Some PerspectiveI believe we now have excellent visibility on the turnaround and understand well all elements that need to be executed in order to truly enter the growth phase of this story.
Some random thoughts for your consideration:
1. The quarterly Software and Services numbers were obviously a disappointment. Not just because of the Prof Services value ($0M), but also because when you strip away this number, the current Q1 2018 to Q1 2017 like-to-like comps are not strong. However, John and Steve that revenue in the Enterpise (UEM) space actually grew at 12% (stripping out deferred numbers and other accounting noise). A bit of good news mixed in with the general disappointment.
2. Revenue has not yet bottomed. That will certainly come next quarter when hardware goes from $37M (current) to near $0M (next). I am estimating an overall revenue figure of $200-$210M (notwithstanding an IP win). So we can expect more noise on revenue compression for another 6 months.
3. A big name win for Radar: Fedex Critical Services (Fedex Critical Inventory Logistics). A high value division within Fedex and another ‘proof point’ for Radar. Much bullishness and optimism from management on Radar in general. New product offering coming. Feels like the real deal and this product alone could propel significant multiple expansion.
4. UEM, Radar and IP ramping in second half of year will be the main growth drivers. Note: not traditional QNX automotive (ADAS and infotainment).
5. QNX ADAS wins today manifest themselves in two years time (paraphrasing).
6. The bulk of Prof. Serv. revenue is realized by preparing/tweaking the Blackberry software suite for hardware providers that do not have the expertise in-house. This need varies based on partner capability but there will be more to come at some stage this year.
7. CPaaS being trialed by a large number of firms. Sounds promising although management did not appear as excited about this opportunity as they did say Radar or the Auto Dashboard.
8. Blackberry has good, differentiated products in many growth markets. Product offering and IP are strengths and not weaknesses. Lead generation and selling are their biggest pain point. They may make a channel acquisition to address this problem or simply scale sales independently (internally). They have the luxury of choice amongst these options because of their current cash position.
9. Auto security dashboard is another offering management has high hopes for – as do I. If they get traction with this product we are going for a serious ride up.
10. Share buy-back. Yawn.
A mixed bag, but the upside here is signficant and I like the risk-reward profile of this company more than ever.