BlackBerry’s lower losses a cause for celebration
Company says it’s on track for 30% growth in software and services revenues
Plunging operating expenses along with an expanding roster of enterprise software clients helped BlackBerry Ltd. to a surprise operating profit in its fourth quarter — even though revenue shrunk as the company continues to exit the handsetmaking business.
“Our results came in at or above expectations in all major metrics,” chief executive John Chen said after Friday’s fourth-quarter fiscal 2017 report. “In our areas of strategic focus, we are executing well and gaining traction.”
Chen said more than 3,500 enterprises placed orders for software and services offerings in the quarter, although revenue from the category at $166 million (U.S.) showed only a modest increase over the previous three months.
The company said it remains on track to deliver 30-per-cent growth in software and services revenues for the full fiscal year.
Analysts said much of the 4 cents per share adjusted income in the quarter (versus a 3-cent adjusted loss a year ago ) came as a result of a 30-per-cent year-over-year drop in operating expenses as BlackBerry outsources hardware development and transforms infrastructure to support higher-margin software businesses.
In the quarter, the company announced a software licensing agreement with Optiemus Infracom Ltd., to design, manufacture, sell and support BlackBerry-branded mobile devices in India, Sri Lanka, Nepal and Bangladesh. Chen said the company could expand the model to include a tablet device made by a third party, but running BlackBerry’s secure software.
BlackBerry is pivoting to software operations in the face of declining hardware revenue — with the emerging businesses including mobile device management products and the QNX industrial operating platform whose car infotainment systems had an estimated market share of 53 per cent in 2013. On the analysts call, Chen forecast 13-per-cent to 15-percent software/services growth in fiscal 2018, with the division currently accounting for more than 65 per cent of overall revenue.
He also predicted adjusted pershare profit along with positive free cash flow for the full fiscal year ending February 2018.
That’s up from the company’s prior guidance for break-even to a fivecent loss, and suggests BlackBerry can at least preserve its $1.7 billion in cash reserves.
BlackBerry’s net loss, including restructuring and other charges, came in at $47 million or nine cents per share, better than the forecast and an improvement over last year’s $238million, or 45 cent per share, loss that was largely driven by asset sales and inventory write-downs.
Net revenue in the quarter ended Nov. 30 fell to $286 million, down 38 per cent from a year earlier but slightly ahead of market expectations.