BlackBerry Ltd’s (TSX:BB) Profits Double in Q2: Is the Stock a Buy?

BlackBerry Ltd (TSX:BB)(NYSE:BB) did a good job of growing its net income in its most recent earnings, but sales were a bit of a different story.

BlackBerry Ltd (TSX: BB)(NYSE: BB) released its quarterly results on Friday, and here’s a quick overview of how the company did:

2018 2017 % Change
Revenue $210 $238 -11.8%
Operating Expenses $122 $153 -20.3%
Net Income $43 $19 +126%

At first glance, we can see that while the company did enjoy a big improvement in its bottom line, sales were down year over year, which was argely to do with improved efficiency and lower costs that BlackBerry was able to produce a strong result.

It’s definitely a big positive to see such strong growth in the company’s bottom line, but the sales number continues to drop and should be a concern for investors. Let’s take a closer look at BlackBerry’s segmented sales to see how it did there, and whether there is a reason for optimism.

Sales breakdown by segment

Segment 2018 2017 % Change
Enterprise software and services $88 $91 -3.3%
Technology solutions $49 $38 +28.9%
Licensing, IP and other $56 $56 0%
Handheld devices $5 $16 -68.8%
System access fees $12 $37 -67.6%
Total $210 $238 -11.8%

We can quickly see that the trend of lower and lower handheld-related sales and system access fees continues, as the once popular cell phone maker has made a drastic overhaul to its business over the years.

And while investors may have given the company a free pass because of such a big transition, at some point, people have to start asking when the growth is going to start.

The company’s technology solutions segment did show impressive growth as a percentage, but overall, that added only $11 million to its top line. Meanwhile, its enterprise software and services were actually down from a year ago.

While the company did state in its release that billing from software and services grew by double-digits, it’s unclear what would have dragged the overall numbers down.

BlackBerry still expects its service and software-related sales to grow between 8% to 10% from last year, and still believes it is on track to meet its goals.

Should investors be happy with these results?

As impressive as the company’s focus has been on cyber security and working on corporate sales rather than consumer, I’m just not convinced that BlackBerry is able to do enough to become a formidable brand anymore.

While the company still believes it is on target to meet its expectations for the year, given the initiatives that BlackBerry has taken on in the self-driving industry and the focus that we’ve seen on privacy and security, I would have expected much more from the company by now.

Bottom line

BlackBerry has a long way to go to prove that it is still a worthy investment. And it may be that it takes years for its transformation to transform into a strong, high-growth company that once attracted investors with ease.

Even without a big price tag attached, BlackBerry is still not a stock that I’d consider investing in. Without much excitement around its growth or results, it’s unlikely that we’ll see investors flocking to this stock anytime soon, and for that reason, you shouldn’t expect much in the way of returns.

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

More on Tech Stocks

Close up of an egg in a nest of twigs on grass with RRSP written on it symbolizing a RRSP contribution.
Dividend Stocks

The RRSP Deadline Is in March: Why Starting in November Gives You the Advantage

Many investors hold stocks like Shopify Inc (TSX:SHOP) in their RRSPs.

Read more »

man studies at computer
Dividend Stocks

Here Are The 3 Canadian Stocks I’d Tell a New Investor to Buy ASAP

Discover strategies for investing in stocks that can help you thrive in a market filled with volatility and uncertainty.

Read more »

Canada Day fireworks over two Adirondack chairs on the wooden dock in Ontario, Canada
Dividend Stocks

Where to Invest Your $7,000 TFSA Contribution Before 2026 Is Over

Put your $7,000 TFSA contribution to work before 2026 ends. Explore BMO, CN and Constellation Software for income and long-term…

Read more »

moving into apartment
Tech Stocks

Your TFSA Contribution Room Could Be Larger Than You Think

Shopify Inc (TSX:SHOP) stock has delivered large returns. Those who cashed out TFSA SHOP positions may have more room than…

Read more »

woman relaxes with phone
Dividend Stocks

BCE Cut its Dividend: Has the Stock Become a Better Income Investment?

BCE’s new payment offers income, but cash after spending still has to support the recovery.

Read more »

A chip in a circuit board says "AI"
Tech Stocks

Celestica Stock: Is AI Growth Worth the Risk in a Retirement Portfolio?

Celestica offers retirement growth potential, with a cash-flow trade-off that deserves more attention than sales alone.

Read more »

A person's hand cupped open with a hologram of an AI chatbot above saying Hi, can I help you
Tech Stocks

CGI vs. OpenText: Which Canadian Tech Stock Offers the Better Long-Term Case?

CGI gets my long-term preference, while OpenText offers a recovery case that still needs stronger sales.

Read more »

young adult uses credit card to shop online
Tech Stocks

Is Shopify Stock Too Expensive? A Great Quarter Meets a Sky-High Valuation

Shopify's latest quarter was impressive, but its expensive valuation could make investors think twice before buying.

Read more »