BlackBerry sinks 12% on poor Q2 preliminary results

BlackBerry (NYSE:) shares fell more than 12% in pre-market Friday after the company reported weaker-than-expected preliminary second-quarter results.

While analysts are expecting $150.5 million in Q2 revenue, BlackBerry (TSX:) said it expects to report sales of $132M.

The revenue for the IoT (Internet of Things) business unit is expected to be approximately $49M, representing a 9% sequential growth compared to the previous quarter. Revenue for the cybersecurity business unit is expected to be approximately $80M, which is lower than expected, with the company blaming certain large government deals not closing in the quarter.

While BlackBerry reiterated the full-year revenue outlook for Cybersecurity and Licensing units, it adjusted the outlook for IoT segments “to reflect factors including revised production schedules at certain automakers.”

The full-year revenue outlook for the IoT business unit is now expected to be in the range of $225M to $240M.

“Like many software companies, our Cybersecurity business has experienced elongated sales cycles, particularly in BlackBerry’s core government vertical, where we have a strong market position. Given the product mix, delays in closing certain large deals are expected to impact revenue recognized in the quarter,” said John Chen, Executive Chair & CEO, BlackBerry.

“However, we expect to close these deals this fiscal year and are therefore reiterating the full-year outlook for the Cybersecurity business unit given previously,” he added. “Our IoT business unit continues to capitalize on its large market opportunity and multi-year secular tailwinds by securing new design wins at a strong rate. However, in the short term we are seeing some automakers shift the start of software development programs, as well as production schedules, and therefore we’ve revised our current year revenue outlook, but not our long-term targets.”