What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2024-04-04 compared with 2023-03-31 · 360 added, 318 removed, 594 unchanged (53% of the section changed)

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dollars, unless otherwise indicated.

Readers should carefully review Part I, Item 1A “Risk Factors” and other documents filed from time to time with the Securities and Exchange Commission (“SEC”) and other securities regulators.

Readers should carefully review Part I, Item 1A “Risk Factors” and other documents filed by the Company from time to time with the Securities and Exchange Commission (“SEC”) and other securities regulators.

A number of factors may materially affect our business, financial condition, operating results and prospects.

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Please refer to our MD&A included in our Annual Report on 10-K for the fiscal year ended February 28, 2023 for a comparative discussion of our fiscal 2023 financial results as compared to our fiscal 2022 financial results, which is incorporated herein by reference.

Additional information about the Company can be found on SEDAR at www.sedar.com and on the SEC’s website at www.sec.gov.

Additional information about the Company can be found on SEDAR+ at www.sedarplus.ca and on the SEC’s website at www.sec.gov.

Cautionary Note Regarding Forward-Looking Statements

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Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws, including statements relating to:

• the Company’s plans, strategies and objectives, including its intentions to increase and enhance its product and service offerings and to patent new innovations, and to complete the sale of a portfolio of its non-core patent assets;

• the Company’s expectations with respect to the impact of the COVID-19 pandemic and the global semiconductor shortage, as well as other macroeconomic factors including inflation and interest rates, on its results of operations and financial condition;

• the Company’s expectations with respect to its revenue and billings in fiscal 2024, the annual recurring revenue of its Cybersecurity business in fiscal 2024, installations of the BlackBerry IVY™ platform and the sale of substantially all of its non-core patent assets;

• the Company’s plans, strategies and objectives, including its intentions to increase and enhance its product and service offerings and to patent new innovations;

• the Company’s expectations with respect to enhancing operational focus and flexibility, driving improved profitability, and increasing optionality for optimizing shareholder value through the full separation of its principal business units;

• the Company’s expectations with respect to its revenue, non-GAAP EPS and adjusted EBITDA in the first quarter of fiscal 2025 and fiscal 2025 as a whole, annual recurring revenue of the Company’s Cybersecurity division and cash usage in the first quarter of fiscal 2025, non-GAAP operating expenses for fiscal 2025 and non-GAAP EPS and cash flow in the fourth quarter fiscal 2025;

• the Company’s estimates of purchase obligations and other contractual commitments;

• the Company’s expectations with respect to the sufficiency of its financial resources.

The words “expect”, “anticipate”, “estimate”, “may”, “will”, “should”, “could”, “intend”, “believe”, “target”, “plan” and similar expressions are intended to identify forward-looking statements in this Annual Report on Form 10-K, including in the sections in Part I, Item 1 “Business” entitled “Products and Services - IoT”, “Products and Services - Licensing and Other”, “Intellectual Property” and “Human Capital”, and in the sections of this MD&A entitled “Business Overview - COVID-19”, “Business Overview - Russia Ukraine Conflict”, “Non-GAAP Financial Measures - Key Metrics - Annual Recurring Revenue”, “Non-GAAP Financial Measures - Key Metrics - TCV Billings”, “Results of Operations - Fiscal year ended February 28, 2023

compared to fiscal year ended February 28, 2022 - Revenue - Revenue by Segment”, “Results of Operations - Three months ended February 28, 2023 compared to the three months ended February 28, 2022 - Revenue - Revenue by Segment” and “Financial Condition - Contractual and Other Obligations”.

Forward-looking statements are based on estimates and assumptions made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors that the Company believes are appropriate in the circumstances, including but not limited to, the Company’s expectations regarding its business, strategy, opportunities and prospects, the launch of new products and services, general economic conditions, the ongoing COVID-19 pandemic, competition, and the Company’s expectations regarding its financial performance.

The words “expect”, “anticipate”, “estimate”, “may”, “will”, “should”, “could”, “intend”, “believe”, “target”, “plan” and similar expressions are intended to identify forward-looking statements in this Annual Report on Form 10-K, including in the sections in Part I, Item 1 “Business” entitled “Products and Services - IoT”, “Products and Services - Licensing and Other”, “Intellectual Property” and “Human Capital”, and in the sections of this MD&A entitled, “Non-GAAP Financial Measures - Key Metrics - Cybersecurity Annual Recurring Revenue”, “Results of Operations - Fiscal year ended February 29, 2024 compared to fiscal year ended February 28, 2023 - Revenue - Revenue by Segment”, “Results of Operations - Fiscal year ended February 29, 2024 compared to fiscal year ended February 28, 2023 - Operating Expenses”, “Results of Operations - Fiscal year ended February 29, 2024 compared to fiscal year ended February 28, 2023 - Net Income (Loss)” and “Financial Condition - Contractual and Other Obligations”.

Forward-looking statements are based on estimates and assumptions made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors that the Company believes are appropriate in the circumstances, including but not limited to, the Company’s expectations regarding its business, strategy, opportunities and prospects, the launch of new products and services, general economic conditions, competition, the Company’s expectations regarding its financial performance, and the Company’s expectations regarding the planned separation of its businesses.

Many factors could cause the Company’s actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the risk factors discussed in Part I, Item 1A “Risk Factors” in this Annual Report on Form 10-K.

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The Company provides intelligent security software and services to enterprises and governments around the world.

The Company secures more than 500 million endpoints including more than 215 million vehicles.

Based in Waterloo, Ontario, the Company leverages artificial intelligence and machine learning to deliver innovative solutions in the areas of cybersecurity, safety and data privacy, and is a leader in the areas of endpoint security, endpoint management, encryption and embedded systems.

The Company secures more than 235 million vehicles.

Based in Waterloo, Ontario, the Company leverages artificial intelligence (“AI”) and machine learning to deliver innovative solutions in the areas of cybersecurity, safety and data privacy, and is a leader in the areas of endpoint security, endpoint management, encryption, and embedded systems.

The Company’s common shares trade under the ticker symbol “BB” on the New York Stock Exchange and the Toronto Stock Exchange.

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Products and Innovation:

• Demonstrated BlackBerry IVY™ running on three commercially-available automotive platforms at CES 2023 and announced general availability for May 2023;

• Launched QNX® Accelerate, making the QNX® Neutrino® real time operating system (RTOS) and QNX® OS for Safety available in the cloud and through AWS Marketplace;

• Released QNX® Hypervisor 2.2 for Safety, the latest edition of the Company’s safety-certified, real-time embedded hypervisor product, certified to the highest level of functional safety for both automotive and medical device software;

• Strengthened QNX® Advanced Virtualization Framework for Android Automotive OS to simplify and accelerate building IVI systems on the QNX® Hypervisor;

• Achieved the certification of QNX® OS for Safety 2.2 to the highest integrity level of the functional safety standard for the railway industry;

• Launched CylanceGATEWAY, BlackBerry’s Zero Trust Network Access (ZTNA) service offering;

• Released CylanceAVERT™, a data loss detection module that provides data access and leakage visibility via CylanceGATEWAY™;

• Released Cyber Threat Intelligence (CTI), a professional threat intelligence service to help customers prevent, detect, and effectively respond to cyberattacks;

• Recognized as a 2023 Gartner® Peer Insights™ Customers’ Choice for Unified Endpoint Management (UEM) tools, including as the only vendor to be placed in the upper right quadrant;

• Named as a ‘Leader’ for a third consecutive year in the IDC MarketScape:

Worldwide UEM Software 2022 Vendor Assessment;

• Announced that NATO Communications and Information Agency (NCI Agency) awarded security accreditation to SecuSUITE for Government for global use in official NATO secure communications;

• Awarded updated NIAP/Common Criteria and CSfC certification for BlackBerry SecuSUITE® for Government.

• Announced general availability of QNX® Software Development Platform (SDP) 8.0, the Company’s scalable, high-performance foundation for next generation automotive and IoT systems;

• Launched an enhanced AI-based Cylance® cybersecurity solutions portfolio, including a major update to its patented Cylance AI engine;

• Launched QNX® Sound, an audio and acoustics innovation platform for software-defined vehicles;

• Announced enhancements to SecuSUITE® for Government, including encrypted video and group audio calls;

• Announced an integration of CylanceGUARD® and BlackBerry® AtHoc® technologies for secure bi-directional response communications during cyber incidents;

• Announced that CylanceENDPOINT™ received Gartner® Peer Insights™ 2023, Customers’ Choice designation for Endpoint Protection Platforms, based on customer feedback, placing in the upper-right quadrant;

• Released a Global Threat Intelligence Report, highlighting that the Company’s AI-driven cybersecurity solutions stopped 55,000 individual cyber-attacks between March and May 2023;

• Launched a generative AI-powered cybersecurity assistant to increase efficiency and reduce fatigue for CISO teams;

• Announced that BlackBerry is the first Mobile Device Management vendor to receive BSI clearance for BlackBerry® UEM Brightsite usage with Apple iNDIGO.

Customers and Partners:

• Announced an agreement to sell substantially all of BlackBerry’s non-core patent assets to Malikie Innovations Limited, a subsidiary of Key Patent Innovations Limited, for a combination of cash at closing and potential future royalties in the aggregate amount of up to $900 million;

• Announced first BlackBerry IVY design win as Dongfeng Motor selected PATEO digital cockpit for the next-generation all-electric VOYAH Model;

• Selected by Volkswagen Group’s software company, Cariad, for its VW.OS, part of a unified software platform to be deployed across all Volkswagen Group brands;

• Entered into a multi-year agreement with Magna International Inc.

to collaborate on next-generation Advanced Driver Assistance System (ADAS) solutions for global automakers;

• Selected by Chongqing Yazaki to power a digital LCD cluster for the Chinese market, including deployment within next-generation vehicles from Geely Auto and Dongfeng Liuzhou Auto;

• Selected by BDStar Intelligent & Connected Vehicle Technology Co., Ltd.

(BICV) to power an intelligent digital cockpit, featuring augmented reality, artificial intelligence, and hologram functions for the new Renault Jiangling all-electric sedan;

• Jointly developed a digital LCD instrument cluster with BiTECH for Changan’s next-generation high-end UNI-V Coupe;

• Selected by Dayin Technology to develop acoustic solutions for Great Wall Motors’ premium, next-generation vehicles;

• Announced a significant, multi-year deal to provide full suite of cybersecurity solutions to the Government of Malaysia;

• Stellantis, BlackBerry QNX and AWS launched the world’s first virtual cockpit, leveraging the QNX® Hypervisor in the cloud to transform in-vehicle software engineering;

• Mobility in Harmony (MIH) consortium, a Foxconn initiative, selected BlackBerry IVY® to power its next-generation electric production vehicles;

• Announced the Company’s new Cybersecurity Center of Excellence (CCoE) in Kuala Lumpur will offer SANS training courses to help grow and upskill cyber workforces in Malaysia;

• Announced that the United States Department of Homeland Security awarded a new PENS (personal emergency notification system) contract to BlackBerry, utilizing BlackBerry® AtHoc® critical event management (CEM) solution;

• Announced that Mitsubishi’s enhanced automotive in-cabin system, FlexConnect.X, will be powered by BlackBerry IVY to deliver AI data-driven experiences;

• Announced that BlackBerry QNX software is embedded in over 235 million vehicles;

• Launched the Software-Defined Vehicle Innovator Awards with MotorTrend;

• Collaborated with LeapXpert to enable the BlackBerry® Dynamics™ platform to provide secure communications through leading messaging applications such as iMessage, WhatsApp and SMS;

• Partnered with Midis Group to expand go-to-market activities in Eastern Europe, the Middle East, and Africa;

• Expanded BlackBerry SecuSUITE secure communications partner network in Asia Pacific, with the addition of NSI Global, Praesidum Group and Teletrol-One.

• Announced an extended partnership with leading managed security services provider (MSSP) Solutions Granted, enabling better scale to address small and medium-sized businesses (SMBs);

• Announced a strategic partnership with McLeod Software, a leading Transportation Management System (TMS) provider, delivering enterprise software solutions to the transportation and logistics industry.

Environmental, Sustainability and Corporate Governance:

• Appointed Phil Kurtz as Chief Legal Officer and Corporate Secretary;

• Released the Company’s 2022 Environmental, Social, and Governance (ESG) report.

Pearlstein Settlement

On April 7, 2022, the Company announced that it had reached an agreement in principle to settle the consolidated securities class action lawsuit captioned Pearlstein v.

Blackberry Limited, et al., Case No.

7060 (CM) (KHP) pending against the Company and certain of its former officers in the U.S.

District Court for the Southern District of New York.

A formal settlement agreement was signed on June 9, 2022, and contemplated an aggregate cash payment by the Company of $165 million to settle the claims brought on behalf of all persons who purchased or otherwise acquired BlackBerry shares on the NASDAQ between March 28, 2013 and September 20, 2013.

The Stipulation of Settlement was executed effective June 7, 2022.

On June 14, 2022, the Court granted plaintiffs’ motion for preliminary approval of the settlement and scheduled the final approval hearing for September 29, 2022.

On September 29, 2022, the Court granted final approval of the settlement and entered final judgment.

While the Company believes that the allegations in the case were without merit, it also believes that eliminating the distraction, expense and risk of continued litigation was in the best interests of the Company and its shareholders.

In the first quarter of fiscal 2023, the Company accrued $165 million associated with this settlement within the line Litigation settlement on the consolidated statement of operations.

On June 29, 2022, the Company paid $1 million of the settlement amount.

The remaining $164 million was paid on September 6, 2022.

• Appointed Philip Brace, an IoT technology industry veteran, to the Board of Directors (the “Board”);

• Appointed John Giamatteo, President of BlackBerry’s Cybersecurity division, as Chief Executive Officer.

Goodwill Impairment

During the fourth quarter of fiscal 2024, as part of its process for setting the annual operating plan for fiscal 2025, the Company updated its estimates of long-term future cash flows to reflect lower revenue and EBITDA growth rate expectations and a reduction in revenue multiples used in the valuation of the BlackBerry Spark reporting unit.

These changes in estimates, combined with the global economic weakness and inflation resulting directly or indirectly from the COVID-19 pandemic and the Russian invasion of Ukraine, higher interest rates implemented in response to inflation, and a broad-based stock market decline impacting the Company’s market capitalization, resulted in the recognition of a goodwill impairment charge of $245 million (the “Fiscal 2023 Goodwill Impairment Charge”) in the BlackBerry Spark reporting unit, which is included within the Company’s Cybersecurity segment.

For additional information, see Note 3 to the Consolidated Financial Statements.

The estimated fair values of the Company’s other reporting units substantially exceeded their carrying values as at the annual goodwill impairment test date.

Long-Lived Asset Impairment (“LLA Impairment”)

During the fourth quarter of fiscal 2023, market conditions and changes in the Company’s estimates as described above under “Goodwill Impairment” provided indicators of potential impairment in the Company’s UES asset group, which is primarily composed of intangible assets recognized in the acquisition of Cylance and is included within the Company’s Cybersecurity segment.

The Company performed the two-step impairment testing process as described in Note 1, utilizing the income approach using a discounted future cash flow model and market-based approaches, and concluded that the carrying values of the Company’s UES asset group exceeded their fair values, necessitating an impairment charge of $231 million.

None of the Company’s other asset groups demonstrated indicators of potential impairment.

During fiscal 2023, the Company also recorded a $4 million impairment charge relating to right-of-use assets for a total LLA impairment charge of $235 million (the “Fiscal 2023 LLA Impairment Charge”).

These changes in estimates, combined with the continued global economic uncertainty, customer budgetary constraints, and inflation, as well as higher interest rates implemented in response to inflation, and a broad-based stock market decline impacting the Company’s market capitalization, resulted in the recognition of a goodwill impairment charge of $35 million (the “Fiscal 2024 Goodwill Impairment Charge”) in the BlackBerry Spark reporting unit, which is included within the Company’s Cybersecurity segment.

For additional information, see Note 3 to the Consolidated Financial Statements.

COVID-19 and Macroeconomic Factors

The COVID-19 pandemic and ensuing global semiconductor shortage have had and continue to have a material adverse impact on production-based royalties for the Company’s QNX automotive software business.

The invasion of Ukraine by Russia and resulting global sanctions against Russia have exacerbated the disruption of automotive supply chains and its impact on the Company’s business.

Economic weakness or inflation resulting directly or indirectly from the COVID-19 pandemic and the Russian invasion of Ukraine, as well as higher interest rates implemented in response to inflation and resulting fears of recession, may negatively impact consumer demand for automobiles and is contributing to reduced spending and longer sales cycles for cybersecurity solutions, which in turn may continue to adversely affect the Company’s business.

The Company does not believe that inflation had a direct effect on its operations during fiscal 2023;

however, higher interest rates implemented in response to inflation negatively impacted the Company’s estimates of the fair values of its reporting units which, among other factors, resulted in the Fiscal 2023 Goodwill Impairment Charge.

The estimated fair values of the Company’s other reporting units substantially exceeded their carrying values as at the annual goodwill impairment test date, with the exception of the Intellectual Property reporting unit.

Business Separation

On May 1, 2023, the Company announced that the Board would initiate a review of the Company’s portfolio of businesses, with the assistance of its financial advisors, as the Board considered strategic alternatives to drive enhanced shareholder value.

On October 4, 2023, the Company announced its intention to separate the IoT and Cybersecurity business units with a view to pursuing a subsidiary initial public offering (“Sub-IPO”) for the IoT business.

On December 11, 2023, the Company announced that it had reassessed its strategy and would no longer pursue a Sub-IPO but intends to pursue a full separation of the IoT and Cybersecurity businesses, including the separation and streamlining of the Company’s centralized corporate functions into business-unit specific teams, with a view to establishing each business as an independently-operated, profitable and cashflow-positive division.

The Company intends for the separation to enhance the operational focus and flexibility for each business, drive improved profitability, and increase optionality for the Company to optimize shareholder value.

On February 12, 2024, the Company announced its progress in separation and provided targets in respect to annualized net profit improvements to be achieved through a combination of cost reductions and margin expansion, identified previously achieved annualized cost savings in the third quarter of fiscal 2024, and provided guidance regarding expected improvements in operating cash flow in fiscal 2025.

On April 3, 2024, the Company stated that it had taken action in fiscal 2024 to reduce annualized expenditures by approximately $105 million and is working towards further run rate reductions.

On May 11, 2023, the Company completed its previously announced patent sale with Malikie Innovations Limited and sold certain non-core patent assets for $170 million in cash on closing, an additional $30 million in cash by no later than the third anniversary of closing and potential future royalties in the aggregate amount of up to $700 million (the “Malikie Transaction”).

In the first quarter of fiscal 2024, the Company recognized revenue of $218 million and cost of sales of $147 million related to non-core intellectual property sold.

The revenue recognized reflects the application of the Company’s accounting policies and

critical accounting estimates, as described in Note 1 to the Consolidated Financial Statements, which resulted in a substantial majority of the potential future royalties from the Malikie Transaction being constrained until future periods.

In evaluating the Malikie Transaction, the Company considered estimates of value, among other factors, which are not fully reflected when applying the principles of revenue recognition, such as the variable consideration constraint that is recognized at the inception of the Malikie Transaction.

Accordingly, amounts initially recognized in the first quarter of fiscal 2024 do not reflect the full fair value of the overall transaction as determined by the Company.

Additional variable consideration is expected to be recognized in future quarters, as determined quarterly based on the revenue recognition accounting framework.

See Note 12 to the Consolidated Financial Statements.

Debt Repayment and New Issuance

On November 13, 2023, the Company repaid all amounts due upon the maturity of its outstanding 1.75% unsecured convertible debentures (the “2020 Debentures”) for an aggregate amount of $365 million.

On November 17, 2023, the Company issued an aggregate of $150 million principal amount of new 1.75% extendable unsecured convertible debentures maturing on February 15, 2024 (the “Extension Debentures” and collectively with the 2020 Debentures, the “Debentures”), with an option for the parties to extend the maturity date to May 15, 2024 by mutual agreement, to certain controlled affiliates of Fairfax Financial Holdings Limited (“Fairfax”) on a private placement basis.

The Extension Debentures had terms that were substantially similar to those of the 2020 Debentures.

Interest expense on the Extension Debentures was approximately $1 million for the period from issuance to maturity on February 15, 2024.

On January 29, 2024, the Company issued $200 million aggregate principal amount of 3.00% senior convertible unsecured notes (the “Notes”) in an offering to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended.

The Company used the net proceeds of the issuance of the Notes principally to repay the Extension Debentures at maturity on February 15, 2024.

The Notes are due on February 15, 2029 unless earlier converted, redeemed, or repurchased.

Interest expense on the Notes will be approximately $6 million per year.

See Note 6 to the Consolidated Financial Statements for a description of the terms of the Notes.

Refer to Part I, Item 1A “Risk Factors” in this Annual Report on form 10-K for a discussion of these factors and other risks.

Fiscal 2024 Summary Results of Operations

The following table sets forth certain consolidated statements of operations data, as well as certain consolidated balance sheet data, as at and for the fiscal years ended February 28, 2023, February 28, 2022, and February 28, 2021:

The following table sets forth certain consolidated statements of operations data for the fiscal years ended February 29, 2024, February 28, 2023, and February 28, 2022:

As at and for the Fiscal Years Ended

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Operating expenses 645 1,144 (499) 469 675

Investment income (loss), net 5 21 (16) (6) 27

Investment income, net 19 5 14 21 (16)

Income (loss) before income taxes (106) (720) 614 19 (739)

Provision for (recovery of) income taxes 14 7 7 (9) 16

Provision for income taxes 24 14 10 7 7

Net income (loss) $ (130) $ (734) $ 604 $ 12 $ (746)

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(1) Diluted loss per share on a U.S.

GAAP basis for fiscal 2021 does not include the dilutive effect of the Debentures (as defined below) as to do so would be anti-dilutive.

GAAP basis for fiscal 2024 does not include the dilutive effect of the Debentures and the Notes as to do so would be anti-dilutive.

Diluted loss per share on a U.S.

GAAP basis for fiscal 2024, fiscal 2023, and fiscal 2022 does not include the dilutive effect of stock-based compensation as to do so would be anti-dilutive.

See Note 8 to the Consolidated Financial Statements for the fiscal year ended February 28, 2023 for calculation of the diluted weighted average number of shares outstanding.

See Note 8 to the

Consolidated Financial Statements for the fiscal year ended February 29, 2024 for calculation of the diluted weighted average number of shares outstanding.

The following section sets forth certain unaudited consolidated statements of operations data for the three months ended February 29, 2024, February 28, 2023 and February 28, 2022:

For the Three Months Ended

(in millions, except for share and per share amounts)

February 29, 2024 February 28, 2023 Change February 28, 2022 Change

Revenue $ 173 $ 151 $ 22 $ 185 $ (34)

Gross margin 129 100 29 124 (24)

Operating expenses 185 599 (414) (22) 621

Investment income (loss), net 4 6 (2) (1) 7

Income (loss) before income taxes (52) (493) 441 145 (638)

Provision for income taxes 4 2 2 1 1

Net income (loss) $ (56) $ (495) $ 439 $ 144 $ (639)

Earnings (loss) per share - reported

Basic $ (0.10) $ (0.85) $ 0.75 $ 0.25 $ (1.10)

$ (0.10) $ (0.85) $ 0.75 $ (0.03) $ (0.82)

Weighted-average number of shares outstanding (000’s)

Basic 587,523 581,493 575,883

587,523 581,493 636,716

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(1) Diluted loss per share on a U.S.

GAAP basis in the fourth quarter of 2024 and 2023 do not include the dilutive effect of the Debentures or Notes as to do so would be anti-dilutive.

Diluted loss per share on a U.S.

GAAP basis in the fourth quarter of 2024, 2023 and 2022 do not include the dilutive effect of stock-based compensation as to do so would be anti-dilutive.

The following tables show information by operating segment for the three months and year ended February 29, 2024 and February 28, 2023.

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The management approach designates the internal reporting used by the CODM for making decisions and assessing performance of the Company’s reportable operating segments.

See “Business Overview - Segment Reporting” for a description of the Company’s operating segments, as well as Note 12 to the Consolidated Financial Statements.

See Note 12 to the Consolidated Financial Statements for a description of the Company’s operating segments.

For the Three Months Ended

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Cybersecurity IoT Licensing and Other Segment Totals

February 28, Change February 28, Change February 28, Change February 28, Change

Feb 29 Feb 28 Change Feb 29 Feb 28 Change Feb 29 Feb 28 Change Feb 29 Feb 28 Change

2024 2023 2024 2023 2024 2023 2024 2023

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Cybersecurity IoT Licensing and Other Segment Totals

February 28, Change February 28, Change February 28, Change February 28, Change

Feb 29 Feb 28 Change Feb 29 Feb 28 Change Feb 29 Feb 28 Change Feb 29 Feb 28 Change

2024 2023 2024 2023 2024 2023 2024 2023

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Operating expenses 599 599

Investment loss, net 1 1

Income before income taxes $ 145

Investment income, net 6 6

Loss before income taxes $ (493)

For the Year Ended February 28, 2023

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Investment income, net 5 5

Income before income taxes $ 19

Loss before income taxes $ (720)

______________________________

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The Company had approximately $298 million in cash, cash equivalents and investments as of February 29, 2024 (Fiscal 2023 - $487 million).

In fiscal 2023, the Company recognized revenue of $656 million and incurred a net loss of $734 million, or $1.27 basic loss per share and $1.35 diluted loss per share on a U.S.

GAAP basis (fiscal 2022 - revenue of $718 million and net income of $12 million, or $0.02 basic earnings per share and $0.31 diluted loss per share).

The net loss was primarily due to the Fiscal 2023 Goodwill Impairment Charge and Fiscal 2023 LLA Impairment Charge, as discussed above in “Business Overview - Goodwill Impairment” and “Business Overview - Long-Lived Asset Impairment”.

The Company recognized adjusted net loss of $103 million, or adjusted loss of $0.18 per share, on a non-GAAP basis in fiscal 2023 (fiscal 2022 - adjusted net loss of $55 million and adjusted loss of $0.10 per share).

In fiscal 2024, the Company recognized revenue of $853 million and incurred a net loss of $130 million, or $0.22 basic and diluted loss per share on a U.S.

GAAP basis (fiscal 2023 - revenue of $656 million and net loss of $734 million, or $1.27 basic loss per share and $1.35 diluted loss per share).

The Company recognized adjusted net income of $31 million, or adjusted income of $0.05 per share, on a non-GAAP basis in fiscal 2024 (fiscal 2023 - adjusted net loss of $103 million and adjusted loss of $0.18 per share).

See “Non-GAAP Financial Measures” below.

Debentures Fair Value Adjustment

As previously disclosed, the Company elected the fair value option to account for its outstanding 1.75% unsecured convertible debentures (the “1.75% Debentures”) and its previously outstanding 3.75% outstanding convertible debentures (the “3.75% Debentures” and together with the 1.75% Debentures, the “Debentures”);

therefore, periodic revaluation has been and continues to be required under U.S.

The fair value adjustment does not impact the terms of the Debentures such as the face value, the redemption features or the conversion price.

As of February 28, 2023, the fair value of the 1.75% Debentures was approximately $367 million versus the principal value of $365 million.

For the three months ended February 28, 2023, the Company recorded a non-cash loss relating to changes in fair value from instrument specific credit risk of $1 million in other comprehensive income (loss) (“OCI”) and non-cash income relating to changes in fair value from non-credit components of $26 million (pre-tax and after tax) (the “Q4 Fiscal 2023 Debentures Fair Value Adjustment”) in the Company’s consolidated statements of operations.

In fiscal 2023, the Company recorded non-cash income relating to changes in fair value from instrument-specific credit risk of $2 million in OCI and non-cash income relating to changes in fair value from non-credit components of $138 million (pre-tax and after tax) (the “Fiscal

2023 Debentures Fair Value Adjustment”) in the Company’s consolidated statements of operations.

As previously disclosed, the Company elected the fair value option to account for the Debentures;

therefore, periodic revaluation was required under U.S.

The fair value adjustment did not impact the terms of the Debentures such as the face value, the redemption features or the conversion price.

In fiscal 2024, the Company recorded non-cash income relating to changes in fair value of the 2020 Debentures of $2 million (pre-tax and after tax) and realized a non-cash charge relating to changes in fair value from non-credit components released from AOCL on maturity of the Extension Debentures and 2020 Debentures of $6 million (the “Fiscal 2024 Debentures Fair Value Adjustment”) in the Company’s consolidated statements of operations.

See Note 6 to the Consolidated Financial Statements for further details on the Debentures.

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GAAP, and information contained in this MD&A is presented on that basis.

On March 30, 2023, the Company announced financial results for the three months and fiscal year ended February 28, 2023, which included certain non-GAAP financial measures and non-GAAP ratios, including adjusted gross margin, adjusted gross margin percentage, adjusted operating expense, adjusted net income (loss), adjusted income (loss) per share, adjusted research and development expense, adjusted selling, marketing and administrative expense, adjusted amortization expense, adjusted operating income (loss), adjusted EBITDA, adjusted operating income (loss) margin percentage, adjusted EBITDA margin percentage and free cash flow (usage).

In the Company’s internal reports, management evaluates the performance of the Company’s business on a non-GAAP basis by excluding the impact of certain items below from the Company’s U.S.

On April 3, 2024, the Company announced financial results for the three months and fiscal year ended February 29, 2024, which included certain non-GAAP financial measures and non-GAAP ratios, including adjusted gross margin, adjusted gross margin percentage, adjusted operating expense, adjusted net income (loss), adjusted earnings (loss) per share, adjusted research and development expense, adjusted sales and marketing expense, adjusted general and administrative expense, adjusted amortization expense, adjusted operating income (loss), adjusted EBITDA, adjusted operating income (loss) margin percentage, adjusted EBITDA margin percentage and free cash flow (usage).

Commencing with this MD&A and consistent with the presentation of the corresponding U.S.

GAAP measures, the Company is presenting adjusted sales and marketing expense and adjusted general and administrative expense separately, whereas they were previously aggregated.

In the Company’s internal reports, management evaluates the performance of the Company’s business on a non-GAAP basis by excluding the impact of certain items from the Company’s U.S.

GAAP financial results.

The Company believes that these non-GAAP financial measures and non-GAAP ratios provide management, as well as readers of the Company’s financial statements, with a consistent basis for comparison across accounting periods and is useful in helping management and readers understand the Company’s operating results and underlying operational trends.

In the first quarter of fiscal 2022, the Company discontinued its use of software deferred revenue acquired and software deferred commission expense acquired adjustments in its non-GAAP financial measures due to the quantitative decline in the adjustments over time.

For purposes of comparability, the Company’s non-GAAP financial measures for the three months ended and year ended February 28, 2021 have been updated to conform to the current year’s presentation.

The Company believes that these non-GAAP financial measures and non-GAAP ratios provide management, as well as readers of the Company’s financial statements, with a consistent basis for comparison across accounting periods and are useful in helping management and readers understand the Company’s operating results and underlying operational trends.

For purposes of comparability, the Company’s non-GAAP financial measures for the three months ended and years ended February 28, 2023 and February 28, 2022 have been updated to conform to the current year’s presentation.

• Debentures fair value adjustment .

The Company has elected to measure its outstanding 1.75% Debentures at fair value in accordance with the fair value option under U.S.

Each period, the fair value of the 1.75% Debentures is recalculated and resulting non-cash income and charges from the change in fair value from non-credit components of the 1.75% Debentures are recognized in income.

The amount can vary each period depending on changes to the Company’s share price, share price volatility and credit indices.

This is not indicative of the Company’s core operating performance, and may not be meaningful when comparing the Company’s operating performance against that of prior periods.

The Company elected to measure the Debentures at fair value in accordance with the fair value option under U.S.

Each period, the fair value of the Debentures was recalculated and the resulting non-cash income and charges from the change in fair value from non-credit components of the Debentures were recognized in income.

The amount varied each period depending on changes to the Company’s share price, share price volatility and credit indices.

This was not indicative of the Company’s core operating performance, and may not be meaningful when comparing the Company’s operating performance against that of prior periods.

• Restructuring charges .

The Company believes that restructuring costs relating to employee termination benefits, facilities and other costs pursuant to the Cost Optimization Program to reduce its annual expenses amongst R&D, infrastructure and other functions do not reflect expected future operating expenses, are not indicative of the Company’s core operating performance, and may not be meaningful when comparing the Company’s operating performance against that of prior periods.

The Company believes that restructuring costs relating to employee termination benefits, facilities, streamlining the Company’s centralized corporate functions into Cybersecurity and IoT specific teams and other costs pursuant to the programs to reduce its annual expenses amongst R&D, infrastructure and other functions do not reflect expected future operating expenses, are not indicative of the Company’s core operating performance, and may not be meaningful when comparing the Company’s operating performance against that of prior periods

• Stock compensation expenses .

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GAAP based measures for the three months ended February 29, 2024, February 28, 2023 and February 28, 2022

Readers are cautioned that adjusted gross margin, adjusted gross margin percentage, adjusted operating expense, adjusted net income (loss), adjusted income (loss) per share, adjusted research and development expense, adjusted selling, marketing and administrative expense, adjusted amortization expense, adjusted operating income (loss), adjusted EBITDA, adjusted operating income (loss) margin percentage, adjusted EBITDA margin percentage and free cash flow (usage) and similar measures do not have any standardized meaning prescribed by U.S.

Readers are cautioned that adjusted gross margin, adjusted gross margin percentage, adjusted operating expense, adjusted net income (loss), adjusted earnings (loss) per share, adjusted research and development expense, adjusted sales and marketing expense, adjusted general and administrative expense, adjusted amortization expense, adjusted operating income (loss), adjusted EBITDA, adjusted operating income (loss) margin percentage, adjusted EBITDA margin percentage and free cash flow (usage) and similar measures do not have any standardized meaning prescribed by U.S.

GAAP and are therefore unlikely to be comparable to similarly titled measures reported by other companies.

Commencing with this MD&A and consistent with the presentation of the corresponding U.S.

GAAP measures, the Company is presenting adjusted sales and marketing expense and adjusted general and administrative expense separately.

These non-GAAP financial measures should be considered in the context of the U.S.

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For the Three Months Ended (in millions, except per share amounts) February 29, 2024 February 28, 2023 February 28, 2022

Basic loss per share Basic earnings per share Basic earnings (loss)

Basic earnings (loss)

per share Basic loss per share Basic earnings

Net income (loss) $ (56) $(0.10) $ (495) $(0.85) $ 144 $0.25

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Reconciliation of U.S.

GAAP research and development, selling, marketing and administration, and amortization expense for the three months ended February 28, 2023, February 28, 2022 and February 28, 2021 to adjusted research and development, selling, marketing and administration, and amortization expense is reflected in the table below:

GAAP research and development, sales and marketing, general and administrative, and amortization expense for the three months ended February 29, 2024, February 28, 2023 and February 28, 2022 to adjusted research and development, sales and marketing, general and administrative, and amortization expense is reflected in the table below:

For the Three Months Ended (in millions) February 29, 2024 February 28, 2023 February 28, 2022

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Adjusted research and development $ 38 $ 45 $ 45

Selling, marketing and administration $ 83 $ 64 $ 92

Sales and marketing $ 41 $ 48 $ 45

Stock compensation expense 1 2 1

Adjusted sales and marketing $ 40 $ 46 $ 44

General and administrative $ 53 $ 35 $ 19

Restructuring charges 20 7 —

Stock compensation expense 2 4 1

Adjusted selling, marketing and administration $ 70 $ 62 $ 79

Adjusted general and administrative $ 31 $ 24 $ 18

Amortization $ 12 $ 18 $ 32

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Adjusted amortization $ 4 $ 3 $ 10

Reconciliation of selected non-GAAP based measures with most directly comparable U.S.

GAAP measures for the years ended February 28, 2023, February 28, 2022 and February 28, 2021

Reconciliation of non-GAAP based measures with most directly comparable U.S.

GAAP based measures for the years ended February 29, 2024, February 28, 2023 and February 28, 2022

A reconciliation of the most directly comparable U.S.

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For the Fiscal Years Ended (in millions, except per share amounts) February 29, 2024 February 28, 2023 February 28, 2022

Basic loss per share Basic earnings (loss) per share Basic earnings (loss) per share

Basic earnings (loss) per share Basic loss per share Basic earnings (loss) per share

Net income (loss) $ (130) $ (0.22) $ (734) $ (1.27) $ 12 $ 0.02

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Adjusted net income (loss) $ 31 $0.05 $ (103) $(0.18) $ (55) $(0.10)

Reconciliation of U.S GAAP research and development, selling, marketing and administration, and amortization expense for the years ended February 28, 2023, February 28, 2022 and February 28, 2021 to adjusted research and development, selling, marketing and administration, and amortization expense is reflected in the table below:

Reconciliation of U.S GAAP research and development, sales and marketing, general and administrative, and amortization expense for the years ended February 29, 2024, February 28, 2023 and February 28, 2022 to adjusted research and development, sales and marketing, general and administrative, and amortization expense is reflected in the table below:

For the Fiscal Years Ended (in millions) February 29, 2024 February 28, 2023 February 28, 2022

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Adjusted research and development $ 178 $ 198 $ 211

Selling, marketing and administration $ 340 $ 297 $ 344

Sales and marketing $ 171 $ 176 $ 183

Stock compensation expense 6 5 5

Adjusted sales and marketing $ 165 $ 171 $ 178

General and administrative $ 181 $ 164 $ 114

Restructuring charges 37 11 —

Stock compensation expense 16 14 13

Adjusted selling, marketing and administration $ 310 $ 279 $ 306

Adjusted general and administrative $ 128 $ 139 $ 101

Amortization $ 54 $ 96 $ 165

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For the Fiscal Years Ended (in millions) February 29, 2024 February 28, 2023 February 28, 2022

Net cash provided by (used in) operating activities $ (263) $ (28) $ 82

Net cash used in operating activities $ (3) $ (263) $ (28)

Acquisition of property, plant and equipment (7) (7) (8)

Free cash flow (usage) $ (270) $ (36) $ 74

For the year ended February 28, 2023, free cash usage includes $165 million paid in relation to the Pearlstein settlement discussed above in “Business Overview - Pearlstein Settlement”.

Free cash usage $ (10) $ (270) $ (36)

For the year ended February 28, 2023, free cash usage includes $165 million paid in relation to a legal settlement.

The Company regularly monitors a number of financial and operating metrics, including the following key metrics, in order to measure the Company’s current performance and estimated future performance.

Readers are cautioned that annual recurring revenue (“ARR”), dollar-based net retention rate (“DBNRR”), Cybersecurity total contract value (“TCV”) billings, recurring revenue percentage and QNX royalty backlog do not have any standardized meaning and are unlikely to be comparable to similarly titled measures reported by other companies.

Readers are cautioned that Cybersecurity annual recurring revenue (“ARR”), Cybersecurity dollar-based net retention rate (“DBNRR”), Cybersecurity total contract value (“TCV”) billings, recurring software product revenue percentage and QNX royalty backlog do not have any standardized meaning and are unlikely to be comparable to similarly titled measures reported by other companies.

Comparative breakdowns of certain key metrics for the three months ended February 29, 2024 and February 28, 2023 are set forth below.

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Cybersecurity Total Contract Value Billings $ 91 $ 107 $ (16)

Recurring Software Product Revenue ~ 90% ~ 80 % 10 %

Annual Recurring Revenue

Recurring Software Product Revenue Percentage ~ 90% ~ 90 % — %

QNX Royalty Backlog $ 815 $ 640 $ 175

Cybersecurity Annual Recurring Revenue

The Company defines ARR as the annualized value of all subscription, term, maintenance, services, and royalty contracts that generate recurring revenue as of the end of the reporting period.

The Company uses ARR as an indicator of business momentum for the Cybersecurity business.

Cybersecurity ARR was approximately $298 million in the fourth quarter of fiscal 2023 and decreased compared to $313 million in the third quarter of fiscal 2023 and decreased compared to $347 million in the fourth quarter of fiscal 2022 primarily due to customer churn in the BlackBerry Spark business.

The Company expects Cybersecurity ARR to return to sequential growth in the second half of fiscal 2024.

Dollar-Based Net Retention Rate

The Company calculates the DBNRR as of period end by first calculating the ARR from the customer base as at 12 months prior to the current period end (“Prior Period ARR”).

The Company then calculates the ARR for the same cohort of customers as at the current period end (“Current Period ARR”).

Cybersecurity ARR was approximately $280 million in the fourth quarter of fiscal 2024 and increased compared to $273 million in the third quarter of fiscal 2024 and decreased compared to $298 million in the fourth quarter of fiscal 2023 primarily due to customer churn in the BlackBerry Spark business.

The Company previously stated that it expected ARR in the fourth quarter of fiscal 2024 to be broadly consistent with the third quarter of fiscal 2024.

Cybersecurity ARR increased by 3% compared to the third quarter of fiscal 2024.

The Company expects Cybersecurity ARR to be flat sequentially in the first quarter of fiscal 2025.

Cybersecurity Dollar-Based Net Retention Rate

The Company calculates the Cybersecurity DBNRR as of period end by first calculating the Cybersecurity ARR from the customer base as at 12 months prior to the current period end (“Prior Period ARR”).

The Company then calculates the Cybersecurity ARR for the same cohort of customers as at the current period end (“Current Period ARR”).

The Company then divides the Current Period ARR by the Prior Period ARR to calculate the DBNRR.

Cybersecurity DBNRR was 81% in the fourth quarter of fiscal 2023 and decreased compared to 84% in the third quarter of fiscal 2023 and compared to 91% in the fourth quarter of fiscal 2022 primarily due to customer churn in the BlackBerry Spark business.

The Company defines TCV billings as amounts invoiced less credits issued.

The Company considers TCV billings to be a useful metric because billings drive deferred revenue, which is an important indicator of the health and visibility of the business, and represents a significant percentage of future revenue.

Cybersecurity TCV billings was $107 million in the fourth quarter of fiscal 2023 and increased compared to $103 million in the third quarter of fiscal 2023 and decreased compared to $125 million in the fourth quarter of fiscal 2022 primarily due to elongated sales cycles in government causing some large deals to slip into later quarters.

The Company previously stated that it expected quarterly year-over-year Cybersecurity TCV billings growth throughout fiscal 2023 when compared to the same quarter in the prior year, with growth of between 8% to 12% in fiscal 2023 as a whole compared to fiscal 2022.

In the fourth quarter of fiscal 2023, Cybersecurity TCV billings decreased compared to the fourth quarter of fiscal 2022 and Cybersecurity TCV billings decreased in fiscal 2023 as a whole compared to fiscal 2022, in each case primarily due to the reasons discussed in the paragraph immediately above.

The Company expects Cybersecurity TCV billings for fiscal 2024 to be in the range of $430 million to $480 million.

The Company also expects Cybersecurity TCV billings to continue to exceed Cybersecurity revenue in fiscal 2024.

Recurring Software Product Revenue

The Company defines recurring software product revenue percentage as recurring software product revenue divided by total software and services revenue.

Cybersecurity DBNRR was 85% in the fourth quarter of fiscal 2024 and increased compared to 82% in the third quarter of fiscal 2024 and 81% in the fourth quarter of fiscal 2023.

Cybersecurity Total Contract Value Billings

The Company defines Cybersecurity TCV billings as amounts invoiced less credits issued.

The Company considers Cybersecurity TCV billings to be a useful metric because billings drive deferred revenue, which is an important indicator of the health and visibility of the business, and represents a significant percentage of future revenue.

Cybersecurity TCV billings was $91 million in the fourth quarter of fiscal 2024 and decreased compared to $109 million in the third quarter of fiscal 2024 and $107 million in the fourth quarter of fiscal 2023 primarily due to the timing of closing large customer contracts and churn in the BlackBerry Spark business.

The Company previously stated that it expected Cybersecurity TCV billings to continue to exceed Cybersecurity revenue in fiscal 2024.

Cybersecurity TCV billings exceeded Cybersecurity revenue in fiscal 2024.

Recurring Software Product Revenue Percentage

The Company defines recurring software product revenue percentage as recurring software product revenue divided by total Software & Services revenue.

Recurring software product revenue is comprised of subscription and term licenses, maintenance arrangements, royalty arrangements and perpetual licenses recognized ratably under ASC 606.

Total software and services revenue is comprised of recurring product revenue, non-recurring product revenue and professional services.

Total Software & Services revenue is comprised of recurring product revenue, non-recurring product revenue and professional services.

The Company uses recurring software product revenue percentage to provide visibility into the revenue expected to be recognized in the current and future periods.

Total Software and Services product revenue, excluding professional services, was approximately 90% recurring in the fourth quarter of fiscal 2023 and increased compared to approximately 80% recurring in the third quarter of fiscal 2023 and fourth quarter of fiscal 2022.

Total Software & Services product revenue, excluding professional services, was approximately 90% recurring in the fourth quarter of fiscal 2024 and increased compared to approximately 70% recurring in the third quarter of fiscal 2024 due to product mix and was consistent with the fourth quarter of fiscal 2023.

QNX Royalty Backlog

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The revenue that the Company will recognize is subject to several factors, including actual volumes and potential terminations or modifications to customer contracts.

The Company’s QNX royalty backlog was approximately $640 million at the end of the fourth quarter of fiscal 2023 and increased compared to approximately $560 million at the end of the first quarter of fiscal 2023.

The Company’s QNX royalty backlog was approximately $815 million at the end of the fourth quarter of fiscal 2024 and increased compared to approximately $640 million at the end of the fourth quarter of fiscal 2023.

Results of Operations - Fiscal year ended February 29, 2024 compared to fiscal year ended February 28, 2023

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Cybersecurity

The decrease in Cybersecurity revenue of $59 million was primarily due to a decrease of $47 million relating to product revenue in BlackBerry Spark, a decrease of $12 million relating to professional services and a decrease of $3 million relating to non-automotive OEM business, partially offset by an increase of $6 million relating to product revenue in Secusmart.

The Company previously stated that it expected Cybersecurity revenue in fiscal 2023 to be broadly consistent with fiscal 2022.

Cybersecurity revenue in fiscal 2023 decreased compared to fiscal 2022 due to both elongated sales cycles in government causing some large deals to slip into later quarters and customer churn in the BlackBerry Spark business.

The Company expects Cybersecurity revenue for the first quarter of fiscal 2024 to increase sequentially and be in the range of $100 million to $110 million.

The Company expects Cybersecurity revenue for fiscal 2024 as a whole to be in the range of $425 million to $450 million.

The Company previously disclosed long-term Cybersecurity revenue targets in the first quarter of fiscal 2023.

The Company expects to disclose updated long-term Cybersecurity revenue targets in the first quarter of fiscal 2024.

The increase in IoT revenue of $28 million was primarily due to an increase of $18 million in QNX development seat revenue and an increase of $15 million in BlackBerry QNX royalty revenue, partially offset by a decrease of $5 million relating to professional services.

The Company previously stated that it expected IoT revenue to be between $205 million and $210 million for fiscal 2023.

IoT revenue was $206 million in fiscal 2023.

The Company expects IoT revenue to be in the range of $50 million to $53 million in the first quarter of fiscal 2024 and expects IoT revenue to be in the range of $240 million and $250 million for fiscal 2024 as a whole.

The decrease in Cybersecurity revenue of $40 million was primarily due to a decrease of $28 million relating to product revenue in BlackBerry Spark, a decrease of $8 million relating to product revenue in Secusmart and a decrease of $3 million in professional services.

The Company previously stated that it expected Cybersecurity revenue for fiscal 2024 as a whole to be in the range of $369 million to $374 million.

Cybersecurity revenue for fiscal 2024 as a whole was $378 million.

The Company expects Cybersecurity revenue to be in the range of $78 million to $82 million in the first quarter of fiscal 2025, and for the full year to be in the range of $350 million to $365 million in fiscal 2025.

The increase in IoT revenue of $9 million was primarily due to an increase of $12 million in BlackBerry QNX royalty revenue and an increase of $3 million in product revenue from BlackBerry Radar, partially offset by a decrease of $6 million in professional services.

The Company previously stated that it expected IoT revenue to be in the range of $211 million to $215 million for fiscal 2024 as a whole.

IoT revenue for fiscal 2024 was $215 million.

The Company expects IoT revenue to be in the range of $48 million to $52 million in the first quarter of fiscal 2025, and for the full year to be in the range of $220 million to $235 million in fiscal 2025.

The Company previously stated that it expected total Software & Services revenue, excluding potential revenue from BlackBerry IVY, to be in the range of $580 million and $589 million for fiscal 2024 as a whole.

Total Software & Services revenue, excluding potential revenue from BlackBerry IVY for fiscal 2024 was $593 million due to higher revenue in Cybersecurity as described above.

Licensing and Other

The decrease in Licensing and Other revenue of $31 million was primarily due to a decrease of $23 million in revenue from the Company’s intellectual property licensing arrangements due to a proposed patent portfolio sale transaction with Catapult IP Innovations, Inc.

(the “Catapult Sale Transaction”) that was pending in the fourth quarter of fiscal 2023 and associated restrictions on monetization activity and a decrease of $7 million in SAF revenue.

The Company expects revenue from intellectual property licensing to be approximately $5 million per quarter in fiscal 2024, excluding the Malikie Transaction.

The increase in Licensing and Other revenue of $228 million was primarily due to an increase of $218 million related to the completed Malikie Transaction and an increase of $10 million in revenue from the Company’s intellectual property licensing arrangements.

The Company expects Licensing and Other revenue to be approximately $4 million in each of the four quarters of fiscal 2025.

The Company expects total Company revenue to be approximately $130 million to $138 million in the first quarter of fiscal 2025 and total Company revenue to be approximately $586 million to $616 million in fiscal 2025.

Revenue by Geography

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North America Revenue

The decrease in North America revenue of $63 million was primarily due to a decrease of $28 million in product revenue in BlackBerry Spark, a decrease of $23 million in Licensing and Other revenue due to the reasons discussed above in “Revenue by Segment” and a decrease of $17 million relating to professional services, partially offset by an increase of $7 million in BlackBerry QNX royalty revenue.

The increase in North America revenue of $206 million was primarily due to an increase of $228 million in Licensing and Other revenue due to the reasons discussed above in “Revenue by Segment”, an increase of $4 million in BlackBerry QNX development seat revenue and an increase of $4 million relating to product revenue in AtHoc, partially offset by a decrease of $20 million in product revenue in BlackBerry Spark and a decrease of $13 million in professional services.

Europe, Middle East and Africa Revenue

The decrease in Europe, Middle East and Africa revenue of $12 million was primarily due to a decrease of $19 million in product revenue in BlackBerry Spark and a decrease of $3 million in SAF revenue, partially offset by an increase of $6 million relating to product revenue in Secusmart and an increase of $5 million in BlackBerry QNX development seat revenue.

The decrease in Europe, Middle East and Africa revenue of $50 million was primarily due to a decrease of $38 million relating to product revenue in Secusmart, a decrease of $15 million in product revenue in BlackBerry Spark and a decrease of $3 million in BlackBerry QNX development seat revenue, partially offset by an increase of $6 million in BlackBerry QNX royalty revenue.

Other Regions Revenue

The increase in Other regions revenue of $13 million was primarily due to an increase of $8 million in BlackBerry QNX development seat revenue and an increase of $6 million in BlackBerry QNX royalty revenue, partially offset by a decrease of $2 million in SAF revenue.

The increase in Other regions revenue of $41 million was primarily due to an increase of $27 million relating to product revenue in Secusmart, an increase of $7 million in product revenue in BlackBerry Spark, an increase of $6 million in professional services and an increase of $2 million in BlackBerry QNX royalty revenue.

Consolidated Gross Margin

Consolidated gross margin decreased by $48 million to approximately $419 million in fiscal 2023 (fiscal 2022 - $467 million).

The decrease was primarily due to a decrease in revenue from BlackBerry Spark and Licensing and Other, partially offset by an increase in revenue from BlackBerry QNX and Secusmart due to the reasons discussed above in “Revenue by Segment”, as much of the Company’s cost of sales does not significantly fluctuate based on business volume.

Consolidated gross margin increased by $101 million to approximately $520 million in fiscal 2024 (fiscal 2023 - $419 million).

The increase was primarily due to the completed Malikie Transaction and an increase in revenue from Secusmart, partially offset by a decrease in revenue from BlackBerry Spark due to the reasons discussed above in “Revenue by Segment”, as much of the Company’s cost of sales does not significantly fluctuate based on business volume.

Consolidated Gross Margin Percentage

Consolidated gross margin percentage decreased by 2.9%, to approximately 61.0% of consolidated revenue in fiscal 2024 (fiscal 2023 - 63.9%).

The decrease was primarily due to lower gross margin percentage in Spark and Licensing and Other due to the reasons discussed above in “Revenue by Segment” as the cost of sales for these units is relatively fixed, partially offset by a change in mix, specifically higher contribution from BlackBerry QNX and Secusmart due to the reasons discussed above in “Revenue by Segment”.

The decrease was primarily due to a change in mix, specifically higher contribution from Licensing and Other, which had a lower gross margin percentage due to the completed Malikie Transaction, partially offset by a higher gross margin contribution from Secusmart software licenses, which had a higher relative gross margin percentage.

Gross Margin by Segment

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Cybersecurity IoT Licensing and Other Segment Totals

February 28, Change February 28, Change February 28, Change February 28, Change

Feb 29 Feb 28 Change Feb 29 Feb 28 Change Feb 29 Feb 28 Change Feb 29 Feb 28 Change

2024 2023 2024 2023 2024 2023 2024 2023

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Cybersecurity

The decrease in Cybersecurity gross margin of $50 million was primarily due to the reasons discussed above in “Revenue by Segment”, as the cost of sales for most Cybersecurity products does not significantly fluctuate based on business volume, and to an increase in infrastructure costs allocated due to the Company no longer supporting or maintaining legacy device operating systems that previously were included under Licensing and Other for SAF.

The decrease in Cybersecurity gross margin percentage of 3% was primarily due to an increase in infrastructure costs allocated, partially offset by a higher gross margin percentage on professional services revenue in Secusmart.

The increase in IoT gross margin of $21 million was primarily due to the reasons discussed above in “Revenue by Segment”, partially offset by an increase in salaries expense.

The decrease in IoT gross margin percentage of 1% was primarily due to an increase in salaries expense within cost of goods sold.

The increase in Cybersecurity gross margin of $3 million was primarily due to the reasons discussed above in “Revenue by Segment”, a decrease of $13 million in network infrastructure costs and a change in mix, specifically a higher gross margin contribution from Secusmart software licenses, which had a higher relative gross margin percentage.

The increase in Cybersecurity gross margin percentage of 6% was primarily due to the same reasons discussed above.

The increase in IoT gross margin of $10 million was primarily due to the reasons discussed above in “Revenue by Segment”, as the Company’s cost of sales does not significantly fluctuate based on business volume.

The increase in IoT gross margin percentage of 1% was primarily due to the reasons discussed above in “Revenue by Segment”, as the Company’s cost of sales does not significantly fluctuate based on business volume.

Licensing and Other

The decrease in Licensing and Other gross margin of $20 million was primarily due to the reasons discussed above in “Revenue by Segment”, partially offset by a decrease in infrastructure costs due to the Company no longer supporting or maintaining legacy device operating systems.

Licensing and Other gross margin percentage was consistent with fiscal 2023.

The increase in Licensing and Other gross margin of $88 million was primarily due to the completed Malikie Transaction.

The increase in Licensing and Other gross margin percentage of 27% was primarily due to the completed Malikie Transaction, which had a lower relative gross margin percentage due to the cost basis of the sold assets which were de-recognized.

Operating Expenses

The table below presents a comparison of research and development, selling, marketing and administration, and amortization expense for fiscal 2023 compared to fiscal 2022 and fiscal 2022 compared to fiscal 2021.

The Company believes it is meaningful to provide a sequential comparison between fiscal 2023 and fiscal 2022.

The table below presents a comparison of research and development, sales and marketing, general and administrative, and amortization expense for fiscal 2024 compared to fiscal 2023 and fiscal 2023 compared to fiscal 2022.

For the Fiscal Years Ended

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Research and development 186 207 (21) 219 (12)

Selling, marketing and administration 340 297 43 344 (47)

Sales and marketing 171 176 (5) 183 (7)

General and administrative 181 164 17 114 50

Amortization 54 96 (42) 165 (69)

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Research and development 21.8 % 31.6 % 30.5 %

Selling, marketing and administration 51.8 % 41.4 % 38.5 %

Sales and marketing 20.0 % 26.8 % 25.5 %

General and administrative 21.2 % 25.0 % 15.9 %

Amortization 6.3 % 14.6 % 23.0 %

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GAAP Operating Expenses

Operating expenses increased by $675 million, or 143.9% in fiscal 2023 compared to fiscal 2022.

The increase was primarily due to the Fiscal 2023 Goodwill Impairment Charge of $245 million, the Fiscal 2023 LLA Impairment Charge of $235 million, a $165 million litigation settlement, the difference between the Fiscal 2023 Debentures Fair Value Adjustment and the fair value adjustment related to the Debentures incurred in fiscal 2022 of $74 million, a decrease in benefits of $43 million in government subsidies resulting from claims filed for the Canada Emergency Wage Subsidy and Hardest-Hit Business Recovery Program programs (“COVID-19 subsidies”) to support the business through the COVID-19 pandemic, and an increase of $11 million in restructuring costs, partially offset by a decrease of $69 million in amortization expense, a decrease of $21 million in salaries and benefits expenses and a decrease of $7 million in sales incentive plan costs.

Operating expenses decreased by $499 million, or 43.6% in fiscal 2024 compared to fiscal 2023.

The decrease was primarily due to a decrease of $220 million in impairment of long-lived assets, a decrease of $210 million in goodwill impairment, a $165 million litigation settlement in fiscal 2023 that did not recur, a decrease of $42 million in amortization expense and a decrease in $20 million in salaries and benefits expenses, partially offset by the difference between the Fiscal 2024 Debentures Fair Value Adjustment and the fair value adjustment related to the Debentures incurred in fiscal 2023 of $141 million, an increase of $27 million in restructuring costs, a decrease in benefits of $4 million in government subsidies resulting from claims filed for the Canada Emergency Wage Subsidy and Hardest-Hit Business Recovery Program programs (“COVID-19 subsidies”) to support the business through the COVID-19 pandemic and an increase of $2 million in the Company’s deferred share unit costs.

Adjusted Operating Expenses

Adjusted operating expenses decreased by $29 million, or 5.6%, to $487 million in fiscal 2024, compared to $516 million in fiscal 2023.

The decrease was primarily attributable to a decrease of $36 million in amortization expense, a decrease of $21 million in salaries and benefits expenses, a decrease of $7 million in sales incentive plan costs and a $6 million gain on sale of property, partially offset by a decrease in benefits of $43 million in COVID-19 subsidies and an increase of $5 million in bad debt expense.

The decrease was primarily attributable to a decrease of $20 million in salaries and benefits expenses and a benefit of $17 million related to the release of an accrued liability relating to the Company’s legacy mobile device business, partially offset by a decrease in benefits of $4 million in COVID-19 subsidies, an increase of $2 million in amortization expense and an increase of $2 million in the Company’s deferred share unit costs.

The Company expects its average quarterly non-GAAP operating expense run rate to be approximately $110 million in fiscal 2025.

Research and Development Expenses

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Research and development expenses decreased by $21 million, or 10.1% in fiscal 2024 compared to fiscal 2023.

The decrease was primarily attributable to a decrease of $8 million in salaries and benefits expenses and a decrease of $5 million in consulting costs, partially offset by a decrease in benefits of $2 million in claims filed with the Ministry of Innovation, Science and Economic Development Canada relating to its Strategic Innovation Fund program’s investment in BlackBerry QNX (“SIF”).

Adjusted research and development expenses decreased by $13 million, or 6.2% to $198 million in fiscal 2023 (fiscal 2022 - $211 million).

The decrease was primarily attributable to a decrease of $11 million in salaries and benefits expenses and a decrease of $3 million in consulting costs, a decrease of $3 million in variable incentive plan costs and a decrease of $2 million in stock based compensation expense.

Adjusted research and development expenses decreased by $20 million, or 10.1%, to $178 million in fiscal 2024 compared to $198 million in fiscal 2023.

The decrease was primarily due to the same reasons described above on a U.S.

Selling, Marketing and Administration Expenses

Selling, marketing and administration expenses consist primarily of marketing, advertising and promotion, salaries and benefits, external advisory fees, information technology costs, office and related staffing infrastructure costs and travel expenses.

Selling, marketing and administration expenses increased by $43 million, or 14.5% in fiscal 2023 compared to fiscal 2022.

The increase was primarily due to a decrease in benefits of $43 million in COVID-19 subsidies, an increase of $11 million in restructuring costs, an increase of $5 million in bad debt expense and an increase of $3 million in travel expenses, partially offset by a decrease of $13 million in salaries and benefits expenses and a decrease of $8 million in sales incentive plan costs.

Adjusted selling, marketing and administration expenses increased by $31 million, or 11.1%, to $310 million in fiscal 2023 compared to $279 million in fiscal 2022.

The increase was primarily due to the same reasons above, excluding the increase in restructuring costs.

GAAP basis, excluding the decrease in stock based compensation expense.

Sales and Marketing Expenses

Sales and marketing expenses consist primarily of marketing, advertising and promotion, salaries and benefits, information technology costs and travel expenses.

Sales and marketing expenses decreased by $5 million, or 2.8% in fiscal 2024 compared to fiscal 2023.

The decrease was primarily due to a decrease of $6 million in salaries and benefits and a decrease of $4 million in marketing and advertising costs, partially offset by an increase of $3 million in consulting costs and an increase of $1 million in stock based compensation expense.

Adjusted sales and marketing expenses decreased by $6 million, or 3.5%, to $165 million in fiscal 2024 compared to $171 million in fiscal 2023.

The decrease was primarily due to same reasons described above on a U.S.

GAAP basis, excluding the increase in stock based compensation expense.

General and Administrative Expenses

General and administration expenses consist primarily of salaries and benefits, external advisory fees, information technology costs, office and related staffing infrastructure costs.

General and administrative expenses increased by $17 million, or 10.4%, in fiscal 2024 compared to fiscal 2023.

The increase was primarily due to an increase of $27 million in restructuring costs, a decrease in benefits of $4 million in COVID-19 subsidies, an increase of $2 million in variable incentive plan costs and an increase of $2 million in stock based compensation expense, partially offset by a benefit of $17 million related to the release of an accrued liability relating to the Company’s legacy mobile device business.

Adjusted general and administrative expenses decreased by $11 million, or 7.9%, to $128 million in fiscal 2024 compared to $139 million in fiscal 2023.

The decrease was primarily due a benefit of $17 million related to the release of an accrued liability relating to the Company’s legacy mobile device business, a decrease of $3 million in consulting costs, partially offset by a decrease in benefits of $4 million in COVID-19 subsidies, an increase of $2 million in variable incentive plan costs and a decrease of $2 million in the Company’s deferred share unit cost.

Amortization Expense

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Amortization included in Operating Expense

The decrease in amortization expense included in operating expense of $69 million was due to a decrease in intellectual property held and used related to the previously pending Catapult Sale Transaction and due to the lower cost base of assets.

Adjusted amortization expense decreased by $36 million to $14 million in fiscal 2023 compared to $50 million in fiscal 2022 due to the reasons described above on a U.S.

The decrease in amortization expense included in operating expense of $42 million was primarily due to the lower cost base of acquired technology assets due to the impairment of long-lived assets in fiscal 2023.

Adjusted amortization expense increased by $2 million to $16 million in fiscal 2024 compared to $14 million in fiscal 2023 due to an increase in patent amortization expense included in operating expenses as a result of the decrease in revenue from the Company’s intellectual property licensing arrangements.

Amortization included in Cost of Sales

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Investment Income, Net

Investment income, net, which includes the interest expense from the Debentures, decreased by $16 million to investment income, net of $5 million in fiscal 2023 compared to investment income, net of $21 million in fiscal 2022.

The decrease in investment income, net was primarily due to gains recognized from a return of capital from a non-marketable equity investment in fiscal 2022 and lower average cash and investment balances, partially offset by a higher yield on cash and investments in fiscal 2023.

For fiscal 2023, the Company’s net effective income tax expense rate was approximately 2% (fiscal 2022 - net effective income tax expense of approximately 37%).

The Company’s net effective income tax rate reflects the change in unrecognized income tax benefits, if any, and the fact that the Company has a significant valuation allowance against its deferred tax assets, and in particular, the change in fair value of the 1.75% Debentures, amongst other items, was offset by a corresponding adjustment of the valuation allowance.

Investment income, net, which includes the interest expense from the Debentures and the Notes, increased by $14 million to investment income, net of $19 million in fiscal 2024 compared to investment income, net of $5 million in fiscal 2023.

The increase in investment income, net was primarily due to a higher yield on cash and investments and interest income on significant financing components within certain revenue contracts with customers, partially offset by lower average cash and investment balances.

For fiscal 2024, the Company’s net effective income tax expense rate was approximately 23% (fiscal 2023 - net effective income tax expense rate of approximately 2%).

The Company’s net effective income tax rate reflects the change in unrecognized income tax benefits, if any, and the fact that the Company has a significant valuation allowance against its deferred tax assets, and in particular, the change in loss carry forwards, research and development credits, amongst other items, was offset by a corresponding adjustment of the valuation allowance.

The Company’s net effective income tax rate also reflects the geographic mix of earnings in jurisdictions with different income tax rates.

Net Income (Loss)

The Company’s net loss for fiscal 2023 was $734 million, or $1.27 basic loss per share and $1.35 diluted loss per share on a U.S.

GAAP basis (fiscal 2022 - net income of $12 million, or $0.02 basic earnings per share and $0.31 diluted loss per share).

The increase in net loss of $746 million was primarily due to an increase in operating expenses, as described above in “Operating Expenses”, a decrease in revenue as described above in “Revenue by Segment” and a decrease in gross margin percentage, as described above in “Consolidated Gross Margin Percentage”.

Adjusted net loss for fiscal 2023 was $103 million (fiscal 2022 - adjusted net loss of $55 million).

The increase in adjusted net loss of $48 million was primarily due to a decrease in revenue as described above in “Revenue by Segment” and a decrease in gross margin percentage, as described above in “Consolidated Gross Margin Percentage”, partially offset by a decrease in operating expenses as described above in “Operating Expenses”.

The Company’s net loss for fiscal 2024 was $130 million, or $0.22 basic and diluted loss per share on a U.S.

GAAP basis (fiscal 2023 - net loss of $734 million, or $1.27 basic loss per share and $1.35 diluted loss per share).

The decrease in net loss of $604 million was primarily due to a decrease in operating expenses, as described above in “Operating Expenses” and an increase in revenue as described above in “Revenue by Segment”, partially offset by a decrease in gross margin percentage, as described above in “Consolidated Gross Margin Percentage”.

Adjusted net income for fiscal 2024 was $31 million (fiscal 2023 - adjusted net loss of $103 million).

The increase in adjusted net income of $134 million was primarily due to an increase in revenue as described above in “Revenue by Segment” and a

decrease in operating expenses as described above in “Operating Expenses”, partially offset by a decrease in gross margin percentage, as described above in “Consolidated Gross Margin Percentage”.

The Company expects a sequential increase in operating cash usage in the first quarter of fiscal 2025, but a year-on-year improvement in fiscal 2025 after adjusting for the impact of the sale of our legacy patent portfolio in the first quarter of fiscal 2025.

The Company expects non-GAAP EPS to be in the range of ($0.04) to ($0.06), and adjusted EBITDA to be in the range of negative $15 million to negative $25 million in the first quarter of fiscal 2025.

The Company expects non-GAAP EPS to be in the range of ($0.02) to ($0.06), and adjusted EBITDA to be in the range of breakeven to $10 million in fiscal 2025.

The Company expects to return to positive non-GAAP EPS and positive cash flow in the fourth quarter of fiscal 2025.

The Company does not provide a reconciliation of expected adjusted EBITDA and expected Non-GAAP basic EPS for the first quarter and full fiscal year 2025 to the most directly comparable expected GAAP measures because it is unable to predict with reasonable certainty, among other things, restructuring charges and impairment charges and, accordingly, a reconciliation is not available without unreasonable effort.

These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the guidance period.

The weighted average number of shares outstanding was 585 million common shares for basic loss and diluted loss per share for the fiscal year ended February 29, 2024.

The weighted average number of shares outstanding was 579 million common shares for basic loss per share and 639 million common shares for diluted loss per share for the fiscal year ended February 28, 2023.

The weighted average number of shares outstanding was 571 million common shares for basic earnings per share and 631 million common shares for diluted loss per share for the fiscal year ended February 28, 2022.

Common Shares Outstanding

On March 28, 2023, there were 582 million voting common shares, options to purchase 0.5 million voting common shares, 20 million restricted share units and 2 million deferred share units outstanding.

In addition, 60.8 million common shares are issuable upon conversion in full of the 1.75% Debentures, as described in Note 6 to the Consolidated Financial Statements.

On April 1, 2024, there were 589 million voting common shares, options to purchase 0.2 million voting common shares, 19 million restricted share units and 1 million deferred share units outstanding.

In addition, 51.5 million common shares are issuable upon conversion in full of the Notes, as described in Note 6 to the Consolidated Financial Statements.

The Company has not paid any cash dividends during the last three fiscal years.

Results of Operations - Three months ended February 29, 2024 compared to the three months ended February 28, 2023

The following section sets forth certain unaudited consolidated statements of operations data, which is expressed in millions of dollars, except for share and per share amounts and as a percentage of revenue, for the three months ended February 28, 2023, February 28, 2022 and February 28, 2021:

For the Three Months Ended

(in millions, except for share and per share amounts)

February 28, 2023 February 28, 2022 Change February 28, 2021 Change

Revenue $ 151 $ 185 $ (34) $ 210 $ (25)

Gross margin 100 124 (24) 152 (28)

Operating expenses 599 (22) 621 465 (487)

Investment income (loss), net 6 (1) 7 — (1)

Income (loss) before income taxes (493) 145 (638) (313) 458

Provision for income taxes 2 1 1 2 (1)

Net income (loss) $ (495) $ 144 $ (639) $ (315) $ 459

Earnings (loss) per share - reported

Basic $ (0.85) $ 0.25 $ (1.10) $ (0.56) $ 0.81

$ (0.85) $ (0.03) $ (0.82) $ (0.56) $ 0.53

Weighted-average number of shares outstanding (000’s)

Basic 581,493 575,883 566,089

581,493 636,716 566,089

______________________________

(1) Diluted loss per share on a U.S.

GAAP basis in the fourth quarter of 2023 and 2021 do not include the dilutive effect of the Debentures as to do so would be anti-dilutive.

Diluted loss per share on a U.S.

GAAP basis in the fourth quarter of 2023, 2022 and 2021 do not include the dilutive effect of stock-based compensation as to do so would be anti-dilutive.

Revenue by Segment

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Cybersecurity

The decrease in Cybersecurity of $34 million was primarily due to a decrease of $19 million relating to product revenue in Secusmart, a decrease of $13 million relating to product revenue in BlackBerry Spark and a decrease of $4 million relating to professional services.

The increase in IoT revenue of $1 million was primarily due to an increase of $6 million in BlackBerry QNX royalty revenue and an increase of $2 million in Blackberry QNX development seat revenue, partially offset by a decrease of $6 million relating to professional services.

The increase in Cybersecurity revenue of $4 million was primarily due to an increase of $5 million relating to product revenue in Secusmart and an increase of $1 million in professional services, partially offset by a decrease of $2 million relating to product revenue in BlackBerry Spark.

The Company previously stated that it expected Cybersecurity revenue in the fourth quarter of fiscal 2024 to be in the range of $83 million to $88 million.

Cybersecurity revenue in the fourth quarter of fiscal 2024 was $92 million.

The increase in IoT revenue of $13 million was primarily due to an increase of $8 million in BlackBerry QNX development seat revenue, an increase of $2 million in BlackBerry QNX royalty revenue and an increase of $2 million in professional services.

The Company previously stated that it expected IoT revenue in the fourth quarter of fiscal 2024 to be in the range of $62 million to $66 million and to be higher than in any previous quarter.

IoT revenue in the fourth quarter of fiscal 2024 was $66 million and was higher than any previous quarter.

Licensing and Other

The decrease in Licensing and Other revenue of $1 million was primarily due to a decrease of $1 million in SAF revenue.

The increase in Licensing and Other revenue of $5 million was primarily due to an increase of $5 million in revenue from the Company’s intellectual property licensing arrangements.

The Company previously stated that it expected revenue from intellectual property licensing to be approximately $5 million per quarter in fiscal 2024, excluding the Malikie Transaction.

Revenue from intellectual property licensing was approximately $15 million excluding the Malikie Transaction due to higher licensing program royalty revenue.

The Company previously stated that it expected total BlackBerry revenue in the fourth quarter of fiscal 2024 to be in the range of $150 million to $159 million.

Total BlackBerry revenue in the fourth quarter of fiscal 2024 was $173 million due to higher revenue in Cybersecurity and Licensing and Other as described above.

GAAP Revenue by Geography

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North America Revenue

The decrease in North America revenue of $16 million was primarily due to a decrease of $8 million relating to professional services and a decrease of $8 million in product revenue in BlackBerry Spark, partially offset by an increase of $2 million in BlackBerry QNX development seats revenue.

The increase in North America revenue of $7 million was primarily due to an increase of $5 million in Licensing and Other revenue due to the reasons discussed above in “Revenue by Segment”, an increase of $3 million in BlackBerry QNX development seats revenue, an increase of $2 million in BlackBerry QNX royalty revenue and an increase of $2 million in product revenue in Radar, partially offset by a decrease of $7 million in product revenue in BlackBerry Spark.

Europe, Middle East and Africa Revenue

The decrease in Europe, Middle East and Africa revenue of $20 million was primarily due to a decrease of $17 million relating to product revenue in Secusmart, a decrease of $4 million in product revenue in BlackBerry Spark and a decrease of $2 million relating to professional services, partially offset by an increase of $1 million in BlackBerry QNX royalty revenue.

Europe, Middle East and Africa revenue in the fourth quarter of fiscal 2024 was consistent with revenue in the fourth quarter of fiscal 2023.

The increase of $3 million in product revenue in Secusmart and the increase of $2 million in BlackBerry QNX development seat revenue was offset by the decrease of $5 million relating to product revenue in BlackBerry Spark.

Other Regions Revenue

The increase in Other regions revenue of $2 million was primarily due to an increase of $4 million in BlackBerry QNX development seat revenue, partially offset by a decrease of $1 million in product revenue in BlackBerry Spark.

The increase in Other regions revenue of $16 million was primarily due to an increase of $10 million in product revenue in BlackBerry Spark, an increase of $3 million in BlackBerry QNX development seat revenue and an increase of $2 million in professional services.

Consolidated Gross Margin

Consolidated gross margin decreased by $24 million to approximately $100 million in the fourth quarter of fiscal 2023 (fourth quarter of fiscal 2022 - $124 million).

The decrease was primarily due to a decrease in revenue from BlackBerry Spark and Secusmart due to the reasons discussed above in “Revenue by Segment” as much of the Company’s cost of sales does not significantly fluctuate based on business volume.

Consolidated gross margin increased by $29 million to approximately $129 million in the fourth quarter of fiscal 2024 (fourth quarter of fiscal 2023 - $100 million).

The increase was primarily due to an increase in revenue from BlackBerry QNX and Licensing and Other due to the reasons discussed above in “Revenue by Segment” as much of the Company’s cost of sales does not significantly fluctuate based on business volume.

Consolidated Gross Margin Percentage

Consolidated gross margin percentage decreased by 0.8%, to approximately 66.2% of consolidated revenue in the fourth quarter of fiscal 2023 (fourth quarter of fiscal 2022 - 67.0%).

The decrease was primarily due to a lower gross margin percentage in IoT and BlackBerry Spark due to the reasons discussed below in “Gross Margin by Segment”, partially offset by a change in mix, specifically higher contribution from BlackBerry QNX.

Consolidated gross margin percentage increased by 8.4%, to approximately 74.6% of consolidated revenue in the fourth quarter of fiscal 2024 (fourth quarter of fiscal 2023 - 66.2%).

The increase was primarily due to a higher gross margin percentage in Licensing and Other due to the reasons discussed below in “Gross Margin by Segment” and higher gross margin contribution from Secusmart software licenses, which had a higher relative gross margin percentage.

Gross Margin by Segment

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Cybersecurity IoT Licensing and Other Segment Totals

February 28, Change February 28, Change February 28, Change February 28, Change

Feb 29 Feb 28 Change Feb 29 Feb 28 Change Feb 29 Feb 28 Change Feb 29 Feb 28 Change

2024 2023 2024 2023 2024 2023 2024 2023

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Cybersecurity

The decrease in Cybersecurity gross margin of $23 million was primarily due to the reasons discussed above in “Revenue by Segment”, as the cost of sales for most Cybersecurity products does not significantly fluctuate based on business volume, and an increase in infrastructure costs allocated due to the Company no longer supporting or maintaining legacy device operating systems.

The decrease in Cybersecurity gross margin percentage of 2% was primarily due to an increase in infrastructure costs allocated.

The decrease in IoT gross margin of $1 million was primarily due to the reasons discussed above in “Revenue by Segment”, partially offset by an increase in variable incentive plan costs.

The decrease in IoT gross margin percentage of 4% was primarily due to an increase in variable incentive plan costs.

The increase in Cybersecurity gross margin of $8 million was primarily due to the reasons discussed above in “Revenue by Segment”, a decrease of $2 million in network infrastructure costs and a change in mix, specifically a higher gross margin contribution from Secusmart product revenue, which had a higher relative gross margin percentage.

The increase in Cybersecurity gross margin percentage of 6% was primarily due to the same reasons discussed above.

The increase in IoT gross margin of $13 million was primarily due to the reasons discussed above in “Revenue by Segment”, as the Company’s cost of sales does not significantly fluctuate based on business volume.

The increase in IoT gross margin percentage of 4% was primarily due to the same reasons discussed above.

Licensing and Other

Licensing and Other gross margin of $6 million was consistent with the fourth quarter of fiscal 2022.

The decrease in revenue discussed above in “Revenue by Segment” was offset by a decrease in infrastructure costs due to the Company no longer supporting or maintaining legacy device operating systems.

The increase in Licensing and Other gross margin percentage of 5% was primarily due to a decrease in infrastructure costs due to the Company no longer supporting or maintaining legacy device operating systems.

The increase in Licensing and Other gross margin of $7 million was primarily due to the reasons discussed above in “Revenue by Segment” and a decrease of $1 million in patent costs included in cost of sales in the fourth quarter of fiscal 2023, which did not recur.

The increase in Licensing and Other gross margin percentage of 27% was primarily due to the same reasons discussed above.

Operating Expenses

The table below presents a comparison of research and development, selling, marketing and administration, and amortization expenses for the quarter ended February 28, 2023, compared to the quarter ended November 30, 2022 and the quarter ended February 28, 2022.

The table below presents a comparison of research and development, sales and marketing, general and administrative, and amortization expenses for the quarter ended February 29, 2024, compared to the quarter ended November 30, 2023 and the quarter ended February 28, 2023.

The Company believes it is meaningful to provide a sequential comparison between the fourth quarter of fiscal 2024 and the third quarter of fiscal 2024.

For the Three Months Ended

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Research and development 40 42 48 47

Selling, marketing and administration 83 89 64 92

Sales and marketing 41 42 48 45

General and administrative 53 43 35 19

Amortization 12 13 18 32

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Research and development 23.1 % 24.0 % 31.8 % 25.4 %

Selling, marketing and administration 55.0 % 52.7 % 34.6 % 43.8 %

General and administrative 23.7 % 24.0 % 31.8 % 24.3 %

Sales and marketing 30.6 % 24.6 % 23.2 % 10.3 %

Amortization 6.9 % 7.4 % 11.9 % 17.3 %

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GAAP Operating Expenses

Operating expenses increased by $488 million, or 439.6% in the fourth quarter of fiscal 2023, compared to $111 million in the third quarter of fiscal 2023 primarily due to the Fiscal 2023 Goodwill Impairment Charge of $245 million, impairment of long-lived assets of $231 million, the difference between the Q4 Fiscal 2023 Debentures Fair Value Adjustment and the fair value adjustment related to the Debentures incurred in the third quarter of fiscal 2023 of $30 million, an increase of $7 million in restructuring costs and an increase of $3 million in marketing and advertising costs, partially offset by a decrease of $17 million in variable incentive plan costs, a decrease of $8 million in amortization expense and a decrease of $2 million in patent abandonment costs.

Operating expenses increased by $621 million, or 2,822.73% in the fourth quarter of fiscal 2023, compared to $(22) million in the fourth quarter of fiscal 2022.

The increase was primarily attributable to the Fiscal 2023 Goodwill Impairment Charge of $245 million, impairment of long-lived assets of $231 million, the difference between the Q4 Fiscal 2023 Debentures Fair Value Adjustment and the fair value adjustment related to the Debentures incurred in the fourth quarter of fiscal 2022 of $139 million, a decrease in benefits of $14 million in COVID-19 subsidies, an increase of $7 million in restructuring costs and an increase of $5 million in stock compensation expense, partially offset by a decrease of $14 million in amortization expense and a decrease of $4 million in variable incentive plan costs.

Operating expenses increased by $47 million, or 34.1% in the fourth quarter of fiscal 2024, compared to $138 million in the third quarter of fiscal 2024 primarily due to the goodwill impairment charge of $35 million in the fourth quarter of fiscal 2024, the benefit of the fair value adjustment related to the 2020 Debentures incurred in the third quarter of fiscal 2024 of $13 million that did not recur and an increase of $11 million in restructuring costs, partially offset by a decrease of $7 million in impairment of long-lived assets and a decrease of $5 million in legal expenses.

Operating expenses decreased by $414 million, or 69.12% in the fourth quarter of fiscal 2024, compared to $599 million in the fourth quarter of fiscal 2023.

The decrease was primarily attributable to a decrease of $227 million in impairment of long-lived assets, a decrease of $210 million in goodwill impairment and a decrease of $6 million in amortization costs, partially offset by the benefit of the fair value adjustment related to the 2020 Debentures incurred in the fourth quarter of fiscal 2024 of $26 million that did not recur and an increase of $14 million in restructuring costs.

Adjusted Operating Expenses

Adjusted operating expenses decreased by $2 million, or 1.7%, to $113 million in the fourth quarter of fiscal 2024 compared to $115 million in the third quarter of fiscal 2024.

The decrease was primarily to a decrease of $17 million in variable incentive plan costs and a decrease of $1 million in foreign exchange losses, partially offset by an increase of $3 million in marketing and advertising costs.

Adjusted operating expenses increased by $1 million, or 0.9%, to $118 million in the fourth quarter of fiscal 2023, compared to $117 million in the fourth quarter of fiscal 2022.

The increase was primarily attributable to a decrease in benefits of $14 million in COVID-19 subsidies and an increase of $3 million in marketing and advertising costs, partially offset by a decrease of $7 million in amortization expense, a decrease of $4 million in variable incentive plan costs and a decrease of $3 million in salaries and benefits expenses.

The decrease was primarily due to a decrease of $5 million in legal expenses, and a decrease of $1 million in marketing and advertising costs, partially offset by an increase of $3 million in variable incentive plan costs and a benefit of $3 million related to a legal settlement in the third quarter of fiscal 2024 that did not recur.

Adjusted operating expenses decreased by $5 million, or 4.2%, to $113 million in the fourth quarter of fiscal 2024, compared to $118 million in the fourth quarter of fiscal 2023.

The decrease was primarily attributable to a decrease of $8 million in salaries

and benefits costs and a decrease of $5 million in marketing and advertising costs, partially offset by an increase of $8 million in variable incentive plan costs.

The Company previously stated that it expected non-GAAP sales and marketing expense to be approximately 27% of revenue, research and development to be approximately 30% of revenue, and general and administration, excluding amortization, to be approximately 20% of revenue in the fourth quarter of fiscal 2024.

Adjusted sales and marketing expense was 23% of revenue, adjusted research and development expense was 22% of revenue and adjusted general and administrative expense was 18% of revenue due to the expectation being based on achievement of the mid-point of the Company’s expected range for total revenue.

Research and Development Expenses

Research and development expenses consist primarily of salaries and benefits costs for technical personnel, new product development costs, travel expenses, office and building costs, infrastructure costs and other employee costs.

Research and development expenses increased by $1 million, or 2.1%, to $48 million in the fourth quarter of fiscal 2023 compared to $47 million in the fourth quarter of fiscal 2022, primarily due to an increase of $1 million in variable incentive plan costs.

Adjusted research and development expenses were $45 million in the fourth quarter of fiscal 2023, consistent with $45 million in the fourth quarter of fiscal 2022.

Selling, Marketing and Administration Expenses

Selling, marketing and administration expenses increased by $19 million, or 29.7%, to $83 million in the fourth quarter of fiscal 2023 compared to $64 million in the fourth quarter of fiscal 2022, primarily due to a decrease in benefits of $14 million in COVID-19 subsidies, an increase of $7 million in restructuring costs and an increase of $4 million stock compensation costs, partially offset by a decrease of $5 million in variable incentive plan costs.

Adjusted selling, marketing and administration expenses increased by $8 million, or 12.9%, to $70 million in the fourth quarter of fiscal 2023 compared to $62 million in the fourth quarter of fiscal 2022.

The increase was primarily due to a decrease in benefits of $14 million in COVID-19 subsidies, an increase of $3 million in marketing and advertising costs, partially offset by a decrease of $5 million in variable incentive plan costs and a decrease of $2 million in sales incentive plan costs.

Research and development expenses decreased by $8 million, or 16.7%, in the fourth quarter of fiscal 2024 compared to the fourth quarter of fiscal 2023, primarily due to a decrease of $5 million in salaries and benefit costs, a decrease of $2 million in consulting costs and a decrease of $1 million in stock compensation expense.

Adjusted research and development expenses decreased by $7 million, or 15.6%, to $38 million in the fourth quarter of fiscal 2024 compared to $45 million in the fourth quarter of fiscal 2023, was primarily due to the same reasons described above on a U.S.

GAAP basis, excluding the decrease in stock based compensation expense.

Sales and Marketing Expenses

Sales and marketing expenses consist primarily of marketing, advertising and promotion, salaries and benefits, information technology costs and travel expenses.

Sales and marketing expenses decreased by $7 million, or 14.6% in fiscal 2024, in the fourth quarter of fiscal 2024 compared to the fourth quarter of fiscal 2023, primarily due to a decrease of $4 million in advertising and marketing costs, a decrease of $3 million in salaries and benefit costs, partially offset by an increase $1 million in sales incentive plan costs.

Adjusted sales and marketing expenses decreased by $6 million, or 13.0%, to $40 million in the fourth quarter of fiscal 2024 compared to $46 million in the fourth quarter of fiscal 2023.

The decrease was primarily due to the same reasons described above on a U.S.

General and Administrative Expenses

General and administration expenses consist primarily of salaries and benefits, external advisory fees, information technology costs, office and related staffing infrastructure costs.

General and administrative expenses increased by $18 million, or 51.4%, in the fourth quarter of fiscal 2024 compared to the fourth quarter of fiscal 2023.

The increase was primarily due to an increase of $14 million in restructuring costs and an increase of $8 million in variable incentive plan costs, partially offset by a decrease of $2 million in stock compensation expense.

Adjusted general and administrative expenses increased by $7 million, or 29.2%, to $31 million in the fourth quarter of fiscal 2024 compared to $24 million in the fourth quarter of fiscal 2023.

The increase was primarily due to an increase of $8 million in variable incentive plan costs.

Amortization Expense

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Amortization included in Operating Expense

The decrease in amortization expense included in operating expense of $14 million was due to a decrease in intellectual property held and used related to the previously pending Catapult Sale Transaction and due to the lower cost base of assets.

Adjusted amortization expense decreased by $7 million to $3 million in the fourth quarter of fiscal 2023 compared to $10 million in the fourth quarter of fiscal 2022 due to the reasons described above on a U.S.

The decrease in amortization expense included in operating expense of $6 million was primarily due to the lower cost base of acquired technology assets.

Adjusted amortization expense increased by $1 million to $4 million in the fourth quarter of fiscal 2024 compared to $3 million in the fourth quarter of fiscal 2023 due to an increase in patent amortization expense included in operating expenses as a result of the decrease in revenue from the Company’s intellectual property licensing arrangements.

Amortization included in Cost of Sales

Amortization expense relating to certain property, plant and equipment and intangible assets employed in the Company’s service operations of $2 million was consistent with the fourth quarter of fiscal 2023.

The decrease in amortization expense relating to certain property, plant and equipment and intangible assets employed in the Company’s service operations of $1 million was primarily due to the lower cost base assets.

Investment Income (Loss), Net

Investment income, net, which includes the interest expense from the 1.75% Debentures, increased by $7 million to investment income, net of $6 million in the fourth quarter of fiscal 2023 compared to investment loss, net of $1 million in the fourth quarter of fiscal 2022.

The increase in investment income, net is primarily due to observable price changes on non-marketable equity investments without readily determinable fair value and a higher yield on cash and investments, partially offset by lower cash and investment balances.

Investment income, net, which includes the interest expense from the Debentures and Notes, decreased by $2 million to investment income, net of $4 million in the fourth quarter of fiscal 2024 compared to investment income, net of $6 million in the fourth quarter of fiscal 2023.

The decrease in investment income, net is primarily due to observable price changes on non-marketable equity investments without readily determinable fair value in the fourth quarter of fiscal 2023 that did not recur and lower cash and investment balances, partially offset by interest income on significant financing components within certain revenue contracts with customers and a higher yield on cash and investments.

For the fourth quarter of fiscal 2024, the Company’s net effective income tax expense rate was approximately 8% (fourth quarter of fiscal 2023 - net effective income tax expense rate of approximately 0%).

The Company’s net effective income tax rate reflects the change in unrecognized income tax benefits, if any, and the fact that the Company has a significant valuation allowance against its deferred tax assets, and in particular, the change in fair value of the Debentures, amongst other items, was offset by a corresponding adjustment of the valuation allowance.

The Company’s net effective income tax rate reflects the change in unrecognized income tax benefits, if any, and the fact that the Company has a significant valuation allowance against its deferred tax assets, and in particular, the change in loss carry forwards, research and development credits, amongst other items, was offset by a corresponding adjustment of the valuation allowance.

The Company’s net effective income tax rate also reflects the geographic mix of earnings in jurisdictions with different income tax rates.

1 unchanged sentence

The Company’s net loss for the fourth quarter of fiscal 2024 was $56 million, or $0.10 basic and diluted loss per share on a U.S.

GAAP basis (fourth quarter of fiscal 2022 - net income of $144 million, or $0.25 basic earnings per share and $0.03 diluted loss per share).

The decrease in net income of $639 million was primarily due to an increase in operating expenses, as described above in “Operating Expenses”, a decrease in revenue as described above in “Revenue by Segment” and a decrease in gross margin percentage as described above in “Consolidated Gross Margin Percentage”.

Adjusted net loss was $13 million in the fourth quarter of fiscal 2023 (fourth quarter of fiscal 2022 - adjusted net income of $6 million).

The decrease in adjusted net income of $19 million was primarily due to a decrease in revenue as described above in “Revenue by Segment”, a decrease in gross margin percentage, as described above in “Consolidated Gross Margin Percentage” and an increase in operating expenses, as described above in “Operating Expenses”.

GAAP basis (fourth quarter of fiscal 2023 - net loss of $495 million, or $0.85 basic and diluted loss per share).

The decrease in net loss of $439 million was primarily due to a decrease in operating expenses, as described above in “Operating Expenses”, partially offset by an increase in revenue, as described above in “Revenue by Segment” and an increase in gross margin percentage, as described above in “Consolidated Gross Margin Percentage”.

Adjusted net income was $16 million in the fourth quarter of fiscal 2024 (fourth quarter of fiscal 2023 - adjusted net loss of $13 million).

The increase in adjusted net income of $29 million was primarily due to an increase in revenue as described above in

“Revenue by Segment”, an increase in gross margin percentage, as described above in “Consolidated Gross Margin Percentage” and a decrease in operating expenses, as described above in “Operating Expenses”.

The weighted average number of shares outstanding was 588 million common shares for basic and diluted loss per share for the fourth quarter of fiscal 2024.

The weighted average number of shares outstanding was 576 million common shares for basic earnings per share and 637 million common shares for diluted loss per share for the fourth quarter of fiscal 2022.

The weighted average number of shares outstanding was 581 million common shares for basic and diluted loss per share for the fourth quarter of fiscal 2023.

Financial Condition

Liquidity and Capital Resources

Cash, cash equivalents, and investments decreased by $283 million to $487 million as at February 28, 2023 from $770 million as at February 28, 2022, primarily as a result of the U.S.

securities class actions settlement discussed in “Business Overview - Pearlstein Settlement” and changes in working capital, excluding the amounts payable in respect of the 1.75% Debentures.

The majority of the Company’s cash, cash equivalents, and investments are denominated in U.S.

dollars as at February 28, 2023.

Cash, cash equivalents, and investments decreased by $189 million to $298 million as at February 29, 2024 from $487 million as at February 28, 2023, primarily due to the repayment of the 2020 Debentures and Extension Debentures at maturity, partially offset by the issuance of the Notes, the completed Malikie Transaction and changes in working capital.

A comparative summary of cash, cash equivalents, and investments is set out below:

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Cash and cash equivalents $ 175 $ 295 $ (120) $ 378 $ (83)

Restricted cash equivalents and restricted short-term investments 27 28 (1) 28 —

Restricted cash and cash equivalents 25 27 (2) 28 (1)

Short-term investments 62 131 (69) 334 (203)

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Current Assets

The decrease in current assets of $300 million at the end of fiscal 2023 from the end of fiscal 2022 was primarily due to decreases in short term investments of $203 million, a decrease in cash and cash equivalents of $83 million, a decrease in accounts receivable, net of allowance of $18 million, a decrease of $13 million in other receivables and a decrease income taxes receivable of $6 million, partially offset by an increase in other current assets of $23 million.

At February 28, 2023, accounts receivable, net of allowance was $120 million, a decrease of $18 million from February 28, 2022.

The decrease was primarily due to lower revenue recognized over the three months ended February 28, 2023 compared to the three months ended February 28, 2022, offset by an increase in days sales outstanding to 75 days at the end of the fourth quarter of fiscal 2023 from 67 days at the end of the fourth quarter of fiscal 2022.

At February 28, 2023, other receivables was $12 million, a decrease of $13 million from February 28, 2022.

The decrease was primarily due to a decrease of $8 million relating to COVID-19 subsidies and a decrease of $6 million in in intellectual property licensing receivable.

At February 28, 2023, income taxes receivable was $3 million, a decrease of $6 million from February 28, 2022.

The decrease was primarily due to tax refunds received.

At February 28, 2023, other current assets was $182 million, an increase of $23 million from February 28, 2022.

The increase is primarily due to maintenance payments on intellectual property relating to the previously pending Catapult Sale Transaction of $23 million.

The decrease in current assets of $235 million at the end of fiscal 2024 from the end of fiscal 2023 was primarily due to a decrease in other current assets of $135 million, a decrease in cash and cash equivalents of $120 million and a decreases in short term investments of $69 million, partially offset an increase in accounts receivable, net of allowance of $79 million, an increase of $9 million in other receivables and an increase of income taxes receivable of $1 million.

At February 29, 2024, other current assets was $47 million, a decrease of $135 million from February 28, 2023.

The decrease was primarily due to a decrease in intellectual property of $141 million as a result of the completed Malikie Transaction, partially offset by an increase of $6 million in prepaid cloud services.

At February 29, 2024, income taxes receivable was $4 million, an increase of $1 million from February 28, 2023.

The increase was primarily due to tax installments and prepayments required in certain taxable jurisdictions.

At February 29, 2024, accounts receivable, net of allowance was $199 million, an increase of $79 million from February 28, 2023.

The increase was primarily due to higher revenue recognized over the three months ended February 29, 2024 compared to the three months ended February 28, 2023, and an increase in days sales outstanding to 100 days at the end of the fourth quarter of fiscal 2024 from 75 days at the end of the fourth quarter of fiscal 2023.

At February 29, 2024, other receivables was $21 million, an increase of $9 million from February 28, 2023.

The increase was primarily due to an increase of $12 million related to accretion of interest on the significant financing components within certain revenue contracts with customers, partially offset by a decrease of $3 million relating to GST/VAT receivables.

Current Liabilities

The increase in current liabilities of $332 million at the end of fiscal 2023 from the end of fiscal 2022 was primarily due to an increase in the amounts payable in respect of the 1.75% Debentures of $367 million, an increase in income taxes payable of $9

million and an increase in accounts payable of $2 million, partially offset by a decrease in deferred revenue, current of $32 million and a decrease in accrued liabilities of $14 million.

Accrued liabilities was $143 million, reflecting a decrease of $14 million compared to February 28, 2022, which was primarily attributable to a decrease of $4 million in operating lease liability, current, a decrease of $3 million in audit fee accrual, a decrease of $3 million in the Company’s deferred share unit liability and a decrease of $2 million in the liability associated with the CEO contingent cash award.

Deferred revenue, current was $175 million, which reflects a decrease of $32 million compared to February 28, 2022 that was attributable to a $34 million decrease in deferred revenue, current related to BlackBerry Spark, partially offset by a $5 million increase in deferred revenue, current related to BlackBerry QNX.

The decrease in current liabilities of $373 million at the end of fiscal 2024 from the end of fiscal 2023 was primarily due to a decrease in the amounts payable in respect of the 2020 Debentures of $367 million, a decrease in accrued liabilities of $26 million, and a decrease in accounts payable of $7 million, partially offset by an increase in deferred revenue, current of $19 million, and an increase in income taxes payable of $8 million.

Accrued liabilities was $117 million, reflecting a decrease of $26 million compared to February 28, 2023, which was primarily attributable to a decrease of $17 million in liabilities from the release of a legacy mobile device business accrual and a decrease in $12 million in payroll accruals.

As at February 29, 2024, accounts payable were $17 million, reflecting a decrease of $7 million from February 28, 2023, which was primarily due to timing of payments of accounts payable.

Deferred revenue, current was $194 million, which reflects an increase of $19 million compared to February 28, 2023 that was attributable to a $12 million increase in deferred revenue, current related to AtHoc, a $4 million increase in deferred revenue, current related to BlackBerry Spark and a $3 million increase in deferred revenue, current related to Secusmart.

Income taxes payable was $28 million, reflecting an increase of $8 million compared to February 28, 2023, which was primarily due to income earned in taxable jurisdictions.

As at February 28, 2023, accounts payable were $24 million, reflecting an increase of $2 million from February 28, 2022, which was primarily due to timing of payments of accounts payable.

Cash flows for the fiscal year ended February 29, 2024 compared to the fiscal year ended February 28, 2023 were as follows:

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Financing activities (165) 6 (171) 10 (4)

Effect of foreign exchange gain (loss) on cash and cash equivalents (3) (1) (2) 2 (3)

Effect of foreign exchange loss on cash and cash equivalents — (3) 3 (1) (2)

Net increase (decrease) in cash and cash equivalents $ (122) $ (84) $ (38) $ 188 $ (272)

Operating Activities

The increase in net cash flows used in operating activities of $235 million primarily reflects the net changes in working capital and includes the payment of the $165 million U.S.

securities class actions settlement.

The decrease in net cash flows used in operating activities of $260 million primarily reflects the net changes in working capital and includes the payment of the $165 million U.S.

securities class actions settlement in fiscal 2023.

Investing Activities

During the fiscal year ended February 28, 2023, cash flows provided by investing activities were $176 million and included cash provided by transactions involving the acquisitions of restricted short-term, short-term and long-term investments, net of the proceeds on sale or maturity in the amount of $200 million and proceeds on sale of property, plant and equipment of $17 million, partially offset by intangible asset additions of $34 million, and acquisitions of property, plant and equipment of $7 million.

During fiscal 2022, cash flows provided by investing activities were $207 million and included cash flows used in transactions involving the acquisitions of short-term and long-term investments, net of the proceeds on sale or maturity in the amount of $211 million and a distribution from a non-marketable equity investment without readily determinable fair value in the amount of $35 million, partially offset by intangible asset additions of $31 million, and acquisitions of property, plant and equipment of $8 million.

During the fiscal year ended February 29, 2024, cash flows provided by investing activities were $46 million and included cash provided by transactions involving the acquisitions of restricted short-term, short-term and long-term investments, net of the proceeds on sale or maturity in the amount of $67 million, partially offset by intangible asset additions of $14 million, and acquisitions of property, plant and equipment of $7 million.

During fiscal 2023, cash flows provided by investing activities were $176 million and included cash flows used in transactions involving the acquisitions of short-term and long-term investments, net of the proceeds on sale or maturity in the amount of $200 million and proceeds on sale of property, plant and equipment of $17 million, partially offset by intangible asset additions of $34 million and acquisitions of property, plant and equipment of $7 million.

Financing Activities

The decrease in cash flows provided by financing activities was $4 million for fiscal 2023 due to a decrease in common shares issued upon the exercise of stock options.

Debenture Financing and Other Funding Sources

See Note 6 to the Consolidated Financial Statements for a description of the Debentures.

The decrease in cash flows used in financing activities was $171 million for fiscal 2024 due to the maturity of the 2020 Debentures and Extension Debentures, partially offset by the issuance of the Notes as described above in “Business Overview - Debt Repayment and New Issuance”.

Debt Financing and Other Funding Sources

See Note 6 to the Consolidated Financial Statements for a description of the Debentures and the Notes.

The Company has $25 million in collateralized outstanding letters of credit in support of certain leasing arrangements entered into in the ordinary course of business.

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The Company’s management remains focused on maintaining appropriate cash balances, efficiently managing working capital balances and managing the liquidity needs of the business.

The Company has experienced recent operating losses and the 1.75% Debentures will mature on November 13, 2023 as described in Note 6, but the Company maintains positive working capital, has the ability and intent to access other potential financing arrangements on commercially reasonable terms, and has entered into the patent sale transaction.

Taking these factors into account and based on its current financial projections, the Company believes its financial resources, together with expected future operating cash generating and operating expense reduction activities, should be sufficient to meet funding requirements for current financial commitments and future operating expenditures not yet committed, and should provide the necessary financial capacity for the foreseeable future.

Based on its current financial projections, the Company believes its financial resources, together with expected future operating cash generating and operating expense reduction activities, should be sufficient to meet funding requirements for current financial commitments and future operating expenditures not yet committed, and should provide the necessary financial capacity for the foreseeable future.

Contractual and Other Obligations

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Total $ 344 $ 78 $ 266

Contractual and other obligations amounted to approximately $556 million as at February 28, 2023, including future principal and interest payments of $371 million on the 1.75% Debentures and operating lease obligations of $82 million.

Contractual and other obligations amounted to approximately $344 million as at February 29, 2024, including future principal and interest payments of $230 million on the Notes and operating lease obligations of $65 million.

The remaining balance consists of purchase orders for goods and services utilized in the operations of the Company.

Total aggregate contractual obligations as at February 28, 2023 decreased by approximately $47 million as compared to the February 28, 2022 balance of approximately $603 million, which was attributable to decreases in purchase obligations and commitments and in operating lease obligations.

The Company does not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or under applicable Canadian securities laws.

Total aggregate contractual obligations as at February 29, 2024 decreased by approximately $212 million as compared to the February 28, 2023 balance of approximately $556 million, which was attributable to a decreases in debt interest and principal payments as a result of the repayment of the 2020 Debentures at maturity on November 13, 2023, partially offset by the issuance of the Notes as described above in “Business Overview - Debt Repayment and New Issuance”, a decrease in purchase obligations and commitments and a decrease in operating lease obligations.

The Company does not have any material off-balance sheet arrangements.

Accounting Policies and Critical Accounting Estimates

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See Note 1 to the Consolidated Financial Statements for a description of the Company’s significant accounting policies.

See Note 2 to the Consolidated Financial Statements for a description of accounting policies adopted by the Company in fiscal 2023.

Critical Accounting Estimates

The preparation of the consolidated financial statements requires management to make estimates and assumptions with respect to the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities.

Significant areas requiring the use of management estimates relate to revenue-related estimates including variable consideration, standalone selling price (“SSP”), estimated customer life, if control of licenses to intellectual property has transferred, right of return and customer incentive commitments, fair value of reporting units in relation to actual or potential goodwill impairment, fair value of the Debentures, fair value of share-based liability awards, fair value of long-lived assets in relation to actual or potential impairment, the Company’s long-lived asset groupings, estimated useful lives of property, plant and equipment and intangible assets, provision (or recovery) of income taxes, realization of deferred income tax assets and the related components of the valuation allowance, allowance for credit losses, incremental borrowing rates in determining the present value of lease liabilities and the determination of reserves for various litigation claims.

Actual results could differ from these estimates, which were based upon circumstances that existed as of the date of the consolidated financial statements, February 28, 2023.

The Company’s critical accounting estimates are those estimates that involve a significant level of uncertainty at the time the estimate was made, and changes in them have had or are reasonably likely to have a material effect on the Company’s financial condition or results of operations.

Accordingly, actual results could differ materially from the Company’s estimates.

The Company’s estimates are based on past experience and other assumptions that it believes is reasonable under the circumstances, and the Company evaluates these estimates on an ongoing basis.

The Company’s critical accounting estimates have been reviewed and discussed with the Company’s Audit & Risk Management Committee and are set out below.

Except as noted, there have not been any changes to the critical accounting estimates made by the Company, during the past three fiscal years.

Valuation of Long-Lived Assets

The LLA impairment test prescribed by U.S.

GAAP requires the Company to identify its asset groups and test impairment of each asset group separately.

To conduct the LLA impairment test, the asset group is tested for recoverability using undiscounted cash flows over the remaining useful life of the primary asset.

If forecasted net cash flows are less than the carrying value of the asset group, an impairment charge is measured by comparing the fair value of the asset group to its carrying value.

Determining the Company’s asset groups and related primary assets requires significant judgment by management.

Different judgments could yield different results.

The Company’s determination of its asset groups, its primary asset and its remaining useful life, and estimated cash flows are significant factors in assessing the recoverability of the Company’s assets for the purposes of LLA impairment testing.

The Company’s share price can be affected by, among other things, changes in industry or market conditions, including the effect of competition, changes in the Company’s results of operations, changes in the Company’s forecasts or market expectations relating to future results, and the Company’s strategic initiatives and the market’s assessment of any such factors.

See Part 1, Item 1A “Risk Factors - The market price of the Company’s common shares is volatile”.

The current macroeconomic environment and competitive dynamics continue to be challenging to the Company’s business and the Company cannot be certain of the duration of these conditions and their potential impact on the Company’s future financial results and cash flows.

A decline in the Company’s performance, the Company’s market capitalization and future changes to the Company’s assumptions and estimates used in the LLA impairment test, particularly the expected future cash flows, remaining useful life of the primary asset and terminal value of the asset group, may result in further impairment charges in future periods of some or all of the assets on the Company’s balance sheet.

During the fiscal year ended February 29, 2024, the Company continued to experience varying levels of decline in performance amongst the businesses associated with its asset groups, as well as a decline in market capitalization;

however, it did not identify any indicators which would indicate an impairment in its LLA and there were no critical estimates pertaining to the valuation of its LLA during fiscal 2024.

Continued declines in the Company’s performance, the Company’s market capitalization and future changes to the Company’s assumptions and estimates used in the LLA impairment test, particularly the expected future cash flows, remaining useful life of the primary asset and terminal value of the asset group, may result in further impairment charges in future periods of some or all of the assets on the Company’s balance sheet.

Although it does not affect the Company’s cash flow, an impairment charge to earnings has the effect of decreasing the Company’s earnings or increasing the Company’s losses, as the case may be.

The Company’s share price could also be adversely affected by the Company’s recorded LLA impairment charges.

The Company used the discounted cash flow analysis and market approach to determine the fair values of its assets to measure and allocate impairment.

Valuation of Goodwill Reporting Units

Goodwill represents the excess of the acquisition price in a business combination over the fair value of identifiable net assets acquired.

Goodwill is allocated at the date of the business combination.

Goodwill is not amortized but is tested for impairment annually on December 31 or more frequently if events or changes in circumstances indicate the asset may be impaired.

These events and circumstances may include a significant change in legal factors or in the business climate, a significant decline in the Company’s share price, an adverse action or assessment by a regulator, unanticipated competition, a loss of key personnel, significant disposal activity and the testing of recoverability for a significant asset group.

In the annual impairment test, the carrying value of the reporting unit, including goodwill, was compared with its fair value.

The estimated fair value was determined utilizing multiple approaches based on the nature of the reporting units being valued.

In its analysis, the Company utilized multiple valuation techniques, including the income approach using a discounted future cash flow model, market-based approaches, and the asset value approach.

The analysis requires significant judgment, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rates of revenue growth for the Company’s reporting units, estimation of the useful life over which cash flows will occur, terminal growth rates, profitability measures, and determination of the discount rates for the reporting units.

In the annual impairment test, the analysis requires significant judgment, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rates of revenue growth for the Company’s reporting units, estimation of the useful life over which cash flows will occur, terminal growth rates, profitability measures, and determination of the discount rates for the reporting units.

The carrying value of the Company’s assets was assigned to reporting units using reasonable methodologies based on the asset type.

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Different judgments could yield different results.

For the year-ended February 29, 2024, the Company recognized an impairment charge of $35 million in the BlackBerry Spark reporting unit.

The fair value of all remaining reporting units, with the exception of the Intellectual Property reporting unit, substantially exceeded their carrying values.

The fair value of Intellectual Property exceeded its carrying value by approximately 5%.

The Company has $97 million of goodwill related to Intellectual Property at risk of potential future impairment.

The estimated fair values were determined utilizing multiple approaches based on the nature of the reporting units being valued.

In its analysis, the Company utilized multiple valuation techniques, including the income approach using a discounted future cash flow model and the market-based approach.

The market approach estimates fair value by applying multiples to the reporting unit’s projected operating performance.

The multiples are derived from comparable publicly traded companies with similar characteristics to the reporting unit.

Assumptions and estimates about future cash flows and discount rates are complex and often subjective.

The analysis requires significant judgment, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rates of revenue growth for the Company’s reporting units, estimation of the useful life over which cash flows will occur, estimation of the total amount of variable consideration to be received under royalty arrangements, terminal growth rates, profitability measures, and determination of the discount rates for the reporting units.

These forecasted cash flows took into consideration management’s outlook for the future and were compared to historical performance to assess reasonableness.

A discount rate was applied to the forecasted cash flows.

The discount rate considered market and industry data, as well as the specific risk profile of the reporting unit.

A terminal value was calculated, which estimates the value of annual cash flow to be received after the discrete forecast periods.

It is reasonably possible that future judgements, assumptions and estimates of cash flows may change, resulting in the need to write down those assets to fair value.

Reductions in the Company’s estimates of long-term revenue growth rates, operating margins, and variable consideration could potentially result in impacts that would be material to the consolidated financial statements, including the fair value of the Company’s goodwill.

As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual goodwill impairment test will prove to be accurate predictions of the future.

Although management believes the assumptions and estimates made are reasonable and appropriate, different assumptions and estimates could materially impact the reported financial results.

If the Company’s expectations of future results and cash flows decrease significantly or other economic conditions deteriorate, goodwill may be further impaired.

As a measure of sensitivity, a 10% decrease in the fair value of the Intellectual Property reporting unit as of December 31, 2023, would result in the carrying amount exceeding its fair value by approximately $9 million or 5%.

Examples of events or circumstances that could negatively affect the underlying key assumptions and ultimately impact the estimated fair value of the aforementioned reporting unit may include such items as the following:

• volatility in the equity and debt markets or other macroeconomic factors

• an increase in the weighted-average cost of capital due to further increases in interest rates

• decreases in future cash flows due to lower than forecast licensing revenue and/or lower than estimated variable consideration received under existing royalty arrangements

• a failure to align the costs associated with maintaining the Company’s patent portfolio to its realized revenues

• failure to protect the Company’s intellectual property could harm its ability to compete effectively and the Company may not earn the revenues it expects from intellectual property rights

The Company intends to continue to monitor the performance of its reporting units for potential indicators of impairment.

If impairment indicators exist, the Company will perform an interim goodwill impairment analysis.

Valuation Allowance Against Deferred Tax Assets

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All available evidence, both positive and negative, that may affect the realization of deferred tax assets must be identified and considered in determining the appropriate amount of the valuation allowance.

There have been no changes in the Company’s judgement in determining the valuation allowance for the fiscal year ended February 29, 2024.

Additionally, for interim periods, the estimated annual effective tax rate should include the valuation allowance for current year changes in temporary differences and losses or income arising during the year.

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Different judgments could yield different results.

See “Results of Operations - Fiscal year ended February 28, 2023 compared to fiscal year ended February 28, 2022 - Income Taxes” and “Results of Operations - Three months ended February 28, 2023 compared to three months ended February 28, 2022 - Income Taxes”.

There have been no changes to the method with which the Company estimates the valuation allowance for the interim quarters during the fiscal year ended February 29, 2024.

Revenue Recognition

The Company’s contracts with customers often include promises to transfer multiple products and services to a customer.

Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment.

Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue recognized under the contract will not occur.

Any estimates, including any constraints on variable consideration, are evaluated at each reporting period.

To the extent the transaction price in a contract with a customer includes variable consideration, the Company estimates the amount of variable consideration that should be included in the price utilizing either the expected value method or the most likely amount method, depending on the nature of the variable consideration.

The Company also estimates whether and how much variable consideration is subject to constraint if it cannot conclude it is probable that a significant reversal in revenue will not occur, due to factors such as:

the consideration being highly susceptible to factors outside the Company’s influence, the period of time before the variable consideration is resolved, the Company’s previous experience with similar contracts, the Company’s history of price concessions or changing of payment terms, and whether there is a large number and broad range of possible variable consideration amounts.

Apart from future revenues from the Malikie Transaction which are constrained, there have been no changes to the Company’s assumptions or estimates on any material variable consideration for the fiscal year ended February 29, 2024.

Judgment is required to determine the SSP for each distinct performance obligation.

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However, in instances where SSP is not directly observable, the Company determines the SSP by maximizing observable inputs and using an adjusted market assessment approach using information that may include market conditions and other observable inputs from the Company’s pricing team, including historical SSP.

Judgment is required to determine in certain agreements if the Company is the principal or agent in the arrangement.

The Company considers factors such as, but not limited to, which party can direct the usage of the product or service, which party obtains substantially all the remaining benefits and which party has the ability to establish the selling price.

Significant judgment is required to determine the estimated customer life used in perpetual license contracts that require access to the Company’s proprietary secure network infrastructure to function.

The Company uses historical experience regarding the length of the technology upgrade cycle and the expected life of the product to draw this conclusion.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis