BlackBerry catapults on sales, outlook
EMILY JACKSON
TORONTO BlackBerry Ltd.’s stock surged Thursday after the company posted record revenue in its software business.
The Waterloo, Ont.-based smartphone-turned-software company beat analysts’ expectations that it would break even, posting a profit of $26 million, or five cents per share, excluding some items for the second quarter.
Revenue for software and services for the three months ended Aug. 31 hit US$196 million on the strength of growth in its enterprise software and important deals in its automotive business, including a partnership with Delphi Automotive to build a software operating system for self-driving cars.
Its stock closed at $13, up 12.75 per cent Thursday in Toronto.
The success comes a year after BlackBerry gave up on the handset business that catapulted the small-town company to one of the world’s most recognizable brands. Instead, it turned to other lines of business on which it could bank its reputation for high security.
Now, CEO John Chen said his company is winning again. In a call with analysts, he pointed to contracts with the U.S. government — BlackBerry had 23 transactions of more than US$100,000, seven larger than $500,000 and five of more than $1 million with federal agencies in the last quarter — and a few awards and accolades for its security acumen as signs of success in the enterprise software realm, its biggest cash driver.
BlackBerry also announced its first “BlackBerry Secure” licensing deal with NTD, a Yangzhou- and Beijing-based designer manufacturer of smartphones and Internet of Things devices. It will embed BlackBerry’s security software into its devices for a fee, a business model that Chen expects to drive growth for the second half of the year. He sees vast opportunities in licensing their software technology.
The company also has an appetite for mergers and acquisitions, Chen said. While he didn’t reveal specific plans for the US$1.9-billion stockpile of cash, he said the company is looking at buying players in cyber-security, automotive and enterprise management. “We’re going to make acquisitions. We’re very patient. We don’t want to be over paying,” he told media.
It also upgraded its outlook for the year, stating it expects software revenue to grow by 10 per cent to 15 per cent this fiscal year, which ends in February.