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BlackBerry's (BB -10%) sell-off continues today despite posting beats on its top and bottom lines in Q4 (Feb). Since surging by +160% from November to mid-February, the stock has plunged roughly 40% following today's reaction. BB no longer engages in developing phone software. Instead, it focuses solely on cybersecurity (referred to as its Secure Communications segment) and IoT (QNX) software development, which is used extensively in the automotive industry.

Despite around half of BB's QNX revenue emanating from outside North America, helping insulate the company somewhat from tariffs, there is still uncertainty surrounding the policy's future impacts, resulting in BB expanding the lower bound of its QNX FY26 sales estimate. Likewise, in Secure Communications, which depends largely on government contracts, the company is taking a prudent approach due to the uncertainty surrounding DOGE as well as changes in governments across Canada, Germany, and elsewhere. Taken together, BB projected Q1 revs and the midpoint of its FY26 top-line outlook below consensus, expecting $107-115 mln and $504-534 mln, respectively.

• While the focus is not on Q4 results, BB did perform well in the quarter, posting adjusted EPS of $0.03, well ahead of its $(0.02)-$0.00 forecast. Revenue fell by 7.3% yr/yr to $143 mln but was above BB's guidance of $126-135 mln. Notably, QNX royalty backlog grew to around $865 mln in the quarter, boding well for the ongoing health of the business.
• A major development during the quarter was BB divesting its struggling Cylance cybersecurity business to Arctic Wolf for around $160 mln in cash and around 5.5 mln shares of the privately held acquiring firm. Cylance acted as a weak link for BB, which bought the company for $1.4 bln in 2018, constantly generating losses. Combining this with a significant restructuring, BB's Secure Communications segment can move ahead in a less encumbered way.
• BB sees massive opportunities to expand its QNX software outside the automotive field, with potential use cases in health care, industrial, and robotic verticals. However, in the meantime, most of its exposure is in the automotive field, where tariffs are spurring plenty of concern. BB mentioned that thus far, it has not seen any material supply chain issues and noted that because it works with nearly every major OEM globally, it is cushioned to some extent from U.S.-specific impacts. Still, management cautioned that it remains a fluid situation.
• Meanwhile, Secure Communications faces similar federal policy-related challenges, as around a quarter of the segment's revenue is derived from the U.S. government. Again, like in QNX, BB does not see any material impacts at the moment, citing the mission-critical nature of its software in this business. However, the company remains conservative in its outlook due to the uncertainties related to its renewals and contracts.

Sellers remain in control of BB as the company steers through thick clouds brought on by tariffs, a new U.S. administration, and changes to the political landscape overseas. At the same time, macroeconomic headwinds that have persisted over the past few years remain a hindrance to overall growth. Until more clarity appears, investors are staying away, which could keep a lid on an aggressive rally over the next few months.