BB.TO - Earnings call transcript Q4 2024

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Operator

Good afternoon, and welcome to the BlackBerry Fourth Quarter and Full Fiscal Year 2024 Results Conference Call. My name is MJ, 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, CFO, Cybersecurity Division and Head of Investor Relations. Tim, please go ahead.

Tim Foote

MJ. you, Thank and Fiscal everyone, BlackBerry's Quarter Fourth Good XXXX welcome Earnings Full Year Conference and afternoon, to Call.

I Officer, Joining me John Rai. regarding Financial Officer, Steve John update will review Chief Blackberry's cautionary provide After forward-looking Steve a statements, on today's Giamatteo, the call and financial is read note our and business Executive will Chief results.

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

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

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

forward-looking statements them, update by place statements. to and You made as forward-looking any no intention on company as company's revise of Any and undertakes should not or the of no law. required has undue the reliance only are except today, obligation

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

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

John Giamatteo

where we BlackBerry profitable us beat records. and improved expectations exceeded operating We either further would. set we Tim, flow and quarter expectations a we all as met process, for on said new in share delivered thank earnings solid you Terrific. of joining focus growth, the or laser for and today. Thanks, number a cash our given per

In our have year we design all-time Despite has usage. with cash from best positive strongest fiscal EBITDA with and delays And halved top new their fact, backlog being and coming software we approximately XX% for year-over-year be our of more recorded we revenue. design flow than growth. line royalty automakers for wins. this its or adding $XXX backlog QNX the also royalty driven the experienced development quarter, operating both year. In quarter This high IoT business million measured despite outlook, an quarter, achieved programs, momentum win expect to our cash this ever prudent

well. side, On the solid important Cyber sequentially. we demonstrates with growing standpoint very this improvements even has recently. the saw many a a the year-over-year a as little also revenue data We from of the cyber point impact enacting growth and recorded ARR been team stabilizing believe

review my unit. with start the me business let So IoT

As you relationships. strong from business know, customer its the benefits multiyear QNX

Given we lifetime this this wins better, estimated for royalty on revenue been business approximately the long-time never a gives the quarter. metric horizon, million view the design is royalty this health has reaching that of secured. backlog. This key past from the And metric have $XXX

sacrificing contributed wins from strong last it number we new quarter, year the wins, for the to backlog QNX past design design cockpit In mixed Hypervisor year. that to mentioned, secured I was of this in a was adding achievement. Within As a surpassing the this who automotive, we among continue enable criticality digital cockpit Hyundai performance. Mobis, without domain, wins dominate and the to selected

of middleware acoustics design and growing win a for strong number automotive, cockpit our core audio a the across have largest the general medical RTOS recorded a position for medical. in this our RTOS, OEMs a embedded markets, world of machine of enable Beyond health. especially X medical and imaging of we Among range foundation a selected QNX OEM assessing who the vehicles. Outside as in that in the X the a heart we will with digital blood quarter wins was Japanese next-generation for the

robot. with secure, QNX our win OEM will reliable a fifth a platform generation secured where applications, also U.S.-based QNX for our real-time provide operating system surgical We a In real-time other their into for operating in intelligent. system display becomes verticals use for power demonstrating to more as been expand new the a digital edge has BlackBerry potential selected recreational progressively vehicles, the for sport leading

quarter's the automotive guidance and growth at cockpit of digital margin at the strong the sequential We ADAS a in revenue the range. XX% $XX the CES very Revenue to successful event end XX% moving delivered our services design revenue had new professional Vegas. by and strong strength in the broadly and the came and Gross representing remained growth. which reflects with Revenue wins. Within and line we million, very year-over-year revenue, driven QX. recorded quarter-to-quarter in is largest we from recent January, was top lumpy and at royalties development drivers, strong a So in seat XX%. were quarter remain Las relatively automotive, QNX In primarily financials. of very

meetings with Our incredibly productive many potential current held customers. and was and booth busy, we

number of we addition, very a important made product announcements. In

and past designs our safety without this as market almost while limitations our moat also similar suppliers well. fundamental this new, QNX engaging on very This a development see The industry has open core software as The step with future-proof very change cases, XX powerful more SDP encouraging, a CES to first response than performance in offer cores. We step operating SDP in tools. This in even offers and Linux case world's up available. scaling become automotive BlackBerry next-generation some source purchase one as quarter safety the was competitive our X.X silicon significant our the to nonsafety of chips X.X. our expanding the chip allows critical high-powered linearly critical performance leading better system, addressable into been launch to expanding including since of use significant to in

was has digital available Another of develop from collaborate that hardware around and world, the This key first their in Stellantis the the our increasing in reducing the cloud. for world's teams Hypervisor RTOS digital to significantly need cockpit, being productivity. to joined their allowed twin development announcement physical our software allowing anywhere greatly

made that we some launched the regarding expensive and platform. hardware already for consortium we've Sound, we major car. the middleware various without for Further, automaker. QNX Mobility need in platform electrical enables and recorded offerings. experiences our IVY our win addition, vehicle In audio heavy design Project audio a X selected The Harmony announcements in acoustics a software-defined its European complete with And first

relatively upcoming moving for expect be So the to quarter. for new wins, sales QX for the to past development outlook to potential design IoT this compared seat timing we potential the business. quiet Due to

about In past as delays auto programs. the face we've addition, year, to material industry the fiscal in spoken continues throughout vehicle software-defined

near to help automakers long-term greater the for next-generation their potential While upside platforms this solve developing term, clearly to delays are the order address from support vehicles, presents development to challenges the tasks. it for software-defined actually in business. In BlackBerry view discussing for them potential increasingly undifferentiated represents the for software

retain of expert create up BlackBerry BlackBerry has like integrating to focus on having a the what full OS, platform. Further, potential development OEMs handle is a vehicle than the up professional into further to integration top and development rather support team trusted as sometimes this expanding RTOS differentiating to teams over referred in the development on control provide greater their fact, to software themselves, address their middleware projects. software accelerate stack, greatly automakers complex simplify to attempting customers our allowing the their we're the In of our frees experiences to our to to services allowing while

expect So at to these for QX mind, midpoint. of $XX million, the with $XX dynamics all year-over-year which we XX% approximately the range growth in million in is to be revenue

the year, be to the expect revenue $XXX we to of $XXX For fiscal million. million in range

quarter division. and Cybersecurity the beat let year-over-year group. for That Revenue $XX strength X% expectations product this quarter representing from Spark Cylance Now and to million, growth. came The in came turn me UEM. at is the our

or we one our ARR, indicators to cyber recurring revenue, be for of business. consider the key annual Now

earnings this As basis. quarter, outlined delivered our we last during stabilization a sequential call, of on ARR

the slightly X% $XXX small impact within but these metrics even number by for increased made percentage million. DBNRR points in to key having increased direction In X the XX%. illustrate fact, are to a of improvements we've that also the steps right by very business. ARR These sequentially the important

strong a the quarter this In and past net driver was best on X our fact, offering CylanceGUARD areas and service years. been logos. coming In We as winning. CylanceGUARD renewal down a this see the UEM being have improving the quarters for have managed this the been rates growth particular, in renewal and year, new past X CEM demonstrated as rates well have for we're as we we doubling are where other and

deployed we the Malaysian deal and a were products of with that number successfully significant November. the that quarter, in we of government During services the part announced

our we In training to that a have officially help skilled wide will This grow Lumpur. recognized that, of were Excellence last workforce. a addition, range proud Cybersecurity courses week, center seen Kuala of open in will globally you Malaysia may provide cybersecurity Center

major Canadian upsells with as Schweizerische for banks, the Police. quarter well Switzerland globe, leading Baer Agency, Netherlands this In Bank Police, Manchester Air wins agencies Crime Transport the such and in National U.K.'s in and business cyber the So across and some U.S. and to Police examples as we U.S. wins of government Homeland the of Department India. British services, renewals division and Force, included the financial Julius Security as secured addition of the as Greater with such

is last constraints single and of So customers' for take QX significant year. the diverse large base, longer-term that view close the Cybersecurity so some now see ability in business. drive to outlook timing a near-term in is near for of large both government years this business ahead. That ongoing said, From position revenue which the any in Despite addressable to our the leading dominate a needs the Cybersecurity is a the software vendor near-term deals our the dynamics, opportunities growth that of large and was security could no the we term, standpoint, customer on so portion market to market. in we as customers, for moving prudent given case for of budget the a our

base, we year. fiscal security For revenue customer recent us confidence a QX. enterprise Therefore, as stabilize unchanged, macroeconomic to compared broadly revenue we although that into gives be quarters. sequentially challenging we mission-critical environment head to mid-market backdrop continue priority, and through this expect This and our our consistent new remains and a base, a somewhat stream recurring we flat predictable can core to ARR expect more see we

for impact revenue allowing million So for of of we range deals smaller to and for macroeconomic the the in million be first a $XXX lumpy $XXX in to government the expect the the from and be year million quarter million. $XX to range to full $XX environment, ongoing large,

Revenue revenue million to be touching came stronger expected So the the the looking When than year, of million. to in approximately quarter licensing. $X briefly each on expect coming $XX in fiscal X for quarters. at we

on me now who Steve, more you color over let financials. turn to Steve? our a will the So call little provide

Steve Rai

you, John. Thank

$XX financial performance was comments $X acquired for amortization XX. million million. BlackBerry were activities than million. the in million. $XX otherwise IoT million, revenue non-GAAP long-lived terms $XXX percentage earnings non-GAAP $X.XX for the revenue my licensing adjustments was and million compensation was that operating non-GAAP million stock was $XX intangibles, goodwill to of million. $XXX per million impairment recurring operating the million. Non-GAAP be $X million assets. net halved our previously profit operating revenue for unless $XXX margin was was on Cybersecurity more always, impairment in approximately Total quarter, quarter at The $XX equivalents the improved cash, increased Cash fourth of operating share $XX company million quarter revenue delivered and February XX%, company noted. Total As and Total Both and a million. XX%. decreased in $XX beating gross profit cash by of expenses revenue to expense product of $XX used expenses while basic We restructuring in investments EBITDA, $X software increased Adjusted expenses, exclude sequentially $XX million. as charge, to of excluding to mentioned, to non-GAAP will expectations.

after factoring a profile. in noncore last QX a of million quarters increase Therefore, the year-on-year million. Traditionally, usage, flow ago, sequential QX X this sale the impact a and improvement seasonal our portfolio in low the As year. operating payments expect and is of would however, we cash was QX $XX reminder, was patent in of annual billings for a driven $XX cash by

We in $X.XX range $XX EPS the of EBITDA to negative for adjusted in the to be expect and range negative million. negative negative QX $XX of to $X.XX million to be

For fiscal positive range $X.XX EBITDA negative the of XXXX, in in to be $X.XX to breakeven $XX the full EPS million. to the to year we of expect range be and negative adjusted

We EPS and year both QX. with positive positive also cash expect to the in exit flow operating

This quarter, to our required noncash cap. market units, we of in details impairment total review a the a GAAP XX-K. of with perform share. the required recorded In which be Spark $X.XX goodwill for a to a will unit. This per we were determining reconcile all noncash accounting for goodwill disclosed Form value earnings accounting our reporting $XX is to by reporting Further to million accordance impairment rules, charge represents of fair

As we successfully during million the was interest X-year past in quarter, competitive rates. and to debt we the high, offering were level $XXX able achieve a The raise. completed announced of convertible we

result, on November. has With to well to and turn debentures had that the our the fully are since long-term financing execute balance a Blackberry concludes able I'll short-term back previous been were my matured to extension comments, strategy. That sheet, John. As this in debentures $XXX in of million and we last positioned it place we place, a solid repay

John Giamatteo

you, Steve. Thank

Okay.

profitable are So stand-alone as establish we mentioned, on to executing Steve our divisions. currently X strategy

take, can I that to confirm update on we planned. as During expected the actions an delivered we and provided we quarter,

including savings legal, reductions. cybersecurity to divisional you $XX the building approximately recall regards of needs may out We rate finance, support. In have within those million the leaders QX, on headcount address businesses and run their leaders executed appointed and such XXX are during business of approximately that HR as currently cost, they to teams and specific the predominantly we

million During million came enable for is the savings. an our the this came will reductions Cybersecurity additional starting it how went shareholders worth quarter, actions P&L. Approximately cost G&A past important of this that of $XX $XX functions. We million in to benefits $XX further we the Cybersecurity, and and these to took from of from understand see business central realize

So without This consider lower an although OpEx million million described was million a think $XXX many on $XXX helpful separately quarter, a as for it that X quarter. having year, time we're tracking This revenue. order QX the it is and long-term of taken the we to to shows OpEx the the $XXX million. and in a to or a million and million rate from before an reflect the in general $XX make baseline quarter, can past this track Also, reporting be baseline expect take and is average basis. we the administrative. are a already annualized to provide the you puts baseline of of cost cost it targets split comparison. That was improvements, fully average QX fair in $XX of a various significant sales are run from we started into too OpEx to for than new run to and our we've to $XXX as them rate. marketing we easier million, giving this This And how QX for actions will effect, lower QX $XXX aligns use. Non-GAAP past the onetime for getting starting percentage reporting takes towards reductions non-GAAP

to million. on coming annualized approximately an average incremental the than goods of to in this to run particularly IoT in basis. savings reconciles cost sold allowing $XXX by million and our million year timing, fiscal approximately $XXX the baseline lower rate addition is investments, of for targeted That expect the This $XX be quarterly OpEx We business. for fixed reductions OpEx in

And incremental having process to to the towards action run due further more little like rate as addition expect, reductions. working can In a or these longer you will dependencies complex outlined, are efficiencies. we systems take to savings

modeling cost reductions, cash impact are Given the we positive various for year adjusted for flow operating and the XXXX. fiscal EBITDA of

for year in some would, we said and ever adding approximately open the solid royalty let we its a Cyber stabilized growth, and ARR number showing quickly $XXX fact, of This ever summarize lines before backlog for X% messages. sequential quarter modest new IoT from set records. The its So a quarter Q&A, for was best wins me design which million. as highest for BlackBerry quarter backlog grew for we year-over-year. ever key the it business in the new revenue revenue, best its recorded of

addition In previous coming significant positive on a this bottom actions of concludes also and we're the positive line. helping very those build remarks. fiscal news We my on are the top from prepared line, focused drive the and cash to on quarter for the that number executed year. That cost-saving EBITDA flow

So don't we you, Q&A? lines can open over for MJ, so it I the why turn to

Operator

first Our with today from Genuity. Mike be will question Instructions] Canaccord [Operator Walkley

T. Michael Walkley

to wanted Cybersecurity the to on just little a John, the improving bit delve ARR business. in

over endpoint talk the and With this market legacy of is improvement of can still XX% the how some the legacy positioned in year? relative just was see players how BlackBerry maybe part to over it like the solutions, growth the course you and Cylance about quarter, you of this sounds segment

John Giamatteo

get stabilize a lifting it's to Yes. and ARR Absolutely, a engagement Mike. we customer to heavy of We're for activities. it pivoting product lot our our where growth, been -- really so and in journey long the pleased to started -- in

we're kind stabilize. starting see that we're of that to So pleased

of next-generation a there. a Trellixs Trend out for When like think, we a we what of future the world, lines opportunity think the still Broadcom up we grabs the like endpoint think about Micros, the legacy installed for think endpoint in of Symantec like you base, providers, that's, the the capability amount As growth, about along lot Cylance. there's tremendous offer we there's

was our but lot Guard the next smaller platform, logos in the So a direction quarter. actually course and over move we're logos, telling that year. And the that last the for it of fiscal a logos right albeit lot cautiously to in of of new new optimistic opportunities between

T. Michael Walkley

Great. And question. just for my follow-up

some kind mid-single-digit lot IoT delays, the royalty that your of and strong delays strong as are to conversation with 'XX? Based laid you a delays, the suggests on backlog? through these customers about the out you you've and the maybe Or do backlog. in talk that of records year these year things some to multiyear of business, year. On a in guidance close of ramping But this opportunity, growth calendar picking up grow this and and kind see

John Giamatteo

Yes.

not talked shift, shift, about we kind X-quarter the have -- of seen a -- have X that delays not improve we like quarter, yet. X-quarter that We last

OEMs, So competency. it's vehicles, we and and little skill the software-defined Getting complexity tell will of sets their the of to out I we're can these them. the is you, a doing little a challenged. not of things help the more complex everything core more a

the to we're some our prudent a little programs -- development at I floodgates the that's more We're because why increase what in being about edge with going based mentioned, not open we're we're of we're as on help launched. trying some integration seeing. why new of being and do them seeing this getting somewhat software-defined we're One a little -- with in cautious to still vehicle it those cautious projects. at that be we're seeing wide point. That's sluggishness But the our to their customers engineering

T. Michael Walkley

on and the Understood, cost Congrats execution.

John Giamatteo

Mike. Thanks,

Operator

with next from Kerwin William question is The Morningstar.

William Kerwin

it of IoT keep lot CES. a at the Obviously, positive to announcements just Maybe on business.

of would that, this still maybe path received it's slower as gaining months. Just they towards forward? pipeline so And X going like. curious a you traction already to of kind just how the are than a as understand growth probably follow-up been profile growing in those over course get past look some you the the to far but in And the have double-digit business,

John Giamatteo

process, of SDP at Yes. X.X, in the Thanks, capability CES through capability, a to in The productive that. chip the couple change the things. The buzz more to the capability, a of growing position. us these and couple other the as nicely, excited product we of we I to supporting fact acoustics suppliers at us is but capabilities walking about it pipeline William. now just platform impact the cloud really, much kind leverage there, ADAS, some of one was level a be buy we're of RTOS so we're a stronger that step it's think, the and their of in their leading that base got a just were actually with design in It's position. development -- Stellantis exciting. to a statement pipeline that Yes, puts in that. wins puts efforts tools, strong the more cloud a much have strong And is --

excited we're faster of when the would business your going stuff million up, about bit this little think stuff opportunity really model a it's So the leverage been. into drive be some wish it's of pipeline future. would to -- some business. for roll opens good that we to a point, off To But some backlog than that the we $XXX

William Kerwin

one progress already. on I some makes just on, cost That could good if Awesome. savings And the more tack obviously, sense.

you right for are targets business the you've progress that could and you if the longer I through think term curious past talk see Just the fiscal laid you how forward, 'XX. going why the guess, size out

John Giamatteo

are where split into that. we strategy investing, on us of of clarify divisions, the our that impact twofold we of really X back look kind how. where forces a I it's think -- and me, To that us off and kind to we're investing just can question. embarked Great things. we where side as of Yes. really us cost to One, say Is makes from helped

where some renowned fact, some benchmarking us industry the we are and really industry some with is. on consultants provide In had advice we where

right the the benchmarks levels for target of that. kind we and So right

aspect one So it. I that's think of

a I see think cyber, is of came we cyber, of efficiencies the cyber can of that think rightsizing out getting you were lot think so out there. I other the it

I throughout years. the cyber acquisitions X think I in mentioned different grew or X past, over the

rationalization a thought business. overall that there was innovation same but cycle time, we at of the the R&D So to going not the was improve impact lot

on focused the think right as some I well the cyber on feel really from the we split of landing X efficiencies working right side, kind -- between a So as standpoint. now with into consultants like we're at place divisions cost of

William Kerwin

on Congrats Awesome. quarter. beat this the

Operator

with The next Paul question from comes RBC Capital Treiber Markets.

Paul Treiber

think, I out next that, and helpful you're sales quarter, breaking It's marketing from G&A.

You touched on between into and that? disclosures the frame What and the in of segmented company by time cyber split of Cyber. terms the around the profitability expect IoT IoT for we should -- and

Steve Rai

Yes. Thanks, Paul.

-- a So from at there's play, from streamlining and a business standpoint. both separation of separation internally lot cost obviously, a restructuring and standpoint activity

provide given to kind I We're you ask time, kind to that but a a on business company stay full towards So of on we've P&L appreciate that. would to a markers that total we position that, at units. the in this as the have each just desire basically not work of basis, of we for the tuned

John Giamatteo

giving it better articulated, to be ahead, to think overall I next structure. the Steve we'll kind the -- that you a think of more down it's good Paul, marketing question. the breakout That's and of a you payment said, Kind and sales feel a of in cost transparency take G&A. like in of level. as as to our on we'll And -- position quarters

and throughout in go us, we with So the updates year. as we'll you hang provide there

Paul Treiber

the those also to just opportunities savings. the the with for everything future second relates also to that those so my elaborate make can that you're time And also once? then considering? that reductions like Okay. I that, nature announcements? frame of relate to question you And you're we targeting segments what's get the does of may cost And those split on mean at

Steve Rai

Those ranging IT there. I'll an systems, entity and a of terms from of particularly -- in I supporting structures, mean we've talked happen simplifying, bigger a IT about structural legal Maybe types items of rocks, the are there's which infrastructure just that before from standpoint. back-office from doesn't corporate overnight. things number start

at types -- on that that the about but those large, out will of we'll able items beyond by that's execute be plans year, -- formulating probably go of going squeeze to actively looking go So go obviously to We'll how those. to some and this to fiscal. and this

John Giamatteo

are a now, coming to to I'd million in just the that more structural. are -- I of think, more momentum little add -- -- that cyber. careful some that's to business. We're next million opportunities last heavy about the efficient. the last the did -- that's it There's And that, out. a to said, to those -- November said, our of talked those not rate. not heavy in rationalizing that a We're $XXX market We to like to real fine-tuning lifting We're on of on down. as Paul, they're run We're go we're They're we things, in be we thoughtful things peak, proceed cost more starting worth more see heavy when little still and intertwined. some to closed lift. The there's -- labs. We Steve our facilities, I time on be have more lot little we're we of those going to And year But trickier. continue focus, a doing and those disrupt underpinned more lifting little got think little a dependencies. that's we how a we $XXX

but to cautious be have We And done as lot of that's it. the you more a So the still about lot provide do, we'll months. year. last X in we a we'll updates work go throughout

Operator

the BlackBerry, like Giamatteo, CEO to John turn in the I no queue, of further would over Seeing call closing Instructions] to [Operator questions remarks. back for

John Giamatteo

MJ. you, Thank Terrific.

Just, call today. everybody, hey, the of for thanks, being part

that cyber IoT. encouraging we as -- about, ways, our and set front. well really many, It's on in look progress really quarter transparent that both are towards made to providing to and go as company executing and we're divisions we business into to we've X we're going strategy them. And We all solid many company stabilizing the to year. profitability talked this opportunities the the records fiscal new marching the and committed -- see the in updates for on within and with the we a you the forward more have of We're far, split thus throughout pleased

talk being us you and quarter. call today, thanks the So on next for we'll to with

Operator

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

You your now may disconnect lines.

BlackBerry Limited (BB) 3 Apr 242024 Q4 Earnings call transcript