BlackBerry Ltd.’s efforts to recover from the decline of its once-dominant handset business appear to be moving on the right track.
In its fourth-quarter earnings report today, the company revealed it beat analyst estimates on all major counts during the three months ended Feb. 27. One of the areas where BlackBerry made the biggest improvement is the revenue front. On an adjusted basis, excluding some onetime and other items, sales from the software and services groups at the center of its turnaround push rose 12 percent over the previous quarter, to $193 million, well ahead of the $186 million that Wall Street had expected.
This rise can be credited in part to the new offerings that BlackBerry has introduced over the past few quarters as part of its push to reach more markets. Most recently, the company introduced a development kit to let companies embed the communications features of its BBM Enterprise platform into their applications. Another promising source of revenue is the QNX operating system, which runs in tens of millions of vehicles worldwide.
The revenue generated by BlackBerry’s growth businesses is helping to cushion the impact of its shift away from mobile devices. The company’s total sales fell 38 percent year-over-year to $286 million in the fourth quarter, but this figure increases to $297 million when including deferred revenue from contracts, which easily beat the $289.3 million consensus estimate.
In conjunction, BlackBerry’s growing reliance on high margin software and services is benefiting its bottom line. The company nearly halved operating expenses in the fourth quarter while narrowing losses to 10 cents per share or $47 million, a significant improvement compared to the $238 million it burned during the same period 12 months ago. This loss turns into a profit of 4 cents a share when excluding onetime items, a pleasant surprise for shareholders given that the analyst community had only expected BlackBerry to break even.
Chief Executive John Chen told investors that he’ll have more good news to share in the coming quarters. During the earnings call, he said he expects BlackBerry to “grow at or above the overall market in our software business” during fiscal 2018 and promised to achieve profitability this year.
The results sent Blackberry’s stock price soaring 15 percent in morning trading before stabilizing around the $7.85 mark, about 13 percent higher than before the earnings report.