What happened

Shares of BlackBerry (NYSE:BB) have popped today, up by 14.8% as of 12:29 p.m. EDT, after the company reported fiscal second-quarter earnings.

So what

Non-GAAP revenue in the second quarter totaled $249 million, with non-GAAP earnings per share of $0.05. The Street was modeling for a breakeven bottom line, so squeezing out an adjusted profit was a welcome surprise for investors.

Interface of BlackBerry Unified Endpoint Management

BlackBerry Unified Endpoint Management (UEM) dashboard. Image source: BlackBerry.

BlackBerry hit a record in software and services sales of $196 million (non-GAAP), showing that the transition away from hardware toward higher-margin software is progressing well. BlackBerry's turnaround hinges on this transition. It's no coincidence that non-GAAP gross margin also hit a record of 76%.

Now what

"I am pleased with our strong execution in Q2. We achieved historical highs in total software and services revenue and gross margin, as well as the highest non-GAAP operating margin in over five years, reflecting our complete transformation to a software company," CEO John Chen said in a statement.

Enterprise billings jumped 19%, and BlackBerry continues to push deeper into the automotive market with its QNX operating system. The licensing business is also executing well, with licensing revenue soaring to $56 million, up from just $16 million a year ago. Hardware revenue fell from $105 million to $16 million, which is actually a good thing as BlackBerry continues to step away from that bleeding business.

In terms of outlook for fiscal 2018, total non-GAAP revenue is expected in the range of $920 million to $950 million, with non-GAAP software and services revenue forecast to grow 10% to 15%. BlackBerry expects to be profitable on a non-GAAP basis for the full year, with positive free cash flow.