BlackBerry posts small profit as software and services strategy takes shape

15068423_10153983052070848_5200096295077833112_o

BlackBerry Ltd. posted a small profit despite reporting declining revenues on Tuesday, but Chief Executive Officer John Chen insisted that the company would finally break even next quarter.

The former smartphone maker-cum-software developer reported a fiscal third-quarter profit of one cent per share, ahead of Wall Street’s expectations of a two-cent loss. That gain was tempered by the fact it missed out on revenue, grossing $301 million instead of the expected $332 million. Still, the mixed results were better than BlackBerry was expecting. As a result, the company’s shares rose by 2 percent in pre-market trading.

The news comes following BlackBerry’s statement in September that it was planning to abandon the smartphone market that made it famous and transform itself into a software and services company with a focus on security and device management products for enterprises and the Internet of Things. Last week, the company finally confirmed its departure from the smartphone hardware business when it announced it was licensing its brand to Chinese manufacturer TCL Corp.

In a statement, Chen announced that the company’s new Radar fleet tracking service for monitoring fleets of trucks had landed a second customer, Titanium Transportation Group. In addition, Chen said BlackBerry is investing $75 million in a new autonomous vehicle testing hub in Ottawa, which it hopes will start bringing in revenues by 2018, as well as a new cyber security consulting practice.

However, the company’s latest earnings report shows that it still has some way to go before it can complete its transition. The firm’s declining smartphone unit accounted for 23 percent of its revenues, pulling in $62 million for the quarter, down from $220 million a year earlier. Meanwhile, the software and services unit made up 55 percent of its revenues at $160 million.

“We achieved significant milestones in Q3, delivering the highest gross margin in the company’s history for the second consecutive quarter and continuing to transform our infrastructure and operations to support an enterprise software business,” Chen said in a statement. “These accomplishments drove operating profitability in all business segments and overall positive non-GAAP EPS.”

Chen also raised the company’s fourth-quarter outlook to break-even. If that happens, it will likely be down to software sales, which Chen reckons will grow by at least 15 percent in the fiscal year beginning in March 2017, after hitting a 30 percent growth target for the current fiscal year.

Image courtesy of BlackBerry via Facebook