Blackberry (TSX:BB) is a Waterloo-based company that provides intelligent security software and services to enterprises and governments around the world. Today, I want to explore this company’s transition from a hardware giant to an up-and-comer in the software space. Let’s jump in.
How has Blackberry performed over the past year?
Shares of this top technology stock have dropped 2.2% month over month as of early afternoon trading on Friday, July 21. Meanwhile, Blackberry stock has surged 37% so far in 2023. Its shares are still down 22% in the year-over-year period. Investors can see more of its recent performance with the interactive price chart below.
Here’s how this company has transitioned from hardware to software
Blackberry’s time in the sun in the hardware space has stirred the imagination of Canadians. The company’s rise and fall is the subject of a 2023 film that was met with critical success. At one point, the Blackberry was the dominant smart phone on the market. However, the rise of competition like the Apple iPhone and Android alternatives saw that market share chipped away in the late 2000s and early 2010s. In the end, Blackberry could not compete with the state-of-the-art operating systems (OS) of their competitors.
The company scrambled to secure a future after the collapse of its dominant position in the smartphone space. Fortunately, it has found its footing in the software space offering its expertise in the cyber security space and development of automotive software. Both industries are geared up for big growth going forward, which makes Blackberry an interesting target.
SkyQuest Technology Consulting recently valued the global encryption software market at US$8.2 billion in 2021. The same report projected that this industry would deliver a compound annual growth rate (CAGR) of 14% through 2028. Meanwhile, Technavio last forecast that the autonomous car software market would increase by US$5.6 billion, or a CAGR of 40%, from 2021 through to 2026.
Should investors be happy with the company’s recent earnings?
Blackberry released its first quarter (Q1) fiscal 2024 earnings on June 28. The company delivered total revenue of $373 million – up from $168 million in the previous year. Moreover, it reported a net loss of $11 million, which was much improved from the net loss of $181 million it delivered in Q1 2022. Adjusted net income rose to $35 million, or adjusted earnings per share (EPS) of $0.06, compared to an adjusted net loss of $31 million, or $0.05 EPS loss, in the prior year.
On the business front, Blackberry QNX released an ultra-scalable, high performance compute ready operating system that it states will advance software development for the next generation of vehicles and IoT systems. Indeed, Blackberry’s QNX software is now embedded in over 235 million vehicles around the world. That represented a 20 million increase in vehicles compared to the previous year.
Blackberry: Is it worth buying today?
This top Canadian tech company is on track for solid revenue growth going forward. However, it is not expected to achieve profitability for another few years. Blackberry is a volatile pick that carries some risk at this stage, but I’m still bullish on its long-term prospects.
