BlackBerry Ltd. posted more than a half-billion-dollar loss in its most recent quarter as it slashed US$594-million from the value of its Spark device-management platform after integrating it with Cylance, the cybersecurity company it bought in late 2018.
The company’s first-quarter fiscal 2021 loss totalled US$636-million or US$1.14 a share, including the one-time goodwill impairment charge. That’s compared with a loss of US$41-million or 7 US cents a year earlier.
But BlackBerry’s overall quarter was mixed, as revenue fell nearly 17 per cent but its profit, excluding the impairment charge and other items, beat analyst expectations. Shares fell about 3 per cent from its $6.69 closing price in Toronto in after-hours trading early Wednesday evening.
While its QNX connected-car operating system took a revenue hit amid a pandemic-related slowdown in the auto sector, BlackBerry’s non-generally accepted accounting principle earnings per share was 2 US cents, beating analyst consensus of a 2-US-cent loss. Its revenue fell 16.6 per cent to US$206-million. On a conference call with analysts, chief executive officer John Chen said BlackBerry had “a good shot” at being profitable on a non-GAAP basis in the fiscal year.
The company has long transitioned away from making smartphones, instead building on a key strength of its former BlackBerry handsets – securely transmitting information. Its chief focuses today include securing data between devices for large business and government clients as well as data from internet-connected sensors, as well as developing the QNX operating system for connected cars.
BlackBerry announced Spark in 2018, hoping to make a platform that would centralize its secure device-management offerings for large business customers in the former category. The same year, it made the biggest acquisition in company history when it bought the California predictive cybersecurity company Cylance for US$1.4-billion.
On the conference call, Mr. Chen said that as of March 1, the company had fully integrated Cylance into Spark, and that it would be branded as Spark.
The company’s shift from handsets to security has been uneven in the past few years, as it faced accounting-method changes and volatile sales growth. Chief revenue officer Steve Capelli said on the conference call that the goodwill impairment charge for Spark was “required in accordance with accounting rules, and was driven by the broad-based economic decline and corresponding impact on our market capitalization.”
Mr. Chen said Spark had seen new active subscriber growth of about 15 per cent in the quarter.
The company reported its first-quarter fiscal 2021 financial results after markets closed Wednesday. Its closing price was $6.69 on the Toronto Stock Exchange, down 3.2 per cent from the day before. BlackBerry shares are down 19.9 per cent since the start of 2020 after a steep pandemic-related fall alongside the rest of the market that began in February.
BlackBerry was removed from the blue-chip S&P/TSX 60 Index this month. In 2007, it was Canada’s most valuable company and worth nearly $85-billion. But its less-than-$4-billion market capitalization today is smaller than numerous other Canadian companies that are not on the index.
The company also announced last week that it was conducting a security review on a COVID-19 contact tracing app that was being developed by Shopify Inc. staff with the federal and Ontario governments. Earlier this month, it also announced former Citrix senior vice-president Thomas Eacobacci as its new president, following the departure of Bryan Palma last November.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.