2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Three and Nine Months Ended November 30, 2019.
|
3.
|
Canadian Forms 52-109F2 - Certification of Interim Filings
|
|
As at
|
||||||
|
November 30, 2019
|
|
February 28, 2019
|
||||
Assets
|
|
|
|
||||
Current
|
|
|
|
||||
Cash and cash equivalents
|
$
|
515
|
|
|
$
|
548
|
|
Short-term investments
|
367
|
|
|
368
|
|
||
Accounts receivable, net
|
216
|
|
|
233
|
|
||
Other receivables
|
13
|
|
|
19
|
|
||
Income taxes receivable
|
10
|
|
|
9
|
|
||
Other current assets
|
58
|
|
|
56
|
|
||
|
1,179
|
|
|
1,233
|
|
||
Restricted cash and cash equivalents
|
32
|
|
|
34
|
|
||
Long-term investments
|
56
|
|
|
55
|
|
||
Other long-term assets
|
23
|
|
|
28
|
|
||
Deferred income tax assets
|
—
|
|
|
2
|
|
||
Operating lease right-of-use assets
|
133
|
|
|
—
|
|
||
Property, plant and equipment, net
|
76
|
|
|
85
|
|
||
Goodwill
|
1,459
|
|
|
1,463
|
|
||
Intangible assets, net
|
955
|
|
|
1,068
|
|
||
|
$
|
3,913
|
|
|
$
|
3,968
|
|
Liabilities
|
|
|
|
||||
Current
|
|
|
|
||||
Accounts payable
|
$
|
27
|
|
|
$
|
48
|
|
Accrued liabilities
|
193
|
|
|
192
|
|
||
Income taxes payable
|
19
|
|
|
17
|
|
||
Debentures
|
609
|
|
|
—
|
|
||
Deferred revenue, current
|
264
|
|
|
253
|
|
||
|
1,112
|
|
|
510
|
|
||
Deferred revenue, non-current
|
117
|
|
|
136
|
|
||
Operating lease liabilities
|
127
|
|
|
—
|
|
||
Other long-term liabilities
|
8
|
|
|
19
|
|
||
Long-term debentures
|
—
|
|
|
665
|
|
||
Deferred income tax liabilities
|
1
|
|
|
2
|
|
||
|
1,365
|
|
|
1,332
|
|
||
Commitments and contingencies (Note 11)
|
|
|
|
||||
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 - 552,131,972 voting common shares (February 28, 2019 - 547,357,972)
|
2,742
|
|
|
2,688
|
|
||
Deficit
|
(157
|
)
|
|
(32
|
)
|
||
Accumulated other comprehensive loss
|
(37
|
)
|
|
(20
|
)
|
||
|
2,548
|
|
|
2,636
|
|
||
|
$
|
3,913
|
|
|
$
|
3,968
|
|
|
Capital Stock
and Additional
Paid-in Capital
|
|
Deficit
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
|
||||||||
Balance as at February 28, 2019
|
$
|
2,688
|
|
|
$
|
(32
|
)
|
|
$
|
(20
|
)
|
|
$
|
2,636
|
|
Net loss
|
—
|
|
|
(111
|
)
|
|
—
|
|
|
(111
|
)
|
||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
(17
|
)
|
|
(17
|
)
|
||||
Cumulative impact of adoption of ASC 842
|
—
|
|
|
(14
|
)
|
|
—
|
|
|
(14
|
)
|
||||
Shares issued:
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation
|
46
|
|
|
—
|
|
|
—
|
|
|
46
|
|
||||
Exercise of stock options
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Employee share purchase plan
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
||||
Balance as at November 30, 2019
|
$
|
2,742
|
|
|
$
|
(157
|
)
|
|
$
|
(37
|
)
|
|
$
|
2,548
|
|
|
Capital Stock
and Additional
Paid-in Capital
|
|
Deficit
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
|
||||||||
Balance as at February 28, 2018
|
$
|
2,560
|
|
|
$
|
(45
|
)
|
|
$
|
(10
|
)
|
|
$
|
2,505
|
|
Net income
|
—
|
|
|
42
|
|
|
—
|
|
|
42
|
|
||||
Cumulative impact of adoption of ASC 606
|
—
|
|
|
(86
|
)
|
|
—
|
|
|
(86
|
)
|
||||
Cumulative impact of adoption of ASU 2016-01
|
—
|
|
|
6
|
|
|
(6
|
)
|
|
—
|
|
||||
Shares issued:
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation
|
53
|
|
|
—
|
|
|
—
|
|
|
53
|
|
||||
Exercise of stock options
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Employee share purchase plan
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||
Balance as at November 30, 2018
|
$
|
2,618
|
|
|
$
|
(83
|
)
|
|
$
|
(16
|
)
|
|
$
|
2,519
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 30, 2019
|
|
November 30, 2018
|
|
November 30, 2019
|
|
November 30, 2018
|
||||||||
Revenue
|
$
|
267
|
|
|
$
|
226
|
|
|
$
|
758
|
|
|
$
|
649
|
|
Cost of sales
|
69
|
|
|
56
|
|
|
207
|
|
|
157
|
|
||||
Gross margin
|
198
|
|
|
170
|
|
|
551
|
|
|
492
|
|
||||
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Research and development
|
66
|
|
|
55
|
|
|
199
|
|
|
167
|
|
||||
Selling, marketing and administration
|
132
|
|
|
93
|
|
|
385
|
|
|
299
|
|
||||
Amortization
|
49
|
|
|
33
|
|
|
146
|
|
|
105
|
|
||||
Debentures fair value adjustment
|
(20
|
)
|
|
(69
|
)
|
|
(71
|
)
|
|
(111
|
)
|
||||
|
227
|
|
|
112
|
|
|
659
|
|
|
460
|
|
||||
Operating income (loss)
|
(29
|
)
|
|
58
|
|
|
(108
|
)
|
|
32
|
|
||||
Investment income (loss), net
|
(1
|
)
|
|
2
|
|
|
2
|
|
|
13
|
|
||||
Income (loss) before income taxes
|
(30
|
)
|
|
60
|
|
|
(106
|
)
|
|
45
|
|
||||
Provision for income taxes
|
2
|
|
|
1
|
|
|
5
|
|
|
3
|
|
||||
Net income (loss)
|
$
|
(32
|
)
|
|
$
|
59
|
|
|
$
|
(111
|
)
|
|
$
|
42
|
|
Earnings (loss) per share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.06
|
)
|
|
$
|
0.11
|
|
|
$
|
(0.20
|
)
|
|
$
|
0.08
|
|
Diluted
|
$
|
(0.07
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.27
|
)
|
|
$
|
(0.09
|
)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 30, 2019
|
|
November 30, 2018
|
|
November 30, 2019
|
|
November 30, 2018
|
||||||||
Net income (loss)
|
$
|
(32
|
)
|
|
$
|
59
|
|
|
$
|
(111
|
)
|
|
$
|
42
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
||||||||
Net change in unrealized gains on available-for-sale debt securities
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Net change in fair value of derivatives designated as cash flow hedges during the period, net of income taxes of nil for the three and nine months ended November 30, 2019 and November 30, 2018
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(3
|
)
|
||||
Amounts reclassified to net income (loss) during the period for derivatives designated as cash flow hedges, net of income taxes of nil for the three and nine months ended November 30, 2019 and November 30, 2018
|
—
|
|
|
1
|
|
|
—
|
|
|
2
|
|
||||
Foreign currency translation adjustment
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|
(6
|
)
|
||||
Gain (loss) from change in fair value from instrument-specific credit risk on the Debentures
|
(2
|
)
|
|
5
|
|
|
(15
|
)
|
|
6
|
|
||||
Other comprehensive income (loss)
|
(2
|
)
|
|
2
|
|
|
(17
|
)
|
|
—
|
|
||||
Comprehensive income (loss)
|
$
|
(34
|
)
|
|
$
|
61
|
|
|
$
|
(128
|
)
|
|
$
|
42
|
|
|
Nine Months Ended
|
||||||
|
November 30, 2019
|
|
November 30, 2018
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income (loss)
|
$
|
(111
|
)
|
|
$
|
42
|
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
||||
Amortization
|
160
|
|
|
116
|
|
||
Stock-based compensation
|
46
|
|
|
53
|
|
||
Non-cash consideration received from contract with a customer
|
(8
|
)
|
|
—
|
|
||
Debentures fair value adjustment
|
(71
|
)
|
|
(111
|
)
|
||
Other long-term assets
|
—
|
|
|
2
|
|
||
Operating leases
|
(12
|
)
|
|
—
|
|
||
Other
|
9
|
|
|
4
|
|
||
Net changes in working capital items:
|
|
|
|
|
|||
Accounts receivable, net
|
17
|
|
|
13
|
|
||
Other receivables
|
6
|
|
|
46
|
|
||
Income taxes receivable
|
(1
|
)
|
|
13
|
|
||
Other assets
|
3
|
|
|
(1
|
)
|
||
Accounts payable
|
(21
|
)
|
|
(14
|
)
|
||
Income taxes payable
|
2
|
|
|
(1
|
)
|
||
Accrued liabilities
|
(24
|
)
|
|
(57
|
)
|
||
Deferred revenue
|
(10
|
)
|
|
(23
|
)
|
||
Other long-term liabilities
|
7
|
|
|
—
|
|
||
Net cash provided by (used in) operating activities
|
(8
|
)
|
|
82
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Acquisition of long-term investments
|
(1
|
)
|
|
(2
|
)
|
||
Proceeds on sale or maturity of long-term investments
|
—
|
|
|
2
|
|
||
Acquisition of property, plant and equipment
|
(9
|
)
|
|
(14
|
)
|
||
Proceeds on sale of property, plant and equipment
|
—
|
|
|
1
|
|
||
Acquisition of intangible assets
|
(24
|
)
|
|
(24
|
)
|
||
Business acquisitions, net of cash acquired
|
1
|
|
|
—
|
|
||
Acquisition of short-term investments
|
(829
|
)
|
|
(2,754
|
)
|
||
Proceeds on sale or maturity of short-term investments
|
830
|
|
|
2,962
|
|
||
Net cash provided by (used in) investing activities
|
(32
|
)
|
|
171
|
|
||
Cash flows from financing activities
|
|
|
|
||||
Issuance of common shares
|
8
|
|
|
5
|
|
||
Finance lease liability
|
(2
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
6
|
|
|
5
|
|
||
Effect of foreign exchange loss on cash, cash equivalents, restricted cash, and restricted cash equivalents
|
(1
|
)
|
|
(3
|
)
|
||
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents during the period
|
(35
|
)
|
|
255
|
|
||
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period
|
582
|
|
|
855
|
|
||
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period
|
$
|
547
|
|
|
$
|
1,110
|
|
1.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES
|
|
As at
February 28, 2019
(as previously disclosed)
|
|
Correction
|
|
As at
February 28, 2019
(corrected)
|
||||||
Assets
|
|
|
|
|
|
||||||
Accounts receivable, net
|
$
|
194
|
|
|
$
|
39
|
|
|
$
|
233
|
|
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
||||||
Deferred revenue, current
|
214
|
|
|
39
|
|
|
253
|
|
2.
|
FAIR VALUE MEASUREMENTS, CASH, CASH EQUIVALENTS AND INVESTMENTS
|
•
|
Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 30, 2019
|
|
November 30, 2018
|
|
November 30, 2019
|
|
November 30, 2018
|
||||||||
Balance, beginning of period
|
$
|
19
|
|
|
$
|
20
|
|
|
$
|
19
|
|
|
$
|
20
|
|
Principal repayments
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Balance, end of period
|
$
|
19
|
|
|
$
|
19
|
|
|
$
|
19
|
|
|
$
|
19
|
|
|
Cost Basis
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Other-than-
temporary
Impairment
|
|
Fair Value
|
|
Cash and
Cash
Equivalents
|
|
Short-term
Investments
|
|
Long-term
Investments
|
|
Restricted Cash and Cash Equivalents
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Bank balances
|
$
|
151
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
151
|
|
|
$
|
151
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other investments
|
37
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37
|
|
|
—
|
|
|
—
|
|
|
37
|
|
|
—
|
|
|||||||||
|
188
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
188
|
|
|
151
|
|
|
—
|
|
|
37
|
|
|
—
|
|
|||||||||
Level 1:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Equity securities
|
10
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Level 2:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Term deposits, certificates of deposits and GICs
|
133
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
133
|
|
|
20
|
|
|
81
|
|
|
—
|
|
|
32
|
|
|||||||||
Bankers’ acceptances/bearer deposit notes
|
109
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
109
|
|
|
104
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|||||||||
Commercial paper
|
195
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
195
|
|
|
162
|
|
|
33
|
|
|
—
|
|
|
—
|
|
|||||||||
Non-U.S. promissory notes
|
186
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
186
|
|
|
78
|
|
|
108
|
|
|
—
|
|
|
—
|
|
|||||||||
Non-U.S. government sponsored enterprise notes
|
105
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
105
|
|
|
—
|
|
|
105
|
|
|
—
|
|
|
—
|
|
|||||||||
Non-U.S. treasury bills/notes
|
34
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
—
|
|
|||||||||
|
762
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
762
|
|
|
364
|
|
|
366
|
|
|
—
|
|
|
32
|
|
|||||||||
Level 3:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Auction rate securities
|
20
|
|
|
2
|
|
|
—
|
|
|
(3
|
)
|
|
19
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|||||||||
|
$
|
980
|
|
|
$
|
2
|
|
|
$
|
(9
|
)
|
|
$
|
(3
|
)
|
|
$
|
970
|
|
|
$
|
515
|
|
|
$
|
367
|
|
|
$
|
56
|
|
|
$
|
32
|
|
|
Cost Basis
|
|
Unrealized
Gains |
|
Unrealized
Losses |
|
Other-than-
temporary Impairment |
|
Fair Value
|
|
Cash and
Cash Equivalents |
|
Short-term
Investments |
|
Long-term
Investments |
|
Restricted Cash and Cash Equivalents
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Bank balances
|
$
|
326
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
326
|
|
|
$
|
322
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4
|
|
Other investments
|
36
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|
—
|
|
|||||||||
|
362
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
362
|
|
|
322
|
|
|
—
|
|
|
36
|
|
|
4
|
|
|||||||||
Level 1:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Equity securities
|
10
|
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Level 2:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Term deposits, certificates of deposits and GICs
|
85
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
85
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
30
|
|
|||||||||
Bankers’ acceptances
|
39
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39
|
|
|
4
|
|
|
35
|
|
|
—
|
|
|
—
|
|
|||||||||
Commercial paper
|
264
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
264
|
|
|
177
|
|
|
87
|
|
|
—
|
|
|
—
|
|
|||||||||
Non-U.S. promissory notes
|
20
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Non-U.S. government sponsored enterprise notes
|
139
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
139
|
|
|
25
|
|
|
114
|
|
|
—
|
|
|
—
|
|
|||||||||
Non-U.S. treasury bills/notes
|
35
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
—
|
|
|||||||||
U.S. treasury bills/notes
|
42
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
—
|
|
|
42
|
|
|
—
|
|
|
—
|
|
|||||||||
|
624
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
624
|
|
|
226
|
|
|
368
|
|
|
—
|
|
|
30
|
|
|||||||||
Level 3:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Auction rate securities
|
20
|
|
|
2
|
|
|
—
|
|
|
(3
|
)
|
|
19
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|||||||||
|
$
|
1,016
|
|
|
$
|
2
|
|
|
$
|
(10
|
)
|
|
$
|
(3
|
)
|
|
$
|
1,005
|
|
|
$
|
548
|
|
|
$
|
368
|
|
|
$
|
55
|
|
|
$
|
34
|
|
|
As at
|
||||||
|
November 30, 2019
|
|
February 28, 2019
|
||||
Cash and cash equivalents
|
$
|
515
|
|
|
$
|
548
|
|
Restricted cash and cash equivalents
|
32
|
|
|
34
|
|
||
Total cash, cash equivalents, restricted cash, and restricted cash equivalents presented in the consolidated statements of cash flows
|
$
|
547
|
|
|
$
|
582
|
|
|
As at
|
||||||||||||||
|
November 30, 2019
|
|
February 28, 2019
|
||||||||||||
|
Cost Basis (1)
|
|
Fair Value
|
|
Cost Basis (1)
|
|
Fair Value
|
||||||||
Due in one year or less
|
$
|
762
|
|
|
$
|
762
|
|
|
$
|
624
|
|
|
$
|
624
|
|
Due after five years
|
17
|
|
|
19
|
|
|
17
|
|
|
19
|
|
||||
No fixed maturity
|
10
|
|
|
1
|
|
|
10
|
|
|
—
|
|
||||
|
$
|
789
|
|
|
$
|
782
|
|
|
$
|
651
|
|
|
$
|
643
|
|
(1)
|
Cost basis includes other-than-temporary impairment.
|
3.
|
DERIVATIVE FINANCIAL INSTRUMENTS
|
|
Derivative Assets (1)(2)
|
|
Derivative Liabilities (1)(3)
|
||||||||||||
|
As at
|
|
As at
|
||||||||||||
|
November 30, 2019
|
|
February 28, 2019
|
|
November 30, 2019
|
|
February 28, 2019
|
||||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
||||||||
Fair value of derivatives designated as cash flow hedges
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
Total estimated fair value
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
|
|
|
|
|
|
|
||||||||
Notional amount
|
$
|
97
|
|
|
$
|
93
|
|
|
$
|
155
|
|
|
$
|
91
|
|
(1)
|
The fair values of derivative assets and liabilities are measured using Level 2 fair value inputs.
|
(2)
|
Derivative assets are included in other current assets.
|
(3)
|
Derivative liabilities are included in accrued liabilities.
|
|
Amount of Loss
Recognized in Other Comprehensive Income (Loss) on
Derivative Instruments
(Effective Portion)
|
|
Location of Loss Reclassified
from AOCI into Income
(Effective Portion)
|
|
Amount of Loss
Reclassified from AOCI into
Income (Effective Portion)
|
||||||||
|
|
Three Months Ended November 30, 2018
|
|
Nine Months Ended November 30, 2018
|
|||||||||
Foreign exchange contracts
|
$
|
(2
|
)
|
|
Selling, marketing and administration
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
Total
|
$
|
(2
|
)
|
|
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
|
|
|
Amount of Gain (Loss) in Income on
Derivative Instruments
|
||||||||||||||
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
Location of Gain (Loss) Recognized in
Income on Derivative Instruments
|
|
November 30, 2019
|
|
November 30, 2018
|
|
November 30, 2019
|
|
November 30, 2018
|
||||||||
Foreign exchange contracts
|
Selling, marketing and administration
|
|
$
|
(1
|
)
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
4
|
|
Total
|
|
|
$
|
(1
|
)
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
4
|
|
4.
|
CONSOLIDATED BALANCE SHEETS DETAILS
|
|
As at
|
||||||
|
November 30, 2019
|
|
February 28, 2019
|
||||
Cost
|
|
|
|
||||
Buildings, leasehold improvements and other
|
$
|
74
|
|
|
$
|
68
|
|
BlackBerry operations and other information technology
|
85
|
|
|
85
|
|
||
Manufacturing, repair and research and development equipment
|
74
|
|
|
73
|
|
||
Furniture and fixtures
|
11
|
|
|
14
|
|
||
|
244
|
|
|
240
|
|
||
Accumulated amortization
|
168
|
|
|
155
|
|
||
Net book value
|
$
|
76
|
|
|
$
|
85
|
|
|
As at November 30, 2019
|
||||||||||
|
Cost
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
||||||
Acquired technology
|
$
|
1,019
|
|
|
$
|
618
|
|
|
$
|
401
|
|
Intellectual property
|
487
|
|
|
267
|
|
|
220
|
|
|||
Other acquired intangibles
|
494
|
|
|
160
|
|
|
334
|
|
|||
|
$
|
2,000
|
|
|
$
|
1,045
|
|
|
$
|
955
|
|
|
As at February 28, 2019
|
||||||||||
|
Cost
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
||||||
Acquired technology
|
$
|
1,020
|
|
|
$
|
557
|
|
|
$
|
463
|
|
Intellectual property
|
466
|
|
|
239
|
|
|
227
|
|
|||
Other acquired intangibles
|
494
|
|
|
116
|
|
|
378
|
|
|||
|
$
|
1,980
|
|
|
$
|
912
|
|
|
$
|
1,068
|
|
|
Carrying Amount
|
||
Carrying amount as at February 28, 2019
|
$
|
1,463
|
|
Effect of foreign exchange on non-U.S. dollar denominated goodwill
|
(2
|
)
|
|
Measurement period adjustment (see Note 5)
|
(2
|
)
|
|
Carrying amount as at November 30, 2019
|
$
|
1,459
|
|
|
As at
|
||||||
|
November 30, 2019
|
|
February 28, 2019
|
||||
Variable incentive accrual
|
$
|
29
|
|
|
$
|
36
|
|
Operating lease liabilities, current
|
33
|
|
|
—
|
|
||
Other
|
131
|
|
|
156
|
|
||
|
$
|
193
|
|
|
$
|
192
|
|
6.
|
INCOME TAXES
|
7.
|
DEBENTURES
|
|
|
As at
|
||
|
|
November 30, 2019
|
||
Balance as at February 28, 2019
|
|
$
|
665
|
|
Change in fair value of the Debentures
|
|
(56
|
)
|
|
Balance as at November 30, 2019
|
|
$
|
609
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
November 30, 2019
|
|
November 30, 2018
|
|
November 30, 2019
|
|
November 30, 2018
|
||||||||
Income associated with the change in fair value from non-credit components recorded in the consolidated statements of operations
|
|
$
|
20
|
|
|
$
|
69
|
|
|
$
|
71
|
|
|
$
|
111
|
|
Income (expense) associated with the change in fair value from instrument-specific credit components recorded in AOCI
|
|
(2
|
)
|
|
5
|
|
|
(15
|
)
|
|
6
|
|
||||
Total decrease in the fair value of the Debentures
|
|
$
|
18
|
|
|
$
|
74
|
|
|
$
|
56
|
|
|
$
|
117
|
|
8.
|
CAPITAL STOCK
|
(a)
|
Capital Stock
|
|
Capital Stock and Additional
Paid-in Capital
|
|||||
|
Stock
Outstanding
(000s)
|
|
Amount
|
|||
Common shares outstanding as at February 28, 2019
|
547,358
|
|
|
$
|
2,688
|
|
Stock-based compensation
|
—
|
|
|
46
|
|
|
Exercise of stock options
|
713
|
|
|
2
|
|
|
Common shares issued for restricted share unit settlements
|
3,150
|
|
|
—
|
|
|
Common shares issued for employee share purchase plan
|
911
|
|
|
6
|
|
|
Common shares outstanding as at November 30, 2019
|
552,132
|
|
|
$
|
2,742
|
|
(b)
|
Stock-based Compensation
|
9.
|
EARNINGS (LOSS) PER SHARE
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 30, 2019
|
|
November 30, 2018
|
|
November 30, 2019
|
|
November 30, 2018
|
||||||||
Net income (loss) for basic earnings (loss) per share available to common shareholders
|
$
|
(32
|
)
|
|
$
|
59
|
|
|
$
|
(111
|
)
|
|
$
|
42
|
|
Less: Debentures fair value adjustment (1)
|
(20
|
)
|
|
(69
|
)
|
|
(71
|
)
|
|
(111
|
)
|
||||
Add: Interest expense on Debentures (1)
|
6
|
|
|
6
|
|
|
17
|
|
|
17
|
|
||||
Net loss for diluted loss per share available to common shareholders
|
$
|
(46
|
)
|
|
$
|
(4
|
)
|
|
$
|
(165
|
)
|
|
$
|
(52
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of shares outstanding (000s) - basic (2)
|
554,585
|
|
|
540,406
|
|
|
552,931
|
|
|
538,251
|
|
||||
Effect of dilutive securities (000s)
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation (3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Conversion of Debentures (1)
|
60,500
|
|
|
60,500
|
|
|
60,500
|
|
|
60,500
|
|
||||
Weighted average number of shares and assumed conversions (000s) - diluted
|
615,085
|
|
|
600,906
|
|
|
613,431
|
|
|
598,751
|
|
||||
Earnings (loss) per share - reported
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.06
|
)
|
|
$
|
0.11
|
|
|
$
|
(0.20
|
)
|
|
$
|
0.08
|
|
Diluted
|
$
|
(0.07
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.27
|
)
|
|
$
|
(0.09
|
)
|
(1)
|
The Company has presented the dilutive effect of the Debentures using the if-converted method, assuming conversion at the beginning of the quarter for the three and nine months ended November 30, 2019, and three and nine months ended November 30, 2018. Accordingly, to calculate diluted loss per share, the Company adjusted net income (loss) by eliminating the fair value adjustment made to the Debentures and interest expense incurred on the Debentures in the three and nine months ended November 30, 2019, and three and nine months ended November 30, 2018, and added the number of shares that would have been issued upon conversion to the diluted weighted average number of shares outstanding. See Note 7 for details on the Debentures.
|
(2)
|
Includes approximately 4,182,189 common shares to be issued in equal instalments on the next three anniversary dates of the Cylance acquisition, in consideration for the acquisition. There are no service or other requirements associated with the issuance of these shares.
|
(3)
|
The Company has not presented the dilutive effect of in-the-money options and RSUs that will be settled upon vesting by the issuance of new common shares in the calculation of earnings (loss) per share for the three and nine months ended November 30, 2019, and three and nine months ended November 30, 2018 as to do so would be antidilutive.
|
|
|
Foreign Currency Cumulative Translation Adjustment
|
|
Accumulated Net Unrealized Losses on
Cash Flow Hedges
|
|
Other Post-Employment Benefit Obligations
|
|
Accumulated Net Unrealized Gains on Available-for-Sale Debt Securities
|
|
Change in fair value from instrument-specific credit risk on Debentures
|
|
Total
|
||||||||||||
AOCI as at February 28, 2019
|
|
$
|
(7
|
)
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
2
|
|
|
$
|
(14
|
)
|
|
$
|
(20
|
)
|
Change in cumulative comprehensive loss for the period
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
(17
|
)
|
||||||
AOCI as at November 30, 2019
|
|
$
|
(9
|
)
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
2
|
|
|
$
|
(29
|
)
|
|
$
|
(37
|
)
|
11.
|
COMMITMENTS AND CONTINGENCIES
|
(a)
|
Letters of Credit
|
(b)
|
Contingencies
|
(c)
|
Concentrations in Certain Areas of the Company’s Business
|
(d)
|
Indemnifications
|
12.
|
LEASES
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
|
|
November 30, 2019
|
|
November 30, 2019
|
||||
Operating lease cost, included in selling, marketing and administration
|
|
$
|
9
|
|
|
$
|
26
|
|
|
|
|
|
|
||||
Finance lease cost
|
|
|
|
|
||||
Amortization of ROU assets, included in amortization
|
|
$
|
1
|
|
|
$
|
2
|
|
Interest on lease liabilities, included in investment income, net
|
|
—
|
|
|
—
|
|
||
Total finance lease cost
|
|
$
|
1
|
|
|
$
|
2
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
|
|
November 30, 2019
|
|
November 30, 2019
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
||||
Cash used in operating activities related to operating lease payments
|
|
$
|
10
|
|
|
$
|
31
|
|
|
|
As at
|
||||||
|
|
November 30, 2019
|
|
March 1, 2019 (adoption)
|
||||
Operating leases
|
|
|
|
|
||||
Operating lease assets
|
|
|
|
|
||||
Operating lease ROU assets
|
|
$
|
133
|
|
|
$
|
161
|
|
Operating lease liabilities
|
|
|
|
|
||||
Accrued liabilities
|
|
33
|
|
|
36
|
|
||
Operating lease liabilities
|
|
127
|
|
|
153
|
|
||
Total operating lease liabilities
|
|
$
|
160
|
|
|
$
|
189
|
|
|
|
|
|
|
||||
Finance leases
|
|
|
|
|
||||
Finance lease assets
|
|
|
|
|
||||
Property, plant and equipment
|
|
$
|
7
|
|
|
$
|
8
|
|
Accumulated depreciation
|
|
(6
|
)
|
|
(5
|
)
|
||
Total finance lease assets
|
|
$
|
1
|
|
|
$
|
3
|
|
|
|
|
|
|
||||
Finance lease liabilities
|
|
|
|
|
||||
Accrued liabilities
|
|
$
|
1
|
|
|
$
|
2
|
|
Other long-term liabilities
|
|
—
|
|
|
1
|
|
||
Total finance lease liabilities
|
|
$
|
1
|
|
|
$
|
3
|
|
|
|
As at
|
|
|
|
November 30, 2019
|
|
Weighted Average Remaining Lease Term
|
|
|
|
Operating leases
|
|
5.6 years
|
|
Finance leases
|
|
1.4 years
|
|
Weighted Average Discount Rate
|
|
|
|
Operating leases
|
|
3.5
|
%
|
Finance leases
|
|
5.8
|
%
|
|
|
As at
|
||||||
|
|
November 30, 2019
|
||||||
|
|
Operating Leases
|
|
Finance
Leases
|
||||
Fiscal year 2020 (excluding the nine months ended November 30, 2019)
|
|
$
|
10
|
|
|
$
|
—
|
|
Fiscal year 2021
|
|
36
|
|
|
1
|
|
||
Fiscal year 2022
|
|
34
|
|
|
—
|
|
||
Fiscal year 2023
|
|
28
|
|
|
—
|
|
||
Fiscal year 2024
|
|
22
|
|
|
—
|
|
||
Thereafter
|
|
47
|
|
|
—
|
|
||
Total future minimum lease payments
|
|
177
|
|
|
1
|
|
||
Less:
|
|
|
|
|
||||
Imputed interest
|
|
(17
|
)
|
|
—
|
|
||
Total
|
|
$
|
160
|
|
|
$
|
1
|
|
13.
|
REVENUE AND SEGMENT DISCLOSURES
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 30, 2019
|
|
November 30, 2018
|
|
November 30, 2019
|
|
November 30, 2018
|
||||||||
North America (1)
|
$
|
188
|
|
|
$
|
151
|
|
|
$
|
527
|
|
|
$
|
423
|
|
Europe, Middle East and Africa
|
60
|
|
|
56
|
|
|
168
|
|
|
161
|
|
||||
Other regions
|
19
|
|
|
19
|
|
|
63
|
|
|
65
|
|
||||
Total
|
$
|
267
|
|
|
$
|
226
|
|
|
$
|
758
|
|
|
$
|
649
|
|
|
|
|
|
|
|
|
|
||||||||
North America (1)
|
70.4
|
%
|
|
66.8
|
%
|
|
69.5
|
%
|
|
65.2
|
%
|
||||
Europe, Middle East and Africa
|
22.5
|
%
|
|
24.8
|
%
|
|
22.2
|
%
|
|
24.8
|
%
|
||||
Other regions
|
7.1
|
%
|
|
8.4
|
%
|
|
8.3
|
%
|
|
10.0
|
%
|
||||
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 30, 2019
|
|
November 30, 2018
|
|
November 30, 2019
|
|
November 30, 2018
|
||||||||
IoT
|
$
|
145
|
|
|
$
|
148
|
|
|
$
|
413
|
|
|
$
|
410
|
|
BlackBerry Cylance
|
40
|
|
|
1
|
|
|
108
|
|
|
2
|
|
||||
Licensing
|
77
|
|
|
68
|
|
|
220
|
|
|
187
|
|
||||
Other
|
5
|
|
|
9
|
|
|
17
|
|
|
50
|
|
||||
Total
|
$
|
267
|
|
|
$
|
226
|
|
|
$
|
758
|
|
|
$
|
649
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 30, 2019
|
|
November 30, 2018
|
|
November 30, 2019
|
|
November 30, 2018
|
||||||||
Products and services transferred over time
|
$
|
122
|
|
|
$
|
120
|
|
|
$
|
391
|
|
|
$
|
365
|
|
Products and services transferred at a point in time
|
145
|
|
|
106
|
|
|
367
|
|
|
284
|
|
||||
Total
|
$
|
267
|
|
|
$
|
226
|
|
|
$
|
758
|
|
|
$
|
649
|
|
|
Accounts Receivable
|
|
Deferred Revenue
|
|
Deferred Commissions
|
||||||
Opening balance as at March 1, 2019, as corrected
|
$
|
252
|
|
|
$
|
389
|
|
|
$
|
23
|
|
Increases due to invoicing of new or existing contracts, associated contract acquisition costs, or other
|
162
|
|
|
415
|
|
|
27
|
|
|||
Decreases due to payment, fulfillment of performance obligations, or other
|
(187
|
)
|
|
(423
|
)
|
|
(24
|
)
|
|||
Increase, net
|
(25
|
)
|
|
(8
|
)
|
|
3
|
|
|||
Closing balance as at November 30, 2019
|
$
|
227
|
|
|
$
|
381
|
|
|
$
|
26
|
|
|
As at November 30, 2019
|
||||||||||||||
|
Less than 12 Months
|
|
12 to 24 Months
|
|
Thereafter
|
|
Total
|
||||||||
Remaining performance obligations
|
$
|
278
|
|
|
$
|
104
|
|
|
$
|
55
|
|
|
$
|
437
|
|
|
As at
|
||||||||||||||
|
November 30, 2019
|
|
February 28, 2019
|
||||||||||||
|
Property, Plant and Equipment, Intangible Assets, Operating Lease ROU assets and Goodwill
|
|
Total Assets
|
|
Property, Plant and Equipment, Intangible Assets and Goodwill
|
|
Total Assets
|
||||||||
Canada
|
$
|
395
|
|
|
$
|
623
|
|
|
$
|
396
|
|
|
$
|
667
|
|
United States
|
2,184
|
|
|
3,116
|
|
|
2,178
|
|
|
3,099
|
|
||||
Other
|
44
|
|
|
174
|
|
|
42
|
|
|
202
|
|
||||
|
$
|
2,623
|
|
|
$
|
3,913
|
|
|
$
|
2,616
|
|
|
$
|
3,968
|
|
•
|
the Company’s plans, strategies and objectives, including the anticipated benefits of its strategic initiatives and its intentions to increase, enhance and integrate its product and service offerings;
|
•
|
the Company’s expectations regarding revenue, billings and earnings for fiscal 2020;
|
•
|
the Company’s estimates of purchase obligations and other contractual commitments; and
|
•
|
the Company’s expectations with respect to the sufficiency of its financial resources.
|
•
|
the Company’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;
|
•
|
the Company’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 the Company;
|
•
|
the occurrence or perception of a breach of the Company’s network or product security measures, or an inappropriate disclosure of confidential or personal information could significantly harm its business;
|
•
|
risks related to the Company’s continuing ability to attract new personnel, retain existing key personnel and manage its staffing effectively;
|
•
|
the Company’s dependence on its relationships with resellers and channel partners; and
|
•
|
risks related to acquisitions, divestitures, investments and other business initiatives, which may negatively affect the Company’s results of operations.
|
•
|
Entered into an agreement with electric carmaker WM Motor to embed BlackBerry’s QNX Neutrino Realtime Operating System and other BlackBerry QNX software products within the company’s third-generation SUVs;
|
•
|
Entered into a strategic collaboration to integrate the QNX Platform for Digital Cockpits in MARELLI Electronics China’s eCockpit and Digital Cluster solution;
|
•
|
Announced the second cohort of companies for the Company’s joint accelerator program with L-SPARK to advance Canadian startups that are focused on connected vehicle technologies;
|
•
|
Announced that its QNX Hypervisor 2.0 for Safety has been recognized as ISO 26262 ASIL D compliant by the independent auditors at TÜV Rheinland, making it the world’s first ASIL D safety-certified commercial hypervisor;
|
•
|
Announced that Reece Group has deployed BlackBerry Cylance technology to protect thousands of endpoints across its retail stores and offices in Australia and the United States;
|
•
|
Entered into an agreement with Canadian Pacific Railway to deploy BlackBerry Radar across 2,000 of its domestic intermodal chassis;
|
•
|
Entered into an agreement for BlackBerry QNX technology to power Arrival’s Generation 2.0 autonomous-ready commercial electric vehicles;
|
•
|
Announced an agreement with ETAS GmbH, a subsidiary of Bosch, to cooperate on the joint development and marketing of an automotive software platform based on the AUTOSAR Adaptive standard;
|
•
|
Announced that Hyundai Autron selected BlackBerry QNX technology to power its next-generation advanced driver-assistance systems (ADAS) and autonomous driving software platform;
|
•
|
Launched AtHoc & BlackBerry SecuSUITE solutions on Amazon Web Services;
|
•
|
Launched CylancePROTECT for mobile devices managed by BlackBerry UEM;
|
•
|
Announced the promotion of John McClurg to the role of Chief Information Security Officer and Christopher Hummel to the role of Chief Information Officer;
|
•
|
Announced the integration of CylancePROTECT and CylanceOPTICS with Chronicle’s Backstory security analytics platform;
|
•
|
Launched BlackBerry Solutions on the Microsoft Azure Marketplace;
|
•
|
Launched the BlackBerry Advanced Technology Development Labs to develop cutting-edge security innovations;
|
•
|
Announced the transition of Steve Capelli to the role of Chief Revenue Officer and the promotion of Steve Rai to the role of Chief Financial Officer;
|
•
|
Entered into an agreement with Matson Logistics to deploy the BlackBerry Radar-M solution across its entire fleet of domestic intermodal containers;
|
•
|
Announced, along with DENSO Corporation, that the first integrated Human Machine Interface digital cockpit system with BlackBerry QNX technology has shipped in SUBARU vehicles;
|
•
|
Launched the BlackBerry QNX Acoustics Management Platform 3.0, the latest version of its automotive acoustics software;
|
•
|
Announced a deeper partnership with Jaguar Land Rover for the use of the Company’s AI and machine learning technologies, BlackBerry QNX software and BlackBerry Cybersecurity Consulting services in the development of the automaker’s next-generation vehicles;
|
•
|
Appointed Lisa Disbrow to the Company’s Board of Directors (the “Board”) and to the audit and risk management committee of the Board;
|
•
|
Named as a Leader in Gartner’s 2019 Magic Quadrant for Unified Endpoint Management Tools for the fourth consecutive year;
|
•
|
Launched BlackBerry Intelligent Security, the first cloud-based solution that leverages the power of adaptive security, continuous authentication and artificial intelligence to enhance mobile endpoint security in zero trust environments;
|
•
|
Entered into an agreement with SYNNEX Corporation to distribute the BlackBerry Enterprise Mobility Suite in the United States and accelerate partner recruitment for the BlackBerry Enterprise Partner Program;
|
•
|
Introduced CylanceGUARD, a managed detection and response solution that leverages BlackBerry Cylance security experts and its industry-leading native AI platform to provide continuous threat hunting and monitoring;
|
•
|
Entered into a collaborative supply agreement expanding the Company’s partnership with LG Electronics Inc. to accelerate the deployment of connected and autonomous vehicle technology for automotive OEMs and Tier 1 vendors;
|
•
|
Announced that BlackBerry QNX Software is embedded in more than 150 million vehicles;
|
•
|
Achieved Federal Risk and Authorization Management Program (“FedRAMP”) Ready status for the BlackBerry Government Mobility Suite, a cloud-based endpoint management solution developed specifically for U.S. government agencies;
|
•
|
Announced support of Canada’s Digital Charter, aimed at protecting the privacy and data security of Canadians, and that the Company has been recognized by the Government of Canada as a benchmark for trusted technology;
|
•
|
Announced that Forrester found that BlackBerry Cylance’s AI-driven endpoint security products delivered a 99 percent return on investment;
|
•
|
Announced that BlackBerry Cylance has completed an Australian Information Security Registered Assessors Program (IRAP) assessment to obtain certification as a security solutions provider to Australian federal government agencies;
|
•
|
With WITTENSTEIN high integrity systems, announced a new embedded software platform that enables the development of safety-certified and mission-critical applications on heterogenous system-on-chip processors;
|
•
|
Launched BlackBerry Radar H2, a new intelligent, data-driven asset monitoring device that can help automate operations, improve utilization of trailers, containers, chassis and other remote assets, as well as ensure assets are safe and secure;
|
•
|
Established BlackBerry Government Solutions, to accelerate the company’s FedRAMP initiatives and deepen ties with U.S. federal agencies;
|
•
|
BlackBerry Limited announced that the NATO Communications and Information (NCI) Agency has awarded a contract for BlackBerry’s SecuSUITE® for Government to encrypt the conversations of its technology and cyber leaders;
|
•
|
Announced that Verizon added BlackBerry Cylance’s AI-driven antivirus security solutions to its Managed Security Services portfolio; and
|
•
|
Introduced CylancePERSONA, the first proactive endpoint behavioral analytics solution.
|
•
|
Debenture fair value adjustment. The Company has elected to measure its outstanding 3.75% unsecured convertible debentures (the “Debentures”) at fair value in accordance with the fair value option under U.S. GAAP. Each period, the fair value of the Debentures is recalculated and resulting gains and losses from the change in fair value from non-credit components of the Debentures are recognized in income.
|
•
|
Restructuring charges. The Company believes that restructuring costs relating to operating lease right-of-use (“ROU”) assets, employee termination benefits, facilities, and manufacturing network simplification efforts pursuant to the Resource Allocation Program (“RAP”) do not reflect expected future operating expenses, are not indicative of the Company’s core operating performance, and are not meaningful in comparison to the Company’s past operating performance.
|
•
|
Software deferred revenue acquired. The Company has acquired businesses whose net assets include deferred revenue. In accordance with U.S. GAAP reporting requirements, the Company recorded write-downs of deferred revenue under arrangements pre-dating each acquisition to fair value, which resulted in lower recognized revenue than the original transaction price until the related service obligations under such arrangements are fulfilled. Therefore, U.S. GAAP revenues after the acquisitions will not reflect the full amount of revenue that would have been reported if the acquired deferred revenue was not written down to fair value. The Company believes that reversing the acquisition-related deferred revenue write-downs (so that the full amount of revenue booked by the acquired companies is included) provides a more appropriate representation of revenue in a given period and, therefore, provides readers of the Company’s financial statements with a more consistent basis for comparison across accounting periods. The Company also believes that the adjustment is more useful in helping readers to understand the Company’s operating results and underlying operational trends, especially in future periods when the contracts underlying the acquired deferred revenue are renewed at amounts more consistent with their transaction price.
|
•
|
Software deferred commission expense acquired. The Company has acquired businesses whose net assets include deferred commissions. In accordance with U.S. GAAP reporting requirements, the Company recorded write-downs of deferred commissions under arrangements pre-dating each acquisition to fair value, which in most cases is nil. Therefore, U.S. GAAP commission expense after the acquisitions will not reflect commissions expense that would have been reported if the acquired deferred commissions were not written down to fair value. The Company believes that reversing the acquisition-related deferred commission write-downs (so that the full amount of commission expense is included) provides a more appropriate representation of commission expense in a given period and, therefore, provides readers of the Company’s financial statements with a more consistent basis for comparison across accounting periods. The Company also believes that the adjustment is more useful in helping readers to understand the Company’s operating results and underlying operational trends, especially in future periods when the Company recognizes commissions on the renewals of the contracts underlying the acquired deferred commissions.
|
•
|
Stock compensation expenses. Equity compensation is a non-cash expense and does not impact the ongoing operating decisions taken by the Company’s management.
|
•
|
Amortization of acquired intangible assets. When the Company acquires intangible assets through business combinations, the assets are recorded as part of purchase accounting and contribute to revenue generation. Such acquired intangible assets depreciate over time and the related amortization will recur in future periods until the assets have been fully amortized.
|
•
|
Business acquisition and integration costs. The Company incurs costs associated with business acquisitions, including legal costs, audit and accounting fees, and other acquisition and integration expenses. These expenditures do not relate to the ongoing operation of the business and they tend to vary significantly based on the circumstances of each transaction.
|
•
|
Acquisition valuation allowance. The Company records an income tax valuation allowance associated with business acquisitions.
|
•
|
the Q3 Fiscal 2020 Debentures Fair Value Adjustment (as defined below under “Third Quarter Fiscal 2020 Summary Results of Operations – Financial Highlights – Debentures Fair Value Adjustment”) of approximately $20 million;
|
•
|
restructuring charges from RAP consisting of amounts associated with operating lease ROU assets, employee termination benefits, and certain other costs of approximately $10 million;
|
•
|
software deferred revenue acquired but not recognized due to business combination accounting rules of approximately $13 million;
|
•
|
software deferred commission expense acquired but not recognized due to business combination accounting rules of approximately $4 million;
|
•
|
stock compensation expense of approximately $15 million; and
|
•
|
amortization of intangible assets acquired through business combinations of approximately $35 million.
|
Q3 Fiscal 2020 Non-GAAP Adjustments
|
|
For the Three Months Ended November 30, 2019
|
||||||||||||||||||||||
|
(in millions, except for per share amounts)
|
|||||||||||||||||||||||
|
Income statement location
|
|
Revenue
|
|
Gross margin (before taxes)
|
|
Gross margin % (before taxes)
|
|
Income (loss) before income taxes
|
|
Net income (loss)
|
|
Basic earnings (loss) per share
|
|||||||||||
As reported
|
|
|
$
|
267
|
|
|
$
|
198
|
|
|
74.2
|
%
|
|
$
|
(30
|
)
|
|
$
|
(32
|
)
|
|
$
|
(0.06
|
)
|
Debentures fair value adjustment (1)
|
Debentures fair value adjustment
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
(20
|
)
|
|
(20
|
)
|
|
|
||||||
Restructuring charges (2)
|
Cost of sales
|
|
—
|
|
|
3
|
|
|
1.1
|
%
|
|
3
|
|
|
3
|
|
|
|
||||||
Restructuring charges (2)
|
Selling, marketing and administration
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
7
|
|
|
7
|
|
|
|
||||||
Software deferred revenue acquired (3)
|
Revenue
|
|
13
|
|
|
13
|
|
|
1.1
|
%
|
|
13
|
|
|
13
|
|
|
|
||||||
Software deferred commission expense acquired
|
Selling, marketing and administration
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
(4
|
)
|
|
(4
|
)
|
|
|
||||||
Stock compensation expense
|
Cost of sales
|
|
—
|
|
|
1
|
|
|
0.4
|
%
|
|
1
|
|
|
1
|
|
|
|
||||||
Stock compensation expense
|
Research and development
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
4
|
|
|
4
|
|
|
|
||||||
Stock compensation expense
|
Selling, marketing and administration
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
10
|
|
|
10
|
|
|
|
||||||
Acquired intangibles amortization
|
Amortization
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
35
|
|
|
35
|
|
|
|
||||||
Adjusted
|
|
|
$
|
280
|
|
|
$
|
215
|
|
|
76.8
|
%
|
|
$
|
19
|
|
|
$
|
17
|
|
|
$
|
0.03
|
|
(1)
|
See “Third Quarter Fiscal 2020 Summary Results of Operations – Financial Highlights - Debentures Fair Value Adjustment”.
|
(2)
|
See “Third Quarter Fiscal 2020 Summary Results of Operations – Financial Highlights - Restructuring Charges”.
|
(3)
|
Included in BlackBerry Cylance revenue.
|
•
|
the Fiscal 2020 Debentures Fair Value Adjustment (as defined below under “Third Quarter Fiscal 2020 Summary Results of Operations – Financial Highlights – Debentures Fair Value Adjustment”) of approximately $71 million;
|
•
|
restructuring charges from RAP consisting of amounts associated with operating lease ROU assets, employee termination benefits, and certain other costs of approximately $14 million;
|
•
|
software deferred revenue acquired but not recognized due to business combination accounting rules of approximately $50 million;
|
•
|
software deferred commission expense acquired but not recognized due to business combination accounting rules of approximately $13 million;
|
•
|
stock compensation expense of approximately $46 million;
|
•
|
amortization of intangible assets acquired through business combinations of approximately $106 million;
|
•
|
business acquisition and integration costs incurred through or as a result of business combinations of approximately $3 million; and
|
•
|
income tax valuation allowance related to the acquisition of Cylance of approximately $1 million.
|
Fiscal 2020 Non-GAAP Adjustments
|
|
For the Nine Months Ended November 30, 2019
|
||||||||||||||||||||||
|
(in millions, except for per share amounts)
|
|||||||||||||||||||||||
|
Income statement location
|
|
Revenue
|
|
Gross margin (before taxes)
|
|
Gross margin % (before taxes)
|
|
Income (loss) before income taxes
|
|
Net income (loss)
|
|
Basic earnings (loss) per share
|
|||||||||||
As reported
|
|
|
$
|
758
|
|
|
$
|
551
|
|
|
72.7
|
%
|
|
$
|
(106
|
)
|
|
$
|
(111
|
)
|
|
$
|
(0.20
|
)
|
Debentures fair value adjustment (1)
|
Debentures fair value adjustment
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
(71
|
)
|
|
(71
|
)
|
|
|
||||||
Restructuring charges (2)
|
Cost of sales
|
|
—
|
|
|
5
|
|
|
0.7
|
%
|
|
5
|
|
|
5
|
|
|
|
||||||
Restructuring charges (2)
|
Selling, marketing and administration
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
9
|
|
|
9
|
|
|
|
||||||
Software deferred revenue acquired (3)
|
Revenue
|
|
50
|
|
|
50
|
|
|
1.6
|
%
|
|
50
|
|
|
50
|
|
|
|
||||||
Software deferred commission expense acquired
|
Selling, marketing and administration
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
(13
|
)
|
|
(13
|
)
|
|
|
||||||
Stock compensation expense
|
Cost of sales
|
|
—
|
|
|
3
|
|
|
0.4
|
%
|
|
3
|
|
|
3
|
|
|
|
||||||
Stock compensation expense
|
Research and development
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
10
|
|
|
10
|
|
|
|
||||||
Stock compensation expense
|
Selling, marketing and administration
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
33
|
|
|
33
|
|
|
|
||||||
Acquired intangibles amortization
|
Amortization
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
106
|
|
|
106
|
|
|
|
||||||
Business acquisition and integration costs
|
Selling, marketing and administration
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
3
|
|
|
3
|
|
|
|
||||||
Acquisition valuation allowance
|
Income taxes
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
(1
|
)
|
|
|
||||||
Adjusted
|
|
|
$
|
808
|
|
|
$
|
609
|
|
|
75.4
|
%
|
|
$
|
29
|
|
|
$
|
23
|
|
|
$
|
0.04
|
|
(1)
|
See “Third Quarter Fiscal 2020 Summary Results of Operations – Financial Highlights - Debentures Fair Value Adjustment”.
|
(2)
|
See “Third Quarter Fiscal 2020 Summary Results of Operations – Financial Highlights - Restructuring Charges”.
|
(3)
|
$48 million was included in BlackBerry Cylance revenue and $2 million was included in IoT revenue.
|
•
|
a fair value adjustment associated with the Debentures of approximately $69 million (the “Q3 Fiscal 2019 Debentures Fair Value Adjustment”);
|
•
|
restructuring charges from RAP consisting of amounts associated with employee termination benefits, facilities, and certain other costs of approximately $1 million;
|
•
|
software deferred revenue acquired but not recognized due to business combination accounting rules of approximately $2 million;
|
•
|
stock compensation expense of approximately $15 million; and
|
•
|
amortization of intangible assets acquired through business combinations of approximately $20 million.
|
•
|
a fair value adjustment associated with the Debentures of approximately $111 million (the “Fiscal 2019 Debentures Fair Value Adjustment”);
|
•
|
restructuring charges from RAP and recoveries from the Cost Optimization and Resource Efficiency (“CORE”) program consisting of amounts associated with employee termination benefits, facilities, and certain other costs of approximately $8 million on a net basis;
|
•
|
software deferred revenue acquired but not recognized due to business combination accounting rules of approximately $10 million;
|
•
|
stock compensation expense of approximately $54 million;
|
•
|
amortization of intangible assets acquired through business combinations of approximately $64 million; and
|
•
|
business acquisition and integration costs recovered through business combinations of approximately $1 million.
|
|
|
|
For the Three Months Ended November 30, 2018
|
|
For the Nine Months Ended November 30, 2018
|
||||||||||||||||||||||||||||
|
|
|
(in millions)
|
|
(in millions)
|
||||||||||||||||||||||||||||
|
Income statement location
|
|
Revenue
|
|
Gross margin (before taxes)
|
|
Income before income taxes
|
|
Net income
|
|
Revenue
|
|
Gross margin (before taxes)
|
|
Income before income taxes
|
|
Net income
|
||||||||||||||||
As reported
|
|
|
$
|
226
|
|
|
$
|
170
|
|
|
$
|
60
|
|
|
$
|
59
|
|
|
$
|
649
|
|
|
$
|
492
|
|
|
$
|
45
|
|
|
$
|
42
|
|
Debentures fair value adjustment
|
Debentures fair value adjustment
|
|
—
|
|
|
—
|
|
|
(69
|
)
|
|
(69
|
)
|
|
—
|
|
|
—
|
|
|
(111
|
)
|
|
(111
|
)
|
||||||||
Restructuring charges
|
Cost of sales
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||||||
Restructuring charges
|
Research and development
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||||||
Restructuring charges
|
Selling, marketing and administration
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
||||||||
Software deferred revenue acquired (1)
|
Revenue
|
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
10
|
|
|
10
|
|
|
10
|
|
|
10
|
|
||||||||
Stock compensation expense
|
Cost of sales
|
|
—
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
|
|
3
|
|
|
3
|
|
|
3
|
|
|||||||||
Stock compensation expense
|
Research and development
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
9
|
|
||||||||
Stock compensation expense
|
Selling, marketing and administration
|
|
—
|
|
|
—
|
|
|
11
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
42
|
|
||||||||
Acquired intangibles amortization
|
Amortization
|
|
—
|
|
|
—
|
|
|
20
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
64
|
|
|
64
|
|
||||||||
Business acquisition and integration costs recovered
|
Selling, marketing and administration
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||||
Adjusted
|
|
|
$
|
228
|
|
|
$
|
173
|
|
|
$
|
29
|
|
|
$
|
28
|
|
|
$
|
659
|
|
|
$
|
506
|
|
|
$
|
69
|
|
|
$
|
66
|
|
(1)
|
Included in IoT revenue.
|
|
|
For the Three Months Ended November 30, 2019
|
|
For the Nine Months Ended November 30, 2019
|
||||
|
|
(in millions)
|
|
(in millions)
|
||||
Operating loss
|
|
$
|
(29
|
)
|
|
$
|
(108
|
)
|
Non-GAAP adjustments to operating loss
|
|
|
|
|
||||
Debentures fair value adjustment
|
|
(20
|
)
|
|
(71
|
)
|
||
Restructuring charges
|
|
10
|
|
|
14
|
|
||
Software deferred revenue acquired
|
|
13
|
|
|
50
|
|
||
Software deferred commission acquired
|
|
(4
|
)
|
|
(13
|
)
|
||
Stock compensation expense
|
|
15
|
|
|
46
|
|
||
Acquired intangibles amortization
|
|
35
|
|
|
106
|
|
||
Business acquisition and integration costs
|
|
—
|
|
|
3
|
|
||
Total non-GAAP adjustments to operating loss
|
|
49
|
|
|
135
|
|
||
Non-GAAP operating income
|
|
20
|
|
|
27
|
|
||
Amortization
|
|
53
|
|
|
160
|
|
||
Acquired intangibles amortization
|
|
(35
|
)
|
|
(106
|
)
|
||
Adjusted EBITDA
|
|
$
|
38
|
|
|
$
|
81
|
|
Adjusted revenue (per above)
|
|
280
|
|
|
808
|
|
||
Adjusted EBITDA margin percentage
|
|
14
|
%
|
|
10
|
%
|
|
|
For the Three Months Ended November 30, 2018
|
|
For the Nine Months Ended November 30, 2018
|
||||
|
|
(in millions)
|
|
(in millions)
|
||||
Operating income
|
|
$
|
58
|
|
|
$
|
32
|
|
Non-GAAP adjustments to operating income
|
|
|
|
|
||||
Debentures fair value adjustment
|
|
(69
|
)
|
|
(111
|
)
|
||
Restructuring charges
|
|
1
|
|
|
8
|
|
||
Software deferred revenue acquired
|
|
2
|
|
|
10
|
|
||
Stock compensation expense
|
|
15
|
|
|
54
|
|
||
Acquired intangibles amortization
|
|
20
|
|
|
64
|
|
||
Business acquisition and integration recovery
|
|
—
|
|
|
(1
|
)
|
||
Total non-GAAP adjustments to operating income
|
|
(31
|
)
|
|
24
|
|
||
Non-GAAP operating income
|
|
27
|
|
|
56
|
|
||
Amortization
|
|
37
|
|
|
116
|
|
||
Acquired intangibles amortization
|
|
(20
|
)
|
|
(64
|
)
|
||
Adjusted EBITDA
|
|
$
|
44
|
|
|
$
|
108
|
|
Adjusted revenue (per above)
|
|
228
|
|
|
659
|
|
||
Adjusted EBITDA margin percentage
|
|
19
|
%
|
|
16
|
%
|
|
For the Three Months Ended
|
||||||||||||||||
|
(in millions, except for share and per share amounts)
|
||||||||||||||||
|
November 30, 2019
|
|
November 30, 2018
|
|
Change
|
||||||||||||
Revenue (1)(2)
|
$
|
267
|
|
|
100.0
|
%
|
|
$
|
226
|
|
|
100.0
|
%
|
|
$
|
41
|
|
Gross margin (1)(2)
|
198
|
|
|
74.2
|
%
|
|
170
|
|
|
75.2
|
%
|
|
28
|
|
|||
Operating expenses (1)(2)
|
227
|
|
|
85.0
|
%
|
|
112
|
|
|
49.6
|
%
|
|
115
|
|
|||
Income before income taxes
|
(30
|
)
|
|
(11.2
|
%)
|
|
60
|
|
|
26.5
|
%
|
|
(90
|
)
|
|||
Provision for income taxes
|
2
|
|
|
0.7
|
%
|
|
1
|
|
|
0.4
|
%
|
|
1
|
|
|||
Net income (loss)
|
$
|
(32
|
)
|
|
(12.0
|
%)
|
|
$
|
59
|
|
|
26.1
|
%
|
|
$
|
(91
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per share - reported
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.06
|
)
|
|
|
|
$
|
0.11
|
|
|
|
|
$
|
(0.17
|
)
|
||
Diluted (3)
|
$
|
(0.07
|
)
|
|
|
|
$
|
(0.01
|
)
|
|
|
|
$
|
(0.06
|
)
|
||
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of shares outstanding (000s)
|
|
|
|
|
|
|
|
|
|
||||||||
Basic (4)
|
554,585
|
|
|
|
|
540,406
|
|
|
|
|
|
||||||
Diluted (3)
|
615,085
|
|
|
|
|
600,906
|
|
|
|
|
|
(1)
|
See “Non-GAAP Financial Measures” for the impact of the Q3 Fiscal 2020 Non-GAAP Adjustments on adjusted revenue, adjusted gross margin and adjusted operating expenses in the third quarter of fiscal 2020.
|
(2)
|
See “Non-GAAP Financial Measures” for the impact of the Q3 Fiscal 2019 Non-GAAP Adjustments on adjusted revenue, adjusted gross margin and adjusted operating expenses in the third quarter of fiscal 2019.
|
(3)
|
Diluted loss per share on a U.S. GAAP basis for the third quarter of fiscal 2020 and fiscal 2019 does not include the dilutive effect of in-the-money options and RSUs that will be settled upon vesting by the issuance of new common shares, as it would be anti-dilutive. See Note 9 to the Consolidated Financial Statements for the Company’s calculation of diluted loss per share.
|
(4)
|
Basic loss per share on a U.S. GAAP basis for the third quarter of fiscal 2020 includes approximately 4,182,189 common shares to be issued in equal instalments on the next three anniversary dates of the Cylance acquisition, in consideration for the acquisition. There are no service or other requirements associated with the issuance of these shares.
|
|
For the Three Months Ended
(in millions)
|
|||||||||||||||||||
|
November 30, 2019
|
|
November 30, 2018
|
|
Change
|
|||||||||||||||
Revenue by Product and Service
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
IoT
|
$
|
145
|
|
|
54.3
|
%
|
|
$
|
148
|
|
|
65.5
|
%
|
|
$
|
(3
|
)
|
|
(2.0
|
)%
|
BlackBerry Cylance
|
40
|
|
|
15.0
|
%
|
|
1
|
|
|
0.4
|
%
|
|
39
|
|
|
3,900.0
|
%
|
|||
Licensing
|
77
|
|
|
28.8
|
%
|
|
68
|
|
|
30.1
|
%
|
|
9
|
|
|
13.2
|
%
|
|||
Other
|
5
|
|
|
1.9
|
%
|
|
9
|
|
|
4.0
|
%
|
|
(4
|
)
|
|
(44.4
|
)%
|
|||
|
$
|
267
|
|
|
100.0
|
%
|
|
$
|
226
|
|
|
100.0
|
%
|
|
$
|
41
|
|
|
18.1
|
%
|
|
For the Three Months Ended
(in millions)
|
|||||||||||||||||||
|
November 30, 2019
|
|
November 30, 2018
|
|
Change
|
|||||||||||||||
Revenue by Geography
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
North America
|
$
|
188
|
|
|
70.4
|
%
|
|
$
|
151
|
|
|
66.8
|
%
|
|
$
|
37
|
|
|
24.5
|
%
|
Europe, Middle East and Africa
|
60
|
|
|
22.5
|
%
|
|
56
|
|
|
24.8
|
%
|
|
4
|
|
|
7.1
|
%
|
|||
Other regions
|
19
|
|
|
7.1
|
%
|
|
19
|
|
|
8.4
|
%
|
|
—
|
|
|
—
|
%
|
|||
|
$
|
267
|
|
|
100.0
|
%
|
|
$
|
226
|
|
|
100.0
|
%
|
|
$
|
41
|
|
|
18.1
|
%
|
|
For the Three Months Ended
(in millions)
|
|||||||||||||||||||
|
November 30, 2019
|
|
November 30, 2018
|
|
Change
|
|||||||||||||||
Revenue by Product and Service
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
IoT (1)
|
$
|
145
|
|
|
51.8
|
%
|
|
$
|
150
|
|
|
65.9
|
%
|
|
$
|
(5
|
)
|
|
(3.3
|
)%
|
BlackBerry Cylance (1)
|
53
|
|
|
18.9
|
%
|
|
1
|
|
|
0.4
|
%
|
|
52
|
|
|
5,200.0
|
%
|
|||
Licensing
|
77
|
|
|
27.5
|
%
|
|
68
|
|
|
29.8
|
%
|
|
9
|
|
|
13.2
|
%
|
|||
Other
|
5
|
|
|
1.8
|
%
|
|
9
|
|
|
3.9
|
%
|
|
(4
|
)
|
|
(44.4
|
)%
|
|||
|
$
|
280
|
|
|
100.0
|
%
|
|
$
|
228
|
|
|
100.0
|
%
|
|
$
|
52
|
|
|
22.8
|
%
|
(1)
|
See “Non-GAAP Financial Measures” for the relevant Q3 Fiscal 2020 Non-GAAP Adjustments and Q3 Fiscal 2019 Non-GAAP Adjustments made to BlackBerry Cylance and IoT.
|
|
For the Three Months Ended
(in millions)
|
|||||||||||||||||||
|
November 30, 2019
|
|
August 31, 2019
|
|
November 30, 2018
|
|||||||||||||||
|
|
|
% of
Revenue
|
|
|
|
% of
Revenue
|
|
|
|
% of
Revenue
|
|||||||||
Revenue
|
$
|
267
|
|
|
|
|
$
|
244
|
|
|
|
|
$
|
226
|
|
|
|
|||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development (1)(2)(3)
|
$
|
66
|
|
|
24.7
|
%
|
|
$
|
62
|
|
|
25.4
|
%
|
|
$
|
55
|
|
|
24.3
|
%
|
Selling, marketing and administration (1)(2)(3)
|
132
|
|
|
49.4
|
%
|
|
132
|
|
|
54.1
|
%
|
|
93
|
|
|
41.2
|
%
|
|||
Amortization (1)(2)(3)
|
49
|
|
|
18.4
|
%
|
|
48
|
|
|
19.7
|
%
|
|
33
|
|
|
14.6
|
%
|
|||
Debentures fair value adjustment (1)(2)(3)
|
(20
|
)
|
|
(7.5
|
)%
|
|
(23
|
)
|
|
(9.4
|
)%
|
|
(69
|
)
|
|
(30.5
|
)%
|
|||
Total
|
$
|
227
|
|
|
85.0
|
%
|
|
$
|
219
|
|
|
89.8
|
%
|
|
$
|
112
|
|
|
49.5
|
%
|
(1)
|
See “Non-GAAP Financial Measures” for the impact of the Q3 Fiscal 2020 Non-GAAP Adjustments on adjusted operating expenditures in the third quarter of fiscal 2020.
|
(2)
|
See “Non-GAAP Financial Measures” for the impact of the Q3 Fiscal 2019 Non-GAAP Adjustments on adjusted operating expenditures in the third quarter of fiscal 2019.
|
(3)
|
In the second quarter of fiscal 2020, the Company recognized non-cash income associated with a change in the fair value of the Debentures of approximately $23 million (the “Q2 Fiscal 2020 Debentures Fair Value Adjustment”), restructuring charges of approximately $2 million in selling, marketing and administration expenses, software deferred commission acquired of $4 million in selling, marketing and administration expense, stock compensation expense of $3 million and $10 million in research and development and selling, marketing and administration expenses, respectively, acquired intangibles amortization of $36 million and business acquisition and integration costs of $2 million in selling, marketing and administration expense (collectively, the “Q2 Fiscal 2020 Non-GAAP Adjustments”).
|
|
For the Three Months Ended
(in millions)
|
||||||||||||||||||||||
|
Included in Amortization
|
|
Included in Cost of Sales
|
||||||||||||||||||||
|
November 30, 2019
|
|
November 30, 2018
|
|
Change
|
|
November 30, 2019
|
|
November 30, 2018
|
|
Change
|
||||||||||||
Property, plant and equipment
|
$
|
5
|
|
|
$
|
4
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
(1
|
)
|
Intangible assets
|
44
|
|
|
29
|
|
|
15
|
|
|
3
|
|
|
2
|
|
|
1
|
|
||||||
Total
|
$
|
49
|
|
|
$
|
33
|
|
|
$
|
16
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
For the Nine Months Ended
|
||||||||||||||||
|
(in millions, except for share and per share amounts)
|
||||||||||||||||
|
November 30, 2019
|
|
November 30, 2018
|
|
Change
|
||||||||||||
Revenue (1)(2)
|
$
|
758
|
|
|
100.0
|
%
|
|
$
|
649
|
|
|
100.0
|
%
|
|
$
|
109
|
|
Gross margin (1)(2)
|
551
|
|
|
72.7
|
%
|
|
492
|
|
|
75.8
|
%
|
|
59
|
|
|||
Operating expenses (1)(2)
|
659
|
|
|
86.9
|
%
|
|
460
|
|
|
70.9
|
%
|
|
199
|
|
|||
Income (loss) before income taxes
|
(106
|
)
|
|
(14.0
|
%)
|
|
45
|
|
|
6.9
|
%
|
|
(151
|
)
|
|||
Provision for income taxes
|
5
|
|
|
0.7
|
%
|
|
3
|
|
|
0.5
|
%
|
|
2
|
|
|||
Net income (loss) (1)
|
$
|
(111
|
)
|
|
(14.6
|
%)
|
|
$
|
42
|
|
|
6.5
|
%
|
|
$
|
(153
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per share - reported
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.20
|
)
|
|
|
|
$
|
0.08
|
|
|
|
|
$
|
(0.28
|
)
|
||
Diluted (3)
|
$
|
(0.27
|
)
|
|
|
|
$
|
(0.09
|
)
|
|
|
|
$
|
(0.18
|
)
|
||
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of shares outstanding (000s)
|
|
|
|
|
|
|
|
|
|
||||||||
Basic (4)
|
552,931
|
|
|
|
|
538,251
|
|
|
|
|
|
||||||
Diluted (3)
|
613,431
|
|
|
|
|
598,751
|
|
|
|
|
|
(1)
|
See “Non-GAAP Financial Measures” for the impact of the Fiscal 2020 Non-GAAP Adjustments on adjusted revenue, adjusted gross margin, adjusted operating expenses and adjusted net income (loss) in fiscal 2020.
|
(2)
|
See “Non-GAAP Financial Measures” for the impact of the Fiscal 2019 Non-GAAP Adjustments on adjusted revenue, adjusted gross margin and adjusted operating expenses in fiscal 2019.
|
(3)
|
Diluted loss per share on a U.S. GAAP basis for the first nine months of fiscal 2020 and fiscal 2019 does not include the dilutive effect of in-the-money options and RSUs that will be settled upon vesting by the issuance of new common shares, as it would be anti-dilutive. See Note 9 to the Consolidated Financial Statements for the Company’s calculation of diluted loss per share.
|
(4)
|
Basic loss per share on a U.S. GAAP basis for the first nine months of fiscal 2020 includes approximately 4,182,189 common shares to be issued in equal instalments on the next three anniversary dates of the Cylance acquisition, in consideration for the acquisition. There are no service or other requirements associated with the issuance of these shares.
|
|
For the Nine Months Ended
|
|||||||||||||||||||
|
(in millions)
|
|||||||||||||||||||
|
November 30, 2019
|
|
November 30, 2018
|
|
Change
|
|||||||||||||||
Revenue by Product and Service
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
IoT
|
$
|
413
|
|
|
54.6
|
%
|
|
$
|
410
|
|
|
63.2
|
%
|
|
$
|
3
|
|
|
0.7
|
%
|
BlackBerry Cylance
|
108
|
|
|
14.2
|
%
|
|
2
|
|
|
0.3
|
%
|
|
106
|
|
|
5,300.0
|
%
|
|||
Licensing
|
220
|
|
|
29.0
|
%
|
|
187
|
|
|
28.8
|
%
|
|
33
|
|
|
17.6
|
%
|
|||
Other
|
17
|
|
|
2.2
|
%
|
|
50
|
|
|
7.7
|
%
|
|
(33
|
)
|
|
(66.0
|
)%
|
|||
|
$
|
758
|
|
|
100.0
|
%
|
|
$
|
649
|
|
|
100.0
|
%
|
|
$
|
109
|
|
|
16.8
|
%
|
|
For the Nine Months Ended
|
|||||||||||||||||||
|
(in millions)
|
|||||||||||||||||||
|
November 30, 2019
|
|
November 30, 2018
|
|
Change
|
|||||||||||||||
Revenue by Product and Service
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
IoT (1)
|
$
|
415
|
|
|
51.4
|
%
|
|
$
|
420
|
|
|
63.7
|
%
|
|
$
|
(5
|
)
|
|
(1.2
|
)%
|
BlackBerry Cylance (1)
|
156
|
|
|
19.3
|
%
|
|
2
|
|
|
0.3
|
%
|
|
154
|
|
|
7,700.0
|
%
|
|||
Licensing
|
220
|
|
|
27.2
|
%
|
|
187
|
|
|
28.4
|
%
|
|
33
|
|
|
17.6
|
%
|
|||
Other
|
17
|
|
|
2.1
|
%
|
|
50
|
|
|
7.6
|
%
|
|
(33
|
)
|
|
(66.0
|
)%
|
|||
|
$
|
808
|
|
|
100.0
|
%
|
|
$
|
659
|
|
|
100.0
|
%
|
|
$
|
149
|
|
|
22.6
|
%
|
(1)
|
See “Non-GAAP Financial Measures” for the relevant Fiscal 2020 Non-GAAP Adjustments and Fiscal 2019 Non-GAAP Adjustments made to BlackBerry Cylance and IoT.
|
|
For the Nine Months Ended
|
|||||||||||||||||||
|
(in millions)
|
|||||||||||||||||||
|
November 30, 2019
|
|
November 30, 2018
|
|
Change
|
|||||||||||||||
|
|
|
% of
Revenue
|
|
|
|
% of
Revenue
|
|
|
|
% of
Change
|
|||||||||
Revenue
|
$
|
758
|
|
|
|
|
$
|
649
|
|
|
|
|
$
|
109
|
|
|
16.8
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development (1)(2)
|
$
|
199
|
|
|
26.3
|
%
|
|
$
|
167
|
|
|
25.7
|
%
|
|
$
|
32
|
|
|
19.2
|
%
|
Selling, marketing and administration (1)(2)
|
385
|
|
|
50.8
|
%
|
|
299
|
|
|
46.1
|
%
|
|
86
|
|
|
28.8
|
%
|
|||
Amortization (1)(2)
|
146
|
|
|
19.3
|
%
|
|
105
|
|
|
16.2
|
%
|
|
41
|
|
|
39.0
|
%
|
|||
Debentures fair value adjustment (1) (2)
|
(71
|
)
|
|
(9.4
|
)%
|
|
(111
|
)
|
|
(17.1
|
)%
|
|
40
|
|
|
(36.0
|
)%
|
|||
Total
|
$
|
659
|
|
|
87.0
|
%
|
|
$
|
460
|
|
|
70.9
|
%
|
|
$
|
199
|
|
|
43.3
|
%
|
(1)
|
See “Non-GAAP Financial Measures” for the impact of the Fiscal 2020 Non-GAAP Adjustments on adjusted operating expenditures in fiscal 2020.
|
(2)
|
See “Non-GAAP Financial Measures” for the impact of the Fiscal 2019 Non-GAAP Adjustments on adjusted operating expenditures in fiscal 2019.
|
|
For the Nine Months Ended
|
||||||||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||
|
Included in Amortization
|
|
Included in Cost of sales
|
||||||||||||||||||||
|
November 30, 2019
|
|
November 30, 2018
|
|
Change
|
|
November 30, 2019
|
|
November 30, 2018
|
|
Change
|
||||||||||||
Property, plant and equipment
|
$
|
14
|
|
|
$
|
10
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
5
|
|
|
$
|
(1
|
)
|
Intangible assets
|
132
|
|
|
95
|
|
|
37
|
|
|
10
|
|
|
6
|
|
|
4
|
|
||||||
Total
|
$
|
146
|
|
|
$
|
105
|
|
|
$
|
41
|
|
|
$
|
14
|
|
|
$
|
11
|
|
|
$
|
3
|
|
|
As at
(in millions)
|
||||||||||
|
November 30, 2019
|
|
February 28, 2019
|
|
Change
|
||||||
Cash and cash equivalents
|
$
|
515
|
|
|
$
|
548
|
|
|
$
|
(33
|
)
|
Short-term investments
|
367
|
|
|
368
|
|
|
(1
|
)
|
|||
Restricted cash and cash equivalents
|
32
|
|
|
34
|
|
|
(2
|
)
|
|||
Long-term investments
|
56
|
|
|
55
|
|
|
1
|
|
|||
Cash, cash equivalents, and investments
|
$
|
970
|
|
|
$
|
1,005
|
|
|
$
|
(35
|
)
|
|
As at
(in millions)
|
||||||||||
|
November 30, 2019
|
|
February 28, 2019
|
|
Change
|
||||||
Current assets
|
$
|
1,179
|
|
|
$
|
1,233
|
|
|
$
|
(54
|
)
|
Current liabilities
|
1,112
|
|
|
510
|
|
|
602
|
|
|||
Working capital
|
$
|
67
|
|
|
$
|
723
|
|
|
$
|
(656
|
)
|
|
For the Nine Months Ended
|
||||||||||
|
(in millions)
|
||||||||||
|
November 30, 2019
|
|
November 30, 2018
|
|
Change
|
||||||
Net cash flows provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
(8
|
)
|
|
$
|
82
|
|
|
$
|
(90
|
)
|
Investing activities
|
(32
|
)
|
|
171
|
|
|
(203
|
)
|
|||
Financing activities
|
6
|
|
|
5
|
|
|
1
|
|
|||
Effect of foreign exchange on cash and cash equivalents
|
(1
|
)
|
|
(3
|
)
|
|
2
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
(35
|
)
|
|
$
|
255
|
|
|
$
|
(290
|
)
|
1
|
Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of BlackBerry Limited (the “issuer”) for the interim period ended November 30, 2019.
|
2
|
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
|
3
|
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
|
4
|
Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.
|
5
|
Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings
|
(a)
|
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
|
(i)
|
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
|
(ii)
|
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
|
(b)
|
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
|
5.1
|
Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
|
6.
|
Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on September 1, 2019 and ended on November 30, 2019 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
|
|
/S/ JOHN CHEN
|
JOHN CHEN
|
Chief Executive Officer
|
1
|
Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of BlackBerry Limited (the “issuer”) for the interim period ended November 30, 2019.
|
2
|
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
|
3
|
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
|
4
|
Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.
|
5
|
Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings
|
(a)
|
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
|
(i)
|
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
|
(ii)
|
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
|
(b)
|
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
|
5.1
|
Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
|
6.
|
Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on September 1, 2019 and ended on November 30, 2019 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
|
|
/S/ STEVE RAI
|
STEVE RAI
|
Chief Financial Officer
|
|
BLACKBERRY LIMITED
|
||
|
(Registrant)
|
||
Date:
|
December 20, 2019
|
By:
|
/S/ STEVE RAI
|
|
|
|
Name: Steve Rai
|
|
|
|
Title: Chief Financial Officer
|