Financial Performance

U.S. Government Orders Boost BlackBerry Sales

The company's enterprise software and services revenue rose 11.5% in Q3 as it bagged some 3,000 customer orders.
Matthew HellerDecember 20, 2017

BlackBerry posted record enterprise software and services revenue for a second straight quarter, benefiting from strong U.S. government orders as it continued to reinvent itself following the collapse of its smartphone business.

For the third quarter, the company earned an adjusted $16 million, or 3 cents per share, on revenue of $226 million, down 25% from a year earlier. Analysts had expected earnings to break even on revenue of $215.4 million.

Enterprise software and services sales rose 11.5% from a year ago to $97 million, beating the record set in the second quarter, as BlackBerry received some 3,000 orders from customers such as Deutsche Bank, NATO, and the U.S. government.

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On news of the earnings, BlackBerry’s U.S.-listed shares rose 10.3% to $11.99 while its shares on the Toronto Stock Exchange jumped 12% to C$15.68, the highest level since April 2013.

“It’s pretty impressive, beating on both the top and bottom lines,” Ali Mogharabi, an analyst at Morningstar, told Reuters. “The growth specifically in enterprise software is good to see.”

According to CEO John Chen, BlackBerry secured 36 deals with U.S. federal government agencies in the quarter, seven of which were each worth more than $1 million. It has also established partnerships with companies including Intel, Fujisoft, Hitachi, Tata Elxsi, and Tokyo Electron.

“We have very good momentum,” Chen said in an earnings call, singling out government sales to the U.S., Canada and Germany. “It will have a snowball effect.”

Sales in BlackBerry’s Technology Solution group — which includes the QNX software used in auto infotainment units and self-driving vehicle systems — were flat at $43 million. The company recently signed deals for work on next-generation automotive systems with chip maker Qualcomm as well as technology companies Denso and Aptiv but Chen said they are not expected to generate revenue until 2019.

“They’re on a good path, and they’re consistently moving in the right direction,” Nicholas McQuire, vice president of enterprise research at CCS Insight, told the Toronto Globe and Mail.