BlackBerry Earnings Review: Q4 2015

  • BlackBerry handsomely beats earnings estimates, misses heavily on revenues.
  • Revenue shortfall largely due to declining revenue from handset segment.
  • Operating cash flows positive for the fourth consecutive quarter.

BlackBerry (NASDAQ:BBRY) announced its Q4 2015 and FY 2015 earnings before the markets opened, delivering its fifth consecutive earnings beat, and that too by a handsome margin. BlackBerry announced Non-GAAP EPS of $0.04, against the analysts’ estimate of -$0.05, a surprise of 9 cents. However it fell far short of its revenues estimate. BlackBerry’s revenue stood at $660 million against analysts’ consensus of $786.4 million, a 16% miss.


Source: Data from

The Hardware decline

Revenue was dragged by decline in hardware sales. BlackBerry was able to recognize revenue on 1.3 million handsets, way below 2 million handsets in last quarter. Hardware contributed 43% of total revenue, down 3% from last quarter. Clearly, BlackBerry’s handsets are not selling. This is likely to continue to be a drag upon BlackBerry’s revenue going forward. With revenues from services also declining and software revenues still in their infancy, BlackBerry’s revenues will continue to decline in next quarter. According to John Chen, 90% of the devices sold were new generation devices, which lifted the average selling price of devices to $211 from $180 making the hardware segment profitable.

Profitable Days Ahead?

BlackBerry surprised the markets with a positive Non-GAAP operating profit of $2 million and Non-GAAP EPS of $0.04. This was largely achieved by cost cuts. This coupled with positive GAAP operating cash flow will buy time for Mr. Chen to continue his turnaround efforts. Its normalized cash flow for the quarter stood at $76 million, a huge improvement over cash outflow of $784 million in Q4 2014. BlackBerry’s GAAP cash flow from operations continued to be positive for fourth consecutive quarter.


Software Continues To Grow

BlackBerry’s software revenues continued to grow at a fast clip. Software revenues stood at $67 million, up 20% YoY. While this growth is likely to continue in future quarters, it will not be able to fill the hole in revenues left by declining services and hardware revenues. During the con call Mr. Chen also admitted that many new customers chose BES10 over BES12, though he believes that they will migrate to BES 12 in future.


BlackBerry surprised the market with a positive EPS. While positive EPS and cash flow have provided a breather to BlackBerry’s management, declining revenue is still a major concern. BlackBerry has managed to report positive profit by slashing costs. However, there is a limit to how far this can take you. BlackBerry needs to find ways for driving its revenue growth, as clearly, its phones are not doing the job.

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Comments on this article and BBRY stock

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Already some inaccuracies being spouted. They did not sell 90% BB10 with an ASP of 211. Chen said 90% of the devices they shipped in the quarter were BB10. That does not equate to sales. a lot of the sales in this quarter were clearout of old BBOS inventory, hence the low relative ASP.

Software revenue was up 24% and Chen also indicated that in spite of the curious note of the BES 10 uptake, a large majority of those taking BES 10 indicated that they intended to upgrade to BES 12 in the near term.

Why everyone is so convinced that BB phones are or won't sell is beyond me. I have had multiple models from the old BB7 to the Passport over the past few years and can assure you their product is getting better with each new release with the Passport being second to none and superior to most including the new APPL lineup.
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