BlackBerry Posts Strong Earnings, Sells Cylance Unit

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Blackberry,Financials,Cybersecurity

BlackBerry Ltd. exceeded analyst expectations for revenue and operating earnings in its fiscal third quarter, driven by strong performance in its cybersecurity and connected-car software units. The company also announced the sale of its Cylance cybersecurity unit to Arctic Wolf Networks Inc. for US$120 million in cash and 5.5 million shares.

The Waterloo, Ont., software company said it generated US$162-million in revenue in its fiscal third quarter ended Nov. 30, well above analyst expectations of US$151-million, driven by better-than-expected results in both its cybersecurity and connected-car software units. The company’s adjusted operating earnings for the quarter were US$23-million, significantly higher than analyst expectations in the mid-single digits millions.

Excluding the US$23-million in quarterly losses from the Cylance cybersecurity unit that it is selling, the company generated a US$12-million profit.“BlackBerry achieved a significant inflection in its results this past quarter,” CEO John Giamatteo said in a release. “This is a significant shift in the profitability of this company,” chief financial officer Tim Foote said on a conference call with analysts.

But Cylance, which uses artificial intelligence and machine learning to provide cybersecurity protection for small and medium-sized businesses, needed heavy investment when market dynamics shifted to build features and products it didn’t offer. Revenues in the unit declined.

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