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BlackBerry (NASDAQ:BBRY) Releases Q1 Earnings, Key Points And Market Reaction

Blackberry ltd NASDAQ:BBRY

BlackBerry Ltd (NASDAQ:BBRY) has released its first quarter (Q1 2016) results today as previously reported. The firm’s first quarter results have largely missed estimates but the result is not without some positive news for investors. Highlights of the first quarter results are presented below:

Blackberry ltd Earnings NASDAQ:BBRY

Highlights of Blackberry Ltd Q1 Earnings

Earnings: BlackBerry delivered loss per share of ($0.05), which is wider than the consensus estimate of loss of ($0.03) per share. Nonetheless, the reported $0.05 loss is better than loss of $0.11 from the comparable quarter last year.

Revenue: The firm delivered revenue of $658M, which is below the consensus estimate of $694M. Nonetheless, the breakdown of revenue shows that the firm is on track to meet the $500M software revenue by the end of fiscal 2016.

The firm’s smartphone revenue dropped to $263M down from $379M in the comparable quarter from last year. The drop in smartphone sales is not surprising because BlackBerry has been finding it hard to compete with the Apple’s (NASDAQ:AAPL) iPhones and the large array of phone sporting Google’s (NASDAQ:GOOGL) Android OS. The quarterly drop in smartphone revenue further shows the wisdom in BlackBerry’s hints at developing an Android phone.

Revenue from software climbed an incredible 153% to $137 on an annual basis. Software now accounts for 20% of BlackBerry’s revenue as the company continues to reposition itself as a software firm. The growth recorded in software revenue silences the dissenting voice of Tim Long of BMO Capital Markets. Long has been pessimistic about BlackBerry’s ability to effect a successful turnaround with its software line.

BlackBerry also revealed three strategic acquisitions that will hasten its change into a software company. BlackBerry bought a firm that allows people run a personal and business account on the same device. The software works on iOS, Android, and BB10 OS. Last month, BlackBerry also bought WatchDox, a data security firm.

BlackBerry ended the first quarter with a decent cash position. The firm ended the quarter with a positive cash flow of $123M. The positive cash flow says it might be too early to give up on BlackBerry.

And The Market Responds

BlackBerry has not been having a smooth ride in the capital market lately. The stock has declined about 15% in the year-to-date period. A 15% decline in price in the first six months of the year contrasts sharply with the gains of 40% that the stock recorded in 2014.

BlackBerry investor seems to be pleased with the stock at least from the initial response to the news. The stock is up almost 8% in pre-market trading as a mark of increase in investor confidence in the ability of CEO John Chen to turn the firm around. As at 8:31AM EDT, the stock was up 3.15% to $9.49.

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.