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BlackBerry Ltd. Results Recap: What’s Next for This Tech Darling?

BlackBerry Ltd. (TSX:BB)(NYSE:BB) announced quarterly results this week that were, in a word, impressive.

Non-GAAP revenue across the most recent quarter came in at US$239 million, with the software and services segment of the company bringing in US$218 million, thereby shattering the record set in the previous quarter. In addition, 70% of that revenue was recurring, with the company reporting 500 enterprise customer orders in the quarter.

Non-GAAP operating income came in at US$19 million, or $0.05 per share, representing the eighth consecutive quarter of positive operating income. Non-GAAP margins also set a record, exceeding the record set in the previous quarter by coming in at 79%.

One of the driving forces behind BlackBerry’s turnaround is CEO John Chen. When Chen took the reins of the company just a few years ago, BlackBerry was burning through cash and lacked focus, with little direction or vision.

Chen quickly proceeded to turn things around by reintroducing a focus on the enterprise sector and elevating BlackBerry’s IoT vision from what was at best an R&D pet project to a fully-fledged product.

The most controversial, yet expected change was the shuttering of the hardware department and the adoption of Android. That decision proved to be the catalyst to freeing up resources to work on other projects, such as autonomous driving.

It’s no coincidence that since Chen took over at BlackBerry, the stock price has more than doubled and is the impetus behind BlackBerry recently announcing an extension to Chen’s contract through 2023.

Good things are happening at BlackBerry

In addition to the strong results, BlackBerry recently announced two separate deals that will continue to push BlackBerry toward stronger results and growth.

The first is an agreement with tech giant Microsoft Corporation related to new software developed by BlackBerry called BlackBerry Enterprise BRIDGE. Both companies have many of the same customers, and BRIDGE will help nurture those relationships, thus fueling growth.

The second announcement involves BlackBerry’s growing dominance in the automotive space. BlackBerry recently signed an agreement with Jaguar Land Rover to license and use QNX in Jaguar Land Rover vehicles. BlackBerry is also providing the company with a team of engineers to help develop the secure technology even further.

Should you invest in BlackBerry?

There are three reasons why I’m really beginning to like BlackBerry as an investment.

First, these strategic agreements are becoming more frequent, and with each one signed comes the potential for further growth and exposure into the market. For example, the Microsoft deal has the potential to bring in more enterprise clients who are no longer or have never been clients of BlackBerry.

Second, BlackBerry has a passion and focus now. In the pre-Chen years, there was little to any motivation to innovate into a new segment of the economy. Compare that with the work done by the QNX automotive team that is pressing into new and potentially lucrative growth areas such as autonomous driving and you can witness that passion and drive.

Finally, BlackBerry has multiple emerging revenue streams that are only going to improve with time. One of the key points from the quarterly earnings announcement was the expectation that software and services continue growing by the double digits in fiscal 2019.

In my opinion, BlackBerry remains an excellent opportunity for investors seeking long-term growth from a tech stock.

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

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