Does BlackBerry Make Enough Profit?

Does mid-cap Software company BlackBerry have a sustainably profitable business model? By studying its gross margins and comparing them to its operating margins, we can gain insight into quality of its business. With gross margins at 65.0%, you might be telling yourself the BlackBerry is profitable -- but there is more to the story.

Gross margins take into account only the cost of revenue, meaning the expenses directly related to each sale. So it's important to also look at operating margins, which take into account overhead costs. One way to look at it is that gross profit gives insight into BlackBerry's market and the viability of its business model. Operating margins, on the other hand, show you how efficiently the company is implementing this business model.

Date Reported Revenue ($ k) Cost of Revenue ($ k) Gross Margins (%) YoY Growth (%)
2022-02-28 718,000 251,000 65.04 -9.67
2021-02-28 893,000 250,000 72 -1.87
2020-02-29 1,040,000 277,000 73.37 n/a

BlackBerry's gross margins are currently in the green, but this might not be the case for long. Since its cost of revenue is growing at a rate of -3.1% compared to -11.2% for its revenues, its gross margins have been shrinking -3.8% on average each year.

Date Reported TotalRevenue ($ k) Operating Expenses ($ k) Operating Margins (%) YoY Growth (%)
2022-02-28 718,000 681,000 -29.81 -171.74
2021-02-28 893,000 741,000 -10.97 37.67
2020-02-29 1,040,000 946,000 -17.6 n/a

The table above tells us that, on average, BlackBerry has not been profitable over the last four years, which should be a warning sign to prospective investors. Indeed, the company's operating margins are sinking at rate of -44.7%

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.