What happened

Shares of BlackBerry (BB -7.14%) were falling about 8% on Wednesday, as of 11 a.m. ET. The Canada-based tech company is famous for pioneering the personal handsets decades ago, but has since pivoted its business completely to software for both the cybersecurity and Internet-of-Things spaces.

In any case, the stock was down today based on the muted outlook given on last night's earnings call -- despite the company beating expectations in the third quarter.

So what

In the third quarter, Blackberry saw revenue decline 8.2% to $169 million, with adjusted (non-GAAP) losses per share of $0.05. Despite the revenue decline and adjusted losses on the bottom line, those figures were actually ahead of expectations.

Of that $169 million, BlackBerry's cybersecurity business made up about $106 million, so it's the majority of revenue at this point. On that front, management struck a cautious tone on the post-earnings conference call with analysts. CEO John Chen said:

We've seen the same, as many other software companies, including those in cybersecurity, in noticing some elongation of sales cycles during the past quarters. Therefore, it is likely that the macro environment will be a headwind for the business in the near term, although we're likely to fare better than most given [we are] heavy skewed toward regulated customers, particularly government. Furthermore, cybersecurity still remains an essential purchase.

Chen went on to say BlackBerry's team was "working to close" some large government deals at the moment, but it sounded as if those deals might not close before the end of the fourth quarter. Thus, some investors may be taking this as a sign that the macroeconomic uncertainty may cause next quarter's cyber revenue to come in lower than previously thought. Still, Chen maintained that there would still be sequential growth in the current fourth quarter, and that if those deals did slip out of the fourth quarter, they would likely close in the fiscal first quarter.

Now what

BlackBerry is an interesting case in the software world, as it's not an expensive high-growth cloud company, but rather a legacy business trying to make a turnaround. Unlike the sector's high-growth favorites, BlackBerry is currently posting year-over-year declines; however, it's also posting sequential increases, so it's possible a return to growth will be in the cards soon. For its part, management believes the company will be able to return to annualized recurring revenue (ARR) growth in the latter part of 2023.

That could be a potential catalyst, as Blackberry trades for less than 4 times sales -- certainly cheap for the cybersecurity software sector.

However, it will still be some time and remains to be seen if the company really can show sustainable growth and profits, and a potential recession could put that goal further off.

Therefore, BlackBerry remains an interesting turnaround case to watch, but it's difficult to say how successful its turnaround will ultimately be or when it will become appreciated by investors, making BlackBerry a difficult bet in today's challenging economic environment.