BlackBerry Reports Record Software & Services Revenue for the Second Consecutive Quarter

BlackBerry Reports Record Software and Services Revenue for the Second Consecutive Quarter in Q3 Fiscal 2018

• Record total company gross margin of 77 percent (non-GAAP) and 74 percent (GAAP) for the second consecutive quarter
• Double-digit software and services billings growth year over year for the second consecutive quarter

WATERLOO, ONTARIO–(Marketwired – Dec. 20, 2017) – BlackBerry Limited (NYSE:BB)(TSX:BB), a cybersecurity software and services company dedicated to securing the enterprise of things, today reported financial results for the three months ended November 30, 2017 (all figures in U.S. dollars and U.S. GAAP, except where otherwise indicated).

Q3 Highlights

• Total company revenue of $235 million (non-GAAP) and $226 million (GAAP)
• Record software and services revenue of $199 million (non-GAAP) and $190 million (GAAP), breaking the record set last quarter
• Record gross margin of 77% (non-GAAP) and 74% (GAAP), breaking the record set last quarter
• Operating income of $16 million (non-GAAP) and operating loss of $258 million (GAAP); positive non-GAAP operating income for the seventh consecutive quarter
• EPS of $0.03 (non-GAAP) and loss of ($0.52) (GAAP)
• Adjusted EBITDA of $35 million; positive for the fifteenth consecutive quarter
• Total cash balance of $2.5 billion at the end of the fiscal third quarter
• Highly competitive customer wins, in regulated industries, including NATO, the U.S. Department of Justice, U.S. Department of Defense, the Dutch Government, Deutsche Bank and more
• New cybersecurity practice launched to enable GDPR compliance in Europe
• The only vendor, with a single platform offering, recognized by Gartner in all eight categories of their Market Guide for Information-Centric Endpoint and Mobile Protection
• Ranked an EMM leader by Forrester, for the third consecutive year
• BlackBerry QNX design wins with ten automotive suppliers in the quarter. We now partner with the top three automotive tier ones; Bosch, Denso and Magna
• Strategic expansion of Qualcomm relationship, in connected and autonomous vehicle platforms
• Patent licensing agreement signed with Teletry, enabling a market opportunity of the majority of smartphone manufacturers worldwide
• After the quarter closed we announced in partnership with Denso, that we have started development of the world’s first integrated Human Machine Interface Platform (HMI). Intel is collaborating in the development of this product

Q3 Results

• Non-GAAP revenue for the third quarter of fiscal 2018 was $235 million with GAAP revenue of $226 million. Approximately 75% of third quarter software and services revenue (excluding IP licensing and professional services) was recurring.
• BlackBerry had approximately 3,000 enterprise customer orders in the quarter.
• Non-GAAP operating income was $16 million, and non-GAAP earnings per share was $0.03 (basic and diluted). GAAP operating loss was $258 million. GAAP net loss for the quarter was $275 million, or $0.52 per share (basic and diluted).
• GAAP net income includes $23 million in amortization of acquired intangibles, $20 million in restructuring charges, a charge of $77 million of fair value adjustment related to the debentures, and other amounts as summarized in a table below.
• Total cash, cash equivalents, short-term and long-term investments were approximately $2.5 billion as of November 30, 2017. This reflects usage of free cash of $9 million, which includes cash used in operations of $4 million and capital expenditures of $5 million. Excluding $605 million in the face value of the company’s debt, the net cash balance at the end of the quarter was approximately $1.9 billion. The cash impact of the Nokia arbitration decision will be reflected in the fourth quarter of fiscal 2018. There were no purchase orders with contract manufacturers at the end of the third quarter of fiscal 2018, down from $35 million a year ago.

“Our momentum continues, with the delivery of a strong third quarter; I am very pleased with our results. Our progress, in both our financial and strategic objectives, is notable,” said John Chen, Executive Chairman and CEO, BlackBerry. “We achieved records in software and services revenue and total company gross margin; breaking the records we set last quarter. We expanded our position in key verticals and geographies, with many new partners and highly competitive customer wins.”

“Our strategy is working and our execution is yielding results,” said Chen. “We are a market leader in secure endpoint management and embedded software. The validation we have received, from partners, customers and industry experts around the world, speaks for itself.”

“BlackBerry’s market opportunity is significant and, based on our progress so far in FY18, I am pleased with our near-term outlook and longer-term potential.”

Outlook

We are maintaining our guidance for the full year fiscal 2018:

• Total non-GAAP revenue guidance is maintained, in the range of $920 million to $950 million. Given the strength of our first three quarters and our outlook for the full year fiscal 2018, we expect to come in the mid to higher end of that range
• Total non-GAAP software and services revenue growth in the range of 10 percent to 15 percent
• Positive non-GAAP EPS for the full year
• Positive free cash flow for the full year, before taking into account the net impact of arbitration awards and damages, as well as costs related to restructuring and transition from the hardware business

Conference Call and Webcast

A conference call and live webcast will be held today beginning at 8 a.m. ET, which can be accessed by dialing 1-844-309-0607 or by logging on at http://ca.blackberry.com/company/investors/events.html. A replay of the conference call will also be available at approximately 11 a.m. ET by dialing 1-855-859-2056 or 1-404-537-3406 and entering Conference ID #3192119 and at the link above.

About BlackBerry

BlackBerry is a cybersecurity software and services company dedicated to securing the enterprise of things. Based in Waterloo, Ontario, the company was founded in 1984 and operates in North America, Europe, Asia, Australia, Middle East, Latin America and Africa. The Company trades under the ticker symbols “BB” on the Toronto Stock Exchange and “BB” on the New York Stock Exchange. For more information, visit www.BlackBerry.com.

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