BlackBerry Ltd (BB) 2019 Q4 法說會逐字稿

Good morning, and welcome to the BlackBerry Fiscal Year 2019 Fourth Quarter Results Conference Call.

My name is Michelle, and I will be your conference moderator for today's call.

(Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to our host for today's call, Christopher Lee, Vice President of Finance.

Please go ahead.

Thank you, Michelle.

Welcome to the BlackBerry's Fiscal Fourth Quarter and Fiscal Year 2019 Results Conference Call.

With me on the call today are Executive Chairman and Chief Executive Officer, John Chen; and Chief Financial Officer, Steve Capelli.

After I read our cautionary note regarding forward-looking statements, John will provide a business update and Steve will then review the financial results.

We will then open the call for a brief Q&A session.

This call is available to the general public via call-in numbers and via webcast in the Investor Information section at BlackBerry.com.

A replay will also be available on 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, including the risk factors that are discussed in the company's annual information form, which is included in our annual report on Form 40-F and in our MD&A.

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 their summary of our quarterly and annual results.

For a reconciliation between our GAAP and non-GAAP numbers, please see the earnings press release and supplement published earlier today.

I will now turn the call over to John.

Thank you, Chris.

Good morning, everybody.

As Chris has stated earlier, I will only reference non-GAAP numbers in my summaries.

So BlackBerry had a very, very positive quarters and as well as the fiscal 2019.

Let me start with the fiscal 2019 results.

For fiscal 2019, we delivered upon all our financial outlooks, including 10% total software and services revenue growth, double-digit percentage total software and services billing growth.

We reported $0.24 in earnings per share versus $0.14 fiscal -- last fiscal year, and we generated $83 million in reported free cash flow.

In the quarter, we achieved 8% -- but now it's for the Q4 -- in the quarter, Q4, we achieved 8% year-over-year total company revenue growth.

This was the first time in many years, driven by 4 consecutive years of software and services growth that overcame the quarter-to-quarter decline in handset revenue and Service Access Fees.

This is where the violins come in.

We believe total company revenue growth is a significant milestone to both the company and our shareholder.

This profitable growth is a clear indication that we have successfully pivot to become an enterprise software company.

This quarter results and due to the achievement of record high in total software and services revenue enabling BlackBerry to exceed the consensus expectation in both revenue and earnings per share for the quarter.

Finally, we completed our acquisition of Cylance.

Cylance next generation -- is a next-generation endpoint security technology, which participates in the fast-growing market and it provide technologies that is shaping the future direction of cyber security.

The AI and machine learning capabilities we added are synergistic with our long-term vision for BlackBerry Spark, our integrated secure communication platform for the IoT.

Now let me provide some highlights for the fourth fiscal quarter.

Total company revenue came in at $257 million.

Total software and services revenue was $248 million.

As I mentioned before, this is a new record quarterly high.

Total software and services billing grew a solid double-digit percentage year-over-year for both the fiscal quarter as well for the fiscal year.

Gross margin came in at 82%.

Operating income was $58 million, positive for the 12th consecutive quarter.

Operating margin was 23%, an increase of 9 percentage points from last quarter.

This is the highest operating margin reported by the company since fiscal 2011.

EPS came in at $0.11.

Total ending cash and investments, after the closing of the acquisition of Cylance, came in as $1 billion.

Next, I will cover some significant highlights by business.

Fourth quarter enterprise software and services revenue declined 20% year-over-year, primarily due to the impact of the ASC 606 accounting.

You may recall that in the fourth quarter of fiscal 2018, we reported approximately $30 million of perpetual license that we recognized upfront prior to the 606.

It is worth noting that this is the last quarter of year-over-year comparative impact related to the implementation of the ASC 606.

As we look at billings and other operating -- operational metrics in the quarter, we expect to see growth in enterprise software and services in fiscal 2020.

Billings grew strongly on a sequential basis.

The strength in the quarter came from mainly -- came mainly from financial services and government vertical.

In the financial services vertical, we received over 400 orders from banking customers from all around the world, which includes Barclays PLC and Bank of Oman.

In the government vertical, some notable orders received, including The Austrian Federal Computing Center, the Defense Logistics Agency, the Police Service of Scotland, Public Service and Procurement Canada, U.S. Air Force, U.S. Army, U.S. Navy, just to name a few.

After the quarter, we made 2 major announcements that underscore our continued progress in the government sector: first, we were selected by NATO for our secure voice solution, SecuSUITE for Government; second, we announced the creation of BlackBerry Government Solutions, which is the Washington, D.C.-based subsidiary that would deepen our reach within The United States government and ensure that all our company's solutions and products are FedRAMP authorized.

This is a model that we can still deploy with other countries in the future, of course.

As we have demonstrated consistently throughout the fiscal year, we were well positioned to not only compete but to win in the regulated industry.

Our strongest revenue performer within the enterprise software and services in the quarter was our UEM, the Unified Endpoint Management business, which grew at a high single-digit percentage on a sequential basis.

Enterprise software and services deferred revenue also grew in the fourth quarter since we have largely transitioned to a ratable revenue model.

We're still on track to release the first module for the BlackBerry Spark platform this September.

As a reminder, BlackBerry Spark is our integrated secure communication platform designed to address the hyper-connected needs in the IoT markets.

So let me move to BlackBerry Technology Solutions business.

Fourth quarter BTS revenue came in -- increased 20% year-over-year.

Growth in BTS is mainly driven by BlackBerry QNX, the software development license, services and royalty revenue.

They all grew year-over-year as we continue to select -- be selected for designs by our customers in both the automotive as well as the general embedded market.

In the quarter, we had a total of 22 design wins, of which 14 were in automotive.

3 of the wins were for infotainment and the remaining 11 wins were across ADAS, which is Advanced Driver Assist, Digital Cockpits, instrument cluster and other noninfotainment applications.

Based on one of our recent wins with a prominent Tier 1 supplier, we are seeing an emerging trend in the automotive software architecture, where domain controllers are -- on consolidating function -- our consolidating function that has historically been distributed across many ECU, the electronic control units.

This trend is constructive for BlackBerry QNX.

Our safety certified operating system and Hypervisor are very relevant for this current market demand.

During the quarter, we announced an investment of CAD 310 million over 10 years to develop the next generation of safe and secure embedded software for the future automobile and other enterprise markets and other autonomous platform.

Our investment continues to increase the breadth of our product, and we -- and that are necessary to serve the active safety and autonomous platform now as well as in the future.

I believe this investment is going to help BlackBerry to stay ahead of competition.

And if we -- so that's all we have for Radar -- and then I'm going to move on to Radar.

In the quarter, we added 8 new customers, including Fletes México, continuing our international expansion.

We also received repeated orders from 9 existing customers, including Bimbo Bakeries USA and Flexi-Van.

We are actively engaged with a number of very large companies in our pipeline, and we look to continue to ramp up volume.

In our business reporting -- regarding licensing, IP and other revenue, which in the future by the way, we're going to refer it as licensing throughout the core from now -- I guess, from now until perpetuity.

We continue to execute well against the strategy to monetize our IP and technology portfolio.

Our licensing business performance in the fourth quarter result in an increase in revenue of 71%, 7-1, year-over-year.

The performance was driven by the [close of the] opportunities we have actually highlighted and has been discussing with you early in the fiscal year that we were all working on.

We expect a steady annual revenue contribution from this business.

Based on our pipeline, we're working towards a goal of around $270 million, 2-7-0, in licensing revenue in fiscal year 2020.

A brief word on BlackBerry Cylance.

Those of you who attended RSA -- by the way, we completed the acquisition the last week of February.

Those of you who attended RSA this month, which is March, are aware of our release of CylancePERSONA, which generated a lot of interest as the first proactive protection solution based on individual behavioral characteristics.

At RSA, we also announced a Verizon selective BlackBerry Cylance to be part of the managed service -- managed security service portfolio.

This partnership strengthen our channel as well as broaden our reach to Verizon Enterprise and a small and medium business customer base.

BlackBerry Cylance was also recently recognized by multiple cyber security industry experts for their innovation and leadership, I guess, i.e., got a lot of awards at RSA.

BlackBerry Cylance is off to a bright start, and we are very pleased with this acquisition and it's a very -- is a positive validation on our investment thesis.

Before I turn the call over to Steve, let me provide you a couple of key personnel updates.

First, I'm pleased to welcome and announce that Bryan Palmer recently joined BlackBerry as our President and Chief Operating Officer.

Bryan is an excellent addition to our team.

Bryan started his career as a forensic specialist for The United States Secret Service.

He was also the first CISO, the CISO for Pepsi, VP of Cyber and Security Solutions for Boeing and a Senior Vice President of an $8 billion professional services business from Cisco.

The combinations of Bryan's strong go-to-market focus and a cyber security background has enabled him to deliver growth at all his prior's organization and engagement.

As you have seen, we added some strong talent over the last several months, with Bryan as well as Stuart and the Cylance team.

We plan to add others to our team, all of them will be key for BlackBerry to execute against our strategy for profitable growth.

For fiscal 2020, company is now organized in 3 business units, whose leadership will report to me.

Bryan will lead the new BlackBerry IoT business, which will include our enterprise software and services as well as the BlackBerry Technology Solution team.

Stuart, the Co-Founder and CEO of Cylance, will lead the BlackBerry Cylance business.

Steve Capelli will lead licensing in conjunction with his CFO role.

I will now turn the call over to Steve to provide more details about our financial performance.

Thank you, John.

Before I comment on the fiscal quarter, I'd like to comment on fiscal 2019.

As John previously mentioned, I am pleased that we did what we said we would do regarding our fiscal 2019 financial outlook.

More importantly, we ended the year on a high note with total company revenue growth, gross margins over 80%, positive free cash flow generation and $1 billion in cash after closing the Cylance acquisition.

Now onto the fiscal quarter.

Note my comments on our financial performance for the fiscal quarter will be in non-GAAP terms unless specified otherwise.

We delivered fourth quarter non-GAAP total company revenue of $257 million and GAAP total company revenue of $255 million.

I will now break down revenue shortly.

Fourth quarter total company gross margin was 82%, primarily due to the higher mix of licensing revenue.

Our non-GAAP gross margin includes software deferred revenue acquired but not recognized of $2 million and excludes stock compensation expense of $1 million and restructuring costs of $1 million.

Operating expenses of $152 million were up 8% sequentially, due primarily to the inclusion of Cylance in our numbers for about a week of our fiscal quarter.

Our non-GAAP operating expenses exclude $18 million in amortization of acquired intangibles, $13 million in stock comp expense, $8 million in acquisition and integration costs, $2 million in restructuring charges and a onetime benefit of $9 million from the settlement with Panasonic and a benefit of $6 million related to the fair value adjustment on the debentures.

Non-GAAP operating income was $58 million and non-GAAP net income was $60 million.

Non-GAAP EPS was $0.11 in the quarter.

Our adjusted EBITDA was $73 million this quarter, excluding the non-GAAP adjustments previously mentioned.

This equates to an adjusted EBITDA margin of 28%.

I will now provide a breakdown of our revenue in the quarter.

Total software and services revenue was $248 million, representing 96% of total revenue and up from 91% a year ago.

Total SAF revenue was $9 million and total handset device revenue was 0.

I will now provide a further breakdown of our software and services revenue in the quarter.

Please refer to the supplemental table in the press release for the GAAP and non-GAAP details.

Enterprise software accounted for 37%, BlackBerry Technology Solutions accounted for 22%, licensing accounted for 40% and Cylance accounted for 1%.

Recurring software and services revenue was 93% in the quarter consistent with the definition we used last quarter, which was to include perpetual licenses recognized ratably.

Now moving on to our balance sheet and cash flow performance.

Total cash, cash equivalents and investments were $1 billion, which decreased by $1.4 billion from the November 30, 2018, due to the closing of the Cylance acquisition.

Our net cash position was $400 million at the end of the quarter.

Free cash flow before considering the impact of acquisition and integration expenses, restructuring costs and legal proceedings was a positive $20 million.

Cash generated in operations was $21 million and capital expenditures were $3 million.

That concludes my comments.

I'll now turn the call back to John to provide further outlook.

Thank you, Steve.

Before I provide the fiscal year 2020 outlook, let me summarize our strategic priorities for the fiscal year and I will break it down by business unit.

For BlackBerry IoT, our goal is to drive profitable revenue growth, increase our market share in the industry vertical that we have been strong in and expand -- starting to expand the vertical that we have been under weighted.

For BlackBerry Cylance, our goal is to increase market share, of course, while improving its profitability and reducing the cash burn.

For licensing, we look to close opportunity that result in a higher amount of recurring revenue.

We are investing for growth, including expanding our channel reach and our innovation.

We have begun to integrate AI and machine learning capabilities on to both our UEM product as well as the QNX product line, and we anticipate, at least, if the beginning of the release is 12 months probably started with UEM first.

We are also investing to accelerate the development of the Spark for our internal growth.

With that as a context, our outlook for the first fiscal year '20 is as follows: we believe the total revenue growth will came in -- will come in between 23% to 27%, driven by a double-digit percentage increase in billings.

Revenue growth is broken down as follows: IoT business unit growth between 12% to 16%.

We expect that BTS to grow faster than the enterprise UEM business.

We are sharing this detail with you only on this call, I guess, it should be only once on this call to help you align your historical model with our forward-looking -- with our going-forward financial reporting.

License, we expect to decrease 5% year-over-year, as we focus on closing opportunity that build upon our recurring licensing revenue base.

In summary, the combination of IoT and licensing business unit should deliver organic growth somewhere between 8% to 10%.

Also, we expect BlackBerry Cylance growth somewhere between 25% to 30% from a base of around $170 million for the 12 months ending February 28, 2019.

Service Access Fees, or SAF, to be around -- somewhere between $10 million to $20 million.

As stated earlier, we are investing for current and future growth.

Though we are investing, we still anticipate being profitable on a full year basis even with a diluted impact of the Cylance acquisition.

As previously noted on the November announcement call, we anticipate that the acquisition to be accretive in the second fiscal year and thereafter.

BlackBerry stand-alone annual growth and operating margin profile is largely unchanged.

However, we are adding about $300 million of costs related to Cylance.

This will break down to about $75 million in cost of goods sold and $220 million operating expense.

The total company intends to improve operating leverage throughout the fiscal 2020.

We anticipate our fiscal 2020 financial results will be consistent with the seasonality we have exhibited last fiscal year.

We anticipate minimum change to the tax expense and capital expenditure and we have -- that we have reported last year.

So with all that, you should be able to come up with the final answers with a definite number.

But I would like -- operator -- Michelle, I would like to open the call for question and answer, please.

Michelle?

(Operator Instructions) Our first question will come from Steven Fox from Cross Research.

Two questions from me, please.

First of all, John, given all the organizational changes, I was curious if you could, sort of, outline what it does to free up your time and maybe how your emphasis in terms of your own management is going to change going forward?

And then secondly, when we think about Cylance and, obviously, everything you said is fairly consistent with -- when you announced the acquisition.

But can you give us a little color on maybe how that business plays out seasonally quarter-to-quarter, roughly?

And also, how the direction we should think about the cash burn declining as the year goes on?

Okay, good, good.

I will leave the cash burn answer to Steve.

So the first question is, I'm buying all the maps about beaches and golf courses and -- no, no, Steve.

So I think, I will be immensely busy.

And part of the reason is to make sure that we have the synergy both in the financial side and, more important, the technology and build out our internal communication platform for the IoT.

And there are some really big projects that I need to focus on.

And also, making sure that the Cylance being a very high growth company continue that growth, but being integrated into BlackBerry as one company.

So I have to kind of balance that culture on both cultures.

And I think we'll work very well.

I mean, initially, we worked exceedingly well right now.

So people at Cylance are very excited to join us, and we're very excited to have them.

So -- anyway, so there's going to be a lot of work and hoping that I could spend more time in getting the company more focused on the strategy going forward.

So that's -- like there is -- because of their growth, there wasn't really much of a seasonality, obviously -- because they're growing every quarter, basically.

And so -- but if you look at the full quarter over full quarters, I think, you basically see Q1 being lower and Q4 being higher.

I mean, the same kind of mathematics, a little bit more profound on our enterprise size business, less profound on theirs.

Okay?

Okay.

So Steven, first of all, we will submit a business acquisition report, where you have to submit by 75 days, on May 7 would be the deadline.

We hope to have that done before our Analyst Day, which is late April.

So in about 30 days, I think you'll have a better view.

John mentioned because of the high amount of recurring revenue that the -- how the revenue flow would come through.

And on a cash flow basis, we did say there will be accretive next year for us.

But as we look to this year, we're really looking at decreasing losses on cash.

Do expect to have that throughout the full year, obviously, more heavily weighted in Q1 and gradually moving out to more profitability or cash flow generation in Q4.

Your next question will come from Gus Papageorgiou from Macquarie.

Just a couple of questions.

On the license, so I think, Steve, you said $270 million annually.

Is that...

No, that's for next year.

Yes, for next year.

Is that -- is there any seasonality in that?

Or is that pretty consistent across quarters?

And then also on the gross margin, I mean, very strong gross margin this quarter.

I know Cylance is only there for a week.

What kind of -- if you think about -- if you think the gross margin profile for the year, whereas we kind of keeping it flat where it is or where we're at -- trailing up or down?

Great question.

So on the licensing component, I would expect an uptick through the year Q1 to Q4.

Q2 and Q3 will be flat and probably a stronger Q4 as we did this year on the licensing model.

Secondarily, on the gross margins.

When we combine the 2 companies, Cylance has a greater proportion of professional services.

And as we look at our company, when I combined the 2, I would say mid-70s.

If you say 75% going forward would be a good number to work from.

Your next question comes from Daniel Chan from TD Securities.

So can you put the expected growth of Cylance of 25% to 30% in context of last year's growth, where they stated they were doing about 90%.

What are the factors that are kind of changing your assumptions here?

90% is a abnormality because of a virus.

I don't remember if it was petabyte or...

or WannaCry ransomware.

WannaCry, it's because of that.

And then also, the map of small number versus bigger numbers.

And one of the plan -- I'm glad you mentioned this, our apple-to-apple comparison -- although I'm allergic to apples, but apple-to-apple comparison is actually 5% off the growth because we mapped their fiscal year -- in fiscal year into ours.

So -- and mathematically, Chris and Steve could show you that if you are interested.

So you really need to look at the 25% to 30% growth.

From the historical way, it's actually 5% higher than that.

They lose the impact of a strong quarter end because of the way we do the modeling on that.

And Dan -- and your reference point of the 100%, I think when the bars released, you'll kind of see -- I think the 100% is actually even dated to our prior year.

2 years ago, yes.

And then so you'll see it.

And not to mention that the competition in this marketplace is growing significantly less than that.

Yes, we are -- if you map our number, we will be literally doubling the growth of a competition that are public.

Okay, great.

That's very helpful.

Wonder if you could switch gears to the enterprise segment.

So that segment dropped sequentially.

Can we get some more color there, especially considering that most of it is now being recorded as recurring if you include the perpetual licenses?

If it's mostly recurring and you're gaining customers, wouldn't you expect that segment to increase?

I know you said that UEM grew sequentially.

So where did the sequential decline come from?

Sure.

So the quarter-over-quarter, it's really the product mix.

As you pointed out, there are certain product lines that are recurring in nature and others that are not.

So the fact remains is billings grew quarter-over-quarter and that was substantial and as well as the fact that due to the mix, you can look back and you see that John spoke about 95% recurring -- 93% recurring this quarter, last quarter was 88%.

So we have more recurring, less immediate revenue and that's really the mix.

Again...

The higher percentage of business was actually UEM that came in and they are all unratable.

So that pushes our number up by 5% to recurring number or the ratable number, sorry, is by 5% up, so it then drops, that's the revenue number.

If I could just squeeze one more in.

What was the -- that recurring revenue number, if you exclude the perpetual licenses?

What was the recurring revenue?

Well, we said 93% is total company and that's how we report.

So if you include the perpetual licenses record as ratably.

What if you were to exclude those perpetual licenses that you...

We have very -- this quarter we have very few -- yes, we have very few perpetual licenses.

Very few perpetual, so it would still be mid-80s.

Yes, probably mid- and high-80s.

Your next question comes from Paul Treiber from RBC Capital Markets.

Just on the theme of recurring revenue.

In regards to IP licensing, I think, in the past, you mentioned, sort of, like a base level run rate.

But what's the mix of recurring versus one time in either the quarter or the year and then relative to the $270 million outlook for next year?

Yes.

Go ahead, Steve.

Yes.

So first of all, we don't include IP revenue as part of our recurring percentages.

So I wanted to kind of set that tone first.

The second piece of it is, we still say that $40 million to $45 million is that baseline of recurring revenue and the rest is more onetime in nature.

However, as you've seen, we've been able to kind of deliver a consistent number above that numbers and that's due to our pipeline.

Okay.

And then...

So your model -- Paul, your model should be still about $40 million to $45 million a quarter on a baseline basis.

You used the word baseline, you used to use that.

And then, the rest will come in more on the one time.

Okay.

And bigger picture in regards to the IP licensing business and I think in the past you talked about that there's 10 to 11 years or so remaining on the patents.

Is this -- is the opportunity just to monetize the business?

And then what happens out 10 to 11 years like to the extent are you replacing those patents or can you extend those patents to sustain the durability of that revenue stream?

Yes.

Well, we currently have over 100 patents in application.

There are new.

And then added to it, a set of patents also from Cylance.

So we are filling up the pipeline very rapidly.

We have a lot of innovation going on in the company.

So I wouldn't be overly concerned about running our foot.

And that includes patents also from QNX and other areas.

It's all in there, yes.

The next question comes from Todd Coupland from CIBC.

I wanted to see if you could unpack the outlook for QNX and enterprise solutions.

I know you bundled it up together here 12% to 16%, but how should we think about those 2 segments as we look out the next year?

QNX is on the high end of the range and UEM on the lower end of the range.

Okay.

So you still think that UEM can grow in the high single digits from regulated and governmental demand?

That's how you're thinking about that?

Absolutely.

Well, I hope it's a little better than high single digit, but yes, that's correct.

We have a lot of projects going on.

We have new product in the pipeline.

I'm not overly concerned.

We saw a good sequential growth from Q3 to Q4.

Okay.

And then on QNX.

Like, it's hard for us to see what's going on under the surface because you have professional services before, you got the recurring revenue and then you have various design wins ramping and you have the mix of design wins, ADAS versus entertainment, et cetera.

What actually is happening overall from a growth perspective in the areas that you like?

So if I were to look at that 12% to 16%, 16% QNX, that's just okay relative to where you had been growing that business the last couple of years.

So help us bridge what's going on in the business.

Yes, I hope -- there was also something you have to remember, we -- the ratio of UEM revenue and the QNX revenue is such that, I hope QNX is growing faster than 16%.

The QNX -- you know we have a design win type of a revenue model and royalties are quite steady throughout all these years and gradually upticking.

Design wins brings in development set -- development fleet revenue as well as some professional services.

But by and large, this is a royalty-based business.

So I don't know how you want me to unpack it.

Now the last -- now this last fiscal year we just finished or we're reporting, we grew 25% year-over-year.

That's a pretty good year.

And we shouldn't be drop off any more than that or we might even be going into 25% or a little higher.

So it's kind of a little different -- difficult to just pinpoint the exact numbers on.

Now -- so we model ourselves as growing on the high-teens-type environment.

And just last question if I could on Cylance.

So lots of noise with the peers in the market, some of them are probably bulking up to have a story to go public, et cetera.

Like, help us -- help investors understand, sort of, competitive differentiation of Cylance to, sort of, like see through some of that commentary?

Yes.

So there are 2 -- yes, there are a lot of people calling themselves cyber security company.

They are basically 3 category.

1 category is the one that we will call the signature base.

In the industry, they're referred to the first-generation antivirus software.

This will be company like Symantec and McAfee of sorts.

And then the second generation are tuned towards -- more towards AI and machine learning and more -- much more lightweight and the player there are the 3 Cs: the Carbon Black, Cylance and CrowdStrike.

And then you have the third category, which are more tied to the IoT endpoints, more in the discovery side of the equation.

So we are definitely in the newer generation -- second-generation antivirus and cyber security threat detection and prediction technology.

So in the second generation, there are 2 major fields: one is called the EPP and one is called EDR.

EPP is more on the predictive protection.

EDR is more on the remediations -- detection and remediations.

Cylance is, at least, from the analyst community -- the industry analyst community, has been ranked #1 on EPP.

And so -- and the RSA announcement, the reason I referred to it and this, obviously, is part of our due diligence is they have the newest set of the EDR products also, so they just announced that in March.

So we're pretty pleased with the technology and how competitive it is, but there's definitely in the top handful of names in the market.

And our final question for today will come from Mike Walkley from Canaccord Genuity.

Just following up on Cylance just in the 25% to 30% guidance.

Can you talk about if there are any cross-selling synergies built into there?

Is that more longer term?

And can you share any initial feedback from your customers now that you've had it closed for a little over a month here?

Yes.

The initial feedbacks are very, very strong, very interested.

A, there are overlap customers.

And the good news is BlackBerry is on mobile, Cylance is mostly on PC and laptops, so we could now provide end-to-end.

In our math, there is no revenue synergy assumed.

Now the reason why we don't have a revenue synergy assumed is because we are integrating the 2 products from PC to mobile.

And so -- and as I said, the first set of product will come on in 12 months.

And -- so the next fiscal year will be a growth catalyst from that.

So I'm quite excited about that fact that we could have a 2 way -- hopefully more than 2 way.

Then after that, we will integrate -- after that, we will integrate Cylance into the QNX offering.

Great.

And just my follow-up question.

Just on Radar, can you -- any updates there maybe on a quarterly run rate or total subs you have for Radar after a little over a year of the platform?

Right now, it's not significant enough for us to break it out.

When it gets to that, be rest assure we will give you some numbers to follow.

But the POCs are going on very well.

We have very large customers kicking our tires, so to speak.

And it doesn't mean that we're going to win it all, but we're going to win our share.

And the repeat buying tell us that customers are happy and they're rolling out.

And a couple of new ones, it's always nice, so -- but it's still small total -- as a total business.

Okay.

Well, thank you, and we will be around to answer the -- any further of your questions.

So please do call us.

And let me do -- give you -- provide you with some closing statements.

Before I start the closing statement, we do have an Analyst Day and please contact Chris, if you like to come, and I know it's filling up very quickly.

And the Analyst Day is end of April in San Ramon, California.

The significance of that is, Cylance founder will be there.

The Chief Product Officer will be there to talk about everything about Cylance.

We have our CTO also going to talk about the integration of Cylance product in -- on to UEM and QNX.

So it's pretty exciting from a technology.

A lot of these questions that's been asked, the next level of details they were able to provide.

So anyway, the closing statement.

So we, obviously, BlackBerry, the thing that pleases us is BlackBerry has evolved from a portfolio of strong assets to enterprise security software company.

We will talk about the platform -- the smart platform that we are developing ourselves with integration of Cylance on to it, which will make it extremely competitive in the market.

We expect our security solution to generate more than $1 billion in revenue for fiscal 2020.

And they are not too many security company of our size and reach.

So we have a technology portfolio and significant know-how in data security and privacy that is extremely relevant to an emerging IoT market.

So this is a very encouraging from that.

And all in all, I hope you could see the optimism of the company, and we are executing.

Still a lot of work to do, but we feel pretty good about where we are today, okay?

And we hope we'll see in late April.

Thank you very much.

This concludes today's call.

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