BlackBerry's Software Numbers Add Up, But Not How You Might've Thought

• BlackBerry Ltd BBRY has seen an almost 5 percent increase in its share price over the past month.
• RBC Capital’s Mark Sue has maintained a Sector Perform rating and price target of $9 on the company.
• Sue expects the company’s IP licensing revenue to drive software revenues, while the FY16 software revenue target appears achievable, following the Good Technology acquisition.

According to the RBC Capital report, the integration of Good Technology “suggests organic MDM acceleration may be a few quarters out with incremental opex near-term.”

The company is slated to report its earnings results on September 25. Sue expects BlackBerry to report a sharp year-on-year decline in SAF revenues. Although the software and other contributions are growing, they are still too small to offset this decline. Sue also expects the company to report loss per share of $0.11, representing opex of $319 million.

On the other hand, Sue believes that the FY16 software revenue target would be achievable, although the mix is unlikely to be what was initially expected. Apart from the $40 million in quarterly GAAP revenues expected after the closure of the Good Technology deal, BlackBerry’s other acquisitions are expected to drive revenue growth in the latter half of FY16.

“BlackBerry is rolling up software assets with the Good acquisition. Good brings a platform that helps BlackBerry address some of the work needed on iOS containerization,” Sue stated.

In addition, there have been growing expectations that the company would launch an Android based device, “building on BlackBerry’s security pedigree, which may help BlackBerry remain more relevant in the enterprise and may represent the first step towards a software-only model,” the report added.