What changed in this filing

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Item 1. Financial Statements

2024-12-20 compared with 2024-09-27 · 359 added, 168 removed, 571 unchanged (48% of the section changed)

4 unchanged sentences

Consolidated Balance Sheets

August 31, 2024 February 29, 2024

November 30, 2024 February 29, 2024

Cash and cash equivalents (note 3) $ 189 $ 175

4 unchanged sentences

Other current assets (note 4) 39 32

Assets held for sale, current (note 2) 24 37

Restricted cash and cash equivalents (note 3) 11 25

5 unchanged sentences

Goodwill (note 4) 473 475

Assets held for sale, non-current (note 2) 176 198

$ 1,309 $ 1,395

3 unchanged sentences

Deferred revenue, current (note 11) 133 148

Liabilities held for sale, current (note 2) 60 64

Deferred revenue, non-current (note 11) 10 15

2 unchanged sentences

Long-term notes (note 6) 195 194

Liabilities held for sale, non-current (note 2) 27 32

Commitments and contingencies (note 10)

16 unchanged sentences

Consolidated Statements of Shareholders’ Equity

Three Months Ended August 31, 2024

Three Months Ended November 30, 2024

Capital Stock

2 unchanged sentences

Comprehensive Loss Total

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

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

Net loss — ( 11 ) — ( 11 )

Other comprehensive income — — 2 2

Other comprehensive loss — — ( 4 ) ( 4 )

Stock-based compensation 6 — — 6

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

Three Months Ended August 31, 2023

Shares issued:

Employee share purchase plan 2 — — 2

Balance as at November 30, 2024 $ 2,972 $ ( 2,230 ) $ ( 17 ) $ 725

Three Months Ended November 30, 2023

Capital Stock

2 unchanged sentences

Comprehensive Loss Total

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

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

Net loss — ( 21 ) — ( 21 )

1 unchanged sentence

Stock-based compensation 8 — — 8

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

Shares issued:

Employee share purchase plan 2 — — 2

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

See notes to consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Shareholders’ Equity

Six Months Ended August 31, 2024

Nine Months Ended November 30, 2024

Capital Stock

4 unchanged sentences

Net loss — ( 72 ) — ( 72 )

Other comprehensive income — — 1 1

Other comprehensive loss — — ( 3 ) ( 3 )

Stock-based compensation (note 7) 21 — — 21

1 unchanged sentence

Employee share purchase plan (note 7) 3 — — 3

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

Six Months Ended August 31, 2023

Balance as at November 30, 2024 $ 2,972 $ ( 2,230 ) $ ( 17 ) $ 725

Nine Months Ended November 30, 2023

Capital Stock

8 unchanged sentences

Employee share purchase plan 4 — — 4

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

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

See notes to consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Operations

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

November 30, 2024 November 30, 2023 November 30, 2024 November 30, 2023

Revenue (note 11) $ 143 $ 152 $ 391 $ 606

7 unchanged sentences

Impairment of long-lived assets (note 3) 1 9 4 9

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

Prior Debentures fair value adjustment (note 6) — ( 13 ) — 3

93 101 282 342

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

Operating income 19 18 7 25

Investment income, net (note 3 and note 6) — 5 8 15

Loss before income taxes ( 18 ) ( 40 ) ( 52 ) ( 48 )

Income before income taxes 19 23 15 40

Provision for income taxes (note 5) 7 15 16 20

Income (loss) from continuing operations 12 8 ( 1 ) 20

Loss from discontinued operations, net of tax (note 2) ( 23 ) ( 29 ) ( 71 ) ( 94 )

Net loss $ ( 11 ) $ ( 21 ) $ ( 72 ) $ ( 74 )

Loss per share (note 7)

Basic $ ( 0.03 ) $ ( 0.07 ) $ ( 0.10 ) $ ( 0.09 )

Diluted $ ( 0.03 ) $ ( 0.07 ) $ ( 0.10 ) $ ( 0.09 )

Earnings (loss) per share (note 8)

Basic earnings per share from continuing operations $ 0.02 $ 0.01 $ — $ 0.03

Total basic loss per share $ ( 0.02 ) $ ( 0.04 ) $ ( 0.12 ) $ ( 0.13 )

Diluted earnings (loss) per share from continuing operations $ 0.02 $ ( 0.01 ) $ — $ 0.03

Total diluted loss per share $ ( 0.02 ) $ ( 0.05 ) $ ( 0.12 ) $ ( 0.13 )

See notes to consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Comprehensive Loss

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

November 30, 2024 November 30, 2023 November 30, 2024 November 30, 2023

Net loss $ ( 11 ) $ ( 21 ) $ ( 72 ) $ ( 74 )

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

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, 2024 and November 30, 2023 (note 9) ( 1 ) — ( 1 ) 1

Foreign currency translation adjustment ( 3 ) 1 ( 2 ) 3

Other comprehensive income 2 1 1 3

Net change in fair value from instrument-specific credit risk on the Prior Debentures, net of income taxes of nil for the three and nine months ended November 30, 2024 and November 30, 2023 (note 6) — 6 — 6

Other comprehensive income (loss) ( 4 ) 7 ( 3 ) 10

Comprehensive loss $ ( 15 ) $ ( 14 ) $ ( 75 ) $ ( 64 )

3 unchanged sentences

Consolidated Statements of Cash Flows

Six Months Ended

August 31, 2024 August 31, 2023

Nine Months Ended

November 30, 2024 November 30, 2023

Cash flows from operating activities

5 unchanged sentences

Intellectual property disposed of by sale — 147

Debentures fair value adjustment (note 5) — 16

Prior Debentures fair value adjustment (note 6) — 3

Operating leases ( 8 ) ( 7 )

Other ( 2 ) —

Net changes in working capital items

17 unchanged sentences

Issuance of common shares 3 4

Net cash provided by financing activities 1 2

Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents during the period ( 12 ) 121

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

Issuance of Extension Debentures (note 6) — 150

Net cash used in financing activities 3 ( 211 )

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

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 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.

Operating results for the three and nine months ended November 30, 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.

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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 year’s presentation.

Certain of the comparative figures have been reclassified to conform to the current year’s presentation, including for held for sale and discontinued operation, as further discussed in Note 2 and facilities discussed below.

The Company reclassified all expenses associated with its facilities within General and administrative expenses, whereas previously these costs were allocated amongst the functional expense areas of the business based on assumptions of usage of those facilities by the functional areas.

The impact of the change on previously issued financial statements was as follows for the three and nine months ended November 30, 2023:

Three Months Ended Nine Months Ended

Revised Revised

November 30, 2023 Impact of change November 30, 2023 November 30, 2023 Impact of change November 30, 2023

Cost of Sales 48 ( 2 ) 46 289 ( 6 ) 283

Gross Margin 127 2 129 391 6 397

Research and development 42 ( 3 ) 39 146 ( 10 ) 136

Sales and marketing 42 ( 2 ) 40 131 ( 7 ) 124

General and administrative 43 7 50 127 23 150

Cybersecurity

Segment cost of sales 37 ( 1 ) 36 110 ( 4 ) 106

Segment gross margin 77 1 78 176 4 180

Segment cost of sales 9 ( 1 ) 8 26 ( 2 ) 24

Segment gross margin 46 1 47 123 2 125

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 is organized and managed as three reportable operating segments:

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

Secure Communications (formerly “Cybersecurity”), IoT (and, collectively with Cybersecurity, “Software & Services”), and Licensing, as further discussed in Note 11.

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.

There have been no material changes to the Company’s accounting policies or critical accounting estimates from those described in the Annual Financial Statements with the exception of the below:

Assets held for sale and discontinued operations

When certain criteria are met, the Company reclassifies assets and related liabilities as held for sale at the lower of their carrying value or fair value less costs to sell and, if material, presents them separately on the Company’s consolidated balance sheets.

If the carrying value exceeds the fair value less costs to sell, a loss is recognized.

Assets classified as held for sale are no longer amortized.

Comparative figures are reclassified to conform to the current year’s presentation.

When the Company has disposed of or classified as held for sale a component of the entity, and certain criteria are met, the results of operations of the component, including any loss recognized, are reported separately on the consolidated statements of operations as discontinued operations.

Discontinued operations are presented if the component’s operations and cash flows have been, or will be, eliminated from the Company and the Company will not have significant continuing involvement in the operations of the component after the disposal.

Earnings (loss) per share amounts for both continuing operations and discontinued operations are presented separately on the consolidated statements of operations and income (loss) from continuing operations.

Comparative figures are reclassified to conform to the current year’s presentation.

Accounting Standards Adopted During Fiscal 2025

9 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.

The Company early adopted this guidance in the first quarter of fiscal 2025 and have provided the applicable disclosures in Note 11.

BlackBerry Limited

15 unchanged sentences

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

In November 2024, the FASB issued ASU 2024-03 to amend the codification on “Expense Disaggregation Disclosure” (Subtopic 220-40):

Income Statement - Reporting Comprehensive Income”.

The standard requires additional disclosure on specific expense categories included in the expense captions presented on the statements of operations.

The Company will adopt this guidance in fiscal 2028 and is in process of evaluating the new requirements.

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

DISCONTINUED OPERATIONS

On October 16, 2024, the Company announced that it was revisiting capital allocation priorities within its Cybersecurity division and, as such, the Company would begin exploring opportunities for the business.

At November 30, 2024, the Company determined that the assets and liabilities constituting the Cylance business, which consists of the Company’s AI and machine learning-based cybersecurity solutions previously acquired on February 21, 2019, met the criteria requiring classification as held for sale as specified in ASC 360 Property, Plant and Equipment (“ASC 360”) and met the criteria for presentation as a discontinued operations under ASC 205 Presentation of Financial Statements.

While presented as a discontinued operations in its Consolidated Statement of Operations, the Company continues to operate Cylance during the time that the assets and liabilities constituting its business are held for sale.

Assets Held for Sale

For assets not covered by ASC 360, such as goodwill, the Company first considered whether any adjustment was required prior to measuring the fair value less costs to sell of the assets and liabilities associated with the Cylance business and determined none was required.

The Company then estimated the fair values of assets identified as held for sale, less costs to sell, and compared them against the carrying value of the assets and determined that no impairment was present.

The following table sets forth the aggregate carrying amounts of assets and liabilities held for sale related to the discontinued operations of Cylance as of November 30, 2024 and February 29, 2024:

November 30, 2024 February 29, 2024

Accounts receivable, net of allowance of $1 and nil, respectively $ 11 $ 20

Other receivables 2 2

Other current assets 11 15

Total currents assets of discontinued operations 24 37

Other long-term assets 3 3

Operating lease right-of-use assets, net 8 10

Property, plant and equipment, net 2 2

Intangible assets, net 76 96

Goodwill 87 87

Total long-term assets of discontinued operations 176 198

Accounts payable 1 1

Accrued liabilities 21 17

Deferred revenue, current 38 46

Total current liabilities of discontinued operations 60 64

Deferred revenue, non-current 12 13

Operating lease liabilities 15 19

Total long-term liabilities of discontinued operations 27 32

The financial results of Cylance are presented as “loss from discontinued operations, net of tax” in the Consolidated Statements of Operations and have been removed from the presentation of results from continuing operations.

The following table represents the financial results of Cylance for the three and nine months ended November 30, 2024 and November 30, 2023:

Three Months Ended Nine Months Ended

November 30, 2024 November 30, 2023 November 30, 2024 November 30, 2023

Revenue $ 19 $ 23 $ 60 $ 74

Cost of sales 11 13 36 44

Gross margin 8 10 24 30

Operating expenses

Research and development 9 10 26 38

Sales and marketing 11 15 36 47

General and administrative 4 5 13 17

Amortization 7 7 20 20

Impairment of long-lived assets — 2 — 2

Operating loss ( 23 ) ( 29 ) ( 71 ) ( 94 )

Provision for income taxes — — — —

Loss from discontinued operations, net of tax $ ( 23 ) $ ( 29 ) $ ( 71 ) $ ( 94 )

Basic loss per share from discontinued operations $ ( 0.04 ) $ ( 0.05 ) $ ( 0.12 ) $ ( 0.16 )

Diluted loss per share from discontinued operations $ ( 0.04 ) $ ( 0.06 ) $ ( 0.12 ) $ ( 0.16 )

The following table represents the amortization, stock-based compensation (representing the significant non-cash operating item) and acquisition of property, plant and equipment of the discontinued operations for the three and nine months ended November 30, 2024 and November 30, 2023:

Three Months Ended Nine Months Ended

November 30, 2024 November 30, 2023 November 30, 2024 November 30, 2023

Amortization $ 7 $ 7 $ 20 $ 20

Stock based compensation 2 1 5 3

Acquisition of property, plant and equipment — — 1 —

FAIR VALUE MEASUREMENTS, CASH, CASH EQUIVALENTS AND INVESTMENTS

6 unchanged sentences

or other inputs that are observable or can be corroborated by observable market data.

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)

• Level 3 - Significant unobservable inputs that are supported by little or no market activity.

8 unchanged sentences

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.

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)

Non-Recurring Fair Value Measurements

4 unchanged sentences

Impairment of Long-Lived Assets

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.

The Company exited certain leased facilities and recorded a pre-tax and after-tax impairment charge of $ 1 million and $ 4 million during the three and nine months ended November 30, 2024, respectively, related to the operating lease right-of-use (“ROU”) assets and property, plant and equipment associated with those facilities (three and nine months ended November 30, 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 360, using Level 3 inputs.

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

1 unchanged sentence

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

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.

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)

During the third quarter of fiscal 2025, the Company reorganized its reporting structure resulting in its BlackBerry Spark reporting unit being disaggregated into two separate reporting units:

UEM and Cylance.

In accordance with ASC 350 Intangibles - Goodwill and Other, the Company conducted a valuation of the individual reporting units and allocated the goodwill associated with the previous BlackBerry Spark reporting unit to the UEM and Cylance reporting units using a relative fair value approach.

The valuations of the reporting units were based on a combination of income approach using a discounted future cash flow model, market-based approach, and estimated exit value approaches for Cylance using the same critical accounting estimates as disclosed in Note 1 of the Annual Financial Statements.

Following the assignment of assets, liabilities, and goodwill to the UEM and Cylance reporting units, the Company compared the carrying values of the reporting units against their fair values and determined no impairment was present in either reporting unit.

Cash, Cash Equivalents and Investments

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

The components of cash, cash equivalents and investments by fair value level as at November 30, 2024 were as follows:

Cost Basis (1)

12 unchanged sentences

promissory notes 1 — — 1 1 — — —

government sponsored enterprise notes 4 — — 4 — — — 4

treasury bills 1 — — 1 1 — — —

treasury bills 19 — — 19 19 — — —

126 — — 126 84 31 — 11

26 unchanged sentences

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

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.

As at November 30, 2024, the Company had non-marketable equity investments without readily determinable fair value of $ 35 million (February 29, 2024 - $ 36 million).

During the three and nine months ended November 30, 2024, the Company recorded downward adjustments, net of upward adjustments, of $ 2 million and $ 1 million, respectively, to the carrying value of certain non-marketable equity investments 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 November 30, 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 nine months ended November 30, 2024 and November 30, 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 four years.

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

The following table provides a reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents as at November 30, 2024 and February 29, 2024 from the consolidated balance sheets to the consolidated statements of cash flows:

November 30, 2024 February 29, 2024

Cash and cash equivalents $ 189 $ 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 August 31, 2024 and February 29, 2024 were as follows:

August 31, 2024 February 29, 2024

The contractual maturities of available-for-sale investments as at November 30, 2024 and February 29, 2024 were as follows:

November 30, 2024 February 29, 2024

Cost Basis Fair Value Cost Basis Fair Value

2 unchanged sentences

$ 136 $ 126 $ 176 $ 166

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

As at November 30, 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 August 31, 2024 were $ 6 million (February 29, 2024 - $ 6 million).

The current estimated credit losses (“CECL”) for accounts receivable as at November 30, 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 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%).

Ending balance of the allowance for credit loss as at November 30, 2024 $ 6

The allowance for credit losses as at November 30, 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 were two customers that comprised more than 10% of accounts receivable as at November 30, 2024 (February 29, 2024 - two customers comprised more than 10%).

Other Receivables

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.

As at November 30, 2024 and February 29, 2024, other receivables included items such as receivables related to intellectual property sold in fiscal 2024, see Note 11 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 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.

As at November 30, 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:

August 31, 2024 February 29, 2024

November 30, 2024 February 29, 2024

BlackBerry operations and other information technology $ 76 $ 76

6 unchanged sentences

Intangible assets comprised the following:

As at August 31, 2024

As at November 30, 2024

Cost Accumulated

11 unchanged sentences

$ 981 $ 923 $ 58

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:

For the nine months ended November 30, 2024, amortization expense related to intangible assets amounted to $13 million (nine months ended November 30, 2023 - $18 million).

Total additions to intangible assets for the nine months ended November 30, 2024 amounted to $ 6 million (nine months ended November 30, 2023 - $ 12 million).

During the nine months ended November 30, 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 November 30, 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 - $ 4 million;

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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 six months ended August 31, 2024 were as follows:

Changes to the carrying amount of goodwill during the nine months ended November 30, 2024 were as follows:

Carrying Amount

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dollar denominated goodwill ( 2 )

Carrying amount as at August 31, 2024 $ 563

Carrying amount as at November 30, 2024 $ 473

Other Long-term Assets

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.

As at November 30, 2024 and February 29, 2024, other long-term assets included long-term receivables related to intellectual property sold in fiscal 2024, see Note 11 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:

August 31, 2024 February 29, 2024

November 30, 2024 February 29, 2024

Variable incentive accrual $ 25 $ 14

1 unchanged sentence

Restructuring program liabilities, current portion 7 20

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.

As at November 30, 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 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.

The reduction of overall Company costs has 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 ( 23 ) ( 6 ) ( 29 )

Balance as at August 31, 2024

Balance as at November 30, 2024

Current portion $ 5 $ 2 $ 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 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.

Total charges incurred for the nine months ended November 30, 2024 and November 30, 2023 were $ 16 million and $ 17 million, respectively, recorded within General and administrative on the Consolidated Statements of Operations.

For the nine months ended November 30, 2024, the Company’s net effective income tax expense rate was approximately 29 % compared to a net effective income tax expense rate of 37 % for the nine months ended November 30, 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 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’s total unrecognized income tax benefits as at November 30, 2024 were $ 20 million (February 29, 2024 - $ 20 million).

As at November 30, 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.

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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, 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 Extension Debentures and 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.

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

Prior to the close of business on

BlackBerry Limited

1 unchanged sentence

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

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

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

3 unchanged sentences

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

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

The following table summarizes the change in the Notes for the nine months ended November 30, 2024:

Carrying Amount

1 unchanged sentence

Amortization of debt issuance costs 1

Balance as at August 31, 2024 $ 195

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”).

Balance as at November 30, 2024 $ 195

Extension Debentures and 2020 Debentures

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

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

The Extension Debentures matured on February 15, 2024 .

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

No portion of the fair value of the Prior Debentures were recorded as equity.

Each period, the fair value of the Prior Debentures were recalculated and resulting gains and losses from the change in fair value of the Prior 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 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.

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.

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

BlackBerry Limited

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

The following table shows the impact of the changes in fair value of the 2020 Debentures for the three and nine months ended November 30, 2024 and November 30, 2023:

Three Months Ended Nine Months Ended

November 30, 2024 November 30, 2023 November 30, 2024 November 30, 2023

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

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 2020 Debentures $ — $ 18 $ — $ 2

For the three and nine months ended November 30, 2024, the Company recorded interest expense related to the Debentures of $ 1 million and $ 5 million, respectively, which has been included in investment income, net on the Company’s consolidated statements of operations (three and nine months ended November 30, 2023 - $ 1 million and $ 5 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 and the 2020 Debentures, respectively, owned the full principal amount of the Extension Debentures and $ 330 million principal amount of the 2020 Debentures.

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

CAPITAL STOCK

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

The following details the changes in issued and outstanding common shares for the nine months ended November 30, 2024:

Capital Stock and

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Common shares issued for employee share purchase plan 1,163 3

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.

Common shares outstanding as at November 30, 2024 591,583 $ 2,972

The Company had 592 million voting common shares outstanding, 0.2 million options to purchase voting common shares, 17 million RSUs and 2 million DSUs outstanding as at December 17, 2024.

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

LOSS PER SHARE

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

Three Months Ended Six Months Ended

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

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)

EARNINGS ( LOSS) PER SHARE

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

Three Months Ended Nine Months Ended

November 30, 2024 November 30, 2023 November 30, 2024 November 30, 2023

Net income (loss) from continuing operations for basic and diluted earnings (loss) per share available to common shareholders $ 12 $ 8 $ ( 1 ) $ 20

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

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

Net income (loss) from continuing operations for diluted earnings (loss) per share available to common shareholders $ 12 $ ( 4 ) $ ( 1 ) $ 20

Net loss for basic and diluted loss per share available to common shareholders $ ( 11 ) $ ( 21 ) $ ( 72 ) $ ( 74 )

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

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

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

Net loss for diluted loss per share available to common shareholders $ ( 11 ) $ ( 33 ) $ ( 72 ) $ ( 74 )

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

591,240 584,331 590,537 583,559

Loss per share - reported

Effect of dilutive securities (000’s)

Stock-based compensation (4) (5)

2,290 — — 5,272

Conversion of 2020 Debentures (1) (2)

Conversion of Extension Debentures (1) (3)

— 4,670 — 1,182

Weighted average number of shares and assumed conversions (000’s) diluted 593,530 638,470 590,537 590,013

Earnings (loss) per share - reported

Basic earnings per share from continuing operations $ 0.02 $ 0.01 $ — $ 0.03

Total basic loss per share $ ( 0.02 ) $ ( 0.04 ) $ ( 0.12 ) $ ( 0.13 )

Diluted earnings (loss) per share from continuing operations $ 0.02 $ ( 0.01 ) $ — $ 0.03

Total diluted loss per share $ ( 0.02 ) $ ( 0.05 ) $ ( 0.12 ) $ ( 0.13 )

______________________________

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

(1) The Company has not presented the dilutive effect of the Debentures using the if-converted method in the calculation of diluted loss per share for the three and nine months ended November 30, 2024 and nine months ended November 30, 2023, as to do so would be antidilutive.

See Note 6 for details on the Debentures.

(2) 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.

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 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.

(3) 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 and nine months ended November 30, 2023.

Accordingly, to calculate diluted loss per share, the Company adjusted net loss by

BlackBerry Limited

1 unchanged sentence

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

eliminating the fair value adjustment made to the Extension Debentures and interest expense incurred on the Extension Debentures for the three and nine 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.

(4) 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 nine months ended November 30, 2024 and the three months ended November 30, 2023, as to do so would be antidilutive.

(5) The Company has 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 November 30, 2024 and the nine months ended November 30, 2023.

ACCUMULATED OTHER COMPREHENSIVE LOSS

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

The changes in AOCL by component net of tax, for the three and nine months ended November 30, 2024 and November 30, 2023 were as follows:

Three Months Ended Nine Months Ended

November 30, 2024 November 30, 2023 November 30, 2024 November 30, 2023

Cash Flow Hedges

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

Other comprehensive income (loss) before reclassification ( 1 ) — ( 1 ) 1

Amounts reclassified from AOCL into net loss — — — —

2 unchanged sentences

Balance, beginning of period $ ( 13 ) $ ( 14 ) $ ( 14 ) $ ( 16 )

Other comprehensive income 2 1 1 2

Other comprehensive income (loss) ( 3 ) 1 ( 2 ) 3

Foreign currency cumulative translation adjustment $ ( 16 ) $ ( 13 ) $ ( 16 ) $ ( 13 )

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

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

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

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

Amounts reclassified from AOCL into net loss — 6 — 6

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

$ — $ — $ — $ —

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(a) Letters of Credit

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.

The Company had $ 11 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, 2024.

See the discussion of restricted cash in Note 3.

BlackBerry Limited

Notes to the Consolidated Financial Statements

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

(b) Contingencies

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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.

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 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;

As of November 30, 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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BlackBerry Limited ).

The Statement of Claim alleges that actions the Company took when certain of its employees decided to accept offers of employment from Ford Motor Company of Canada amounted to a wrongful termination of the employees’ employment with the Company.

The Statement of Claim alleges that actions the Company took when certain of its

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)

employees decided to accept offers of employment from Ford Motor Company of Canada amounted to a wrongful termination of the employees’ employment with the Company.

The claim seeks (i) an unspecified quantum of statutory, contractual, or common law termination entitlements;

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

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

The parties attended a pre-trial conference on December 4, 2024.

The Court has set a trial date of June 2, 2025.

Discovery is proceeding.

Other contingencies

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.

As at November 30, 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

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)

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.

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

During the third quarter of fiscal 2025, the CODM added the segment EBITDA as a measure of profit or loss used under the “management” approach in reviewing the results of the Company’s operating segments to its existing measure of profit or loss of segment gross margin.

Prior period comparatives have been recast to reflect the change in metric, including the significant operating expenses included within that metric, and the change in presentation relating to expenses associated with its facilities as disclosed in Note 1.

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

The Company does not specifically allocate assets to operating segments for internal reporting purposes.

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)

Segment Disclosures

The Company is organized and managed as three operating segments:

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:

With the Cylance business being presented as a discontinued operations as discussed in Note 2, the Company is organized and managed as three operating segments:

Secure Communications (formerly Cybersecurity), IoT, and Licensing.

The following table shows information by operating segment for the three and nine months ended November 30, 2024 and November 30, 2023:

For the Three Months Ended

Cybersecurity IoT Licensing Segment Totals

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

Secure Communications IoT Licensing Segment Totals

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

2024 2023 2024 2023 2024 2023 2024 2023

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$ 54 $ 68 $ 53 $ 47 $ 5 $ 5 $ 112 $ 120

For the Six Months Ended

Cybersecurity IoT Licensing Segment Totals

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

Segment research and development 11 12 16 15 — — 27 27

Segment sales and marketing 12 15 11 10 — — 23 25

Segment general and administrative 10 9 9 10 1 6 20 25

Less amortization included in the above 1 1 1 — 2 3 4 4

Total Segment EBITDA (1)

$ 22 $ 33 $ 18 $ 12 $ 6 $ 2 $ 46 $ 47

For the Nine Months Ended

Secure Communications IoT Licensing Segment Totals

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

2024 2023 2024 2023 2024 2023 2024 2023

Segment revenue $ 205 $ 212 $ 170 $ 149 $ 16 $ 245 $ 391 $ 606

2 unchanged sentences

$ 138 $ 150 $ 142 $ 125 $ 11 $ 95 $ 291 $ 370

Segment research and development 36 44 47 49 — — 83 93

Segment sales and marketing 34 45 32 31 — — 66 76

Segment general and administrative 30 35 25 32 5 19 60 86

Less amortization included in the above 3 4 2 2 6 8 11 14

Total Segment EBITDA (1)

$ 41 $ 30 $ 40 $ 15 $ 12 $ 84 $ 93 $ 129

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

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.

______________________________

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

Secure Communications consists of BlackBerry® UEM, BlackBerry® AtHoc® and BlackBerry® SecuSUITE®.

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.

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

IoT consists of BlackBerry® QNX®, BlackBerry® Certicom®, BlackBerry Radar®, BlackBerry IVY® and other IoT applications.

4 unchanged sentences

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 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

The following table reconciles total segment gross margin for the three and nine months ended November 30, 2024 and November 30, 2023 to the Company’s consolidated totals:

Three Months Ended Nine Months Ended

November 30, 2024 November 30, 2023 November 30, 2024 November 30, 2023

Total segment gross margin $ 112 $ 120 $ 291 $ 370

Adjustments (1) :

Stock compensation 1 1 2 2

Stock compensation expense — 1 2 3

Research & development 27 29 85 98

3 unchanged sentences

Impairment of long-lived assets 1 9 4 9

Debentures fair value adjustment — ( 6 ) — 16

Prior Debentures fair value adjustment — ( 13 ) — 3

Investment income, net — ( 5 ) ( 8 ) ( 15 )

Loss before income taxes $ ( 18 ) $ ( 40 ) $ ( 52 ) $ ( 48 )

Consolidated income from continuing operations before income taxes $ 19 $ 23 $ 15 $ 40

______________________________

1 unchanged sentence

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

Three Months Ended Nine Months Ended

November 30, 2024 November 30, 2023 November 30, 2024 November 30, 2023

Total Segment EBITDA $ 46 $ 47 $ 93 $ 129

Adjustments (1) :

Stock compensation expense 4 7 16 25

Restructuring expenses 7 9 16 17

Corporate general and administrative expense 9 10 31 24

Amortization 6 7 19 26

Impairment of long-lived assets 1 9 4 9

Prior Debentures fair value adjustment — ( 13 ) — 3

Investment income — ( 5 ) ( 8 ) ( 15 )

Consolidated income from continuing operations before income taxes $ 19 $ 23 $ 15 $ 40

______________________________

(1) The CODM reviews segment information on an adjusted basis, which excludes certain amounts as described below:

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

Restructuring expenses - Restructuring costs relate to employee termination benefits, facilities, streamlining many of the Company’s centralized corporate functions into Secure Communications (previously Cybersecurity) and IoT specific teams, and other costs pursuant to programs to reduce the Company’s annual expenses amongst R&D, infrastructure and other functions do not reflect expected future operating expenses, are not indicative of the

BlackBerry Limited

Notes to the Consolidated Financial Statements

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

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

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”).

1 unchanged sentence

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 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.

As at November 30, 2024, the remaining financing component on the patent sale was $ 6 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.

1 unchanged sentence

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

BlackBerry Limited

Notes to the Consolidated Financial Statements

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

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 Six Months Ended

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

Three Months Ended Nine Months Ended

November 30, 2024 November 30, 2023 November 30, 2024 November 30, 2023

North America (1)

11 unchanged sentences

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

November 30, 2024 November 30, 2023 November 30, 2024 November 30, 2023

Products and services transferred over time $ 62 $ 60 $ 182 $ 179

1 unchanged sentence

Total $ 143 $ 152 $ 391 $ 606

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)

Revenue contract balances

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

The following table sets forth the activity in the Company’s revenue contract balances for the nine months ended November 30, 2024:

Accounts and Other Receivable Deferred Revenue Deferred Commissions

3 unchanged sentences

Decrease, net ( 8 ) ( 20 ) ( 1 )

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

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)

Closing balance as at November 30, 2024 $ 226 $ 142 $ 14

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 August 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 November 30, 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 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 11.

As at August 31, 2024

As at November 30, 2024

Less than 12 Months 12 to 24 Months Thereafter Total

Remaining performance obligations $ 133 $ 3 $ 6 $ 142

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)

Revenue recognized for performance obligations satisfied in prior periods

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).

For the three and nine months ended November 30, 2024, revenue of nil and $ 2 million respectively, was recognized relating to performance obligations satisfied in a prior period (three and nine months ended November 30, 2023 - $ 1 million and $ 32 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:

August 31, 2024 February 29, 2024

November 30, 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 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 ).

There was one customer that comprised 18 % of the Company’s revenue and one customer that comprised 15 % of the Company’s revenue in the three and nine months ended November 30, 2024, respectively (three and nine months ended November 30, 2023 - two customers that comprised 29 % of the Company’s revenue and one customer that comprised 37 % 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 Six Months Ended

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

Three Months Ended Nine Months Ended

November 30, 2024 November 30, 2023 November 30, 2024 November 30, 2023

Interest paid during the period $ 1 $ 1 $ 5 $ 5

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

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

At November 30, 2024, approximately 23 % of cash and cash equivalents, 24 % of accounts receivable and 88 % 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 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.

As at November 30, 2024, no single issuer represented more than 32 % 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 $ 265 million as at August 31, 2024.

Cash, cash equivalents, and investments were approximately $ 266 million as at November 30, 2024.

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

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.

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)

SUBSEQUENT EVENTS

On December 15, 2024 , the Company entered into an Equity and Asset Purchase Agreement (the “Equity and Asset Purchase Agreement”) with Arctic Wolf Networks, Inc.

(“Arctic Wolf”) and certain subsidiaries of the Company and Arctic Wolf, pursuant to which and upon the terms and subject to the conditions described therein, Arctic Wolf will acquire the Company’s Cylance® endpoint security assets for a purchase price consisting of $ 160 million of cash, subject to certain purchase price adjustments set forth in the Equity and Asset Purchase Agreement (the “Cash Consideration”), and 5.5 million common shares in Arctic Wolf (the “Equity Consideration”).

After giving effect to the purchase price adjustments to the Cash Consideration, the Company will receive approximately $ 80 million of the Cash Consideration and the Equity Consideration at closing of the transaction, and approximately $ 40 million of the Cash Consideration on the one-year anniversary of closing.

The Equity and Asset Purchase Agreement contains customary representation, warranties, covenants and indemnification made by the Company and Arctic Wolf.

In addition, the Equity and Asset Purchase Agreement provides that, on the closing date of the transaction, the Company and Arctic Wolf will enter into (i) a non-exclusive patent license agreement, (ii) a partner agreement pursuant to which the Company will agree to resell certain products and services of Arctic Wolf, and (iii) a strategic customer support agreement, pursuant to which Arctic Wolf will agree to provide certain customer support services to the Company.

Completion of the transaction is conditional upon the provision of customary closing deliverables and satisfaction of customary conditions.

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