BLACKBERRY Ltd 10-Q, filed Jun 25, 2021

BLACKBERRY Ltd (BB)

10-Q 2021-06-25 For: 2021-05-31

Added on April 08, 2026

About this 10-Q

BLACKBERRY Ltd filed this 10-Q on June 25, 2021, covering the quarter ended May 31, 2021.

Headline figures

Quarter ended May 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $174M; down 15.5% from $206M a year earlier
Net loss: $62M; compared with a net loss of $636M a year earlier
Diluted EPS: -$0.11; compared with -$1.14 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, 2021 (unaudited) and February 28, 2021	5
	Consolidated Statements of Shareholders’ Equity - Three Months Ended May 31, 2021 and 2020 (unaudited)	6
	Consolidated Statements of Operations - Three Months Ended May 31, 2021 and 2020 (unaudited)	7
	Consolidated Statements of Comprehensive Loss - Three Months Ended May 31, 2021 and 2020 (unaudited)	8
	Consolidated Statements of Cash Flows - Three Months Ended May 31, 2021 and 2020 (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	48
Item 4	Controls and Procedures	49

PART II	OTHER INFORMATION
Item 1	Legal Proceedings	49

Item 6	Exhibits	49
Signatures		51


	As at
	May 31, 2021		February 28, 2021
Assets
Current
Cash and cash equivalents (note 3)	$	339	$	214
Short-term investments (note 3)	364		525
Accounts receivable, net of allowance of $9 and $10, respectively (note 4)	153		182
Other receivables	26		25

Income taxes receivable	10		10
Other current assets (note 4)	61		50
	953		1,006
Restricted cash equivalents and restricted short-term investments (note 3)	29		28
Long-term investments (note 3)	37		37
Other long-term assets (note 4)	15		16

Operating lease right-of-use assets, net	59		63
Property, plant and equipment, net (note 4)	46		48
Goodwill (note 4)	850		849
Intangible assets, net (note 4)	732		771

	$	2,721	$	2,818
Liabilities
Current
Accounts payable	$	22	$	20
Accrued liabilities (note 4)	164		178
Income taxes payable (note 5)	8		6

Deferred revenue, current (note 11)	208		225
	402		429
Deferred revenue, non-current (note 11)	57		69
Operating lease liabilities	85		90
Other long-term liabilities (note 4)	6		6
Long-term debentures (note 6)	715		720


	1,265		1,314
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 - 566,247,741 voting common shares (February 28, 2021 - 565,505,328 )	2,834		2,823
Deficit	(1,368)		(1,306)
Accumulated other comprehensive loss (note 9)	(10)		(13)
	1,456		1,504
	$	2,721	$	2,818


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 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 (note 7)	7		—		—		7
Shares issued:
Exercise of stock options (note 7)	1		—		—		1

Employee share purchase plan (note 7)	3		—		—		3
Balance as at May 31, 2021	$	2,834	$	(1,368)	$	(10)	$	1,456


	Three Months Ended May 31, 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	—		(636)		—		(636)
Other comprehensive income	—		—		7		7
Cumulative impact of adoption of ASC 326	—		(4)		—		(4)
Stock-based compensation	13		—		—		13
Shares issued:
Exercise of stock options	1		—		—		1

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


	Three Months Ended
		May 31, 2021		May 31, 2020
Revenue (note 11)		$	174	$	206
Cost of sales		60		63

Gross margin		114		143

Operating expenses
Research and development		57		57
Selling, marketing and administration		73		90
Amortization		46		46
Impairment of goodwill (note 3)		—		594


Debentures fair value adjustment (note 6)		(4)		1

		172		788
Operating loss		(58)		(645)
Investment loss, net		(2)		—
Loss before income taxes		(60)		(645)
Provision for (recovery of) income taxes (note 5)		2		(9)


Net loss		$	(62)	$	(636)
Loss per share (note 8)
Basic		$	(0.11)	$	(1.14)
Diluted		$	(0.11)	$	(1.14)


	Cost Basis		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Short-term Investments		Long-term Investments		Restricted Cash Equivalents
Bank balances	$	90	$	—	$	90	$	90	$	—	$	—	$	—
Other investments	37		—		37		—		—		37		—
	127		—		127		90		—		37		—
Level 1:

Equity securities	10		(8)		2		—		2		—		—


Level 2:
Term deposits, certificates of deposits, and GIC's	147		—		147		60		58		—		29
Bankers’ acceptances/bearer deposit notes	45		—		45		45		—		—		—
Commercial paper	198		—		198		58		140		—		—
Non-U.S. promissory notes	92		—		92		50		42		—		—

Non-U.S. government sponsored enterprise notes	139		—		139		20		119		—		—
Non-U.S. treasury bills/notes	16		—		16		16		—		—		—

Corporate notes/bonds	3		—		3		—		3		—		—
	640		—		640		249		362		—		29





	$	777	$	(8)	$	769	$	339	$	364	$	37	$	29


	As at
	May 31, 2021
Beginning balance as of February 29, 2020	$	9
Impact of adopting ASC 326	4
Prior period recovery for expected credit losses	(3)
Ending balance of the allowance for credit loss as at February 28, 2021	10

Current period recovery for expected credit losses	(1)


Ending balance of the allowance for credit loss as at May 31, 2021	$	9


	As at May 31, 2021
	Cost		Accumulated Amortization		Net Book Value
Acquired technology	$	1,023	$	730	$	293
Intellectual property	502		310		192
Other acquired intangibles	494		247		247
	$	2,019	$	1,287	$	732


	As at February 28, 2021
	Cost		Accumulated Amortization		Net Book Value
Acquired technology	$	1,023	$	712	$	311
Intellectual property	498		299		199
Other acquired intangibles	494		233		261
	$	2,015	$	1,244	$	771


	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 February 28, 2021	849


Effect of foreign exchange on non-U.S. dollar denominated goodwill	1
Carrying amount as at May 31, 2021	$	850


	As at
	May 31, 2021		February 28, 2021
Cost
Buildings, leasehold improvements and other	$	57	$	67
BlackBerry operations and other information technology	112		110
Manufacturing, repair and research and development equipment	72		72
Furniture and fixtures	10		10
	251		259
Accumulated amortization	205		211
Net book value	$	46	$	48


	Three Months Ended
	May 31, 2021			May 31, 2020
North America (1)	$	111		$	150
Europe, Middle East and Africa	45			41
Other regions	18			15

Total	$	174		$	206

North America (1)	63.8		%	72.8		%
Europe, Middle East and Africa	25.9		%	19.9		%
Other regions	10.3		%	7.3		%
Total	100.0		%	100.0		%


	Accounts Receivable		Deferred Revenue		Deferred Commissions
Opening balance as at February 28, 2021	$	188	$	294	$	21
Increases due to invoicing of new or existing contracts, associated contract acquisition costs, or other	153		118		5
Decrease due to payment, fulfillment of performance obligations, or other	(181)		(147)		(6)

Decrease, net	(28)		(29)		(1)
Closing balance as at May 31, 2021	$	160	$	265	$	20


	As at May 31, 2021
	Less than 12 Months		12 to 24 Months		Thereafter		Total
Remaining performance obligations	$	217	$	54	$	19	$	290


	Capital Stock and Additional Paid-in Capital
	Stock Outstanding (000s)	Amount
Common shares outstanding as at February 28, 2021	565,505	$	2,823
Exercise of stock options	132	1
Common shares issued for restricted share unit settlements	232	—
Stock-based compensation	—	7






Common shares issued for employee share purchase plan	379	3
Common shares outstanding as at May 31, 2021	566,248	$	2,834


	For the Three Months Ended
	Cyber Security				IoT			Licensing and Other		Segment Totals
	May 31, 2021		May 31, 2020			May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020
Segment revenue	$	107	$	119		$	43	$	29	$	24	$	58	$	174	$	206
Segment cost of sales	46		47			7		6		6		8		59		61
Segment gross margin (1)	$	61	$	72		$	36	$	23	$	18	$	50	$	115	$	145


	For the Three Months Ended (in millions, except for share and per share amounts)
	May 31, 2021		May 31, 2020		Change
Revenue	$	174	$	206	$	(32)
Gross margin	114		143		(29)
Operating expenses	172		788		(616)
Investment loss, net	(2)		—		(2)
Loss before income taxes	(60)		(645)		585
Provision for (recovery of) income taxes	2		(9)		11
Net loss	$	(62)	$	(636)	$	574
Loss per share - reported
Basic	$	(0.11)	$	(1.14)
Diluted	$	(0.11)	$	(1.14)

Weighted-average number of shares outstanding (000’s)
Basic (1)	567,358		557,839
Diluted (2)	567,358		557,839


	For the Three Months Ended (in millions)
	Cyber Security						IoT						Licensing and Other						Segment Totals
	May 31, 2021		May 31, 2020		Change		May 31, 2021		May 31, 2020		Change		May 31, 2021		May 31, 2020		Change		May 31, 2021		May 31, 2020		Change
Segment revenue	$	107	$	119	$	(12)	$	43	$	29	$	14	$	24	$	58	$	(34)	$	174	$	206	$	(32)
Segment cost of sales	46		47		(1)		7		6		1		6		8		(2)		59		61		(2)
Segment gross margin	$	61	$	72	$	(11)	$	36	$	23	$	13	$	18	$	50	$	(32)	$	115	$	145	$	(30)


	For the Three Months Ended May 31, 2021
	(in millions)
	Cyber Security		IoT		Licensing and Other		Segment Totals		Reconciling Items		Consolidated U.S. GAAP
Revenue	$	107	$	43	$	24	$	174	$	—	$	174
Cost of sales (1)	46		7		6		59		1		60
Gross margin	$	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 May 31, 2020
	(in millions)
	Cyber Security		IoT		Licensing and Other		Segment Totals		Reconciling Items		Consolidated U.S. GAAP
Revenue	$	119	$	29	$	58	$	206	$	—	$	206
Cost of sales (1)	47		6		8		61		2		63
Gross margin	$	72	$	23	$	50	$	145	$	(2)	$	143
Operating expenses									788		788

Loss before income taxes											$	(645)


For the Three Months Ended (in millions)	May 31, 2021			May 31, 2020




Gross margin	$	114		$	143



Stock compensation expense	1			2
Adjusted gross margin	$	115		$	145

Gross margin %	65.5		%	69.4		%



Stock compensation expense	0.6		%	1.0		%
Adjusted gross margin %	66.1		%	70.4		%


For the Three Months Ended (in millions, except per share amounts)	May 31, 2021			May 31, 2020
			Basic earnings (loss) per share			Basic earnings (loss) per share
Net loss	$	(62)	$(0.11)	$	(636)	$(1.14)


Restructuring charges	—			1
Stock compensation expense	7			14
Debenture fair value adjustment	(4)			1

Acquired intangibles amortization	32			33

Goodwill impairment charge	—			594




Adjusted net income (loss)	$	(27)	$(0.05)	$	7	$0.01


	For the Three Months Ended (in millions)
	Included in Operating Expense
	May 31, 2021		May 31, 2020		Change
Property, plant and equipment	$	3	$	4	$	(1)
Intangible assets	43		42		1
Total	$	46	$	46	$	—

	Included in Cost of Sales
	May 31, 2021		May 31, 2020		Change
Property, plant and equipment	$	1	$	1	$	—
Intangible assets	2		3		(1)
Total	$	3	$	4	$	(1)


	As at (in millions)
	May 31, 2021		February 28, 2021		Change
Cash and cash equivalents	$	339	$	214	$	125
Restricted cash equivalents and restricted short-term investments	29		28		1
Short-term investments	364		525		(161)
Long-term investments	37		37		—
Cash, cash equivalents, and investments	$	769	$	804	$	(35)


	(in millions)
	Total		Less than One Year		One to Three Years		Four to Five Years		Greater than Five Years
Operating lease obligations	$	127	$	36	$	50	$	27	$	14
Purchase obligations and commitments	186		130		56		—		—
Debt interest and principal payments	382		6		376		—		—
Total	$	695	$	172	$	482	$	27	$	14


Exhibit Number						Description of Exhibit
10.1*†						Amended and restated employment agreement with Tom Eacobacci, dated May 3, 2021
10.2*†						Employment agreement with Marjorie Dickman, dated January 6, 2020 and amended employment agreement, dated January 4, 2021
10.3*†						Time-based restricted share unit agreement with Tom Eacobacci, dated June 15, 2020
10.4*†						Performance-based restricted share unit agreement with Tom Eacobacci, dated June 15, 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: June 25, 2021	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 25, 2021			/s/ John Chen
			Name: John Chen
			Title: Chief Executive Officer


Date: June 25, 2021			/s/ Steve Rai
			Name: Steve Rai
			Title: Chief Financial Officer