BlackBerry (TSX:BB) is unlikely to deliver the 20% upside the four analysts are predicting. At the very least, shareholders will have to wait for a few more painful months before the stock returns to the $9 - $10 range.
BlackBerry found itself defending a MarketWatch piece that accused the company on the inappropriate use of non-standard metrics. Still, the astute investor will have no issues deciphering the non-GAAP figures. In Q1 FY19, it had $28 million in debentures, $4 million in each of software deferred revenue and commission ($8 million total), stock compensation of $18 million, and acquired intangibles amortization of $22 million. GAAP loss was $60 million or $0.11 EPS loss, compared to the $0.11 EPS loss in the quarter.
As expected, device sales accounted for $0 revenue as revenue growth pivots to software. Revenue grew 23% Y/Y led by the 35% Y/Y software and services revenue. BlackBerry Cylance revenue grew 31%. Analysts on the conference call questioned the company discount with valuations of Cylance weight down. By comparison, its competitors enjoy a huge price/sales multiple.
Until the BlackBerry Cylance integration with UEM is complete, the stock will trade poorly. Rumors of Microsoft (NASDAQ:MSFT) buying out BlackBerry could give a lift because it embraces BlackBerry’s complete UEM solution. For now, suffering shareholders need to wait for Cylance growth to help the company deliver on GAAP profitability.
