HTC Q1 2016 earnings reveal 64% drop in revenue

HTC has published its financial results for Q1 2016 and things continue to look bleak for the once-giant of the smartphone world. The company made a loss of NT $4.8 billion ($148 million) on revenues of NT $14.8 billion ($455 million). Despite that, the company is predicting a strong 2016, thanks to the recent launch of its flagship smartphone and the market-leading Vive VR headset.

In terms of operating margin (percentage difference between profit and revenue), HTC hasn’t had as poor a quarter in a long time, as it did between January and March this year. With close to NT$5 billion in operating losses on revenue of just NT$14.8 billion, the company’s operating margin was -32.4%. That’s on revenue which was down over 64% on the same quarter one year ago, and 42% down on the previous quarter.

Despite the gloomy reading, HTC does have reason to be hopeful. Early response to both the HTC 10 and HTC Vive has been mostly positive. Many suggest that the company’s VR headset is by far and away the best, even if setup is a little clunky. As we know, however, a strong positive response from media doesn’t always mean consumers will be persuaded to part with their cash.

As HTC continues its restructuring to become a smaller company with fewer expenses, the revenue will likely continue to trend downwards. But eventually, if the plan works, HTC should start seeing profit again in the not-too-distant future. In fact, the company’s CFO Chialing Chang thinks the company can start breaking even on its smartphone business as soon as Q3 this year.