BlackBerry falls as software revenue plunges

BlackBerry plunged the most in a year after investors focused on weak growth in software revenues that the company attributed to a change in accounting standards.

Shares in the Ontario-based company fell as much as 10% to $10.49 in New York, the most intraday since June 23, 2017. Software revenue, the company’s most important growth metric, was $83m in the first quarter, 18% lower than a year earlier, according to a statement issues on Friday. Analysts at RBC Capital Markets had estimated it would be $106m.

Software is what BlackBerry is banking on for its future now that it’s not a leading handset maker anymore. Instead, CEO John Chen has worked to establish the company as a serious security software provider in a range of different product lines, such as systems to manage an entire company’s stable of mobile phones, or to let cars securely update their entertainment systems.

Chen said the gulf between expectation and reality in the first quarter results was due to a change in the company’s accounting standards. He said the company would still hit previously set revenue forecasts, including double-digit software revenue growth through this fiscal year, which ends in March 2019.

“The shift to subscriptions from perpetual licenses in BlackBerry’s core enterprise-software business, almost a third of sales, is the major reason its fiscal first-quarter adjusted revenue was down 11.1%,” John Butler, a senior analyst with Bloomberg Intelligence, said in a note.
BlackBerry went from recognising big contracts all at once to the subscription model, where clients pay a smaller fee but on an ongoing basis, Butler said.

The company is on track to transition almost all of its software revenue to subscriptions from the older style licenses, Chen said in an interview.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Rand - Dollar
17.93
-1.8%
Rand - Pound
19.45
-0.0%
Rand - Euro
17.37
-0.0%
Rand - Aus dollar
11.70
-0.0%
Rand - Yen
0.13
-0.0%
Gold
1,643.66
0.0%
Silver
18.87
0.0%
Palladium
2,073.00
0.0%
Platinum
858.50
0.0%
Brent Crude
86.15
-5.0%
Top 40
57,110
-3.1%
All Share
63,417
-2.9%
Resource 10
56,319
-7.5%
Industrial 25
78,436
-1.2%
Financial 15
14,142
-1.6%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders