BB's Secure Comms Gains Traction: Will This Fuel a Turnaround?

BlackBerry Limited BB continues to shift its focus toward enterprise software and cybersecurity. Its Secure Communications revenues of $67.3 million contributed nearly 50% of total revenues in the last reported quarter, outpacing management’s expectations ($62-$66 million).

BlackBerry’s Secure Communications division encompasses encrypted voice, messaging and critical event management solutions. These products are trusted by governments, defense departments and enterprises worldwide that require military-grade protection. Key offerings include Secusuite, AtHoc and UEM. Secusuite has a strong foundation with the German government and is expanding its focus to a new mobile app suite and growth beyond Germany. Its key competitive advantages are NSA-certified end-to-end encryption, cryptographic proof of identity, full data sovereignty and a wide range of industry certifications, making it a trusted choice for secure communications.

AtHoc is expanding its presence in the U.S. government sector, focusing on police, fire and ambulance services. Known for its scalability, reliability and extensive alerting integrations, it is supported by essential U.S. and global certifications to meet vital public safety requirements. UEM drives robust cybersecurity revenues with an emphasis on retention, efficiency and profitability. Its strengths include data sovereignty, on-premise multi-tenant support, strong app and data security and important regulatory certifications.

Over the past fiscal year, Secure Comms underwent major changes, including the sale of Cylance and cost-cutting.  Amid this, BB reported strong results with stable revenues, improved profitability and solid underlying metrics.  The focus is on delivering solid margins and strong cash flow, which are key goals for this part of the business. It is showing positive momentum, with ARR trends moving in a healthier and more stable direction, reflecting improving fundamentals and long-term growth potential. It is also a strong contributor to BB’s EBITDA and cash flow.

BlackBerry Limited Price and Consensus

BlackBerry Limited price-consensus-chart | BlackBerry Limited Quote

Several macro and geopolitical factors are fueling growth in BlackBerry's secure communication offerings. Increased defense budgets in the United States, Europe and Asia are driving demand for secure, sovereign communication systems. With hybrid work continuing, companies, especially in finance, healthcare and legal, are investing in secure communication tools to prevent data breaches, cyber-attacks and compliance issues.

However, BB is taking a cautious stance on the Secure Communications unit due to ongoing turmoil in its core government markets. The potential impact of DOGE and other shifts within the U.S. administration, as well as political changes in Canada, Germany and other regions, are likely to create a challenging and unstable environment. While significant effects are yet to be seen, the situation remains unpredictable. These developments could lead to short-term disruptions for the business. Although there may be long-term opportunities through consolidation, the current outlook is uncertain and carries risks.

A Look at BB’s Competitors in the Cybersecurity Domain

Fortinet FTNT has been making steady progress in AI-driven cybersecurity, with strong customer adoption across security operations. In the first quarter of 2025, its AI-powered SecOps business grew 29% year over year and now contributes 10% of its business. The company has been expanding its FortiAI product line, including FortiAI Assist for automation, FortiAI Protect for threat detection and FortiAI Secure AI for safeguarding AI infrastructure.

However, Fortinet’s SecOps growth faces pressure from economic uncertainty. Deal sizes and timelines may be adversely impacted, and sales teams are cautious about short-term growth. While AI-driven security offers promise, balancing innovation with cautious enterprise spending could be challenging in the second half of the year.

CrowdStrike CRWD is doubling down on the next generation of Security Information and Event Management (SIEM) as part of its mission to protect enterprises against evolving cyber threats. The company’s Falcon Next-Gen SIEM is modernizing the way businesses detect, investigate and respond to security incidents. Enterprises can now use its Falcon agent to automate data collection for endpoints and cloud workloads. CRWD has unified threat detection, added AI-based investigations and streamlined response with Falcon Fusion SOAR. Its Next-Gen SIEM also offers 24/7 managed detection and response services.

BB’s Price Performance and Valuation

Shares of BB have gained 77.4% in the past year compared with the Zacks Internet – Software industry’s growth of 33.2%.

From a valuation standpoint, BB trades at a forward price-to-sales of 4.53X, lower than the industry’s average of 5.6X.

BB currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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