<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="- Total company non-GAAP revenue of $280 million , or 23% growth year-over-year; total company GAAP revenue of $267 million , or 18% growth year-over-year” data-reactid=”11″>- Total company non-GAAP revenue of $280 million , or 23% growth year-over-year; total company GAAP revenue of $267 million , or 18% growth year-over-year
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="- Total non-GAAP Software and Services revenue of $275 million , or 26% growth year-over-year; total GAAP Software and Services revenue of $262 million , or 21% growth year-over-year; both are record quarterly highs” data-reactid=”12″>- Total non-GAAP Software and Services revenue of $275 million , or 26% growth year-over-year; total GAAP Software and Services revenue of $262 million , or 21% growth year-over-year; both are record quarterly highs
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="- Total company non-GAAP earnings per basic and diluted share of $0.03 ; GAAP loss per basic share of $0.06 and GAAP loss per diluted share of $0.07 ” data-reactid=”13″>- Total company non-GAAP earnings per basic and diluted share of $0.03 ; GAAP loss per basic share of $0.06 and GAAP loss per diluted share of $0.07
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="- Total company free cash flow generated of $37 million , as reported” data-reactid=”14″>- Total company free cash flow generated of $37 million , as reported
WATERLOO, Ontario , Dec. 20, 2019 /CNW/ — BlackBerry Limited (NYSE: BB; TSX: BB) today reported financial results for the three months ended November 30, 2019 (all figures in U.S. dollars and U.S. GAAP, except where otherwise indicated).
BlackBerry Logo Black (PRNewsfoto/Blackberry Limited)
Total company non-GAAP revenue for the third quarter of fiscal 2020 was $280 million , up 23% year-over-year. Total company GAAP revenue for the third quarter of fiscal 2020 was $267 million , up 18% year-over-year. Total non-GAAP software and services revenue was $275 million , up 26% year-over-year. Total GAAP software and services revenue was $262 million , up 21% year-over-year. Third quarter recurring non-GAAP software and services revenue (excluding IP licensing and professional services) was over 90%. Non-GAAP gross margin was 77% and GAAP gross margin was 74%.
Total company non-GAAP operating earnings was $20 million . Total company GAAP operating loss was $29 million . Non-GAAP earnings per share was $0.03 (basic and diluted). GAAP net loss was $0.06 per basic share and $0.07 per diluted share. GAAP net loss includes $35 million for acquired intangibles amortization expense, $15 million in stock compensation expense, $10 million in restructuring charges, a benefit of $20 million related to the fair value adjustment on the debentures, and other amounts as summarized in a table below.
Total cash, cash equivalents, short-term and long-term investments was $970 million as of November 30, 2019 . Free cash flow generated, before considering the impact of acquisition and integration expenses, restructuring costs and legal proceedings, was $41 million . Cash generated from operations was $40 million and capital expenditures were $3 million .
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content=""BlackBerry achieved sequential growth in revenue across all of our software businesses while generating healthy non-GAAP profitability and free cash flow as we continue to invest in our future," said John Chen , Executive Chairman and CEO, BlackBerry. "I am pleased with our progress. Our pipeline is growing as we deliver against our product roadmap and execute on our go-to-market expansion." ” data-reactid=”43″>“BlackBerry achieved sequential growth in revenue across all of our software businesses while generating healthy non-GAAP profitability and free cash flow as we continue to invest in our future,” said John Chen , Executive Chairman and CEO, BlackBerry. “I am pleased with our progress. Our pipeline is growing as we deliver against our product roadmap and execute on our go-to-market expansion.”
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Outlook BlackBerry will provide fiscal year 2020 outlook in connection with the quarterly earnings announcement on its earnings conference call. The earnings call transcript will be made available on our website and on SEDAR.” data-reactid=”44″>Outlook BlackBerry will provide fiscal year 2020 outlook in connection with the quarterly earnings announcement on its earnings conference call. The earnings call transcript will be made available on our website and on SEDAR.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Reconciliation of GAAP revenue, gross margin, gross margin percentage, income (loss) before income taxes, net income (loss) and basic earnings (loss) per share to Non-GAAP revenue, gross margin, gross margin percentage, income before income taxes, net income and basic earnings per share for the three months ended November 30, 2019 :” data-reactid=”45″>Reconciliation of GAAP revenue, gross margin, gross margin percentage, income (loss) before income taxes, net income (loss) and basic earnings (loss) per share to Non-GAAP revenue, gross margin, gross margin percentage, income before income taxes, net income and basic earnings per share for the three months ended November 30, 2019 :
Q3 Fiscal 2020 Non-GAAP Adjustments
For the Three Months Ended November 30, 2019
(in millions, except for per share amounts)
Income statement location
Revenue
Gross margin (before taxes)
Gross margin % (before taxes)
Income (loss) before income taxes
Net income (loss)
Basic earnings (loss) per share
As reported
$
267
$
198
74.2
%
$
(30)
$
(32)
$
(0.06)
Debentures fair value adjustment (2)
Debentures fair value adjustment
—
—
—
%
(20)
(20)
Restructuring charges (3)
Cost of sales
—
3
1.1
%
3
3
Restructuring charges (3)
Selling, marketing and administration
—
—
—
%
7
7
Software deferred revenue acquired (4)
Revenue
13
13
1.1
%
13
13
Software deferred commission expense acquired (5)
Selling, marketing and administration
—
—
—
%
(4)
(4)
Stock compensation expense (6)
Cost of sales
—
1
0.4
%
1
1
Stock compensation expense (6)
Research and development
—
—
—
%
4
4
Stock compensation expense (6)
Selling, marketing and administration
—
—
—
%
10
10
Acquired intangibles amortization (7)
Amortization
—
—
—
%
35
35
Adjusted
$
280
$
215
76.8
%
$
19
$
17
$
0.03
Note: Non-GAAP revenue, non-GAAP gross margin, non-GAAP gross margin percentage, non-GAAP income before income taxes, non-GAAP net income and non-GAAP basic earnings per share do not have a standardized meaning prescribed by GAAP and thus are not comparable to similarly titled measures presented by other issuers. The Company believes that the presentation of these non-GAAP measures enables the Company and its shareholders to better assess the Company’s operating results relative to its operating results in prior periods and improves the comparability of the information presented. Investors should consider these non-GAAP measures in the context of the Company’s GAAP results.
(1)
During the third quarter of fiscal 2020, the Company reported GAAP gross margin of $198 million or 74.2% of revenue. Excluding the impact of stock compensation expense and restructuring charges included in cost of sales and software deferred revenue acquired included in revenue, non-GAAP gross margin was $215 million, or 76.8% of revenue.
(2)
During the third quarter of fiscal 2020, the Company recorded the Q3 Fiscal 2020 Debentures Fair Value Adjustment of $20 million. This adjustment was presented on a separate line in the Consolidated Statements of Operations.
(3)
During the third quarter of fiscal 2020, the Company incurred restructuring charges of approximately $10 million, of which $3 million was included in cost of sales and $7 million was included selling, marketing and administration expense.
(4)
During the third quarter of fiscal 2020, the Company recorded software deferred revenue acquired but not recognized due to business combination accounting rules of $13 million, which was included in BlackBerry Cylance revenue.
(5)
During the third quarter of fiscal 2020, the Company recorded deferred commission expense acquired but not recognized due to business combination accounting rules of approximately of $4 million.
(6)
During the third quarter of fiscal 2020, the Company recorded stock compensation expense of $15 million, of which $1 million was included in cost of sales, $4 million was included in research and development, and $10 million was included in selling, marketing and administration expense.
(7)
During the third quarter of fiscal 2020, the Company recorded amortization of intangible assets acquired through business combinations of $35 million, which was included in amortization expense.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Supplementary Revenue by Product and Service Type Breakdown” data-reactid=”54″>Supplementary Revenue by Product and Service Type Breakdown
BlackBerry Limited
(United States dollars, in millions)
Revenue by Product and Service Type
U.S. GAAP
Adjustments
Non-GAAP
For the Three Months Ended
For the Three Months Ended
For the Three Months Ended
November 30, 2019
November 30, 2018
November 30, 2019
November 30, 2018
November 30, 2019
November 30, 2018
IoT
$
145
$
148
$
—
$
2
$
145
$
150
BlackBerry Cylance
40
1
13
—
53
1
Licensing
77
68
—
—
77
68
Other
5
9
—
—
5
9
Total
$
267
$
226
$
13
$
2
$
280
$
228
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Conference Call and Webcast A conference call and live webcast will be held today beginning at 8 a.m. ET , which can be accessed by dialing 1- 877-682-6267 or by logging on at BlackBerry.com/Investors. A replay of the conference call will also be available at approximately 11 a.m. ET by dialing 1-800-585-8367 and entering Conference ID #9608207 and at the link above.” data-reactid=”57″>Conference Call and Webcast A conference call and live webcast will be held today beginning at 8 a.m. ET , which can be accessed by dialing 1- 877-682-6267 or by logging on at BlackBerry.com/Investors. A replay of the conference call will also be available at approximately 11 a.m. ET by dialing 1-800-585-8367 and entering Conference ID #9608207 and at the link above.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="About BlackBerry BlackBerry (NYSE: BB; TSX: BB) is a trusted security software and services company that provides enterprises and governments with the technology they need to secure the Internet of Things. Based in Waterloo, Ontario , the company is unwavering in its commitment to safety, cybersecurity and data privacy, and leads in key areas such as artificial intelligence, endpoint security and management, encryption and embedded systems. For more information, visit BlackBerry.com and follow @BlackBerry.” data-reactid=”58″>About BlackBerry BlackBerry (NYSE: BB; TSX: BB) is a trusted security software and services company that provides enterprises and governments with the technology they need to secure the Internet of Things. Based in Waterloo, Ontario , the company is unwavering in its commitment to safety, cybersecurity and data privacy, and leads in key areas such as artificial intelligence, endpoint security and management, encryption and embedded systems. For more information, visit BlackBerry.com and follow @BlackBerry.
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 the anticipated benefits of its strategic initiatives and its intentions to expand and enhance 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, historical trends, current conditions and expected future developments, as well as other factors that BlackBerry believes are appropriate in the circumstances. 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 the following risks: BlackBerry’s ability to enhance, develop, introduce or monetize products and services for the enterprise market in a timely manner with competitive pricing, features and performance; BlackBerry’s ability to maintain or expand its customer base for its software and services offerings to grow revenue or achieve sustained profitability; the intense competition faced by BlackBerry; the occurrence or perception of a breach of BlackBerry’s network or product security measures or an inappropriate disclosure of confidential or personal information could significantly harm its business; risks related to BlackBerry’s continuing ability to attract new personnel, retain existing key personnel and manage its staffing effectively; BlackBerry’s dependence on its relationships with resellers and channel partners; risks related to acquisitions, divestitures, investments and other business initiatives, which may negatively affect BlackBerry’s results of operations; risks related to BlackBerry’s products and services being dependent upon interoperability with rapidly changing systems provided by third parties; the risk that failure to protect BlackBerry’s intellectual property could harm its ability to compete effectively and BlackBerry may not earn the revenues it expects from intellectual property rights; the risk that BlackBerry could be found to have infringed on the intellectual property rights of others; the risk that litigation against BlackBerry may result in adverse outcomes; risks related to the use and management of user data and personal information, which could give rise to liabilities as a result of legal, customer and other third-party requirements; BlackBerry’s ability to obtain rights to use third-party software; the risk that network disruptions or other business interruptions could have a material adverse effect on BlackBerry’s business and harm its reputation; BlackBerry’s ability to generate revenue and profitability through the licensing of security software and services or the BlackBerry brand to device manufacturers; the substantial asset risk faced by BlackBerry, including the potential for charges related to its long-lived assets and goodwill; risks related to BlackBerry’s indebtedness, which could adversely affect its operating flexibility and financial condition; risks related to government regulations applicable to BlackBerry’s products and services, including products containing encryption capabilities, which could negatively impact BlackBerry’s business; risks related to foreign operations, including fluctuations in foreign currencies; risks associated with any errors in BlackBerry’s products and services, which can be difficult to remedy and could have a material adverse effect on BlackBerry’s business; risks related to the failure of BlackBerry’s suppliers, subcontractors, channel partners and representatives to use acceptable ethical business practices or to comply with applicable laws, which could negatively impact BlackBerry’s business; BlackBerry’s reliance on third parties to manufacture and repair its hardware products; risks related to the Company’s success in fostering an ecosystem of third-party application developers; risks related to regulations regarding health and safety, hazardous materials usage and conflict minerals, and to product certification risks; risks related to tax provision changes, the adoption of new tax legislation or exposure to additional tax liabilities, which could materially impact BlackBerry’s financial condition; risks related to the fluctuation of BlackBerry’s quarterly revenue and operating results; the volatility of the market price of BlackBerry’s common shares; and risks related to adverse economic and geopolitical conditions, which may negatively affect BlackBerry.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="These risk factors and others relating to BlackBerry are discussed in greater detail in BlackBerry's Annual Information Form, which is included in its Annual Report on Form 40-F and the "Cautionary Note Regarding Forward-Looking Statements" section of BlackBerry's MD&A (copies of which filings may be obtained at www.sedar.com 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. BlackBerry has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.” data-reactid=”67″>These risk factors and others relating to BlackBerry are discussed in greater detail in BlackBerry’s Annual Information Form, which is included in its Annual Report on Form 40-F and the “Cautionary Note Regarding Forward-Looking Statements” section of BlackBerry’s MD&A (copies of which filings may be obtained at www.sedar.com 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. BlackBerry has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
BlackBerry Limited
Incorporated under the Laws of Ontario
(United States dollars, in millions except share and per share amounts) (unaudited)
Consolidated Statements of Operations
For the Three Months Ended
For the Nine Months Ended
November 30, 2019
August 31, 2019
November 30, 2018
November 30, 2019
November 30, 2018
Revenue
$
267
$
244
$
226
$
758
$
649
Cost of sales
69
68
56
207
157
Gross margin
198
176
170
551
492
Gross margin %
74.2
%
72.1
%
75.2
%
72.7
%
75.8
%
Operating expenses
Research and development
66
62
55
199
167
Selling, marketing and administration
132
132
93
385
299
Amortization
49
48
33
146
105
Debentures fair value adjustment
(20)
(23)
(69)
(71)
(111)
227
219
112
659
460
Operating income (loss)
(29)
(43)
58
(108)
32
Investment income (loss), net
(1)
—
2
2
13
Income (loss) before income taxes
(30)
(43)
60
(106)
45
Provision for income taxes
2
1
1
5
3
Net income (loss)
$
(32)
$
(44)
$
59
$
(111)
$
42
Earnings (loss) per share
Basic
$
(0.06)
$
(0.08)
$
0.11
$
(0.20)
$
0.08
Diluted
$
(0.07)
$
(0.10)
$
(0.01)
$
(0.27)
$
(0.09)
Weighted-average number of common shares outstanding (000s)
Basic
554,585
552,343
540,406
552,931
538,251
Diluted
615,085
612,843
600,906
613,431
598,751
Total common shares outstanding (000s)
552,132
548,336
547,084
552,132
547,084
BlackBerry Limited
Incorporated under the Laws of Ontario
(United States dollars, in millions) (unaudited)
Consolidated Balance Sheets
As at
November 30, 2019
February 28, 2019
Assets
Current
Cash and cash equivalents
$
515
$
548
Short-term investments
367
368
Accounts receivable, net
216
233
Other receivables
13
19
Income taxes receivable
10
9
Other current assets
58
56
1,179
1,233
Restricted cash and cash equivalents
32
34
Long-term investments
56
55
Other long-term assets
23
28
Deferred income tax assets
—
2
Operating lease right-of-use assets
133
—
Property, plant and equipment, net
76
85
Goodwill
1,459
1,463
Intangible assets, net
955
1,068
$
3,913
$
3,968
Liabilities
Current
Accounts payable
$
27
$
48
Accrued liabilities
193
192
Income taxes payable
19
17
Debentures
609
—
Deferred revenue, current
264
253
1,112
510
Deferred revenue, non-current
117
136
Operating lease liabilities
127
—
Other long-term liabilities
8
19
Long-term debentures
—
665
Deferred income tax liabilities
1
2
1,365
1,332
Shareholders’ equity
Capital stock and additional paid-in capital
2,742
2,688
Deficit
(157)
(32)
Accumulated other comprehensive loss
(37)
(20)
2,548
2,636
$
3,913
$
3,968
BlackBerry Limited
Incorporated under the Laws of Ontario
(United States dollars, in millions) (unaudited)
Consolidated Statements of Cash Flows
For the Nine Months Ended
November 30, 2019
November 30, 2018
Cash flows from operating activities
Net income (loss)
$
(111)
$
42
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Amortization
160
116
Stock-based compensation
46
53
Non-cash consideration received from contract with a customer
(8)
—
Debentures fair value adjustment
(71)
(111)
Other long-term assets
—
2
Operating leases
(12)
—
Other
9
4
Net changes in working capital items:
Accounts receivable, net
17
13
Other receivables
6
46
Income taxes receivable
(1)
13
Other assets
3
(1)
Accounts payable
(21)
(14)
Income taxes payable
2
(1)
Accrued liabilities
(24)
(57)
Deferred revenue
(10)
(23)
Other long-term liabilities
7
—
Net cash provided by (used in) operating activities
(8)
82
Cash flows from investing activities
Acquisition of long-term investments
(1)
(2)
Proceeds on sale or maturity of long-term investments
—
2
Acquisition of property, plant and equipment
(9)
(14)
Proceeds on sale of property, plant and equipment
—
1
Acquisition of intangible assets
(24)
(24)
Business acquisitions, net of cash acquired
1
—
Acquisition of short-term investments
(829)
(2,754)
Proceeds on sale or maturity of short-term investments
830
2,962
Net cash provided by (used in) investing activities
(32)
171
Cash flows from financing activities
Issuance of common shares
8
5
Finance lease liability
(2)
—
Net cash provided by financing activities
6
5
Effect of foreign exchange loss on cash, cash equivalents, restricted cash, and restricted cash equivalents
(1)
(3)
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents during the period
(35)
255
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period
582
855
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period
Netflix (NFLX) stock slid as much as 9.6% Friday after the company gave a second quarter revenue forecast that missed estimates and announced it would stop reporting quarterly subscriber metrics closely watched by Wall Street.
On Thursday, Netflix guided to second quarter revenue of $9.49 billion, a miss compared to consensus estimates of $9.51 billion.
The company said it will stop reporting quarterly membership numbers starting next year, along with average revenue per member, or ARM.
“As we’ve evolved our pricing and plans from a single to multiple tiers with different price points depending on the country, each incremental paid membership has a very different business impact,” the company said.
Netflix reported first quarter earnings that beat across the board on Thursday, with another 9 million-plus subscribers added in the quarter.
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Subscriber additions of 9.3 million beat expectations of 4.8 million and followed the 13 million net additions the streamer added in the fourth quarter. The company added 1.7 million paying users in Q1 2023.
Revenue beat Bloomberg consensus estimates of $9.27 billion to hit $9.37 billion in the quarter, an increase of 14.8% compared to the same period last year as the streamer leaned on revenue initiatives like its crackdown on password-sharing and ad-supported tier, in addition to the recent price hikes on certain subscription plans.
Netflix’s stock has been on a tear in recent months, with shares currently trading near the high end of its 52-week range. Wall Street analysts had warned that high expectations heading into the print could serve as an inherent risk to the stock price.
Earnings per share (EPS) beat estimates in the quarter, with the company reporting EPS of $5.28, well above consensus expectations of $4.52 and nearly double the $2.88 EPS figure it reported in the year-ago period. Netflix guided to second quarter EPS of $4.68, ahead of consensus calls for $4.54.
Profitability metrics also came in strong, with operating margins sitting at 28.1% for the first quarter compared to 21% in the same period last year.
The company previously guided to full-year 2024 operating margins of 24% after the metric grew to 21% from 18% in 2023. Netflix expects margins to tick down slightly in Q2 to 26.6%.
Free cash flow came in at $2.14 billion in the quarter, above consensus calls of $1.9 billion.
Meanwhile, ARM ticked up 1% year over year — matching the fourth quarter results. Wall Street analysts expect ARM to pick up later this year as both the ad-tier impact and price hike effects take hold.
On the ads front, ad-tier memberships increased 65% quarter over quarter after rising nearly 70% sequentially in Q3 2023 and Q4 2023. The ads plan now accounts for over 40% of all Netflix sign-ups in the markets it’s offered in.
Netflix reported first quarter earnings after the bell on Thursday. REUTERS/Dado Ruvic/File Photo (REUTERS / Reuters)
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
Oil prices initially spiked on Friday due to unconfirmed reports of an Israeli missile strike on Iran.
Prices briefly reached above $90 per barrel before falling back as Iran denied the attack.
Iranian media reported activating their air defense systems, not an Israeli strike.
Oil prices gave up nearly all of early Friday’s gains after an Iranian official told Reuters that there hadn’t been a missile attack against Iran.
Oil surged by as much as $3 per barrel in Asian trade early on Friday after a U.S. official told ABC News today that Israel launched missile strikes against Iran in the early morning hours today. After briefly spiking to above $90 per barrel early on Friday in Asian trade, Brent fell back to $87.10 per barrel in the morning in Europe.
The news was later confirmed by Iranian media, which said the country’s air defense system took down three drones over the city of Isfahan, according to Al Jazeera. Flights to three cities including Tehran and Isfahan were suspended, Iranian media also reported.
Israel’s retaliation for Iran’s missile strikes last week was seen by most as a guarantee of escalation of the Middle East conflict since Iran had warned Tel Aviv that if it retaliates, so will Tehran in its turn and that retaliation would be on a greater scale than the missile strikes from last week. These developments were naturally seen as strongly bullish for oil prices.
However, hours after unconfirmed reports of an Israeli attack first emerged, Reuters quoted an Iranian official as saying that there was no missile strike carried out against Iran. The explosions that were heard in the large Iranian city of Isfahan were the result of the activation of the air defense systems of Iran, the official told Reuters.
Overall, Iran appears to downplay the event, with most official comments and news reports not mentioning Israel, Reuters notes.
The International Atomic Energy Agency (IAEA) said that “there is no damage to Iran’s nuclear sites,” confirming Iranian reports on the matter.
The Isfahan province is home to Iran’s nuclear site for uranium enrichment.
“Brent briefly soared back above $90 before reversing lower after Iranian media downplayed a retaliatory strike by Israel,” Saxo Bank said in a Friday note.
The $5 a barrel trading range in oil prices over the past week has been driven by traders attempting to “quantify the level of risk premium needed to reflect heightened tensions but with no impact on supply,” the bank said, adding “Expect prices to bid ahead of the weekend.”
At the time of writing Brent was trading at $87.34 and WTI at $83.14.
