BlackBerry and Amazon Web Services to collaborate on intelligent vehicle data platform

BlackBerry Ltd (BB) on Tuesday announced that it has inked a multi-year deal with Amazon Web Services (AWS). The two companies will mutually design and market BlackBerry’s intelligent vehicle data platform, called IVY, as a part of the agreement.

Shares of BlackBerry skyrocketed more than 40 percent on Tuesday morning following the news, marking the highest surge in more than one year.

IVY is a cloud-based software platform that will enable automakers to read sensor data of the vehicles in a secure way. Subsequently, they will be able to develop personalized in-vehicle services after analyzing that data.

The two companies said in a joint statement that the platform will reduce the time needed to develop, deploy, and modify in-vehicle apps and connected services across several brands and models. It will also help automakers to easily interact with a bigger pool of developers to speed up the rollout of new services.

BlackBerry and AWS are looking to market IVY as a standard platform in the automobile market, in the same way as Google and Apple did with their operating systems in the mobile phone industry. The two companies did not disclose the names of the companies that will deploy the IVY platform in their vehicles.

Speaking on the latest collaboration, Chief Executive Officer at BlackBerry, John Chen said in a statement that “data and connectivity are opening new avenues for innovation in the automotive industry, and BlackBerry and AWS share a common vision to provide automakers and developers with better insights so that they can deliver new services to consumers.”

Besides the latest partnership with BlackBerry, AWS is also collaborating with Verizon to roll out 5G Edge services in different cities across the U.S.

Takeaways for BlackBerry from the deal

BlackBerry has evolved over the years from a famous mobile phone brand to an enterprise software and services company. The transformation has helped the Canadian technology specialist to increase its margins and prepare itself to capitalize on the new opportunities in the tech space.

The latest partnership with AWS will further strengthen its position in the connected automobile industry. BlackBerry’s existing automotive operating system, called QNX, is already deployed in more than 175 million vehicles.

BlackBerry’s financial performance

BlackBerry last announced its quarterly financial results in September. The company reported revenue of $259 million for the second quarter ended August 31, up 6 percent from $244 million in the comparable period of 2019. On the other hand, analysts were expecting BlackBerry to report revenue of $237.03 million.

The company’s security software products and patent licensing business made a significant contribution to its overall revenue in the second quarter. On an adjusted basis, it reported earnings of 11 cents per share, significantly higher than the consensus forecast of 2 cents per share.

Revenue from the QNX car software segment also improved in the quarter. The performance of the segment was previously affected by weakness in the U.S. auto market due to the Covid-19 pandemic. Comparatively, BlackBerry’s core security software Spark also performed well in the quarter, as demand improved after an increasing number of businesses and individuals started working from home. Moreover, the company generated $108 million from its patent licensing segment in the quarter.

BlackBerry did not offer any financial outlook for fiscal 2021, citing uncertainties due to the pandemic. However, it reaffirmed its revenue forecast of around $950 million for the year, as compared to analysts’ average estimate of $954.9 million.

Analysts coverage

Currently, 10 analysts are maintaining price target for BlackBerry . The average price target for the stock is $5.50 per share, with a high price outlook of $20 per share, and a low outlook of $4.50 per share. When it comes to recommendations, most analysts are maintaining a “Hold” rating for the stock.

BlackBerry Stock performance

BlackBerry shares hit a new 52-week high of $9.69 on Tuesday after announcing auto deal with AWS. More than 320 million shares of BlackBerry changed hands during the day, well above the average daily volume of 4.43 million shares, making it one of the top hot stocks of the day. Overall, BlackBerry’s share price has increased about 9 percent on a year to date basis, including today’s surge.