BB.TO - Earnings call transcript Q1 2025

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Operator

Good afternoon, and welcome to the BlackBerry First Quarter Fiscal Year 2025 Results Conference Call. My name is Cole, and I'll 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. Please go ahead.

Tim Foote

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

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

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

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

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

the risk that the include factors These filings are company's discussed factors and in annual MD&A.

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

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

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

John Giamatteo

today. Thanks, and for to Tim, us joining thanks everyone Terrific.

while quarter another sequentially despite businesses seasonality. past establishing at working. quarter divisions further for and cash as I'm our IoT cybersecurity strategy better we We report pleased quarter, cost delivered driving the time, We of with believe additional free This third our of stand-alone to efficiencies. BlackBerry. consecutive the impact made same solid is progress our usage

the We by both non-GAAP to path further also adjusted moved EBITDA share. per along improving earnings and profitability

line, revenue, Cybersecurity Cybersecurity improvement and IoT and dollar-based top and its the retention both our key better-than-expected in business delivered divisions On net achieved rate metrics. our ARR

was let So above quarter the the with range Revenue end strong XX%. provided the $XX remained of top me division. previously. Gross for begin IoT we margin the at million,

to OEM lower revenue development in the expected, more QX. set As of typical record level than programs, the timing seat due to a returned

royalties and levels. However, services professional strong both and remain at record near

In fact, royalties outperformance. the and were revenue expected than IoT drove largely stronger

Cockpit little of quarter further. first accounted ADAS. Digital the driven above for revenue in in and XX% particular clicking Automotive Double by a total the approximately typical more a XX%

levels. near unlocking Our near-term and in to in customers team backlog. professional services record drive our is but customers scaling helps million services their we continue at starting royalty in To $XXX support team. invest operating not development our assist production only This also revenue our programs,

a largest ADAS won acoustics and QNX wins Cockpit as Among for top a ADAS. and new as was module number we this Within well the Hypervisor the deployment. framework automaker of global quarter, automotive, the utilizing is X QNX global in design that a Digital sensor

Qualcomm in high-performance and electrical QNX deploy European OEM that a cockpit a pickups. with leading vehicle was OEM latest will range and Snapdragon the chipset win leading in that of Another leverage a their SUVs will

navigation high-performance, this for wins, an hip, silicon. an This highly X.X, a win Black a multiparameter QNX this in other Biomedical, industrial secured X.X. next-generation surgical a on robotic monitoring top nonautomotive, cruise will adaptive based on stack that control LX+ system. stack. latest business version complex chipset will general was in on patient among we operating procedures. X and RTOS, spine orthopedic be QX will autopilot, further other the SDP quarter, Chinese the In Building with automaker, robot features. utilized initial control, system. Digicare leverage design controller past includes embedded power for for In In OEM, that wins surgical U.S. ADAS, will SDP that used run secured the and scalable be to wins, a Sesame next-generation medical selected QNX equipment automation, lane automated other high-performance of knee, a QNX NXP a power market new other our RTOS Geely, we and to ADAS

of mentioned QNX. that software into Interest we increasingly how Last ], for and plumbing [ quarter, build, customers the requesting past including are workshops to a continues products number this quarter. this customer directly more we software third-party we of provide held integrating

QNX's calendar Turning in production they Leading XX per number to units. market more expect stable this conditions. XXXX light content and growth compared of greater a driven being as defined. analysts progressively as approximately is smarter year vehicle by million as to penetration vehicle of become total well units be increased XXXX at global an to software

and in year. this to the software programs QNX are continue. delivering QNX a emphasize term, to in a global QNX the are to applicable BEV of automakers in supports, vehicles industry is vehicle just that said, That Digital as engine battery the production challenges combustion pullback Cockpits, vehicle electric These internal mix or well approximately are for diversified to in level as remain It's expected is and demand, others development ADAS, fiscal XXXX. experiencing Despite important the systems the XX% grow chassis they the still electric business to that agnostic powertrain. near challenges EVs. headwind largely

full $XXX this, year expect to $XXX for be continue million the revenue to the we of despite million. range in However, to

revenue million For $XX million. in be $XX to the second expect range the fiscal we to quarter, of

from uplift revenue solid in with services potential development some expect professional revenue. for license and We seat royalties sequential

$XX good but second go-to-market that product net made. we've another where third sequentially a market-leading $XXX key really lower, This mission-critical due -- margin driven the to Revenue consecutive -- metrics above Cybersecurity end-to-end environments, for further Secusmart's the This increased modest Secusmart further strength retention The switching Secusmart. especially is business. Cybersecurity ARR for XX%. in We again, to also quarter we for and resonating rate, was largely quarter continue for million gross was our dollar-based we in governments. benefits improvement the voice the improved division. consecutive increased encouraging see NSA-certified the quarter was So changes now -- DBNRR, and saw or by and recurring to encryption division. the from was Annual solution quarter revenue, ARR, guidance X this or to million. large XX%, our other range. strong outperformance to strong in

renewal large delivered well ARR. that revenue This and quarter, expansions as both BlackBerry as X in-quarter secured

the This for coming book of lower is margins gross we Given expect strong quarter. to this to Secusmart. mean cyber that will business, solid QX another likely quarter be remain

secured. need on-demand that on SOC past large MDR services, that Cylance, To Guard For support small- additional quarters, highly they address segments and market, obtain solution allows leader. with and win from team customers our over quarter, we the in our issues to next this as bridge already the help. solution launched a we're rebranded as we technology coverage. where are and encouraged include operational no of pipeline the business only fragmented where these the We of traction CylanceMDR amount new for and are has and opportunity segments see between an generating We're strongest, full some pleased well for focused as MDR couple rates MDR we're a clarity software we our this the by XX/X in initiatives getting. These better see that enterprises. clear medium-sized market this a Further, managed as

platforms of high. upselling improvement row. our this our has endpoint than Gartner's ensure the Cylance of quarter customers has Cylance winning offering endpoints of of new most consecutive and is through included product. second latest the capabilities in third use area by Award for customer year sequential newer and Cylance. X.X These customers to Customers such focus recently are Another AI been drive More This assistant. Version customer for Choice or a using a demonstrated feature-rich impact The helped satisfaction are XX% Cylance was now the our in protection versions MDR for DBNRR as

product with our X among UEM resonate continues Its rates. renewals customers. Administration, renewal CIBC, core in better-than-expected services, bank, X Transportation Canadian Security delivered security bank, Our others. high the TSA, top we to U.S. on-premise environments, offering, secured financial the government quarter, including in of In especially significant or a top U.S. and number a

very ad rates Event strong, to platform, turning Management services. Critical hoc, government particularly retention and Finally, customer remained among our federal our emergency

key of critical from geo-fencing services been we month, and this front, agencies that accurate product for launched positive. the emergency in enables feature events. new tracking more a very during preparation Feedback leading has On personnel

Cybersecurity driven better business in In costs. than initiatives our by addition to came costs revenue, planned, cloud in significantly to public streamline part for

moving the outlook. outlook year macroenvironment So elongate our business. a Despite reiterating continues cycles across cyber we the the industry, for sales that to challenging to full on are

for fiscal million. million the to range $XXX to continue We to $XXX of the expect cybersecurity full revenue year in be

be fiscal revenue million. expect the $XX of the we to million For in to quarter, range second $XX

up a ramping at further And me on from significant comment $X briefly XX%. years. at party in year, their let does came expected was million. Revenue progress little The any margin good expecting a business. from we present making purchased upside they're while understand it efforts. arrangement revenue So our than a that in that portfolio licensing Malikie, aren't that noncore better our for gross this future fiscal We patent we potential

deliver past begun was over of and Significant a further This X we quick internal to management that systems cost So of authority provide number let on as processes in includes the reductions. significant projects update separate streamline divisional the custom-fit the before businesses. this quarter Work progress X call product expect the each separating well efforts me I fit a X for drive to businesses. on made core turn has decision-making delegating more our both teams. tailoring as IT the businesses to Steve, a and to to

significant gave annualized non-GAAP the came of million earnings was costs, $XXX OpEx demonstrates past call sequential $XXX baseline impact or last an the million at the $XX that $XX we On decrease This better in million, million. actions during taken. we've you quarter on $X The a $XXX basis. better than of million million this

cybersecurity, and of All of DBNRR. illustrated this improvements fundamentals as backdrop the by against improving comes in ARR

a will, million The is However, of BlackBerry significant achievement past from of in time, $XX a taken $XX additional approximately from year last The drive how million that of a of actions of further savings we've cost million back-office stopped QX included reductions we date. $XX of and short the fullness million meaning took proud and facilities. head period annual approximately builds This total I'm $XX quarter, reduction the of count million. haven't far we This the actions there. $XXX cost in and by come such on team, to time. QX, in incremental

expectation made adjusted and the flow cash Given fiscal we've to that fourth EBITDA in -- quarter are and make, of fiscal progress our generating positive we quarter. fourth reiterating continue our our

let Steve? who detail. more So with will to me in discuss Steve, over you turn the now call our financials

Steve Rai

Thank and everyone. afternoon, you, John, good

reminder, unless during a revenue, my for otherwise numbers As will all non-GAAP. remarks, noted, provided be except

was provided outlook of $XXX upper previously the revenue company million, exceeded our Total which end range.

million million and for of licensing mentioned, comprised cybersecurity others. $X for revenue was and $XX for John IoT, $XX million As

at software balance recurrent. meaningful pleased such and approximately the was our the repeatable of was a component, and Of XX% portion XX%. product professional XX% Software is business We're approximately was product that of revenue approximately reliable. services

was Total company gross XX%. margin

on As million quarter. progress at million great adjusted lower QX. marketing XX% We at cash to and and continue XX%. make loss expectations reductions. for development $X mentioned, sequential in million. $XXX we usage of million $X was cost expenses John and beat in compared was expectations $XX and million, used beat negative million, operating a improvement was net for $XX Non-GAAP EBITDA the Operating XX% cash operations $X free at million. $XX meaningfully G&A came Research sequentially revenue and Sales to

year. a operating in usage last increase than better Given we the customer QX, in timing of significantly do some QX sequential expect million larger $XX payments, used although cash still in

the John QX, flow cash operating to For sequentially half, as cash in we achieving before operating flow improve second positive mentioned. in expect QX

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

For reiterating we the are year, full fiscal expectations. our

to adjusted expect and $XX negative EBITDA be breakeven non-GAAP range to $X.XX. negative the in We to EPS $X.XX and be million of between positive

to back John. the call pass I'll that, With

John Giamatteo

Terrific. you, Thank Steve.

to now don't and ahead Q&A. why we go proceed So

if you mind we questions. Carl, So don't opening take can some lines, the

Operator

Luke today Instructions] from with [Operator And first our Baird. come Junk question will

Luke Junk

the improvement you're sustainable now? given you prior Is seeing think term, ramping how in seeing it hoping just what's new that unpack would improvement it launches? online? the John, launches I'm the royalties? driving near in some we're Is that driving coming just the royalties And it, what's is right you IoT that

John Giamatteo

No, that's existing as a that being number have Yes. but back million things bit by, the of wins, design design obviously, a both. demand, of wins as are off rolling major it's really driven line implementations. $XXX It's some pent-up that well the some new of

we're kind had more volume a first picked up business that of both bit broadly quarter. overall, pleased sides see really of the to So in little across the

Luke Junk

supplemented auto being bigger software by of VW night. maybe partnerships, my and for follow-up, been and potentially wake emerging and the Rivian then in a OEM compute investor picture some whatnot There's suppliers about question. And last concern

perspective to curious maybe dialogue your just customers engaged insight pretty but this your are saying. and I'd especially the and ongoing Just more on from that thinking even real with OEMs is and curious you're time, with what get about be your

John Giamatteo

of a the anyone. understands a kind our to side software of adviser lot of I this business us customers ways, who than think as look better trusted in

organization, of deeper capabilities. So these as them. an overall, adviser going a on with an we providing We're vehicle work value their future well designs, and into definitely really feel becoming as on But we more like more them from both little software-defined we're bit combustion. around of we're closely kind increasingly EV internal collaborating trusted to kind with matters them

Steve Rai

asking anything. I'll probably that moat the that think moat I may, if just The to competitive business of in those And here add change point, -- its Luke, And around announcements that, I to position QNX don't to a a we're fairly coming if sort are continues really and recent bit strong to OEMs remain more. us anything, very John's that deep. us

any of significant So I last see slide a night. don't announcement result headwinds as

Operator

question And next RBC our Capital will from with Treiber Paul come Markets.

Paul Treiber

question to up I -- path million? How or million. think the reach Just the regards your more do in good to in a target of opportunity think It's you and the million see you're reductions. what comment to to regards to remaining achieve about $XXX progress, or $XX the $XXX cost

John Giamatteo

it. question, the feel We good Paul. Yes. really Thanks about for

the the taking we've on to comprehensive We've program simplify around actions think things. it. I more a executed got We're obviously $XXX of complex further some million.

mentioned kind of think that things our I I'd like before, systems divisions. IT the are both of hardwired into

some that capabilities we level for As of unwinding that just getting of and a are to next $XX get size to see businesses, we additional building good that million. sight of those line the right to of the

to our in said, million million as get feel an $XX you to $XX $XX and the rest. QX, in QX, in just We million good QX. we really about So did of additional sight line

Paul Treiber

of business through units constraint will the get this bottleneck in that, terms to units? point? follow-up effectively split And you then X or systems. And be separate of the the separation at a Is the the once that then on you IT ready or the

John Giamatteo

Yes, Paul.

I so. think

next NetSuite step like I I separating into salesforce.com of both think of -- the or have that, parts firmly X. parent unwinding businesses, think, the the existing Microsoft systems when unwinding agreements from -- own is at divisions, them that aligning Oracle you level, the the we the have really or permeates

that's much I from X parents opportunities these were we've maybe to tell can honestly, structures. tell we operating, the lift perspective teams where connect operate. integrated bigger is are to one leadership seen than license now mind, business of And with kind got how beginning the years. fact the bigger in another in of are the quicker teams the But I the and these faster said, because we would when you, their decision-making But that and market we the that bigger BlackBerry. They're of separate them of that one all we've kind ever year, nature will the over of big operationally, them -- agile that's a systems be were units than being were the more separate benefit my you the we governance from where the

Operator

next from our will Coupland question And Todd CIBC. with come

Thomas Ingham

the the of business. expect I'll the along for of would segmented X to units split the lines the you continue results revenue line? When provide below

John Giamatteo

that's Todd, working October. we're We're room right for Yes. a some to our kind us, things in in ready for here and pro on, of all analyst introducing them getting great Top planning mind of of forma update the honestly, question. on time it we've you and now. at prime got

Thomas Ingham

Great. Okay.

with So you'll guess, present you'll at results the I that break and the Day? it Analyst summer quarter's out,

Tim Foote

an have call, Todd, earnings we'll So normal. as

of run XXth. be And will an when the actually, of Investor just you've remarks, John's weeks that prepared October at So front a is of kind wrap that later, have the September. on Day end couple which we'll

Thomas Ingham

October when reporting okay. And XXth unveil revenue segmented below XXth, line? you the the plan to October is

John Giamatteo

Correct. Absolutely.

Thomas Ingham

didn't My comment quite question is understand the IoT. headwind I second and

the So of then talk you I about that's drivetrains and royalties went quarter. the to from the on business. upside But a mix headwind got in to

And please. the that sure wanted to talk causing make to the go settle understood year? that. through to And the I we XX% IoT below is growth through I as so cause going that rate again, what's Just just

Tim Foote

of course. Yes,

So this I'll take one.

ICE obviously EV, So we the house. talk the there engine. certainly the softness to of we're strength side there's to means there, drivetrain. at lot Todd, the of some or was this softness point going in there's And if almost on that see in some point that around The largely a agnostic point hybrid EV was be

been been we that that the on the however, that some talking a we've we have signs about did headwind. are diversification due things delayed, where programs though, enjoys. front, still it's still QNX there's but some We don't reiterate, to So very better that. necessarily seen that We've actually see headwind that a that signs, getting encouraging as see much

we reiterated thinking full outlook, when about our help? when mind that it. you those to keep in So year headwinds need Does

Thomas Ingham

those does headwinds right? on And while, new. help. going for little Yes, that that's programs, the for a not That's been

Tim Foote

Yes. for quarters several about We've now. talking been that

Thomas Ingham

with how the breaks talk about see thinking on that. you're logjam Just that today? what through And you what

Tim Foote

traditional going from do as that and It's development auto the described to what software with it a they huge down to vary And having OEM. task. up ramp Ultimately, had to Todd. easy challenges, we've an being makers go is to teams, through by really software developers. huge comes transformation it's not And

-- been about talking some we've So this time. for

I we're of to committed professional and all think, we're ultimately, the On will to get they by think services and this definitely is that will indicator OEMs signs it adding additional some early The that side problem a possibly that, helping for seeing our ever. of engine their to that's demand size, happening. our we're going business. progress. into be headcount hands around the And an some our is not I for customers and helping fire make that

help doing stay there the they're So for load to one. everything we lighten tuned can end that we're so regardless, to get OEMs, on going but the in ultimately

Operator

Crane come Genuity. Our next Canaccord question from will with Kingsley

William Kingsley Crane

have respect about and to the MDR talk endpoint on-demand, So between endpoints CylanceMDR more coverage? bringing under you more with opportunities outside of expansion can you

John Giamatteo

of them that we many of services a just and the MDR got installed one upselling of to business. from track them licensing are today Certainly, on. Cylance multi-faceted Cylance -- running which software we're is hard customers, of upgrading that think, I obviously, we've large Well, growth a kind that our a approach and directly base

verticals have need think focusing exceptionally that devices capabilities care is on old health a us that I particular and on is very, be small we the have agent care for provide there. systems do Another devices, think different customer that another to focused secured target to of perform with that variety to AI very operating well, customers a I health on we -- tend where OT,

small-level to have These They third, market. the manage And or X,XXX then of kind say, talent, are, smaller don't the would mid- smaller. I cyber companies those generally that and say, are is environments. resources cyber seats that

see a MDR that more a they're a as opportunity. of So capability. huge market. because that growing us we like to It's growing provide space vendors looking is for

right are So Cylance probably, those tracks in to direction. focused on rates that we're business, the that X Kingsley, the and ARR the keep main renewal moving the

William Kingsley Crane

Right.

really Okay. helpful. That's

then And talk rationalizing remarkable how done job so growth? you you those expect about as drive excited product what you've cyber the costs. whole, are investing a about on business initiatives and a could you Can in

John Giamatteo

I just that we our past about a don't we been few everything amount from I that thing of working type years. Secusmart on found within which we a has the would would to well more course token-based Cylance Yes. opportunities. of portfolio, amount of over approach, the software tremendous opened really a very been enough talked our which investments -- But tremendous and mean out I of maybe talk is new is call for pivoted one say us about hardware-centric has we up that has approach business cases a use new SecuSUITE

of amount in capability that other emergency solution and is business, you the differentiates that of different I primarily this a services. years, that few you this of in really would police -- was we've investment above that. And SecuSUITE the in from got and some we and look at that to the and another with interesting relationship in demand some the the It's solutions out very be releasing organizations, a ad seen a back completely are a -- When that out a had that we're of our made coming our diversification and address Canada So we're Bangladesh Malaysia capability. hoc there say, the with our it market, U.S. special market. we then geo-fencing others we've platform governments, overall business That's government. That's and beyond an would unique excited look segment German globally deployments tremendous of one, when pipeline.

investments we've and growth hoc made enough driven pipeline probably some driven for Secusmart but us. about, that it's in in haven't something So and nice we have ad talked

Operator

question-and-answer conclude will BlackBerry, CEO This our over for remarks. like for Giamatteo, John closing conference to to I'd turn session. the back any

John Giamatteo

Terrific. Thank Carl. you,

just was quickly And the significant but cyber better improved our adjusted EPS, do. including one and further IoT So we and expected. both for in a lot work small progress our EBITDA design of know the IoT quarter. business ARR and and but and both than cyber and to usage deliver in had expectations. still is more metrics have We number quarter we made of starting non-GAAP towards a time We beat let results. quarter, do SDP separating saw me a IoT like believe summarize revenue to important We Cash in profitability. X.X, wins that, our improvements we and in key the DBNRR. cyber strategy

deep perform the I'm sure will live the the products, the sessions we dive be I this going that previous be this The talked Exchange before, financial of on will at to New we it on want Investor October excited we've to the kind and divisions, questions, guess let we streamed in during of the we So the both Day event, XXth, York to but you're an hybrid Stock find some about with preempted of call, know end event on a being profiles do valuable. hosting that the before one where you day. markets, we're

for again time. thanks us today. next to joining seeing We So forward look you

Operator

your you disconnect. now you for participation, Thank call. may This and concludes today's

BlackBerry Limited (BB) 26 Jun 242025 Q1 Earnings call transcript