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BlackBerry posts a surprise profit as turnaround efforts continue

It ain't over 'til the fat lady sings: BlackBerry shows signs of hope as it focuses its efforts on software, security and connected cars

There might be signs of a revivification at BlackBerry, as the former smartphone king reported a surprise profit in the third quarter,

BlackBerry said it now expects to post a profit for the full year, up from initial estimates of – at best – breaking even, according to a statement yesterday.

Total revenue for third fiscal quarter missed estimates, coming in at $301m. But the miss was largely irrelevant given that the firm is transitioning to a high margin software focused business. The adjusted profit margin was almost 70% of revenue, the company’s highest ever. Total company software and services came in at $172 million, accounting for 57% of the Q3 revenue.

Operating income was $12m, the third consecutive quarter of operating profitability. EBITDA was positive for the 12 consecutive quarters, coming in at $37m.

CEO John Chen is now three years into his five-year contract and told Bloomberg that he believes the turnaround is nearly complete.

“In Q3, we continued to make good progress on our financial objectives and I am pleased to report the non-GAAP EPS profitability this quarter,” he said on the conference call. “We also completed a number of significant milestones to transform BlackBerry into a software and services company.”

Chen highlighted several agreements and initiatives that underpinned the turnaround. BlackBerry has struck deals with Ford and TCL related to its connected car initiatives.

He also mentioned the enterprise mobility platform, BlackBerry Secure, as well as its new Cybersecurity Operations Center in the US, focused on strengthening its security initiatives with the government.

“We firmly believe that the move to a software business model will be positive for revenue growth going forward, sustainable profitability and long-term shareholder value,” Chen said.

Following the results, shares rose as much as 4.4%, the largest intraday gain in two months.

 

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