BlackBerry (TSX:BB) Reports Strong Results: Now What?

BlackBerry Ltd (TSX:BB)(NYSE:BB) has finally emerged from a long, multi-year turnaround and posted handsome results for the latest fiscal, but what does this mean for the longer-term?

| More on:

BlackBerry (TSX:BB)(NYSE:BB) recently raised the eyebrows of investors everywhere when the company posted much-improved results for the full fiscal year as well as a strong outlook for the next fiscal. In many ways, it would seem that BlackBerry’s long turnaround and return to profitability are finally a reality.

In the aftermath of the earnings report, the stock surged nearly 10% before returning some of those gains, but overall, BlackBerry remains up by an impressive 28% year to date, handily making it one of the best-performing investments on the market.

Let’s talk results

BlackBerry’s results were, in a word, impressive. non-GAAP revenue saw an 8% year-over-year increase to US$257 million, with the software and services segment once again leading the way with revenues of US$248 million, reflecting an impressive 14% gain over the same period last year. Even more impressive than that growth is the fact that a whopping 93% of that revenue was recurring.

From an earnings standpoint, on a non-GAAP basis, BlackBerry realized US$0.11 per basic and diluted share and the company managed a free cash flow of $18 million in the quarter after acquisition, restructuring and other costs were taken into consideration.

Commenting on the impressive growth, BlackBerry CEO John Chen said, “This profitable growth is a clear indication that we have successfully pivoted to become an enterprise software company,” before stressing the point that not only did BlackBerry met all of its targets for fiscal 2019, but also surpassed expectations for the fourth quarter.

Finally, looking toward the next fiscal, BlackBerry is forecasting revenue growth of between 23% and 27%

What’s next?

There’s no denying the fact that BlackBerry’s results generated some excitement among investors, particularly among long-term holders who have been predicting that the company’s return to profitability in a strong way was coming, but it does beg the question of what’s next?

To try to answer that question, let’s take a moment to mention Cylance – the California-based artificial-intelligence and cybersecurity company that BlackBerry acquired just before the close of the prior quarter. At $1.4 billion, Cylance was BlackBerry’s largest acquisition to date and promises to be a major revenue driver for the company, despite the fact that it may take a year to fully integrate Cylance and its potentially overlapping customers.

After that, the integration of Cylance into QNX, as Chen alluded to recently, is something that could hold even bigger gains for the company, particularly given emerging array of devices and end-points that Cylance caters to as well as QNX’s already strong presence in the emerging autonomous vehicle segment of the market.

In short, if you haven’t considered buying BlackBerry until now, it might be the opportune time to take a small position and see what the future has in store.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Demetris Afxentiou has no position in any of the stocks mentioned. The Motley Fool owns shares of BlackBerry. BlackBerry is a recommendation of Stock Advisor Canada.

More on Tech Stocks

An investor uses a tablet
Tech Stocks

Canadian Tech Stocks to Buy Now for Future Gains

Not all tech stocks are created equal. In fact, these three are valuable options every investor should consider.

Read more »

dividend growth for passive income
Tech Stocks

2 Rapidly Growing Canadian Tech Stocks With Lots More Potential

Celestica (TSX:CLS) and Constellation Software (TSX:CSU) are Canadian tech darlings worth watching in the new year.

Read more »

BCE stock
Tech Stocks

10% Yield: Is BCE Stock a Good Buy?

The yield is bigger than it's ever been in the company's history. That might not be a good thing.

Read more »

Happy shoppers look at a cellphone.
Tech Stocks

So You Own Shopify Stock: Is it Still a Good Investment?

Shopify (TSX:SHOP) stock has had a run, but there's still room to the upside.

Read more »

A person uses and AI chat bot
Tech Stocks

AI Where No One’s Looking: Seize Growth in These Canadian Stocks Before the Market Catches Up

Beyond flashy headlines about generative AI, these two Canadian AI stocks could deliver strong returns for investors who are willing…

Read more »

Data center servers IT workers
Tech Stocks

Better Buy: Shopify Stock or Constellation Software?

Let's dive into whether Shopify (TSX:SHOP) or Constellation Software (TSX:CSU) are the better options for growth investors in this current…

Read more »

nvidia headquarters with nvidia sign in front
Tech Stocks

Nvidia Just Delivered a Beat-and-Raise Quarter. There’s 1 Red Flag Investors Shouldn’t Ignore.

The chipmaker continued to benefit from robust demand for artificial intelligence (AI). But can it last?

Read more »

GettyImages-1473086836
Tech Stocks

Why Super Micro Computer Stock Is Soaring Today

The volatile stock is getting a boost from Nvidia.

Read more »