Artificial intelligence, or AI, is changing the world, improving processes, efficiencies, and performance. Blackberry Inc. (TSX:BB) has been a part of this change for many years, having developed its embedded machine-to-machine connected technology to become an invaluable player in the field. Today, this AI stock is finally gearing up for sustained revenue and earnings growth.
Let’s take a look.
A new Blackberry
In its most recent transformation, Blackberry has taken steps to improve its balance sheet, cash flows, and cost structure. These steps included splitting the company up into three divisions – QNX, secure communications, and licensing — and selling its Cylance cybersecurity business. The restructuring also included taking more than $150 million out of its cost structure and initiating a share buyback program.
Blackberry’s business is made up of three main segments, QNX, secure communications, and licensing. The QNX segment is the one that we hear most about and is the primary focus. Blackberry’s QNX provides critical software for embedded, machine-to-machine connected systems. It’s used in automotive applications, as well as medical devices, industrial controls, and robotics.
The secure communications segment specializes in secure communications software for enterprises. Some of Blackberry’s secure communications clients include government agencies, financial institutions, and essential service providers.
An emerging AI stock
It’s true that many investors have grown skeptical with regard to Blackberry. But the list of reasons to like this AI stock is growing. For example, the QNX segment has grown its revenues from $178 million in 2022 to $236 million in 2025 – that’s a 33% increase over this time period. And its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin stands at a healthy 25%.
Also, Blackberry’s QNX is in more than 250 million vehicles worldwide and it’s in strong demand. In fact, QNX has more than $865 million in backlog, which will make its way to the income statement over the next few years. Backlog was $460 million in 2022.
In the secure communications segment, revenue is stable, with a 19% EBITDA margin and solid cash flows.
Improving risk profile
Along with revenue improvements, Blackberry is also seeing improvements to its balance sheet and cash flows. And this is what takes Blackberry stock to a new level, both in terms of returns and risk.
As we can see from the company’s latest quarter, Blackberry’s cash flows and balance sheet have strengthened considerably. In the most recent quarter, the company’s operating cash usage came in at $18 million, which is a low point. Looking to the full year, Blackberry expects operating cash flow of a positive $35 million. This compares to prior years of negative operating cash flow. As for its balance sheet, Blackberry has $410 million in cash, with no debt maturities until 2029. This has given the company flexibility to invest in organic and inorganic growth, and to buy back shares if they present a good opportunity. All of this will drive shareholder value in the short and long term.
Two things will likely happen as a result of this. Firstly, Blackberry’s stock will trade higher because of the earnings and cash flow lift. Secondly, the stock will likely get re-rated and investors will assign it a higher multiple. This should send the stock higher in the coming months and years.
