Partnership Monetization. FY16 Software Outlook Key for BlackBerry (BBRY) into Q1 Report - Cowen

Cowen and Company maintains its Market Perform rating and $11 price target on BlackBerry (Nasdaq: BBRY) ahead of the company's FQ116 report, which is expected out on Tuesday, June 23rd.

Analyst Bryan Prohn is looking for BlackBerry to post Q1 revenue of $671 million and adjusted loss of $0.07 per share, which is relatively flat with consensus views calling for revenue of $686 million and loss of $0.04 per share, respectively.

Prohn commented, The open question is whether the company can deliver Q/Q overall revenue growth and profitability in FQ1 on the back of renewed U.S. operator support for its newest smartphones and improving software pipeline conversions. We model Hardware up ~14% Q/Q (to $313 million) on slightly lower Q/Q unit shipments (1.2 million) but a ~29% Q/Q ASP increase (to $272). We model Software revenue up ~27% Q/Q (to $85 million or ~13% of revenue) but continue to expect a more material ramp coincident with the end of the 6mo EZ Pass conversion period next month. We model Service revenue of $263 million, down an in-line ~15% Q/Q on a ~4 million decline in the installed base.

Prohn also highlighted key issues for BlackBerry:

1. Outlook for F2016 overall revenue stabilization and return to growth;
2. Updated F2016 Software revenue, cash flow and profitability guidance;
3. Monetization of key partnerships (e.g., Samsung) and Android ecosystem more generally (e.g., Android for Work);
4. Latest pipeline conversion metrics;
5. Commentary on new Hardware traction, channel inventory and F2016 roadmap;
6. Latest BBM MAU metrics and thoughts on how to best monetize the platform;
7. Potential for further cost savings in Hardware given recent layoffs;
8. Expected F2016 revenue contribution from recent acquisitions; and
9. Latest thoughts on inorganic growth opportunities

For an analyst ratings summary and ratings history on BlackBerry click here. For more ratings news on BlackBerry click here.

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