BLACKBERRY Ltd 10-Q, filed Jun 25, 2020

BLACKBERRY Ltd (BB)

10-Q 2020-06-25 For: 2020-05-31

Added on April 08, 2026

About this 10-Q

BLACKBERRY Ltd filed this 10-Q on June 25, 2020, covering the quarter ended May 31, 2020.

Headline figures

Quarter ended May 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $206M; down 16.6% from $247M a year earlier
Net loss: $636M; compared with a net loss of $35M a year earlier
Diluted EPS: -$1.14; compared with -$0.09 a year earlier

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Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares	BB	New York Stock Exchange
Common Shares	BB	Toronto Stock Exchange


Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	o	Smaller reporting company	☐
		Emerging growth company	☐


	As at
	May 31, 2020		February 29, 2020
Assets
Current
Cash and cash equivalents (note 3)	$	312	$	377
Short-term investments (note 3)	562		532
Accounts receivable, net of allowance of $13 and $9, respectively (note 1 and note 4)	210		215
Other receivables	20		14

Income taxes receivable	8		6
Other current assets (note 4)	60		52
	1,172		1,196
Restricted cash and cash equivalents (note 3)	48		49
Long-term investments (note 3)	33		32
Other long-term assets (note 4)	57		65

Operating lease right-of-use assets, net	118		124
Property, plant and equipment, net (note 4)	66		70
Goodwill (note 4)	843		1,437
Intangible assets, net (note 4)	878		915

	$	3,215	$	3,888
Liabilities
Current
Accounts payable	$	46	$	31
Accrued liabilities (note 4)	185		202
Income taxes payable (note 5)	12		18
Debentures (note 6)	599		606
Deferred revenue, current (note 11)	249		264
	1,091		1,121
Deferred revenue, non-current (note 11)	92		109
Operating lease liabilities	111		120
Other long-term liabilities (note 4)	8		9



	1,302		1,359
Commitments and contingencies (note 10)
Shareholders’ equity
Capital stock and additional paid-in capital
Preferred shares: authorized unlimited number of non-voting, cumulative, redeemable and retractable	—		—
Common shares: authorized unlimited number of non-voting, redeemable, retractable Class A common shares and unlimited number of voting common shares
Issued - 555,622,606 voting common shares (February 29, 2020 - 554,199,016)	2,777		2,760
Deficit	(838)		(198)
Accumulated other comprehensive loss (note 9)	(26)		(33)
	1,913		2,529
	$	3,215	$	3,888


John S. Chen			Barbara Stymiest
Director			Director


	Capital Stock and Additional Paid-in Capital		Deficit		Accumulated Other Comprehensive Loss		Total























Balance as at February 29, 2020	$	2,760	$	(198)	$	(33)	$	2,529
Net loss	—		(636)		—		(636)
Other comprehensive income	—		—		7		7
Cumulative impact of adoption of ASC 326	—		(4)		—		(4)
Stock-based compensation (note 7)	13		—		—		13
Shares issued:
Exercise of stock options (note 7)	1		—		—		1

Employee share purchase plan (note 7)	3		—		—		3
Balance as at May 31, 2020	$	2,777	$	(838)	$	(26)	$	1,913


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended
	May 31, 2020		May 31, 2019
Revenue (note 11)	$	206	$	247
Cost of sales	63		70

Gross margin	143		177

Operating expenses
Research and development	57		71
Selling, marketing and administration	90		121
Amortization	46		49
Impairment of goodwill (note 4)	594		—


Debentures fair value adjustment (note 6)	1		(28)

	788		213
Operating loss	(645)		(36)
Investment income, net	—		3
Loss before income taxes	(645)		(33)
Provision for (recovery of) income taxes (note 5)	(9)		2


Net loss	$	(636)	$	(35)
Loss per share (note 8)
Basic	$	(1.14)	$	(0.06)
Diluted	$	(1.14)	$	(0.09)


	Cost Basis		Unrealized Gains		Unrealized Losses		Other-than- temporary Impairment		Fair Value		Cash and Cash Equivalents		Short-term Investments		Long-term Investments		Restricted Cash
Bank balances	$	120	$	—	$	—	$	—	$	120	$	120	$	—	$	—	$	—
Other investments	33		—		—		—		33		—		—		33		—
	153		—		—		—		153		120		—		33		—
Level 1:

Equity securities	10		—		(8)		—		2		—		2		—		—


Level 2:
Corporate notes/bonds	37		—		—		—		37		37		—		—		—
Term deposits, certificates of deposits, and GICs	108		—		—		—		108		10		50		—		48
Bearer deposit notes	131		—		—		—		131		79		52		—		—
Commercial paper	289		—		—		—		289		62		227		—		—
Non-U.S. promissory notes	172		—		—		—		172		4		168		—		—

Non-U.S. government sponsored enterprise notes	38		—		—		—		38		—		38		—		—
Non-U.S. treasury bills/notes	25		—		—		—		25		—		25		—		—

	800		—		—		—		800		192		560		—		48





	$	963	$	—	$	(8)	$	—	$	955	$	312	$	562	$	33	$	48


	Three Months Ended
	May 31, 2020
Beginning balance as of February 29, 2020	$	9
Impact of adopting ASC 326	4
Current period provision for expected credit losses	—


Ending balance of the allowance for credit loss as at May 31, 2020	$	13


	As at May 31, 2020
	Cost		Accumulated Amortization		Net Book Value
Acquired technology	$	1,020	$	656	$	364
Intellectual property	493		284		209
Other acquired intangibles	494		189		305
	$	2,007	$	1,129	$	878


	As at February 29, 2020
	Cost		Accumulated Amortization		Net Book Value
Acquired technology	$	1,019	$	636	$	383
Intellectual property	489		275		214
Other acquired intangibles	494		176		318
	$	2,002	$	1,087	$	915


	Carrying Amount
Carrying amount as at February 29, 2020	1,437

Goodwill impairment charge	(594)

Carrying amount as at May 31, 2020	$	843


	Capital Stock and Additional Paid-in Capital
	Stock Outstanding (000s)	Amount
Common shares outstanding as at February 29, 2020	554,199	2,760
Exercise of stock options	300	1
Common shares issued for restricted share unit settlements	325	—
Stock-based compensation	—	13






Common shares issued for employee share purchase plan	799	3
Common shares outstanding as at May 31, 2020	555,623	$	2,777


	Foreign Currency Cumulative Translation Adjustment		Accumulated Net Unrealized Losses on Cash Flow Hedges		Other Post-Employment Benefit Obligations		Change in fair value from instrument-specific credit risk on Debentures		Total
AOCL as at February 29, 2020	$	(9)	$	(1)	$	(1)	$	(22)	$	(33)
Other comprehensive income before reclassification	1		$	1	$	—	7		$	9
Amounts reclassified from AOCL into net loss	—		(2)		—		—		(2)
Change in cumulative comprehensive income (loss) for the period	1		(1)		—		7		7
AOCL as at May 31, 2020	$	(8)	$	(2)	$	(1)	$	(15)	$	(26)


	Three Months Ended
	May 31, 2020			May 31, 2019
North America ⁽¹⁾	$	150		$	160
Europe, Middle East and Africa	41			61
Other regions	15			26

Total	$	206		$	247

North America ⁽¹⁾	72.8		%	64.8		%
Europe, Middle East and Africa	19.9		%	24.7		%
Other regions	7.3		%	10.5		%
Total	100.0		%	100.0		%


	Accounts Receivable		Deferred Revenue		Deferred Commissions
Opening balance as at February 29, 2020	$	267	$	373	$	28
Increases due to invoicing of new or existing contracts, associated contract acquisition costs, or other	181		117		8
Decrease due to payment, fulfillment of performance obligations, or other	(193)		(149)		(9)

Decrease, net	(12)		(32)		(1)
Closing balance as at May 31, 2020	$	255	$	341	$	27


	As at May 31, 2020
	Less than 12 Months		12 to 24 Months		Thereafter		Total
Remaining performance obligations	$	264	$	90	$	32	$	386


For the Three Months Ended (in millions)	May 31, 2020			May 31, 2019
Revenue	$	206		$	247
Software deferred revenue acquired ⁽¹⁾	8			20
Adjusted revenue	$	214		$	267

Gross margin	$	143		$	177
Software deferred revenue acquired ⁽¹⁾	8			20

Restructuring charges	—			1
Stock compensation expense	2			1
Adjusted gross margin	$	153		$	199

Gross margin %	69.4		%	71.7		%
Software deferred revenue acquired ⁽¹⁾	1.2		%	2.1		%

Restructuring charges	—		%	0.4		%
Stock compensation expense	0.9		%	0.3		%
Adjusted gross margin %	71.5		%	74.5		%


	For the Three Months Ended
	May 31, 2020		May 31, 2019
Interest paid during the period	$	6	$	6
Income taxes paid during the period	—		1
Income tax refunds received during the period	1		2


	For the Three Months Ended (in millions, except for share and per share amounts)
	May 31, 2020		May 31, 2019		Change
Revenue	$	206	$	247	$	(41)
Gross margin	143		177		(34)
Operating expenses	788		213		575
Investment income, net	—		3		(3)
Loss before income taxes	(645)		(33)		(612)
Provision for (recovery of) income taxes	(9)		2		(11)
Net loss	$	(636)	$	(35)	$	(601)
Loss per share - reported
Basic	$	(1.14)	$	(0.06)
Diluted	$	(1.14)	$	(0.09)

Weighted-average number of shares outstanding (000’s)
Basic	557,839		551,845
Diluted ⁽¹⁾	557,839		612,345


For the Three Months Ended (in millions, except per share amounts)	May 31, 2020					May 31, 2019
			Basic earnings per share			Basic earnings per share
Net loss	$	(636)	$(1.14)	$	(35)	$(0.06)
Software deferred revenue acquired	8			20

Restructuring charges	1			1
Stock compensation expense	14			17
Debenture fair value adjustment	1			(28)
Software deferred commission expense acquired	(3)			(5)
Acquired intangibles amortization	33			35
Business acquisition and integration costs	—			1
Goodwill impairment charge	594			—



Acquisition valuation allowance	—			(1)
Adjusted net income	$	12	$0.02	$	5	$0.01


	For the Three Months Ended (in millions)
	May 31, 2020			May 31, 2019			Change
Revenue by Product and Service
Software and Services	$	148		$	168		$	(20)

Licensing and Other	58			79			(21)

	$	206		$	247		$	(41)

% Revenue by Product and Service
Software and Services	71.8		%	68.0		%

Licensing and Other	28.2		%	32.0		%

	100.0		%	100.0		%


	For the Three Months Ended (in millions)
	Included in Operating Expense
	May 31, 2020		May 31, 2019		Change
Property, plant and equipment	$	4	$	5	$	(1)
Intangible assets	42		44		(2)
Total	$	46	$	49	$	(3)

	Included in Cost of Sales
	May 31, 2020		May 31, 2019		Change
Property, plant and equipment	$	1	$	1	$	—
Intangible assets	3		3		—
Total	$	4	$	4	$	—


	(in millions, except per share data)
	Fiscal Year 2021		Fiscal Year 2020														Fiscal Year 2019
	First Quarter		Fourth Quarter		Third Quarter		Second Quarter		First Quarter		Fourth Quarter		Third Quarter		Second Quarter
Revenue	$	206	$	282	$	267	$	244	$	247	$	255	$	226	$	210
Gross margin	143		212		198		176		177		206		170		161
Operating expenses	788		253		227		219		213		178		112		122
Income (loss) before income taxes	(645)		(42)		(30)		(43)		(33)		32		60		44
Provision for (recovery of) income taxes	(9)		(1)		2		1		2		(19)		1		1
Net income (loss)	$	(636)	$	(41)	$	(32)	$	(44)	$	(35)	$	51	$	59	$	43

Earnings (loss) per share
Basic earnings (loss) per share	$	(1.14)	$	(0.07)	$	(0.06)	$	(0.08)	$	(0.06)	$	0.09	$	0.11	$	0.08
Diluted earnings (loss) per share	$	(1.14)	$	(0.07)	$	(0.07)	$	(0.10)	$	(0.09)	$	0.08	$	(0.01)	$	(0.04)


	As at (in millions)
	May 31, 2020		February 29, 2020		Change
Cash and cash equivalents	$	312	$	377	$	(65)
Restricted cash	48		49		(1)
Short-term investments	562		532		30
Long-term investments	33		32		1
Cash, cash equivalents, and investments	$	955	$	990	$	(35)


	(in millions)
	Total		Less than One Year		One to Three Years		Four to Five Years		Greater than Five Years
Operating lease obligations	$	158	$	34	$	61	$	37	$	26
Purchase obligations and commitments	196		110		64		22		—
Debt interest and principal payments	615		615		—		—		—
Total	$	969	$	759	$	125	$	59	$	26


Exhibit Number						Description of Exhibit














10.1*†						Employment agreement with Billy Ho, dated March 17, 2020
10.2*†						Employment agreement with Nita White-Ivy, dated April 7, 2017
10.3*†						Employment agreement with Randall Cook, dated August 6, 2018
10.4*†						Employment agreement with Steven Capelli, dated September 23, 2019
31.1*						Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a)
31.2*						Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a)
32.1††						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2††						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



101*						XBRL Instance Document – the document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document
101*						Inline XBRL Taxonomy Extension Schema Document
101*						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101*						Inline XBRL Taxonomy Extension Definition Linkbase Document
101*						Inline XBRL Taxonomy Extension Label Linkbase Document
101*						Inline XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File – formatted as Inline XBRL and contained in Exhibit 101


Date: June 25, 2020			/s/ John Chen
			Name: John Chen
			Title: Chief Executive Officer


Date: June 25, 2020			/s/ Steve Rai
			Name: Steve Rai
			Title: Chief Financial Officer