Five Key Takeaways From BlackBerry Ltd (BBRY) Conference Call


There are at least five key takeaways from the conference call of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB). Though the loss is wider than the Street analysts’ estimates, the company’s focus on software is yielding the expected results. For the second quarter in a row, the smartphone inventor was able to deliver solid positive free cash flow. The most important factor is that the company was able to maintain the overall revenue number, which was badly missing in the earlier quarters.

Software Division

BlackBerry Ltd (NASDAQ:BBRY)’s CEO, John Chen, has talked about the software business time and again. Therefore, the software was the first key take away from the conference call. He pointed out that software and technology delivered 130% YOY growth at $137 million. That was possible since the enterprise business delivered YOY double-digit growth for the second straight quarter besides significant contribution from its technology licensing program. Software’s contribution to the overall revenue increased to 21%. This is in line with Chen’s goal to double software revenue each year.

The smartphone inventor indicated that it could win two technology license deals. That included a cross-licensing agreement with Cisco Systems, Inc. (NASDAQ:CSCO). Chen preferred not to mention the other company’s name but indicated that it is a big technology provider. Also, the company could boost its enterprise customer wins by 400 to 2600, both existing and new. Chen said that he was comfortable with the Street expectations of software revenue of $490 million for the current fiscal year. Its enterprise and BTS is predicted to witness YOY growth of 20% to help achieve the figure.

Free Cash Flow

The second factor is the positive free cash flow of $134 million in the first quarter. That came on top of $76 million positive free cash flow delivered in the fourth quarter. BlackBerry Ltd (NASDAQ:BBRY) indicated that about $50 million of the cash balance was added to the fourth quarter level. That means the total cash and cash equivalents were $3.32 billion at the end of the first quarter. The Canadian company expects to maintain the positive free cash flow in the remainder of the current fiscal year.

The third key factor is the revenue. One of the objectives of the new management is to stabilize revenue generation. For the second quarter in a row, the smartphone inventor managed to deliver revenue of more than $650 million. Revenue for the first quarter totaled $658 million on top of $660 million delivered in the fourth quarter. That surprised a section of the analysts, who were expecting revenue of below $500 million. The quarterly revenue suggests that the company is nearing the stage of generating stabilized revenue.

Net Loss

BlackBerry Ltd (NASDAQ:BBRY) suffered an adjusted loss of five cents a share in the first quarter, which is wider than the Street analysts’ expectations of three cents of loss per share. That was partly because of investments. The company indicated that it is investing in the software business and will continue to see QoQ growth in operating expenses. The first quarter’s operating costs witnessed $20 million more compared to the fourth quarter.

The fifth takeaway is the adjusted gross margin. The key is that the Canadian firm was able to maintain positive gross margins in its hardware section for the fourth straight quarter. On a YOY basis, its adjusted gross margin improved to 50.3% from 47.9%.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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