WATERLOO, ONTARIO — (Marketwired) — 09/28/16 — BlackBerry Limited (NASDAQ: BBRY)(TSX: BB), a global software leader in securing, connecting and mobilizing enterprises, today reported financial results for the three months ended August 31, 2016 (all figures in U.S. dollars and U.S. GAAP, except where otherwise indicated).
Q2 Highlights
Q2 Results
Non-GAAP revenue for the second quarter of fiscal 2017 was $352 million with GAAP revenue of $334 million. The non-GAAP revenue breakdown for the quarter was approximately 44% for software and services, 26% for service access fees (SAF), and 30% for mobility solutions.
BlackBerry had around 3,000 enterprise customer wins in the quarter. Approximately 81% of the second quarter software and services revenue was recurring.
Non-GAAP operating income was $16 million, and non-GAAP earnings per share was break even for the second quarter. GAAP net loss for the quarter was $(372) million, or $(0.71) per basic share. Adjustments to GAAP net income and earnings per share are summarized in a table below.
Total cash, cash equivalents, short-term and long-term investments was approximately $2.5 billion as of August 31, 2016. This reflects a use of free cash of $37 million, which includes $34 million of cash used in operations. Excluding $1.25 billion in the face value of our debt, the net cash balance at the end of the quarter was $1.22 billion. Purchase orders with contract manufacturers totaled approximately $71 million at the end of the second quarter, compared to $150 million at the end of the first quarter and down from $248 million in the year ago quarter.
“We are reaching an inflection point with our strategy. Our financial foundation is strong, and our pivot to software is taking hold,” said John Chen, Executive Chairman and CEO, BlackBerry. “In Q2, we more than doubled our software revenue year over year and delivered the highest gross margin in the company–s history. We also completed initial shipments of BlackBerry Radar, an end-to end asset tracking system, and signed a strategic licensing agreement to drive global growth in our BBM consumer business.”
“Our new Mobility Solutions strategy is showing signs of momentum, including our first major device software licensing agreement with a telecom joint venture in Indonesia. Under this strategy, we are focusing on software development, including security and applications. The company plans to end all internal hardware development and will outsource that function to partners. This allows us to reduce capital requirements and enhance return on invested capital,” continued Chen.
“We remain on track to deliver 30 percent revenue growth in software and services for the full fiscal year. We are revising upward our non-GAAP EPS outlook to a range of breakeven to a five cent loss, compared to the current consensus of a 15 cent loss. This reflects increased confidence based on improving margins and reduced interest expense from the recent refinancing of our debt, as well as planned investments in growth areas.”
Note: Non-GAAP gross margin, non-GAAP gross margin percentage, non-GAAP 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.
Supplementary Geographic Revenue Breakdown
Conference Call and Webcast
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A replay of the conference call will also be available at approximately 11 am ET by dialing 1-855-859-2056 or 1-404-537-3406 and entering Conference ID # 68672235 or by clicking the link above.
About BlackBerry
BlackBerry secures, connects and mobilizes the enterprise. For today–s enterprise of things, BlackBerry provides devices and a software platform that enables and manages security, mobility and communications between and among hardware, programs, mobile apps and the internet of things. Founded in 1984 and based in Waterloo, Ontario, BlackBerry operates in North America, Europe, Middle East and Africa, Asia Pacific and Latin America. The Company trades under the ticker symbols “BB” on the Toronto Stock Exchange and “BBRY” on the NASDAQ. For more information, visit .
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 the new strategic direction for its Mobility Solutions business; the anticipated impact of BlackBerry–s recently completed convertible debt restructuring; BlackBerry–s expectations regarding anticipated demand for, and the timing of, product and service offerings, including its device software; BlackBerry–s expectations regarding the growth of its BBM consumer business; BlackBerry–s expectations regarding its capital requirements and return on invested capital in connection with the implementation of its new Mobility Solutions strategy; BlackBerry–s expectations with respect to the strength of its financial resources; BlackBerry–s expectations regarding revenue growth in its Software & Services business; and BlackBerry–s expectations regarding its non-GAAP earnings per share.
The terms and phrases “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, including its ability to implement meaningful changes to address its business challenges, the launch of new products and services, general economic conditions, product pricing levels and competitive intensity, supply constraints, and BlackBerry–s expectations regarding the cash flow generation of its business and the sufficiency of its financial resources.
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 the following risks: BlackBerry–s ability to attract new enterprise customers and maintain its existing relationships with its enterprise customers, or transition them to the Company–s latest enterprise software platforms and deploy smartphones; BlackBerry–s ability to develop, market and distribute an integrated software and services offering, or otherwise monetize its technologies, to grow revenue, achieve sustained profitability, or to offset the decline in BlackBerry–s service access fees; BlackBerry–s ability to enhance its current products and services, or develop new products and services, in a timely manner, at competitive prices, or to meet customer requirements, or accurately predict emerging technological trends; BlackBerry–s ability to successfully market and distribute new devices, including the PRIV and DTEK50; intense competition faced by BlackBerry; the occurrence or perception of a breach of BlackBerry–s security measures or an inappropriate disclosure of confidential or personal information; risks related to BlackBerry–s products and services being dependent upon the interoperability with rapidly changing systems provided by third parties; risks related to BlackBerry–s ability to attract new personnel and retain existing key personnel; BlackBerry–s dependence on its relationships with network carriers and distributors;
risks related to acquisitions and other business initiatives; the risk that network disruptions or other business interruptions could have a material adverse effect on BlackBerry–s business and harm its reputation; the risk that failure to protect BlackBerry–s intellectual property could harm its ability to compete effectively or impact its ability to earn revenues it expects from intellectual property rights; BlackBerry–s reliance on its suppliers for functional components and risks relating to its supply chain; risks related to sales to customers in highly regulated industries and governmental entities; BlackBerry–s reliance on third parties to manufacture and repair its products; BlackBerry–s ability to obtain rights to use software or components supplied by third parties; BlackBerry–s ability to address inventory and asset risk and the potential for charges related to its inventory and long-lived assets; BlackBerry–s ability to maintain or increase its liquidity; risks related to BlackBerry–s significant indebtedness; risks related to intellectual property rights; risks related to litigation, including litigation claims arising from BlackBerry–s disclosure practices; risks related to government regulations applicable to BlackBerry–s products and services, including products containing encryption technology; risks related to the use and disclosure of user and personal information; risks related to foreign operations, including fluctuations in foreign currencies; risks related to potential defects and vulnerabilities in BlackBerry–s products; risks as a result of actions of activist shareholders; BlackBerry–s ability to supplement and manage its catalogue of third-party applications; risks related to the failure of BlackBerry–s suppliers and other parties it does business with to use acceptable ethical business practices or to comply with applicable laws; risks related to health and safety and hazardous materials usage regulations and network certification risks; costs and other burdens associated with regulations regarding conflict minerals; risks related to BlackBerry possibly losing its foreign private issuer status under U.S. federal securities laws; the potential impact of copyright levies in numerous countries; risks related to tax liabilities; risks related to the volatility of the market price of BlackBerry–s common shares; risks related to economic and geopolitical conditions; market and credit risk related to BlackBerry–s cash and investments; and risks relating to the fluctuation of BlackBerry–s quarterly revenue and operating results.
These risk factors and others relating to BlackBerry are discussed in greater detail in BlackBerry–s Annual Information Form, which is included in its Annual Report on Form 40-F and the “Cautionary Note Regarding Forward-Looking Statements” section of BlackBerry–s MD&A (copies of which filings may be obtained at or ). All of these factors should be considered carefully, and readers should not place undue reliance on BlackBerry–s forward-looking statements. BlackBerry has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
BlackBerry®, BBM, QNX®, Good® and related trademarks, names and logos are the property of BlackBerry Limited and are registered and/or used in the United States and countries around the world. All other trademarks are the property of their respective owners.
Contacts:
Investor Contact:
BlackBerry Investor Relations
+1-519-888-7465
Media Contact:
BlackBerry Media Relations
(519) 597-7273
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