Revenues boost BlackBerry shares
Company benefits from focusing on software and client services
BlackBerry Ltd. shares surged to a four-year high Wednesday after the cybersecurity vendor reported better-than-expected software and services revenue in the its third quarter, even though the net loss on charges reached $275 million (U.S.), or 52 cents per share.
“Our strategy is working and our execution is yielding results,” BlackBerry chief executive officer John Chen said in a statement.
The Waterloo-based company said adjusted operating income excluding items was $16 million, or three cents per share, versus the consensus analyst estimate for a break-even quarter on an adjusted-per-share basis.
BlackBerry reported strong business software sales and revenue from licensing deals, and said the net loss included $149 million in expenses after it lost a payment disputes with Nokia in arbitration. BlackBerry reported a cash balance of $2.5 billion at the end of the quarter.
BlackBerry’s revenue was also higher than expected at $226 million, versus the average forecast for $214.6 million. Revenue was down from $289 million a year ago, reflecting an ongoing decline in BlackBerry’s legacy hardware business as it focuses on software and services for enterprise and government clients.
Total revenue from services and licensing was a record $190 million in the three months ended Nov. 30, accounting for 85 per cent of total sales. The company said enterprise software and services sales increased 11.5 per cent from a year ago as it received orders from customers including the U.S. Department of De- fence. Revenue from hand-held devices dropped to $9 million from $62 million a year ago, and revenue from hardwarerelated system access fees fell to $27 million from $67 million.
“We had a very strong quarter and I’m very pleased with our results,” Chen said on a conference call with analysts. He said that some of the progress was through agreements with Tier 1 auto parts suppliers and with chip manufacturers that won’t immediately have an impact on BlackBerry’s revenue.
“Some of the design wins we had last year will turn into revenue in 2019 and the wins that we are having right now are going to turn into (revenue) in 2020,” Chen said.
Chen said growth in the overall automotive industry is expected to be slower for a couple of years before picking up again when autonomous vehicles become more of a factor.
Sales in the BlackBerry unit that includes QNX automotive software came in flat after BlackBerry announced deals for work on nextgeneration automotive systems that Chen said are not expected to generate revenue until 2019.
Revenue from intellectual property and licensing rose to $50 million from a year ago, $30 million.
The company said it is maintaining its revenue guidance for the full fiscal 2018 at the mid to higher end of the previously disclosed range of $920 million to $950 million.
BlackBerry shares jumped as high as 13.6 per cent to $15.87, its highest level on the Toronto Stock Exchange since April 2013, before closing at $15.59.