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Why is BlackBerry (BB) Down 11.7% Since its Last Earnings Report?
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It has been about a month since the last earnings report for BlackBerry Limited (BB - Free Report) . Shares have lost about 11.7% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is BB due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
BlackBerry Q1 Earnings & Revenues Top on Software Sales
BlackBerry reported solid financial results for first-quarter fiscal 2019 (ended May 31, 2018), driven by strong customer demand for its security-focused products, resulting in double-digit year-over-year software and services billing growth. BlackBerry Technology Solutions and the Licensing business reflected the highest momentum.
Net Loss
On a GAAP basis, net loss for the reported quarter came in at $60 million or a loss of 11 cents per share against net income of $671 million or $1.23 per share in the year-ago quarter. The deterioration was primarily due to a favorable arbitration award received in the year-earlier quarter.
Non-GAAP net income was $17 million or 3 cents per share and beat the Zacks Consensus Estimate by a couple of cents.
Revenues
Quarterly GAAP revenues decreased 9.4% year over year to $213 million. The top line, however, surpassed the Zacks Consensus Estimate of $206 million.
Total GAAP software and services revenues were $189 million, up 18% year over year, driven by strong double-digit billings and increase in recurring revenues.
Segmental Performance
GAAP revenues from Enterprise software and services decreased 14.1% year over year to $79 million.
BlackBerry Technology Solutions GAAP revenues increased 31% from a year ago to $47 million, primarily driven by BlackBerry QNX software embedded and connected in autonomous auto platforms. Notably, BlackBerry QNX software is now embedded in more than 120 million automobiles worldwide, doubling the install base in the last three years.
Revenues from Licensing, IP and other were $63 million compared with $32 million in the year-earlier quarter. Licensing revenues saw strong year-over-year growth as the pace of recurring revenues continues to rise. Technology licensing business showed progress as TCL — the company’s Chinese handset partner — launched BlackBerry KEY2 weeks ago with positive market reception. Optiemus, the company’s partners in India, will launch multiple BlackBerry smartphones in the market this summer. One of the company’s consumer electronic partners, Punkt, announced the launch of a new mobile phone with BlackBerry Cyber Security Technology integrated in it.
Subsequent to the quarter end, BlackBerry inked a technology and brand licensing deal with Bullitt Group, an international manufacturer of branded connected device, thereby broadening its consumer reach. The company strengthened its IP licensing business and thus expects to do better than 100 million annual run rate for the IP licensing, as mentioned in prior quarters.
Handheld devices revenues were $8 million compared with $37 million in the year-earlier quarter. This resulted from the release of accrued expenses reconciled to historical carrier agreements. SAF (services access fees) revenues continued its downtrend and decreased to $16 million from $38 million in the year-earlier quarter.
Operating Metrics
Gross profit was $161 million or 75.6% of revenues, up from $150 million or 63.8% of revenues in the year-ago quarter. The improvement was attributable to the increase in contribution from software and services to overall revenue mix.
Operating loss was $65 million against an operating income of $536 million in the prior-year quarter. Adjusted EBITDA was $31 million, equating to an adjusted EBITDA margin of 14%.
Cash Flow
During the quarter, BlackBerry used $7 million of cash in operations against $863 million of operating cash flow in the year-earlier period.
Free cash flow before considering the impact of restructuring and legal proceedings was $3 million.
Liquidity
As of May 31, 2018, BlackBerry had $520 million of cash and cash equivalents and $810 million of long-term debt.
As of May 31, 2018, the company’s total cash, cash equivalents, short-term and long-term investments were approximately $2.3 billion.
Fiscal 2019 Outlook
BlackBerry expects total software and services revenue growth to be in the range of 8-10% year over year. It expects total software and services billings growth to be in double-digits. The company anticipates non-GAAP earnings per share to be positive. Free cash flow is also expected to be positive, before considering the impact of restructuring and legal proceedings.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
At this time, BB has an average Growth Score of C, a grade with the same score on the momentum front. The stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value investors than those looking for growth and momentum.
Outlook
BB has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why is BlackBerry (BB) Down 11.7% Since its Last Earnings Report?
It has been about a month since the last earnings report for BlackBerry Limited (BB - Free Report) . Shares have lost about 11.7% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is BB due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
BlackBerry Q1 Earnings & Revenues Top on Software Sales
BlackBerry reported solid financial results for first-quarter fiscal 2019 (ended May 31, 2018), driven by strong customer demand for its security-focused products, resulting in double-digit year-over-year software and services billing growth. BlackBerry Technology Solutions and the Licensing business reflected the highest momentum.
Net Loss
On a GAAP basis, net loss for the reported quarter came in at $60 million or a loss of 11 cents per share against net income of $671 million or $1.23 per share in the year-ago quarter. The deterioration was primarily due to a favorable arbitration award received in the year-earlier quarter.
Non-GAAP net income was $17 million or 3 cents per share and beat the Zacks Consensus Estimate by a couple of cents.
Revenues
Quarterly GAAP revenues decreased 9.4% year over year to $213 million. The top line, however, surpassed the Zacks Consensus Estimate of $206 million.
Total GAAP software and services revenues were $189 million, up 18% year over year, driven by strong double-digit billings and increase in recurring revenues.
Segmental Performance
GAAP revenues from Enterprise software and services decreased 14.1% year over year to $79 million.
BlackBerry Technology Solutions GAAP revenues increased 31% from a year ago to $47 million, primarily driven by BlackBerry QNX software embedded and connected in autonomous auto platforms. Notably, BlackBerry QNX software is now embedded in more than 120 million automobiles worldwide, doubling the install base in the last three years.
Revenues from Licensing, IP and other were $63 million compared with $32 million in the year-earlier quarter. Licensing revenues saw strong year-over-year growth as the pace of recurring revenues continues to rise. Technology licensing business showed progress as TCL — the company’s Chinese handset partner — launched BlackBerry KEY2 weeks ago with positive market reception. Optiemus, the company’s partners in India, will launch multiple BlackBerry smartphones in the market this summer. One of the company’s consumer electronic partners, Punkt, announced the launch of a new mobile phone with BlackBerry Cyber Security Technology integrated in it.
Subsequent to the quarter end, BlackBerry inked a technology and brand licensing deal with Bullitt Group, an international manufacturer of branded connected device, thereby broadening its consumer reach. The company strengthened its IP licensing business and thus expects to do better than 100 million annual run rate for the IP licensing, as mentioned in prior quarters.
Handheld devices revenues were $8 million compared with $37 million in the year-earlier quarter. This resulted from the release of accrued expenses reconciled to historical carrier agreements. SAF (services access fees) revenues continued its downtrend and decreased to $16 million from $38 million in the year-earlier quarter.
Operating Metrics
Gross profit was $161 million or 75.6% of revenues, up from $150 million or 63.8% of revenues in the year-ago quarter. The improvement was attributable to the increase in contribution from software and services to overall revenue mix.
Operating loss was $65 million against an operating income of $536 million in the prior-year quarter. Adjusted EBITDA was $31 million, equating to an adjusted EBITDA margin of 14%.
Cash Flow
During the quarter, BlackBerry used $7 million of cash in operations against $863 million of operating cash flow in the year-earlier period.
Free cash flow before considering the impact of restructuring and legal proceedings was $3 million.
Liquidity
As of May 31, 2018, BlackBerry had $520 million of cash and cash equivalents and $810 million of long-term debt.
As of May 31, 2018, the company’s total cash, cash equivalents, short-term and long-term investments were approximately $2.3 billion.
Fiscal 2019 Outlook
BlackBerry expects total software and services revenue growth to be in the range of 8-10% year over year. It expects total software and services billings growth to be in double-digits. The company anticipates non-GAAP earnings per share to be positive. Free cash flow is also expected to be positive, before considering the impact of restructuring and legal proceedings.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
BlackBerry Limited Price and Consensus
BlackBerry Limited Price and Consensus | BlackBerry Limited Quote
VGM Scores
At this time, BB has an average Growth Score of C, a grade with the same score on the momentum front. The stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value investors than those looking for growth and momentum.
Outlook
BB has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.