In September, BlackBerry (NASDAQ: BB) faced troubles when Facebook (NASDAQ: FB) said it would counter-sue the company for stealing voice messaging technology. Previously, BlackBerry sued Facebook in March over patent infringement in the latter’s messaging apps. These days, BlackBerry is in the limelight after reporting profits that doubled.
BlackBerry earned $0.04, albeit non-GAAP, in the second quarter. Revenue dove 10.1% year-on-year to $214 million, which still beat consensus. BB stock rose 11.68 percent on Sep. 28. Markets know better than to compare the firm’s Y/Y revenue drop: BlackBerry Technology Solutions outperformed expectations. Thanks to growth in the automotive vertical, the company’s cash flow growth will continue with low risks. Over 80% of revenue is recurring after the company shifted its corporate customers to subscriptions. Profitability from this billing model is higher.
Where is the Growth?
BlackBerry is still a non-growth story, for now. It is carrying out a more aggressive growth through acquisitions strategy in the quarters ahead. Judging from the successful deals in its history, like acquiring Good Technology, such purchases should widen the company’s addressable market while complementing the existing lines of business. Mobile device management is already mature, offering little upside but steady cash flow.
Software in automotive will drive BlackBerry’s potential growth.
After the run-up, look for profit-taking first before starting a position in the stock.
Tech Insider
