B2B Payments

BlackBerry’s Moment Of Truth

The once-mighty BlackBerry is now rarely in the hands of consumers, having been chased out by the new smartphone leaders like Apple. But in the years since its downfall began, BlackBerry has been building up its presence at the workplace.

Its new strategy involves taking advantage of the Bring Your Own Device movement, encouraging businesses to themselves encourage their employees to use BlackBerry phones. In addition to highlighting its security strength, the firm has pivoted its investment into developing new enterprise solutions, including the BES12 Cloud Software-as-a-Service tool launched in April.

Another part of its B2B strategy is to make its solutions, including BES12 Cloud, compatible on rival devices and operating systems. BlackBerry went so far as to partner with Samsung to allow its SaaS to work on Samsung Knox security devices.

While the company’s report for the quarter ending Feb. 28 revealed a 20 percent global expansion of its businesses thanks to new enterprise cloud solutions, BlackBerry’s latest figures have failed to impress investors. The latest data may call into question the firm’s ability to regain its footing, even in the B2B world.

Software Gains, Smartphone Losses

It may come as no surprise to industry experts that BlackBerry posted lackluster figures for its smartphone business. According to reports, the company said smartphone sales dropped by more than 30 percent in the first quarter of FY2016 – down to $263 million from $379 million in the same period the year prior.

Luckily, the news wasn’t all bad. BlackBerry posted $137 million in software and technology-licensing revenue, a 150 percent spike compared to Q1 FY2015, reports said.

BlackBerry CEO John Chen described the growth as “rather solid” during the company’s earnings call on Tuesday (June 23), noting an additional 2,600 enterprise customers gained since the quarter before. Among those clients includes several major players in health care and financial services, including CarePartners, Grand River Hospital, Blackstone, and the Royal Bank of Scotland.

The latter, Chen said, is an especially critical enterprise customer for the company. RBS is reportedly switching to BlackBerry’s software from rival Mobile Iron and expanding the BES enterprise mobility management SaaS throughout the corporation and across platforms, including for all employees with BlackBerry BYOD phones that run on the iOS, Android and BlackBerry platforms.

That cross-platform use of BlackBerry’s SaaS tools are a major source of growth for the company, the executive added. According to Chen, about 45 percent of the firm’s new business customers plan to implement its software for cross-platform purposes.

Is It Enough?

Industry analysts, however, highlight that BlackBerry’s improving numbers include the company’s new technology licensing business. Since that launch, BlackBerry has inked deals with Cisco Systems, Intel and others. Falling shares following the earnings call, USA Today reports said, were partially due to the fact that BlackBerry did not specify how much of its $137 million revenue figure came from cloud services, and how much from the licensing business.

Ahead of the Tuesday earnings call, analysts had their eyes and ears fixed on the performance of BlackBerry’s software services, poised to become the company’s redemption. “All eyes will be on the software revenue line, which needs to show an upward trend to support management’s ambitious turnaround goals,” said Bank of Montreal analyst Tim Long in recent remarks to investors before the earnings report. “Whether the numbers hit or not, we hope management provides enough metrics to get some transparency on the underlying trends in the software-oriented recovery.”

BlackBerry’s decision not to lay out exactly how much of its revenue increase was attributed to SaaS efforts may not appease shareholders in search of that transparency.

Still, following the earnings call, the general outlook for the company remained neutral among investors and analysts. While BlackBerry shares fell 3 percent following the report, the market has not lost faith that enterprise services will save BlackBerry.

BGC Financial technology analyst Colin Gillis, for example, proposed a “muted” earnings forecast for BlackBerry, yet still maintained a Buy rating for the firm, according to USA Today reports. “For investors, this is a turnaround story. Turnarounds take time,” he said.

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