BlackBerry Ltd (Nasdaq: BBRY) stock jumped more than 17 percent on Thursday after the company reported record software sales in the second quarter. In addition, BlackBerry delivered a surprise profit and exceeded revenue expectations.
BlackBerry reported second-quarter earnings per share of 5 cents on revenue of $249 million. Analysts had been expecting 0 cents of EPS on revenue of $220 million.
BlackBerry delivered a record $196 million in software and services revenue and a record non-GAAP gross margin of 76 percent in the second quarter.
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“Based on our progress thus far in FY18, we are on track to achieve software and services revenue growth in the range of 10 percent to 15 percent and profitability for the full year,” CEO John Chen says.
BlackBerry management expects full-year revenue of between $920 million and $950 million. The company also expects fiscal 2018 to be profitable with positive full-year free-cash-flow.
The quarter marked another positive step in BlackBerry’s transition away from its legacy smartphone business and into its next-generation software and security business.
Earlier this week, TD Securities analyst Daniel Chan described BlackBerry management as on the right track.
“Management continues to successfully transition the business into a software company, in our view,” Chan says. “With a building pipeline of near-term opportunities and significant capital to deploy, we remain buyers of the stock.”
However, other analysts say there are still too many uncertainties for investors to get excited about BlackBerry’s transition. Last week, Bank of America analyst Daniel Bartus said BlackBerry stock already has a generous market valuation for a barely profitable business.
“In our view, BlackBerry’s low growth profile and participation in highly competitive markets pose risk to its long-term turnaround potential,” Bartus writes.
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TD Securities has a “buy” rating on BlackBerry, while Bank of America has an “underperform” rating on the stock.
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BlackBerry’s Turnaround Strategy is Working originally appeared on usnews.com
