BlackBerry Software Sales Gain Toehold as Q1 2016 Revenue Tumbles

BlackBerry’s (BBRY) revenue slid precipitously again in Q1 FY 2016 but the mobile device maker showed signs that its strategy to up software and security sales on multiple platforms has gained some traction.

The vendor’s overall sales for the quarter tumbled 32 percent to $658 million from the $966 million it posted at the same time last year, dipping below the $683 million analysts expected. Still, its software and licensing sales nearly doubled on a sequential basis to $137 million, putting the company on pace to record the $500 million in software revenue chief executive John Chen set as a goal for this fiscal year.

The vendor realized 40 percent of its sales from hardware, 38 percent from services and 21 percent from software and licensing. The quarter marked the second straight reporting period BlackBerry’s revenue has dumped by a substantial amount, matching the sales slide the vendor incurred in Q4 FY 2015.

On a non-GAAP basis, BlackBerry lost $28 million, or $0.05 per share, for the period, narrowing its $0.11 per share loss at the same time last year. On a GAAP basis, the vendor posted basic net income of $68 million, or $0.13 per basic share.

“I am pleased with the strong performance of our software and technology business,” said Chen. “This is key to BlackBerry’s future growth. Our financials reflect increased investments to sales and customer support for our software business,” he said.

Chen said BlackBerry is “taking steps” to bring its hardware business to profitability, although he didn’t provide any details. The vendor said that while its hardware unit sales dipped to 1.1 million devices from the 1.3 million it sold in the previous quarter, the average selling price per device rose nearly $30 to $240.

“We believe these actions are prudent and necessary to grow the business and we believe the remaining milestones in our strategic plan are achievable,” Chen said.

BlackBerry said that during the period it landed some 2,600 contracts for its BES12 mobile management software platform, with some 45 percent tied to cross-platform deals.

BlackBerry closed the quarter with $2.07 billion in cash.

Separately, BlackBerry said it has signed a patent cross licensing deal with Cisco (CSCO) spanning both companies’ products and technologies.

Neither vendor disclosed terms of the deal other than to say BlackBerry will receive a license fee from Cisco.

“With the agreement in place, BlackBerry and Cisco can focus on innovation and continued technical cooperation, allowing our companies more freedom to create leading products and services for customers without the potential for patent disputes,” said Dr. Mark Kokes, BlackBerry Intellectual Property and Licensing vice president.

Dan Lang, Vice President of Cisco Intellectual Property vice president said the licensing agreement “recognizes Cisco’s patent portfolio, one that is regularly rated among the strongest in the telecommunications and networking industry.”