BlackBerry (BBRY) Tops Q2 Estimates, but N-T non-Hardware Headwinds Remain - Cowen

Cowen and Company is out with initial thoughts on BlackBerry's (Nasdaq: BBRY) Q215 report, which was released earlier on the session. The firm has BlackBerry with a Market Perform rating and $9 price target.

Analyst Timothy Arcuri commented: BBRY posted another solid EPS beat in FQ2:15 and modest smartphone upside as key elements of its strategic transition continue to deliver. However, given near-term non-Hardware growth drivers remain limited, investor concerns are increasingly likely to key on how/when new technology and growth initiatives can/will arrest the Service decline and deliver a revenue inflection beyond Hardware.

Arcuri also offered a little more on BlackBerry's numbers:

BBRY reported mixed FQ2:15 results BMO on 9/26. Revenue of ~$916MM (-5% Q/Q; -42% Y/Y) came in light of our $928MM and Street $942MM, as upside in Hardware (~$420MM, or ~46% of revenue) was offset by weaker than expected results in Service (~$420MM, ~46% of revenue). The company recognized hardware revenue on ~2.1MM smartphones during the quarter and further reduced channel inventory on quarterly sell-through of ~2.4MM units (including shipments made and recognized in previous quarters).

FQ2:15 adjusted EPS of ($0.02) comfortably beat ($0.16) consensus on solid adjusted gross margins of 47.5% (+~80 bps Q/Q) as the company achieved positive non-GAAP gross margin in Hardware (recall standing guidance is for profitability in hardware on annualized shipments of ~10MM units). Sequential growth in EZ Pass (to ~3.4MM BES10 licenses issued, from ~1.2MM previously) and BBM (to 91MM MAU from 85MM previously) were roughly in-line with expectations. Net cash (ex-debentures) was roughly flat Q/Q, at $3.1B, while cash burn was very slight, at $36MM. BBRY continues to target break-even cash flow results by the end of F2015.

For an analyst ratings summary and ratings history on BlackBerry click here. For more ratings news on BlackBerry click here.

BlackBerry closed at $9.80 yesterday.

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