-over-year excluding Cylance, but above consensus expectations of $133 million [1] - Adjusted EBITDA for the fourth quarter was $21 million, exceeding consensus of $14 million, while adjusted EPS was three cents, above the consensus estimate of two cents [1] - Fiscal 2026 revenue guidance is set at $504-534 million, which is below the consensus estimate of $548 million, primarily due to lower Secure Communications revenue [2] Group 2: Revenue Outlook - The fiscal 2026 adjusted EBITDA guidance is projected at $69-84 million, also below the consensus of $89 million, indicating a back-end loaded fiscal year [2] - BlackBerry has revised its QNX revenue outlook for fiscal 2026 from $260-270 million to $250-270 million, with the mid-point slightly above consensus at $257 million [3] - The fiscal 2026 Secure Communications revenue guidance is set at $230-240 million, a decrease of 14% year-over-year, which is short of the consensus estimate of $274 million [4] Group 3: Market Position and Valuation - Despite the lower guidance, BlackBerry's recurring revenue remains high at $208 million ARR as of the fourth quarter, although large license deals with government customers are less likely due to recent political changes [4] - The company has not experienced churn in its U.S. Federal government contracts, suggesting resilience in its U.S. business [5] - BlackBerry is currently trading at 3.6 times NTM EV/S, slightly below its historical average of 3.8 times, and at 25 times NTM EV/EBITDA, below the peer group average of 31 times [6]