Blackberry Ltd (BBRY) Earnings Call Transcript: 2014 Q3, Q3 FY2015

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Colin Gillis

Perfect, thank you.

Operator

We’ll go next to Maynard Um with Wells Fargo.

Maynard Um, Senior Equity Research Analyst – IT Hardware, Wells Fargo

Congratulations on your profit and your cash flow.

John Chen

Thank you.

Maynard Um

A couple of questions though. Sustainable profits in fiscal 16, you’ve hit the profit here this quarter. You’ve got the Classic ramp coming despite the decline in the SAF revenue. I’m just curious does this imply that your spending in OpEx side will jump up materially due to the new launches?

And then separately John I just wanted to confirm that the run rate for software and the increase that we’re going to start to see in June of next year, is that run rate going to reflect the $500 million?

I’m just curious because I guess typically large enterprises won’t — don’t buy the first revision of the software. They wait for all the bugs to come out and then they sort of ramp in in small pilots and then ramp up overtime.

So I’m just curious if that ramp, the expectation should be that when we see that that will be a run rate to the $500 million or how do we think about that ramp in the June quarter. Thanks.

John Chen

That’s a good question, that’s an interesting question.

First of all, no, you should not expect to see expenses jump up. And even if it is jumped up, it is not because of launch activities. We have already paid for the launch activities. So you already seen it in Q3.

So now we will obviously manage it extremely, expenses extremely conservative. We’re not going to let this thing get ahead of its own headlight. I will make you that commitment.

You have a good point there. That is going to be a danger. On the $500 million run rate, that shouldn’t be too difficult to be really honest with you, because we have very, very deep pipeline right now.

The question is do we actually register $500 million of revenue in FY16 and that’s what I’m shooting for. I’m not only shooting for the run rate part. The run rate, of course that’s also a great achievement, there is no question about that. But I am hoping to do better than that.

But I take your point. By the way I have been in the software business for a long time. Regarding the piloting and this first, second version and all that, on BES 12 you could do some channel checks, the BES 12, it’s solid.

Maynard Um

Great, thank you.

John Chen

All right, thank you.

Operator

We’ll go next to Ehud Gelblum with Citi.

Ehud Gelblum

Hey guys, thank you. Good to see you over there so there quite a lot of activity this week.

A couple of questions. Just want to understand a couple of the moving parts in the quarter. The software, James, the software and other revenues seemed to fall this quarter.

Your other revenue line has always been kind of constant in the mid-teens, about $16 million last quarter. If you do that math on the software and other, this time you back into a software number that seems to have declined by a decent amount.

Was that a QNX decline and if you can give a little color into that? Or it’s a license or a software decline and just give us a sense as to kind of what happened with that?

And also the ASP is clearly, you shifted the number of units to 2 million. The ASP obviously fell, even with assuming 200,000 sort of a 10% of those were Passports, at a pretty high ASP.

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