BlackBerry Ltd reports 45.0% EBITDA growth while 35.2% Revenue decline
01.04.2016 • About BlackBerry Ltd (
$BB) • By InTwits
BlackBerry Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- BlackBerry Ltd is a company in decline: FY2016 revenue growth was -35.2%, 5 years revenue CAGR was -35.9%
- BlackBerry Ltd motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2012-FY2016 was 0.0%. On average EBITDA Margin was -3.7% for the sames years0
- BlackBerry Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.4%. At the same time it's a lot of higher than industry average of 1.4%.
- CAPEX is quite volatile: 32 in FY2016, 87 in FY2015, 283 in FY2014, 418 in FY2013, 902 in FY2012
- The company has unprofitable business model: ROIC is at -4.6%
- It operates with high leverage: Net Debt/EBITDA is 0.8x while industry average is -6.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
BlackBerry Ltd ($BB) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 18,423 | 11,073 | 6,813 | 3,335 | 2,160 | -35.2% |
| Gross Profit | 6,575 | 3,434 | -43 | 1,604 | 941 | -41.3% |
| SG&A | 2,600 | 2,111 | 2,103 | 904 | 712 | -21.2% |
| EBITDA | 3,020 | 683 | -5,893 | 271 | 393 | 45.0% |
| Net Income | 1,164 | -646 | -5,873 | -304 | -208 | |
Balance Sheet
|
|---|
| Cash | 1,527 | 1,549 | 1,579 | 1,233 | 957 | -22.4% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 0 | 0 | 1,627 | 1,707 | 1,277 | -25.2% |
Cash flow
|
|---|
| Capex | 902 | 418 | 283 | 87 | 32 | -63.2% |
Ratios
|
|---|
| Revenue growth | -7.5% | -39.9% | -38.5% | -51.0% | -35.2% | |
| EBITDA growth | -45.7% | -77.4% | -962.8% | -104.6% | 45.0% | |
| Gross Margin | 35.7% | 31.0% | -0.6% | 48.1% | 43.6% | -4.5% |
| EBITDA Margin | 16.4% | 6.2% | -86.5% | 8.1% | 18.2% | 10.1% |
| Net Income Margin | 6.3% | -5.8% | -86.2% | -9.1% | -9.6% | -0.5% |
| SG&A, % of revenue | 14.1% | 19.1% | 30.9% | 27.1% | 33.0% | 5.9% |
| CAPEX, % of revenue | 4.9% | 3.8% | 4.2% | 2.6% | 1.5% | -1.1% |
| ROIC | 15.2% | -12.3% | -95.6% | -8.1% | -4.6% | 3.5% |
| ROE | 12.2% | -6.6% | -89.8% | -8.6% | -6.3% | 2.4% |
| Net Debt/EBITDA | -0.5x | -2.3x | | 1.7x | 0.8x | -0.9x |
BlackBerry Ltd ($BB) key quoterly financial indicators
| mln. $ | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 658 | 490 | 548 | 464 | -31.9% | -46.5% | -30.9% | -29.7% |
| EBITDA | 253 | 196 | 58 | -114 | 19.9% | | 87.1% | -303.6% |
| Net Income | 68 | 51 | -89 | -238 | 195.7% | | | -950.0% |
Balance Sheet
|
|---|
| Cash | 1,165 | 1,447 | 1,123 | 957 | -31.9% | -5.0% | -25.0% | -22.4% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | |
| Long Term Debt | 1,550 | 1,322 | 1,317 | 1,277 | 15.7% | -12.3% | -20.5% | -25.2% |
Ratios
|
|---|
| Gross Margin | 47.1% | 37.8% | 43.1% | 45.3% | 0.4% | -8.6% | -8.6% | -2.9% |
| EBITDA Margin | 38.4% | 40.0% | 10.6% | -24.6% | 16.6% | 42.9% | 6.7% | -33.1% |
| Net Income Margin | 10.3% | 10.4% | -16.2% | -51.3% | 8.0% | 33.0% | 2.4% | -55.5% |
Revenue and profitability
BlackBerry Ltd's Revenue dropped on 35.2%. Annual revenue decline showed slowdown in FY16Q4 - revenue dropped on 29.7%. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin surged on 10.1 pp from 8.1% to 18.2% in FY2016.
Gross Margin decreased on 4.5 pp from 48.1% to 43.6% in FY2016. SG&A as a % of Revenue increased on 5.9 pp from 27.1% to 33.0% in FY2016.
Net Income marign decreased slightly on 0.51 pp from -9.1% to -9.6% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 1.5%. BlackBerry Ltd's CAPEX/Revenue decreased on 2.3 pp from 3.8% in FY2013 to 1.5% in FY2016. For the last three years the average CAPEX/Revenue was 2.7%.
Return on investment
The company operates at negative ROIC (-4.62%) and ROE (-6.27%). ROIC increased on 3.5 pp from -8.1% to -4.6% in FY2016. ROE increased on 2.4 pp from -8.6% to -6.3% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.8x and Debt / EBITDA is 3.2x. Net Debt / EBITDA dropped on 0.9x from 1.7x to 0.8x in FY2016. Debt dropped on 25.2% while cash dropped on 22.4%.
Management team
John S Chen is a the company's CEO. John S Chen is a founder and has spent 5 years at the company.
Appendix 1: Peers in Technology
Below you can find BlackBerry Ltd benchmarking vs. other companies in Technology industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Smart Employee Benefits Inc ($SEB) | | | 97.2% | 151.5% | |
| ProntoForms Corp ($PFM) | 59.9% | 75.4% | 43.9% | 46.4% | |
| iLOOKABOUT Corp ($ILA) | 19.6% | 8.9% | 58.8% | 32.3% | |
| Kinaxis Inc ($KXS) | 22.7% | 30.3% | 15.2% | 30.3% | |
| Halogen Software Inc ($HGN) | | 22.6% | 10.1% | 28.0% | |
| |
|---|
| Median (21 companies) | 1.3% | 5.6% | 13.7% | 12.7% | |
|---|
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Constellation Software Inc/Canada ($CSU) | 86.2% | 85.5% | 86.1% | 86.2% | |
| ProntoForms Corp ($PFM) | 96.1% | 98.1% | 98.0% | 79.4% | |
| Espial Group Inc ($ESP) | 77.5% | 81.7% | 78.5% | 74.3% | |
| Halogen Software Inc ($HGN) | 72.0% | 74.8% | 71.8% | 73.8% | |
| Kinaxis Inc ($KXS) | 71.8% | 70.4% | 70.4% | 71.8% | |
| |
|---|
| Median (19 companies) | 53.8% | 45.8% | 52.2% | 51.9% | |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Wi-LAN Inc ($WIN) | 40.9% | 12.2% | 56.2% | 53.2% | |
| Kinaxis Inc ($KXS) | 18.7% | 23.0% | 19.2% | 28.0% | |
| Constellation Software Inc/Canada ($CSU) | 20.9% | 20.1% | 21.8% | 25.2% | |
| Quorum Information Technologies Inc ($QIS) | 4.4% | 8.1% | 14.8% | 14.4% | |
| Intrinsyc Technologies Corp ($ITC) | -10.5% | -38.8% | 2.2% | 10.8% | |
| |
|---|
| Median (21 companies) | 0.1% | 2.2% | 2.5% | -1.9% | |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kinaxis Inc ($KXS) | 2.9% | 2.3% | 5.0% | 4.7% | |
| Halogen Software Inc ($HGN) | 4.9% | 9.0% | 8.4% | 2.9% | |
| Espial Group Inc ($ESP) | 1.6% | 0.2% | 1.9% | 2.1% | |
| Smart Employee Benefits Inc ($SEB) | | 3.8% | 1.6% | 2.0% | |
| ProntoForms Corp ($PFM) | 1.1% | 0.8% | 3.6% | 1.9% | |
| |
|---|
| Median (21 companies) | 1.0% | 0.9% | 1.2% | 1.1% | |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kinaxis Inc ($KXS) | | 61.8% | 63.6% | 44.0% | |
| Constellation Software Inc/Canada ($CSU) | 45.9% | 22.4% | 24.7% | 38.5% | |
| Pivot Technology Solutions Inc ($PTG) | | 92.9% | 42.9% | 14.5% | |
| Intrinsyc Technologies Corp ($ITC) | -7.5% | -22.7% | 0.9% | 12.3% | |
| Wi-LAN Inc ($WIN) | 2.6% | -7.6% | 8.9% | 7.4% | |
| |
|---|
| Median (21 companies) | -3.2% | -12.5% | -2.1% | -13.1% | |
|---|
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Mitel Networks Corp ($MNW) | 3.7x | 3.8x | 2.6x | 6.2x | |
| Pivot Technology Solutions Inc ($PTG) | | -0.4x | 1.1x | 4.8x | |
| Constellation Software Inc/Canada ($CSU) | 0.0x | 1.6x | 0.6x | 0.4x | |
| Wi-LAN Inc ($WIN) | -4.9x | -12.1x | -2.3x | -1.7x | |
| Quorum Information Technologies Inc ($QIS) | -0.4x | -0.6x | -1.0x | -3.1x | |
| |
|---|
| Median (9 companies) | 0.0x | -0.2x | -1.7x | -3.1x | |
|---|
