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BlackBerry Limited (NYSE:BB)
Q3 2020 Earnings Call
Dec 20, 2019, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the BlackBerry Fiscal Year 2020 Third Quarter Results Conference Call. My name is Jack, 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 toward the end of the conference. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes.

And I'd like to turn the call over to Christopher Lee, Vice President of Finance. Please go ahead, sir.

Christopher Lee -- Vice President, Finance

Thank you, Jack. Welcome to the BlackBerry fiscal year 2020 third quarter results conference call. With me on the call today are Executive Chairman 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 then review the financial results. We will then open the call for a brief Q&A session.

This call is available to the general public via call-in numbers and via webcast in the Investor Information section at blackberry.com. A replay will also be available on the blackberry.com website. Some of the statements we'll be making today constitute forward-looking statements and are made pursuant to the Safe Harbor provisions of applicable US and Canadian securities laws. We'll indicate forward-looking statements by using words such as expect, will, should, model, intend, believe, and similar expressions.

Forward-looking statements are based on estimates and assumptions made by the company in light of its experience and its perception of historical trends, current conditions, and expected future developments as well as any 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 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.

John Chen -- Executive Chairman & Chief Executive Officer

Thanks, Chris. Good morning, everybody, and welcome to our call. As a reminder, I will be using -- referencing non-GAAP numbers in my summary of quarterly results unless otherwise stated. Let me start.

I'm encouraged by our progress in the third quarter as revenue grew sequentially in all of our software businesses. The total company revenue was $280 million, growing 23% year-over-year. Total software and services revenue was $275 million. It grew to 26% year-over-year. This is a new record high for the quarter. We also record double-digit percentage building growth in the same period.

Software and services revenue growth, excluding Cylance, was 9% sequentially. Earnings per share came in at positive $0.03 and reported free cash flow was a positive $37 million. We continue to invest in product development and go-to-market to drive long-term sustainable growth.

Let's move into business segment and provide you some commentary. Let's start with the IoT business. IoT revenue grew 8% sequentially with an IoT, both BTS and ESS, the Enterprise Software Solutions, reported sequential growth in billings and revenue. In BTS, QNX, the largest part of BTS, continued to perform well. In the quarter, we had a total of 31 design wins, of which 11 were in the automotive market and 20 were in the general embedded market. Within the general embedded market, we're experiencing good demand in the industrial vertical. As noted last quarter, growth in the general embedded market has been a stated strategic objective and priority for us this quarter -- this fiscal year, sorry -- this fiscal year.

There were several very positive development in the quarter. They are aligned with BlackBerry QNX strategic goal of increasing ARPU and volume in the auto sectors. This development also extend our market leadership in automotive.

I'd like to share a few of them with you. First, I will highlight Hyundai Autron, a leader in electronic control software, has selected BlackBerry QNX for two design wins. One is in the ADAS design, which is advanced driver assist, and as well as the autonomous driving platform. This is meaningful because Tier 1 relation -- is a meaningful Tier 1 relationship that provides BlackBerry QNX an opportunity to work directly with Hyundai. Hyundai happened to be the sixth largest auto OEM in the world and its affiliate -- and we also could work -- extend the work with its affiliate for the first time.

In addition to winning the traditional OEMs, we are also winning with emerging smart-ups and I think -- thank you. This is quickest sneakiest work in here. Smart-up like smart start-up. Anyway, as an example, a rival and electric commercial OEM based in the UK has chosen BlackBerry QNX as a safe and secure foundation again for the ADAS features in the self-driving vehicles.

In the quarter, we also entered into a partnership with ETAS to develop a safety-critical platform using AUTOSAR Adaptive standard. Bosch, the world largest automotive supplier and the parent of ETAS, decided to join force with BlackBerry to develop this common software platform that will enable the production of safe and secure connected and autonomous vehicle for the future.

Let me give a brief update on the radar business. In the quarter, we added 15 new customers, one-five, including an initial order of 2,000 units from CP Rail, and we're very pleased with that obviously. And we have repeated purchases from a number of our customers, including Lowe's, [Indecipherable] and Bimbo Bakeries. We're also starting to explore expansion in the Europe and Middle East arena.

Now, a few comment on our enterprise software and services business progress. The sales team is getting back into form and operating with better discipline and accountability. The team has restored a normal cadence in managing the pipeline and converting the pipeline to billings. As a result, our pipeline increased nicely in both numbers of opportunity and dollar size since -- dollar size since the second fiscal quarter.

Revenue for UEM, AtHoc, and Secusmart all grew sequentially. These included a contribution for our new continuous authentication product, BlackBerry Intelligent Services. We named it BIS. BIS is gaining traction in the market as evidenced by high-profile wins such as the Department of National Defense in Canada and Julius Baer Group. Julius Baer Group is one of the oldest and largest banking institutions in Switzerland. And as a reminder, we only released this product in August.

Next, on the customer front. Our regulated industry business remained healthy and stable. We added a number of new logo wins in the competitive situation across federal government agency worldwide, including in Canada, Germany, Panama, Poland, Romania, Saudi Arabia as well as United States. Furthermore, in the United States state agency, we won the Alaskan Army National Guard and the California Department of Technology, just to name a few.

We also achieved notable progress in the financial services and energy verticals with wins like Bank of China, Mizuho Bank, Great Eastern Life Assurance. Great Eastern Life Assurance just happen to be the largest life insurance company in Singapore and Malaysia. We also won ScottishPower and all these things -- naming just a few of our new wins.

On the US National Security Fund, we partnered with CACI International to provide the first secure and certified mobile communication applications, utilizing BlackBerry SecuSUITE secure voice and tax -- secure tax technology. The initial target market will be more than 4 million United States government issued cellphones. Our application meet the NSA's stringent commercial solution for classified program requirements and is the only solution of this kind in the FedRAMP certification.

Lastly, on the product front, we introduced CylancePROTECT for mobile endpoints. This mobile threat defense, which now referred to from now on as MTD product, this MTD product integrates AI endpoint security capabilities from Cylance as well as the endpoint management functionality from UEM. This second second generation MTD product, which we delivered only eight months after the close of our acquisition, demonstrate a collaborative team work of the two development teams. The teams worked very well together to execute a common product road map and share the same vision.

We have a total of 14, one-four -- 14 beta customers, which includes several top multi-national financial institution and notable telecommunication companies. They all have shared very positive feedback. In fact, we received our first customer order during the quarter. Spark, our secure IOT platform, is progressing well with the addition of these two products, the MTD product I just mentioned and the BIS product I mentioned earlier.

Moving on to our licensing business. Revenue increased double-digit percentage year-over-year growth, which is slightly ahead of our expectations for the quarter. We maintained a full-year outlook that we provided last quarter for our licensing business.

Now, onto the BlackBerry Cylance business. Revenue increased 13% year-over-year, one-three. ARR was $171 million, a 15%, one-five, year-over-year. Our dollar-based net retention rate was 99%. And we ended the quarter with 20% year-over-year growth in active subscription customers.

We anticipate stronger growth in the future as we have now released an enhanced endpoint detection and response, the EDR, technology product as well as a single agent platform. The lack of these features in the past have prevented us from winning more deals as well as larger size deals, of course, until now,

By adding BlackBerry resources, we're able to deliver both products at the end of the third quarter, which are the OPTICS 2.4, which is the EDR product that I mentioned earlier, shipped in October this year followed by the release of our single agent platform, our internal code name called Cocoon last month. These new products improved our capacity to address our customers' cyber-security needs across the entire spectrum.

Cylance endpoint security is best known for its AI-driven prediction and production. Our team has won a number of new deals in competitive environments, which are -- with the enterprise-sized customers. I will name a few for you such as the AmBank Group in Malaysia, the International Container Terminal Services in the Philippines, the AES Corporation, Deloitte, and Molex in the United States.

In the quarter, we also released our managed service offering, CylanceGUARD. Market demand and pipeline has been strong, especially in the SMB, small medium business, sector. The complete offering of these products and services will no doubt help drive stronger revenue growth next year.

Before I turn the call over to Steve, let me make a couple of comments regarding the Cylance integration. We continue to be ahead in the joint integration efforts. We are achieving the product development synergies we discussed while we announced the acquisition, including the MPD product, which I discussed earlier, that uses to -- as well as [Indecipherable] integrated QNX and Cylance technologies together, both of which will be demonstrated at CES in three weeks.

Both customer and industry analysts have told us our product meets the needs of a large addressable market of both fixed and mobile endpoint where management and security for endpoints are now converging. We are now ready to increase sales and marketing synergies as well as partner cross-selling. Given the operational efficiency gains so far, we remain comfortable that Cylance will be accretive in fiscal 2021.

With that, let me turn the call over to Steve Rai to provide more details about our financial performance.

Steve Rai -- Chief Financial Officer

Thank you, John. My comments on our financial performance for the fiscal quarter will be in non-GAAP terms, unless otherwise noted. Also, 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 $280 million and GAAP total company revenue of $267 million. I will break down revenue shortly. Third quarter total company gross margin was 77%. Our non-GAAP gross margin includes software deferred revenue acquired but not recognized at $13 million and excludes restructuring costs of $3 million and stock compensation expense of $1 million.

Operating expenses of $195 million were up sequentially by $2 million as we manage spending while continuing to invest in product development and go-to-market. Our non-GAAP operating expenses exclude $35 million in amortization of acquired intangibles, which represents about $0.06 of GAAP loss per share. Additionally, our non-GAAP operating expenses exclude $14 million in stock compensation expense, $4 million for software deferred commissions expense acquired, $7 million in restructuring costs and a benefit of $20 million related to the fair value adjustment on the convertible debentures.

Non-GAAP operating income was $20 million and non-GAAP net income was $17 million. Non-GAAP earnings per share was $0.03 in the quarter. Our adjusted EBITDA was $38 million this quarter, excluding the non-GAAP adjustments previously mentioned. This equates to an adjusted EBITDA margin of 14%.

I will now provide a breakdown of our revenue in the quarter. Total software and services revenue was $275 million, representing 98% of total company revenue broken down as follows: IoT accounted for 52% of total revenue; BlackBerry Cylance accounted for 19% of total revenue; and licensing accounted for 27% of total revenue; other revenue of 2% is solely comprised of service access fees.

Service access fees were $5 million, down from $9 million or 44% year-over-year. Service access fees were expected to decline, given the continued wind down of this legacy business. Recurring software and services revenue, including BlackBerry Cylance, was above 90% in the quarter.

Now, moving to our balance sheet and cash flow performance. Total cash, cash equivalents, and investments were $970 million, which increased by $32 million from the previous quarter ended August 31, 2019. Our net cash position was $365 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 positive $41 million. Cash generated from operations was $40 million and capital expenditures were $3 million.

That concludes my comments. I'll now turn the call back to John to provide our financial outlook.

John Chen -- Executive Chairman & Chief Executive Officer

Thank you, Steve. For fiscal 2020, we are comfortable with the current consensus estimate for the total company, which is approximately $1.1 billion in non-GAAP revenue and $0.06 in non-GAAP profitability. However, based on the year-to-date performance, we expect to do better than the $0.06 in the non-GAAP profitability. Our current forecast indicates more like $0.08 of earnings per share in fiscal 2020.

On a longer-term basis, we're executing upon our strategy of being the trusted provider of secure communication for endpoints. Our customers and industry analysts agree that the endpoint management and securities markets are converging and customer demand, better solution to combat, increasing security threat to an expanding set of diverse endpoints. All these efforts this year, including the acquisition and the integration of Cylance, are to position BlackBerry as a leader in this emerging market.

BlackBerry has the assets to solve the industry problems, and we are already delivering relevant products such as the Zero Trust platform and AI for Security as well as many other different platform -- products. We believe that we could be a winner in this fast-growing $20 billion-plus market. We look forward to discussing more of our plan in our FY financial -- the FY 2021 financial outlook at our next Analyst Day, which happened to be April 21st in San Ramon.

I will now open the call for Q&A. Jack?

Questions and Answers:

Operator

Certainly. We will now begin the question-and-answer session. [Operator Instructions] Steven Fox with Cross Research, your line is open.

John Chen -- Executive Chairman & Chief Executive Officer

Hi, Steven.

Steven Fox -- Cross Research LLC -- Analyst

Hi. Good morning, everyone.

John Chen -- Executive Chairman & Chief Executive Officer

Good morning.

Steven Fox -- Cross Research LLC -- Analyst

Couple of questions, if I could. First of all, John, you mentioned that the UEM revenues rose quarter-over-quarter, but I didn't quite get the details behind that in the quarter. Can you maybe just provide some color as to what drove this sequential increase? And then, looking ahead to the fourth quarter, it looks like you're looking for some further sequential increases in revenues. Can you talk about where you're most confident in revenues growing fourth quarter versus third quarter? And then I have a quick follow-up. Thank you.

John Chen -- Executive Chairman & Chief Executive Officer

Okay, great. Thank you, Steven. Yeah. The UEM product, we just happen to -- If you think about it a quarter ago, we have signaled that the pipeline is still strong. We have a little bit of a conversion problems that was in Q2. Q3, we have much better focus on converting the pipeline to revenue. And so, we're fortunate to close a number of business that we're expecting. It's really general UEM as well as the customer got -- they're impressed with the products and the road map in security, especially the BlackBerry Intelligent Security solutions, which are very -- quite price-like [Phonetic] I say so myself. And so, the combination of really a better focus as well as the ability to deliver the road map, especially about industry category or caliber of security help us drive more business. And yes, we expect to see a continuous strengthening of that in Q4.

Steven Fox -- Cross Research LLC -- Analyst

In UEM in particular?

John Chen -- Executive Chairman & Chief Executive Officer

Yeah, UEM. Again, all three businesses done well. I mean, all three components of the enterprise software business, which were Secusmart and AtHoc. Secusmart are more government-based. We have a number of pilots going. We've got the very committed partners in CACI, which has happened to be one of the largest system integrators in the United States federal governments as well as in the AtHoc space. In the AtHoc space, we see a lot of opportunities obviously not only in the federal -- compact federal space, but as well as the state and education sector.

Steven Fox -- Cross Research LLC -- Analyst

Great. That's very helpful. And then, just a quick follow-up, you mentioned momentum now building with QNX on non-auto side, and you mentioned industrial. What's the timeline for turning some of those wins into revenues? Is it much different than auto?

John Chen -- Executive Chairman & Chief Executive Officer

Yes.

Steven Fox -- Cross Research LLC -- Analyst

Can you just give us some color on that?

John Chen -- Executive Chairman & Chief Executive Officer

It should be faster than auto. So, the design win could go into production a lot sooner and go for development cycle and then deliver into production a lot sooner. Because if you notice the auto business, if you have to win a design win with a Tier 1 in the OEM, and then they would then incorporate into the design of the car, and then the car comes out in a year or two later. So, there was a period in there of at least two to three years that you see a low in revenue and then it goes -- and then it goes up and they ship it. In a GM market, the cycle to the market is a lot faster than the auto sectors.

Steven Fox -- Cross Research LLC -- Analyst

Okay. All right. Thank you very much.

John Chen -- Executive Chairman & Chief Executive Officer

Sure. Thank you.

Operator

Gus Papageorgiou with PI Financial. Your line is open.

John Chen -- Executive Chairman & Chief Executive Officer

Hey.

Gus Papageorgiou -- PI Financial Corp. -- Analyst

Good morning. Thanks for taking my question.

Steve Rai -- Chief Financial Officer

Hi, Gus.

Gus Papageorgiou -- PI Financial Corp. -- Analyst

I also just wanted to focus on that -- on the QNX progress in the -- outside the auto vertical. Can you just talk a little bit about the ASPs in that vertical versus the auto? I know that in auto, like there's several QNX modules that go into -- or potentially several modules that go into car. But if you look at the non-auto, can you compare the ASPs there? And I guess, can you just kind of highlight what industries you're having success in?

John Chen -- Executive Chairman & Chief Executive Officer

Yeah. A quarter ago, we were having success in the energy sectors. And I would say, I didn't really focus on the ARPU or the ASP, but kind of an educated guess on my part, the numbers are probably a little lower on an ARPU basis. However, the volume was going to be a lot higher. So, I would think overall revenue on a constant run rate basis will probably be higher than the auto sectors. Oh, by the way, I forgot also the medical sector.

Gus Papageorgiou -- PI Financial Corp. -- Analyst

And over what timeline do you think, John, you'd see that the non-auto would eclipse auto revenue?

John Chen -- Executive Chairman & Chief Executive Officer

As I said earlier to Steven, the timeline for the Ford and GM is going to be faster. The gestation period is going to be fast and the revenue is going to be faster than the auto side.

Gus Papageorgiou -- PI Financial Corp. -- Analyst

Great. Thank you very much.

John Chen -- Executive Chairman & Chief Executive Officer

Sure.

Operator

Daniel Bartus with BofA Securities, your line is open.

John Chen -- Executive Chairman & Chief Executive Officer

Hi, Dan.

Daniel Bartus -- Bank of America Merrill Lynch -- Analyst

Hey, guys. Yeah. Thanks for taking my questions. First, I just want to ask about Cylance. It's great to hear about the new EDR update, but can you give us a sense of how much of the customer base already buys EDR? And obviously just curious about how significant of an upsell cycle that could be.

John Chen -- Executive Chairman & Chief Executive Officer

Yeah, it's interesting. So, the -- in general -- this is a generalized statement. In general, the SMB market more focus on EPP. The very large institutions are more focused on EDR. There has always been -- even prior to BlackBerry involvement, there's always been that tug of war in the market, is EPP which is protection more important than remediation, detect and remediation. And those -- this is kind of the ongoing discussion in the industry. So, the good thing about this quarter is, we finally just put that discussion to rest. We don't -- we just -- we will provide whatever the customer would want. We have the best EPP technology that market acknowledged. And now, we have a very strong EDR as well as single in-store.

The other thing about a single agent was also a factor that customers find it tedious to do multiple in-store. So we could now do one, and then we all added managed service, so very strong lineup. And so, it served all spectrum of the market. The very large, which have literally thousands of people like banks, you're familiar with, and then you have the very small SMB market, which volume wise is quite high, but there's 10, 100, 1,000 users type. So, EPP, depending on what sector you're talking about, they have a little bit of bias between EPP and EDR. The good news about us is, we eliminate the bias. We don't need to worry about that anymore. People want EPP. We are about the best there is in this industry.

Daniel Bartus -- Bank of America Merrill Lynch -- Analyst

Great. That's helpful. And then, a quick follow up on licensing. Could you just talk about if the recurring level is starting to grow? And is that a story for next year perhaps? And maybe, in general, if you could just give a little bit color on what continues to drive the outperformance on the licensing?

John Chen -- Executive Chairman & Chief Executive Officer

Yeah.

Daniel Bartus -- Bank of America Merrill Lynch -- Analyst

Thanks.

John Chen -- Executive Chairman & Chief Executive Officer

Yeah. The recurring part, we kind of pretty much maintain a relatively steady, roughly about $160 million a year. And then, the total number bounced around about $250 million. And so, there is a lot of opportunity to do licensing business. It's just a little bit of a hard to predict quarterly. It's not like a sales cycle with a science of where you are. You could kind of predict a little bit with better accuracy, and when you're going to close it. This one is a little bit hard to manage in that.

But on an annual basis, you should expect us to do about $160 million in a recurring basis. And then, the rest of them, we will have to bring it in as the quarters develop.

Daniel Bartus -- Bank of America Merrill Lynch -- Analyst

Makes sense. Thanks, guys.

John Chen -- Executive Chairman & Chief Executive Officer

Okay, thanks.

Operator

Paul Steep with Scotia Capital, your line is open.

John Chen -- Executive Chairman & Chief Executive Officer

Hey, Paul.

Paul Steep -- Scotia Capital -- Analyst

Good morning, John.

John Chen -- Executive Chairman & Chief Executive Officer

Good morning.

Paul Steep -- Scotia Capital -- Analyst

Could you talk a little bit about the opportunity into 2021 in integrating Cylance further into that EMM base product and how you're feeling about that and what you think the timing sort of looks like for any uptick on that side?

John Chen -- Executive Chairman & Chief Executive Officer

Let's see. Very good question. Thank you. I'm feeling very good about it. And the hint is in my script. We work with a lot of industry analysts. We know from their customer contact, which are big, and our customer contact. The customer wanted to have a more orderly platform to integrate many part of their enterprise software, especially in the security space. And these are anything from the employee management, the application management, the management of travelers, accessibility through the cloud or on-premise and so forth. They have so many solutions, it's just not funny.

And so, we have a very strong platform in Spark that we will deliver the Zero Trust platform technology, which involve and combine everything I just named, including identity management. And so, we're working extremely hard. Silence was a very important part of the puzzles. We now have it. We're integrated. Teams are working well together. We will deliver the Spark platform with Zero Trust capability for the combination of both management and security, it's not only mobile but fixed also.

So, we're very excited about these things, and we will do much more discussion at our Analyst Day with you all. But this is the great opportunity for us, and we believe we not only had the leadership and the DNA for it and the technology for it, we're early than anybody else. By the way , I'll leave it at that without getting too excited about telling you the product name.

Paul Steep -- Scotia Capital -- Analyst

That helps. So, maybe just as a final one to follow-on, the teaser there, as I recall, you didn't have the capability around fixed. Should we think that either one of three options; you are either building it and develop it in-house; would you look to acquire a large existing base, would that be something; or would it be a partnership? And then, we'll say Happy Holidays. Thanks.

John Chen -- Executive Chairman & Chief Executive Officer

Why don't I wait to tell you that? I don't think acquisition is my first choice. Partnership is probably more relevant.

Paul Steep -- Scotia Capital -- Analyst

That makes sense. I'll wait to hear more in the New Year. Thanks, guys.

John Chen -- Executive Chairman & Chief Executive Officer

Okay, thank you. Happy New Year.

Operator

Trip Chowdhry with Global Equities Research, your line is open.

Unidentified Speaker

Hi, Trip. How are you.

Trip Chowdhry -- Global Equities Research -- Analyst

I've doing wonderful. Again, congratulations on the phenomenal execution.

John Chen -- Executive Chairman & Chief Executive Officer

Thank you.

Trip Chowdhry -- Global Equities Research -- Analyst

A couple of questions I would like to ask is, when you think about security and especially the new paradigm in which Cylance and BlackBerry are these days with machine learning and using that as a way to proactively better the security glitch before it really happens, I was wondering what do you think is the reason that traditional security heavyweights like RSA, Trend Micro, Symantec, they haven't been able to pivot themselves to the new work. What is your sense? What is happening in the industry that prevents them from doing something like what you guys are doing?

John Chen -- Executive Chairman & Chief Executive Officer

Well, Trip, that's a good question. I never underestimate competitors in a market. All those are good company that you talk about that have built on the security paradigm where there is remote like the RSA, or Symantec, and more PC-based and so forth. I'm sure that they have their development road map and things that they're working on. BlackBerry happens just to want to leapfrog everybody by acquiring Cylance. And so, we go to the second generation first without even going to the first generation on the AV side.

So -- and we see the capability that is needed with machine learning as well as using machine to do the policing and the trapping and the correction of potential attack and threat. So, I will only speak the fact that I am pleased that BlackBerry is able to execute it. We have the capacity of the dollars. You know we pay $1.4 billion. It was a big -- you know me well, I mean that's a big commitment on our part and it works out. We got great product out with the MTD, for example, only eight months, very pleased with that, because teams are working well together, and we have great vision together. And this will -- we will be a good player. We will be a very strong player in the IoT security world.

Trip Chowdhry -- Global Equities Research -- Analyst

Beautiful. Also I was wondering like, do you have any update on your partnership with Microsoft on various initiatives that you have fostered over the last six to eight months?

John Chen -- Executive Chairman & Chief Executive Officer

Yeah, Microsoft and us, as you know, we deliver a bridge product, which put all the Microsoft application on our platform in the native mode. So, in a way, we are competing with Microsoft because they obviously also deliver Intune with the same capability, but then we have better security, at least we think so. And the customer doesn't have to choose to move away from security to use the Microsoft application. They obviously are very committed to -- most of the customers are very committed with Microsoft applications. So, I think this partnership works well for both.

Trip Chowdhry -- Global Equities Research -- Analyst

Beautiful. Beautiful. And Steve Capelli has become the Chief Revenue Officer. So it seems like he hits the homerun right off the bat.

John Chen -- Executive Chairman & Chief Executive Officer

Yeah. He is the one who is hitting the ball.

Trip Chowdhry -- Global Equities Research -- Analyst

Yes. I was just also wondering, like when -- John, you were at Sybase and Steve Capelli and your whole team did extremely well with the US federal government. I was wondering, are we building a pipeline with the US federal government with Cylance or BlackBerry products? And how is it coming along?

John Chen -- Executive Chairman & Chief Executive Officer

Sorry, I didn't get the...

Trip Chowdhry -- Global Equities Research -- Analyst

Like in the US federal government, the --

John Chen -- Executive Chairman & Chief Executive Officer

Yeah.

Trip Chowdhry -- Global Equities Research -- Analyst

How is that coming along? Like are we building a pipeline with the US federal agencies regarding the products and solutions that...

John Chen -- Executive Chairman & Chief Executive Officer

Yeah. Trip, we are very strong in federal. So, just for example, in only AtHoc as a product, which is the crisis management and emergency management alert systems, we have multi-millions of licenses in the United States government with the federal space. So, we're very strong and we continue to expand that pipeline, so -- and I spoke a little early about CACI, that's actually a very strong partnership because they're taking us into the secured communication world in the United States government. And so -- and they have the heritage to do it and they have the credibility to do it. And our product meets the highest standard for top secret or secret. And so, we're doing a lot of things together with not only ourselves directly in the federal space but also with the partners.

Operator

James Faucette with Morgan Stanley, your line is open.

John Chen -- Executive Chairman & Chief Executive Officer

Hey.

Meta Marshall -- Morgan Stanley -- Analyst

Thanks. This is Meta Marshall for James. Just one question for me. You spoke about kind of seeing better discipline and the pipeline increasing among your sales force. And I know you are making kind of some changes to go from gather to hunter mentality. And just do you consider that complete or are there still kind of some transitions under way just kind of on the sales force mentality, particularly around some of the more like a few products? Thanks

John Chen -- Executive Chairman & Chief Executive Officer

Yeah. Thanks. We have a -- we established a framework. It took us a couple of quarters. There was some -- a little bit of a glitch on our part when we make some changes. So, those changes are behind us. So we have a good platform now. All now we're doing is to concentrate on not only executing, turning the pipeline into buildings, creating that momentum, but also hiring more of the sales people that fit into their model. And so, that's the metrics that we focus a lot on inside the company. So, we feel good about where we are now, the management team and so forth, and we will continue to add -- adding fuel to the fire -- I guess, maybe that's the word -- we think the way to think about it. So, we feel we're doing pretty good right now.

Meta Marshall -- Morgan Stanley -- Analyst

Okay, great. Thanks.

John Chen -- Executive Chairman & Chief Executive Officer

Thank you.

Operator

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

John Chen -- Executive Chairman & Chief Executive Officer

Okay. All right. Okay. Thank you, everybody, for joining us today. I hope to see you at CES and let me do a little of commercial. At CES, we have a booth at North Hall. In the past, we put in there sports cars and, this time, we have other demonstrated automobile. And rumor has that we have a motorcycle there too. We're going to show -- what we're going to show you at CES is, obviously the continuation advancement of our QNX technology in auto, but also to show you the Cylance integration into the car. I think that would attract a lot of attention. And I know there are some government agency people already wanted to come see and have appointment with me.

So, I hope to see you there. And in the meantime, have a very happy and safe holidays.

Operator

[Operator Closing Remarks]

Duration: 41 minutes

Call participants:

Christopher Lee -- Vice President, Finance

John Chen -- Executive Chairman & Chief Executive Officer

Steve Rai -- Chief Financial Officer

Unidentified Speaker

Steven Fox -- Cross Research LLC -- Analyst

Gus Papageorgiou -- PI Financial Corp. -- Analyst

Daniel Bartus -- Bank of America Merrill Lynch -- Analyst

Paul Steep -- Scotia Capital -- Analyst

Trip Chowdhry -- Global Equities Research -- Analyst

Meta Marshall -- Morgan Stanley -- Analyst

More BB analysis

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