BlackBerry Ltd. (NASDAQ: BBRY) posted better-than-expected third quarter profit and lifted its profit outlook for fiscal 2017, showing that the transition to a software company is paying off on Tuesday.
The Canadian-based company expects a turnaround after the company now focus more on higher-margin software business rather than its less profitable smartphone manufacturing. The company ended its in-house development of its smartphone in September.
BlackBerry posted a net loss of $117 million, or 22 cents a share, in the fiscal third quarter. Excluding certain items, the company earned 2 cents a share, compared with a loss of 3 cents a share a year earlier. Analyst had expected the company to post a loss of 5 cents. Revenue fell to $289 million from $548 million a year earlier, missing analysts’ estimate of $331.9 million.
The company said the gross margin reached a record high of 66.8 percent in the company’s history, thanks to more profitable software business. Revenue from software and services operation rose 16 percent to $160 million in the third quarter. The company expected its software business would grow 30 percent this this year.
“We remain on track to deliver 30 percent growth in company total software and services revenues for the full fiscal year,” Chen said in the statement. “BlackBerry is now a software company.”
The company also raised its full year profit guidance, seeing an adjusted profit for the current fiscal year, up from a prior range of break even to a loss of 5 cents.
“We achieved significant milestones in Q3, delivering the highest gross margin in the company’s history for the second consecutive quarter and continuing to transform our infrastructure and operations to support an enterprise software business,” said Mr.Chen in a press release accompanying earnings. “These accomplishments drove operating profitability in all business segments and overall positive non-GAAP EPS.”