Personal Finance
BB

BlackBerry's Profitability Continues to Improve

A businessperson holding a digital-like shield

BlackBerry 's (NYSE: BB) transformation from a mobile phone maker to a security software and services company is taking hold. In the company's third quarter of fiscal 2019, BlackBerry posted strong growth where it counts. Software and services revenue, non- GAAP (generally accepted accounting principles) earnings per share, and free cash flow all increased by double-digit rates year over year.

Here's an overview of the third-quarter results, which were released Thursday morning.

A businessperson holding a digital-like shield

Image source: Getty Images.

BlackBerry's third-quarter results: The raw numbers

Metric Q3 2019 Q3 2018 Change
Non-GAAP revenue $228 million $235 million (3%)
Non-GAAP EPS $0.05 $0.03 67%
Non-GAAP operating income $27 million $16 million 69%

Data source: BlackBerry's third-quarter results for fiscal 2018 and fiscal 2019 . Fiscal years shown.

What happened with BlackBerry this quarter?

Improving profitability continued to claim the spotlight in the company's financial results. Here are some of the key takeaways from the quarter:

  • Non-GAAP software and services revenue hit a record high of $219 million, up 10% year over year
  • GAAP software and services revenue increased 14% year over year to $217 million
  • BlackBerry's software and services revenue growth rate was an acceleration compared to growth seen in Q2
  • 88% of the period's revenue was recurring -- up from 75% in the year-ago quarter
  • $27 million in non-GAAP operating income for the period marked the company's 11th quarter in a row of positive non-GAAP operating income
  • Free cash flow was $57 million, or $39 million including the impact of restructuring and legal proceedings

What management had to say

BlackBerry CEO John Chen was pleased with the period. It was "another solid quarter," Chen said in the company's Q3 earnings release. To highlight the BlackBerry's momentum, Chen pointed to the company's double-digit year-over-year growth in software and services revenue, non-GAAP earnings per share, and free cash flow.

Chen also said he was looking forward to the company's pending acquisition of artificial intelligence and cybersecurity leader Cylance. BlackBerry announced an intent to acquire the company in November.

Looking forward

The company reaffirmed its outlook for full-year fiscal 2019 results. Management expects:

  • Double-digit growth in software and services billings
  • 8% to 10% growth in software and services revenue
  • Positive non-GAAP earnings per share
  • Positive free cash flow

Chen also commented on the company's pending acquisition of Cylance, noting the company will "extend our strategy with cutting-edge AI cybersecurity capabilities and, combined with BlackBerry's capabilities, present the opportunity for revenue acceleration in our businesses, including UEM, QNX, and Spark."

BlackBerry expects its acquisition of Cylance to close before the end of February.

10 stocks we like better than BlackBerry

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and BlackBerry wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of November 14, 2018

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool recommends BlackBerry. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

BB

Other Topics

Stocks

Latest Personal Finance Videos

    #TradeTalks: The Changing E-Commerce Landscape

    e-Commerce Consultant James Thomson joins Jill Malandrino on Nasdaq #TradeTalks to discuss the changing e-commerce landscape, what consumers should prepare for as we head into shopping season and why you shouldn’t do last minute shipping.

    6 days ago

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More