Post by
nellybb on Jun 27, 2024 1:45pm
The ship is beginning to turn
The ship is beginning to turn:
- IoT revenue has proven to be resilient against multiple headwinds. Blackberry has demonstrated that they're able to expand their product mix (e.g. QNX Sound) to capture more revenue per vehicle.
- Cyber revenue has stabilized. The wild swings, often downwards, that have haunted the business over the years have subsided.
- Product quality has improved. QNX SDP 8 is now arguably the best embedded software platform on the market. The cyber suite has enjoyed a number of improvements (UX, platform support, among others) that have collectively increased customer retention to near record levels.
- Costs are down to sustainable levels. finally in line with industry-average R&D spending as percentage of revenue.
- Executive confidence is here. John G and team have delivered on all of their major commitments for the past couple of quarters. A stark contrast to years prior.
Liftoff analysis and why October might be a critical inflection point:
- Share price: Even if revenue remains flat in the mid term, the improvements to cost and near-inevitability of positive cash flow would warrant a higher stock price when comparing financial metrics to Blackberry's peers.
- We've stabilized revenue. But for how long are we going to be flat? Does the existing combination of product mix and market demand warrant a possibility of 10%+ sustained y/y growth for the coming years? We'd all like to see much more than 10% growth, but BB must show that they're capable of not just consolidation and optimization of existing business, but also generation of incremental revenue.
- I expect Blackberry to show a growth plan in October, aligned with when they will break out business performance below the revenue line. This would be a reasonable time to do so, as they would have (1) further cemented trust in the leadership team through potentially 4 quarters of hitting their milestones. (2) come within striking distance of profitability, and (3) understood realistic growth drivers in their core businesses for FY2026-2027.
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