BlackBerry Ltd (BB.TO) (BB.N) reported quarterly revenue below Wall Street estimates on Wednesday, as demand for its QNX software used in cars was hit by the COVID-19 pandemic that severely bruised the auto industry.
U.S.-listed shares of the Canadian company, which sells security software to companies and governments as well as infotainment software to carmakers, were down about 3% after the bell.
Coronavirus-related job losses and shuttered dealerships during lockdowns led to a sharp decline in demand for cars. Light vehicle sales in the United States, among BlackBerry’s biggest markets, fell nearly 27% in March from a month earlier.
“We’re starting to see signs of recovery in the auto sector, evidenced by the reopening of the production facilities,” Chief Executive John Chen said in a call with analysts, adding the company expects a “slow and gradual recovery for QNX” this year.
The company posted a surprise profit as it put a tight lid on costs by slashing marketing and related costs by $31 million in the quarter. Adjusted operating expense fell 22.7% to $150 million.
The quarter also benefited from strong demand for BlackBerry’s enterprise security software as companies spent more on bolstering IT security to protect data of employees now working remotely.
Total revenue for the first quarter ended May 31 fell 16.6% to $206 million from a year earlier. Analyst had expected revenue of $214.1 million, according IBES data from Refinitiv.
Net loss widened to $636 million, or $1.14 per share, from $35 million, or 9 cents per share. Net loss includes impairment charge of $594 million related to its Spark reporting unit.
Excluding items, the company reported a profit of 2 cents per share, while analysts were expecting a loss of 2 cents per share.