BB - Earnings call transcript Q3 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon and welcome to the BlackBerry Third Quarter Fiscal Year 2022 Results Conference Call. My name is Charlie 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. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. turn over to BlackBerry Tim like Relations. Investor now the to call Foote, I’d sir. ahead, go Please

Tim Foote

the Thank Steve afternoon me forward-looking note Charlie. Executive Steve XXXX a today, you, Rai. Good provide Executive statements, Officer, earnings will quarter BlackBerry’s are update financial read Chief business conference John fiscal John third After Chen, results. will call. Financial and I regarding With Chair on review and call and the and Chief welcome Officer, to cautionary our

We general for will This replay section will webcast a brief call is Information open the website. A then call call-in also via Q&A be available public and Investor blackberry.com. session. to numbers available the the on in at blackberry.com by the

we’ll and such be will, forward-looking Canadian safe expression. statements intend, to the securities constitute today statements believe, are words and as forward-looking provisions indicate pursuant by the of U.S. statements harbor making using laws. expect, of applicable and model, made Some should, similar We’ll

Forward-looking the the pandemic. historical actual annual statements. COVID-XX cause Company Company of in in factors implied well the statements its by factors, other made relevant. by filings are or and perception of its estimates These risk the differ the performance on the and including as factors experience and to current future are Company’s developments, from light could conditions factors Company’s discussed as forward-looking that those results expected MD&A, materially expressed as or assumptions include the Many believes trends, and based

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

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

please earnings to turn with the available between blackberry.com the a release and call SEDAR, today, earlier over is John. EDGAR, the GAAP And that, see press I’ll on published which non-GAAP numbers, and For reconciliation our websites.

John Chen

afternoon, sequential investment everybody. report and Good much call pleased came ongoing top expectations. Tim. on grow solid than better I’m in you, pleased joining this to and business and cyber the these line, both IoT billings at today. growth Thanks our despite Thank delivered that for I’m also that the revenue we EPS expected. unit, to quarter our in

quarter driven my Revenue was in Let quarter growth, has quarterly me a strength the year-over-year representing ARR achieved development $XX million. although XX% for year This from record was professional wins start IoT and activities. positive services. now and business $XX noting was margin ARR last that with by review associated the impacted IoT unit. increased which a increased. and heavily pandemic. to as We is consecutive well was revenue Gross XX% as This license very QNX, the million, third by seats continued design

In fact, team demand heads our right additional is we’re strong into services professional by so now QNX. expanding that hiring

designs these in design of obviously, of In the move a business these term generate addition health benefit, indicator production future as near-term royalty leading positive into and QNX Once will overall. strong wins the quarters. revenue the to serves revenue longer completed,

of terms we royalty to compared saw QX. In a modest this increase production-based quarter,

are strength additional evidence auto. versus QX design QX the improvement -- The of versus our around experiencing the as production industry to the including the position in a well the headwind lessening, supply continued and provide gradually on fiscal issues volumes to this will meaningful we quarter. in QX. chain year leadership XXXX, impact auto of into expect we remain vehicle end further is an now in in see QNX While wins through I we colors

BMW we had entered position BMW a aspects a We the In models because autonomous defensible with are BMW entire you BMW. of the business. to Autonomous is which across know and system develop X with and the records our safety of of strong in major certainly car, well reliability, this security. application QNX. for X+ on the granted in most QNX expertise invest drive agreement all as drive as attributes new as example for of makes Group. multiyear is and track selected not software us in critical quarter, safety, to taking win continue the Level QNX deep and clearest a

team for be auto providing our In Other support addition development licensing major higher our the of new include middleware, one ASP technology, to design acoustic services in products. our BMW to a will timeline. we professional wins aggressive a

the in embedded We and wins as general of of had number leading next surgical cockpit sorry, a In applications, -- robotic XX design XX new medical OEM embedded a wins and GEM, digital auto of a had infectious and we the X. gateways ADAS, general included number as Tier total with market, assist, the also disease market. arm. ADAS, design QX, driver a diagnostic XX advanced generation platform, as wins well such was

well any word be also including product CES wins we’ll development. the simulator at all in to share significant able leading details auto on luck with in industrial an applications also January. aerospace engine aviation, We design you the as had with of as wins A further company. With

chipset seamlessly cockpit three autonomous announced digital During Google, build collaboration of automotive. BlackBerry’s and with allows leaders integrate the a the to BlackBerry, Android Hypervisor in that quarter, the a Qualcomm to

running single the infotainment provides QNX OEM With this results auto European already technology as with a design requirements. Android a even Previously, improve -- this first This consolidating this a our both digital RTOS, with integrations. safety The the customers, the for towards space, of seeing system. to our to will building in that wins position, Hypervisor major securing will the cockpit strong the for and designs quarter. their develop win digital application for to developer delivering takes collaboration hundreds time additional in automotive strong continues are even system hours with well be We costs as saving market overall the an operating alongside more potential this require given a custom on particularly quality is higher them QNX extra chip of to care This of move and critical consolidating safety digital consolidation, time product. cockpits the -- industry will cockpits.

to into the supply slight Turning IoT and expected anticipate design QX outlook a continue seen And have the in The activities to we headwinds. easing strength chain we for business. is QX.

returning further IoT but business in for result, rate. revenue our should now, range keep revenue investors about is be QX $XX We million, growth industry IVY October production feel will provide a the early pre-pandemic right previously the as the in the a auto brief basis of As have outlook to headwinds. update partners version run demonstration $XX IVY. mind of in good we for of and to form very to in January. million I the This at targeted. ecosystem will has on the number released our CES sequential and version now product of to been small access released a We

co-development quarter, AWS complementary This the AWS product FleetWise. partner, called our announced for IoT launch a IVY, of

insights provider, could AWS a and take micro an any service allows to and cloud While they the IVY can side be cloud Cloud, to major IVY with is uploaded IoT is efficiently intelligently AWS where work support [ph] FleetWise off that called applications.

new is IVY. the and base. announced growing potential that installed the on Bosch, for largest Another Hypervisor, IVY and integration significant showing X upselling large the QNX platform auto This software supplier, world’s for QNX design Tier to their will development is platform support RTOS built future and IVY

the on now POC, right main pleased securing we focus future. we near that with hopeful are is progress some for in IVY announce the Our made. and we’re we Overall, proof-of-concept, can

cyber me move business. of Let now to side the

pipeline growth quarter and ARR This gross based quarter. was margin $XXX XX%. was particularly million, We sequential net second our saw service products, retention growth we and was million, consecutive continuous the unified offering, for Revenue delivered security $XXX managed revenue endpoint Guard. was dollar billings for in XX%.

excited very our other head-to-head in performs competitor our performed When how we this next-gen quarter. We’re a about factor off take well. POC, technology products against

Other of based the a European like and against include as leading wins McAfee last As XX another comparative XX Symantec. building and older was these SentinelOne, Microsoft, and Among agency. signature win top global automaker, marketing players illustrated you competitive wins global on top wins told quarter. firm a by the international group, OEM other banking about services financial an we notable CrowdStrike

the success too. to with from interest seeing larger addition companies, this And is be as opportunity a an In large. business to market lot of focus sized us we’re and for continue medium area of will small

having in the automated and customer companies often our sized that our products small advantage. service performing the competitive resonate POC competitors’ have security Our with and Protect managed large involves of and against offerings are infrastructure. don’t we medium success one a testing really vigorous illustrating Guard

Let of those me key highlight few a ones.

to testing on aims focus our that EDR threats the demonstrating we This after customer is stop first contrasts threats approach through to the remediate the fact. The that with prevention, execution.

The and intelligence, for identify is learned the and characteristics. AI in files to central our trillions other the feature, AI an most is second It new market, XX over is technology. engine even relatively from mature of billion literally whereas artificial our of Cylance optional having the is analysis

four offerings space security in we Caesar This could competitor. and XX expensive. cloud the cloud third Apache as major mobile knows you library, at of threats the The Nobody I becoming level severity. largest one and works is better maximum protect are classified and of for Blackberry. surfaces. connection, rapidly our have in sure online, is Java to protected that, known advantage used security the protection. which as vulnerabilities our connection is LogXj I’m extensively industry. both, agree BlackBerry from major offline on hope relates this about differentiate LogXShell, don’t the we EPP mobile. with all which very the by rely the Endpoints XXxX heard than has Fourth, incidence attributes course you These be

update impacted rapidly that Hypervisor, confirm help core can This Optics, impact, those this try these understand our and product vulnerabilities. with products able our means quickly our to track This you are threats prevent our namely of software BlackBerry UEM, uses perspective. Guard release suite and companies and none the EPP provide me negatively patches to a evolving that evolve. struggling still We malware our particularly can very software Protect, and from obviously could that by of Furthermore, are using and customers and a managed of mitigation And an situation. source we’re products, many open who as execute ransomware QNX, product products, which actors categorize cyber these vulnerabilities. identify RTOS bad none service the Protect, to of we unlike portfolio, is create Let content. library

significant that on given partnerships expand Cyber adding brief the telemetry a managed XDR allows partnership In extended In response and both number with key a XDR. of update new complexity for the with partnership as we XDR managing next-gen threats detection threat then and contacts Cyber. to a on and XDR partnerships. is our Managed across released or quarter, Guard of and by as Now integration well partnership of and leading network. SIEM the have to is XM the visibility we And were of to Okta improve announced service. greatly provider. Stellar a offering, our excited quarters, Exabeam, announce strong products This Mimecast us opportunity, recent data network our hundreds market

new ranked are BlackBerry independent leading leading A of a the XXXX. -- name of a Aviation government, logo for protection an government Labs, as key few. were as as the business IRS the key a of world’s AtHoc, customer. leading customer Dutch insurance. we government, endpoint the wins this In words FAA be during pleased just spacing firm, of Across Central who our The with Navy, best Scottish U.S. Command, banking new a the government, happened agencies, Department few cybersecurity governments our business the government, vertical U.S. to quarter, independent wins. which and that U.S. -- the SE including and closed research Finally, some well Authority, competitors, units, Education, was the we Federal the on of the quarter Homeland and Department Security, became to new SecuVOICE solution

to Moving for outlook the business. the cyber

revenue QX million We the expect range of for $XXX million. $XXX be continued and in sequential building growth in to to

quarter, deals large said I previously QX it be in As certain important. think last closing I will government indicated,

licensing. to on Moving

portfolio. we This soon. know, Both negotiations the to of taking me, down and very a regarding definitive As reach are a much items had literally line. you are about hoped. Negotiations parties few conclusion, now. the patent our portion sale are important expect of finished, very And I and noncore our is trust close been share agreement we than get this the the working we IP have time last in to process frustration to to we longer hard

update In was on gross reach XX%. in We revenue monetization will January, to and a activity This suspend an margin million and we definitive licensing revenue for January. this progress be therefore, sale zero. in expectation $XX agreement Should beats provide shareholders the to was QX the quarter, close expect will quarter.

the However, continue we’ll expect the to for provide I’ll if to then revenue around million now Steve financials. additional be hand quarter. mark to not, the colors on over $XX to

Steve Rai

We of third you, revenue million. unless the My non-GAAP otherwise to table delivered release Please comments the noted. quarter $XXX on total details. for will in press financial our in and terms third performance company supplemental Thank quarter the for John. non-GAAP refer GAAP the be

XX%. margin Third quarter company total gross was

gross non-GAAP of compensation quarter were expenses million. expense operating stock third million. margin $X $XXX excludes our Our And

expenses operating a non-GAAP of value on $XX amortization acquired in exclude the expense intangibles, in gain million $XXX compensation Our stock fair million convertible $Xmillion debentures. and

operating legacy Given was ongoing gains core and during was a balance up -- the quarter. net our received gain, which balance third a $XX funds venture on share Non-GAAP had, and a of of $X of the per this line approximately the million, the We two driving quarter cash the funds Related passive of gain quarter quarter. non-GAAP investment that a loss in investment underlying make earnings were investment million recorded distribution interest distribution investments loss our sold million the million. majority towards to $XX cyber we -- underlying non-GAAP breakeven as IoT non-operating realized long-term these $XX growth we in our businesses, result third and top represent the was these sheet. in

Cybersecurity I now was was and was revenue negative a excluding will this provide million. $XX non-GAAP of EBITDA in quarter. adjustments revenue adjusted the mentioned. our $XXX revenue million, Our breakdown million quarter, $X previously the IoT

revenue to the The the to the the comprising and product our software revenue professional potential to of recurring was remained in given remained approximately XX%. services limitations Software million, other sale. due of monetization at the $XX Licensing range XX% revenue XX% with total, portion IP of portfolio product balance. activities

Now November were balance quarter. XXXX, and remaining moving $XXX equivalents flow Total and consistent investments cash to million as performance. at the our sheet cash, XX, cash during

million. Again, $X our $XX used third cash John. net it our quarter I’ll negative million, and software Our turn investment businesses, That position and free remained in at were expenditures was $XXX million, to flow given cash concludes my core $XX back cash comments, million. was by capital now operations

John Chen

Thanks, Steve.

quarter. let move for the to I Before Q&A, me points summarize key the the

made into how chain are supply see for Macro QX. and continue. are with right achieving heading the We we product. will We looks IVY, business, activities picture, including like pleased is of saw releasing design improvement in early design-related vehicle version impacting executing progress organization it strength quarter headwinds revenue, our the good access a production, an structure now. still QNX our for but with record We new it

revenue On billings we growth cyber head-to-head also great the our competitors. is LogXShell against and more example capabilities. again sequential opportunity side, ongoing huge in of market including our the the cyber seek showcase key incident wins The and a

call, source rapidly progress we the beating solid progress, effectively. While delivered earnings for quarter. from BlackBerry impact we and and delivered Overall, a products the both are identify their others open revenue expectations to are solid on struggling responding --

Q&A. So process of Charlie, please start the

Operator

will ahead. Our TD first Daniel problem, with sir. from from No Instructions] Please today Securities. be question Sure. go Chan [Operator

Daniel Chan

million from color It declined it the to any on like million looks $XXX cybersecurity $XXX you Can quarter-on-quarter. ARR? provide

any strength? Just may if which churn any are showing and have and been products maybe affected there’s products wondering outside

John Chen

product. Yes, came we have more with in revenue a than positive surprise Secusmart we higher a from expected

So, that that you saw. has principally the drove numbers

Daniel Chan

you. And provided quarter, Okay. Thank are next that guidance that takes then, and for guidance? you in the puts what the

John Chen

Yes.

two side, into pieces, just think I about me the versus break good In all it. feeling Cyber. pretty we’re let So, it touchwood, IoT IoT

a back As to to we our earlier, the I said pipeline from as little developer to deploy -- Design bit to are professional QX. I customers to said, seat. we And as backlog of expect That well uptick for the help -- have we’re going good. technology get the royalty, wins good brings services level. as a pre-pandemic professional

So, looks that okay. don’t kind guidance of it, jinx between to about but composed I the million. for $XX feel math the to okay $XX I million want that.

deals in a that close fact these that quite on On a because later big revenue relies little government the expect from of the of the the to number cyber we side it a are perspective from quarter. side,

contribution will obviously, of is, look it in but quarter, the So, revenue as fine. the will as big the buildings be not beginning the

Operator

question Global line Your go Please comes Chowdhry Research. ahead. Equities with Trip next from the of

Trip Chowdhry

Thank would Hello. platform. related quarter. is Few I good Very the execution you. on things be interested to IVY

access Any terms have the early any for of I partners, two had like in reaction? of You applications maybe a specific you And points download share almost would to data program question. months. now follow-up then,

John Chen

Okay.

of So of and partners very application release a yes, course, OEMs handful it manufacturer. The positive. car feedback the to we, was

As a talk or use we’re our those basis to and stream digitize booth. as little that of and going our we’re that to also at bit And demonstration CES sessions. that said going I our -- about I’ll at talk later. a -- earlier,

The a see single -- So, I them every have positive of we response, the can’t we a battery but systems, we application, lot you the lots have as promise management applications. announced few booth, activities have will hope going wallet. of at our know, one to on. do, a I you car,

We have other rideshare applications.

to it quite make I will them our will. them of one single every number of whether booth, a know don’t expect I but So,

Trip Chowdhry

And…

John Chen

the cockpit, by And you’ll -- Trip. way a sorry also see

collaborate with AWS. that or also will we see You Amazon, a cockpit

Trip Chowdhry

generation over-the-air the does at new we the was or whether Then of now wondering, the be provide platform, out the players, I automobile updates on also, players QNX, box? your if just and Beautiful. old EV of over-the-air look getting seem guard there of updates. also bandwagon IVY it’s to

John Chen

an on has option OTA. QNX Yes.

And is physical the advantage AWS the of IVY course, new is between link Of we’re I important do earlier the car The to simple got more taking cloud. the allow link the a talked thing called that Amazon FleetWise, surface. And and micro new release has OTA. about logical about the of thing, that it. the we edge a -- have

do the car from both yes, vice the -- to and ways the So, both it’s cloud obviously we versa.

data So, do already have capabilities existed. from and we OTA cold,

Operator

Your next question comes from ahead. Please the line Canaccord. with Mike Walkley of go

Unidentified Analyst

is Daniel actually This for on Mike. questions. taking for Thanks our

as I sales guess with quarter, trending Giamatteo of reps should of how this quota-carrying yes, investments about last your in business? move of cybersecurity how just And unit in John sustained into see joining area investments to your the wanted we we maybe productivity your So ‘XX? your the some think are

John Chen

Good that the of McAfee question. John billion part of business as CRO John a is He exciting us, before. President has joined cybersecurity $X enormous that of and the in market. experience ran

so, a in brings lot customers with of and he particularly relationship And and very he’s relevant, partners.

So, cyber that’s salespeople And to how the in very world. good. knows make he successful

we the don’t carrier, I to direct carrier. how more quota could one call point that today tell I you but have know So, data we what or quote productivity, XX% describe

the of did We XX% ago way, seeing math year, the have so. -- that. carrier start direct beginning more the we of productivity will the the a quota than the or We sorry, year. beginning And than year that

next them, a in recently the see of those quarters. coming As hired will are new because lot them we few we

the in let’s I year. results be two quarter cycle, think about say, If quarters, three, it a to call the three maybe quarter third should either second next or you some seeing sales

Unidentified Analyst

a follow-up. I as just And guess,

sequential noted growth and further expect should in this within you ARR? billings you growth showing So, you pipeline cybersecurity QX. up When start in we expect saw also to

John Chen

year, hope. Next I

looking I ARR So, year. about feel for that growth pretty good good we’re mathematically next a

Operator

from next Markets. Capital with the line of Paul [Operator Treiber RBC Instructions] Thank you. comes Please Your ahead. go question

Paul Treiber

work you’re gap like upbeat services. between it revenue, IoT, win-related the when What’s Within duration seats typical like professional quite and I then the in developer dollar design see? a seems like goes and on sort mean, services you professional revenue professional is production? there the it like every royalty also, for into that ultimate to And services may and seats of of ratio developer design

John Chen

no wants OEM really there’s No, ratio. -- some -- schedules. It’s aggressive no a direct there’s really very development

provide under they parallel. higher will because in to to they use they us program. of -- it the -- And expertise. they seats number So, want more of And, engineers on they developer case, course, put that then to ask will a -- some have professional we in service buy typically

whether whether more all vehicle it a in or little do asked former to the bit people would if you’re I time auto in want of than line seeing competition heating that you more the you Some the up is are as -- we’re folks you’re tell both, vehicle electric sequentially. know. the because the our or that not design the you an industry, combination autonomous design aggressive,

new is of years. to usually, of the production. that important XX old in years come thumb get model the conception them, from time So, takes to to to the it five model a And last market out seven new to the unlike kind out rule

partly cycle players. Their the of a like of and sales of Chinese I manufacturing the cycle think, much players are the world are lot those development very lot by shorter and because collapsed Tesla cycle. a

you constant really royalty. production seats developer isn’t a -- a and relationship bigger think more there. therefore, factor have I long, you or there don’t a real So, buy there’s

we start service. I then as down, you -- said, a seeing add Usually, as see typically, developer well and you production. professional three seat a about developer win Now licenses a as years

royalty more bit that seeing to royalty three growing, be once numbers a in lasts seen the than a numbers. And from will have the I say of starts typical are little shouldn’t I cycle a to usually start five are excess Plans growing. years. off But aggressive years that. -- bit seven Nowadays, little plans, win

Paul Treiber

helpful. That’s Okay. Thank you.

we more How this planning about question, significantly, follow-up here? and from I sales sales up quarter. under marketing, you’re it past impression think flat marketing it’s spending should one that ramp the to and was been Just

John Chen

marketing and QNX definitely don’t are we side. Sales Yes. a We John of already space of in do IoT the name the in known cyber up. much vertical, because known on Giamatteo auto tell ramp and reasonably I will some or marketing entity. could GEM and you especially as

need On as you need focused much. it. to know, quite is bit, we very John do cyber, to don’t as do so. a on And we So, G

you So, up see fact. and a building bit, that would -- going going in up quite

Operator

this to John have And time. further we for Executive the questions Chen, turn no I would closing remarks. at like Chair call of to back BlackBerry, over CEO and

John Chen

Thank you, Charlie.

Okay. from participating mentioned, CES business focus and as Thank you, in Las IVY illustrating addresses we use create on our sensor key how No in highlight everybody. how benefit of hardware including doubt, January. IoT the And for technology, we’re be computing to it data, edge at a key will software-defined IVY both insight sensor. in be computing. trend demonstration Vegas edge and the will the The

much. the call wishing I’d joining on and wrap safe shortly. thank everyone and you up you holidays followed an hybrid very happy in-person Xth. X technology, investors will all a be wishing be the Thursday, us and releasing of Eriksson, by a on at to of demonstration live hosting Q&A the and -- like a.m. of and Pacific successful session all you new stream year. more BlackBerry details here, about We’ll a IoT Group, and by the President Mattias you investor Thank We this of IVY the January for with

Operator

Thank today’s conference call. for participation. concludes you this your And

You disconnect. may now

BlackBerry Limited (BB) 22 Dec 212022 Q3 Earnings call transcript