How Are BlackBerry’s QNX Operations Faring?
BlackBerry (NYSE:BB) posted a stronger than expected set of Q1 2018 results on Friday, beating market expectations, driven by continued uptake of the company’s enterprise mobility management software and a stronger performance of its QNX embedded systems business. Although BlackBerry’s total revenue declined by roughly 9.4% to $213 million, due to shrinking SAF revenues (down 58% year-over-year), its software revenues grew by 14% year-over-year. BlackBerry’s software and services revenue growth was primarily driven by double-digit billings growth and an increasing mix of recurring revenue. The company noted that about 86% of its software and services revenues were now recurring. Company-wide margins also expanded from 67% a year-ago to 76%, driven by a higher mix of software sales. Below, we review the performance of the company’s increasingly important QNX operations.
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.
Trefis has an $11 price estimate for BlackBerry, which is slightly below the current market price.
See our complete analysis for BlackBerry here
How Are The QNX Operations Faring?
BlackBerry’s QNX software, which is primarily used in automotive infotainment systems, has seen its installed base grow from about 60 million in 2015 to over 120 million automobiles worldwide currently. While the auto infotainment market is a relatively low-value space from a licensing perspective ($3 to $5 per unit), BlackBerry is betting on emerging opportunities including connected/autonomous vehicles which could offer higher per license revenues. Over the quarter, the company had two notable design wins in the connected automotive space. The first win was for a digital instrument cluster for a major auto OEM through its tier 1 partner, Denso. The company also struck an agreement with Byton, which is a China-based electric car start-up, which intends to make its first car available in China starting in 2019, with plans to eventually expand globally. BlackBerry is also expanding its sales channels for QNX, adding Hitachi ULSI in Japan and Sasken Technologies in India as partners. While BlackBerry doesn’t break out its QNX business financials, revenues are estimated to stand at just below $50 million a quarter, with the company noting that it expects double-digit growth through the year.
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