BlackBerry Achieves Non-GAAP Profitability and Positive Cash Flow for the Fiscal 2015 Third Quarter
Waterloo, ON, December 19, 2014: BlackBerry Limited , a global player in mobile communications, today reported financial results for the three months ended November 29, 2014 (all figures in U.S. dollars and U.S. GAAP, except where otherwise indicated).
Q3 Highlights:
- Cash and investments balance of $3.1 billion at the end of the fiscal quarter
- Normalized positive cash flow of $43 million in the quarter, compared to cash use of $36 million in the prior quarter
- Non-GAAP earnings of $0.01 per share compared to a loss of $0.02 per share in the prior quarter
- Non-GAAP and GAAP gross margin of 52%, driven by a second consecutive quarter of positive hardware gross margin
- Non-GAAP operating profit of $16 million, up from $2 million last quarter
- Launched BES12 and a portfolio of Value Added Services
- Ending the EZ Pass Program after the quarter with a total of 6.8 million licenses issued for BES10, a 100% increase from last quarter, with over 30% of total licenses traded in from competitors’ Mobile Device Management platforms
- Completed the acquisition of Movirtu, a provider of virtual SIM solutions, during the quarter. Completed the acquisition of Secusmart, a leader in high-security voice and text encryption, after the quarter ended
- Announced partnerships with Samsung, Vodafone, Ingram Micro, Brightstar, Salesforce.com and many others
Q3 Results
Revenue for the third quarter of fiscal 2015 was $793 million. The revenue breakdown for the quarter was approximately 46% for hardware, 46% for services and 8% for software and other revenue. During the third quarter, the Company recognized hardware revenue on approximately 2 million BlackBerry smartphones. During the third quarter, approximately 1.9 million BlackBerry smartphones were sold through to end customers, which included shipments made and recognized prior to the third quarter and which reduced the Company’s inventory in channel.
Non-GAAP profit for the third quarter was $6 million, or $0.01 per share, reversing a loss of $0.02 last quarter. GAAP net loss for the quarter was $148 million, or $0.28 per share. The GAAP net loss includes a non-cash charge associated with the change in the fair value of the debentures of $150 million (the “Q3 Fiscal 2015 Debentures Fair Value Adjustment”) and pre-tax restructuring charges of $5 million related to the restructuring program. The impact of these adjustments on GAAP net loss and loss per share is summarized in a table below.
Total cash, cash equivalents, short-term and long-term investments was $3.1 billion as of November 29, 2014. The cash balance increased $43 million in the third quarter, excluding net outlays of $31 million related to acquisitions during the quarter. Purchase obligations and other commitments amounted to approximately $1.6 billion as of November 29, 2014, with purchase orders with contract manufacturers representing approximately $565 million of the total, compared to $344 million at the end of the second quarter.
“We achieved a key milestone in our eight quarter plan with positive cash flow. We also attained another important milestone in the release of our new enterprise software products and devices,” said Executive Chairman and CEO John Chen. “Our focus now turns to expanding our distribution and driving revenue growth.”
Outlook
The Company continues to anticipate maintaining its strong cash position, while increasingly looking for opportunities to prudently invest in growth. The Company continues to anticipate break-even or better cash flow from operations.
The Company is expanding its distribution capability, and expects traction from these efforts to manifest some time in fiscal 2016. The company continues to target sustainable non-GAAP profitability some time in fiscal 2016.
Reconciliation of GAAP loss before income taxes, net income (loss) and earnings (loss) per share to Non-GAAP loss before income taxes, net income (loss) and earnings (loss) per share:
(United States dollars, in millions except per share data)
|
|
Loss before income taxes |
Net income (loss) |
Earnings (loss) per share |
|||||||||
| As reported | $ |
(160 |
) | $ |
(148 |
) | $ |
(0.28 |
) | |||
| Adjustments: | ||||||||||||
| CORE charges (1) |
5 |
4 |
||||||||||
| Q3 Fiscal 2015 Debenture Fair Value Adjustment (2) |
150 |
150 |
||||||||||
| Adjusted | $ |
(5 |
) | $ |
6 |
$ |
0.01 |
|||||
Note: Non-GAAP loss before income taxes, non-GAAP net income and non-GAAP earnings 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 third quarter of fiscal 2015, the Company incurred charges related to the restructuring program of $5 million pre-tax, or $4 million after tax, of which $4 million were included in research and development and $1 million were included in selling, marketing, and administration expenses.
(2) During the third quarter of fiscal 2015, the Company recorded the Q3 Fiscal 2015 Debentures Fair Value Adjustment of $150 million. This adjustment was presented on a separate line in the Consolidated Statement of Operations.
Supplementary Geographic Revenue Breakdown
(United States dollars, in millions except per share data)
Blackberry Limited
(United States dollars, in millions)
Revenue by Region
|
For the quarter ended |
|||||||||||||||||||||||||||||||||||
|
November 29, 2014 |
August 30, 2014 |
May 31, 2014 |
March 1, 2014 |
November 30, 2013 |
|||||||||||||||||||||||||||||||
| North America | $ |
213 |
26.9 |
% |
$ |
297 |
32.4 |
% |
$ |
276 |
28.6 |
% |
$ |
297 |
30.4 |
% |
$ |
340 |
28.5 |
% |
|||||||||||||||
| Europe, Middle East and Africa |
366 |
46.1 |
% |
368 |
40.2 |
% |
414 |
42.9 |
% |
412 |
42.2 |
% |
549 |
46.0 |
% |
||||||||||||||||||||
| Latin America |
84 |
10.6 |
% |
111 |
12.1 |
% |
125 |
12.9 |
% |
127 |
13.0 |
% |
135 |
11.3 |
% |
||||||||||||||||||||
| Asia Pacific |
130 |
16.4 |
% |
140 |
15.3 |
% |
151 |
15.6 |
% |
140 |
14.4 |
% |
169 |
14.2 |
% |
||||||||||||||||||||
| Total | $ |
793 |
100.0 |
% |
$ |
916 |
100.0 |
% |
$ |
966 |
100.0 |
% |
$ |
976 |
100.0 |
% |
$ |
1,193 |
100.0 |
% |
|||||||||||||||
