Blackberry 2007 Annual Report Download - page 41

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39
Results of Operations
Fiscal year ended March 3, 2007 compared to the fiscal year
ended March 4, 2006
The fiscal year ended March 3, 2007 comprised 52 weeks
compared to the 53 weeks for the fiscal year ended
March 4, 2006. The consolidated statement of operations
information below for the fiscal year ended March 4, 2006
has been restated. See “Explanatory Note Regarding
Restatement of Previously Issued Financial Statements” and
note 4 to the Consolidated Financial Statements.
Revenue
Revenue for fiscal 2007 was $3.04 billion, an increase of $971.3
million, or 47.0%, from $2.07 billion for fiscal 2006.
A comparative breakdown of the significant revenue
streams is set forth in the following table:
Fiscal 2007 Fiscal 2006 Change - Fiscal
2007/2006
Number of devices sold 6,414,000 4,043,000 2,371,000 58.6%
ASP $ 346 $ 356 $ (10) (2.7%)
Revenues
Devices $ 2,215,951 73.0% $ 1,439,674 69.7% $ 776,277 53.9%
Service 560,116 18.4% 383,021 18.5% 177,095 46.2%
Software 173,187 5.7% 156,556 7.6% 16,631 10.6%
Other 87,849 2.9% 86,594 4.2% 1,255 1.4%
$ 3,037,103 100.0% $ 2,065,845 100.0% $ 971,258 47.0%
Device revenue increased by $776.3 million, or 53.9%, to
$2.22 billion, or 73.0% of consolidated revenue in fiscal 2007
compared to $1.44 billion, or 69.7% of consolidated revenue
in fiscal 2006. This increase in device revenue over the prior
year’s period is primarily attributable to a volume increase
of 2.4 million devices, or 58.6%, to approximately 6.4 million
devices sold in fiscal 2007 compared to approximately
4.0 million devices sold in fiscal 2006, partially offset by a
decrease of $10, or 2.7%, in ASP to $346 in the current fiscal
period from $356 in fiscal 2006. This decrease of $10 in ASP
is due primarily to a change in BlackBerry device mix in fiscal
2007. As RIM expands its market focus into the consumer
market and as the technology continues to mature, the
Company expects the ASP to continue to decline year over
year. ASP is dependant on projected future sales volumes,
device mix, new device introductions for the Company’s
enterprise, prosumer and consumer offerings as well as
pricing by competitors in the industry.
The Company estimates that a $10 change in ASP would
result in an annual revenue change of approximately $64
million, based on the Company’s volume of handhelds
shipped in fiscal 2007.
Service revenue increased by $177.1 million, or 46.2%,
to $560.1 million and comprised 18.4% of consolidated
revenue in fiscal 2007 compared to $383.0 million, or
18.5% of consolidated revenue, in fiscal 2006. BlackBerry
subscriber account additions were approximately net 3.1
million for fiscal 2007 compared to approximately net 2.3
million for the comparable period last year. The total base of
BlackBerry subscriber accounts at the end of fiscal 2007 was
approximately 8 million.
Software revenue includes fees from licensed BES
software, CALs, technical support, maintenance and
upgrades. Software revenue increased $16.6 million, or 10.6%,
to $173.2 million in fiscal 2007 from $156.6 million in fiscal
2006, primarily as a result of increased sales of CALs as well as
increased revenues from technical support and maintenance.
Other revenue, which includes accessories, non-warranty
repairs and NRE, increased marginally by $1.2 million to $87.8
million in fiscal 2007 compared to $86.6 million in fiscal 2006.
Gross Margin
Gross margin increased by $517.6 million, or 45.4 %, to
$1.66 billion, or 54.6% of revenue, in fiscal 2007, compared
to $1.14 billion, or 55.2% of revenue, in the previous fiscal
year. The net decrease of 0.6% in consolidated gross margin
percentage was primarily due to the higher percentage of
device shipments which comprised 73.0% of the total revenue
mix for fiscal 2007 compared to 69.7% in the comparable
period of fiscal 2006 as well as changes in BlackBerry device
mix. Gross margin percentage for devices are generally lower
than the Company’s consolidated gross margin percentage.