BlackBerry's (NYSE: BB) transformation from a mobile phone maker to a security software and services company is taking hold. In the company's third quarter of fiscal 2019, BlackBerry posted strong growth where it counts. Software and services revenue, non-GAAP (generally accepted accounting principles) earnings per share, and free cash flow all increased by double-digit rates year over year.
Here's an overview of the third-quarter results, which were released Thursday morning.
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BlackBerry's third-quarter results: The raw numbers
What happened with BlackBerry this quarter?
Improving profitability continued to claim the spotlight in the company's financial results. Here are some of the key takeaways from the quarter:
- Non-GAAP software and services revenue hit a record high of $219 million, up 10% year over year
- GAAP software and services revenue increased 14% year over year to $217 million
- BlackBerry's software and services revenue growth rate was an acceleration compared to growth seen in Q2
- 88% of the period's revenue was recurring -- up from 75% in the year-ago quarter
- $27 million in non-GAAP operating income for the period marked the company's 11th quarter in a row of positive non-GAAP operating income
- Free cash flow was $57 million, or $39 million including the impact of restructuring and legal proceedings
What management had to say
BlackBerry CEO John Chen was pleased with the period. It was "another solid quarter," Chen said in the company's Q3 earnings release. To highlight the BlackBerry's momentum, Chen pointed to the company's double-digit year-over-year growth in software and services revenue, non-GAAP earnings per share, and free cash flow.
Chen also said he was looking forward to the company's pending acquisition of artificial intelligence and cybersecurity leader Cylance. BlackBerry announced an intent to acquire the company in November.
The company reaffirmed its outlook for full-year fiscal 2019 results. Management expects:
- Double-digit growth in software and services billings
- 8% to 10% growth in software and services revenue
- Positive non-GAAP earnings per share
- Positive free cash flow
Chen also commented on the company's pending acquisition of Cylance, noting the company will "extend our strategy with cutting-edge AI cybersecurity capabilities and, combined with BlackBerry's capabilities, present the opportunity for revenue acceleration in our businesses, including UEM, QNX, and Spark."
BlackBerry expects its acquisition of Cylance to close before the end of February.
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