Q4 2020 Earnings Call
Good morning, and welcome to the Blackberry fiscal fourth quarter in fiscal year 2020 results Conference call. My name is Josh and I will be a conference moderator for today's call.
During the presentation, all participants will be in listen only mode. We they'll be facilitating a brief question and answer session towards the end of the conference should you need assistance during the call the signal a conference specialist by pressing star zero.
As a reminder, this conference is being recorded for replay purposes.
Now I'd like to try and today's call over to Christopher Lee Vice President Finance. Please go ahead.
Thank you Josh welcome to the Blackberrys fiscal fourth quarter and fiscal year 2020 results conference call with me on the call today, our executive Chairman and Chief Executive Officer, John Chen and Chief Financial Officer, Steve right. After I read our cautionary note regarding forward looking statements.
John will provide a business update and Steve will then review the financial results. He will then open the call for a brief cure in H. Sasha.
This call is available to the general public by a call when numbers and by what cascading Investor information section of Blackberry Dot com.
A replay will also be available on the Blackberry Dot com Lucky side. Some of the statements will be making today constitute forward looking statements and are made pursuant to the safe Harbor provisions of the clickable U.S. and Canadian Securities laws.
Indicate forward looking statements by using words such as expect.
Well 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 than expected future developments as well as other factors at the company believes are relevant.
Many factors could cause the company's actual results or performance could differ materially from those expressed or implied by such forward. Looking statements. These factors include the risks factors that are discussing the company's annual filings and Mdna and the coated 19, Corona virus outbreak, which has negatively impacting public health financial.
Our kids in global economic activity.
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.
Just customer during the call John and Steve will reference non-GAAP numbers in there summary of our quarterly results for a reconciliation between GAAP and non-GAAP numbers. Please see the earnings press release and supplement published earlier today, which are available on the Edgar CDR and Blackberry Dot Com website.
I will now turn the call over to John that can Cook a good afternoon everybody.
Before I speak about the Blackberry themselves I like to a knowledge everyone who's doing what they can to contain a.
And it will become the Cobra 19 virus.
Blackberry has taking the number steps to help the global community, including enabling we know working for our customers employees and we're taking the lead by offering a limited licensable enterprise software products free two organizations around the world. So 60 days.
Now onto the lease outs.
As Chris stated I will reference non-GAAP number my summary of up and actual results unless otherwise stated let me start up by some highlights what the school 2020, the fiscal year entirely library and she is eminent.
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All right now thank you very much you're very welcome have agreed to trigger.
And operator will be with you.
Moving to the business commentary I, let me start with the incentives on licensing.
Business revenue increase not those annual year were better than expected performance due to some business. They actually came in early.
Moving onto the Iraqi business, the idle aiotv reserves underperforming the quarter due primarily to bts.
Cts has been unexpectedly impact both slowdown the auto industry supply chain due to the Golar 19.
Unfortunately, we expect this trend to continue in near future due to temporary global auto production shutdowns and related slowdowns of auto sales.
Customer fosback have become more cautious in a decision making related to capital expenditure and development.
The leading indicator to us we expected to large transactions with reliable customers that were unfortunately delayed.
While our fourth quarter.
Focuses on quarter results were impacted we believe these two delay transaction will occur as the business environment returned to normal.
On a positive note Blackberry QNX continue to gain design wins.
We were chosen for 31 design wins in the quarter.
16, Onesix, we're in the automotive market and 13, we're in the generally embedded general embedded market.
Within the auto market the vast majority of design wins came in where.
The us the advanced driver assistance program and digital instrument cluster applications.
These wins secured through our customer like large continental and this xeon just to name a few of those tier one continue to trend of increasing ARPU.
And volume in the future and we'll continue to build a leading provider Caesars safety certify software to the industry.
Moving to January on general embedded market, we saw increased demand in the industrial and medical verticals.
Including being chosen by webcast corporations, a global leader in transportation solutions, who merge with GE transportation last year.
And as noted in the last few quarters grow in the general embedded market has been a stated already a strategic priority for us battery.
A brief update on our radar business in a quarter. We saw continued growth double the number is shipped units and service revenue, we added seven new customers, resulting in 50, new customers firewall.
For the fiscal year. Additionally, we continue to hold steady redefine from existing customers.
Moving onto our enterprise software and services business the sales team executed well, resulting in a sequential billing grows in the high teens percentage.
Fourth quarter. He asked as billing was at its highest level in fiscal 2020.
The billing strain was across all the assets businesses led by strong performance on all the new year endpoint management as well as ad hoc.
On the customer front, our regulated industry business, such as government financial services and healthcare remains healthy and stable. We also experienced strengthen our non regulated industry business, most notably the energy and utility vertical as well as a manufacturing vertical.
Were added several large size wins, all new logos and up sale in competitive situation and we highlight deal.
General dynamics, a fortune 100, aerospace and defense leaders.
CG I, a global professional services and consulting company.
John Hopkins article healthcare, a leading healthcare provider in Saudi Arabia.
Ian Group.
One of the largest producers and transfers of electricity in Europe.
And Nippon steel one of the world's largest steel producers.
Our pipeline is building for our new product gas wells, notably for MTD for mobile for defense and the Blackberry Intelligence security.
Now onto our silence Blackberry science business revenue was up slightly year over year again serve recently topcon.
Billing increase sequentially is as we anticipated.
We are highly competitive against other Jack next generation ABT players because of the hauling reasons number one primary silenor is the best mobile solution in the market.
Number two our lightweight solution for that or endpoints earlier connected on art.
Other nexgen players only project with the endpoint is connected to their cloud.
Number three instead of being cloud only we support cloud managed.
On premise and hybrid deployment models.
And last anomalies, where compatible bold occurring and legacy dividing operating system, especially on the desktop.
This was a strong quarter a new logo.
Silence, one over 300, new customers some of the new logo, new logos, one in the competitive environment improve with on Hara from Fonterra.
Complera cooperative group, the world's largest very exporters.
A notable say healthcare organization in Australia. Unfortunately, we don't have emissions remainder name.
A fortune 500 financial services company Ace in the Midwest of the United States.
Mizuho Securities, which was a cross sell opportunity to leverage our new year relationships.
And Heartless financial services group, a leading insurance our leader a leader in insurance vertical there was one through our managed service partner with horizon.
As a result, our our 167 million up 9% year over year.
Our dollar based net retention rates continue to be over 90%. We ended the quarter was 18% year over year Grogan Act active active subscription customers.
As I previously previously said with leasing momentum will only continue now that Blackberry silencer, the portfolio, but other blackberry capabilities in a market.
Before I turn the call the Steve Let me update you on a smartphone and the silence integration.
We have made tangible progress into development spark.
Our security platform.
This past February we announced the release of our unified endpoint security all year Slayer within the smart platform the Leverages AI machine learning.
And automation to deliver a zero trust security across all fixed and mobile endpoints.
The U.S. layer.
Is supported by six initial products, which are endpoint protection platform ETP.
Endpoint detection and response the are.
The mobile threat defense van GDV continuous authentication.
Data loss prevention, no SDLP and secure web gateway.
These products work seamlessly together to analyze and defined will.
Make contact shows decision based on large amount of share data and dynamically dynamically apply a set of policy control to address the risks of our customer environment.
Our platform development of this platform development is in line with a marketplace converges noted by Gartner, who see the consolidation of NTD offerings with DDR Mtwos and calling this combined stack unify endpoint security.
Garner Cedar stack, forming a single solution during the next three to five years in indicated their organization. She invests review, yes in mind.
Pardon also noted that 70% of organization will need a combined endpoint management Council by 2024, and 50% organization. We're out there our mobile traffic event by 2022, which is up on 20% this year.
Given our product and the marketplace progression, we're now ready to increase go to market synergies and go after these big new yes, and Euafme opportunities. Accordingly, we have successfully integrated entire silence organization, including sales and R&D teams into our Iraqi business segment.
The effective March one 2020, which was just a month ago.
We believe the unified team needs to broader customer coverage, a richer product roadmap, a clearer sales message and most importantly, very differentiated offerings.
Well the value proposition to a customer.
As far back very Sparks provide a highest level security and management with a similar we are more productive user experience on any endpoint fix all mobile from any location over any network.
Many of you actually have actually over the past several quarters of our back very prospect in the competitive landscape, especially the games much larger players.
I will I could not provide you a comprehensive and only to tell you that we're working on it because the solution at a time was under development. We now have a differentiated technology architecture. This ready to ship in the market.
Today, our unions products work with Blackberry you yes.
However, we recognize that customer may be using a competitors offering more than one new OEM products. Therefore in the new future as part of our roadmap are you year solution will be may compatible with insurance Airwatch and other competitors you yen products to give customer the vessel was mainly for.
Serving investment are enjoying the benefit of the higher security and management that back very provides.
We believe you, yes changes to competitive dynamics and our operated color objectives now is to gain market share.
Because you, yes is complementary to the not a direct competitor all the non Blackberry and products and also Blackberry urea, we'll maintain our leadership in the regulator industry due to our continued focus and commitment on security and management.
In time will be leaders spark architecture expand our total addressable market, including in the Ionkey security area.
With that let me turn over to Steve to provide more details about our financial performance.
Thank you John.
My comments on our financial performance for the fiscal quarter will be a non-GAAP terms unless otherwise noted.
Please refer to the supplemental table in the press release for the GAAP and non-GAAP detailed reconciliation.
We delivered fourth quarter non-GAAP total company revenue of $291 million and GAAP total company revenue of 282 million.
I will break down revenue shortly.
Fourth quarter total company gross margin or 77%.
Non-GAAP gross margin and client software deferred revenue acquired but not recognized of $9 million.
And excludes stock compensation expense of 2 million.
Fourth quarter operating expenses of 172 million were down sequentially by 23 million.
And we continue to invest in product development and go to market.
At the same time, we continue to demonstrate cost discipline across the entire company and gain operating leverage in particular as highlights.
Our non-GAAP operating expenses exclude 35 million and amortization of acquired intangibles, which equates to about six cents impact to GAAP earnings per share.
Additionally, our non-GAAP operating expenses exclude 27 million and goodwill and long term asset impairment charges.
$15 million and stock compensation expense.
3 million for software deferred commissions expense acquired.
1 million and acquisition and integration costs, 1 million and restructuring costs and a charge of 5 million related to the fair value adjustment on the convertible debenture.
Fourth quarter non-GAAP operating income was 51 million five one.
And fourth quarter non-GAAP net income was also 51 million.
Non-GAAP earnings per share was nine cents in the quarter.
Our adjusted EBITDA was $68 million this quarter, excluding the non-GAAP adjustments previously mentioned.
This equates to an adjusted EBITDA margin of 23%.
I will now provide a breakdown of our revenue in the corner.
Total software and services revenue was 287 million, representing 99% our total company revenue.
Other revenue is solely comprised of service access fees, which were $4 million and were expected to decline given the continued wind down of this legacy business.
Recurring software and services revenue, excluding IP licensing and professional services revenue was about 90% in the quarter.
Now moving to our balance sheet and cash flow performance.
Total cash cash equivalents and investments were 990 million at February 29, 2020, which increased by 20 million from November Thirtyth 2019.
And net cash position was 385 million at the end of the quarter.
Fourth quarter free cash flow before considering the impact of acquisition and integration expenses restructuring costs and legal proceedings was positive 36 million.
Cash generated from operations was 35 million and capital expenditures were $3 million.
That concludes my comments I'll turn the call back to John to provide our financial outlook for fiscal 2021.
Thank you thank you Steve.
Bakken bankruptcy.
Currently.
I am sure you all agreed as a lot of uncertainty across the global economy due to the call the 19.
Devil is not prudent for blackberries prior provide any specific fiscal 2021 financial outlook as things are changing on almost on a daily basis, However, I'd like to mix on macro comments on our business.
Our revenue most likely will be negatively impacted by continuing headwinds to global auto production and sales.
We anticipate a continued delay in capital spending in the auto as well as the other industry.
At the same time this negative impact could be partially offset because our product and services portfolio is well suited to how enterprise meet the challenges our business continuity driven by the dramatic expansion of the more workers or the number of remote workers.
We are no offering the best security infertility solution, each product and services, including our new OEM product silence digital workplace safety, Smart, which is secure voice and tax solution as well as AD hoc our crisis communication solution, including the new situation respond corridor, which is the entire.
Lifecycle of managing crisis.
In fact, we are experiencing increased demand more transaction and increase comes in daily from new and existing customer, resulting in more licenses being deployed.
Furthermore, our finance products, including silence card, which our cloud based managed detection and respond offering are helping customer to combat growing cyber security and privacy risk as the number of Iot endpoints the increase in on rate increases in a remote working environment.
While it is difficult to predict the volume of business year over year. The company remains strongly focus on the overall financial health in fiscal 2021.
The management team has managed to uncertain times in the past and has a track record in balancing profitability and investment for a long term growth.
As it related to the shape of the fiscal 2009, one we anticipate a tough first quarter due to recover 19 impact on our business. This may linger into the second quarter, but we do anticipate a stronger second half of fiscal year versus the first half of the fiscal year.
When looking beyond 2021, we do not the leaders current global prices.
Changes Blackberry strategy and the pieces of any of our long term profitability growth and value creation.
I will I now like to open up for two and a Josh.
Okay. We will now begin the question answer session to ask a question you May press star one on your telephone keypad, if you're using a speakerphone. Please make sure your mute function. It turned out to allow you signal to be sure.
Again, Please press star one after question, we'll pause for just a moment to allow everyone and opportunity to signal for question. We do request the limit yourself to one question and one follow up.
Our first question comes from Daniel Chan with TD Securities. Please go ahead.
Well I don't my question Hi, John.
Now given the macro uncertainty how are you thinking about capital requirements in particular, how much do you need and what are your plans for the convert.
Yes, we have.
After paying off the convert we have $385 million of cash.
All equivalent.
And so we have made some assumptions under stress Cas environment.
A couple assumptions number one we will payback I will convert.
The good news are paying back our convert is.
That we will save healthy about $23 million a year in interest in interest payment.
Obviously, the cash balance will go down by that.
We also assume there's no financing.
Work being done and Pilar reason is as you know very low you probably know budget led by showed an IPO.
Last couple of weeks the market isn't really available I think is starting to loosen up a little bit.
But there, but we assume no financing, we assume no dramatic cutback, our headcount or investment for the future. This is why said earlier with a balanced profitability and long term goal. We know this will pass.
We know things will come back to normal and we believe we have very competitive strategy and products. So we don't want to compromise the future at the same time will want to quell selling the financial difficult decision. So we're going to be working balancing that but we're not we're not data with the overhaul anything to disrupt.
Our investment thesis given dose as kind of the background. We ran through the scenario of revenue coming down by 20% by 30% by 50% you expect anybody to do in modeling and we believe we are we're quite comfortable unless as being very extreme condition, which we are now.
Anticipating we're quite comfortable to be able to last illiquidity in the health financial health or couple of years.
Oh Thats very helpful. Thank you.
I want to ship here is a little bit to the enterprise software side. It sounds like things are improving there can you give us a sense on whether the enterprise software segment grew year over year, and maybe give us a sense of how well you see or go to market.
And your channel is that is developing the way that you anticipated.
Yes.
I don't have and I think it's 50 year over year numbers, so I'd like to tell you.
From a billings growth perspective, we saw very healthy yuval.
Better than in our double digit over Q3.
And so that feels good.
Does this is are there.
We have a hiccup I think we overcame the hiccup.
We have people very committed going after the business, which has infrastructure buildout for both the renewal and new businesses.
That we will that fall through the crack.
Youre, a while back it was really us doing our viewing.
For not youre being more diligent on summers south.
So now I think those are overcome we have.
Number of layers that watch us our business as I said open a new renewal and new logo going after the new logo are we have a bigger salesforce now and the combination.
While the.
Silencer Society portfolio with the you, yes makes it even even more exciting because now with each of our sales rep as small thing to sell the silence sales rep for Saudi you Yam AD hoc and other products, mainly udi admirably and vice versa and now the Euafme Salesforce now combined as well.
Want to sell the yes, Florida, which include a lot of slide into AI technology results. So we feel good about the focus we feel good about how we align their territories.
So the majority of our sales is still going to wrap up.
We are building channel business.
But thats, probably that that benefit will probably take in mid mid year this year or maybe towards the end of year.
Your next question comes from Daniel Burke with Bank of America. Please go ahead.
Hi, Daniel.
Hey, guys.
Thank you tighten questions.
First I wanted to ask about the competitive environment for endpoint security. So moving on one hand, we have prostrate growing very well enable similar approach it seemed like the silence and then you have others like Vmware and Microsoft's decking follow your moves to integrate the classic you yen business with the endpoint security plan.
So if we could you just get an update on the competitive landscape, you're seeing for assignments and I'm curious at the combined you Yemen security is a real conversation yet with customers in another portfolio.
Okay.
Okay, guys isn't question so.
So.
I took a little while to label due to two laid out sign on labor to laid out.
Why we when some of the silence steel as I said earlier.
Silencer.
Secure over 300, new logo in the quarter.
And so we're winning against somebody.
I want to name names.
We remain against.
And it looks like to summarize stay low side, where the silence.
One ability to win rate basically comes from a.
We are the mobile leader.
Before we.
We don't always need to cloud so we do secure protection on the endpoint, both offline and online and that the differentiators.
We have now managed service and a full suite of products. So that also as a factor so those are.
Among other things don't those are three that that I feel jumped out at me when I look at the win.
The combination of that whole set of silence portfolio with the managed service and other management tools that you Yam has its exactly where the market is going.
And and its verified and confirmed by Gardner.
Thats, what they named as whole segment core EPS unify endpoint security, which is a combination of mobile and fixed.
Cloud on premise and also managed and managers and and threat detection and projections. So.
We just happen to be Youre early provider of the product and I am hoping that therefore give us a much more competitive advantage of against some of our big players.
And our big competitors out there and then we'll win.
Hopefully unfair share the of the deals.
Finally.
Well most of you have asked me to question about there are from some of our traditional competitors step advice site licenses.
And if you look at everything that we offer we are above.
[music].
For example, a site license for year Yale 85.
We'll be a lot cheaper than yellow, a five and and much better security product.
So yeah, five is not free unlikely yell athree sell but so I believe that we could we could be competitive out there.
Great. Thanks, that's very helpful. And then this quickly on the licensing strengths.
When we entered this year you guys were thinking that segment might be down 5% or so year over year, and then turned out to really surprise of 15%.
So I was wondering if you could kind of walk through what changed throughout the year and more importantly did this strength comedy expense of in fiscal 2001 licensing strategy. Thanks.
Yes, I like to be processors is the problem today. It is a good business because it's very good margin. Unfortunately, you all know very well that is somewhat lumpy.
And the timing as little hard to predict.
Then just a kind of an enterprise transactions. So so because of that I'm always conservative.
Inc.
I prefer to steal Canada about a 250 mark.
For the Fi 21, and hoping we'll do better I mean, but but it is really hard to predict that this quarter I did expected to come in that that strong honestly.
It's been stronger over the entire year.
Great. Thanks, guys.
Thank you.
Your next question comes from call Cheever with RBC capital markets. Please go ahead.
Thanks, Good afternoon.
Afternoon.
Just trying to understand the Pts segment, a little bit more DTC to them back into the decline in quarter and then is that driven predominately from like royalties on the volume of production or are there other nonrecurring items in there on professional services.
Gafisa licenses a tools in their contracted.
Yeah, Hi, Unfortunately is it's a little bit of everything.
So first saw royalties are down.
We have projects, we believed that we were going to get the developer seats are there has been delayed.
And once the project the new projects being delayed.
Hi line you Didnt go away didn't go away at all its has been delayed because.
A lot of these our tier one and OEM they sell looking at the auto sales figures and they started to become a little concern there will be a local cautious.
We still on the projects, there's no question about it and but at the end a developer seats. This has had gone down and those are the higher you call. It one time the immediate revenue type and then once the developer seats got slowdown normally they come with some some portion.
Our professional services, so that they they have us help them to deploy added.
And Andrew started a new projects are that of course is also slowed down because of that so it is a it is a as rather unusual situation and I do expect it will add song our game plan.
Is to do more the professional services work on a remote basis. Then of course, you have to get a.
Operation from from the from the customers with Air working remodel also.
And so these we should be able to get that and second thing is to go after more the jam growth.
Because then they would need to buy developed the seat.
So those are the two.
And continue working with auto customers, obviously because.
They will come back on the business.
It's not going to this end so they will come back in May take a quarter another quarter.
But thats about thats about why expected to be.
Okay. That's helpful.
Shifting to corporate 19 in regards the promotions you implemented or announced a could you provide some uptake.
Hey, Keith and some some metrics on the uptake of that.
And in what you expect in terms of potential conversion.
Longer term.
Yes.
Okay. This is.
My people, probably going to yell at me about out I'll give you the update in the first in the first week I think we saw our pipeline grew at least $30 million.
And diesel good pipeline because this is the one that actually came to us with strong needs customers are able in some cases process appeal in record time.
Are you guys know orders, so I'm not saying anything they don't so I know I said, we we do have that situation and so it's a lot of different software company, though I'm not saying anything to do that are very sand operation very unique but I. Just want you ought to know that we do have a piece of business.
In an environment like this.
Unfortunately benefit from the from from here on this home prices and.
So we do okay in that area and so that's about they only metrics like a share with you that's more than more anybody with failure.
At that.
Your next question comes from Mike Walkley with Canaccord Genuity. Please go ahead.
Hi, Thank you.
Thanks, taking my question.
Just following up a little bit on on cost structure.
Actually take about kind of the investment level. It sounds like you guys feel good with the team in place and one and Thats for the long term.
But opex or the lower than expected this quarter imagine it could be lower again, just given lack of travel entertainment tight budgets and by Patrick is on Opex rate, you're looking at maybe on a run rate credit for the calendar year that's about.
Hi, I did not I did not calculated that we know we have a number of level.
So for example in out now plan.
They have of course.
Replacement of attrition of headcount would probably another given this environment will still be hiring people are we actually make up some offer a slightly but were higher in other areas are quoted areas of people that are billables also so that could help us on the revenue side and in other areas unnecessary specific.
Like we just recently hired a very strong data scientists.
And so of course, we will always be looking for excellent people like that but other areas, we might slow down I would probably not might we are slowing down.
And partly because it's just everybody's working from home and we have a global work from home now and it's just difficult you do the interview and the processing the background check in and has entered the references shack and so just take much longer so there will be some natural reduction.
Caused billion, obviously, we look at our capital spending very carefully.
And that also I'd like you pointed out travel goes down literally.
95%.
Yes.
Probably even conservative party say that nobody is traveling at all and there are other and there are other areas that we could take some costs out.
Infrastructures facilities, but kind of areas.
Thanks.
Yes, My follow up question, just circling back to the licensing which was strongly as you laid out. This year can you share with us just kind of heading into this year, what with the recurring revenue run rate is.
Typically idea a good number for the year, but in your recurring Peafiel pretty solid.
For the calendar year coming up thank you.
Yeah from a my model I mean is the same as last year I realize that.
I, probably don't have a whole channel capability, because I tell everybody knows about facility I'm going to tell you is going to be about two to 50 for the coming fiscal year.
But I hope this time, you will believe me a little bit more.
Last last year, we have a lot of things a lot of deals in play and so and they came in through the various.
Time of year, so a different quarters.
I believe this year.
Planning on Twofifty is reasonable.
Your next question comes from across desktop Associate financial Please go ahead.
Hey, guys. Thanks for taking hey, thanks to in question and just a couple of questions. Steve on the $27 million goodwill impairment can you tell a story what caused that for.
And the impairment I think was was 22 million.
Turning to yet.
Thanks.
That that related to the.
The BBM consumer.
Resuming a while back we licensed this was a licensing.
Arrangement.
And we were we were no longer operating the consumer BBM piece and then eventually.
It was it was known there were certain amounts that we were going to receive under under the agreement.
Yes nationally this.
We had to allocate some goodwill to it back in time and since that that.
Service has been shut down during the year.
Yeah.
The impairment results from that.
Thanks, and then just I guess on QNX and the auto so obviously you're seeing volumes.
The under pressure here in short term, but I guess part of the.
Part of the plan for QNX is that you should increase your market share, but also the ASP per car should go up is.
Car manufacturers adopt more software modules do you think the.
And can be a speed gross is going to get pushed back as well or do you think that which is just a volume issue in a short term, but you should still be should still see a isps increase this year and an increase again next year.
Is it is short term in a volume base not not the ASP to ARPU has gone up because if you look back in the last 345 quarters. When we announce results we talk about the design win in clusters instrumentation HEICO advisors are Adolph.
Okay, we talk about those wins those wins all carry a higher higher.
ARPU.
Speed.
And the traditional IDI business.
Okay, so they're not getting deferred and all that there's just margin.
No not not that we could see we're basically based on.
And at this point it is really more volume versus less volume.
Great. Thanks.
Yes.
Your next question comes from Paul steep with Scotiabank. Please go ahead.
Correct. Thanks.
Hey, John can you maybe try this one a little bit about AD hoc and what we've seen the there obviously, that's one area that I'm, assuming you're seeing a with skin and that'll give you one quick follow up thanks, Yeah.
And have an environment like this so so for those of you are not haven't really follow our business.
It's very strong in the federal government and a more the kind of and I meant federal government I actually mandate United States enrollments.
And we have over 2 million seats in the United States Federal government space, including ample assistance of and then of course in Canada.
Your AD markets in the Parliament and then and are the energy 15 countries allow them users at all and coordinate security and prices.
So, but we don't really have we haven't really got out of the government and the federal space, which we are beginning to see us getting into.
Yeah. There is a company core Everbridge public company and they do exactly what we do but they are more in the state local and education market, which we're interested in so we're hiring people building that up.
And so it is as an opportunity this is as opportunity of relevant.
It looks like we're quite competitive and we just release our latest part of which we're very proud of which is a lifecycle management of the crisis.
And and so.
Hey, right. So I think this is going to be a good good growth engine.
Great in the last one from me would be.
Maybe to talk a little bit about where you see the organization being you've obviously change things around integrated side. We've seen it looks like you got to do head of field operations and marketing or presumably deals is what the title means how should we think of it any changes to the sales force and then secondly, how would you.
Recapture any of the cost saves from you know, but it goes to a people in the silence area, which you redirect that capital to grow or just kind of sort of hold onto admin current impairment. Thanks. Good yeah. So first saw I'm I'm very pleased to.
When you combine to organization like that who have traditionally their own infrastructure and sales management.
Got the luxury to pick a team.
Between the so called legacy Blackberry and and silence.
And and it help save a lot of the management infrastructure costs that we will then so fully back into the hiring wraps around the world. So the question, what's our fine with us for us.
And they Casanova is picked to run a sales fuel marketing and customer services.
For spark, which is a combination for the new Yemen and silence products.
And so we now have one organization do that and we dealt FC Cascade down to a number levels reduced the regional manager of country managers and so forth. We obviously at the luxury of picking one.
Which is the other person so.
That in my mind give us a cleaner structure and also give us an opportunity to take.
Yeah, the better person at the same time, there are number or.
Opportunity out there and geographies and and regions said actually have both very strong person.
Very promising person were able to deploy one of the two to a solution side of the business, which our AD hoc second smart and QNX. So so like for example, we now have a solution team in Asia Pac.
Leading by some really good people and so so we are we're taking advantage of the talents who and the simplification all that all of the organizations.
Your next question comes from Chip Chowdhry Global Equities Research. Please go ahead.
Asia. Thank you.
Very good execution in a terrible environment I have two quick questions first regarding your digital workplace I think youre doing this product free for six months do you see that.
Business still give you some uplift as you mentioned in your prepared remarks during the second how do you think that product is playing.
Unimportant through the second question I have is.
Zhu video is getting more popular but they are terrible and providing the security and privacy.
We'll take some sort of OEM engagement, our relationship with companies like zoom could be if they use digital workplace those issues could be put to rest any thoughts on that up.
Okay. Thank you.
So.
The first question is digital workspace is a brand new product for us.
We we just released said probably no one and couple of months.
And is fairly early to tell.
Well through this process of the we we more working from home.
We've been seeing some good license movement on digital workplace, not big enough to make a dent a <unk> so I will reserve.
My comment on this probably wait till quarter to from now.
But it certainly has picked up already and partly because of the environment when not having to deal with MTN.
And be able to put it on biodiesel. It's a huge is a huge deal is a huge deals so and we're now integrating by the way on every one of those desktop we're putting silence for tacked on it and so it.
So I'm up I'm hopeful, we certainly doing the right thing.
So that's one area.
Zoom is is obviously picking up quite a bit because of the reason of it and yes, there were some concern or security and privacy and not just assume and other other players show.
During this part of our container like contain Lifesize program, meaning that soon works in our container.
If you are a new year customers, our Blackberry OEM customers running soon.
You are already secure old and the data privacy and security of it.
That's really wonderful good to know so the container is if you're talking about containers in the context offer of dockers or an audit is this contemplates the is in some different context, particularly if I'm a customer of for say Youre unified endpoint management and whatever.
Yes, I Troy I put into that antenna by default. They will have the same level of security as a though under nine talk from provides isn't the correctly to think of adapt yeah. So the container I was referring to is our our endpoint management software, which at the combination of mobile device management and application.
Management.
And we use the container technology there so.
That wraps around every application and protect the thread and in intrusion of that of Altai agent. So the I'm talking about that container.
Got it over time, we had for questions I'd like to turn call back over to John check.
And CEO Blackberry for closing remarks.
Okay.
Thank you I was just having fun.
Thank you very much for your time today.
We look forward to speaking with you at our analyst day, which unfortunately, we now need to be on webcast.
Because of the working shelter in place.
It will be webcast on April 21st.
Right coming April 20, plus our lastly, I like to take some opportunity to hope you on your family to stay healthy and stay safe.
As we work together through these challenging times and and I added one statement. This crisis shall pass so looking forward to interacting with all you. Thank you very much for your time.
This concludes today's call. Thank you for your participation you may now disconnect.
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