BlackBerry Ltd (BBRY) – Will Patience Ever Pay Off?

BlackBerry Ltd (NASDAQ:BBRY) is back into the limelight after posting excellent second quarter results. Revenue in the quarter came in at $249 million, while analysts were expecting the company to report a revenue of $231 million. However, it should be noted that revenue managed to exceed expectations amid a one-time contract by a single customer, according to which Blackberry will receive about $30 billion over the next 12 months. Licensing and IP revenue of $56 million was significantly better than last year’s $16 million. BlackBerry Ltd (NASDAQ:BBRY) is no longer a smartphone company. Its handset revenue fell a whopping 85% in the fiscal second quarter, as the company clears its remaining inventory before shutting down its phones business for good. BlackBerry Ltd (NASDAQ:BBRY) is close to completing the transition towards software and services business. As a result, margins are improving. In the second quarter, gross margins increased to 74%, compared to just 29% reported in the second quarter of last year. EBITDA increased by 11% year over year. Software and Services revenue accounted for about 79% of the total sales of Blackberry, compared to 44% a year earlier.

BlackBerry Ltd (NASDAQ:BBRY) Unified Endpoint Management platform is getting a lot of traction. The segment billings were up 19% year over year in the fiscal second quarter of 2018. Blackberry’s CEO John Chen also told investors that there were over 20 transactions of $100,000 related to its security business outside the US. Blackberry’s encrypted voice solution SecuSUITE received NYAP certification in the quarter. This will significantly increase the demand of SecuSUITE among federal agencies.

BlackBerry Ltd (NASDAQ:BBRY) now has about $2.4 billion in cash, thanks to CEO John Chen’s continuous efforts to cut costs. Analysts think that Blackberry could continue to make acquisitions to increase its presence in the Enterprise and software industry. In 2015, the company completed its acquisition of California-based Good Technology. This acquisition helped Blackberry to increase its lucrative enterprise mobility management business.

BlackBerry Ltd (NASDAQ:BBRY) is also tapping into the highly profitable Internet of Things industry. The company recently partnered with Ontario-based fleet management and GPS tracking company Fleet Complete.

However, BlackBerry Ltd (NASDAQ:BBRY) guidance for its revenue remains week for the coming quarters. The stock will remain under pressure and it will take several months before investors start reaping some benefits.