Q4 2020 Earnings Call
[music].
Good morning, and welcome to the Blackberry fiscal fourth quarter in fiscal year 2020 results Conference call. My name is Josh and that will be a conference moderator for today's call.
During the presentation, all participants will be in 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 P. signal a conference specialist by pressing Star Zero as a reminder, this conference is being recorded for replay purposes.
I would now like it turns today's call over to Christopher Lee Vice President Finance. Please go ahead.
Thank you Josh welcome to the Blackberrys fiscal fourth quarter in 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. We will then open the call for a brief Q in a session.
This call is available to the general public by a calling numbers in via webcast in the Investor information section of Blackberry Dot com.
A replay will also be available on the Blackberry Dotcom website.
Some of the statements will be making today constitute forward looking statements and are made pursuant to the safe Harbor provisions of the applicable U.S. and Canadian Securities laws.
Indicate forward looking statements by using words such as expect.
We'll 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 in expected future developments as well as other factors at the company believes are relevant many factors could.
Caused the company's actual results or performance could differ materially from those expressed or implied by such forward. Looking statements. These factors include the risk factors that are discussed in the company's annual filings and Mdna and the Covidien 19, Corona virus outbreak, which is negatively impacting public health financial markets 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.
As is customary during the call John and Steve will reference non-GAAP numbers in there summary of our quarterly results for a reconciliation between our 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 websites I will now turn the call over.
John.
Thank you Chris a good afternoon everybody.
Before I speak about the Blackberry results I'd like to a knowledge everyone who's doing what they can to contain and and overcome the corporate 19 virus.
Blackberry has taken the numbers steps to held the global community, including enabling remote working for our customers employees and we are taking the lead by offering a limited license, although enterprise software products three two organizations around the world what 60 days.
Now onto that leaves out.
As Chris stated I will reference non-GAAP number you my summary of our financial results unless otherwise stated let me start up by some highlights for fiscal 2020, the fiscal year entirely by bearing achieve ended the year of profitable growth. We're pleased to report 1.1 billion total company revenue, resulting in 20% growth.
The year software and services revenue grew.
Grew 26% year over year earnings earnings per shares of 13 cents. This amount like seats expectation replaced during the year.
Positive free cash flow of 14 million.
Perhaps the best news this the strong set of products release in the past fiscal year, we released over 30, new products I like to give you. Some highlights of the one data we really excited about.
QNX Hypervisor 2.0, plus safety, which has achieved the highest isos safety standard in the industry.
The second product Blackberry intelligence security, which uses a guy to provide adaptive security and continuous authentication to overcome the static security one abilities.
There are the silence optics 2.4, how enhance endpoint detection and response product.
Dan followed by a single agent platform to deploy all the silence put attack as well as sinus optics.
Followed by our mobile threat defense product MPD brought up the immigration AI base endpoint security to K security capabilities with our portfolio of endpoint management technologies appears do not have a full mobile solution like we do.
And last but not final the Blackberry digital workplace.
Which delivers lightweight secure desktop virtualization, while eliminating the need for VPN and adding AI AI based protection.
Digital workplace can be deploying on corporate and personally owned devices.
Used by the entire Salesforce, although workforce sorry, excuse me. The workforce. This is a must have the secure remove worker productivity and business continuity.
Additionally, we made tremendous progress into development of the spark platform I will speak more about that later.
Now let me provide some highlights for the fourth quarter, both fiscal quarters total revenue came in as 291 million.
We achieved positive year over year software and services building grows we also have a healthy sequential billing performance from enterprise software and services.
Gross margin was 77%.
Operating income was 51 million and operating margin was 18%.
Nobody saw very strong results compare sequentially is the increase on 20 million and 7% respectively from Q3.
EPS came in as nine cents, which was five cents higher than expectation, we had for the quarter.
Free cash flow 32 million.
Ah contributing to a total ending cash.
And investment balance of 990 million.
Let's move into the business commentary I, let me side with a sentence on licensing business revenue increased 9% year over year went better than expected performance due to some business. They actually came in early.
Moving onto the Aiotv business, the eye to eye on T. business underperforming the quarter due primarily to bts.
Bts, that's been unexpectedly impact by the slowdown in the auto industry supply chain due to the cold and 19.
Fortunately, we expect this trend to continue for the near future due to a temporary global auto production shutdowns and related slowdown of auto sales.
Customer fosback have become more cautious in the decision making related to capital expenditure and development.
The leading indicator to us was that we expected to large transactions with reliable customers that were unfortunately delayed.
While our fourth quarter.
Real quick fiscal quarter results were impacted we believe these two delay transaction will occur at the business environment returned to normal.
On a positive note Blackberry QNX continued to gain design win.
We were chosen for 31 design wins in the quarter.
16, Onesix, we're in the automotive market and 15, we're in the generally embedded general embedded market.
Within the auto market the vast majority design wins came in where.
Right off the advanced driver assist program and digital instrument cluster applications.
These wins secured for our customer like barge Continental and Visteon just to name a few of those tier one continued to trend of increasing ARPU.
And volume in the future and we continue to be the leading provider of safety sort of safety soda five software to the industry.
We have into January and general embedded market, we saw increased demand into industrial and medical verticals.
Including being chosen by web Tech corporations, a global leader in transportation solutions will merge with GE transportation last year.
And as noted in the last few quarters rolled into general embedded market has been as stated party a strategic priority for us that Barry.
A brief update on our radar business in the quarter. We saw continued growth in both the numbers shipped units and surface revenue, we added seven new customers, resulting in 50, new customers five low.
The fiscal year. Additionally, we continue to steady repeat buying from existing customers.
Moving onto identify software and services business the sales team executed well, resulting in a sequential billing grows in the high teens percentage.
Fourth quarter, he assets billing, what's at its highest level in fiscal 2020.
The billing strain was across all the assets businesses led by strong performance on both the new Yam endpoint management as well as at Hawk.
On the customer front, our regulated industry business, such a 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.
We added several large size wins, both new logos and upsale in competitive situation I'd be highlight field.
General dynamics, a fortune 100, aerospace and defense leaders.
C.G.I., a global professional surfaces and consulting company.
John Hopkins, AMR, CLO healthcare, a leading healthcare provider in Saudi Arabia.
He and group.
One of the largest producers and transfer to solve electricity in Europe.
And we PON steel one of the world's largest steel producers.
Our pipeline is building, a new product gas wells, notably for the MTD, the mobile threat defense and the fact very intelligent security.
Now onto outside as Blackberry Science business revenue was up slightly year over year against a recently telecom.
Billing increase sequential these as we anticipated.
We are highly competitive against other jet next generation Avi players because of the falling reasons number one Blackberry side and is the best mobile solution in the market.
Number two a lightweight solution protax or endpoints, where did they are connected or not.
Other nexgen Avi players only flotek when the endpoint is connected to their cloud.
Number three.
Instead of being clar, only we support cloud managed.
On premise and hybrid deployment models.
And last but not least where compatible with both the current and legacy Dubai operating system, especially on the desktop.
This was a strong quarter of new logo.
Side as one over 300, new customers some of the new logo real locals one in the competitive environment improve the phone Kara phone fund Tara.
Cantera cooperative group, the world's largest dairy exporters.
A notable say healthcare organization in Australia. Unfortunately, we don't have permission to names and aim.
Hey, Fortune 500 financial services company based in the Midwest of the United States.
We Sue home security, which was a cross sell opportunity to leverage are you you have relationships.
And hearted financial services group, a leading insurance of either a leader in insurance vertical that was one through our managed service partner with horizon.
At the resell Hey are 167 million up 9% year over year.
Ill dollar base net retention rates continued to be over 90%. We ended the quarter was 18% year over year Brogan active active subscription customers.
And as I Pietrzyk previously said with the lead the momentum will only continue now that back very silence as a full portfolio, but other blackberry capabilities in the market.
Before I turn the call because it's Steve Let me update you on a spot platform and the finance integration.
We have made tangible progress in the development of spark.
How secure Aiotv platform.
This past February we announced the release of our unify endpoint security all you, yes layer within the spot platform the Leverages AI machine learning.
And automation to deliver a zero trust security of costs auto fixed and mobile endpoints.
Do you, yes layer.
He is supported by six initial products.
Which our endpoint protection platform the ERP.
Endpoint detection and response the are.
The mobile effect defense, they MTD continuous authentication.
Data loss prevention, no SDLP and secure web gateway.
These products work seamlessly together to analyze and do you find with.
Big contact shows decision based on large amount of shared data and die Manically 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 convergence noted by garner we've seen the consolidation of MTD offerings with FBR and Mtwos and calling this combined stack unify endpoint security.
Gardeners seed to stack, forming a single solution. During the next three to five years in indicated that organization should invest with view, yes in mind.
Pharma also noted that 70% of organization will need a combined endpoint management Council by 2024, and 50% all belt sensation warehouse mobile threat defense 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 based new yes, and use them opportunities. Accordingly, we have successfully integrated entire side as organization, including sales and R&D teams into our Aiotv business segment.
The effective March one 2020 of which was just a month ago.
We believe a unified team needs to broader customer coverage, a richer product road map, a keira salus message and most importantly, very differentiated offerings.
The value the value proposition to a customer.
Step back very Sparks provide the highest level security and management will the CYMBA, yes, more productive user experience on any endpoint fix all mobile on any location over any network.
Many of you actually have asked me over the past several quarters of all back very prospect in the competitive landscape, especially the games much larger players.
I wouldn't I could not provide you a complete hence the Dan only to tell you that we're working on it because the solution at the time was under development. We now have a differentiated technology architecture, that's ready to ship into market.
Today are you, yes products work with Blackberry you yet.
However, we recognize that customer may be using a competitor's often more than one new OEM products. Therefore in the new future as part of our roadmap are you you have solution will be may compatible with Intuit Airwatch and other competitors you yen products to give customer the best circle gross.
Namely preserving investment are enjoying the benefit of the highest security and management that back fairly provides.
We believe you, yes changes to competitive dynamics and our operating objectives now is to gain market share.
Because you, yes, it's complementary too, but not a direct competitor on the non Blackberry OEM products and also back Berriew, yet, we'll maintain our leadership in the regulated industry due to our continued focus and commitment on security and management.
In time would be lead to spark architecture expand all total addressable market, including in the Io T. 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, we'll be in non-GAAP terms unless otherwise noted.
Please refer to the supplemental table in the press release for the GAAP and non-GAAP details and 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 was 77%.
Non-GAAP gross margin includes 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.
Particular at silence.
Our 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 quarter.
Total software and services revenue was 287 million, representing 99% of 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.
Our 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.
Thank you Stacy.
Currently.
I am sure you all agreed as a lot of uncertainty across the global economy due to the coal the 19.
Yes, well, it's not food and for blackberries via provide any specific fiscal 2021 financial outlook as things are changing on almost on a daily basis. However, I'd like to make some macro comments on our business.
Our revenue most likely will be negative 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 would be partially offset because our product and services portfolio is well suited to how enterprise sneaker challenges our business continually driven by the dramatic expansion I'll be more workers or the number of remote workers.
We had no offering the best security and productivity solution, these product and services, including our new OEM product silence digital workplace sticky smart, which is secure voice syntax solution as far as AD hoc I'll crisis communication solution, including the new situation respond caught a which is the entire.
Cycle of managing places.
In fact, we are experiencing increased demand more transaction increase comes in daily from new and existing customer, resulting in more licenses being deployed.
Furthermore, outside ends products, including silence clock, which our cloud based managed detection and respond offering I, helping customer to combat growing cyber security and privacy with as the number of the bio de endpoints increased in rate increases in a remote working environment.
While it is difficult to predict the volume of business year over year. The company remains strongly focused on the overall financial health in fiscal 2021.
The management team has finished good uncertain times in the path 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 the colder 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 believed as current global crisis.
Changes Blackberry strategy and the pieces of any of our long term profitability growth and value creation.
I would like now I'd like to open up for two and a Josh.
Hey, 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 is turned off to a lagging signal to be sharklet.
Again, Please press star one to ask a question, we'll pause for just a moment until now everyone an opportunity to signal for question. We do request that you limit yourself to one question and one follow up.
Our first question comes from Daniel Chan with TD Securities. Please go ahead.
Hi, Thanks, Mike Slessor Hi, John.
Now given the macro uncertainty how are you thinking about capital acquaintances in particular, how much do you need and what are your plans for the convert.
Yes, we have.
After paying off that convert we have $385 million of cash.
All you equivalent.
And so we had made some assumptions undue stress test environment.
Couple of assumption is number one we will payback I will converge.
The good news for paying back I will convert is.
That we would say probably about $23 million a year in interest income interest payment.
Obviously, the cash balance will go down quite a bit.
We also assume there's no financing.
Work being done and pilot reason is as you know very well you probably know budget I'd much rather than I do.
Last couple of weeks the market isn't really available I think is starting to loosen up a little bit.
But but we assume no financing we assume no dramatic cut back of headcounts all investment for the future. This is why said earlier, we're going to balanced profitability and long term growth. We know this will caf.
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, we don't want to put out selling the financial difficult decision. So we're going to be working balancing that but we're not we're not saying, though with the overhaul anything to disrupt out.
Our investment thesis given does that kind of the background. We ran through the scenario all revenue coming down by 20% by 30% by 50% you expect anybody to do in modeling and we believe we owed we're quite comfortable unless as being very extreme condition, which we are not answer.
Dissipating, we're quite comfortable would you be able to last of liquidity in the health financial help all couple of years.
Well that's very helpful. Thank you.
I want to shifting gears, 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 your go to market.
And your channel is is it developing the way that you anticipated.
Yeah.
I don't have a am I think it's 50 year over year numbers, so, but I could tell you.
From a billings growth perspective, we saw very healthy will fall out.
Better than double digit over Q3, and so that feels good.
The business out there.
We have a hiccup I think we overcame the hiccup.
We have people very committed going after the business, we got infrastructure build up for both the renewal and new businesses.
That we will that fall through the crack.
You know a while back it was really ups doing our doing.
For for not being more diligent on some of the south.
So now I think those are all bocom we have.
Number of layers that watches solid business as I said open a new renewal and new logo going after the new logo Oh, we have a bigger salesforce now and the combination of the.
Hi dance into this aiotv portfolio with the EU, yes makes it even even more exciting because now we each of our sales rep as small thing to sell the side as sales rep could sell the yen AD hoc and other products, mainly Uzi I believe and why Switzer day now the Euafme Salesforce now combining a swap.
On to sell the you, yes, Plata, which include a lot of silence AI technology. So so we feel good about the focus we feel good about how we aligned at territories.
So the majority of our sales is still going direct.
We are building channel business.
But thats probably debt that benefit will probably kick in mid mid year, this year or maybe towards the end of the year.
Your next question comes from Daniel Baucus with Bank of America. Please go ahead.
Hi, Daniel.
Hey, guys.
Thanks tightened question.
First I wanted to ask about the competitive environment for endpoint security so.
On the one hand, we have crossed straight growing very well and they have the similar approach. It seems like the silence and then you have others like Vmware and Microsoft's that can follow your moves to integrate the classic you again business with the endpoint security potentially so it'd be great you just get an update on the competitive landscape you're seeing.
For silence and I'm curious if the combined Euafme and security is a real conversation yet with customers and then as a quick follow up.
Okay.
Okay does a good question so.
So you know.
I took a little while two levo due to two laid out sorry, not label to laid out why we when some of the silence yield as I said earlier financed.
Secure over 300, new logo in the quarter.
And so we're winning against somebody.
I don't want to name names are weighing against and and it looks like to summarize day look site with a silent one though the wind way basically comes from a where the mobile leader.
Be.
We don't always need to cloud so we do a secure protection on the endpoint, both offline and online and that's a differentiators.
We have now managed service and a full suite of products. So that also was a factor. So those are among other things. So those are three that that I feel jumped out at me when I look at the win.
The combination of that holds set of silence portfolio with the managed surface and the management tools that you haven't had its exactly where the market is going.
And and its verified and confirmed by Gardner.
Thats, what you know they named as whole segment called Ouest unify endpoint security, which is a combination of mobile and fixed.
Cloud on premise and also managed and managers and and threat detection and protection. So.
We just happen to be Youre early provider of the product and I am hoping that therefore give us a much more competitive NHL again, some of our big players and a big competitors out there.
And then we'll win.
Hopefully unfair share of the of the deals.
Finally.
Most of you had asked me to question about there are come some of our traditional competitors step advice state licenses.
And if you look at everything that we offer we are above.
All.
For example, a site license full year yellow a five.
We will be a lot cheaper than yellow, a five and and much better security product.
So yeah five is not free unlike the yellow a free so those so I believe that we could we could be competitive out there.
Great. That's that's very helpful. And then just quickly on the licensing strengths you know 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 up 15%.
So I was wondering if you could just kind of walk through what changed throughout the year and more importantly did this strength come at the expense ups in fiscal 2001 licensing strategy. Thanks.
Yeah, Yeah, I like to because as soon as is the problem is that I mean, it is a good business because it's very good margin and unfortunately, you all know very while that is somewhat lumpy.
And does the timing is little hard to predict a than just a kind of an enterprise transactions. So so because of that I'm always conservative.
I think you all I prefer to steal fascinated about a 250 mark.
For the F., why 21, and hoping we'll do better I mean, but.
It's really hard to predict that this quarter I did expected to come in that that strong honestly.
That it's been strongly over the entire year.
Great. Thanks, guys.
I think.
Your next question comes from Paul Cheever with RBC capital markets. Please go ahead.
Thanks, Good afternoon.
Good afternoon.
Hi, just trying to understand the Bts segment, a little bit more do you can you speak to them back into the declining in the quarter and then is that driven predominately from like royalties on the volume or production or are there other nonrecurring items in there like professional services Gaga, so the licenses a tools and NIM contraction.
Yeah, it's hard for Chile.
It's it's a little bit of everything.
Oh.
So first saw royalties are now.
We have projects, we believed that we were going to get to develop a seats are that has been delayed.
And once the project the new project up being delayed.
Mind, you Didnt go away didn't go away at all it's just been delayed because a lot of these our tier one and OEM. They start looking at the auto sales figures and they started to become a little concern there will be a little more cautious.
We still want to projects, there's no question about it and but at the end of develop that seats. This has that gone down and those are the higher you quite a onetime the immediate revenue type and then wanting to develop a seats got so down normally they come with some some portion.
I'll professional services, so that they they help us help them to deploy did as Andrew stopped the new projects. Our data of course is also slowed down because of that so it is say it is a.
Rather unusual situation and I don't expect it to last fall our game plan.
It's to do more the professional services work on the remote basis.
You have to get the Oh.
While price action from from the from the customers, which they are working we will also.
And so that 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 other two and continue working with auto customers, obviously because.
They will come back I mean is.
It's not going to this and so they will come back is it may take a quarter and another quarter.
But thats about that's about why expected to be.
Okay. That's helpful. Just shifting to cope with 19 in regards to the promotions that you implemented yeah or announced a could you provide some uptake.
Okay, and some some metrics on the uptake of that and in what do you expect in terms of potential conversion.
Longer term.
Yeah.
Okay. This is.
My people, probably going to yell at me about how 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 decent good pipeline because this is the one that actually came to us with a strong needs customers are able in some cases process appeal in record time, I mean, you guys know all there so I'm not saying anything they don't so I don't I will I said, we we view.
How's that situation and so it's a lot of different software company, though I'm not saying anything to do that are very San alisha and very unique but I. Just want you ought to know that we do have a piece of business. They didnt environment like this.
Unfortunately benefit from the from from you know this home prices and.
So we do okay in that area and so so so that's about the only metrics I could share with you.
That's more than what anybody with how you.
As a.
[laughter].
Your next question comes from Mike Walkley with Canaccord Genuity. Please go ahead.
Hi, Thank you.
Hi, Thanks, taking my question just following up a little bit on on cost structure. You know how should we think about kind of the investment level. It sounds like you guys feel good with the team in place someone and Thats for the long term.
But opex as a little lower than expected this quarter I imagine it could be lower again, just given lack of travel entertainment type projects things like that but is there an opex rate you're looking at maybe on a run rate for the for the calendar year that will take about.
I did not I did not calculated that we know we have a number of level. So for example in our and our plan. Your level of course, you know replacement of attrition of headcount would probably I got the isn't this environment. We're still be hiring people are we actually make up some offer slightly but it.
In a higher in the areas of quota carriers of people that are billable see also so that could help us on the revenue side and in other areas unless it's very 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 the references shack and so just take much longer so there will be some natural a reduction of pause build in oh. They obviously, we look out capital spending very carefully.
And that's also I like you pointed out traveled goes down literally.
92, 5%.
Hi.
Probably even conservative when you say that they nobody's traveling at all and there are other and there are other areas that we could take some costs out you know infrastructures facilities that kind of areas.
Hey, Thanks to just my follow up question, just circling back to the licensing which was the strongly as you laid out this year can you share with us just kind of heading into this year, what what the recurring revenue run rate is and up to 15 idea a good numbers to the year, but is there a recurring peafiel.
He solitaire rig count here coming up thank you.
Yeah I phone in my model I mean, as saying that last year I realize that you know I, probably don't have a hotel capability because I told everybody who is about to 50 I'm going to tell you is going to be about two to fiftyth over 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.
I'm of the year so of different quarters.
I I believe this year.
Planning on 250 is reasonable.
Your next question comes from costs, that's how does your she'll be I financial. Please go ahead.
Hey, guys. Thanks to a thanks to his question I'm just a couple of questions Steve on the $27 million goodwill impairment can you tell a slow that will cause that for.
Yes.
Impairment I think was was 22 million.
Turning to yeah.
Thanks.
That that related to the.
The BBM consumer.
It was it was a while back we license 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 and.
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.
You know the the impairment results from that.
Thanks, and then just I guess on QNX and the auto so obviously, we're seeing volumes.
Under pressure here in short term, but I guess part of the.
For the plan for QNX is that you should increase your market share, but also the as Peaker car should go up as.
His 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 would just it's just a volume issue in the short term, but you should still be should still see a Sps increase this year and then increase again next year.
It is it is a 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 announced results we talk about the design win in clusters instrumentation Hypervisors our Adolph.
Okay, we talk about those wins those wins all carry a higher higher.
ARPU.
Hey, Sp than the traditional ipi business.
Okay, so they're not getting deferred and all that there's just largely not not that we could see a we were basically based on.
On a discipline is really more volume versus less volume.
Great. Thanks.
Yep.
Your next question comes from Paul steep with Scotiabank. Please go ahead.
Craig Thanks, Hey, John can you maybe tied this one a little bit of but AD hoc and what we've seen the there obviously, that's one area that I'm, assuming you're seeing a list skin and then I'll give you one quick follow up thanks, Yeah add hall and environment like this so so far.
Most of you are not haven't really follow our at all business.
It is very strong in the federal government and a more of a kind of and I meant federal government I actually manda United State Federal governments.
And we have over 2 million seats in the United States Federal government space, including emphasis and Sofa and then of course in Canada.
As you know AD hoc assumed to Parliament and then and are the energy 15 countries a lot of 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 go.
Heading into you know there was a company core everbridge.
The company and they are they do except that what we do but they they are more in the state local and education market, which we're interested in so we're hiring people building that up and said it. It is as an opportunity. This is an opportunity of growth and it looks like that we are quite competitive and.
We just release, our latest part of which we're very proud off which is the lifecycle management of a crisis and and so.
Anyway. So I think this is going to be a good good growth engine.
[noise] great than the last one for me would be.
Maybe you could talk little bit about where you see the organization being you've obviously change things around integrated silent soon it looks like you've got to do a head of field operations in marketing or presumably sales is what the title means how should we think about any changes to the sales force and then secondly.
How would you recapture in either cost saves from you know letting go fewer people in the silence area would you redirect that capital to gross or you just kind of sort of hold onto it in the current apartment. Thanks. Good yeah. So first of all I'm I'm I'm very pleased to.
When you combine to organization like that who have traditionally their own infrastructure and sales management.
I got the luxury to pick a team.
Between those so for legacy Blackberry and and silence.
And and ended help save a lot of the management infrastructure costs that we will then full pull it back into the hiring reps around the world. So the question, what's how fine with us that for us and they test. The NOLA is picked to run a sales feel marketing and customer services.
Oh, plus spark, which is a combination for the you Yemen and silence products and so we now have one organization do that and we you know the SP cascade down to a number of levels reduced the regional manager a country managers and so fault, we obviously at the luxury picking one.
With is the other person so.
That in my mind give us a cleaner structure and and also give us an opportunity to take.
Yeah, the better person at the same time, there are number was opportunity out there and geographies and and regions that actually have both very strong person and very promising both and we're 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 a leading by some really good people and and so so we are we're taking advantage of the talents who and the the simplification all that all of the organization.
Yes.
Your next question comes from kept the Chowdhry with global Equities Research. Please go ahead.
Thank you.
Very good execution in the tenable environment I have two quick questions first regarding your digital workplace I think you're giving ER. This product freefall six months do you see that business to give you. Some uplift as you mentioned in your prepared remarks during the second call.
Do you think that product is playing a unimportant rule.
Second question I have is.
Zoom Bee deal is getting more popular but they are terrible and providing the security and privacy.
Do you think some sort of William engagement, our relationship with companies like zoom.
I would be if they use digital workplace.
Issues could be put to rest any talk from Bob.
Okay. Thank you.
So.
Or the first question is Sicher workspace, it's a brand new product.
Yes.
Well, we we just released that probably know wanting couple of months.
And is fairly early to tell about well food. This process all 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 you know so I will reserve.
My comment on this probably wait till a quarter or two from now.
But it's certainly have picked up already and partly because of the environment, we didn't not having to deal with MTN.
And and be able to put it on B Y O D. It's a huge is a huge deal is a huge deals so and we're now integrating by the way.
Every one of those desktop we're putting aside as for tacked on it and so is it so I'm I'm hopeful we should they doing the right thing. So that's that's one area zoom is is always see picking up quite a bit because of the reason of it and yes. There were some.
Concerning the security and privacy and not just assume and other other players true.
Zoom is part of our container like contain Lifesize program, meaning that soon works enough container well. If you are eight you you have customers our Blackberry you young customers running soon.
You will already be secure both in the data privacy and security of it.
That's really wonderful well a good to know so the container is if you're talking about spends united in the context off Oh dockers off and on it is just come to life. So is in some different context, typically if I'm a customer oh for say youre unified endpoint management and whatever.
So this I, probably I put into backed antenna by default. They will have the same level of security as a though under nine talked foam for life is that the correctly to pick up on that Ah. Yes. So the container that I was referring to is our endpoint management software, which is a combination of mobile device management in Africa.
As a management.
And we use the container technology there. So as you know that wraps around every application and protect the a threat any intrusion of that allows our agents. So the I'm talking about that container.
That's all the time, we had for questions I would like to turn the call back over to John Chen Chairman and CEO Blackberry for closing remarks.
Okay.
Thank you I was just having fun.
But ah. Thank you very much for your time today Oh, we go forward you speaking with you at our analyst day, which unfortunately, we now need to be on the webcast.
Because of the working you don't shelter in place.
It will be webcast on April 21st so.
I am coming April 20, plus our lastly, I like it takes some opportunity to hope you and your family who stay healthy and stay safe.
As we work together for this challenge times and and I added one statement. This crisis shall pass so looking forward to interacting with all you. Thank you very much for the time.
This concludes today's call. Thank you for your participation you may now disconnect.
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