BlackBerry Limited (BB) Q4 2019 Earnings Report, Transcript and Summary

Good morning and welcome to the BlackBerry Fiscal Year 2019 Fourth Quarter Results Conference Call. My name is Mitchell 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. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I’d 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, Mitchell. Welcome to the BlackBerry 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 will 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 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 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 summary. So BlackBerry had a very, very positive quarter 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 last fiscal year. And we generated $83 million in reported free cash flow. In the quarter we achieved 8% -- 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 four consecutive years of software and services growth that overcame the quarter-to-quarter decline in handset revenue and service SS fees. This is where the violins come in. We believe total company revenue growth is a significant milestone to both the company and our shareholders. This profitable growth is a clear indication that we have successfully pivot to become an enterprise software company. This quarter results are due to the achievement of the 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 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 as $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 as for the fiscal. Gross margin came in at 82%, operating income was $58 million, positive for the 12 consecutive quarter. Operating margin was 23%, an increase of 9 percentage point 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 investment 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 a 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 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 mainly from financial services and government vertical. In the financial services vertical, we received over 400 orders from banking customer from all around the world, which includes [indiscernible], BLC and Bank of Oman. In the government vertical, some notable orders received including the Austria Federal Computing Center, The Defense Logistic 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 two major announcement that underscore our continued progress in the government sector. First, we were selected by NATO for our secure voices solution, SecuSUITE for government. Second, we announced the creation of Blackberry Government Solutions, which is the Washington DC based subsidiary that will deepen our reach within the United States government and ensure that all our company’s solutions and products are FedRAMP authorize. This is a model that we could see 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 Employee 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 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. Three of the wins were for infotainment and the remaining 11 wins will across ADAS which is Advanced Driver Assist, digital cockpits, instrument cluster and other non-infotainment 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 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 C$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 platforms. Our investment continues to increase the breath of our product 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 the competition and a brief -- so that's all we have for the -- Radar. And now I'm going to move on to Radar. In the quarter we added eight new customers including Fleets, [ph] Mexico, continuing our international expansion. We also received repeated orders from nine existing customers, including Bimbo Bakeries, USA and Faxovan [ph]. 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 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 till perpetuity. We continue to execute well against a strategy to monetize our IP and technology portfolio. Our licensing business performance in the fourth quarter result in an increase in revenue of 71% year-over-year. The performance was driven by the closer opportunities we have actually highlighted and have 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 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 a first proactive protection solution based on individual behavioral characteristics. At RSA, we also announced that Verizon selected 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 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 award at RSA. BlackBerry Cylance if off to a bright start and we're very pleased with this acquisition and is a very -- is a positive validations 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 announced that Bryan Palma 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 combination of Bryan’s strong go-to-market focus and a cyber-security background has enabled him to deliver growth at all his prior organization and engagement. As you have seen, we added some strong talent over the last several months with Bryan as well as Stuart in 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 organizing three 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 Solutions 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 on to the fiscal quarter. Note my comments on a 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 include software deferred revenue acquired, but not record of $2 million and exclude 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 one-time 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 SaaS revenue was $9 million and total handset device revenue was zero. 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 recognize 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 a 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 expanded -- starting to expand the vertical that we have been underweighted. 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 at the beginning of the releases in 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 look for first fiscal year 2020 is as follows. We believe the total revenue growth 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 of between 12% to 16%. We expect the BTS to grow faster than the enterprise UEM business. We're sharing this detail with you only on this call. I guess you'd be only one on this call to help you align your historical model with our forward looking without 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 expect we expected blackberry silence row somewhere between 25% to 30%, from a base around $170 million for the 12 month ending February 28 2019. Service SS feed as SAF to be around somewhere between $10 million to $20 million. As stated earlier, we're 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 anticipated that the acquisition to be accretive in the second fiscal year and thereafter. Blackberry standalone annual gross 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 costs 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 exhibit last fiscal year. We anticipate minimum change to the tax expense and capital expenditure 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 now -- 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. Your line is open.

Hi, good morning.

Good morning, Steve.

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've said is fairly consistent with when you announced the acquisition. But can you give us a little color on maybe how their 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? Thanks.

Okay, 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, 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 their culture on both cultures, and I think will work very well. I mean, initially, we were seeding the well right now. So people are at Cylance were 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 that -- there is because of the growth, there wasn't really much of a seasonality, obviously, because they're growing every quarter basically. And so -- but if you look at it four quarter over four quarters type thing, 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 side business, less profound on their. Okay.

Okay. So, Steven, first of all, we will submit a business acquisition report where we have to submit by 75 days on May 7 would be that deadline. We hope to have that done before our Analysts 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 they would 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.

Great, that's helpful. And feel free to send some of those beach postures over the mail when you get chance.

Okay. We'll do it.

Your next question will come from Gus Papageorgiou from Macquarie. Your line is open.

Hi, guys. How are you guys. Thanks and congrats on a great quarter. Just a couple questions on the licensing. So I think Steve, you said $270 million annually. Is that...

No, for next year.

Yes. For next year. Yes. 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 the gross margin profile for the year, where should we kind of keeping it flat at where it is or what we're trending actually down?

Great question. So on the licensing component, I would expect an uptick through the year Q1 to Q4. Q2 and Q3 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 two companies Cylance has a greater proportion of professional services and as we look at our company, when I combine the two. I would say mid-70s, if you say 75% going forward would be a good number to work from.

Great, thanks a lot.

Yes.

Your next question comes from Daniel Chan with TD Securities. Your line is open.

Thanks for taking my questions. 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 an abnormality because of a virus, I don't remember it was Petabyte [ph] or WannaCry is because of that. And then also the math of small number versus bigger numbers. And one other plan Dan you mentioned this, our apple-to-apple comparison, although I'm allergic to apple-to-apple comparison is actually 5% of the growth because we map their fiscal, in fiscal year into ours. So, mathematically, Chris and Steve to show you that if you're interested. So you really need to look at the 25% to 30% growth from their historical way is 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, 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 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. Thanks. That's very helpful. I wondered if we 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 occurring, if you include the perpetual licenses? If it's mostly recurring and you're gaining customers, when should expect that segment to increase? I know you said that UEM grew sequentially. So where did this 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 is 88%. So we have more recurring, less immediate revenue, and that's really the mix.

The higher percentage of business was actually UEM that came in. And they're all on ratable. So that pushes our numbers up by 5% of recurring number -- or the ratable number by 5% up, potentially drops thus the revenue number.

If I could just squeeze one more in, what was 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.

That it 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 perpetual.

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

Yes, will probably mid and high-80s.

Okay, great. Thank you very much.

The next question comes from Paul Treiber from RBC Capital Markets. Your line is open.

Hey, Paul.

Hi. Thanks very much and good morning, guys. 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 one time 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 due to our pipeline.

Okay. And then…

So your model, Paul model should be still above $40 million to $45 million a quarter on a baseline basis, you use the word baseline, you should use that and then the rest will come in more of the one-time.

Okay. And then 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 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 out our foot.

And that includes patents also QNX and other areas.

It’s already there, yes.

Okay, thanks so much.

Sure. Thanks.

The next question comes from Todd Coupland from CIBC. Your line is open.

Good morning, everyone. I wanted to see if you could unpack the outlook for QNX and Enterprise Solutions. I know you bundle it up together here 12% to 16%. But how should we think about those two segments as we look out the next year?

QNX on the high end of the range and UEM on the low 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?

That’s absolutely. Well, I hope it's a little better than high-single digits. 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 and 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 get 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 years. So help us bridge what's going on in the business? Thanks.

Yes, I hope there was also something you have to remember the ratio of UEM revenue and the QNX revenue is such that, I hope QNX is going faster than 16%, that 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 seat 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 this last fiscal year we just finished, 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 bit higher. So it's kind of a little different --- difficult to just pinpoint the exact numbers. 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?

So, there are two -- there are a lot of people call themselves cyber security company, there are basically three category, one category is the one that we will call a signature base, in the industry, they refer to the first generation anti-virus software, this will be the company like Symantec and McAfee of sorts. And then the second generation attuned what’s more towards AI and machine learning, and much more lightweight and the player there are the three Cs, the Carbon Black, Cylance and Cloud Stride [ph]. 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 anti-virus and cyber security threat detection and prediction technology. So in the second generation, there are two major field, one is called the EPP and one is called the EDR, EPP is more on the predictive protection, EDR is more on the remediation -- detection and remediation. Cylance is at least from the analyst community, the industry analyst community has been ranked number one on EPP. And so -- and the RSA announcement, the reason I refer to it, and this is obviously part of our due diligence is they have done -- they have the newest set of the EDR products also. So they just announced that in March. So though we're pretty pleased with the technology and how competitive is, but this is definitely in the top handful of names in the market.

Great, appreciate the color.

Sure.

And our final question for today will come from Mike Walkley from Canaccord Genuity. Your line is open.

Hi, Mike.

Hi, thanks. 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 of 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? Thanks.

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 are mostly on PC and laptops. So we can 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 assume is because we are integrating the two products from PC to mobile. And so -- and as I said, the first set of product will come out 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 two wave or hopefully more than two wave. Then after that we will integrate Cylance into the QNX offering.

Great, thanks. 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 Radar after a little over a year of the platform? Thanks.

Right now, it's not significant enough for us to break it out. When it gets to that be rest assured we will give you some numbers to follow. But the BOCs [ph] are going on very well. We have very large customers kicking our tire so to speak. And which doesn't mean that we're going to win it all, but we're going to win our share. And they buy -- the repeat buying tell us that customers are happy and they're rolling out and a couple of new ones, it's always nice. But it’s still small total -- is the total business.

Okay, thank you.

All right, thanks. Okay. Well thank you and we'll be around to answer the -- any part of your question. So please do call us. And let me do give you provide some closing statements. Before I start the closing statement, we do have an Analysts Day and please contact Chris if you’d like to come and I know it's filling up very quickly and Analysts Day is end of April in San Ramon, California. The significance of that is the 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 summer technology. A lot of these questions has being asked the next level details they were able to provide. So anyway, the closing statement, so we obviously BlackBerry, the thing that pleased us is BlackBerry has evolved from a portfolio of strong assets to enterprise security software company. And we will talk about the platform, the Spark platform that we are developing ourselves with the integration of Cylance onto 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 there 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 the emerging IoT market. So this is 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. And we will hopefully see you in late April. Thank you very much.

This concludes today's call. Thank you for your participation. You may now disconnect.