Blackberry 2006 Annual Report Download - page 32
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Research In Motion Limited
30
Research In Motion Limited • Incorporated Under the Laws of Ontario (In thousands of United States dollars, except per share data, and except as otherwise indicated)
A comparative breakdown of the signicant revenue streams for the fourth quarter is set forth in the
following table:
FY 2005 4th Quarter
Number of devices sold 712,000
ASP $ 379
Devices $ 269,458 66.6%
Service 67,639 16.7%
Software 55,899 13.8%
Other 11,806 2.9%
$ 404,802 100.0%
Device revenue increased by $121.5 million, or 45.1%, to $391.0 million in the fourth quarter of scal 2006
compared to $269.5 million in the preceding year’s comparable period. The number of BlackBerry devices
sold increased by 406,000, or 57.0%, to 1,118,000 in scal 2006 compared to 712,000 in the fourth quarter
of scal 2005. ASP decreased by $29 or 7.7% to $350 primarily as a result of overall device mix.
Service revenue increased by $49.0 million to $116.7 million in the current quarter, compared to
$67.6 million in the fourth quarter of scal 2005, as a result of the increased number of BlackBerry
subscribers as well as the impact of the 14 week quarter in scal 2006 compared to the 13 week quarter
in scal 2005. BlackBerry subscriber account additions were approximately 625,000 in the fourth
quarter of scal 2006 compared to approximately 470,000 for the comparable period last year.
Software revenue decreased by $26.9 million to $29.0 million, compared to $55.9 million in the fourth
quarter of scal 2005, primarily as a result of the timing of the BlackBerry Enterprise Server v4.1 release
which occurred subsequent to scal 2006 compared to the scal 2005 BlackBerry Enterprise Server v4.0
release which occurred during the fourth quarter last year.
Overall, the Company believes scal 2006 fourth quarter revenue and subscriber account additions were
adversely affected as a result of certain customers delaying purchases due to the uncertainty created by
the NTP litigation.
Gross Margin
Gross margin decreased to 55.0% of revenue in the fourth quarter of scal 2006, compared to 56.8%
of revenue in the same period of the previous scal year. The net decrease of 1.8% in consolidated gross
margin percentage was primarily due to the following factors:
• Software revenues at $29.0 million comprised 5.2% of the total revenue mix, compared to $55.9 million
and 13.8% respectively, in the fourth quarter of scal 2005 relating to the timing of the BlackBerry
Enterprise Server v4.1 software release which occurred subsequent to scal 2006 compared to the
BlackBerry Enterprise Server v4.0 release which was introduced in the fourth quarter of scal 2005;
• An increase in amortization expense as a percentage of consolidated revenue; offset in part by
• A reduction in net warranty expense;
• Improved service margins resulting from cost efciencies in RIM’s network operations infrastructure
as a result of the increase in BlackBerry subscribers.