Q2 2022 BlackBerry Ltd Earnings Call
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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.
Is that 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.
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Should not place undue reliance on the company's forward looking statements income.
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Undertakes no obligation to update or revise any forward looking statements.
As required by law.
As is customary during the call John and Steve will reference non-GAAP numbers and a summary of our quarterly results.
For a reconciliation between our GAAP and non-GAAP numbers. Please see the earnings press release published earlier today, which is available on the Heska Peter.
<unk> dot com websites.
And with that I'll turn the call over to John Thank.
Thank you. Thank you, Tim and good afternoon, everybody and thanks for joining the call today one correction.
All of the number or the revenue number we use will be GAAP base correct, yes.
Non-GAAP numbers.
It's actually.
The revenue number we referred to our GAAP based number okay.
I highlight this quarter the business performed well with revenue for all the three business segments, beating expectation.
The cyber security business unit delivered strong sequential billings and revenue growth.
Iot business unit performed better than expected with strong design related activities.
It really offsets offsetting the impact of the global chip shortage and protection royalties licensing revenue reflects the restriction on monetization activity from the ongoing patent sale negotiations, which I'll talk about more in detail shortly licensing and other revenue came in slightly stronger than expected.
This quarter Blackberry generated positive operating cash flow.
Following the strengthening of the Iot leadership team in Q1, we have appointed John Joe Matteo to lead our cyber security business unit, beginning all commencing November October bauxite commencing October for these switches couple of weeks from now.
John was period of feet of Mcafee, President and Chief revenue officer, running to enterprise and consumer cyber security businesses.
This new appointment upfront piece, the refocus of our software business into two business units I'll cover this in more detail later.
Excuse me.
Tom I review with the Iot business unit revenue came in at $40 million, which is better than expected primarily due to ongoing strength in the design activities area gross margin remained strong at 83% Iot AAR increased to $89 million.
As you are all aware the auto industry experienced some significant headwinds in Q2 due to the global.
The global semiconductor chip shortage.
This impact production volume, particularly in North America for US for instance, a major customers of ours reported 700000.
<unk> lost units of production in calendar Q2 production.
Production base royalty I historically, the largest single component of our <unk> X revenue. However, a significant portion of revenue is also generated from design activities prior to the vehicle entering production.
This part of the business remains very vibrant and we continue to generate strong development seat and professional services revenues as a result total Iot revenue in the quarter was better than expected.
Furthermore, these design wins will translate into future production base royalties.
As we look ahead to the rest of the year, we continue to see the headwind from a vehicle production.
The problem is spear to a shifted on surprise of wafers to more of a backend assembly and testing issues largely due to a spike in Covid cases in Asia as well as some of the.
The accident <unk> going on in Asia, some of the plants at fire for example.
Feedback from OEM about the impact on production volumes in the second half is somewhat mixed and constantly evolving for example, daimon recently indicated they are expecting a lessening impact by Q4.
Sorry, but Volkswagen and on the other hand.
The challenge is persisting into 2020.
In terms of outlook, we continue to see that the past quarter is the low point.
Significant headwinds I expected to continue into Q4, and Q3, and Q4, and perhaps even beyond that albeit with a sequentially decreasing impact.
The impact of the chip shortage on <unk> royalty revenue is expected to be buffered somewhat by ongoing strength in design activities.
We are comfortable with the current Iot revenue consensus, meaning the full year revenue outlook remains unchanged.
As mentioned, despite a supply chain issue.
<unk> continue to win new design at a very solid pace in the quarter. We had 23, new design wins with seven in auto and 16 in the general embedded market we call it Jim.
Because of our market presence and leader leading technology, we are the trusted go to supplier and market leader in auto.
Furthermore, we are delighted to announce that we now have design wins with 24 of the worlds top 25 electric vehicle automakers as measured by volume.
Haven't been selected most recently by Daimler as part of their design.
As part of that design.
This is profit from the <unk> 25, we had last quarter.
These 24 Oems between dam represent 82% of global EV market, where production sorry.
82% of global EV production. This guidance this demonstrated leading position we have in this very fast growing parts of the auto industry.
Yeah.
I would like to expand on a couple of design wins to get investor more colors as to why <unk> chosen and why we are the industry leader.
The first reason.
With the automotive tier one that is building food digital cockpit and gateway solution for a Chinese OEM youll see that <unk> real time operating system and Hypervisor Q&A.
<unk> technology is well known and trusted in China, and the Chinese automotive industry, given this reputation for safety and security <unk>.
<unk> was chosen about software solution from both domestic and multinational and as well as multinational competitors production is expected in 2022, which is next year and run for around five years.
The second is a leading Japanese industrial robotics manufacturer that has also happened to be a new logo to a blackberry.
The customers select <unk> and autonomous <unk> robot robot warehousing system ahead of the leading competitors <unk> was chosen for its functional safety credentials.
Should I expect it to start this year and continue for five years.
Other notable design wins this quarter in auto included instrument cluster and Adas systems in a gym space design wins, including medical diagnostic industrial process control and a thermal control system for a power plant.
I'm on a shifted to Jarvis during the quarter, we launched <unk> to point out. This is a SaaS version of our software composition analytics too, which was previously offer as a bespoke service engagement.
Jamba is to know which include a market leading binary code scanner is an SMB.
Important part of our Blackberry and assess customer to achieve compliance with the reason.
Asphalt executive order.
Secure billow materials software billing materials following software beyond matures executive orders mandated by the <unk> administration.
Moving to a brief update on IV.
We are pleased with the ongoing progress being made.
<unk> and AWS is significant resources allocated a project and our timelines remains on track.
We are on schedule to release in early as exploration that a reduction in October.
And the product side.
Scheduled to release in early access version of the product in October that will enable further engagement with Oems and also allow demonstration at CES in January.
This version will be available to certain ecosystem partners to begin actively building application on IV and speaking of applications for our IV to be embraced by automakers. We recognize that it is important to demonstrate <unk> value to them.
Following on from the AI, driven battery management apps that we announced last quarter.
We announced another application that we will we will be built on IV. This new application enabled in vehicle payments and is being delivered through a partnership with car IQ a California based startup.
The application will use direct access to sensitive data is in the edge compute to of the IV key differentiators to produce a unique digital fingerprint for EMEA for the photo vehicle.
This will allow us a fabrication of payments for items, such as few tolls parking surfaces et cetera.
Without the need of a three credit cards or auto traditional payment methods.
This opened up the possibility for OEM to participate in a new revenue streams and is another of the many potential applications that IV will enable.
In summary, <unk> continues to progress nicely.
Now, let me turn to cyber security.
This quarter the business unit delivered strong sequential billings and revenue growth revenue was $120 million gross margin came in at 59%.
<unk> was 364 million mentioned earlier, John Gol Matteo will be joining Blackberry two liters.
The cyber security business unit, taking over from <unk>, who is the acting chairman.
During his six years as perhaps.
President and Chief revenue officer at Mcafee, It delivered double digit growth in margin expansion for the enterprise.
As far as the consumer divisions.
John will build on our progress has been made in recent quarters with our cyber security business unit go to market engine and will also direct both product development and business unit strategy.
<unk> has decided to pursue other opportunities and will leaseback very at the end of October software and services business into two market focus.
This unit, both Iot and cyber.
Our targeted we're driving growth and with it.
Great shareholder value.
The two business units will report directly to me.
As mentioned this was a good quarter, although still work for the team to do a few outstanding area that I feel that I would like to share with you about.
Especially for the new logo customers.
Pipeline grew strongly for Blackberry Gateway, a zero Trust network access product.
Investment of our direct Salesforce.
Particularly the hiring of quota carrying sales heads continues.
We're also making further progress with the channel as illustrated by a 32% sequential growth in the channel billings this quarter.
New partner program is also have significantly increased both channel driven pipeline generation and a new local billings, mainly in North America.
Donna.
We also have seen robust growth in business through managed service managed security service providers, all MSP using MSP MSR Sophie sorry to quickly scale, our guidance managed service offering to day one of these partners.
So I'm happy to report managed more than 100000 endpoints using <unk> cypress products.
I'd like to take a closer look at some wins during the quarter that demonstrated why customer chose our choosing blackberry for their cyber security needs.
The first customer is one of the top 10 automakers in the world.
This customer select a protest ETP and optics Edr solution following a competitive bake off in which we went head to head with cloud straight and carbon black.
The customer selected Blackberry due to a near 100% of our detection rate a lightweight engine and flexible deployment.
Options, both in the cloud as well as a Standalone factory network.
The second is a fortune 100 financial services company Blackberry displays.
Place, Microsoft defender will protect and Opex the company select us, particularly for our performance on Mac OS.
The third is where we have continued success. This quarter, we saw protect optics and Alfred zero consulting services into a number of agency the spray technology.
Technology.
On the industry revenue.
Initial funds F E lab.
Leading independent research firm.
Firm based in London as perform a rigorous set of tests on our ETT and Edr products.
<unk> and optics.
This breach tests defer some their quarterly <unk> inability of traditional signature based vendors represent zero day threats that breach chassis.
And real world of hacking tactics.
Okay.
Hey.
<unk> comprehensive techniques to evade or defense.
And concluded that protect and Opex provide complete protection prevention threat as well as zero false positive.
A link to the full report could be found on our investor.
This.
Third party validation of our product not just our EVP ETP or we have successfully closed.
On a GAAP two competitors with recent product launches.
The market demand.
Three of our AI engine.
We're seeing new malware and ransomware.
Hitting the headlines on an almost daily.
During the most mature in the industry.
And Houston will provide zero day protection against a host of these threats.
Okay.
In the quarter, our product successfully Brock new profile ransomware, such as high.
Locked bid Ragnar locker.
More before they could do any damages Blackberry silence AI engine is firmly focused on preventing a customer from being breached, whereas some of the leading competitors in that focus.
So I'm showing customer all the ways that system or a different ways at the system could DSS.
On the OEM front, we have continued to invest in our roadmap delivering enhancement that admiral add that add most value to customers with.
We recently announced that enterprise can now benefit from Blackberry, leading security, while enjoying a seamless and native user experience with Microsoft 365 productivity apps.
This is enabled by additional integration between Blackberry <unk> and Microsoft Microsoft 365, primarily through the Azure active directory conditional assets.
This is part of the latest version of the <unk> will provide zero day support for Android <unk> and iOS 13.
This past quarter with securities.
And agencies, such as the IRS the department of Homeland Security.
The U S Marine Corps.
U S Europe United States.
Air Force as far as leading enterprise, such as general dynamics and Magnum.
We also won a number of new loans.
General industry Institute.
For a criminal research and Tel Aviv stock exchange.
Yeah.
With the continued growth in pipeline coupled.
So the investment in our direct and channel sales the outlook of the cyber security business unit is.
The sequential revenue growth due to the subscription model.
The full year outlook remains as before at the lower end of what R&D $5 million to $515 million range.
Turning now to licensing.
As I mentioned earlier negotiation to sell a portion of that patent portfolio related to mobile devices messaging and why.
Paul including preliminary agreement of many of the key items.
Key terms of the deal.
We expect to execute definitive agreement this quarter.
<unk>.
Normal naturally.
So in this backdrop.
We will continue.
Due to limited monetization activities for the remaining of the fiscal year <unk> revenue for both Q3 and Q4 is expected to be similar to Q2, which is that $10 million per quarter.
While we expect the sale to conclude.
Central Italy, the process has taken longer than we expected or anticipated should not conclude this quarter, we will have other options, including additional interested parties.
We will update investors on the material on any of the material developments in a timely manners.
So let me now hand over to <unk> to further review of the financials.
Thank you John.
My comments on our financial performance for the second quarter will be in non-GAAP terms unless otherwise noted.
Please refer to the supplemental table in the press release for the GAAP and non-GAAP.
Second quarter total company revenue.
Gross margin was 65%.
10%.
Our non-GAAP gross margin excludes <unk>.
Compensation expense of $1 million.
Second quarter operating expenses were $143 million.
Our non-GAAP operating expenses exclude $32 million in amortization of acquired intangibles.
$11 million in stock compensation expense and.
At $67 million fair value adjustment on the convertible debentures, which is a noncash accounting adjustment prone to large swings driven by market and trading conditions.
The second quarter non-GAAP operating loss was $30 million in the second quarter non-GAAP net loss was $33 million.
Non-GAAP earnings per share was <unk> <unk>.
Loss in the quarter.
Our adjusted EBITDA was negative $14 million this quarter.
Excluding the non-GAAP adjustments previously mentioned as we continue to invest in both our cyber and Iot businesses to drive topline growth.
I will now provide a breakdown of our revenue in the quarter.
Cyber security revenue was $120 million and Iot revenue was $40 million.
Software product revenue remained in the range of 80% to 85% of the total with professional services comprising the balance.
The recurring portion of software product revenue was approximately 80%.
Licensing and other revenue.
$15 million.
As John mentioned, our IP monetization activities remained limited while negotiations for the potential sale continue.
Now moving to our balance sheet and cash flow performance.
Total cash cash equivalents and investments were $772 million.
August 31, 2021 and.
An increase of $3 million during the quarter.
Our net cash position increased to $407 million.
Second quarter free cash flow was $10 million.
Cash generated from operations was $12 million and capital expenses.
Thank you Steve.
Before we move to Q&A.
I'd like to summarize this past quarter.
I'm pleased with how the business performed beating revenue expectations, our Oracle business software business unit.
He is already delivering results and we are adding additional relevant industry experience.
Okay.
<unk> design activity remains pretty strong and we are very well.
Entering the impact of the chip shortage is slow we are now also making good progress with <unk> and with that I'd.
Mike Ashley the operator to open the line for Q&A Kris.
Well now begin the question on Boston.
Ask the question you may follow one on your telephone keypad.
Yeah.
At this time.
Nishu Your line is open.
Coupon from Star one to ask a question.
Well pause for just a moment to allow everyone.
Thank you.
So I can answer your questions.
Question that you limit yourself to one question and one follow.
Uh huh.
Our first question today.
Yes.
Mike Walkley Canaccord.
<unk>.
Great.
Thanks.
John how are you doing.
Thanks, Thanks for all the updates and the guidance.
I guess my first question for you is your guidance arguably implies an aggressive second half outlook just to reach the full year guidance can you walk us through what needs to go right for you to achieve that guidance are stronger second half.
Yes. Thank you can you break it down a little bit.
Licensing of course, we already explained so I don't want to go into much detail on that.
And I think it all.
I think we're going to have $10 million quarter for the next two quarters for the second half.
Each of the quarter.
And add something to do with the fact that we are we're not going to monetize.
Push on the monetization effort and licensing assay, our billings for this negotiation on selling the portion of the of the patents that is on those.
Areas of business that we no longer actively involved with.
Regarding Iot.
The only wildcard so to speak is the chip shortage and the impact of that.
From all the indicators, so all the ups and downs and Katherine take when we spoke to a lot of them.
<unk>.
That.
North America seems to be getting better.
A good example will be 40 believe they get there.
They are improving.
And GM also is although they are going to shut down.
A couple of factories in Q3, but I think for my Manitou, it's improving.
Europe, However, still had about.
10% to 15% impact.
While the production and Southeast Asia Pacific.
So net of all that.
If we're in that range without any dramatic departure.
Polls.
And a big part of that.
Of course, as we are winning some.
Very strong design wins that.
That bring us more developed.
Our policy.
Revenue in <unk> as well as professional services revenue.
So I'm pretty comfortable with that on cyber.
Really it's a function of one thing I've got two two consideration in there.
One thing the patient part as we have.
A lot of salespeople join us in the last couple of two three quarters, we have a pretty young.
<unk>.
Goodbye.
The activities in our pipeline has been very strong in the last quarter into <unk>. So the rate of conversion.
Of the pipeline with our newest.
Alright, and it is something that we have to managed revenue.
Very carefully but the good news there is even if it takes longer.
These things dis business.
Don't tend to go away so so.
So I'd say, that's the assumption that we made.
In our forecast.
The other one is in Q4, we got a couple of large government deals with.
With some of the government and especially in North America.
Some of those needs to come to fruition and downside of Nm, we expect them to so those are those are the basis of our forecast, yes second half seems to be a bigger number.
A stronger number than the first half that's correct.
Great. Thank you and just my follow up question, congrats on adding <unk> to the team.
Is he going to run in kind of the same playbook that was being put in place for all the team or do you expect further changes positioning and did that impact your guidance.
Guidance parts at all.
Early to tell but I'm dying to hear has experienced a growth because he was being able to grow.
He.
He was the president or Mcafee and the CRO. So I'm sure he will make some changes.
Because I am doubtful that everything will remain exactly the same on the other hand.
And.
The.
The investment that we made in channel the investment we made in pipeline and investment we make in partners.
The engineering and then.
The investment we make in hiring more sales at.
And we have.
A couple of quarters ago, we hired a pretty good.
Head of professional services I'm sure they will take full advantage of those.
Okay. Thanks for taking my questions.
Okay.
Thank you.
Your next question comes from Daniel Chan with TD Securities. Your line is open Hey, Daniel.
Hey, Jonathan.
You mentioned earlier that typically your Q <unk> revenue has a higher mix of royalty versus development should we expect a higher mix of developments for the next couple of years as electronics and software development become ramped up a lot of these Oems.
I think you should expect.
Probably for this year is it will continue to be the same the reason I say this is because remember.
Amber I should be seeing some of the production.
Revenue coming from Adas, assuming the pie shortages.
Issue.
Got it to improve and it has to improve over time and is a huge industry.
In semiconductor for the whole semiconductor industry auto is not really that date.
It's not 100%, obviously is probably like more like 15% of the opex of the market. So it will it will address that and.
So I expect that our royalty rate to go back into some kind of growth, especially with all the design wins that we had in the last couple of two or three years.
Okay. That's helpful can you remind us how you sell these developments.
More of like a perpetual license or is there a recurring proportion of courses as well.
More like a perpetual licenses selling seats.
Okay, and do you kind of get like 20% maintenance.
Yeah, Yeah, we get upgrade and maintenance on it yes, okay.
One more if I may cyber security IRR was.
Flat sequentially.
<unk> been saying that the pipeline has been growing just wondering when we're going to start seeing that metric start to tick up or whether there was some seasonality built cornerstone yes.
That's good that's a good question I asked that question also and they always take give me the product makes sensor.
<unk>.
Some of them we took earlier.
And because of the Rev Rec policy.
I expect for the full Salesforce and I said it in the past by the way. So it's very consistent mid year of next year is where I'm going to see.
We are going to see some hoping to see some strong growth of all the investment we have made the pipeline going into new sales and so forth.
Okay. Thank you sure.
Your next question comes from Paul Treiber, RBC capital markets. Your line is open.
Ida.
Hi, John.
First question on the patent sale and I know you can't say much just.
Just could you bridge between those two statements because they are actually quite far apart from a tone perspective.
Yeah.
That's a good alignment I am glad you caught it yes. It is going to allow I fully expect to finish this this.
This quarter, but I'm tired of waiting.
I know a lot of our investors are too.
No.
It just is.
I'm not blaming anything on anybody and maybe we have too many lawyers assigned to this salary lawyers.
But.
This key is.
It's a complex any big portfolio.
He is rightfully so that they have done a lot of due diligence.
And those things are now completed by the way all the due diligence are completed and then we have a lot of time span our definitive agreement negotiation and then by and large with the exception of one or two items, where we're done with that.
And then we had the purchase agreement.
So it's just.
For me it.
Spin.
And this last Christmas.
It's coming up the next Christmas So I basically kind of draw the line at that and say.
Kansas staff.
Licensing.
The business you know.
These to either move on one direction or the other.
And then there are other interested parties in calling.
And so we are not entertaining down because as you recall during our during a period of time not long in the past.
We're an exclusive discussion with these people. So so I can't really entertained at third party sales by only point is if you want to put.
Percentage weighting percentage I put 80, 20, I put 80% we get it done this quarter.
Does that help.
Yes.
Very helpful.
<unk>.
I wasn't announced sort of a percentage from guidance.
Switching back to the <unk>.
Business.
In regards to 'twenty four on a 25 EV Oems.
Do we think about the magnitude or size.
These wins like you find like Evs, the ASP is higher than <unk>.
Gasoline vehicles is that what youre seeing generally no usually to ASP ties to functionality.
<unk>.
If you look at.
Functionality like <unk>, it's usually low single digit dollars per for Iot.
But if you look at AWS and.
Clusters, they are usually high single digit pushing into double digits.
So it's not gasoline versus <unk>.
Electric vehicle.
And so the electric vehicle had one advantage, which is very <unk> in a more component of highly complex ecu's. When you have highly complex <unk>. It does two things for US number one because we had the highest certification in security and safety.
You have a high complex C E C U.
Like a compute engine in a car they tend to go after that most secure and most are more.
<unk> phase.
Our protection product. So we have a actual an advantage to win it that's number one.
Number two number two they used to they tend to use very complex algorithm and that will help us.
Sometimes selling more than even one copy.
For you see you.
No.
And when you sell these complex CCU.
And with eight hours a cluster so a hypervisor typically the ASB has done are higher on the higher end. So so it's really more function that drive ESP versus easy all gas.
Okay. That's helpful and then one follow up.
Seems like Blackberry <unk> has good traction in the Chinese EV market could you speak to the pricing for that market is it materially different than that then the other Oems or other geographies for Q&A.
No not not only non material difference. So it's also other things you need to be aware that a lot of those Chinese players actually have design center in the United States.
So that was the.
The market price is the market price.
They are.
A lot of them all in the U S. But of course, we have a Chinese team and and then deal with the customers over there in the factories over there and and so far but.
Not materially different.
Okay. Thank you I'll pass on.
John.
Hey, John Nice to talk to you.
I'll follow up on the <unk>.
Your line of questioning so that 25th OEM, which you don't have.
Yeah.
Relative to bringing out new vehicles.
On many many.
New vehicles that are selling well and at lower prices et cetera.
I am hopeful that.
They typically like to do.
Circle integrations.
From us.
But but.
But we're working it.
Okay.
On the patent sale.
<unk>.
There has been press articles that.
You're more or less have settled on up.
Price and it was really the complexity of.
On the all of the participants in Asia.
I guess the buyers group if you will.
Any any comments on on on these these details with the various parties that has yet to get worked out thanks a lot.
Can I can't comment on ongoing negotiations because it doesn't help EMEA whatsoever.
Okay.
I would say to you that.
That we have we have settled on the price.
Yeah I would agree.
I would confirm everything else I can't really comment on.
Okay, Alright, that's great I appreciate the color. Thanks.
Sir your line is open.
Hi, there.
Hi, Joe.
Two quick ones. The first one maybe talk to us, but how you're thinking about monetizing IV and how those thoughts have evolved and then I'll toss it with my quick follow ups.
I'm, sorry, how they monetize.
Hi, Ivy.
Ivy.
Okay, well there is.
It's a work in progress, but I have a lot of ideas.
First of all.
As the revenue model and Anne.
Okay.
It's a collection.
Central there.
The ability to analyze that push you on the edge.
On the cloud apply AI to it and feed it back to the OEM or application providers.
And one of the reason why we spend so much time on the application side.
A quarter ago, we have a intelligent battery management systems.
Performance in four.
Managing anything regarding related to our battery and the usage of it.
And this past quarter, we turn our attention to have an application that turned the churn youll vehicle into a wallet basically.
And it's a huge market for those of you who follow this.
Because the fleet costs.
Especially the trucks and the Amazon delivery drugs or bad acts or <unk>.
UBS or all cargos.
Our commercial trucks.
Hey, David.
We are equipped with IV.
There are tons of sensing data.
Between security and productivity.
And the ability to.
Not having to use a third party to do payment and silver are all very positive and cost effective.
So <unk> tried to find ways.
To enrich their source of revenue.
No.
They sold the car.
And this will dissipate IV may be able to do it so thats kind of where I am.
Really focused on.
Great.
Creating usage base.
Its app base.
Yes.
So use cases.
And in some cases I could share with third parties that could share with banks.
I can share the revenue with OEM and these are all possibilities. So that's.
That's how we focus on monetizing IV.
Great. Thanks, two quick follow ups I guess for years.
I did this quarter in aggregate.
What are sort of <unk>.
Reflective.
Throughout the remainder of the year and then the.
The other sort of clarification not asking you bet.
How should we think about stranded.
Costs in the SG&A line.
Or is it effectively sure profit.
Maybe move off that business was not to be there.
Good question.
Uh huh.
Okay.
I need to get co location of course.
First question what was the.
You didn't eto legislation, yes.
You've talked about adding more sales head count and just sort of looking at the pacing of what you've done in terms of investment is that all sort of in the envelope harder in Europe EV as you continue to win deals.
I.
We have made.
Hi quick question.
So as you all know me.
I've been here for making money running a profitable business and and.
<unk>.
And so.
On the other hand in the last year.
Recognize that the business needs to investment to establish on the gas you use the word.
Yeah.
And we had done that in the last two quarters.
There are still three quarters before the timing.
On loss versus profit.
As long as it's manageable, meaning that it's not going to be outrageous.
It's not going to kill a lot of my cash operating alone in my cash.
We are going to step on the gas and continued hiring and continue to increase and the idea is.
Since we now have the product and we could generate a pipeline if I could close the pipeline.
With more.
Feet on the Street and channel partners and so forth.
It will help grow the business and then that will then create a profit that I needed to offset a very profitable.
Source of revenue, which was licensing.
So and licensing as you all know.
I am not getting an evaluation of our licensing.
That is the recognition of my stock price and partly because it is lumpy and a lot of you have expressed that you actually don't know how to measure it.
Valued add Andi don't know how to think about the growth part of it. So that's all fair.
So I believe that while while we could while we have very fresh.
Set of portfolios.
With good average lifespan lap in the portfolio.
We should monetize at one time Henk debt proceeds to step on the gas and then invest in the cyber business, which we know there is a high growth and we know we caught up in the product GAAP and then also enhance the goal of Iot in and invest in IV, which is a <unk>.
As the future revenue source.
It could be significant and we have a great partner in Amazon there so.
So those are all I believe are positive.
Value creation for Blackberry.
That helps thank you.
Sure.
I'll conclude with Samsung.
On the call back over to Thompson T.
T spot for closing remarks, okay, well, thank you Ashley and I, thank everybody for joining us.
Today and before I end the call I'd like to remind you that we actually have our eighth annual Blackberry security summit hosted virtually on October 13.
The event will feature live and on demand section, including keynote addresses from Blackberry executive customer led case study inside from into the cyber security and Iot technology landscape is three to register for all of you and if you havent already and I encourage you to do so.
Otherwise a replay of the event will also be available through our investor relation website. Thanks.
Thanks, again and see you next time I hope to see you in person some time.
Take care.
This concludes today's call. Thank you for Europe.
Okay.
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