(Reuters) - BlackBerry Ltd reported quarterly profit above Wall Street estimates on Friday, fueled by demand for its software used in self-driving vehicles and lower costs, sending its shares up 16 percent.
The Canadian technology company, which dominated the smartphone market nearly a decade ago before losing out to Apple Inc’s iPhones and Android devices, has shifted to selling software to manage mobile devices, as well as focusing on emerging areas such as driverless cars.
In the second quarter, BlackBerry’s revenue from its technology and solutions business jumped 29 percent to $49 million, largely driven by the QNX unit that makes software for next-generation autonomous cars.
“We are probably going to step up more investment in QNX,” said Chief Executive John Chen on a post-earnings call with analysts. “We will add more engineers around the world, and especially in Canada.”
BlackBerry’s Toronto-listed shares rose 15 percent to C$15.29, while they jumped 16 percent to $11.84 in New York trading, their biggest one-day percentage gains since April 2017.
The QNX unit, which has long been used to run car infotainment consoles, is expected to start generating revenue in 2019.
BlackBerry has licensing agreements for the QNX software with a host of companies including Jaguar Land Rover, Qualcomm Inc, Baidu Inc and Aptiv Plc.
Revenue from the company’s enterprise software and services, its biggest, fell 3 percent to $88 million in the second quarter ended Aug. 31.
The company said in June it would shift to a subscription-based model for its software and services, and signaled slower growth in the business.
“We anticipate the headwind from.. accounting and sales model changes to impact enterprise software revenue for the remainder of fiscal year 2019,” said Chief Financial Officer Steven Capelli on the call.
BlackBerry has shifted to new accounting standards for sales reporting that recognizes certain enterprise licensing revenue over the life of the contracts, rather than upfront.
Excluding items, the company earned 4 cents per share, beating analysts’ average estimate of 1 cent, according to Thomson Reuters I/B/E/S.
The company’s expenses fell in the quarter. Selling and marketing costs dropped about 6 percent to $106 million, while research and development costs fell 15 percent.
Total revenue fell 13 percent to $210 million, but topped estimates of $207.48 million.
Reporting by Debroop Roy in Bengaluru; Editing by Shailesh Kuber and Sriraj Kalluvila