• BlackBerry Narrows Non-GAAP Loss Per Share To ($0.02) On Broad-Based Operational Progress In Fiscal 2015 Second Quarter



    BlackBerry 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). 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.

    Press Release

    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
    Gross margin Loss
    margin(1) %(1) before
    (before (before income Net Loss per
    taxes) taxes) taxes loss 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)
    ---------- ---------- ----------- ------------ -----------
    ---------- ---------- ----------- ------------ -----------
    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.

    (1) During the second quarter of fiscal 2015, the Company reported GAAP
    gross margin of $425 million or 46.4% of revenue. Excluding the impact
    of the restructuring charges included in cost of sales, the non-GAAP
    gross margin was $435 million, or 47.5%.
    (2) During the second quarter of fiscal 2015, the Company incurred charges
    related to the restructuring program of $33 million pre-tax, or $29
    million after tax, of which $10 million were included in cost of sales,
    $19 million were included in research and development and $4 million
    were included in selling, marketing, and administration expenses.
    (3) During the second quarter of fiscal 2015, the Company recorded the Q2
    Fiscal 2015 Debentures Fair Value Adjustment of $167 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)
    For the quarter ended
    ----------------------------------------------------
    August 30, 2014 May 31, 2014 March 1, 2014
    ---------------- ---------------- -----------------
    North America $ 297 32.4% $ 276 28.6% $ 297 30.4 %
    Europe, Middle East and
    Africa 368 40.2% 414 42.9% 412 42.2 %
    Latin America 111 12.1% 125 12.9% 127 13.0 %
    Asia Pacific 140 15.3% 151 15.6% 140 14.4 %
    -------- ------- -------- ------- -------- --------
    Total $ 916 100.0% $ 966 100.0% $ 976 100.0 %
    -------- ------- -------- ------- -------- --------
    -------- ------- -------- ------- -------- --------


    Supplementary Geographic Revenue Breakdown
    (United States dollars, in millions except per share
    data)
    For the quarter ended
    ---------------------------------
    November 30,
    2013 August 31, 2013
    ---------------- ----------------
    North America $ 340 28.5% $ 414 26.3%
    Europe, Middle East and
    Africa 549 46.0% 686 43.6%
    Latin America 135 11.3% 196 12.5%
    Asia Pacific 169 14.2% 277 17.6%
    -------- ------- -------- -------
    Total $ 1,193 100.0% $ 1,573 100.0%
    -------- ------- -------- -------
    -------- ------- -------- -------


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