Operator: The next question comes from Mike Walkley of Canaccord Genuity. Please go ahead.
John Chen: Hi.
Mike Walkley: Hey you. Hey, John. Switching gears maybe to the cybersecurity business, with the fourth consecutive quarter of billings growth, can you share a little more color, just what’s driving the improving billings or maybe more specifically, what solutions in the portfolio are some of these multi-year government contracts choosing?
John Chen: I think there is a number — first of all, you know we had a challenge, we had two challenges in the past. We got one challenge as the SMB for the UEM challenge, where they were leaving us and there was a lot of churn in that and that churn over the quarters, over the time, is now stabilized. So, that’s number one. Number two, on UES, the Cylance product line, as you know, we were having trouble integrating it and we did integrate it and then we caught up on the EDRs’ technology. We’re now winning bake-off. So, we are comfortable with that and the customer is not seeing that. So, the — our renewal rate are now trending up nicely and that is — and winning new logo by replacing, kind of, the legacy folks in the SMB market and that’s why I also commented on the channel.
The channel does bring us a lot more businesses than usually do. So, those are the second part of the reason. And then on — we have a growth, although now based on a little smaller number, for both AtHoc for the critical event management software, as well as the secure communication software. And they are typically tied to government and government problem is, it takes a long time. So, but they are all very high renewal rate, very high. In fact, we seldom never lose one, it will be a rare for us to lose the renewal and we are winning new ones, but that takes time as I said. So, I feel that all the four components what makes up our cyber offering, are all building some level of momentum and you raising or addressing some of the issue, the pain point that we had.
Mike Walkley: That’s very, very helpful, and maybe just a follow-up question, just going back to IoT and your big pipeline there. I know it’s tough on the development seat timing, but as these new design wins turn to production, what are you thinking about in terms of revenue uptick, in terms of what you’re getting today from current royalties?
John Chen: Oh, so the first set of revenue that we’re going to get on the design wins that we had is the developer seat. As they get into a very strong development cycle, typically every OEM will buy more seats, and so that’s Number one. And then they sometimes will require professional services help which we also offer, to make sure they get to use the QNX the most efficient way. So, those are the second one. Typically, an SOP which is, that is Start of Production, on a design win, three to four years from the day we win it, but you see that — I think that was going to accelerate, partly because of competition from China and some of the other Asian countries like Vietnam and they was — they will — I think they will compress the cycle.
And so, that’s kind of — I don’t know whether I answered your question. That’s kind of where we expect the revenue come in. So, the $640 million are literally beyond the — this is only royalty. This is not — doesn’t include professional services, doesn’t include a developer seat. So, we will eventually get all that — hopefully get, if not all, the majority of the $640 million and we of course will continue to grow the $640 million.
Mike Walkley: Great. Well, thanks for taking my questions, and congrats on finalizing the latest Intel.
John Chen: Thank you.
