Good afternoon and welcome to the BlackBerry Third Quarter Fiscal Year 2022 Results Conference Call. My name is Charlie and I will be your conference moderator for today’s call. During the presentation, all participants will be in a listen-only mode. We will be facilitating a brief question-and-answer session towards the end of the conference. As a reminder, this conference is being recorded for replay purposes. I’d now like to turn the call over to Tim Foote, BlackBerry Investor Relations. Please go ahead, sir.

Thank you, Charlie. Good afternoon and welcome to BlackBerry’s third quarter fiscal 2022 earnings conference call. With me on the call today are Executive Chair and Chief Executive Officer, John Chen, and Chief Financial Officer, Steve Rai. After I read our cautionary note regarding forward-looking statements, John will provide a business update and Steve 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 by 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. 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. 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, as discussed in the Company’s annual filings and MD&A, including the COVID-19 pandemic. You should not place undue reliance on the Company’s forward-looking statements. The Company has no intention and undertakes no obligation to update or revise any forward-looking statements, except as required by law. As is customary during the call, John and Steve will reference non-GAAP numbers in a summary of our quarterly results. For a reconciliation between our GAAP and non-GAAP numbers, please see the earnings press release published earlier today, which is available on the EDGAR, SEDAR, and blackberry.com websites. And with that, I’ll turn the call over to John.

Thank you, Tim. Good afternoon, everybody. Thanks for joining the call today. I’m pleased to report that this quarter we delivered solid sequential billings and revenue growth in both our IoT and cyber business units and exceeded expectations. I’m also pleased that despite our ongoing investment to grow the top line, EPS came in much better than expected. Let me start my review with the IoT business unit. Revenue was $43 million, representing a 34% year-over-year growth, although noting that last year was heavily impacted by the pandemic. Gross margin was 81%, and IoT ARR increased to $91 million. This is now the third consecutive quarter in which ARR has increased. This was a very positive quarter for QNX, driven by continued strength and design wins activities. We achieved record quarterly revenue from development seats licenses and associated professional services. In fact, demand is so strong right now that we’re expanding our professional services team by hiring additional personnel into QNX. In addition to the near-term revenue benefit, these strong design wins serve as a positive leading indicator of the longer-term health of the QNX business overall. Once completed, these designs will move into production and generate royalty revenue in future quarters. In terms of production-based royalty this quarter, we saw a modest increase compared to Q2. While we expect the auto industry supply chain issues to remain a meaningful headwind to vehicle production volumes through the end of this fiscal year and into 2022, we see the impact on QNX gradually lessening, including an improvement in Q4 versus Q3. I will now provide additional details around the design wins in the quarter. The continued strength we are experiencing is further evidence of our leadership position in the automotive sector. We are certainly not taking this position for granted and continue to invest in all aspects of the business. In the quarter, we had a major win with BMW. BMW entered a multiyear agreement with us to develop new Level 2 and 2+ autonomous drive systems on QNX for makes and models across the entire BMW Group. Autonomous drive is the clearest example of safety-critical software applications in a car, which is one of the most defensible attributes of QNX. BMW selected QNX because of our deep expertise and strong track record in safety, reliability, and security. In addition to licensing our technology, we will be providing a professional services team to support BMW in their aggressive development timeline. Other automotive wins include a major new design for our acoustic middleware, one of our higher ASP products. We also had a number of ADAS gateways and digital cockpit designs with leading OEMs and Tier 1s. In Q3, we had a total of 11 new automotive design wins and 13 wins in the general embedded market. General Embedded Market wins included a number of medical applications such as an infectious disease diagnostic platform as well as the next generation robotic surgical arm. We also had wins in industrial applications and aviation, including an engine simulator with a leading aerospace company. With any luck, we’ll also be able to share details of further significant automotive design wins with you all at CES in January. A word on product development: During the quarter, Google, Qualcomm, and BlackBerry, three leaders in the autonomous digital cockpit, announced a collaboration to build a chipset that allows BlackBerry’s Hypervisor to seamlessly integrate with Android automotive. We are already seeing the results, securing our first design wins for this technology with a major European OEM in the quarter. Previously, to develop a digital cockpit with an Android automotive infotainment system running alongside safety-critical applications on a single chip would require hundreds of hours of extra developer time for building custom integrations. This collaboration takes care of this for the customers, saving them both costs and time to market as well as delivering a higher quality product. The auto industry continues to move towards consolidation, particularly consolidating the digital cockpits. With this position, QNX will be even stronger in this space, given the safety requirements. This provides the potential to win additional designs that will enhance our Hypervisor and our QNX operating system. Turning to the Q4 outlook for the IoT business, the strength we have seen in design activities is expected to continue into Q4. We anticipate a slight easing of supply chain headwinds. As a result, our outlook is for further sequential revenue growth and for Q4 revenue to be in the range of $50 million to $55 million, returning to the pre-pandemic run rate. We feel very good about the IoT business right now, but investors should keep in mind the auto industry production headwinds. I will now provide a brief update on IVY. We released the early access version of IVY in October as we had previously targeted. This version has been released to a small number of ecosystem partners and will form the basis of our product demonstration at CES in January. This quarter, our co-development partner, AWS, announced the launch of a complementary product for IVY, called AWS IoT FleetWise. While IVY is cloud-agnostic and can work with any major cloud provider, AWS IoT FleetWise is a micro-service that allows IVY insights to be efficiently and intelligently uploaded to the AWS Cloud, where they can support cloud-side applications. Another significant development for IVY is that Bosch, the world’s largest auto Tier 1 supplier, announced that their new software integration platform will support IVY. This platform is built on QNX RTOS and Hypervisor, showcasing the potential for upselling IVY and future designs to the large and growing QNX installed base. Our main focus for IVY right now is on securing proof-of-concept agreements, and we are hopeful that we can announce some in the near future. Overall, we’re pleased with the progress we made. Let me now move to the cyber side of the business. This quarter we delivered sequential billings and revenue growth for the second consecutive quarter. Revenue was $128 million, and gross margin was 59%. ARR was $358 million, and dollar-based net retention was 95%. We saw continuous growth in the pipeline for unified endpoint security products, particularly our managed service offering, Guard. We’re very excited about how our products performed in head-to-head take-offs against other next-gen competitors this quarter. When we factor a proof-of-concept, our technology performs well, as illustrated by comparative wins against CrowdStrike and SentinelOne, as well as older signature-based players like Microsoft, McAfee, and Symantec. Among these wins was another top 10 global automaker, building on the win of the top 10 OEM we told you about last quarter. Other notable competitive wins include an international banking group, a leading European financial services firm, and a global marketing agency. In addition to success with larger companies, we’re seeing a lot of interest from small and medium-sized businesses too, and this will continue to be an area of focus for us as the market opportunity is large. Our automated Protect and Guard managed service offerings really resonate with small and medium-sized companies that don’t have a large security infrastructure. Proof-of-concept agreements often involve customers performing vigorous testing of our products against competitors’ products, and we are successfully illustrating our competitive advantage. Let me highlight a few of those key advantages. The first is our focus on prevention, with customer testing demonstrating that we stop threats through execution. This contrasts to the EDR approach that aims to remediate threats after the fact. The second is artificial intelligence; whereas for others, AI is relatively new and even an optional feature, our Cylance AI engine is central to our technology. It is the most mature in the market, having learned from the analysis of trillions of files and identifying over 20 billion characteristics. The third advantage we have is that our EPP works both offline and online, ensuring endpoints are protected 24/7 without relying on a cloud connection, which can be very expensive. Fourth, we protect mobile devices; nobody in this space knows mobile better than BlackBerry, and it is rapidly becoming one of the largest threat surfaces. These four attributes differentiate BlackBerry security offerings from the competition. I’m sure you all heard about the significant security incident known as Log4Shell, which has been classified at the maximum level 10 for severity. This relates to major vulnerabilities in the Apache Log4j Java library, extensively used by the industry. Let me provide you with an update from a BlackBerry perspective. This is obviously a rapidly evolving situation. Unlike many software companies that are still struggling to understand the impact, we track and categorize our product portfolio and open-source software content. This means that we’re able to very quickly identify which of our products use this library and create mitigation and release patches as the threats evolve. We can confirm that none of our core products, namely Protect, Optics, UEM, QNX, RTOS, and Hypervisor, are negatively impacted by these vulnerabilities. Furthermore, our suite of cyber products, particularly our Protect EPP and Guard managed service offerings, can help customers prevent malware and ransomware that bad actors could try to execute using these vulnerabilities. Now for a brief update on key partnerships. In recent quarters, we have released a number of new products and announced partnerships that expand our extended detection and response offering, or XDR. In the quarter, we were excited to announce partnerships with Okta, Mimecast, Stellar Cyber, and XM Cyber. A significant XDR partnership is with Exabeam, the leading next-gen SIEM provider. This partnership greatly improves both context and visibility of threats by adding telemetry data on hundreds of network integrations to our Guard managed XDR service. Managed XDR is a strong market opportunity, given the complexity of managing threats across the network. Finally, we are pleased that during the quarter, SE Labs, a leading independent cybersecurity research firm, ranked BlackBerry as the best new endpoint protection solution of 2021. A few words on customer wins: Across the business units, our key verticals this quarter were government, banking, and insurance. In government, we closed business with some of the world’s leading governments and government agencies, including the U.S. Navy, who became a new SecuVOICE customer. The Department of Homeland Security, the Dutch government, the U.S. Department of Education, which was a new logo win for our AtHoc, the spacing of key competitors, as well as the Scottish government, U.S. Central Command, the Federal Aviation Authority, and the IRS just to name a few. Moving on to the outlook for the cyber business, we expect continued sequential growth in billings and for Q4 revenue to be in the range of $125 million to $135 million. As previously indicated, closing certain large government deals in Q4 will be important. Moving on to licensing: As you know, we have been in negotiations regarding the sale of our non-core portion of our IP patent portfolio. This process is taking much longer than we had hoped, and I share the frustration about the timeline. Negotiations are very close to conclusion, and we are literally down to the last few important items now. Both parties are working hard to finalize this, and we expect to reach a definitive agreement very soon. We will provide shareholders with an update on progress in January. In the quarter, licensing revenue was $13 million, and gross margin was 54%. This beat expectations for the quarter. Should this sale reach a definitive agreement in January, we will suspend monetization activity and therefore, expect Q4 revenue to be close to zero. However, if not, we will continue to expect revenue to be around the $10 million mark for the quarter. I’ll now hand over to Steve to provide additional details on the financials.

Thank you, John. My comments on our financial performance for the third quarter will be in non-GAAP terms unless otherwise noted. Please refer to the supplemental table in the press release for the GAAP and non-GAAP details. We delivered third quarter total company revenue of $184 million. Third quarter total company gross margin was 64%. Our non-GAAP gross margin excludes stock compensation expense of $1 million. Our third quarter operating expenses were $142 million. Our non-GAAP operating expenses exclude $29 million in amortization of acquired intangibles, $5 million in stock compensation expense, and a $110 million fair value gain on the convertible debentures. Given our ongoing investment towards driving top-line growth in our core IoT and cyber businesses, the third quarter non-GAAP operating loss was $24 million, and the third quarter non-GAAP net loss was $1 million. We recorded a non-operating gain of $25 million as a result of gains realized in two legacy venture investment funds that comprise the majority of the long-term investment balance on our balance sheet. Related to this gain, the underlying investments represent a passive interest we had, which were sold, and we received a cash distribution of approximately $35 million during the quarter. Non-GAAP earnings per share was breakeven in the quarter. Our adjusted EBITDA was negative $8 million this quarter, excluding the non-GAAP adjustments previously mentioned. I will now provide a breakdown of our revenue for the quarter. Cybersecurity revenue was $128 million, and IoT revenue was $43 million. Software product revenue remained in the range of 80% to 85% of the total, with professional services comprising the balance. The recurring portion of software product revenue remained at approximately 80%. Licensing and other revenue was $13 million, given the limitations to our monetization activities due to the potential IP portfolio sale. Now moving to our balance sheet and cash flow performance. Total cash, cash equivalents, and investments were $772 million as of November 30, 2021, remaining consistent during the quarter. Our net cash position remained at $407 million. Given our investment in our core software businesses, third quarter free cash flow was negative $21 million, cash used in operations was $19 million, and capital expenditures were $2 million. That concludes my comments, and I’ll now turn it back to John.

Thanks, Steve. Before I move to the Q&A, let me summarize the key points for the quarter. We are pleased with how our new organizational structure is executing right now. We saw strength in design activities for our QNX business, achieving a record quarter for design-related revenue, and it looks like this trend will continue. Macro supply chain headwinds are still impacting vehicle production, but we see an improving picture heading into Q4. We made good progress with IVY, including releasing the early access version of the product. On the cyber side, we again see sequential growth in billings and revenue, including more head-to-head wins against our key competitors. The ongoing Log4Shell incident is a great example of the huge cyber market opportunity and showcases our capabilities. While others are struggling to identify the impact on their products from open-source vulnerabilities, we are responding rapidly and effectively. Overall, BlackBerry delivered solid progress, beating both revenue and earnings expectations for the quarter. So Charlie, please start the process of Q&A.

Sure. No problem, sir. Our first question from today will be from Daniel Chan with TD Securities. Please go ahead.

Can you provide any color on the cybersecurity ARR? It looks like it declined to $358 million from $364 million quarter-on-quarter. Just wondering if there’s any churn and which products may have been affected and maybe any products are showing outside strength?

Yes, we had a positive surprise with a higher revenue that exceeded our expectations from the Secusmart product. So, that has principally driven the numbers you saw.

Okay. And then, the guidance that you provided for next quarter, what are the puts and takes in that guidance? Thank you.

Yes. So, let me just break it into two pieces, IoT versus Cyber. On the IoT side, I think we’re feeling pretty good about it. As I said, we're going to get back to pre-pandemic levels. Design wins are good, and we have a strong pipeline for professional services to help customers deploy our technology. The royalties, we expect to increase a bit from Q3. So, that constitutes the math for the guidance between $50 million to $55 million. I feel okay about that. On the cyber side, it relies on a number of significant deals, particularly from the government, and we expect these to close a little later in the quarter. So, the revenue contribution will not be as big at the start of the quarter, but the billings should look fine.

Your next question comes from the line of Trip Chowdhry with Global Equities Research. Please go ahead.

Hello. Thank you. Very good execution on the quarter. Few things I would be interested in related to the IVY platform. You had the early access program for almost two months. Any specific data points you would like to share, maybe in terms of download applications from partners, any reaction? And then, I have a follow-up question.

Yes, we released it to application partners and a handful of OEM car manufacturers. The feedback was very positive. As I said earlier, we’re going to use that as a basis of our demonstration at CES. We have announced a few applications, but I can’t promise every single one will be showcased at our booth. However, I expect quite a number will be.

And... if we look at the new generation EV players and also the old guard of automobile players, there seem to be now getting on the bandwagon of over-the-air updates. I was wondering, does your platform, whether IVY or QNX, provide over-the-air updates right out of the box?

Yes, QNX offers the option for over-the-air updates, and IVY has that capability as well. The physical connection is straightforward, and we possess it. Our partnership with AWS facilitates a logical connection between the car's edge and the cloud, and we are leveraging that microservice. Therefore, we are able to operate in both directions, from the cloud to the car and vice versa. Regarding data encoding, we indeed have over-the-air capabilities.

Your next question comes from the line of Mike Walkley with Canaccord. Please go ahead.

This is actually Daniel on for Mike. Thanks for taking our questions. So yes, I guess with John Giamatteo joining your cybersecurity unit last quarter, just wanted to see how the productivity of your investments in your quota-carrying sales reps are trending in this area of your business? And how should we think about maybe some of the sustained investments as we move into 2023?

Good question. John joined us, bringing enormous experience in the cybersecurity market. He ran a $3 billion business as President of CRO of McAfee before. He has a lot of relationships with customers and partners. We have 10% more quota carriers now than at the beginning of the year. And the productivity will start showing in the next few quarters. The sales cycle typically leads to results in two to three quarters, so I anticipate some results in either the second or third quarter of next year.

And as a follow-up. You noted you saw further pipeline growth within cybersecurity, and you also expect sequential billings growth in Q4. When should we expect this to start showing up in ARR?

Next year, I hope. I feel pretty good about our ARR growth for next year.

Thank you. Your next question comes from the line of Paul Treiber with RBC Capital Markets. Please go ahead.

Within IoT, it seems like you’re quite upbeat on the design win-related revenue, like developer seats and professional services. What’s the typical gap in duration between professional services work and when it goes into production? And then also, is there a ratio for every dollar of professional services and design or developer seats to ultimate royalty revenue that you may see?

No, there’s really no direct ratio. Some OEMs have very aggressive development schedules and may ask us to provide expertise, increasing their purchase of developer seats. We are seeing more aggressive timelines now; competition is heating up in the auto industry. In the past, a new model would take five to seven years from conception to production. Now, timelines are often collapsing because of competitive pressure. Typically, after a win, we see about three years before production royalties start growing, and once they do, they usually last in excess of seven years.

Okay. Thank you. That's helpful. Just one follow-up question—sales and marketing, I was under the impression that you’re planning to ramp it up more significantly, but it has been flat this past quarter. How should we think about sales and marketing spending from here?

Yes, sales and marketing will definitely ramp up. On the cyber side, we need to do more marketing compared to IoT because we are already a known entity in that space. John Giamatteo is very focused on building up the sales and marketing efforts, which will increase significantly going forward.

And we have no further questions at this time. I would like to turn the call back over to John Chen, Executive Chair and CEO of BlackBerry, for closing remarks.

Thank you, Charlie. Thank you, everybody. As we mentioned, we’re participating at CES in Las Vegas in January. The focus will be on our IoT business and how it addresses the benefit from the key trend in edge computing. A key highlight will be the demonstration of our IVY technology, including illustrating how IVY uses edge computing to create insights from sensor data. We will host a hybrid in-person and live stream demonstration of the IVY technology, followed by an investor Q&A session with Mattias Eriksson, the President of the BlackBerry IoT Group, at 8 a.m. Pacific on Thursday, January 6th. We’ll be releasing more details about this shortly. I’d like to wrap up by wishing all of you, our investors and everyone on the call, a happy holiday and a safe and successful new year. Thank you very much.

And this concludes today’s conference call. Thank you for your participation. You may now disconnect.