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BlackBerry’s Licensing and Enterprise Software Verticals

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Licensing revenue rose nearly 100% in fiscal Q1 2019

BlackBerry’s (BB) licensing revenue almost doubled, from $32 million in fiscal Q1 2018 to $63 million in fiscal Q1 2019. Strong growth was driven by recurring revenue. BlackBerry’s Chinese (FXI) licensing partner TCL launched the BlackBerry KEY2 and said that the market reception was positive.

BlackBerry’s partner in India, Optiemus Infracom, is expected to launch several smartphones later this year for the Indian (INDA) market. BlackBerry’s consumer electronic partner Punkt announced a new mobile phone with integrated BlackBerry cybersecurity technology.

The company also signed a technology and brand licensing deal with Bullitt Group, a manufacturer of connected devices. BlackBerry has estimated the IP (intellectual property) licensing vertical to generate more than $100 million in annual revenue.

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Enterprise software

BlackBerry’s enterprise software revenue fell 14% YoY (year-over-year) in fiscal Q1 2019. The company didn’t provide revenue guidance in its fiscal Q4 2018 earnings call since it needed to gauge the impact of the accounting standard ASC 606. That accounting standard requires it to recognize software and services revenue on a ratable basis since it delivers a service component to customers through network operation centers.

We know that BlackBerry has been looking to move toward a recurring software-based subscription model and wants to align the accounting standard to it. That change in revenue recognition has led BlackBerry to modify its business practice where it doesn’t offer perpetual licenses to customers with the exception of government customers.

Perpetual licenses accounted for 20%–30% of enterprise software in fiscal 2018.

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