BlackBerry has today reported a smaller than expected fiscal third-quarter loss and its first quarter-to-quarter revenue gain in over two years, indicating turnaround efforts may be gaining traction. 

The better than expected results were driven by higher hardware and software revenues. 

"I'm pleased with our progress and the growth in Q3," said chief executive Officer John Chen, on a conference call. 

"Our results demonstrate that we're executing on the turnaround," he added. 

In the quarter ended November 28, the Ontario-based company reported a loss of $89m, or 17 cents a share. That compared with a year ago loss of $148m, or 28 cents a share. 

Quarterly revenue fell 31% to $548m from a year earlier, but rose 12% from the previous quarter, after nine consecutive quarters of declines. 

Analysts, on average, expected BlackBerry to post a loss of 14 cents a share on revenue of $489m. 

Software revenue, a metric being closely watched by analysts as BlackBerry pivots to focus on that segment, more than doubled to $162m from a year earlier.

Year-to-date software revenue is about $362m, within striking range of the company's forecast target of $500m for the current fiscal year ending February 2016. 

Revenue from smartphone sales also rose for the first time in four quarters to $214m from $201m in the second quarter. 

It sold 700,000 devices in the latest quarter down from about 800,000 in the prior period, but average selling prices (ASPs) on devices jumped to $315 from $240. 

The ASP increase came after BlackBerry recently rolled out the Priv, its first device powered by Alphabet's Google Android operating system. 

BlackBerry said it sees its hardware arm possibly returning to breakeven operating profit in the current quarter. 

Significantly, gains in software revenue more than offset a decline in BlackBerry's legacy system access fees this quarter. 

BlackBerry said it expects the trend to continue, helping it beat both top-line and bottom-line Wall Street expectations in the ongoing quarter.