Good Isn’t all that Great, while Iron shows its Rust

Enterprise

BlackBerry on Good and Mobile Iron

For businesses deciding on their mobile management strategy, it’s vital that they weigh the security technology as well as all of the other risks, including the health of their potential suppliers. At BlackBerry, we’ve taken a few lumps over the latter, especially from our rivals in the Enterprise Mobility Management space, who have the transparent motive of trying to steal away the tens of thousands of companies that rely on BlackBerry Enterprise Server (BES).

Naturally, our critics never acknowledge the good things that are happening at BlackBerry. Things like the fact we’ve gained more than 800,000 licenses to BES since March in part because of its low Total Cost of Ownership; that we’ve just launched a cost-competitive new phone to a positive reception; that we’re enhancing our BlackBerry 10 OS and licensing access to industry giants such as AirWatch, IBM, SAP and Citrix. We’re even teasing consumers with a tasty new device or two.

Nor do they acknowledge that as of March we had $2.7 billion in cash. And while we’re still losing money, we’re quickly slashing our burn rate in order to achieve our goal of becoming cash-flow positive by the end of fiscal 2015. So BlackBerry not only is not disappearing anytime soon, we’re firmly on a turnaround path.

It only seems fair that we turn the spotlight around onto some of our critics. Take Good Technology, which filed for an IPO on Wednesday, revealing its financial performance for the first time. Good’s numbers didn’t live up to its name, reported Fortune magazine’s venture markets expert, Dan Primack:

There really is no way to sugarcoat the top-line numbers. For 2013 it’s a $118 million net loss on around $160 million in revenue, compared to a $90 million net loss on $116 million in revenue for the year-earlier period. If you go back even one year further, you’ll find that losses have tripled while revenue has doubled.

Over at CITEWorld, Matt Rosoff pointed out that $23 million of Good’s revenue comes not from selling EMM products, but from IP licensing. And that Good spent $112 million on sales and marketing in 2013. As a result, Good burned through $54 million in cash in 2013, leaving a stash of just $42 million at the end of last year. At its current $13 million+/quarter burn rate, Good could be as good as gone by the end of September if it doesn’t execute its IPO before that.

Given the contrast between Good’s financial performance and its healthier startup peers as analyzed by the Wall Street Journal earlier this week, investors will judge Good harshly if it tries to go IPO, writes Fortune’s Primack:

Maybe this sort of thing would have been glossed over 18 months ago, but today’s IPO market is taking a pretty dim view of losses growing at a clip in excess of 30% (despite Scott Kupor’s compelling argument that SaaS companies are being valued on the wrong metrics). Rival MobileIron has much better top-line trends, and already is said to be delaying an offering that it filed for just last month.

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Speaking of MobileIron, it’s true that while its numbers are better than Good’s (read the company’s S-1 here), that’s all relative. MobileIron had revenue of $105.6 million in 2013, but its net loss was still $32.5 million. While its 2013 revenue was more than double from the prior year, it included $21.1 million from perpetual license deals that were signed and delivered in prior years. In other words, if you’re trying to judge MobileIron’s momentum, you might consider $84.5 million a truer 2013 revenue figure.

Like Good, MobileIron is spending freely to try and win business from us. Its sales and marketing expenses tripled between 2011 and 2013, to $68.3 million last year. And while MobileIron had $73.5 million in cash at the end of last year, enough to survive for another 2 years from today, according to the WSJ, that assumes its revenue and expense growth remain on their current trajectories.

MobileIron may need all of that reserve if it continues to delay its IPO, as Bloomberg reported. Even profitable tech startups are having a difficult time going public, notes Jeremy C. Owens of the San Jose Mercury News:

While biotechnology companies enjoyed a run of success in the first quarter of 2014, few pure-tech companies from Silicon Valley have made debuts this year. Coupons.com, A10 Networks and Aerohive Networks managed to complete their offerings in March, but a strong tech downturn on Wall Street that has most strongly affected companies that went public in the past year has put a chill on many companies’ IPO plans, including high-profile filers such as Box…
“Whenever it looks like it’s possible to lose money is when it becomes very easy for sentiment to swing,” Santa Clara University professor Robert Hendershott noted of the IPO market recently.

With Good’s and MobileIron’s proposed (albeit uncertain) IPOs, CIOs are finally able to judge the financial risk of other EMM vendors for the first time. Now, they have the information to compare BlackBerry and its competitors in true apples-to-apples fashion. When you take all of that into account, suddenly, I don’t think we look so risky after all.

About Eric Lai

I have written about technology and mobility for Computerworld, ZDNet, Forbes and others. I continue to track and opine about the latest news and trends in enterprise mobility for BlackBerry. Read the Inside for BlackBerry blog at blogs.blackberry.com. Or follow me on Twitter (ericylai)

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