BlackBerry Limited

Good afternoon and welcome to the BlackBerry fourth quarter and full fiscal year 2024 results conference call. My name is MJ 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, CFO, Cybersecurity Division, and Head of Investor Relations. Tim, please go ahead.

Thank you, MJ. Good afternoon, everyone, and welcome to BlackBerry's fourth quarter and full fiscal year 2024 earnings conference call. Joining me on today's call is BlackBerry's 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 harbor 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 results. For reconciliation between our GAAP and non-GAAP numbers, please see the earnings press release published earlier today, which is available on the EDGAR, Cedar Plus and BlackBerry.com websites. And with that, I'll turn the call over to John.

Terrific. Thanks, Tim. And thank you all for joining us today. BlackBerry delivered a solid quarter where we either met or exceeded expectations and in the process set a number of new records. We beat expectations for earnings per share And given our laser focus on profitable growth, further improved operating cash flow as we said we would. In fact, this quarter, we more than halved operating cash usage. And despite being prudent and measured with our top line outlook, we expect to be both cash flow and EBITDA positive this coming fiscal year. In the quarter, our IoT business recorded its best ever quarter for revenue. Despite the delays automakers have experienced with their software development programs, we also achieved our strongest year for adding royalty backlog from new design wins. This design win momentum has driven an all-time high QNX royalty backlog of approximately $815 million. or 27% year-over-year growth. On the cyber side, we saw a very important data point with ARR stabilizing and even growing a little sequentially. We believe this demonstrates the impact of the many improvements the team has been enacting recently. Cyber also recorded solid year-over-year growth from a revenue standpoint as well. So let me start my review with the IoT business unit. As you know, the QNX business benefits from its strong multi-year customer relationships. Given this long time horizon, the key metric for the health of the business is royalty backlog. This gives a view on estimated lifetime royalty revenue from the design wins that we have secured. And this metric has never been better, reaching approximately $815 million this past quarter. As I mentioned, it was a strong year for adding new backlog from design wins, surpassing last year. And this past quarter, we secured a number of design wins that contributed to this achievement. Within automotive, we continue to dominate the digital cockpit domain, and among the wins was Hyundai Mobus, who selected the QNX hypervisor to enable mixed criticality in the cockpit without sacrificing performance. Beyond our core RTOS, we recorded a design win with a Japanese OEM for our acoustics middleware that will enable audio in the digital cockpit across a range of vehicles. Outside of automotive, we have a strong and growing position in a number of general embedded markets, especially medical. Among the wins this quarter was one of the five largest medical OEMs in the world who selected the QNX RTOS as the foundation for a next generation medical imaging machine for assessing blood and heart health. We also secured a win with a leading US-based OEM where our QNX real-time operating system will provide a secure, reliable platform for their fifth generation surgical robot. In other applications, our QNX real-time operating system has been selected for use in a digital display for recreational power sport vehicles demonstrating the potential for BlackBerry to expand into new verticals as the edge becomes progressively more intelligent. So moving to the quarter's financials, we delivered revenue at the top end of our guidance range. Revenue came in at $66 million, representing 20% sequential and 25% year-over-year growth. Gross margin remained at a very strong 85%. Revenue growth was primarily driven by automotive and very strong QNX development seat revenue, which is relatively lumpy from quarter to quarter and reflects the strength of the recent new design wins. Within automotive, the digital cockpit and ADAS remain the largest revenue drivers. And royalties and professional services were broadly in line with the strong quarter we recorded in Q3. In January, we had a very successful CES event in Las Vegas. Our booth was incredibly busy and we held many productive meetings with current and potential customers. In addition, we made a number of very important product announcements. The first was the launch of our next generation QNX operating system, SDP 8.0. This offers a very significant step change in performance on high-powered silicon, scaling almost linearly even up to 64 cores. This allows BlackBerry to offer performance similar to, and in some cases better than, Linux without the fundamental open-source safety limitations and future-proof software designs as new, more powerful chips become available. We see this as a significant step in expanding our competitive moat in our core safety critical use case, while also expanding our addressable market into non-safety critical as well. The industry response since CES has been very encouraging, including engaging this past quarter with one of the world's leading automotive chip suppliers to purchase our SDP 8.0 development tools. Another key announcement was that our hypervisor has joined our RTOS in being available in the cloud. This allowed Stellantis to develop the world's first digital twin of their digital cockpit, allowing their software development teams to collaborate from anywhere around the world, greatly reducing the need for physical hardware and significantly increasing productivity. In addition, we made some announcements regarding our various middleware offerings. The Mobility and Harmony Consortium selected Ivy for its Project X electrical vehicle platform. Further, we launched QNX Sound, a complete audio and acoustics platform that enables software-defined audio experiences without the need for heavy and expensive hardware in the car. and we've already recorded our first design win with a major European automaker. So moving to the outlook for the IoT business, due to the timing for potential upcoming design wins, we expect Q1 to be relatively quiet for potential new development seat sales compared to this past quarter. In addition, as we've spoken about throughout the past fiscal year, the auto industry continues to face material delays in software-defined vehicle programs. While this clearly presents challenges for the near term, it actually represents potential upside to the long-term view for the business. In order to address delays in developing next-generation software-defined platforms for their vehicles, automakers are increasingly discussing the potential for greater support from BlackBerry to help them solve undifferentiated software development tasks. In fact, rather than OEMs attempting to address this themselves, having a trusted expert like BlackBerry handle the complex integration of middleware on top of the RTOS frees up their development teams to focus on the differentiating experiences further up the stack. Allowing BlackBerry to create what is sometimes referred to as a vehicle OS has the potential to greatly simplify and accelerate software development while allowing automakers to retain full control over their platforms. Further, we're expanding our professional services team to provide greater support to our customers in integrating our software into their development projects. So with all these dynamics in mind, we expect revenue for Q1 to be in the range of 48 to 52 million, which is approximately 11% year over year growth at the midpoint. For the fiscal year, we expect revenue to be in the range of 220 to $235 million. Now, let me turn to the cybersecurity division. Revenue for the quarter beat expectations and came in at $92 million, representing 5% year-over-year growth. The strength this quarter came from our Spark product group, that is Cylance and UEM. Now, we consider annual recurring revenue, or ARR, to be one of the key indicators for our cyber business. As outlined during our last earnings call, this quarter we delivered stabilization of ARR on a sequential basis. In fact, ARR even increased slightly by 3% to 280 million. DBNRR also increased by three percentage points sequentially to 85%. These small but very important steps in the right direction for these key metrics illustrate the impact that a number of the improvements we've made are having within the business. In fact, the CEM and UEM renewal rates have been improving, and the past two quarters have been the best renewal rates in the past four years. In particular, this was a strong quarter for our Silance Guard managed service offering, as well as net new logos. We see Silance Guard as being a driver for growth this coming year, and we're doubling down on this and other areas where we have demonstrated we are winning. During the quarter, we successfully deployed a number of products and services that were part of the significant deal with the Malaysian government that we announced in November. In addition, you may have seen that last week we were proud to officially open our Cybersecurity Center of Excellence in Kuala Lumpur. This center will provide a wide range of globally recognized training courses that will help Malaysia grow a skilled cybersecurity workforce. Some examples of the wins for the Cyber Division this quarter included renewals and upsells with leading government agencies such as the US Air Force, Department of Homeland Security, as well as wins across the globe, such as the Netherlands Police, UK's National Crime Agency, Greater Manchester Police, and British Transport Police. In financial services, in addition to major U.S. and Canadian banks, we secured business with Swizerich and Julius Baer in Switzerland and the Bank of India. So moving now to the outlook for the cybersecurity business, from a longer term standpoint, the addressable market for security software is so large and our customers' needs so diverse that no single vendor is in a position to dominate this market. Despite any near-term dynamics, we see significant opportunities for growth for our cybersecurity business in the years ahead. That said, in the near term, given the ongoing budget constraints of some of the leading government customers, which is a large portion of our customer base, we take a prudent view on both the timing and ability to close large deals that can drive near-term revenue, as was the case in Q1 of last year. For our enterprise and mid-market customer base, security remains a mission critical priority, and we see a broadly unchanged, although somewhat challenging, macroeconomic environment compared to recent quarters. This consistent backdrop gives us confidence that we can continue to stabilize our core recurring revenue base, and we expect ARR to be flat sequentially into Q1. Therefore, we expect a more predictable revenue stream as we head through this new fiscal year. So allowing for a smaller impact from large, lumpy government deals and the ongoing macroeconomic environment, we expect revenue for the first quarter to be in the range of 78 to 82 million and for the full year to be in the range of 350 to 365 million. So touching briefly on licensing, revenue for the quarter came in stronger than expected at 15 million. Looking to the coming fiscal year, we expect revenue to be approximately $4 million in each of the four quarters. So now let me turn the call over to Steve, who will provide you a little more color on our financials. Steve?