BlackBerry (TSX:BB) has significantly underperformed the broader markets since its 2016 transformation from a hardware manufacturer to a software provider. In this period, the former smartphone maker has failed to establish itself as a major player in the crowded enterprise software and cybersecurity markets dominated by giants like Microsoft and CrowdStrike.
BlackBerry’s QNX operating system continues to gain traction in the automotive sector. However, the company hasn’t delivered the innovations required to differentiate itself in a competitive landscape. Additionally, its attempts to capitalize on AI (artificial intelligence) and IoT (Internet of Things) trends have not yielded results that could drive meaningful growth.
BlackBerry continues to wrestle with sluggish revenue growth. Its sales fell from $920 million in the fiscal year 2019 (which ended in February) to $535 million in the fiscal year 2025. This decline in the top line, as well as inconsistent profit margins, has raised questions over the tech stocks’ valuations and growth prospects.
BlackBerry shares are down 18% in the last five years, trailing the broader markets by a sizeable margin. However, as past returns don’t matter much to current and future investors, let’s see if the TSX tech stock is a good buy right now.
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How did BlackBerry stock perform in Q4 of fiscal 2025?
BlackBerry delivered a surprisingly strong fourth quarter to cap off what Chief Executive Officer John Giamatteo called a “transformative year” for the company. The technology firm beat expectations across all key metrics, with total revenue of $141.7 million exceeding guidance and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) reaching $21.1 million.
BlackBerry completed the divesture of Cylance, its struggling cybersecurity business, to Arctic Wolf. The transaction was valued at $80 million in cash and 5.5 million shares of Arctic Wolf.
With Cylance’s financial drag removed, BlackBerry has emerged as a leaner, more focused operation built around two primary business units. QNX, the embedded software platform, generated $65.8 million in Q4 revenue. Moreover, QNX ended fiscal 2025 with a royalty backlog of $865 million, showcasing the strength of its competitive position in automotive markets despite industry headwinds.
BlackBerry is strategically expanding QNX beyond automotive into medical equipment, rail, aerospace, and defence, leveraging its 45-year reputation for safety-critical software.
The Secure Communications division exceeded expectations with $67.3 million in Q4 revenue. Management has substantially restructured this business, exceeding its target of removing $150 million in costs from BlackBerry’s run rate.
Is the TSX tech stock undervalued?
Looking ahead, BlackBerry faces some uncertainty from automotive tariff impacts and government spending changes in key markets, reflected in somewhat cautious guidance.
However, with $410 million in cash and investments and expectations for a positive operating cash flow of approximately $35 million in fiscal year 2026, BlackBerry appears better positioned for sustainable growth in years.
Bay Street expects BlackBerry to expand adjusted earnings from $0.02 per share in fiscal 2025 to $0.29 per share in fiscal 2030. In this period, its free cash flow is forecast to improve from $13.4 million to $166 million.
If BB stock is priced at 20 times trailing FCF, it should be valued at a market cap of $3.3 billion in April 2030. This indicates an upside potential of 27% from current levels.
I think BlackBerry stock will continue to underperform peers and the TSX index despite the expansion of its earnings and free cash flow margins.
