BlackBerry Limited

Good afternoon and welcome to the BlackBerry third quarter fiscal year 2021 results conference call. My name is David 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. Should you need assistance during the call, please signal a conference specialist by pressing star zero. As a reminder, this conference is being recorded for replay purposes. I would now like to turn today's call over to Tim Foote, BlackBerry Investor Relations. Please go ahead.

Thank you, David. Good afternoon and welcome to BlackBerry's third quarter fiscal 2021 earnings conference call. With me on the call today are Executive Chair and Chief Executive Officer John Chen and Chief Financial Officer Steve Ray. After I read our cautionary notes regarding forward-looking statements, John will provide a business update and Steve will review the financial results. We will then open the call for a brief Q&A session. This call is available to the general public via call-in numbers and via webcast in the investor information section at blackberry.com. The replay will also be available on the blackberry.com website. As noted in our press release earlier this afternoon, slides will be shown during today's live webcast. These slides relate to the recent BlackBerry IB announcement. For those of you not on the webcast but joining via the call-in numbers, the slides are available for you to access on the investor information section at blackberry.com. Some of the statements we'll be making today constitute forward-looking statements and are made pursuant to the safe harbour provisions of applicable US and Canadian securities laws. We will indicate forward-looking statements by using words such as expect, will, should, model, intend, believe and similar. Forward-looking statements are based on estimates and assumptions made by the company in light of its experience and its perception of historical trends, current conditions, and expected future developments, as well as other factors that the company believes are relevant. Many factors could cause the company's actual results or performance to differ materially from those expressed or implied by the forward-looking statements. These factors include the risk factors that are discussed in the company's annual filings and MD&A, including the COVID-19 pandemic. You should not place undue reliance on the company's forward-looking statements. The company has no intention and undertakes no obligation to update or revise any forward-looking statements, except as required by law. As is customary during the call, John and Steve will reference non-GAAP numbers in a summary of our quarterly results. For a reconciliation between our GAAP and non-GAAP numbers, please see the earnings press release and supplement published earlier today, which are available on the EDGAR, CEDAR, and BlackBerry.com websites. And with that, I'll turn the call over to John. Thank you, Jim.

Good afternoon, everybody. Today, I'd like to keep the financial and business updates relatively brief because I'd like to spend a little bit more time discussing our recent BlackBerry IV announcement. This third fiscal quarter, we continue to build on the momentum from our second quarter, delivering results in line with our outlook we provided. We delivered sequential revenue growth, both in the total software and services section as well as BTS. We continue to deliver positive EPS and positive free cash flow this quarter. BlackBerry reported total revenue, company revenue of $224 million. Software and services revenue came in at $168 million, $168 million. License was $56 million. Closed margin was 70%. Earnings per share was positive $0.02. Cash generated from operation was $29 million. Total ending cash and investment at November 30th was $757 million. I'll start my business commentary with the software and services group. AR was approximately $475 million. Dollar-based net retention rate was 90%. Net customer churn reduced to around 1%. SPARC is the combination of, as a reminder, is a combination of our UEM and UES, the Unified Endpoint Security offerings. This quarter, we made good progress in both the government and financial services verticals with customer wins, including U.S. Army, U.S. Postal Service, the IRS, the Department of Energy, and Department of Justice, as well as Raymond James International. City Bank, the German Bundesbank, the Bank of India, and the government of Rwanda. In addition, we have customer wins in other verticals, including healthcare and manufacturing. We continue to see progress in upgrading BlackBerry UEM customer to the full SparkStreet. i.e., adding our UES suite. Example in the quarter, including Deutsche Bank, Deutsche Börse, Converge One, and multiple ministries of the Dutch government. Significantly during the quarter, we released BlackBerry Cyber Suite, our AI-powered cyber suite, which combines our industry-leading EPP, EDR, and MDR products. is further strengthened by the continuous authentication and the mobile threat defense capabilities. This CyberSuite is highly competitive against both traditional and the next-gen player in the cybersecurity market. This has been validated by 451 Research and other industry experts. CyberSuite brings together the best of BlackBerry and Sideline technology. Further, CyberSuite will be available in version They integrate with all major UEM offerings, including Microsoft Intern, VMware's Workspace ONE, Mobile Ion, as well as IBM Maps 360. This integration will allow BackBerry to provide additional security to users of our rival UEMs. Cyber Street has only been in the market for a month, but early interest is strong, both in the new logo and existing customer base. with significant pipeline growth this past quarter. CyberStreet obviously allows us to give our prospect and customer greater options for increasing their cybersecurity while protecting their UEM investment. As a result of these technology enhancement and positive customer receptivity, we will in turn step up our investment in sales and marketing to compete more aggressively. Before I move to VTS, I'd like to highlight the security certifications we have achieved. This quarter, BlackBerry UEM achieved the National Security Agency, NSA, commercial solution for classified program approval. This adds to the portfolio of U.S. government certifications we have received for BlackBerry UEM, including the NIAP certification, the Department of Defense Information Network approval product list, which I think we talked about last quarter, called IN-APL or dash IN-APL. FedRAMP, FIPS 140-2. No other software vendor in the cybersecurity space has been awarded more security certification by the U.S. government than BlackBerry. BlackBerry achieving NSA certification comes at a time when most of our major competitors have been identified having vulnerabilities that are being exploited by nation-state hackers. This should give our customer and prospect a higher degree of comfort about the cybersecurity protection they receive from BlackBerry. Now moving on to BTS. QNX, the largest component of BTS, reports sequential revenue growth. QNX remain on track to be back to its normal run rate by early next fiscal year. In the quarter, we have 17 new designs, one seven, design wins, sorry, six in auto, and 11 in generally embedded market. Our expansion in the GEM continues, with diverse wins, including a controller system for power turbines, a next-generation satellite receiver system, and a rail traffic management system from the Seoul-Seonnam subway. In auto, we have design wins in both kinetic cars and electric vehicles. The wins included instrument clusters, a couple of them in domain controller, a handful of them in ADOS designs, the advanced driverless systems. Speaking of electric vehicles, we are very pleased to share with you our strong position in the EV market. QNX now has design wins with 19 of the top 25 electric vehicle OEMs, which together had 61% of the EV market in the first half of this calendar year. We are working hard to recruit the remaining six. Moving on to secure communication, which includes ad hoc and SecuSMART. Secure communication had a strong quarter. This strength was primarily due to ongoing transition to remote working, which has been obviously greatly accelerated by the pandemic. Ad hoc has some strategic win this quarter, including the California Department of Correction and Rehabilitation, or Rehab, Department of Correction and Rehab, as well as the California Department of Justice, I believe that no one now can claim to power the entire state of California. Other notable renews and upsells from Ad Hoc in the quarter, including the United States Army, Navy, as well as the Air Force, as well as the Federal Aviation Administration, FAA. We also renew within the U.S. Defense Intelligence Agency, U.S. Department of Energy, Treasury, and Agricultural, as well as the FEMA, Federal Emergency Management Agency. Finally, I want to touch on licensing. Revenue for the quarter came in at $56 million. That's before the majority of the licensing revenue comes from our IP licensing business. As I mentioned at the beginning of the call, I'd like to spend some time discussing BackBerry IV, which we are very excited about. Modern cars continue to generate a huge amount of data. I think you all agree and know. The auto industry is not prepared to capture and create value from the analytics because these data is difficult to collect and interact with without very costly integrations. BlackBerry iLeaf's mission is to make it easy to gather, securely transport, and analyze these data in a standard and a cost-efficient way across multiple brands and models on a common platform. This will allow the developer's ecosystem to use the data to provide intelligent insight and application on a global scale. We have entered into a multi-year exclusive co-development and co-marketing agreement with AWS. This type of agreement is rare. BlackBerry and AWS Engineer have been working very closely to jointly build the platform. Under the terms of our agreement, BlackBerry will own all the commercial relationships with customers and will share revenues with AWS. Each side contributes the key capabilities required. On the BackBerry side, BackBerry QNX brings over 20 years of auto industry experience, as well as relationship, as well as a huge footprint of over 175 million cars. We are a trusted leader with a deep knowledge of automotive safety and security software systems. AWS is the world's largest cloud provider with a vast developer community and outstanding expertise in consumer experience, interfaces, as well as IoT. Combined, we're able to provide a full end-to-end platform. We expect an ecosystem of apps and services developed on the BlackBerry IP platform over time. We will work with AWS a proven due to a successful developer communities to help drive the process. With BlackBerry IV, we're creating a recurring revenue data business, recurring revenue model that is, targeting revenue on a usage as well as a subscription base. An important difference between BlackBerry IV and competitors in this space is that we allow the OEM to own the data and with that, the relationship with their customers. We are already in discussion with some automakers who were granted early SF, and we have received positive initial feedback. The target is to be in the 2023 auto model, or 2023 years model, with possibly potentially some professional services prior to it, While it is too early for us to provide a revenue outlook, we are confident that BlackBerry IV addresses a very large market opportunity that will greatly increase our ESP. With that, let me turn the call over to Steve to provide more details about our financial performance.

Thank you, John. My comments on our financial performance were the first. sorry, for the fiscal quarter will be in non-GAAP terms unless otherwise noted. Please refer to the supplemental table in the press release for the GAAP and non-GAAP details. We delivered third quarter non-GAAP total company revenue of $224 million and GAAP total company revenue of $218 million. Third quarter total company gross margin was 70%. Our non-GAAP gross margin includes software deferred revenue acquired but not recognized of $6 million and excludes stock compensation expense of $1 million. Third quarter operating expenses were $142 million. Our non-GAAP operating expenses exclude $32 million in amortization of acquired intangibles, $11 million in stock compensation expense, $4 million for software deferred commissions expense acquired, and $95 million fair value adjustment on the convertible to ventures, which is a non-cash accounting adjustment driven by market conditions. Third quarter non-GAAP operating income was $14 million, and third quarter non-GAAP net income was $11 million. Non-GAAP earnings per share was $0.02 in the quarter. Our adjusted EBITDA was $31 million this quarter, excluding the non-GAAP adjustments previously mentioned. And I will now provide a breakdown of our revenue in the quarter. Software and services revenue was $168 million. Software product revenue remained in the range of 80% to 85% of the total, with professional services comprising the balance. The proportion of software product revenue that is recurring was approximately 83% due to product mix. The decrease in ARR this quarter, similar to the prior quarter, is primarily due to BTS. We include QNX royalties in our ARR metric to give a total company view. We expect to see the impact of COVID on ARR normalized early next fiscal year as we return to our normal revenue run right there. Licensing and other revenue was $56 million. Now moving to our balance sheet and cash flow performance. Total cash, cash equivalents, and investments were $757 million at November 30, 2020, a decrease of $220 million during the quarter. This is mainly due to the early redemption of the $605 million of convertible debentures and issuance of $365 million of new convertible debentures on September 1st. This represented a $240 million reduction in debt financing, partially offset by cash generated in the period. Our net cash position increased to $392 million at the end of the quarter. Third quarter free cash flow was $27 million. and cash generated from operations was $29 million, with capital expenditures of $2 million. That concludes my comments, and I'll now turn the call back to John.

Thank you, Steve. Before I provide our outlook for the remaining of the current fiscal year, I'd like to highlight some noteworthy partnerships, in addition to the Bechler-Ivey that we're very excited about. This quarter, we partnered with Zoom to provide a BlackBerry secure version of Zoom, which is a highly secure way to hold virtual meetings in this new work-from-anywhere environment. It provides increased protection from corporate data leakage as well as cyber threats. In a quarter, Verizon launched their Business Internet Secure offering, which includes our BlackBerry Smart AV antivirus product and Cisco Umbrella security service. This new product is aimed at a rise in large number of small and medium-sized business customers. During the quarter, we announced the integration of Ad Hoc with both Microsoft Team and ServiceNow Now platform. Team, as most of you know, is the market leader in collaboration software with over 115,115, 115 million daily active users. And the Now platform has 51% of the IT service management market. This integration will further enhance Ad Hoc's reach and the ability of enterprise to protect their assets. I'll now move on to our outlook. We continue to expect total company revenue for the year to be around $950 million, as we indicated last quarter. We expect licensing revenue will finish the fiscal year a little stronger than previously indicated. We expect revenue for BTS to continue to grow sequentially in the fourth quarter, and as we talk about, as we turn to its normal run rate early next fiscal year. This quarter, we continue to make good progress. We deliver solid financial as per our outlook. We have developed exciting new business model, the recurring revenue model for QNX, as well as partnership, which I outlined, and we deliver industry-leading products as per our roadmap. With that, I'd like to turn the call over to our operator to conduct a Q&A session, please. David?

Yes, and we will now begin the question and answer session. To ask a question, you may press star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star 1 to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We request that you limit yourself to one question and one follow-up. Our first question today will be from Daniel Chan with TD Securities. Your line is open.

Hi, Dan. Hi. Thanks for taking my question. I don't know if you guys mentioned it or if I missed it. Did you provide a metric on the billings growth?

No, we did not. You didn't miss it. We haven't provided it.

Okay. And then on the ARR declining, Steve, you talked about how it's declining because of BTS. Can you just remind us what you're including there from BTS and why that's causing it to drop?

The numbers – go ahead, go ahead, Steve.

Sure. So they – you know, our ARR is a total company, you know, metric, well, for software and services. The – The Q and X part of it, we include, it's basically a trailing four quarters that feeds into that metric. So there is a lag effect in it. So it's got the, you know, with the COVID, you know, impact that we've been discussing, you know, consistently, that's got a lag effect making it back into the metric as we move forward and recover.

Your next question comes from the line of Mike Walkley with CannaCore Genuity. Your line is open.

Hi, yeah. Hi, Mike. Hi, John. Thanks for taking my questions and best wishes to everybody on the call for the holiday season and to stay healthy. Yes, you too. You too. Great. Thank you. Just a question for me, just building on Ivy, you know, lots of interest and excitement around it. I know you're not sizing it yet because it's early days, John, but as you've shared longer term about getting to kind of ASPs and the high teams to $20 per car, how does this help close the gap if things go really well? How do you see ASP for car developing over time?

As I said, we don't really have all our – kind of the revenue laid out yet because the earliest we'll get the revenue, I believe, is the model year 2023. So we do expect this to help close the gap in a very – or increase ASP in a very big way. It has to do – a lot to do with not only the base platform to collect sensor data and and analyzed it both at the edge and in the cloud. And OEM could then take advantage of all these sensor daters and the combination of those sensor daters to make certain decisions, either real time or in the long term. But you're also depending a lot on how many applications could we spin up. And OEM is going to build the application. The Tier 1 will build the application using our platform. And so will other third parties. So if there are more applications, then obviously there are more instances that could increase our ESP per vehicle. So we're very hopeful that this not only has a recurring part of it, but it also will bring us a good chunk of revenue going forward.

Great. Thanks, John. And just my follow-up question, kind of longer term also. With BlackBerry, you guys have launched several new different software security modules. As you look at your sales force, what are they feeding back to you in terms of their ability to land and expand customers? What are they leading with, and what are some of the upsell opportunities that they're excited about with these new modules that you've launched over the last several quarters?

Yeah, so first off, on the product side, our cybersecurity suite is a very timely offering to the market because of all the hacks and the vulnerabilities going on right now. We have been invited to more cases nowadays because of the environment and the attention switched to cyber protection and all the hacking that's going on out there. So, for example, at Knock on Wood, we haven't been, we haven't been successfully, I guess, intruded yet. That's not to say, this is not a challenge. This is just a state of the affair at this point. So, on a medium term, when we Our sales force are very focused on upgrading all our UEM base, which accounts for, depending on who you listen to, in terms of analysts, industry analysts, somewhere between 9% to 12% of the market shares of UEM space. So we are very busy upgrading that. So they sell them the UES on top of UEMs. And then, you know, very soon, and, you know, literally we're talking in months, we will release our UES platform onto the competitor's UEM, which are Intune, MobileIon, AirWatch, and IBM Mass360. Not all at the same time, by the way, sequentially. but we're probably going to start with Microsoft first. So that's another aspect of it. And the fact that we are – so that's how that part of cybersecurity play. So that should keep us busy for the next couple of years and give us a lot of opportunities going after the market.

And just one last question. I'll pass the line. Just on the UES, you know, going to other UEM platforms, you know, what is the feedback or interest level, you know, for that? And who do you see is even able to offer those similar capabilities for the mobile market?

The interest levels are reasonably high. I mean, I don't have a specific – quantitative answer to your question, but when I speak to customers and make groups of customers at the same time, they all think that makes sense. It gives them an ability to protect their current investment. Whatever UEM that they already invested in, if you're happy and comfortable with, your pros and cons on each of the vendors, but they could then use this primary security, which we believe is the best know is the best of the bunch um in terms of technology and i i laid out all the certification we got from governments and so obviously we we have the best technology in in protection in cyber protection so you know that gave them the best of both worlds without having to uh rip out their investment which of course there's no you know there's a No big hurry to do that, even if they wanted to do it in the long term. So this helps to add value to what they have and keep their investment so everybody's happy about at least have that choice to look at.

Well, best wishes for the new year, and thanks, Jake, for my question. Sure, thank you.

Your next question comes from the line of Tripp Chowdhury with Global Equities Research. Your line is open. Hi, Tripp.

Hi, Trish. Hello, John. This quarter was phenomenal, both from execution point of view and from partnership point of view. Two strongest companies, Amazon AWS and Zoom. My question is more on the ID platform. When do you think the developers can get a hand of pre-alpha versions so that the excitement in the developer community is very strong? And I was hoping that they could start capitalizing the imagination on your platform sometime in 2021. Do you think that's reasonable to expect?

Good question. Thank you, Triv. I know that we will have a beta version be ready in third quarter next year. Third quarter, our quarter, sorry. Our quarter, third quarter, it's a September day. We will have a developer version. We're hoping to have a developer version before that. So I would say, be safe to say that about mid-year next year, the application provider will be able to lay their hands on that.

Beautiful. And also, in terms of some OEMs, EV OEMs, you did not name them. If possible, can you name a few that you think we can keep an eye on as we move forward and see what kind of applications and how they are embracing your platform?

Well, I don't think they will appreciate me naming them. And I might, so, but I would say this. The initial groups of company that we have been in contact with and have gotten positive feedback, it's in a group of about 20 people, 20 different OEMs. So, you know, obviously not all 20 will sign up. But I will commit to the following thing. You know, as we're getting customers sign up, we will try to make a public announcement when obviously the customer has to agree to it. Both Amazon and us are very excited and, you know, are very busy in making presentation and getting strong feedback today.

Beautiful. Congratulations and all the best. Thank you.

Your next question comes from the line of Paul Treber with RBC Capital Markets.

Your line is up. Hi, Paul. Hi, Paul. Hi, John. Good evening. Good evening. A couple of follow-up questions. On the Amazon relationship, I know you're not giving details on revenue, but could you speak to the details of the partnership itself in terms of maybe the duration of the exclusivity period and then maybe the magnitude of Amazon's commitment for co-development and co-marketing? And it also relates to that, does the agreement allow you to open it up from Amazon to other cloud providers at some point in the future? Yes.

So we agreed for a multiple number of years that Amazon We will be exclusive with using the Amazon Cloud and developing that product. They will be exclusive with us. They will not market or develop with any other party with the same, you know, in the auto sector and in the same area of data platform and analytical platform. So it's a very broad agreement. It does allow us to open it up for other cloud, but we probably won't do that until this particular one is done. Not meaning the exclusive here is done. It's at least set the product out and presenting to the customer. It's a co-development and co-marketing agreement, exclusively in both dimensions. And as I pointed out, BlackBerry will hold a commercial relationship, meaning that we will transact the deal with the OEM or the tier one or the application provider. We'll lean on the help of AWS to get the ecosystem up and going with us. They have a lot of engineers assigned to this. I will refer you to a number of keynote speakers at the AWS reInvent conference. It's public information, starting with Andy Jassy, the CEO, and how he describes our relationship with AWS, as well as the head of the IoT. When he made his keynote, he specifically uh, quite a bit of time on how this particular this relationship. So you could see that they're very serious. It's serious. That's not only come from the cloud side, but it comes from the Iot side also at Amazon.

All right. Thank you for those details. Very interesting. Secondly, I'm just, you know, looking at the transition to work from home globally and, you know, all the uptake of, you know, various cyber security and, you know, other applications. You know, how do you see BlackBerry benefiting from that? And then also, how has BlackBerry benefited from that trend? And then could you dovetail that against the net revenue retention in the quarter? You know, what's been driving the net revenue retention? I think a little bit in the quarter, you know, versus this transition to working home.

Yeah. So I can only tell you that the UEM license, We're doing well initially in the COVID-19 shutdown because a lot of our customers wanted to expand their number of licenses to cover everybody to work from home and work remotely. As you know, most of our customers are large institutions in the banking industry as well as in the government. So the volumes are quite high. at that time. Now, gradually, it shifted to two other areas. One in the secure voice technology area that they rework remote from home. Both government and all the regulated industry sectors are seriously looking at the secure voice technology And then the emergency alert systems, now I think it used to be that are reasonably focused by user, reasonably focused in the government space, but now it's now expanded to medium to larger enterprise where they want to be able to reach their employees and all the constituents. So we see very good pickup in those areas that clearly has benefited from the unfortunately the pandemic situation but the the pandemic situation drove the uh realization of secure communications is very important so there we see a lot um and then of course um there is an indirect effect on um on uh cyber cyber street although you know we just released the cyber street um and As you know, we've been behind in EDR, but we believe we all caught up and we ran enough tests to show that. So you should see some revenue start coming from those areas. So those are kind of the areas related to the work from remote.

Reading between the lines, the one you didn't mention was – Legacy silence business the so is that day should we show that's part of the second Street. Sorry.

Sorry.

Sorry Sorry, that was a new retention Is the site drop there is that is that driven from just the older cyber the older silence products? Maybe some churn there that number is the total company number and

So it's not just the so-called the older sidelines product. It's a combination of all enterprise products.

Okay. Thanks for taking my question. Sure. Your next question comes from the line of Todd Coopland with CIBC. Your line is open.

Hi, Todd. Hey there, John. Good evening. I just wanted to ask you about the Q4 outlook, $950 million for the year. So it's, I don't know, $20 million or so higher than where Street is for the year, according to FactSet. And then you called out IP being higher. So I'm wondering within that mix, will software and services be up sequentially? Yes. Okay.

And can you sort of – Wait, wait. I always get into trouble with lawyers when I answer that it is my expectation and the current model that it is up sequentially.

Okay. And can you characterize sort of the puts and takes within that? I know there's a few pieces in the bucket there. Just close that loop for us on that.

Yeah, we believe secure communication will continue to do well. It's a combination of ad hoc and Secchi smart. And we believe that UEM will be relatively flat. BTS will have a sequential up order. And those are kind of the major, major pieces.

Yeah, okay. And, you know, you've talked in the past about sort of COVID slowing new customers, deciding, and as you're, for I guess enterprise decisions just broadly, I know there were some other questions about this earlier, but As you are thinking about the next fiscal year, is there enough loosening now sort of, you know, post the vaccine, et cetera, where you can start to see some of those enterprise decisions loosen up? Can you just talk about your thinking on that for the next year or so? Yeah.

Our assumption is they will loosen up, and we are in the process of building our annual operating plan, our AOP, for next year. So our assumption that it will loosen up and get back to normal, from the auto sector point of view, we already start seeing that. So we will start seeing it also on the commercial side. I am reasonably sure cybersecurity is, like I said earlier, it's a topic that everybody wants to talk about. And so we have to kind of double down on that ourselves in terms of reaching the marketplace. And we have a number of products and channel programs, which I didn't put in. But in the interest of time, I didn't put it in my script. But we have a very robust channel program that combines the Silence and BlackBerry channel program together. So there are a few things that we're doing with Believable

both see the growth and be able to execute for the growth next year okay uh last question it's i guess it's not really stock specific uh to certainly my thesis but just curious You know, you've seen a few major tech companies come out and say, you know, back to the office by September, you know, work three days in the office, but you can still work from home. Have you decided how you're thinking about BlackBerry from that perspective once that opportunity is there?

No, we have not decided. September next year seems to be a little far away, and – Well, let me put it this way. We would have been speaking at least another three times before that. But we're open-minded. I'm an applicator. I'm an old-fashioned guy. I'm an applicator that we should be together to build a business together, to build a team in person. That's just me. But I also recognize the fact that that there are some reality and there are people who like the flexibility. So as long as it doesn't lose productivity, I'm willing to try a couple of things. Okay.

I appreciate your comments. Thanks very much. Absolutely. Thank you.

Your next question comes from the line of Stephen Lee with Raymond James. Your line is open.

I see. Thank you. Hey, John, just a clarification first. The 950 outlook, that's your non-GAAP revenue number, correct? Yes, that's the non-GAAP revenue number. Yes, correct. Okay, and you expect VTS to grow sequentially, and you said enterprise software as well to grow a little bit sequentially in Q4? Yes, that's what I said. Okay. All right. And, John, on Ivy, do you see Ivy as a bit higher output compared to some of the other modules, or would you expect it to be in the same range?

Oh, no. In terms of the ASP? Yes. Oh, I'm hoping. I'm hoping it's higher than. Okay. You know, to be fair, let me. maybe reset here for the following. So you know that our current module, whether it's hypervisor, ADOT, clusters, cockpit, IDI, ranges anywhere from the low single digit dollars to literally high single digit or low double digit dollars per module. So that's the range. I would expect this to be more towards the higher end of that spectrum. So when I said, oh, no, earlier, I was thinking about IBI. So compared to IBI, this will be a lot more.

Right. Okay. But you will split that with AWS?

Yes, I will have to have a revenue split with AWS, correct. Okay. Got it. Okay. Thanks a lot. Sure.

I would like to turn the call back over to John Chen, Executive Chair and CEO of BlackBerry, for closing remarks.

Oh, thank you. Thank you, David. So thank you very much, Eric, for attending today's call. And I know it's – we have this thing now on your early evening, on most of your early evening if you're on the East Coast. I apologize for that because, A, I'm sheltering in the West Coast, and, B, we had our board meeting today. So this is one reason why we're doing it at this hour. I hope it's not overly inconvenient to you all. Before I sign off, I'd like to wish you and your family a very safe and happy holidays, and I hope to see each and every one of you in person next year. So with that, have a good day. Thank you.

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