Will BlackBerry’s Software Revenues Rebound In Q2?

by Trefis Team
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BlackBerry (NASDAQ:BBRY) is expected to publish its Q2 FY 2018 results on September 28. We expect the company’s revenues to trend lower on a year-over-year basis, amid declining service access fees and smartphone revenues, although this could be partially offset by stronger software sales. Below we provide a brief overview of what to expect when BlackBerry publishes its results.

Trefis has an $10 price estimate for BlackBerry, which is slightly ahead of the current market price.

See our complete analysis for BlackBerry here

Will Software Revenues Rebound? 

Although BlackBerry has been banking on its software and services revenues to compensate for sizable declines in the handset and SAF business, software revenues disappointed over Q1, declining by 12% sequentially to $160 million. While BlackBerry attributed the slowdown to lower professional services revenues, noting that its bread-and-butter enterprise mobility management business (now called Unified Endpoint Management) continued to grow, it did witness a slowdown in customer orders. The company processed around 3,000 customer orders during the April to June period, down from over 3,500 orders in Q4 FY’17 and 3,300 in Q1 FY’17. BlackBerry also has several other fledgling bets in the software space, ranging from fleet management to embedded software for the automotive market – but it’s unlikely that they will move the needle for software revenues over Q2. (related: Does BlackBerry Have A Shot At Success In The Fleet Management Market?)

How Are The Smartphone Licensing Operations Faring? 

It has been about a year since BlackBerry exited the smartphone hardware market, instead opting to license its brand and technology to partners who develop and market new handsets that use the BlackBerry name. The company has multiple partners globally, the most notable partner being China’s TCL, which recently launched the premium KEYone device. We will be interested to hear updates on how the device is selling. BlackBerry’s other partners include Indonesia’s BB Merah Putih , India’s Optimus and STK from the U.K. While most of these licensing deals appear to be low-volume, BlackBerry could garner relatively thick margins on its licensing fees.

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