Blackberry 2003 Annual Report Download - page 15

Research฀In฀Motion฀Limited฀฀|฀฀Incorporated฀Under฀the฀Laws฀of฀Ontario฀(United฀States฀dollars,฀in฀thousands฀except฀per฀share฀data฀or฀as฀otherwise฀indicated)
For฀the฀years฀ended฀March฀1,฀2003,฀March฀2,฀2002฀and฀February฀28,฀2001
13
Revenue
In฀scal฀2003,฀revenue฀increased฀$12.6฀million฀to฀$306.7฀million฀from฀$294.1฀million฀in฀the฀previous฀year.฀
RIM’s฀primary฀revenue฀stream฀is฀generated฀by฀BlackBerry,฀which฀includes฀sales฀of฀wireless฀handhelds,฀
service฀and฀software.฀BlackBerry฀provides฀users฀with฀a฀wireless฀extension฀of฀their฀enterprise฀and฀personal฀
email฀accounts,฀including฀Microsoft®฀Outlook®,฀MSN®,฀Hotmail®,฀AOL®฀and฀POP3/ISP฀email฀accounts.฀When฀
coupled฀with฀the฀BlackBerry฀Enterprise฀Server,฀BlackBerry฀allows฀Microsoft฀Exchange®฀and฀Lotus®฀Domino™฀
users฀to฀send฀and฀receive฀secure฀corporate฀email฀and฀personal฀information฀management฀(‘‘PIM’’)฀functions,฀
such฀as฀calendar,฀address฀book,฀task฀list฀and฀other฀functions฀associated฀with฀personal฀organizers฀securely,฀
from฀a฀single฀handheld.฀In฀addition,฀BlackBerry,฀through฀its฀Mobile฀Data฀Service฀(MDS)฀functionality฀allows฀
users฀to฀securely฀access฀data฀from฀their฀enterprise฀applications฀using฀the฀secure฀BlackBerry฀architecture.฀
Handheld฀revenues฀include฀sales฀of฀data฀only฀handheld฀products฀such฀as฀the฀RIM฀950,฀RIM฀957฀and฀
RIM฀857;฀together฀with฀sales฀of฀data฀and฀voice-enabled,฀second฀generation฀(“2.5G”)฀devices฀such฀as฀the฀
BlackBerry฀6700฀Series,฀BlackBerry฀6510฀and฀the฀BlackBerry฀6750฀handhelds.
BlackBerry฀service฀comprises฀two฀revenue฀streams.฀For฀RIM’s฀direct฀Mobitex฀and฀DataTac®฀BlackBerry฀
subscribers,฀the฀Company฀purchases฀wholesale฀airtime฀and฀provides฀a฀complete฀end-to-end฀solution฀
to฀its฀subscribers.฀In฀contrast,฀where฀carriers฀distribute฀handhelds฀to฀customers,฀RIM฀bills฀the฀carriers฀for฀
a฀monthly฀infrastructure฀access฀fee฀per฀BlackBerry฀subscriber฀and฀does฀not฀bill฀the฀subscriber฀directly.฀
In฀the฀latter฀case,฀the฀carriers฀own฀the฀relationship฀with฀the฀BlackBerry฀subscribers฀and฀bill฀the฀BlackBerry฀
subscribers฀for฀airtime฀(voice฀and฀data)฀and฀BlackBerry฀service฀directly.฀
BlackBerry฀software฀is฀licensed฀to฀end฀customers.฀Revenue฀from฀software฀is฀derived฀from฀BlackBerry฀
Enterprise฀Server฀software,฀Client฀Access฀Licences฀(“CAL’s”),฀which฀are฀charged฀for฀each฀subscriber฀using฀
the฀BlackBerry฀service,฀and฀through฀upgrades฀for฀software.
Revenues฀are฀also฀generated฀from฀sales฀of฀radio฀modems฀to฀OEM฀manufacturers,฀through฀NRE,฀
accessories฀and฀repair฀and฀maintenance฀programs.
A฀comparative฀revenue฀breakdown฀is฀set฀out฀in฀the฀following฀table:
฀ ฀ ฀ Fiscal฀Year฀2003฀ Fiscal฀Year฀2002฀ Increase฀(Decrease)
฀ ฀ ฀ ($000’s)฀ ($000’s)฀ 2003/2002฀($000’s)
Handhelds฀ ฀ $฀122,711฀ ฀ 40.0%฀ $฀ 160,198฀ ฀ 54.5%฀ $฀(37,487)
Service฀ ฀ ฀129,331฀ ฀ 42.2%฀ ฀ 88,880฀ ฀ 30.2%฀ ฀ 40,451
Software,฀OEM,฀NRE,฀
฀ accessories฀and฀other฀฀ ฀54,690฀ ฀ 17.8%฀ ฀ 44,975฀ ฀ 15.3%฀ ฀ 9,715
฀ ฀ ฀ $฀306,732฀ ฀100.0%฀ $฀ 294,053฀฀ ฀ 100.0%฀ $฀ 12,679฀
Handheld฀product฀revenues฀decreased฀by฀$37.5฀million฀or฀23.4%฀to฀$122.7฀million฀or฀40.0%฀of฀consoli-
dated฀revenues฀in฀2003฀compared฀to฀$160.2฀million฀or฀54.5%฀of฀revenues฀for฀the฀prior฀year.฀RIM฀attributes฀
this฀decline฀in฀handheld฀revenues฀to฀delays฀in฀the฀rollouts฀of฀2.5G฀networks฀and฀delays฀in฀the฀timing฀of฀
new฀handheld฀launches.฀Additionally,฀demand฀for฀the฀Company’s฀Mobitex฀and฀DataTac฀products฀declined฀
in฀scal฀2003.฀The฀Company฀attributes฀such฀decline฀primarily฀to฀a฀reduced฀demand฀from฀Cingular฀Wireless,฀
Motient฀and฀direct฀customers฀as฀a฀result฀of฀the฀transition฀to฀2.5G฀by฀subscribers.฀
Service฀revenue฀increased฀$40.5฀million฀or฀45.5%฀to฀$129.3฀million฀in฀scal฀2003฀from฀$88.9฀million฀in฀2002;฀
and฀comprised฀42.2%฀of฀consolidated฀revenues.฀BlackBerry฀subscribers฀increased฀by฀213,000฀or฀66.4%฀to฀
approximately฀534,000฀in฀the฀current฀year฀from฀321,000฀as฀at฀March฀1,฀2002.฀
Software,฀OEM,฀NRE,฀accessories฀and฀other฀revenues฀increased฀to฀$54.7฀million฀or฀17.8%฀of฀consolidated฀
revenues฀compared฀to฀$45.0฀million฀or฀15.3%฀of฀revenues฀in฀the฀previous฀year.฀Software฀growth฀is฀generally฀
consistent฀with฀the฀increase฀in฀handheld฀sales฀and฀service฀revenues.฀NRE฀revenues฀have฀declined฀in฀scal฀
2003,฀primarily฀as฀a฀result฀of฀the฀completion,฀during฀the฀third฀quarter฀of฀scal฀2003,฀of฀a฀large฀contract฀with฀
one฀customer฀that฀was฀secured฀and฀commenced฀during฀the฀second฀quarter฀of฀scal฀2002.฀
Revenue฀Mix฀Fiscal฀2002
Handhelds฀54.5%
Service฀30.2%
Software,฀NRE฀
and฀other฀15.3%
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Revenue฀Mix฀Fiscal฀2003
Handhelds฀40.0%
Service฀42.2%
Software,฀NRE฀
and฀other฀17.8%
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