BB.TO - Earnings call 1 2023 | BlackBerry Limited

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

Operator

Good afternoon and welcome to the BlackBerry First Quarter Fiscal Year 2023 Results Conference Call. My name is Brent, and I will be your conference moderator for today's call. [Operator Instructions].

As a reminder, this conference is being recorded for replay purposes. I would now like to turn today's call over to Tim Foote, Vice President of BlackBerry Investor Relations. ahead. go Please

Tim Foote

John Good regarding Fiscal Brent. review the welcome Blackberry's a read and Executive to today Steve update, Financial Thank After business statements, Rai. Earnings afternoon, financial John Conference the Quarter I Officer, Chief and XXXX Executive cautionary on will and Call. First results. Chief are Officer, note you, our Chair and Chen; forward-looking With Steve call provide me will

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

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

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

on place You reliance undue the company's should statements. forward-looking not

law. as no obligation any or company as today, the undertakes no are of required has intention revise only statements and update made by of forward-looking them, except Any to and

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

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

John Chen

the my Board joining apologize. thanks X afternoon, little we and a Tim. speaking for is Good because and call. days, meeting, After first throat I AGM Thanks, for everybody, sketchy. must our had

apologize that. I for So

momentum and representing Anyway, this quarter, Software was delivering continue we 'XX Services $XXX Total and solid on execute X% well, revenue revenue year-over-year built year-over-year. growth. million, to it a from fiscal the

start million, today for XX%. third the Despite which Gross Let me first of with environment quarterly X% professional development revenue business in at a $XX margin year-over-year unit. from XX% review ARR quarter recorded we my IoT represents the macro preproduction delivered year-over-year. auto, and IoT came strong tough a record increasing seats for row. in another million, yet setting was revenue $XX We services, growth.

this a future you of for not but into revenue also the production. strong enter As positive only a once know, indicator design year, the current is

a from million revenue have a the from XX% million. year-over-year design increased Further, to has QNX driven in which year-over-year of embedded $XXX now X-X-X, vehicles Our approximately at wins backlog, increase in number $XXX, a with ago. Software new royalty over our strength is securing increase over million, $XXX X-X-X, year

design that and wins, supply China, lockdowns us the the issues, our industry of once impact the Ukraine chain strength to pleased I'm war, the headwind COVID-related interest in again facing. of currently with the include headwinds is inflation rates. allow These auto overcome rising

showing supply appears stabilization. some chain signs be to the situation the On of front,

electric overall the to While auto holding and up. demand appears for market, higher-end vehicle models the be economic issues will impact

XX a total terms As quarter, of we perform mentioned, new in In auto QNX new with embedded well continued securing X wins. in general wins design in market. gained design the and to the X of

Cockpits, assist, that both ADAS, is, and domains. in leader safety-critical market a are fast-growing driver Digital We advanced

And XX% and market we within auto continue for those even ADAS be In we XX%. win to as market domains, independent X-year a Cockpit estimate share. leading Strategy be analyst, to plan that fact, Analytics, to faster CAGR to grow a than Digital

of had large in we a Cockpit. Digital quarter, the design In wins number

Great with [indiscernible] In and automaker electric Chinese global number for in Renault Chinese wins we addition lockdown well in of able based BICV, deployed with augmented others. major Cockpit design America bit design sedan. North an to hologram-enabled latest to we with as leading as leading AI win That's secured secure Bosch a automakers, and X Furthermore, a Digital a autonomous and quite drive technology. a new Tier were challenges, Tier wins Visteon, X despite Wall reality, be fully with Motor of including to a

Hypervisor, our QNX this auto, TÜV at highest software. for QNX device the medical to by Outside the Hypervisor sorry, safety precertified level -- quarter was of Rheinland independent auditor of

make good to in the progress a And a quarter major machine a medical base continue design for was wins. in customer example India. in dialysis with We technology

update Let we're the an IVY. me now on progress with provide you making with

could currently guide This right right range handle, more. POCs, that receive include As time. more commenced with strong Tier development is global continue requests and hardware. and we our we at trial well, In product right previously have our the and POC mentioned, now supports a leading is sensors of automakers positive which in the of been we and release we Xs. some strategy, of proof-of-concept wider learnings received place indicator and even has the far IVY are than advancing development. an is to quarter, number product or Engagement a a the so June helping the Product

are POCs. partners a potential to being to variety of well predictive battery progress with progressing potential being And maintenance a number made the partners. Progress cases, currently management, our inclusion the name considered We continue them by IVY insurance also of user-based few. are excited and be opportunity pleased also we just These and this current are for of is side, for in with use including Overall, ecosystem AI-driven quarter. wide exciting developers' tools. a application engage the we enable with multiple and

dollar-based cybersecurity ARR cybersecurity. a XX%. This XX%, to $XX perpetual moving X-X-X, was net Now course, X-X-X, margin $XXX not in in solid value at was million, Gross increase. for does million, the Revenue include came license contract was unit. million, certain on nor a $XXX Buildings growth quarter year-over-year. on basis rate This year-over-year X% a business was was wins XX% wins number, of government. retention logo new a total

With the demand cyber see environment we a present. levels, strong elevated threat at

headcount. added continue new quarter, Given to we this quarter net backdrop, the in market. net In to invest go -- carrying direct we

them are We it will with to full reach And are team quarters up. additions course, the these a few ramping how pleased to productivity. for of take

of added employees service and a expanded service partner in brings a with with This X,XXX we quarter, the past presence. expand Midis over Symantec MSSP the -- over a During Europe experience also been and in security our cyber, Midis Group, countries enhancements our East, McAfee, program. in across presence Africa. to XX having Micro significantly reach managed and We which Trend our of channel distributed number those markets. provider a managed also lot made or Middle

our MSSP scale demand growth a large is there's in Guard and for a to out very this us in has MDR shown, cybersecurity greatly our large service solution allow go-to-market. As very managed -- demand

very legacy a campaigns. number In a secured a of to from we number and wins, have BlackBerry, running vendors. this customers saw we large we been [indiscernible] a of quarter, particular, quarter, opportunity market displacing remains targeted of the The mainly for logo a legacy move vendors sorry, During new number CylancePROTECT.

very CylancePROTECT is quick to easy context and this both its well agent works in and lightweight deploy.

was of past example of continue a quarter customer and endpoints A a tens as by direct in players. to customer compete high effectiveness head-to-head Coveris good other because of win as of win against well cloud customers thousands against our We competition U.S.-based major level were of and of deployments this medical they of LogXj The the product, industry head-to-head next-gen cyber our a select the especially against service. strength. BlackBerry impressed with

in cyber minor attack received recent Our further validation evaluations. external products a

Our solution occurred. critically attacks before each damages preventing was successful in early and in scenario very cyber any a suite and both sandworm of [indiscernible] XXX%

update Let me an now provide UEM. for

as agency Serious Special Manchester secured with U.S. with largest Command, Navy, Canadian U.S. great London we amount well Supreme Royal Vancouver the Air the the the of a both Police as Police quarter, and with of quarter, This Force, business additional such the and booked increase renewal of Canadian the U.K. number including and the Canada Fraud Services Mint. customers, Department. license in UEM these to pleased Office, our customers. the deploy Court as some law to Senate, the Ops enforcement of were U.S. We products We

largest X customers, large we government, secure, MUFG financial leading are upsell to -- the they believe and services Sumitomo including Japanese leading largest addition Mitsui renew of Japan's X bank. banks. Mizuho of a Corporation, number I In banks the Banking and

in Citizens as First Liberty as United well Canada. Germany both Group, and Baer leading other Julius Switzerland's and the in banks Bank States Bank

recently we given more market not leading strengthen the to partner XX% for UEM as that the OS to desktop approximately and product world's enterprise OS As share. add with browser, with running Microsoft previously, support IDC, to According browser mentioned than also and our Chrome Chrome and overtook to macOS market, does OS Intune XX% share, offer. continue with Chrome #X competitive offering, Chrome we're we support market is Google pleased the

items, core third certification help a of a for year recognized. BlackBerry leader a compliance and offering position MarketScape These And as Among BlackBerry that maintain host. our UEM strong be wide security other strength UEM in month, government of they BlackBerry highlight UEM markets. range and a IDC to last continues The named row. in the regulated in industrial certifications

licensing the issued and sale Catapult, legacy the as Catapult margin the are under forward longer buyer portfolio. licensing. of and In is to to way. free now are press Earlier time, And of as we explore status working release updating the our come completion options was no financing, XX%. look revenue their At about quarter, we we exclusivity transaction. with million, month, this to same of brief the word of was new portion a proposed they secure The the $X the patent a our gross we

appropriate. as We will and provide more details when

to hand additional Let the our who now will for on over color provide financial results quarter. me Steve,

Steve Rai

Thank John. you,

Also, usual, to be and supplemental unless otherwise table the on financial release this GAAP our for will performance my the details. comments As please non-GAAP past non-GAAP in noted. refer quarter press the in terms,

million. $XXX for revenue was company quarter the Total

quarter XX%. gross total company margin First was

stock margin non-GAAP expense $X million. of Our excludes gross compensation

First $XXX quarter expenses million. were operating

intangibles, restructuring expenses expenses, dating the stock XXXX, value debentures. in a convertible matter to non-GAAP $X $XX expense amortization of $XX Our back of a settlement litigation and million in on relating operating onetime gain million compensation of million exclude million acquired $XXX $X million fair to

Non-GAAP settlement. million $X.XX loss per the operating per driven basic was million. GAAP the net impact non-GAAP quarter, of the of non-GAAP loss litigation and by $XX share The primarily This loss was $XX quarter. was loss was share in $X.XX onetime

Our previously negative non-GAAP million, $XX the adjusted was EBITDA excluding adjustments mentioned.

I revenue will revenue million of $XXX revenue IoT breakdown million. quarter. now in $XX was provide the our a Cybersecurity was and

the range up product remains remained software with approximately at of Software XX% product the portion of Licensing revenue to making was other in recurring balance. XX%. $X revenue The services the million. professional of XX% total, revenue and

our XX, of May and now cash, sheet flow equivalents and Total $XXX to investments I'll move balance as cash XXXX. were cash performance. million

were Our and in $XX $XXX and net ongoing usage Cash annual cash was together and cash QX seasonal investment million. of items, expenditures million. free high position used million payment million. for traditionally by $XX of is business, the the capital operations was annual given was a bonuses use with $X the cash other

That turn comments, to now I'll concludes my it back John. and

John Chen

Thank Steve. you,

Q&A we There's a no provide commence session, outlook. guidance. let me previous current change year our first our from Before

about XX% for expect the to revenue 'XX range in line $XXX broadly continue fiscal year year-over-year growth. IoT and through billings million We the in the unit to to with be 'XX, revenue business year with unit business for to the to $XXX of cybersecurity million, be fiscal X%

to like recent Analyst thank who I'd our everybody attended Day.

I think May XX. it was

provided those were able join, for to BlackBerry. For we and X- target a who X-year revenue

and 'XX FY a the of X-year company with $XXX approximately billion in 'XX. XX% of revenue, excluding CAGR with We expect to IVY, grow $X.X the million revenue in FY total

driven IoT TAM grow to expected range Breaking revenue while of this business is to at growth our CAGR This safety XX%. core the domains. market share X% the the over the down next grow IoT primarily critical of industry years, in market auto X-year rate. XX% X is the to This than doubled we by a unit, approximately rate in gain expect faster by growth

'XX. and growth adjacent This in a potential auto, to already model and revenue multiyear IVY, include addition and to approximately be of In particularly medical addressable verticals, becomes the design the important is story. million FY which on $XXX from market. broadening $XXX to FY -- to million we industrial, that also from targets approximately note the partially It We built our revenue IoT then sight is is from any 'XX do expect to designs in estimate these not wins. new upcoming line revenue backlog confirmed still upside

For technology CAGR road revenue includes million our cyber, million 'XX in of grow endpoint business in We cyber endpoint products. approximately expect as revenue $XXX mature portfolio condition, more The given 'XX. the and strong map, unit FY market of both the we with cybersecurity higher and target a well as the X-year growth to management $XXX products the XX%. FY security

by operating XXX points We business, per expect operating average year 'XX. basis leverage margin for XX% gross trending by margin over on and the our FY towards expanding

moderately current cash we becoming year, 'XX approximately and flow negative approaching EPS in the cash EPS fiscal flow onwards. FY we're Given FY EPS breakeven and -- positive expect from and this making, flow 'XX and investment cash

X converge both the our market capitalize these position position expect to markets in trends. growing on IoT to and strong cybersecurity a place in We us very will and

on double-digit in expanding cyber activities billings macro recorded auto in make quarter takeaway the of key market business a the the set another One, was headwinds in to growth progress both delivered and solid good IoT, year-over-year summarize our IoT record continue revenue three, quarterly quarter. the our we design from Cyber on for growth side, we where me let and So impact two, reach. offsetting production; we unit; this

point. final One

we our first BlackBerry ESG neutrality. quarter, report highlights with achieving including This released carbon

it from our haven't be a For yet, website. those copy seen who can downloaded

concludes line please That my open for can remarks. Brent, you the Q&A?

Operator

RBC line [Operator of the Instructions] Treiber Your Capital Paul first with question from Markets. comes

Paul Treiber

healthy can there between from ARR decline quarter? quarter. was cyber business question, the very you the in And the like specifically, billings versus dots any the between growth First connect in in -- perpetual the license more in SecuSUITE contribution the

John Chen

of answers somewhat first question. Actually, had and We because the second Yes. way government to a the technology. the quarter government question your SecuSUITE good partially the perpetual the selling purchase it's

And so for last cannot minor was the There identified mid-market, fully reflect did and we reflected UEM obviously, not be some quarter. on the ARR. it churn it which that have

of explain So the delta. combination those X the

Paul Treiber

-- you third going the sale through with through And second party. would helpful. are the patent not are you you don't can't question, obviously, But sale, the on negotiations you That's back just in sale. mentioned the I ongoing. go you're details and and so to a you mean, definitely if to disclose much go Or find doesn't revert IP licensing? --

You just price. the right have and to find right buyer the

John Chen

I do for we monetizing our buyer, We focus, a shy ready. from believe the a of find buyer. away and company's should But story team we simplicity will ourselves. we I and believe have and standby our find not will

it Catapult there has -- So that but will still secure that priority buyer. I get believe my a And but people done. approached, have been first is other

Operator

line Your with Trip Equities. Global of next question Chowdhry is from the

Trip Chowdhry

Always questions have. hear exciting about I X IVY. to

because be the regarding think cryptos, released automotive is may some in supply Do you something position. out the that the and been of easing chip chip Are seeing that have facing. industry First to capacity effect? is that depression chip shortage may you

Tim Foote

Seeing the chip shortages.

free So that fact is it's think currently crypto depressed, that the chips? does up I currency

John Chen

I'm Trip. crypto not I good I'm there, you. I fan. got a am to question your not enough answer not big

chip I depressed with very point. shortages at that I some I'm relationship I don't So there know very are And don't this sure issue. that. closely. with follow know the it's the

can't answer question. that I sorry, So

Trip Chowdhry

getting wondering and kind all of what insurers it. over that evolve insurance the can IVY Second me. cases a can of of and about on auto you think -- that's was from regarding it's I question I -- time? use you're period top platform, had is And

John Chen

example. thing we is very with at a -- this as That's area, if pay-as-you-go least two our insurance in so area The good kind insurance question. -- the calculated for how of organization of auto not one, of partnership, And equation. management one big the first other in the I insurance particularly specialized area about the kind have, meaningful fleet is were usage-based insurance model. in the they side related a more of how to a the -- then it's and the redefinition one

So or in use a of lot other use could use cases lot IVY there's host cases, a cases. IVY of

it's told battery the you whether predictive could generate, course, about actions trader, guys their every want over-the-air physically we Of around to area or The management. the And of whole are around update. huge. that OEM maintenance will get hands

So we're also it. a of financial as around of lot cases auto of use there's seeing a a interest technology lot wallet, and lot a different of

so IVY. this for And exciting time

Operator

comes question CIBC. with Coupland next Instructions] Your line [Operator Todd of the from

Thomas Ingham

had couple a of I questions.

First on IoT.

about Could the you last just update. seeing what the how changed seeing gave talk talked supply you're You that's you since about chain you're ease.

John Chen

Yes.

OEMs are finally strategy. as On each to cars see that but manage and strategy, around chain good supply chain able it being to the they that I the of side, cars high-end their hold built, build more they world, more suited supply their value the have them. a release and them And own to has issue then

So environment gas particularly demand high-end environment. course, built, constant a is of car vehicle price a being and given there the today's the with of electric

And high-end about of volume the so production top typically of footprint, -- to a is embedded XX the EV in QNX than us addition have is vehicle and good the XX they're in the cars electric the lower-end we world. So is QNX that, that producer, thing of strong more models. users the

although So vehicles that I small of volume as seeing still now, right sales sold, think XX% percentage we're like it's total a volume up, uptick. goes the

us. for trend -- it's a good So it's

Thomas Ingham

move for I year. it's the -- IoT enough guide guess material But it's to the not

John Chen

when on a headwind. this demand lockdown little of read, uptick rate had a And COVID. a We causing a very probably delay then, course, that purchases. slowdown China of know the now, stuff is because of little all you the no, has vehicle No, of you as a some there for and guys new because is interest well, bit

that all still those so to need And we are confront with. factors

is some see areas strategy license production a we the typically winning there any. is on license, revenue. shortfall new so slowdown We're strong in And rate. win come our enough services they design win those design and covers of with developer and that of We're lot strong a or if production professional

is still I wrong we guidance still little guidance And hope shifted that So our side. a the our a bit. is think And good. believe conservative But good. on I'm I there's mix

Thomas Ingham

helpful. That's Okay. And on business. cyber my then to do question had second the

talked competitor. I You into say, if of What enterprise. that that in that Just in And auctions see about concern an I'm starting couple a you're versus, modest a And BlackBerry churn was some just bleed let's larger churn you we're And for staff SMBs. wondering give about wondering that being is UEM quarters. about of trend. given talked that to talk the seeing might businesses? you other does enterprise

John Chen

seen haven't that. we Currently, Yes.

continue and is this on about. which important work to products that talked we partnerships, I So our

nonregulated the the churn and usually small, is is So UEM space far, medium -- enterprise. in a small more

have particularly So world. the and for the we very renewal large continuous one, government

knock so haven't been I major that far trend as at a seen all. okay, Even no, So banks on wood. have

Operator

from of Daniel next Your comes line TD Chan with Securities. the question

Daniel Chan

that in ASP? higher to Just of on helpful. XX% production a the QNX you that programs color volumes, would behind Is wondering Just some or any on the the recovery due some extension backlog. increase can provide drivers be of color if

John Chen

wins Yes. telling of quarter. every design folks been the It's you the result we've

what is volume counted, OEM on took program. the future this we're and counted. we the have told what expect on a as get strict is a total get But of conservative And result sometimes so as didn't guideline discount it And we should a years do in you very what formula of very we it, sometimes that us And the this on is. that.

and is and got we the And -- -- accumulation months, XX% royalty which those obviously a that the offsetting the increase. which of last was is in it so XX the results runoff

Daniel Chan

sale. patent to question helpful. a on then the And That's Okay. I wanted ask

your to the would You as know other are had options said back are whether you options? just come you you Like you looking process in. actively going starting bits they want again? actually or beginning from in like guys you explore initial are I to for other

John Chen

all. No, no. Not at

being or for I'm we're by actively looking fact, approached In starting square others. not from one.

sure with do want shareholder I As that to just and expect we we're would stuck not one Catapult has with we deal we've the exclusivity option, I now that the to expired. we're what said getting to responding previously saying to the calls like But been knows make we the to but see, happen. because see are And calls. is now announced basically

Operator

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

John Chen

Thank joining a you, And a late it's have with And looking Brent. good you I to Thank for back speaking soon. forward us. have east. realize good all you, evening. everybody, again day --

Operator

call. Ladies you for this today's participation. gentlemen, your Thank and concludes

may You disconnect. now

BlackBerry Limited (BB) 23 Jun 222023 Q1 Earnings call transcript