Beats non-GAAP earnings expectations
Second Quarter Fiscal 2024:
- Total company revenue of $132
million.
- IoT revenue of $49
million.
- Cybersecurity revenue of $79
million.
- Licensing & Other revenue of $4
million.
- Non-GAAP basic loss per share of $0.04 and GAAP basic loss per share of
$0.07.
WATERLOO, ON, Sept. 28,
2023 /CNW/ -- BlackBerry Limited (NYSE: BB; TSX: BB)
today reported financial results for the three months ended
August 31, 2023 (all figures in U.S.
dollars and U.S. GAAP, except where otherwise indicated).
![BlackBerry Logo Black (PRNewsfoto/Blackberry Limited) BlackBerry Logo Black (PRNewsfoto/Blackberry Limited)](https://mma.prnewswire.com/media/726868/BlackBerry_Logo.jpg)
"Our IoT business continues to win new designs and add
royalty backlog at a strong rate, illustrating how well-positioned
this business is in the medium to long term. We expect a
strong finish for IoT revenue this fiscal year, with the fourth
quarter forecasted to be the strongest ever. Further, we are
excited by the response from beta customers to our next generation
QNX® Software Development Platform 8.0, and its potential to enable
embedded Generative AI applications," said John Chen, Executive Chair & CEO,
BlackBerry. "We also expect a strong second half for revenue in our
Cyber business, with a pipeline of deals that include large, mainly
perpetual government opportunities that can deliver meaningful
in-year revenue. Therefore, we are reiterating our full-year
Cyber revenue outlook."
Second Quarter Fiscal 2024 Financial Highlights
- Total company revenue was $132
million.
- Total company non-GAAP gross margin was 65% and GAAP gross
margin was 64%.
- IoT revenue was $49 million, a 9%
sequential increase; IoT gross margin was 84%, increasing by 400
basis points sequentially.
- Cybersecurity revenue was $79
million, with gross margin of 54%.
- Cybersecurity ARR was $279
million.
- Cybersecurity billings were $74
million.
- Licensing and Other revenue was $4
million.
- Non-GAAP operating loss was $28
million and GAAP operating loss was $47 million.
- Total cash, cash equivalents, short-term and long-term
investments decreased by $59 million
to $519 million.
Business Highlights & Strategic Announcements
- Foxconn-initiated group, Mobility in Harmony (MIH) consortium,
selects safety-certified BlackBerry® QNX® and BlackBerry IVY® for
its next-generation electric vehicle platform
- Mitsubishi Electric selects BlackBerry IVY to power its new
automotive in-cabin system, FlexConnect.X, helping enhance road
safety and enabling new customer experiences by leveraging IVY's
sensor insights
- BlackBerry IVY innovation fund invests in Israeli start-up,
CorrActions, whose AI-powered application will leverage IVY sensor
insights to detect potential driver awareness issues
- BlackBerry introduces major update to its patented Cylance® AI
engine, further improving protection from zero-day threats
- CylanceENDPOINT™ receives Gartner Peer Insights, Customers'
Choice designation for Endpoint Protection Platforms, based on
customer feedback, placing in the upper-right quadrant
- BlackBerry releases its latest Quarterly Global Threat
Intelligence Report, highlighting that the company's AI-driven
cybersecurity solutions stopped 55,000 individual cyber-attacks
between March and May 2023
BlackBerry also announced that Timothy
Dattels has decided to resign from the BlackBerry Board of
Directors, effective today.
Mr. Dattels joined the Board in 2012. He chaired a special
committee of the Board through a review of strategic alternatives
in 2013 and also served on the Audit and Risk Management Committee
from 2013 to 2019.
Mr. Chen said, "We thank Tim for his longstanding contributions
as BlackBerry transformed itself from a device-centric company to a
Cybersecurity and IoT software and services company, and we wish
him the best in his future endeavors."
Mr. Dattels noted, "It's been an honor to serve with my fellow
directors and I remain supportive of the company and its strategic
direction."
Outlook
BlackBerry will discuss its outlook in connection with the
quarterly earnings announcement further on its earnings conference
call.
Use of Non-GAAP Financial Measures
The tables at the end of this press release include a
reconciliation of the non-GAAP financial measures and non-GAAP
financial ratios used by the company to comparable U.S. GAAP
measures and an explanation of why the company uses them.
Conference Call and Webcast
A conference call and live webcast will be held today beginning
at 5:30 p.m. ET, which can be
accessed using the following link (here) or through the Company's
investor webpage (BlackBerry.com/Investors) or by dialing toll free
+1 (877) 270-2148 and entering Elite Entry Number 6312676.
A replay of the conference call will be available at
approximately 8:30 p.m. ET today
using the same webcast link (here) or by dialing Canada toll free +1 (855) 669-9658 or US toll
free +1 (877) 344-7529 and entering Replay Access Code 4522458.
About BlackBerry
BlackBerry (NYSE: BB; TSX: BB) provides intelligent security
software and services to enterprises and governments around the
world. The company secures more than 500M endpoints including more than 235M vehicles. Based in Waterloo, Ontario, the company leverages AI
and machine learning to deliver innovative solutions in the areas
of cybersecurity, safety and data privacy, and is a leader in the
areas of endpoint security, endpoint management, encryption, and
embedded systems. BlackBerry's vision is clear - to secure a
connected future you can trust.
BlackBerry. Intelligent Security. Everywhere.
For
more information, visit BlackBerry.com and follow
@BlackBerry.
Investor Contact:
BlackBerry Investor Relations
+1 (519) 888-7465
investorrelations@blackberry.com
Media Contact:
BlackBerry Media Relations
+1 (519) 597-7273
mediarelations@blackberry.com
This news release contains forward-looking statements within the
meaning of certain securities laws, including under the U.S.
Private Securities Litigation Reform Act of 1995 and applicable
Canadian securities laws, including statements regarding
BlackBerry's plans, strategies and objectives including its
expectations with respect to increasing and enhancing its product
and service offerings.
The words "expect", "anticipate", "estimate", "may", "will",
"should", "could", "intend", "believe", "target", "plan" and
similar expressions are intended to identify these forward-looking
statements. Forward-looking statements are based on estimates and
assumptions made by BlackBerry in light of its experience and its
perception of historical trends, current conditions and expected
future developments, as well as other factors that BlackBerry
believes are appropriate in the circumstances, including but not
limited to, BlackBerry's expectations regarding its business,
strategy, opportunities and prospects, the launch of new products
and services, general economic conditions, competition,
BlackBerry's expectations regarding its financial performance, and
BlackBerry's expectations regarding its ability to repay at
maturity, or possibly refinance, its debentures. Many factors
could cause BlackBerry's actual results, performance or
achievements to differ materially from those expressed or implied
by the forward-looking statements, including, without limitation,
risks related to the following factors: BlackBerry's strategic
review of its businesses, including risk related to BlackBerry's
ability to realize the benefits of any strategic alternatives being
explored and risk that uncertainty relating to the review may
adversely impact the Company's business and relationships with its
partners, customers and employees; a prolonged labour disruption
involving North American auto workers; BlackBerry's ability to
enhance, develop, introduce or monetize products and services for
the enterprise market in a timely manner with competitive pricing,
features and performance; BlackBerry's ability to maintain or
expand its customer base for its software and services offerings to
grow revenue or achieve sustained profitability; the intense
competition faced by BlackBerry; the occurrence or perception of a
breach of BlackBerry's network cybersecurity measures, or an
inappropriate disclosure of confidential or personal information;
the failure or perceived failure of BlackBerry's solutions to
detect or prevent security vulnerabilities; BlackBerry's continuing
ability to attract new personnel, retain existing key personnel and
manage its potential CEO succession and staffing effectively;
litigation against BlackBerry; BlackBerry's dependence on its
relationships with resellers and channel partners; acquisitions,
divestitures and other business initiatives; the impact of the
COVID-19 pandemic; network disruptions or other business
interruptions; BlackBerry's ability to foster an ecosystem of
third-party application developers; BlackBerry's products and
services being dependent upon interoperability with rapidly
changing systems provided by third parties; BlackBerry's ability to
obtain rights to use third-party software and its use of open
source software; failure to protect BlackBerry's intellectual
property and to earn expected revenues from intellectual property
rights; BlackBerry being found to have infringed on the
intellectual property rights of others; the substantial asset
risk faced by BlackBerry, including the potential for charges
related to its long-lived assets and goodwill; BlackBerry's
indebtedness; tax provision changes, the adoption of new tax
legislation or exposure to additional tax liabilities; the use and
management of user data and personal information; government
regulations applicable to BlackBerry's products and services,
including products containing encryption capabilities;
environmental, social and governance expectations and standards;
the failure of BlackBerry's suppliers, subcontractors, channel
partners and representatives to use acceptable ethical business
practices or comply with applicable laws; regulations regarding
health and safety, hazardous materials usage and conflict minerals;
foreign operations, including fluctuations in foreign currencies;
adverse economic, geopolitical and environmental conditions; the
fluctuation of BlackBerry's quarterly revenue and operating
results; the volatility of the market price of BlackBerry's common
shares; and rising inflation.
These risk factors and others relating to BlackBerry are
discussed in greater detail in BlackBerry's Annual Report on
Form 10-K and the "Cautionary Note Regarding
Forward-Looking Statements" section of BlackBerry's MD&A
(copies of which filings may be obtained at www.sedar.com or
www.sec.gov). All of these factors should be considered carefully,
and readers should not place undue reliance on BlackBerry's
forward-looking statements. Any statements that are forward-looking
statements are intended to enable BlackBerry's shareholders to view
the anticipated performance and prospects of BlackBerry from
management's perspective at the time such statements are made, and
they are subject to the risks that are inherent in all
forward-looking statements, as described above, as well as
difficulties in forecasting BlackBerry's financial results and
performance for future periods, particularly over longer periods,
given changes in technology and BlackBerry's business strategy,
evolving industry standards, intense competition and short product
life cycles that characterize the industries in which BlackBerry
operates. Any forward-looking statements are made only as of today
and the company has no intention and undertakes no obligation to
update or revise any of them, except as required by law.
BlackBerry
Limited
Incorporated under the
Laws of Ontario
(United States dollars,
in millions except share and per share amounts)
(unaudited)
|
|
Consolidated
Statements of Operations
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
August 31,
2023
|
|
May 31,
2023
|
|
August 31,
2022
|
|
August 31,
2023
|
|
August 31,
2022
|
Revenue
|
$
132
|
|
$
373
|
|
$
168
|
|
$
505
|
|
$
336
|
Cost of
sales
|
47
|
|
194
|
|
62
|
|
241
|
|
126
|
Gross
margin
|
85
|
|
179
|
|
106
|
|
264
|
|
210
|
Gross margin
%
|
64.4 %
|
|
48.0 %
|
|
63.1 %
|
|
52.3 %
|
|
62.5 %
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
Research and
development
|
50
|
|
54
|
|
54
|
|
104
|
|
107
|
Selling, marketing and
administration
|
73
|
|
99
|
|
86
|
|
172
|
|
168
|
Amortization
|
14
|
|
15
|
|
25
|
|
29
|
|
52
|
Impairment of
long-lived assets
|
1
|
|
—
|
|
4
|
|
1
|
|
4
|
Gain on sale of
property, plant and equipment, net
|
—
|
|
—
|
|
(6)
|
|
—
|
|
(6)
|
Debentures fair value
adjustment
|
(6)
|
|
22
|
|
(10)
|
|
16
|
|
(56)
|
Litigation
settlement
|
—
|
|
—
|
|
—
|
|
—
|
|
165
|
|
132
|
|
190
|
|
153
|
|
322
|
|
434
|
Operating
loss
|
(47)
|
|
(11)
|
|
(47)
|
|
(58)
|
|
(224)
|
Investment income
(loss), net
|
7
|
|
3
|
|
(2)
|
|
10
|
|
(3)
|
Loss before income
taxes
|
(40)
|
|
(8)
|
|
(49)
|
|
(48)
|
|
(227)
|
Provision for income
taxes
|
2
|
|
3
|
|
5
|
|
5
|
|
8
|
Net
loss
|
$
(42)
|
|
$
(11)
|
|
$
(54)
|
|
$
(53)
|
|
$
(235)
|
Loss per
share
|
|
|
|
|
|
|
|
|
|
Basic
|
$
(0.07)
|
|
$
(0.02)
|
|
$
(0.09)
|
|
$
(0.09)
|
|
$
(0.41)
|
Diluted
|
$
(0.07)
|
|
$
(0.02)
|
|
$
(0.10)
|
|
$
(0.09)
|
|
$
(0.45)
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number
of common shares outstanding (000s)
|
|
|
|
|
|
|
|
|
|
Basic
|
583,524
|
|
582,812
|
|
577,314
|
|
583,171
|
|
577,097
|
Diluted
|
583,524
|
|
582,812
|
|
638,147
|
|
583,171
|
|
637,930
|
Total common shares
outstanding (000s)
|
583,684
|
|
583,237
|
|
577,416
|
|
583,684
|
|
577,416
|
BlackBerry
Limited
Incorporated under the
Laws of Ontario
(United States dollars,
in millions) (unaudited)
|
|
Consolidated Balance
Sheets
|
|
|
|
As at
|
|
|
August 31,
2023
|
|
February 28,
2023
|
Assets
|
|
|
|
|
Current
|
|
|
|
|
Cash and cash
equivalents
|
|
$
415
|
|
$
295
|
Short-term
investments
|
|
41
|
|
131
|
Accounts receivable,
net of allowance of $6 and $1, respectively
|
|
127
|
|
120
|
Other
receivables
|
|
8
|
|
12
|
Income taxes
receivable
|
|
5
|
|
3
|
Other current
assets
|
|
49
|
|
182
|
|
|
645
|
|
743
|
Restricted cash and
cash equivalents
|
|
28
|
|
27
|
Long-term
investments
|
|
35
|
|
34
|
Other long-term
assets
|
|
62
|
|
8
|
Operating lease
right-of-use assets, net
|
|
43
|
|
44
|
Property, plant and
equipment, net
|
|
22
|
|
25
|
Goodwill
|
|
597
|
|
595
|
Intangible assets,
net
|
|
181
|
|
203
|
|
|
$
1,613
|
|
$
1,679
|
Liabilities
|
|
|
|
|
Current
|
|
|
|
|
Accounts
payable
|
|
$
18
|
|
$
24
|
Accrued
liabilities
|
|
117
|
|
143
|
Income taxes
payable
|
|
21
|
|
20
|
Debentures
|
|
383
|
|
367
|
Deferred revenue,
current
|
|
174
|
|
175
|
|
|
713
|
|
729
|
Deferred revenue,
non-current
|
|
21
|
|
40
|
Operating lease
liabilities
|
|
49
|
|
52
|
Other long-term
liabilities
|
|
1
|
|
1
|
|
|
784
|
|
822
|
Shareholders'
equity
|
|
|
|
|
Capital stock and
additional paid-in capital
|
|
2,931
|
|
2,909
|
Deficit
|
|
(2,081)
|
|
(2,028)
|
Accumulated other
comprehensive loss
|
|
(21)
|
|
(24)
|
|
|
829
|
|
857
|
|
|
$
1,613
|
|
$
1,679
|
BlackBerry
Limited
Incorporated under the
Laws of Ontario
(United States dollars,
in millions) (unaudited)
|
Consolidated
Statements of Cash Flows
|
|
|
Six Months
Ended
|
|
August 31,
2023
|
|
August 31,
2022
|
Cash flows from
operating activities
|
|
|
|
Net loss
|
$
(53)
|
|
$
(235)
|
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities:
|
|
|
|
Amortization
|
32
|
|
57
|
Stock-based
compensation
|
20
|
|
15
|
Impairment of
long-lived assets
|
1
|
|
4
|
Intellectual property
disposed of by sale
|
147
|
|
—
|
Gain on sale of
property, plant and equipment, net
|
—
|
|
(6)
|
Debentures fair value
adjustment
|
16
|
|
(56)
|
Operating
leases
|
(5)
|
|
(9)
|
Other
|
—
|
|
3
|
Net changes in working
capital items
|
|
|
|
Accounts receivable,
net of allowance
|
(7)
|
|
38
|
Other
receivables
|
4
|
|
10
|
Income taxes
receivable
|
(2)
|
|
—
|
Other
assets
|
(61)
|
|
(1)
|
Accounts
payable
|
(6)
|
|
(2)
|
Accrued
liabilities
|
(24)
|
|
145
|
Income taxes
payable
|
1
|
|
6
|
Deferred
revenue
|
(20)
|
|
(35)
|
Net cash provided by
(used in) operating activities
|
43
|
|
(66)
|
Cash flows from
investing activities
|
|
|
|
Acquisition of
long-term investments
|
(1)
|
|
(2)
|
Acquisition of
property, plant and equipment
|
(3)
|
|
(4)
|
Proceeds on sale of
property, plant and equipment
|
—
|
|
17
|
Acquisition of
intangible assets
|
(10)
|
|
(16)
|
Acquisition of
short-term investments
|
(92)
|
|
(273)
|
Proceeds on sale or
maturity of short-term investments
|
182
|
|
395
|
Net cash provided by
investing activities
|
76
|
|
117
|
Cash flows from
financing activities
|
|
|
|
Issuance of common
shares
|
2
|
|
3
|
Net cash provided by
financing activities
|
2
|
|
3
|
Effect of foreign
exchange loss on cash, cash equivalents, restricted cash, and
restricted cash equivalents
|
—
|
|
(2)
|
Net increase in
cash, cash equivalents, restricted cash, and restricted cash
equivalents during the period
|
121
|
|
52
|
Cash, cash
equivalents, restricted cash, and restricted cash equivalents,
beginning of period
|
322
|
|
406
|
Cash, cash
equivalents, restricted cash, and restricted cash equivalents, end
of period
|
$
443
|
|
$
458
|
|
As at
|
August 31,
2023
|
|
February 28,
2023
|
Cash and cash
equivalents
|
$
415
|
|
$
295
|
Restricted cash and
cash equivalents
|
28
|
|
27
|
Short-term
investments
|
41
|
|
131
|
Long-term
investments
|
35
|
|
34
|
|
$
519
|
|
$
487
|
Reconciliations of the Company's Segment Results to the
Consolidated Results
The following tables show information by operating segment for
the three months ended August 31,
2023 and August 31,
2022. The Company reports segment information in accordance
with U.S. GAAP Accounting Standards Codification Section 280 based
on the "management" approach. The management approach designates
the internal reporting used by the Chief Operating Decision Maker
for making decisions and assessing performance of the Company's
reportable operating segments.
|
For the Three Months
Ended
(in millions)
(unaudited)
|
|
Cybersecurity
|
|
IoT
|
|
Licensing and
Other
|
|
Segment
Totals
|
|
August 31,
|
|
August 31,
|
|
August 31,
|
|
August 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Segment
revenue
|
$
79
|
|
$
111
|
|
$
49
|
|
$
51
|
|
$
4
|
|
$
6
|
|
$
132
|
|
$
168
|
Segment cost of
sales
|
36
|
|
50
|
|
8
|
|
9
|
|
2
|
|
2
|
|
46
|
|
61
|
Segment gross
margin
|
$
43
|
|
$
61
|
|
$
41
|
|
$
42
|
|
$
2
|
|
$
4
|
|
$
86
|
|
$
107
|
Segment gross margin
%
|
54 %
|
|
55 %
|
|
84 %
|
|
82 %
|
|
50 %
|
|
67 %
|
|
65 %
|
|
64 %
|
The following table reconciles the Company's segment results for
the three months ended August 31,
2023 to consolidated U.S. GAAP results:
|
For the Three Months
Ended August 31, 2023
|
|
(in millions)
(unaudited)
|
|
Cybersecurity
|
|
IoT
|
Licensing and
Other
|
Segment
Totals
|
|
Reconciling
Items
|
|
Consolidated
U.S.
GAAP
|
Revenue
|
$
79
|
|
$
49
|
|
$
4
|
|
$
132
|
|
$
—
|
|
$
132
|
Cost of
sales
|
36
|
|
8
|
|
2
|
|
46
|
|
1
|
|
47
|
Gross margin
(1)
|
$
43
|
|
$
41
|
|
$
2
|
|
$
86
|
|
$
(1)
|
|
$
85
|
Operating
expenses
|
|
|
|
|
|
|
|
|
132
|
|
132
|
Investment income,
net
|
|
|
|
|
|
|
|
|
(7)
|
|
(7)
|
Loss before income
taxes
|
|
|
|
|
|
|
|
|
|
|
$
(40)
|
______________________________
(1)
|
See "Reconciliation of
Non-GAAP Measures with the Nearest Comparable U.S. GAAP Measures"
for a reconciliation of selected U.S. GAAP-based measures to
adjusted measures for the three months ended August 31,
2023.
|
The following tables reconcile the Company's segment results for
the three months ended August 31,
2022 to consolidated U.S. GAAP results:
|
For the Three Months
Ended August 31, 2022
|
|
(in millions)
(unaudited)
|
|
Cybersecurity
|
|
IoT
|
Licensing
and Other
|
Segment
Totals
|
|
Reconciling
Items
|
|
Consolidated
U.S.
GAAP
|
Revenue
|
$
111
|
|
$
51
|
|
$
6
|
|
$
168
|
|
$
—
|
|
$
168
|
Cost of
sales
|
50
|
|
9
|
|
2
|
|
61
|
|
1
|
|
62
|
Gross margin
(1)
|
$
61
|
|
$
42
|
|
$
4
|
|
$
107
|
|
$
(1)
|
|
$
106
|
Operating
expenses
|
|
|
|
|
|
|
|
|
153
|
|
153
|
Investment loss,
net
|
|
|
|
|
|
|
|
|
2
|
|
2
|
Loss before income
taxes
|
|
|
|
|
|
|
|
|
|
|
$
(49)
|
______________________________
(1)
|
See "Reconciliation of
Non-GAAP Measures with the Nearest Comparable U.S. GAAP Measures"
for a reconciliation of selected U.S. GAAP-based measures to
adjusted measures for the three months ended August 31,
2022.
|
Reconciliation of Non-GAAP Measures with the Nearest
Comparable U.S. GAAP Measures
In the Company's internal reports, management evaluates the
performance of the Company's business on a non-GAAP basis by
excluding the impact of certain items below from the Company's U.S.
GAAP financial results. The Company believes that these non-GAAP
financial measures and non-GAAP ratios provide management, as well
as readers of the Company's financial statements, with a consistent
basis for comparison across accounting periods and is useful in
helping management and readers understand the Company's operating
results and underlying operational trends.
Readers are cautioned that adjusted gross margin, adjusted gross
margin percentage, adjusted operating expense, adjusted net income
(loss), adjusted income (loss) per share, adjusted research and
development expense, adjusted selling, marketing and administrative
expense, adjusted amortization expense, adjusted operating income
(loss), adjusted EBITDA, adjusted operating income (loss) margin
percentage, adjusted EBITDA margin percentage and free cash flow
(usage) and similar measures do not have any standardized meaning
prescribed by U.S. GAAP and are therefore unlikely to be comparable
to similarly titled measures reported by other companies. These
non-GAAP financial measures should be considered in the context of
the U.S. GAAP results.
Reconciliation of non-GAAP based measures with most
directly comparable U.S. GAAP based measures for the three months
ended August 31, 2023 and
August 31, 2022
A reconciliation of the most directly comparable U.S. GAAP
financial measures for the three months ended August 31, 2023 and August
31, 2022 to adjusted financial measures is reflected in the
table below:
For the Three Months
Ended (in millions)
|
|
August 31,
2023
|
|
August 31,
2022
|
Gross
margin
|
|
$
85
|
|
$
106
|
Stock compensation
expense
|
|
1
|
|
1
|
Adjusted gross
margin
|
|
$
86
|
|
$
107
|
|
|
|
|
|
Gross margin
%
|
|
64.4 %
|
|
63.1 %
|
Stock compensation
expense
|
|
0.8 %
|
|
0.6 %
|
Adjusted gross
margin %
|
|
65.2 %
|
|
63.7 %
|
Reconciliation of U.S. GAAP operating expense for the three
months ended August 31, 2023 and
August 31, 2022 to adjusted operating
expense is reflected in the table below:
For the Three Months
Ended (in millions)
|
|
August 31,
2023
|
|
August 31,
2022
|
Operating
expense
|
|
$
132
|
|
$
153
|
Restructuring
charges
|
|
3
|
|
3
|
Stock compensation
expense
|
|
10
|
|
5
|
Debentures fair value
adjustment
|
|
(6)
|
|
(10)
|
Acquired intangibles
amortization
|
|
10
|
|
22
|
LLA impairment
charge
|
|
1
|
|
4
|
Adjusted operating
expense
|
|
$
114
|
|
$
129
|
Reconciliation of U.S. GAAP net loss and U.S. GAAP basic loss
per share for the three months ended August
31, 2023 and August 31, 2022
to adjusted net loss and adjusted basic loss per share is reflected
in the table below:
For the Three Months
Ended (in millions, except per share amounts)
|
|
August 31,
2023
|
|
August 31,
2022
|
|
|
|
|
Basic
loss
per
share
|
|
|
|
Basic
loss
per
share
|
Net
loss
|
|
$
(42)
|
|
$(0.07)
|
|
$
(54)
|
|
$(0.09)
|
Restructuring
charges
|
|
3
|
|
|
|
3
|
|
|
Stock compensation
expense
|
|
11
|
|
|
|
6
|
|
|
Debentures fair value
adjustment
|
|
(6)
|
|
|
|
(10)
|
|
|
Acquired intangibles
amortization
|
|
10
|
|
|
|
22
|
|
|
LLA impairment
charge
|
|
1
|
|
|
|
4
|
|
|
Adjusted net
loss
|
|
$
(23)
|
|
$(0.04)
|
|
$
(29)
|
|
$(0.05)
|
Reconciliation of U.S. GAAP research and development, selling,
marketing and administration, and amortization expense for the
three months ended August 31, 2023
and August 31, 2022 to adjusted
research and development, selling, marketing and administration,
and amortization expense is reflected in the table below:
For the Three Months
Ended (in millions)
|
|
August 31,
2023
|
|
August 31,
2022
|
Research and
development
|
|
$
50
|
|
$
54
|
Stock compensation
expense
|
|
2
|
|
2
|
Adjusted research
and development
|
|
$
48
|
|
$
52
|
|
|
|
|
|
Selling, marketing
and administration
|
|
$
73
|
|
$
86
|
Restructuring
charges
|
|
3
|
|
3
|
Stock compensation
expense
|
|
8
|
|
3
|
Adjusted selling,
marketing and administration
|
|
$
62
|
|
$
80
|
|
|
|
|
|
Amortization
|
|
$
14
|
|
$
25
|
Acquired intangibles
amortization
|
|
10
|
|
22
|
Adjusted
amortization
|
|
$
4
|
|
$
3
|
Adjusted operating loss, adjusted EBITDA, adjusted operating
loss margin percentage and adjusted EBITDA margin percentage for
the three months ended August 31,
2023 and August 31, 2022 are
reflected in the table below.
For the Three Months
Ended (in millions)
|
|
August 31,
2023
|
|
August 31,
2022
|
Operating
loss
|
|
$
(47)
|
|
$
(47)
|
Non-GAAP adjustments to
operating loss
|
|
|
|
|
Restructuring
charges
|
|
3
|
|
3
|
Stock compensation
expense
|
|
11
|
|
6
|
Debentures fair value
adjustment
|
|
(6)
|
|
(10)
|
Acquired intangibles
amortization
|
|
10
|
|
22
|
LLA impairment
charge
|
|
1
|
|
4
|
Total non-GAAP
adjustments to operating loss
|
|
19
|
|
25
|
Adjusted operating
loss
|
|
(28)
|
|
(22)
|
Amortization
|
|
16
|
|
28
|
Acquired intangibles
amortization
|
|
(10)
|
|
(22)
|
Adjusted
EBITDA
|
|
$
(22)
|
|
$
(16)
|
|
|
|
|
|
Revenue
|
|
$
132
|
|
$
168
|
Adjusted operating
loss margin % (1)
|
|
(21 %)
|
|
(13 %)
|
Adjusted EBITDA
margin % (2)
|
|
(17 %)
|
|
(10 %)
|
______________________________
(1)
|
Adjusted operating loss
margin % is calculated by dividing adjusted operating loss by
revenue.
|
(2)
|
Adjusted EBITDA margin
% is calculated by dividing adjusted EBITDA by revenue.
|
Reconciliation of non-GAAP based measures with most
directly comparable U.S. GAAP based measures for the six months
ended August 31, 2023 and
August 31, 2022
A reconciliation of the most directly comparable U.S. GAAP
financial measures for the six months ended August 31, 2023 and August
31, 2022 to adjusted financial measures is reflected in the
table below:
For the Six Months
Ended (in millions)
|
|
August 31,
2023
|
|
August 31,
2022
|
Gross
margin
|
|
$
264
|
|
$
210
|
Stock compensation
expense
|
|
2
|
|
2
|
Adjusted gross
margin
|
|
$
266
|
|
$
212
|
|
|
|
|
|
Gross margin
%
|
|
52.3 %
|
|
62.5 %
|
Stock compensation
expense
|
|
0.4 %
|
|
0.6 %
|
Adjusted gross
margin %
|
|
52.7 %
|
|
63.1 %
|
Reconciliation of U.S. GAAP operating expense for the six months
ended August 31, 2023 and
August 31, 2022 to adjusted operating
expense is reflected in the table below:
For the Six Months
Ended (in millions)
|
|
August 31,
2023
|
|
August 31,
2022
|
Operating
expense
|
|
$
322
|
|
$
434
|
Restructuring
charges
|
|
8
|
|
4
|
Stock compensation
expense
|
|
18
|
|
11
|
Debentures fair value
adjustment
|
|
16
|
|
(56)
|
Acquired intangibles
amortization
|
|
20
|
|
45
|
LLA impairment
charge
|
|
1
|
|
4
|
Litigation
settlement
|
|
—
|
|
165
|
Adjusted operating
expense
|
|
$
259
|
|
$
261
|
Reconciliation of U.S. GAAP net loss and U.S. GAAP basic loss
per share for the six months ended August
31, 2023 and August 31, 2022
to adjusted net income (loss) and adjusted basic earnings (loss)
per share is reflected in the table below:
For the Six Months
Ended (in millions, except per share amounts)
|
|
August 31,
2023
|
|
August 31,
2022
|
|
|
|
|
Basic
earnings
(loss)
per
share
|
|
|
|
Basic
loss
per
share
|
Net
loss
|
|
$
(53)
|
|
$(0.09)
|
|
$
(235)
|
|
$(0.41)
|
Restructuring
charges
|
|
8
|
|
|
|
4
|
|
|
Stock compensation
expense
|
|
20
|
|
|
|
13
|
|
|
Debentures fair value
adjustment
|
|
16
|
|
|
|
(56)
|
|
|
Acquired intangibles
amortization
|
|
20
|
|
|
|
45
|
|
|
LLA impairment
charge
|
|
1
|
|
|
|
4
|
|
|
Litigation
settlement
|
|
—
|
|
|
|
165
|
|
|
Adjusted net income
(loss)
|
|
$
12
|
|
$0.02
|
|
$
(60)
|
|
$(0.10)
|
Reconciliation of U.S. GAAP research and development, selling,
marketing and administration, and amortization expense for the six
months ended August 31, 2023 and
August 31, 2022 to adjusted research
and development, selling, marketing and administration, and
amortization expense is reflected in the table below:
For the Six Months
Ended (in millions)
|
|
August 31,
2023
|
|
August 31,
2022
|
Research and
development
|
|
$
104
|
|
$
107
|
Stock compensation
expense
|
|
4
|
|
4
|
Adjusted research
and development
|
|
$
100
|
|
$
103
|
|
|
|
|
|
Selling, marketing
and administration
|
|
$
172
|
|
$
168
|
Restructuring
charges
|
|
8
|
|
4
|
Stock compensation
expense
|
|
14
|
|
7
|
Adjusted selling,
marketing and administration
|
|
$
150
|
|
$
157
|
|
|
|
|
|
Amortization
|
|
$
29
|
|
$
52
|
Acquired intangibles
amortization
|
|
20
|
|
45
|
Adjusted
amortization
|
|
$
9
|
|
$
7
|
Adjusted operating income (loss), adjusted EBITDA, adjusted
operating income (loss) margin percentage and adjusted EBITDA
margin percentage for the six months ended August 31, 2023 and August
31, 2022 are reflected in the table below.
For the Six Months
Ended (in millions)
|
|
August 31,
2023
|
|
August 31,
2022
|
Operating
loss
|
|
$
(58)
|
|
$
(224)
|
Non-GAAP adjustments to
operating loss
|
|
|
|
|
Restructuring
charges
|
|
8
|
|
4
|
Stock compensation
expense
|
|
20
|
|
13
|
Debentures fair value
adjustment
|
|
16
|
|
(56)
|
Acquired intangibles
amortization
|
|
20
|
|
45
|
LLA impairment
charge
|
|
1
|
|
4
|
Litigation
settlement
|
|
—
|
|
165
|
Total non-GAAP
adjustments to operating loss
|
|
65
|
|
175
|
Adjusted operating
income (loss)
|
|
7
|
|
(49)
|
Amortization
|
|
32
|
|
57
|
Acquired intangibles
amortization
|
|
(20)
|
|
(45)
|
Adjusted
EBITDA
|
|
$
19
|
|
$
(37)
|
|
|
|
|
|
Revenue
|
|
$
505
|
|
$
336
|
Adjusted operating
income (loss) margin % (1)
|
|
1 %
|
|
(15 %)
|
Adjusted EBITDA
margin % (2)
|
|
4 %
|
|
(11 %)
|
______________________________
(1)
|
Adjusted operating
income (loss) margin % is calculated by dividing adjusted operating
income (loss) by revenue.
|
(2)
|
Adjusted EBITDA margin
% is calculated by dividing adjusted EBITDA by revenue.
|
The Company uses free cash flow (usage) when assessing its
sources of liquidity, capital resources, and quality of earnings.
The Company believes that free cash flow (usage) is helpful in
understanding the Company's capital requirements and provides an
additional means to reflect the cash flow trends in the Company's
business.
Reconciliation of U.S. GAAP net cash flow used in operating
activities for the three months ended August
31, 2023 and August 31, 2022
to free cash flow (usage) is reflected in the table below:
For the Three Months
Ended (in millions)
|
|
August 31,
2023
|
|
August 31,
2022
|
Net cash used in
operating activities
|
|
$
(56)
|
|
$
(23)
|
Acquisition of
property, plant and equipment
|
|
(1)
|
|
(3)
|
Free cash flow
(usage)
|
|
$
(57)
|
|
$
(26)
|
Key Metrics
The Company regularly monitors a number of financial and
operating metrics, including the following key metrics, in order to
measure the Company's current performance and estimated future
performance. Readers are cautioned that annual recurring revenue
("ARR"), dollar-based net retention rate ("DBNRR"), Cybersecurity
total contract value ("TCV") billings, and recurring revenue
percentage do not have any standardized meaning and are unlikely to
be comparable to similarly titled measures reported by other
companies.
For the Three Months
Ended (in millions)
|
|
August 31,
2023
|
Cybersecurity Annual
Recurring Revenue
|
|
$
279
|
Cybersecurity
Dollar-Based Net Retention Rate
|
|
81 %
|
Cybersecurity Total
Contract Value Billings
|
|
$
74
|
Recurring Software
Product Revenue
|
|
~ 90%
|
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SOURCE BlackBerry Limited