The former global smartphone giant BlackBerry (TSX:BB) continues to pivot. Fourth-quarter EPS and revenue beats prove that once again, the turnaround is progressing, albeit at a slow pace. For now, investors may enjoy last Friday’s 13.6% rally.
BlackBerry is pivoting its business in EoT – Enterprise of Things – which includes endpoint management, appliances, embedded software, and IP licensing. In short, BlackBerry software supplies endpoint security management instead of relying on smartphone OS and device sales. The firm spent billions to double-down in this market by acquiring Cylance. Cylance is described as the leading next-gen AI-based cybersecurity platform.
In the fourth quarter, BB reported earnings of $0.08. Software and services revenue grew 14%, albeit at a small $248 million total. This unit now accounts for nearly all (96% of total revenue). Sadly, the firm reported total headset devices revenue of zero. End of an era indeed.
Even after the Cylance acquisition, the firm had $1 billion. Cylance of strategic importance as BlackBerry reduces the cash burn and improves on profitability.
Looking ahead, BlackBerry forecast revenue growth of 23%-27%, driven by a double-digit percentage increase in billings. IoT will grow 12%-16% and BTS (BlackBerry Technology Solutions) growth will outpace enterprise UEM. This is a relief to investors because Microsoft’s (NASDAQ:MSFT) Office Portal strength will eat into device management revenue. Vmware’s (NYSE:VMW) AirWatch also validates BlackBerry’s need to focus on other markets.
