BlackBerry Limited

Good afternoon and welcome to the BlackBerry third quarter fiscal year 2024 results conference call. My name is Chuck and I'll be your conference moderator for today's call. During the presentation, all participants will be in a listening mode. We will be facilitating a question and answer session towards the end of the conference. Should you need assistance during the call, please signal a conference specialist by pressing the star key followed by zero. As a reminder, this conference is being recorded for replay purposes. I would now like to turn today's call over to Mr. Tim Foote, Vice President of BlackBerry Investor Relations. Please go ahead, sir.

Thank you, Chuck. Good afternoon, everyone, and welcome to BlackBerry's third quarter 2024 earnings conference call. I'm delighted to say that joining me on today's call is BlackBerry's new Chief Executive Officer, John Giammatteo, 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. 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. 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 results. For 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, Tim. And hello, everyone. My name is John G. Matteo, and I'm delighted to be joining you all today as BlackBerry's new CEO. I'm sure some of you will already know me from my time as president of the cybersecurity business unit, where while we still have work to do, the team has made significant progress with product, go-to-market, and overall operational efficiency during the past couple of years. As president, I've been at the heart of BlackBerry's operations, and I'm already very familiar with how things work, the challenges we face, and the steps we need to take going forward. I've stepped into this role at a pivotal time for BlackBerry, as we have a lot of work ahead of us. Among my first priorities is to fully separate the IoT and cybersecurity business units, right-sizing our operations and driving efficiencies in the process. But I'll come back to this more later in the call. Let me first discuss our performance this quarter, starting with the IoT business. The IoT team delivered the strongest quarter for revenue for several years, despite a number of industry-level headwinds. Revenue for the quarter increased 12% sequentially and 8% year-on-year to $55 million. Gross margin remained at a strong 84%. The main driver for revenue growth this quarter was the automotive, and in particular, Advanced Driver Assistance Systems, or ADAS. Revenue from royalties increased sequentially, and while still below the long-term average, represented 44% of QNX revenue. Development seats was 32%, and services, 24% of revenue in the quarter. In addition to delivering solid revenue, we maintained our design win momentum, adding meaningfully to our QNX royalty backlog. This was a strong quarter for new ADAS-related design wins. We secured a design win for our RTARs for safety and secure C++ libraries for use in a front facing camera solution that will be deployed by a leading European automaker. QNX was also be the foundation for an ADAS platform to be developed by a global tier one supplier and used by two leading Asian OEMs. Among other ADAS wins was a design with one of the largest automakers in the world who will use QNX OS for safety as its operating system. But this wasn't only a good quarter for automotive. We secured a number of new gem design wins as well. The use cases secured this quarter were broad. They included displacing a rival product with QNX hypervisor for an industrial automation controller that will be used in applications such as petroleum refineries, factory automation, and wastewater treatment. In medical, we secured a significant design for infusion pumps for bedside medication delivery. And our hypervisor and black channel products will be used in autonomous off-road defense vehicles as well. We continue to be excited about the large and growing opportunities outside of auto, where the need for safety-critical, high-performance software at the edge is growing fast. And speaking of high performance, we remain firmly on track for general access release for our QNX STP 8.0 next generation platform. This will be a really significant product launch, and everybody at BlackBerry couldn't be more excited about it. This step change in performance and scalability will enable developers to fully harness the significant levels of additional compute that next generation processors offer. So look out for more information on this and other exciting developments as we gear up for CES in January. Turning now to a brief update on Ivy, we continue to make progress in what is a long sales cycle business. Proof-of-concept trials are progressing well, and feedback from customers remains strong. We remain focused on converting POCs into design wins and hope to announce another win at CES in January. The Ivy ecosystem continues to grow strongly, and at CES, we'll be demonstrating more than 20 use cases with 12 partners, and expect there to be three third-party booths demonstrating Ivy-based products. Moving now to Outlook for the IoT business in Q4. As mentioned, the strong revenue growth and continued design wind momentum in Q3 was achieved despite some macro headwinds. The first was the UAW labor disputes, which naturally has had a negative impact on production volumes for some of our largest customers, and we expect this impact to be felt in our fiscal Q4. The second is ongoing slippage of software programs at major automakers. Leading OEMs continue to deal with the challenges of delivering very complex automotive software solutions. And while there is no change in strategic direction towards software-defined vehicles, some of the timelines have pushed back. Because of these near-term headwinds, we're taking a more conservative view on our Q4 outlook. That said, we continue to expect QNX to have its strongest quarter ever, with revenue in the range of 62 to 66 million. Now, let me turn to the cybersecurity business unit. This was a strong year for cyber. I'm sorry, strong quarter for cyber. Revenue in Q3 was $114 million, growing 44% sequentially and 8% year over year. Gross margin improved by 14 percentage points to 68%. While ARR of $273 million showed a sequential decrease, it was the smallest decrease in the last two years, pointing to a stabilization in Q4 before an anticipated return to growth next fiscal year. The dollar-based net retention rate improved one percentage point to 82%. Cyber total contract value or TCV billings was 109 million representing solid sequential growth of 47% and year over year growth of 6%. The cyber business has a very strong foothold in the government space where leading governments around the world trust BlackBerry software to secure their environments, communications and data. While this type of business often has longer sales cycles, the partnerships that are built are often very long-term. We are delighted to build such a partnership with the government of Malaysia this quarter by securing a significant multi-year contract to provide a full range of products. The deal included our Cylance, UEM, Ad Hoc, and SecuSmart offerings. As part of the deal, BlackBerry will establish a cybersecurity center of excellence in Kuala Lumpur during calendar year 2024. We were also very pleased to land a significant seven-year ad hoc contract with the US Department of Homeland Security. Ad hoc, which is the leading critical events management solution in the U.S. federal government with 75% market share, will be used to power the DHS's new personal emergency notification system. Revenue recognition on some of the products in the portfolio result in significant in-quarter revenue. In particular, our SecuSmart secure communication software offerings and some elements of our UEM endpoint management. The remainder, in contrast, are generally recognized on a ratable basis. Given the strong SecuSMART content this quarter, this was a significant tailwind, helping in part to drive both revenue and gross margin improvements. While deals of this magnitude don't necessarily land every quarter, we're very pleased with the overall traction we're seeing with SecuSmart outside of its core German market. Let me now switch to some of the key product developments that we have going on in cyber. Over the past couple of years, the cyber product team has been busy bringing leading solutions to market, closing a number of product gaps and positioning us to compete. During the quarter, we announced the latest of these with a launch of the generative AI-powered cybersecurity SOC Assistant. This solution helps customers to quickly understand threat alerts and prioritize their response with in-line generative AI assistance without needing to be an expert in prompt engineering. We also announced a number of enhancements to our SecuSmart product suite for secure communications. This included encrypted video and group audio calls, along with additional compliance tools and administrative features as well. Moving now to Outlook for a cyber business in Q4, we expect revenue to be in the range of 83 to 88 million for the quarter. This is lower than our previous outlook, primarily because of the reassessment of the likelihood, size, and timing of some of the large government deals in the pipeline. We also expect ARR to stabilize and to be flat sequentially. Touching briefly on licensing, revenue for the quarter was $6 million, and we continue to expect Q4 to be approximately 5 million as before. So let me now hand the call over to Steve, who will provide you more color on our financials. Steve, over to you.