BlackBerry Looks to Software, IoT After Profitable Q4

Banking on its growing enterprise software and Internet of things business units, the struggling smartphone maker managed to eke out a profit.


BlackBerry's software is a bright spot for the embattled smartphone maker as it tries to orchestrate a turnaround.

The Canadian device and secure messaging software provider today announced revenue of $660 million for its fiscal 2015 fourth quarter, which ended Feb. 28, missing analyst estimates of $734.5 million. During the quarter, 1.6 million BlackBerry smartphones made their way into the hands of end customers, with an average sales price of $211, compared with $180 in the third quarter.

"Over 90 percent of the products shipped in the quarter were newer-generation, higher-margin products," said CEO John Chen, referencing newer handsets like the BlackBerry Passport and Classic, during a conference call this morning. He described early reports of sales at AT&T stores as "encouraging." All told, the company's latest batch of handsets is being offered through "160 carriers and over 7,000 retail stores in 86 countries," he said.

Services accounted for 47 percent of the revenue booked by the company during its fiscal fourth quarter, followed by hardware (at 42 percent) and software (at 10 percent).

"Our software business had a particularly strong quarter," noted Chen. BlackBerry attained software sales of $67 million, a 20 percent year-over-year improvement. The segment is performing strongly for the company, with "2,200 customer wins in the quarter," including Delta Air Lines, the Canada government and HSBC, said Chen. In a bid to attract more enterprise customers, Chen said BlackBerry is "stepping up our investment in security and privacy," and increasing its head count.

BlackBerry posted a profit of $20 million (non-GAAP), or 4 cents per share, for the quarter, beating analyst expectations of a 6-cent-per-share loss. Operating income was $2 million (non-GAAP), reversing the $156 million operating loss the company suffered in the same quarter a year earlier.

"Our focus this past year was on getting our financial house in order while creating a multi-year growth strategy and investing in our product portfolio," CEO John Chen said in a statement. "We now have a very good handle on our margins, and our product road maps have been well-received."

At CES this January, BlackBerry unveiled its QNX-based platform for the Internet of things (IoT). During the call, Chen cited deals with Volkswagen and LG as signs of progress in the IoT space. And earlier this month at Mobile World Congress 2015, the company debuted the Leap, an all-touch smartphone that will retail for $275 unlocked when it goes on sale in April.

For the full fiscal 2015 year, which ended Feb. 28, BlackBerry generated revenue of $3.3 billion, below analyst estimates of $3.43 billion. Losses amounted to $45 million, or 9 cents per share (non-GAAP), better than the 15-cent-per-share loss that Wall Street watchers were anticipating.

Now that BlackBerry is "halfway through [its] two-year turnaround effort," the company will focus on two key areas to sustain its momentum, said Chen. Going forward, the company will pursue growing its "high-margin software business and focus on profitability in our hardware business," he said.

Pedro Hernandez

Pedro Hernandez

Pedro Hernandez is a contributor to eWEEK and the IT Business Edge Network, the network for technology professionals. Previously, he served as a managing editor for the network of...