Research In Motion Ltd. — now doing business as BlackBerry (NASDAQ:BBRY) (TSX:BB) — today reported financial results for the three months and fiscal year ended March 2, 2013. The Canadian mobile devices maker — which last year was on the brink of bankruptcy — posted a profit of US $114 million, or $0.22 per share diluted to $0.18 when accounting for adjustments. The profit surprised many analysts, who expected BlackBerry to lose $0.31 per share.
Although BlackBerry’s Q4 revenue of $2.7 billion was lower than the $2.83 billion forecast by analysts, the company was able to hold down operating expenses to deliver a fantastic 40% gross margin. BlackBerry’s new CEO Thorsten Heins reduced expenses in 2012 in numerous ways, including eliminating a large portion of the company’s workforce.
The return to profit was also aided by the company’s stock bouncing back from near death, buoyed by the hype surrounding product leaks and the eventual launch of the new BlackBerry 10 platform and BlackBerry Z10 smartphone on January 31 of this year. Although the Z10 has only been available for one month — so far only landing in 40 of 70 planned countries — BlackBerry says it has shipped over 1 million units, with a sell-through rate of around 70 percent.
BlackBerry also announced that company founder and former co-CEO Mike Lazaridis will retire as Vice Chair and a Director of the company. Lazaridis founded BlackBerry in 1984 and served as its co-CEO along with Jim Balsillie until January 22, 2012. Lazaridis will focus on running Quantum Valley Investments, a new venture that he announced last week.
Details from BlackBerry’s Q4 announcement are below. All figures are in U.S. dollars and U.S. GAAP, except where otherwise indicated). CrackBerry.com has posted an excellent analysis of the announcement here.
Q4 Highlights:
– Revenue of $2.7 billion
– GAAP income from continuing operations of $94 million, or $0.18 per share diluted
– Adjusted income from continuing operations of $114 million, or $0.22 per share diluted
– Gross margin of 40% driven by higher average selling prices and hardware margins
– Shipments of 6 million smartphones, including about 1 million BlackBerry 10 units
– Subscriber base of approximately 76 million
– Cash flow from operations of $219 million, cash and investments balance of $2.9 billion
Q4 Results:
Revenue for the fourth quarter of fiscal 2013 was approximately $2.7 billion, down $49 million or 2% from approximately $2.7 billion in the previous quarter and down 36% from $4.2 billion in the same quarter of fiscal 2012. The revenue breakdown for the quarter was approximately 61% for hardware, 36% for service and 3% for software and other revenue. During the quarter, BlackBerry shipped approximately 6 million BlackBerry smartphones and approximately 370,000 BlackBerry PlayBook tablets.
GAAP income for the quarter from continuing operations was $94 million, or $0.18 per share diluted, compared with the GAAP income from continuing operations of $14 million, or $0.03 per share diluted, in the prior quarter and a GAAP loss from continuing operations of $118 million, or $0.23 per share diluted, in the same quarter of fiscal 2012. GAAP income for the quarter, including income from discontinued operations, was $98 million, or $0.19 per share diluted, compared with the GAAP income including loss from discontinued operations of $9 million, or $0.02 per share diluted, in the prior quarter and a GAAP loss, including loss from discontinued operations of $125 million, or $0.24 per share diluted, in the same quarter of fiscal 2012.
Adjusted income from continuing operations for the fourth quarter was $114 million, or $0.22 per share diluted. Adjusted income and adjusted diluted earnings per share (“EPS”) exclude the impact of pre-tax charges of $29 million ($20 million on an after-tax basis) related to the Cost Optimization and Resource Efficiency (“CORE”) program. This impact on GAAP income from continuing operations and diluted EPS are summarized in the table below.
The total of cash, cash equivalents, short-term and long-term investments was approximately $2.9 billion as of March 2, 2013 and at the end of the previous quarter. Cash flow from operations in the fourth quarter was approximately $219 million. Uses of cash included intangible asset additions of approximately $235 million and capital expenditures of approximately $88 million.
“We have implemented numerous changes at BlackBerry over the past year and those changes have resulted in the Company returning to profitability in the fourth quarter,” said Thorsten Heins, President and CEO. “With the launch of BlackBerry 10, we have introduced the newest and what we believe to be the most innovative mobile computing platform in the market today. Customers love the device and the user experience, and our teams and partners are now focused on getting those devices into the hands of BlackBerry consumer and enterprise customers.”
Heins added, “As we go into our new fiscal year, we are excited with the opportunities for the BlackBerry 10 platform, and the commitments we are seeing from our global developers and partners. We are also excited about the new, dynamic culture at BlackBerry, where we are laser-focused on continuing to drive efficiency and improve the Company’s profitability while driving innovation. We have built an engine that is able to drive improved financial performance at lower volumes, which should allow us to generate additional benefits from higher volumes in the future.”
Outlook
The Company will be increasing its marketing investment in the first quarter of fiscal 2014 in support of the global launch of BlackBerry 10. Including the anticipated 50% sequential increase in marketing spending, the Company believes it will approach breakeven financial results in the first quarter based on its lower cost base, more efficient supply chain, and improved hardware margins.
Mike Lazardis leaves the board
The Company also announced that Mike Lazaridis, having fulfilled the commitment he made to the Board in January 2012, has decided to retire as Vice Chair and a Director of the Company. Lazaridis co-founded BlackBerry nearly 30 years ago and served as a co-CEO of the company until last year when he was elected Vice Chair of the Board. Lazaridis, who last week announced the launch of his new venture, Quantum Valley Investments, will step down from the BlackBerry Board effective May 1, 2013.
“With the launch of BlackBerry 10, I believe I have fulfilled my commitment to the Board,” Lazaridis said. “Thorsten and his team did an excellent job in completing BlackBerry 10. We have a great deal of which to be proud. I believe I am leaving the company in good hands. I remain a huge fan of BlackBerry and, of course, wish the company and its people well.”
You can read the rest of BlackBerry’s Q4 results announcement on Marketwire here.