Please note that all participants have been placed on listen-only mode. I would turn the call over to Debbie Tuck, VP of Finance and Head of Investor Relations for BlackBerry. With me on the call today are Executive Chairman and Chief Executive Officer, John Chen and Chief Financial Officer, James Yersh. After I read our cautionary note regarding forward-looking statements, John will provide a business update and James will then review the fourth quarter results. In order to let as many people as possible ask questions, please limit yourself to one question.

This call is available to the general public via call-in numbers and via webcast in the Investor Relations section at BlackBerry. A replay will also be available on the BlackBerry. 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. 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. 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.

Good morning everybody and welcome. This morning, I will take you through the summary of our Q4 results as well as the highlights from our fiscal year, then I will provide more details on the main area of our business focus.

Our overall Q4 performance was reasonably good. We made progress on all our strategic priorities. I like to remind everybody what they are. First and foremost is to grow our software business faster than the market. Two, we are going to get towards a profitable device business. And third, but not last or last but not least is to continue to generate positive cash flow. In fact, on the first one, we have more than doubled our software business growing faster than the mobility software market.

We increased our overall gross margin and continue to generate cash, and we made significant progress in moving our device business towards profitability, which I am going to talk a little bit, and James and I both will talk about that later.

In all, but one area, we were in line with or ahead of our key business metrics and the metrics in the analyst model. The one area of shortfall was in hardware revenue, which declined from last quarter and I will talk about plans to address this later in the call. On the plus side, we reduced a loss in hardware, a key positive device gross margin and average selling price was steady from the last quarter from Q3.

As I mentioned before, software was clearly the highlight in Q4. We are increasing in both scale and gaining market share, and consistent with the strategy we laid out. Like in Q3, growth in software more than offset the decline in SAF revenue in the quarter.

This of course exclude the BBM consumer revenue. This is more than double the amount compared to last year.

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We have multiple growth engines in software and I continue to expect above market growth in FY Now, a summary of our Q4 results. All the number I use is non-GAAP. As usual, James will take you through the financials in much more detail. In FY16, we achieved some significant business accomplishments. I would like to point out some of the highlights. Software orders were over 10, enterprise customers.

We completed the acquisition of WatchDox, AtHoc, Good Technology and Encription to drive the cross-platform software and Internet of Things strategy. We launched two new devices, Leap and Priv. Now, let me provide various details on our key businesses starting with the hardware.

Our strategy call for a profitable device business and I am encouraged at least by the progress we are making here. At the same time, our device volume would be low as our expectations. The softness in the high-end of the smartphone market is certainly a headwind. So the main reasons, the main issues that we face, issue that we need to address is the distribution. As planned, Priv is now available in 34 countries, up from four last quarter.

Unfortunately, contract negotiations took longer than planned with certain major carriers, including Verizon. It pushes the Verizon launch out of the quarter. However, Priv continues to receive very positive review and net promoter scores. Our value proposition that is to offer the most secured Android smartphone for the enterprise is actually quite strong. We believe this market opportunity, whilst maybe small today, we continue to develop and open up, and we are leveraging this through increased channel coverages.

Here are some things that we are working on. With March, we launched Priv with Verizon Enterprise in all 1, plus retail store. We are working on six more countries and 14 more additional carriers. In the last week, we formally launched in Japan, and next week we are planning to launch in Mexico. We are also focusing on expanding the e-commerce channel and ramping up enterprise direct activity for Priv as well as for BB A word on our overall device roadmap.

We are planning our Android Marshmallow release, known as the M release for late April, early May. On BB10, the With the official release pending technical acceptance targeted for mid-June, we are waiting on the certificate testing and this is a little outside of our control. From a financial standpoint, we have made significant progress on margin improvement and moving the business towards profitability.

In fact, in Q4, we reduced our device business operating loss by half from Q3. We are still on track with our plans falling for achieving device business profitability some time in this fiscal year, FY Moving on to the enterprise software, as I noted at the beginning, our software business is performing well and we are gaining share. There were a number of deltas when we first set this goal in November So this milestone now shows the scale and the traction that we are achieving.

In addition, we landed 3, customer orders in Q4 giving us over 10, customer orders for the fiscal year FY We also had further wins with Dell, CommonWealth Bank and Rabobank.

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The Good Technology organization is now fully integrated in BlackBerry, and our go-to-market functions are operating as one. In addition, we are now delivering BlackBerry level customer support to Good customers.

Well, all customers are good, but Good customers, which has been very well received. In January, we launched five secure Enterprise Mobility Management, a management suite, combining the best of breed capabilities from BlackBerry and Good Technology. These suites provided a secure mobile platform for messaging, collaboration, application enablement, device management as well as content management.

The customer feedback since we launched this week has been extremely encouraging and positive, besides they were amazed that we were able to do it so quick after the coming of the two company together. With that we won 90 — we have 90 wins in the first 60 days of the release. I also want to emphasize that these integrated suites are important for our cross-platform story. We are seeing this resonate well across our customer base as well as with the analyst communities. To accelerate adoption of the suite, we are expanding our professional services practice by adding additional billable resources.

Looking forward, we feel very good about the outlook of our software business. We have multiple growth engines in place, I count total of 5. I will give you some quick recap here. Secure messaging and content management came from our acquisition of AtHoc and WatchDox are now fully integrated also provide us differentiation as an entry point to new customers and new verticals.

Third, which is a major focus of this year, the strength of our QNX business, especially in automotive helps drive growth in the IoT. I will give you some data points. The QNX kernel is embedded in over 60 million cars around the world.

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At CES, in the beginning of the calendar year, we launched new capabilities in advanced driver assist system, ADAS and the vehicle to vehicle communications. Some of you might have seen it on the CES floor.

These innovation demonstrate our commitment to the connected car and autonomous driving technology.

We also launched our latest IoT initiative, our assets tracking box branded as BlackBerry. Radar, which we just announced yesterday and demonstrated at the Mid-America trucking shows. We are starting a pilot program and there are already a number of customers signing up to do that. The general availability of this product is in summer of this year. Four, we form a cyber security consulting practice to build on our security heritage that include the experience in managing hundreds of millions of mobile endpoints.

We made an acquisition and announced that at Mobile World Congress, a UK-based company by the name of Encription Limited. This help accelerate the effort as well the effort supporting this practice together as well as supporting our auto and IoT initiative. This practice combined with our existing security offering will address strategic and technical security, the latest cyber security threat and risk mitigations. Of course, we are going to use both our internal resources and then try to leverage a lot of the system integrators and partners around the world to deliver the services.

Last, but not least, we did not generate — although we did not generate any IP licensing revenue in Q4 as we have predicted in Q3, we are working on building a base of recurring IP revenue.

So with these five growth engines, we do expect to grow faster and pick share in the markets for mobile, software and services. We have been ramping up investment in all these areas in FY16 and we will continue to do that in FY We expect quarterly software and service growth to exceed the decline in SAF revenue cumulatively over the full year.

I would now turn the call over to James for a detailed look at the financials. Thank you, John and good morning everyone. Our non-GAAP income statement presentation exclude making quick money with penny stocks accounted deferred revenue write-down, debenture per value adjustments, stock compensation expense, restructuring program charges, amortization of purchased intangibles and business acquisition and integration charges.

My comments going forward on our financial performance for the quarter will be based in non-GAAP terms unless otherwise specified.

For reconciliation between GAAP and non-GAAP numbers, please see the earnings release and supplement published earlier today. Now let me begin with the income statement. We recognized stocklands rockhampton christmas trading hours 2015 on roughlyunits in the quarter.

Hardware volumes and revenue declined from last quarter, yet we delivered solid results overall as our gross margins on future shop call of duty ghosts trade in deal improved in the quarter and at an operating income level, we cut the loss in hardware by half compared to the prior quarter. Turning to margins, gross margin was Gross margin increased sequentially due to strong performance in software and services.

The reduction in fixed royalty costs, slightly offset by low hardware volume and continued decline in SAF also helped gross margins in the quarter. Our model reflects a australia usd exchange rate history margin in the mid-to-high 40s for the next quarter. As a reminder, this non-cash adjustment to the debt has no impact on the face value, on our liquidity or on our operations and cash flow.

Now binary options interesting articles onto the balance sheet and our working capital performance. This reflects the increased investments we made in working capital leading up to the Priv launch. This is our eighth consecutive quarter of positive free cash flow.

Looking forward, we expect to maintain our positive free cash flow and positive EBITDA for fiscal Okay, well thank you James. I expect continued gain in market share at that level; I also expect quarterly software and service growth to offset the decline in our SAF cumulatively over the full year. Work remains in the device to drive higher volume and we have plan to accomplish that.

The path to profitability however in device looks quite reasonable. To provide transparency on our progress, we plan to report a multiple operating segment known as segment reporting including device as one segment, software services as one and SAF. We expect this to begin reporting in the basis starting in this fiscal year, FY Your line is now open.

And then just quickly on hardware, if you can just help us understand the cost structure, how much of the cost structure is now related to hardware and how strategic you think that is because you can obviously grow your soft business - software business even without the hardware? I just took your software revenue from the quarter and then annualized and multiplied by four --and you obviously did acquisitions through the year Yeah, I think that might not be the most accurate probably because while now A, we are pushing more modest subscription B, there is a - what do you call that, not a timing but seasonalization sectors and I don't think you take that number and multiply by four and then you said [indiscernible] assuming there is seasonalization assuming we are even pushing harder onto subscriptions.

In fact, I would tell you, my plan of the IT number is actually lower than the IT numbers what we see in FY So, that should give you a general idea. Truly I believe it's truly organic. There are no segment of the market that are growing less than like in the So everything else is about that. And then John just to the other part of that question. You can obviously grow your software business pretty strongly in your EMM business without sort of significant hardware growth.

So I guess I'm just curious how strategic that is to you? My goal is, I mean my plan is always been I wanted to get to a break even or better device business.

It does have some tied in, a number of our major accounts for example, especially in government so, they actually buy both the hardware and the software to create a more robust and more secure environment.

So, there are some tie in, I would agree in general industry side maybe not as much of a tie-in. So there are some relationships - you're right, right now the number one focus that I have or the company now has is to continue to ramp ways to invest and make money fast software and canadian stock brokerage comparison program.

And our next question comes from the line of Daniel Chan from TD Securities. That's a good question I'm not really prepared to talk about, first of all I would say moral investments stock market beginners I agree with what you said. I too are looking at a more of a midrange profit-owned type of devices with good security for Android.

But I'm not prepared to make an announcement as such. The first thing I want to do is to get my cost deflation and expenses and capabilities line up correctly in the device process.

As you all know and I said many times if we - despite of all the efforts that we put in, if we cannot make money on the device business and it become a burden due to consolidation then 10 price action trading for binary option will have to get out of that particular business but that's not a big secret, I say it.

I say it and that hurts me how much money does roger federer make in endorsements front of the customers. A lot of time I go to show to a customer, they keep wanting me to explain that but I think I explained it as a reasonable good business person and that people get it. But I still believe that we have a shot at it, hopefully I'm not naive but we do have a pretty good plan with multiple engine firing at the same time.

That's where we are. But we will have to take - you hit it right on the nose. One of the problem that we ran into in the last quarter, people does like our Priv but there is a much more limited audience in that particular market that segment seems to be quite saturated at this point.

Our next question comes from the line of the Tim Long from BMO Capital Markets. Your line is open. Just one clarification and then a question for you. Just want to understand the revenues from software. I think as I understood it for the full year that revenue growth should be higher than SAF decline in absolute numbers, I mean running my math I would seem like the SAF revenues would go down a lot less or have to go up, am I missing something in the interpretation of that comment.

And then on the just wanted to talk about all the new customers who moved to some of these integrated suites. Could you talk a little bit about deal sizes and what are you seeing with these integrated deals, are you seeing a meaningful move up in revenue opportunities with some of these newer customers?

Thanks Jim, this is James. So ultimately that's been our objective all along. So the answer to the question, actually the suites are quite encouraging. The average transaction rate has picked up I am seeing high six figures, seven figures deal but cautionary note is that usually is subscription base for multi-year.

So, we're going to have to take it on a monthly basis, but it's quite encouraging. Our next question comes from the line of Ben Bollin from Cleveland Research. James, I wanted to start by looking at the last question, you talked about coverage of the SAF decline. So where the delta in terms of the coverage and then Should i buy bbry stock have a follow-up.

Okay, then go back to one of my last answer. Duration usually is two to three years. There are one-year deals but they don't tend to be dominant, they are usually two to three years, three years renewal cycle very common. So that's point number fine one. And good technology usually tends to have a higher percentage of the recurring revenue.

And BlackBerry used to be more perpetual base or term license maybe I should say. And of course at the same time upsell them new capability like the suites trading mechanism of nepal stock exchange provide professional services for migration for the cross platform migration.

So that's basically a strategy. We do, should i buy bbry stock some perpetual licenses but really almost at a instance of the customers.

Our next question from the line of Paul Treiber from RBC Capital Markets. Looking at the software revenue growth exceeding the decline in SAF, how should we think about the profitability, the EBITDA profitability of those two businesses over the year? They are actually reasonably comparable. So, because I do have a lot of infrastructure supporting the SAF.

So it doesn't come as pure margins and our software because we own a lot of software, we sell them to third-party - we sell software only a couple of them, [indiscernible] so other than that so our margins are reasonable, so they are very comparable. And Paul and also remember just that the infrastructure that John talked about also involved in delivering some of these enterprise services too.

So, one of our task of course is to make sure its sufficient but there is kind of a reuse for that functionality from SAF across to the new services as well. So we should think as a mix shift from software to -- or from SAF to software, the profitability would be essentially a wash as that mix happens? Very similar, yes correct. Since day one, I have always been since I cannot stop the SAF from declining given all the dynamics out there.

I have always been very focused on replacing the SAD revenue and eventually go the other way because the SAF revenue will come down. And so that's always been my strategy and then fortunately, luckily Q3, Q4 we made that happen and I hope to continue on. Just one follow up just in regards to the hardware business. Has the hardware at the breakeven point for hardware declined from the 5 million units previously indicated?

It's roughly about three now. It all has to do with the ASP, right. Its 3 million units, or so ASP that we experienced. So I mean, as we move downstream which we want to occur in compensation that I have to increase that sales but my problem really is more on the channel.

And their audience we need to ship to their enterprise audience more so and that's what I'm working on. Our next question comes from the line of Rod Hall from JP Morgan. Just a couple of things to clarify and then a question. I just wanted to see on the software revenue can you guys talk about the Good plus AtHoc revenue for fiscal Q4 against any kind of idea how big that was just so we can calculate underlying organic revenue there more easily?

Here is a thing, I will give you a number because we kind of expected on this fall people would want that organic number. I would give you a number but I have to first explain that we completely integrated and we have common customer base. We basically have a combined suite with a base platform and five offerings. So with that and so I would hopefully appreciate the fact that there is no special SKUs to identify is this from the old or is this from the new.

So -- but I know that that would not satisfy any one of you guys. And then the other thing I wanted to ask, John, is you made this comment in the response to the last question that you were thinking about distribution.

You talked about distribution a couple times. Are you saying you want to go outside the carriers and just go direct to the enterprises and distribute these devices or what is it you're doing with distribution exactly there because it seems like it would make sense to go direct to enterprises, but--?

So, some of the carriers, so -- great questions. We have a history that are very much tied to the retail side of the carriers. We do a lot of emphasis on that where everybody is really trying their best and I mean it everybody.

And slower than I like obviously, so but they all have the enterprise arm. And we seem to have, in very selective, this is extremely early, some reasonably good example of wins in the last quarter, so we just did it in like literally the last month. Seems to be a strong amount of interest for us to do that. And I want to extend that answer to one other thing.

Notice that we are putting together a professional services for both security services like intrusion detection and management of that as well as helping people to move on the cross-EMM platform. Two professional services organizations are being built up right now in the company and the pipelines are very, very good.

And then I know it's three questions, but I wanted to double check with you on this Foxconn deal. Is that still a big part of the getting to profitability or do you feel like that's kind of popped out now in terms of the proportion?

I know you've been reluctant to give us the proportion of units, but if you can give us any idea how big that is in terms of relative units, just be curious?

In fact, people still want the classic. But maybe we can work on something else with Foxconn. The financial arrangements works for both sides and there are other ODMs will offer us the same thing now.

So that environment has completely changed and I thank Foxconn for leading the charge with us when I first joined, but now other people are doing the same thing with us now.

And then I've got one quick follow-up? QNX in fact, our people are calm on design wins. So as I added more modules to it, we will get more royalty going forward.

How much of that is traditional maintenance that is up for annual renewals? It really is a subscription based count. One quick follow-up, sorry. Just on the EMM business, you mentioned it before. How significant is the government as a customer percentage-wise?

That may be even higher, I mean higher than actual. And our next question comes from the line of Steven Li from Raymond James. Does that sound about right? So we want to try to ballpark. I think it sounded low to me.

I can follow up. And then James, in your prepared remarks, you said hardware losses, you cut it in one-half. Does that fully reflect the fixed royalties step function decline or is there more to come? Even as we know, we -- the one particular deal took us to the end of December, calendar So conceptually there is one more month for that benefit to come in to Q1.

And our next question comes from the line of Michael Kim from Imperial Capital. Hi, good morning, guys. You talked a little about the strategy around expanding into the cyber security service and professional services with the Encription acquisition, maybe more specifically how you think about scaling that business globally, given the shortage in skilled talent, and Encription had somewhere around 40 folks?

So the reason why Encription is important to us is first of all, their main customers are basically UK, government agencies and we could learn a lot about from them about the process of delivering that. In addition to that, my IoT strategy, in order for IOT to move forward that we can offer more to our customers, we really do need to have a security services and certification program that our customers are more than willing to pay for.

So those two are my immediate focus. We do have a security -- a pretty big security team actually quite close to where Encription is physically. Our big security team is in UK. Our next question comes from the line of Vijay Bhagavath from Deutsche Bank. This is actually -- this is AJ Shrestha in for Vijay Bhagavath.

Just a real quick one from me. I just wanted to get some kind of a demand trend based on the geo current macro on the smartphone and PRIV.

Any kind of granularity would be great? So I think those are what we see a better demand than a different tier of the market. And at this time, I would like to pass the call back to John Chen for any closing remarks. Software services doing very well, teams are great. They are charged and energized and I think they will continue to do well on that. Have a good day. This does conclude the program and you may all disconnect.

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BBRY Q4 Earnings Conference Call April 01, Debbie Tuck Thank you, operator. I will now turn the call over to John. John Chen Thank you. TechnologyDiversified Communication ServicesCanadaTranscripts. Error in this transcript? Contact us to add your company to our coverage or use transcripts in your business. Learn more about Seeking Alpha transcripts here.

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