BlackBerry Announces Second Quarter Fiscal 2015 Results

BlackBerry Corporate 2

 

BlackBerry have published the following press release ahead of the press conference in an hour from time of publication. On the face of it it’s steady as she goes and all on track, we’ll know more shortly…

September 26, 2014

BlackBerry Narrows Non-GAAP Loss per Share to ($0.02) on Broad-Based Operational Progress in Fiscal 2015 Second Quarter

Waterloo, ON –BlackBerry Limited (NASDAQ: BBRY; TSX: BB), a global leader in mobile communications, today reported financial results for the three months ended August 30, 2014 (all figures in U.S. dollars and U.S. GAAP, except where otherwise indicated).

Q2 Highlights:

• Cash and investments balance of $3.1 billion at the end of the fiscal quarter, up $11 million from the prior quarter

• Normalized cash use of $36 million in the quarter, compared to $255 million in the prior quarter

• Non-GAAP gross margin of 47.5%, driven by positive non-GAAP hardware gross margin

• Breakeven non-GAAP operating margin

• The EZ Pass Program has resulted in a total of 3.4 million licenses issued for BES10, a nearly three-fold increase from last quarter, with 25% of total licenses traded in from competitors’ Mobile Device Management platforms

• 91 million monthly active BBM users, up from 85 million in the prior quarter

• Created the BlackBerry Technology Solutions unit, encompassing QNX (embedded software), Certicom (cryptography), Paratek (antenna tuning), the patent portfolio and the Internet of Things strategy

• Announced an agreement to acquire Secusmart, a leader in high-security voice and text encryption, and recently announced the acquisition of Movirtu, a provider of virtual SIM solutions, after the end of the quarter

Q2 Results

Revenue for the second quarter of fiscal 2015 was $916 million. The revenue breakdown for the quarter was approximately 46% for hardware, 46% for services and 8% for software and other revenue. During the second quarter, the Company recognized hardware revenue on approximately 2.1 million BlackBerry smartphones. During the second quarter, approximately 2.4 million BlackBerry smartphones were sold through to end customers, which included shipments made and recognized prior to the second quarter and which reduced the Company’s inventory in channel.

Non-GAAP loss for the second quarter was $11 million, or $0.02 per share. GAAP net loss for the second quarter was $207 million, or a $0.39 loss per share. The GAAP net loss includes a non-cash charge associated with the change in the fair value of the Debentures of $167 million – the “Q2 Fiscal 2015 Debentures Fair Value Adjustment” – and pre-tax restructuring charges of $33 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 August 30, 2014. The Company used $36 million in the second quarter, excluding net receipts of $47 million related to non-strategic operations during the quarter. Purchase obligations and other commitments amounted to approximately $1.6 billion as of August 30, 2014, with purchase orders with contract manufacturers representing approximately $344 million of the total.

“We delivered a solid quarter against our key operational metrics, and we are confident that we will achieve breakeven cash flow by the end of FY15,” said John Chen, Executive Chairman and CEO, BlackBerry. “Our workforce restructuring is now complete, and we are focusing on revenue growth with judicious investments to further our leadership position in enterprise mobility and security, driving us towards non-GAAP profitability during FY16.”

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 target break-even cash flow results by the end of fiscal 2015.

Reconciliation of GAAP gross margin, gross margin percentage, loss before income taxes, and net loss 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) Gross margin(1) (before taxes) Gross margin %(1) (before taxes) Loss before income taxes Net loss Loss per share
As reported $ 425 46.4 % $ (218 ) $ (207 ) $ (0.39 )
Adjustments:
Restructuring charges (2) 10 1.1 % 33 29
Q2 Fiscal 2015 Debenture Fair Value Adjustment (3) % 167 167
Adjusted $ 435 47.5 % $ (18 ) $ (11 ) $ (0.02 )
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