On the surface, BlackBerry’s (TSX: BB) quarterly results will please its shareholders. The company reported record revenue, driven by software and services revenue. The nightmare of the devices unit is officially in the company’s past. But CEO John Chen still has plenty of work ahead before its business is on the path for sustained growth.
Strengths
BlackBerry reported gross margin topping record highs of 77%. Operating income topped a modest $1 million, while operating margin nearly doubled to 7%, up from 4%. This translated to positive earnings (EPS) of $0.03 a share. It ended the quarter with $2.5 billion in cash.
Enterprise software sales drove profitability. Billings grew at a double-digit rate. BlackBerry won key clients, notably in the U.S. government.
This includes the Department of Defense, Treasury, Justice, House of Representatives, and Senate, just to name a few. It expects to add more security authorization from other U.S. federal agencies in the quarters ahead.
BlackBerry added two enterprise channel partners in Indonesia. Deutsche Bank (NYSE: DB), which said it would wind down BlackBerry devices in September, announced it would use BlackBerry Endpoint Management.
Takeaway
BlackBerry is on track to delivering positive free cash flow for the full 2018 fiscal year. Revenue is small but growing but profits from software sales will keep value stocks interested in BB stock.
Tech Insider
