BlackBerry (NYSE:BB) stock is down nearly 4% today after agreeing to stop reporting non-GAAP (generally acceptable accounting practices) earnings in response to a comment letter from the U.S. Securities and Exchange Commission. BB stock has been reporting non-GAAP earnings alongside GAAP earnings since the first quarter of fiscal year 2019.
The comment letter from the SEC said in part that “non-GAAP adjustments [were] intended to eliminate the impact” of acquisitions by the company. In the first quarter of 2019, when the company began reporting non-GAAP metrics, those adjustments allowed BlackBerry to post a slight earnings beat by counting revenue that wouldn’t be allowed under GAAP.
While BlackBerry also reported GAAP numbers during the quarter, SEC rules dictate the company give GAAP numbers at least equal priority as non-GAAP numbers. In its response to the comment letter, BlackBerry said:
“… the Company did not view this adjustment as misleading. Further, if the Company did not [report non-GAAP figures] its results could be less useful to investors… However, as a result of the declining quantitative impact of these adjustments as they trend to zero due to the time elapsed since its acquisitions, the Company plans to discontinue its usage of [non-GAAP figures] beginning in its upcoming fiscal year.”
BB stock was reporting non-GAAP figures as recently as December 2020, when it reported fiscal year 2021 third quarter results. Those results saw the company bottom line beat out the Zacks Consensus Estimate by 3 cents. It’s worth noting that non-GAAP earnings per share of 2 cents were much higher than GAAP losses of 23 cents per share.
BlackBerry is set to report Q4 and full year earnings for fiscal 2021 on March 30. Those results will still include non-GAAP figures alongside GAAP figures.
On the date of publication, Vivian Medithi did not have (either directly or indirectly) any positions in the securities mentioned in this article.
