BlackBerry turned a fourth quarter profit excluding charges, but its revenue continues to tank as its turnaround remains a work in progress.
The company reported a fourth quarter profit of $28 million, or 5 cents a share, on revenue of $660 million, down from $976 million a year ago. Non-GAAP earnings were 4 cents a share.
Wall Street was looking for BlackBerry to report a loss of 5 cents a share on revenue of $734 million.
For BlackBerry's fiscal 2015, the company's revenue was $3.33 billion, down from $6.81 billion. The good news is that BlackBerry cut its losses from $5.87 billion in fiscal 2014 to $304 million in fiscal 2015.
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CEO John Chen said that BlackBerry has "a very good handle on our margins and product roadmaps have been well received." Now the company needs to stabilize the revenue, said Chen. The company also said it plans to remain cash flow positive and expand its distribution in a move that won't pay off until later in BlackBerry's fiscal year. On a conference call, Chen said:
With the fourth quarter under our belt we are now halfway through our two year turnaround effort and I'm very pleased to report that our financial house is in order...Our financial viability is no longer in question. We are now turning our attention to revenue stabilization, staying cash flow positive and achieving sustainable profitability sometime starting this year.
BlackBerry, which has $3.27 billion in cash and equivalents, has plenty of capital to see its turnaround through.
BlackBerry's turnaround largely depends on its software fortunes and whether it can sell its experience as a cross-platform suite. Software revenue in the fourth quarter was $67 million, up 20 percent from a year ago. BlackBerry also plans to utilize its strength in security and develop an Internet of things business.
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The company's software fortunes may improve as it rolled out BES 12 Cloud and forged partnerships with Google and Samsung.
Among the key points from the conference call:
- The Classic and Passport are carried by more than 160 carriers.
- Chen said that BlackBerry has had its best carrier support in years.
- Channel inventory is down 37 percent from a year ago.
- The company had 2,200 enterprise wins in the quarter. That sum includes BES upgrades from version 10 to 12 and new licenses.
- QNX is deployed in 50 million cars worldwide.
- BBM is "slightly behind in monetization." The enterprise business is on track.
- About 11 percent of the company's headcount is devoted to enterprise sales. Chen said he wants to get that number up to 15 percent to 20 percent.
Overall, BlackBerry will need to sell more hardware and devices such as its Passport and Classic to stabilize revenue. In the fourth quarter, BlackBerry recognized revenue on 1.3 million smartphones and about 1.6 million devices were sold to end customers with an average selling price of $211, up from $180 in the third quarter.
By region, 31 percent of BlackBerry's sales come from North America with 42.9 percent from EMEA and 17 percent from Asia Pacific. Latin America is 9.1 percent of sales.