Press Release: BlackBerry Q1 2015 Earnings Report

By Bla1ze on 19 Jun 2014 07:09 am EDT

Right on time. BlackBerry has now posted their BlackBerry Q1 2015 Earnings Report there's plenty of highlights throughout. Their cash balance is up from $2.7 billion in the prior quarter to $3.1 billion at the end of the fiscal first quarter, they reduced adjusted operating expenses by 57% year over year and 13% quarter over quarter and have successfully released the BlackBerry Z3 in Indonesia with 8 other countries soon to follow. We'll be digging into it all more in a bit here but for now, the press release is below for you to read through.

Press Release

BlackBerry Reports 2015 Fiscal First Quarter GAAP Profitability

WATERLOO, ONTARIO--(Marketwired - June 19, 2014) - BlackBerry Limited (NASDAQ:BBRY)(TSX:BB), a global leader in mobile communications, today reported financial results for the three months ended May 31, 2014 (all figures in U.S. dollars and U.S. GAAP, except where otherwise indicated).

Q1 Highlights: Cash and investments balance of $3.1 billion at the end of the fiscal first quarter, up from $2.7 billion in the prior quarter Adjusted Q1 gross margin of 48%, up from 43% in the prior quarter Reduced adjusted operating expenses by 57% year over year and 13% quarter over quarter Successfully launched the new Z3 device in Indonesia; 8 additional countries to follow EZ Pass Program resulted in a total of 1.2 million licenses issued for BES10, including more than 10% of total licenses traded in from competitors' Mobile Device Management platforms Launched Project Ion focused on the "Internet of Things" market

Q1 Results Revenue for the first quarter of fiscal 2015 was $966 million, down $10 million or 1% from $976 million in the previous quarter. The revenue breakdown for the quarter was approximately 39% for hardware, 54% for services and 7% for software and other revenue. During the first quarter, the Company recognized hardware revenue on approximately 1.6 million BlackBerry smartphones compared to approximately 1.3 million BlackBerry smartphones in the previous quarter. During the first quarter, approximately 2.6 million BlackBerry smartphones were sold through to end customers, which included shipments made and recognized prior to the first quarter and which reduced the Company's inventory in channel.

GAAP net income for the first quarter was $23 million, or $0.04 earnings per share ("EPS"). The net income includes non-cash income associated with the change in the fair value of the Debentures of $287 million (the "Q1 Fiscal 2015 Debentures Fair Value Adjustment") and pre-tax restructuring charges of $226 million related to the Cost Optimization and Resource Efficiency ("CORE") program. Excluding these items, adjusted loss for the first quarter was $60 million, or $0.11 per share. These impacts on GAAP net income and EPS are summarized in the table below.

The total of cash, cash equivalents, short-term and long-term investments was $3.1 billion as of May 31, 2014, compared to $2.7 billion at the end of the previous quarter - a net increase of $429 million. Excluding receipt of a tax refund of $397 million and proceeds on the sale of real estate of $287 million, the Company used $255 million in the first quarter. This represents a decrease from $784 million used last quarter, after excluding proceeds of $250 million related to convertible debt issuance. Purchase obligations and other commitments amounted to approximately $1.8 billion as at May 31, 2014, with purchase orders with contract manufacturers representing approximately $317 million of the total.

"Our performance in fiscal Q1 demonstrates that we are firmly on track to achieve important milestones, including our financial objectives and delivering a strong product portfolio," said John Chen, Executive Chairman and Chief Executive Officer of BlackBerry. "Over the past six months, we have focused on improving efficiency in all aspects of our operations to drive cost reductions and margin improvement. Looking forward, we are focusing on our growth plan to enable our return to profitability."


The Company anticipates maintaining its strong cash position, while increasingly looking for opportunities to prudently invest in growth. The Company is targeting break-even cash flow results by the end of fiscal 2015.

Reconciliation of GAAP gross margin, gross margin percentage, loss before income taxes, and net income to adjusted gross margin, adjusted gross margin percentage, adjusted loss before income taxes, adjusted net loss and adjusted loss per share: (United States dollars, in millions except per share data)

BlackBerry Reports 2015 Fiscal First Quarter GAAP Profitability

Note: Adjusted gross margin, adjusted gross margin percentage, adjusted loss before income taxes, adjusted net loss and adjusted loss per share do not have a standardized meaning prescribed by GAAP and thus are not comparable to similarly titled measures presented by other issuers. The Company believes that the presentation of these non-GAAP measures enables the Company and its shareholders to better assess the Company's operating results relative to its operating results in prior periods and improves the comparability of the information presented. Investors should consider these non-GAAP measures in the context of the Company's GAAP results.

(1) During the first quarter of fiscal 2015, the Company reported GAAP gross margin of $451 million or 47% of revenue. Excluding the impact of the CORE charges included in cost of sales, the adjusted gross margin was $463 million, or 48%.

(2) During the first quarter of fiscal 2015, the Company incurred charges related to the CORE program of $226 million pre-tax, or $204 million after tax, of which $12 million were included in cost of sales, $41 million were included in research and development and $173 million were included in selling, marketing, and administration expenses.

(3) During the first quarter of fiscal 2015, the Company recorded the Q1 Fiscal 2015 Debentures Fair Value Adjustment of $287 million. This adjustment was presented on a separate line in the Consolidated Statement of Operations.

Supplementary Geographic Revenue Breakdown

Conference Call and Webcast A conference call and live webcast will be held beginning at 8 am ET, which can be accessed by dialing 1-877-974-0445 or through your BlackBerry® 10 smartphone, personal computer or BlackBerry® PlayBook™ tablet here. A replay of the conference call will also be available at approximately 10 am by dialing (+1)416-640-1917 and entering pass code 4680440# or by clicking the link above on your BlackBerry® 10 smartphone, personal computer or BlackBerry® PlayBook™ tablet. This replay will be available until midnight ET July 4, 2014.

Reader comments

Press Release: BlackBerry Q1 2015 Earnings Report


2.6 million sold
latest quarter BlackBerry sold 3.4
How much bb10?
This one is not good at all

Posted via CB10

Great write up, but why didn't Umi write it up? It's a shame about how much hate he has gotten lately...I still like the guy a lot, even if our tastes in phone are different.

Posted via CB10

Go easy on Umi. While he has been anything but positive lately, he does his job, which takes a lot of time. We'll hear from him soon I think

I was surprised to see anyone but Umi write this. The guy just has a way of taking the long, boring and mundane and making it not as long, not as boring and not as mundane. Bla1ze is cool but Umi should be doing ALL the articles relating to financials.

Cheers. :)

It's easy to meet GAAP requirements when a company slashes over 80%of the workforce. With the announced focus on Android applications via the Amazon partnership the consumer side of BlackBerry is headed for collapse. The question remains whether native applications for enterprise subscribers will be developed in-house, by third-party developers, or by the organisations themselves. At this rate BlackBerry 10 smartphones will be communication only just as they were in the 1990s. Oh and with the 3.1 billion in cash and investments why keep the pariah loan from Prem et. al.?

Posted via CB10 on BlackBerry Q5

"""he consumer side of BlackBerry is headed for collapse."""
Not in a million years. If anything, this rectifies BlackBerry's position in the consumer space, and BB10 growth.

Geez - everything really is awful, in every way, all the time and under every circumstance with you. You must really be fun at parties.

No, BlackBerry is showing signs of a turnaround and the first steps towards full recovery is huge! Chen is no fool, this much is absolutely clear.
Z10 STL100-1, OS

You are in another world! But you will all be surprised. If you have no good news, keep your views to yourself or start your company and let's see how much you will fair.

Cash balance up. Major deals announced. Even sales erosion stopped. 1.2 million BES10.... are you really f'ing serious about trying to spin this into doom and gloom. take your spit bucket elsewhere man, this is the best news ever in 2 years.

Z30 Vivo Brasil

Bingo, your spot on. The tide has turned. Not out of the woods yet but the signs of a turn around have begun.

Agreed. 80% of the workforce was what... 10,000 people... at let's say $55-65K avg per person, that's $550+ Million staying put.

He's fast AND he has the ability to insert his comment anywhere in the discussion. Hmmm....maybe not so fast, after all. ;)

Cheers. :)

As long as it's not stupid irimmedabimmer saying first, I don't care. Plus it's Kevin, I have respect for Kevin. Not for the others that think they are cool. Kevin is cool

So if I said the exact same thing as the first post you would have jumped down my throat but you praise Kevin for posting it cuz he is cool?

Posted via CB10

It's not like Kevin was rushing to say first just for the sake of it. He probably read the whole thing before it was even posted.

And even then, he could be the first to post anyway if he wanted!

Posted via CB10 on my Z30STA100-5/

The bleeding has stopped! HOPEFULLY, whjen new products get introduced into the mix later in the year, we will see growth!

@lawguy...from this day on we will see growth and people will return to BB just because the stock is going up ,People love a comeback story.

Wow. Much better than I think most people expected. Hope that it's the beginning of a long trend!

Posted via CB10

Yeah, the sellthrough and shipments need to start to rise again. Looks like BlackBerry 10 may have finally begun to outsell BlackBerry 7 ... not sure though

Release 10.3 and a few more phones before 2015! I really hope the Amazon deal and Q1 results get people to buy the stock again.

Posted via CB10

Lol.. only? They were already number one in that space. Hard to take more from your competitors when you are already in the dominant position.

The GIF Exchange C001B7B16ً

It depends on the market you're looking at. If I remember correctly, BlackBerry likes to mention the G20 and regulated enterprises, but there are many more industries which can benefit from using a MDM.

10% was just from the competition and does not factor in the total increase from the enterprise segment. I'd say this is good news.

Posted via CB10

This is a trade-in programme, it's more about conversion than increase.
Yes, it's good news that some BES 10 servers are converted into BES 12 ones since that should drive the adoption of BB10 in the enterprise, but BlackBerry should try to get more new customers on board.
Based on the amount of emails I get regarding their offer, they're busy trying, but I'm not sure they're succeeding yet.

Most companies have only recently invested in Mobile Iron or Good or whatever. When I say recently, I mean within the last year. For them to do such a dramatic U-turn would be seen as them having made a bad decision and no one wants to appear that way. If BB gets traction again, the move would be much easier to justify but then those companies might have to pay to switch.

I wasn't expecting a profit so soon. Isn't much but definitely better than the alternative! Well done Chen.

The GIF Exchange C001B7B16ً

Technically expenses dramatically decreased from last quarter. Overall sales and revenue decreased by 10 million is kind of concerning. Will BlackBerry lose more sales? Or is it just this quarter?
Who knows where BlackBerry is headed, but they are certainly at a wayyyyy better position than before.

Remember that they don't see a dime in hardware sales from the Z3 until a certain quality sold is reached.

Posted via CB10

10 million is like zero. This is not concerning at all and that's the good new. Read pas quarters and sales were free falling double digit year over year. This is flat line, it is AMAZING considering where BlackBerry was just 6 months ago.

Z30 Vivo Brasil

"loss for the first quarter was $60 million"

They aren't there yet, but this was MUCH better on many fronts than was expected. And 2.6 Million devices in a quarter is a very sad number, but what counts is they are moving to a position where making a profit does seem like a reachable goal.

Difficult for the media to put a negative spin on this. Therefore i think they will probably just ignore it...

No they'll make a negative spin, just watch.
Something like "Only so many devices sold" or "Its just 1 quarter doing fine it wont save them" BS like that.
Hell with em, I love this news! I applaude Chen for what he did in such a short time, and I believe there will be more of this good news next time when new devices, OS etc will be released.

Negative media spin was created by short-sellers to eke out a profit on their positions. As the earnings have turned black (from red), they will exit to cut risk. So the propaganda will die quietly.

The negative spin the typical media types will throw out will be that they lost $10M in revenue and less phones sold from prior quarter as if 1% of revenue and devices are the death knell of this company. The media should just get over themselves already. The company is nowhere close to being out of business.

Posted via the Android CrackBerry App!

The most important number is free cash flow from operations for BlackBerry. And good news there too.

They burned 500 million last quarter. They reduced it to half that. 250 million. Too me that is the strongest sign they are stabilizing the business.

And they are confirming that this number will be zero to slightly positive by the end of this fiscal year and that is the best thing to happen. Then the vultures can stop circling.

Posted via CB10

Only 13% this quarter, but makes sense since business is stabilising now. Another 13% next quarter once they get rid of the dev relations team.

Amazing how people seem to think that team is some giant monolith. A rumour starts and suddenly people think a third of BlackBerry works in developer relations.

It's ridiculous.

True, that team is not that large, but they will still save a lot of money by getting rid of all those salaries. (not 13% though)

Glad to see CrackBerry up and running again :)!! I cannot follow BlackBerry earnings without you guys!!

Posted via CB10

The tide has begun to turn. I truly believe that the Q3 results (after Q2) will be very interesting. :)

Posted via CB10

This is just a start. It seems Chen will bring back the glory days with q30,classic and rumoured manitoba in the pipeline.

Posted from my Black Beast Q10

You mean the style of phone that no longer sells? Like the Q10 and the 9000s?

Doomed. Keep doing the same thing over and over and expecting a positive change is insane.

Using a BlackBerry Z10! The "UnDroid"!

Progress shown on the books.

Bad news for the consumer side of things.

Folks, unless the Droid items have Google Play it's doomed. Not sure if it will or not.

Again, clear as mud!

Using a BlackBerry Z10! The "UnDroid"!

Congrats to Mr. Chen and his team! I truly believe now that he will be the man to turn BlackBerry around. Long Live The RIM-Pire!

Posted on my Q10!!! BB10 FTW!!!

Man, it makes you wonder just how much better position BlackBerry would have been had Chen been in charge during Hein's reign. In Chen we trust!

I love it, under promise and over deliver. That's what the market likes. This will be a huge relief to businesses and consumers worried about choosing BlackBerry. While there is still some weakness in the numbers (# of handsets sold and sold through) it's exactly what BBRY needs at this juncture. Hopefully some of that pile of cash can be used to market a little bit.

Posted via CB10

This is a positive quarter. BlackBerry soars after FQ1 results; expects break-even cash flow this year.
Congrat's to John Chen.

John Chen is achieving his set-out objectives, beating expectations and building confidence back in the BlackBerry brand. This is leadership that any struggling company would die for. I salute you Mr. BlackBerry CEO!

Posted via CB10

Good news! This is the first step in blackberry's turn around. It is a critical step but not the most import. The more important step ultimately is market adoption. I think BB has a decent chance of increasing market share in Europe and developing countries but I fear opportunities in North America are severely compromised. As an owner of a successful law firm I know that you can only cut expenses so much. In the end new revenue sources are critical. And it is going to continue to be an uphill battle against entrenched competitors such as android and apple.

I am routing for BB and hope to return to them someday but right now the other platforms just seem to offer me more.

This is decent. I am, however, more worried about Q2. I have a feeling it is going to be rather bad, I am actually waiting more for Q4 results than anything else.

Posted via CB10

Waiting to see the hardware sales breakdown BB7 vs. BB10 devices sold. Hoping for some good news there.

Would someone like to give a simple explanation to us dummies? :)

Thanks in advance

Posted via My Beast Q10

This is brilliant news. The main thing is that they beat the expectations on Wall Street. A company can't be turned around in a few short months, it takes time. Since John Chen took over all signs have been pointing to a 180 degree turn.

Posted via CB10

I think all of CrackBerry just breathed a huge sigh of relief. We have gotten much too familiar with bad news for this company. They need to keep making products we want so that I can get the latest BlackBerry when my god-awful contract is up. Lol.

Posted via CB10

They are definitely headed in the right direction. They may see profitably ahead of schedule. I look forward to seeing how the Z3 does in the additional countries it's coming to. It would be helpful, I think, if the U.S was one of them, just to help get BB10 into more hands. I also hope we finally start seeing a serious marketing campaign with at least one of (preferably all of) the next major handsets coming out later this year. The Amazon deal will help with the consumer side of things if they execute that properly. An increase in sales and getting BB10 into more hands would drive enough attention to the platform to get the big name developers to make native versions of their respective apps.

They have big things coming down the pipeline. Here's hopes they continue to deliver. Good luck, BlackBerry. CrackBerry Nation is behind you.

Posted via CB10

I wonder how much of the $ 173 million for selling, marketing and administration is actually spent on marketing? Cuz I don't really see it.
However, the results are promising. Keep moving.

Sent from the best touch keyboard, the Z.

Go BlackBerry! Keep it moving. John Chen is a Genius! He knows what he is talking about, and he has a plan... now we can see his plan working!!!! Keep it moving John. Keep it moving team BlackBerry!

Chen will need to revise his forecast for saving 'patient' BlackBerry.

Maybe now >90% chance of recovery to become a fully competitive mobile device manufacturer? 10% or less to go bankrupt or be sold/split into parts for the highest bigger.

But any company could take a wrong turn, even ones that look healthy now are only a few years or failed products away from becoming a footnote in the history of tech devices.

I'd like to see BlackBerry grow stronger, take a bite out of Apple's and Android's market share and take a solid lead ahead of Windows phones before I get too bold with further predictions on their health.

I'm nit reqllly familiar with economics, but if u kook to the stockexchange being up by mire than 12% thus can only mean this is good news :)

I get that there are positive newest finally and that is what I was interested mostly in, from the point of view of a customer who does not wish to see his (overly) expensive BlackBerry handset become a premature paperweight.

I tried to wade through the financial speak, finaleze, but then I remembered I have a life...

So please will we get another posting that can discuss and distil all this information and it's meaning for most of us lay folk?!

Cartman says: Screw you guys I'm going home!

They may not be profitable, but at least they are not burning cash, or did I miss something.

It gets better, blackberry is moving forward. :) KEEP BRING US GREAT BLACKBERRY PRODUCTS! Even if it has an amazon jungle in it. :D

Posted via CrackBerry 10 (CB10) application using my BlackBerry Q10.