What changed in this filing

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Item 1. Financial Statements

2024-06-27 compared with 2023-12-21 · 210 added, 297 removed, 493 unchanged (51% of the section changed)

4 unchanged sentences

Consolidated Balance Sheets

November 30, 2023 February 28, 2023

May 31, 2024 February 29, 2024

Cash and cash equivalents (note 2) $ 143 $ 175

15 unchanged sentences

Income taxes payable (note 4) 29 28

Debentures (note 6) 150 367

Deferred revenue, current (note 10) 174 194

2 unchanged sentences

Other long-term liabilities 1 3

Long-term notes (note 5) 194 194

Commitments and contingencies (note 9)

16 unchanged sentences

Consolidated Statements of Shareholders’ Equity

Three Months Ended November 30, 2023

Capital Stock

and Additional

Paid-in Capital Deficit Accumulated

Comprehensive Loss Total

Balance as at August 31, 2023 $ 2,931 $ ( 2,081 ) $ ( 21 ) $ 829

Net loss — ( 21 ) — ( 21 )

Other comprehensive income — — 7 7

Stock-based compensation 8 — — 8

Shares issued:

Employee share purchase plan 2 — — 2

Balance as at November 30, 2023 $ 2,941 $ ( 2,102 ) $ ( 14 ) $ 825

Three Months Ended November 30, 2022

Capital Stock

and Additional

Paid-in Capital Deficit Accumulated

Comprehensive Loss Total

Balance as at August 31, 2022 $ 2,887 $ ( 1,529 ) $ ( 28 ) $ 1,330

Net loss — ( 4 ) — ( 4 )

Other comprehensive income — — 2 2

Stock-based compensation 9 — — 9

Shares issued:

Employee share purchase plan 2 — — 2

Balance as at November 30, 2022 $ 2,898 $ ( 1,533 ) $ ( 26 ) $ 1,339

See notes to consolidated financial statements.

BlackBerry Limited

(United States dollars, in millions) (unaudited)

Consolidated Statements of Shareholders’ Equity

Nine Months Ended November 30, 2023

Three Months Ended May 31, 2024

Capital Stock

4 unchanged sentences

Net loss — ( 42 ) — ( 42 )

Other comprehensive income — — 10 10

Other comprehensive loss — — ( 1 ) ( 1 )

Stock-based compensation (note 6) 8 — — 8

1 unchanged sentence

Employee share purchase plan (note 6) 1 — — 1

Balance as at November 30, 2023 $ 2,941 $ ( 2,102 ) $ ( 14 ) $ 825

Nine Months Ended November 30, 2022

Balance as at May 31, 2024 $ 2,957 $ ( 2,200 ) $ ( 15 ) $ 742

Three Months Ended May 31, 2023

Capital Stock

4 unchanged sentences

Net loss — ( 11 ) — ( 11 )

Other comprehensive loss — — ( 7 ) ( 7 )

Other comprehensive income — — 2 2

Stock-based compensation 9 — — 9

1 unchanged sentence

Employee share purchase plan 2 — — 2

Balance as at November 30, 2022 $ 2,898 $ ( 1,533 ) $ ( 26 ) $ 1,339

Balance as at May 31, 2023 $ 2,920 $ ( 2,039 ) $ ( 22 ) $ 859

See notes to consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Operations

Three Months Ended Nine Months Ended

November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022

Three Months Ended

May 31, 2024 May 31, 2023

Revenue (note 10) $ 144 $ 373

3 unchanged sentences

Research and development 42 54

Selling, marketing and administration 85 89 258 257

Sales and marketing 38 45

General and administrative 40 54

Amortization 12 15

Impairment of long-lived assets (note 2) 3 —

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

Debentures fair value adjustment (note 5) — 22

Litigation settlement (note 10) — — — 165

138 111 460 545

Operating loss ( 39 ) ( 11 )

Investment income (loss), net (note 3 and note 6) 5 2 15 ( 1 )

Investment income, net (note 2 and note 5) 5 3

Loss before income taxes ( 34 ) ( 8 )

8 unchanged sentences

Consolidated Statements of Comprehensive Loss

Three Months Ended Nine Months Ended

November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022

Three Months Ended

May 31, 2024 May 31, 2023

Net loss $ ( 42 ) $ ( 11 )

Other comprehensive income (loss)

Net change in fair value and amounts reclassified to net loss from derivatives designated as cash flow hedges during the period, net of income taxes of nil for the three and nine months ended November 30, 2023 and November 30, 2022 (note 9) — — 1 ( 1 )

Net change in fair value and amounts reclassified to net loss from derivatives designated as cash flow hedges during the three months ended, net of income taxes of nil (May 31, 2023 - income taxes of nil) (note 8) — 1

Foreign currency translation adjustment ( 1 ) 1

Net change in fair value from instrument-specific credit risk on the Debentures, net of income taxes of nil for the three and nine months ended November 30, 2023 and November 30, 2022 (note 6) 6 1 6 3

Other comprehensive income (loss) ( 1 ) 2

4 unchanged sentences

Consolidated Statements of Cash Flows

Nine Months Ended

November 30, 2023 November 30, 2022

Three Months Ended

May 31, 2024 May 31, 2023

Cash flows from operating activities

4 unchanged sentences

Impairment of long-lived assets (note 2) 3 —

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

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

Intellectual property disposed of by sale — 147

Debentures fair value adjustment (note 5) — 22

Operating leases ( 2 ) ( 1 )

Other ( 3 ) —

Net changes in working capital items

11 unchanged sentences

Acquisition of property, plant and equipment ( 1 ) ( 2 )

Proceeds on sale of property, plant and equipment — 17

Acquisition of intangible assets ( 1 ) ( 8 )

1 unchanged sentence

Proceeds on sale or maturity of short-term investments 25 39

Net cash provided by investing activities 112 126

Net cash used in investing activities ( 26 ) ( 38 )

Cash flows from financing activities

Issuance of common shares 1 2

Maturity of 2020 Debentures (note 6) ( 365 ) —

Issuance of Extension Debentures (note 6) 150 —

Net cash provided by (used in) financing activities ( 211 ) 6

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

Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents during the period ( 87 ) ( 124 )

Net cash provided by financing activities 1 2

Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents during the period ( 40 ) 63

Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period 200 322

10 unchanged sentences

In the opinion of management, all normal recurring adjustments considered necessary for fair presentation have been included in these interim consolidated financial statements.

Operating results for the three and nine months ended November 30, 2023 are not necessarily indicative of the results that may be expected for the full year ending February 29, 2024.

Operating results for the three months ended May 31, 2024 are not necessarily indicative of the results that may be expected for the full year ending February 28, 2025.

The consolidated balance sheet at February 29, 2024 was derived from the audited Annual Financial Statements but does not contain all of the footnote disclosures from the Annual Financial Statements.

1 unchanged sentence

Actual results could differ from these estimates and any such differences may be material to the Company’s consolidated financial statements.

Certain of the comparative figures have been reclassified to conform to the current period’s presentation.

Certain of the comparative figures have been reclassified to conform to the current year’s presentation.

The Company is organized and managed as three reportable operating segments:

1 unchanged sentence

Significant Accounting Policies and Critical Accounting Estimates

There have been no material changes to the Company’s accounting policies or critical accounting estimates from those described in the Annual Financial Statements other than those noted below.

Critical Accounting Estimates during the Nine Months Ended November 30, 2023 (Note 11)

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

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

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

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.

There have been no material changes to the Company’s accounting policies or critical accounting estimates from those described in the Annual Financial Statements.

Accounting Standards Adopted During Fiscal 2025

The Company has not adopted any new standards to date during fiscal 2024.

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 (unaudited)

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.

8 unchanged sentences

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 early adopted this guidance in the first quarter of fiscal 2025 and it did not have a material impact on its disclosures.

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 (unaudited)

Accounting Pronouncements Not Yet Adopted

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.

17 unchanged sentences

When the Company concludes that there is a significant financing component included within a contract with a customer due to timing differences between the fulfillment of certain performance obligations and the receipt of payment for those performance obligations, the Company determines the present value of the future consideration utilizing 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.

For a description of how the fair value of the 2020 Debentures (as defined in Note 5) was determined, see the “Convertible debentures” accounting policies in Note 1 to the Annual Financial Statements.

BlackBerry Limited

1 unchanged sentence

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

For a description of how the fair value of the 2020 Debentures (as defined in Note 6) was determined, see the “Convertible debentures” accounting policies in Note 1 to the Annual Financial Statements.

The Extension Debentures (as defined in Note 6) are classified as Level 2.

Non-Recurring Fair Value Measurements

4 unchanged sentences

Impairment of Long-Lived Assets

During the three and nine months ended November 30, 2023, the Company exited certain leased facilities and recorded a pre-tax and after-tax impairment charge of $ 3 million and $ 3 million, respectively, related to the operating lease right-of-use (“ROU”) assets for those facilities (three and nine months ended November 30, 2022 - $ 4 million).

During the three months ended May 31, 2024, the Company exited certain leased facilities and recorded a pre-tax and after-tax impairment charge of $ 3 million related to the operating lease right-of-use (“ROU”) assets and property, plant and equipment associated with those facilities (three months ended May 31, 2023 - nil ).

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.

1 unchanged sentence

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 three and nine months ended November 30, 2023, the Company determined it has 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 (three and nine months ended November 30, 2022 - nil 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 (unaudited)

The fair value measurement of ROU impaired assets is classified as Level 3.

Cash, Cash Equivalents and Investments

The components of cash, cash equivalents and investments by fair value level as at November 30, 2023 were as follows:

The components of cash, cash equivalents and investments by fair value level as at May 31, 2024 were as follows:

Cost Basis (1)

9 unchanged sentences

Term deposits, and certificates of deposits 13 — — 13 — — — 13

Bearer deposit notes 24 — — 24 24 — — —

Bankers' acceptances/bearer deposit notes 12 — — 12 12 — — —

Commercial paper 89 — — 89 28 61 — —

promissory notes 26 — — 26 11 15 — —

treasury bills/notes 3 — — 3 3 — — —

treasury bills/notes 75 — — 75 71 — — 4

treasury bills 4 — — 4 — — — 4

treasury bills 10 — — 10 — 10 — —

154 — — 154 51 86 — 17

Other investments 2 1 — 3 — — 3 —

$ 286 $ 7 $ ( 10 ) $ 283 $ 143 $ 86 $ 37 $ 17

19 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

1 unchanged sentence

(1) Cost basis for other investments includes the effect of returns of capital and impairment.

As at November 30, 2023, the Company had non-marketable equity investments without readily determinable fair value of $ 36 million (February 28, 2023 - $ 34 million).

As of November 30, 2023, 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).

There were no realized gains or losses on available-for-sale securities for the three and nine months ended November 30, 2023 and November 30, 2022.

As at May 31, 2024, the Company had non-marketable equity investments without readily determinable fair value of $ 37 million (February 29, 2024 - $ 36 million).

During the three months ended May 31, 2024, the Company recorded an upward adjustment of $ 1 million to the carrying value of a certain non-marketable equity investment without readily determinable fair value resulting from observable price changes in orderly transactions for identical or similar securities which have been included in investment income, net on the Company’s consolidated statements of operations.

As of May 31, 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 29, 2024 - $ 3 million).

There were no realized gains or losses on available-for-sale securities for the three months ended May 31, 2024 and May 31, 2023.

The Company has restricted cash and cash equivalents, consisting of cash and securities pledged as collateral to major banking partners in support of the Company’s requirements for letters of credit.

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 two years.

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

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

however, the Company can continue to invest the funds and receive investment income thereon.

The following table provides a reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents as at November 30, 2023 and February 28, 2023 from the consolidated balance sheets to the consolidated statements of cash flows:

November 30, 2023 February 28, 2023

The following table provides a reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents as at May 31, 2024 and February 29, 2024 from the consolidated balance sheets to the consolidated statements of cash flows:

May 31, 2024 February 29, 2024

Cash and cash equivalents $ 143 $ 175

4 unchanged sentences

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

The contractual maturities of available-for-sale investments as at November 30, 2023 and February 28, 2023 were as follows:

November 30, 2023 February 28, 2023

The contractual maturities of available-for-sale investments as at May 31, 2024 and February 29, 2024 were as follows:

May 31, 2024 February 29, 2024

Cost Basis Fair Value Cost Basis Fair Value

2 unchanged sentences

$ 164 $ 154 $ 176 $ 166

As at November 30, 2023 and February 28, 2023, the Company had no available-for-sale debt securities with continuous unrealized losses .

As at May 31, 2024 and February 29, 2024, the Company had no available-for-sale debt securities with continuous unrealized losses .

CONSOLIDATED BALANCE SHEET DETAILS

Accounts Receivable, Net of Allowance

The allowance for credit losses as at November 30, 2023 was $ 6 million (February 28, 2023 - $ 1 million).

The Company recognizes current estimated credit losses (“CECL”) for accounts receivable.

The CECL for accounts receivable are estimated based on days past due and region for each customer in relation to a representative pool of assets consisting of a large number of customers with similar risk characteristics that operate under similar economic environments.

The Company determined the CECL by estimating historical credit loss experience based on the past due status and region of the customers, adjusted as appropriate to reflect current conditions and estimates of future economic conditions.

When specific customers are identified as no longer sharing the same risk profile as their current pool, they are removed from the pool and evaluated separately.

The current estimated credit losses (“CECL”) for accounts receivable as at May 31, 2024 was $ 5 million (February 29, 2024 - $ 6 million).

The Company also has long-term accounts receivable included in Other Long-term Assets.

The CECL for the long-term accounts receivable is estimated using the probability of default method and the default exposure due to limited historical information.

The CECL for long-term accounts receivable is estimated using the probability of default method and the default exposure due to limited historical information.

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

3 unchanged sentences

Prior period provision for expected credit losses 5

Write-offs charged against the allowance

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

Current period provision for expected credit losses 5

Ending balance of the allowance for credit loss as at November 30, 2023 $ 6

The allowance for credit losses as at November 30, 2023 consists of $ 2 million (February 28, 2023 - $ 1 million) relating to CECL estimated based on days past due and region and $ 4 million (February 28, 2023 - nil ) relating to specific customers that were evaluated separately.

There were two customers that comprised more than 10% of accounts receivable as at November 30, 2023 (February 28, 2023 - two customers comprised more than 10%).

Current period recovery for expected credit losses ( 1 )

Ending balance of the allowance for credit loss as at May 31, 2024 $ 5

The allowance for credit losses as at May 31, 2024 consists of $ 1 million (February 29, 2024 - $ 1 million) relating to CECL estimated based on days past due and region and $ 4 million (February 29, 2024 - $ 5 million) relating to specific customers that were evaluated separately.

There was one customer that comprised more than 10% of accounts receivable as at May 31, 2024 (February 29, 2024 - two customers comprised more than 10%).

Other Receivables

As at May 31, 2024 and February 29, 2024, 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.

BlackBerry Limited

1 unchanged sentence

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

Other Receivables

As at November 30, 2023 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

Other current assets comprised the following:

November 30, 2023 February 28, 2023

Intellectual property $ — $ 141

As described in Note 11, 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 11 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.

As at May 31, 2024 and February 29, 2024, other current assets 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

Property, plant and equipment comprised the following:

November 30, 2023 February 28, 2023

May 31, 2024 February 29, 2024

BlackBerry operations and other information technology $ 86 $ 85

4 unchanged sentences

Net book value $ 19 $ 21

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 (unaudited)

Intangible Assets, Net

Intangible assets comprised the following:

As at November 30, 2023

As at May 31, 2024

Cost Accumulated

11 unchanged sentences

$ 1,397 $ 1,243 $ 154

For the nine months ended November 30, 2023, amortization expense related to intangible assets amounted to $ 38 million (nine months ended November 30, 2022 - $ 76 million).

Total additions to intangible assets for the nine months ended November 30, 2023 amounted to $ 12 million (nine months ended November 30, 2022 - $ 24 million).

During the nine months ended November 30, 2023, additions to intangible assets primarily consisted of payments for intellectual property relating to patent maintenance, registration and license fees.

Based on the carrying value of the identified intangible assets as at November 30, 2023, and assuming no subsequent impairment of the underlying assets, the annual amortization expense for the remainder of fiscal 2024 and each of the five succeeding years is expected to be as follows:

For the three months ended May 31, 2024, amortization expense related to intangible assets amounted to $ 11 million (three months ended May 31, 2023 - $ 13 million).

Total additions to intangible assets for the three months ended May 31, 2024 amounted to $ 1 million (three months ended May 31, 2023 - $ 2 million).

During the three months ended May 31, 2024, additions to intangible assets primarily consisted of payments for intellectual property relating to patent maintenance, registration and license fees.

Based on the carrying value of the identified intangible assets as at May 31, 2024, and assuming no subsequent impairment of the underlying assets, the annual amortization expense for the remainder of fiscal 2025 and each of the five succeeding years is expected to be as follows:

fiscal 2025 - $ 32 million;

6 unchanged sentences

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

Changes to the carrying amount of goodwill during the nine months ended November 30, 2023 were as follows:

Changes to the carrying amount of goodwill during the three months ended May 31, 2024 were as follows:

Carrying Amount

6 unchanged sentences

dollar denominated goodwill ( 1 )

Carrying amount as at November 30, 2023 $ 597

Carrying amount as at May 31, 2024 $ 561

Other Long-term Assets

As at November 30, 2023, other long-term assets included long-term receivables related to intellectual property sold, see Note 11 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, among other items, none of which were greater than 5% of the total assets balance.

As at May 31, 2024 and February 29, 2024, other long-term assets included long-term receivables related to intellectual property sold in fiscal 2024, see Note 10 under the heading “Patent Sale”, other 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.

Accrued Liabilities

As at November 30, 2023 and February 28, 2023, other accrued liabilities included operating lease liabilities, current and 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.

For the nine months ended November 30, 2023, the Company’s net effective income tax expense rate was approximately 37 % compared to a net effective income tax expense rate of 5 % for the nine months ended November 30, 2022.

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

Accrued liabilities is comprised of the following:

May 31, 2024 February 29, 2024

Operating lease liabilities, current 20 20

Restructuring program liabilities, current portion 11 20

Other accrued liabilities included current and 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.

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.

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 (unaudited)

The following table sets forth the activity in the Company’s restructuring program liabilities:

Benefits Facilities

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

Charges incurred 5 3 8

Cash payments made ( 15 ) ( 2 ) ( 17 )

Balance as at May 31, 2024

Current portion $ 7 $ 4 $ 11

Long-term portion — 1 1

The long-term portion of the restructuring liabilities is recorded at present value, determined by measuring the remaining payments at present value using an effective interest rate of 5.7 %, 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 for the three months ended May 31, 2024 and May 31, 2023 were $ 8 million and $ 5 million, respectively, recorded within General and administrative on the Consolidated Statements of Operations.

For the three months ended May 31, 2024, the Company’s net effective income tax expense rate was approximately 24 % compared to a net effective income tax expense rate of 38 % for the three months ended May 31, 2023.

in particular, any change in loss carry forwards or research and development credits, amongst other items, is offset by a corresponding adjustment of the valuation allowance.

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

The Company’s total unrecognized income tax benefits as at November 30, 2023 were $ 21 million (February 28, 2023 - $ 21 million).

As at November 30, 2023, $ 21 million of the unrecognized income tax benefits have been netted against deferred income tax assets and nil has been recorded within income taxes payable on the Company’s consolidated balance sheets.

The Company’s total unrecognized income tax benefits as at May 31, 2024 were $ 20 million (February 29, 2024 - $ 20 million).

As at May 31, 2024, $ 20 million of the unrecognized income tax benefits have been netted against deferred income tax assets and nil has been recorded within income taxes payable on the Company’s consolidated balance sheets.

The Company is subject to ongoing examination by tax authorities in certain jurisdictions in which it operates.

1 unchanged sentence

While the final resolution of audits is uncertain, the Company believes the ultimate resolution of these audits will not have a material adverse effect on its consolidated financial position, liquidity or results 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 (unaudited)

On November 17, 2023, the Company issued $ 150 million aggregate principal amount of 1.75% extendible convertible unsecured debentures (the “Extension Debentures”) in a private placement to certain controlled affiliates of Fairfax Financial Holdings Limited (“Fairfax”).

The Company used the net proceeds of 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” and, together with the Extension Debentures, the “Debentures”) at maturity on November 13, 2023 .

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

The Extension Debentures are due on February 15, 2024 (the “Initial Maturity Date”), with an option for the parties to extend the maturity date to May 15, 2024 (the “Final Maturity Date” and, together with the Initial Maturity Date, each a “Maturity Date”) by mutual agreement.

Each $ 1,000 principal amount of Extension Debentures is 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 include limitations on the Company’s total indebtedness.

Interest on the Extension Debentures is 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 increases to 5.75 % per annum.

The Extension Debentures are 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) 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 Extension 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.

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 has 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 has 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 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 accumulated other comprehensive loss (“AOCL”).

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

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” and, collectively with the “2020 Debentures” (as defined below), the “Debentures”) in an offering to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended.

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

BlackBerry Limited

1 unchanged sentence

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

The following table summarizes the change in fair value of the 2020 Debentures for the nine months ended November 30, 2023, which also represents the total changes through earnings of items classified as Level 3 in the fair value hierarchy:

November 30, 2023

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 .

The Company had recorded the Notes, including the debt itself and all embedded derivatives, at cost less debt issuance costs of $ 6 million and presents 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 three months ended May 31, 2024:

Carrying Amount

Balance as at February 29, 2024 194

Change in fair value of the 2020 Debentures ( 2 )

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

Balance as at November 30, 2023 $ —

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:

November 30, 2023

Principal received as of November 17, 2023 $ 150

Change in fair value of the Extension Debentures —

Balance as at November 30, 2023 $ 150

The difference between the fair value of the Extension Debentures and the unpaid principal balance of $ 150 million is nil .

The following table shows the impact of the changes in fair value of the Debentures for the three and nine months ended November 30, 2023 and November 30, 2022:

Three Months Ended Nine Months Ended

November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022

Income associated with the change in fair value from non-credit components recorded in the consolidated statements of operations $ 18 $ 56 $ 2 $ 112

Income associated with the change in fair value from instrument-specific credit components recorded in AOCL — 1 — 3

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

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

Total decrease in the fair value of the Debentures $ 18 $ 57 $ 2 $ 115

For the three and nine months ended November 30, 2023, the Company recorded interest expense related to the Debentures of $ 1 million and $ 5 million, respectively, which has been included in investment income (loss), net on the Company’s consolidated statements of operations (three and nine months ended November 30, 2022 - $ 2 million and $ 5 million).

Amortization of debt issuance costs —

Balance as at May 31, 2024 $ 194

2020 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 debentures (the “2020 Debentures”).

The 2020 Debentures matured on November 13, 2023 .

Due to the conversion option and other embedded derivatives within the 2020 Debentures, the Company elected to record the 2020 Debentures, including the debt itself and all embedded derivatives, at fair value and presented the 2020 Debentures as a single hybrid financial instrument.

No portion of the fair value of the 2020 Debentures was recorded as equity.

Each period, the fair value of the 2020 Debentures was recalculated and resulting gains and losses from the change in fair value of the 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 2020 Debentures was 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 2020 Debentures at issuance.

The following table shows the impact of the changes in fair value of the Debentures for the three months ended May 31, 2024 and May 31, 2023:

Three Months Ended

May 31, 2024 May 31, 2023

Charge associated with the change in fair value from non-credit components recorded in the consolidated statements of operations $ — $ ( 22 )

Total increase in the fair value of the 2020 Debentures $ — $ ( 22 )

For the three months ended May 31, 2024, the Company recorded interest expense related to the Debentures of $ 2 million, which has been included in investment income, net on the Company’s consolidated statements of operations (three months ended May 31, 2023 - $ 2 million).

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 now owns $ 150 million principal amount of the Extension Debentures.

As such, the payment of interest on the Extension Debentures to Fairfax represents a related party transaction.

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

As such, the payment of interest on the 2020 Debentures to Fairfax represented a related party transaction.

BlackBerry Limited

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CAPITAL STOCK

The following details the changes in issued and outstanding common shares for the nine months ended November 30, 2023:

The following details the changes in issued and outstanding common shares for the three months ended May 31, 2024:

Capital Stock and

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Common shares outstanding as at February 29, 2024 589,233 $ 2,948

Exercise of stock options 92 —

Common shares issued for restricted share unit settlements 383 —

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Common shares issued for employee share purchase plan 555 1

Common shares outstanding as at November 30, 2023 585,340 $ 2,941

The Company had 585 million voting common shares outstanding, 0.3 million options to purchase voting common shares, 13 million RSUs and 2 million DSUs outstanding as at December 18, 2023.

In addition, 25 million common shares are issuable upon conversion in full of the Extension Debentures as described in Note 6.

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 (unaudited)

Common shares outstanding as at May 31, 2024 590,171 $ 2,957

The Company had 590 million voting common shares outstanding, 0.2 million options to purchase voting common shares, 18 million RSUs and 1 million DSUs outstanding as at June 24, 2024.

In addition, 51.5 million common shares are issuable upon conversion in full of the Notes as described in Note 5.

LOSS PER SHARE

The following table sets forth the computation of basic and diluted loss per share:

Three Months Ended Nine Months Ended

November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022

Net loss for basic loss per share available to common shareholders $ ( 21 ) $ ( 4 ) $ ( 74 ) $ ( 239 )

Debentures fair value adjustment (1) (2) (3) (4)

( 13 ) ( 56 ) — ( 112 )

interest expense on Debentures (1) (2) (3) (4)

Net loss for diluted loss per share available to common shareholders $ ( 33 ) $ ( 58 ) $ ( 74 ) $ ( 346 )

Weighted average number of shares outstanding (000’s) - basic (5)

584,331 578,948 583,559 577,718

Effect of dilutive securities (000’s)

Conversion of 2020 Debentures (1) (3)

Three Months Ended

May 31, 2024 May 31, 2023

Net loss for basic and diluted loss per share available to common shareholders $ ( 42 ) $ ( 11 )

Weighted average number of shares outstanding (000’s) - basic and diluted (1)(2)

589,821 582,812

Conversion of Extension Debentures (2) (4)

Weighted average number of shares and assumed conversions (000’s) diluted 638,470 639,781 583,559 638,551

Loss per share - reported

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______________________________

(1) The Company has presented the dilutive effect of the 2020 Debentures using the if-converted method for the period the 2020 Debentures were outstanding, assuming conversion at the beginning of the quarter for the three months ended November 30, 2023 and three and nine months ended November 30, 2022.

Accordingly, to calculate diluted loss per share, the Company adjusted net loss by eliminating the fair value adjustment made to the 2020 Debentures and interest expense incurred on the 2020 Debentures for the three months ended November 30, 2023 and three and nine months ended November 30, 2022, and added the number of shares that would have been issued upon conversion to the diluted weighted average number of shares outstanding.

See Note 6 for details on the 2020 Debentures.

(2) The Company has presented the dilutive effect of the Extension Debentures using the if-converted method for the period the Extension Debentures were outstanding, assuming conversion at the issuance date for the three months ended November 30, 2023.

Accordingly, to calculate diluted loss per share, the Company adjusted net loss by eliminating the fair value adjustment made to the Extension Debentures and interest expense incurred on the Extension Debentures for the three months ended November 30, 2023 and added the number of shares that would have been issued upon conversion to the diluted weighted average number of shares outstanding.

See Note 6 for details on the Extension Debentures.

(3) The Company has not presented the dilutive effect of the 2020 Debentures using the if-converted method in the calculation of diluted loss per share for the nine months ended November 30, 2023, as to do so would be antidilutive.

See Note 6 for details on the 2020 Debentures.

(4) The Company has not presented the dilutive effect of the Extension Debentures using the if-converted method in the calculation of diluted loss per share for the nine months ended November 30, 2023, as to do so would be antidilutive.

See Note 6 for details on the Extension Debentures.

(5) 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 three and nine months ended November 30, 2023 and November 30, 2022, as to do so would be antidilutive.

(1) The Company has not presented the dilutive effect of the Notes or 2020 Debentures using the if-converted method in the calculation of diluted loss per share for the three months ended May 31, 2024 and May 31, 2023, as to do so would be antidilutive.

See Note 5 for details on the Notes and 2020 Debentures.

(2) 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 three months ended May 31, 2024 and May 31, 2023, as to do so would be antidilutive.

BlackBerry Limited

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ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in AOCL by component net of tax, for the three and nine months ended November 30, 2023 and November 30, 2022 were as follows:

Three Months Ended Nine Months Ended

November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022

The changes in AOCL by component net of tax, for the three months ended May 31, 2024 and May 31, 2023 were as follows:

Three Months Ended

May 31, 2024 May 31, 2023

Cash Flow Hedges

Balance, beginning of period $ — $ ( 1 )

Other comprehensive loss before reclassification — ( 2 ) 1 ( 3 )

Amounts reclassified from AOCL into net loss — 1

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Change in Fair Value From Instrument-Specific Credit Risk On Debentures

Balance, beginning of period $ ( 6 ) $ ( 6 ) $ ( 6 ) $ ( 8 )

Other comprehensive income before reclassification — 1 — 3

Amounts reclassified from AOCL into net loss 6 — 6 —

Change in fair value from instruments-specific credit risk on Debentures

$ — $ ( 5 ) $ — $ ( 5 )

Other Post-Employment Benefit Obligations

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(a) Letters of Credit

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 November 30, 2023.

The Company had $ 17 million in collateralized outstanding letters of credit in support of certain leasing arrangements entered into in the ordinary course of business as of May 31, 2024.

See the discussion of restricted cash in Note 2.

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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.

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 (unaudited)

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.

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

As of November 30, 2023, there are no material claims outstanding for which the Company has assessed the potential loss as both probable to result and reasonably estimable;

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 (unaudited)

As of May 31, 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.

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

class actions was settled;

see “Litigation Settlement” below in this Note 10.

class actions Stipulation of Settlement was executed effective June 7, 2022.

On July 23, 2014, the plaintiff in the putative Ontario class action ( Swisscanto Fondsleitung AG v.

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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 November 30, 2023, 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 program’s investment in BlackBerry QNX.

As at May 31, 2024, the Company has recognized $ 17 million (February 29, 2024 - $ 17 million) in funds from claims filed with the Ministry of Innovation, Science and Economic Development Canada relating to its Strategic Innovation Fund 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.

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 (unaudited)

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

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

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

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

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.

(d) Indemnifications

The Company enters into certain agreements that contain indemnification provisions under which the Company could be subject to costs and damages, including in the event of an infringement claim against the Company or an indemnified third party.

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To date, the Company has not encountered material costs as a result of such indemnifications.

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 (unaudited)

The Company has entered into indemnification agreements with its current and former directors and executive officers.

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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.

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

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.

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Cybersecurity, IoT, and Licensing and Other.

The following table shows information by operating segment for the three and nine months ended November 30, 2023 and November 30, 2022:

The following table shows information by operating segment for the three months ended May 31, 2024 and May 31, 2023:

For the Three Months Ended

Cybersecurity IoT Licensing and Other Segment Totals

November 30, November 30, November 30, November 30,

2023 2022 2023 2022 2023 2022 2023 2022

Segment revenue $ 114 $ 106 $ 55 $ 51 $ 6 $ 12 $ 175 $ 169

Segment cost of sales 37 46 9 10 1 4 47 60

Segment gross margin (1)

$ 77 $ 60 $ 46 $ 41 $ 5 $ 8 $ 128 $ 109

For the Nine Months Ended

Cybersecurity IoT Licensing and Other Segment Totals

November 30, November 30, November 30, November 30,

May 31, May 31, May 31, May 31,

2024 2023 2024 2023 2024 2023 2024 2023

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

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 (unaudited)

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

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

The BlackBerry 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™, CylanceMDR™, 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.

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Licensing and Other consists of the Company’s intellectual property arrangements and settlement awards.

Other consists of the Company’s legacy service access fees (“SAF”) business, which ceased operations on January 4, 2022.

The following table reconciles total segment gross margin for the three and nine months ended November 30, 2023 and November 30, 2022 to the Company’s consolidated totals:

Three Months Ended Nine Months Ended

November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022

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 (unaudited)

The following table reconciles total segment gross margin for the three months ended May 31, 2024 and May 31, 2023 to the Company’s consolidated totals:

Three Months Ended

May 31, 2024 May 31, 2023

Total segment gross margin $ 97 $ 180

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Research & development 42 54

Selling, marketing and administration 85 89 258 257

Sales and marketing 38 45

General and administrative 40 54

Amortization 12 15

Impairment of long-lived assets 3 —

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

Debentures fair value adjustment — 22

Litigation settlement — — — 165

Investment income (loss), net ( 5 ) ( 2 ) ( 15 ) 1

Consolidated loss before income taxes $ ( 6 ) $ — $ ( 54 ) $ ( 227 )

Investment income, net ( 5 ) ( 3 )

Loss before income taxes $ ( 34 ) $ ( 8 )

______________________________

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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.

The Malikie Transaction will not impact customers’ right to use any of the Company’s products, solutions or services.

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 November 30, 2023, the remaining financing component on the patent sale was $ 12 million and will be recognized as interest income over the payment terms.

As at May 31, 2024, the remaining financing component on the patent sale was $ 9 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

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

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

variable consideration constrained was $ 210 million.

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”.

The Company’s revenue, classified by major geographic region in which the Company’s customers are located, was as follows:

Three Months Ended Nine Months Ended

November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022

Three Months Ended

May 31, 2024 May 31, 2023

North America (1)

$ 77 $ 92 $ 466 $ 266

Europe, Middle East and Africa 47 37

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

Three Months Ended Nine Months Ended

November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022

Three Months Ended

May 31, 2024 May 31, 2023

Products and services transferred over time $ 78 $ 85

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Revenue contract balances

The following table sets forth the activity in the Company’s revenue contract balances for the nine months ended November 30, 2023:

The following table sets forth the activity in the Company’s revenue contract balances for the three months ended May 31, 2024:

Accounts and Other Receivable Deferred Revenue Deferred Commissions

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Decrease due to payment, fulfillment of performance obligations, or other ( 182 ) ( 139 ) ( 7 )

Increase (decrease), net 118 ( 13 ) 4

Closing balance as at November 30, 2023 $ 238 $ 202 $ 21

Decrease, net ( 48 ) ( 16 ) ( 2 )

Closing balance as at May 31, 2024 $ 207 $ 206 $ 19

BlackBerry Limited

2 unchanged sentences

Transaction price allocated to the remaining performance obligations

The table below discloses the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as at November 30, 2023 and the time frame in which the Company expects to recognize this revenue.

The table below discloses the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as at May 31, 2024 and the time frame in which the Company expects to recognize this revenue.

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 patent sale to Malikie, 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 11.

As at November 30, 2023

The disclosure excludes estimates of variable consideration relating to potential future royalty revenues from the patent sale to Malikie, which have been constrained based on the Company’s accounting policies and critical accounting estimates and as described under “Patent Sale” in this Note 10.

As at May 31, 2024

Less than 12 Months 12 to 24 Months Thereafter Total

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Revenue recognized for performance obligations satisfied in prior periods

For the three and nine months ended November 30, 2023, $ 1 million and $ 32 million of revenue, respectively, was recognized relating to performance obligations satisfied in a prior period as a result of certain variable consideration no longer being subject to constraint (three and nine months ended November 30, 2022 - nil and $ 1 million).

For the three months ended May 31, 2024, revenue of nil was recognized relating to performance obligations satisfied in a prior period (three months ended May 31, 2023 - $ 9 million as a result of certain variable consideration no longer being subject to constraint).

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:

November 30, 2023 February 28, 2023

May 31, 2024 February 29, 2024

Property, Plant and Equipment, Intangible Assets, Operating Lease ROU Assets and Goodwill Total Assets Property, Plant and Equipment, Intangible Assets, Operating Lease ROU Assets and Goodwill Total Assets

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Information About Major Customers

There was one customer that comprised 15 % of the Company’s revenue in the three months ended November 30, 2023 and one customer that comprised 33 % of the Company’s revenue in the nine months ended November 30, 2023 due to the completed Malikie Transaction (three and nine months ended November 30, 2022 - one customer that comprised 11 % and 14 % of the Company’s revenue, respectively ).

There was one customer that comprised 13 % of the Company’s revenue in the three months ended May 31, 2024 (three months ended May 31, 2023 - one customer that comprised 58 % of the Company’s revenue, due to the completed Malikie Transaction ).

BlackBerry Limited

3 unchanged sentences

(a) Certain consolidated statements of cash flow information related to interest and income taxes paid is summarized as follows:

Three Months Ended Nine Months Ended

November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022

Three Months Ended

May 31, 2024 May 31, 2023

Interest paid during the period $ 2 $ 2

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The Company is exposed to foreign exchange risk as a result of transactions in currencies other than its functional currency, the U.S.

The majority of the Company’s revenue in the third quarter of fiscal 2024 was transacted in U.S.

The majority of the Company’s revenue in the first quarter of fiscal 2025 was transacted in U.S.

Portions of the revenue were denominated in Canadian dollars, euros and British pounds.

1 unchanged sentence

dollars, euros and British pounds.

At November 30, 2023, approximately 13 % of cash and cash equivalents, 36 % of accounts receivable and 48 % of accounts payable were denominated in foreign currencies (February 28, 2023 – 19 %, 24 % and 36 %, respectively).

At May 31, 2024, approximately 21 % of cash and cash equivalents, 22 % of accounts receivable and 76 % of accounts payable were denominated in foreign currencies (February 29, 2024 – 19 %, 25 % and 59 %, respectively).

These foreign currencies primarily include the Canadian dollar, euro and British pound.

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Interest rate risk

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

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.

1 unchanged sentence

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 Debentures with a fixed interest rate, as described in Note 6.

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

Consequently, the Company is exposed to interest rate risk as a result of the Debentures.

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

The Company has also issued Notes with a fixed interest rate, as described in Note 5.

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.

1 unchanged sentence

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 November 30, 2023, no single issuer represented more than 35 % 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 November 30, 2023, the Company had no collateral posted or held with counterparties (February 28, 2023 - $ 1 million in collateral held).

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 (unaudited)

As at May 31, 2024, no single issuer represented more than 30 % of the total cash, cash equivalents and investments (February 29, 2024 - no single issuer represented more than 30 % of the total cash, cash equivalents and investments), with the largest such issuer representing bankers’ acceptances, bearer deposits, term deposits and cash balances with one of the Company’s banking counterparties.

Liquidity risk

Cash, cash equivalents, and investments were approximately $ 271 million as at November 30, 2023.

Cash, cash equivalents, and investments were approximately $ 283 million as at May 31, 2024.

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 Extension Debentures will mature on February 15, 2024 , with an option for the parties to extend the maturity date to May 15, 2024 , by mutual agreement, as described above in Note 6, but the Company has the ability to access other potential financing arrangements on commercially reasonable terms.

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 and access to other potential financing arrangements, are expected to be sufficient to meet funding requirements for current financial commitments and future operating expenditures not yet committed, and should provide the necessary financial capacity for the foreseeable future.

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

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-Q

Item 1. Financial Statements