BlackBerry released its latest earnings report before opening bell this morning, posting adjusted losses of 5 cents per share on $658 million. Analysts had been expecting losses of 3 cents per share on $683.65 million. In the same quarter a year ago, BlackBerry reported losses of 11 cents per share.

BlackBerry Ltd Surges On Strong Software Revenue

BlackBerry’s software target in sight

Basic GAAP earnings were 13 cents per share. Adjusted EBITDA increased 5% year over year to $157 million.

BlackBerry stock surged in premarket trading despite the wider-than-expected loss as Wall Street hailed the company’s strong software revenue number. The company reported that about 40% of its revenue was hardware, 38% was services and 21% was for software and licensing. Software and licensing revenue increased 150% year over year to $137 million. BlackBerry management is targeting $600 million in annual software revenue within the next two to four years.

The Canadian smartphone maker reported 2,600 enterprise customer wins during the first fiscal quarter, with about 45% of the licenses it sold being cross-platform deals. BlackBerry recognized revenue on about 1.1 million BlackBerry smartphones during the quarter. The average selling price for those devices was $240.

BlackBerry reported positive cash flow of $123 million, while non-GAAP operating losses were $7 million, compared to losses of $41 million in the same quarter a year ago. Non-GAAP gross margin was 50.3%, while GAAP gross margin was 47.1%. Purchase orders with manufacturers were about $238 million at the end of the quarter.

BlackBerry still sees sustainable positive cash flow

Looking ahead, BlackBerry management said they still expect positive free cash flow and sustainable non-GAAP profitability by the end of the current fiscal year.

Also this morning, BlackBerry announced a patent cross-licensing deal with Cisco Systems in which the former will receive a regular fee from the latter. The smartphone maker also said it entered into joint device development deals with Compal and Wistron, adding to its partnership with Foxconn.

The company also said it acquired high security document syncing service WatchDox during the quarter.

As of this writing, shares of BlackBerry were up 8.7% at $10 per share at the NASDAQ.