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BlackBerry CEO John Chen takes part in an event at BlackBerry QNX Headquarters in Ottawa on Feb. 15, 2019.

Sean Kilpatrick/The Canadian Press

BlackBerry Ltd.'s fortunes turned in its latest quarter, with accelerating revenue growth sending its shares up more than 12 per cent Friday as chief executive John Chen promised more consistent sales.

The boost came three months after the enterprise and security software company reported a quarterly earnings miss and a dimmer full-year forecast that prompted investors to push its stock price to lows not seen in years.

The US$267-million in revenue it reported on Friday was up 18 per cent year over year for the quarter ending in November – higher than the 16-per-cent growth rate of prior quarter. The shares closed at $8.57 in Toronto, up 94 cents.

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Since the arrival of Mr. Chen in 2013, BlackBerry, based in Waterloo, Ont., has moved away from its legacy smartphone business, gradually transitioning to providing secure data transmission and management services for government and business clients. The shift has been met with turbulence, particularly in the past two years, as the company dealt with volatile sales growth and accounting-method changes as more revenue sources became recurring.

The period has also been marked with the biggest acquisition in BlackBerry history: the US$1.4-billion acquisition of California predictive cybersecurity company Cylance Inc. The company uses artificial-intelligence techniques to predict and, it hopes, prevent cyberattacks. When he announced the acquisition in November, 2018, Mr. Chen said that he hoped to integrate Cylance into Spark, the Blackberry platform that centralizes its device-management offerings for enterprise customers.

Cylance and BlackBerry’s internet-of-things business now compose the company’s two primary revenue lines. The latter includes its QNX connected-device platform for cars and industry, as well as the software that helps governments and corporations manage their myriad computers, phones and other wireless devices – called endpoints in industry parlance.

On a conference call Friday morning, Mr. Chen told analysts that its development teams had hit milestones integrating Cylance into its core offerings. “Management and security of endpoints are now converging,” he said, adding that there were many cross-selling opportunities between the business lines. “… We believe we can be a winner in this fast-growing, $20-billion market.”

Analyst Trip Chowdhry of Global Equities Research heralded BlackBerry’s “phenomenal execution” of the integration on the conference call. In a research note, Paul Treiber of RBC Dominion Securities pointed out that the tribulations of the prior quarter had been fully priced into BlackBerry shares – giving the stock room to bounce back up Friday on news that results were “less bad.”

Canaccord Genuity Group’s T. Michael Walkley said in an interview that Friday’s report shows that “the worst might be behind them.” Given BlackBerry’s low valuation in recent months, the stronger quarter likely played a large role in driving investors back into the stock, he said. But he added that management needed to show better clarity with its product plans and integration, and deliver more consistent enterprise-software sales.

BlackBerry reported a loss of US$32-million for the quarter, or 7 US cents a diluted share, as year-over-year costs rose across the company, including in sales and marketing, and owing to amortization. It had a profit of US$59-million a year earlier, which translated to a loss of 1 US cent a diluted share.

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The slide in share price after the prior quarter was in part due to conservative forecasts for its 2020 fiscal year, which ends next February. But Mr. Chen said Friday that BlackBerry had done a better job converting leads into sales of its device-management products in the most recent quarter. He also said that the company was in line to match the current analyst consensus of US$1.1-billion in non-GAAP (generally accepted accounting principles) revenue.

The company’s president and chief operating officer, Bryan Palma, unexpectedly resigned in November, less than a year into the job. He ran the company’s internet-of-things business, overseeing its secure connected-device software and the BlackBerry Technology Solutions Group, which includes connected-car software group QNX. Mr. Chen did not address Mr. Palma’s departure on the conference call; BlackBerry did not make Mr. Chen available for an interview.

The internet-of-things division – a crucial element of the company’s turnaround – saw revenue fall 2 per cent to US$145-million. Cylance growth, meanwhile, decelerated to 13 per cent year over year, down from 24 per cent in the previous quarter. (The company’s acquisition of Cylance did not close until February, 2019, and did not impact BlackBerry’s revenues a year ago.)

Mr. Treiber of RBC, who currently has a “sector perform” rating on BlackBerry, said that to improve its rating, “longer term, BlackBerry needs to show sustained reacceleration in growth.” He held his target price at US$7.50.

On the conference call, Mr. Chen said there was growing demand for the QNX connected-device operating system among potential industrial clients that are increasingly digitizing operations. While the software is traditionally associated with connected cars – BlackBerry most recently said it’s in 120 million vehicles worldwide – the CEO said he expected QNX revenue from industrial clients to eventually eclipse automotive revenue.

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