BlackBerry Ltd. has finally stanched the last of its financial wounds and might even be licensing its name to a new tablet soon, CEO John Chen told investors Friday.
The company posted fourth-quarter revenues of $286 million (all figures USD) for the period ending on Feb. 28, with a net loss of $47 million. Its software and services segment – the company’s primary focus moving forward – accounted for $193 million in revenue, or 65 per cent of the company’s total, and is expected to reach profitability next year.
“I am pleased to report that our Q4 results came in at or above forecast in all major metrics,” Chen said during a March 31 conference call. “With our focus and shift towards a software model, we have consolidated our software business to enable tighter product and go-to-market integration.”
As expected, quarterly device revenue was $55 million, representing 19 per cent of the company’s total, while system access fees brought in $49 million, representing 16 per cent – a 26 per cent decline quarter-over-quarter. The company expects an additional 25 per cent decline in system access fee revenue next quarter, CFO Steve Capelli said, though he noted that each of the company’s business segments were profitable on an operating basis.
The company also achieved its full-year target of 30 per cent growth in its software and services division, which brought in $687 million, Chen said.
“I’m very pleased with that accomplishment,” he said.
And the tablet?
Chen said that in addition to software and services, the company’s licensing efforts – the future source of any BlackBerry-branded mobile devices – were seeing “good traction” as well, citing TCL’s KeyOne, revealed at Mobile World Congress last month, and BlackBerry’s commitment to developing further security-focused versions of Android, as examples.
He also mentioned, as an aside, that his company might license its name to a tablet soon as well.
“We are now expanding to the next phase of our licensing program,” Chen said. “What this might mean, and I make no promise, is that you may soon see a BlackBerry tablet.”
Later, while taking questions from analysts, Chen clarified his statement, emphasizing that any future tablet would not be another PlayBook, would likely be released in the Chinese, Indian, and Indonesian markets to start, and would not be designed by BlackBerry – and that no deal was in place for another company to do so yet.
“Other than Radar, I’m not building [a] piece of hardware,” he said. “One of our partners get [sic] very excited to build a tablet, which [is] based on Android… and they wanted us to give them the portfolio rights to do that. And I’m interested in that because I’m going to get royalty for every piece of tablet they ship.”
A burgeoning automotive giant
Chen also mentioned BlackBerry’s recent success in pursuing automotive software, including last October’s partnership with Ford and the security-focused QNX software development platform that it revealed at this year’s CES.
In a recent interview with ITWC, BlackBerry COO Marty Beard revealed the company has partnerships with some 250 automakers.
While responding to a question, Chen confirmed that it was “likely” the company would win additional agreements similar to Ford’s magnitude.
“We just need a little bit of time,” he said.
Chen reminded investors that the company’s primary focus now is end-to-end platform security, which consists of four main components: unified endpoint management (UEM); horizontal and vertical mobile apps; embedded software enabling mobile endpoints such as connected cars; and Internet of Things (IoT) appliances such as BlackBerry Radar.
“Each of the above areas give us good opportunity for growth and they’re synergistic across all these areas,” he said.
As for the next fiscal year, Chen said he expects the company’s software and services business to grow at or above the overall market rate, noting that the company hired 1000 people last year.
“After completing our planning process and based on our portfolio breakdown, we see market growth of roughly about 10 per cent to 15 per cent on average,” he said. “We are now targeting the higher end of the range, so somewhere between 13 per cent to 15 per cent. We also expect to be profitable on a non-GAAP [Generally Accepted Accounting Principles] basis and free cash flow positive for the full year.”
Our thanks to investment research platform Seeking Alpha for the transcriptions from BlackBerry’s March 31 Q4 earnings call.
