Shares of BlackBerry were on the run on Thursday after the company reported revenue from its software and services businesses reached a record high in the most recent quarter.
The Waterloo, Ontario, company posted net income of $19 million in its second quarter, while it had a loss in the same period last year.
Revenue from its software and services operations was $185 million for the three months ended August 31. This amount represented approximately three-quarters of its quarterly sales.
According to BlackBerry CEO John Chen, this revenue and improved margins of the company attest to the “complete transformation” of BlackBerry into a software company.
In recent years, BlackBerry has embarked on a strategic shift to focus on the production of software and services. The company, once a giant in the manufacture of smart phones, had lost its share of the market at the hands of Apple and Samsung.
Blackberry has not made any smartphones since 2016 because Apple and Android manufacturers have become too heavy. The company then sold the license on its brand to the Chinese TCL. Since then, and under the auspices of John Chen, it focuses on security services and software. A number of other companies were also taken over. Since then, the company, which once flirted with bankruptcy, has become windy again.
Since this year, Blackberry has also targeted software for self-propelled cars, for which the company concluded a partnership with Delphi Automotive. Since then, it also has a contract with Ford to develop software for autonomous cars. A contract with a second, still unknown car manufacturer would already be in the pipeline. The company could then earn five to twenty-five dollars per license license fee. By comparison, for software for infotainment systems, it takes one and a half to five dollars.
For its latest quarter, BlackBerry posted a net profit of 4 cents US per share. This compares to a loss of $372 million, or 71 cents per share, for the same period last year.
BlackBerry’s quarterly sales totaled $238 million, down from $334 million in the second quarter of last year.
According to Michael Walkley, an analyst for Canaccord Genuity based in Minneapolis, the upturn in the most recent quarter was “more exceptional in nature” as it was backed by non-recurring licensing items.
Nevertheless, BlackBerry’s results show that the company is making progress on its long-term goals, he added. “And this is another strong quarter compared to analysts’ expectations, which explains why the stock climbs.”
In addition, Chen has revised upwards the outlook for BlackBerry for the fiscal year ending February 28, 2018. The company expects its annual revenues to be between $920 million and $950 million. Revenue growth for software and services is expected to be between 10% and 15% for the full year. BlackBerry is expected to generate a profit for the entire exercise, added the big boss.
