Q3 2025 BlackBerry Ltd Earnings Call

Operator: Good afternoon, welcome to the BlackBerry Q3 fiscal year 2025 Results Conference Call. My name is Alicia, and I'll be your conference moderator for today's call. During the presentation, all the participants will be in a listen-only mode. We will be facilitating a brief question and answer session towards the end of the conference. Should you need assistance during the call, please signal a conference specialist by pressing star zero. As a reminder, this conference is being recorded for replay purposes. I would now like to turn today's call over to Martha Gonder, Director of Investor Relations, BlackBerry. Please go ahead.

Good afternoon, and welcome to the Blackberry third quarter fiscal year 2025 results conference call.

Alicia: My name is Alicia and I'll be your conference moderator for today's call.

Alicia: During the presentation, all participants will be in a listen only mode.

Alicia: We'll be facilitating a brief question and answer answer session towards the end of the conference should you need assistance during the call. Please signal a conference specialist by pressing.

Alicia: Pressing star Zero as a reminder, this conference is being recorded for replay purposes.

Speaker Change: I would now like to turn today's call over to Martha Gondar Director of Investor Relations Blackberry. Please go ahead.

Martha Gonder: Thank you, Alicia. Good afternoon, everyone, and welcome to BlackBerry's Q3 fiscal year 2025 Earnings Conference Call. Joining me on today's call is BlackBerry's Chief Executive Officer, John Giamatteo, and Chief Financial Officer, Tim Foote. After I read our cautionary note regarding forward-looking statements, John will provide a business update, and Tim will review the financial results. We will then open the call for a brief Q&A session. This call is available to the general public via call-in numbers and via webcast in the investor information section at blackberry.com. A replay will also be available on blackberry.com website. Some of the statements we will be making today constitute forward-looking statements and are made pursuant to the safe harbor provisions of applicable US and Canadian securities laws. We'll indicate forward-looking statements by using words such as expect, will, should, model, intend, believe, and similar expressions.

Martha Gondar: Thank you Alicia good afternoon, everyone and welcome to Blackberrys third quarter fiscal year, 2020 five earnings Conference call. Joining me on today's call is blackberries, Chief Executive Officer, John Jim Matteo and Chief Financial Officer, Jim, but after I read our cautionary note regarding forward looking statements John will provide a bit.

Martha Gondar: This update and Tim will review the financial results. We will then open the call for a brief Q&A session.

Martha Gondar: This call is available to the general public via calling numbers and via webcast in the Investor information section at Blackberry Dot Com a replay will also be available on Blackberry Dot com website.

Martha Gondar: Some of the statements, we'll be making today constitute forward looking statements and are made pursuant to the safe Harbor provisions of applicable U S and Canadian Securities laws, we'll indicate forward looking statements by using words, such as expect will should model intend believe and similar expressions.

Martha Gonder: Forward-looking statements are based on estimates and assumptions made by the company in light of its experience and its perception of historical trends, current conditions, and expected future developments, as well as other factors that the company believes are relevant. Many factors could cause the company's actual results or performance to differ materially from those expressed or implied by the forward-looking statements. These factors include the risk factors that are discussed in the company's annual filings and MD&A, as well as risks associated with our ability to consummate the sale of the Cylance business on the timeline anticipated or at all. You should not place undue reliance on the company's forward-looking statements. Any forward-looking statements are made only as of today. The company has no intention and undertakes no obligation to update or revise any of them, except as required by law.

Martha Gondar: Forward looking statements are based on estimates and assumptions made by the company in light of its experience and its perception of historical trends current conditions and expected future developments as well as other factors that the company believes are relevant many factors could cause the company's actual results or performance to differ materially from those expressed or implied by the.

Martha Gondar: <unk> looking statements.

Martha Gondar: These factors include the risk factors that are discussed in the company's annual filings and MD&A as well as risks associated with our ability to consummate the sale of the <unk> business on the timeline anticipated or at all.

Martha Gondar: Should not place undue reliance on the company's forward looking statements.

Martha Gondar: Any forward looking statements are made only as of today. The company has no intention and undertakes no obligation to update or revise any of them except as required by law.

Martha Gonder: As is customary during the call, John and Tim will reference non-GAAP numbers in their 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 EDGAR, SEDAR+, and blackberry.com websites. Additionally, given that we've entered into a definitive agreement for the sale of Cylance, in accordance with GAAP accounting rules, Cylance's results will now be shown as a discontinued operation and its assets and liabilities as held for sale. Therefore, when referencing results for the cybersecurity division and BlackBerry in total, John and Tim will be referring to the results of both continuing and discontinued operations. We believe that this will be helpful to investors, especially given that the Cylance agreement was entered into after the end of the quarter.

Martha Gondar: As is customary during the call John and Tim will reference non-GAAP numbers in their 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 Edgar SEDAR, plus and Blackberry Dot Com website.

Martha Gondar: Additionally, given that we've entered into a definitive agreement for the sale of silence in accordance with GAAP accounting rules silences results will now be shown as a discontinued operation and its assets and liabilities as held for sale. Therefore, when referencing results for the cyber security Division and Blackberry in total John inch.

Martha Gondar: Kim will be referring to the results of both continuing and discontinued operations. We believe that this will be helpful to investors, especially given that the silence agreement was entered into after the end of the quarter.

Martha Gonder: With that, let me now turn the call over to John.

Martha Gondar: And with that let me now turn the call over to John.

Martha Gondar: Yeah.

John Giamatteo: Thanks, Martha. Thanks to everyone for joining today's call. This past quarter marked a significant inflection point for BlackBerry. We delivered solid top-line performance for our IoT and cybersecurity divisions, both of which exceeded the top end of our guidance ranges. This strong top line and continued focus on cost control and efficiency has enabled the company to pivot back to profitability, recording both positive EBITDA and EPS in the quarter. BlackBerry was able to convert this profitability into a return to positive operating and free cash flow generation for the first time since Q3 of fiscal year 2022, when controlling for the impact of the Malikie sale last fiscal Q1. That means this is the first time in 12 quarters that BlackBerry has generated both positive operating and free cash flow.

John Inch: Thanks Martha.

And thanks to everyone for joining today's call.

John Inch: This past quarter marked a significant inflection point for Blackberry.

John Inch: We delivered solid top line performance for our Iot and cyber security divisions, both of which exceeded the top end of our guidance ranges.

John Inch: This strong topline and continued focus on cost control and efficiency.

John Inch: Has enabled the company to pivot back to profitability recording both positive EBITDA and EPS in the quarter.

John Inch: Blackberry was able to convert this profitability into a return to positive operating and free cash flow generation for the first time since Q3 of fiscal year 2022.

John Inch: When controlling for the impact of the molecule sale last fiscal Q1.

John Inch: That means this is the first time in 12 quarters that Blackberry has generated both positive operating and free cash flow.

John Giamatteo: In fact, excluding the Malikie transaction, year to date for Q1 to Q3, operating cash flow is $136 million better this year than last. This strong performance illustrates just how far we've come as a company in the past year. In addition, as we announced earlier this week, we've signed a definitive agreement with Arctic Wolf for the sale of Cylance. This deal, which is subject to closing conditions, will quickly address the challenges of the Cylance financial profile and simultaneously further strengthen our balance sheet. This is a transformational move for BlackBerry that aligns with our clear strategic direction we outlined at our recent Investor Day and places the company on a strong trajectory going forward. Let me begin by reviewing what was another good quarter for our IoT division.

John Inch: In fact, excluding the Maliki transaction year to date for Q1 to Q3.

John Inch: Operating cash flow is 136 million better this year than last.

John Inch: This strong performance illustrates just how far we've come as a company in the past year.

John Inch: In addition, as we announced earlier this week, we signed a definitive agreement with Arctic Wolf for the sale of silence.

John Inch: This deal, which is subject to closing conditions will quickly address the challenges of the sign last financial profile and simultaneously further strengthen our balance sheet.

John Inch: This is a transformational move for Blackberry.

John Inch: It aligns with our clear strategic direction, we outlined at our recent Investor Day and places the company on a strong trajectory going forward.

John Inch: So let me begin by reviewing what was another good quarter for our Iot Division.

John Giamatteo: IoT overcame the ongoing difficult backdrop in the automotive space to deliver revenue of $62 million above the top end of our guidance range. This represents 13% year-over-year and sequential growth. The strength this past quarter was predominantly driven by both royalties and development seat licenses. Automotive was the strongest performer, led by revenue from both the digital cockpit and advanced driver assistance systems, or ADAS. In terms of design wins, the two largest this past quarter were with leading automakers. The first was with a German luxury automaker for the QNX Hypervisor to form the foundation of a digital cockpit software stack on a next-generation chipset that will be used across a full range of vehicles. The second was with one of Asia's largest auto OEMs for the QNX operating system to be deployed in the ADAS domain.

John Inch: Iot overcame the ongoing difficult backdrop in the automotive space to deliver revenue of $62 million above the top end of our guidance range.

John Inch: This represents 13% year over year and sequential growth.

John Inch: The strike this past quarter was predominantly driven by both royalties and development seat licenses.

Automotive was the strongest performer.

John Inch: Led by revenue from both the digital cockpit and advanced driver assistance systems or Adas.

John Inch: In terms of design wins, the two largest this past quarter with leading automakers.

The first was with a German luxury automaker for the Q N X hypervisor to form the foundation of a digital cockpit.

Cockpit software stack on a next generation chipset.

John Inch: That will be used across a full range of vehicles.

John Inch: The second was with one of Asia's largest auto Oems for the Q N X operating system to be deployed in the Adas domain.

John Giamatteo: We continue to see strong traction for our next-generation version of QNX operating system, SDP 8.0. Despite having only been launched earlier this year, prior to Q3, we had already secured a number of exciting partnerships and design wins. At Investor Day in October, we announced that more than 10 leading silicon vendors have already committed to supporting SDP 8.0. The momentum is absolutely building. This past quarter, we secured one of our largest-ever GEM wins with one of the leading industrial automation OEMs, who elected to upgrade from version 7 to version 8. This design is for a high-performance OS to be used in a number of industrial use cases. The data point illustrates the significant market opportunity that we have in verticals outside of automotive. In fact, we made significant progress across medical, industrial, and rail verticals.

John Inch: We continue to see strong traction for our next generation version of <unk> operating system S. D. P eight downhill.

John Inch: Despite having only been launched earlier this year prior to Q3, we had already secured a number of exciting partnerships and design wins.

John Inch: At Investor Day in October, we announced that more than 10, leading silicon vendors have already committed to supporting S. D. P. Eight.

John Inch: The momentum is absolutely building.

John Inch: This past quarter, we secured one of our largest ever gem wins with one of the leading industrial auto automation Oems who elected to upgrade from version seven to version eight.

John Inch: This design is for a high performance O S to be used in a number of industrial use cases.

John Inch: The data point Elisa illustrates the significant market opportunity that we have in verticals outside of automotive.

John Inch: In fact, we made significant progress across medical industrial and rail verticals. This past quarter in rail we secured a number of net new logos, including universal signaling and progress rail.

John Giamatteo: This past quarter, in rail, we secured a number of net new logos, including Universal Signalling and Progress Rail. We are also pleased with the customer reception of our QNX Cabin offering. As a reminder, this is a platform that allows for QNX development in the cloud and the creation of a digital twin of a vehicle's digital cockpit. In the quarter, we made a huge step forward by securing an order for this subscription-based product from a major Japanese OEM. They will start by developing their next-generation cockpit with a cloud-first approach to drive down time to market, as well as achieve scale and cost efficiency. In addition, we are continuing discussions with a number of other leading auto OEMs. I'm very proud of the results for IoT. The solid growth in the face of a challenging backdrop reflects QNX's strong position in the markets we address.

John Inch: We are also pleased with the customer reception of our Q N X cabin offering.

John Inch: As a reminder, this is a platform that allows for Q N X development in the cloud and the creation of a digital twin of our vehicles digital cockpit.

John Inch: In the quarter, we made a huge step forward by securing an order for this subscription based product.

John Inch: From a major Japanese OEM.

John Inch: They will start by developing their next generation cockpit with a cloud first approach to drive downtime time to market as well as achieve scale and cost efficiency.

John Inch: In addition, we are continuing discussions with a number of other leading auto Oems.

Speaker Change: I'm very proud of the results for Iot.

Speaker Change: Solid growth in the face of a challenging backdrop reflects Q1 extra strong position in the markets we address.

John Giamatteo: Let me now move over to our cybersecurity division. This was a really good quarter for cyber as well. We delivered revenue of $93 million, exceeding the top end of our guidance range we provided last quarter. Cyber achieved 7% sequential revenue growth when including Cylance, or 10% for the secure communications division, that is UEM, AtHoc, and SecuSUITE collectively. On a year-over-year basis, the division had a tough compare due to significant revenue relating to the large multi-year deal with the Malaysian government that we secured this time last year. Within the secure communications division, UEM endpoint management had a solid quarter, recording both sequential and year-over-year growth. We secured a number of wins this past quarter within our core government sector and also large deals with financial services. These included renewals and expansions with leading global banks, including German bank KfW.

Speaker Change: Let me now move over to our cyber Security Division.

Speaker Change: This was a really good quarter for cyber as well.

Speaker Change: We delivered revenue of $93 million exceeding the top end of our guidance range, we provided last quarter.

Speaker Change: Ciber achieved 7% sequential revenue growth, when including silence or 10% for the secure communications division that is UN AD hoc and secchi smart collectively.

Speaker Change: On a year over year basis, the division had a tough compare due to significant revenue relating to the large multi year deal with the Malaysian government that we secured this time last year.

Speaker Change: Within the secure Communications Division UE M endpoint management had a solid quarter recording both sequential and year over year growth.

Speaker Change: We secured a number of wins this past quarter within our core government sector and.

Speaker Change: And also large deals with financial services.

Speaker Change: These included renewals and expansions with leading global banks, including German Bank K F. W.

John Giamatteo: Other deals included the Scottish Police, Johns Hopkins University, and the Dutch Water Ministry. AtHoc also had a solid quarter. It continued to demonstrate its strong position in the US federal government by securing a significant renewal and expansion with the Department of Homeland Security. Other wins included the US Department of Justice. We're further strengthening AtHoc's competitive position with a number of new product enhancements, including new alert approval workflows and native Android and iOS applications. Moving over to SecuSUITE, we've been pleased with our ability to grow outside of Germany, where we leverage our software-based version of the product. Q3's solid performance was largely driven by some strong renewals within the German market, where we have strong relationships with a number of government agencies.

Speaker Change: Other deals included the Scottish police.

Speaker Change: Johns Hopkins University, and the Dutch water Ministry.

Speaker Change: AD hoc also had a solid quarter. It continued to demonstrate its strong position in the U S. Federal government by securing a significant renewal and expansion.

Speaker Change: With the department of Homeland Security.

Speaker Change: Other wins included the U S Department of Justice.

Speaker Change: We're further strengthening and hawks competitive position with a number of new product enhancements, including new alert approval workflows and native Android and iOS applications.

Speaker Change: Moving over to <unk> smart, we've been pleased with our ability to grow outside of Germany, where we leverage our software based version of the product.

Speaker Change: However, Q3s solid performance was largely driven by some strong renewals with within.

Speaker Change: Within the German market.

Speaker Change: We have strong relationships with a number of government agencies.

John Giamatteo: The annual recurring revenue, or ARR metric for cybersecurity, including Cylance, remained largely stable, recording a small sequential increase and a 3% increase on a year-over-year basis to $281 million. For secure communications, that is excluding Cylance, the increase was even more pronounced, where ARR increased by 3% sequentially and 8% year-over-year to $215 million. The dollar-based net retention rate, or DBNRR, for cybersecurity continued to improve, increasing by 2 percentage points sequentially and 8 percentage points year-over-year to 90%. Similar to ARR, DBNRR for secure communications division is much stronger. The dollar-based net retention rate for this past quarter was 95%. In summary, this was a really solid quarter for the cybersecurity division, where we beat expectations.

Speaker Change: The annual recurring revenue or a R. R metric for cyber security, including silence remained largely stable recording a small sequential increase and a 3% increase on a year over year basis to $281 million.

For secure communications that is excluding silence the increase was even more pronounced.

Speaker Change: We're a R R increased by 3% sequentially and.

Speaker Change: And 8% year over year to $215 million.

Speaker Change: The dollar based net retention rate or D. B N. R. R for cyber security continued to improve increasing by two percentage points sequentially and eight percentage points year over year to 90%.

Speaker Change: Similar to a R. R D B N IRR for secure Communications Division is much stronger the dollar based and our dollar based net retention rate for this past quarter was 95%.

Speaker Change: So in summary, this was a really solid quarter for the cyber security Division, where we beat expectations as.

John Giamatteo: As we head towards the close of the Cylance deal with Arctic Wolf, we are focusing our attention on the operational strategy for our secure communications business and maximizing the growth engines within it. Turning now briefly to IP licensing. Revenue came in slightly better than guidance at $7 million, which drove a sequential improvement in gross margin to 71%. This revenue continues to relate largely to legacy deals that predate the sale of our non-core portion of the portfolio to Malikie. Bringing this all together, this past quarter, BlackBerry delivered revenue of $162 million, exceeding the upper end of the previously provided guidance range. Total company gross margins improved both sequentially and year-over-year to 74%. With that, let me now turn the call over to our CFO, Tim, who will provide further details on our financials.

Speaker Change: As we head towards the close of the silence deal with Arctic Wolf.

Speaker Change: We are focusing our attention on the operational strategy for our secure communications business and maximizing the growth engines within it.

Speaker Change: Turning now briefly to IP licensing.

Speaker Change: Revenue came in slightly better than guidance at $7 million, which drove a sequential improvement in gross margin to 71%.

Speaker Change: This revenue continues to relate largely to legacy deals that predate the sale of our noncore portion of the portfolio to Maliki.

Speaker Change: So bringing this all together this past quarter Blackberry delivered revenue of 162 million exceeding the upper end of the previously provided guidance range.

Speaker Change: Total company gross margins improved both sequentially and year over year to 74%.

Tim: With that let me now turn the call over to our CFO Tim.

Tim: Who will provide further details on our financials.

Tim Foote: Thank you, John, and good afternoon, everyone. As usual, the numbers I'll reference will be non-GAAP. At our Investor Day in October, we delivered on our commitment to provide profitability by division, and I'm happy to report that the IoT division delivered $18 million of EBITDA, representing 38% sequential growth. Given the strong top-line performance that John mentioned earlier, gross margins expanded from the prior quarter to 85%. Cybersecurity, including both secure communications and Cylance, delivered positive EBITDA of $8 million, which was a $14 million sequential improvement. Excluding Cylance, EBITDA for the secure communications division was $22 million, meaning a strong 30% EBITDA margin. Gross margins for Cybersecurity improved by 12 percentage points versus the prior quarter to 67%, primarily due to a strong mix of SecuSUITE software licenses. For secure communications, gross margins were 73%.

Tim: Thank you John and good afternoon, everyone.

Speaker Change: As usual the numbers I'll reference will be non-GAAP.

Our Investor Day in October we delivered on our commitments to provide profitability by division montage.

Speaker Change: I'm happy to report that the Iot Division delivered $18 million of EBITDA, representing 38% sequential growth.

Speaker Change: Given the strong topline performance that Joe mentioned earlier.

Speaker Change: Gross margins expanded from the prior quarter to 85%.

Speaker Change: Cyber security, including <unk> secure communications and silence delivered positive EBIT of $8 million, which was a 14 million sequential improvement.

Speaker Change: Excluding silence EBITA for the secure Communications Division was 22 million, meaning a strong 30% EBITA margin.

Gross margins for cyber security improved by 12 percentage points versus the prior quarter to 67%.

Speaker Change: Primarily due to a strong mix of set you small software licenses.

And for secure communications gross margins was 73%.

Tim Foote: Finally, our licensing division delivered stronger than expected revenue at $7 million, which drove a solid $6 million of EBITDA. The new management team maintains a close focus on cost control, and operating expenses this quarter remained broadly in line with Q2 at $101 million, and significantly below the $130 million baseline for OpEx that we provided as a reference point prior to cost streamlining over the past year. Given the strong top line and tight cost control, BlackBerry has delivered solid profitability this quarter with positive adjusted EBITDA above the top end of our guidance range at $23 million. Adjusted net income for Q3 was $12 million, and non-GAAP EPS beat expectations at +$0.02. In addition to a return to profitability, BlackBerry achieved both positive operating and free cash flow of +$3 million.

Speaker Change: Finally, our licensing division delivered stronger than expected revenue at $7 million, which drove a solid 6 million of EBITDA.

Speaker Change: The new management team maintains a close focus on cost control.

Speaker Change: On operating expenses this quarter remained broadly in line with Q2 at $101 million.

And significantly below the 130 million baseline for Opex that we provided as a reference point prior to call streamlining over the past year.

Speaker Change: Given the strong topline and tight cost control Blackberry has delivered solid profitability this quarter with positive adjusted EBITDA above the top end of our guidance range at $23 million.

Speaker Change: Adjusted net income for Q3 was 12 million, our non-GAAP EPS beats expectations at plus two cents.

Speaker Change: In addition to our returns profitability Blackberry achieved both positive operating and free cash flow of plus $3 million.

Tim Foote: This was one quarter ahead of schedule and represents a year-over-year operating cash flow improvement of $34 million when compared to the Q3 of the prior year. Turning now to financial outlook for the Q4. Given the pending closure of the sale of Cylance to Arctic Wolf and reporting Cylance as a discontinued operation, we are standing down all previously provided guidance relating to the cybersecurity division and with it, guidance for the full company. Instead, we'll provide guidance only for the new secure communications division and then only for the current Q4. We'll provide revised guidance for fiscal year 2026 for both our secure communications division and total BlackBerry during our Q4 earnings.

Speaker Change: This was one quarter ahead of schedule and represents a year over year operating cash flow improvements of $34 million when compared to the third fiscal quarter of the prior year.

Speaker Change: Turning now to financial outlook for the fourth fiscal quarter.

Speaker Change: Giving the pending closure of the sale of silence to Arctic Wolves, and reporting silence as a discontinued operation.

Speaker Change: We are standing down all previously provided guidance relating to the cyber security division and with its guidance for the full company.

Speaker Change: Instead, we will provide guidance only for the new secure communications Division.

Speaker Change: And then I need for the current fourth fiscal quarter.

Speaker Change: We'll provide revised guidance for fiscal year 'twenty six.

Speaker Change: Both our secure communications division and so to Blackberry during our Q4 earnings.

Tim Foote: We expect revenue for the Secure Comms division to be in the range of $62 to 66 million in Q4. We also expect EBITDA for Secure Comms to be in the range of +$4 to 6 million. For IoT, we expect revenue this quarter to be in the range of $60 to 65 million, which means once again, we are raising the bottom end of our full-year guidance range for IoT revenue, such that the range is now $230 to 235 million. For IoT, we expect EBITDA for Q4 to be in the range of $8 to 10 million. We continue to expect revenue for our licensing business to be approximately $4 million for Q4, and for EBITDA to be approximately $3 million.

We expect revenue for the secure Combs division to be in the range of $62 million to $66 million in the fourth quarter.

Speaker Change: We also expect to EBITA for secure columns spanning a range of pulse to four as opposed to $6 million.

Speaker Change: So Iot we expect revenue this quarter to be in the range of $60 million to $65 million, which means once again, we are raising the bottom end of our full year guidance range for Iot revenue.

Speaker Change: So right now $230 million to $235 million.

Speaker Change: But I O T. We expect EBITDA for Q4, it's being in the range of $8 million to $10 million.

Speaker Change: We continue to expect revenue for our licensing business to be approximately 4 million for the fourth fiscal quarter I'm, sorry, EBITDA would be approximately $3 million.

Tim Foote: At a total company level, we expect adjusted EBITDA from continuing operations for Q4 to be in the range of $+10 to +20 million, meaning we expect BlackBerry, on a continuing basis, that is excluding Cylance, to generate between $60 and 70 million of EBITDA this fiscal year. This is a significant shift in the profitability of this company. For non-GAAP EPS, which will include discontinued operations, we expect it to be between -$0.01 to +$0.01 in Q4. Finally, we expect a further sequential improvement in operating cash flow for Q4. Let me now turn the call back to John.

Speaker Change: That's a total company level, we expect adjusted EBITDA from continuing operations for Q4, it's being in the range of positive 10. So.

Posted 20 million mean.

Speaker Change: Meaning we expect Blackberry on a continuing basis.

Speaker Change: Lastly, as excluding silence to generate between 60 and 70 million, albeit all this fiscal year.

Speaker Change: This is a significant shift in the profitability of this company.

Speaker Change: For non-GAAP EPS, which will include discontinued operations, we expect it to be between minus one to plus one sentence in the fourth quarter.

Speaker Change: Finally, we expect a further sequential improvement in operating cash flow for Q4.

Joe: And with that let me now turn the call back to Joe.

Speaker Change: Yeah.

John Giamatteo: Thanks for the summary, Tim. Before we move to Q&A, let me quickly summarize the key takeaways for this past quarter. Q3, as I said before, was an inflection point for BlackBerry. The announced sale of Cylance to Arctic Wolf will provide a true win-win for stakeholders, including providing BlackBerry with a rapid path to increasing profitability and cash flow generation. Even including Cylance, this past quarter, BlackBerry achieved profitability and positive cash flow ahead of expectations. This was powered in part by revenue for both IoT and the Cybersecurity division exceeding the top end of our guidance range. Standing back from this, we see that this past quarter, all three engines were profitable. Cyber generated $8 million of EBITDA, and excluding Cylance, Secure Communications generated $22 million. IoT generated $18 million, and our Licensing business contributed a further $6 million.

Tim: Thanks for the summary, Tim.

Tim: Now before we move to Q&A, let me quickly summarize the key takeaways for this past quarter.

Tim: Q3, as I said before was an inflection point for Blackberry.

Tim: The announced sale of silence to Arctic Wolf will provide a true win win for stakeholders, including providing blackberry with a rapid path to increasing profitability and cash flow generation.

Tim: Even including silence this past quarter, Blackberry achieve profitability and positive cash flow ahead of expectations.

Tim: This was powered in part by revenue for both Iot and cyber security division exceeding the top end of our guidance range.

Tim: Standing back from this we see that this past quarter all three engines were profitable.

Tim: Cyber generated $8 million of EBITDA, and excluding silence secure communications generated $22 million.

Tim: Iot generated $18 million.

Tim: And our licensed our licensing business contributed a further $6 million.

John Giamatteo: I'm excited about the tremendous progress that we've made the past year here at BlackBerry and about the path that we've charted ahead. Now why don't we move to Q&A, and Alicia, maybe you can open up the lines.

Tim: I'm excited about the tremendous progress that we've made the past year here of Blackberry and about the path that we've charted ahead.

Speaker Change: So now why don't we move to Q&A and Alicia.

Maybe you can open up the lines.

Operator: Of course. We will now begin the question and answer session. To ask a question, please press star one at this time. We will pause for just a moment to allow everyone an opportunity to signal for questions. We request that you limit yourself to one question and one follow-up. One moment, please. Our first question comes from the line of Todd Coupland with CIBC. Please proceed.

Alicia: Of course.

Speaker Change: We will now begin the question and answer session to ask a question. Please press star one.

At this time.

Speaker Change: We will pause for just a moment to allow everyone an opportunity to signal for questions. We request that you limit yourself to one question and one follow up.

Speaker Change: One moment please.

Speaker Change: Our first question comes from the line of Todd Copeland with CIBC. Please proceed.

Todd Coupland: Oh, great. Good evening, everyone. Appreciate the additional disclosure. I was wondering if you could, the EBITDA by segment and for the guide, is that ex-corporate costs? This is a small adjustment question. That'd be the first question. My follow-up is, just give us a bridge to what is very strong segmented EBITDA in Q3 and then the sequential step down on EBITDA with more or less flat revenue sequentially. Just talk us through that. Thanks a lot.

Todd Copeland: Oh, great. Good evening, everyone I appreciate the additional disclosure.

Speaker Change: I was wondering if you could.

Speaker Change: This is a small adjustment question.

Speaker Change: The EBITDA by segment and for the guide is that ex corporate costs.

Speaker Change: That'd be the first question.

Speaker Change: And then my follow up is just give us a bridge to what is very strong segmented EBITDA in Q3, and then the sequential step down step down on EBITDA with more or less flat revenue sequentially, just talk us through that thanks a lot.

Tim Foote: Yes. Hi, Todd. Always nice to hear from you. The first part of the question, well, I'll take the second part. The second part is really a function of mix. Mix is the main driver there. As I mentioned in my prepared remarks, this was a strong quarter for licensing revenue, for the SecuSUITE business, which is very strong margin. In Q4, we see that mix shifting more towards some of the hardware components, which is at just a lower margin. On the QNX side, we had some strong royalties this time around. Next time we see that being a little bit more of a regular mix. You know that from quarter to quarter, there can be some shifts, particularly around development seat licenses. That goes up and down. Finally, on the QNX side, we're continuing to invest.

Speaker Change: Yes, Hi, Todd.

Speaker Change: Always nice to hear from you. So the first part of the question.

Speaker Change: I'll take the second part.

Speaker Change: The second part is it's really a function of mix mix is the main driver of that so as I mentioned in my prepared remarks.

Speaker Change: This was a strong quarter of our licensing revenue.

For the <unk> Smart business, which is very strong margin in Q4, we see that mix shifting more towards some of the hardware component switch is.

Is it just a lower margin.

Speaker Change: On the Q&A sides, we had some strong strong royalties. This this time round next time, we see that being a little bit more of a regular mix you know that from quarter to quarter. There can be some shifts, particularly around development seat licenses that goes up and down.

Speaker Change: And finally on the Q&A side, we're continuing to invest so one of the things we said at our Investor day.

Tim Foote: One of the things we said at our Investor Day was that pending this transaction, which we have managed to achieve much quicker potentially than some might have expected, we would focus our attention on the growth opportunities that we have for the QNX business. We are actively increasing headcount and expense in our R&D and sales and marketing functions on that side.

Speaker Change: Pending this this transaction, which we've.

Speaker Change: Managed to achieve much greater potential than some I would expect that.

Speaker Change: We would focus our attention on the growth opportunities to be hubs for the Q&A business, So where.

Speaker Change: We're actively increasing head count and expenses in.

Speaker Change: Our R&D and sales marketing functions on on that side.

Todd Coupland: Oh, sorry.

Speaker Change: And in place.

Tim Foote: No, please go ahead.

Speaker Change: Please go ahead, while I was just going to say if you could just clean up.

Todd Coupland: Well, I was just going to say, if you could just clean up these segmented results. At the Investor Day, you gave pre-corporate overhead EBITDA. Is this pre or post-corporate overhead? Thanks a lot.

Speaker Change: Is.

Speaker Change: The segmented results.

Speaker Change: The analyst day, you gave pre pri.

Pre corporate overhead Ebitdas is is this pre or post corporate overhead. Thanks, a lot yeah. So when we when we look at the segments. The three segments of Iot secure columns and licensing then you also have corporate.

Tim Foote: Yeah. When we look at the segments, the three segments of IoT, secure comms, and licensing, you also have corporate. You can find that in the reconciliation. I think it was around about $9 million this quarter, it doesn't show as a standalone segment. That's really just an accounting thing. You need to add that in to the other components to get to the total for the company. Does that make sense?

Speaker Change: You can find that in the in the Brexit situation I think it was around about 9 million this quarter, but it doesn't show as a standalone segment.

Speaker Change: It's really just.

Speaker Change: An accounting thing so you need to add that in to the other components to get to the total for the company because that makes sense.

Todd Coupland: That does. Thanks a lot.

Speaker Change: That does thanks a lot.

Tim Foote: Of course.

Speaker Change: Of course.

Operator: Thank you. Our next question comes from the line of Luke Junk with Baird. Please proceed.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Luke junk with Baird.

Speaker Change: Proceed.

Luke Junk: Great. Thanks for taking the questions. John, maybe if I could start just with a higher level question and your preliminary thinking just with priorities now assuming the Cylance deal closes, what you are going to do with that consideration, just allocation between strengthening the balance sheet and investing back into the business, maybe leaning into some of the things that Tim mentioned relative to QNX, especially. Thank you.

Oh, great. Thanks for taking the questions John maybe if I could start just with a higher level question and your preliminary thinking just with price priorities no. When you know assuming this time line deal closes what youre going to do with that consideration just allocation between strengthening the balance sheet and investing back into the <unk>.

Speaker Change: And this may be leaning into some of the things that you mentioned relative to cunaxa specially thank you.

John Giamatteo: Yeah. No. Luke, it's great to get this kind of question again, because I guess this time last year, we were in a little bit of a different position. Being able to talk about where we would utilize or deploy some of this capital, that's something that's definitely on our minds. As you mentioned, first things first, let's get this thing to closing. We think there's a really good, strong path there. The relationship and the dynamics with Arctic Wolf has been excellent. We're going to work diligently to get to the finish line on the closing of that. From there, we'll take a look at all the different options, as you mentioned.

Speaker Change: Yeah, Yeah yeah.

Lucas: Lucas it's great to.

Lucas: Get this kind of question again says I guess this time last year, we were in a little bit of a different position so being able to talk about you.

Lucas: You know where we would.

Lucas: Utilize or deploy some of this capital that's something that's definitely on our minds. As you mentioned you know first things first let's get this thing to closing.

Lucas: We think there's a really good strong path there the the relationship and the dynamics are with Arctic Wolf has been excellent. So so we're going to have we're going to work diligently to kind of get to the finish line on the closing of that.

Lucas: And and then from there well, we'll take a look at all the different options as you've mentioned like strengthening the balance sheet.

John Giamatteo: Strengthening the balance sheet is something that, from a conservative perspective, we love to do, but at the same time, deploying capital to drive growth, to drive more earnings, to drive more shareholder value, we're going to be exploring those kinds of opportunities as well. Most likely short term, I would say, organically, through, as Tim mentioned, we still think there's tremendous growth opportunities in IoT. We're going to make sure that we're placing the right bets to drive and propel that business forward. At some point, I would say more longer term, for sure, I think we'd take a look at things like a little small tuck-in M&A that gives us better scale in the IoT space.

Lucas:

Lucas: It's something that you know from a conservative perspective will we love to do but at the same time deploying capital to drive growth to drive more earnings to drive more shareholder value, we're going to be exploring those kinds of opportunities as well.

Lucas: Most likely short term I would say you know kind of organically through as Tim mentioned, we still think theres tremendous growth opportunities in Iot and we're going to make sure that we're placing the right bets to to drive and propel that business forward.

Lucas: You know at some point I would say more longer term.

Lucas: For sure I think we take a look at.

Things like a you know a little small tuck in M&A that gives us a better scale and are in the Iot space.

John Giamatteo: Finally, I think there's always a consideration that we have to have with the board on when we look at the stock price and where it is today, is buybacks a good utilization of some of that capital? Those are the things that once we get the Arctic Wolf transaction over the line, that's on our mind right now, and as we come to some more firmer decisions, both me and Tim, in consultation with our board, we'll certainly be disclosing and communicating with all of you.

Lucas: And and finally, and I think Theres always always a consideration that we have to have with the board on.

Lucas: Hum.

Lucas: When you look at the stock price, where it is today is is buyback say a good utilization of some of that capital. So those are the things that once we get the Arctic Wolf transaction over the line.

Lucas: That's on our mind right now and as we come to some more firmer decisions, both me and Tim and consultation with our board, we'll will certainly be disclosing and communicating with all of you.

Luke Junk: Thanks for that, John. That was really helpful. Maybe for my follow-up, just for Tim, you mentioned in the remarks that strength was predominantly driven in QNX by royalties this quarter in terms of the margin flow through, but also some seat license in there. Can you just level set us on where mix in QNX is across the major revenue streams, kind of on a run rate basis right now, and maybe give us some high-level thoughts as to the moving parts into fiscal 2026? Thank you.

Speaker Change: Oh, Thanks for that time that was really helpful. Maybe for my follow up just for Tim You know you mentioned in the remarks that strength was predominantly driven in <unk> by royalties. This quarter in terms of the margin flow through but also some seat license in there can you just level set us on.

Speaker Change: On where mix in <unk> is across the major revenue streams kind of on a run rate basis, right now and maybe give us some high level thoughts as to the moving parts into fiscal 'twenty six.

Tim Foote: Yeah, great question. I think I've given you that kind of shorthand cheat sheet answer of 20% dev, 20% services, and 60% royalties. That mix shifts around from quarter to quarter, particularly with the dev seat piece being the main wild card. As we've discussed before, there's been some challenges in terms of getting design programs up and running at OEM. As things kind of come back in and go back out, there can be some up and down. I'd say generally speaking, overall, we're still kind of tracking broadly to where we've mentioned in the long run. Yeah, just from quarter to quarter, can be a little bit flexible. Going into the new year, we're hopeful.

Speaker Change: Yeah, Great question, So I think I've, given you that kind of shorthand cheat sheet serve 20% 20%.

Speaker Change: Services and 60% royalties.

You know that mix shifts around from quarter to quarter, particularly with the dep seat piece being the main wildcards.

Speaker Change: As we've discussed before.

Speaker Change: There's been some challenges in terms of getting design programs up from running the Oems. So that's.

Speaker Change: Things kind of come back in and go back out there can be some up and down I'd say generally speaking April was still kind of tracking broadly to where while we we've mentioned in the long run.

Speaker Change: But yeah, just from quarter to quarter, it can be a little bit a little bit flexible going into the new year.

Speaker Change: And I wish I full I mean, its still challenging backdrop out there that you know Oems do have to get their arms around some of these challenges eventually and when it does we hope to see an uptick in in.

Tim Foote: It's still a challenging backdrop out there. OEMs do have to get their arms around some of these challenges eventually, and when it does, we hope to see an uptick in the dev seat revenue, which has been a bit challenged this fiscal year. Ultimately, we'll start to see some of these richer designs that we've been winning over the last few years come into the number and come out of our backlog. I think we're in a good place going forward, but right now, obviously, there's still some challenges.

Speaker Change: In the type C revenue, which has been a bit challenged this fiscal year, but then ultimately we will start to see some of these rich of designs that we've been winning over the last few years come into the numbers come out of our backlog side.

Speaker Change:

Speaker Change: I think we're in a good place going forward, but right now obviously, there's still some challenges.

Luke Junk: Got it. I'll leave it there. Thank you.

Speaker Change: Got it I'll leave it there. Thank you thanks Luke.

Tim Foote: Thanks, Luke.

Speaker Change: Okay.

Operator: Thank you. Our next question comes from the line of Kingsley Crane with Canaccord Genuity. Please proceed.

Speaker Change: Thank you. Our next question comes from the line of Kingsley Crane with Canaccord Genuity. Please proceed.

Kingsley Crane: Hey, thanks for taking the question. 95% DBNRR for Secure Comms. Can you talk about how you felt that segment performed in the quarter now that that's an independent segment? How that DBNRR trended and then where we should expect it's going to move forward? Thanks.

Speaker Change: Hey, Thanks for taking the question a 95% D V. NR for secure comps can you talk about how you felt that segment performed in the quarter.

Speaker Change: Now that that's an independent segment like how old the DNR trended and then.

You know, where we should expect it is going to move forward.

Speaker Change:

John Giamatteo: Yeah. Good question. We're really pleased to see it move in that direction. As I am sure you know, it's been a number that we've been working really hard at to try to stabilize, and now it's nice to see it generate some growth out of it. Across the board, I would say all the products within Secure Comms pretty much contributed. Mostly, it was a strong, very resilient UEM quarter with some nice government renewals. A couple of big banks not only renewed but added some licenses. I think that was helpful in this particular quarter. The AtHoc business tends to run pretty well. I would say they're probably our best-in-class, strongest renewal rates, ARR, DBNRR. I think we're always trying to target that between 95 and ambitiously or aspirationally, how do we get it to 100 plus?

Speaker Change: Yeah. Good question Casey it's.

Speaker Change: We're really pleased to see it move in that direction as I am sure. You know it's been a number that we've been working really hard as they try to stabilize and now it's nice to see it.

Speaker Change: You know generate.

Speaker Change: Some growth out of it.

Speaker Change: It's across the board.

I would say all of the products within secure comps pretty much contributed mostly.

Speaker Change: It was a strong very resilient OUI EM quarter with some nice government renewals some a couple of big banks.

Speaker Change: Not only renewed but added some theres some licenses. So I think that was that was helpful. In this particular quarter.

Speaker Change: Hearth business tends to.

Speaker Change: Run run pretty well I would say, they're probably our best in class strongest renewal rates a R. R. D. B N R. R.

Speaker Change: So.

Speaker Change: I I think you know, we're always trying to target that between 95, and you know ambitiously, our aspirational, how do we get it to a 100 plus but there can be some fluctuations quarter to quarter. You know this is.

John Giamatteo: There can be some fluctuations quarter to quarter. I wouldn't be that surprised if we did have 1 quarter it drop a couple of points and in another quarter, maybe it goes up a couple of points closer to 100. A little bit of volatility in there. I think what you'll find is it's going to be much more stable than it was without the Cylance business, because that drove a lot of volatility. I think you'll probably see a much stronger performance around that going forward.

Speaker Change: So I wouldn't it wouldn't be that surprised if we did have one quarter. It dropped a couple of points and then another quarter, maybe it goes up.

Speaker Change: Couple of points closer to 100, so a little bit of volatility in there, but I think it's what you'll find is its going to be much more stable than it was.

Speaker Change: With the silence without the <unk> business, because that that drove a lot of volatility and I think you'll probably see a much stronger performance around that going forward.

Kingsley Crane: Thanks, John. That's really helpful. For AtHoc, that's in process for achieving FedRAMP High. I'm curious, do you think that's going to be a meaningful unlock? How do you feel about the timing of that being finished for potentially the next fiscal Q2?

Thanks, John that's really helpful.

Speaker Change: And then for AD hoc that's in process for achieving better and I am curious do you think that's going to be meaningful unlock and then Uh huh.

Speaker Change: Do you feel about the timing of that being finished for potentially the next fiscal year.

John Giamatteo: Yeah. My guess is, to be honest, the heavy lifting is done at this point. We've done a lot of all the configurations, the product, and the networking investments. It's a big documentation component associated with FedRAMP High. A lot of that happened. Now it's a matter of filing, going through the government's process, getting them to give us their check mark. I'd love for it to be by the end of Q4, but if I had to guess, it's probably something that'll linger on, especially right now with all the things that are going on with the government. Things seem to be moving a little bit more slowly, but I do think it'll open up some opportunities, but I think even more so, it's going to really strengthen our existing position because it will lock out a lot of competitors to do it.

Speaker Change: Yeah, It's my guess is.

Speaker Change: To be honest the heavy lifting is done at this point, we've done a lot of the you know all the configurations. The are the product of the networking investments so big documentation component associated with fed ramp I. So a lot of that heavy now it's a matter of filing going through the government process getting them.

Speaker Change: You know too.

Speaker Change: Give us their kind of their check mark.

Speaker Change: I'd love for it to be by the end of Q4, but if I had to guess, it's probably something that will linger on especially.

Speaker Change: Now with all the things that are going on with the government things are seem to be a little move in a little bit more slowly, but I do think it's going to it'll open up some opportunities, but I think even more so it's going to really strengthen our existing position because it it it will lock out or.

Speaker Change: A lot of competitors could do it to get to this level.

John Giamatteo: To get to this level, you got to have a lot of staying power, a lot of investment, a lot of process, and I think that's really going to secure our existing footprint and I think opportunistically open up some new ones.

Speaker Change: You got to have a lot of staying power lost a lot of investment a lot of process.

Speaker Change: And I think that's really going to secure our existing footprint.

Speaker Change: And I think Opportunistically open up some new ones.

Kingsley Crane: That's helpful. Thank you.

Speaker Change: That's helpful. Thank you.

Operator: Thank you. Our next question comes from the line of Paul Treiber with RBC Capital Markets. Please proceed.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Paul Treiber with RBC capital markets. Please proceed.

Paul Treiber: Yeah, thanks very much, and good afternoon. A question on the Secure Comms ARR growth in the quarter. I think I heard up 8%. Sounds like a good number. How has that been tracking over the last several quarters, and has there been variability in that number from quarter to quarter?

Paul Treiber: Yeah, Thanks, very much and good afternoon.

Paul Treiber: On the the secure com AOR growth in the quarter.

Paul Treiber: I I heard up 8% it.

Speaker Change: It sounds like a good number how is that tracking over the last several quarters and has there been variability in that in that number from quarter to quarter.

Tim Foote: Yeah, I'll take that one. It's been tracking up in actual fact. Obviously we've been pleased that cyber's been largely stable, but if you take X, Cylance, actually the trend line is up. Occasionally it goes down one or two, but it's been trending up.

Paul Treiber: Yeah, all type of them so.

Paul Treiber: It's been tracking up and actual facts so.

Paul Treiber: Obviously, we've been pleased cyber has been largely stable, but if you take ex silence actually the trend line is is up.

Paul Treiber: Occasionally it goes down one or two but it's been it's been trending up.

Paul Treiber: That's helpful. A follow-up is just in regards to Q4 guidance for Secure Comms, how do we think about what it implies for the year-over-year growth in Q4? We see sequentially, but you do have that tough comp in Q3. Just trying to understand the year-over-year growth in that business.

That's that's helpful and the follow up is I.

Paul Treiber: Just in regards to Q4 guidance for secure comms, Yeah, how do we think about the the you know what it implies for the year over year growth in Q4, I mean, we've seen sequentially, but you did have that tough comp in Q3, just trying to.

Paul Treiber: Understand that the year over year growth in that business.

Tim Foote: Yeah. I think it's going to be a little bit down because of the Q3 compare, because we obviously had a significant amount of revenue relating to the Malaysia deal in Q3, particularly on the SecuSUITE side of the house. If you control for that, I think this is a fairly stable business year on year. Certainly, it's a lot more stable than it was as the cybersecurity division. Ultimately, as we've kind of pointed out at Investor Day, we see this as a stable business that's generating a decent profit margin. This quarter, obviously there was a couple of things in there that helped, but it was 30% EBITDA margin this quarter. We see the QNX side of the house as being really the growth engine for BlackBerry.

Paul Treiber: Yeah.

Paul Treiber: Yeah. So.

Paul Treiber:

Paul Treiber: I think it's going to be at a little bit down because of the Q3 compare because we obviously had a significant amount of revenue relating to the Malaysia deal in Q3 uptick there almost like you saw small side of the house, but if you control for that.

Paul Treiber: I think this is a fairly fairly stable business year on year.

Paul Treiber: Certainly, it's there's a lot more stable than it was a it was the <unk>.

Paul Treiber: <unk> Security Division.

Paul Treiber: Ultimately as we've kind of pointed out at Investor day. This we see this as a stable businesses generating a decent profit margin. This quarter. Obviously, there was a couple of things in there that helped but it was 30% EBITDA margin this quarter. So.

Speaker Change: We see the kubernetes cyber house as being really the growth engine for Blackberry there are opportunities in secured comms, particularly.

Tim Foote: There are opportunities in Secure Comms, particularly as the apps are in SecuSUITE business, but we don't see this as a huge grower. It's more stable. John, anything you want to add to that?

Speaker Change: They are talking second smart business.

Speaker Change: We don't see this as a huge grower.

John Inch: Stable, John anything you want to add to that.

John Giamatteo: I think that's right. I think it's more of a stability type. One thing I would say is, as it relates to ARR on Secure Comms, when we introduced the software-only product of SecuSUITE, the business model with that is more subscription-based.

John Inch: I think that's I think that's right I think it's a hum.

John Inch: More of a stability type, but one thing I would say is when it relates to a R. R. On.

John Inch: Secure comps.

John Inch: We are increasingly when we introduce the software only product of.

John Inch: Most of <unk> smart.

John Inch: That now the business model with that is more of a subscription base, so and which which will drive a I think it will you know and.

John Giamatteo: Historically, it was more perpetual. We sold it with a device. It was very complex. We'd have these big lumpy swings because we were a device. I think over time, as we adopt more of, and migrate more of our customers over to the software version, as we grow our business outside of Germany, which historically has been a more hardware-centric type of customer, we think that's a good kind of trajectory for us to stabilize and even grow that on a going-forward basis. We'll update you on that as we go forward, but that's a fairly new phenomenon as we introduce the software version of SecuSUITE and that providing some more ARR stability.

John Inch: Historically it was more perpetual we sold with the device. It was a very complex you know so we'd have these the big lumpy swings because we were device I think over time as we adopt more of and migrate more of our customers over to these these the software version as we are.

John Inch: Grow our business outside of Germany, which historically has been a more hardware centric type of customer.

John Inch: That's a we think that's a good kind of trajectory for us too.

John Inch: Stabilize and even grow that on a going forward basis. So well, we'll update you on that as we go forward, but that's a fairly new phenomenon as we introduce the software version of <unk> smart not providing some more AOR stability.

Paul Treiber: Thanks for the color there. I'll pass it on.

Speaker Change: Thanks for the color there I'll pass along.

Operator: Thank you. Our next question comes from the line of Daniel Chan with TD Cowen. Please proceed.

Speaker Change: Thank you. Our next question comes from the line is Daniel Chan with TD Cowen. Please proceed.

Daniel Chan: Thanks. Good afternoon. You mentioned that IoT strength this quarter was partly driven by higher royalties. How do we reconcile the royalty strength relative to the weak macro backdrop?

Daniel Chan: Thanks. Good afternoon, you mentioned that Iot strength. This quarter was partly driven by higher royalties, how do we reconcile the royalty strengths relative to the weak macro backdrop.

Tim Foote: Yeah. I might be odd starting this one. John, feel free to chime in, but ultimately, the narratives that we have for the growth in QNX is it's not really dependent on the SAR, the number of vehicles produced, as much as it is content per vehicle. Directionally, we don't necessarily need to see a growing SAR in order for QNX to grow. Directionally, there's a content piece that comes into that, Dan.

Speaker Change: Yes, maybe I'll start on this one drug and feel free to chime in but.

Speaker Change: I mean, ultimately the Maverick saves that we have for the the growths in Q&A.

Speaker Change: Not really dependent on the saw the number of vehicles produced as much as it is content per vehicle. So direction me, we don't necessarily need to see a growing saw in order for <unk> to grow so.

Speaker Change: Direction Adas.

Speaker Change: Content piece that comes into that Tam.

Daniel Chan: That's helpful. Thanks. On finance, you mentioned that you guys are keeping the tax losses there. How much tax losses do you get to keep, and what's the opportunity to use those now that you're profitable?

Speaker Change: That's helpful. Thanks, and then on silence you mentioned that you guys are keeping the tax losses there.

Speaker Change: How much tax losses does it do you get to keep and what's the opportunity to use those now that you're profitable.

Tim Foote: Oh, it's significant. It's well into the hundreds of millions. Ultimately, that provides a significant shelter for profits that we hope to make in our US businesses. For us, we see significant value to that. We're really pleased that we continue to maintain those losses.

Speaker Change: Oh, it's significant it's it's well into the hundreds of millions so.

Speaker Change: Ultimately that provides a significant shelter for profit so we hope to make an all U S.

<unk> businesses.

Speaker Change: For us we see significant value to that so we're really pleased that we continue to maintain those losses.

Daniel Chan: Great. Thank you.

Speaker Change: Great. Thank you.

Operator: Thank you. I would now like to turn the call back over to John Giamatteo, CEO of BlackBerry, for closing remarks.

Thank you.

Speaker Change: I would now like to turn the call back over to John Thiel, Mikael seals, Blackberry for closing remarks.

John Giamatteo: Very good. Thanks, Alicia. Before we end today's call, I'd just like to let everybody know that our BlackBerry QNX team will be participating at CES in Las Vegas from Tuesday, 7 January 2025 to Friday, 10 January 2025 at Booth 4224 in the West Hall. This is always a great opportunity to catch up with the latest developments for the QNX business and see how strong we're positioned, not only within the auto industry, but also other opportunities as well. Really encourage any of you that can make it to stop by the booth and visit us down in Vegas in January. With that, why don't I conclude by just thanking everybody for joining today? We hope you all have a great holiday season, and look forward to talking to you next time. Bye for now.

Speaker Change: Very good thanks Alicia.

Speaker Change: Before we end today's call I'd, just like to let everybody know that our Blackberry <unk> will be participating at the CES in Las Vegas from Tuesday January 7th to Friday January 10th.

Speaker Change: At Booth for two to four in the West Hall.

Speaker Change: This is always a great opportunity to catch up with the latest developments for the Q1 ex business and see how strong we were positioned not only within the auto industry, but also other opportunities as well so really encourage any of you that can make it to stop by the booth and <unk>.

Speaker Change: And then visit us down in Vegas in January.

Speaker Change: And with that why don't I conclude by just thanking everybody for joining today.

Speaker Change: We hope we hope you all have a great holiday season, and we look forward to talking to you next time.

Bye for now.

Operator: This concludes today's call. Thank you for your participation. You may now disconnect.

Speaker Change: This concludes today's call. Thank you for your participation you may now disconnect.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Paul.

Speaker Change: Paul.

Speaker Change: Okay.

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