BB
$11.52
Blackberry
$1.42
14.06%
Earnings Details
2nd Quarter August 2021
Wednesday, September 22, 2021 5:05:00 PM
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Summary

Blackberry Reports In-line

Blackberry (BB) reported a 2nd Quarter August 2021 loss of $0.06 per share on revenue of $175.0 million. The consensus estimate was a loss of $0.07 per share on revenue of $163.5 million. The Earnings Whisper number was for a loss of $0.06 per share. Revenue fell 32.4% compared to the same quarter a year ago.

BlackBerry provides intelligent security software and services to enterprises and governments around the world.

Results
Reported Earnings
($0.06)
Earnings Whisper
($0.06)
Consensus Estimate
($0.07)
Reported Revenue
$175.0 Mil
Revenue Estimate
$163.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

BlackBerry Reports Second Quarter Fiscal Year 2022 Results

Revenue exceeds expectations and Company adds deep cybersecurity industry experience to drive growth

- Total company revenue of $175 million.

- IoT revenue of $40 million.

- Cyber Security revenue of $120 million.

- Licensing & Other revenue of $15 million.

- Positive operating cash flow of $12 million.

- Non-GAAP loss per basic and diluted share of $0.06; GAAP loss per basic and diluted share of $0.25. A non-cash accounting adjustment to the fair value of the convertible debentures, as a result of market and trading conditions, accounts for approximately $0.12 of GAAP loss per share.

WATERLOO, ON, Sept. 22, 2021 /CNW/ -- BlackBerry Limited (NYSE: BB; TSX: BB) today reported financial results for the three months ended August 31, 2021 (all figures in U.S. dollars and U.S. GAAP, except where otherwise indicated).

"Revenue for all businesses beat expectations this quarter.  The Cyber Security business unit delivered robust sequential billings and revenue growth and the IoT business unit performed well in the face of global chip shortage pressures," said John Chen, Executive Chairman & CEO, BlackBerry. "We are already seeing benefits from establishing the two key business units and are delighted to appoint John Giamatteo as President of Cyber Security.  Giamatteo, who was previously President and Chief Revenue Officer at McAfee, adds leading industry expertise. In IoT, design activity for our QNX products remains very strong, demonstrating both our industry leadership position and secular trends, such as ECU consolidation. In Cyber Security we received strong third-party validation of the effectiveness of our AI-driven, prevention-first suite of products, illustrating progress made with recent product launches."

Second Quarter Fiscal 2022 Financial Highlights

  • Total company revenue for the second quarter of fiscal 2022 was $175 million.
  • Total company non-GAAP gross margin was 65% and GAAP gross margin was 64%.
  • IoT revenue for the second quarter of fiscal 2022 was $40 million, with gross margin of 83% and ARR of $89 million.
  • Cyber Security revenue for the second quarter of fiscal 2022 was $120 million, with gross margin of 59% and ARR of $364 million.
  • Licensing and Other revenue for the second quarter of fiscal 2022 was $15 million as negotiations for the sale of a portion of the patent portfolio continue. Gross margin was 60%.
  • Non-GAAP operating loss was $30 million. GAAP operating loss was $141 million, primarily due to a non-cash accounting adjustment to the fair value of the convertible debentures, resulting from market and trading conditions, of $67 million.
  • Non-GAAP loss per share was $0.06 (basic and diluted). GAAP loss per share was $0.25 (basic and diluted).
  • Total cash, cash equivalents, short-term and long-term investments were $772 million.
  • Net cash generated from operating activities was $12 million.

Business Highlights & Strategic Announcements

  • BlackBerry has design wins with 24 of the world's leading 25 Electric Vehicle (EV) automakers. This has increased from 23 of the top 25 last quarter following an EV win with Daimler.
  • BlackBerry IVY™ to deliver highly secure vehicle-based payments, leveraging direct access to vehicle sensor data and edge processing to create a "digital fingerprint". Delivered through a partnership with Car IQ.
  • Nobo Technologies selects BlackBerry QNX® Neutrino® as foundation for new Digital Cockpit Controller for Great Wall Motors' Haval G6S SUV. Great Wall Motors is China's largest producer of SUV vehicles.
  • sTraffic, Korea's leading solution developer for transportation infrastructure systems, selects QNX® OS for Safety as the foundation for their train traffic management system that includes unmanned train operations.
  • BlackBerry launches BlackBerry® Jarvis 2.0® composition analysis tool. Delivered as a more user-friendly SaaS offering, Jarvis 2.0 empowers OEMs to validate and ensure the quality of their multi-tiered software bill of materials.
  • BlackBerry awarded highest AAA rating by SE Labs in breach test of BlackBerry® Protect (EPP) and BlackBerry® Optics (EDR). The breach test adopted a range of real-world hacker tactics and BlackBerry's AI-driven products delivered complete prevention and detection with zero false positives.
  • BlackBerry® UEM integrates with Microsoft 365, delivering BlackBerry's industry-leading security to Microsoft's productivity products.
  • BlackBerry® AtHoc® critical event management platform used as foundation for autonomous flood risk and clean water monitoring solution.
  • BlackBerry updates SecuSUITE capabilities to protect group phone calls and messages for governments and businesses from high risk eavesdropping.

Appointment of New Cyber Security Business Unit President
BlackBerry has appointed John Giamatteo as President of the Cyber Security business unit.  With this strategic hire the company adds significant industry experience. Giamatteo will join the company on October 4th and report to Executive Chairman and CEO John Chen.  He will be responsible for business unit strategy, engineering, and go-to-market.

Giamatteo brings to BlackBerry over 30 years of experience with technology companies. Most recently he served as President and Chief Revenue Officer of McAfee, where he was responsible for sales, marketing, and customer success.  During his time with McAfee, he delivered strong double-digit growth across its Enterprise, SMB and Consumer businesses as well as significant margin expansion across the portfolio.  Prior to that he served as Chief Operating Officer at AVG Technologies, a leading provider of Internet and mobile security. Giamatteo also held leadership positions with Solera Holdings, RealNetworks, Inc. and Nortel Network Corporation.

"I'm excited to be joining BlackBerry and to be leading the Cyber Security business unit.  Never has the threat of cyberattacks been higher, nor more in the minds of management," said Giamatteo. "BlackBerry's AI-driven, prevention-first technology is well placed to scale to meet the constantly evolving cybersecurity needs of companies everywhere.  I'm very positive about the opportunities that we have as a company."

Tom Eacobacci, BlackBerry's President and COO, has decided to pursue other opportunities and will leave the Company on October 29thBlackBerry thanks Tom for his hard work and contributions in his time at the Company.

Outlook
BlackBerry will provide fiscal year 2022 outlook in connection with the quarterly earnings announcement on its earnings conference call. The earnings call transcript will be made available on our website and on SEDAR.

Use of Non-GAAP Financial Measures
The tables at the end of this press release include a reconciliation of the non-GAAP financial measures used by the company to comparable U.S. GAAP measures and an explanation of why the company uses them.

Conference Call and Webcast
A conference call and live webcast will be held today beginning at 5:30 p.m. ET, which can be accessed by dialing +1 (877) 682-6267 or by logging on at BlackBerry.com/Investors.

A replay of the conference call will also be available at approximately 8:30 p.m. ET by dialing +1 (800) 585-8367 and entering Conference ID #6149337 and at the link above.

About BlackBerry
BlackBerry (NYSE: BB; TSX: BB) provides intelligent security software and services to enterprises and governments around the world. The company secures more than 500M endpoints including more than 195M vehicles.  Based in Waterloo, Ontario, the company leverages AI and machine learning to deliver innovative solutions in the areas of cybersecurity, safety and data privacy, and is a leader in the areas of endpoint security, endpoint management, encryption, and embedded systems.  BlackBerry's vision is clear - to secure a connected future you can trust.

BlackBerry. Intelligent Security. Everywhere. 

For more information, visit BlackBerry.com and follow @BlackBerry.  

Investor Contact:
BlackBerry Investor Relations
+1 (519) 888-7465
investor_relations@blackberry.com

Media Contact:
BlackBerry Media Relations
+1 (519) 597-7273
mediarelations@blackberry.com

This news release contains forward-looking statements within the meaning of certain securities laws, including under the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws, including statements regarding BlackBerry's plans, strategies and objectives including its expectations with respect to increasing and enhancing its product and service offerings. 

The words "expect", "anticipate", "estimate", "may", "will", "should", "could", "intend", "believe", "target", "plan" and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are based on estimates and assumptions made by BlackBerry in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors that BlackBerry believes are appropriate in the circumstances, including but not limited to, BlackBerry's expectations regarding its business, strategy, opportunities and prospects, the launch of new products and services, general economic conditions, the ongoing COVID-19 pandemic, competition, and BlackBerry's expectations regarding its financial performance.  Many factors could cause BlackBerry's actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, risks related to the following factors: BlackBerry's ability to enhance, develop, introduce or monetize products and services for the enterprise market in a timely manner with competitive pricing, features and performance; BlackBerry's ability to maintain or expand its customer base for its software and services offerings to grow revenue or achieve sustained profitability; the intense competition faced by BlackBerry; the occurrence or perception of a breach of BlackBerry's network cybersecurity measures, or an inappropriate disclosure of confidential or personal information; the failure or perceived failure of BlackBerry's solutions to detect or prevent security vulnerabilities; the impact of the COVID-19 pandemic; BlackBerry's continuing ability to attract new personnel, retain existing key personnel and manage its staffing effectively; BlackBerry's dependence on its relationships with resellers and channel partners; litigation against BlackBerry; network disruptions or other business interruptions; BlackBerry's ability to foster an ecosystem of third-party application developers; BlackBerry's products and services being dependent upon interoperability with rapidly changing systems provided by third parties; BlackBerry's ability to obtain rights to use third-party software and its use of open source software; failure to protect BlackBerry's intellectual property and to earn expected revenues from intellectual property rights; BlackBerry being found to have infringed on the intellectual property rights of others;  the substantial asset risk faced by BlackBerry, including the potential for charges related to its long-lived assets and goodwill; BlackBerry's indebtedness; tax provision changes, the adoption of new tax legislation or exposure to additional tax liabilities; the use and management of user data and personal information; government regulations applicable to BlackBerry's products and services, including products containing encryption capabilities; the failure of BlackBerry's suppliers, subcontractors, channel partners and representatives to use acceptable ethical business practices or comply with applicable laws; regulations regarding health and safety, hazardous materials usage and conflict minerals; acquisitions, divestitures and other business initiatives; foreign operations, including fluctuations in foreign currencies; the fluctuation of BlackBerry's quarterly revenue and operating results; the volatility of the market price of BlackBerry's common shares; adverse economic, geopolitical and environmental conditions.

These risk factors and others relating to BlackBerry are discussed in greater detail in BlackBerry's Annual Report on Form    10-K and the "Cautionary Note Regarding Forward-Looking Statements" section of BlackBerry's MD&A (copies of which filings may be obtained at www.sedar.com or www.sec.gov). All of these factors should be considered carefully, and readers should not place undue reliance on BlackBerry's forward-looking statements. Any statements that are forward-looking statements are intended to enable BlackBerry's shareholders to view the anticipated performance and prospects of BlackBerry from management's perspective at the time such statements are made, and they are subject to the risks that are inherent in all forward-looking statements, as described above, as well as difficulties in forecasting BlackBerry's financial results and performance for future periods, particularly over longer periods, given changes in technology and BlackBerry's business strategy, evolving industry standards, intense competition and short product life cycles that characterize the industries in which BlackBerry operates. BlackBerry has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

 

BlackBerry Limited

Incorporated under the Laws of Ontario

(United States dollars, in millions except share and per share amounts) (unaudited)


Consolidated Statements of Operations 



Three Months Ended


Six Months Ended


August 31,
2021


May 31,
2021


August 31,
2020


August 31,
2021


August 31,
2020

Revenue

$

175



$

174



$

259



$

349



$

465


Cost of sales

63



60



60



123



123


Gross margin

112



114



199



226



342


Gross margin %

64.0

%


65.5

%


76.8

%


64.8

%


73.5

%

Operating expenses










Research and development

58



57



57



115



114


Selling, marketing and administration

83



73



79



156



169


Amortization

45



46



46



91



92


Impairment of goodwill









594


Impairment of long-lived assets





21





21


Debentures fair value adjustment

67



(4)



18



63



19



253



172



221



425



1,009


Operating loss

(141)



(58)



(22)



(199)



(667)


Investment loss, net

(1)



(2)



(5)



(3)



(5)


Loss before income taxes

(142)



(60)



(27)



(202)



(672)


Provision for (recovery of) income taxes

2



2



(4)



4



(13)


Net loss

$

(144)



$

(62)



$

(23)



$

(206)



$

(659)


Loss per share










Basic

$

(0.25)



$

(0.11)



$

(0.04)



$

(0.36)



$

(1.18)


Diluted

$

(0.25)



$

(0.11)



$

(0.04)



$

(0.36)



$

(1.18)












Weighted-average number of common shares
outstanding (000s)










Basic

568,082



567,358



558,882



567,724



558,365


Diluted

568,082



567,358



558,882



567,724



558,365


Total common shares outstanding (000s)

566,995



566,248



556,468



566,995



556,468


 

BlackBerry Limited

Incorporated under the Laws of Ontario

(United States dollars, in millions) (unaudited)


Consolidated Balance Sheets




As at



August 31, 2021


February 28, 2021

Assets





Current





Cash and cash equivalents


$

291



$

214


Short-term investments


416



525


Accounts receivable, net of allowance of $9 and $10, respectively


121



182


Other receivables


23



25


Income taxes receivable


9



10


Other current assets


50



50




910



1,006


Restricted cash equivalents and restricted short-term investments


27



28


Long-term investments


38



37


Other long-term assets


13



16


Operating lease right-of-use assets, net


57



63


Property, plant and equipment, net


44



48


Goodwill


848



849


Intangible assets, net


695



771




$

2,632



$

2,818


Liabilities





Current





Accounts payable


$

22



$

20


Accrued liabilities


174



178


Income taxes payable


9



6


Deferred revenue, current


198



225




403



429


Deferred revenue, non-current


46



69


Operating lease liabilities


79



90


Other long-term liabilities


4



6


Long-term debentures


782



720




1,314



1,314


Shareholders' equity





Capital stock and additional paid-in capital


2,845



2,823


Deficit


(1,512)



(1,306)


Accumulated other comprehensive loss


(15)



(13)




1,318



1,504




$

2,632



$

2,818



 

BlackBerry Limited

Incorporated under the Laws of Ontario

(United States dollars, in millions) (unaudited)


Consolidated Statements of Cash Flows



Six Months Ended


August 31, 2021


August 31, 2020

Cash flows from operating activities




Net loss

$

(206)



$

(659)


Adjustments to reconcile net loss to net cash used in operating activities:




Amortization

97



100


Stock-based compensation

17



22


Impairment of goodwill



594


Impairment of long-lived assets



21


Debentures fair value adjustment

63



19


Operating leases

(8)



(2)


Other

(2)



(3)


Net changes in working capital items




Accounts receivable, net of allowance

61



(29)


Other receivables

2



(11)


Income taxes receivable

1



(3)


Other assets

4



43


Accounts payable

2



(2)


Accrued liabilities

(2)



(21)


Income taxes payable

3



(12)


Deferred revenue

(50)



(57)


Net cash used in operating activities

(18)




Cash flows from investing activities




Acquisition of long-term investments

(1)



(1)


Acquisition of property, plant and equipment

(4)



(3)


Acquisition of intangible assets

(14)



(16)


Acquisition of short-term investments

(429)



(320)


Proceeds on sale or maturity of restricted short-term investments

24




Proceeds on sale or maturity of short-term investments

537



794


Net cash provided by investing activities

113



454


Cash flows from financing activities




Issuance of common shares

5



6


Payment of finance lease liability



(1)


Net cash provided by financing activities

5



5


Effect of foreign exchange gain on cash, cash equivalents, restricted cash, and restricted cash
equivalents



1


Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents during the
period

100



460


Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period

218



426


Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period

$

318



$

886




As at

August 31, 2021


February 28, 2021

Cash and cash equivalents

$

291



$

214


Restricted cash equivalents and restricted short-term investments

27



28


Short-term investments

416



525


Long-term investments

38



37



$

772



$

804


 


Reconciliations of the Company's Segment Results to the Consolidated Results

The following table shows information by operating segment for the three months ended August 31, 2021 and August 31, 2020.  The Company reports segment information in accordance with U.S. GAAP Accounting Standards Codification Section 280 based on the "management" approach. The management approach designates the internal reporting used by the Chief Operating Decision Maker for making decisions and assessing performance of the Company's reportable operating segments.


For the Three Months Ended

(in millions) (unaudited)


Cyber Security


IoT


Licensing and Other


Segment Totals


August 31,
2021


August 31,
2020


August 31,
2021


August 31,
2020


August 31,
2021


August 31,
2020


August 31,
2021


August 31,
2020

Segment revenue

$

120



$

120



$

40



$

31



$

15



$

108



$

175



$

259


Segment cost of sales

49



46



7



6



6



7



62



59


Segment gross margin

$

71



$

74



$

33



$

25



$

9



$

101



$

113



$

200


Segment gross margin %

59

%


62

%


83

%


81

%


60

%


94

%


65

%


77

%

































The following table reconciles the Company's segment results for the three months ended August 31, 2021 to consolidated U.S. GAAP results:


For the Three Months Ended August 31, 2021


(in millions) (unaudited)


Cyber Security


IoT

Licensing and
Other

Segment Totals


Reconciling
Items


Consolidated
U.S. GAAP

Revenue

$

120



$

40



$

15



$

175



$



$

175


Cost of sales (1)

49



7



6



62



1



63


Gross margin

$

71



$

33



$

9



$

113



$

(1)



$

112


Operating expenses









253



253


Investment loss, net









1



1


Loss before income taxes











$

(142)



______________________________

(1) See "Reconciliations of Non-GAAP Measures with the Nearest Comparable U.S. GAAP Measures" for a reconciliation of selected U.S. GAAP-based measures to adjusted measures for the three months ended August 31, 2021.


 

The following table reconciles the Company's segment results for the three months ended August 31, 2020 to consolidated U.S. GAAP results:



For the Three Months Ended August 31, 2020


(in millions) (unaudited)


Cyber Security


IoT

Licensing and
Other

Segment Totals


Reconciling
Items


Consolidated
U.S. GAAP

Revenue

$

120



$

31



$

108



$

259



$



$

259


Cost of sales (1)

46



6



7



59



1



60


Gross margin

$

74



$

25



$

101



$

200



$

(1)



$

199


Operating expenses









221



221


Investment loss, net









5



5


Loss before income taxes











$

(27)



______________________________

(1) See "Reconciliations of Non-GAAP Measures with the Nearest Comparable U.S. GAAP Measures" for a reconciliation of selected U.S. GAAP-based measures to adjusted measures for the three months ended August 31, 2020.

 

Reconciliations of Non-GAAP Measures with the Nearest Comparable U.S. GAAP Measures

In the Company's internal reports, management evaluates the performance of the Company's business on a non-GAAP basis by excluding the impact of certain items below from the Company's U.S. GAAP financial results. The Company believes that these non-GAAP measures provide management, as well as readers of the Company's financial statements, with a consistent basis for comparison across accounting periods and is useful in helping management and readers understand the Company's operating results and underlying operational trends. In the first quarter of fiscal 2022, the Company discontinued its use of software deferred revenue acquired and software deferred commission acquired adjustments in its non-GAAP financial measures due to the quantitative decline in the adjustments over time. For purposes of comparability, the Company's non-GAAP financial measures for the three and six months ended August 31, 2020 have been updated to conform to the current year's presentation.

Readers are cautioned that adjusted gross margin, adjusted gross margin percentage, adjusted operating expense, adjusted operating income (loss), adjusted EBITDA, adjusted operating income (loss) margin percentage, adjusted EBITDA margin percentage, adjusted net income (loss), adjusted income (loss) per share, adjusted research and development expense, adjusted selling, marketing and administrative expense and adjusted amortization expense and similar measures do not have any standardized meaning prescribed by U.S. GAAP and are therefore unlikely to be comparable to similarly titled measures reported by other companies. These non-GAAP financial measures should be considered in the context of the U.S. GAAP results.

Reconciliation of non-GAAP based measures with most directly comparable U.S. GAAP based measures for the three months ended August 31, 2021 and August 31, 2020

A reconciliation of the most directly comparable U.S. GAAP financial measures for the three months ended August 31, 2021 and August 31, 2020 to adjusted financial measures is reflected in the table below:

For the Three Months Ended (in millions)


August 31, 2021


August 31, 2020

Gross margin


$

112



$

199


Stock compensation expense


1



1


Adjusted gross margin


$

113



$

200







Gross margin %


64.0

%


76.8

%

Stock compensation expense


0.6

%


0.4

%

Adjusted gross margin %


64.6

%


77.2

%

Reconciliation of operating expense for the three months ended August 31, 2021 and August 31, 2020 to adjusted operating expense is reflected in the table below:

For the Three Months Ended (in millions)


August 31, 2021


August 31, 2020

Operating expense


$

253



$

221


Restructuring charges




1


Stock compensation expense


11



8


Debentures fair value adjustment


67



18


Acquired intangibles amortization


32



32


LLA impairment charge




21


Adjusted operating expense


$

143



$

141


Reconciliation of U.S. GAAP net loss and U.S. GAAP basic loss per share for the three months ended August 31, 2021 and August 31, 2020 to adjusted net income (loss) and adjusted basic earnings (loss) per share is reflected in the table below:

For the Three Months Ended (in millions, except per share amounts)


August 31, 2021


August 31, 2020





 Basic loss
per share




Basic
earnings
(loss) per
share

Net loss


$

(144)



$(0.25)


$

(23)



$(0.04)

Restructuring charges






1




Stock compensation expense


12





9




Debentures fair value adjustment


67





18




Acquired intangibles amortization


32





32




LLA impairment charge






21




Adjusted net income (loss)


$

(33)



$(0.06)


$

58



$0.10

Reconciliation of U.S. GAAP research and development, selling, marketing and administration, and amortization expense for the three months ended August 31, 2021 and August 31, 2020 to adjusted research and development, selling, marketing and administration, and amortization expense is reflected in the table below:

For the Three Months Ended (in millions)


August 31, 2021


August 31, 2020

Research and development


$

58



$

57


Stock compensation expense


2



2


Adjusted research and development


$

56



$

55







Selling, marketing and administration


$

83



$

79


Restructuring charges




1


Stock compensation expense


9



6


Adjusted selling, marketing and administration


$

74



$

72







Amortization


$

45



$

46


Acquired intangibles amortization


32



32


Adjusted amortization


$

13



$

14


Adjusted operating income (loss), adjusted EBITDA, adjusted operating income (loss) margin percentage and adjusted EBITDA margin percentage for the three months ended August 31, 2021 and August 31, 2020 are reflected in the table below.


For the Three Months Ended (in millions)


August 31, 2021


August 31, 2020

Operating loss


$

(141)



$

(22)


Non-GAAP adjustments to operating loss





Restructuring charges




1


Stock compensation expense


12



9


Debentures fair value adjustment


67



18


Acquired intangibles amortization


32



32


LLA impairment charge




21


Total non-GAAP adjustments to operating loss


111



81


Adjusted operating income (loss)


(30)



59


Amortization


48



50


Acquired intangibles amortization


(32)



(32)


Adjusted EBITDA


$

(14)



$

77







Revenue


$

175



$

259


Adjusted operating income (loss) margin % (1)


(17)

%


23

%

Adjusted EBITDA margin % (2)


(8)

%


30

%


______________________________

(1) Adjusted operating income (loss) margin % is calculated by dividing adjusted operating income (loss) by revenue

(2) Adjusted EBITDA margin % is calculated by dividing adjusted EBITDA by revenue

Reconciliation of non-GAAP based measures with most directly comparable U.S. GAAP based measures for the six months ended August 31, 2021 and August 31, 2020

A reconciliation of the most directly comparable U.S. GAAP financial measures for the six months ended August 31, 2021 and August 31, 2020 to adjusted financial measures is reflected in the table below:

For the Six Months Ended (in millions)


August 31, 2021


August 31, 2020

Gross margin


$

226



$

342


Stock compensation expense


2



3


Adjusted gross margin


$

228



$

345







Gross margin %


64.8

%


73.5

%

Stock compensation expense


0.5

%


0.7

%

Adjusted gross margin %


65.3

%


74.2

%






Operating expense


$

425



$

1,009


Restructuring charges




2


Stock compensation expense


17



20


Debentures fair value adjustment


63



19


Acquired intangibles amortization


64



65


Goodwill impairment charge




594


LLA impairment charge




21


Adjusted operating expense


$

281



$

288


Reconciliation of U.S. GAAP net loss and U.S. GAAP basic loss per share for the six months ended August 31, 2021 and August 31, 2020 to adjusted net income (loss) and adjusted basic earnings (loss) per share is reflected in the table below:

For the Six Months Ended (in millions, except per share amounts)


August 31, 2021


August 31, 2020





Basic loss
per share




Basic
earnings
(loss) per
share

Net loss


$

(206)



$

(0.36)


$

(659)



$

(1.18)

Restructuring charges






2




Stock compensation expense


19





23




Debentures fair value adjustment


63





19




Acquired intangibles amortization


64





65




Goodwill impairment charge






594




LLA impairment charge






21




Adjusted net income (loss)


$

(60)



$(0.11)


$

65



$0.12


















Reconciliation of U.S. GAAP research and development, selling, marketing and administration, and amortization expense for the six months ended August 31, 2021 and August 31, 2020 to adjusted research and development, selling, marketing and administration, and amortization expense is reflected in the table below:

For the Six Months Ended (in millions)


August 31, 2021


August 31, 2020

Research and development


$

115



$

114


Stock compensation expense


4



5


Adjusted research and development


$

111



$

109







Selling, marketing and administration


$

156



$

169


Restructuring charges




2


Stock compensation expense


13



15


Adjusted selling, marketing and administration


$

143



$

152







Amortization


$

91



$

92


Acquired intangibles amortization


64



65


Adjusted amortization


$

27



$

27


Adjusted operating income (loss), adjusted EBITDA, adjusted operating income (loss) margin percentage and adjusted EBITDA margin percentage for the six months ended August 31, 2021 and August 31, 2020 are reflected in the table below.


For the Six Months Ended (in millions)


August 31, 2021


August 31, 2020

Operating loss


$

(199)



$

(667)


Non-GAAP adjustments to operating loss





Restructuring charges




2


Stock compensation expense


19



23


Debentures fair value adjustment


63



19


Acquired intangibles amortization


64



65


Goodwill impairment charge




594


LLA impairment charge




21


Total non-GAAP adjustments to operating loss


146



724


Adjusted operating income (loss)


(53)



57


Amortization


97



100


Acquired intangibles amortization


(64)



(65)


Adjusted EBITDA


$

(20)



$

92







Revenue


$

349



$

465


Adjusted operating income (loss) margin % (1)


(15)

%


12

%

Adjusted EBITDA margin % (2)


(6)

%


20

%


______________________________

(1) Adjusted operating income (loss) margin % is calculated by dividing adjusted operating income (loss) by revenue

(2) Adjusted EBITDA margin % is calculated by dividing adjusted EBITDA by revenue

 

Key Metrics

The Company regularly monitors a number of financial and operating metrics, including the following key metrics, in order to measure the Company's current performance and estimate future performance. Readers are cautioned that annual recurring revenue ("ARR"), dollar-based net retention rate ("DBNRR"), and recurring revenue percentage do not have any standardized meaning and are unlikely to be comparable to similarly titled measures reported by other companies.

For the Three Months Ended (in millions)


August 31, 2021

Annual Recurring Revenue



Cyber Security


$

364


IoT


$

89


Dollar-Based Net Retention Rate



Cyber Security


95

%

Recurring Software Product Revenue


~ 80

%

 

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SOURCE BlackBerry Limited