BlackBerry Limited (BB) Q3 2021 Earnings Report, Transcript and Summary

Good afternoon. And welcome to the BlackBerry Third Quarter Fiscal Year 2021 Results Conference Call. My name is David, and I’ll 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 would now like to turn today’s call over to Tim Foote, BlackBerry Investor Relations. Please go ahead.

Thank you, David. Good afternoon. And welcome to BlackBerry’s third quarter fiscal 2021 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 via calling numbers and via webcast in the Investor Information section at blackberry.com. A replay will also be available on the blackberry.com website. As noted in our press release earlier this afternoon, slides we will be shown during today’s live webcast. These slides relate to the recent BlackBerry IV announcements. For those of you not on the webcast, joining via the calling numbers, the slides are available for you to access on the Investor Information section at blackberry.com. Some of the statements we’ll be making today constitute forward-looking statements and are made pursuant to the Safe Harbor provisions are applicable in 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. Forward-looking statement 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 that are 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 their summary of our quarterly results. For a reconciliation between our GAAP and non-GAAP numbers, please see the earnings press release and supplement published earlier today, which are available on the EDGAR, SEDAR and blackberry.com websites. And with that, I’ll turn the call over to John.

Thanks, Tim. Good afternoon, everybody. Today, I’d like to keep the financial and business updates relatively brief, because I’d like to spend a little bit more time discussing our recent BlackBerry IV announcement. This third fiscal quarter we continue to build on the momentum from our second quarter, delivering results in line with our outlook we provided. We delivered sequential revenue growth both in the Total Software and Services section and as well as BTS. We continue to deliver positive EPS and positive free cash flow this quarter. BlackBerry reported total revenue -- company revenue of $224 million. Software and Services revenue came in at $168 million, 1-6-8. License was $36 million [ph]. Gross margin was 70%. Earnings per share was positive $0.02. Cash generated from operations was $29 million. Total ending cash and investment at November 30th was $757 million. I will start my business commentary with the Software and Services Group. ARR was approximately $475 million. Dollar base net retention rate was 90%. Net customer churn reduced to around 1%. Spark is a combination of -- as a reminder, it’s a combination of our UEM and UES, the unify endpoint security offerings. This quarter we made good progress in both the Government and Financial Services verticals with customer wins, including U.S. Army, U.S. Postal Service, the IRS, the Department of Energy, and Department of Justice, as well as Raymond James Financials, Citibank, the German Bundesbank, the Bank of India and the Government of Rwanda. In addition, we have customer wins in other verticals including healthcare and manufacturing. We continue to see progress in upgrading BlackBerry UEM customer to the full Spark suite, i.e., adding our UES suite, example in the quarter, including Deutsche Bank, Deutsche Boerse, ConvergeOne and multiple Ministry of the Dutch Government. Significantly during the quarter we released BlackBerry Cyber Suite. Our AI powered Cyber Suite, which combines our industry leading EPP, EDR and MDR product. It is further strengthened by the continuous authentication and the mobile threat defense capabilities. This Cyber Suite is highly competitive against both traditional and the next-gen player in the cybersecurity market. This has been validated by 451 Research and other industry experts. Cyber Suite brings together the best of BlackBerry and Cylance technology. Further Cyber Suite will be available in version that integrated with all major UEM offerings, including Microsoft Intune, VMware’s Workspace ONE, Mobileye, as well as IBM MaaS360. This integration will allow BlackBerry to provide additional security to users of our rival UEMs. Cyber Suite has only been in the market for a month. But early interest is strong, both in the new logo and existing customer base, with significant pipeline growth this past quarter. Cyber Suite obviously allows us to give our prospect and customer greater options for increasing the cybersecurity while protecting their UEM investment. As a result of these technology enhancement and positive customer receptivity, we will in turn step up our investment in sales and marketing to compete more aggressively. Before I move to BTS, I’d like to highlight the security certifications we have achieved. This quarter, BlackBerry UEM achieved the National Security Agency, NSA, Commercial Solutions for Classified Program approval. This adds to the portfolio of U.S. Government certifications we have received with BlackBerry UEM, including the NIAP Certification, the Department of Defense Information Network approval product list, which I think we talked about last quarter, called IN-APL or HINAPL [ph], FedRAMP *, FIPS 140-2. No other software vendor in the cybersecurity space has been awarded more security certification by the U.S. Government than* BlackBerry. BlackBerry achieving NSE* Certification comes at a time when most of our major competitors have been identified having vulnerabilities that are being exploited by national -- by nation state hackers. This should give our customer and prospect a higher degree of comfort about the cybersecurity protection they receive from BlackBerry. Now moving on to BTS. QNX the largest component of BTS reported sequential revenue growth. QNX remain on track to be back to its normal run rate by early next fiscal year. In the quarter we have 17 new design wins, sorry, six in auto and 11 in a generally embedded market. Our expansion into gen continues, which with diverse wins, including a controller system for power turbines, a next-generation cell receiver system and a rail traffic management system from the Seoul’s Sunan Subway [ph]. In auto we have design wins in full kinetic cars and electric vehicle. The wins included instrument clusters, a couple of them in domain controller, a handful of them in ADAS designs, the advanced driver-assistance, sorry, the advanced driver-assistance. Speaking of electric vehicles, we’re very pleased to share with you our strong position in the EV market. QNX now has designed wins with 19 of the top 25 electric vehicle OEMs, which together has 61% of the EV market in the first half of this calendar year. We’re working hard to recruit the remaining six. Moving on to secure communication, which includes AtHoc and Secusmart. Secure communication has a strong quarter. This strength was primarily due to ongoing transition to remote working, which has been obviously greatly accelerated by this pandemic. AtHoc had some strategic win this quarter, including the California Department of Corrections & Rehabilitation or Rehab -- Department of Corrections & Rehab, as well as the California Department of Justice. I believe that no one now can claim to power the entire State of California. Other notable renews and upsell from AtHoc in the quarter including the United States Army, Navy, as well as the Air Force, as well as the Federal Aviation Administration, FAA. We also renewed the U.S. Defense Intelligence Agency, the U.S. Department of Commerce -- the Energy, Treasury and Agricultural, as well as the FEMA, Federal Emergency Management Agency. Finally, I want to touch on licensing. Revenue for the quarter came in at $56 million. As before, the majority of the licensing revenue comes from our IP licensing business. As I mentioned at the beginning of the call, I’d like to spend some time discussing BlackBerry IV, which we’re very excited about. Modern cars [ph] continue generate huge amount of data. I think you all agree, you know. The auto industry is not prepared to capture and create value from the analytics because these data is difficult to cars collect and interact with without very costly integrations. BlackBerry IV’s mission is to make it easy to gather, securely transport and analyze these data in a standard and a cost efficient way across multiple brands and models on a common platform. This will allow the developers ecosystem to use the data to provide intelligent insights and application on a global scale. We have entered into a multiyear exclusive co-development and co-marketing agreement with AWS. This type of agreement is rare. BlackBerry and AWS engineer have been working very closely to jointly build the platform. Under the terms of our agreement BlackBerry will own all the commercial relationships with customers and we share revenues with AWS. Each side contributes the key capabilities required. On the BlackBerry side BlackBerry QNX brings over 20 years of auto industry experience, as well as relationship, as well as a huge footprint of over 175 million cars. We are a trusted leader with a deep knowledge of automotive safety and security software system. AWS is the world’s largest cloud provider with a vast developer community and outstanding expertise in consumer experience, interfaces, as well as IoT. Combined, we’re able to provide a full end-to-end platform. We expect an ecosystem of apps and services developed on the BlackBerry IV platform over time, we will work with AWS a proven builder of successful developer communities to help drive the process. With BlackBerry IV, we’re creating a recurring revenue data business -- recurring revenue model that is targeting revenue on a usage, as well as the subscription base. An important difference between BlackBerry IV and competitors in this space is that we allow the OEM to own the data and with that the relationship with their customers. We already in discussion with some automakers who were granted early access and we have received positive initial feedback. The target is to be in the 2023 auto model -- 2023 years model with possibly potentially some professional services apply to it. While it is too early for us to provide a revenue outlook, we are confident that BlackBerry IV addresses a very large market opportunity that will greatly increase our ASP. With that, let me turn the call over to Steve to provide more details of our financial performance.

Thank you, John. My comments on our financial performance for the first, sorry, for the fiscal 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 non-GAAP total company revenue of $224 million and GAAP total company revenue of $218 million. Third quarter total company gross margin was 70%. Our non-GAAP gross margin includes software deferred revenue acquired but not recognized of $6 million and excludes stock compensation expense of $1 million. Third quarter operating expenses were $142 million. Our non-GAAP operating expenses exclude $32 million in amortization of acquired intangibles, $11 million in stock compensation expense, $4 million for software deferred commissions expense acquired and $95 million fair value adjustment on the convertible debentures, which is a non-cash accounting adjustment driven by market conditions. Third quarter non-GAAP operating income was $14 million and third quarter non-GAAP net income was $11 million. Non-GAAP earnings per share was $0.02 in the quarter. Our adjusted EBITDA was $31 million this quarter, excluding the non-GAAP adjustments previously mentioned. And I will now provide a breakdown of our revenues in the quarter. Software and Services revenue was $168 million. Software Product revenue remained in the range of 80% to 85% of the total, with Professional Services comprising the balance. The proportion of Software Product revenue that is recurring was approximately 83% due to product mix. The decrease in ARR this quarter similar to the prior quarter is primarily due to BTS. We include QNX royalties in our ARR metric to give a total company view. We expect to see the impact of COVID on ARR normalized early next fiscal year as we return to our normal revenue run rate there. Licensing and Other revenue was $56 million. Now moving to our balance sheet and cash flow performance. Total cash, cash equivalents and investments were $757 million at November 30, 2020, a decrease of $220 million during the quarter. This is mainly due to the early redemption of the $605 million of convertible debentures and issuance of $365 million of new convertible debentures on September 1st. This represented a $240 million reduction in debt financing, partially offset by cash generated in the period. Our net cash position increased to $392 million at the end of the quarter. Third quarter free cash flow was $27 million and cash generated from operations was $29 million, with capital expenditures of $2 million. That concludes my comments and I’ll now turn the call back to John.

Thank you, Steve. Before I provide outlook for the remaining of the current fiscal year, I’d like to highlight some noteworthy partnership in addition to the BlackBerry IV that we’re very excited about. This quarter we partnered with Zoom to provide a BlackBerry secure version of Zoom, which is highly secure way to hold virtual meetings in this still work from anywhere environment. It provides increased protection from corporate data leakage, as well as cyber threats. In the quarter, Verizon launch their business internet secure offering, which includes our BlackBerry Smart AV antivirus product and Cisco Umbrella Security Service. This new product is aimed at Verizon large number of small and medium-sized business customer. During the quarter, we announced the integration of AtHoc with both Microsoft team and ServiceNow platform. Team, as most of you know is the market leader in collaboration software, with over 115, 1-1-5, 515 million daily active user and the Now platform have 51% of the IT Service Management market. This integration will further enhance AtHoc reach and the ability of enterprise to protect their assets. I’ll now move on to our outlook. We continue to expect total company revenue for the year could be around $950 million, as we indicated last quarter. We expect licensing revenue will finish the fiscal year a little stronger than previously indicated. We expect revenue for BTS to continue to grow sequentially in the fourth quarter and as we talked about as to return to its normal runway early next fiscal year. This quarter we continue to make good progress. We deliver solid financial as per our outlook. We develop exciting new business model, the recurring revenue model for QNX, as well as partnership which I outlined and we deliver industry leading products as per our roadmap. With that, I’d like to turn the call over to our Operator to conduct a Q&A session, please, David?

Yes. [Operator Instructions] Our first question today will be from Daniel Chan with TD Securities. Your line is open.

Oh! Hi, Dan.

Thanks for taking my -- hi. Thanks for taking my questions. The -- I don’t know if you guys mentioned it, but if I missed it, did you provide a metric on the billings growth?

No. We did not. We really missed it. We haven’t provided that.

Okay. And then on the ARR declining, Steve, you talked about how it’s declining because of BTS. Can you just remind us what you’re including there from BTS and why that’s causing it to drop?

The numbers -- go ahead. Go ahead. Go ahead, Steve.

Sure.

Yeah.

So the -- we -- our ARR is a total company metric, well, for Software And Services. The QNX part of it, we include -- it’s basically a trailing four quarters that feeds into that metric. So there is a lag affecting. So it’s got, but with the COVID impact that we’ve been discussing, consistently that’s got a lag effect making it back into the metric as we move forward and recover.

Dan?

Next question comes from the line of Mike Walkley with Canaccord Genuity. Your line is open.

Hi. Hi, Mike.

Hi. Thanks. Hi, John. Thanks for taking my question and good…

Sure.

… swishes to everybody on the call for the holiday season and to stay healthy.

Yeah. You too. You too.

Yeah. Thank you. Yeah. Just a question for me, just building on IV, lots of interest and excitement around it. I know you’re not sizing it yet, because it’s early days, John. But as you’ve shared longer term getting to kind of ASPs in the high-teens to $20 per car, how does this help close the gap that things go really well? How do you see ASP for car developing over time.

As I said, we don’t really have all our kind of the revenue laid out yet, because the earliest will get the revenue, I believe is the model year 2023. So we do expect this to help close the gap in a very or increase ASP in a very big way. It has to do a lot to do with not only the base platform to collect sensor datas and analyzed it over the edge and into the cloud and OEM could then take advantage of all these sensor daters and the combination of those sensor datas to make certain decisions and -- either real time or in the long-term. But it also depending a lot on how many application could we spin up. So an OEM is going to build the application, the Tier 1 will build the application using our platform and so will other third parties. So if there are more applications, then obviously there are more instances that could increase our ASP per vehicle. So we’re very hopeful that this not only have a recurring part of it, but it’s also bringing us a good chunk of revenue going forward.

Great. Thanks, John. And just my follow up question kind of longer term also with BlackBerry, you guys have launched several new different software security modules. As you look at your sales force, what are they feeding back to you in terms of their ability to land and expand customers? What are they leading with and what are some of the upsell opportunities that they’re excited about with the new modules that you’ve launched over the last several quarters?

Yeah. So, first off, on the product side, our cybersecurity suite is a very timely offering to the market, because of all the hacks and the vulnerability is going on right now. We have been invited to more cases nowadays because of the environment and the attention switch to cyber protection and all the hacking that’s going on out there. So, for example, knock on wood, we haven’t been successfully, I guess, intruded yet. That’s not to say this is not a challenge. This is just to say, the state of the affair at this point. So on a medium-term, when we -- our sales force are very focused on upgrading all our UEM base, which accounts for depending on who you listen to of -- in terms of analysts -- industry analysts is somewhere between 9% to 12% of the market shares of UEM space. So we are very busy upgrading that. So they sell them the UES on top of UEM. And then very soon and literally we’re talking in months, we will release our UES platform on to the competitors UEM, HR Intune, Mobileye, AirWatch and IBM MaaS360. Not all at the same time, by the way, sequentially. But we’re probably going to start with Microsoft first. So that’s another aspect of it. And the fact that we are -- so that’s the part -- that part of the cybersecurity play. So that should keep us busy for the next couple of years and give us a lot of opportunities going after the market.

Okay. Thanks. And just one last question, I’ll pass the line, just on the UES, you’re going to other UEM platforms. What is the feedback or interest level for that? Is CDC even able to offer those similar capabilities for the mobile market?

The interest levels are reasonably high. I mean, I don’t have a specific quantitative answer to your question. But when I speak to customers and make groups of customers at the same time, they all think that makes sense. It gives them an ability to protect their current investment, whoever, whatever UEM that they already invested in. If you’re happy and comfortable with your pros and cons on each of the vendors about this data and then uses BlackBerry Security, which we believe is the best of the bunch in terms of technology and I laid out all the certification we got from governments and so, obviously, we have the best technology in protection -- in cyber protection. So that gave them the best of all world without having to rip out the investment, which of course, there’s no -- there’s a no big hurry to do that even if they wanted to do it in a long-term. So that -- this helps to add value to what they have and keep their investment. So everybody’s happy about at least at their choice to look at.

Great. Best wishes for the year and thanks for taking my question.

Sure. Thank you.

Your next question comes from the line of Trip Chowdhry with Global Equities Research. Your line is open.

Hi, Trip. Hi, Trip.

Hello, John. Hello, John. This is -- this quarter was phenomenal, both from execution point of view and from partnership point of view, two strongest companies, Amazon, AWS and Zoom. My question is more on the IV platform. When do you think that developers can get a hand off of pre-alpha versions so that the excitement in the developer community is very strong and I was hoping that, they could start capitalizing the imagination on your platform sometime in 2021? Do you think that reasonable to expect?

I -- good question. Thank you, Trip. I know that we will have a beta version be ready in third quarter next year, third quarter, our quarter, sorry, our quarter, third quarter is a September -- September day. We will have a developer version. We’re hoping to have a developer version before that. So I would say, be safe to say that about mid-year next year, the application provider will be able to lay their hands on that.

Beautiful. And also in terms of some OEMs, EV OEM, you did not name them. If possible, can you name a few that you think we can keep an eye on as we move forward and see what kind of applications and how they’re embracing your platform?

Well, I don’t think they will appreciate me naming them. And my -- and so -- but I would say this, the initial groups of company that we have been in contact with and have gotten positive feedback it’s in a group of about 20 people, 20 different OEMs. So obviously that -- not all 20 will sign up, but I will commit to the following thing. As we are getting customers sign up, we will try to make a public announcement when, obviously, the customer has to agree to it. Both Amazon and us are very excited and have -- I was very busy in making presentation and getting strong feedback today.

Beautiful. Congratulations and all the best.

Thank you.

Next question comes from the line of Paul Treiber with RBC Capital Markets. Your line is open.

Hi, Paul.

Hi, Paul.

Hi, John. Good evening.

Good evening.

A couple of follow up questions, on the Amazon relationship, I know you’re not giving details on revenue. But could you speak to the details of the partnership itself, in terms of new the duration of the exclusivity period and then maybe the magnitude of Amazon’s commitment for co-development and co-marketing? And then also related to that, the agreement allow you to open it up from Amazon to other cloud providers at some point in the future?

Yes. So we agreed on multiple number of years that we will be exclusive with using like -- using the Amazon Cloud and developing that product. They will be exclusive with us. They will not market or develop with any other party with the same in the auto sector and in the same area of data platform, analytical platform. So it’s a very broad agreement. It does allow us to open it up for other clouds. But we probably won’t do that until this particular one is done. Not meaning the exclusivity is done is at least that the product out and presenting to the customer. It’s a co-development and co-marketing agreement, exclusively in both dimension. And as I pointed out, BlackBerry will hold a commercial relationship, meaning that we will transact the deal with the OEM or the Tier 1 or the application provider will lean on the help of AWS to get the ecosystem up and going with us. They have a lot of engineers assigned to this. If you will, I will refer you to a number of keynote speaker at the AWS Reinvent Conference. It’s public information. On starting with Andy Jassy, the CEO and how he describes our relationship with AWS, as well as the Head of the IoT, where he made his keynote. He specifically spend* quite a bit of time on how this particular -- this relationship. So you can see that they are very serious. This seriousness not only come from the cloud side, but it comes from the IoT side also at Amazon.

All right. Thank you for those details. Very interesting. Secondly, I’m just -- looking at the transition to work-from-home globally and all the uptake of various cybersecurity and other applications. How do you see BlackBerry benefiting from that? And then also -- or how high BlackBerry benefited from that trend? And then could you dovetail that against the net revenue retention in the quarter, how -- what’s been driving the net revenue retention? It fell, I think a little bit in the quarter versus it’s transitioned to work-from-home?

Yeah. So I can only tell you that the UEM license, we’re doing well, in initially of the -- in a COVID-19 shutdown, because a lot of our customers wanted to expand their number of licenses to cover everybody to work-from-home and work remotely. As you know, most of our customers are large institutional, in the banking industry, as well as in the government. So the volumes are quite high at that time. Now, gradually, it shifted to two other areas. One in the secure voice technology area, I say, we work remote from home, both government and all the regulated industry sectors seriously looking at the secure voice and then the emergency alert systems. Now I think it’s used to be that are reasonably focused by user, have recently focused in the government space, but now the -- it’s now expanded to a medium to larger enterprise, where they want to be able to reach their employees and other constituents. So we see very good pick up in those areas that clearly is benefited from the unfortunately the pandemic situation, but the pandemic situation drove the realization of secure communications is very important. So there we see a lot. And then, of course, there is the indirect effect on Cyber Suite. Although, we just released the Cyber Suite, and as you know, we’ve been behind an EDR, but we believe we all caught up and we ran enough tests to show that. So you should see some revenue start coming from those area. So those are kind of the area related to the work from remote.

And just reading between the lines, the one you didn’t mention was legacy Cylance business. The -- so is that -- should we think that…

That’s part of the Cyber Suite, sorry, sorry, sorry. Yeah, sorry, that was a…

The net revenue retention the slight drop there, is that driven from just the older cyber -- the older Cylance products, you made some churn there?

That number is the total company number. So it’s not -- it’s not just the so called the older side Cylance product. It is a combination of our enterprise product.

Okay. Thanks for taking my question.

Sure.

Next question comes from the line of Todd Coupland with CIBC. Your line is open.

Hi, Todd.

Hey, there. John, good evening.

Good evening.

I just wanted to ask you about the Q4 outlook.

Yeah.

$950 so million for the year. So it’s a -- I don’t know, $20 million or so higher than where street is for the year, according to FactSet and then you call out IP being higher. So I’m wondering within that mix, will Software And Services be up sequentially?

Yes.

Okay. And can you sort of characterize.

[Inaudible] I always get a trouble with lawyers, when I answered that, it is my expectation and the current model that it is up sequentially.

Okay. And can you characterize sort of the puts and takes within that? I know there’s a few pieces in the bucket there, just expose that little for us on that?

Yeah. We believe secure communication will continue to do well. It’s a combination of AtHoc and SecuSMart. And we believe that UEM will be relatively flat. BTS will have a sequential up quarter and those are kind of the major pieces.

Yeah. Okay. And you’ve talked in the past about sort of COVID slowing new customers deciding, and as you are -- for -- I guess, enterprise decisions, just broadly, I know there were some other questions about this earlier. But as you are thinking about the next fiscal year, is there a enough loosening now sort of post the vaccine, et cetera, where you can start to see some of those enterprise decisions loosen up? Can you just talk about your thinking on that for the next year or so?

Yeah. Our assumption is they will loosen out and we are in the process of building out a new operating plan, our ALT [ph] for next year. So our assumption that it will loosen up and get back to normal. From the auto sector point of view, we already start seeing that. So we will start seeing it also on the commercial side. I am reasonably sure. Cyber Security is, like I said earlier, it’s a topic that everybody wants to talk about and so we have to kind of double down that ourselves in terms of reaching the marketplace and we have along a number of products and channel programs and which I didn’t put. But in the interest of time, I didn’t put it in my script, but we have a very robust channel program that combined the Cylance and BlackBerry channel program together. So there are a few things that we’re doing with the leap will both see the growth and be able to execute for the growth next year.

Okay. Last question, it’s -- I guess, it’s not really stock specific to certainly my thesis, but just curious, you’ve seen a few major tech companies come out, and say, back to the office by September, work three days in the office, you can still work-from-home? Have you decided how you’re thinking about BlackBerry from that perspective once that opportunity is there?

No. We have not decided. September of next year seems really far away. And although we could say, we would have been talking -- we will be speaking at least another few times…

Yeah.

…before that. So -- but we’re open -- we’re open minded. I’m an applicator. I’m an old fashioned guy. I’m an applicator that we should be together to build a business together to build a team. In person, that’s just me. But I also recognize the fact that, there is some reality and there are people who would like the flexibility. So as long as it doesn’t lose productivity, I’m willing to try a couple of things.

Yeah. Okay.

Okay.

Appreciate your comments. Thanks very much.

Absolutely. Thank you.

Your next question comes from the line of Steven Li with Raymond James. Your line is open.

Hi, Steve.

Thank you. Hey. Hey, John. Just a clarification first, the $950 million outlook, that’s your non-GAAP revenue number. Correct?

Yeah. That’s a non-GAAP revenue number? Yes. Correct.

Okay. And you expect that BTS to grow sequentially and you said enterprise software as well to grow a little bit sequentially in Q4?

Yes. That’s what I said.

Okay. All right. And John on IV, do you see IV as a bit higher ARPU compared to some of the other modules or would you expect it to be in the same range?

Oh!. No. In terms of the ASP?

Yes.

Oh! I am hoping that is -- I’m hoping is higher than -- okay. In order to be fair, let me, maybe reset here for the following. So that our current module whether is hypervisors, ADAS, clusters, [inaudible], IDI ranges anywhere from the low single-digit dollars to literally high single-digit or double -- low double-digit dollars per module. So…

Yeah.

So that’s the range. I would expect this to be more towards the higher end of that spectrum. So when I said, oh, no, earlier, I was thinking about IDI. So this compared to IDI this will be a lot more.

Right. Okay. And then -- and but you will split that with AWS.

Yes. I will have revenue split with AWS. Correct.

Okay. Got it. Okay. Thanks a lot.

Sure.

I’d like to turn the call back over to John Chen, Executive Chairman and CEO of BlackBerry for closing remarks.

Well, thank you. Thank you, David. So thank you very much everyone for attending today’s call and I know it’s a -- this is -- we have to say now on your own early evening, most of your early evening if you’re on the East Coast. I apologize for that. But I am sheltering in the West Coast, and B, we had our Board meeting today. So this is one reason why we’re doing it at this hour. I hope not overly inconvenient to you all. Before I sign off, I’d like to wish you and your family a very safe and happy holidays and I hope to see each and every one of you in person next year. So with that, have a good day. Thank you.

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