BlackBerry Ltd T.BB

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[blackberry]

BlackBerry DD

 

DD

Note: BlackBerry is NOT a cyber security company. They are a security company. Revenue does not care about your AI driven autonomous machine learning EV car with DDs. People are using these terms loosely. A quick lookup for interviews with John Chen would prove that he explicitly avoids these terms as they do not define nor matter to the products/revenue of BlackBerry. QNX revenue does not depend on any of these terms, it's on installation on any device. This includes the space station, of which there is 1 of with obviously non-recurring revenue. Buying based on these basis would be gambling.

Bull:

• Business transformation: BlackBerry is now a software company, starting the transformation in 2015. The focus is security, the general term.

• 5 Products:

  • QNX: Embedded system OS.

    • Multi-OS housing: It has the capability to allow for multiple OSs on a single chip.

    • Real-time availability/software prioritization: Not all pieces of software operate on the same priority. Steering/braking would be higher priority than media, and QNX allows for that. Even if the thread/core is shared with other applications, when high priority software is requesting a resource it will be prioritized to ensure reliability.

    • Resource sharing: CPU, RAM, and GPU resource sharing between different applications capability. Two applications can share the same CPU core and bump each other based on prioritization.

    • Why not Linux? QNX has the highest certification for security available. Linux does not. CEOs would want to avoid liability and this certification allows for that.

    • Device agnostic: It can be installed on any device, not just cars. Any IoT and offline device can use QNX.

  • QNX Hypervisor: Consolidate multiple OSs on a single SoC using virtualization

    • SoC: System on a chip. Instead of using multiple ECUs, which is what car manufacturers currently do, they can use one single chip to run multiple high priority applications and multiple OSs. This is what Tesla does now.

    • Virtualization: Running an OS in a virtual environment. Think Linux environment inside of Windows. This helps with debugging for developers without having to have the actual hardware.

  • IVY: Scalable cloud-connected software platform for vehicles.

    • What is it a solution for? When a vehicle manufacturer wants a way to transmit the QNX/OS data safely, normalize it, and visualize it/interact with it. It also allows car manufacturers to own the data, unlike other OSs.

    • Scalable: AWS servers are capable of handling the load from many endpoints.

    • Software platform: There is currently no centralized software ecosystem for vehicles. IVY is providing that.

    • Non-BB developers would be able to use an SDK to develop applications on IVY for infotainment/general apps/others. IVY will also use ML to gain insight on unrecognized patterns by developers. An example of this is detecting if a car slipped, without having the developer connect multiple sensors to figure out if that event happened.

    • 50/50 joint effort on revenue and effort to develop the ecosystem. Using AWS's knowledge in AI/ML for calculated sensors (slip, driver on seat, etc)

    • Usage by other vendors: A city can connect to the data from vehicles and detect when ice/slipping is happening. If brakes are getting overheated coming from a high elevation area. If a car had an accident, etc. An insurance company can provide an app to give discounts similar to the currently implemented OBD-2 readers. A maintenance provider can also connect to this data and check if an error is specific to maintenance, malpractice, or general misuse.

  • Spark: Endpoint management. Basically API security. Did not delve far into this, basic info.

    • Unified Endpoint Security: This is the endpoint where a laptop/phone/IoT device hits. It provides encryption and security around that. Continuous authentication is a part of it, where a device is learning the user behavior using ML and continuously checking if the behavior matches the original owner; if not, lock the device.

    • Unified Endpoint Management: Basically managing your API for devices.

    • Zero trust: I think this is specifically talking about continuous authentication. Basically, it's not an authenticate once and forget it. It's constantly tracking behavior to verify the user is the authenticated user.

  • AtHoc: Non-enterprise communication system.

    • Target customers: Government, healthcare, education, etc.

    • Solution: A communication system targeting non-enterprise businesses; specifically for Event management, cross organizational communication/collaboration, mass notifications.

    • Who does this benefit? You've seen the hacks in healthcare/educational/governmental sector. This is specifically for them.

  • SecuSUITE: Phone application to allow employees to use work related data in personal devices without cross communication (between personal and work data).

    • End to end encryption.

    • Separation of concerns between personal and work data. Employers CANNOT access your personal data.

    • Used by NATO; doesn't carry much value in my book but maybe in yours.

• Customer oriented solutions: As you've seen in the products above, some products overlap and are just names to target specific customers. It allows customers to easily understand what product could solve their issue. Continuous authentication is a great example of this: Their customer complained that they kept re-authenticating, so they designed a solution allowing them to authenticate once and using ML they learned their behavior and can continuously check if the user is the owner/authenticated user. This kind of passion in leadership is good for business.

• Liability: QNX has the highest security rating available. Most CEOs want to avoid liability when it comes to security, using QNX would help them avoid that in a similar way cloud services help them avoid being blamed for hacking.

• Leadership: BBs leadership isn't one to play on famous words to drive the stock up. John Chen explicitly states this in his interviews and says they are a security company. Not cyber, doesn't mention AI or whatever. He explicitly avoids meme words and understands what the point of BBs business is.

Where I think growth can be made:

1. QNX in more cars. They can capitalize on the idea of less ECUs = less cost for OEMs + security.

2. IVY usage by OEMs along with QNX.

3. IVY ecosystem. Maybe application billing?

4. Professional services (support) for the products listed.

5. AtHoc increased market share in more governmental/healthcare/educational entities.

6. SecuSUITE for more enterprise customers with the idea being saving employers money from purchasing work phones for employees, and worrying about securing them.

Bear:

• Revenue: It is not yet based on a subscription/usage basis. You can only produce so many cars, and they don't give an insight on how much do they charge per car for QNX. Anywhere from $2 - $20 is what was mentioned in transcripts. This is a growth area, but not at a trajectory that's excellent. IVY does work on a subscription/usage basis, but IVY can be used WITHOUT QNX. I'm worried about this, but still see it as an area that will generate revenue in the range of $400 MM - $600 MM at the price of $20 per 30M cars. The 30M per year is based on the listing of their customers and their yearly production rates. Keep in mind I stated any device, this does not include trucks or other IoT devices.

• Market share: These are relatively new products. J.P. Morgan pointed this out as a priority for growth. This could end up not working out and growth never happens. This is a relatively low risk due to QNX and IVY providing SO MUCH value for car manufacturers Vs. other products in the market.

• Patent revenue: They sold a chunk of their no longer relevant patents to Huawei. This makes up a small (<= 32%) of their revenue and is a one time sale. The coming quarter could be equal or less to the last quarter revenue due to either other sales making up the lost revenue from patents, or coming up short. It could come higher if they sold more services, but due to COVID and knowing that many car manufacturers have lowered their production due to chip shortage, the next quarter will most likely be lower.

• VW.os: VW is making their own OS. VW.os is what they're calling it. They're currently using QNX, but that revenue could potentially stop. Personally I don't believe VW is capable of doing that. It's a marketing hype. Their companies are not capable of good collaboration or good implementation based on what I've read and researched (can't find article right now), but it's something to be concerned about.

• QNX success: While IVY could be using QNX, it does NOT depend on it. There is potential for OEMs to use IVY without QNX. I think this is a low risk, but still risk. 19 OEMs are already using QNX.

• Lack of Answers: I can't get much out of their earnings call. They don't delve into pricing for QNX, how they plan to grow it besides getting more car manufacturers and more cars post Corona. How they plan to do recurring revenue. A breakdown of each revenue segment would be helpful, but I don't see that either and there is hesitancy to delve into it.

Prediction: I think QNX can become a $1B revenue per year alone. $2B revenue per year as a company is not far fetched. Without a subscription/usage based model, it is difficult to see how growth can go beyond that. BB is good in 2-5 years, not this year. I can see their revenue growing to potentially $2B - $4B revenue per year. They did mention trying to figure out a subscription/usage based billing, if done then the revenue would be much higher. I think $18 is a fair price on the high end. It could grow further than that, but expectations would be HIGH.

Resources:

1. John Chen interview: https://youtu.be/_hQQlCWMrQA?t=313

2. John Chen interview: https://youtu.be/FNdbGhun2E8

3. J.P. Morgan IVY presentation: https://cache.webcasts.com/content/jpmo001/1416508/content/58ffe5daaa24e738fdef0d065b9b15077892ea63/pdf/secured/BlackBerry_-_Winter_2020-21_Investors_Deck.pdf

4. IVY: https://blackberry.qnx.com/en/aws

5. QNX: https://blackberry.qnx.com/content/dam/bbcomv4/qnx/software-solutions/embedded-software/qnx-neutrino-rtos/pdf/QNX-Neutrino-Product-Brief-v7.pdf

6. QNX Hypervisor: https://blackberry.qnx.com/content/dam/qnx/products/hypervisor/hypervisorGEM-ProductBrief.pdf

7. QNX Tools: https://blackberry.qnx.com/en/embedded-software/qnx-software-development-platform

8. Spark UEM: https://www.blackberry.com/content/dam/bbcomv4/blackberry-com/en/products/resource-center/resource-library/guides/guide-blackberry-spark-uem-suites.pdf

9. Spark UES: https://www.blackberry.com/content/dam/bbcomv4/blackberry-com/en/products/resource-center/resource-library/briefs/Solution_Brief_BlackBerry_Spark_UES_Suite_Final.pdf

10. AtHoc: https://www.blackberry.com/us/en/products/blackberry-athoc

11. AtHoc in healthcare: https://www.blackberry.com/us/en/products/blackberry-athoc/healthcare

12. SecuSUITE: https://www.blackberry.com/us/en/products/secusuite

13. Customer oriented solutions - continuous authentication: Start the video at 5:04: https://www.blackberry.com/us/en/events/security-summit/2020/video-details/work-anywhere

14. Easier link: https://vimeo.com/497426347

15. VW OS: https://electrek.co/2020/06/19/vw-to-develop-its-own-operating-system-but-dodges-question-about-id-3-software/

Position: 1,500.

Disclaimer: I don't know everything, I may be incorrect about some things. This is based on what I've researched and to the best of my ability. Do your own DD. Obligatory this is not an investment advice.

 

Edit: This is the only sub with a lot of discussion. I appreciate y'all.