eResearch | On June 24, BlackBerry Ltd. (TSX: BB), released its first quarter F2021 (FQ1/2021) results, for the quarter ending on May 31.
Headquartered in Waterloo, Ontario, the Company uses artificial intelligence and machine learning to deliver innovative solutions in the areas of cybersecurity, safety (cars and mobile phones), and data privacy solutions. BlackBerry secures more than 500 million endpoints including over 175 million cars.
FQ1/2021 Financial Results
In FQ1/2021, the reported revenue of $206 million was 16.5% lower than the $247 million of revenue reported in FQ1/2020. Gross Margins decreased slightly to 69% in FQ1/2021 when compared with Gross Margins of 72% from the same quarter last fiscal year.
Revenue from the Software and Services Group was $148 million and the IP Licensing and Other Group reported revenue was $58 million. Overall, recurring software product revenue was over 90% of total sales.
At May 31, 2020, BlackBerry held a net Cash position of $350 million and reported that its Cash & Cash Equivalents position decreased by $35 million to $955 million.
In the quarter, operating results came in at a loss of $645 million versus a $36 million loss from the same period last year.
The Net Loss included $594 million in a non-cash, one-time goodwill impairment charge primarily related to the impairment of the BlackBerry Spark reporting unit.
The Company stated net customer churn was close to zero percent.
Reported adjusted EBITDA of $20 million generated a margin of 9% against a negative adjusted EBITDA of -$9 million from FQ1/2020.
BlackBerry anticipates Licensing revenue to be around $250 million for the full fiscal year and according to normal seasonality, it is expected to have a strong fiscal fourth quarter.
A set of financial stress tests were run assuming up to a 30% revenue decline. The results showed stable solvency and liquidity and no need for new financing.
Operating Results and Partnerships
BlackBerry’s QNX automotive software business was negatively affected by the economic downturn caused by the COVID-19 health crisis.
QNX revenues declined mainly due to the auto production shutdowns and project delays. The reopening of production facilities shows signs of recovery according to the Company and BlackBerry expects a slow and gradual recovery throughout the year.
On April 14, BlackBerry launched QNX Black Channel Communications Technology, a new software solution that Original Equipment Manufacturers (“OEMs”) and embedded software developers can use to ensure safe data communication exchanges within safety-critical systems.
A recent assessment by Frost & Sullivan defining cyberthreats to the entire IoT landscape recognizes BlackBerry’s solutions can address over 96% of the collective threats.
On May 19, BlackBerry launched Spark Suites, a platform that combines endpoint security, as well as endpoint management. Over 15 customers have purchased Spark Suites including Deutsche Boerse AG (XTRA: DB1), one of the largest providers of financial market transaction infrastructure worldwide.
On June 16, BlackBerry became Bell Canada’s preferred partner for Mobile Threat Defense (“MTD”). The AI-driven MTD product is one of the core pillars in Spark Suites and provides enhanced secure communications to business and government customers.
BlackBerry Webcast Takeaways
- Annual Recurring Revenue is approximately $500 million, and QNX royalty backlog is reaching $450 million.
- Roughly 175 million cars, 30% of the market share of the connected cars, utilize BlackBerry’s software.
- Although the Company keeps investing for growth, SG&A was lower due to a reduction and relocation of headcount from the back office to the specific divisions. Reduction and streamlining of employees took place in several areas, including Finance, Human Resources, Information Technology and Legal.
- Operating Expenses in the quarter benefited due to the office and plant shutdowns. As BlackBerry gradually re-opens offices, the Company plans to hire on a global basis, and expects Marketing and Sales expenses to increase in the next two quarters.
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