Significant steps taken towards positive
cashflow
- Company is targeting $100 million
of annualized net profit improvements, through a combination of
cost reductions and margin expansion. This is in addition to
$50 million of annualized cost saving
actions disclosed in prior quarter
- Actions to achieve approximately $55
million of the $100 million
annualized target have been identified and are being implemented in
the current quarter
- Company continues to expect sequential improvements to
operating cash flow usage in the current quarter and to be
operating cash flow positive in the fourth quarter of the upcoming
fiscal year (FY25)
- Significant progress made in establishing standalone divisions,
including establishment of divisional leadership teams and
engagement of leading external consulting firm with separation work
now underway
- As previously disclosed, BlackBerry completed a
$200M convertible debenture debt
raise that both reduced company debt by 45% when compared to
November 2023, and provides
significant, long-term liquidity and stability for the Company
- BlackBerry reiterates total Company revenue outlook of
$150 - $159
million and for Cybersecurity ARR to stabilize sequentially
in the current quarter
- Management to hold investor briefing call at 8am ET on
Tuesday, February 13, 2024
WATERLOO, Ontario, Feb. 12,
2024 /PRNewswire/ -- BlackBerry Limited (NYSE: BB;
TSX: BB) today provided an update on the previously
announced process to separate its IoT and Cybersecurity
businesses as standalone divisions, and drive the Company towards
profitability and positive cash flow.
Progress on Path to Profitability
As previously outlined, in the prior quarter BlackBerry took
actions that, once fully realized, will reduce the annual cost run
rate by approximately $50 million.
These actions were largely focused on the Cybersecurity business
and included approximately 200 headcount reductions.
During the current quarter, BlackBerry is taking further actions
to streamline its cost structure. Within the Cybersecurity
business, additional headcount reductions are expected to generate
annualized savings of approximately $27
million and non-headcount actions an incremental
$8 million. Efficiencies have been
identified in all functions, but in particular within cost of goods
sold and research and development. Backed by solid,
industry-typical levels of R&D investment, the Cybersecurity
business is executing on its exciting product roadmap in a focused
and efficient manner.
Within G&A functions, actions are being taken during the
current quarter to realize annualized run rate savings of
approximately $20 million. As part of
these savings, BlackBerry has exited 6 of its 36 global office
locations, including San Ramon,
California, which are expected to realize annualized savings
of approximately $7 million. Other
reductions in force are expected to realize annualized savings of
approximately $13 million.
Costs associated with these actions in the current quarter are
expected to total approximately $12
million.
Expected return to Positive Cashflow
In the current fiscal year, operating cash usage in Q2 was
$56 million and improved
significantly to $31 million in Q3.
As previously outlined, BlackBerry expects a further sequential
reduction in operating cash usage for the current, fourth
quarter.
Given the cost-reduction actions taken, as outlined above, and
anticipated further operating efficiencies during FY25, BlackBerry
expects to maintain a positive net cash position throughout the
coming fiscal year, despite the first fiscal quarter being a
seasonal low for cash, and to be operating cashflow positive by Q4
FY25.
Progress with Separation
BlackBerry has made material progress towards establishing both
the IoT and Cybersecurity business units as fully standalone
divisions. The Company has established a Project Management Office,
and appointed leading management consultants, Alvarez
& Marsal, to assist with the process.
Divisional Chief Financial Officers, Chief People Officers and
General Counsel for both the IoT and Cybersecurity businesses have
been appointed and are in the process of establishing divisional
back-office teams that will complement the already-standalone
Sales, Marketing and R&D functions for each business.
Solid Balance Sheet
As previously disclosed, BlackBerry secured long-term financing
last month through the issuance of convertible senior notes in the
aggregate principal amount of $200
million. The Board was pleased by the significant level of
interest in the offering and the Company will use the net proceeds
primarily to repay $150 million of
short-term debentures due on February 15,
2024. Following this repayment, BlackBerry will have
reduced its debt by 45% compared to November
2023 and, with the planned return to positive operating cash
flow, expects to be well-positioned with a solid balance sheet.
"I'd like to thank the BlackBerry team for the significant
progress made towards separating our core businesses and achieving
profitability and positive cash flow. The steps taken have required
difficult decisions, and I appreciate the thoughtful, rigorous
approach that has been adopted," said John J. Giamatteo, Chief
Executive Officer, BlackBerry. "The Company is fully focused and
working with urgency towards our goals. We're directing our
resources where we believe we can maximize returns and continue to
delight our customers. Our balance sheet is solid following the
refinancing and we believe BlackBerry is well-positioned to
execute on our strategy."
Investor Briefing Call
An investor briefing conference call and live webcast will be
held tomorrow, Tuesday February 13,
2024, beginning at 8:00 a.m.
ET, which can be accessed using the following link (here) or
through the Company's investor webpage (BlackBerry.com/Investors)
or by dialing toll free +1 (844) 512-2926 and entering Elite Entry
Number 6312676. Slides used during the presentation will be
available for download through the Company's investor webpage.
A replay of the conference call will be available at
approximately 12:00 p.m. ET on
February 13, 2024, using the same
webcast link (here) or by dialing Canada toll free +1 (855) 669-9658 or US toll
free +1 (877) 344-7529 and entering Replay Access Code 3593353.
About BlackBerry
BlackBerry (NYSE: BB; TSX: BB) provides intelligent security
software and services to enterprises and governments around the
world. The company's software powers over 235M vehicles. Based in Waterloo, Ontario, the company leverages AI
and machine learning to deliver innovative solutions in the areas
of cybersecurity, safety and data privacy, and is a leader in the
areas of endpoint security management, encryption, and embedded
systems. BlackBerry's vision is clear - to secure a connected
future you can trust.
BlackBerry. Intelligent Security. Everywhere.
For
more information, visit BlackBerry.com and follow @BlackBerry.
Investor Contact:
BlackBerry Investor Relations
+1 (519) 888-7465
investorrelations@blackberry.com
Media Contact:
BlackBerry Media Relations
+1 (519) 597-7273
mediarelations@blackBerry.com
Forward-looking Statements:
This news release contains forward-looking statements within the
meaning of certain securities laws, including under the U.S.
Private Securities Litigation Reform Act of 1995 and applicable
Canadian securities laws, including statements regarding
BlackBerry's plans, strategies and objectives including its
expectations with respect to increasing and enhancing its product
and service offerings.
The words "expect", "anticipate", "estimate", "may", "will",
"should", "could", "intend", "believe", "target", "plan" and
similar expressions are intended to identify these forward-looking
statements. Forward-looking statements are based on estimates and
assumptions made by BlackBerry in light of its experience and its
perception of historical trends, current conditions and expected
future developments, as well as other factors that BlackBerry
believes are appropriate in the circumstances, including but not
limited to, BlackBerry's expectations regarding its business,
strategy, opportunities and prospects, the launch of new products
and services, general economic conditions, competition, and
BlackBerry's expectations regarding its financial performance. Many
factors could cause BlackBerry's actual results, performance
or achievements to differ materially from those expressed or
implied by the forward-looking statements, including, without
limitation, risks related to the following factors: BlackBerry's
proposed business unit separation and cost-reduction activities,
including risk that they may disrupt BlackBerry's operations or
adversely impact its relationships with business partners and
customers and its ability to attract and retain key employees, and
risk that BlackBerry may not be able to complete the separation and
cost-reduction activities successfully and in a timely manner, or
at all.
These risk factors and others relating to BlackBerry are
discussed in greater detail in BlackBerry's Annual Report on Form
10-K and the "Cautionary Note Regarding Forward-Looking Statements"
section of BlackBerry's MD&A (copies of which filings may be
obtained at www.sedarplus.ca or www.sec.gov). All of these factors
should be considered carefully, and readers should not place undue
reliance on BlackBerry's forward-looking statements. Any statements
that are forward-looking statements are intended to enable
BlackBerry's shareholders to view the anticipated performance and
prospects of BlackBerry from management's perspective at the time
such statements are made, and they are subject to the risks that
are inherent in all forward-looking statements, as described above,
as well as difficulties in forecasting BlackBerry's financial
results and performance for future periods, particularly over
longer periods, given changes in technology and BlackBerry's
business strategy, evolving industry standards, intense competition
and short product life cycles that characterize the industries in
which BlackBerry operates. Any forward-looking statements are made
only as of today and the company has no intention and undertakes no
obligation to update or revise any of them, except as required by
law.
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SOURCE BlackBerry Limited