BlackBerry (BB) AGM 2025 - Full Coverage

Good morning and welcome to the BlackBerry annual and special meeting of shareholders 2025. During the meeting, all participants will be in a listen-only mode. We will be facilitating a brief question and answer session towards the end of the meeting. I would now like to turn today's call over to Mr. Dick Lynch, chair of BlackBerry's board of directors.

Thank you very much and hello everyone. I'm Dick Lynch, chairman of the BlackBerry Limited Board of Directors. On behalf of the board and management, it is my pleasure to welcome you to the company's annual and special meeting of shareholders. I will serve as chair of today's meeting. We are hosting our meeting in a virtual-only format through a live audio webcast, which we've found to be more inclusive—many more shareholders have been able to join us virtually than at past in-person meetings. Phil Kurtz, the chief legal officer, will act as secretary of the meeting. Phil is joining me today, as is our CEO John Giamatteo and our CFO Tim Foote. Following the formal business, John will provide an update on BlackBerry's strategy and performance, and then he and Tim will address shareholder questions. Reflecting on the past year, our management team reached for significant improvement and delivered improvement in every facet of our business. The trajectory has been positive and we are still very much on track for continuous progress going forward. We truly have two virtually autonomous business units under a thin corporate layer. With the sale of Cylance, we formed a profitable Secure Communications business unit. Our IoT business unit has been renamed to highlight QNX, a very positive and healthy asset. We are well positioned to take advantage of other strategic opportunities. Our executive team has been renewed and strengthened, with a smaller and more nimble corporate component. I am pleased to announce we recruited Lisa Bahash to join the board. Lisa has experience in the automotive industry and has replaced Mike Daniels, who resigned during the last year. We want to thank Mike for his contributions and wish him well. In summary, the board, management, and the whole BlackBerry team are excited about the direction of the business, and we believe the company will continue to show strong improvement positioning BlackBerry to be best-in-class. I would now like to call this meeting to order and ask Phil to go over the procedures and items of business from the meeting.

Okay. Thank you, Phil. As there is no further business to come before the meeting, I declare the formal part of the meeting to be concluded. John will now make some remarks about the state of the company. John.

Good morning, and I'd like to thank you all for joining us today. I'd like to walk you through the notable progress we've seen over the past year and why BlackBerry is better positioned to make an impact in the market than it has been in a long time. This has been a transformational year for BlackBerry. Early this past year, we made the fundamental decision to focus the company on two virtually autonomous divisions. Why was this fundamental? It created clarity and focus. At our annual investor day last October, we shared real transparency into the financial health of our two virtually autonomous business units. The strategic decision to divest ourselves of the Cylance business to Arctic Wolf has allowed us to remain laser-focused on our two new and profitable divisions: QNX, formerly IoT, and Secure Communications, formerly BlackBerry Cyber Security. It has also provided us the chance to outline our key strategic priorities for the future. I'd like to review five key components of our transformation. First, we have strengthened our portfolio with the relaunch of the QNX brand. QNX software is the clear leader in the automotive software industry, powering over 255 million vehicles worldwide. QNX is essentially the foundational operating system that powers your car, providing next-generation mission-critical safety systems. I'm incredibly proud that we work with all of the top 10 global automakers and 24 of the top 25 electric vehicle OEMs. We are also seeing good demand beyond automotive in general embedded industries like robotics and industrial technology. The sale of Cylance has also allowed us to focus on what BlackBerry has always been known for: secure communications. From BlackBerry UEM to BlackBerry AtHoc to SecuSuite, our heritage of security, trust, and innovation shines through. Our Secure Communications division works with all G7 governments and the majority of the G20, eight of the 10 largest global banks, and is the number one provider of critical events management software to the US federal government.

Second, let's look at the improving and stabilizing fundamentals across our business. For QNX, this manifests in our royalty backlog—a key indicator of estimated future revenue. When we achieve a design win with an automotive partner, we expect revenue generation for around seven to ten years. Over the past two years, this royalty backlog has grown substantially from $460 million in Q4 of fiscal year '22 to $865 million at the end of fiscal year '25. Needless to say, this is something we are extremely excited about. On the Secure Communications side, annual recurring revenue and dollar-based net retention rate are both healthy and continue to show steady improvement. Thanks to QNX's year-over-year double-digit growth and a highly defensible competitive moat built on decades of experience, we are on the path to becoming a Rule of 40 division. Our Secure Communications division is more than just a stable business generating positive adjusted EBITDA—it's a cash generator we can leverage to fuel higher-growth parts of the business. Third, we are focused on proactively creating a more resilient earnings profile. Over the past year, we reduced our global office footprint by 14 locations, consolidated global R&D presence by 50%, and reduced cloud infrastructure spend by 38% year-over-year. As a result, adjusted EBITDA improved $54 million year-over-year to $39 million in fiscal year '25. Fourth, we achieved positive operating cash flow for the first time in three years in Q3 of fiscal year '25, one quarter ahead of expectations. We reduced gross debt by $165 million with no debt maturities until 2029. Finally, we will continue to leverage BlackBerry's great people, brand, and financial foundation by prioritizing organic investments in growth segments, primarily QNX. In the medium term, we'll look to be opportunistic with tuck-in M&A to accelerate QNX growth, diversification, and expansion into adjacent markets.

Transformation is a journey, not a destination—one marked by milestones of progress along the way. For QNX, the journey continues with urgency and precision, strengthening our go-to-market strategy to take advantage of expanded opportunities in the general embedded market, leveraging new product investments in our next-generation SDP 8.0 auto platform, Cabin, sound technologies, and accelerating our path towards a Rule of 40. In Secure Communications, our mission is clear: fortify our portfolio as a reliable source of EBITDA by delivering purpose-built mission-critical solutions that governments and critical infrastructure providers rely on. At a corporate level, in addition to the share buyback program, we will continue to diligently manage cash flow and profitability while looking for opportunities to operate as efficiently as possible. This past year has been transformational for this great company. Together, we'll keep pushing boundaries, embracing change, and driving value to write the next chapter of this extraordinary journey. The road ahead is bright, and we intend to walk it with purpose. Thank you.

Okay. Before we address questions from shareholders, Tim will provide details of protocols for the question period. Tim.

Thank you, John. We will now address questions submitted by shareholders and their proxies who are in attendance on this webcast for approximately 15 minutes. Shareholders and proxy holders have had the opportunity to submit questions in advance and can do so now using the instant messaging function on the portal. As a reminder, we are unable to receive questions from guests who have not logged in with a control number or username. We will answer as many questions as time permits, and before answering we will read out or summarize the question. Questions that are redundant, offensive, not primarily related to our business, or otherwise out of order will not be addressed. Okay, we have a question here. The question is: when is there going to be a return on investment to shareholders? I have been a shareholder for more than 12 years and have not seen any significant return in that time. Meanwhile, executives and directors of the company continue to be compensated very well.

Well, I'll start. The entire management team, the entire board, is 100% focused on driving shareholder value. A lot of the actions and decisions and the transformation that we've been on over the course of the last 18 months is certainly moving in that direction. When you look at all of our indicators of how the stock has performed over the course of the last 12 months, the last 6 months, the last month, we're certainly guiding all of our decisions around maximizing shareholder value. Please know that's top of mind for myself, for the leadership team, and for the entire board.

Okay. We have no further questions at this time. So that concludes the Q&A session. I'll now turn the call back to Dick.

Okay. Thanks very much, Tim. That ends today's meeting. I want to thank everyone for attending. We look forward to welcoming you again at next year's meeting. This concludes the BlackBerry annual and special meeting of shareholders 2025.