What changed in this filing

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Item 1. Financial Statements

2024-09-27 compared with 2024-06-27 · 152 added, 116 removed, 587 unchanged (31% of the section changed)

4 unchanged sentences

Consolidated Balance Sheets

May 31, 2024 February 29, 2024

August 31, 2024 February 29, 2024

Cash and cash equivalents (note 2) $ 171 $ 175

38 unchanged sentences

Consolidated Statements of Shareholders’ Equity

Three Months Ended May 31, 2024

Three Months Ended August 31, 2024

Capital Stock

2 unchanged sentences

Comprehensive Loss Total

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

Net loss — ( 19 ) — ( 19 )

Other comprehensive income — — 2 2

Stock-based compensation 7 — — 7

Balance as at August 31, 2024 $ 2,964 $ ( 2,219 ) $ ( 13 ) $ 732

Three Months Ended August 31, 2023

Capital Stock

and Additional

Paid-in Capital Deficit Accumulated

Comprehensive Loss Total

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

Net loss — ( 42 ) — ( 42 )

Other comprehensive income — — 1 1

Stock-based compensation 11 — — 11

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

See notes to consolidated financial statements.

BlackBerry Limited

(United States dollars, in millions) (unaudited)

Consolidated Statements of Shareholders’ Equity

Six Months Ended August 31, 2024

Capital Stock

and Additional

Paid-in Capital Deficit Accumulated

Comprehensive Loss Total

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

Net loss — ( 61 ) — ( 61 )

Other comprehensive loss — — ( 1 ) ( 1 )

Other comprehensive income — — 1 1

Stock-based compensation (note 6) 15 — — 15

1 unchanged sentence

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

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

Three Months Ended May 31, 2023

Balance as at August 31, 2024 $ 2,964 $ ( 2,219 ) $ ( 13 ) $ 732

Six Months Ended August 31, 2023

Capital Stock

8 unchanged sentences

Employee share purchase plan 2 — — 2

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

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

See notes to consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Operations

Three Months Ended

May 31, 2024 May 31, 2023

Three Months Ended Six Months Ended

August 31, 2024 August 31, 2023 August 31, 2024 August 31, 2023

Revenue (note 10) $ 145 $ 132 $ 289 $ 505

8 unchanged sentences

Debentures fair value adjustment (note 5) — ( 6 ) — 16

115 132 250 322

Operating loss ( 21 ) ( 47 ) ( 60 ) ( 58 )

10 unchanged sentences

Consolidated Statements of Comprehensive Loss

Three Months Ended

May 31, 2024 May 31, 2023

Three Months Ended Six Months Ended

August 31, 2024 August 31, 2023 August 31, 2024 August 31, 2023

Net loss $ ( 19 ) $ ( 42 ) $ ( 61 ) $ ( 53 )

Other comprehensive income (loss)

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

Other comprehensive income

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 six months ended August 31, 2024 and August 31, 2023 (note 8) — — — 1

Foreign currency translation adjustment 2 1 1 2

Other comprehensive income (loss) ( 1 ) 2

Other comprehensive income 2 1 1 3

Comprehensive loss $ ( 17 ) $ ( 41 ) $ ( 60 ) $ ( 50 )

3 unchanged sentences

Consolidated Statements of Cash Flows

Three Months Ended

May 31, 2024 May 31, 2023

Six Months Ended

August 31, 2024 August 31, 2023

Cash flows from operating activities

24 unchanged sentences

Proceeds on sale or maturity of short-term investments 94 182

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

Net cash provided by investing activities 15 76

Cash flows from financing activities

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

Operating results for the three and six months ended August 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.

3 unchanged sentences

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

Cybersecurity, IoT (collectively, “Software & Services”), and Licensing and Other, as further discussed in Note 10.

Cybersecurity, IoT (collectively, “Software & Services”), and Licensing, as further discussed in Note 10.

Significant Accounting Policies and Critical Accounting Estimates

9 unchanged sentences

(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.

and (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.

44 unchanged sentences

Impairment of Long-Lived Assets

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 ).

During the three and six months ended August 31, 2024, the Company exited certain leased facilities and recorded a pre-tax and after-tax impairment charge of nil and $ 3 million, respectively, related to the operating lease right-of-use (“ROU”) assets and property, plant and equipment associated with those facilities (three and six months ended August 31, 2023 - $ 1 million).

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.

3 unchanged sentences

Cash, Cash Equivalents and Investments

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

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

Cost Basis (1)

9 unchanged sentences

Term deposits, and certificates of deposits 23 — — 23 10 — — 13

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

Bearer deposit notes 31 — — 31 29 2 — —

Commercial paper 44 — — 44 18 26 — —

1 unchanged sentence

treasury bills 23 — — 23 19 — — 4

treasury bills 10 — — 10 — 10 — —

163 — — 163 106 40 — 17

26 unchanged sentences

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

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.

As at August 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 and six months ended August 31, 2024, the Company recorded an upward adjustment of nil and $ 1 million, respectively, 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 August 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 and six months ended August 31, 2024 and August 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 one year.

The letters of credit are for terms ranging from one month to four 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;

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 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

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

August 31, 2024 February 29, 2024

Cash and cash equivalents $ 171 $ 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 May 31, 2024 and February 29, 2024 were as follows:

May 31, 2024 February 29, 2024

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

August 31, 2024 February 29, 2024

Cost Basis Fair Value Cost Basis Fair Value

2 unchanged sentences

$ 173 $ 163 $ 176 $ 166

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

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

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

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

7 unchanged sentences

Current period recovery for expected credit losses —

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%).

Ending balance of the allowance for credit loss as at August 31, 2024 $ 6

The allowance for credit losses as at August 31, 2024 consists of $ 1 million (February 29, 2024 - $ 1 million) relating to CECL estimated based on days past due and region and $ 5 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 August 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.

As at August 31, 2024 and February 29, 2024, other receivables included items such as other receivables related to intellectual property sold in fiscal 2024, see Note 10 under the heading “Patent Sale”, and 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

2 unchanged sentences

Other Current Assets

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.

As at August 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:

May 31, 2024 February 29, 2024

August 31, 2024 February 29, 2024

BlackBerry operations and other information technology $ 85 $ 85

6 unchanged sentences

Intangible assets comprised the following:

As at May 31, 2024

As at August 31, 2024

Cost Accumulated

11 unchanged sentences

$ 1,397 $ 1,243 $ 154

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:

For the six months ended August 31, 2024, amortization expense related to intangible assets amounted to $ 22 million (six months ended August 31, 2023 - $ 26 million).

Total additions to intangible assets for the six months ended August 31, 2024 amounted to $ 4 million (six months ended August 31, 2023 - $ 10 million).

During the six months ended August 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 August 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 - $ 21 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 three months ended May 31, 2024 were as follows:

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

Carrying Amount

6 unchanged sentences

dollar denominated goodwill 1

Carrying amount as at May 31, 2024 $ 561

Carrying amount as at August 31, 2024 $ 563

Other Long-term Assets

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.

As at August 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

Accrued liabilities is comprised of the following:

May 31, 2024 February 29, 2024

August 31, 2024 February 29, 2024

Variable incentive accrual $ 21 $ 15

Operating lease liabilities, current 17 20

Restructuring program liabilities, current portion 7 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.

As at August 31, 2024 and February 29, 2024, other accrued liabilities included accrued director fees, accrued vendor liabilities, 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.

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 significantly separating and streamlining the Company’s centralized corporate functions into Cybersecurity and IoT specific teams such that the businesses may operate quasi-independently and on a profitable and cash flow positive basis.

The reduction of overall Company costs had included and will continue to 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.

10 unchanged sentences

Cash payments made ( 20 ) ( 2 ) ( 22 )

Balance as at May 31, 2024

Balance as at August 31, 2024

Current portion $ 4 $ 3 $ 7

2 unchanged sentences

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.

Total charges incurred for the six months ended August 31, 2024 and August 31, 2023 were $ 9 million and $ 8 million, respectively, recorded within General and administrative on the Consolidated Statements of Operations.

For the six months ended August 31, 2024, the Company’s net effective income tax expense rate was approximately 17 % compared to a net effective income tax expense rate of 10 % for the six months ended August 31, 2023.

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;

1 unchanged sentence

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

As at August 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.

2 unchanged sentences

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.

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, 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.

7 unchanged sentences

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 Notes 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:

The following table summarizes the change in the Notes for the six months ended August 31, 2024:

Carrying Amount

1 unchanged sentence

Amortization of debt issuance costs 1

Balance as at May 31, 2024 $ 194

Balance as at August 31, 2024 $ 195

2020 Debentures

5 unchanged sentences

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).

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

Three Months Ended Six Months Ended

August 31, 2024 August 31, 2023 August 31, 2024 August 31, 2023

Income (charge) associated with the change in fair value from non-credit components recorded in the consolidated statements of operations $ — $ 6 $ — $ ( 16 )

Total decrease (increase) in the fair value of the 2020 Debentures $ — $ 6 $ — $ ( 16 )

For the three and six months ended August 31, 2024, the Company recorded interest expense related to the Debentures of $ 2 million and $ 3 million, respectively, which has been included in investment income, net on the Company’s consolidated statements of operations (three and six months ended August 31, 2023 - $ 2 million and $ 3 million).

Fairfax, a related party under U.S.

5 unchanged sentences

CAPITAL STOCK

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

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

Capital Stock and

5 unchanged sentences

Common shares issued for employee share purchase plan 555 1

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.

Common shares outstanding as at August 31, 2024 590,728 $ 2,964

The Company had 591 million voting common shares outstanding, 0.2 million options to purchase voting common shares, 18 million RSUs and 1 million DSUs outstanding as at September 24, 2024.

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

1 unchanged sentence

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

Three Months Ended

May 31, 2024 May 31, 2023

Three Months Ended Six Months Ended

August 31, 2024 August 31, 2023 August 31, 2024 August 31, 2023

Net loss for basic and diluted loss per share available to common shareholders $ ( 19 ) $ ( 42 ) $ ( 61 ) $ ( 53 )

5 unchanged sentences

______________________________

(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.

(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 and six months ended August 31, 2024 and August 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.

(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 and six months ended August 31, 2024 and August 31, 2023, as to do so would be antidilutive.

BlackBerry Limited

2 unchanged sentences

ACCUMULATED OTHER COMPREHENSIVE LOSS

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

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

Three Months Ended Six Months Ended

August 31, 2024 August 31, 2023 August 31, 2024 August 31, 2023

Cash Flow Hedges

4 unchanged sentences

Balance, beginning of period $ ( 15 ) $ ( 15 ) $ ( 14 ) $ ( 16 )

Other comprehensive income (loss) ( 1 ) 1

Other comprehensive income 2 1 1 2

Foreign currency cumulative translation adjustment $ ( 13 ) $ ( 14 ) $ ( 13 ) $ ( 14 )

1 unchanged sentence

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

$ — $ ( 6 ) $ — $ ( 6 )

Other Post-Employment Benefit Obligations

3 unchanged sentences

(a) Letters of Credit

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.

The Company had $ 16 million in collateralized outstanding letters of credit in support of certain leasing arrangements entered into in the ordinary course of business as of August 31, 2024.

See the discussion of restricted cash in Note 2.

9 unchanged sentences

Where a range of loss can be reasonably estimated with no best estimate in the range, the Company records the minimum amount in the range.

The Company does not provide for claims for which the outcome is not probable or claims for which the amount of the loss cannot be reasonably estimated.

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

BlackBerry Limited

1 unchanged sentence

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;

The Company does not provide for claims for which the outcome is not probable or claims for which the amount of the loss cannot be reasonably estimated.

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

As of August 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.

38 unchanged sentences

Other contingencies

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.

As at August 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.

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.

Such intellectual property infringement indemnification clauses are generally not subject to any dollar limits and remain in effect for the term of the Company’s agreements.

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

BlackBerry Limited

1 unchanged sentence

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

Such intellectual property infringement indemnification clauses are generally not subject to any dollar limits and remain in effect for the term of the Company’s agreements.

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

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

10 unchanged sentences

The Company is organized and managed as three operating segments:

Cybersecurity, IoT, and Licensing and Other.

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

Cybersecurity, IoT, and Licensing.

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

For the Three Months Ended

Cybersecurity IoT Licensing and Other Segment Totals

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

Cybersecurity IoT Licensing Segment Totals

August 31, August 31, August 31, August 31,

2024 2023 2024 2023 2024 2023 2024 2023

3 unchanged sentences

$ 48 $ 43 $ 45 $ 41 $ 2 $ 2 $ 95 $ 86

For the Six Months Ended

Cybersecurity IoT Licensing Segment Totals

August 31, August 31, August 31, August 31,

2024 2023 2024 2023 2024 2023 2024 2023

Segment revenue $ 172 $ 172 $ 108 $ 94 $ 9 $ 239 $ 289 $ 505

Segment cost of sales 74 73 20 17 3 149 97 239

Segment gross margin (1)

$ 98 $ 99 $ 88 $ 77 $ 6 $ 90 $ 192 $ 266

______________________________

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

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.

Cybersecurity consists of BlackBerry® UEM and Cylance® cybersecurity solutions, BlackBerry® AtHoc® and BlackBerry® SecuSUITE®.

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

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

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

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

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

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 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

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

Three Months Ended Six Months Ended

August 31, 2024 August 31, 2023 August 31, 2024 August 31, 2023

Total segment gross margin $ 95 $ 86 192 $ 266

12 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”).

On May 11, 2023, the Company completed the sale of certain non-core patent assets to Malikie Innovations Limited 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 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.

As at August 31, 2024, the remaining financing component on the patent sale was $ 8 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.

6 unchanged sentences

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

Three Months Ended

May 31, 2024 May 31, 2023

Three Months Ended Six Months Ended

August 31, 2024 August 31, 2023 August 31, 2024 August 31, 2023

North America (1)

$ 69 $ 72 $ 137 $ 389

Europe, Middle East and Africa 47 39 94 76

9 unchanged sentences

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

Three Months Ended

May 31, 2024 May 31, 2023

Three Months Ended Six Months Ended

August 31, 2024 August 31, 2023 August 31, 2024 August 31, 2023

Products and services transferred over time $ 79 $ 79 $ 156 $ 165

2 unchanged sentences

Revenue contract balances

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

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

Accounts and Other Receivable Deferred Revenue Deferred Commissions

3 unchanged sentences

Decrease, net ( 45 ) ( 33 ) ( 1 )

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

Closing balance as at August 31, 2024 $ 210 $ 189 $ 20

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 May 31, 2024 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 August 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 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

The disclosure excludes estimates of variable consideration relating to potential future royalty revenues from the Malikie Transaction, 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 August 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 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).

For the three and six months ended August 31, 2024, revenue of $ 2 million and $ 2 million respectively, was recognized relating to performance obligations satisfied in a prior period (three and six months ended August 31, 2023 - $ 1 million and $ 12 million respectively).

Assets by Geography

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:

May 31, 2024 February 29, 2024

August 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

4 unchanged sentences

Information About Major Customers

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 ).

There was one customer that comprised 11 % of the Company’s revenue and one customer that comprised 12 % of the Company’s revenue in the three and six months ended August 31, 2024, respectively (three and six months ended August 31, 2023 - no customer that comprised more than 10 % of the Company’s revenue and one customer that comprised 45 % 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

May 31, 2024 May 31, 2023

Three Months Ended Six Months Ended

August 31, 2024 August 31, 2023 August 31, 2024 August 31, 2023

Interest paid during the period $ 2 $ 2 $ 3 $ 3

4 unchanged sentences

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 first quarter of fiscal 2025 was transacted in U.S.

The majority of the Company’s revenue in the second 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 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).

At August 31, 2024, approximately 26 % of cash and cash equivalents, 26 % of accounts receivable and 73 % 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.

12 unchanged sentences

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 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.

As at August 31, 2024, no single issuer represented more than 28 % 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 bearer deposits, term deposits and cash balances with one of the Company’s banking counterparties.

Liquidity risk

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

Cash, cash equivalents, and investments were approximately $ 265 million as at August 31, 2024.

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

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-Q

Item 1. Financial Statements