BlackBerry has today posted an adjusted profit that beat expectations despite a sharp drop in its revenues.

The software growth Blackberry is relying on failed to fully make up for its retreat from handsets and lost service fees. 

The Canadian smartphone pioneer has gone through a wrenching transition in recent years.

It has endured huge writedowns and job cuts as it seeks to build up a software business not tied directly to its eponymous smartphones, which have fallen from market dominance to also-ran in the iPhone and Android era. 

BlackBerry said about 80% of its software and services revenue, excluding patent licensing and professional services, was recurring, which helped it notch a record gross margin. 

The company said it had software and services revenue of $160m in the quarter, up from the previous quarter and same time last year.

Sales from its handset business dropped to $62m from $220m a year earlier.  

Adjusted earnings of two cents a share came in ahead of analysts' expectations for a 1 cent a share loss, according to Thomson Reuters I/B/E/S. 

BlackBerry also said it expects to achieve an adjusted profit for this fiscal year, up from a prior outlook of breakeven to a five cent loss. 

The Ontario-based company said it had a net loss of $117m, or 22 cents a share, on revenue of $289m in its fiscal third quarter. 

A year ago, it reported a net loss of $89m, or 17 cents a share, on revenue of $548m.

Analysts had expected revenue of $331.9m.