BLACKBERRY Ltd 10-Q, filed Dec 18, 2020

BLACKBERRY Ltd (BB)

10-Q 2020-12-18 For: 2020-11-30

Added on April 08, 2026

About this 10-Q

BLACKBERRY Ltd filed this 10-Q on December 18, 2020, covering the quarter ended November 30, 2020.

Headline figures

Quarter ended November 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $218M; down 18.4% from $267M a year earlier
Net loss: $130M; compared with a net loss of $32M a year earlier
Diluted EPS: -$0.23; compared with -$0.07 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	☐


BLACKBERRY LIMITED

TABLE OF CONTENTS
		Page No.
PART I	FINANCIAL INFORMATION
Item 1	Financial Statements
	Consolidated Balance Sheets as of November 30, 2020 (unaudited) and February 29, 2020	5
	Consolidated Statements of Shareholders’ Equity - Three and Nine Months Ended November 30, 2020 and 2019 (unaudited)	6
	Consolidated Statements of Operations - Three and Nine Months Ended November 30, 2020 and 2019 (unaudited)	8
	Consolidated Statements of Comprehensive Income (Loss) - Three and Nine Months Ended November 30, 2020 and 2019 (unaudited)	9
	Consolidated Statements of Cash Flows - Nine Months Ended November 30, 2020 and 2019 (unaudited)	10
	Notes to the Consolidated Financial Statements	11
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3	Quantitative and Qualitative Disclosures about Market Risk	61
Item 4	Controls and Procedures	62

PART II	OTHER INFORMATION
Item 1	Legal Proceedings	62

Item 6	Exhibits	63
Signatures		64


	As at
	November 30, 2020		February 29, 2020
Assets
Current
Cash and cash equivalents (note 3)	$	223	$	377
Short-term investments (note 3)	451		532
Accounts receivable, net of allowance of $13 and $9, respectively (note 1 and note 4)	212		215
Other receivables	21		14

Income taxes receivable	10		6
Other current assets (note 4)	54		52
	971		1,196
Restricted cash and cash equivalents (note 3)	50		49
Long-term investments (note 3)	33		32
Other long-term assets (note 4)	19		65

Operating lease right-of-use assets, net	91		124
Property, plant and equipment, net (note 4)	54		70
Goodwill (note 4)	849		1,437
Intangible assets, net (note 4)	803		915

	$	2,870	$	3,888
Liabilities
Current
Accounts payable	$	29	$	31
Accrued liabilities (note 4)	173		202
Income taxes payable (note 5)	8		18
Debentures (note 6)	—		606
Deferred revenue, current (note 11)	217		264
	427		1,121
Deferred revenue, non-current (note 11)	75		109
Operating lease liabilities	99		120
Other long-term liabilities (note 4)	7		9
Long-term debentures (note 6)	459		—


	1,067		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 - 562,015,875 voting common shares (February 29, 2020 - 554,199,016 )	2,803		2,760
Deficit	(991)		(198)
Accumulated other comprehensive loss (note 9)	(9)		(33)
	1,803		2,529
	$	2,870	$	3,888


John S. Chen			Barbara Stymiest
Director			Director


☒			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 November 30, 2020
	Capital Stock and Additional Paid-in Capital		Deficit		Accumulated Other Comprehensive Loss		Total
Balance as at August 31, 2020	$	2,788	$	(861)	$	(13)	$	1,914
Net loss	—		(130)		—		(130)
Other comprehensive income	—		—		4		4

Stock-based compensation	11		—		—		11
Shares issued:
Exercise of stock options	1		—		—		1

Employee share purchase plan	3		—		—		3
Balance as at November 30, 2020	$	2,803	$	(991)	$	(9)	$	1,803


	Three Months Ended November 30, 2019
	Capital Stock and Additional Paid-in Capital		Deficit		Accumulated Other Comprehensive Loss		Total
Balance as at August 31, 2019	$	2,722	$	(125)	$	(35)	$	2,562
Net loss	—		(32)		—		(32)
Other comprehensive loss	—		—		(2)		(2)

Stock-based compensation	15		—		—		15
Shares issued:
Exercise of stock options	1		—		—		1

Employee share purchase plan	4		—		—		4
Balance as at November 30, 2019	$	2,742	$	(157)	$	(37)	$	2,548


	Nine Months Ended November 30, 2020
	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	—		(789)		—		(789)
Other comprehensive income	—		—		24		24
Cumulative impact of adoption of ASC 326	—		(4)		—		(4)
Stock-based compensation (note 7)	33		—		—		33
Shares issued:
Exercise of stock options (note 7)	3		—		—		3

Employee share purchase plan (note 7)	7		—		—		7
Balance as at November 30, 2020	$	2,803	$	(991)	$	(9)	$	1,803


	Nine Months Ended November 30, 2019
	Capital Stock and Additional Paid-in Capital		Deficit		Accumulated Other Comprehensive Loss		Total























Balance as at February 28, 2019	$	2,688	$	(32)	$	(20)	$	2,636
Net loss	—		(111)		—		(111)
Other comprehensive loss	—		—		(17)		(17)
Cumulative impact of adoption of ASC 842	—		(14)		—		(14)
Stock-based compensation	46		—		—		46
Shares issued:
Exercise of stock options	2		—		—		2

Employee share purchase plan	6		—		—		6
Balance as at November 30, 2019	$	2,742	$	(157)	$	(37)	$	2,548


	Three Months Ended				Nine Months Ended
	November 30, 2020		November 30, 2019		November 30, 2020		November 30, 2019
Revenue (note 11)	$	218	$	267	$	683	$	758
Cost of sales	69		69		192		207

Gross margin	149		198		491		551

Operating expenses
Research and development	53		66		167		199
Selling, marketing and administration	83		129		252		380
Amortization	45		49		137		146
Impairment of goodwill (note 3)	—		—		594		—
Impairment of long-lived assets (note 3)	—		3		21		5

Debentures fair value adjustment (note 6)	95		(20)		114		(71)

	276		227		1,285		659
Operating loss	(127)		(29)		(794)		(108)
Investment income (loss), net	(1)		(1)		(6)		2
Loss before income taxes	(128)		(30)		(800)		(106)
Provision for (recovery of) income taxes (note 5)	2		2		(11)		5


Net loss	$	(130)	$	(32)	$	(789)	$	(111)
Loss per share (note 8)
Basic	$	(0.23)	$	(0.06)	$	(1.41)	$	(0.20)
Diluted	$	(0.23)	$	(0.07)	$	(1.41)	$	(0.27)


	Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Short-term Investments		Long-term Investments		Restricted Cash and Cash Equivalents
Bank balances	$	163	$	—	$	—	$	163	$	163	$	—	$	—	$	—
Other investments	33		—		—		33		—		—		33		—
	196		—		—		196		163		—		33		—
Level 1:

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


Level 2:
Corporate notes/bonds	25		—		—		25		—		25		—		—
Term deposits, certificates of deposits, and GIC's	120		—		—		120		25		45		—		50

Commercial paper	231		—		—		231		35		196		—		—
Non-U.S. promissory notes	35		—		—		35		—		35		—		—

Non-U.S. government sponsored enterprise notes	98		—		—		98		—		98		—		—
Non-U.S. treasury bills/notes	50		—		—		50		—		50		—		—

	559		—		—		559		60		449		—		50





	$	765	$	—	$	(8)	$	757	$	223	$	451	$	33	$	50


	Nine Months Ended
	November 30, 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 November 30, 2020	$	13


	As at November 30, 2020
	Cost		Accumulated Amortization		Net Book Value
Acquired technology	$	1,022	$	694	$	328
Intellectual property	496		297		199
Other acquired intangibles	494		218		276
	$	2,012	$	1,209	$	803


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

Goodwill impairment charge (see Note 3)	(594)
Effect of foreign exchange on non-U.S. dollar denominated goodwill	6
Carrying amount as at November 30, 2020	$	849


	Three Months Ended						Nine Months Ended
	November 30, 2020			November 30, 2019			November 30, 2020			November 30, 2019
North America (1)	$	147		$	188		492			527
Europe, Middle East and Africa	55			60			144			168
Other regions	16			19			47			63

Total	$	218		$	267		$	683		$	758

North America (1)	67.5		%	70.4		%	72.0		%	69.5		%
Europe, Middle East and Africa	25.2		%	22.5		%	21.1		%	22.2		%
Other regions	7.3		%	7.1		%	6.9		%	8.3		%
Total	100.0		%	100.0		%	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	625		389		23
Decrease due to payment, fulfillment of performance obligations, or other	(671)		(470)		(29)

Decrease, net	(46)		(81)		(6)
Closing balance as at November 30, 2020	$	221	$	292	$	22


	As at November 30, 2020
	Less than 12 Months		12 to 24 Months		Thereafter		Total
Remaining performance obligations	$	224	$	77	$	27	$	328


	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


	As at
	November 30, 2020
Principal received as of September 1, 2020	$	365
Change in fair value of the Debentures	94
Balance as at November 30, 2020	$	459


	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	1,185	3
Common shares issued for restricted share unit settlements	5,107	—
Stock-based compensation	—	33






Common shares issued for employee share purchase plan	1,525	7
Common shares outstanding as at November 30, 2020	562,016	$	2,803


	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	5		$	2	$	—	10		$	17
Amounts reclassified from AOCL into net loss	—		1		—		6		7
Change in cumulative comprehensive income for the period	5		3		—		16		24
AOCL as at November 30, 2020	$	(4)	$	2	$	(1)	$	(6)	$	(9)


	For the Three Months Ended (in millions, except for share and per share amounts)
	November 30, 2020		November 30, 2019		Change
Revenue	$	218	$	267	$	(49)
Gross margin	149		198		(49)
Operating expenses	276		227		49
Investment loss, net	(1)		(1)		—
Loss before income taxes	(128)		(30)		(98)
Provision for (recovery of) income taxes	2		2		—
Net loss	$	(130)	$	(32)	$	(98)
Loss per share - reported
Basic	$	(0.23)	$	(0.06)
Diluted	$	(0.23)	$	(0.07)

Weighted-average number of shares outstanding (000’s)
Basic (1)	562,443		554,585
Diluted (2)	562,443		615,085


For the Three Months Ended (in millions)	November 30, 2020			November 30, 2019
Revenue	$	218		$	267
Software deferred revenue acquired (1)	6			13
Adjusted revenue	$	224		$	280

Gross margin	$	149		$	198
Software deferred revenue acquired (1)	6			13

Restructuring charges	—			3
Stock compensation expense	1			1
Adjusted gross margin	$	156		$	215

Gross margin %	68.3		%	74.2		%
Software deferred revenue acquired (1)	0.9		%	1.1		%

Restructuring charges	—		%	1.1		%
Stock compensation expense	0.4		%	0.4		%
Adjusted gross margin %	69.6		%	76.8		%


For the Three Months Ended (in millions)	November 30, 2020		August 31, 2020		November 30, 2019
Operating expense	$	276	$	221	$	227
Restructuring charges	—		1		4
Stock compensation expense	11		8		14
Debenture fair value adjustment (1)	95		18		(20)
Software deferred commission expense acquired	(4)		(3)		(4)
Acquired intangibles amortization	32		32		35


LLA impairment charge	—		21		3


Adjusted operating expense	$	142	$	144	$	195


For the Three Months Ended (in millions, except per share amounts)	November 30, 2020			November 30, 2019
			Basic earnings (loss) per share			Basic earnings (loss) per share
Net loss	$	(130)	$(0.23)	$	(32)	$(0.06)
Software deferred revenue acquired	6			13

Restructuring charges	—			7
Stock compensation expense	12			15
Debenture fair value adjustment	95			(20)
Software deferred commission expense acquired	(4)			(4)
Acquired intangibles amortization	32			35


LLA impairment charge	—			3



Adjusted net income	$	11	$0.02	$	17	$0.03


For the Nine Months Ended (in millions)	November 30, 2020			November 30, 2019
Revenue	$	683		$	758
Software deferred revenue acquired (1)	21			50
Adjusted revenue	$	704		$	808

Gross margin	$	491		$	551
Software deferred revenue acquired (1)	21			50

Restructuring charges	—			5
Stock compensation expense	4			3
Adjusted gross margin	$	516		$	609

Gross margin %	71.9		%	72.7		%
Software deferred revenue acquired (1)	0.8		%	1.6		%

Restructuring charges	—		%	0.7		%
Stock compensation expense	0.6		%	0.4		%
Adjusted gross margin %	73.3		%	75.4		%

Operating expense	$	1,285		$	659
Restructuring charges	2			4
Stock compensation expense	31			43
Debenture fair value adjustment (2)	114			(71)
Software deferred commission expense acquired	(10)			(13)
Acquired intangibles amortization	97			106
Business acquisition and integration costs	—			3
Goodwill impairment charge	594			—
LLA impairment charge	21			5


Adjusted operating expense	$	436		$	582


For the Nine Months Ended (in millions, except per share amounts)	November 30, 2020				November 30, 2019
			Basic earnings (loss) per share				Basic earnings (loss) per share
Net loss	$	(789)	$	(1.41)	$	(111)	$	(0.20)
Software deferred revenue acquired	21				50

Restructuring charges	2				9
Stock compensation expense	35				46
Debenture fair value adjustment	114				(71)
Software deferred commission expense acquired	(10)				(13)
Acquired intangibles amortization	97				106
Business acquisition and integration costs	—				3
Goodwill impairment charge	594				—
LLA impairment charge	21				5


Acquisition valuation allowance	—				(1)
Adjusted net income	$	85	$0.15		$	23	$0.04


	For the Three Months Ended (in millions)
	November 30, 2020			November 30, 2019			Change
Revenue by Product and Service
Software and Services	$	162		$	185		$	(23)

Licensing and Other	56			82			(26)

	$	218		$	267		$	(49)

% Revenue by Product and Service
Software and Services	74.3		%	69.3		%

Licensing and Other	25.7		%	30.7		%

	100.0		%	100.0		%


	For the Three Months Ended (in millions)
	Included in Operating Expense
	November 30, 2020		November 30, 2019		Change
Property, plant and equipment	$	4	$	5	$	(1)
Intangible assets	41		44		(3)
Total	$	45	$	49	$	(4)

	Included in Cost of Sales
	November 30, 2020		November 30, 2019		Change
Property, plant and equipment	$	1	$	1	$	—
Intangible assets	3		3		—
Total	$	4	$	4	$	—


	For the Nine Months Ended
	(in millions, except for share and per share amounts)
	November 30, 2020		November 30, 2019	Change
Revenue	$	683		$	758	$	(75)
Gross margin	491			551		(60)
Operating expenses	1,285			659		626
Investment income (loss), net	(6)			2		(8)
Loss before income taxes	(800)			(106)		(694)
Provision for (recovery of) income taxes	(11)			5		(16)


Net loss	$	(789)		$	(111)	$	(678)
Loss per share - reported
Basic	$	(1.41)		$	(0.20)	$	(1.21)
Diluted	$	(1.41)		$	(0.27)	$	(1.14)

Weighted-average number of shares outstanding (000’s)
Basic (1)	559,732			552,931
Diluted (2)	559,732			613,431


	For the Nine Months Ended
	(in millions)
	November 30, 2020			November 30, 2019			Change
Revenue by Product and Service
Software and Services	$	461		$	521		$	(60)

Licensing and Other	222			237			(15)

	$	683		$	758		$	(75)

% Revenue by Product and Service
Software and Services	67.5		%	68.7		%

Licensing and Other	32.5		%	31.3		%

	100.0		%	100.0		%


	(in millions, except per share data)
	Fiscal Year 2021						Fiscal Year 2020								Fiscal Year 2019
	Third Quarter		Second Quarter		First Quarter		Fourth Quarter		Third Quarter		Second Quarter		First Quarter		Fourth Quarter
Revenue	$	218	$	259	$	206	$	282	$	267	$	244	$	247	$	255
Gross margin	149		199		143		212		198		176		177		206
Operating expenses	276		221		788		253		227		219		213		178
Income (loss) before income taxes	(128)		(27)		(645)		(42)		(30)		(43)		(33)		32
Provision for (recovery of) income taxes	2		(4)		(9)		(1)		2		1		2		(19)
Net income (loss)	$	(130)	$	(23)	$	(636)	$	(41)	$	(32)	$	(44)	$	(35)	$	51

Earnings (loss) per share
Basic earnings (loss) per share	$	(0.23)	$	(0.04)	$	(1.14)	$	(0.07)	$	(0.06)	$	(0.08)	$	(0.06)	$	0.09
Diluted earnings (loss) per share	$	(0.23)	$	(0.04)	$	(1.14)	$	(0.07)	$	(0.07)	$	(0.10)	$	(0.09)	$	0.08


	As at (in millions)
	November 30, 2020		February 29, 2020		Change
Cash and cash equivalents	$	223	$	377	$	(154)
Restricted cash	50		49		1
Short-term investments	451		532		(81)
Long-term investments	33		32		1
Cash, cash equivalents, and investments	$	757	$	990	$	(233)


	(in millions)
	Total		Less than One Year		One to Three Years		Four to Five Years		Greater than Five Years
Operating lease obligations	$	144	$	34	$	57	$	33	$	20
Purchase obligations and commitments	164		92		69		3		—
Debt interest and principal payments	385		6		379		—		—
Total	$	693	$	132	$	505	$	36	$	20


Exhibit Number						Description of Exhibit














4.1						Indenture dated September 1, 2020 (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K filed by the Company on September 2, 2020)
4.2						First Supplemental Indenture dated August 28, 2020 (incorporated by reference to Exhibit 4.2 to the current report on Form 8-K filed by the Company on September 2, 2020)
4.3						Second Supplemental Indenture dated August 28, 2020 (incorporated by reference to Exhibit 4.3 to the current report on Form 8-K filed by the Company on September 2, 2020)
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


	BLACKBERRY LIMITED

Date: December 18, 2020	By:	/s/ John Chen
	Name:	John Chen
	Title:	Chief Executive Officer

	By:	/s/ Steve Rai
	Name:	Steve Rai
	Title:	Chief Financial Officer (Principal Financial and Accounting Officer)


Date: December 18, 2020			/s/ John Chen
			Name: John Chen
			Title: Chief Executive Officer