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BlackBerry’s software sales, license revenue send shares surging by 12 per cent

BlackBerry's move to work towards software and licensed patent sales have paid dividends, as the Canadian company's registered better-than-expected Q3 earnings.

By: Reuters | Toronto |
December 21, 2017 5:16:29 pm
BlackBerry share price, licensing patents, enterprise software, BlackBerry smartphone business, automotive systems, Qualcomm, Deutsche Bank, NATO, intellectual property, US government The Waterloo, Ontario-based company said enterprise software and services sales jumped 11.5 percent from a year ago. (File Photo)

Canada’s BlackBerry Ltd beat third-quarter earnings forecasts on Wednesday amid strong enterprise software sales and licensing revenue, sending its Toronto-listed shares surging 12 percent to a four-year high.

The company, which has sought to reinvent itself after the collapse of its smartphone handset business, secured 36 deals with US federal government agencies in the quarter, seven of which were each worth more than $1 million, Chief Executive John Chen said during an analyst call.

“We have very good momentum,” he said, singling out government sales to the United States, Canada and Germany. “It will have a snowball effect.” BlackBerry will hire more staff for sales, marketing and leadership positions as it focuses on growth. Its chief operating officer resigned last month.

The company reported adjusted earnings of 3 cents a share in the quarter ended November 30, beating the average analyst forecast for it to break even, according to Thomson Reuters I/B/E/S. Quarterly revenue fell 25 percent from a year earlier to $226 million, but beat the average forecast of $215.4 million.

“It’s pretty impressive, beating on both the top and bottom lines,” said Ali Mogharabi, an analyst at Morningstar. “The growth specifically in enterprise software is good to see.” Shares jumped 12 percent to C$15.68 on the Toronto Stock Exchange, its highest since April 2013. US-listed shares were up 10 percent at $11.98.

The Waterloo, Ontario-based company said enterprise software and services sales jumped 11.5 percent from a year ago to $97 million as it received some 3,000 orders in the quarter from customers such as Deutsche Bank, NATO and the US government. It had about 3,300 orders in the second quarter.

“They’re on a good path, and they’re consistently moving in the right direction,” said Nicholas McQuire, vice president of enterprise research at CCS Insight. Sales in its group that includes QNX software, used in automobiles, were flat at $43 million.
BlackBerry recently signed deals for work on next-generation automotive systems with chipmaker Qualcomm as well as technology companies Denso and Aptiv Plc.

Supplier Yanfeng Visteon agreed to use BlackBerry’s instrument-cluster software with an unnamed Chinese auto maker. While those deals are considered positive by analysts, Chen said they are not expected to generate revenue until 2019. Revenue from intellectual property and licensing surged 67 percent to $50 million. A jump in that category had provided an unexpected boost to second-quarter earnings.

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