Unlike last quarter when its software revenues disappointed investors, BlackBerry (NASDAQ: BBRY) turned things around in the second quarter. Markets rewarded BBRY stock with a convincing 22.4% return on the week.
Software and services accounted for $196 million revenue. $102 million coming from enterprise software and services, while the Technology Solutions unit added $56 million. while IP and licensing added $56 million to revenue. Most notably, handheld devices added just $16 million to the total, down 85% Y/Y. Management issued a FY18 revenue forecast of $920 million to $950 million, sharply above the consensus estimates.
At an annualized $1 billion in revenue from software, BBRY stock could be at fair value and holding the $10+ stock price. The company needs revenue sources outside of its traditional MDM and IP licensing segments. AI wins could gain traction over time, accelerating with strategic buyouts that bolster the offering.
In the devices market, BlackBerry announced a licensing agreement for its secure variant of the Android operating system with a China-based firm. Higher adoption of this software from other hardware vendors would give BlackBerry a decent cushion of steady cash flow.
Takeaway
BlackBerry’s stock is fairly valued at best but another quarter of higher IP revenue and software sales will give investors more upside.
