WATERLOO, ONTARIO--(Marketwired - June 23, 2015) - BlackBerry Limited (NASDAQ:BBRY)(TSX:BB), a global leader in mobile communications, today reported financial results for the three months ended May 30, 2015 (all figures in U.S. dollars and U.S. GAAP, except where otherwise indicated).
Q1 Highlights
•Software and technology licensing revenue of $137 million, a 150% increase over Q1 FY15
•Positive free cash flow of $123 million in the quarter
•Cash and investments balance of $3.32 billion at the end of the fiscal quarter, an increase of $50 million over Q4 FY15
•Non-GAAP loss of ($0.05) per share, improving on a loss per share of ($0.11) in Q1 FY15
•Basic GAAP earnings of $0.13 per share
•Non-GAAP operating loss of ($7) million, improving on a non-GAAP operating loss of ($41) million in Q1 FY15
•Non-GAAP gross margin of 50.3% and GAAP gross margin of 47.1%
•Adjusted EBITDA of $157 million, a 5% increase over Q1 FY15
•Acquired WatchDox, a leader in high-security document synchronization, sharing and management
•Launched the BlackBerry Leap in April, with availability in 22 markets
•Entered into joint development deals with Wistron and Compal for devices, in addition to the Company's existing partnership with Foxconn
Q1 Results
Revenue for the first quarter of fiscal 2016 was $658 million. The revenue breakdown for the quarter was approximately 40% for hardware, 38% for services and 21% for software and technology licensing. BlackBerry had 2,600 enterprise customer wins in the quarter. Approximately 45% of the licenses associated with these deals are cross-platform. During the first quarter, the Company recognized hardware revenue on approximately 1.1 million BlackBerry smartphones with an ASP of $240.
Non-GAAP loss for the first quarter was ($28) million, or ($0.05) per share, compared to a loss of ($0.11) per share in the same year-ago period. GAAP basic net income for the quarter was $68 million, or $0.13 per basic share. Basic GAAP net income includes non-cash income associated with the change in the fair value of the debentures of $157 million (the "Q1 Fiscal 2016 Debentures Fair Value Adjustment") and pre-tax charges of $61 million related to restructuring. The impact of these adjustments on GAAP net income and earnings per share is summarized in a table below.
Total cash, cash equivalents, short-term and long-term investments was $3.32 billion as of May 30, 2015. The cash balance increased $50 million in the first quarter. Excluding $1.25 billion in the face value of our debt, the net cash balance at the end of the quarter was $2.07 billion. Purchase orders with contract manufacturers totaled approximately $238 million at the end of the first quarter, compared to $394 million at the end of the fourth quarter. Operating cash flow was $134 million with free cash flow (operating cash flow minus capital expenditures) of $123 million.
In Q1, BlackBerry completed its acquisition of WatchDox, a leading provider of secure enterprise file-sync-and-share (EFSS) solutions that allows users to protect, share and work with their files on Android, iOS, Windows Phone, BlackBerry and PCs. WatchDox will be integrated into BlackBerry's BES12 Enterprise Mobility Management solution, extending the company's ability to secure communications end-to-end from voice, text, messaging and data to now include documents.
In addition to BlackBerry's existing partnership with Foxconn, the Company also entered into joint development and manufacturing agreements with Wistron Corporation and Compal Electronics. These agreements will reduce the time to market of new devices, streamline the supply chain, leverage greater economies of scale and enable resource and fixed asset reductions for greater business efficiency - which are all significant steps toward BlackBerry achieving profitability in its devices business.
"I am pleased with the strong performance of our software and technology business. This is key to BlackBerry's future growth," said Executive Chairman and CEO John Chen. "Our financials reflect increased investments to sales and customer support for our software business. In addition, we are taking steps to make the handset business profitable. We believe these actions are prudent and necessary to grow the business and we believe the remaining milestones in our strategic plan are achievable."
Outlook
The company continues to anticipate positive free cash flow. The company continues to target sustainable non-GAAP profitability some time in fiscal 2016.
Reconciliation of GAAP gross margin, gross margin percentage, income before income taxes, net income and earnings per share to Non-GAAP gross margin, gross margin percentage, loss before income taxes, net loss and loss per share:
(United States dollars, in millions except per share data)
For the three months ended May 30, 2015
Gross margin
(1) Gross margin %
(1) Income (loss)
before income
taxes Net
income
(loss) Basic
earnings (loss)
per share
As reported $ 310 47 % $ 73 $ 68 $ 0.13
Adjustments:
Q1 Fiscal 2016 Debenture Fair Value Adjustment (2) - - % (157 ) (157 )
CORE Program Charges (3) - - % 9 9
RAP Charges (4) 21 3 % 52 52
Adjusted $ 331 50 % $ (23 ) $ (28 ) $ (0.05 )
Note: Non-GAAP gross margin, gross margin percentage, loss before income taxes, non-GAAP net loss and non-GAAP loss per share do not have a standardized meaning prescribed by GAAP and thus are not comparable to similarly titled measures presented by other issuers. The Company believes that the presentation of these non-GAAP measures enables the Company and its shareholders to better assess the Company's operating results relative to its operating results in prior periods and improves the comparability of the information presented. Investors should consider these non-GAAP measures in the context of the Company's GAAP results.
(1) During the first quarter of fiscal 2016, the Company reported GAAP gross margin of $310 million or 47% of revenue. Excluding the impact of the RAP charges included in cost of sales, the adjusted gross margin was $331 million, or 50%.
(2) During the first quarter of fiscal 2016, the Company recorded the Q1 Fiscal 2016 Debentures Fair Value Adjustment of $157 million. This adjustment was presented on a separate line in the Consolidated Statement of Operations.
(3) During the first quarter of fiscal 2016, the Company incurred charges related to the CORE program of $9 million, of which $2 million were included in research and development and $7 million were included in selling, marketing, and administration expenses.
(4) During the first quarter of fiscal 2016, the Company incurred charges related to the RAP of $52 million, of which $21 million were included in cost of sales, $13 million were included in research and development and $18 million were included in selling, marketing, and administration expenses.
Supplementary Geographic Revenue Breakdown
BlackBerry Limited
(United States dollars, in millions)
Revenue by Region
For the quarter ended
May 30, 2015 February 28, 2015 November 29, 2014 August 30, 2014 May 31, 2014
North America $ 285 43.3 % $ 205 31.0 % $ 213 26.9 % $ 297 32.4 % $ 276 28.6 %
Europe, Middle East and Africa 245 37.2 % 283 42.9 % 366 46.1 % 368 40.2 % 414 42.9 %
Latin America 42 6.4 % 60 9.1 % 84 10.6 % 111 12.1 % 125 12.9 %
Asia Pacific 86 13.1 % 112 17.0 % 130 16.4 % 140 15.3 % 151 15.6 %
Total $ 658 100.0 % $ 660 100.0 % $ 793 100.0 % $ 916 100.0 % $ 966 100.0 %
Conference Call and Webcast
A conference call and live webcast will be held beginning at 8 am ET, which can be accessed by dialing 1-877-795-3635 or by logging on at Investor Events - Canada. A replay of the conference call will also be available at approximately 11 am ET by dialing 1-647-436-0148 and entering pass code 8517132# or by clicking the link above. This replay will be available until 11 am ET July 9th, 2015.
Consolidated Statements of Operations
For the three months ended
May 30, 2015 February 28, 2015 May 31, 2014
Revenue $ 658 $ 660 $ 966
Cost of sales 348 342 515
Gross margin 310 318 451
Gross margin % 47.1 % 48.2 % 46.7 %
Operating expenses
Research and development 139 134 237
Selling, marketing and administration 174 172 400
Amortization 65 68 81
Debentures fair value adjustment (157 ) 50 (287 )
221 424 431
Operating income (loss) 89 (106 ) 20
Investment income (loss), net (16 ) 105 (26 )
Income (loss) before income taxes 73 (1 ) (6 )
Provision for (recovery of) income taxes 5 (29 ) (29 )
Net income $ 68 $ 28 $ 23
Earnings (loss) per share
Basic $ 0.13 $ 0.05 $ 0.04
Diluted $ (0.10 ) $ 0.05 $ (0.37 )
Weighted-average number of common shares outstanding (000's)
Basic 529,235 528,685 526,742
Diluted 670,539 543,556 658,228
Total common shares outstanding (000's) 529,484 528,802 526,908
BlackBerry Limited
Incorporated under the Laws of Ontario
(United States dollars, in millions except per share data) (unaudited)
Consolidated Balance Sheets
As at May 30, 2015 February 28, 2015
Assets
Current
Cash and cash equivalents $ 1,165 $ 1,233
Short-term investments 1,799 1,658
Accounts receivable, net 470 503
Other receivables 93 97
Inventories 133 122
Income taxes receivable 16 169
Other current assets 258 375
Deferred income tax asset 8 10
3,942 4,167
Long-term investments 293 316
Restricted cash 59 59
Property, plant and equipment, net 519 556
Goodwill 96 76
Intangible assets, net 1,281 1,375
$ 6,190 $ 6,549
Liabilities
Current
Accounts payable $ 149 $ 235
Accrued liabilities 466 658
Deferred revenue 464 470
1,079 1,363
Long term debt 1,550 1,707
Deferred income tax liability 48 48
2,677 3,118
Shareholders' Equity
Capital stock and additional paid-in capital 2,459 2,444
Retained earnings 1,078 1,010
Accumulated other comprehensive loss (24 ) (23 )
3,513 3,431
$ 6,190 $ 6,549
BlackBerry Limited
Incorporated under the Laws of Ontario
(United States dollars, in millions except per share data) (unaudited)
Consolidated Statements of Cash Flows
Three Months Ended
May 30, 2015 May 31, 2014
Cash flows from operating activities
Net income $ 68 $ 23
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization 164 191
Deferred income taxes 2 25
Stock-based compensation 14 14
Loss on disposal of property, plant and equipment 12 108
Debentures fair value adjustment (157 ) (287 )
Other 16 6
Net changes in working capital items:
Accounts receivable, net 35 227
Other receivables 4 (73 )
Inventories (11 ) 137
Income tax receivable, net 153 298
Other current assets 124 104
Accounts payable (86 ) (213 )
Accrued liabilities (191 ) (190 )
Deferred revenue (13 ) (68 )
Net cash provided by operating activities 134 302
Cash flows from investing activities
Acquisition of long-term investments (77 ) (215 )
Proceeds on sale or maturity of long-term investments 1 11
Acquisition of property, plant and equipment (11 ) (26 )
Proceeds on sale of property, plant and equipment - 292
Acquisition of intangible assets (11 ) (142 )
Business acquisitions, net of cash acquired (53 ) -
Acquisition of short-term investments (574 ) (824 )
Proceeds on sale or maturity of short-term investments 532 799
Net cash used in investing activities (193 ) (105 )
Cash flows from financing activities
Issuance of common shares 1 2
Transfer to restricted cash - (69 )
Net cash provided by (used in) financing activities 1 (67 )
Effect of foreign exchange gain (loss) on cash and cash equivalents (10 ) 1
Net increase (decrease) in cash and cash equivalents during the period (68 ) 131
Cash and cash equivalents, beginning of period 1,233 1,579
Cash and cash equivalents, end of period $ 1,165 $ 1,710
As at May 30, 2015 February 28, 2015
Cash and cash equivalents $ 1,165 $ 1,233
Short-term investments 1,799 1,658
Long-term investments 293 316
Restricted cash 59 59
$ 3,316 $ 3,266
Investor Contact:
BlackBerry Investor Relations
+1-519-888-7465
investor_relations@blackberry.com
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