BlackBerry Limited

Good afternoon and welcome to the BlackBerry first quarter fiscal year 2024 results conference call. My name is Andrea 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 then 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, Vice President of BlackBerry Investor Relations. Please go ahead.

Thank you, Andrea. Good afternoon and welcome to BlackBerry's first quarter 2024 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 harbour provisions of applicable US and Canadian securities laws. We'll 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. You should not place undue reliance on the company's forward-looking statements. Any forward-looking statements are made only as of today, and the company has no intention and undertakes no obligation to update or revise any of them, except as required by law. As is customary during the call, John and Steve will reference non-GAAP numbers in their summary of our quarterly and full-year results. For a reconciliation between our GAAP and non-GAAP numbers, please see the earnings press release published earlier today, which is available on the EDGA, CEDA and BlackBerry.com websites. And with that, I'll turn the call over to John.

Thanks, Jim. Good afternoon, everybody, and thanks for joining the call today. Let me start with the IoT business unit. Revenue for the quarter was $45 million, and gross margin remained strong at 80%. Revenue came in lower than expected for two main reasons. The first related to a number of leading industry players that are revising their development plans as they step up their software-defined vehicle efforts. This has caused some program to be delayed. While seeing our customer placing a higher priority on the SDD transition is a good thing for both QNX and Ivy, the delay rolled out of QNX development license has therefore pushed our revenue this quarter. This was purely a timing issue. As we have outlined in the past, from quarter to quarter, design phase revenues will fluctuate depending on the timing of large design awards and when the work begins. However, we haven't seen any weakening of the strong secular trends driving the business. We remain confident in our ability to win new designs. The second factor is the macro environment, which has impacted some regional production volumes, and with it, royalty revenues. As has been the case in recent quarters, the impact appears to be mixed across OEMs and geographies. While production in China in the early part of this year was much softer than I expected, elsewhere in North America, Europe, Japan, and Korea, output continues to look relatively steady, helped, of course, by an easing of supply-side constraints. We will closely monitor the situation and assess for any potential impact for the year. And at this time, we continue to expect to achieve the full-year revenue consensus for IoT. Further, we are reiterating the 18 to 22% three-year revenue CAGR that we provided at our analyst day last month. These targets are based on a number of factors, including our strong QNX backlog, which we reported as being $640 million at last fiscal year end. Our pipeline of upcoming potential design wins in our assessment of ongoing secular trends. A data point that illustrates those trends and our leadership position in the market is our annual vehicle count. Tech Insight, a leading technology analysis and market research firm, has published that QNX is now embedded in over 235 million vehicles, a year-on-year net increase of 20 million, or 9%. When compared to annual global vehicle production, this supports a growing market share for QNX. Excuse me. QNX remains the foundational software of choice for leading automakers and tier one suppliers around the globe as we continue to add new design ways. In the quarter, QNX has seven design wins in auto and seven in general embedded market verticals. In auto, we continue to secure design wins in the digital cockpit domain. This fast-growing domain has largely led the way in consolidating various software stacks onto a single high-powered chip in the car. This quarter, we recorded wins with two of the top five global automakers. The first win includes our real-time operating systems, as well as our hypervisor and acoustic middleware. The second win will deploy two instances of QNX, supporting the digital carpet and main body domain, both running on high-performance compute engines. We also secure a win of a leading US-based EV automaker with multiple instances of QNX being deployed. QNX in that case will support a SONO and central compute architecture, including the digital cockpit and the vehicle telematics. These wins demonstrate how we expanded both the number of domains deploying QNX and the number of layers of QNX deployed in each of the domains. Outside of auto, we recorded wins supporting a range of different applications. In industrial, We secure an ADAS platform for heavy industry machinery and requires both our hypervisor and OS for safety. We also secure wins for industrial testing and control, including a next generation controller for use in marine and aerospace application and a win with a leading global household appliance, sorry, household appliance manufacturer for production line testing equipment. In medical, WINS includes medical eye laser equipment with a leading surgical technology manufacturer. These designs in operational technologies like medical and industry, industrial, sorry, like medical and industrial demonstrate our ability to win in this very large and growing market. These protocols are showing similar trends to auto, including significantly higher compute at the edge and a need for complex safety critical software stacks, which is where QNX is the market leader. On the product front, last month we announced the early SS release of our next generation kernel. This is a significant step change for QNX. The new release helped deliver significantly higher performance and particularly scaling almost linearly as the number of cores on the underlying chip increased up to 64 cores. While safety and reliability are essential parts of the QNX value proposition, it is also our leading performance in complex compute stack that helps differentiate us from our competitors. This release will position QNX to support the future of rapidly increased compute power at the edge for many years to come. Moving on to Ivy. As planned, we have now released a general availability version of Ivy. This is a much more standalone version of the product than before, requiring far less support from the IV technical team. We see this as a significant step forward for scaling our go-to-market efforts, allowing us to support a much wider range of proof-of-concept trials than before. We are making good progress with building the IV ecosystem, an important part of the overall value proposition. This past quarter, we announced an investment in the Michigan-based CerebaMax. Ford, Celantis, and Toyota are all currently working with CerebaMax, and they offer AI-driven solutions that analyze vehicle data on driver behavior and vehicle health. They harness this data to deliver applications such as fleet management and personalized insurance plans. IV end-to-end edge-to-cloud platform will provide CerebaMax with higher quality, easier-to-use data in a standardized development environment. We also announced a go-to-market partnership with a leading automotive cybersecurity firm, Upstream Security. Upstream Security partners with BMW, Volvo, and Renault as they are already protecting over 20 million vehicles against cyber attacks with their VDR, stand for Vehicle Detection and Response, platform. This new partnership with BlackBerry will allow them to leverage Ivy's edge capabilities to pre-process data in near real-time, maintaining cybersecurity while significantly reduce cloud overhead. The strategic decision by BlackBerry and AWS to develop a primarily edge-based architecture is proven to be the right call, especially as some cloud-only players, such as Regio and Autonomo, have struggled to achieve profitability. Turning now to the cybersecurity units. Revenue for the quarter was $93 million, representing 6% of sequential growth. Like many others in this market, we've also seen delays from elongated sales cycles with additional layer of approval compared to previous quarter, slowing our ability to convert our growing pipelines into revenue. That said, a leading indicator for revenue for this business is billings. And this quarter, we booked total contract value or TCV billings of $122 million. significantly higher than revenue for the second consecutive quarter. TCV building grew for the fourth consecutive quarters with 14% sequentially and 37% year-on-year growth. This growth was anchored on multi-year deals in our core government vertical, where we continue to have a lot of success. In the quarter, we closed one of the deals that slipped from Q4, with the other two still progressing well and likely to close later in the year. We also see two new large potential deals in government that have entered the pipeline. Given this pipeline and buildings momentum, we expect to achieve full-year revenue consensus and expect TCV buildings for the year to be in the range of $430 to $480 million. Finally, we are reiterating the three-year revenue growth CAGR of 9% to 12% that we gave at our annual stay. Growth margin for the quarter improved to 60%, which is 700 basis points higher than the prior year, largely due to product mix. In addition, the decline in ARR slowed and came in at $289 million. This trend is encouraging as we remain on track for ARR to return to sequential growth in the second half of the fiscal year. The dollar-based net retention rate or DBNRR also stabilized at 81%. As a reminder, DBNRR doesn't include new logos. As mentioned in the quarter, we secured new, renewed, new, renewed, and expanded business with a number of leading government institutions. This includes Share Service Canada, Transport Canada, the Canadian House of Commons, the U.S. Special Ops Command, the U.S. Navy, the U.S. Army Corps of Engineers, the White House Communication Agency, and the U.S. Transportation Security Administration, or known as TSA. Outside North America, we secure business with the French Ministry of Defense, the German State Police, the Netherlands Ministry of General Affairs, the New Zealand Ministry of Foreign Affairs, and the British Transport Police, just to name a few. We also close business in healthcare and financial services, including John Muir Health, Kaiser Permanente, and Hartford Healthcare, and a number of leading international banks. On the channel front, a critical element of scaling our SMB go-to-market presence, this quarter we saw a promising sign of progress from our renewed channel programs. In North America, deal registration and new logos brought by the channel increased significantly, both sequentially and year-over-year. Turning briefly to product, leading independent test lab, the TOLI Group, recently performed an assessment of a number of endpoint protection platforms, EPPs, including Silence Endpoint, Microsoft Defender, and others, and tested performance for detection rates, CPU utilization, and total scanning time. Silence Endpoint came out on top with a market-leading 98.9% detection rate, both online and offline, while also using the lowest amount of CPU capacity. In comparison, competitors allow between nine to 52 times more malware through than silence. Moving now to licensing. The past quarter, we were pleased to have closed a deal with Key Patent Innovations for the sale of the non-core portion of the patent portfolio. The deal includes an initial $170 million cash payment, which we have received, and a deal value could total as much as $900 million over time. KPI has already started to ramp up their monetization activities, including adding to their experienced team by hiring executives and patent lawyers, as well as starting to engage with potential licensees. That said, it would take some time to be fully ramped up, and we do not expect any meaningful additional revenue from the sale to be recognized this fiscal year. Under the terms of the deal, we retain ongoing revenue for any licensing arrangement in place prior to the sale. And in this quarter, this was $17 million. We expect revenue to be approximately $5 million per quarter for the remaining of this fiscal year. Let me now hand the call over to Steve, who will provide more color on our financials. Steve?