BlackBerry (BBRY) Q4 Earnings: Software And Services Business Boost EPS, Revenues Below Expectations

UPDATE: 7:30 a.m. EDT — BlackBerry posted a non-GAAP loss of 3 cents a share for the fourth quarter ending February, beating analyst estimates of a loss of 10 cents a share.

The Canadian smartphone maker also showed strong growth in its software and services business, which grew by 106 percent in the fourth quarter and 113 percent for the fiscal year 2016.

Revenues for the quarter fell significantly short of estimates, however, coming in at $487 million compared to analysts’ expectations of over $563 million. About a third of the revenue came from software and services, while hardware and other sources accounted for 39 percent.

Original story:

As BlackBerry shifts its focus from manufacturing mobile handsets to becoming a software and services company, investors closely watch its quarterly results to see how the company is faring under the stewardship of CEO John Chen. And the quarter ended February, the first full quarter with the company’s Android-powered Priv device available in the market, is no exception.

So what does the market expect from the Canadian smartphone maker whose native operating system no longer supports the Facebook app?

Analysts expect revenues of about $562 million for the fourth quarter, a fall of 14.9 percent from a year ago, but higher than the $548 million of reported revenues last quarter, according to Reuters consensus estimates. With a loss of $34.5 million for the fourth quarter, analysts also forecast a loss of 9 cents a share, compared to a profit of 4 cents a share a year ago and sliding further from the 3 cents a share loss reported in the third quarter.

BlackBerry was targeting revenues of $500 million from software and services for the fiscal year that ended February, and up till the third quarter, the company had accumulated $364 million from those businesses. How much of the remaining $136 million the company generates from those two revenue sources in the fourth quarter will be a key indicator of how well Chen’s turnaround plans are working.

The smartphone manufacturer also tried to revive its hardware business when it launched the Priv handset in November, opting to use Google’s Android operating system instead of its own homegrown software. The fourth quarter marked the first full quarter that the handset was available in the market, and its sales numbers would be another factor investors watch for.

BlackBerry shares closed 1 percent higher in Nasdaq Thursday but fell by 1 cent, or 0.12 percent, during after hours trade.