What To Expect As BlackBerry Reports Q1 2019 Earnings

by Trefis Team
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BlackBerry (NYSE:BB) is expected to publish its Q1 FY’19 results on Friday, June 22, reporting on a quarter that likely saw the company’s enterprise software and technology businesses gain some traction. Below, we take a look at some of the key trends to watch when the company reports its results.

We have also created an interactive dashboard analysis outlining our forecasts. You can modify the graphs with blue dots to arrive at your own estimates.

Recent Enterprise Customer Wins Will Drive Revenues 

Blackberry’s bread-and-butter Enterprise Mobility Management business, which accounts for over 50% of software and services revenue, has been seeing reasonably strong traction from government agencies and customers in regulated industries. Over the last quarter, the company won about 3,500 enterprise orders as well as notable government wins, including a deal for endpoint management with the U.S. Air Force. BlackBerry has shifted towards a subscription-based model, and this should help to ensure some revenue stability, as roughly 70% of software revenues excluding IP licensing and professional services are recurring in nature currently.

Blackberry’s once lucrative Service Access Fee revenues are trending towards zero, as customers abandon their legacy BlackBerry devices. Although we continue to model the division in our valuation for  BlackBerry (it contributes 2% of the company’s value per our estimates), we believe that there is a possibility that the company will pull the plug on the service when fixed costs exceed its revenues.

Updates On Newer Bets

We will also be looking for updates on Blackberry’s other bets, including fleet management and the QNX embedded software. The QNX business, which currently derives much of its revenue from automotive infotainment systems, is branching out into other areas in the connected automobile space including safety and autonomous driving systems. Over the last few months, the company forged new deals with Baidu and Nvidia to collaborate on automotive technologies. BlackBerry is also betting on the fleet management and asset tracking space, with its Radar product. Although the business remains small (sales only recently crossed the $1 million mark), it gives BlackBerry an entry into the fast-growing telematics space, where revenues are projected to grow from $9.5 billion in 2016 to $27.9 billion by 2021.

We have a $11 price estimate for BlackBerry which is roughly in line with the current market price.

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