How BlackBerry Successfully Transformed Its Business
Transformation formulated in fiscal 2015
BlackBerry (BBRY) management first devised a turnaround strategy in fiscal 2015. BlackBerry was then struggling with falling sales in global smartphone markets as Apple (AAPL) and Samsung (SSNLF) as well as China’s (FXI) Huawei, OPPO, and Vivo significantly increased their market shares and shipments.
In fiscal 2017, BlackBerry’s Software and Services business segment revenue accounted for 30% of its total revenue. The firm also launched cybersecurity services that fiscal year along with a licensing program. BlackBerry’s achieved non-GAAP (generally accepted accounting principles) breakeven or profitability in every quarter in fiscal 2017.
Interested in BBRY? Don't miss the next report.
Receive e-mail alerts for new research on BBRY
Free cash flow was positive in fiscal 4Q17.
Investing in growth
As we saw earlier, BlackBerry is investing in high-growth areas such as the IoT (Internet-of-things), cybersecurity, and innovation in the automobile segment. In fiscal 2017, BlackBerry saw a 75% YoY (year-over-year) rise in enterprise channels and 44% growth in BlackBerry Secure enterprise applications.
Software and services
BlackBerry’s Software and Services revenue rose over 34% YoY (year-over-year) in fiscal 2Q18. In fiscal 2017, revenue from this segment rose 30% YoY to offset falling revenue form the SAF business. We can see that Software and Services revenue rose from $247 million in fiscal 2015 to $530 million in fiscal 2016 and $687 million in fiscal 2017.
BlackBerry’s gross margin has also risen significantly from 46% in fiscal 2016 to 62% in fiscal 2017 and over 70% in fiscal 2Q18.