Security software and services company BlackBerry (NYSE:BB) reported its second-quarter results for its fiscal 2019 on Friday. The better-than-expected results, which included a 4% increase in software and services revenue and a meaty 78% non-GAAP gross margin, sent shares surging on Friday.

Here are some of the key takeaways from the quarterly update. 

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BlackBerry's second-quarter results: The raw numbers

Metric

Q2 2019

Q2 2018

Change

Revenue

$210 million

$238 million

(12%)

Net income

$43 million

$19 million

126%

Non-GAAP gross margin

78%

76%

N/A

Fiscal years used. Data source: BlackBerry second-quarter earnings release

What happened with BlackBerry this quarter?

Improved profitability was the standout trend in BlackBerry's second quarter. Here are some highlights from the important period:

  • Though revenue fell 12% year over year, net income more than doubled during this time frame.
  • Non-GAAP software and services revenue increased 4% year over year, or 1% on a non-GAAP basis.
  • 81% of BlackBerry's revenue was recurring during the quarter, up from 79% in the year-ago quarter.
  • Research and development spending decreased from $60 million in the year-ago quarter to $51 million.
  • Sales, marketing, and administration expenses declined from $113 million to $106 million.
  • BlackBerry's non-GAAP gross margin expanded from 76% to 78%.
  • Free cash flow, adjusted to exclude the impact of restructuring and legal proceedings, was $37 million during the quarter.
  • Total cash, cash equivalents, and short- and long-term investments at the end of the period were $2.4 billion.

What management had to say

"In the quarter, we exceeded our financial expectations driven by sequential growth in both our BlackBerry technology solutions and enterprise software and services businesses," CEO John Chen said.

The company's technology solutions segment did indeed stand out. Its revenue increased 29% year over year to $49 million, a record high for the segment. In addition, this revenue is up from $47 million in the first quarter of fiscal 2019. Enterprise software and services revenue was down 3% year over year but was up 11% sequentially.

Looking forward

Management was optimistic about the opportunities ahead, citing the fast-growing Enterprise of Things market and the strong potential for the company's BlackBerry Spark (its platform for securely communicating and collaborating between smart endpoints).

Specifically, BlackBerry expects full-year fiscal 2019 software and services billings to increase at a double-digit rate compared to the year-ago quarter, and software and services revenue to rise 8% to 10% year over year. Management also forecast positive earnings per share and positive free cash flow "before considering the impact of restructuring and legal proceedings" for the full-year period.

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