Good morning, everyone, and welcome to BlackBerry's twenty twenty-four Investor Day. My name is Martha Gonder, and I am the new Director of Investor Relations. I'm happy that you could all join us today. We have an informative morning planned for you with the leadership teams from both the cybersecurity division and the IoT division. Our CEO, John Giamatteo, is gonna kick off the event. Following him, the IoT division will have President Mattias Eriksson and VP of Products and Strategy, Grant Courville. Then from cybersecurity division, we'll have General Manager Nate Jenniges and other members from the leadership team. Finally, after a short break, we'll have CFO Tim Foote and CFO, IoT, Vito Giallorenzo, provide a financial update. For those in the room, we please ask you to save your questions for the Q&A session that will follow the financial update.
For everyone online, feel free to submit your questions through the Q&A function in the bottom right corner of your WebEx at any time. We'll address as many questions during the Q&A session as we can. This presentation is available to the general public on our investor relations section of the BlackBerry.com website, and a replay will be available on the BlackBerry.com website as well. Today, management is going to be making forward-looking statements about our expectations. These statements are subject to the risks and uncertainties that could cause our actual results to differ materially. These risks and uncertainties include the factors identified in our filings on EDGAR and SEDAR+. So please review these safe harbor statement on the screen. Whoops! On the screen and in the presentation.
On the screen and on the first page of the presentation, as the content of today's event will be governed by this language. Please also see our statement on the non-GAAP financial measures, as the financial metrics in this presentation, other than revenue, will be in non-GAAP terms. Now that we have all the housekeeping items out of the way, let's begin.
Do you know what the company BlackBerry does today? I didn't know they still existed.
Not a clue. No.
I've got no idea.
No. No idea.
I'm not sure what's going on with BlackBerry right now.
I have no idea. I had no idea they even existed still.
No, I actually don't. I would like to know. Are they still around?
Please welcome to the stage BlackBerry's Chief Executive Officer, John Giamatteo.
Good morning, and thank you all for joining us today. For those that I've not met, my name is John Giamatteo, and as CEO of BlackBerry, I'd like to welcome you to our Investor Day. I'm so pleased that you've all taken some time to be here with us, whether it's live here in the room or virtually, as we share some exciting updates about this great company and the amazing transformation that we're going through. As you saw in the video, when people hear the name BlackBerry, quite often one question comes to mind: "BlackBerry, are you still around?" We hear it all the time, talking to our customers and partners and different people.
Since joining the company, and particularly since stepping into the CEO role, I really hear this question a lot, and perhaps it's really not surprising given the evolution the company has made by focusing strictly on software and services. However, it is a question that I'm proud to answer. This year, we celebrated our fortieth anniversary, and forty years on, BlackBerry continues to have an incredible brand recognition in the technology industry. As I've mentioned on many occasions, it was our rich history is one of the things that drew me to the company in the first place. And while it's true, the products and services that we're delivering today and will continue to offer in the future can't be held in the palm of your hand, the core values of what we deliver to our customers hasn't really changed that much. Security, trust, and innovation.
This is the promise of BlackBerry, and this has never changed. For those of you that have watched our evolution over the years, you know that BlackBerry has always been about more than just a handset. We deliver innovative, trusted, and secure solutions designed to accelerate the world around us. From powering the safety-critical systems in your vehicle, to protecting governments around the world, to ensuring the security and business continuity across regulated industries, to supporting small and medium-sized businesses with the most advanced AI-based cybersecurity solutions in the industry, BlackBerry is there.
and I can assure you, not only are we still around, but we're also making significant progress across all aspects of our business. Since our leadership team changed this last December, we made the fundamental decision to focus the company on two virtually autonomous divisions. Now, why was this fundamental? It created clarity and focus. There were a lot of little things we were doing, little investments, little future visions, all things that served to distract the organization. So we decided, if it's not cyber, if it's not IoT, we aren't doing it. Now, this clarity, this focus, has allowed us to make tremendous progress that we're gonna highlight for you today, with a clear vision and line of sight to where we want to go from a profitability and cash flow perspective.
Now, to set the stage for what's to come over the next few hours, I'd like to walk you through some of the key components of this transformation that really illustrate the incredible progress that we're making as an organization, and why we think you should be taking another look at this great company. First, let's take a closer look at the strength of our portfolio across both our IoT and cybersecurity businesses. Starting with IoT, our 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, merging unprecedented performance with unparalleled security and reliability.
I'm incredibly proud of the fact that we work with all 10 of the top 10 global automakers, and 24 of the 25 top electric vehicle OEMs. Thanks to these strong relationships, this business continues to benefit from strong, multiyear secular tailwinds, positioning us well for sustained growth and success. And it's a business we are remarkably excited about. Mattias and team will provide a much deeper dive into this business for us a little bit later today. On the cybersecurity front, this division includes a collection of different capabilities that align across two key functional categories: secure communications and endpoint security. Secure communications, of course, is at the core of what BlackBerry has always provided.
From protecting mobile devices with BlackBerry UEM, to advanced critical event management functionality with BlackBerry AtHoc, to offering the highest level of encryption across voice, video, and data with SecuSUITE, our strong heritage of security, trust, and innovation shines through. And on the endpoint security side, our Cylance solutions provide some of the most advanced AI, ML-based cybersecurity solutions in the industry, including a full range of managed detection and response capabilities. Our cybersecurity division works with all G7 governments and the majority of the G20. Eight out of the 10 largest global banks, we power them in some way. We're the number one provider for critical events management software in the U.S. federal government, and as the pioneer in leveraging artificial intelligence in cybersecurity, we hold five times more patents for malware detection and neural networks than any of our competitors.
The cyber team will also be joining us later today to expand on the work that they are doing as well. So second, I'm pleased to say that over the past ten months, we've made significant progress in reshaping our cost profile, with rationalization efforts across laboratories, global facilities, and corporate infrastructure, all aimed at establishing two virtually autonomous business units. Thus far, we've reduced our global footprint by fourteen locations. We've consolidated our global lab, lab presence by 50%. We took a really hard look at our cloud infrastructure, reducing this spend by an additional 38%. And we shuttered a number of what I like to sometimes call science projects, that don't necessarily advance the primary goals of our two business divisions.
I'm pleased to say that over the past 10 months, these efforts have resulted in significant savings of approximately $135 million, setting us up for a return to profitability and return to positive cash flow as we move into the end of this year. Now, third, across each of our 2 business units, the underlying fundamentals are reflecting significant improvement. Now, for QNX, this manifests itself in the form of our royalty backlog, a key indicator of estimated future revenues that we expect to come on the continuum of a long lifecycle business. When we achieve a design win with one of our automotive partners, we could expect revenue generation for around 7 - 10 years.
Over the past two years, this royalty backlog has grown substantially from $560 million in the first quarter of fiscal year 2023, to $815 million at the end of our fiscal year 2024. Needless to say, this is something we are very excited about, and Vito is gonna dive into this in more detail later on today. On the cybersecurity side, despite some recent headwinds over the course of the last year or so, our two key metrics that really show the underlying health of this business, annual recurring revenue and dollar-based net retention rate, have each begun to move at a good pace into a much more stable and sustainable place. Our newly appointed CFO, Tim Foote, is gonna join us later today to talk more about that as well.
So now fourth, when you consider the cost savings that we've achieved and the improving fundamentals of our business units that are starting to generate top line stability, and in some cases, growth, you could see that our cash flow position has improved dramatically. In our Q2 of last year, our cash burn was approximately $56 million a quarter. Today, we've narrowed that to around $13 million, with further improvements on the horizon. And when you couple that with the capital raise that we executed back in January, we find that our balance sheet now is in as strong a position as ever to execute on our plan to bring this great company back to growth. And finally, a crucial aspect of our transformation journey has centered on driving increased focus and optionality from our two virtually autonomous divisions. You know, real transformation requires, you know, clarity.
Clarity not only on what we're focused on, but just as importantly, what we're not. And getting these two businesses, IoT and cybersecurity, firing on all cylinders, has been a key priority for myself and the leadership team as we work to get BlackBerry back to profitability and set the stage for future growth. Now, in the context of this transformational progress that we've made, it's our capital allocation strategy that the team and I are now focused on. Now, a little bit of a story. Some years ago, BlackBerry made a big bet in expanding its addressable market beyond its primary expertise of secure communications and into a rapidly growing endpoint security market. At the time, Cylance was an up-and-coming leader in the endpoint protection and next-generation antivirus, introducing artificial intelligence and machine learning into the realm of cybersecurity.
It was a bold bet, but the market quickly shifted. It shifted its focus from endpoint protection to endpoint detection and response, or EDR, a solution that Cylance did not address, didn't have it in the portfolio. So since that time, closing this competitive gap has been our number one capital allocation priority as a company. And while we've made tremendous progress, adding both EDR and managed detection and response capabilities to our portfolio, while also increasing our IP in artificial intelligence and machine learning, the cybersecurity market is a highly competitive one, and at its current scale, the Cylance business still requires significant investment to drive growth. So as part of our ongoing transformation, BlackBerry's new management team and I have taken a fresh look across the entire portfolio, including the relative levels of profitability for each part of the business and their respective growth potential.
This review has revealed that three of the four components of the cybersecurity division, those which leverage BlackBerry's traditional core competency of secure communications, UEM, AtHoc, and Secusmart, collectively represent a healthy, profitable, and stable business. They also share notable customer crossover, each sharing the government sector as their largest market vertical. So we believe that with a sustainable industry average level of investment in R&D and go-to-market, these three parts of the business will provide healthy cash generation for the company. And while we've seen improvements in our Cylance metrics, due to the significant level of investment required, this business on its own is not currently profitable, resulting in a cybersecurity division that operates at about break even.
We've considered options for organic growth within the Cylance business, and after very careful consideration, we don't believe that ongoing investment at the current levels is sustainable and unlikely to generate an acceptable return on capital. We believe the time is now to instead focus on streamlining some of those costs and investments in Cylance to get to a better place. With a cyber division now focused on profitability and cash generation, we can provide meaningful fuel for organic, and over time, inorganic investments in other parts of the business, primarily QNX. QNX holds a unique position of being at the intersection of safety and performance. It benefits from a deep competitive moat and strong secular tailwinds, meaning that we expect any increased investment in QNX will provide a significant ROI.
Additionally, this business offers untapped near adjacencies to expand into, including extending our offerings in automotive or more fully addressing adjacent verticals in the general embedded markets, such as medical, industrial, and robotics. I'm very confident in this new, clear, and focused capital allocation strategy for BlackBerry. By assessing the decisions we've made in recent years that have worked well and those that haven't, we've learned that focusing on our core competencies rather than taking significant steps into relatively unknown verticals represents the most successful path for BlackBerry. And as we move forward with any new investments, whether organic or inorganic, it'll be closely scrutinized to ensure that they are set up for success. Now, armed with these learnings, BlackBerry and the new management team are in a much stronger position to execute going forward.
Over the course of the past ten months, we've been engaged in an aggressive transformation designed to leverage the strength of our portfolio, reshape our cost profile, and improve the fundamentals across our two virtually autonomous business units. While we work to build upon this progress, the team and I are excited to share some updates on that today, and I'm sure you're gonna like what you see. We're making tremendous progress, and I'm really proud of everybody and what they've contributed. For 40 years, BlackBerry has stood on the foundation of security, trust, and innovation. While you may not always realize it, we remain a pervasive presence in the lives of people around the world. Whether it's powering your car safety critical systems, making sure that you arrive with your family safely on your destination on your annual road trip, BlackBerry is there.
Or it could be in the mobility apps that enhance your productivity at work, or the file-sharing solutions that enable secure collaboration with your teammates. BlackBerry is there. Your government or bank likely relies on BlackBerry to safeguard your most sensitive data. Your doctor might use our software to securely communicate with you and remotely monitor your health. Your business may deploy our industry-leading critical events management software to ensure the safety of your colleagues during a crisis, or our AI-based cybersecurity protection to thwart malicious actors. Across it all, BlackBerry is there. And while BlackBerry may look different from the company you remember from years ago, we're still here, powering the world around us and ready for the next 40 years. So those of you that ask me, "Hey, BlackBerry, are you still around?" I'm proud to say, "You better believe it.
We never went away." So I wanna thank you all again for being with us here today. And now I'd like to invite up to the stage the leader of our IoT business, Mattias Eriksson. Mattias?
Morning. My name is Mattias, and I run the IoT business. Thanks again for choosing to spend your time with us this morning. I have three parts to my presentation. I wanna start by quickly recapping what has happened in the last 18 months, basically since we last stood on stage presenting to you. Secondly, I obviously wanna tell you about what's going on in the industries that we serve and with the resources that we're deploying. Last but not least, I wanna focus on the future. I wanna focus on where we're spending time, where we're spending money, and what you should be paying attention to if you're interested in following this business. I have 12 slides, one summary slide, 30 minutes. Let's get started.
For those of you who have been following us for a while, you've seen a version of this framework before, the investment thesis. Why are we investing in IoT? Why should you be considering investing in IoT? Let me quickly recap it and give you a couple of pointers regarding the development over the last eighteen months or so. So going from left to right, first of all, there's a large growing market opportunity with attractive economics if you play your cards right. As John hinted at, we are very, very strong in the automotive segment, and you have all seen some structural issues in the automotive segment over the last eighteen months or so. In spite of that, we believe this opportunity is larger than it's ever been. I'll come back and talk more about that in a second...
Secondly, we're investing in this because the commercial and technical trends are pushing the industry in our direction. As edge compute becomes more advanced, the requirements on performance, safety, security, and reliability, they're only going one way, and that's up, and that plays straight into the product portfolio that we have, the roadmap that we are investing in, et cetera, et cetera. As you follow the presentations, both mine and Grant's, pay attention to how these products are investing and driving support for the challenges that the various customers have. Thirdly, we're investing in this because we are the clear segment leader. We have unique capabilities, we have unique IP, and we have, very importantly, a unique track record in the segments that we serve. We are winning.
We are winning in the most advanced of the edge compute segments, and that will have spillover effects to the other edge compute segments. Fourthly, we have deep, long-standing relationships with leading customers and partners across all the segments and across all the geographies that we serve. Why is that important? Well, it's important because this is a long-cycle business, and unless you're spending a lot of time in close collaboration with your customers, you're not gonna be at the innovation edge of this industry. These are the reasons why we are investing in IoT. Let's talk a little bit about the last 18 months, and hopefully, many of you have some of this base data. I just wanna make sure that we start from the same foundation. So going from top to bottom, financial progress. You have seen the numbers in the first couple of quarters.
First half revenue, up 15% year on year. We announced a royalty backlog as we started this fiscal year, $815 million. On the profitability side, gross margin in the 80s, the internal profitability metric that we use, controllable contribution margin that excludes some of the corporate overhead, up 45% in the first half. On the product side, I know some of you attended CES last year. We had the biggest product launch year in a decade, and throughout the last six months, we have made tremendous progress with these products. We have our first SDP 8 wins, both in automotive and GEM. We have IVY cars on the road in China. We have productized that cloud collaboration with AWS and Stellantis that we announced at CES. QNX Sound has its first wins, et cetera, et cetera.
Great progress on the product side. On the customer and partner side, in spite of some of the headwinds, in particular in automotive over the last 18 months, we have multiple structural strategic wins over the last 18 months. As you track the earnings calls, you get pieces of that information. We are not always allowed to announce the wins that we have, but pay attention to what we're saying about them. Many of them have been structural in the last 18 months.
Two-thirds of the wins in our most important segments, and this is critical for the commercial transition we're making, are now signed with the automakers themselves, meaning we have gone from being a tier two to a tier one, and we have a seat at the table for the strategic discussions around the evolution of the software architecture. Multiple award wins. I put a couple of them down here. Company of the Year, Frost & Sullivan, PACE Award for IVY last year. If you look at the booth outside, you will see that we're now in the third year running for our MotorTrend Software-Defined Vehicle Award. That award that we give to innovators in the automotive software space at CES together with MotorTrend every year. Lot of things are going on that gives us industry recognition.
Let's talk a little bit more about the design wins. The design wins are obviously the lifeblood of this business, and they are long-term based. So, as I've said many times, we are very fortunate to work with the best and the brightest in the segments that we serve. We work with companies that are far larger, far more important for the overall ecosystem than we are, and that is critical in a long-cycle business. Unless you have those relationships, and you allow those relationships to feed your innovation cycle, you're not gonna be at the cutting edge of innovation in these segments. You have some of the stats on the left-hand side of this slide. We took two boxes, and we just dropped some logos into this slide. Over a hundred substantial design wins in the last eighteen months.
to draw your attention to the first bullet point in the automotive box there. Automotive is still dominated by digital cockpit in terms of software sophistication, digital cockpit, ADAS, and high-performance compute. In the last 18 months, some of the things we have discussed for the last two years have started to materialize. We have our first wins in other compute domains in the car. We have our first zonal wins, we have our first advanced gateway wins, we have our first body and control and chassis wins. So it's moving a little bit slower than we've said before, but it's moving in the direction that we have outlined over the last two years.
On the GEM side, it's a little bit more fragmented, but one of the big surprises to us, tying back to what I said about long-term relationships with our customers and partners for innovation, we developed our next-generation software platform, SDP 8, partly as a result of NVIDIA's requirements for automotive. As we launched that product at CES last year, we have already secured our first wins, both in automotive, but maybe a little bit surprising, also in GEM. The same software platform is getting significant traction for high-end compute in GEM, which is great news... The most important box in this slide is the one at the bottom of this slide.
You can see it says, "Select QNX SDP 8 Silicon commitments." So as we take this next generation compute platform for the most advanced edge compute, and we deploy it through the various segments that we serve, it's absolutely critical to be accepted and working in collaboration with the silicon providers. I only listed a few here, but in the last six months, NVIDIA is committed, Qualcomm is committed, NXP is committed, MediaTek is committed, Renesas is committed, et c. That is really, really good evidence of the progress we have made with SDP 8 in a short six months. Last slide on the recap. We talk a lot about the backlog. Why do we talk a lot about the backlog? Well, because our backlog, in the context of these long cycle businesses, is special. It is special because this is a royalty backlog.
We get paid every time a device is produced. That is very different from some of the other backlogs that you hear about in the ecosystems that we serve. This is royalty. Obviously, the marginal cost of that royalty is very low. We've grown this backlog 30% CAGR the last two years, $815 million, close to four times current revenue. And a tidbit that I don't think we have shared before, if you take the first bullet point there in the box on the left-hand side, out of the $500 million + in royalty backlog that we have secured in the last two years, less than $20 million will hit revenue this fiscal year.
This drives the sustainability of this business and the stability that we have when we need to invest long-term for the macro trends that we believe drives this business long term. Okay, let's talk about what's going on in the industry. And again, for people that have been listening to us for a while, you have seen the macro trends here on the left-hand side multiple times. At the thirty thousand feet view, this is what drives our business. More B2B compute, more sophisticated B2B compute. When it's more sophisticated, it needs a sophisticated layered stack, and that stack requires something like QNX as foundational software to make it work properly.
In the last two years or so, I've seen multiple times in conferences, in some research papers, et c, people sort of trying to challenge the notion that we have put forward that automotive is the tip of the spear for edge compute. What the team did here, they put a box together with some of the metrics for edge compute, one single compute domain, and you know, there are multiple compute domains in the car. We have discussed, for example, not a great metric, but still an approximation. We've discussed over the last couple of years that a modern car has a hundred, 200 million lines of code. Last year, there were cars launched with five hundred million lines of code. You need someone to help you with that sophisticated stack if it's going to be manageable.
There are many false analogies here. The one I most often hear is the car is an iPhone on wheels. The car is not an iPhone on wheels. The car is the first robot that moves around that scale semi-autonomously. Very, very different. There are actually multiple iPhone compute stacks in the car in terms of compute sophistication. And it's very, very important to remember that when you chastise the OEMs for being late and struggling to get their cars out on time. This is a very, very difficult task, and it's never been done before. Automotive is the tip of the spear. Another favorite of mine is there have been attempts of comparing automotive to telecoms. You know, a base station, certain software practices being used, and so forth, and the base station, the car, you know, they should align and...
The car is not a base station. The car, a base station doesn't push, you know, telecom operator doesn't push millions of lines of code out to consumers. It doesn't have ML models that touch actuators in the real world. It's a orders of magnitude different type of problem to solve, and it's important to remember that. There are merits to these analogies, but they are far from perfect, though. The car is the tip of the spear for automotive, for edge compute today. And why is that important? Well, it's important because obviously we're doing well in automotive, and we believe that will have tremendous spillover effects to other industries. So where are we at in automotive edge compute? Where are we at in this path towards the software-defined vehicle? I have two slides on this.
The first one is qualitative, and the second one is gonna be quantitative. What I've done here is I've put a graphic in on the right-hand side of the slide. This graphic happens to be from BCG, one of the consultants. They did some work with, I think it was the World Economic Forum, trying to describe various dimensions that are important for the software-defined vehicle to really materialize. If you look at the slide here, you need to be able to manage mixed criticality, you need to be able to manage the cloud, both the digital twin aspect and the workload aspect, so moving workloads from the cloud to the edge and from the edge to the cloud, et c, et c.
You need to have an integrated tool chain, you need to have a standardized architecture, you need to be chip agnostic, et c, et c. And then they outline here a timeline. Where are we at on this path to the SDV Nirvana that we've been talking about for a while? As you can see, based on their interviews in the ecosystem, we have just passed the emerging stage, and obviously, it varies across different OEMs. But we are still in the very early stages of the transition that is happening in the automotive industry. It's ten years left before we see cars that are software-defined on the road as the main type of car. Here's a different graph. This one is trying to give you some numbers, and this is from another consultancy.
This is from McKinsey, and what they've done is they looked at the hardware compute. So again, the sophistication of hardware at the edge. They have divided into two points in time, 2025 and 2030. They look at ECUs and DCUs. And I know the definitions here vary a little bit. We talk about ECUs and DCUs, and MCUs and MPUs, and I will not get into that debate. Think of ECUs as low-end compute, single function or simple functions, and DCUs as a sophisticated layered stack running on a high-performance SoC. 2025, you can see $89 billion of the hardware compute market here for automotive sits on legacy, so to speak, ECUs. Single function, basic functionality. $17 billion sits on modern, high-performance SoCs.
The color coding here, going from bottom to top, you have ADAS, safety, semi-autonomous, L2, L3, whatever it is, is dark blue. Orange is digital cockpit and infotainment, then you have the powertrain, chassis, and body, and so forth. What is important here is obviously the transition, again, over a multi-year period. Towards the tail end of this decade, the DCU market is gonna be the more important market, obviously, in terms of sophistication of the stack. Why does this matter to us? We don't serve the ECU market. We serve the DCU market, and we are actually doing incredibly well in the DCU market, and I'll give you some stats here in the next slide, bringing it back to numbers that matters to us and some archetypes.
And what we tried to do in this slide is to take the simplest possible way of modeling the architecture for this tip of the spear, for edge compute, for the automotive industry. So going from top to bottom here, there's a distributed architecture that has been dominant for quite some time. It moves in some form to a domain-based, and there are many forms of domain-based. I know Justin will make fun of me in his breakout session later, because I'm oversimplifying. And at some point, you get to a centralized high-performance compute architecture. Where are we at in terms of numbers? Well, what this graph does, and this graph I think is from S&P, it maps these archetypes to volumes.
So going from left to right, 90 million light commercial vehicles and personal vehicles sold in 2023, growing to 97.6 million in 2030, and then you have the categories matched to the architectures here. And what you can see in the graph is obviously that as of last year, the vast majority, 80% or so, shipped in the legacy architecture. The vast majority of those legacy architectures we don't serve. And then as you move through this decade, the new architectures take over. So as the subheading says here, we are winning an outsized share in the advanced architectures, the DCU-based architectures, and the share of the advanced architectures is growing. That's a good structural trend to have in your back. We gave you some of the numbers at the bottom of the slide.
You know, we work with sixteen out of the twenty of the top global OEMs for cockpit solutions. We work with fifteen out of twenty of the global OEMs for ADAS solutions. We have a very strong foothold for the most advanced edge compute in the most advanced edge compute segment. Let me give you one more slide on the architecture, because it's so fundamental to what's going on in the industry. So on the left-hand side here, we are basically illustrating the story that we have told you for the last couple of years. We've told you a story about more sockets and more layers, us providing components in this overall architecture. And the way it's illustrated is at the bottom of the slide, you have hardware and electronics. There are two boxes there because that's ADAS and DC, the two that have really moved.
There's a shade of something else coming. We have some wins, as I indicated before, and then as you move up, you have operating systems and virtualization, and then you have middleware, and the real functionality, as you're aware, sits in the application layer, so ADAS functionality, lane departure, warning, automatic braking, L3, et c. The real work that affects the consumer experience sits in the application layer, and over the last couple of years, we have done really well by getting a couple of sockets and a couple of pieces indicated by blue here in the middleware layer, and we have some sub-platforms that we have invested in, QNX Sound, IVY, et c. But they are sort of subcomponent in a broader architecture that the OEM is managing.
What the team is most excited about in the last eighteen months is that some of the leading OEMs, when it comes to the software-defined vehicle architecture, they have approached us and said: "Why are we spending so much time building this foundational layer? Couldn't QNX take a bigger role? If we ask you to take a bigger portion of this and maintain the foundation so we can really focus on the application layer, could you do that for us?" And obviously, the answer when the customer asks is yes. That's one of the big investments that started this year and will run over quite some time looking forward here. What does it look like? What it looks like, the next graph here on the right-hand side. So we would take our subcomponents in the middleware layer, and we would integrate them into a holistic vehicle platform.
Ivy components would become part of this, Sound components would become part of that, some other middleware components that we have would become part of that. We maintain the OS and hypervisor layer underneath it, and that allows the OEM to focus on the things that are differentiating to the consumer... freeing up those precious software resources to, again, reduce complexity, accelerate time to market, drive costs down, et c, et c. We are very excited about this. These are early days in this evolution, but we believe over the next decade, back to the trends, this could be a major opportunity for us. What does it mean for the markets that we serve, the size of the markets that we serve?
And again, for people that have been following us for the last two years or three years or so, what essentially happened over the last eighteen months was that our TAM and SAM moved to the right as our biggest market, the automotive edge compute market, had significant delays. Many SOPs were delayed, many programs were delayed. What the market looks like from our perspective at this point in time is illustrated in this graph. We believe calendar year 2024, our core products, meaning essentially QNX across automotive and GEM, is roughly $1.7 billion. We believe this market, over the planning period that we're discussing in this forum, the next couple of years, will grow somewhere between 8% and 12% overall.
What you see in the light blue, and especially what you see happening beyond this current planning period that we're talking about here, is that structural trend that I hinted at before. We believe that the SAM towards the tail end of this decade is opening up for us, and we believe it's a tremendous opportunity that is even larger than what we thought as late as last year when we talked to you. So what are we doing about it? What are we focusing our resources and time on? A couple of years ago, we decided that we're gonna talk about strategy with these four components. There are many ways of talking about strategy. I think this is a simple framework that works for us. So starting from left to right, again, we've talked about how we focus on particular segments.
In particular, we have said that we go after automotive first and high-end compute in certain subsegments, robotics, medical, et cetera. We've said we're not gonna stop what we've done on the R&D side for many years, these long-term R&D projects that are really based on customers asking us to do things together with them. We talked about how IVY was one of them. We've talked about how SDP8 came from requirements from NVIDIA, et cetera. And thirdly, we've said, as a subcomponent of that, we have a very targeted R&D approach. We spend a lot of money on R&D because this is an R&D and engineering-heavy business. But although we spend a lot of money, we wanna make sure that we get bang for the buck.
And we talked about that three-pillar roadmap, and Grant will come back and describe both the progress in that three-pillar roadmap and what we're gonna do over the next couple of years. And last but not least, as you heard from John, the business unit transformation is obviously high up on our agenda, being allowed to modify and adapt our processes and organizational structure, et c, to the customers and partners that we serve. Let me give you a couple of pointers about what's going on and where we're going with this. So starting with the market segments again. This year, for the first time, we're gonna start spending money on go-to-market for industries outside of automotive, meaning increasing the reach that we have in the GEM markets.
That's gonna take some time, but this is gonna be the first year that we're where we go there. Not surprisingly, given what you've just heard, we have further investments in ecosystem solution selling and partnerships. Makes perfect sense, given where the lead segments are going. On the long-term commitments, we are, this year, spending significant money, significant R&D money, ramping the work on the vehicle platform and on QNX Everywhere. That is critical to be able to capture that bigger opportunity towards the tail end of this decade. For R&D, I'll let Grant comment on the three pillars in detail. I would just wanna call out two. Some of you might remember that at CS last year, or this year, I should say, but last fiscal year, we announced that specific cloud partnership with AWS and Stellantis.
In less than six months, the team have now turned that into a product, which is a significant achievement. You will hear more about that, and we're investing very significantly in moving our cloud offering forward. The second thing you will hear, and should pay attention to, is we do a lot of work with open source. Sometimes people claim that we don't, but we do a lot of work with open source in the ecosystem. We contribute to open source. Every stack that we're deployed in is a mixed stack, open source, in-house development, and commercial software. We are gonna accelerate, over the next couple of years, that effort. We're also gonna accelerate our reach to a broader developer community for non-commercial use. That's what you have on the label of QNX Everywhere.
Last but not least, just to give you an example of the business unit transformation, marketing now sits fully in our organization for IoT and QNX. Pay attention to that area. We have things coming in the not-too-distant future. How do you track this business? What should you look at beyond the quarterly financials that you get on a regular cadence? This is important because this is a long-cycle business. How do you track our progress? Here are some examples of things that we pay close attention to internally. Starting from the top here, automotive is obviously a cyclical business, and there's nothing we can do about that cycle, but are we doing, as a company, better than the automotive macro is showing? If you look back the last eighteen months, that's clearly the case.
The most important leading indicator is the backlog, but not just the size of that backlog, also what is in that backlog. Are we announcing structural wins? Do you see things that point at those big trends that I referred to earlier in the presentation? Thirdly, is the tangible progress on integrated marketing and the QNX Everywhere piece. This is something to really pay attention to over the next 12 - 24 months, because we are ramping investments in those two areas at present. What ecosystems are we making? And again, across the whole stack, what SoC vendors are committing to our next generation platform? What cloud vendors are we playing with? What other partners are we announcing things with throughout the stack? And last but not least, QNX Everywhere. Over the next couple of years, this will be a major effort for us.
Let me try to summarize. So first of all, the long-term investment thesis is as strong as it's ever been. Secondly, we have made significant progress in the last eighteen months. Thirdly, leading customers are now asking us to do more beyond the more sockets, more layers narrative that you've heard. It's a pull, not a push from our side. And last but not least, we have clear initiatives to advance critical work on both the product and go-to-market fronts over the next 12-24 months. The team has never been more excited. It's summarized in the sentence at the bottom of this slide, BlackBerry IoT and QNX, never been stronger, and the opportunity has never been larger. Thank you. And with that, I would like to introduce our Head of Product and Strategy, Grant.
Thanks. Hi there, I'm Grant Courville. I head up Product and Strategy at BlackBerry IoT. Thank you, Mattias, and I've had a long history in automotive and embedded computing in general, and it's been a fun ride. It really has, and the innovation we're all seeing is absolutely tremendous, so in this session, I'm gonna build on what Mattias shared earlier, talk about our investments to date, talk a bit about the trends and challenges that Mattias highlighted in automotive and in general embedded, and talk about the tremendous innovation and investments that we're making going forward, so Mattias talked a bit about our three-pillar roadmap, and you may have seen this slide before, but I'm gonna touch on this and give you, I guess, a bit of a report card since the last summit that we held.
So as you can see, we focus on, obviously, innovation at the edge, big focus on security and safety, and what we call reduction to developer friction and, and around cloud and, and making ourselves more transparent and whatnot, and I'll, I'll talk about that. Mattias touched on our QNX 8 release, QNX SDP 8, or our software development platform, 8.0. It was in research for many years. As you know, we've had a microkernel operating system for quite some time, actually, since day one, and it is absolutely the best OS architecture as it pertains to safety and security. And after that research and, and we re-architected our microkernel, surgical rearchitecture of our microkernel, to the point where now we have the most performant OS ever, that we've ever released. It'll scale one to one with the number of cores.
So if you think about embedded devices today, dual core, quad core, eight core, twelve, sixteen, and so on, and where compute is going and intelligence at the edge is going, this is absolutely the foundation that our customers can make use of to build on for those devices. We benchmarked it on hardware, we benchmarked it in the cloud. Our customers, of course, have benchmarked our OS kernel, and the results have been absolutely fantastic. As you probably know, the OS, the QNX eight OS, and actually our current OS, it is the basis for our hypervisor, our safety OS, and our safety version of our hypervisor. So anything we do to improve the operating system, all of our other products inherit. It's a product strategy we embraced and took on many years ago, and one that our customers are seeing tremendous benefits with.
We also provided an early access release of our QNX 8 Hypervisor, and again, it enjoys and benefits from all the performance and innovation from QNX 8. Excuse me. And Matthias mentioned some of the silicon vendors. If you think about what we do, we sit directly above the hardware. So working very closely and innovating with the silicon vendors and investing with the silicon vendors is incredibly important. So we're thrilled to have vendor support and commitment from companies like Ambarella, AMD, Horizon Robotics, Intel, MediaTek, NVIDIA, NXP, Qualcomm, Renesas, Samsung, Texas Instruments, and I could go on. It's been great. They've really, really, really been receptive to what we're doing today and what our roadmap is going forward. So if we talk about the middle column for a minute, safety and security, excuse me, innovation, we provided what industry first VirtIO frameworks.
And what those are are APIs that let you abstract the hardware across the silicon vendors and, done properly, which of course we've done, abstract to the cloud. So they can develop common software, both for the device and in the cloud. We've safety certified our OS against multiple functional safety standards for auto, industrial, medical, and rail. I'll talk a bit more about that, and released a safety certified C++ environment. So again, a lot of investment in safety. On the security front, we've increased our security analysis team and incident response team. Obviously, that is inherited from BlackBerry, because BlackBerry has a tremendous history in there, and we brought that forward to automotive. We've achieved ISO 21434 certification.
That might not be familiar to you, but WP.29, and there's some regulations that go along with it, came into full effect just recently, actually, just this past summer. For the member countries, you need to. If your vehicle needs to comply with that standard and you don't comply, you can't sell your vehicle in that country. So it's got teeth. It's new to the industry. And again, it's. We've certified to 21434 to help our customers achieve that level of certification and conform to those regulations. On the developer friction side, last column, far right, Matthias talked a bit about the cloud. So we've invested tremendously in the cloud.
We've put our OS in the cloud. We've put our hypervisor in the cloud. We put our safety OS in the cloud, and I'll talk a bit more about cloud going forward. Open source and standards are something that we've been investing in for years and continue to invest in. In terms of partner integration, working with both software partners as well as hardware partners to truly innovate and integrate to give our customers the best possible solutions. Let's switch gears a bit, and let's talk a bit about the software journey we're witnessing in automotive. If you look back a few years, many automakers recognized that software could unlock tremendous value, so they started taking on much more of the software development in-house. Many plan to invest, quite frankly, billions of dollars to take on this challenge.
For quite a few, they wanted to take on the entire software development, from what I'll call the base software to middleware, to applications, to connectivity. These are global investments, involve restructuring, partnerships, and acquisitions. Recently, OEMs realized that the software foundation for those, for these systems is far more complex than ever anticipated. The integration is far more challenging, especially for the high-end systems that Mattias talked about earlier. Unfortunately, we're seeing a few false starts, some program delays, some restructuring, and quite frankly, some changes in strategy. The biggest OEM realization was that the differentiation and consumer-facing value was not in developing that, the entire stack from top to bottom. They realized that they should really build on top of a platform, on top of a foundational software platform from a trusted software provider, and focus on consumer-facing value and differentiation above that platform.
So where are we now? Well, quite frankly, we're at an inflection point in this journey. As we saw, the industry realized, excuse me, that software could create tremendous value, so they began to take on that software development in-house and invest and restructure to take this on. This meant that they also started to pull back on outsourcing the complete software and hardware development to the traditional Tier One suppliers, which caused a lot of disruption in the industry. And then we saw an almost universal realization that foundational vehicle software, although critical to each system in the car, actually offered the automakers little direct consumer-facing differentiation and value. And to top that off, as I mentioned earlier, incredibly difficult, expensive, time-consuming, and complex to develop and integrate. So today, we're at an inflection point where we see automakers looking for a foundational software platform from a trusted partner.
This is a tremendous opportunity for BlackBerry, for greater collaboration, focused investments, and new value creations for automakers and for us. You've seen various, I'll say, evolutionary diagrams, I'll call it. But while all this software disruption is occurring and the evolution's occurring, you've got the same thing occurring in the vehicle, and Matthias touched on this a bit. Again, if we look at the far left. This applies to most of the vehicles on the road today. There's many fixed function ECUs. ECU is a system in the car, essentially, and they range from microcontrollers to lower-end processors to higher-end processors, and they expand across multiple networks. Usually, again, in these traditional architectures, when consumers demanded new features, that meant new ECUs. New ECUs meant a new system in the car, meant new wiring, harnesses, power, weight, and so on.
Quite frankly, there was little opportunity to consolidate this function, and it wasn't economical and just didn't scale. The complexity was really focused around the hardware. If you look in the middle column, this is where we're seeing more of a domain-centralized approach, and it's a reduction in these fixed function ECUs, and we're starting to see some initial consolidation, and you're seeing that consolidation around safety systems or what are called ADAS systems, Advanced Driver Assistance Systems. You're also seeing the introduction of what we call mixed-critical ECUs, where you're mixing a safety-critical system and non-safety-critical functionality into that same ECU or that same system. The digital cockpit is the first place you're seeing that, and we've seen, as Matthias mentioned earlier, tremendous success around digital cockpits and around these consolidated safety systems. All of this is causing an increase in software complexity.
So you can start to see the shift from hardware complexity to software complexity. And for any of you that know me, I always say, complexity is our friend. We know how to deal with complexity. So if you look at the far right, this is where you get to more of a vehicle-centralized architecture. And again, you'll see different representations of this. Bottom line is, essentially, it's a reduction in those fixed function ECUs, the introduction of much more high-end processing, high-end systems in the car. It's ultimately the North Star for just about every OEM, is this vehicle-centralized approach. And again, it drives the need, the critical need, for a vehicle-wide foundational software platform to deal with that complexity and enable the OEM innovation and value. So opportunity knocks.
To deal with this complexity and the integration challenges, and Mattias touched on it earlier, our customers are asking us, and dare I say, telling us, and multiple OEMs, by the way, and as you all know, we work very, very closely with our customers. This is pretty much universal. They're telling us they need us, they need someone to build that foundational software platform. Quite honestly, most of them are saying BlackBerry QNX, you're the only ones that can do it. We need you to do this. We're being asked to build on our trusted OS, our hypervisor, our virtualization technology, our middleware, our connectivity services, and build out that foundational software platform, and to have it be used on safety and non-safety critical systems.
This platform will, of course, evolve or involve, sorry, collaboration with trusted third parties, well, I'll say like-minded third parties, and again, will be used in the high-performance compute, mixed critical systems across ECUs, across domains, and quite frankly, across the vehicle. This foundational software platform should be simple by design, performant by nature, and scalable, and not only across the vehicle, but scalable to the cloud, and I'll talk a bit more about cloud technology in a bit. It should also use common APIs, so again, we're big promonents, proponents of standards, sorry, common APIs, common tools, be pre-integrated. And when I say pre-integrated, it's not just the software. Think about safety and the safety artifacts and the processes, so again, integrating all of that, not just within BlackBerry QNX, but also amongst the partners that we invite to take part in this platform.
Again, using this platform will allow the OEMs to focus on consumer differentiation and consumer value. The value of this platform, the big thing to keep in mind, the value of this platform is far greater than the sum of the parts. This is a shift, if you like, and it was touched on earlier. This is a shift from being a component provider to not only doing that, but also being a platform provider, a foundational software platform provider that our customers can build on top of. So let's talk about open standards, open source, and I'll say standards tools. Our strategy has always been to embrace standards from almost, again, from day one. We support standard tools and languages like the GCC tool chain and Rust environment, Python, Ada.
You may not be familiar with some of these, but know that these are common languages, common APIs, common software that you'll see on QNX and that you'll also see on many other operating systems. And speaking of standards, we were a founding member of Eclipse. You may have heard of the Eclipse Consortium, the Eclipse Foundation. We were a founding member in the early 2000s. In fact, we created the C, C++ environment for Eclipse. So a long, long history as it pertains to standards. For decades, we've supported standards like POSIX, and we also support a number of tools and APIs and utilities that you'll also find on Linux and other operating systems. And we also contribute to many open-source standards as well as open-source, we'll say, consortiums.
If you think of consortiums like OASIS and AUTOSAR, we're leading contributors there for things like virtualization, for instance. We headed up the virtualization concept within AUTOSAR. And again, we contribute ... I talked a little bit about VirtIO earlier. We contribute VirtIO to OASIS, and we contribute to many, many other environments as well. The other thing you probably heard this year, and I'm sure you've taken note of, is we're increasing access to the source code, to the QNX source code, as part of our commitment to industry standards and transparency. That was mentioned by John Wall, I think, in the spring. You're gonna see more of our source code being published. Let's shift gears a bit and talk about safety. Obviously, we're very well known for safety, security, reliability, and high performance.
So you may have heard a lot of, I'll say, activity and announcements around Linux and safety. Well, here's the reality. The reality has been, or is, there's a lot of churn with minimal results, no timeline to success, and some major initiatives have failed to deliver on their promises. And I think what's happening is people are realizing that what makes Linux somewhat attractive for certain environments, so the iterations, the thousands of contributors, I'll say, and the quickly evolving software, almost makes it impossible to safety certify, especially to the highest levels. You've also seen companies try to essentially bolt software around Linux to try to have it be accommodated in a safety environment, and pretty much it's being shunned by the industry as well.
And major automakers have flat out told us that they're not interested in kind of safe or good enough safety as it pertains to Linux. Safety requires, and we know this, and you know this, and the industry knows this, safety requires the right OS architecture, which we believe is the microkernel architecture, and our customers tell us the microkernel architecture is the way to go. Processes, the right processes, the right culture, the right experience, the right people, and the right commitment to safety above all else. Safety is not a one and done. You need to do that over a long period of time, and we have, and we continue to do that, and we're trusted to do that. And, of course, there's the business reality of accountability and support over the long term. Bottom line is safety and security shouldn't be an afterthought, shouldn't be retrofitted.
Again, we know that, and the industry knows that. So let's talk a bit about cloud for a sec. So we are seeing a real paradigm shift as it pertains to cloud. Cloud is nothing new in the IT environment. If you think about embedded development, this is where you're seeing more adoption of cloud, and customers are at different phases, I'll say, of their cloud adoption journey. So traditionally, cloud use in automotive has mostly been focused on back-end systems. So think telematics, think data acquisition to a certain extent, think over-the-air software updates and whatnot. And what we're seeing, and I touched on it earlier, is customers want to truly decouple from hardware. They don't want to be tied to specific hardware, and they wanna leverage the cloud to accelerate development, iterate more quickly, and drive better collaboration.
So we're enabling what I'll call is a cloud-first embedded development approach. And we're working with key partners to enable scale, velocity, and greater customer and ecosystem collaboration. At a presentation earlier this year, in fact, a German OEM put up a slide, and he said they have 10,000 developers contributing to their environment. Now, that's within the OEM, within their suppliers, within the ecosystem at large, but think about that number, 10,000 developers contributing to that environment. Things like that just would not be possible without the cloud. It's a very advanced German OEM, and again, you're seeing more and more adoption across the automotive industry and across general embedded as it pertains to cloud.
So we're providing common binaries, common interfaces, and working with partners on cloud edge parity to blur the line between the edge and the cloud. So essentially, what I'm saying is you're running the same operating system, same OS for safety, same hypervisor that you would run in the car, you're running it in the cloud. So it's not a special custom version. So our customers benefit tremendously from that. The cloud is and will change the software development paradigm. We're seeing it. Some of our customers are quite advanced down that journey, others are just beginning, and we're in lockstep with them, and we're not dictating how they use the cloud. Again, we provide frameworks. We work very closely to provide services, to integrate, tightly integrate into their environment. The end game is about transparency between in-vehicle, physical, and digital environments, and do this at scale.
If you look at the bottom right, you'll see a couple quotes from a global automaker, just to give you an idea of some of the scale and benefits that they can see from the cloud. So you can see here, enabling the delivery of infotainment tech to customers a hundred times faster than previous processes. And what used to take months to be achieved, down to 24 hours. For those of you that are here, you'll also see a Digital Cockpit in the demonstration area that we're showing, also making use of the cloud. And the software you see in that Digital Cockpit, our foundational software, is the same software that is running in Digital Cockpits in vehicles today. So again, achieving that parity between the edge devices, the systems in cars, and what you see in the cloud.
Tremendous benefits for our customers and new areas of innovation, new areas of monetization for us, so if we look beyond automotive for a sec, the trends we're seeing in auto are absolutely emerging, I'll say, beyond auto, in markets such as industrial, medical, robotics, aerospace, and defense, and Matthias mentioned earlier, I was very happy to see industry leaders like Doug Field at Ford and others dispel this myth of the vehicle being a smartphone on wheels. We all know the vehicle is way more complex than a smartphone. We talked about the hundreds of millions lines of code, the multiple ECUs from microcontrollers, low-end fixed function ECUs, to the domains, to the multiple sensors in a vehicle, think cameras and LIDAR and radar, excuse me, oxygen sensors, occupant sensors in the vehicle.
And if you think about the vehicle, tremendous need for safety, security, reliability at all times, and again, for over 10 years, the vehicle, typical vehicle life cycle. So again, completely different than a smartphone. So earlier on, it might have been cool to say, "Hey, smartphone on wheels." Well, it really doesn't apply when you dig a few layers down and look at the technology involved and what's really required from a supplier, a trusted supplier, in automotive of technology and services. So with our decades of trust and support for critical devices, and we've been in these markets, by the way, for decades, I'm sure you know. We've had multiple companies come to us in these markets and say, "Hey, our legacy RTOSes, our legacy OSes just can't cut it.
As this complexity grows, as the intelligence at the edge grows, as the demands on those edge devices, those control systems grow, we just can't get there from here with, I'll say, what used to be our traditional competitors in those markets. And a long-standing fundamental tenet of ours from a product strategy perspective has been to take our operating system and then certify it across multiple functional safety standards. So 61508 for industrial, 62304 for medical, 26262 , obviously for automotive, and 50128 for rail. Now, why is that important? That's because any innovation, any improvements, any functionality we add, let's just say for automotive, guess what? Our industrial customers can benefit from that. Our medical customers can benefit from that. Rail customers can benefit from that.
So again, you get that commonality of innovation, and we certify our products across all of those. So they get to use common binaries, common APIs, so interfaces, and common tools. So yes, we take on some extra burden to do that, but that was a strategic decision we made many years ago, and our customers are benefiting from that tremendously. So let's look at our three-pillar roadmap again, but let's look forward to 2024 and beyond. So if we look at the edge, obviously, I talked about QNX Eight earlier. We made an announcement earlier this year around container support. It's been one of those things where we've been asked about containers 'cause there's been a lot of influence from the hyperscalers, the cloud vendors, about containers. So we're implementing containers on our microkernel operating system, again, an ideal architecture for safety and security.
So we've announced that. We're releasing that, so they'll be fully available and compliant to OCI standards and whatnot. So it'll be standard interfaces and use of containers. We're actually continuing to innovate around virtualization extensions, again, to provide that commonality of programming interfaces, cloud and edge. We're gonna have a commercial release of our hypervisor. In terms of pre-integrated platforms, I talked a lot about our foundational software platform and our digital cockpit reference that we have. And again, we're gonna support next-gen silicon. We work very, very closely with the silicon vendors on what they have today and what they're planning for the future. We're also, and you'll see that out here, for those that are here, software-defined audio is a shift going on in the industry regarding audio.
They're moving to a more, I'll say, a holistic approach to audio, where they can essentially not require those expensive smart amplifiers anymore, move the audio and acoustics processing into a domain like the cockpit, for instance. And then the other interesting thing that we're seeing on the edge is that we're being asked by customers, "Hey, we're using QNX on these high-performance processors and across many microprocessors, could you support microcontrollers?" In other words, use common tools, common technology, common software across all of the processing on those systems. And of course, there, the answer is yes. We're looking at the microcontrollers that are 64- bit. We're taking a look at as well as even 32- bit, and seeing where we can provide that value to our customers. In safety and security, obviously, we're gonna certify the QNX OS, QNX Hypervisor.
We're also gonna certify containers. No one's done that yet. That's something we believe we can do. And we're gonna, of course, expand our portfolio in general as it pertains to safety. I talked about ISO 21434. Again, it's a standard and regulation with teeth as it pertains to WP.29, and we're gonna also introduce an auditing and monitoring framework for anomaly detection and intrusion detection, and just that our customers can build on top of. QNX Everywhere, this is where we're gonna enable developers at large to be able to make use of QNX and not prototype on other operating systems, then move to QNX for their production systems. We're gonna enable them to easily get access to QNX for non-commercial use, think students, research institutions, hobbyists, and whatnot, and really build out that talent base around the planet.
For open source projects, again, we've had tremendous support in the past. We've beefed up the team internally such that we're bringing in the relevant open source projects, reporting them, optimizing them, and upstreaming them, providing them back to the community as well, and cloud, talked about cloud earlier. Again, cloud is firmly part of our roadmap, firmly part of our innovation, and it's something our customers are counting on, so really enabling that cloud-first embedded development approach, so to sum things up, we're already trusted and proven to provide safe, secure, and reliable software foundation for many of the world's most critical embedded systems, and we've been trusted for decades. From low-end to high-end, safety, non-safety, components to platforms, we've got the experience, the culture, the trust, and quality, that true commitment to quality, to enable customer success.
Customers are telling us that we're critical to their systems today as well as their next-generation systems and across industries. And as the world becomes more automated with more intelligence at the edge, no one wants to compromise the performance, reliability, safety, or security, and we're trusted and proven to take on those challenges across industries. We believe that safety and security should never be an afterthought or a retrofit to a company's culture, the software, the services they provide, and that's why our customers are counting on us. So to close things out, some key takeaways. One is we're a trusted and proven leader for mission-critical, safe, and secure software and automotive for quite some time. We've been in automotive since 1998 and for the future. Secondly, no one else has the proven foundational software portfolio that we have and the investments for the future.
Third, as vehicles move towards high-performance compute, customers will benefit even more from what we provide today and the investments we're making for the future, and especially if you think back to QNX Hypervisor, where it can scale one to one to high-performance systems. And fourth, as more and more industries evolve to intelligence at the edge, safety and security, our unique differentiation and roadmap investments will provide new opportunities for growth for us and a true foundation to allow innovation and value for our customers. So in closing, as I mentioned earlier, developing and maintaining safe, secure, and reliable certified software is incredibly difficult. But like we say, that's what we do. We've done it successfully for decades, and our customers are counting on us to do that today and for the future. Thank you.
I'd like to hand over the stage to our CEO, John Giamatteo, again.
Okay, nicely done. Great job, guys. You know, I thought I would just take a second to kinda... I talked about security, trust, and innovation, and how it really underpins everything that we're doing as a company. You can hold on the monitor. So as just when you see what Matthias and Grant went through, how many times did Grant talk about safety, certifications, security, how important that is in the level of critical mission-critical types of capabilities that we provide? How many times did you hear Matthias and Grant talk about the trust that we've established in the ecosystem of what we do, whether it's the OEMs, the auto manufacturing, whether it's the tier ones, whether it's the silicon providers, from Texas Instruments to Intel to NVIDIA?
We're trusted across the entire industry, and they welcome the opportunity to work with us. And, obviously, from an innovation perspective, tremendous amount, that's coming out. Tremendous amount of investments that we make. Mattias talked about, we're an R&D-heavy organization because this industry requires it. And when you look at everything that we're doing across QNX, whether that's SDP 8.0, whether that's QNX Everywhere, whether that's QNX Sound, whether that's Ivy, from an innovation perspective, you see the tenets of what we do as a one BlackBerry company, you know, really kinda come through. So I just thought I'd take a minute to kinda piece that together a little bit, and hopefully you see what we mean when we talk about security, trust, and innovation, and the two business units that it really underpins.
So, you know, when we opened today, we talked about, you know, security and trust, innovation, and I would tell you, nowhere is that more evident in than the cybersecurity business unit. You saw it firsthand on the IoT side, and, you know, unlike other players on the cyber side, we think of, you know, the cybersecurity market in a much more expansive view. And, yes, you know, while we're the pioneer in leveraging advanced AI ML technologies to protect endpoints and help organizations scale and manage their increasingly complex security needs, absolutely, that's kind of front and center of what we do as a company. However, drawing on our rich heritage of secure communications, we do so much more.
Our solutions allow any organization to safely leverage your bring your own or commercial off-the-shelf devices into the workplace, providing mobile fortification to ensure that data and applications remain safe. We protect mission-critical communications, delivering end-to-end cryptographic protection in digital voice and text conversations, and our encryption solution, which you're gonna hear more from Christoph later today, are completely authorized all the way up to top secret classifications. Not many people in the industry that can address that level of classification. And what happens when something happens? When an organization inevitably faces that crisis, whether it's a natural disaster, whether it's a cyberattack, or whether it's some type of other kinetic event, we help them respond instantly to mass alert civilian populations and orchestrate first responders.
In fact, BlackBerry is used in 90% of the U.S. federal government, allowing communications across any device for maximum reach and speed during a crisis. So that just gives you a little overview of what you're gonna hear from as I invite Nate Jenniges to the stage. He's our senior vice president and general manager of our UEM, AtHoc, and Cylance products. So Nate, come on up.
... Good morning, everyone, and thank you, John. It is an honor to be here sharing with you how we are driving profitable growth around our secure communications products. As I reflected on this opportunity, I was thinking about the intersection of communications and security. And this is a part that merges parts of my career, because I've spent time both in mobile phones and in cybersecurity, just like the history of BlackBerry. In fact, many times throughout my career, I found myself competing against BlackBerry, and now it is the privilege to be leading teams here, fighting for the future of this great company. Why are we so bullish about this secure communications product portfolio? And why now? These are products that we've had in our portfolio for a number of years, quietly evolving them, patiently adapting them, and targeting new addressable markets.
Over the past couple of years, we've refocused these products, truly understanding who our core customers are, what makes our products extremely unique and differentiated, and doubling down on those, while continuing to find strategic investments that we could make to unlock new addressable markets. And as we started to put this real story together around secure communications last year, wrapping in that rich history of BlackBerry's trust, security, and innovation, we brought it to customers around the world, and we started uncovering renewed interest in some of our products, like UEM. We started finding new emerging market demands for some of our other products. We found ourselves talking to customers and being able to elevate conversations around communication.
We were finding ourselves getting to higher levels in organizations than we could have ever achieved in the past, treating these things as isolated products in our portfolio. Today, I'm gonna share more details on these products, what makes us unique, our strong, defensible customer base, where our opportunities for growth are, and of course, why this matters to us and to you, and that is because these products, as John has said, they are growing and they are profitable. Every day, the world is bombarded with situations that require trusted, timely communications. Many times these work, and you don't hear anything about it, but there are other cases where that communication breaks down, and it has made situations worse. Cyberattacks and IT outages, we know they can cripple our corporate communication systems. Just in July, with the major CrowdStrike IT outage, our products came to the rescue.
They were used extensively, immediately, to ensure business continuity inside of organizations and to enable them to rapidly respond and recover. We see espionage and, sadly, global conflicts continuing to rise, and in these cases, we have directly seen compromises of mobile communications have an impact on people's lives. Social unrest, financial uncertainties, extreme weather, all of these continue to create unpredictable events that require someone to bring trusted, timely communications for our customers. And as we've engaged with governments and many of the largest enterprises around the world, we see a growing awareness that they also recognize that they need better solutions in the face of all of this change to ensure their business resiliency. Who has the right pieces at this right time? BlackBerry. We have three technologies, as you've heard. We've got Unified Endpoint Management, SecuSUITE, and AtHoc.
When you look across these three technologies, we cover so many of the use cases that all of our customers ask for every single day. You think of a use case, we probably have it, or we know how to address it. Similar to QNX, right? As customers ask, we know what to do. From secure voice and messaging, to the ability to defend our devices, our apps, our data, and our networks, to the ability to bring that real-time collaborative, out-of-band communications and manage critical events, and doing all of this with BlackBerry's history in solid security and trust and encryption, all the way up to top secret levels. I'm gonna drill into each of these products a little bit more to give you some perspectives on them. First, BlackBerry UEM. This has been a cornerstone of our portfolio since we acquired Good Technology in twenty fifteen.
This product remains a meaningful contributor to the revenue of this business today. This is our product. It's a suite of capabilities underpinned by mobile device management, with a bunch of other capabilities to help you secure applications and data on any type of mobile device, whether corporate bought it for you or it's your BYOD device. And we strategically, over the past few years, have refocused on this product line. Again, understanding who our core customers were, why they wanted us, what were our unique differentiators that kept us there? I know for many years there's been a lot of discussion on this type, this UEM space, customers moving to cloud-based solutions. Despite all of that, today, we retain a meaningful, sustainable customer base that really loves our product. We remain strong. We have defensible strengths against Intune and other competitors in this market.
In many places in the world, we are the only viable option that can bring the level of data sovereignty, on-premise security, and certifications that those customers demand, and we haven't stopped. Just in the last year, we've added even more certifications to this product line, and we have multiple large-scale government deployments happening right now in multiple places in the world. You combine this with the operational efficiencies that we've done in this business, especially in the last nine months, and this product is a profit driver for this business. Next, SecuSUITE. This was the first of these three products that we acquired back in twenty fourteen. SecuSUITE, as you've heard, delivers the highest level of security, from encrypted voice, message, and data. This product has achieved some of the most difficult-to-obtain government certifications and approvals you can imagine.
Our unparalleled end-to-end encryption technology sets us apart from any competitors in this space. We ensure on these devices that your communications are not intercepted, that your data is not accessed without authorization, and that we leave no data behind, no metadata behind in public networks, and that's especially important because we have seen directly that type of information collected and used by threat actors and governments against governments. Now, for a long time, this product was a hardware-based product, focused solely on Germany, where the product was founded. Over the past several years, with investment, we have made this into a fully software-based product that works across Android and iOS devices, with the same level of security, trust that we've delivered before.
This was important because this has unlocked a tremendously larger market opportunity for us around the world, and we've been taking advantage of that opportunity over the past year. We have landed numerous large-scale government wins, including Malaysia late last year, and most recently, a large central European government. BlackBerry SecuSUITE is a growth driver for this cybersecurity business. Finally, AtHoc. This is our oldest product. In fact, dates its roots back to nineteen ninety-nine, and was acquired by BlackBerry in twenty fifteen. BlackBerry AtHoc works every single day. Every single day, our product is being used in situations to keep people safe. Our end-to-end crisis workflows that we're able to do with this product enable any organization to quickly and accurately respond to any type of critical event. Historically, this product, as you heard, was really concentrated on the U.S. government.
We dominate in the U.S. government, and that domination has allowed us to build a product that has the utmost level of scale, reliability, deep integrations, and a plethora of certifications. And that has created a very strong, defensible position in that market segment, where no competitor can come in and take that out. Now, over many years, we've attempted to take this into broader markets, and we've ran into some challenges, whether it was an entrenched competitor that had solved something more unique for that customer base, or us getting in our own way, where we didn't have all parts of our organization on the same page to go address those markets. In the past year, we changed that.
We've picked a specific segment of the market where it was a near adjacent that needed the same level of reliability and trust, and we coordinated our efforts across product, marketing, and sales. We decided to go after police, fire, and ambulance. We launched new capabilities in our product around geofencing for police dispatch units. We ran marketing campaigns targeting emergency service use cases, and we specifically enabled people in our sales team to go win those types of opportunities. Those efforts are starting to bear fruit for us. Just recently, we've landed numerous police organizations just within a month of having availability of these new capabilities. Like SecuSUITE, BlackBerry AtHoc is a growth driver for our cybersecurity business. When you step back across all these products, what really truly is impressive and sets us apart is this plethora of certifications and government approvals.
These are extremely difficult, not only to obtain, but to continue to retain all of these ongoing. This is just a sampling of them. We can't even list them all on here. It'd be six-point font that you couldn't read. Some of these are long-standing approvals that we've had, like our top-secret encryption capabilities, approved by the NSA, NATO, and others. Some are new. We continue to add to these, where we've added new certifications just in the last year in the U.S. and German government. This breadth of certifications has created a significant barrier to entry for any of our competitors. It's protecting our current customer base, and it's unlocking some new opportunities for us as well. This business has a strong foundation of customers. Approximately 80% of all of our business here is in governments and large enterprises. These are strong, big, and loyal customers.
Especially a product like BlackBerry AtHoc, we boast nearly 100% renewal rates. Customers do not leave. Now, many of these products, as you've heard, started as pockets of strength, whether it was U.S. government or German government. But over the past several years, as we've continued to expand our reach of these products, we have built a very nice, global, diversified business. And in certain segments of the market, as you've heard, like governments and military, we are the preferred choice in so many countries around the world for these solutions. Not only this now, one of our next pieces of this strategy wasn't just to get a product in. We're starting to find success of getting two or all three of the solutions into our customers.
Today, we can say that we have $17 million of our ARR in this business is coming from multi-product secure communications customers. This traction that we've been able to get in the market with these products is a testament to the quality, reliability, and trust our customers have. Our commitment to our customers shines through in many awards and the public statements they make about us. One of the things we're extraordinarily proud about is we are the only vendor to have achieved two consecutive years of being a leader in Gartner Peer Insights Customer Choice Awards. These are things voted by customers. So they voted BlackBerry UEM the best two years in a row of any product in the industry.
Now, while we maintain UEM in a lot of analyst reports, we're also extremely proud to show that our efforts in Secusmart and AtHoc have both recently been recognized in leading reports by Forrester in their respective categories. This is going to be an ongoing key focus area for us, driving awareness of our solutions. As you heard in the opening video, a lot of people don't know what we do, so we're gonna continue to drive this awareness of what we do in secure communications, because that'll fuel our ongoing sustained growth in this business. We believe we have a strong market opportunity. When you look across these product segments, it represents around a $4.6 billion addressable market, with ample opportunities for us to come in and capture market share.
Now, from a strategy perspective, we target very specific subsegments of these markets, especially those where we can take the power of this combined solution of our three products, and to be able to go into customers and elevate those decisions across what might have historically been disparate buying centers. In UEM, we truly understand what we do best. We cater to a niche. They demand on-premise, they demand the security, they demand the certifications, they demand the control over their solutions. In the critical communication space, we specialize in those encrypted communications, especially for governments, where around the world, we find a significant amount of greenfield opportunities for that product.
And in the broader physical security market, that's where we concentrate on this critical event management software, where we have a strong share in a lot of leading governments, and as you've heard, we're starting to expand that product into those adjacencies where our product fits best. And having products in all three of these markets, again, we're starting to find it's bringing a way that we can bring a unique, coordinated solution, where our customers can see that it delivers greater value for them. They can get a holistic security across their mobile efforts, and we deliver a lot of operational efficiency for them. It's also important that we're in markets that are growing. And as you can see, these markets are growing anywhere from 7% - 12% per year.
This gives us confidence as we're investing in these, that we've got sustainable growth in the future as well. Now, in our go-to-market strategy, right, again, we're very focused on where we know our products win and win best. Sometimes these start with just getting a single product in the door, and then we have that conversation, and we go through a land and expand strategy to get further penetration. But other cases, we're able to go in and get to those higher levels and convince them right up front to take the comprehensive solution. As we look at our strengths in a lot of those governments that you've seen, U.S., Canada, you know, places in Germany, Europe, Germany, it's paving the way for us to have expansion talks, especially. We're finding opportunities in Central and Eastern Europe, the Middle East, and South Asia.
In addition to those large governments, we continue to penetrate downward into the governments as well, into the state and local spaces, and expanding into those government-related adjacencies. You combine this with the opportunities that we have that need our on-premise, our certifications, our ability to bring all of those three solutions into dark sites, places in the world that will not connect to the Internet, and there are still quite a few of them, because those customers demand and need absolute control over their solutions. In many cases, we are finding those greenfield opportunities where customers don't have anything. It is still surprising how many places in the world that they haven't adopted these types of communications products. In those cases, when we bring in the entire pitch of our solution and that trust in the BlackBerry brand, as John said, people remember this still.
Those are opening doors for us to go win these opportunities. In other cases, we walk into customers and they already have stuff. In some cases, a lot of them are using consumer off-the-shelf products. You know, probably the most common thing we'll hear is, "We're using WhatsApp," and you go, "You're using WhatsApp for what?", and it is quite shocking. Other places, we see them using homegrown technologies, and they've cobbled together solutions across these things, extremely disjointed. We're able to walk into those accounts, and the ability for us to bring that consolidated solution and deliver that value is winning business. Now, for us to continue to do this, we also have to have the right strategic investments. So on the product front, we're continuing to look at what do we need to do to continue to expand?...
We're investing in video technologies, both from that secure end-to-end trusted communication, and how do we use video and AI and other technologies in our critical event management software in AtHoc? We're also bringing new AI capabilities. You hear on-premise and government, and you're like, AI? Yes, we're gonna bring AI into these capabilities, generative AI capabilities, doing it with the same level of end-to-end encryption, security, and trust that our customers depend on. We continue also to make sure we expand those integrations. Those are what keep us sticky inside of these accounts. When you have a product that is tightly integrated into so many workflows the customers depend on every day, it's hard to get out, and of course, we continue to look at any types of technological changes that are happening and staying on top of those.
From a customer perspective, we continue to obsess over simplicity, just in our overall organization, simplify, simplify. Our customers continue to want this, so we continue to look at ways that we can deliver increased operational efficiency as their evolving needs change, and on the go-to-market side, you're gonna see a little bit more as well. We continue to need to drive that awareness of our solutions, continue to branch out and create the demand for our products. We're going through a strategy, as I said, of land and expand. We have a lot of customers who just have one huge opportunity for us to go in and get the additional products in our portfolio, and as we continue to evolve this product line, we're gonna continue to look at what are those adjacencies, where are those next spaces?
Just like the QNX business going after things, we're gonna look at this on secure comms, too. Where can we go, where our products resonate the best to continue to drive growth in the business? Now, I know going back, if you look at a lot of the analyst things, we haven't really talked about many of these products, so you're probably hearing a lot more than you've heard about in a long time. I wanna summarize for you why we're so excited about these products and why you should be paying attention as we move forward. First, we have the right solutions at the right time and place in this market. We're uniquely positioned to deliver the security needed in modern communications. Number two, we have a great, defensible, strong customer base. These customers have high retention rates with us. Number three, we've really focused...
We understand what makes us special and where those growth opportunities are for us. And number four, we're making sure that we're not investing in a lot of frivolous projects. Every investment we're making in these is on purpose to go after those opportunities. And finally, number five, as you're gonna hear from Tim a little bit more later, with all of the work that we've done for the business, this set of products is extremely operationally efficient. We're growing year over year, and they are profit-driving for the business. Thank you. Now, to share with you a little bit more on our SecuSUITE product, its history and evolution, and how we're driving growth with this product, I'm pleased and honored to bring to the stage the founder of Secusmart and Senior Vice President at BlackBerry, Dr. Christoph Erdmann.
Yeah, thanks, Nate, and welcome, everybody. Still awake? Okay, good. So, as Nate said, there has been quite an evolution of the Secusmart product over time, and quick look back in history, when I actually founded it seventeen years ago, which personally to me feels like a different life, but back then, really, secure mobile comms was a total niche market. Imagine using clumsy Frankenstein phones, appealing only to a very limited audience, actually, paying for users in the intelligence community, right, who were using these devices. And the mission back then, two thousand and seven, remember, no iPhone, no Android, just BlackBerrys and Nokia phones dominating the mobile phone market back then, was getting military-grade, mobile, secure comms on conventional, off-the-shelf, totally unaltered devices.
I got a lot of lifting eyebrows back then when I started with this idea, but history proved that the timing was right, and just seven years later, so actually ten years ago from now, from today, we got acquired by BlackBerry, and so Secusmart became part of the BlackBerry family, and if you watched Nate's slides carefully, there was this picture on this one slide with a ten years younger version of me next to the German Chancellor, so back then, I was this guy who secured Angela Merkel's phone while it was under attack, and I was given the opportunity, we were given the opportunity to grow this business outside of Germany, but we very soon figured out it wasn't just about replicating what we did in Germany, the German model.
It took a lot more. We actually had to change the product quite dramatically. First of all, we had to get certifications, not just from Germany, which we had, but also from the U.S. government, the Canadian government, so the target market we were addressing back in the days. And for those of you who know a little about certification, that typically means change your entire crypto stack to what the national crypto in the country is, right? And change basically the software architecture upside down. So there's a lot going on. And then ten years later from then, which is today, as you see, giving me a lot of gray hair, but still having fun doing it, we achieved this goal. And SecuSUITE today is used by governments around the globe.
But make no mistake, what we do in Germany, and also this product has evolved quite a bit. What we do there is still at the very core of everything we do at Secusmart, because it provides a very solid revenue stream and business with the German government, which I'm gonna talk about a little bit now. So it's worth looking at, as it is really, in many ways, the foundation of what we do. It's a holistic solution, so for government-classified work. Of course, it includes, which I'm talking about in a second, this famous solution for secure voice and text that, in the meantime, is used by governments around the globe. But it actually goes far beyond that. It's full separation between classified and unclassified apps on one device.
Now, you may say, "Well, okay, that sounds like containerization, and this multiple persona containerization isn't that unusual when it comes to secure enterprise comms." That's true. That's totally unusual if you go into the classified government space. What you see there typically is locked-down devices that cater just to a single purpose. And it goes far beyond and it goes even further. We have. It opens up a lot of use cases because we have, in the meantime, developed a technology that allows us to secure any given third-party app to become certified and usable for classified, without actually touching the code of the app. Now, you can imagine that allowed us to spread our use cases from more civilian government classified use into the military, even down to tactical applications in the field, right?
which broadened up really the adoption, also in Germany, quite a bit. Solutions like this typically need to be integrated, deeply integrated into government network, and one of the most recent things we did is, you heard Nate saying in the beginning, it was based on an external hardware chip to do the crypto. In the meantime, smartphone security has evolved quite a bit, and there are so-called embedded secure elements, miniaturized single-purpose crypto processors are being embedded into smartphones, into Samsung and also Apple phones. So we'll make use of those, and this allows us, for the first time, to completely over-the-air, deploy these solutions and manage these solutions. So there's no like manual crypto deployment, which is what typical government do. It's all fully over-the-air. So that just summarizes what we do in Germany.
That's a lot of the foundations and also, I mean, we're on an analyst day here, so it provides a very solid revenue stream from one continuous device refreshes that we do, selling mobile software licenses. But it's not just the mobile end of the house, it's also the license and maintenance fees for all the many server components we deliver into the government network because they're integrated there. So it's also a very sticky solution. And while being very successful in the home market in Germany, it was quite hard to replicate that elsewhere. This level of integration and trust, you don't earn that overnight, right? That takes years to get. So we took a step back and said: Okay, let's focus really on the essence of secure mobile comms.
That's voice messaging, of course, group messaging, group call, data sharing, doing that cross-platform on Android, on iOS, on Windows, so on desktop machines. So really and do it full software-based, so as an app and as a server appliance. Think of it as a government-grade WhatsApp. Of course, it has to support certifications for classified governments. We achieved those from starting with the NSA and then going into the Canadian government. Recently, also, NATO became part of it and became a user of it. That's the one side. Then there's this other thing, what makes it attractive. It has to be flexible. Flexible deployment options, because typically, particularly when you go top secret, it has to be on-prem.
Because if it's on-prem, that's the only way you get maximum security over your system, maximum control over your metadata. And that's and it's so flexible that you may go outside after the session and see my colleague, David, presenting this solution, and it's fully deployed in a box. Everything is in a box. So you can take it in a box, but at the same time, you can scale it up to use it spread across data centers in a highly available solution. So that's how flexible it is. So this just means it's a very focused and powerful capability coming in a very easy-to-deploy package, and that is attractive to many governments around the globe. Of course, starting with-...
agencies in the U.S. government, Shared Services Canada, I mentioned NATO, but also the big win we had last week, sorry, not last week, last year in Malaysia. Last week was another one. In Malaysia, that was mainly based in SecuSUITE, on the SecuSUITE capabilities. And as you can imagine, we do get, at this time, requests from all those countries neighboring Russia and China, North Korea. So, all these customers have come to the conclusion that protecting their information superiority by a solution like this is at the core of any tactical or strategic operations they do. So that's my update on Secusmart. And with that, I hand it over to my dear colleague, Ismael Valenzuela. He's our VP of Threat Research and Intelligence. Thank you. Ismael is going to share our progress on the Cylance innovation.
Thank you, Christoph. Good morning. In my 24 years in the industry as a practitioner, defending organizations from all over the world, from the trenches, I have seen two contrasting realities. On one side, I have observed how attackers are pretty much like quickly evolving their tactics and their techniques. On the other side, I have seen how cyber defenders usually they're a bit more slow, right, to catch up with this type of threats. What I've also seen during this time is that traditional methods typically fail to anticipate and to prevent these type of attacks. It is just through technologies, breakthrough technologies like AI, that I truly feel that we have now an opportunity to give defenders the upper hand, so to speak, to be able to balance that type of asymmetry.
That is why I'm very proud and very excited to be here today to tell you more about this transformational journey, and how, in the Cylance in the BlackBerry business, we're leading the way in this new AI-driven cybersecurity, a tremendous opportunity. I feel with tremendous opportunities. You have heard a little bit about our remarkable evolution over the last 18 months, and our CEO, John, talked about how we tried to catch up with EDR for quite some time. This is something that finished in 2022 with the release of CylanceOPTICS 2.0. But this is not the only thing that we did. We not just caught up, we pivoted, we shifted to areas of higher growth, moving from a solutions-oriented type of strategy to a security outcome-based strategy.
Because at the end of the day, what really matters is not that much the product or the technology, the tool that we use, but the security outcomes. How do we best defend our customers? To do that, we have also shifted our strategic alignments to these areas of growth, including MDR and XDR, Managed Detection Response and Extended Detection and Response. In order to do that, we also had to rebuild two of our core capabilities, and that's what we're here today to tell you about. Threat research and intelligence, the team that I lead, and our AI engines, and you will hear more from Shil on that in a few minutes. As we did that, we modernized our Cylance cloud experience, allowing us to also drive significant cost efficiencies.
We have also partnered with leaders in data analytics, like Databricks, allowing us to rebuild our entire back end in the cloud, allowing us to scale and to have better innovation, sustain this innovation as well. Just an example, two months ago, we released our new cloud-native platform, XDR platform, Extended Detection and Response, that allows us to have better integrations, more flexibility, and to unlock more power for our customers. So as you're hearing, at this stage, we have been able to shift our priorities to higher areas of growth, and we are doing this through MDR, our MDR business. Now, one of those core areas is the threat research capability, the threat research team. Why is this so important? Well, the first thing is that not all of the players out there, especially in the MSSP or MDR business, have a solid threat research capability.
The majority of them, they rely on insights provided by other organizations. We deliver those insights from our team, and this is vital to do two things. It's vital because it gives us the opportunity to improve the efficacy of our products and services, for example, fueling the AI engines that we do. And also, there's no other really effective way to do that without knowing what adversaries are doing, right? It all starts with the knowledge of the adversary, their weapons, their tools, to be able to provide these specific, effective countermeasures. And the second reason why this is vital is because it allows us to build credibility in the market through expert positioning. And this is something that we have been doing over the last couple of years.
It's been recognized by the awards, the multiple awards we have gotten, also by our partners, including, as you can see there, a lot of the law enforcement agencies that we work with internationally, not only here in the U.S., like FBI or CISA, but also Royal Canadian Mounted Police, Interpol, and many others. Just as an example, since we're talking about things that haven't happened recently, in the last few days, we received a communication from the FBI that one of the investigations that we led with them resulted in the disruption of a very prolific ransomware group that was impacting customers around the world. It also have helps us to influence at the highest level, not just CISOs in organizations, but also policymakers.
Just a couple of weeks ago, I was in Washington, D.C., invited by the White House and the government of Canada, and I'm very happy to announce that BlackBerry was selected to co-chair a very important initiative, public-private initiative, driven by these entities, White House and government of Canada, as part of the largest coalition in cybersecurity in the world. This is the Counter Ransomware Initiative, and BlackBerry has been selected to co-chair one of these groups, so this is why a strong world-class threat research capability is so vital, it's central to this transformation, and if there's one publication that I would highlight that has helped to put BlackBerry in the map, back in the map, is the quarterly threat report. This is something that my team does. Our team monitors actively what's happening out there in the threat landscape, 24/7, all over the world.
But we not only talk about what attackers are doing. I get it, it's kind of fascinating, right? But it's more important to understand how organizations can defend, what they can do strategically, tactically, to defend against these threats. So what have we seen? Nate talked before about the threat landscape, right? The natural disasters, the geopolitical unrest, social unrest, all of these things are translated into the internet, right into the cyber world. And what we see is a reflection of that, an increase in the volume of attacks, an increase in the scale of the attacks. In the last report, we reported that our solutions, in just one quarter, were able to stop over 3.7 million attacks.
But the interesting figure is that this represents a 52% increase in the number of unique pieces of malware that we found over the last period, over the last quarter. 52% increase in one quarter. So I want you to remember, to remember that figure, because what that clearly indicates is that traditional security solutions are simply ineffective to stop, to anticipate, to prevent these threats. AI is the only way. But this is a publication that is not just technical, it's for decision makers, so CISOs can build threat models based on fresh data, on the knowledge on what's happening out there. But it's also being used by policymakers. We have seen this report being used out there in Washington, D.C., by the Senate, talking about how to best protect critical infrastructure in the U.S.
So no wonder that this has become the number one resource downloaded in across BlackBerry, and also helps our sales teams to create revenue opportunities. But I said before, more importantly, this data is the data that fuels our AI models to make them effective, highly efficient. That's why I would like to invite now to stage my colleague, Shil Sircar, Senior VP of Product Engineering and Data Science, who also happens to have more than 12 patents in the application of AI to the field of cybersecurity, to tell us more about how Cylance is innovating once again.
Thank you, Ismael. Good morning, everyone. I'm delighted to be here, and thanks again, Ismael, to talk about our transformation journey. It'll be about nine to 10 minutes. There are six or seven slides, and I will take you through our innovation in how we are transforming, what we've done in the last 18 months, how we've shifted our focus to our MDR, and how we are focusing on our managed detection and remediation service, what progress we've made, how our customers are recognizing us, including the industry analyst. Let's get started. In order to tackle this growing threat landscape, Cylance came up with this machine learning-based threat protection, and at acquisition, they had three core ML models that differentiated their EPP product to stop malware on the endpoint.
In the last 18 months , we've focused on our transformation, and we've now developed 18 new machine learning models that cover various aspects of cybersecurity, and with a new model inferencing platform, both on the endpoint and the cloud, that unleashes hundreds of different machine learning and AI preventative, predictive AI use cases. We haven't stopped there. We've taken a LLM, we fine-tuned it with the cybersecurity data that Ismael and team has talked about, contextualized it, fine-tuned it, and integrated this in our MDR services and product to give meaningful insights of new threats, provide explanations of novel detections, and make the SOC workflow simpler. Well, it all matters because this helps drive efficiency for our customers, make them more effective, and helps them enable their scale much better. Now, this wasn't easy. Through this journey, we've increased our patent portfolio in core machine learning.
In fact, this year itself, we filed five additional patents in ML applications in predictive machine learning, which is the one that makes a prediction, stops a threat, and in generative applications of machine learning, where contextualizing of threat information makes a long-term prediction on how to make it simple for a SOC analyst to manage the workflow. So that was the quantitative aspect of our innovation in machine learning and how we're focused on staying at the forefront of a cybersecurity platform led with machine learning. But let's look at some quantitative results. So by an independent test organization, in this particular test, how to evaluate a machine learning model, only two things matter if you're doing ML.
The first thing is how often the model is right in making a prediction and stopping a threat from proliferating, and how often the model is wrong in making an incorrect prediction. These two metric matter. At the end of the day, they drive cost, either a financial cost or a customer support cost due to incorrect prediction. And I'm actually quite thrilled with our innovations and our focus that we've done. Our latest generation Cylance engine is able to stop 25% more threats, more novel, unseen, undetected threats in this test than other leading vendors with similar technology, and that, too, with eight times less CPU utilization. And that matters because these things are running on endpoints, and of course, we don't want to impact the productivity of the users that are using it.
The other chart talks about how often the model gets it wrong. Now, VirusTotal is a publicly available website. They run over 600 engines of different vendors, and they provide week-over-week scores in terms of how these things are correct or wrong. I'm quite thrilled to share with you our week-over-week stats remain at the lowest quadrant. Lower is better, means less errors that the models make than other similar products in the market. In fact, we prepared the slides a few weeks ago, and changes week over week, so Ismael and myself were looking at it yesterday, and, you know, we're also thrilled to see that it's still as what we're talking about, even those slides were made few months ago, I guess.
So that's actually good because it helps drive customer satisfaction and better outcomes, and these are the proof points on a quantitative level. As you heard about the strategic shift and focus on MDR, a security outcome-based business, MDR is a 24/7, 365 days, managed service delivered by our SOC analysts in Cylance, for customers who do not have a fully staffed SOC management team. This strategic shift is basically playing to our core advantage because we have some of the fundamentals that are required in delivering a security-centric outcome. This strategy is also beneficial because it focuses in our existing customer base in verticals where we tend to win. In fact, 15% more than just our endpoint deployments, which are in manufacturing, industrial, legal services, business services, and education. You might wonder, why manufacturing?
Because one of the differentiating elements of our machine learning technology is that it is cloud-enabled, but not cloud-dependent. In other words, the efficacy of our models, as you've seen in the past results in the previous slide, does not deteriorate depending on whether the endpoint is connected or disconnected, and this unique capability, when we bring it to our MDR services, will help enable this addressable two billion TAM that we see. Now, one important thing about the MDR market is that it's highly fragmented, and it is being disrupted by AI and data consolidation technologies, and we'll see how we're correctly positioned to take advantage of this emerging trend, so to summarize, you know, we are in a place where we feel we're competitive.
We've transformed and modernized our cloud-native platform from when we were taking over Cylance about three, four years ago. We've consolidated our core intelligence and machine learning into a centralized data platform, partnering with Databricks. We have expanded our predictive machine learning and generative AI scope and integrated that tightly in our, in our platform. We are differentiating our feature capability by integrating with BlackBerry AtHoc that helps us manage disaster, a cyber disaster in, in our case, and our new MDR offering with XDR last quarter completes our engineering execution and helps shift our strategic focus, as you heard from John earlier, so let's look at what the composition of the platform looks like. The important thing I want you to take away from here is that our engineering investment has enabled our platform to be open.
So we are no longer limited in delivering an outcome-based security service to just Cylance customers or Cylance endpoint products. We're now able to connect over 300 different types of cybersecurity connectors, and we can integrate with them and provide an MDR service, a managed detection and remediation service, to all our customers. This helps broaden our TAM, and this broad coverage of security tools helps us to deliver this service faster and helps our customers to detect and respond to breaches faster, quicker, in a better, contained way. We're very proud of this integration, and we'd like to share with you how our customers and industry analysts are recognizing us as we move on this trajectory towards this shift.
Cylance has received peer insights for both Gartner and Forrester in the last two years, and very recently, an IDC has recognized our innovation as being a major player in the MDR market, and these two from Gartner and Forrester are just very recent in their 2024 guide. With that, our customers are also rating us quite highly. I've taken a few samples. The one that is very close to what we are trying to accomplish and resonates with our engineering focus is that hearing from a CEO of an IT organization saying that our solution is simple, it has excellent performance, and is secure, so these innovations, the material impact is how do the customers reflect with whether they're renewing our solution in a quarter basis?
This, I'm very happy to share, that we're seeing improving overall customer satisfaction, as seen by the renewal rates trending in the right direction for MDR services. We are able to do this with a 54% reduction in our overall cloud COGS cost. We've modernized and optimized our technology to deliver this service in the most effective and the most efficient way. With this, I'd like to take a moment and quickly summarize, you know, what we have been able to accomplish. We have a differentiated service with a world-class research and threat research team that you heard from Ismael. We have a unique patented technology to tackle this growing threat landscape, and we've delivered it through results and external-facing validations.
We've modernized our infrastructure, delivered better COGS outcome with a much efficient way of delivering a cloud-centric service. We've improved our customer retention, increasing our satisfaction and lowering overall cost, and we focused on our MDR growth, and we're now at the cusp of exploring and opening up market opportunities, as we said, with our extended connectors. With that, I'd like to thank you and would like to invite John back on the stage. Thank you.
All right. We're going to get you guys to a break because I know you're probably all at that point now. But let me just do a little bit of a wrapper on the cyber side. You can see from what the team talked about, Nate and Christoph, and particularly just what you heard from Ismael and Shil, we're doing a lot on the Cylance side. When you hear things. You know, when you hear Shil talk about 18 new machine learning models, that's a lot. That's more than anybody else in the industry is doing. Those models create, you know, zero false positives. Those models create, you know, the best efficacy in the industry. Those models create the best CPU utilization in the industry.
So there's a tremendous amount of investment that goes with that. You've, you know, heard Nate and Ismael talk about optics. We introduced, invested in closing the gap in delivering an optics platform. That's EDR. When we bought Cylance five years ago, there was no EDR. They had a great protect capability. We had to build that up from scratch, from the ground up. We launched a comprehensive set of MDR capabilities and XDR capabilities. And, you know, you heard from Ismael all the different things we're doing from a threat intelligence perspective that drives a lot of this activity.
So when you hear me say that we're after all of that investment, which is a mouthful, and then some, that we might get to, you know, maybe now is the time to take a little bit, just take a step back and see. I think we can find the right balance of continue the right level of investment to be competitive and keep our innovation going, but at the same time, also meet the financial needs of the company and that financial health of the company, which is important for us for the long-term growth and investment and where we want to go in the future. So I just thought I'd give you a little bit of perspective because you heard so much about what we're doing in cyber.
Excited about all the capabilities from secure communications, all the innovations that we've done on the Cylance side, and now kind of getting this. You're going to hear a little more from Tim around, you know, the focus on how we get the economic situation a little bit better so we can fuel the investment in growth opportunities like QNX. So with that, let's take a quick break. We'll say fifteen minutes, and maybe just right after noon, we'll come back and start up the next part of the session. Thanks again for everybody's attention.
Investor Day programming will resume shortly. Please be seated. Please make your way to Freedom Hall to be seated. The program will begin shortly. Please welcome our next speaker, BlackBerry's Chief Financial Officer, Tim Foote.
Hello, everyone. I hope everyone in the room and online had an opportunity to stretch your legs, get a few cookies out there, I see, and also get caffeinated up for the excitement of the financial session. Before I begin, a couple of housekeeping items, just to reiterate a couple of things Martha said to you earlier. Number one, draw your attention back to the safe harbor statement. I will be making forward-looking statements during this section, as will Vito, so please refer back to that. Secondly, the numbers that I'll be referring to will be on a non-GAAP basis. Okay, let's begin. Anyone who doesn't know me, my name is Tim Foote, and I'm the new Chief Financial Officer here at BlackBerry.
As we heard today, we've got some amazing technology addressing some very exciting market opportunities, so I could not be more excited or proud to be the new CFO here at the company, so as the newest member of what's already a very new management team, you may be wondering what you can expect from me. Well, I can tell you a number of things will remain the same. First, commitment to a very high standards of external reporting and internal control that is synonymous with BlackBerry. Secondly, I will ensure that we continue to nurture the strong culture within our finance team, and that's a culture built around a strong bench of very talented individuals committed to the success of this company, and thirdly, I will ensure we continue to drive forward with the cost reduction efforts that John and the team have achieved since December of last year.
So what can you expect to be different from me? Well, the first is gonna be capital allocation. You've heard a little bit already from John. I'll dive into that more deeply, but ultimately, we're gonna be pushing our investment towards our growth engines, driving this business back to growth. Third, second, growth. So from the capital allocation transformation, I want to see this company move back to top-line growth overall. And not just growth, profitable growth. Enhanced communication and financial transparency. We'll be making a down payment on that today, here in this session by, as promised, providing you with visibility into the profits of our divisions. So let me double-click on the greater clarity. So we've got some great technology.
We've got some great IP, we've got some great markets, but one thing I hear consistently is it can be difficult to understand the various financial models that we have here at BlackBerry, given the information that you have at hand. So we're going to address that today by providing our financial information in four sub-components. One, IoT. Two, cyber. Three, probably the forgotten area of our top line, which is our IP licensing business, and four, our central corporate costs. John mentioned as well that back in December of last year, we announced a clear, new strategy, and that was to separate the business into two virtually autonomous divisions, the IoT and cybersecurity. As a result, we separated a lot of our back-office functions and pushed them into the divisions, and we separated the majority of those functions already.
Now, there are some areas where it just didn't make sense to separate, 'cause we've been very careful not to introduce dyssynergies as part of this process. A good example of that is our IT infrastructure, where, in order to separate into two, we'd end up duplicating a load of things, we'd have to do a load of one-time costs, and we'd increase our run rate, and we just didn't see the value. But that said, the vast majority of costs are now fully separated. What that means is the numbers we'll provide to you today are not based on a load of general allocations and assumptions. They are genuine costs, owned and controlled by the divisions. They give a true view of the cost and, therefore, profitability. In addition to the divisional costs, there are some costs that just don't belong in the divisions.
So great example of that would be public company costs, like listing fees. For transparency, we've kept those separate, and we'll show you that as a separate component today. So with that framework in mind, let's dive into the cyber division. As you heard from Nate earlier, cyber is not just one business. In fact, it's really four fairly distinct businesses, which now, as a new management team, we've taken a look, and we've decided or we can see, that they subdivide into two groups. The first group has elements of commonality, and that is in terms of its customer base. The BlackBerry UEM, Endpoint Management, BlackBerry AtHoc, Critical Events Management, and BlackBerry Secusmart have a very strong government focus in their customer base. And ultimately, these three collectively represent the bulk of the revenue for the cyber division at around three-quarters of the total.
Ultimately, this, as Nate mentioned, is stable from a top line. It's profitable as well. In addition, in the portfolio, as you heard, we have our Cylance endpoint security business. Now, this has made significant progress in terms of our product and our IP, and that has been the result of some pretty heavy investment. We'll, we'll double-click on that in a bit. This has led to improving metrics, but ultimately, when we look at this, it's actually got a very different profile to the rest. It focuses predominantly enterprise and most commonly, small and medium-sized enterprise, so there are a number of differences here. When we look at cyber division in totality, and we look at the fundamentals under the hood, what we've seen in the last number of quarters, last four quarters or so, is stabilization or even improvement in the fundamentals.
When we look at ARR, annual recurring revenue, this metric has been under pressure for a number of years, and that's been largely due to churn in our Cylance and our UEM businesses. But when we look at it now, as you can see here, in Q2 of this year, compared to Q2 last year, they're actually dead flat. Stabilization. And I can tell you, this is a significant step forward for the cyber division compared to previous years. When we look at dollar-based net retention rate, DBNRR, the story here is even better. Again, like ARR, this metric has been under pressure in the last few years.
As you can see from the chart here on the right, in each of the last four quarters, we've seen a sequential improvement in this metric, and that's partly due to improvements in the UEM renewal rates, but also our AtHoc business, as you heard, has got near a 100% renewal rate. Very sticky business. Ultimately, 88% is not where we want this metric to be. However, these are very positive, early steps forward, and they're steps we intend to build upon. Okay, so the slide you've probably been waiting for. It's this here shows the current year, two years forward, and two years prior to both revenue and profitability. As I mentioned, one of my priorities is profitability.
What we can see is that the Cyber division has moved from losing approximately $79 million a year, back in fiscal year 2023, to likely to achieve breakeven this current year. That's a tremendous transformation. And how have we achieved that? Well, you can see that revenue has been declining, but we've taken out a tremendous amount of cost. Across BlackBerry as a whole, we've taken out $135 million of cost, and of that, approximately $100 million has come out of the Cyber business. How we achieve that? Well, you heard from Nate, again, I keep picking on you, Nate. Cyber R&D efficiency has been a key factor. We were just trying to do too many things. We've narrowed our focus. What we're doing is fewer things, but better.
And credit to the team, who've not only increased the level of output, but simultaneously decreased the level of cost. On our sales and marketing, we've again narrowed the focus. We've gone from multiple sales plays to just two, focusing in on the areas where we know we can win. And all of this has allowed us to very much reduce our Cyber facilities footprint, exiting 14 Cyber facilities in the past year. These are significant steps. If we look at margins, margins are forecast to improve significantly. Looking back to FY 2023, margins were in the mid-fifties, and then looking forward, we're targeting the mid-sixties. Now, partly, one of the reasons behind this improvement is Secusmart. So you heard from Christoph earlier. The traditional format of Secusmart is to provide a hardware-based product, and the margins on the device side are actually pretty low.
I'm incredibly excited by the opportunity that's being presented with the software-only version, that we've already had success selling into a number of governments worldwide. That product has significantly higher margins. The revenue guide for the next two years is for stability. You can see it's broadly in line with the guidance that we've given for the current fiscal year, fiscal year 2025. Again, indication of stabilization in this business. And finally, on profitability looking forward, we see that far distant is the $79 million loss to break even this fiscal year, before actually moving into profitability for the next two fiscal years. $25 million-$35 million of EBITDA in FY 2026, increasing further to $30 million-$40 million in FY 2027. The cybersecurity division is no longer going to be a drag on the BlackBerry financial profile. So this comes back to...
We've kinda touched upon a couple of times already, but capital allocation. As a new management team, we've taken a fresh look at our investments, where we're gonna place our emphasis. When we look at Cylance, we have invested heavily. We are currently investing heavily. Now, this has driven the progress you heard from my colleagues, Ismael and Shil, just only moments ago, significant progress in our products and our IP. The downside to that investment is a meaningful loss for the Cylance business. It's currently losing approximately $50 million a year. And what's more, when we consider the level of investment required to grow this business, such that it reaches scale, and therefore profitability, well, we see that's gonna be substantial. And what's more, it's gonna be required for a number of years. We no longer think this is the optimal use of the company's capital.
Instead, I'm sure you shared with me the excitement of the outlook that Matthias and Grant gave earlier, the opportunities within the QNX business. This is a business with a strong, deep competitive moat and being propelled forward by strong secular trends in a growing market. We see that investment here in order to grow the opportunities in the existing verticals and increasing our TAM by entering into adjacent verticals is a better use of the company's capital. In addition, there are some growth engines that Nate mentioned within the secure communications portfolio, and we see here with modest investment in both product and go-to-market, we can position ourselves for further profitable growth. Remember, this is a portion of the business that's already profitable, near 20% EBITDA margins. So what this means, we are gonna take immediate actions to significantly reduce the level of investment in Cylance.
In addition, in parallel, we will explore opportunities for this business. So let me summarize. Cybersecurity was heavily loss-making. We expect this to be break even this current fiscal year, and we expect to move to profitability in the next two fiscal years. We've achieved this by taking out a significant amount of cost, and despite doing that, the fundamentals have actually either stabilized or improved. And that's a testament to the amount of focus that has been introduced into this organization as a consequence. Within the portfolio, we have a secure communications business, which is the majority of the revenue, and it has commonality with a strong government and blue-chip enterprise customer focus. It's stable from a revenue perspective, and it's meaningfully profitable at around $50 million of positive EBITDA.
Finally, we intend to pivot our focus away from Cylance into our growth engines, particularly QNX, where we see a very significant opportunity. With that, I'd like to welcome to the stage the CFO of the IoT division, Vito Giallorenzo, who's gonna walk us through the opportunities within the IoT division.
Hi, good morning. So for those who don't know me, Vito Giallorenzo, I worked at BlackBerry for over seven years now in various roles, and I focused the last few years on the IoT business, and now I drive finance there. I've always been very attracted by the financial prospects of this division and the QNX business, and the value creation potential that it offers. And, you know, hopefully, I'll be able to show you why, and show you how this division has four key attractive financial attributes. You know, has an expanding TAM, has a stable top line, has a highly profitable underlying business, and has a significant upside potential for the long term. And I wanna start by going back to these four points that you've seen from Matthias' slides already.
You know, this is why we think we should invest more, continue to invest in IoT, and I wanna put a financial lens on it. So in terms of our market, the R&D investments that we have been making for the past few years, coupled with the structural transformations that are happening in the industry, are expanding our TAM, as you saw before, from less than $2 billion today to almost $6 billion by 2028.
In terms of top line, those tight engineering engagement and relationships that, you know, Grant and Sheridan and the rest of the team have built with all the top OEM, all the top tier one, all the underlying technology providers in the space, those translate in very long-term contractual commitments that we get from our customers, and those contractual commitment translate in that stable top line. In terms of profitability, the strong bench of IP and technology and products that we've built drives a very high-margin business, and that allow us to deliver superior EBITDA growth, as you'll see, and in terms of long-term upside, again, those R&D investments are allowing us to see an opportunity that we will be able to capture from this SDV transition that is happening in the industry through an expanded vehicle platform, as you heard from Grant.
So I want to start by looking first at our business model. For those of us who maybe are not that familiar with QNX, I'm focusing on an automotive product, a typical automotive program. Our business model is kind of aligned to the typical life cycle of a vehicle program. When we win a customer, we call it a design win, that customer starts a contractual engagement with us that lasts over a decade. In that first phase, this pre-production phase, that lasts about two years before the cars are produced, they buy from us developer licenses to enable their engineering teams to build, integrate, test, safety certify their software stack on top of QNX. Sometimes they buy our engineering services for, you know, to get some help in some of those complex safety or integration tasks.
So in the first part, in this pre-production part, we record developer licenses and engineering services revenue. Those happen earlier in the lifetime of a program, but they are not the majority of the revenue that we record through that ten-year journey. Once the final software has been tested and safety certified on the final production hardware, that's where we usually deliver the final configuration to our customers, and they start shipping the vehicle. And so when the vehicle starts shipping, they follow a production curve for, you know, produced volume that looks like the one in the picture. And, you know, that bell curve peaks usually around year four. The volumes are carefully estimated, typically by the OEM at the outset, and, you know, especially the large one, they are pretty good at doing that.
And we record what we call a runtime royalty fee. That royalty fee is calculated, you know, from the volume, the estimated volume production over the full lifetime of the program, and the contractual revenue royalty per system that we get, and that's driven by the amount of QNX components that are in that particular config. And also, often there are more, could be more than one QNX-enabled system per car, depending on the program. What's important to note here is that the majority of the revenue throughout those ten years are royalties and developer licenses, and both of those revenue streams have very negligible variable costs. So they are pretty much very close to be virtually all profits.
And so when you put it all together, like a customer signs up with us, they commit to a stream of growing profits, mostly, that grow over the first five, six years of the program. And so in my book, that's actually better than recurring revenue, and it's very valuable. So how that translates now in our book of business, so last year, we recorded $215 million in revenue, and an estimated backlog of future royalties royalty revenue of $850 million, which is roughly almost four times our current revenue base. Our revenue, maybe not surprising for many of you, the majority of our revenue, almost over 80%, is transportation, mainly automotive.
And in terms of geography distribution, our automotive business is actually fairly equally distributed across those three geographies: APAC, EMEA, and North America and Americas. Our non-automotive business is actually more skewed towards Americas. And that's why when you put it all together, you see that half of our total business in America. So this underscore two things. I think, one, our leadership in automotive, obviously, and two, the opportunity that we have, and you heard from Matthias, we're working on it, to actually grow more and expand our business outside of automotive, and particularly outside of North America. Then, looking at our backlog.
So just to recap, our backlog is the estimated royalty revenues that we expect to recognize over the course of the next several years, under the long-term contracts that we have with our customers as they ship their vehicles. And it's based on the contractual price that we agreed and the estimated volume that they report and communicate to us. What I want to point out is that from a time distribution point of view, you know, Matthias gave you a stat. I give you another stat that points to the kind of longevity of the model. Only about 33% of our revenues from this backlog are expected to come over the next three years, which is the horizon of the forecast we're giving here.
Over $500 million, over almost $550 million dollars of that backlog will come after fiscal year 2027. So again, a testament to the resilience and the reliability of the business model here. In terms of domain distribution, also fairly well distributed. Not surprisingly, again, for those who follow the industry, half of our revenue and future backlog comes from cockpit and ADAS systems. Those are the most Advanced Compute Systems in modern cars. We are starting winning also more and more central compute architectures, where the domain, where the automakers are consolidating multiple functions. And then in that other, others category, as you heard from Matthias, we have more and more of other discrete functions, such as driver monitoring, gateway, body and chassis, acoustics, et cetera.
And I think to another testament to the longevity of this business, 8% of our backlog is still from infotainment, which is a domain that we defocused from in 2015, 2016, in favor of the underlying safety cockpit. So again, to recap, $200 million, over $200 million in revenue, a well-diversified base, both geographically and in terms of domain inside a vehicle, backed by a backlog that is almost four times the size of our revenue base, and an opportunity to grow outside of automotive. Now, how this translates in revenue, that's it. So in the last past three years, we grew through, you know, after the COVID fluctuations and through industry SDV delays and cycles, 10% and we forecast to grow at a higher rate, at 14% CAGR over the next three years.
So from $225 million-$235 million that we're guiding for this year, to $295 million-$305 million in 2027. This growth will be driven primarily by growth in our royalty revenue as we monetize the pretty rich backlog of design wins that we achieved in the last two, three years. It estimates a fairly consistent professional services revenue growth in line with the last few years, and a slow but gradual recovery in our developer licenses as the SDV program delays slowly improve in the industry. What's important also to note here is that we assume no significant revenue contribution in this projection from the new initiatives that you heard before, particularly from our vehicle platform programs.
So while we definitely expect to generate returns, as you heard, that's a pull from our customers, our customers are asking for that, so we are pretty confident about the investments we're making. Given the delays that we're seeing in the industry, and given this sort of two, three years pre-production cycle, we expect the majority of those revenues to come after this forecast horizon. But again, this further underscore the long-term upside opportunity that exists in this business beyond this horizon and these forecasts. So how does this translate in profitability? So I mentioned before, we have an attractive product mix, mainly made up of royalties and developer licenses. Those allow us to drive an 84% gross margin for our business. Then and we expect that to continue over the next three years. The largest OpEx line, not surprising, it's R&D.
As you heard from Matthias, you know, and many of my colleagues, we're an R&D, R&D-focused organization. But I want to point out a few things. We are through an investment cycle. We had technical debt to compensate in the past. We had big initiatives from IVY to SDP 8.0 to now a vehicle platform. So we are going through an R&D investment cycle. R&D investment and discussions and engagement and engineering engagement with our customers actually drive a lot of opportunity, often direct opportunities that happens at the engineering level. So R&D drives are actually a very effective sales motion in for us. So we expect our R&D today, our R&D is about 30% of sales.
Over the next three years, we expect to now reap the benefit of the past few years' investments that we've made, manage to get operating leverage out of those R&D investment, and start shifting gradually our investment from R&D towards sales and marketing. So in this plan, R&D ratio goes from 30% down to the mid-twenties over the course of this forecast period, while sales and marketing stays constant around 20%. And we also expect scale benefits in G&A, so the G&A ratio goes, ratio of sales goes from 15 to the mid-teens by two thousand and twenty-seven. So what that translates in terms of EBITDA, as you can see for this year, we estimate about $40 million - $45 million of EBITDA, which is on average 18% EBITDA margin.
And that, at the higher end of our range, will double, growing at 35% CAGR to $80 million of EBITDA by 2027. That represents about 26% EBITDA margin that, when you couple with the growth we have, takes QNX well into a Rule of 40 financial profile. So just to recap, a solid EBITDA expansion strategy that should drive value creation potential here. So just to conclude again, back to why we are excited and we think we should invest in IoT because we have a strong market position and strong business model economics. And I want to sort of recap some of the stats I made here. So when a customer signs up with us, they sign up for a 10-year relationship of growing, profitable, repeat business.
That translates in a backlog, which is already almost four times our annual revenue base at over $800 million. We have consistently deliver double-digit growth, and we expect to continue to do so. We have a strong product mix and a very effective go-to-market motion that allow us to generate 18% EBITDA margin through an R&D investment cycle. And this R&D investment cycle is allowing us to drive value, both in the near term, over the next three years, via operating leverage to double our EBITDA by 2027. And in the longer term, offering the potential for revenue upside, expanding our share of wallet with the platform, offering an investment that we have already seeded. So, you know, strong business fundamentals, solid plan to generate and grow EBITDA over the next three years with a long-term potential upside opportunity.
That's why we are excited about investing in IoT, and hope you agree with us. Thank you, and now over to Tim.
... Thanks, mate. So yeah, it is exciting. I'm certainly excited by it. Some very, very exciting numbers to look at there. Okay, so let me now just bring this home, you'll be pleased to hear, by bringing this together into a corporate BlackBerry level view. So just to, just look at the separation activity that we did, why did we do that? Well, the first reason to separate the business into these two, virtually autonomous, standalone divisions was to create focus. And I'm sure you can agree, having heard from a number of the management teams on both the IoT and the cyber side, there is a lot of focus. In addition to focus, however, there's also optionality that comes from it.
Last year, we undertook a strategic review of options for the business and the divisions, and while that process did not result in a transaction, we did learn a number of things as a result. The first was that it was somewhat difficult to fully understand what was in each of the divisions, and that was a problem for valuation. Secondly, the financial profile, which we've showed you, of the cyber division, was another challenge for valuation. The steps that we've taken since December of last year will go a long way to helping address those concerns. The divisions now have their leadership team in place, and what's more, we've taken out a tremendous amount of costs, as I mentioned, and that has allowed us to achieve breakeven in this last fiscal quarter, Q2, ahead of schedule.
And as you can see from the chart here, OpEx has dropped down to $100 million per quarter, which was better than we expected. Okay, so we've mentioned IoT, we've mentioned cyber. As promised, there are two other components that make up BlackBerry. The first I'll address is the IP licensing business. Now, one of the great things about being BlackBerry is we have a deep legacy of intellectual property that has been generated over decades. And we've done a tremendous job in terms of monetizing, licensing that portfolio over the last number of years, generating meaningful amounts of revenue and cash flow in the process. And last year, we sold the majority of that non-core portfolio to a company called Malikie.
What that does for us is it provides us with a potential upside that could be very significant in the form of a profit share of the monetization efforts that Malikie generate from that portfolio. In addition, we still have a further $30 million of guaranteed cash to come out of that deal, which we'll receive in May 2026. In the meantime, we continue to generate around about $16.6 million per year from what are largely legacy deals in that space, and that's generating approximately 65% EBITDA margin on that. We think the IP licensing business is an underappreciated part of the BlackBerry story. Quickly switching to corporate costs, as I mentioned, a very large portion of those central costs have been either eliminated or pushed into the divisions.
But there are elements which still remain central because it just doesn't make sense to subdivide. This time last year, for reference, the 48 up here was $216 million. Of that, we pushed approximately $100 million down into the divisions, allowing Mattias and the cyber team to determine what is the right level of support that they need for their business, and take cost actions as they'd seen fit. Of what was left, we've taken out $68 million and leaving $48 million here for this current fiscal year. But we still think that number is too high, so we've identified actions that will take that number down to approximately $40 million in FY 2026, and then we'll go even further to approximately $35 million in FY 2027.
I'm sure you can appreciate the transformation that we've had here at BlackBerry since last December has been remarkable. Significant change in our financial profile. The first inflection point I'll call to your attention, revenue. Revenue has been declining for some time. Just wanna draw attention to the chart here. This is revenue here. You can see in last year, $853 million. Of that, $218 million related to that patent sale transaction that I just described a few moments ago. Declining revenue inflects to growing revenue from FY 2026 and 2027 onwards, growing at a 5% CAGR. And we expect revenue for the total company to reach between $655 million and $685 million by FY 2027. And with this top line growth, we expect to see gross margin expansion as well.
If we go back to FY 2023, we see that our gross margin was in the mid-sixties. We expect that to expand by approximately eight percentage points and move back into the mid-seventies within two fiscal years from now. That brings me to inflection point two, profitability. As you can see, BlackBerry was losing a significant amount of money just two fiscal years ago. And with the benefit of the patent sale, we see the profitability there. But we've inflected to this year, having already achieved breakeven in Q2, we expect that we will achieve profitability for the full fiscal year that we're currently in, fiscal year 2025. Before moving forward to double-digit EBITDA margins in both FY 2026 and 2027, and heading towards approximately $100 million of EBITDA, positive EBITDA, in FY 2027.
These solid financials layer on top of what is already a solid balance sheet. Earlier this year, we secured long-term, cost-effective, five-year financing, almost halving the level of debt in the process from $365 million down to $200 million. This debt is not due to mature until 2029. And what's more, BlackBerry is net cash positive, and we expect to be generating positive operating cash flow in Q4 of this current fiscal year. This will put us in a very strong position to deliver on the capital allocation priorities that we've outlined during this session. Solid balance sheet, reliably generating positive cash flow and profitability, put us in a very strong position, as is generating profit going forward. And this chart here, I think this is a great chart.
It shows the transformation and progress across all areas of the P&L, so the first column is fiscal year 2023, two years ago, and the second is this most recent fiscal quarter. As you can see, I mentioned the focus in our R&D function. That's improved our R&D spend as a percentage of revenue by five hundred basis points. On narrowing our focus on sales and marketing, it's improved S&M spend by three hundred basis points, and all the work that we've done on our central corporate costs has improved G&A by a further three hundred points, so putting it all together, BlackBerry, in total, adjusted operating income margin has improved by eleven hundred basis points, so what does this mean? Well, we've mentioned capital allocation. In the near term, we see this as primarily organic, investing predominantly in the QNX opportunity.
For instance, the vehicle platform that Grant mentioned earlier and the investment required there. But in the medium term, as BlackBerry starts to become reliably generating positive cash, we'll be in a position to opportunistically look at the M&A market, driving growth in existing verticals and potentially expanding our addressable market into adjacent verticals. So, key takeaways. Number one, we've made tremendous amount of progress and have achieved setting up virtually autonomous divisions for IoT and cyber, taking out a tremendous amount of cost in the process, approximately $135 million. Two, this translates into profitability and cash flow. We expect to achieve between $0 and $10 million of positive EBITDA this current fiscal year. Moving forward, we expect to see significantly improved margins. Three, IoT. We've shown you today this is a profitable, growing business, very well-positioned in the markets that it serves.
Four, within cyber, we have the secure communications portfolio, a synergistic government and blue-chip enterprise-focused business that is stable on the top line and generating meaningful profit at the bottom line of approximately $50 million of EBITDA. Five, we're making a significant capital allocation pivot, deprioritizing investment levels in Cylance, and focusing our efforts on BlackBerry's growth drivers of QNX, and the growth engines within secure communications, and finally, our solid balance sheet and our inflection towards positive cash flow generation positions us incredibly well to deliver on everything we've just discussed. So with that, I'd like to welcome back to the stage our CEO, John Giamatteo, who will lead some closing comments before we open up for Q&A. John?
Okay, we're running a little late, so I'm going to try to speed my closing so we can get to Q&A, and field some of your, I'm sure, questions that you might have on some of the new things that you heard about the transformation that we're making at BlackBerry. So, you know, the rest of the speakers, the team, we've, you know, gone through a lot today, and I wanna thank everybody for taking the time to be with us, and to really dig into the transformation that we're making over the past ten months.
You know, before we take questions, I really did wanna just kinda do a quick recap and go through, you know, some of the topics and some of the progress that we've made over the course of the past 10 months as a team. You know, number one, we talked about the strength of our portfolio, both IoT and cybersecurity. On the IoT side, we're the clear leader in automotive software industry, with QNX powering over 255 million cars around the world, working with 10 of the top 10 global automakers and 24 of the top 25 electric vehicle OEMs. On the cyber side, we work with the entire G7 and the majority of the G20. Eight of the largest 10 banks in the world use our products and services, and we protect and secure the most critical communications around the world.
As a pioneer in leveraging artificial intelligence and cybersecurity, we hold five times more patents than anybody else in the industry. And when Tim talks about the IP assets, it's a major significant asset that we have in terms of what we can do with the overall valuation of the company. Number two, we've made significant progress, as you heard, in the overall cost profile. You know, we discussed over the past 10 months how we realized savings of $135 million, returning the company to profitability and cash flow positive, setting ourselves up next year as we pivot to growth. Number three, the underlying fundamentals. Talked about the IoT business and how we have $815 million of royalty backlog in QNX, and the improved fundamentals on an ARR and DBNRR side, on the cybersecurity side.
These metrics are incredibly excited, the progress that we're making across both of our divisions. Combine those two, significant cost reductions, improving fundamentals on both sides of the business, it creates a better cash flow situation. We were burning a tremendous amount of cash this time last year. We've narrowed that, getting really, really close to cash flow positive, and, you know, we're really pleased with the progress. That gives us a solid, rock solid balance sheet to execute on our plan. And finally, number five, driving focus and gaining optionality. We've talked a lot about the virtues of setting up these two virtually autonomous business units. Focus and clarity, capital allocation, investing in growth. When you set yourself up with two businesses like that, you clearly see what's important, what we need to invest in, and how inevitably we're gonna drive shareholder value.
So with that summary, and since we're running a little bit late, why don't I go ahead and we can open it up? I welcome Tim back. Oh, Martha, you come back up and field some questions.
Tim's coming, too.
Yep.
Okay, great. Thanks, John.
All right.
Thank you everyone who presented this morning. We are now gonna have Q&A. For everyone in the room, if you could just state your name and what company you're with when you ask a question. We have people with microphones that will bring one over to you. Online, if you could please just submit your question through the Q&A button on the bottom right-hand corner of Webex.
Okay.
All right, and looks like we're set up, so let's begin.
Wonderful.
So is there any questions in the room? Okay. Yep.
Hi, Dan Chan from TD Cowen. John, a few quarters ago, when I asked you about the Cylance business, it sounded like it was a pretty strategic part of the business and your cybersecurity goals. What catalyzed the pivot in that, in the change in how you're viewing that business and how strategic it is to the future of BlackBerry?
Yeah, good question, Dan. Now, obviously, you know, one thing I would tell you is that, going through our strategy of unlocking the two business units, there was a lot of things that, you know, costs were intertwined. You know, it's hard to. I think when we went through the process of setting it up into two completely different divisions, that gave us much more clarity. Well, what are we really spending on Cylance? What are we really? And before that, it was a little bit intertwined. We had our IT costs all done at the corporate level. We had our customer support costs all kind of melded in.
When we ripped that apart and said, "All right, we got two business units now, what's happening in the underlying health of each of them?" I think that's where we had our aha moment, that we said, "Wow, we're actually spending a lot, investing a lot in a lot of those initiatives that I talked about." So I think that was probably the driving force, Dan, of what really kind of brought us to where we are today.
Thank you. This is Craig Armstrong, IDC. You kind of looked at the four divisions on security under four different pillars, but that fourth one, Cylance, you kind of have a breakout of EPP, EDR, and MDR. You know, when we see MDR, IDC is seeing MDR growing 25%-30% CAGRs over the next five years, and you look at the possibilities when you're looking at Cylance, have you thought about the possibility of splitting Cylance? You've already done a great job in MDR in terms of separating out the need-
Yep.
to have Cylance
Yep.
On the endpoint. Have you thought about? I'll use the analogy of IBM and Palo Alto.
Yeah.
IBM just sold off all their Cylance-
Yeah.
All their, a good portion of the security suite to Palo, but it makes sense for BlackBerry to sell the endpoint software piece, continue to work with the services side. Still gives you-
Yep.
kudos or gravitas with your federal government, which is so hard to get into.
Yep.
Once you get rid of that, what scares me is you lose that synergy of security that you get on the BlackBerry side.
Yep.
And you get a little bit of that on the IoT side as well, because that same threat intelligence that's feeding your EDR, MDR, and EPP also feeds your-
Right
-IoT.
Yeah.
I know that was a lot to-
No, it's good. It's good. I'm tracking with you. Really good question, Craig. What I would say on that is, first of all, like, going back to the first question, Dan, now we're able to unlock it and see what we're investing, how. What's the trajectory of the MDR, XDR, the services part of it? What's the trajectory of the subscription business for our Protect and Optics business? We had a professional services capability inside the Cylance bit. So we're like these kind of three engines, and the underlying cost that was running these engines, it was a little bit hard to get our arms around, you know, how much we were spending, where we're going. Now, I think we've got our arms around it, you know, fully.
To you know, when Tim talked about, we're gonna look at, you know, different options, explore different options for the Cylance, that could be an option. You know, I absolutely would tell you, the MDR part of that business is actually a growing segment of the business. You know, the optics and the subscription, I think that's been a more challenging side of it. So we're gonna, you know, we wanna take a look at the cost structure, get at the bottom of that, get this play, get it into a healthier business, and make it the healthiest business it can be. You know, that's our... And if part of that means, you know, we sell one part, we do something, those are all, I think, options that are on the table that we'll consider as far as enhancing shareholder value. Hopefully, that helps. Remember?
Thanks. It's Paul Treiber from RBC. Just a question on Cylance and the outlook there, or I guess. What assumptions are you making for Cylance, the stabilization there or growth or continued declines within your cybersecurity forecast? And then, if it deviates from that projections, would you be more inclined to look at strategic alternatives?
Yeah, I'll take this-
You take this one.
I'll take this one. So I think as we outlined, Paul, on the last earnings call, there are kind of two competing factors, and John just touched on it in the last question, which is the software-only product is more challenged, and the services part is growing, albeit from a small base. I think the fact that we've called out flat for the entire division at this point in time, for the next two years, and we've called out there's a couple of growth drivers in there, you could probably make some assumptions that we see there will be some challenges ahead. And we've been trying to be, as we have in the last few quarters, we try to be prudent with our outlook on this. Obviously, if things change, expectations will change.
So we reserve the right, obviously, to adjust things to your question. But John mentioned that we're gonna explore all options at this point, as we should, as a public company, and, you know, if things evolve as we're doing that, then obviously our decisions will evolve. Anything to add, John?
No.
Great. Good morning or good afternoon. Todd Coupland from CIBC. If I could just step back on cyber, away from Cylance, is the takeaway from the way you positioned cyber today that- ... it's a strategically important unit for BlackBerry, and the secure communications business, we should assume, is an ongoing business for you. And then I have a follow-up on IoT.
Yeah, I think that's a safe assumption, Todd. You know, like I said, when we were able to kind of really break it down, and obviously, we generally knew the revenue streams, but when you took a look at the actual costs that we're investing in, and now you had it by line of business within each of it, it became clear, well, wow, you know, and that secure communications, which, you know, large governments, they share that as a common vertical. Majority, significant part of the business is larger. Large enterprises, a lot of those banks are continuing. So those are generally big, stable relationships that probably have the best ARR and DBNRR in out of all of our portfolio. So that's good, stable, profitable, cash flow type of business.
That's something I think you'll can see it, so to consider, you know, continue to lean into on that side of it. And the Cylance, we've talked about. We'll take a look at that. We'll try to get the cost right. We'll look at our different options, and, you know, we'll update you according to what we find.
Yeah.
You want to take the IoT or?
I was just going to add-
Yes.
If I may, totally agree with everything you said there, but I'd also add that you see it as kind of fuel, really, for the growth engines, and we've called out QNX as being the fuel, being the focus. But that said, you know, we're a public company. We've, you know, mentioned that this process does give optionality, and we would obviously consider any option to, or pathway to increase shareholder value.
Then on IoT, it's been a volatile market for production. Your base revenue is largely based on royalties. What level of production do you need in the automotive industry to achieve, you know, the next couple of years of revenue growth there? Thanks a lot.
Yeah, so what I would say is, while production is obviously a factor, I would say the factor that has probably been the most impactful since the analyst day that we gave eighteen months ago or so, has actually been delays in software development programs. I think, Matthias, you mentioned, the development seat licenses or development licenses, that has been a headwind for us. So I'd say it's not so much... To achieve the growth that the team have outlined, we're not looking for a hockey stick in vehicle production. This is a content per vehicle story, right?
We've spoke about the more sockets, more layers, going from just having one or maybe two instances of QNX to having multiple instances, and then selling additional layers of software as well, to this very exciting opportunity that future which is to actually provide a fully comprehensive vehicle software platform. I wouldn't look at it as, well, if the SAR, obviously, it would help. If we're selling, if the OEMs are selling more cars, it will help. But I would say that the fundamental driver is content and just getting back on track with the development programs.
Shira Rubinoff, Futurum Group. So understanding where you are going with Cylance and your secure communications, and obviously, cybersecurity really does touch everything we deal with today, are you going to be looking, going down in the future, to expand your cybersecurity posture and your focus in terms of what you will be doing once you come to your realization of where you're going to really expand the dollars and the focus?
Yeah. That's a good question. Like I tried to articulate a little bit before, we've been doing a lot. I would argue with, you know, and argue, you say, you know, "Are you doing too much?" You know, when you're talking about 18 machine learning models and filling out the Optics portfolio and launching MDR and, you know, a lot of times there's companies that are just doing one thing, you know, and we're doing, I think, a number of them. So I think at this stage, where we are, if anything, we'll probably take a step back and try to narrow our focus onto fewer things that we think can help us move the needle more, rather than becoming a more expansive cyber player in the endpoint security market.
Definitely on the secure comms, I think there's things we'll be continuing to invest in, but if anything, we'll probably be narrowing and being more surgical in the overall investments that we make on the Cylance side of the picture.
Thank you.
Okay, I have a few questions from online. One of the questions is: During the presentation, I think you estimated the Cylance revenue at 25% of all cyber revenue, so around $90 million in fiscal year 25. Did I hear that correctly?
You certainly heard that approximately-
Approximately
... three quarters.
Yeah.
Approximately so.
Okay.
Yeah.
And, with regard to IVY, it seems like you're now describing it slightly differently than you have in the past. That is a more of a middleware offering, and that exists as part of a larger foundational software platform, as opposed to a standalone platform. Can you confirm whether that is indeed the case, and then discuss what that means in terms of the overall revenue opportunity for BlackBerry?
... Great question. I'm looking over at Vito as, do you wanna come and take that question? Yeah, why not? Can you come and take that question?
So yes, so, we are. It's correct. You have, you've seen IVY as shown as part of the vehicle platform, and I think there are a few things to say about IVY. First of all, the delays in kind of SDV and next generation programs that have impacted the industry and our business have impacted next generation type of initiatives like IVY deployments even more. So we haven't seen the actual production traction in terms of putting IVY into production at the rate that we expected. At the same time, we have learned many things in those engagements. So first of all, the majority of the interest on deploying the IVY services was on QNX systems. And the other thing that we learned is that customers are still. I mean, they want the cake and eat it, right?
They want a bigger platform beyond what IVY offers, like a bigger OS platform, but at the same time, they want the opportunity to pick and choose the components of that platform, and they're not yet ready to always take an entire edge to cloud data orchestration platform like IVY. And so that's why we have made the decision twofold. Like, one, to integrate IVY into the QNX engineering organization, to really drive both cost and product, and go-to-market synergies through that motion. And the other was to sort of obviously so focus on QNX systems and also to integrate IVY into many of the other QNX initiatives that we have. So in the virtual cabin, that actually you see IVY running in that virtual cabin out there for the pre-production phase and in the sort of vehicle platform that Grant talked about for the production phase.
We're still offering IVY, both, both option to our customers, but I think this allow us to offer a greater, flexibility and the ability to kind of capture that opportunity.
Good.
Okay.
And just to add, if I may, that we hadn't included any IVY in any of our outlook comments in the past. So, I just want to make that point.
Okay, well,
Thanks, Vito.
Well, while I have Vito here, actually, I have another IoT, so he might wanna take this, too. We'll see. Can you share the additional detail on the size and timing of IoT opportunity outside of the automotive industry? And to what extent does the BlackBerry brand and the leadership position you've built in automotive carry over to the other end markets? And why are you confident in your ability to drive growth in these new verticals?
Okay, so let me say a few things. So first of all, our projections are fairly prudent, so they do not assume a major inflection in non-automotive business. So I would say non-automotive is an opportunity rather than a risk, in my mind. What QNX has achieved outside of automotive, it's definitely a pull. I mean, Matthias mentioned how, you know, SDP 8 is something that we built for automotive and now other customer want it. You heard, you know, the car is the first robot, but there are many other robots that need the same characteristics, and they need the same safety feature. So people, engineers in the industry who understand this stuff, they really, they definitely make the connection, and that definitely helps. I mean, what needs to happen for us to penetrate these sectors more?
I mean, first of all, obviously, investments. So it could be organic, could be inorganic, but there is product investments to make, because while the underlying software is the same, there are integrations, there are channels, there are things that are very specific, certifications, particularly, very specific to an industry, where you need to invest in order to really meaningfully participate there. And we're doing that. We're doing organic investment and we'll continue to do so. But, you know, we hope to be able to do better than what we forecast, ideally.
Okay, thank you.
Thank you.
Good. Is there any more questions in the room?
I asked John this question last year, and, well, I won't tell you what he said, but, I'm interested in your perspective, and that is: What are your thoughts about China? Is it more of a risk or more of an opportunity?
Yeah. So this was actually a question that came up on the earnings call. So obviously, we see China as a significant market for automotive for us. Obviously, there are some tensions right now in terms of potential risk to non-Chinese software companies. Good thing, we're obviously a Canadian company, which puts us maybe in a different bracket, but we are taking this very seriously. And Matthias and the leadership team are looking at a number of different options. It's something we're gonna watch as we go forward. So it's very much on our mind, put it that way, but at this point in time, we see this as a very significant opportunity for us.
Just to follow up on that China question, is the EV piece of your IoT growth a material driver? And if so, can you comment on it?
... Yeah, so the EV question comes up quite often. Ultimately, QNX, to a large extent, is agnostic to the powertrain. We love being in EVs, but if EVs are not the flavor, and it turns out to be more hybrid, or it turns out to be ICE, then all of those vehicles require a digital cockpit, they require ADAS, they require gateways, they're going to require a similar kind of architecture. The thing that typically separates EV from the traditional ICE models is the speed at which they can adopt the newer features. So, yes, we would like to see EVs growing, it's great. But if it doesn't, and it pivots, one of the great things, as Vito outlined, is that we're very diversified. We're diversified across geographies, across OEMs, and equally across the powertrain as well.
Yeah, on cyber, I wanted to get your comments on growth and net dollar retention expectations, your cross-sell ability ex Cylance. You started to tease that out a little bit, but, you know, you're around 90% now. You know, where could that be ex Cylance? Just talk about, qualitatively where that could trend. Thanks.
You know, so on the entire cyber portfolio, with the secure communications, with UEM, AtHoc, and Secusmart, and then on the endpoint with cyber, you know, we report everything at the total level. I would tell you, Todd, that Cylance is on the lower side of that, for sure. Do we see it improving? We do. Yeah, do we see it improving it to the levels of our AtHoc renewal rates that we see? You know, so when I do the scorecard of our renewal rates and our DBNR across our portfolio, I would say AtHoc and Secusmart are best in class, really strong. Secusmart, rather, UEM, you got the, you know, the Intune competitive threat.
There's always things there that we're dealing with, but, you know, solid performance. And then on the Cylance side, kind of the lower out of the four elements of the portfolio. Am I right?
Yeah.
Okay, I'll take one from online here. Is there additional opportunities for expense reduction? And if so, can you provide some color on the size of the opportunity and the timing?
Yeah, I think we actually addressed this somewhat on our earnings call. In so much as the original target was $150 million. As we outlined, we've already achieved approximately $135 million of that. Now, as you can imagine, the first $135 million is gonna be easier to get at than the final $15 million, but we are working, we're working towards that. Clearly, with the pivot that we discussed today, that has the opportunity to increase that number. Ultimately, we stay very focused on cost. We're currently still losing money, and that's not a position that we're gonna tolerate going forward. So we will continue to keep an eye on costs across the business. John, anything to add?
No, I agree with all that. We've done a lot, but I guess what I keep telling the team is, you know, we've got to keep our foot on the accelerator on continually looking for costs and efficiencies. You look at any company, and there's always an opportunity, I think, for us to do more and to get more out of it. So, you know, $135 million was a good start. I think we've got more kind of in our lines of sight right now. We're gonna obviously, you know, from today, took a closer look at the Cylance part of things to make sure that we're doing everything we can there. But, that continues to be a big underpinning of our overall strategy, is managing that cost structure very, very tight.
Any more questions in the room? Okay, I have one more here. You've outlined several growth initiatives today, some of which have significant long-term potential. As a management team, which opportunities do you find most compelling, and where are you spending most of your time and attention?
I mean, I think we kind of rank stacked it, as QNX is the primary focus, right? We are in an incredibly strong position already in that business, and as the team outlined, there's some very clear opportunities of areas that we can invest and see a very clear line of sight to a return, but in addition, I mean, we should not forget the AtHoc business and the Secusmart business. In SecuSUITE, I mean, this new software-only version, we're seeing some meaningful success in a number of governments, but we haven't addressed everyone yet, and I think with some additional go-to-market focus and maybe some moderate investment there, that could potentially become fairly strong for us, and equally, we've been very focused on the federal space, as the team mentioned, in AtHoc.
There's a whole heap of additional stuff that would benefit from the technology that's very tried and tested in some of the most rigorous environments. So, yeah, there's opportunities in those sectors, too. Anything to add?
No, the only thing I would add is, even within the QNX, just to, like, if you double-click within QNX, you heard Mattias talk about the industry wanting to move more towards maybe a platform approach. We couldn't be better positioned in the automotive space than to play a big kind of position there. You've heard him talk about, you know, investment in the GEM, in the General Embedded. We think industrial and transportation, robot, we think there's tremendous amounts of opportunity. So even within QNX, I think there's pockets within it that are gonna lend itself to maybe more investment and leaning into it to take that to the next level. The rest of everything, Tim, you know, talked about with Secusmart.
It was a revelation, moving that from a hardware-based product to a software token-based product, and the amount of opportunities that that has opened up has been tremendous over the course of the last couple years, so we're excited about that as well.
Okay, any more in the room?
I've never known you be so shy, but okay.
Okay.
We've got time for one more?
We've got some more Q&A sessions later.
Okay, great. All right.
Okay, so, that will conclude our event today. Thank you for attending, and there will be a replay up on the website later today with the slides.
Thanks, Martha.