BlackBerry (BBRY) Up on Q2 Earnings Beat, Software Sales Rise

Shares of BlackBerry Limited BBRY have rallied more than 21% since the release of strong second-quarter fiscal 2018 results last week. The company reported earnings per share (excluding 13 cents from non-recurring items) of 5 cents in second-quarter fiscal 2018 (ended Aug 31, 2017), comparing favorably with the Zacks Consensus Estimate of a loss of a penny. Results were boosted by robust software sales.

Results in Detail

Total revenue in the reported quarter was $249 million, down 25.4% year over year. However, the top line beat the Zacks Consensus Estimate of $231 million.

Segment-wise, Enterprise software and services generated approximately 41% of the revenues, while BlackBerry Technology Solutions contributed 15.3%. Licensing, IP and other raked in 22.5% of the revenues, whereas Handheld devices contributed 6.4%. Services access fees revenues accounted for the balance. Also, the company had around 3,300 enterprise clients on board in the reported quarter.

Geographically, North America has contributed to 55.9% of the total revenue. While Europe, the Middle East and Africa have notched up 31.9% of the revenue pie. Similarly, the Latin America and the Asia-Pacific regions have yielded 1.7% and 10.5% respectively, of the total revenue in fiscal second quarter.

Quarterly operating income (on an adjusted basis) came in at $29 million compared with $16 million in the year-ago quarter.

The company exited second-quarter fiscal 2018 with cash and cash equivalents of $586 million compared with $734 at the end of fiscal 2017. Long-term debt in fiscal second quarter was $739 million in comparison to $591 million at the end of fiscal 2017.

BlackBerry Limited Price, Consensus and EPS Surprise

BlackBerry Limited Price, Consensus and EPS Surprise | BlackBerry Limited Quote

Outlook

The company expects revenues (adjusted) in the range of $920-$950 million for fiscal 2018. Software and Service revenues are estimated to rise between 10% and 15% for fiscal 2018. The company maintains its prior view of profitability (on an adjusted basis) as well as projects a positive free cash flow in fiscal 2018.

Zacks Rank & Key Picks

BlackBerry currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Computer and Technology sector are Vodafone Group PLC VOD, America Movil, S.A.B. de C.V. AMX and TIM Participacoes S.A. TSU. While Vodafone sports a Zacks Rank #1 (Strong Buy), America Movil and TIM Participacoes carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Vodafone, America Movil and TIM Participacoes have gained more than 8%, 23% and 11% respectively, in the last six months.

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