BlackBerry Ltd.'s stock was up in early trading Thursday after the company's third-quarter revenue and profit beat analyst estimates, with growth coming from its software and services business.
The Waterloo, Ont.-based technology company earned US$59 million in net income for the quarter ended Nov. 30, up from a loss of US$275 million in the same quarter last year.
The profit, which BlackBerry reports in U.S. currency, amounted to 11 cents per basic share for the most recent quarter compared with a loss of 52 cents per share a year ago.
The company's adjusted profit for the quarter ended Nov. 30 was five cents per share, up from three cents last year.
Revenue totalled $226 million, which was even with last year's third quarter and up from $210 million in the second quarter this year.
Software and services accounted for $217 million of revenue, up from $190 million a year ago, while handheld device sales – which have been declining for years – contributed no revenue in this year's third quarter.
Analysts on average had expected an adjusted profit of two cents per share and revenue of $212.5 million, according to Thomson Reuters Eikon.
BlackBerry shares were up six per cent at C$10.60 shortly after the Toronto Stock Exchange opened. On the New York Stock Exchange, which sees higher volumes of trading in the stock, BlackBerry was up four per cent at US$7.68, slightly below pre-market levels after the results were issued.
Under the leadership of chief executive John Chen, who joined the company in 2013, BlackBerry has repositioned itself from being a smartphone maker to a leader in highly reliable and secure technology.
He told analysts in a conference call that the company is on track to meet its key financial estimates for its 2019 financial year, which ends in February.
BlackBerry's stock has been trending downward after soaring in late 2017 and early 2018 with a combination of better-than-expected financial results and promising supply contracts, including one to provide the safety operation system for a Chinese autonomous vehicle system being developed by search-engine giant Baidu Inc. and several manufacturers.
From its 2018 high of $18.14 set on Jan. 9 on the Toronto Stock Exchange, BlackBerry shares have dropped to about $10 as of this week, with most of the decline pre-dating the diplomatic and market reaction to Canada's arrest of Chinese businesswoman Meng Wanzhou in Vancouver on Dec. 1 at the request of the United States.
Chen said in an interview that he hasn't seen any disruption tied to China's displeasure over Meng's arrest and that BlackBerry technology is being built into Baidu's Apollo system for self-driving vehicles.
"They're (trying) to sell these platforms to car manufacturers, especially in China. And they'd like to make it more of a standard around the world, obviously. And we'd like to help them too."
Chen said he's optimistic that the political conflicts between China, Canada and the United States – which is BlackBerry's largest source of revenue – will be resolved and won't change the company's long-term plans.
"We do a lot of investments in the auto sector in China, as well as in Korea and Japan, and I will continue to do that until somebody gives me a sign that I should stop."
Several analysts have said they are waiting for BlackBerry revenue to begin increasing on the strength of its newer business ventures. Some have suggested BlackBerry's US$1.4-billion acquisition of Cylance, a U.S. artificial intelligence and cybersecurity firm, may help revenue in the long term but the deal isn't expected to close until February.
Chen told analysts that the transaction has recently passed one of the key regulatory hurdles, under the Hart-Scott-Rodino anti-trust act, and that BlackBerry will now have more freedom to discuss the deal's potential with customers.
"These cybersecurity capabilities will fit nicely with everything we do," Chen said.