BlackBerry Ltd. BB-T reported better-than-expected quarterly earnings Thursday, days after announcing it was unloading a money-losing, declining cybersecurity business at a steep loss.
The Waterloo, Ont., software company said it generated US$162-million in revenue in its fiscal third quarter ended Nov. 30, well above analyst expectations of US$151-million, driven by better-than-expected results in both its cybersecurity and connected-car software units. The company’s adjusted operating earnings for the quarter were US$23-million, significantly higher than analyst expectations in the mid-single digits millions.
BlackBerry’s net loss was US$11-million, or 2 cents a share, an improvement from a US$21-million loss in the same period a year earlier.
Excluding the US$23-million in quarterly losses from the Cylance cybersecurity unit that it is selling, the company generated a US$12-million profit.
Operating cash flows came in at US$3-million; analysts had expected that to be negative.
“BlackBerry achieved a significant inflection in its results this past quarter,” CEO John Giamatteo said in a release.
The company also forecast that it would generate US$126-million to US$135-million during its fourth quarter from its non-Cylance businesses, and operating earnings of US$10-million to US$12-million.
“This is a significant shift in the profitability of this company,” chief financial officer Tim Foote said on a conference call with analysts.
BlackBerry said Monday it had sold Cylance to Arctic Wolf Networks Inc., for US$120-million in cash and 5.5 million of the privately held buyer’s common shares. The value of the deal is difficult to estimate, but is clearly a fraction of the US$1.4-billion that BlackBerry paid for the money-losing business six years ago in what was supposed to be the signature deal of former CEO John Chen as part of his plan to pivot the company further into software after its complete exit from the smartphone business.
But Cylance, which uses artificial intelligence and machine learning to provide cybersecurity protection for small and medium-sized businesses, needed heavy investment when market dynamics shifted to build features and products it didn’t offer. Revenues in the unit declined.
After Mr. Giamatteo, former head of the company’s cybersecurity unit, became CEO a year ago, he decided to stop investing in the declining business and instead focus investment on its other stable, money-making cybersecurity businesses and its growing automobile software business.