I believe there is a lot of potential in Blackberry (BB). I'm not a WSBer, but all the investing subs have blocked my posts because BB was caught up in the meme stocks, so WSB is the only place left. This post focuses on a new product called Blackberry Ivy, launched in partnership with Amazon AWS.
If you haven’t been following BB, they no longer make phones and have transitioned to software. Their two main plays are cybersecurity and IoT, with a specific focus on QNX, a real-time operating system currently installed in 215M+ vehicles on the road. While cybersecurity has been disappointing, QNX has been steady and shows promise. QNX is used by 24 of the top 25 electric vehicle manufacturers (only missing Tesla) and medical/industrial equipment. You will see articles saying QNX is being ditched for Android Automotive, but this is just for infotainment. QNX is still in these cars for safety-critical systems and runs below Android Automotive. To use a crude analogy, Android Automotive is like Chrome and QNX is Windows. However, this post is on a new product, called Blackberry Ivy, which has no known competitor and is first-to-market.
What is Blackberry Ivy?
Ivy is an auto software product that processes and standardizes sensor data both in the car and in the cloud. It allows for applications do be built more efficiently in cars and, in my opinion, will transform the auto apps market just like Apple app store or Android/Google Play did to phone apps.
To give just one example of what Ivy could do, imagine being a third-party app developer who wants to build an app for the auto market that recognizes when a vehicle occupant has fallen asleep, so the vehicle environment can be adjusted for a more enjoyable ride (e.g. The app would turn off air conditioning near that person, turn off volume from closest speaker, etc.). The way to determine if an occupant has fallen asleep is by using data from an inward-facing camera. However, the auto manufacturer would never grant access to raw camera data to a third-party app developer. This is where Ivy comes in. Ivy standardizes the outputs, so you do not need the raw data. The data from the camera is sent to Ivy, where it is processed to standard outputs (e.g. Driver = awake, Front-Passenger = awake, Rear-Right-Passenger = asleep, etc.). The app uses these standardized outputs to create some action in the vehicle without ever seeing the actual video feed.
An app created with Ivy can then be used with any auto manufacturer using Ivy software, creating a much larger app market. A developer no longer has to make separate apps for Ford and BMW vehicles systems, he can just build his app with Ivy and that will work on any car using Ivy. (Think how cell phones used to each create their own apps, until Android allowed them to share a common marketplace). This is especially important for niche apps that already struggle to find a market.
The previous example is just a single example. There are numerous use-cases that can be described for vehicle payment systems, insurance, car maintenance, etc. with many of these already in the works. There is also tremendous potential for a consumer-focused or novelty app marketplace. For example, Spotify could make a feature in their app that identifies the occupants and their music preferences, so the vehicle only plays songs that the most number of occupants would enjoy. That way someone who loves country music will not have to suffer through a rap playlist (e.g. In-ward facing camera sends video data to Ivy, Ivy outputs: Occupant ID: 30432493, Occupant ID: 34824492 are sent to the Spotify app, which uses an algorithm to cross-reference these IDs with playlists and finds songs both occupants would enjoy. Spotify never has to see the raw camera data, yet it gives them a great feature for their app. The car manufacturer benefits because they can create a better driving experience without having to spend a lot of money developing niche apps). This, of course, assumes some level of permission has been given by the occupants to be identified.
What is Blackberry Ivy worth in revenue?
BB's SAM estimate of $800M for Ivy in 2024 suggests Ivy could be worth up to $36.36/car/year (based on ~20M QNX vehicles and ~2M Tesla vehicles being produced in 2024). I encourage you to do your own calculation. Let's say Ivy is worth $10/car/year (with BB getting a 50% cut for $5/car/year). Multiply $5/car/year by how many cars you think may adopt Ivy and be on the road for any given year (remember, BB QNX is currently installed into ~20M new cars each year, with the EV market set to grow).
If all 215M+ cars that currently run on QNX had Ivy, that would produce $1B in revenue each year. I believe Ivy will eventually bring in $1B/year for BB, the question is will it take 5 year or 10 years to get there. Keep in mind, BB’s total revenue for FY 2022 (essentially calendar year 2021) was $718M, so this would be a significant jump in revenue.
BB's SAM disclosure for Ivy can be found here @ 24:17 (Note: FY 2025 for BB is essentially calendar year 2024): https://wsw.com/webcast/oppenheimer23/bb/2273700
What would this do to the stock price?
BB would now be valued more like a high growth stock. BB currently has a P/S ratio of 3.1. High growth stocks like Crowdstrike (11.6), Cloudflare (16.4), Datadog (15.0), and ZScaler (12.7) all have much higher P/S ratios. If BB were to be valued similar to these companies (e.g. P/S ratio of 15) that would put the stock price at $15.92/share just for 2024. This target stock price does not take into account any future revenue from Ivy, only BB being valued more like a growth stock based on current revenue.
Will Blackberry Ivy actually be adopted by auto manufacturers?
There have been a number of recent indicators suggesting Ivy will be adopted by auto manufacturers. Ivy is a 50/50 partnership with Amazon, but it is only in the last couple of months that Amazon AWS engineers have become more vocal about Ivy. Sure, Amazon is involved in many ventures, but this seems different. Ivy was featured a number of times at Amazon's re:Invent 2022 conference just a few weeks ago. Amazon's general manager of automotive name-dropped Blackberry Ivy during a presentation and that presentation had two other speakers: a senior vice president from Stellantis, who spoke about how Stellantis (which owns Dodge/Fiat/Chrysler/Jeep/Opel/Peugeot/Ram/Vauxhall) is transitioning to a software-defined vehicle, and Amazon's general manager of automotive technology, who discussed BB's QNX operating system and how Amazon was bringing it to the cloud. Here is the presentation (Ivy name-drop after 13:00): https://www.youtube.com/watch?v=9Tse4B-fnbI
The inclusion of Stellantis in a presentation discussing BB Ivy and BB QNX is notable. When the first live demo of Ivy was presented at Bosch ConnectedWorld 2022 in November, the vehicle used in the demo was a Peugeot, a brand owned by Stellantis (Bosch, a leading supplier for automotive, is also partnering with Ivy). At the earnings call last week, BB announced they will be demoing Ivy at CES 2023 in a Jeep Cherokee, another brand owned by Stellantis.
Ivy live demo at Bosch ConnectedWorld in November BB announced they hope to have the first design win for Ivy by CES on Jan 5-8 and I expect Stellantis will be the first manufacturer to sign-on to Ivy (If it's not announced at CES, the next bet would be the earnings call in March). Stellantis' CEO will also deliver a keynote at CES.
Re:Invent also featured another presentation on Blackberry Ivy being run by representatives from Amazon and Bosch. That presentation was shared by two BMW engineers discussing machine learning. One of Ivy's selling points is to better allow for machine learning models to be applied to the data generated by the car sensors. BMW also recently signed deals with Amazon AWS and already uses BB QNX. Here is the presentation:https://www.youtube.com/watch?v=SI2RwYUN92E
It's an interesting coincidence that Stellantis and BMW are in presentations that discuss/mention BB Ivy, as well as doing public demos in Stellantis vehicles.
The AWS/Bosch presentation on Ivy had a very interesting slide showing companies that are already partnering with Ivy and showing some potential use-cases for Ivy:
Notice TomTom is mentioned for location-based services. TomTom recently announced a collaboration with Amazon, Meta (Facebook), and Microsoft to create a new open map data system known as Overture Maps Foundation to counter Google Maps' dominance. Does TomTom plan to send their own version of a Google Street View car around the world? No. It appears that TomTom plans to leverage the data already being collected by software-defined vehicles on the road. How can TomTom use data from different auto manufacturers, each with their own systems? Ivy standardizes it. TomTom can then use the improved maps to service consumers. Auto manufacturers bring in additional revenue selling the data collected from the vehicles and consumers get greatly improved mapping services. Everyone wins. And it is Ivy that facilitates this. (Credit to u/snoutandtruffle for bringing TomTom to my attention. I recommend reading every one of his posts about Ivy as he is the best at spotting new info, IMHO).
Blackberry Ivy is also agnostic, meaning manufacturers don't have to use Amazon AWS cloud or BB QNX in order to use Ivy. This gives them complete control over the data.
Final Thoughts:
I'm not here to pump and dump a stock. I'm also not claiming BB will become a $1T company. But, I believe BB will be successful and will become many times more valuable than it is now. Time will tell. Keep an eye on BB. Set reminders for Jan 9 and Mar 31 and see if any auto manufacturers have signed-on to Ivy. If they have (especially if Stellantis is named), come back to this post with a new set of eyes.
I am long BB with a price average below $10 CAD. I have held for 4 or 5 years (pre-meme). A merry Christmas to you and your families