BlackBerry Limited (TSX:BB)(NYSE:BB), the once-dominant smartphone maker that has since transitioned into cybersecurity and the Internet of Things (IoT), has been struggling to generate strong, consistent results.
Last week, it released its financial results for Q2 2024. Revenue totaling $132 million for the period ending Aug. 31 was down 21% year over year. It was a largely underwhelming performance for the tech company as all of its segments generated less revenue than they did in the previous year. To make matters even worse, BlackBerry’s bottom line remained poor, with the company reporting a net loss of $42 million which was only slightly better than the $54 million loss it incurred a year earlier.
CEO John Chen, however, suggested there were strong growth prospects ahead, particularly in the IoT and cybersecurity segments, as the company pivots towards high-margin, sustainable revenue streams. The company highlighted a strong pipeline of deals, mainly from government contracts, suggesting a promising outlook for the rest of the fiscal year. “Our IoT business continues to win new designs and add royalty backlog at a strong rate.”
Investors, however, have been down this road before as BlackBerry has often boasted of deals only for the top line to continue to fall.
Over the past five years, the stock has declined by nearly 60%. If BlackBerry isn’t doing well even as companies are focusing on technology and artificial intelligence, that’s a bad sign for the business. At more than three times book value and sales, this isn’t a cheap stock to own. And with profitability still not in sight and revenue not growing, there’s room for the stock to go lower in the future.
