BLACKBERRY Ltd 10-Q, filed Jun 24, 2022

BLACKBERRY Ltd (BB)

10-Q 2022-06-24 For: 2022-05-31

Added on April 08, 2026

About this 10-Q

BLACKBERRY Ltd filed this 10-Q on June 24, 2022, covering the quarter ended May 31, 2022.

Headline figures

Quarter ended May 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $168M; down 3.4% from $174M a year earlier
Net loss: $181M; compared with a net loss of $62M a year earlier
Diluted EPS: -$0.35; compared with -$0.11 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 May 31, 2022 (unaudited) and February 28, 2022	5
	Consolidated Statements of Shareholders' Equity - Three Months Ended May 31, 2022 and 2021 (unaudited)	6
	Consolidated Statements of Operations - Three Months Ended May 31, 2022 and 2021 (unaudited)	7
	Consolidated Statements of Comprehensive Loss - Three Months Ended May 31, 2022 and 2021 (unaudited)	8
	Consolidated Statements of Cash Flows - Three Months Ended May 31, 2022 and 2021 (unaudited)	9
	Notes to the Consolidated Financial Statements	10
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3	Quantitative and Qualitative Disclosures about Market Risk	47
Item 4	Controls and Procedures	48

PART II	OTHER INFORMATION
Item 1	Legal Proceedings	48

Item 6	Exhibits	48
Signatures		49


	As at
	May 31, 2022		February 28, 2022
Assets
Current
Cash and cash equivalents (note 2)	$	391	$	378
Short-term investments (note 2)	272		334
Accounts receivable, net of allowance of $4 and $4, respectively (note 3)	102		138
Other receivables (note 3)	21		25

Income taxes receivable	9		9
Other current assets (note 3)	169		159
	964		1,043
Restricted cash and cash equivalents (note 2)	28		28
Long-term investments (note 2)	30		30
Other long-term assets (note 3)	8		9

Operating lease right-of-use assets, net	46		50
Property, plant and equipment, net (note 3)	38		41
Goodwill (note 3)	841		844
Intangible assets, net (note 3)	505		522

	$	2,460	$	2,567
Liabilities
Current
Accounts payable	$	14	$	22
Accrued liabilities (note 3 and note 9)	304		157
Income taxes payable (note 4)	13		11

Deferred revenue, current (note 10)	190		207
	521		397
Deferred revenue, non-current (note 10)	32		37
Operating lease liabilities	60		66
Other long-term liabilities	3		4
Long-term debentures (note 5)	459		507


	1,075		1,011
Commitments and contingencies (note 9)
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 - 577,168,941 voting common shares (February 28, 2022 - 576,227,898)	2,880		2,869
Deficit	(1,475)		(1,294)
Accumulated other comprehensive loss (note 8)	(20)		(19)
	1,385		1,556
	$	2,460	$	2,567


John S. Chen			Lisa Disbrow
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 May 31, 2022
	Capital Stock and Additional Paid-in Capital		Deficit		Accumulated Other Comprehensive Loss		Total























Balance as at February 28, 2022	$	2,869	$	(1,294)	$	(19)	$	1,556
Net loss	—		(181)		—		(181)
Other comprehensive loss	—		—		(1)		(1)

Stock-based compensation (note 6)	8		—		—		8
Shares issued:


Employee share purchase plan (note 6)	3		—		—		3
Balance as at May 31, 2022	$	2,880	$	(1,475)	$	(20)	$	1,385


	Three Months Ended May 31, 2021
	Capital Stock and Additional Paid-in Capital		Deficit		Accumulated Other Comprehensive Loss		Total























Balance as at February 28, 2021	$	2,823	$	(1,306)	$	(13)	$	1,504
Net loss	—		(62)		—		(62)
Other comprehensive income	—		—		3		3

Stock-based compensation	7		—		—		7
Shares issued:
Exercise of stock options	1		—		—		1

Employee share purchase plan	3		—		—		3
Balance as at May 31, 2021	$	2,834	$	(1,368)	$	(10)	$	1,456


	Three Months Ended
	May 31, 2022		May 31, 2021
Revenue (note 10)	$	168	$	174
Cost of sales	64		60

Gross margin	104		114

Operating expenses
Research and development	53		57
Selling, marketing and administration	82		73
Amortization	27		46



Debentures fair value adjustment (note 5)	(46)		(4)
Litigation settlement (note 9)	165		—
	281		172
Operating loss	(177)		(58)
Investment loss, net	(1)		(2)
Loss before income taxes	(178)		(60)
Provision for income taxes (note 4)	3		2


Net loss	$	(181)	$	(62)
Loss per share (note 7)
Basic	$	(0.31)	$	(0.11)
Diluted	$	(0.35)	$	(0.11)


	Cost Basis (1)		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Short-term Investments		Long-term Investments		Restricted Cash and Cash Equivalents
Bank balances	$	97	$	—	$	—	$	97	$	95	$	—	$	—	$	2
Other investments	25		5		—		30		—		—		30		—
	122		5		—		127		95		—		30		2
Level 1:

Equity securities	10		—		(10)		—		—		—		—		—


Level 2:
Term deposits, certificates of deposits, and GICs	54		—		—		54		28		—		—		26
Bearer deposit notes	60		—		—		60		60		—		—		—
Commercial paper	257		—		—		257		125		132		—		—
Non-U.S. promissory notes	85		—		—		85		33		52		—		—

Non-U.S. treasury bills/notes	50		—		—		50		50		—		—		—
Non-U.S. government sponsored enterprise notes	69		—		—		69		—		69		—		—

Corporate notes/bonds	19		—		—		19		—		19		—		—
	594		—		—		594		296		272		—		26





	$	726	$	5	$	(10)	$	721	$	391	$	272	$	30	$	28


	As at
	May 31, 2022
Beginning balance as of February 28, 2021	$	10

Prior period recovery for expected credit losses	(2)
Write-offs charged against the allowance	(4)
Ending balance of the allowance for credit loss as at February 28, 2022	4

Current period recovery for expected credit losses	—


Ending balance of the allowance for credit loss as at May 31, 2022	$	4


	As at May 31, 2022
	Cost		Accumulated Amortization		Net Book Value
Acquired technology	$	1,023	$	789	$	234
Other acquired intangibles	494		293		201
Intellectual property	120		50		70
	$	1,637	$	1,132	$	505


	As at February 28, 2022
	Cost		Accumulated Amortization		Net Book Value
Acquired technology	$	1,023	$	776	$	247
Other acquired intangibles	494		283		211
Intellectual property	117		53		64
	$	1,634	$	1,112	$	522


	Carrying Amount
Carrying amount as at February 28, 2021	$	849

Effect of foreign exchange on non-U.S. dollar denominated goodwill	(5)
Carrying amount as at February 28, 2022	844


Effect of foreign exchange on non-U.S. dollar denominated goodwill	(3)
Carrying amount as at May 31, 2022	$	841


	Three Months Ended
	May 31, 2022			May 31, 2021
North America (1)	$	89		$	111
Europe, Middle East and Africa	60			45
Other regions	19			18

Total	$	168		$	174

North America (1)	53.0		%	63.8		%
Europe, Middle East and Africa	35.7		%	25.9		%
Other regions	11.3		%	10.3		%
Total	100.0		%	100.0		%


	Accounts Receivable		Deferred Revenue		Deferred Commissions
Opening balance as at February 28, 2022	$	138	$	244	$	16
Increases due to invoicing of new or existing contracts, associated contract acquisition costs, or other	159		137		6
Decrease due to payment, fulfillment of performance obligations, or other	(195)		(159)		(6)

Decrease, net	(36)		(22)		—
Closing balance as at May 31, 2022	$	102	$	222	$	16


	As at May 31, 2022
	Less than 12 Months		12 to 24 Months		Thereafter		Total
Remaining performance obligations	$	191	$	27	$	10	$	228


	Capital Stock and Additional Paid-in Capital
	Stock Outstanding (000s)	Amount
Common shares outstanding as at February 28, 2022	576,228	$	2,869
Exercise of stock options	27	—
Common shares issued for restricted share unit settlements	456	—
Stock-based compensation	—	8






Common shares issued for employee share purchase plan	458	3
Common shares outstanding as at May 31, 2022	577,169	$	2,880


	For the Three Months Ended
	Cybersecurity				IoT			Licensing and Other		Segment Totals
	May 31,					May 31,				May 31,				May 31,
	2022		2021			2022		2021		2022		2021		2022		2021
Segment revenue	$	113	$	107		$	51	$	43	$	4	$	24	$	168	$	174
Segment cost of sales	53		46			8		7		2		6		63		59
Segment gross margin (1)	$	60	$	61		$	43	$	36	$	2	$	18	$	105	$	115


	For the Three Months Ended (in millions, except for share and per share amounts)
	May 31, 2022		May 31, 2021		Change
Revenue	$	168	$	174	$	(6)
Gross margin	104		114		(10)
Operating expenses	281		172		109
Investment loss, net	(1)		(2)		1
Loss before income taxes	(178)		(60)		(118)
Provision for income taxes	3		2		1
Net loss	$	(181)	$	(62)	$	(119)
Loss per share - reported
Basic	$	(0.31)	$	(0.11)
Diluted	$	(0.35)	$	(0.11)

Weighted-average number of shares outstanding (000’s)
Basic (1)	576,877		567,358
Diluted (2)	637,710		567,358


	For the Three Months Ended (in millions)
	Cybersecurity						IoT						Licensing and Other						Segment Totals
	May 31,				Change		May 31,				Change		May 31,				Change		May 31,				Change
	2022		2021				2022		2021				2022		2021				2022		2021
Segment revenue	$	113	$	107	$	6	$	51	$	43	$	8	$	4	$	24	$	(20)	$	168	$	174	$	(6)
Segment cost of sales	53		46		7		8		7		1		2		6		(4)		63		59		4
Segment gross margin	$	60	$	61	$	(1)	$	43	$	36	$	7	$	2	$	18	$	(16)	$	105	$	115	$	(10)


	For the Three Months Ended May 31, 2022
	(in millions)
	Cybersecurity		IoT		Licensing and Other		Segment Totals		Reconciling Items		Consolidated U.S. GAAP
Revenue	$	113	$	51	$	4	$	168	$	—	$	168
Cost of sales	53		8		2		63		1		64
Gross margin (1)	$	60	$	43	$	2	$	105	$	(1)	$	104
Operating expenses									281		281
Investment loss, net									1		1
Loss before income taxes											$	(178)


	For the Three Months Ended May 31, 2021
	(in millions)
	Cybersecurity		IoT		Licensing and Other		Segment Totals		Reconciling Items		Consolidated U.S. GAAP
Revenue	$	107	$	43	$	24	$	174	$	—	$	174
Cost of sales	46		7		6		59		1		60
Gross margin (1)	$	61	$	36	$	18	$	115	$	(1)	$	114
Operating expenses									172		172
Investment loss, net									2		2
Loss before income taxes											$	(60)


For the Three Months Ended (in millions)	May 31, 2022			May 31, 2021




Gross margin	$	104		$	114



Stock compensation expense	1			1
Adjusted gross margin	$	105		$	115

Gross margin %	61.9		%	65.5		%



Stock compensation expense	0.6		%	0.6		%
Adjusted gross margin %	62.5		%	66.1		%


For the Three Months Ended (in millions, except per share amounts)	May 31, 2022			May 31, 2021
			Basic loss per share			Basic loss per share
Net loss	$	(181)	$(0.31)	$	(62)	$(0.11)


Restructuring charges	1			—
Stock compensation expense	7			7
Debentures fair value adjustment	(46)			(4)

Acquired intangibles amortization	23			32




Litigation settlement	165			—

Adjusted net loss	$	(31)	$(0.05)	$	(27)	$(0.05)


	For the Three Months Ended (in millions)
	Included in Operating Expense
	May 31, 2022		May 31, 2021		Change
Property, plant and equipment	$	4	$	3	$	1
Intangible assets	23		43		(20)
Total	$	27	$	46	$	(19)

	Included in Cost of Sales
	May 31, 2022		May 31, 2021		Change
Property, plant and equipment	$	—	$	1	$	(1)
Intangible assets	2		2		—
Total	$	2	$	3	$	(1)


	As at (in millions)
	May 31, 2022		February 28, 2022		Change
Cash and cash equivalents	$	391	$	378	$	13
Restricted cash and cash equivalents	28		28		—
Short-term investments	272		334		(62)
Long-term investments	30		30		—
Cash, cash equivalents, and investments	$	721	$	770	$	(49)


	(in millions)

	Total		Short-term (next 12 months)		Long-term (>12 months)
Operating lease obligations	$	94	$	30	$	64
Purchase obligations and commitments	129		107		22
Litigation settlement	165		165		—
Debt interest and principal payments	376		6		370
Total	$	764	$	308	$	456


Exhibit Number						Description of Exhibit
10.1*†						Employment agreement with John Giamatteo, dated August 3, 2021
10.2*†						Employment agreement with Mattias Eriksson, dated April 13, 2021


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: June 24, 2022	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: June 24, 2022			/s/ John Chen
			Name: John Chen
			Title: Chief Executive Officer


Date: June 24, 2022			/s/ Steve Rai
			Name: Steve Rai
			Title: Chief Financial Officer