After so many years trying to prove to the markets that its business is now software, BlackBerry (NASDAQ: BB) is doing just that. The former smartphone giant reported fourth quarter results that are ahead of consensus. The bullish guidance may give analysts reasons to raise their expectations.
BlackBerry forecasts positive free cash flow, albeit excluding restructuring and legal costs and positive earnings. This outlook virtually assures investors that the stock will not fall in the single digits again. In the fourth quarter released on Mar. 28, BlackBerry earned $0.05 a share on revenue of $239 million. Both numbers beat consensus estimates. The downside? Revenue fell 19.5% from last year.
BlackBerry succeeded in beating revenue estimates and above its own expectations of software growth of 10% to 15%. In all, 70% of its software revenue, or $218 million, was recurring revenue. In all, 12% of the fourth quarter revenue growth came from enterprise software. Looking ahead, enterprise software will continue to add meaningfully to results.
Takeaway
Software sales numbers are small, still, which is why the stock sold off in the days following the earnings report. But gross margin is a healthy 79%, another record high for the company. BlackBerry still must grow its enterprise software sales. For now, operating income of just $19 million will not get bigger until more big customers sign on more users, buying mobile-related solutions that earn both license fees and software sales for BlackBerry.
Tech Insider
