BlackBerry: From Struggles to Stability with a Profitable Future

Summary:

• BlackBerry has made significant progress in improving its operations and delivering positive free cash flow for the first time in 12 quarters.

• The divestment of Cylance is expected to streamline the business and enhance profitability.

• Competition in both the IoT and cybersecurity markets remains a critical challenge for the company.

• BlackBerry could achieve modest revenue growth in fiscal 2026, though uncertainties persist.

  
  

BlackBerry Limited (NYSE: BB) has long been a polarizing stock, with many skeptical about its ability to transform and thrive in competitive markets. After years of bearish sentiment, followed by a neutral outlook, the recent operational improvements and strategic decisions have prompted a reassessment of its prospects. The company’s ability to generate positive free cash flow and its strategic divestment of Cylance have positioned it for a leaner and potentially more profitable future, making BlackBerry an intriguing investment opportunity.

The company operates two primary business units: the Internet of Things (IoT) and Cybersecurity. Within IoT, BlackBerry’s key product, QNX, is an advanced driver assistance system (ADAS) operating system primarily serving the automotive sector. Meanwhile, its Cybersecurity division offers endpoint management solutions for government and enterprise clients. These two areas represent BlackBerry's focus for driving future growth, especially as the company seeks to recover from past challenges and deliver on its strategic objectives.

Recent results mark a turning point for BlackBerry, as the company delivered positive free cash flow for the first time in three years. This milestone is accompanied by the sale of its Cylance division, which was acquired for $1.4 billion but sold for $160 million, a nearly 90% loss. While this divestment underscores the missteps of prior management, it also represents a critical step toward simplifying the business and improving profitability. The sale allows BlackBerry to focus on its core operations, with fiscal 2026 offering the potential for more consistent growth.

The remaining business operations are expected to generate approximately $135 million in revenue for fiscal Q4 2025. Looking ahead, BlackBerry could achieve modest topline growth of around 2% to 4% in fiscal 2026, aided by favorable comparisons to previous periods. However, achieving sustained growth will require navigating intense competition in both IoT and cybersecurity markets.

BlackBerry’s valuation remains a topic of debate. The company finished fiscal Q3 2025 with $220 million in cash and marketable securities, offset by $195 million in debt. With $160 million expected from the Cylance sale, BlackBerry should maintain approximately $185 million in net cash, representing about 7% of its $2.5 billion market capitalization. This financial setup is encouraging but still leaves questions about BlackBerry’s ability to consistently generate strong free cash flow.

The company’s valuation of 4x sales reflects a cautious optimism about its future. While the sale of Cylance and operational improvements have reduced some risks, the path to sustained profitability and growth remains uncertain. BlackBerry must also contend with formidable competition. In the IoT sector, rivals like Samsara and major tech players like Amazon’s AWS present significant challenges. Similarly, the cybersecurity space is highly competitive, with companies like Palo Alto Networks and others vying for market share.

Despite these challenges, the company’s improving fundamentals and focus on core business areas suggest a brighter future. The new management team’s strategic decisions have positioned BlackBerry for growth, though execution will be critical. Investors should remain cautious but optimistic, as BlackBerry attempts to capitalize on its recent progress and deliver sustainable results in fiscal 2026 and beyond.

TL;DR: BlackBerry has shifted toward profitability, selling Cylance to streamline operations and focus on core business areas. While competition in IoT and cybersecurity remains a challenge, modest revenue growth in fiscal 2026 is possible. The company’s valuation and improving fundamentals warrant cautious optimism.