What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-04-04 compared with 2023-03-31 · 324 added, 399 removed, 1134 unchanged (39% of the section changed)

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Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of BlackBerry Limited and its subsidiaries (together, the Company) as of February 28, 2023 and 2022, and the related consolidated statements of operations, of comprehensive income (loss), of shareholders’ equity and of cash flows for each of the three years in the period ended February 28, 2023, including the related notes (collectively referred to as the consolidated financial statements).

We have audited the accompanying consolidated balance sheets of BlackBerry Limited and its subsidiaries (together, the Company) as of February 29, 2024 and February 28, 2023, and the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for each of the three years in the period ended February 29, 2024, including the related notes (collectively referred to as the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of February 29, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of February 28, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended February 28, 2023 in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of February 29, 2024 and February 28, 2023, and the results of its operations and its cash flows for each of the three years in the period ended February 29, 2024 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 29, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the COSO.

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment Tests of Goodwill for the BlackBerry Spark Reporting Unit and of the Long-Lived Assets for the Unified Endpoint Security (UES) Asset Group

As described in Notes 1, 3 and 4 to the consolidated financial statements, the Company’s goodwill and intangible assets balances were $595 million and $203 million respectively, as of February 28, 2023.

A portion of the goodwill and intangible asset balances relates to the BlackBerry Spark reporting unit and UES asset group, respectively.

The long-lived assets (LLA) of the UES asset group are primarily composed of intangible assets.

Impairment Test of Goodwill for the BlackBerry Spark Reporting Unit

As described in Notes 1, 3 and 4 to the consolidated financial statements, the Company’s goodwill balance was $562 million as of February 29, 2024.

A significant portion of the goodwill relates to the BlackBerry Spark reporting unit.

Management conducts a goodwill impairment test annually on December 31, or more frequently if events or changes in circumstances indicate goodwill may be impaired.

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When the carrying value of a reporting unit exceeds its fair value, goodwill of the reporting unit is considered to be impaired and written down to its fair value.

Management reviews LLA for impairment whenever events or changes in circumstances indicate that the carrying value of the asset or asset group may not be recoverable.

Management identified indicators of potential impairment in the UES asset group, which required management to perform an impairment test that included determining the fair value of the UES asset group.

If the carrying value of the asset group’s net assets exceeds its fair value, then the excess represents the maximum amount of potential impairment that will be allocated to the LLA in the asset group.

Management utilized multiple valuation techniques, which included the income approach using a discounted future cash flow model among others in determining the fair value of a reporting unit or an asset group.

Estimating the fair value of a reporting unit or an asset group using discounted future cash flow models requires significant judgment by management, including estimation of future cash flows, which is dependent on estimation of the long-term rates of revenue growth, terminal growth rates, profitability measures and determination of the discount rates.

Based on the results of the impairment tests related to goodwill and LLA, management concluded that the carrying values of the BlackBerry Spark reporting unit and UES asset group exceeded their respective fair values.

Management recorded impairment charges of $245 million and $231 million relating to the BlackBerry Spark reporting unit and UES asset group, respectively.

The principal considerations for our determination that performing procedures relating to the impairment tests of goodwill for the BlackBerry Spark reporting unit and of the long-lived assets for UES asset group is a critical audit matter are (i) the significant judgment by management when determining the fair values of the BlackBerry Spark reporting unit and UES asset group using discounted future cash flow models;

(ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to long-term rates of revenue growth, terminal growth rates, profitability measures and discount rates;

Management utilizes multiple valuation techniques, which include the income approach using a discounted future cash flow model, among others in determining the fair value of a reporting unit.

Estimating the fair value of a reporting unit using a discounted future cash flow model requires significant judgment by management, including estimation of future cash flows, which is dependent on estimation of the long-term rates of revenue growth, terminal growth rate, profitability measures, and determination of the discount rate.

Based on the result of the impairment test related to goodwill, management concluded that the carrying value of the BlackBerry Spark reporting unit exceeded its fair value.

Management recorded a goodwill impairment charge of $35 million relating to the BlackBerry Spark reporting unit.

The principal considerations for our determination that performing procedures relating to the impairment test of goodwill for the BlackBerry Spark reporting unit is a critical audit matter are (i) the significant judgment by management when determining the fair value of the BlackBerry Spark reporting unit using a discounted future cash flow model;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill and LLA impairment tests for the BlackBerry Spark reporting unit and UES asset group, including controls over the determination of the respective fair values.

These procedures also included, among others, (i) testing management’s process for determining the fair values of the BlackBerry Spark reporting unit and UES asset group;

(ii) testing the completeness and accuracy of underlying data used in the discounted future cash flow models;

(iii) evaluating the appropriateness of the discounted future cash flow models;

and (iv) evaluating the reasonableness of the significant assumptions used by management related to long-term rates of revenue growth, terminal growth rates, profitability measures and discount rates.

Evaluating management’s assumptions related to long-term rates of revenue growth and profitability measures involved assessing whether the assumptions used by management were reasonable considering consistency with (i) the current and past performance of the BlackBerry Spark reporting unit and UES asset group;

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment test for the BlackBerry Spark reporting unit, including controls over the determination of its fair value.

These procedures also included, among others, (i) testing management’s process for determining the fair value of the BlackBerry Spark reporting unit;

(ii) testing the completeness and accuracy of underlying data used in the discounted future cash flow model;

(iii) evaluating the appropriateness of the discounted future cash flow model;

and (iv) evaluating the reasonableness of the significant assumptions used by management related to long-term rates of revenue growth, terminal growth rate, profitability measures and the discount rate.

(ii) external market and industry data;

and (iii) evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the (i) appropriateness of the Company’s discounted future cash flow models and (ii) reasonableness of the discount rates and terminal growth rates.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the (i) appropriateness of the Company’s discounted future cash flow model and (ii) reasonableness of the discount rate and terminal growth rate.

/s/ PricewaterhouseCoopers LLP

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Toronto, Canada

March 31, 2023

April 4, 2024

We have served as the Company's auditor since 2020.

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Property, plant and equipment, net (note 4) 21 25

Goodwill (note 3 and note 4) 595 844

Intangible assets, net (note 3 and note 4) 154 203

Goodwill (note 3 and note 4) 562 595

$ 1,395 $ 1,679

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Other long-term liabilities 3 1

Long-term debentures (note 6) — 507

Long-term notes (note 6) 194 —

Commitments and contingencies (note 10)

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On behalf of the Board:

Chen Lisa Disbrow

John Giamatteo Lisa Disbrow

Director Director

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Balance as at February 28, 2021 $ 2,823 $ ( 1,306 ) $ ( 13 ) $ 1,504

Net loss — ( 1,104 ) — ( 1,104 )

Other comprehensive income — — 20 20

Cumulative impact of adoption of ASC 326 — ( 4 ) — ( 4 )

Net income — 12 — 12

Other comprehensive loss — — ( 6 ) ( 6 )

Stock-based compensation (note 7) 36 — — 36

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Balance as at February 28, 2022 2,869 ( 1,294 ) ( 19 ) 1,556

Net income — 12 — 12

Net loss — ( 734 ) — ( 734 )

Other comprehensive loss — — ( 5 ) ( 5 )

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Shares issued:

Exercise of stock options (note 7) 3 — — 3

Employee share purchase plan (note 7) 6 — — 6

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Net loss — ( 130 ) — ( 130 )

Other comprehensive loss — — ( 5 ) ( 5 )

Other comprehensive income — — 10 10

Stock-based compensation (note 7) 33 — — 33

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Employee share purchase plan (note 7) 5 — — 5

Redemption of deferred share units ("DSUs") (note 7) 1 $ — $ — 1

Balance as at February 29, 2024 $ 2,948 $ ( 2,158 ) $ ( 14 ) $ 776

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Research and development 186 207 219

Selling, marketing and administration 340 297 344

Sales and marketing 171 176 183

General and administrative 181 164 114

Amortization 54 96 165

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Operating loss ( 125 ) ( 725 ) ( 2 )

Investment income (loss), net (note 4 and note 6) 5 21 ( 6 )

Investment income, net (note 3 and note 6) 19 5 21

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

Provision for (recovery of) income taxes (note 5) 14 7 ( 9 )

Provision for income taxes (note 5) 24 14 7

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

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Foreign currency translation adjustment 2 ( 6 ) ( 6 )

Actuarial gains associated with other post-employment benefit obligations 1 — —

Net change in fair value from instrument-specific credit risk on the Debentures during the year (note 6) 6 2 1

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

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Amortization 59 105 176

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Impairment of long-lived assets (note 3)

Intellectual property disposed of by sale (note 4) 147 — —

Gain on sale of property, plant and equipment, net (note 4) — ( 6 ) —

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Deferred revenue 7 ( 29 ) ( 50 )

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

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

Cash flows from investing activities

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Acquisition of short-term investments ( 154 ) ( 514 ) ( 916 )

Acquisition of restricted short-term investments — — ( 24 )

Proceeds on sale or maturity of restricted short-term investments — — 24

Proceeds on sale or maturity of short-term investments 223 717 1,104

Net cash provided by (used in) investing activities 176 207 ( 65 )

Net cash provided by investing activities 46 176 207

Cash flows from financing activities

Issuance of common shares 6 6 10

Payment of finance lease liability — — ( 1 )

Repurchase of 3.75% Debentures — — ( 610 )

Issuance of 1.75% Debentures — — 365

Maturities of 2020 Debentures and Extension Debentures (note 6) ( 515 ) — —

Proceeds from issuance of Extension Debentures and Notes, net (note 6) 344 — —

Net cash provided by (used in) financing activities ( 165 ) 6 10

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

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

Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents during the period ( 122 ) ( 84 ) 188

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BlackBerry Limited (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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Risks and Uncertainties

In fiscal 2023, assumptions and estimates about future cash flows, the economic weakness and inflation resulting directly or indirectly from the COVID-19 pandemic and the invasion of Ukraine, as well as higher interest rates implemented in response to inflation and resulting fears of recession, resulted in the Company making significant judgments related to its estimates and assumptions concerning the impairment of goodwill, indefinite-lived intangible assets, certain operating lease right-of-use (“ROU”) assets and associated property, plant and equipment, and concerning the collectability of receivables.

In fiscal 2024, assumptions and estimates about future cash flows, economic uncertainty, customer budgetary constraints, auto industry labor disruptions and inflation, development timelines for automotive OEM embedded software platforms, as well as higher interest rates implemented in response to inflation and resulting fears of recession, resulted in the Company making significant judgments related to its estimates and assumptions concerning the impairment of goodwill, indefinite-lived intangible assets, certain operating lease right-of-use (“ROU”) assets and associated property, plant and equipment.

As of the date of issuance of the financial statements, the Company is not aware of any additional events or circumstances which would require it to update its estimates, judgments, or revise the carrying value of its assets or liabilities.

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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 (as defined in Note 6), 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.

Significant areas requiring the use of management estimates relate to revenue-related estimates including variable consideration, standalone selling price (“SSP”), estimated customer life, 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 (as defined in Note 6), 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 29, 2024.

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Allowance for Credit Losses on Available-for-sale Debt Securities

On March 1, 2020, the Company adopted “Accounting Standards Codification 326, Financial Instruments - Credit Losses” (“ASC 326”) on a modified retrospective basis.

At each reporting period, the Company evaluates its available-for-sale debt securities at the individual security level to determine whether there is a decline in the fair value below its amortized cost basis (an impairment).

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The Company has building, car and data center lease agreements with lease and non-lease components that are accounted for separately.

For lease terms of 12 months or less on the commencement date, the Company does not apply the Accounting Standards Codification 842 recognition requirements and recognizes the lease payments as lease cost on a straight-line basis over the lease term.

For lease terms of 12 months or less on the commencement date, the Company recognizes the lease payments as lease cost on a straight-line basis over the lease term.

See Note 11 for additional information related to the Company’s leases.

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The Company reviews any changes in events and circumstances that have occurred on a quarterly basis to determine if indicators of LLA impairment exist.

Convertible debentures

The Company has recognized the Notes (as defined in Note 6) as a single liability instrument measured at amortized cost.

Debt issuance costs related to the Notes have been recorded as a direct deduction from the face amount of the Notes and will be amortized using the effective interest method.

BlackBerry Limited

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In millions of United States dollars, except share and per share data, and except as otherwise indicated

The Company recognizes its liability for royalties in accordance with the terms of existing license agreements.

Where license agreements are not yet finalized, the Company recognizes its current estimates of the obligation in accrued liabilities in the consolidated financial statements.

When the license agreements are subsequently finalized, the estimate is revised accordingly.

Management’s estimates of royalty rates are based on the Company’s historical licensing activities, royalty payment experience, and forward-looking expectations.

Convertible debentures

The Company elected to measure its Debentures at fair value in accordance with the fair value option.

Each period, the fair value of the Debentures is recalculated and resulting gains and losses from the change in fair value of the Debentures associated with non-credit components are recognized in income, while the change in fair value associated with credit components is recognized in AOCL.

1.75% Debentures

The fair value of the 1.75% Debentures (as defined in Note 6) has been determined using the significant inputs of principal value, interest rate spreads and curves, any observable trades of the Debentures that occurred during the period, the market price and volatility of the Company’s listed common shares, and the significant Level 3 inputs related to credit spread and the implied discount of the 1.75% Debentures at issuance.

The Company elected to measure its Extension Debentures (as defined in Note 6) and 2020 Debentures (as defined in Note 6) at fair value in accordance with the fair value option.

Each period, the fair value of the Extension Debentures and 2020 Debentures was recalculated and resulting gains and losses from the change in fair value of the Extension Debentures and 2020 Debentures associated with non-credit components were recognized in income, while the change in fair value associated with credit components were recognized in AOCL.

Extension Debentures

The fair value of the Extension Debentures was determined using the significant inputs of principal value, interest rate spreads and curves, and the market price and volatility of the Company’s common shares.

2020 Debentures

The fair value of the 3.75% Debentures (as defined in Note 6) was determined using the significant inputs of principal value, interest rate spreads and curves, embedded call option prices, observable trades of the Debentures, the market price and volatility of the Company’s listed common shares and the Company’s implicit credit spread.

The fair value of the 2020 Debentures was determined using the significant inputs of principal value, interest rate spreads and curves, any observable trades of the 2020 Debentures that occurred during the period, the market price and volatility of the Company’s common shares, and the significant Level 3 inputs related to credit spread and the implied discount of the 2020 Debentures at issuance.

Revenue recognition

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For each of the Company’s major categories of revenue, the following paragraphs describe the applicable specific revenue recognition policy, and when the Company satisfies its performance obligations.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Nature of products and services

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Cybersecurity

Cybersecurity includes revenue from the Company’s BlackBerry Spark® software platform which includes unified endpoint security (“UES”) and unified endpoint management (“UEM”) solutions, BlackBerry® AtHoc®, BlackBerry® Alert, BlackBerry® SecuSUITE® and BlackBerry Messenger (BBM®) Enterprise.

Cybersecurity includes revenue from Cylance® cybersecurity and BlackBerry unified endpoint management (“UEM”) solutions (collectively, BlackBerry Spark®), BlackBerry® AtHoc® and SecuSUITE®.

Cybersecurity revenue is generated predominantly through software licenses, commonly bundled with support, maintenance and professional services.

BlackBerry Spark

The BlackBerry Spark platform is a comprehensive offering of security software products and services, including the BlackBerry® Cyber Suite and the BlackBerry Spark® Unified Endpoint Management Suite, which are also marketed together as the BlackBerry Spark® Suite, offering the Company’s broadest range of tailored cybersecurity and endpoint management options.

The BlackBerry Spark UES Suite includes revenue from the Company’s Cylance® artificial intelligence and machine learning-based platform consisting of CylancePROTECT®, CylanceOPTICS®, CylancePERSONA™, CylanceGATEWAY™, CylanceGUARD® managed services, CylancePROTECT Mobile™ and other cybersecurity applications.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Cylance Cybersecurity

The BlackBerry Spark platform is a comprehensive offering of security software products and services, including the Cylance cybersecurity solutions and BlackBerry Unified Endpoint Management, offering the Company’s broadest range of tailored cybersecurity and endpoint management options.

The Cylance cybersecurity solutions include revenue from the Company’s artificial intelligence and machine learning-based platform consisting of CylanceENDPOINT™, CylanceGUARD®, CylanceEDGE™, CylanceINTELLIGENCE™ and other cybersecurity applications.

The Company generates software license revenue from term subscription products, which includes technical support, and any updates and upgrades.

The BlackBerry Spark UES Suite natively integrates with BlackBerry® UEM and also works with UEM solutions from other vendors.

The Company recognizes the license revenue over the term of the contract beginning on the commencement date of each contract, the date that services are made available to customers.

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Revenue for hourly rate professional services arrangements is recognized as services are performed and revenue for fixed fee professional services is recognized on a proportional performance basis as the services are performed.

The BlackBerry Spark® UEM Suite includes the Company’s BlackBerry® UEM, BlackBerry® Dynamics™ and BlackBerry® Workspaces solutions.

BlackBerry UEM

The Company’s endpoint management platform includes BlackBerry® UEM, BlackBerry® Dynamics™ and BlackBerry® Workspaces solutions (which are often sold together as part of the BlackBerry UEM Suite), and BlackBerry Messenger (BBM®) Enterprise.

The Company generates software license revenue from both term subscription and perpetual license contracts, both of which are commonly bundled with support, maintenance and professional services.

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If access to the Company’s proprietary network infrastructure is not required for the software to function, revenue associated with both term subscription and perpetual licenses contracts is recognized at a point in time upon delivery of the software.

Generally, most of the Company’s enterprise software products sold require access to the Company’s proprietary secure network infrastructure in order to function, and therefore the associated revenue is recognized over time, ratably over either the subscription term or expected customer life as described above.

Generally, most of the Company’s UEM software products sold require access to the Company’s proprietary secure network infrastructure in order to function, and therefore the associated revenue is recognized over time, ratably over either the subscription term or expected customer life as described above.

BlackBerry SecuSUITE

SecuSUITE revenue is generated from software license products associated with secure messaging and the associated hardware.

Similar to the BlackBerry Spark products, if the licensed software requires access to the Company’s proprietary secure network infrastructure, revenue from the contract is recognized over time, ratably over the expected term or over the customer life, if licensed on a perpetual basis.

SecuSUITE revenue is generated from software license products associated with secure communications and the associated hardware.

Similar to the Cylance cybersecurity and BlackBerry UEM products, if the licensed software requires access to the Company’s proprietary secure network infrastructure, revenue from the contract is recognized over time, ratably over the expected term or over the customer life, if licensed on a perpetual basis.

If access to the Company’s proprietary network infrastructure is not required, revenue associated with the license is recognized at a point in time upon delivery of the software.

Revenue from the hardware is recognized once title and the significant risks and rewards of ownership of the products are transferred to the customer, which occurs after the product has shipped.

BlackBerry AtHoc and BlackBerry Alert

BlackBerry AtHoc and BlackBerry Alert generate revenue from networked critical event management solutions through term subscriptions which include technical support and associated professional services.

The Company recognizes the

BlackBerry AtHoc

BlackBerry AtHoc generates revenue from networked critical event management solutions through perpetual and term subscriptions which include technical support, as well as associated professional services.

The licensed software in most contracts requires access to the Company’s proprietary secure network infrastructure in order to function, specifically through AtHoc’s secure platform which is included within the Company’s data center.

The Company recognizes the license revenue over the term of the contract beginning on the commencement date of each contract, the date that services are made available to customers.

IoT consists of BlackBerry Technology Solutions, BlackBerry Radar® and BlackBerry IVY™.

BlackBerry Technology Solutions includes revenue from BlackBerry® QNX®, BlackBerry Certicom® and other IoT applications.

IoT revenue is generated predominantly through software licenses, commonly bundled with support, maintenance and professional services.

BlackBerry Limited

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In millions of United States dollars, except share and per share data, and except as otherwise indicated

license revenue over the term of the contract beginning on the commencement date of each contract, the date that services are made available to customers.

IoT consists of BlackBerry Technology Solutions and BlackBerry IVY™.

BlackBerry Technology Solutions includes revenue from BlackBerry® QNX®, BlackBerry Certicom®, BlackBerry Radar® and other IoT applications.

IoT revenue is generated predominantly through software licenses, commonly bundled with support, maintenance and professional services.

BlackBerry® QNX® software license revenue from both term subscription and perpetual contracts is recognized at a point in time when the software is made available to the customer for use, as the software has standalone functionality and the license is distinct in the context of the contract.

The licenses for certain software embedded into hardware such as automotive infotainment systems and advanced driver-assistance systems are sold as a sales-based royalty where intellectual property is the predominant item to which the royalty relates, and are recognized based on actual volumes and underlying sales by the customer of the hardware with the embedded software except in cases where the customer makes a non-refundable prepayment related to its future royalties, in which case consideration is fixed and recognized immediately.

The licenses for certain software embedded into hardware such as automotive digital cockpit systems and advanced driver-assistance systems are sold as a sales-based royalty where intellectual property is the predominant item to which the royalty relates, and are recognized based on actual volumes and underlying sales by the customer of the hardware with the embedded software shipped by the customer, except in cases where the customer makes a non-refundable prepayment related to its future royalties, in which case consideration is fixed and recognized immediately.

Revenue from technical support is recognized over the support period.

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Revenue from patent licensing agreements is often recognized for the transaction price either when the license has been transferred to the customer or based upon subsequent sales by the customer in the case of sales-based royalty licenses where the license of intellectual property is the predominant item to which the royalty relates.

The transaction price may include non-monetary consideration in the form of patents transferred to the Company, which is recorded at fair value as determined by a combination of market and income-based valuation approaches.

As part of these agreements the Company may also recognize revenue relating to the sale and assignment of patents.

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See Note 12 for further information, including revenue by major product and service types.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Significant judgments in revenue recognition

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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

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

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.

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

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Certain sales commissions are considered incremental and recoverable costs of obtaining a contract with a customer.

The Company’s capitalized commissions are recorded as other current assets and other long-term assets and are recognized immediately or amortized proportionally, based on the satisfaction of the related performance obligations, and are included in selling, marketing and administration expenses.

The Company has applied the practical expedient to expense sales commission as incurred if the amortization period would have been for one year or less.

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In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that contracts generally do not include a significant financing component if the period between when the payment is received and when the Company transfers the promised goods or services to the customer will be one year or less.

To the extent the Company determines that there is a significant financing component in a contract with a customer, it determines the impact of the time value of money in adjusting the transaction price to account for the income associated with the financing component by estimating the discount rate that would be reflected in a separate financing transaction between the customer and the Company at contract inception, based upon the credit characteristics of the customer receiving financing in the contract.

The Company uses the liability method of income tax allocation to account for income taxes.

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The second step is to measure the income tax position that has met the recognition threshold as the largest amount that is more than 50 % likely of being realized upon settlement.

The Company continually assesses the likelihood and amount of potential adjustments and

The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provisions, income taxes payable and deferred income taxes in the period in which the facts that

BlackBerry Limited

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In millions of United States dollars, except share and per share data, and except as otherwise indicated

adjusts the income tax provisions, income taxes payable and deferred income taxes in the period in which the facts that give rise to a revision become known.

give rise to a revision become known.

The Company recognizes interest and penalties related to uncertain income tax positions as interest expense, which is then netted and reported within investment income.

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The Company’s reportable items of comprehensive income (loss) are the cumulative translation adjustment resulting from its non-U.S.

dollar functional currency subsidiary as described under the foreign currency translation policy above, cash flow hedges as described above in derivative financial instruments, changes in the fair value of available-for-sale investments as described in Note 3, changes in fair value from instrument-specific credit risk on the Debentures as described in Note 6 and Note 9, and actuarial gains or losses associated with certain other post-employment benefit obligations.

dollar functional currency subsidiary as described under the foreign currency translation policy above, cash flow hedges as described above in derivative financial instruments, changes in the fair value of available-for-sale investments as described in Note 3, changes in fair value from instrument-specific credit risk on the 2020 Debentures and Extension Debentures as described in Note 6 and Note 9, and actuarial gains or losses associated with certain other post-employment benefit obligations.

Realized gains or losses on available-for-sale investments are reclassified into investment income using the specific identification basis.

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There are approximately 8 million shares in the equity pool available for future grants under the Equity Plan as at February 29, 2024.

In connection with the Cylance Inc.

(“Cylance”) acquisition in fiscal 2019, the Company adopted the BlackBerry-Cylance Stock Plan (the “Cylance Stock Plan”).

The Cylance Stock Plan provided for the grant of replacement awards in connection with unvested Cylance employee equity awards, all of which were canceled upon the closing of the transaction.

The number of common shares authorized for awards under the Cylance Stock Plan were 9,144,176 common shares, which is equal to the amount of replacement awards granted.

As at February 28, 2019, there were no shares remaining in the Cylance Stock Plan for future grants.

In addition, no shares may be reissued under the Cylance Stock Plan in respect of shares that expire, are forfeited, or are settled in cash.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

The Company measures stock-based compensation expense for options at the grant date based on the award’s fair value as calculated by the Black-Scholes-Merton (“BSM”) option pricing model for stock options, and the expense is recognized ratably over the vesting period.

Options granted under the Cylance Stock Plan generally vest over a four -year period with 25 % vesting on the first anniversary date, and the remainder vesting in equal monthly installments.

The BSM model requires various judgmental assumptions including volatility and expected option life.

In addition, judgment is also applied in estimating the number of stock-based awards that are expected to be forfeited, and if actual results differ significantly from these estimates, stock-based compensation expense and the Company’s results of operations would be impacted.

Any consideration paid by employees on exercise of stock options, plus any recorded stock-based compensation within additional paid-in capital related to that stock option, is credited to capital stock.

RSUs are redeemed for common shares issued by the Company or the cash equivalent on the vesting dates established by the Board or the Compensation, Nomination and Governance Committee of the Board.

The RSUs granted under the Equity Plan generally vest over a three -year period, either in equal annual installments or on the third anniversary date.

For PBRSUs, the Company estimates its achievement against the performance goals, which are based on the Company’s business plan approved by the Board.

For PBRSUs, the Company estimates its achievement against the performance goals, which are based on the Company’s business plan approved by the Board and total shareholder return.

The estimated achievement is updated for the Company’s outlook for the fiscal year as at the end of each fiscal quarter.

Compensation cost will only be recognized to the extent that performance goals are achieved.

The Company classifies RSUs as equity instruments as the Company has the ability and intent to settle the awards in common shares.

Compensation cost will only be recognized to the extent that performance goals are expected to be achieved.

The Company classifies RSUs as equity instruments as the

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Company has the ability and intent to settle the awards in common shares.

The compensation expense for standard RSUs is calculated based on the fair value of each RSU as determined by the closing value of the Company’s common shares on the business day of the grant date.

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The Company expenses all advertising costs as incurred.

These costs are included in selling, marketing and administration expenses.

These costs are included in sales and marketing expenses.

Government subsidies

2 unchanged sentences

Accounting Standards Adopted During Fiscal 2024

ASU 2020-06, Debt with Conversion and Other Options

In August 2020, the Financial Standards Accounting Board (“FASB”) issued a new accounting standard on the topic of debt with conversion and other options, accounting standards update (“ASU”) 2020-06.

The amendment in this update simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments and convertible preferred stock.

This update also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions and requires the application of the if-converted method for calculating diluted earnings per share.

The update also requires entities to provide expanded disclosures about the terms and features of convertible instruments, how the instruments have been reported in the entity’s financial statements, and information about events, conditions, and circumstances that can affect how to assess the amount or timing of an entity’s future cash flows related to those instruments.

The guidance is effective for interim and annual periods beginning after December 15, 2021.

The Company adopted this guidance in the

The Company did not adopt any accounting standards during fiscal 2024 .

Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued ASU 2023-07 on the topic of segment reporting.

The standard requires additional disclosures for segment reporting.

These requirements include:

(i) disclosure of significant expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of segment profit or loss (collectively referred to as the “significant expense principle”);

(ii) disclosure of an amount for other segment items (equal to the difference between segment revenue less segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss) by reportable segment and a description of their composition;

(iii) annual disclosure of a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods;

(iv) clarification that, if the CODM uses more than one measure of a segment's profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report those additional measures of segment profit or loss;

(v) disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources;

(vi) requiring a public entity that has a single reportable segment provide all the disclosures required by the amendments in this ASU, and all existing segment disclosures in Topic 280.

The guidance is effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

The Company will adopt this guidance in fiscal 2025 and is in the process of evaluating the new requirements.

As a result, the Company has not yet determined the impact this new ASU will have on its disclosures.

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated

first quarter of fiscal 2023 and it did not have a material impact on its results of operations, financial position and disclosures as the fair value option accounting model used by the Company is not impacted by this ASU and the Company already utilizes the if-converted method in its calculation of diluted earnings per share relating to the 1.75% Debentures.

ASU 2021-08, Business Combinations

In October 2021, the FASB issued a new accounting standard on the topic of business combinations, accounting for contract assets and contract liabilities from contracts with customers, ASU 2021-08.

The amendment in this update improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency.

This update requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers.

The guidance is effective for interim and annual periods beginning after December 15, 2022 and requires entities to prospectively apply business combinations occurring on or after the effective date of the amendments.

The Company early adopted this guidance in the first quarter of fiscal 2023, and will apply it prospectively to any business acquisitions subsequent to the date of adoption.

ASU 2021-10, Government Assistance

In November 2021, the FASB issued a new accounting standard on the topic of government assistance, ASU 2021-10.

The standard requires additional disclosures for transactions with a government accounted for by applying a grant or contribution accounting model by analogy, including:

(i) information about the nature of the transactions and related accounting policy used to account for the transactions;

(ii) the line items on the balance sheet and income statement affected by these transactions including amounts applicable to each line;

and (iii) significant terms and conditions of the transactions, including commitments and contingencies.

The update also requires entities that omit any of the information because it is legally prohibited from being disclosed to include a statement to that effect.

The guidance is effective for annual periods beginning after December 15, 2021.

The Company adopted this guidance in the first quarter of fiscal 2023 and it did not have a material impact on its annual disclosures.

In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures” on the topic of income taxes.

The standard requires additional disclosure for income taxes.

These requirements include:

(i) requiring a public entity to disclose specific categories in the rate reconciliation;

(ii) disclosure of additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5% of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate);

(iii) annual disclosure of the amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes;

(iv) annual disclosure of the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5% of total income taxes paid (net of refunds received);

(v) annual disclosure of income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign;

and (vi) annual disclosure of income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign.

For public entities, the guidance is effective for annual periods beginning after December 15, 2024.

The Company will adopt this guidance in fiscal 2026 and is in the process of evaluating the new requirements.

As a result, the Company has not yet determined the impact this new ASU will have on its disclosures.

FAIR VALUE MEASUREMENTS, CASH, CASH EQUIVALENTS AND INVESTMENTS

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The independent third-party valuator considers the information provided by the Company before determining whether a change in their original pricing is warranted.

For a description of how the fair values of the Extension Debentures and 2020 Debentures were determined, see the “Convertible debentures” accounting policies in Note 1.

The Extension Debentures are classified as Level 2 and the 2020 Debentures are classified as Level 3.

Non-Recurring Fair Value Measurements

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated

The Company’s investments largely consist of debt securities issued by major corporate and banking organizations, the provincial and federal governments of Canada, international government banking organizations and the United States Department of the Treasury and are all investment grade.

The Company also holds certain public equity securities obtained through an initial public offering by the issuer of a previously held non-marketable equity investment.

The Company recognizes transfers in and out of levels within the fair value hierarchy at the end of the reporting period in which the actual event or change in circumstance occurred.

There were no significant transfers in or out of Level 3 assets during the years ended February 28, 2023, February 28, 2022 or February 28, 2021.

For a description of how the fair values of the Debentures were determined, see the “Convertible debentures” accounting policies in Note 1.

The 3.75% Debentures were classified as Level 2 and the 1.75% Debentures are classified as Level 3.

For a description of how the fair value of the CEO Contingent Cash Award (as defined in Note 7) was determined, see the “2019 Executive Chair Incentive Grant” section of Note 7(b).

Non-Recurring Fair Value Measurements

Upon the occurrence of certain events, the Company re-measures the fair value of non-marketable equity investments for which it utilizes the measurement alternative, and long-lived assets, including property, plant and equipment, operating lease ROU assets, intangible assets and goodwill if an impairment or observable price adjustment is recognized in the current period.

lease ROU assets, intangible assets and goodwill if an impairment or observable price adjustment is recognized in the current period.

Non-Marketable Equity Investments Measured Using the Measurement Alternative

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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 in the BlackBerry Spark reporting unit, which is included within the Company’s Cybersecurity segment as disclosed in Note 12.

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 in the BlackBerry Spark reporting unit, which is included within the Company’s Cybersecurity segment as disclosed in Note 12.

Based on the results of the annual goodwill impairment test for the BlackBerry Spark reporting unit, based on the income approach using a discounted future cash flow model and market-based approaches, it was concluded that the carrying value exceeded its fair value, necessitating an impairment charge for the amount of excess and reducing the carrying value of goodwill.

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

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.

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

The analysis 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.

During the year ended February 28, 2023, the Company recorded a goodwill impairment charge of $ 245 million in the BlackBerry Spark reporting unit, which is included within the Company’s Cybersecurity segment as disclosed in Note 12.

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

During the year ended February 28, 2022, there were no goodwill impairment charges.

In its annual goodwill impairment test in the fourth quarter of fiscal 2022, the Company’s estimates indicated the fair values of all its reporting units substantially exceeded their carrying values, such carrying values were expected to be recovered, and there was no goodwill impairment.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

During the year ended February 28, 2021, as a result of the deterioration in economic conditions caused by the global COVID-19 pandemic and its impact on the Company’s reporting units, and the decline of the trading value of the Company’s capital stock below the Company’s consolidated carrying value, the Company determined that it was more likely than not that the fair value of at least one of its reporting units was lower than its carrying value after including goodwill.

As a result, the Company completed an analysis of the fair value of its reporting units to compare against their respective carrying values as of May 31, 2020.

Based on the results of the goodwill impairment test, it was concluded that the carrying value of one reporting unit exceeded its fair value, necessitating an impairment charge for the amount of excess and reducing the carrying value of goodwill.

Consequently, the Company recorded a goodwill impairment charge of $ 594 million in the BlackBerry Spark reporting unit.

The estimated fair values of the Company’s other reporting units substantially exceeded their carrying values at May 31, 2020.

Impairment of Long-Lived Assets (“LLA”)

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 as disclosed in Note 12.

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.

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

The analysis is dependent on internal forecasts, estimation of the long-term growth rates for revenue and cash flows associated with the Company’s asset groups, estimation of the useful life over which those cash flows will occur, terminal growth rates, profitability measures, and determination of the discount rates for the asset groups.

In addition, the Company exited certain leased facilities during the year ended February 28, 2023 and is in the process of seeking subleases for those properties.

The Company recorded a non-cash, pre-tax and after-tax impairment charge of $ 4 million related to the operating lease right-of-use (“ROU”) assets for those facilities.

During the year ended February 29, 2024, the Company exited certain leased facilities and recorded a pre-tax and after-tax impairment charge of $ 7 million, related to the ROU assets for those facilities.

The impairment was determined by comparing the fair value of the impacted ROU asset to the carrying value of the asset as of the impairment measurement date, as required under ASC Topic 360, Property, Plant, and Equipment, using Level 3 inputs.

The fair value of the ROU asset was based on the estimated sublease income for certain facilities taking into consideration the time period it will take to obtain a sublessor, the applicable discount rate and the sublease rate.

The Company conducts an evaluation of the related liabilities and expenses and revises its assumptions and estimates as appropriate as new or updated information becomes available.

During the year ended February 28, 2022, there were no LLA impairment charges.

During the year ended February 28, 2021, the Company recorded a non-cash, pre-tax and after-tax impairment charge of $ 46 million consisting of $ 37 million related to operating lease ROU assets for certain facilities and $ 9 million related to property, plant and equipment associated with those facilities.

In addition, the Company also recorded a decrease to its lease liabilities of $ 3 million associated with certain leased facilities with an early termination option, which has been included as a partial offset in impairment of long-lived assets on the Company’s consolidated statements of operations.

The fair value of the ROU asset was based on the estimated sublease income for certain facilities taking into consideration the estimated time period it will take to obtain a sublessor, the applicable discount rate and the sublease rate, which are considered unobservable inputs.

The Company conducts an evaluation of the related liabilities and expenses and revises its assumptions and estimates as appropriate as new or updated information becomes available.

These ROU impaired assets are classified within Level 3 of the fair value hierarchy.

The Company conducts regular reviews of the individual patents, both organically generated and acquired, comprising its patent portfolio.

As a result of this review, for the year ended February 29, 2024, the Company determined it had an indicator of impairment, as it had ceased enforcement and abandoned the legal right and title to patents with a cost of $ 15 million, accumulated amortization of $ 7 million, and a net book value of $ 8 million, which is classified as an impairment of long-lived assets on the Company’s consolidated statements of operations.

During the year ended February 28, 2023, the Company recorded a non-cash, pre-tax and after-tax impairment charge of $ 235 million consisting of $ 231 million related to the Company’s UES asset group, which is primarily composed of intangible assets recognized on the acquisition of Cylance and is included within the Company’s Cybersecurity segment

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated

as disclosed in Note 12 and $ 4 million related to operating lease ROU assets for certain leased facilities that were exited during the fiscal year.

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

During the year ended February 28, 2022, there were no LLA impairment charges.

Cash, Cash Equivalents and Investments

14 unchanged sentences

promissory notes 35 — — 35 30 5 — —

government sponsored enterprise notes 30 — — 30 10 20 — —

Corporate notes/bonds 15 — — 15 — 15 — —

treasury bills 10 — — 10 6 — — 4

166 — — 166 79 62 — 25

Other investments 2 4 — 6 — — 6 —

$ 302 $ 6 $ ( 10 ) $ 298 $ 175 $ 62 $ 36 $ 25

15 unchanged sentences

Equity securities 10 — ( 10 ) — — — — —

Term deposits, certificates of deposits, and GIC's 157 — — 157 65 65 — 27

Bankers' acceptances/bearer deposit notes 58 — — 58 58 — — —

Term deposits, and certificates of deposits 33 — — 33 8 — — 25

Bearer deposit notes 82 — — 82 82 — — —

Commercial paper 159 — — 159 108 51 — —

1 unchanged sentence

government sponsored enterprise notes 30 — — 30 10 20 — —

treasury bills/notes 43 — — 43 43 — — —

Corporate notes/bonds 15 — — 15 — 15 — —

364 — — 364 208 131 — 25

6 unchanged sentences

As of February 29, 2024, the Company has recorded a cumulative impairment of $ 3 million to the carrying value of certain other non-marketable equity investments without readily determinable fair value (February 28, 2023 - $ 3 million).

During the year ended February 28, 2022, the Company received a distribution from a non-marketable equity investment without readily determinable fair value in the amount of $ 35 million, which for accounting purposes, consisted of a return of capital of $ 13 million and a realized gain of $ 22 million included in investment income (loss), net on the Company’s consolidated statements of operations.

During the year ended February 28, 2022, the Company received a distribution from a non-marketable equity investment without readily determinable fair value in the amount of $ 35 million, which for accounting purposes, consisted of a return of capital of $ 13 million and a realized gain of $ 22 million included in investment income, net on the Company’s consolidated statements of operations.

There were no realized gains or losses on available-for-sale securities for the year ended February 29, 2024 (February 28, 2023 and February 28, 2022 - nil ).

1 unchanged sentence

These letters of credit support certain leasing arrangements entered into in the ordinary course of business.

The letters of credit are for terms ranging from one month to three years.

The letters of credit are for terms ranging from one month to two years.

The Company is legally restricted from accessing these funds during the term of the leases for which the letters of credit have been issued;

26 unchanged sentences

The exposure of default is represented by the assets’ amortized carrying amount at the reporting date.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

The following table sets forth the activity in the Company’s allowance for credit losses:

1 unchanged sentence

Beginning balance as of February 28, 2022 $ 4

Prior period recovery for expected credit losses ( 2 )

Prior period provision for expected credit losses 1

Write-offs charged against the allowance ( 4 )

1 unchanged sentence

Current period provision for expected credit losses 5

Write-offs charged against the allowance ( 4 )

Ending balance of the allowance for credit loss as at February 29, 2024 $ 6

The allowance for credit losses as at February 28, 2023 consists of $ 1 million (February 28, 2022 - $ 2 million) relating to CECL estimated based on days past due and region and nil (February 28, 2022 - $ 2 million) relating to specific customers that were evaluated separately.

There were two customers that comprised more than 10% of accounts receivable as at February 28, 2023 (February 28, 2022 - no customer comprised more than 10%).

The allowance for credit losses as at February 29, 2024 consists of $ 1 million (February 28, 2023 - $ 1 million) relating to CECL estimated based on days past due and region and $ 5 million (February 28, 2023 - nil ) relating to specific customers that were evaluated separately.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

There were two customers that comprised more than 10% of accounts receivable as at February 29, 2024 (February 28, 2023 - two customers comprised more than 10%).

Other Receivables

As at February 28, 2023, other receivables included items such as claims filed with the Ministry of Innovation, Science and Economic Development Canada relating to its Strategic Innovation Fund program’s investment in BlackBerry QNX, among other items, none of which were greater than 5% of the current assets balance.

As at February 28, 2022, other receivables included items such as receivables from the Government of Canada’s Hardest-Hit Business Recovery Program (“HHBRP”) and an intellectual property licensing receivable, among other items, none of which were greater than 5% of the current assets balance.

As at February 29, 2024 and February 28, 2023, other receivables included items such as claims filed with the Ministry of Innovation, Science and Economic Development Canada relating to its Strategic Innovation Fund program’s investment in BlackBerry QNX, among other items, none of which were greater than 5% of the current assets balance.

Other Current Assets

2 unchanged sentences

Intellectual property $ — $ 141

On March 21, 2023, the Company entered into an agreement to sell substantially all of the Company’s non-core patent assets to Malikie Innovations Limited (“Malikie”) 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 $ 900 million.

Contemporaneously, the Company also terminated a prior agreement with Catapult IP Innovations, Inc.

(“Catapult”) relating to the proposed sale of the patent portfolio subject to the Malikie agreement as well as certain additional non-core patents.

See Note 14 on subsequent events.

For the year ended February 28, 2022, the Company had classified $ 118 million of intellectual property that were to be sold under the terminated patent sale agreement with Catapult as other current assets on the Company’s consolidated balance sheets.

As at February 28, 2023, the Company continued to classify $ 141 million of intellectual property, which included the initial $ 118 million referred to above with additions related to patent maintenance, as other current assets on the Company’s consolidated balance sheets.

Other current assets also included items such as the current portion of deferred commissions and prepaid expenses, among other items, none of which were greater than 5% of the current assets balance in any of the periods presented.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

As described in Note 12, on May 11, 2023, the Company completed its previously announced patent sale with Malikie Innovations Limited (“Malikie”) and recognized revenue of $ 218 million and cost of sales of $ 147 million, which is comprised of the carrying value of the intellectual property of $ 141 million referred to above and $ 6 million of capitalized costs during the first quarter of fiscal 2024 related to patent maintenance.

See Note 12 under the heading “Patent Sale”.

Other current assets also included the current portion of deferred commissions and prepaid expenses, among other items, none of which were greater than 5% of the current assets balance as at the balance sheet dates.

Property, Plant and Equipment, Net

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Sale of Property, Plant and Equipment, Net

During the year ended February 29, 2024, the Company had no sale of property, plant and equipment, net.

During the year ended February 28, 2023, the Company sold its corporate aircraft.

As a result, the Company recorded proceeds of approximately $ 17 million and incurred a gain on disposal of approximately $ 6 million (cost of $ 29 million, accumulated amortization of $ 18 million, and a net book value of approximately $ 11 million).

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Intangible Assets, Net

18 unchanged sentences

During fiscal 2024, additions to intangible assets primarily consisted of payments for intellectual property relating to patent maintenance, registration and license fees.

The Company recorded an impairment charge of $ 231 million in fiscal 2023, see Note 3 for further details.

Based on the carrying value of the identified intangible assets as at February 28, 2023, and assuming no subsequent impairment of the underlying assets, the annual amortization expense for each of the succeeding years is expected to be as follows:

For the year ended February 29, 2024, the Company recorded $ 8 million in impairment charges related to patent abandonments (fiscal 2023 - $ 231 million related to intangible assets previously recognized from the acquisition of Cylance), see Note 3 for further details.

Based on the carrying value of the identified intangible assets, as at February 29, 2024, and assuming no subsequent impairment of the underlying assets, the annual amortization expense for each of the five succeeding years is expected to be as follows:

fiscal 2025 - $ 42 million;

13 unchanged sentences

Carrying amount as at February 29, 2021 $ 849

Goodwill impairment charge (note 3) ( 594 )

Effect of foreign exchange on non-U.S.

1 unchanged sentence

Carrying amount as at February 28, 2022 844

Goodwill impairment charge (note 3) ( 245 )

Effect of foreign exchange on non-U.S.

6 unchanged sentences

Other Long-term Assets

As at February 28, 2023 and February 28, 2022, other long-term assets included long-term portion of deferred commission and long-term receivables, among other items, none of which were greater than 5% of total assets in any of the periods presented.

As at February 29, 2024, other long-term assets included long-term receivables related to intellectual property sold (see Note 12 under the heading “Patent Sale”), long-term receivables, and the long-term portion of deferred commission, among other items, none of which were greater than 5% of the total assets balance.

As at February 28, 2023, other long-term assets included the long-term portion of deferred commission and long-term receivables, among other items, none of which were greater than 5% of the total assets balance.

Accrued Liabilities

1 unchanged sentence

February 29, 2024 February 28, 2023

Accrued royalties $ 20 $ 20

Operating lease liabilities, current (note 11)

Other accrued liabilities include variable incentive accrual, accrued director fees, accrued vendor liabilities, accrued carrier liabilities and payroll withholding taxes, among other items, none of which were greater than 5% of the current liabilities balance in any of the periods presented.

Restructuring programs, current portion 20 3

Other accrued liabilities include accrued director fees, accrued vendor liabilities, variable incentive accrual, payroll withholding taxes and accrued royalties, among other items, none of which were greater than 5% of the current liabilities balance in any of the periods presented.

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Restructuring

During fiscal 2023 and fiscal 2024, the Company commenced restructuring programs with the objectives of reducing its annual costs and expenses relating to the Cybersecurity business, and later separating and streamlining the Company’s centralized corporate functions into Cybersecurity and IoT specific teams such that the businesses may operate independently and on a profitable and cash flow positive basis.

The reduction of overall Company costs will include rationalizing and streamlining existing central administrative functions, right-sizing cost structures within both business units including R&D and outsourced contracting, changes to overall product portfolio offerings and geographies the Company operates in, and optimizing related support functions and organizational structure.

Other charges and cash costs may occur as programs are implemented or changes are completed.

The following table sets forth the activity in the Company’s restructuring program liabilities for fiscal 2024 and fiscal 2023:

Benefits Facilities

Balance as at February 28, 2022 $ — $ — $ —

Charges incurred 8 2 10

Cash payments made ( 6 ) ( 1 ) ( 7 )

Balance as at February 28, 2023 2 1 3

Charges incurred 31 6 37

Cash payments made ( 16 ) ( 3 ) ( 19 )

Balance as at February 29, 2024 $ 17 $ 4 $ 21

Current portion $ 17 $ 3 $ 20

Long-term portion — 1 1

$ 17 $ 4 $ 21

The long-term portion of the restructuring liabilities is recorded at fair value, determined by measuring the remaining payments at present value using an effective interest rate of 5.0 %, and the Company recorded interest expense over time to arrive at the total face value of the remaining payments.

The restructuring charges included employee termination benefits and facilities costs to better align the Company’s general and administrative and R&D cost profiles to its market competitors, create a more focused sales force and improve profitability and cash flow.

Total charges incurred in fiscal 2024 and fiscal 2023 were $ 37 million and $ 10 million respectively, recorded within General and administrative on the Consolidated Statements of Operations.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

The difference between the amount of the provision for (recovery of) income taxes and the amount computed by multiplying income (loss) before income taxes by the statutory Canadian tax rate is reconciled as follows:

10 unchanged sentences

Goodwill impairment 9 65 —

Prior period adjustments 9 4 ( 1 )

Other differences 6 5 1

82 unchanged sentences

(1) Includes federal, provincial and state balances.

1.75% Convertible Debentures

On September 1, 2020, Hamblin Watsa Investment Counsel Ltd., in its capacity as investment manager of Fairfax Financial Holdings Limited (“Fairfax”), and another institutional investor invested in the Company through a $ 365 million private placement of new debentures (the “1.75% Debentures”), which replaced $ 605 million of debentures issued in a private placement on September 7, 2016 (the “3.75% Debentures”) as described below (collectively, the “Debentures”).

Interest on the 1.75% Debentures is payable quarterly in arrears at a rate of 1.75 % per annum.

The 1.75% Debentures mature on November 13, 2023 and each $ 1,000 of 1.75% Debentures is convertible at any time into 166.67 common shares of the Company, for a total of 60.8 million common shares at a price of $ 6.00 per share for all 1.75% Debentures, subject to adjustments.

Covenants associated with the 1.75% Debentures include limitations on the Company’s total indebtedness.

Under specified events of default, the outstanding principal and any accrued interest on the 1.75% Debentures become immediately due and payable upon request of holders holding not less than 25 % of the principal amount of the 1.75% Debentures then outstanding.

During an event of default, the interest rate rises to 5.75 % per annum.

The 1.75% Debentures are subject to a change of control provision whereby the Company would be required to make an offer to repurchase the 1.75% Debentures at 115 % of par value if a person or group (not affiliated with Fairfax) acquires 35 % of the Company’s outstanding common shares, acquires all or substantially all of its assets, or if the Company merges with another entity and the Company’s existing shareholders hold less than 50 % of the common shares of the surviving entity.

Additionally, the 1.75% Debentures cannot be converted to the extent that, after giving effect to the conversion, the holder would beneficially own or exercise control or direction over more than 19.99 % of the Company’s then issued and outstanding shares (the “Blocker Provision”).

Due to the conversion option and other embedded derivatives within the 1.75% Debentures, and consistent with the Company’s accounting for the 3.75% Debentures, the Company has elected to record the 1.75% Debentures, including the debt itself and all embedded derivatives, at fair value and present the 1.75% Debentures as a single hybrid financial

3.00% Convertible Senior Notes

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 its outstanding $ 150 million aggregate principal amount of 1.75% extendible convertible unsecured debentures (the “Extension Debentures” and, collectively with the “2020 Debentures” (as defined below) and the Notes, the “Debentures”) at maturity on February 15, 2024 .

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

Each $ 1,000 principal amount of the Notes is convertible into 257.5826 common shares of the Company based on the initial conversion rate, for a total of 52 million common shares at a price of $ 3.88 per share, subject to adjustments.

Prior to the close of business on the business day immediately preceding November 15, 2028, the Notes will be convertible only upon satisfaction of certain conditions and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding February 15, 2029.

The Company may satisfy any conversions of the Notes by paying or delivering, as the case may be, cash, its common shares or a combination of cash and its common shares, at the Company’s election (or, in the case of any Notes called for redemption that are converted during the related redemption period, solely its common shares).

Covenants associated with the Notes include general corporate maintenance, existence and reporting requirements.

The Notes will bear interest at a rate of 3.00 % per annum, payable semi-annually in arrears on February 15 and August 15 of each year, beginning on August 15, 2024 .

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated

No portion of the fair value of the 1.75% Debentures has been recorded as equity, nor would be if the embedded derivatives were bifurcated from the host debt contract.

The fair value of the 1.75% Debentures has been determined using the significant Level 2 inputs interest rate curves, the market price and volatility of the Company’s listed common shares, and the significant Level 3 inputs related to credit spread and the implied discount of the 1.75% Debentures at issuance.

The Company originally determined its credit spread by calibrating to observable trades of the 3.75% Debentures and trending the calibrated spread to valuation dates utilizing an appropriate credit index.

The Company’s credit spread was determined to be 7.90 % as of the issuance date of the 1.75% Debentures and 7.12 % as of February 28, 2023.

An increase in credit spread will result in a decrease in the fair value of 1.75% Debentures and vice versa.

The fair value of the 1.75% Debentures on September 1, 2020 was determined to be approximately $ 456 million and the implied discount approximately $ 91 million.

The Company determined the implied discount on the 1.75% Debentures by calculating the fair value of the 1.75% Debentures on September 1, 2020 utilizing the above credit spread and other inputs described above.

The following table summarizes the change in fair value of the 1.75% Debentures for the fiscal year ended February 28, 2023, February 28, 2022 and February 28, 2021 which also represents the total changes through earnings of items classified as Level 3 in the fair value hierarchy:

Under specified events of default, the outstanding principal and any accrued and unpaid interest on the Notes will become immediately due and payable upon request of holders holding not less than 25 % of the principal amount of the Notes then outstanding.

During the occurrence of certain specific events of default, the Company may elect to cure such events of default by increasing the 3.00 % interest rate on the Notes by 0.25 % to 0.50 % per annum.

The Company may not redeem the Notes prior to February 22, 2027 , except in the event of certain tax law changes.

On or after February 22, 2027, the Company may redeem for cash all or a portion of the Notes, at the Company’s election, if the last reported sale price of the Company’s common shares has been at least 130% of the conversion price then in effect on each of at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a cash redemption price equal to 100% of the aggregate principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

If the Company undergoes a fundamental change, as defined in the indenture governing the Notes, subject to certain conditions the Company will be required to make an offer to repurchase for cash all of the outstanding Notes (or any portion thereof that a holder determines to sell to the Company) at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.

In connection with certain corporate events or if the Company calls the Notes for redemption, the Company will, under certain circumstances, increase the conversion rate for noteholders who elect to convert their Notes in connection with such corporate event or convert their Notes called for redemption.

The Company has recorded the Notes, including the debt itself and all embedded derivatives, at cost less debt issuance costs of $ 6 million and present the Notes as a single hybrid financial instrument.

No portion of the embedded derivatives required bifurcation from the host debt contract.

The following table summarizes the change in the Notes for the fiscal year ended February 29, 2024 from their date of issuance:

February 29, 2024

Principal received as of January 29, 2024 200

Debt issuance costs paid ( 6 )

Balance as at February 29, 2024 $ 194

Extension Debentures and 2020 Debentures

On November 17, 2023, the Company issued the Extension Debentures in a private placement to certain controlled affiliates of Fairfax Financial Holdings Limited (“Fairfax”).

The Company used the net proceeds from the issuance of the Extension Debentures, together with cash on hand, to repay its outstanding $ 365 million aggregate principal amount of 1.75% unsecured convertible debentures (the “2020 Debentures”) at maturity on November 13, 2023 .

Aside from the maturity date, the terms of the Extension Debentures were substantially identical to those of the 2020 Debentures, except that the Extension Debentures were not listed on any stock exchange and did not involve an indenture trustee.

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

Each $ 1,000 principal amount of Extension Debentures was convertible at any time prior to the third business day prior to the maturity date into 166.67 common shares of the Company, for a total of 25 million common shares at a price of $ 6.00 per share, subject to adjustments.

Covenants associated with the Extension Debentures included limitations on the

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Company’s total indebtedness.

Interest on the Extension Debentures was payable on the maturity date in arrears at a rate of 1.75 % per annum.

Under specified events of default, the outstanding principal and any accrued interest on the Extension Debentures become immediately due and payable upon request of holders holding not less than 25 % of the principal amount of the Extension Debentures then outstanding.

During an event of default, the interest rate would increase to 5.75 % per annum.

The Extension Debentures were subject to a change of control provision whereby the Company would be required to make an offer to repurchase the Extension Debentures at 115 % of par value if a person or group (not affiliated with Fairfax) acquired 35 % of the Company’s outstanding common shares, acquired all or substantially all of its assets, or if the Company merged with another entity and the Company’s existing shareholders hold less than 50 % of the common shares of the surviving entity.

Additionally, the Extension Debentures could not be converted to the extent that, after giving effect to the conversion, the holder would beneficially own or exercise control or direction over more than 19.99 % of the Company’s then issued and outstanding common shares.

Due to the conversion option and other embedded derivatives within the Extension Debentures, and consistent with the Company’s accounting for the 2020 Debentures, the Company had elected to record the Extension Debentures, including the debt itself and all embedded derivatives, at fair value and present the Extension Debentures as a single hybrid financial instrument.

No portion of the fair value of the Extension Debentures had been recorded as equity, nor would be if the embedded derivatives were bifurcated from the host debt contract.

Each period, the fair value of the Extension Debentures and 2020 Debentures were recalculated and resulting gains and losses from the changes in fair value of the Extension Debentures and 2020 Debentures associated with non-credit components were recognized in income, while the change in fair value associated with credit components was recognized in accumulated other comprehensive loss (“AOCL”).

The fair value of the Extension Debentures was determined using observable interest rate curves, and the market price and volatility of the Company’s common shares.

The following table summarizes the change in fair value of the Extension Debentures from their date of issuance, which also represents the total changes through earnings of items classified as Level 2 in the fair value hierarchy:

February 29, 2024

Principal received as of November 17, 2023 $ 150

Change in fair value of the Extension Debentures —

Maturity of the Extension Debentures on February 15, 2024 ( 150 )

Balance as at February 29, 2024 $ —

The following table summarizes the change in fair value of the 2020 Debentures for the years ended February 29, 2024 and February 28, 2023 which also represents the total changes through earnings of items classified as Level 3 in the fair value hierarchy:

February 29, 2024

Balance as at February 28, 2022 $ 507

Change in fair value of the 2020 Debentures ( 140 )

1 unchanged sentence

Change in fair value of the 2020 Debentures ( 2 )

Maturity of the 2020 Debentures on November 13, 2023 ( 365 )

Balance as at February 29, 2024 $ —

The difference between the fair value of the 1.75% Debentures and the unpaid principal balance of $ 365 million is $ 2 million.

The following table shows the impact of the changes in fair value of the 1.75% Debentures for the years ended February 28, 2023, February 28, 2022 and February 28, 2021:

For the Years Ended

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

Income (charge) associated with the change in fair value from non-credit components recorded in the consolidated statements of operations $ 138 $ 212 $ ( 347 )

Income (charge) associated with the change in fair value from instrument-specific credit components recorded in AOCL 2 1 ( 8 )

Total decrease (increase) in the fair value of the 1.75% Debentures $ 140 $ 213 $ ( 355 )

For the year ended February 28, 2023, the Company recorded interest expense related to the Debentures of $ 6 million, which has been included in investment income (loss), net on the Company’s consolidated statements of operations (fiscal 2022 - $ 6 million;

fiscal 2021 - $ 15 million).

The Company is required to make quarterly interest-only payments of approximately $ 2 million during the remaining term the 1.75% Debentures are outstanding.

Fairfax, a related party under U.S.

GAAP due to its beneficial ownership of common shares in the Company after taking into account potential conversion of the Debentures, owned $ 500 million principal amount of the 3.75% Debentures and purchased $ 330 million principal amount of the 1.75% Debentures.

As such, the redemption of Fairfax’s portion of the 3.75% Debentures, the investment by Fairfax in the 1.75% Debentures and the payment of interest on the Debentures to Fairfax represent related party transactions.

Fairfax receives interest at the same rate as other holders of the Debentures.

As at February 28, 2023 the $ 365 million principal value of the 1.75% Debentures is a current liability that will mature on November 13, 2023 .

Cash, cash equivalents, and investments were approximately $ 487 million as at February 28, 2023.

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated

The Company has the ability to access other potential financing arrangements on commercially reasonable terms;

for disclosure of liquidity risk, see Note 13.

3.75% Convertible Debentures

On September 7, 2016, Fairfax and other institutional investors invested in the Company through a $ 605 million private placement of the 3.75% Debentures.

The terms of the 3.75% Debentures were substantially similar to those of the 1.75% Debentures, except that the 3.75 % Debentures had a higher interest rate, were convertible into common shares at a price of $ 10.00 per common share, were subject to a lower approval threshold for extraordinary resolutions, did not contain the Blocker Provision and had a maturity date of November 13, 2020 .

On July 22, 2020, the Company announced that, with the required approval of the holders of the 3.75% Debentures, it would redeem the 3.75% Debentures for a redemption amount of approximately $ 615 million (the “Redemption Amount”), which would settle all outstanding obligations of the Company in respect of the 3.75% Debentures.

The redemption was completed on September 1, 2020 .

As the Redemption Amount represented fair value at August 31, 2020 and the Company elected the fair value option for the 3.75% Debentures, the impact to the consolidated statements of operations of the redemption on the fair value was recorded in the second quarter of fiscal 2021.

A portion of the fair value associated with changes in instrument-specific credit components in the amount of $ 6 million remained in OCI until redemption on September 1, 2020 at which point $ 6 million was discharged to the consolidated statement of operations and is included in the table below.

The following table shows the impact of the changes in fair value of the 3.75% Debentures for the year ended February 28, 2021:

February 28, 2021

Charge associated with the change in fair value from non-credit components recorded in the consolidated statements of operations $ ( 19 )

The following table shows the impact of the changes in fair value of the Extension Debentures and 2020 Debentures for the years ended February 29, 2024, February 28, 2023 and February 28, 2022:

For the Years Ended

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

Income associated with the change in fair value from non-credit components recorded in the consolidated statements of operations $ 2 $ 138 $ 212

Income associated with the change in fair value from instrument-specific credit components recorded in AOCL — 2 1

Realized charges associated with the change in fair value from credit components recorded in the consolidated statements of operations on redemption ( 6 )

Realized charges associated with the change in fair value from credit components released from AOCL on redemption 6

Total increase in the fair value of the 3.75% Debentures $ ( 4 )

Realized losses associated with the change in fair value from credit components recorded in the consolidated statements of operations on maturity of the Extension Debentures and 2020 Debentures ( 6 ) — —

Realized losses associated with the change in fair value from credit components released from AOCL on maturity of the Extension Debentures and 2020 Debentures 6 — —

Total decrease in the fair value of the Extension Debentures and 2020 Debentures $ 2 $ 140 $ 213

For the year ended February 29, 2024, the Company recorded interest expense related to the Debentures of $ 6 million, which has been included in investment income, net on the Company’s consolidated statements of operations (fiscal 2023 - $ 6 million;

fiscal 2022 - $ 6 million).

The Company is required to make semi-annual interest-only payments of approximately $ 3 million during the remaining term the Notes are outstanding.

Fairfax, a related party under U.S.

GAAP due to its beneficial ownership of common shares in the Company after taking into account potential conversion of the Extension Debentures, owned $ 330 million principal amount of the 2020 Debentures and $ 150 million principal amount of the Extension Debentures.

As such, the payment of interest on the Extension Debentures and such portion of the 2020 Debentures, and their repayment, to Fairfax represented related party transactions.

CAPITAL STOCK

19 unchanged sentences

Stock-based compensation — 34

Common shares issued related to Exchange Shares 1,422 —

Common shares issued for employee share purchase plan 960 6

3 unchanged sentences

Stock-based compensation — 33

Common shares issued on the redemption of deferred share units 297 1

Common shares issued for employee share purchase plan 1,037 5

2 unchanged sentences

In lieu of cash, a portion of the consideration owed to certain Cylance shareholders was paid in equal installments of Exchange Shares on the first three anniversary dates of the closing.

The Company had 582 million voting common shares outstanding, 0.5 million options to purchase voting common shares, 20 million RSUs and 2 million DSUs outstanding as at March 28, 2023.

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

(b) Stock-based Compensation

Stock options

The Company recorded a charge to income and a credit to paid-in capital of approximately nil in fiscal 2023 (fiscal 2022 - $ 2 million;

fiscal 2021 - $ 6 million) in relation to stock option-based compensation expense.

Stock options previously granted under the Equity Plan generally vest over a period of three years , and are generally exercisable over a period of five years from the grant date.

Replacement stock options granted under the Cylance Stock Plan generally vest between three months and four years and are generally exercisable over a period of five to ten years .

The Company issues new shares to satisfy stock option exercises.

The Company had 589 million voting common shares outstanding, 0.2 million options to purchase voting common shares, 19 million RSUs and 1 million DSUs outstanding as at April 1, 2024.

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

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated

A summary of option activity for fiscal 2023 is shown below:

Options Outstanding

(000’s) Weighted

Price Average

Life in Years Aggregate

Balance as at February 28, 2022 728 $ 4.70

Exercised during the year ( 97 ) 3.59

Forfeited/canceled/expired during the year ( 142 ) 5.71

Balance as at February 28, 2023 489 $ 4.63 4.74 $ —

Vested and expected to vest as at February 28, 2023 489 $ 4.63 4.74 $ —

Exercisable as at February 28, 2023 489 $ 4.63 4.74 $ —

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value that would have been received by the option holders if all in-the-money options had been exercised on February 28, 2023.

The intrinsic value of stock options exercised during fiscal 2023, calculated using the average market price during the year, was approximately $ 1.78 per share (February 28, 2022 - $ 5.35 ;

February 28, 2021 - $ 2.22 ).

A summary of unvested stock options since February 28, 2022 is shown below:

Options Outstanding

(000’s) Weighted Average

Grant Date Fair

Balance as at February 28, 2022 59 $ 4.26

Vested during the year ( 49 ) 4.29

Forfeited during the year ( 10 ) 4.11

Balance as at February 28, 2023 — $ —

As at February 28, 2023, there was no unrecognized stock-based compensation expense related to unvested stock options.

The total fair value of stock options vested during the year ended February 28, 2023 was nominal (February 28, 2022 - $ 1 million;

February 28, 2021 - $ 6 million).

Cash received from the stock options exercised for the year ended February 28, 2023 was nominal (February 28, 2022 - $ 3 million;

February 28, 2021 - $ 12 million).

There were no tax deficiencies incurred by the Company related to stock options exercised as at February 28, 2023 (February 28, 2022 - tax deficiency of nil ;

February 28, 2021 - tax deficiency of nil ).

During the year ended February 28, 2023, there were no stock options granted (February 28, 2022 - nil ;

February 28, 2021 - nil ).

(b) Stock-based Compensation

Restricted share units

1 unchanged sentence

February 28, 2022 - $ 35 million).

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

A summary of RSU activity during fiscal 2024 is shown below:

18 unchanged sentences

February 28, 2022 - $ 69 million).

2019 Executive Chair Incentive Grant

In the first quarter of fiscal 2019, the Board approved an agreement to grant a time-based equity award, a long-term market performance-based equity award and a contingent cash award (together, the “2019 Executive Chair Grant”) to the Company’s Executive Chair and CEO as an incentive to remain as Executive Chair until November 3, 2023 .

The expense associated with the time-based equity award and market performance-based equity award is included in the compensation expense noted above.

Contingent cash award

The contingent cash award consists of a cash amount of $ 90 million that becomes payable should the 10 -day volume weighted average closing price of the Company’s common shares on the New York Stock Exchange reach $ 30 (“CEO Contingent Cash Award”).

As the award is triggered by the Company’s share price, it is considered stock-based compensation and accounted for as a share-based liability award, the fair value of which is determined at each reporting period end utilizing an option pricing model using Level 2 inputs and the associated compensation expense (or reversal) for the reporting period recorded.

The contingent cash award will terminate on November 3, 2023 .

The Company recorded a reversal of compensation expense with respect to the contingent cash award of approximately $ 2 million for the year ended February 28, 2023 (February 28, 2022 - reversal of expense of $ 6 million;

February 28, 2021 - compensation expense of $ 8 million).

The liability recorded in respect to the award was nominal as at February 28, 2023 and is included within accrued liabilities (February 28, 2022 - $ 2 million).

Deferred share units

The Company issued 302,173 DSUs and redeemed 273,836 DSUs in the year ended February 28, 2023.

Deferred share units (“DSUs”)

The Company issued 381,073 DSUs and redeemed 602,753 DSUs during the year ended February 29, 2024.

There were $ 1 million of DSUs redeemed for shares.

There were 1.4 million DSUs outstanding as at February 29, 2024 (February 28, 2023 - 1.6 million).

22 unchanged sentences

______________________________

(1) The Company has not presented the dilutive effect of the 1.75% Debentures using the if-converted method in the calculation of diluted loss per share for the year ended February 28, 2021, as to do so would be antidilutive.

(1) The Company has not presented the dilutive effect of the Notes, Extension Debentures or 2020 Debentures using the if-converted method in the calculation of diluted loss per share for the year ended February 29, 2024, as to do so would be antidilutive.

See Note 6 for details on the Debentures.

2 unchanged sentences

See Note 6 for details on the 2020 Debentures.

(3) The year ended February 28, 2021, included approximately 1,421,945 Exchange Shares that were subsequently issued on the third anniversary date of the Cylance acquisition completed on February 21, 2019 in consideration for the acquisition.

(3) The Company has not presented the dilutive effect of in-the-money options and RSUs that will be settled upon vesting by the issuance of new common shares in the calculation of diluted loss per share for the years ended February 29, 2024, February 28, 2023 and February 28, 2022 as to do so would be antidilutive.

7 unchanged sentences

Balance, beginning of period $ ( 1 ) $ — $ 1

Other comprehensive income (loss) before reclassification ( 3 ) — 2

Other comprehensive loss before reclassification — ( 3 ) —

Amounts reclassified from AOCL into net income (loss) 1 2 ( 1 )

Accumulated net unrealized gains (losses) on derivative instruments designated as cash flow hedges $ ( 1 ) $ — $ 1

Accumulated net unrealized losses on derivative instruments designated as cash flow hedges $ — $ ( 1 ) $ —

Foreign Currency Cumulative Translation Adjustment

8 unchanged sentences

Other Post-Employment Benefit Obligations

Balance, beginning of period $ ( 1 ) $ ( 1 ) $ ( 1 )

Other comprehensive income 1 — —

Actuarial losses associated with other post-employment benefit obligations $ — $ ( 1 ) $ ( 1 )

Accumulated Other Comprehensive Loss, End of Period $ ( 14 ) $ ( 24 ) $ ( 19 )

During the year ended February 28, 2023, $ 2 million in losses (pre-tax and post-tax) associated with cash flow hedges were reclassified from AOCL into selling, marketing and administration expenses (February 28, 2022 - $ 1 million in gains).

During the year ended February 29, 2024, $ 1 million in losses (pre-tax and post-tax) associated with cash flow hedges were reclassified from AOCL into general and administrative expenses (February 28, 2023 - $ 2 million in losses).

COMMITMENTS AND CONTINGENCIES

(a) Letters of Credit

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 as of February 28, 2023.

The Company had $ 25 million in collateralized outstanding letters of credit in support of certain leasing arrangements entered into in the ordinary course of business as of February 29, 2024.

See the discussion of restricted cash in Note 3.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

(b) Contingencies

4 unchanged sentences

Litigation has been, and will likely continue to be, necessary to determine the scope, enforceability and validity of third-party proprietary rights or to establish the Company’s proprietary rights.

Regardless of whether claims

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

against the Company have merit, those claims could be time-consuming to evaluate and defend, result in costly litigation, divert management’s attention and resources and subject the Company to significant liabilities.

Regardless of whether claims against the Company have merit, those claims could be time-consuming to evaluate and defend, result in costly litigation, divert management’s attention and resources and subject the Company to significant liabilities.

Management reviews all of the relevant facts for each claim and applies judgment in evaluating the likelihood and, if applicable, the amount of any potential loss.

3 unchanged sentences

Any settlements or awards under such claims are provided for when reasonably determinable.

As of February 28, 2023, there are no other material claims outstanding for which the Company has assessed the potential loss as both probable to result and reasonably estimable;

As of February 29, 2024, there are no material claims outstanding for which the Company has assessed the potential loss as both probable to result and reasonably estimable;

therefore, no accrual has been made.

14 unchanged sentences

The individual lawsuit was voluntarily dismissed and the consolidated U.S.

class actions reached an agreement in principle to settle;

class actions was settled;

see “Litigation Settlement” below in this Note 10.

9 unchanged sentences

Discovery is proceeding and the Court has not set a trial date.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

On March 17, 2017, a putative employment class action was filed against the Company in the Ontario Superior Court of Justice ( Parker v.

8 unchanged sentences

The parties participated in a mediation on November 9, 2022, which did not result in an agreement.

Discovery is proceeding and the Court has not set a trial date.

The Court has set a trial date of June 2, 2025, and scheduled a pre-trial conference on December 4, 2024.

Discovery is proceeding.

Other contingencies

As at February 28, 2023, the Company has recognized $ 17 million (February 28, 2022 - $ 17 million) in funds from claims filed with the Ministry of Innovation, Science and Economic Development Canada relating to its Strategic Innovation

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Fund (“SIF”) program’s investment in BlackBerry QNX.

As at February 29, 2024, the Company has recognized $ 17 million (February 28, 2023 - $ 17 million) in funds from claims filed with the Ministry of Innovation, Science and Economic Development Canada relating to its Strategic Innovation Fund (“SIF”) program’s investment in BlackBerry QNX.

A portion of this amount may be repayable in the future under certain circumstances if certain terms and conditions are not met by the Company, which is not probable at this time.

On March 14, 2014, the four putative U.S.

class actions were consolidated in the U.S.

District Court for the Southern District of New York, and on May 27, 2014, a consolidated amended class action complaint was filed.

On August 2, 2019, the Magistrate Judge issued a Report and Recommendation that the Court grant the defendants’ motion for judgment on the pleadings dismissing the claims of additional plaintiffs Cho and Ulug.

On September 24, 2019, the District Court Judge accepted the Magistrate Judge’s recommendation and dismissed the claims of Cho and Ulug against all defendants.

On January 26, 2021, the District Court granted the plaintiffs’ motion for class certification.

The class includes “all persons who purchased or otherwise acquired the common stock of BlackBerry Limited on the NASDAQ during the period from March 28, 2013, through and including September 20, 2013”.

The class excludes (a) all persons and entities who purchased or otherwise acquired the Company’s common stock between March 28, 2013, and April 10, 2013, and who sold all their Company common stock before April 11, 2013, and (b) the defendants, officers and directors of the Company, members of their immediate families and their legal representatives, heirs, successors, or assigns, and any entity in which any of the Defendants have or had a controlling interest.

The Second Circuit Court of Appeals affirmed the District Court judgment dismissing Cho and Ulug’s claims on March 11, 2021, and denied Cho and Ulug’s petition for panel rehearing and rehearing en banc on April 28, 2021.

On April 6, 2022, the parties accepted a mediator’s settlement proposal, and reached an agreement in principle to settle the U.S.

consolidated actions for $ 165 million.

On April 6, 2022, through a mediator, the Company agreed in principle to pay $ 165 million to settle the consolidated U.S.

class actions (see “Litigation” above in this Note 10).

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.

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.

On June 29, 2022, the Company paid $ 1 million of the settlement amount and the remaining $ 164 million was paid on September 6, 2022.

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

8 unchanged sentences

The Company has operating and finance leases primarily for corporate offices, research and development facilities, data centers and certain equipment.

The Company’s leases have remaining lease terms of between one year and five years , some of which may include options to extend the lease for up to 10 years, and some of which may include options to terminate the lease within one month .

The components of lease expense were as follows:

For the Years Ended

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

Operating lease cost, included in selling, marketing and administration $ 20 $ 23 $ 30

The Company’s leases have remaining lease terms of between one year and six years , some of which may include options to extend the lease for up to 10 years, and some of which may include options to terminate the lease within one month .

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated

The components of lease expense were as follows:

For the Years Ended

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

Operating lease cost, included in general and administrative $ 18 $ 20 $ 23

Supplemental cash flow information related to leases was as follows:

3 unchanged sentences

During the year ended February 29, 2024, the Company entered into $ 13 million (February 28, 2023 - $ 15 million) in lease obligations and recognized a corresponding ROU asset of $ 13 million (February 28, 2023 - $ 15 million).

During the year ended February 28, 2023, the Company incurred losses of $ 4 million (February 28, 2022 - nil ;

February 28, 2021 - $ 37 million) on LLA impairment of ROU assets, as described in Note 3.

During the year ended February 29, 2024, the Company incurred losses of $ 7 million (February 28, 2023 - $ 4 million;

February 28, 2022 - nil ) on LLA impairment of ROU assets, as described in Note 3.

The Company also had sublease income during the year ended February 29, 2024 of $ 4 million (February 28, 2023 - $ 3 million;

31 unchanged sentences

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

In the first quarter of fiscal 2022, the CODM, who is the Executive Chair and CEO of the Company, began making decisions and assessing the performance of the Company using three operating segments, whereas the CODM previously made decisions and assessed the performance of the Company as a single operating segment.

The CODM, who is the CEO of the Company, makes decisions and assesses the performance of the Company using three operating segments.

The CODM does not evaluate operating segments using discrete asset information.

3 unchanged sentences

Cybersecurity, IoT, and Licensing and Other.

Fiscal 2021 information has been restated to conform to the current presentation of the Company’s segment information.

The Company disaggregates revenue from contracts with customers based on geographical regions, timing of revenue recognition, and the major product and service types as described in Note 1.

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(1) A reconciliation of total segment gross margin to consolidated totals is set forth below.

Cybersecurity consists of the Company’s BlackBerry Spark software platform, BlackBerry AtHoc, BlackBerry Alert and BlackBerry SecuSUITE.

The BlackBerry Spark platform is a comprehensive offering of security software products and services, including the BlackBerry Cyber Suite and the BlackBerry Spark® Unified Endpoint Management Suite, which are also marketed together as the BlackBerry Spark Suite, offering the Company’s broadest range of tailored cybersecurity and endpoint management options.

The BlackBerry Spark UES Suite includes revenue from the Company’s Cylance artificial intelligence and machine learning-based platform consisting of CylancePROTECT, CylanceOPTICS, CylancePERSONA, CylanceGATEWAY, CylanceGUARD managed services, CylancePROTECT Mobile and other cybersecurity applications.

The BlackBerry Spark UEM Suite includes the Company’s BlackBerry UEM, BlackBerry Dynamics, and BlackBerry Workspaces solutions.

Cybersecurity consists of BlackBerry® UEM and Cylance® cybersecurity solutions (collectively, BlackBerry Spark®), BlackBerry® AtHoc® and BlackBerry® SecuSUITE®.

The Company’s Cylance AI and machine learning-based platform consists of CylanceENDPOINT™, CylanceGUARD®, CylanceEDGE™, CylanceINTELLIGENCE™ and other cybersecurity applications.

The Company’s endpoint management platform includes BlackBerry® UEM, BlackBerry® Dynamics™, and BlackBerry® Workspaces solutions.

Cybersecurity revenue is generated predominantly through software licenses, commonly bundled with support, maintenance and professional services.

13 unchanged sentences

Research & development 186 207 219

Selling, marketing and administration 340 297 344

Sales and marketing 171 176 183

General and administrative 181 164 114

Amortization 54 96 165

4 unchanged sentences

Litigation settlement — 165 —

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

Investment income, net ( 19 ) ( 5 ) ( 21 )

Consolidated income (loss) before income taxes $ ( 106 ) $ ( 720 ) $ 19

2 unchanged sentences

Stock compensation expenses - Equity compensation is a non-cash expense and does not impact the ongoing operating decisions taken by the Company’s management.

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

Pursuant to the terms of the Malikie Transaction, the Company received a license back to the patents sold, which relate primarily to mobile devices, messaging and wireless networking.

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

As at February 29, 2024, the remaining financing component on the patent sale was $ 10 million and will be recognized as interest income over the payment terms.

The Company estimated variable consideration from future royalty revenues using an expected value method including inputs from both internal and external sources related to patent monetization activities and cash flows, and constrained the recognition of that variable consideration based on the Company’s accounting policies and critical accounting estimates as described in Note 1.

The present value of variable consideration recognized as revenue was $ 23 million and the amount of variable consideration constrained was $ 210 million.

The Company evaluates its conclusions as to whether the constraints are still applicable on an ongoing basis, and will make updates when it observes a sufficient amount of evidence that amounts of variable consideration are no longer subject to constraint or the estimated amount of variable consideration has changed.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

The Company disaggregates revenue from contracts with customers based on geographical regions, timing of revenue recognition, and the major product and service types, as discussed above in “Segment Disclosures”.

9 unchanged sentences

( 1) North America includes all revenue from the Company’s intellectual property arrangements, due to the global applicability of the patent portfolio and licensing arrangements thereof.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Revenue, classified by timing of recognition, was as follows:

10 unchanged sentences

Decrease due to payment, fulfillment of performance obligations, or other ( 804 ) ( 598 ) ( 28 )

Increase (decrease), net ( 18 ) ( 29 ) 1

Increase, net 135 7 4

Closing balance as at February 29, 2024 $ 255 $ 222 $ 21

2 unchanged sentences

The disclosure includes estimates of variable consideration, except when the variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property.

The disclosure excludes estimates of variable consideration relating to future royalty revenues from the Malikie Transaction, which have been constrained based on the Company’s accounting policies and critical accounting estimates as described in Note 1 and under “Patent Sale” in this Note 12.

As at February 29, 2024

1 unchanged sentence

Remaining performance obligations $ 194 $ 14 $ 14 $ 222

Revenue recognized for performance obligations satisfied in prior periods

For the fiscal year ended February 28, 2023, $ 1 million in revenue was recognized relating to performance obligations satisfied in a prior period (fiscal year ended February 28, 2022 - $ 1 million;

fiscal year ended February 28, 2021 - $ 2 million).

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Revenue recognized for performance obligations satisfied in prior periods

For the fiscal year ended February 29, 2024, $ 12 million in revenue was recognized relating to performance obligations satisfied in a prior period as a result of certain variable consideration no longer being subject to constraint (fiscal year ended February 28, 2023 - $ 1 million;

fiscal year ended February 28, 2022 - $ 1 million).

Property, plant and equipment, intangible assets, operating lease ROU assets and goodwill, classified by geographic region in which the Company’s assets are located, were as follows:

6 unchanged sentences

Information About Major Customers

There was one customer that comprised 12 % of the Company’s revenue in fiscal 2023 (fiscal 2022 - one customer that comprised 11 %;

There was one customer that comprised 27 % of the Company’s revenue in fiscal 2024 due to the completed Malikie Transaction (fiscal 2023 - one customer that comprised 12 %;

fiscal 2022 - one customer that comprised 11 %) .

7 unchanged sentences

(b) Additional Information

Advertising expense, which includes media, agency and promotional expenses totaling $ 29 million is included in selling, marketing and administration expenses for the fiscal year ended February 28, 2023.

Advertising expense, which includes media, agency and promotional expenses totaling $ 22 million is included in sales and marketing expenses for the fiscal year ended February 29, 2024.

(February 28, 2023 - $ 29 million;

February 28, 2022 - $ 25 million)

Selling, marketing and administration expenses for the fiscal year ended February 28, 2023 included nil with respect to foreign exchange gain, net of foreign exchange hedging (February 28, 2022 - $ 1 million;

General and administrative expenses for the fiscal year ended February 29, 2024 included nil with respect to foreign exchange gain, net of foreign exchange hedging (February 28, 2023 - nil ;

February 28, 2022 - $ 1 million).

9 unchanged sentences

The Company does not use derivative instruments for speculative purposes.

Interest rate risk

Cash and cash equivalents and investments are invested in certain instruments of varying maturities.

Consequently, the Company is exposed to interest rate risk as a result of holding investments of varying maturities.

The fair value of investments, as well as the investment income derived from the investment portfolio, will fluctuate with changes in prevailing interest rates.

The Company has also issued 1.75% Debentures with a fixed interest rate as described in Note 6.

The fair value of the 1.75% Debentures will fluctuate with changes in prevailing interest rates.

Consequently, the

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Company is exposed to interest rate risk as a result of the 1.75% Debentures.

The Company does not currently utilize interest rate derivative instruments to hedge its investment portfolio or changes in the market value of the 1.75% Debentures.

Interest rate risk

Cash and cash equivalents and investments are invested in certain instruments with fixed interest rates of varying maturities.

Consequently, the Company is exposed to interest rate risk as a result of holding investments of varying maturities and the significant financing components within certain revenue contracts with customers.

The fair value of investments, as well as the investment income derived from the investment portfolio, will fluctuate with changes in prevailing interest rates.

The Company also has significant financing components within certain revenue contracts with customers and is exposed to interest rate risk as a result of discounting the future payments from customers with a fixed interest rate.

The Company has also issued Notes with a fixed interest rate, as described in Note 6.

The Company is exposed to interest rate risk as a result of the Notes.

The Company does not currently utilize interest rate derivative instruments.

The Company is exposed to market and credit risk on its investment portfolio.

The Company reduces this risk by investing in liquid, investment-grade securities and by limiting exposure to any one entity or group of related entities.

As at February 28, 2023, no single issuer represented more than 12 % of the total cash, cash equivalents and investments (February 28, 2022 - no single issuer represented more than 10 % of the total cash, cash equivalents and investments), with the largest such issuer representing commercial paper at one of the Company’s banking counterparties.

The Company is also exposed to credit risk with customers, as described in Note 4.

The Company reduces this risk from its investment portfolio by investing in liquid, investment-grade securities and by limiting exposure to any one entity or group of related entities.

As at February 29, 2024, no single issuer represented more than 30 % of the total cash, cash equivalents and investments (February 28, 2023 - no single issuer represented more than 12 % of the total cash, cash equivalents and investments), with the largest such issuer representing bearer deposits, term deposits and cash balances with one of the Company’s banking counterparties.

The Company maintains Credit Support Annexes (“CSAs”) with several of its counterparties.

These CSAs require the outstanding net position of all contracts be made whole by the paying or receiving of collateral to or from the counterparties on a daily basis, subject to exposure and transfer thresholds.

As at February 28, 2023, the Company had $ 1 million in collateral held with counterparties (February 28, 2022 - nil in collateral held).

As at February 29, 2024, the Company had no collateral posted or held with counterparties (February 28, 2023 - $ 1 million in collateral held).

Liquidity risk

1 unchanged sentence

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

The Company has experienced recent operating losses and the Debentures will mature on November 13, 2023 as described above in Note 6, but the Company maintains positive working capital, has the ability to access other potential financing arrangements on commercially reasonable terms, and has entered into the patent sale transaction as disclosed below in Note 14.

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.

Government subsidies

During fiscal 2021, the Government of Canada announced the Canada Emergency Wage Subsidy (“CEWS”) and the Canada Emergency Rent Subsidy (“CERS”) for Canadian employers whose businesses were affected by the COVID-19 pandemic.

The CEWS program initially ran for a thirty-six week period between March and November 2020 and the CERS program for a period between September 2020 and July 2021.

The programs were subsequently extended to October 2021.

The CEWS program provided a subsidy of up to 75 % of eligible employees’ employment insurable remuneration, subject to certain criteria.

The extension also included a gradual decrease to the subsidy rate.

CEWS received after June 5, 2021 may be repayable in the future under certain circumstances if certain terms and conditions are not met by the Company, which is not probable at this time.

The CERS program provided a subsidy of up to 65 % of eligible fixed property expenses.

The base subsidy was determined based on the percentage revenue decline experienced by businesses affected by the COVID-19 pandemic.

The CERS program gradually reduced the amount and availability of subsidies in the months leading up to the program’s final claim period.

During the third quarter of fiscal 2022, the Government of Canada announced the HHBRP to continue supporting businesses affected by the COVID-19 pandemic.

The HHBRP provides a subsidy of up to 50 % of eligible employees’ employment insurable remuneration, subject to certain criteria, and rent and ran until May 7, 2022.

The Company applied for the CEWS, CERS and HHBRP to the extent it met the requirements to receive the subsidy and during the year ended February 28, 2023, recorded $ 4 million in government subsidies as a reduction to operating expenses in the consolidated statement of operations (February 28, 2022 - $ 46 million).

As at February 28, 2023, the Company has recorded nil in accrued government subsidies within other receivables on the consolidated balance sheet (February 28, 2022 - $ 8 million).

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

SUBSEQUENT EVENTS

BlackBerry will be entitled to receive annual cash royalties from the profits generated by the patents, on the following basis:

– 8 % of the first $ 500 million of profits

– 15 % of the next $ 250 million of profits

– 30 % of the next $ 250 million of profits;

– 50 % of all subsequent profits.

Completion of the transaction is conditional upon, among other things, satisfaction of all regulatory conditions under the Hart-Scott-Rodino Antitrust Improvements Act in the United States and the Investment Canada Act.

Pursuant to the patent sale agreement, the Company expects to receive a license back to the patents being sold, which relate primarily to mobile devices, messaging and wireless networking.

Patents that are essential to the Company’s current core business operations, as well as certain non-core patent families relating to mobile devices, are excluded from the transaction.

Contemporaneously, the Company also terminated a prior agreement with Catapult relating to the proposed sale of the patent portfolio subject to the Malikie agreement as well as certain additional non-core patents.

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.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

1 unchanged sentence

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 8. Financial Statements and Supplementary Data