Q4 2025 BlackBerry Ltd Earnings Call
Good morning, and welcome to the Blackberry fourth quarter and fiscal year 2025 results conference call.
Rob: Good morning and welcome to the BlackBerry fourth quarter and fiscal year 2025 results conference call. My name is Rob and I'll be your conference moderator for today's call. During the presentation, all participants will be in a listen-only mode.
Rob: My name is Rob and I'll be your conference moderator for today's call.
Rob: During the presentation, all participants will be in a listen only mode.
Rob: We will be facilitating a brief question and answer session towards the end of the conference.
Rob: 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.
Rob: You need assistance during the call. Please signal a conference specialist by pressing star zero.
Rob: As a reminder, this conference is being recorded for replay purposes.
Rob: As a reminder, this conference is being recorded for replay purposes.
Rob: I would now like turn todays call over to Marcia Gondar director of Investor Relations Blackberry. Please go ahead.
Martha Gonder: I would now like to turn today's call over to Martha Gonder, Director of Investor Relations, BlackBerry. Please go ahead. Thank you, Rob. Good morning, everyone.
Marcia Gondar: Thank you Rob good morning, everyone and welcome to Blackberrys fourth quarter and full fiscal year 2025 earnings Conference call. Joining me on today's call is Blackberry, Chief Executive Officer, Jon <unk>, and Chief Financial Officer, Tim, but after I read our cautionary note regarding forward looking statements John will provide a business update.
Martha Gonder: And welcome to BlackBerry's fourth quarter and full fiscal year 2025 earnings conference call.
Martha Gonder: Joining me on today's call is BlackBerry's Chief Executive Officer, John Giamatteo, and Chief Financial Officer, Tim After I read our cautionary note regarding forward looking statements, John will provide a business update and Tim will review the financial results.
Marcia Gondar: Jim will review the financial results. We will then open the call for a brief Q&A session.
Martha Gonder: We will then open the call for a brief Q&A session. This call is available to the general public via call-in numbers and via webcast in the investor information section at blackberry.com. A replay will also be available on the BlackBerry.com website.
Marcia Gondar: This call is available to the general public via call in numbers and via webcast in the Investor information section at Blackberry.
Marcia Gondar: A replay will also be available on the Blackberry Dot com website.
Martha Gonder: 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 security standards. will indicate forward-looking statements by using words such as expect, will, should, model, intend, believe, and similar expressions. Forward-looking statements are based on estimates and assumptions made by the company in light of its experience and its perception of historical trends, current conditions, and expected future developments, as well as other factors that the company believes are relevant. Many factors could cause a company's actual results or performance to differ materially from those expressed or implied by the forward-looking statements.
Some of those 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.
Marcia 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.
Marcia Gondar: Many factors could cause the company's actual results or performance to differ materially from those expressed or implied by the forward looking statements.
Martha Gonder: These factors include the risk factors that are discussed in the company's annual filings and MD&D. should not place undue reliance on the company's forward-looking statement. Any forward-looking statements are made only as of today, and the company has no intention and undertakes no obligation to update or revise any of them, except as required by law.
Marcia Gondar: Factors include the risk factors that are discussed in the company's annual filings and MD&A you should not place undue reliance on the company's forward looking statements any forward looking statements are made only as of today and the company has no intention and undertakes no obligation to update or revise any of them, except as required by law as customary journey.
Martha Gonder: As customary, during the call, John and Tim will reference non-GATT numbers in their summary of 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, CedarPlus, and BlackBerry.com website. Additionally, unless otherwise noted, the numbers John and Tim reference will be for continuing operations only.
Speaker Change: John and Jim will reference non-GAAP numbers in their summary of 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 Dot Com website.
Speaker Change: Additionally, unless otherwise noted the numbers, John and Jim referenced will be for continuing operations only that is excluding the results of silence business, which are included within discontinued operations and with that let me now turn the call over to John.
Martha Gonder: That is excluding the results of Silance Business, which are included within discontinued operations.
John Giamatteo: And with that, let me now turn the call over to John. Thanks, Martha, and thanks to everyone for joining today's call. This past quarter marked another significant step forward in what was a transformative year for BlackBerry. We closed the win-win transaction with Arctic Wolf for the sale of Cylance and through solid execution by the team, we finished the year with another strong quarter that beat expectations across the board. Total company revenues beat the top end of our guidance range at $141.7 million.
John: Thanks, Martha and thanks to everyone for joining today's call.
John: This past quarter marked another significant step forward in what was a transformative year for Blackberry.
John: We closed the win win transaction with Arctic walls for the sale of silence and through solid execution by the team. We finished the year with another strong quarter that beat expectations across the board.
John: Total company revenues beat the top end of our guidance range at $141 7 million.
John: Revenue for the Q&A X Division.
John Giamatteo: Revenue for the Q and X division. Beak Guidance at $65.8 million. Likewise, the Secure Communications Division finished the year strongly, also beating the top end of guidance at 67.3 million. And finally, licensing had a better than expected quarter as well, beating guidance at 8.6%. In terms of profitability, BlackBerry beat guidance for adjusted EBITDA coming in at $21.1 million. and EPS, which includes discontinued operations for both the fourth quarter and the full fiscal year 2025, meet guidance and expectations at positive three cents and positive two cents respectively. Then finally, BlackBerry's cash performance also beat expectations. Total cash and investments increased by $144 million, driven by a significant increase in operating cash flow to $42 million, and the collection of the initial troughs of cash from the Cylance deal of approximately $80 million.
John: Beat guidance of $65 8 million.
John: Likewise, the secure communications Division finished the year strongly also beating the top end of guidance at $67 3 million.
John: And finally licensing had a better than expected quarter as well.
John: <unk> guidance at $8 6 million.
John: In terms of profitability Blackberry beat guidance for adjusted EBITDA coming in at $21 1 million.
John: And EPS, which includes discontinued operations for both the fourth quarter and the full fiscal year 2025 beat guidance and expectations at positive <unk> and positive two cents respectively.
John: Then finally, Blackberry cash performance also beat expectations.
John: Total cash and investments increased by $144 million driven by a significant increase in operating cash flow to $42 million.
John: And the collection of the initial tranche of cash from the sidelines deal of approximately $80 million.
John: As I mentioned at the start of February we closed the <unk> transaction with Arctic Wolf.
John Giamatteo: As I mentioned, at the start of February, we closed the Cylance transaction with Arctic Wolf. Last summer, the new management team performed a deep dive into BlackBerry's various business And once we identified the financial challenges that silence was presenting to the cybersecurity division, and with it, BlackBerry as a whole, we moved quickly to find a solution. I'm very proud of the team's hard work that made this deal happen and close so quickly. At close, BlackBerry received approximately $80 million of cash and 5.5 million common shares. Additionally, BlackBerry retained its pioneering AI ML endpoint security path.
John: Last summer the new management team performed a deep dive into blackberries various businesses.
John: And once we identify the financial challenges that some.
John: Lance was presenting to the cyber security division and with the Blackberry as a whole we moved quickly to find a solution.
I'm very proud of the team's hard work that made this deal happen and close so quickly.
John: At close Blackberry received approximately $80 million of cash and 5.5 million common shares.
John: Additionally, Blackberry retained its pioneering AI ml endpoint security patents as well as tax losses that we expect will provide a significant feel for future profits generated by our U S entities.
John Giamatteo: as well as tax losses that we expect will provide a significant shield for future profits generated by our U.S. enterprise. We were delighted that so many of our colleagues in the Cylance business were able to find a new home in Arctic Wolf as part of the transaction.
We were delighted that so many of our colleagues in the silence business, we're able to find a new home at Arctic Wolf as part of the transaction.
John: With the deal successfully closed we switched our focus to fiscal year 2026 and beyond.
John Giamatteo: With the deal successfully closed, we've switched our focus to fiscal year 2026 and beyond. We performed a thorough review of all aspects of the cost structure in our new, our new secure communications division that includes UEM, ad hoc, and second. This review aimed at refocusing the business more clearly on addressing its narrower, more common customer base, optimizing our cost structure in the process. The cost reduction actions of the past quarter build on others that we've executed over the past year. When we began this process, we said our target was to remove approximately $150 million of costs from our run rate, and I'm delighted to report that we've now exceeded that goal.
John: We performed a thorough review of all aspects of the cost structure in our new our new secure communications division that includes UE M AD hoc and sector smart.
John: This review aimed at refocusing the business more clearly on addressing its narrower more common customer base optimizing our cost structure in the process.
John: The cost reduction actions of the past quarter build on others that we've executed over the past year.
John: When we began this process we set our target was to remove approximately $150 million of costs from our run rate and I'm delighted to report that we've now exceeded that goal.
John: As a result of this hard work blackberries profitability is transformed.
John Giamatteo: As a result of this hard work, BlackBerry's profitability has transformed. Total company adjusted EBITDA was $39.3 million for the year when including silence, a $54 million improvement year over year when controlling for the patent sale in early fiscal year 2024.
John: Total company adjusted EBITDA was $39 3 million for the year, when including silence of 54 million dollar improvement year over year when controlling for the patent sale in early fiscal year 2024.
John: Let me now go into further detail at the divisional level.
John Giamatteo: Let me now go into further detail at the divisional level. Earlier this week, QNX celebrated its 45th anniversary. QNX's leadership position in safety-critical foundational software cannot be replicated overnight. Instead, it has taken decades of working with the biggest names in the auto industry and beyond to establish the competitive moat that this business enjoys today. Notwithstanding the various challenges for the auto industry, the largest market segment for QNX, The team continued to drive results throughout 2025 and finished the year with Q4 revenue beating expectations at $65.8 million. Royalty revenue continued to be strong in Q4, albeit slightly lower sequentially, offset by the strongest quarter of the year for development seat revenue.
John: Earlier this week Q N X celebrated its 45th anniversary.
John: <unk> leadership position in safety critical foundational software cannot be replicated overnight.
John: Instead, it is taken decades of working with the biggest names in the auto industry and beyond to establish the competitive moat that this business enjoys today.
John: Notwithstanding the various challenges for the auto industry, the largest market segment for Q1 ex.
John: The team continued to drive results throughout 2025 and finished the year with Q4 revenue, beating expectations at $65 8 million.
John: Royalty revenue continued to be strong in Q4, albeit slightly lower sequentially.
John: Offset by the strongest quarter of the year for development seat revenue.
John: While services remained relatively constant.
John Giamatteo: while services remained relatively constant. Despite the delay in software development across automotive that have deferred both the start of existing and the award of new designs, QNX royalty backlog grew yet again year over year to approximately $865 million. The growth and backlog demonstrates that QNX continues to add future expected royalty revenue from new designs at a faster rate that is currently recognizing in the P&L. We believe this is a solid indicator of ongoing future health of this business. During the quarter, we continue to demonstrate our leadership in automotive by securing design wins with a number of leading OEMs and Tier 1 suppliers, primarily for ADAS and cockpit domain controllers.
John: Despite the delay in software development across automotive that have deferred both the start of existing and the award of new designs.
John: <unk> royalty backlog grew yet again year over year to approximately $865 million.
John: The growth in backlog demonstrates that <unk> continues to add future expected royalty revenue from new designs at a faster rate that is currently recognizing in the P&L.
John: We believe this is a solid indicator of ongoing future health of this business.
John: During the quarter, we continued to demonstrate our leadership in automotive by securing design wins with a number of leading Oems and tier one suppliers, primarily for Adas and cockpit domain controllers.
John: Q&A is powered by strong multiyear secular tailwind.
John Giamatteo: Tunix is powered by strong, multi-year secular tailwinds. We continue to invest in the business to capture these opportunities. This includes both driving go-to-market penetration, particularly in verticals adjacent to automotive, and bringing exciting new products to market that our broad customer base is asking for. Our next generation version of the QNX platform, SDP 8.0, and our cloud-based digital cockpit development solution, QNX Cabin, are two of these products, and both are gaining traction in the market. Another top 10 global auto OEM made a multi-year commitment to the Kunix cabin solution, building on wins with similar industry leaders in the prior two quarters.
John: We continued to invest in the business to capture these opportunities.
John: This includes both drive a go to market penetration, particularly in verticals adjacent to automotives and bringing exciting new products to market that our broad customer base is asking for.
John: Our next generation version of the <unk> platform S. D P eight dato and our cloud based digital cockpit development solution.
John: <unk> cabin or two of these products and both our greening gaining traction in the market.
John: Another top 10 global auto OEM made a multi year commitment to the Kunitz cabin solution building on wins with similar industry leaders in the prior two quarters.
John: S E T. H Dot O is also building momentum with significant progress across Q4 across automotive medical industrial rail and robotics verticals.
John Giamatteo: SDP 8.0 is also building momentum with significant progress across Q4, across automotive, medical, industrial, rail, and robotic verticals. As mentioned, we see significant opportunity outside of automotives. The QNX code base used in medical, industrial, and other general embedded applications is almost identical to that in automotive, meaning that we can truly leverage our technology investments across a broader addressable market. To help drive this growth, we recently launched the QNX General Embedded Development Platform. designed to accelerate the time to market for high performance, scalable and secure embedded We are also building out our team, adding sales professionals to drive this go-to-market push.
John: As mentioned, we see significant opportunity outside of automotive.
John: The Q&A codebase used in medical industrial and other general embedded applications is almost identical to that in automotive.
John: Meaning that we can truly leverage our technology investments across a broader addressable market.
John: To help drive this growth, we recently launched the <unk> general embedded development platform.
John: Designed to accelerate the time to market for high performance scalable and secure embedded systems.
John: We are also building out our team, adding sales professionals to drive this go to market push.
John: This past quarter, we secured several new logo design wins with customers in medical equipment rail and aerospace and defense.
John Giamatteo: This past quarter, we secured several new logo design wins with customers in medical equipment, rail, and aerospace and defense.
John: <unk> is a leading brand in automotive and Blackberry is very much leaning into this brand as part of our efforts to drive top line growth in fiscal year, 'twenty six and beyond.
John Giamatteo: Tunix is a leading brand in automotive and BlackBerry is very much leaning into this brand as part of our efforts to drive top line growth in fiscal year 26 and beyond. Going forward, the IoT division will now be referred to as QNX, more clearly reflecting the key driver within it. There was no better place to lead with the brand than at the CES trade show in Las Vegas, and the team did a magnificent job in making CUNY shine with the booth sporting the bold new color. We also showcase new product developments centered around helping customers shorten and simplify cycle and time to market.
John: Going forward the Iot Division will now be referred to as <unk> more clearly, reflecting the key driver within it.
John: Yes.
John: There was no better place to lead with the brand and at the CES trade show in Las Vegas, and the team did a magnificent job in making Q&A shine with the booth sporting the bold new color scheme.
John: We also showcased new product developments centered around helping customers shorten and simplify cycle and time to market.
John: In particular, we highlighted the expansion of the <unk> vehicle platform.
John Giamatteo: In particular, we highlighted the expansion of the QNX's vehicle platform. This vehicle OS aims to take the heavy lifting of integrating non-differentiated parts of the software stack off the OEM's plate. leaving them to focus on the application layer that their customers see and interact with. Leading middleware providers, TT Tech and Vector confirmed a multi-year collaboration with BlackBerry on this exciting new platform. We also announced a partnership with Microsoft Azure for SDP 8.0 in the cloud. This expands options for customers that already includes running QNX on AWS.
John: As vehicle O S aims to take the heavy lifting of integrating non differentiated parts of the software stack off the Oems plates.
John: Leaving them to focus on the application layer that their customers see and interact with us.
John: Leading middleware providers T T chek and vector confirmed a multiyear collaboration with Blackberry on this exciting new platform.
John: We also announced the partnership with Microsoft Azure for S. E T H Dot O in the cloud.
John: This expands options for customers that already includes running <unk> on AWS.
Overall 2025 was a solid year of progress for <unk> in a difficult environment.
John Giamatteo: Overall, 2025 was a solid year of progress for CUNIX in a difficult environment, consistently achieving or beating the top end of guidance throughout the fiscal year and continuing to grow the royalty back. Moving over to secure communications, this was another very solid quarter of execution for the division, despite a significant amount of time by the team that was dedicated to both Arctic Wolf transaction and the review of our cost structure. Revenue exceeded the top end of guidance at $67.3 million for Q4. In the quarter, UEM secured new business with a number of government agencies, including the U.S.
John: Consistently achieving or beating the top end of guidance throughout the fiscal year and continuing to grow the royalty backlogs.
John: Moving over to secure communications.
John: This was another very solid quarter of execution for the division. Despite a significant amount of time by the team that was dedicated to both Arctic Wolf transaction and the review of our cost structure.
John: Revenue exceeded the top end of guidance at $67 3 million for Q4.
John: In the quarter <unk> secured new business with a number of government agencies, including the U S Air Force and a number of multi year commitments with leading banks and law firms.
John Giamatteo: Air Force and a number of multi-year commitments with leading banks and law Quarterly revenue for UEM increased sequentially. Year-over-year revenue for Q4 went down, however, partially as a result of a tough compare in the same quarter the year before, as a result of the upfront revenue portion of the large deal with the Malaysian government. Likewise, for the same reason, revenue for UEM for the full fiscal year was slightly lower as well. Speaking of the Malaysian government contract, this past quarter we were delighted to expand our relationship, signing an extension to our existing deal that increased both the contract length and number of licenses.
John: Quarterly revenue for UBM increased sequentially.
John: Year over year revenue for Q4 was down however, partially as a result of a tough compare in the same quarter the year before as a result of the upfront revenue portion of a large deal with the Malaysian government.
Likewise for the same reason revenue for <unk> for the full fiscal year was slightly lower as well.
John: Speaking of the Malaysian government contract. This past quarter, we were delighted to expand our relationship signing an extension to our existing deal and increase both the contract length.
John: And number of licenses.
John Giamatteo: The Malaysian government remains a strong case study for deployment of the full secure communications portfolio and is one we are working to replicate. Ad Hoc, our critical events management solution, also had a solid quarter and full year with revenue increasing both year over year in Q4 and for the full fiscal year. This past quarter, we secured expansions and renewals with key U.S. government agencies, including the Department of Homeland Security, U.S. Department of the Treasury, and the U.S. Missile Defense Agency. Check U Smart, our military grade encrypted voice and data solution, had a solid fiscal 2025 with revenue increasing year over year.
John: The Malaysian government remains a strong case study for deployment of the full secure communications portfolio and as one we are working to replicate.
John: AD hoc our critical event management solutions also had a solid quarter and full year with revenue increasing both year over year in Q4 and for the full fiscal year.
John: This past quarter, we secured expansions and renewals with key U S government agencies, including the department of Homeland Security U S Department of the Treasury.
John: And the U S missile Defense agency.
John: Jackie Smart our military grade encrypted voice and data solution at a solid fiscal 2025 with revenue increasing year over year.
John: Given the significant portion of upfront revenue recognition revenue can vary from quarter to quarter, depending on the timing of new deals as evidenced by Q4 being sequentially lower.
John Giamatteo: Given the significant portion of upfront revenue recognition, revenue can vary from quarter to quarter, depending on the timing of new deals, as evidenced by Q4 being sequentially lower. Annual recurring revenue, or ARR for SecureComms, decreased by $7 million, or 3% sequentially to $208 million, although it was up $6 million, or 3% year-over-year. The Dollar-Based Net Retention Rate, or DVNRR, decreased marginally 2 percentage points sequentially to 93%. but with two percentage points higher than in Q4 of the prior year. Particularly pleasing is the continued strength in ad hoc dollar base net retention rate, which remains north of $100.
John: Annual recurring revenue or a IRR for secure comps decreased by $7 million or 3% sequentially to $208 million.
John: Although it was up $6 million or 3% year over year.
John: The dollar based net retention rate or D. DNR are decreased marginally two percentage points sequentially to 93%.
John: But was two percentage points higher than in Q4 of the prior year.
John: Particularly pleasing is the continued strength in AD hoc dollar based net retention rate, which remains north of 100%.
John: This past fiscal year saw a significant transformation for the secure communications division with both the sale of the silence business and significant restructuring to rightsize the cost structure.
John Giamatteo: This past fiscal year saw significant transformation for the Secure Communications Division with both the sale of the Silance business and significant restructuring to right-size the cost structure. That said, the team has remained laser focused and delivered a very solid year with both reliable revenue, significantly improved profitability, and stable underlying metrics.
John: That said the team has remained laser focused and delivered a very solid year with both reliable revenue significantly improved profitability and stable underlying metrics.
John: Touching briefly on licensing license.
John Giamatteo: Touching briefly on licensing. Licensing revenue came in above guidance at $8.6 million, driven by a stronger-than-expected revenue from pre-existing corrections. For a year of significant change, I'm pleased that BlackBerry as a whole was able to maintain focus and deliver a solid top line of $534.9 million.
John: Licensing revenue came in above guidance at $8 6 million driven by a stronger than expected revenue from pre existing arrangements.
John: For a year of significant change.
John: Pleased that Blackberry as a whole was able to maintain focus and deliver a solid top line of $534 9 million.
John: As we move into fiscal year 2026, I am confident that the team will continue to deliver results.
John Giamatteo: As we move into fiscal year 2026, I am confident that the team will continue to deliver results.
And with that let me now turn the call over to our CFO Tim.
Tim: And with that, let me now turn the call over to our CFO, Tim, who will provide further details on our finances. Thank you, John, and good morning, everyone. As John mentioned, revenue for QNX in the quarter exceeded the top end of guidance at £65.8 million and came in at £236 million for the fall fiscal year. QNX Gross Margins in the quarter remained strong at 83% and for the full fiscal year were 84%. Just Zibit Dar in the quarter was 19.2 million or 29% of revenue and 59.1 million or 25% of revenue for the full fiscal year.
Tim: Who will provide further details on our financials.
Tim: Thank you Joan and good morning, everyone.
Speaker Change: As Joe mentioned revenue for Q&A X in the quarter exceeded the top end of guidance 65 go in type million.
Speaker Change: Came in at $236 million for the full fiscal year.
Speaker Change: <unk> gross margins in the quarter remained strong at 83% and for the full fiscal year were 18, 4%.
Speaker Change: Adjusted EBITDA in the quarter was $19 2 million or 29% of revenue and $59 1 million or 25% of revenue for the full fiscal year.
Speaker Change: Revenue for secure communications in the quarter was $67 3 million.
Tim: Revenue for Secure Communications in the quarter was £67.3 million or £272.6 million for the full fiscal year. Gross margins in Q4 was 64% and for the full fiscal year 2025, 66%, both lower primarily as a result of revenue mix. Adjusted EBITDA for Secure Communications in the quarter was $12.6 million or 19% of revenue, significantly beating the top end of the guidance range, with the division's operating expenses being $2 million lower than the prior quarter. Adjusted EBITDA for SecureComms for the full year was 19% of revenue at £52.3 million, a stark comparison year-over-year from the cybersecurity division, which included Silance, that had a significantly negative Adjusted EBITDA in fiscal 2024.
Speaker Change: $272 6 million for the full fiscal year.
Speaker Change: Gross margins in Q4 was 64% for.
Speaker Change: For the full fiscal year 2025, 66%.
Speaker Change: It's lower primarily as a result of revenue mix.
Speaker Change: Adjusted EBITDA for secure communications in the quarter was 12 $6 million or 19% of revenue significantly beating the top end of the guidance range with the division's operating expenses being $2 million lower than the prior quarter.
Speaker Change: Adjusted EBITDA for secure homes for the full year was 19% of revenue up $52 3 million a stark comparison year over year from the cyber Security Division, which included silence.
Speaker Change: The significantly negative adjusted EBITDA in fiscal 2024.
Speaker Change: Secure communications is a solid soles.
Tim: Secure communications is a solid source of both EBITDA and cash flow generation for BlackBerry as a whole. Finally, our licensing division delivered stronger than expected revenue at £8.6 million. Q4 adjusted EBITDA for licensing was £1.4 million as a result of the resolution of a legacy contract dispute that caused a one-time bad debt expense, driving higher-than-expected operating costs. The full year, licensing delivered strong results, with a total revenue of £26.3m and generating adjusted EBITDA of £15.8m. The adjusted operating costs for the significantly streamlined corporate functions came in at £12.1 million in Q4 and £43 million for the full fiscal year.
Speaker Change: EBITA.
Speaker Change: And cash flow generation for Blackberry as a whole.
Speaker Change: Finally, our licensing division delivered stronger than expected revenue 8.6 million.
Speaker Change: Q4, adjusted EBITDA for licensing was $1 4 million.
Speaker Change: As a result of the resolution of a legacy contract disputes that caused a one time bad debts expense driving higher than expected opex.
Speaker Change: The full year licensing delivered strong results with total revenue of $26 3 million and generating adjusted EBITDA of $15 8 million.
Speaker Change: The adjusted operating costs for the significantly streamlined corporate functions.
Speaker Change: At $12 1 million in Q4 and $43 million for the full fiscal year.
Speaker Change: The costs were higher than expected due primarily to a $3 million charge for revaluing deferred stock units given the strong Blackberry share price performance in the quarter.
Tim: The costs were higher than expected, due primarily to a $3 million charge for revaluing deferred stock units, given the strong BlackBerry's share price performance in the quarter. Pulling this all together, and primarily due to product mix as I described, total company gross margin in the quarter decreased both sequentially and year-over-year. However, total company gross margin for the full fiscal year improved 9 percentage points to 74%. In Q4, total company adjusted EBITDA beat the top end of our guidance range at £21.1 million, representing 15% of revenues. For the full fiscal year, the adjusted EBITDA for the total company, including silence, was $39.3 million.
Speaker Change: Pulling this all together primarily due to product mix as I described total company gross margin in the quarter decreased both sequentially and year over year.
Speaker Change: However, total company gross margin for the full fiscal year.
Speaker Change: <unk> nine percentage points to 17, 4%.
Speaker Change: In Q4 total company adjusted EBITDA beat the top end of our guidance range of $21 1 million, representing 15% of revenue.
Speaker Change: For the full fiscal year adjusted EBITDA for the total company, including silence was $39 $3 million.
Speaker Change: Adjusted net income, including discontinued operations for Q4 was $17 7 million and adjusted EPS beats expectations three cents.
Tim: Adjusted net income, including discontinued operations, per Q4, was £17.7 million and adjusted EPS beat expectations at 3 cents. For the full fiscal year, adjusted net income, including discontinued operations, was £12.5 million and adjusted EPS, also beta expectations, at 2 cents. BlackBerry exits FY25 in a solidly profitable position, a significantly different company to this time last year.
Speaker Change: For the full fiscal year, adjusted net income, including discontinued operations was $12 5 million and adjusted EPS also beat expectations.
Two cents.
Speaker Change: Blackberry exits FY 'twenty five.
Speaker Change: Solidly profitable position a significantly different company. So this time last year.
Speaker Change: A few points on the accounting relating to the sign on so as Joe mentioned at closing we received approximately $18 million in cash the first of two tranches.
Tim: A few points on the accounting relating to the silence. As John mentioned, at closing we received approximately $80 million in cash, the first of two tranches, as well as 5.5 million common shares in Arctic Wolf. The shares are recorded at estimated fair value under a counting rule. The method of determining which can be highly judgmental for private companies. Our estimate is conservative. We have recorded them at a value of 24.6 million. The second tranche of cash of approximately 41 million receivable next January will initially be recorded at 38.6 million in the books due to discounting for the time value of money.
Speaker Change: Well as $5 5 million common shares.
Speaker Change: Sick Wolf.
The shares are recorded at estimated fair value under accounting rules.
Speaker Change: The methods, something which can be highly judgmental for private companies.
Speaker Change: Our estimate is conservative we are.
Speaker Change: Record them at a value of 24 six.
Speaker Change: $6 million.
Speaker Change: The second tranche of cash of approximately 41 million receivable next January will initially be recorded 38 6 million in the books due to discounting for the time value of money.
Speaker Change: This past quarter the company meaningfully strengthened its balance sheets.
Tim: This past quarter, the company meaningfully strengthened its balance sheet. Cash from operations was $42 million, significantly exceeding expectations, and $57 million better than in the same quarter of the prior year. In fact, excluding the patent sale proceeds in Q1 of FY24, this was the strongest operating cash flow performance since Q4 of fiscal 2021. Total cash and investments increased by $144 million during the quarter as a result of the silenced sale of proceeds and the strong operating cash flow to $410 million. This means that BlackBerry now has a solid net cash position in excess of $200 million.
Speaker Change: Cash from operations was 42 million significantly exceeding expectations.
Speaker Change: $57 million better than in the same quarter of the prior year in fact, excluding the pumps in sale proceeds in Q1 of FY 'twenty full.
Speaker Change: This was the strongest operating cash flow performance since Q4 of fiscal year 2021.
Speaker Change: Total cash and investments increased by $144 million during the quarter as a result of the silent sound proceeds and the strong milk pricing cash flow.
$410 million.
Speaker Change: This means that Blackberry now has a solid net cash position in excess of $200 million.
Speaker Change: This healthy cash balance and the strong funds generate fashion FY 'twenty six and beyond provides blackberry with significant optionality.
Tim: This healthy cash balance, and a strong plan to generate cash in FY26 and beyond, provides BlackBerry with significant optionality.
Speaker Change: Turning now to financial outlook for the first fiscal quarter and the full fiscal year.
Tim: Turning now to financial outlook for the first fiscal quarter and the full fiscal year. We expect revenue for QNX in Q1 to be in the range of £51m to £55m and for EBITDA to be in the range of £2m to £6m. Due to the timing of auto programs, we typically see sequential growth throughout the fiscal year with Q1 being the lowest.
Speaker Change: We expect revenue for Q&A X in Q1 to be in the range of $50 million to $55 million and for EBITDA to be in the range of $2 million to $6 million.
Speaker Change: Due to the timing of auto programs, we typically see sequential growth throughout the fiscal year with Q1 being the low point for.
Tim: For the full fiscal year, we see an uncertain backdrop within automobiles. Given the recent tariff changes, and particularly automotive tariffs, like others in the industry, we are currently uncertain of the impact this could have on our business. Well, we currently don't see that tariffs will directly impact our products and service. We do expect some indirect effects on BlackBerry due to impacts to our customers. Supply Chains and Macroeconomic Demand Although these effects are currently difficult to model. That said, because we work with almost all major OEMs across the globe, we are mitigated to some extent from US-specific impacts, given that approximately 50% of QNX's revenue comes from outside North America.
Speaker Change: For the full fiscal year, we see an uncertain backdrop within automotive.
Speaker Change: Given the recent Thomas changes, particularly automotive tariffs like others in the industry. We are currently uncertain of the impact this could have on our business.
Speaker Change: While we currently don't see that Congress will directly impacts all products and service.
Speaker Change: We do expect some indirect effects on Blackberry due to impacts to our customers.
Speaker Change: Supply chains.
Speaker Change: For economic demand.
Speaker Change: These effects are currently difficult to model.
Speaker Change: That sets because we work with almost all major Oems across the globe, we all mitigated to some extent from U S specific impacts given that approximately 50% of <unk> revenue comes from outside North America.
Speaker Change: Due to this uncertainty we are reiterating the top end of our guidance range provided at our Investor day in October, but expanding the boltzmanns. So it should we expect revenue in the range of $250 million to $217 million for the full year or two.
Tim: Due to this uncertainty, we are reiterating the top end of our guidance range provided at our investor day in October, but expanding the bottom end, such that we expect revenue in the range of £250m to £217m for the full year. 10% growth at the mid- Despite this broader range, we continue to expect 4-year adjusted EBITDA to be in the range of $55-$60 million, or a 22% margin at the mid-2020s. We are taking a prudent view on the SecureComms division. Given the uncertainty in its core government markets at this time, this includes the potential impact of DOGE and other parts of the administration in the US.
Speaker Change: 10% growth at the midpoint.
Speaker Change: Despite this broader range, we continue to expect full year adjusted EBITDA spanning the range of $55 million to $60 million or 22% margin at the midpoint.
Speaker Change: We are taking a prudent view will secure combs division.
Speaker Change: Given the uncertainty and it's cool government markets at this time.
Speaker Change: This includes the potential impact deluge and other parts of the administration in the U S.
Tim: and Changes in Government in Canada, Germany and elsewhere. We're obviously tracking the ever-changing landscape and while we haven't yet seen any material impacts, we're keeping a close eye on it. These changes could potentially cause disruption in the short term, but could also present opportunities in the long run through further consolidation of products and vendors. Given this backdrop, we expect revenue to be in the range of £50m to £54m in the first quarter and for EBITDA to be between £3m to £6m. For the full year, we expect revenue to be in the range of £230 million to £240 million.
Speaker Change: And changes in governments in Canada, Germany and elsewhere.
Speaker Change: We're obviously trucking the ever changing landscape and while we haven't yet seen any material impacts we're keeping a close eye on things.
Speaker Change: These changes could potentially cause disruption in the short term, but could also present opportunities in the long run through further consolidation of products and vendors.
Speaker Change: Given this backdrop, we expect revenue to be in the range of $50 million to $54 million in the first quarter.
Speaker Change: EBITDA to be between $3 million to $6 million.
Speaker Change: For the full year, we expect revenue to be in the range of $230 million to $240 million.
Tim: Currently ARR represents a significant portion of this expected range at 208 million. Just to leave it dark, it's expected to be between 34 and 44 million. 17% margin at the midpoint. Profitability for the Secure Communications Division remains the top priority. We are increasing our expectations for revenue for our licensing division to be approximately $6 million each quarter, up from the prior $4 million expectation. with EBITDA of approximately £5 million per quarter. We expect adjusted corporate costs to be approximately £10 million a quarter or £40 million for the full fiscal year. So, at a total company level, we expect revenue in Q1 of between £107m and £115m and adjusted EBITDA in the range of break-even to positive £7m.
Speaker Change: Currently <unk> represents a significant portion of this expected range at $208 million.
Speaker Change: Adjusted EBITDA is expected to be between 34 and $44 million, a 17% margin at the midpoint.
Speaker Change: Profitability for the secure communications Division remains the top priority.
Speaker Change: We are increasing our expectations for revenue for our licensing division to be approximately $6 million each quarter up from our prior 4 million expectation.
Speaker Change: With EBITDA of approximately $5 million per quarter.
Speaker Change: We expect adjusted corporate costs to be approximately $10 million, a quarter or $40 million for the full fiscal year.
Speaker Change: So a total company level, we expect revenue in Q1 of between 107 and $115 million.
And adjusted EBITDA in the range of breakeven to positive $7 million.
Speaker Change: The non-GAAP EPS, we expect it to be between minus one cents.
Tim: For non-GAAP EPS, we expect it to be between minus one cent to break even in the first quarter. For the full fiscal year, we expect revenue for BlackBerry in total to be in the range of £504 to £534 million. with adjusted EBITDA between 69 and 84 million, with adjusted EPS between 8 and 10 cents. Finally, in terms of cash, as in the past, Q1 is expected to be a seasonal load for cash flow, driven by the Billings and Payments profile. Therefore, we expect an operating cash usage for Q1 in the range of £20-30 million. However, for the fall fiscal year, we expect to deliver positive operating cash flow at around £35 million.
Speaker Change: To breakeven in the first quarter.
Speaker Change: For the full fiscal year, we expect revenue for Blackberry in total it's be in the range of $504 million to $534 million.
Speaker Change: Adjusted EBITDA between 69 and <unk>.
Speaker Change: 84 million.
Speaker Change: With adjusted EPS between eight and 10.
Speaker Change: Finally in terms of cash as in the past Q1 is expected to be a seasonal low for cash flow driven by the billings and payments profile there.
Speaker Change: Therefore, we expect an operating cash usage for Q1 in.
Speaker Change: In the range of $20 million to $30 million. However.
Speaker Change: However for the full fiscal year, we expect to deliver positive operating cash flow that's around $35 million.
Tim: This figure includes the number of one-time factors that decreased what would otherwise have been a stronger conversion of EBITDA into operating cash flow. The one-time factors, totalling approximately $20 million, include payments of multiple years of already accrued corporate income tax in Europe The ongoing cash cost of restructured facilities that we have exited but the lease hasn't yet expired, as well as the tail end of severance costs from actions taken this past year, particularly in international locations where the process takes place. These impacts will gradually drop off as the year goes on and the second half of this fiscal year is expected to deliver solid operating cash flow.
Speaker Change: This figure includes a number of one time factors that decrease what would otherwise have been a stronger conversion of EBITDA into operating cash flow.
Speaker Change: The one time factors totaling approximately $20 million.
Speaker Change: Include payments multiple years over the accrued for income tax in Europe.
Speaker Change: The ongoing cash cost restructure facilities that we have exited but the lease expired.
Speaker Change: As well as the tire lens of severance costs from actions taken this posture.
Speaker Change: Clearly in international locations, where the process takes longer.
Speaker Change: These impacts will gradually drop pulse as the year goes on.
Speaker Change: In the second half of this fiscal year is expected to deliver solid operating cash flow.
Speaker Change: In addition to operating cash flow, we will also add approximately $40 million from the second tranche of cash from the Sundance sale.
Tim: In addition to operating cash flow, we will also add approximately £40 million from the second tranche of cash from the finance sale. meaning a further £75 million of cash will be added to the balance sheet this coming fiscal year.
Speaker Change: Meaning a further $75 million of cash will be added to the balance sheet this coming fiscal year.
John Giamatteo: With that, let me now turn the call back to John. Thanks for the summary, Tim.
With that let me now turn the call back to Joe.
Joe: Thanks for the summary, Ken.
John Giamatteo: And before we move to Q&A, let me quickly summarize the key takeaways from this past. Fiscal year 2025 was truly transformative for BlackBerry. We identified and swiftly addressed the challenges that the Silance business presented for the company through a win-win transaction with Arctic Wolf. We increase focus and external visibility by increasing the level of autonomy in each of our divisions and providing their EBITDA as part of our financial statement. And finally, we evaluated our capital allocation priorities, shifting focus to our core growth driver of QNX and reducing our cost run rate by more than $150 million.
Joe: And before we move to Q&A, let me quickly summarize the key takeaways from this past year.
Joe: Fiscal year 2025 was truly transformative for Blackberry.
Joe: We identified and swiftly address the challenges that the sign Lance business presented for the company through a win win transaction with Arctic Wolf.
Joe: We increased focus and external visibility by increasing the level of autonomy in each of our divisions and providing their EBITDA as part of our financial statements.
Joe: And finally, we evaluated our capital allocation priorities shifting focus to our core growth driver of Q&A Andrew.
Joe: And reducing our cost run rate by more than $150 million.
John Giamatteo: This transformation positions BlackBerry as a profitable cash flow positive company heading into the new fiscal year.
Joe: This transformation physicians Blackberry as a profitable cash flow positive company heading into the new fiscal year.
Joe: So, let's now move to Q&A Rob.
Rob: So let's now move to Q&A.
Rob: Rob, could you please open up the lines? Yes, thank you.
Rob: Rob could you please open up the lines.
Rob: Yes. Thank you.
Rob: We will now begin the question and answer session. To ask a question, please press star 1 on your telephone keypad. Please make sure your line is unmuted. Again, press star 1 to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions.
Speaker Change: We will now begin the question and answer session.
Rob: To ask a question. Please press star one on your telephone keypad. Please.
Rob: Please make sure. Your line is muted again press star one to ask a question.
Rob: We'll pause for just a moment to allow everyone an opportunity to signal for questions.
Rob: We request that you limit yourself to one question and one follow up.
Rob: We request you limit yourself to one question and one follow up.
Speaker Change: Thank you. Our first question will be from Paul Tremor with RBC capital markets. Please proceed with your questions.
Paul Treiber: Thank you and our first question will be from Paul Treiber with RBC Capital Markets. Please proceed with your question. on on on tariffs. In what you've seen or heard from auto OEMs, can you just elaborate on some of the comments you made in the prepared remarks and if you've, if you've, if you had any. Comments from OEMs in terms of changing production or other changes to new vehicle introductions as a result. You know, at this point, Paul, we have not seen any material, any conversations that we've had with any of our large customers that said, hey, I'm seeing a real supply chain problem.
Rob: Thanks, So much and good morning, just a question on <unk>.
Speaker Change: Tariffs and and what you've seen or heard from auto Oems can.
Speaker Change: Can you just elaborate on some of the comments you made in your prepared remarks, and if you.
Speaker Change: If you if you had any comment.
Speaker Change: Comments from Oems in terms of changing production or other changes to.
Speaker Change: New vehicle introductions as a result of the uncertainty around tariffs.
Speaker Change: No at this point, Paul we have not seen any material.
Speaker Change: Sure.
Speaker Change: Any conversations that we had with any of our large customers that said, hey, I'm seeing a real supply chain problem.
John Giamatteo: We talk with them every day, we keep our finger on the pulse of everything that's going on. You know, as we said, I think a large part of more than 50% of our revenue comes from things outside of the U.S., so I think we're, you know, insulated a certain degree to this particular dynamic. But, you know, as you can imagine, it's a very fluid situation, but we haven't had any kind of calls of a significant call down in supply chain at this point.
Speaker Change: We talk with them every day, we keep our finger on the pulse of everything that's going on.
Speaker Change: No as we said I think a large part of more than 50% of our of our revenue comes from things outside of the U S. So I think we're.
Speaker Change: Insulated a certain degree to this particular dynamic.
Speaker Change: Got.
Speaker Change: As you can imagine it's a very fluid situation.
Speaker Change: <unk>, but we haven't.
Speaker Change: Had any kind of calls of a significant call down in supply chain at this point.
Speaker Change: Just a follow up just in regards to the overall uncertainty in the market, but looking at U S. Federal can you just remind us again, how large U S. Federal is as a percent of secure communications and then just speak to.
John Giamatteo: Just a follow up just in regards to the overall uncertainty in the market, but looking at U.S. federal, can you just remind us again how large U.S. federal is as a percent of secure communications, and then just speak to if you've heard from any agencies either cutting seats or looking to cut seats. Um, US Federal is a substantial portion, I would say probably, you know, 20-25% of our overall, uh, SecureComms business, uh, comes with, um, the US Federal, uh, business. Um, and we have not seen any material impact. In fact, I think sometimes, we certainly see some uncertainties where some of our renewals and our contracts, uh, you know, they're, You know, they were coming down the line and they decided to move forward with them because I think the nature of the products that we provide are secure, mission-critical communications.
Speaker Change: It incurred from any agencies either either cutting seats are looking to cut seats at this at this point.
Speaker Change: U S federal is substantial.
Speaker Change: A substantial portion I would say probably 20, 25% of our overall secure coms business.
Speaker Change: It comes with.
Speaker Change: The U S federal.
Speaker Change: <unk>.
And we have not seen any material impact in fact, I think some time, we certainly see some uncertainties, where some of our renewals in our contracts.
Speaker Change: There.
Speaker Change: They they were coming down the line and they decided to move forward with them because I think the nature of the products that we provide our secure mission critical communications.
John Giamatteo: And so I think they're very careful and cautious before they cut things like that. There's a lot of other waste and things for them to focus on. So another area that we watch very, very closely, but we haven't seen any material impact to that part of our business primarily because. The nature of what we provide to them is mission critical, and those are things I think they're a little bit more cautious about. Thanks for that clarification, Al.
Speaker Change: So I think they are very careful and cautious before they cut things like that there's a lot of other waste and things for them to focus on so.
Speaker Change: Another area that we watch very very closely while we haven't seen any material impact to that part of our business primarily because.
The nature of what we provide to them as is mission critical and those are things I think there are a little bit more cautious about.
Speaker Change: Thanks for that clarification and I'll pass the line.
Speaker Change: The next question is from the line of Todd Copeland with CIBC. Please proceed with your question.
Todd Copeland: The next question is from the line of Todd Copeland with CBiBC. Yeah, good morning. I had two QNX questions.
Todd Copeland: Yeah good morning.
Speaker Change: <unk> questions.
John Giamatteo: Firstly, what are the OEMs saying in terms of how long it'll take it to work through adjusting to the tariff impact? I think, I think, Todd, they're, they're still navigating their way, quite honestly. So, you know, they're, they're kind of, you know, taking direction from what's happening in the marketplace. Like I said, I go, there's nobody that's kind of flagged, hey, we're going to have a material, you know, downtick in our overall supply chain and volumes throughout the year. But certainly, the uncertainty of everything is, is something that, you know, has them on alert, let's put it that way.
Speaker Change: Firstly, one of the Oems are saying in terms of how long it'll take to work through.
Speaker Change: Adjusting to the.
Speaker Change: The tariff impact.
Speaker Change: I think I think Todd there, they're still navigating their way.
Speaker Change: Quite honestly.
Speaker Change: So yeah, there they're kind of.
Speaker Change: No.
Speaker Change: Taking direction from what's happening in the marketplace like I said.
Speaker Change: There is nobody that's kind of flagged hey, we're going to have a material.
Speaker Change: Downtick in our overall supply chain and volumes throughout the year, but certainly the uncertainty of everything is is something that.
Speaker Change: You know it has them on alert, let's put it that way, but nobody like I said has raised the flag of a material downturn on it. It's just everybody trying to read the tea leaves on where this thing is going in the future and what the impact will be.
John Giamatteo: But nobody, like I said, has raised the flag of a material downturn on it. It's just everybody trying to read the tea leaves on where this thing is going in the future and what the impact will be.
Speaker Change: And in terms of your own Guy a what.
John Giamatteo: And in terms of your own guide, what have you assumed in terms of how long it'll take to work? Tariff Overlay So, what I'd say, Todd, is it's pretty difficult to model right now. I mean, obviously, we've broadened our range to reflect the uncertainty right now. We've kept the top end in line with what we presented at Investor Day back in October. We still see a path to that. But clearly, there's some uncertainty, so we've broadened the range a little bit. So, yeah, right now, it's a little bit difficult to model.
Speaker Change: What have you assumed in terms of how long it'll take to work through.
Speaker Change: Tariffs.
Speaker Change: Overlay.
Speaker Change: So while I'd say tall days, it's pretty difficult to model right now I mean, obviously, we've grown our range to reflect the uncertainty right now.
Speaker Change: Kept the top end in line with what we presented at Investor Day back in October we still see a path to that but clearly there's some some uncertainties.
Speaker Change: Broadened the range a little bit so yeah right now.
Speaker Change: It's a little bit difficult to model.
Speaker Change: Okay.
John Giamatteo: My second question relates to the 50% of your businesses outside the US. Could you just talk about those regions and what are the levers or drivers to that business in the coming year? Thanks a lot. Yeah. I would say, Todd, we're bullish about the prospects and the momentum, the conversations that we're having with our customers outside the U.S. and obviously, quite frankly, inside the U.S. This whole Vehicle OS initiative that we're working with a lot of our OEMs, particularly in Europe, where they're looking for us to do more for them, how we can support them more, how we can bring more value, provide more technology and services.
Speaker Change: Second question relates to the 50% of your business is outside the U S. Could you just talk about those regions and what are the levers or drivers to that business in the coming year. Thanks a lot.
Speaker Change: Yeah.
Speaker Change: I would say, it's not where.
Speaker Change: We're bullish about.
Speaker Change: The prospects and the momentum on the conversations that we're having with our customers outside the U S and obviously quite frankly inside the U S.
Speaker Change: This whole vehicle O S initiatives that we're working with a lot of our Oems.
Speaker Change: Particularly in Europe.
Speaker Change: Where they're looking for us to do more for them, how we can support them more how we can bring more more value provide more technology and services.
John Giamatteo: So, I would say the conversations that we're having, you know, with the industry in general, very robust, very strategic. We're at the centre of what they are planning for strategically. And I think it sets us up for some interesting opportunities in the future.
Speaker Change: So I would say the conversations that we're having.
Speaker Change: With the industry in general very robust very strategic where at the center of what they are planning for strategically and I think it is.
Speaker Change: It sets us up for.
Speaker Change: Some interesting opportunities in the future.
John Giamatteo: And I just add to that, that one of the key focuses for this current fiscal year that we're going into, is expanding beyond automotive. So, we're investing heavily in what we call the GEM, General Embedded Market Opportunity, which is adjacent verticals, such as medical, industrial, this type of thing, which we see massive opportunity as well. So, that's another way of continuing to diversify this business and expand the TAM, which is obviously in a period of volatility, is a good thing. Thank you.
Speaker Change: And I'll just add to that but one of the key focuses for this current fiscal year that we're going into is expanding beyond automotive. So we're investing heavily in vitro, but Jim general embedded market opportunity, which is adjacent.
Speaker Change: Adjacent verticals such as medical industrial.
Speaker Change: This type of thing, which.
Speaker Change: We see massive opportunity as well so that's another way of continuing to diversify this business and expand the time, which is obviously in a period of volatile let's say this is a good thing.
Speaker Change: Thank you.
Trip Chowdhry: The next question is in the line of Trip Chowdhry with Global Equities Research. Thank you. I think you guys are really doing, executing very well like a startup. A lot of progress. I have two questions. Maybe it's more like a comment. Like if we look at everybody's talking about tariffs. And I think if we look at position BlackBerry as more like a The New Steel Company because if you look at the future, every vehicle is now software defined and QNX is right at the center of it. when we come to software-defined vehicles. And they are pretty much a North American company.
Speaker Change: The next question is from the line of trip Chowdhry with Global Equities Research. Please proceed with your question.
Speaker Change: Thank you I think you guys are really doing executing very well like a startup.
Speaker Change: A lot of progress I.
Speaker Change: I have two questions, maybe it's more like a comment.
Speaker Change: Like if we look at everybody's talking about it.
Speaker Change: And I think if we look and position.
Speaker Change: Blackberry as more like Oh.
Speaker Change: The new steel company, because if you look at the future every vehicle is no software defined and <unk> right.
Speaker Change: At the center of it.
Speaker Change: When you come to software defined vehicles and they are pretty much a north American company I think they headquartered in Texas.
Trip Chowdhry: I think they're headquartered in Texas. So I think the effect of tariffs, if positioned well, for QNX could be a little less severe.
Speaker Change: So I think.
Speaker Change: Got it positioned well.
Tim: Paul Q&A could be a little less severe that's one comment and second as Tim rightly mentioned.
John Giamatteo: That's one comment. And second, as Tim rightly mentioned, expanding the market of QNX to adjacent spaces is, I think, a very smart move. This is more of a comment because it seems like robotics or physical AI is Thank you so much and probably QNX can find its way because it's a real-time operating system into this new domain.
Tim: Expanding the market of Cuba next door adjacent spaces, and I think a very smart move this is more of a comment because.
Speaker Change: Seems like robotics are physical AI is.
Tim: Starting to gain some traction.
Speaker Change: And probably to an X can find it's me.
Speaker Change: Because it's a real time operating system into this new domain just two comments and was wondering if you have any thoughts on it and congratulations on and indeed, putting your heart and soul into making blackbody Shane again. Thank you so much.
John Giamatteo: Just two comments and was wondering if you have any thoughts on it and congratulations on really putting your heart and soul into making BlackBerry shine again. Thank you so much. Thanks, Tripp. Thank you for that. Those observations and the course, as Tim mentioned, we are leaning heavily into one of our big investment areas for the QNX business this year is in the GEM space, and we're seeing some real interesting pipeline and some real interesting opportunities coming our way as we take that SDP 8.0 platform, which requires very, very little modification to adjust and adapt to other segments of the market.
Speaker Change: Thanks Tripp, thank you for that.
Speaker Change: Those observations and of course I am.
Speaker Change: As Tim mentioned, we are leaning heavily into.
Speaker Change: One of our big investment areas for the <unk> business. This year is in the gem space and.
Speaker Change: We're seeing some real interesting pipeline and some real interesting opportunities coming our way as we take that S. E. T. H Dot O platform, which requires very very little modification to adjust and adapt to other other segments of the market. So we've been investing in go to market we've been investing in.
John Giamatteo: So, we've been investing in go-to-market. We've been investing in the brand. We've been investing in sales professionals on the ground, driving these relationships forward. So, that's a big part of our plan for this next fiscal year, as well as managing and going up the food chain on our main segment of the market from an automotive perspective, where we're going deeper with our customers. So, that's absolutely part of the plan for us in this coming year. Very good. Thank you.
Speaker Change: The brand we are investing in sales professionals on the ground driving these relationships forward. So that's a big part of our plan for this next fiscal year as well as.
Speaker Change: Managing and going up the food chain on are our main segments of the market for from an automotive perspective, where we're going deeper with our customers. So.
Speaker Change: That's absolutely part of the plan for us in this coming year.
Speaker Change: Very good.
Speaker Change: Thank you.
Luke Junk: Our next question is from the line of Luke Junk with Baird.
Speaker Change: Our next question is from the line of Luke Young with Baird. Please proceed with your questions.
Luke Junk: Please just use your questions. Good morning. Thanks for taking the questions.
Luke Young: Good morning, Thanks for taking my questions.
Luke Junk: Maybe to start bigger picture, John, hoping you could just double click on the vehicle OS initiative in terms of what you're seeing initially with OEMs in terms of scope. In other words, could it maybe expand the number of addressable models with a given customer or something similar to that? And then from a content standpoint, just your ability and maybe early learnings around what the content opportunity might look like relative to your current royalty opportunity per vehicle. Yeah, thank you, Luke. Thanks for the question. And both of those specific areas are places where we see, you know, opportunity.
Luke Young: Maybe just start bigger bigger picture John I'm, hoping you could just double click on the vehicle O S initiative in terms of what.
Luke Young: What you're seeing initially with Oems in terms of scope in other words could it may be expanding the number of addressable models with a given customer or something similar to that and then from a content standpoint, I'm just your ability and maybe early learnings around what the content opportunity might look like relative to your current.
Luke Young: Royalty opportunity per vehicle.
Luke Young: Yes. Thank you Luke Thanks for the question and both of those those specific areas or are places where we see.
Luke Young: Opportunity.
John Giamatteo: We consistently see a lot of, you know, OEMs trying their own thing on the software front, working with other platforms, looking maybe is Linux a solution, and then very quickly pulling back and coming to us and talking to us about how we can expand and help them on different models and help them as they plan for their future going forward. So I think that's, you know, whether that's in the US or in Europe, we definitely see a lot of OEMs kind of coming back to us asking us how we can help them do more. So that's certainly, you know, one trend that has been pretty consistent.
Luke Young: We consistently see.
Luke Young: A lot of Oems trying their own thing on the software front working with other platforms looked and maybe is Linux a solution and then very quickly pull them back and coming to us and talking to us about how we can expand and help them on different models and help them as they as they plan for their few.
Luke Young: Sure going forward, so I think that's.
Luke Young: Whether that's in the U S or or in.
Luke Young: In Europe.
Luke Young: We definitely see a lot of Oems kind of coming back to us asking us how we can help them do more.
Luke Young: So that's certainly one trend that has been pretty pretty consistent the other is expanding our content.
John Giamatteo: The other is, you know, expanding our content as, you know, these vehicles, I know it's a journey as they put more content and more DCUs and more sophistication in the vehicles that obviously plays very well to more instances of QNX in each of these vehicles coming out of off the line. You know, that's a trend that we only see increasing going forward. It's definitely a journey. I don't think it's a switch that they flip and suddenly you see the impact of that in the current fiscal year, but it's definitely a trend that plays to the strength of our QNX brand, our QNX capability, and the position that we have in the market.
Luke Young: These vehicles I know it's.
Luke Young: It's a journey as they put more content and more DC use in.
Luke Young: And more sophistication in the vehicles that obviously plays very well to more instances of <unk> in each of these these vehicles coming out of offline.
Luke Young: That's a trend that we only see increasing going forward. It's definitely a journey. It's I don't think it's a it's a switch if they slip and suddenly you see the impact of that in the current fiscal year, but it's definitely a trend that plays to the strengths of our <unk> brand our kunitz capability.
Luke Young: And the position that we have in the market.
Luke Young: Okay.
John Giamatteo: So if I could just add just a couple of comments on there. I mean I totally agree with all of that and I would just add that this is an ask that's coming from the OEMs for us to do more than to be able to take some of that heavy lifting of pre-integrating a bunch of undifferentiated parts of the stack deep down in the stack on their behalf. This is something that they really want us to help with and ask for working with people like TT Tech and Vector to make sure that we get a really solid native experience.
Luke Young: Just a couple of comments on that.
Luke Young: Totally agree with all of that and I would just add that this is an all scripts coming from the Oems to trust us to do more.
Luke Young: So being able to take some heavy lifting of pre integrating a bunch of them differentiated parts of the stack deep down in the stack on their behalf. This is something that they really want us to help with.
Luke Young: Awesome.
Luke Young: Where it can be painful like <unk> vector.
Luke Young: Make sure we got really solid negative experience.
Luke Young: On the platform is something that really is going to help Oems.
John Giamatteo: And a platform is something that really is going to help OEMs focus on the areas of the stack that they really need to be focusing on and that's the application layer. And to your point about the content per vehicle opportunity, this could be a significant transformation. We obviously need to secure some of this business, so I want to just caution, we're still in the early innings on this, but clearly if we're providing our components, our middleware components, as well as reselling some of our partners' components, that could be a significant step up in terms of content.
Luke Young: Focus on the areas of the stack.
Luke Young: They really need to be focusing on and that's the application layer and to your point about the content per vehicle opportunity. This could be this could be a significant transformation.
Luke Young: We obviously need to secure some of this business. So I want to just caution we are still in the early innings on this but.
Luke Young: Clearly if we're if we are providing all compete.
Luke Young: Guidance on middleware components as well as reselling some of.
Luke Young: Our partners components that could be a significant step up in terms of content per vehicle.
Luke Young: And that's all good color and we'll stay tuned and I appreciate the additional color there Tim.
John Giamatteo: That is all good color. Well, yes, stay tuned and appreciate the additional quality there, Tim.
Luke Junk: For my second question, just relative to those risks and new administrations that you mentioned in a couple of countries, just how should we think about either, I don't know if this is a major factor, cancibility of secure communications contracts across your various business lines, or maybe more importantly, just typical contract terms and materiality of renewals in any given year? Any just guardrails or rules of thumb we can think of? Thank you. Yeah, it's something, Luke, we watch very closely with all the dynamics that are going on. I would say a couple of things. A lot of our contracts with some of these governments around the world, they're long-term agreements.
Luke Young: For my second question, just relative to Jewish risks and new administrations that you mentioned in a couple of countries. Just how should we think about either I don't know if this is a major factor cancer ability of secure communications contracts across your various business lines or maybe more importantly, just typical contract.
Luke Young: Terms and materiality of renewals in any given year and you just guardrails or rules of thumb something we can think of thank you.
Luke Young: Yeah.
Luke Young: It's something look.
Luke Young: We watch very closely with all of the dynamics that are that are going on I would say a couple of things a lot of our contracts with some of these governments around the world. They are long term agreements.
John Giamatteo: You know, our Canadian agreement, how we're positioned well with the German government, the U.S. And, you know, a number of, most, I would say, of all of the U.S.'s, we're very much infiltrated and integrated and a sticky part of their mission-critical communication. So we do think it's unlikely that, you know, suddenly they're gonna flip a switch and all of a sudden, you know, rip out some mission group for the sake of saving a few dollars. In fact, if anything, I think there might be opportunities for us to consolidate because we are such, play such a mission critical role.
Luke Young: Our Canadian agreement.
Luke Young: How we are positioned well with the German government.
Luke Young: U S.
Luke Young: A number of most I would say of all of the U S is we're very much infiltrated an integrated and a sticky part of their mission critical communications. So.
Luke Young: We do think it's unlikely that suddenly they're going to flip a switch and all of a sudden.
Luke Young: Rip out some issues in Michigan under for the sake of save a few dollars in fact, if anything I think there might be opportunities for us to consolidate because we are such play such a mission critical role.
John Giamatteo: There could be opportunities to replace other vendors and expand our position with some of our solutions. So definitely a long journey, but I think the long entrenched sticky relationships that we have with these governments around the world, I think are gonna serve us well at a time where there's a little bit of unknown volatility.
Luke Young: There could be opportunities to replace other vendors and expand our position with some of our solutions. So definitely a long journey, but I think the long entrenched sticky relationships that we have with these governments around the world I think youre going to serve us well at a time, where there is.
Luke Young: A little bit of unknown volatility.
Luke Young: I'll leave it there thank you.
Rob: I'll leave it there. Thank you.
John: Thank you I would now like to turn the call back over to John <unk> CEO of Blackberry for closing remarks.
John Giamatteo: I would now like to turn the call back over to John Giamatteo, CEO of BlackBerry, for closing remarks. Thank you, Rob. And thanks for everybody for joining the call. Very excited about the progress that BlackBerry is making and the transformation that we've executed on in the past fiscal year. And we feel we're very, very well set up for future growth and future acceleration as we go into the next fiscal year. So thanks for your interest. Thanks for joining. And we'll see you next time.
John: Thank you Rob.
John: And thanks for everybody for joining the call.
John: <unk>.
John: Very excited about the progress that Blackberry is making.
John: And the transformation that we've executed on in the past fiscal year, and we feel we're very very well set up for future growth and future acceleration as we go into the next fiscal year. So thanks for your interest thanks for joining and we'll see you next time.
John: This concludes today's call. Thank you for your participation you may now disconnect.
This concludes today's call. Thank you for your participation. You may now disconnect.