BlackBerry(BB) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total company revenue for Q4 was $141.7 million, exceeding guidance [11] - Adjusted EBITDA for Q4 was$21.1 million, beating guidance [12] - Adjusted EPS for Q4 was positive $0.03, surpassing expectations [42] - Total cash and investments increased by$144 million, driven by strong operating cash flow of $42 million [13][45] Business Line Data and Key Metrics Changes - QNX division revenue for Q4 was$65.8 million, beating guidance [11] - Secure Communications division revenue for Q4 was $67.3 million, also exceeding guidance [29] - Licensing revenue for Q4 was$8.6 million, above expectations [35] - Adjusted EBITDA for Secure Communications was $12.6 million for Q4, significantly beating guidance [38] Market Data and Key Metrics Changes - QNX's royalty backlog grew to approximately$865 million, indicating future revenue potential [20] - Annual recurring revenue (ARR) for Secure Communications decreased by $7 million sequentially but increased by$6 million year-over-year to $208 million [34] Company Strategy and Development Direction - The company is focusing on its core growth driver, QNX, and has reduced its cost run rate by over$150 million [60] - The company is expanding its market presence beyond automotive into adjacent verticals such as medical and industrial [82] - The QNX division will now be referred to as QNX to reflect its key role [25] Management's Comments on Operating Environment and Future Outlook - Management noted uncertainty in the automotive sector due to recent tariff changes but emphasized resilience due to diversified revenue sources [48] - The company expects revenue for the full fiscal year 2026 to be in the range of $250 million to$270 million, indicating a 10% growth at the midpoint [49] - Management expressed confidence in maintaining strong relationships with government clients, which are expected to mitigate risks from potential changes in administration [106] Other Important Information - The company completed the sale of the Cylance business to Arctic Wolf, receiving approximately $80 million in cash and common shares [14][43] - The company retained its AI/ML endpoint security patents and tax losses, which are expected to benefit future profits [15] Q&A Session Summary Question: Impact of tariffs on auto OEMs - Management has not seen significant supply chain issues from OEMs related to tariffs, indicating a degree of insulation due to diversified revenue sources [64][65] Question: US federal business impact on Secure Communications - US federal contracts represent about 20-25% of Secure Communications, with no material impact observed so far [68][70] Question: Timeline for OEMs adjusting to tariff impacts - OEMs are still navigating the situation, with no significant downtick in supply chain volumes reported [74][75] Question: Business outside the US - The company is optimistic about growth opportunities outside the US, particularly in Europe, and is investing in adjacent markets [80][82] Question: Vehicle OS initiative and content opportunities - There is a consistent trend of OEMs seeking to expand their collaboration with the company, indicating potential for increased content per vehicle [96][100] Question: Risks related to government contracts - Long-term agreements with governments are expected to remain stable, with opportunities for consolidation and expansion of services [106]