BLACKBERRY Ltd 10-Q, filed Sep 29, 2023

BLACKBERRY Ltd (BB)

10-Q 2023-09-29 For: 2023-08-31

Added on April 08, 2026

About this 10-Q

BLACKBERRY Ltd filed this 10-Q on September 29, 2023, covering the quarter ended August 31, 2023.

Headline figures

Quarter ended August 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $132M; down 21.4% from $168M a year earlier
Net loss: $42M; compared with a net loss of $54M a year earlier
Diluted EPS: -$0.07; compared with -$0.10 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 August 31, 2023 (unaudited) and February 28, 2023	5
	Consolidated Statements of Shareholders' Equity - Three and Six Months Ended August 31, 2023 and 2022 (unaudited)	7
	Consolidated Statements of Operations - Three and Six Months Ended August 31, 2023 and 2022 (unaudited)	8
	Consolidated Statements of Comprehensive Loss - Three and Six Months Ended August 31, 2023 and 2022 (unaudited)	9
	Consolidated Statements of Cash Flows - Six Months Ended August 31, 2023 and 2022 (unaudited)	10
	Notes to the Consolidated Financial Statements	11
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3	Quantitative and Qualitative Disclosures about Market Risk	57
Item 4	Controls and Procedures	58

PART II	OTHER INFORMATION
Item 1	Legal Proceedings	58


Item 6	Exhibits	58
Signatures		60


	As at
	August 31, 2023		February 28, 2023
Assets
Current
Cash and cash equivalents (note 2)	$	415	$	295
Short-term investments (note 2)	41		131
Accounts receivable, net of allowance of $6 and $1, respectively (note 3)	127		120
Other receivables (note 3)	8		12

Income taxes receivable	5		3
Other current assets (note 3)	49		182
	645		743
Restricted cash and cash equivalents (note 2)	28		27
Long-term investments (note 2)	35		34
Other long-term assets (note 3)	62		8

Operating lease right-of-use assets, net	43		44
Property, plant and equipment, net (note 3)	22		25
Goodwill (note 3)	597		595
Intangible assets, net (note 3)	181		203

	$	1,613	$	1,679
Liabilities
Current
Accounts payable	$	18	$	24
Accrued liabilities (note 3)	117		143
Income taxes payable (note 4)	21		20
Debentures (note 5)	383		367
Deferred revenue, current (note 10)	174		175
	713		729
Deferred revenue, non-current (note 10)	21		40
Operating lease liabilities	49		52
Other long-term liabilities	1		1



	784		822
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 and outstanding - 583,684,455 voting common shares (February 28, 2023 - 582,157,203)	2,931		2,909
Deficit	(2,081)		(2,028)
Accumulated other comprehensive loss (note 8)	(21)		(24)
	829		857
	$	1,613	$	1,679


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 August 31, 2023
	Capital Stock and Additional Paid-in Capital		Deficit		Accumulated Other Comprehensive Loss		Total
Balance as at May 31, 2023	$	2,920	$	(2,039)	$	(22)	$	859
Net loss	—		(42)		—		(42)
Other comprehensive income	—		—		1		1

Stock-based compensation	11		—		—		11




Balance as at August 31, 2023	$	2,931	$	(2,081)	$	(21)	$	829


	Three Months Ended August 31, 2022
	Capital Stock and Additional Paid-in Capital		Deficit		Accumulated Other Comprehensive Loss		Total
Balance as at May 31, 2022	$	2,880	$	(1,475)	$	(20)	$	1,385
Net loss	—		(54)		—		(54)
Other comprehensive loss	—		—		(8)		(8)

Stock-based compensation	7		—		—		7




Balance as at August 31, 2022	$	2,887	$	(1,529)	$	(28)	$	1,330


	Six Months Ended August 31, 2023
	Capital Stock and Additional Paid-in Capital		Deficit		Accumulated Other Comprehensive Loss		Total























Balance as at February 28, 2023	$	2,909	$	(2,028)	$	(24)	$	857
Net loss	—		(53)		—		(53)
Other comprehensive income	—		—		3		3
Stock-based compensation (note 6)	20		—		—		20
Shares issued:


Employee share purchase plan (note 6)	2		—		—		2
Balance as at August 31, 2023	$	2,931	$	(2,081)	$	(21)	$	829


	Six Months Ended August 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	—		(235)		—		(235)
Other comprehensive loss	—		—		(9)		(9)

Stock-based compensation	15		—		—		15
Shares issued:


Employee share purchase plan	3		—		—		3
Balance as at August 31, 2022	$	2,887	$	(1,529)	$	(28)	$	1,330


	Three Months Ended				Six Months Ended
	August 31, 2023		August 31, 2022		August 31, 2023		August 31, 2022
Revenue (note 10)	$	132	$	168	$	505	$	336
Cost of sales	47		62		241		126

Gross margin	85		106		264		210

Operating expenses
Research and development	50		54		104		107
Selling, marketing and administration	73		86		172		168
Amortization	14		25		29		52

Impairment of long-lived assets (note 2)	1		4		1		4
Gain on sale of property, plant and equipment, net	—		(6)		—		(6)
Debentures fair value adjustment (note 5)	(6)		(10)		16		(56)
Litigation settlement (note 9)	—		—		—		165
	132		153		322		434
Operating loss	(47)		(47)		(58)		(224)
Investment income (loss), net (note 2 and note 5)	7		(2)		10		(3)
Loss before income taxes	(40)		(49)		(48)		(227)
Provision for income taxes (note 4)	2		5		5		8


Net loss	$	(42)	$	(54)	$	(53)	$	(235)
Loss per share (note 7)
Basic	$	(0.07)	$	(0.09)	$	(0.09)	$	(0.41)
Diluted	$	(0.07)	$	(0.10)	$	(0.09)	$	(0.45)


	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	$	52	$	—	$	—	$	52	$	50	$	—	$	—	$	2
Other investments	29		6		—		35		—		—		35		—
	81		6		—		87		50		—		35		2
Level 1:

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


Level 2:
Term deposits and certificates of deposits	31		—		—		31		9		—		—		22
Bearer deposit notes	115		—		—		115		115		—		—		—
Commercial paper	129		—		—		129		123		6		—		—
Non-U.S. promissory notes	93		—		—		93		58		35		—		—


Non-U.S. treasury bills/notes	40		—		—		40		40		—		—		—
U.S. treasury bills/notes	19		—		—		19		15		—		—		4
Corporate notes/bonds	5		—		—		5		5		—		—		—
	432		—		—		432		365		41		—		26





	$	523	$	6	$	(10)	$	519	$	415	$	41	$	35	$	28


	Carrying Amount

Beginning balance as of February 28, 2022	$	4
Prior period provision for expected credit losses	1
Write-offs charged against the allowance	(4)
Ending balance of the allowance for credit loss as at February 28, 2023	1

Current period provision for expected credit losses	5


Ending balance of the allowance for credit loss as at August 31, 2023	$	6


	As at August 31, 2023
	Cost		Accumulated Amortization		Net Book Value
Acquired technology	$	900	$	837	$	63
Other acquired intangibles	386		325		61
Intellectual property	124		67		57
	$	1,410	$	1,229	$	181


	Three Months Ended						Six Months Ended
	August 31, 2023			August 31, 2022			August 31, 2023			August 31, 2022
North America (1)	$	72		$	85		$	389		$	174
Europe, Middle East and Africa	39			61			76			121
Other regions	21			22			40			41

Total	$	132		$	168		$	505		$	336

North America (1)	54.5		%	50.6		%	77.0		%	51.8		%
Europe, Middle East and Africa	29.6		%	36.3		%	15.1		%	36.0		%
Other regions	15.9		%	13.1		%	7.9		%	12.2		%
Total	100.0		%	100.0		%	100.0		%	100.0		%


	Accounts and Other Receivable		Deferred Revenue		Deferred Commissions
Opening balance as at February 28, 2023	$	120	$	215	$	17
Increases due to invoicing of new or existing contracts, associated contract acquisition costs, or other	530		250		14
Decrease due to payment, fulfillment of performance obligations, or other	(469)		(270)		(13)

Increase (decrease), net	61		(20)		1
Closing balance as at August 31, 2023	$	181	$	195	$	18


	As at August 31, 2023
	Less than 12 Months		12 to 24 Months		Thereafter		Total
Remaining performance obligations	$	174	$	9	$	12	$	195


	As at February 28, 2023
	Cost		Accumulated Amortization		Net Book Value
Acquired technology	$	900	$	824	$	76
Other acquired intangibles	386		318		68
Intellectual property	123		64		59
	$	1,409	$	1,206	$	203


	Carrying Amount
Carrying amount as at February 28, 2022	$	844
Goodwill impairment charge	(245)
Effect of foreign exchange on non-U.S. dollar denominated goodwill	(4)
Carrying amount as at February 28, 2023	595


Effect of foreign exchange on non-U.S. dollar denominated goodwill	2
Carrying amount as at August 31, 2023	$	597


	Capital Stock and Additional Paid-in Capital
	Stock Outstanding (000s)	Amount
Common shares outstanding as at February 28, 2023	582,157	$	2,909
Exercise of stock options	56	—
Common shares issued for restricted share unit settlements	904	—
Stock-based compensation	—	20






Common shares issued for employee share purchase plan	567	2
Common shares outstanding as at August 31, 2023	583,684	$	2,931


	For the Three Months Ended
	Cybersecurity				IoT			Licensing and Other		Segment Totals
	August 31,					August 31,				August 31,				August 31,
	2023		2022			2023		2022		2023		2022		2023		2022
Segment revenue	$	79	$	111		$	49	$	51	$	4	$	6	$	132	$	168
Segment cost of sales	36		50			8		9		2		2		46		61
Segment gross margin (1)	$	43	$	61		$	41	$	42	$	2	$	4	$	86	$	107

	For the Six Months Ended
	Cybersecurity				IoT			Licensing and Other		Segment Totals
	August 31,					August 31,				August 31,				August 31,
	2023		2022			2023		2022		2023		2022		2023		2022
Segment revenue	$	172	$	224		$	94	$	102	$	239	$	10	$	505	$	336
Segment cost of sales	73		103			17		17		149		4		239		124
Segment gross margin (1)	$	99	$	121		$	77	$	85	$	90	$	6	$	266	$	212


	For the Three Months Ended (in millions, except for share and per share amounts)
	August 31, 2023		August 31, 2022		Change
Revenue	$	132	$	168	$	(36)
Gross margin	85		106		(21)
Operating expenses	132		153		(21)
Investment income (loss), net	7		(2)		9
Loss before income taxes	(40)		(49)		9
Provision for income taxes	2		5		(3)
Net loss	$	(42)	$	(54)	$	12
Loss per share - reported
Basic	$	(0.07)	$	(0.09)
Diluted	$	(0.07)	$	(0.10)

Weighted-average number of shares outstanding (000’s)
Basic	583,524		577,314
Diluted (1)	583,524		638,147


	For the Three Months Ended (in millions)
	Cybersecurity						IoT						Licensing and Other						Segment Totals
	August 31,				Change		August 31,				Change		August 31,				Change		August 31,				Change
	2023		2022				2023		2022				2023		2022				2023		2022
Segment revenue	$	79	$	111	$	(32)	$	49	$	51	$	(2)	$	4	$	6	$	(2)	$	132	$	168	$	(36)
Segment cost of sales	36		50		(14)		8		9		(1)		2		2		—		46		61		(15)
Segment gross margin	$	43	$	61	$	(18)	$	41	$	42	$	(1)	$	2	$	4	$	(2)	$	86	$	107	$	(21)


	For the Six Months Ended
	(in millions)
	Cybersecurity						IoT						Licensing and Other						Segment Totals
	August 31,				Change		August 31,				Change		August 31,				Change		August 31,				Change
	2023		2022				2023		2022				2023		2022				2023		2022
Segment revenue	$	172	$	224	$	(52)	$	94	$	102	$	(8)	$	239	$	10	$	229	$	505	$	336	$	169
Segment cost of sales	73		103		(30)		17		17		—		149		4		145		239		124		115
Segment gross margin	$	99	$	121	$	(22)	$	77	$	85	$	(8)	$	90	$	6	$	84	$	266	$	212	$	54


	For the Three Months Ended August 31, 2023
	(in millions)
	Cybersecurity		IoT		Licensing and Other		Segment Totals		Reconciling Items		Consolidated U.S. GAAP
Revenue	$	79	$	49	$	4	$	132	$	—	$	132
Cost of sales	36		8		2		46		1		47
Gross margin (1)	$	43	$	41	$	2	$	86	$	(1)	$	85
Operating expenses									132		132
Investment income, net									(7)		(7)
Loss before income taxes											$	(40)

	For the Six Months Ended August 31, 2023
	(in millions)
	Cybersecurity		IoT		Licensing and Other		Segment Totals		Reconciling Items		Consolidated U.S. GAAP
Revenue	$	172	$	94	$	239	$	505	$	—	$	505
Cost of sales	73		17		149		239		2		241
Gross margin (1)	$	99	$	77	$	90	$	266	$	(2)	$	264
Operating expenses									322		322
Investment income, net									(10)		(10)
Loss before income taxes											$	(48)


For the Three Months Ended (in millions)	August 31, 2023			August 31, 2022




Gross margin	$	85		$	106



Stock compensation expense	1			1
Adjusted gross margin	$	86		$	107

Gross margin %	64.4		%	63.1		%



Stock compensation expense	0.8		%	0.6		%
Adjusted gross margin %	65.2		%	63.7		%


For the Three Months Ended (in millions)	August 31, 2023		May 31, 2023		August 31, 2022
Operating expense	$	132	$	190	$	153
Restructuring charges	3		5		3
Stock compensation expense	10		8		5
Debentures fair value adjustment (1)	(6)		22		(10)

Acquired intangibles amortization	10		10		22


LLA impairment charge	1		—		4


Adjusted operating expense	$	114	$	145	$	129


For the Three Months Ended (in millions, except per share amounts)	August 31, 2023			August 31, 2022
			Basic loss per share			Basic loss per share
Net loss	$	(42)	$(0.07)	$	(54)	$(0.09)


Restructuring charges	3			3
Stock compensation expense	11			6
Debentures fair value adjustment	(6)			(10)

Acquired intangibles amortization	10			22


LLA impairment charge	1			4



Adjusted loss	$	(23)	$(0.04)	$	(29)	$(0.05)


For the Six Months Ended (in millions)	August 31, 2023			August 31, 2022




Gross margin	$	264		$	210



Stock compensation expense	2			2
Adjusted gross margin	$	266		$	212

Gross margin %	52.3		%	62.5		%



Stock compensation expense	0.4		%	0.6		%
Adjusted gross margin %	52.7		%	63.1		%


For the Six Months Ended (in millions, except per share amounts)	August 31, 2023			August 31, 2022
			Basic earnings (loss) per share			Basic loss per share
Net loss	$	(53)	$(0.09)	$	(235)	$(0.41)


Restructuring charges	8			4
Stock compensation expense	20			13
Debentures fair value adjustment	16			(56)

Acquired intangibles amortization	20			45


LLA impairment charge	1			4

Litigation settlement	—			165

Adjusted net income (loss)	$	12	$0.02	$	(60)	$(0.10)


	For the Three Months Ended (in millions)
	Included in Operating Expense
	August 31, 2023		August 31, 2022		Change
Property, plant and equipment	$	1	$	1	$	—
Intangible assets	13		24		(11)
Total	$	14	$	25	$	(11)

	Included in Cost of Sales
	August 31, 2023		August 31, 2022		Change
Property, plant and equipment	$	2	$	2	$	—
Intangible assets	—		1		(1)
Total	$	2	$	3	$	(1)


	For the Six Months Ended
	(in millions, except for share and per share amounts)
	August 31, 2023		August 31, 2022	Change
Revenue	$	505		$	336	$	169
Gross margin	264			210		54
Operating expenses	322			434		(112)
Investment income (loss), net	10			(3)		13
Loss before income taxes	(48)			(227)		179
Provision for (recovery of) income taxes	5			8		(3)


Net loss	$	(53)		$	(235)	$	182
Loss per share - reported
Basic	$	(0.09)		$	(0.41)	$	0.32
Diluted	$	(0.09)		$	(0.45)	$	0.36

Weighted-average number of shares outstanding (000’s)
Basic	583,171			577,097
Diluted (1)	583,171			637,930


	As at (in millions)
	August 31, 2023		February 28, 2023		Change
Cash and cash equivalents	$	415	$	295	$	120
Restricted cash and cash equivalents	28		27		1
Short-term investments	41		131		(90)
Long-term investments	35		34		1
Cash, cash equivalents, and investments	$	519	$	487	$	32


	(in millions)
	Total		Short-term (next 12 months)		Long-term (>12 months)
Operating lease obligations	$	77	$	24	$	53
Purchase obligations and commitments	84		84		—
Debt interest and principal payments	368		368		—
Total	$	529	$	476	$	53


Exhibit Number						Description of Exhibit





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: September 29, 2023	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)