BlackBerry Q2 Results Miss Estimates, See Profitability In Q4

(RTTNews) - Canadian smart phone maker BlackBerry Ltd. (BBRY, BB.TO) reported Friday a profit for the second quarter compared to a loss last year, despite lower gross margins, reflecting a gain change in the fair value of the debentures.

Stripping down the gain, adjusted loss per share came in wider than analysts' expectations, and quarterly revenues also missed their estimates.

The company also said it targets sustainable adjusted profitability in the fiscal 2016 fourth quarter.

"I am confident in our strategy and continued progress, highlighted by our fourth consecutive quarter of year-over-year double digit growth in software licensing revenue and sixth consecutive quarter of positive free cash flow," Executive Chairman and CEO John Chen said.

The Waterloo, Canada-based company posted a net income of $51 million or $0.10 per basic share for the second quarter, compared to loss of $207 million or $0.39 per share in the prior-year quarter.

The company noted that basic net income for the latest quarter primarily include a non-cash income associated with the change in the fair value of the debentures of $228 million, partially offset by pre-tax charges of $85 million related to restructuring.

On a diluted basis, loss per share narrowed to $0.24 from last year's loss per share of $0.39.

Excluding items, adjusted net loss for the latest quarter was $66 million or $0.13 per share. On average, 24 analysts polled by Thomson Reuters expected the company to report a loss of $0.09 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter declined to $490 million from $916 million in the same quarter last year, and missed twenty-two Wall Street analysts' consensus estimate of $610.99 million for the quarter. Adjusted revenue for the quarter of was $491 million.

The revenue breakdown for the quarter was about 15 percent for software and services, 41 percent for hardware, and 43 percent for service access fees. BlackBerry had 2,400 enterprise customer wins in the quarter.

Revenues for North America decreased to $176 million from $297 million, and Europe, Middle East and Africa revenues nearly halved to $202 million from $368 million last year.

Revenues for Latin America totaled $33 million, sharply down from $111 million, and Asia Pacific revenues declined to $79 million from $140 million in the year-ago quarter.

Gross margin for the quarter contracted 860 basis points to 37.8 percent from last year's 46.4 percent.

Additionally, the company confirmed plans to launch a flagship handheld device that will run on the Android operating system with BlackBerry security.

"Today, I am confirming our plans to launch Priv, an Android device named after BlackBerry's heritage and core mission of protecting our customers' privacy. Priv combines the best of BlackBerry security and productivity with the expansive mobile application ecosystem available on the Android platform," Chen added.

Looking ahead, the company said it anticipates modest sequential revenue growth in each of the remaining quarters of fiscal 2016. It also continues to anticipate positive free cash flow, and targets sustainable adjusted profitability in the fiscal 2016 fourth quarter.

BBRY closed Thursday's regular trading session at $7.03, down $0.10 on a volume of 5.68 million shares.