BB - Earnings call transcript Q1 2020

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Operator

Good morning. And welcome to the BlackBerry Fiscal Year 2020 First Conference -- First Quarter Results Conference Call. My name is Lisa, and I will be your conference moderator for today’s call.

During the presentation, all participants will be in a listen-only mode.

We will be facilitating a brief question-and-answer session towards the end of the conference. Instructions] [Operator

Christopher this like recorded over to host today’s reminder, I replay to is of for now President would turn call conference a go for being purposes. our Finance. As Please Vice ahead. Lee, the presentation

Christopher Lee

Welcome and Lisa. fiscal BlackBerry John Financial and Chief conference Executive the quarter call today Officer, year on Chief With Officer, me to the first Steve are results you, Thank XXXX call. Executive Capelli. Chairman Chen;

John our will Steve read After cautionary update the forward-looking statements, a note and provide I will financial regarding business results. review then

We Q&A will then open the call for a session. brief

call This Investor numbers Information the on will public the and blackberry.com. at via available A replay is call-in to available section also in website. via blackberry.com webcast be general the

we statements will constitute and the statements pursuant to Canadian today making and Harbor made the provisions applicable forward-looking Safe be securities of of U.S. are Some laws.

should, expect, believe will and words such We as expressions. by using forward-looking model, intend, indicate will, statements similar

estimates made future company developments, perception relevant. as on Current are expected of and based its are factors that conditions other and historical and company statements by in as of experience assumptions believes Forward-looking trends. its light the the well

XX-F company’s is from included or risk in our by which actual in cause to report differ are MD&A. performance and discussed Form materially our that factors Many could forward-looking statements, factors annual company’s those form, information the implied or the expressed results the including in on the annual

law. statements except intention company’s revise forward-looking update undertakes required to statements. You by no or place should The company on not and has no reliance forward-looking undue the any as obligation

Steve summary in and our As annual results. is of and will non-GAAP reference numbers during their customary call, the quarterly John

earnings our numbers, For earlier GAAP press today. and the non-GAAP a and supplement reconciliation published release see please between

call John. to the now will turn I over

John Chen

increase a Thank growth revenue. fiscal BlackBerry software and year-over-year. driven company by year-over-year Total services a Good in revenue Total morning, is was grew XXXX. start Chris. revenue in everybody. XX% total to good off company XX% you,

services revenue BlackBerry and an To down on it addition year-over-year break services X% further, XX% software grew total and revenue year-over-year. grew and software in organic basis Cylance

report our is ahead These first in XXXX. revenue help Cylance pleased growth us of quarter integration that of profitability in and am in result of the I to activities fiscal schedule. BlackBerry

We with and operation strategic you executing share are upon and for goal fiscal the quarter. we that the share last XXXX -- we

Our us gives fiscal financial to execution confidence our reaffirm XXXX outlook.

let first Now provide fiscal me the for some highlights quarter.

my, voice apologize. bit losing I my little a I am Sorry

$XXX quarterly software a revenue So revenue total was total which Total services thanks, company million, new is was -- and $XXX record million. high.

Total software XX%. margin was resulting operating and company cash in was ending $X.XX. grew services at gross margin strong The Total year-over-year. a percentage company was $X came million. company income investment $XXX Total X%. and billing operating million. EPS The double-digit was Total

I will some businesses. our highlights cover of significant software Next, of our in each

quarter professional with start active by new the was number which across manufacturing, me led at broad Cylance, year-over-year. XX% revenue the as approximately $XX services subscription Let year-over-year in of came customer government. growth was industry driven grew million, new This sector, various well increase This customers. based as XX% by in in

in momentum an revenue, $XXX quarter business and is Annual of the XXXX. was XX% up the fiscal approximately which million recurring of year-over-year indicator first

continues which an XXX%. to is customer metrics, be rate, indicator dollar retention of greater net based expansion Another than retention

mentioned during which integration well is I schedule. earlier ahead process, the BlackBerry of Cylance executed tracking

of some points. are proof Here and highlights the

a the integration majority is and The have which and personnel integration second the the months. back in system used will the the quarter, finished for tools We by of being function of of completed that worldwide. be office couple fiscal end

working sales are together. teams the well Both and R&D

on is key Blackberry by seeing UEM. promising R&D very the track technology to Cylance our account integrate sales team the are within base. interactions team We into The

This all year year. released combination earlier Also integrated technologies on track out of a throughout to QNX the and Gauard the by our thereafter. be and spring namely that Cocoon, are Cylance will announced product BlackBerry came this Cylance be Persona next new with available products that fiscal

let Now Licensing earlier new entering our Revenue fiscal remain that year-over-year grew recurring we discuss arrangement briefly than XXXX me Licensing with IP focused business Licensing on some XX% We occurring business. revenue. generates into in expected. IP

to Total year-over-year. IoT revenue on the business. IoT X% Moving grew

Software company Technology reporting Solution today, As financial Services shared align you we of last combine on manage the is namely Bryan quarter, with the which Enterprise will Palma. executive Group and and BlackBerry our the the with to way

To year-over-year you slightly grew grew with -- up. revenue ESS and XX% the was revenue assist comparisons BTS though, grow

change the to are the ESS, significant completed. leadership we make now team which in sales During quarter,

me general all and our through customer the continue BTS. both for to growth for by in revenue for Let we services walk year-over-year royalty automotive revenue grew QNX highlights embedded BlackBerry BlackBerry and selected drive continue to BTS. be designs some licenses, markets. QNX as

and the wins. -- a quarter, the had wins were in XX cockpits were XX in we automotive which and among In design cluster, total the in XX, X-X were XX instrument general of XX four digital automotive of market. embedded -- wins were had we applications two digital infotainment Of of like the

be to growing quarter multiple instrument digital to QNX consolidator in automotive next-generation partners One OEMs. This includes telematics with -- automotive of LG well infotainment BlackBerry choice preferred growing a digital cockpits, our innovative LG innovate provides was of cluster, a design will the design systems, OEM. as Electronics, all as that a wins systems.

higher will BlackBerry. to to is new OEMs these to With per reach opportunity types -- a the will BlackBerry to and content partnership these our increase average thereby vehicle, us yielding bring bring partnership of Black -- per car what types -- revenue of

and very year to is this year is same shipping launch Looking digital certified -- which integrate are ahead -- Hypervisor, ones. November BTS November time, main a new expect available The at which in two which product to starting XXXX, launches. will have a of the a cockpit busy of XXXX. There exciting safety November start November invader

I integrates come our little a instrument cockpits well cockpit. platform digital infotainment, in highlight managed the of for as one all technology, hypervisor bit a digital real-time requirements digital like security would they and namely about safety -- cluster, will BlackBerry system. number as for as The to QNX the in and technology, BlackBerry one platform

enabled also system platform in Android Linux secure operating Our and manner. a

content yet to to vehicle, opportunity This Of support per continue course, the a have another leading we higher in CarPlay. car. average Auto, as BlackBerry Apple well Android as for more to revenue creates

over independent and embedded years, cars the Based on Strategy This has the statistic XXX strong cars application growth the non-infotainment BlackBerry up over last from been million several experienced we in reported million both Analytics, is infotainment now third-party. that XXX last we by an in have June. validated QNX

top Before name including XX in move units our the me have one let talk of customers, the we new onto the home U.S. I quarter, I not order. new retailers about business. customer Radar ESS, XX individual The specializing customer. customers briefly the improvement. we permission X-X, the to three In X,XXX added placed did apologize a

is gaining more Radar Our in the traction market. business

many with and both through increased seeing from coming reference channels, activity customers partners. existing are directly and the We

highlights. through ESS and make walk I’d me key let three to Now like

me have a water sorry. Let first, sip of

in increased customers year-over-year eco-securities, added SMBC as segment, this representing Germany majority such of of in Canada, government the our priorities industry. revenue as we of the in executing a at We year. First, regulated for we shared the as customers revenue in strategic generated group and beginning customer upon ESS healthy ESS. customer well This fiscal strong We UAE. agency the new are with remain and

status. Our the process is on This United because government States which of ready solutions our a met had UEM and security core based Government. FedRAMP demonstrated the milestones key mobility suite, achieved the cloud -- based requirements has is has

help now share the our FedRAMP U.S. the to anticipate being the beauty the fully are product federal on authorized we community. Also increase listing market our Government. highlighting our marketplace within to We solution of and

also seeing won a In the system the even secure AtHoc key was in are to go-to-market AtHoc, Secusmart like United of Nations. of with new within voice States and crisis that quarter number We outside United quarter our a Government, solution. Federal our celebrate communication a investment in returns we customer,

demand new seeing for Secusmart. also are We

now for sensitive is multinational historically business political countries. secure a do Our from in voice companies agency been that product capability, has which demand seeing government

and XX over across today. sectors underway have We government both non-government pilots

Second, we are in investing new products.

communication zero We at addresses original our will launch for trust. the the for mind concepts These will secure One our authentication security two continuous Conference IoT. August. of are and platform unveiled It be month customers. two in first it of -- a currently top that will Spark, of security be the BlackHat ahead solution month schedules. one are This

to on be This differentiated As using mobile our integrate noted This BlackBerry the to solution. threat detection management integration in Cylance earlier, UEM. a we add endpoint capabilities AI on are into market. endpoint very product will will track

tells and these prospective releases. and they Current us customer waiting products in are interested they are for very these

will even innovation to and allow revenue in Our the us growth. market competitive future more drive be

revenue investing is to for seasonally the in the growth. weighted pipeline changes towards noting throughout while fiscal segment, not segment the growth fiscal year, this promote are sorry, year. future fiscal or reviewing we anticipate sales of in category, operational and adding in and Third, category, quarterly is necessary we rep it channel the half sequential the second making organization, business ESS coverages, After XXXX

performance. to the I that, details turn call With Steve provide would like some financial to our about to

Steve Capelli

details. my on our financial table will Note; the be to fiscal Please terms supplemental release press the for comments quarter and for refer non-GAAP unless John. performance you, in the otherwise. specified Thank the non-GAAP GAAP in

and We shortly. break I delivered million revenue first GAAP down of quarter of company non-GAAP million. revenue $XXX total company total $XXX revenue will

XX%. First was quarter margin company gross total

of deferred million. million non-GAAP of stock and revenue $XX Our software $X includes costs excludes of not million gross $X but and compensation acquired recognized expense margin restructuring

by expenses were to $XXX BlackBerry sequentially inclusion a up of for fiscal primarily million full $XX Operating million, Cylance the of due quarter.

operating million in of adjustment a million million in commissions deferred the stock costs, related $X of amortization Our and and acquired, value in acquisition exclude software $XX debenture. million to expense, comp for expense integration $X convertible non-GAAP intangibles, benefit acquired the $XX on million expenses $XX fair

income was net was $X Non-GAAP $X the and EPS was quarter. non-GAAP in income million. operating $X.XX Non-GAAP million

$XX the of X%. an adjusted previously margin This to adjusted was EBITDA excluding million Our EBITDA this equates non-GAAP mentioned. quarter, adjustments

of was now access services now million, total down $X XX% commonly device or million, handset fees, year-over-year. provide given $XXX or zero, service in Both businesses. Total handset of continued wind $XX these were revenue $X million access our were known decline and quarter. and the fees revenue XX% from Service service revenue. breakdown revenue will to as Total expected access SAF. legacy representing comprised of down Other the million year-over-year. I down device is was revenue fees from of XXX% software revenue a

revenue services range services XX% assumptions was and be BlackBerry XX% software I recurring XX% current and will further our Recurring now Cylance remainder Based in including accounted for The business fiscal a within quarter. to provide the XX% business accounted our for accounted above XXXX. quarter. the Licensing business in the on revenue software the revenue BlackBerry XX%, of the of breakdown IoT XX%. for the we throughout to Cylance model of and

moving onto of which balance the million, $XXX fiscal $XX BlackBerry flow the sheet cash, bonuses February payment equivalents performance. from cash Now quarter. cash and and during funding Total XXXX, operations a combination million was decrease due our of to by XX, XXXX investments Cylance’s and

was net at million quarter. position the end Our of the cash $XXX

million. legal flow $X of proceedings Free the $XX and million. used costs considering in capital Cash integration acquisition operations expenditures and expenses $XX were impact before cash was was negative and million restructuring

concludes will to back call I financial provide John This the outlook. comments. turn our now my to

John Chen

outlook Steve. financial Thank the you, we session. provide before our will do I Q&A

fiscal between percentage revenue we financial the earlier, billings. for year-over-year. come our in company XX% Year-over-year reaffirm to driven said will increase by the I in ‘XX XX%, outlook total As for growth double-digit

will our in follows; revenue of X%, year-over-year it fee to service to about down and to total be million fiscal be revenue break in as BlackBerry million the model Licensing access growth in is between growth Cylance XX%, year-over-year year-over-year come range IoT according growth Revenue to decline will by is the XX% will XX%, $XX $XX between XX% year to XXXX. -- year of expected of

We total also fiscal company reaffirm profitability for XXXX.

Q&A. for Operator, proceed I that. with open call would please the Lisa Lisa. now

Operator

of Securities. you. from And Thank Chan Instructions] line comes first [Operator the from TD question our Daniel

Your line open. is

Daniel Chan

Good morning. hi. Well,

John Chen

Good morning.

Daniel Chan

or John, hadn’t surprises seven positive anticipated months integration negative either the Cylance that any early ago? you from

John Chen

putting to The We technology thing. progress a -- the positive plan good the side. positive thing are The AI integration team most very in there endpoints lot positive wonderful, differentiate of goes UEM number onto put extremely the works together, well, our capability The ourselves, putting well is technology made. -- together. that

and along fiscal a just to are earlier, said things up as nicely. that [inaudible] my to to moving expect in be be meaning as We done we there reasonably I year released that’s time. that very script, And done and this on product, a set so the within team record be

launched that of terms two on has because Cylance AI technology that automotive QNX. Lots next QNX come in of team That’s launching idea post to shortly is platform I will into The behind that. mentioned and Little that partly look pretty schedule onto under too. very for well have a exchange. going earlier that the the that the after product putting

side think, it’s the on I very that, technological So very, positive.

company. said of The sales, it ago, starting is first a BlackBerry slow, a I couple mobile quarters we are as

assets. and on mobility. and servers plan Cylance more runs product fixed a progress PC of our in routers all So is on

So all do way on to that routers. be lot And I our year sale the cover on and it’s align product we again from more revenue in talking and within the which the are that kicked a we when -- there a side. roadmap side will to important about server mobile synergy think then we is end-to-end that

Daniel Chan

also am price. might thoughts if stock I had any good. weighing the think on on you sounds you wondering That what be

CrowdStrike in think, read it? We through in some IPO come explain have overall Does and positive the for underperform the I that shares discussions may anything your seen the market, up you. has

John Chen

is seems should could stock this Hey. the -- for that think, end one concern question. good it too thanks by and could CrowdStrike Cylance, I IPO. is, attention the BlackBerry discussing a with much Cylance, paid and Good the and you and we is really market -- business -- the I eliminated in we their pay Their A, especially actually we our shareholders, -- B, question. concerns has integrate for BlackBerry overpaid asking obviously opportunity to the is price concern

completely undervalued think, I one, a this Number is assets.

think it pay If see revenue X.X it you X in growth, will will to up we you or slightly what be if you to do that will you the see -- from look bar under in probably that Cylance, times you for at that XX% X.X follow math if times will to range. the XX% times, coming

distant point XX times I And while know not future, time where in are but the one don’t in CrowdStrike they today, is trading too at revenue.

is great That’s So number one. I for think this BlackBerry. news

covering all is of one two spend reason in this little In The a time is which we months. system back covered the on the is the this of the integration quarter, more and why will bit integration. our this covered, by be script office next in end

the so the and We into and markets the on corning started Cylance bring also common the started on are calling synergy we joining we thing has that. between about talk and engineering and together customers that governments big the the banks BlackBerry

the Cylance Cylance products to SMB has or products get to channel. We BlackBerry a traditional try good BlackBerry channel.

I it wouldn’t concerned so at be well overly hand the I is about and integration So, will and it. all think help

Daniel Chan

much. very you Thank Great.

John Chen

Sure. Thanks.

Operator

comes Steven next line Research. Fox Our question of the Cross from from

Your line is open.

John Chen

Hey, morning. good

Steven Fox

morning, Good Hi. guys.

little John, on off, detail I more First was a wondering Cylance.

be growth, sales I example, am thought the than the others for business might had Can Cylance in quarter XXX% mentioned, some and models? little compare little full I color originally directionally first better you plus where compared provide retention that also and And we more follow-up? you net So a out to a that given on could bit then a why year how for go similar there can’t bit -- rates. curious

John Chen

Cylance It more. your customers, the they they product -- rate. that retention the the like -- to to buy they it install answer it’s they once speaking question, really for looks and to first easy like the So,

And rates so this retention up. retention is why the dollar, rate

knowledge from -- now Black those I two I there, CrowdStrike. from an would it doing we I are and that point of there see Black and a between, in will is are we of Carbon comparing base. as we understand And understanding view. doing again early understand two from what and really But than now comps numbers Carbon out looking of are I And number public this are the CrowdStrike and what better say we seems are that the well kind as like better, my

both at that kind the that’s could affirmative. look long I they And really decide, guys about questions how and you the answer those staying craziness to we numbers of it for is Now the the when you your talking is looking it’s them more. with to CrowdStrike not is that really of because sustain company, mine. and But customer at very buying good number I job, feel

good are those So things.

We typically if between could more focused we think XX%. we to bit and range so do will could and that the you on more report high about are conservative of XX% definitely little end better a us We better.

Steven Fox

just Okay. Great. in quarter expected had bit during where there drag impacted a difference was forward? little business reorganization, and force about a Was on the as sales of terms it Thanks. then or looking little cetera in it QX that And seems terms sales. it a how is et the like done of your of bit

John Chen

Yes. Yeah. Steve. Thanks. done. completed. Thanks, It’s It’s

made have changes. management We some

phase. for the is in think of more and in we I growth. business rate necessary in phase It’s the we growth a are are -- given growth phase is

talented marketing. So business time and enterprise the and enterprise -- Bryan for executives couple has very long a in who we a in was brought in bought few in is very he in focused sales and service been both he building on and of and

that they And who of internal our could have bigger promoters of grow. theater, then proven the to people moved some some have we run

as executing are and it’s there all that done anticipate. good major more news were so these changes So and right is so all I Bryan but now in no now we planned is came -- we the

Steven Fox

you much. Thank Great. so

John Chen

Sure.

Operator

Our question Mike Genuity. from Canaccord of comes the next from line Walkley

is open. Your line

John Chen

Hi, there.

Mike Walkley

Thank you. Great.

business services -- higher ramping in grow market, could have on about XX% the per ahead growth. up at the end end to of vehicle of think the projects what content terms with on dollar that can of Just the to of expected your some the royalty new you piece in the products new us with you Can portion QNX of XX% growth you you. imagine two platforms talk to pro I help Thank and do those in automobiles? it business, that also about coming

John Chen

between the are really professional for and because and get services, long period services. growth of the are even is the all sticky of a like don’t Because we professional rather long chunk Yeah. sticky royalty benefit. problem big gestation sticky, so is Actually, one sudden long there is revenue so a and one a

we Now with some might about a three quarters. fact and yet. But see [ph] bit see just But uptick the services a It we in speculation. that comes have usually LG was uptake depends customer. in seat ProServe it a professional win and in my win not little when design that’s the with coming own segment, development all confirmed you

the of like customers X, should a for they resources. So our Tier some lot already of actually example, they have engineering

of to what with the do to them. So the wanted don’t We lot from support seem they with and were they get familiar technology. know a they technology

come than seem and lot later. then, we to their we could more over set, royalty of OEM technological are it’s skill more then have up definitely, a -- course, will we because the auto that, if OEMs ramping But

see really compared of those a that buckets, tell major ago I only growth. quarter to revenue all one any three in uptick of year this the you past any So, don’t in could three

to I to we last current the have the cycle have the our now. be that the that the a on coming are the new I higher measurably base ARPU on digital is got the in is have car But because to wins royalty whole a fact it five done and still years. the -- into three with infotainment product ARPU, -- own clusters, like per of the regarding lot more years -- So, cockpit lot from we

will -- ARPU. is so a gradual this sea gradual uptick change ARPU. our our be And of of It ARPU of change and sudden our not a

our good feel we So about business.

You are XX%. quarter high expect right on high they This be to particular on a end it the a came we end. in

Mike Walkley

Okay. Thanks.

of Do you full question, think year? kind the just kind how strong the down a a the to business, thinking are follow-up year in year. strong you. the that X% your flattish for Thank year maybe of about to to expect Licensing the rest year the on just like start of Just to close cadence trying year of just last mid-XXs guidance, seasonal relative that about we the a think so you with the about

Steve Capelli

might -- -- close Yeah. you that half. pretty slightly than similar be in as QX, I I’d so answer greater be like to number to will And expect it. than the the I half second the a believe the QX from will have I that number QX. and am combined that But The one. that down stronger first the or QX number first half.

Mike Walkley

Great. Thank you.

Steve Capelli

we that you already the too. And guided we estimates that make have will

John Chen

the make go to very of to [ph] yeah, flowing is see Steve you minus true. business, year-over-year But, X%. part that’s estimate when close But this they

Mike Walkley

Thank Great. you.

John Chen

Thanks. Sure.

Operator

Our next Steep line from from question Scotia of Capital. the Paul comes

open. Your is line

John Chen

Paul. Hi,

Paul Steep

call total before about cars, today. little in generally base wins. Thanks. installed I Good non-infotainment sort that a terms you where vehicle to you hints could one clarification. AGM and have in QNX around bit, net shift I million ramp have the uptick design into talk and given was would what base of growth the out quick put starting How just morning. announcement Great. about guess, got $XX of of you we Maybe in, little Thanks. yesterday’s us the a talk that’s the it John, then

John Chen

Yeah.

seeing. are we yes, So,

and think second design a wins last of a backup that, in few just Asia. the lot see I to the starting in years, let’s I So them

at the market. breakdown, of on am Asian the million detail the an seeing when uptick And so I $XXX look I

part in count manufacturer Up we somewhere of might source. -- the Asia is the manufacturer there being only represent now Asia driven be other world and in now about XX%,

you the and market tell auto that healthy is of very little Europe continued big just to U.S. a over and obviously Asia about in And it’s sector a bit be part that growing. So

these So uptick basis, ARPU higher a of design the continue revenue we recent it’s so now towards than three to are to years and a of five dollar bit last also Europe. wins, are over wins we infotainment, because and years that design bias -- little Asia the see on

Paul Steep

Okay. just helpful. your or on Great. about some sales is know or leadership in we business, that less centered That’s changed clear, just And guess sometimes more changed wrongly the rightly other talked them still going through, isn’t and then ESS you the realignment, to that I or usually more assuming that people this be that just that going am And around this of UEM be are change AtHoc bring have businesses Secusmart been touching executing? out. question then, those around at reps year all rest uptick the are in seeing I the new the the is to Thanks. with out do confidence so?

John Chen

perform ready That’s Yeah. not Is UEM making for And and Secusmart, this and AtHoc, We for Spark? are AtHoc that actually to Yeah. us. continue and good yes, issue is particularly an getting well question. change.

What they adding that over again, more source make they reach get -- to over are sure new that wrong, we not Spark, with need are to they is the we business on continue focused much industry broader over to back UEM to me but I need and are we we to revenue, do of customers we and for so they customers, do and a it, other don’t going same team channel. have back. going vertical the ready much mean, and our newer get to regulated the the love not

management way, in to we new point. intention but the wholesale mostly change comes change. the not in bring thinking reps, the change our have By will are our about addition, reps. management people new reps. not changing don’t The it’s any That’s We are management in,

Christopher Lee

question. Next

John Chen

Yeah.

Next please. question

Operator

line Our Faucette next from from James question Morgan comes the of Stanley.

open. is line Your

John Chen

Hi.

James Faucette

lot Great. Hi. Thanks morning. Good for… a

John Chen

morning. Good

James Faucette

my …taking questions.

John Chen

Absolutely.

James Faucette

of Cylance. a to wanted follow-up ask on couple questions just I

deceleration rates growth doing that that was you the your what the anticipating year for of business bit First, a from are would of before. the you rest incremental maybe little expect imply

you that deal a bottom the a get some of pretty allow value valued. you assets more Cylance you feel being operationally will are What are the the if of especially that rates And think where focused on to growth out? are think sense assign to are things got to like then market they acquisition, those better other pay? of Thanks want than will to Just broadly, inside good that able you on compared do what the lot. Cylance you key a way to clearly, you the a BlackBerry

John Chen

interesting. That’s Yeah.

James, a turn situation question, swing. First bit you have negative little of positive always question -- a way a to a positive a

So I don’t anticipate…

James Faucette

asking the to -- just you are the where think am what growth do I rates going bottom out…

John Chen

Blackberry gentleman for team and a good really a of BlackBerry the long set anticipate very he I help to base. has don’t runs RSA with a the sales time plans team deterioration. Cylance the qualified -- They of are with in expand The that highly the doing well. of over very and

joint most thing I really, I done. the is mean, important get the product

both have a teams of joint more then done back. to things the sale just the get you in product lot If

and take know would so believe for I XX%. integrated product -- year year I So modest don’t I get us about I because year being this a and think the to it with am that XX% AI, for this to UEM I

And made have I remember and used our model. the this key the guidance was word is I that

to beat some so I you I some going know if so bet will is and one bet will and beat -- me miss that and which probably I and will miss, want will you which there I am the that money means one to don’t about I as And market on, momentum good be what differentiation you money the on beating itself. colleagues well guess. judging it’s I know pretty thinks, out and I the that my there, in but feel and quite Cylance would from know number. very the I my mean robust on That

the literally far integration are in wanted to business. started make like SME that continue to is separate I channel are that why desktop and concern on also is, by have because over with much kept and and synergy, expansion their too. want laptop’s me equation OEMs, of and X,XXX And report and I to channel I They as Cylance mostly partners and continue working they Cylance some operational an business. as -- and they the like there So the as so on directly this focused wanted OEMs the as OEMs to I I consumer side the inroads

show that. also this see then the today separate said, -- will the hope good will you It the industry we all that as stuff. doing. retention the adopted improve the like gives and and and rate we the metrics, standards is business I visibility of business metric number shareholders So well I how I and to a ARR number

And maybe that BlackBerry that and business this make lot continue business to going sure Cylance of the they especially is and part technology go traditional try know was BlackBerry, go-to-market to growth. although that there business although people a of just their also after and between products, in synergy to are

need highlight that. that through shareholders that our of like probably valuation. visibility I help from somebody get hope I So I to yourself

James Faucette

John. Thanks very much

John Chen

Yeah.

Operator

RBC from comes line question from next Paul Our of Capital Treiber Markets. the

Your line is open.

John Chen

Hey, Paul.

Paul Treiber

Good much. so morning. Thanks Hi.

-- couple think a quarter, you I did of them was license those in Just Could close expect in regards term ESS, last to that to of this delayed. deals quarters? were there you coming large quarter any closed

John Chen

will close. majority of them think I

Paul Treiber

Okay. Thank you.

do to the very been is around estimate revenue. in question way on look for design really you The been is Have side. is any there the it? converting have wins backlog then you Is for timeframe? tracking? successful and that But is, seen design and business on automotive you any the you second at timeframe that how’s you win then that can can this change where question And

John Chen

-- I Yeah. QNX at like, of question. look our I management people, backlog. some would Good our always mean, the

And so unfortunately be because the to gestation lot. a like We the of of good. It’s QNX business quite the part the that’s doesn’t always change would shorter. backlog. really it And period predictable

have developer in early to usually lot, about a of kicked -- got and it typically. the wins design you and about here there ProServe -- talk takes wins And then the thousand those the reason We once it And once doesn’t in. we wins and get year revenue anywhere couple change design and from design you the got and have dollars the but design takes seats. you from figures definitely maybe hundred get six a by we way some once six a the are talk months

new am, a of And and intimately the make couple get car OEMs example, him go. I basis. and been for working CEO the to form I the for to a we in ready I the on especially Land Rover talking to kind the of Jaguar couple very on Jaguar, of have And on that sure speak regular well years. last

two. We to in that’s or about have come year a out probably products

see that themselves that So cycle. design of period you roughly three-year could is a about

at for change production like production they family, and years, a happened that ship group does, they family family years. once Daimler a they the three they then And And start do XX ship usually then the two that least is don’t when continue years. if

the see very high. of and enjoying and you quite a -- current that of tail the course enjoyed tail then margins is our lot is royalty could long So it’s

Paul Treiber

when you leave the do you do rate -- think Do we that think on S-curve, of I that, then we the S-curve? think mean, where just you the look business. business, are you And do in it BTS are you think with at or the growth what that

John Chen

to we but will Already, a trend to increase. growth continue step we a not We probably will up. function, expect and see see

year remember if point. you year-over-year. We a are tremendously We And had in grew XX% the year. mid-teens at we good this last

be should expect this We you double-digit expect it and above growth. -- but or year XX% to

Paul Treiber

you. Thank Okay.

John Chen

that -- mean. I Percentage percentage

Operator

CIBC. Our line from Coupland today from the final comes Todd of question

is open. Your line

John Chen

Hi.

Todd Coupland

morning, John. Good

John Chen

morning. Good

Todd Coupland

about this or ask wondering more the not but the do And how CrowdStrike, we you certainly, thinking wonder and I think how and to that? on in year that this XX% XX% it, at in it, am market, less. should look between question, less am about an I you obvious you growth be just investors a differences of and rate about a lot. plus or then lot Thanks on more about Cylance piling are I do when relative there’s difference there and

John Chen

a question. great it’s Well,

than will not parity better CrowdStrike. we So get course, be until we, or of satisfied

I by okay. new am does, this industry, to CrowdStrike the Now way

take So just of grain with it salt. a

or are you this When ready people in I even the experienced for get IPO, more area.

are amount enormous You to They out get amount enormous money. cash money. this they of amount party. spending know losing coming are of spending They of are that enormous an to

in there sustainability of so we the am way, our they the very that wish interested better and And I their could and okay. it do means growth is mean, growth rate could then own what market in. I sustain is I

very But I little are bit Those numbers a very, am doubtful. high.

been in Now we the have business.

retention are rates great. Our

from buying the I have XXX% and As said, buying people revenue. over us we of more, between

XXX%, if So -- sorry.

they customers, our and that we sense new more loyal get and we could and more you are using have are customers for new they us So because net quarter. are XX% customers buying more and will the to

try get us obviously will could CrowdStrike rate to both to we that than So enjoy. do a and XX% market and better

in our that and advantage. whether should know tell are, however, announce But, have retention of out point bit think terms think, game. can’t other that it to I a rate. they don’t we and as retention We I doing take do want they I longer little take don’t they don’t so a than of competitor a rate don’t -- I wouldn’t better same the you one, I anyway, I growth

Todd Coupland

color. for the Thanks Great.

John Chen

Yeah. Sure.

Okay.

Operator

remark. I would to the call to back now like turn for Chen John closing

John Chen

Very well, you. Lisa. Thank

that to lot just the a a is call it a not good is off out pleased at in Cylance and We positive said we overwhelming of being again, talk differentiate asset, on help this QNX. pretty here call, to earlier, because I our UEM technology XXXX. about to we that partners, technology BlackBerry As and in start our doing it’s a a and itself is response have well, are the growing strategic business and and but existing very customer able and start here --

it lot We for good a -- help this out launch entire year may over think products results, up scheduled next across affect in And products fully would XX set but company we coming it to have us have although this year. not year’s We growth. I year. the this of terms of

to to one our have two operation investment growth. sustain up and that is step We priorities main future

already -- of the on are year. fiscal us next working are some We

and the more that So put him. Bryan’s -- on a year. in on pressure call only fiscal little current Bryan bit works probably the

will we products, for really And a I your yield much you integrating that. to to integration, you Cylance, are a on will pleased so which to will am time a thank people, today. start longer-term with day. focus talk very I good shareholder very guys Have we value great much off hope I and on soon.

Operator

This your today’s for participation. concludes call. Thank you

now may You disconnect.

BlackBerry Limited (BB) 26 Jun 192020 Q1 Earnings call transcript