BlackBerry Limited (NYSE:BB) Q1 2020 Earnings Conference Call - Final Transcript

Jun 26, 2019 • 08:00 am ET

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BlackBerry Limited (NYSE:BB) Q1 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
John Chen

and help us in profitability in the first quarter of Fiscal 2020. We are executing upon the strategic and operation goal for Fiscal 2020 that we shared with you last quarter.

Our execution gives us confidence to reaffirm our Fiscal 2020 financial outlook. Now, let me provide some highlights for the first fiscal quarter. Sorry, I'm losing my voice a little bit, so I apologize. Total Company Revenue was $267 million; Total Software and Services Revenue was $260 million which is a new record quarterly high. Total Software and Services Billings grew a strong double-digit percentage year-over-year. Total Company Gross Margin came in at 75%; Total Company Operating Income was $5 million, the resulting operating margin was 2%; the Company EPS was $0.01. Total ending cash and investments were $935 million.

Next, I will cover some of our significant highlights in each of our software businesses. Let me start with Cylance. Revenue came in at $51 million, which grew 31% year-over-year. This was driven by an approximate 30% year-over-year increase in the number of new active subscription customers. This new customer growth in the quarter was broad-based across various industries led by Professional Services sector, manufacturing as well as government. Annual recurring revenue, which is an indicator of the business momentum, was approximately $172 million and up 30% year-over-year in the first quarter of Fiscal 2020.

Another metric, dollar-based net retention rate, which is an indicator of customer retention expansion, continues to be greater than 100%. BlackBerry Cylance executed well during the integration process, which I mentioned earlier is tracking ahead of schedule. Here are some of the highlights and proof points. We have completed the back office function and personnel integration worldwide. The integration for the majority of the system and tools that have been used will be finished by the end of the second fiscal quarter, which is in a couple of months. Both the Sales and R&D teams are working well together. We are seeing very promising interactions by our Sales team within the BlackBerry key account base.

The R&D team is on track to integrate the Cylance technology into UEM. This integrated product will be available by next spring with the combination of the QNX and Cylance technologies thereafter. Also, the new products that BlackBerry Cylance announced earlier this year, namely Cocoon, Guard and Persona, are on track to be released throughout our fiscal year. Let me briefly discuss our Licensing business. Revenue grew 14% year-over-year with some IP licensing business occurring earlier in Fiscal 2020 than we expected. We remain focused on entering into new IP licensing arrangements that generates recurring revenue.

Moving on to the IoT business, Total IoT Revenue grew 5% year-over-year. As shared with you last quarter, the BlackBerry Technology Solutions and the Enterprise Software and Services Group will combine to align our financial reporting with the way we manage the Company today, which is namely under executive Bryan Palma. To assist you with the year-over-year comparison though, BTS Revenue grew 16%