BlackBerry is seeing its business gradually stabilize as growth in the Software business offsets declines in the Smartphone and Service Access Fee businesses. In this note, we take a look at some of the trends that could drive the company's revenues ...and more »
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BlackBerry is seeing its business gradually stabilize as growth in the Software business offsets declines in the Smartphone and Service Access Fee businesses. In this note, we take a look at some of the trends that could drive the company’s revenues and EPS over the next three years. 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.
Software Segment To Drive Growth
Blackberry’s Software segment is likely to be the biggest driver of its earnings going forward. The bread-and-butter Enterprise Mobility Management business should continue to see growth in orders from government agencies and customers in regulated industries, and the shift towards a subscription-based model should ensure revenue stability. BlackBerry has also been betting on emerging areas such as autonomous vehicles and the Internet of Things, leveraging its QNX software platform, which could prove to be a long-term growth driver for the company (related:Why BlackBerry’s Autonomous Driving Deal With Baidu Is Significant). Blackberry’s smartphone operations will play a diminishing role in its revenue mix going forward following its decision to switch to a licensing model. Service Access Fee revenues will also likely trend towards zero, as customers abandon their legacy BlackBerry devices.
We have a $9 price estimate for BlackBerry which is below the current market price following a substantial rally in the company’s stock over the past year.
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