BlackBerry’s (BB) sales rose 23.0% year-over-year in the first quarter. Its Software and Services business accounted for 97.0% of sales, and revenue rose 35.0% to $260 million in this segment. After accounting for acquisitions, Software and Services growth was about 8.0% for BlackBerry.
Software and Services billings rose by double digits while BlackBerry’s gross margin was 75.0%. It reported operating income of $5 million, indicating an operating margin of 2.0%. BlackBerry also reported earnings per share of $0.01 in the first quarter, which was below its earnings of $0.03 in the prior-year quarter. BlackBerry ended the first quarter with cash of $935 million. BlackBerry’s annual recurring revenue rose 30.0% YoY to $172 million, which is a key indicator of business momentum.
SAF and handset revenue was negligible
BlackBerry’s legacy business segments, which include SAF (service access fee) and its handset vertical, have seen a steady revenue decline over the years. SAF revenue was just $7 million in the last quarter, a fall of 56.0% YoY from $16 million in the prior-year period. Total handset revenue is now zero compared to $8 million in the last year quarter.
Cylance acquisition impacted profit margins
BlackBerry’s operating expenses rose 42.0% sequentially to $194 million in the first quarter, primarily due to the Cylance acquisition. While BlackBerry reported an operating income of $5 million, its EBITDA margin stood at 9.0%, or $23 million in the first quarter.