BlackBerry Q1 Doesn't Connect With Investors

The results received a shot in the arm from a $940 million award from the positive outcome of the QUALCOMM, Inc. QCOM arbitration.

Thus far this year, the stock has gained 61 percent, benefiting from M&A rumors and positive analyst opinions on the company's prospects in new-age technologies.

Key Metrics

• Non-GAAP earnings $0.02/share versus break-even results a year ago.
• GAAP earnings $1.23/share versus loss of $1.28 last year.
• Non-GAAP revenues $244 million, missing the consensus of $264.51 million.
• GAAP revenues $235 million.

Ahead of the results, Credit Suisse analyst Kulbinder Garcha estimated earnings of $0.01 per share on revenues of $259.1 million (check out Garcha's track record here).

Read-Through Into Results

The company said in a release software and services revenues totaled $169 million, on a GAAP basis. This category of revenues, accounting for roughly 69 percent of the total revenues, were mostly recurring, with 79 percent of the software and services revenues, excluding IP, licensing and professional services being recurring.

Enterprise software and services revenue, a key gauge, fell to $101 million from $106 million in the year-ago period.

The company said its enterprise customer count in the quarter stood at 3,000, lower than the 3,500 in the fourth quarter.

Non-GAAP gross margin stood at 67 percent, while GAAP gross margin was at 64 percent.

Cash and cash equivalents, short-term and long-term investments rose by $855 million to $2.6 billion as of May 31, 2017. Free cash flow stood at $860 million, including $863 million in cash flow from operations.

"Our financial foundation is solid," said CEO and Chairman John Chen.

"We reported non-GAAP profitability for the third consecutive quarter, and our balance sheet continues to strengthen. More importantly, we are better positioned to invest in our strategic areas of focus to drive long-term sustainable growth, while returning capital through share repurchases to further enhance shareholder value."

Guidance Maintained

BlackBerry said its fiscal year 2018 outlook calling for software and services growth at or above overall market, non-GAAP profitability and being free cash flow-positive, excluding the benefit of the Qualcomm arbitration award, remains unchanged.

Separately, the company announced plans to buy back up to 31 million of its common stock, representing 6.4 percent of its outstanding float as of May 31, 2017.

In pre-market trading, shares of BlackBerry were down 8.14 percent at $10.16.

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