BlackBerry Reports 43% Growth Year-over-Year in Software Licence Revenue for Q3 2016

by Istvan Fekete on December 21, 2015

logo blackberry boldDespite the Priv having been available for three weeks, BlackBerry isn’t yet ready to comment on the sales numbers of its first handset running Android. Instead, BlackBerry’s financial report emphasized the importance of software sales. The non-GAAP revenue breakdown for the quarter was approximately 29% for software and services, 31% for service access fees (SAF), and 40% for hardware and other revenue.

During the third quarter of fiscal 2016, BlackBerry reported GAAP gross margin of $236 million or 43.1% of revenue. Excluding the impact of the resource alignment program charges included in cost of sales and software deferred revenue acquired included in revenue, the non-GAAP gross margin was $250 million or 44.9% of revenue.

BlackBerry reported a small loss of three cents per share on revenue of $557 million, up 15% compared to the previous quarter, but down 44% compared to the same period a year ago.

The company began billing revenue from its recent acquisition of Good Technology. Software and services revenue was $162 million, up 183% year-over-year and 119% quarter-over-quarter. This indicates that John Chen’s goal of $500 million in software revenue for the current fiscal year (ending in March 2016) may be something BlackBerry will reach.

Chen added that the legacy service access fees associated with older BlackBerry handsets will be offset by additional revenue from the company’s software and services division.

“I am pleased with our continued progress on BlackBerry’s strategic priorities, leading to 14 percent sequential growth in total revenue for Q3. We delivered accelerating growth in enterprise software and higher revenue across all of our areas of focus,” said Executive Chairman and Chief Executive Officer John Chen. “Our new PRIV device has been well received since its launch in November, and we are expanding distribution to additional carriers around the world in the next several quarters.

“BlackBerry has a solid financial foundation, and we are executing well. To sustain our current direction, we are stepping up investments to drive continued software growth and the additional PRIV launches. I anticipate this will result in sequential revenue growth in our software, hardware and messaging businesses in Q4.”

The BlackBerry Priv was available for only three weeks in the fiscal quarter ending in November, and we must add that it was available only through AT&T in the US. Next year, however, availability will expand into an additional 31 countries.

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