BlackBerry Limited

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

Thank you, Sadie. Good afternoon and welcome to BlackBerry's fourth 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 note 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. A replay will also be available on the blackberry.com website. Some of the statements we'll be making today constitute forward-looking statements and are made pursuant to the safe harbor provisions of applicable U.S. and Canadian securities laws. will indicate forward-looking statements by using words such as expect, will, should, model, intend, believe and similar expressions. 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 reconciliation between our GAAP and non-GAAP numbers, please see the earnings press release and supplement published earlier today, which are available on the EDGA, CEDA, and BlackBerry.com websites. And with that, I'll turn the call over to John. Thanks, Jim.

Tim. Tim. Sorry, sorry. Thanks, Tim. Good afternoon, everybody, and thank you for joining us today. I'll begin with three headlines for the quarter. The first headline is licensing. This quarter, we entered into an exclusive negotiation of a North American party for the sale of the portion of the company's patent portfolio primarily related to mobile devices, messaging, and wireless networking. BlackBerry will retain rights to use these patents. Patents associated with the company's strategic software and services business including Spark, QNX, Ivy, secure communication, and critical event management will continue to be owned and managed by BlackBerry. The company has not yet reached a definitive binding agreement, and negotiations are ongoing. The company limits its licensing activities in the quarter due to the negotiations and because of accounting rules, which Steve will explain later. This results in licensing revenue being lower than expected. The second headline is software and services. This quarter, we saw a slight sequential revenue improvement for Spark, and a continuing recovery for BTS. BTS had a good quarter, despite vehicle production headwinds, from the global chip shortage. Software and services billing grew strongly and are now back to the level of a year ago. The third headline is BlackBerry Ivy. Discussion with automakers and tier ones are progressing well, and I'll touch on some of the exciting developments later. Now let me get into the more details. BlackBerry reported total company revenue of $215 million. 215 software and services revenue was 165 165 licensing and others was 50 million five zero gross margin was 73 percent earnings per share was positive three cents cash generated from operation came in at 51 million total ending cash and investment as of february 28 was 804 million I'll now turn to our business commentary, starting with software and services. Our ongoing strategy is to safeguard the Internet of Things with intelligence and security. We achieved this by combining our 30 years plus of security expertise with newly acquired technologies such as side-ends AI and machine learning. We currently serve the market in two different ways. The first is to provide cybersecurity for enterprise, particularly large, highly regulated verticals, such as government, financial services, and healthcare. Here, we protect endpoints, networks, and communications with our zero-trust architecture. The second is to embed technology to provide safety and security to the endpoint. Here, our focus is currently largely on automotive. Again, a very large, fast-growing market. Starting from a QNX installed base of over 175 million cars on the road today, QNX and Ivy, in partnership with AWS, have significant growth opportunities. Over time, these two paths that I mentioned will intersect and provide tremendous opportunity for BlackBerry. Investment in smart mobility and smart city infrastructure will help drive this convergence. but obviously the market is too early. We recognize the need to be louder when communicating our strategy and who BlackBerry is today. This month, we launched a major new digital, radio, and print branding campaign across North America and the UK to get the message out powerfully into the marketplace. From a financial reporting perspective, starting this Q1, which is this quarter we're in, we intend to report software and services as two separate revenue lines, namely cybersecurity and BTS. The cybersecurity line addressed include and addressed the cybersecurity endpoint management and critical event management markets. Our main competitors, including other leading next-generation endpoint security providers, as well as notable UEM vendors. We address these markets with our AI-driven SPARC, a fully integrated UES and UEM platform, along with AdHoc and Secchi Smart. BTS addresses the embedded software and vehicle data analytics markets. Notable competitors, including AutoGrade Linux, Android, and proprietary operating systems. Our QNX product, over the highest level in data functional safety and security, our Bacteria IV will provide an end-to-end solution for harnessing data in a car. We believe that this change will help investors to gain greater insight into the performance and opportunity of these businesses going forward. Moving on to software and services metrics. ARR was approximately $468 million, slightly down from last quarter, primarily due as expected to the pandemic-related impact on BTS. Dollar-based net retention rate improved sequentially from 90% last quarter to 91% this past quarter. Net customer churn remained low at around 1%. now moving on to bts as a reminder qnx is by far the largest component of bts as we anticipated during last quarter earnings call we saw improvement in both qnx design win design phase revenue and production based royalties this improvement continued despite a challenge from the global ship chip shortage and it's impacted and its impact on auto supply chain it's not fully clear what the impact will be on production volumes, at least nor for how long will it last. However, we continue to expect improvement from BTS in the upcoming fiscal year. Our plan of returning to a pre-pandemic normal revenue run rate of around $15 million per quarter by mid-fiscal year assumes that the new challenges are overcome by that point. Looking beyond the short-term headwinds, though, Strategy Analytics, a leading research firm, estimated there will be a large expansion in the number of embedded systems in a car by 2027. The estimated disk growth will be mainly driven by ADOS, which is Advanced Driver Assist Systems, as well as data gateways. These systems require the highest level of safety certification and are increasingly deployed on chips with higher compute power. Both factors play to QNX strengths, and recent wins, some of which I'll mention a little shortly, give real data points that support this trend. This validates the strategy of focusing on safety, critical application, and points to an increasing ASP per part. During the quarter, QNX strengthened its leadership position in its safety critical software. We announced enhancement to our hypervisor, which, by the way, is the only one in the market certified to the highest level of functional safety. We also announced a number of design wins, including our Motional, a joint venture between Hyundai and Aptiv, will be using QNX black channel communication technology in its next generation driverless vehicle. Also, Baidu announced that their machine maps, a critical component of autonomous driving, will also be built on QNX and designed into the new energy ion models from GAC, which happen to be a leading Chinese electrical vehicle automaker. These announcements demonstrate that QNX is at the heart of data's vehicle technology development, positioning the business well for future revenue growth. It was also confirmed at CES that QNX has been selected by Sony, the latest Sony NuVision S car. Furthermore, Scania selected QNX as its primary operating system for its heavy-duty trucks. Overall, in the quarter, QNX has 25 design wins, with 9 in auto and 16 in general embedded market, or JAMM. The auto wins were predominantly ADAS and digital instrument custom designs. The GM wins include a mail processing control system for USPS, United States Postal Service, a connected manufacturing plant system from GE, and a next-generation eye surgery equipment from the leading medical device company. We are delighted to report that now we have half-designed wins with 23 of the world's top 25 electric vehicle OEMs, who together represent 68% of the global EV production. This is an increase, by the way, from 19 of the top 25 last quarter, with recent wins including Toyota and Honda. In the recent reports, Deloitte estimated the CAGR, the compound annual growth rate, the global EV sales will be around 29% over the next 10 years. And QNX is well positioned to benefit from this growth. Let me now provide you with an update on Ivey. Since the announcement in December, the response from OEMs has been very positive. We have held many discussions, many workshops with a number of leading automakers and are pleased in how these discussions have progressed so far. Many use cases have already been discussed, showing the potential of this platform once creative app developers are able to build on it. Most of these use cases are being developed under NDA and can be shared right now. However, one we can share is the Right to Repair Initiative. Garner the leading analyst, has identified BlackBerry iV as a potential solution to the problem of safety and securely sharing standardized vehicle data with repair shops without compromising either vehicle safety or the OEM's IP. To support the development of the app ecosystems, this quarter we made an investment to grow the iV R&D team This includes starting an ecosystem development group led by a new executive joining us shortly from a major OEM. We recently announced the creation of an IB innovation fund. The fund will drive use case innovation and adoption of IB by startups We intended to start with a $50 million investment in the fund. Portfolio Company, by the way, will also have access to up to $100,000 in AWS credit as well as insight and guidance through the AWS Activate program, a program that has already helped develop hundreds and thousands of early-stage startups. We're also soon to unveil an IV advisory council designed to shape and advise the IV development community, focused on defining vertical specific use cases. Among the first names to have already signed up are leading insurance company, technology company, as well as telcos. Their input will complement the auto industry expertise provided by the top OEMs in Tier 1. Following our IV announcement, major players such as Ford and Google, as well as Bosch and Microsoft, announced commitments to the vehicle data market. Because IV is hardware, operating system, and cloud-agnostic, we do not see these announcements as competition, but rather opportunity for IV to partner and add value. The vehicle data analytics market is both large and growing. McKinsey In their monetizing data report, estimate that the TAM, the total available market, will be in the region of $450 to $750 billion per year by 2030. We recognize that this market is going to be competitive, but we're still very well positioned. While we are already working with OEM, in October, we expect to release the early SS version of IVY. We also expect to ship, we should start shipping the product in February of next year. Now moving on to Spark. As a reminder, we launch our new Spark Suites in May and the Cyber Suites in October. Pipeline for our Spark Suites grew strongly sequentially. The typical sell cycle is given nine months. So we're expecting a good second half of the fiscal 22. We continue to have success in upgrading our UEM install base to Spark, adding Unify, Endpoint Security, or UES. This year, we will start focusing on new logos for the cyber street. Across Spark, we start to see strength in both renewal and upsell in our key verticals. Let me share some names with you, some wins. These included Q4 businesses with IRS, the United States Department of Commerce, the Qatar Development Bank, the Scottish Government, as well as the Scottish Police, the London Metro Police Services, and the US Marine Corps, as well as Bail Canada, just to name a few. On the service front, I must mention that none of our Guard MDR managed service customer were negatively impacted by the recent SolarWinds breach. While I'm on that subject, the happiness Today's sponsored attack on Microsoft Exchange Server identified early this month was an example of threat actors leveraging patch-run abilities. The script control of our EPP product, Protect, has demonstrated we can safeguard customers from this threat. Optics, our EDR product, provides additional protection. We're excited about two upcoming products that will launch and are an important part of our extended detection and response, or our XDR strategy. The first is our cloud-based EDR product, Optics 3.0, that due to be released this coming quarter. And we'll expand data query and provide richer content for alert triage and threat hunting. The second is our BlackBerry Gateway product, that will be the first to offer the zero-trust network access to both SaaS environment as well as on-prem applications, while enabling Sidense AI for faster detection and response. We will provide more detail at our Virtual Analyst Day next month. Finally, a brief word about SecuSmart and AdHop. We have been pleased with the progress made by SecuSmart this fiscal year, SecuSmart technology is now used by 18 governments worldwide, offering the highest level of security for voice and text communication. Ad hoc has a strong position in federal government around the world, including protecting over 70% of U.S. federal government employees. We see a significant opportunity for ad hoc in the enterprise. And following the quarter end, just most recently that is, we announced a new BlackBerry Alert product. Alert is built on our critical event management expertise in the public sector, but with the additional features tailored to the needs of the enterprise, such as integration with Microsoft Teams and ServiceNow. While it's much early in this stage of our sale, we have already recorded enterprise win, including Fujitsu. I'll now turn the call over to Steve to provide more details about our financial performance. Steve?