What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-04-02 compared with 2024-04-04 · 420 added, 372 removed, 582 unchanged (58% of the section changed)

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

On February 3, 2025, the Company completed the sale of its Cylance endpoint security assets and related liabilities to Arctic Wolf Network, Inc.

(“Arctic Wolf”) for $160.0 million of cash, subject to certain adjustments of approximately $39.1 million, and 5.5 million common shares of Arctic Wolf.

As a result of the Cylance sale, it is no longer reported alongside UEM, SecuSuite and AtHoc as the Cybersecurity segment, and those three businesses are now reported separately from Cylance as the Secure Communications segment.

The financial results of Cylance are presented as discontinued operations and are included in “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.

Prior period comparatives in the financial statements, and throughout this Annual Report on Form 10-K where applicable, have been recast to reflect this change

Cautionary Note Regarding Forward-Looking Statements

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

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

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

• the Company’s expectations with respect to its revenue, segment adjusted EBITDA, adjusted Corporate general and administrative costs, adjusted EBITDA, non-GAAP EPS and operating cash flow in the first quarter of fiscal 2026, and these items for fiscal 2026 as a whole;

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

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

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

A heritage of innovation”, “Industry Background - QNX”, “Competition and Competitive Strengths - QNX”, “Intellectual Property” and “Human Capital”, and in the sections of this MD&A entitled, “Results of Operations - Fiscal year ended February 28, 2025 compared to fiscal year ended February 29, 2024 - Revenue - Revenue by Segment”, “Results of Operations - Fiscal year ended February 28, 2025 compared to fiscal year ended February 29, 2024 - Gross Margin and Adjusted EBITDA by Segment”, “Results of Operations - Fiscal year ended February 28, 2025 compared to fiscal year ended February 29, 2024 - Operating Expenses - General and Administrative Expenses”, “Results of Operations - Fiscal year ended February 28, 2025 compared to fiscal year ended February 29, 2024 - Net Loss ”, and “Financial Condition - Contractual and Other Obligations”.

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

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Business Overview

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

The Company secures more than 235 million vehicles.

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

The Company provides enterprises and governments the intelligent software and services that power the world around us.

Based in Waterloo, Ontario, the Company’s high-performance foundational software enables major automakers and industrial giants alike to unlock transformative applications, drive new revenue streams and launch innovative business models, all without sacrificing safety, security, and reliability.

With a deep heritage in Secure Communications, BlackBerry delivers operational resiliency with a comprehensive, highly secure, and extensively certified portfolio for mobile fortification, mission-critical communications, and critical events management.

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

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Products and Innovation:

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

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

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

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

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

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

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

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

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

• QNX announced that its embedded technology powers more than 255 million vehicles;

• QNX launched its General Embedded Development Platform to accelerate developer innovation for embedded systems;

• QNX introduced a software-defined functional safety platform for industrial automation in collaboration with Intel;

• QNX added QNX® Containers to support operating system virtualization and containerization on QNX-based devices;

• BlackBerry UEM placed in the upper-right quadrant as a 2024 Gartner® Peer Insights™ Customers’ Choice for Unified Endpoint Management tools;

• The Company announced that BlackBerry AtHoc is “in process” to become the first critical events management solution to obtain FedRAMP high authorization.

Customers and Partners:

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

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

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

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

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

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

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

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

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

• The Company completed the sale of its Cylance endpoint security assets to Arctic Wolf;

• QNX collaborated with Microsoft to make QNX SDP 8.0 available in the Microsoft Azure cloud environment;

• QNX announced a multi-year collaboration with Vector and TTTech Auto to develop and market a vehicle software platform that pre-integrates the QNX OS with other leading middleware components;

• QNX partnered with Pi Square Technologies to train software engineers across India as part of QNX Everywhere ecosystem expansion strategy;

• QNX extended its relationship with AMD to support a wider range of adaptive computing devices used in robotic systems and other embedded devices;

• QNX was selected by Hyundai Mobis to power its next-generation digital cockpit platform;

• QNX partnered with ETAS to jointly sell and market software solutions for SDVs;

• QNX was selected by FERNRIDE for its safety-certified autonomous terminal tractor solution;

• BlackBerry announced the Government of Canada’s investment in the Malaysia Cybersecurity Center of Excellence.

Environmental, Sustainability and Corporate Governance:

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

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

Goodwill Impairment

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

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

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

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

Business Separation

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

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

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

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

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

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

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

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

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

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

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

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

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

See Note 12 to the Consolidated Financial Statements.

Debt Repayment and New Issuance

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

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

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

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

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

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

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

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

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

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

• Appointed Lori O’Neill, an experienced corporate director and financial expert, to the Board of Directors;

• Appointed Lisa Bahash, an automotive OEM and Tier 1 supplier veteran, to the Board of Directors;

• Appointed Tim Foote as Chief Financial Officer.

Fiscal 2025 Summary Results of Operations

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Provision for income taxes 17.0 24.2 (7.2) 13.7 10.5

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

Income (loss) from continuing operations (8.5) 5.6 (14.1) (215.5) 221.1

Loss from discontinued operations (1)

(70.5) (135.8) 65.3 (518.9) 383.1

Net loss $ (79.0) $ (130.2) $ 51.2 $ (734.4) $ 604.2

Earnings (loss) per share - reported

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______________________________

(1) As a result of the Cylance sale, it is no longer reported alongside UEM, SecuSuite and AtHoc as the Cybersecurity segment, and those three businesses are now reported separately from Cylance as the Secure Communications segment.

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.

Prior period comparatives have been recast to reflect this change.

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

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

GAAP basis for fiscal 2025 and 2024 do not include the dilutive effect of the Debentures (as defined below in “Debt Financing and Other Funding Sources”) as to do so would be anti-dilutive.

Diluted loss per share on a U.S.

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

See Note 8 to the

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

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

GAAP basis for fiscal 2025 and fiscal 2023 do not include the dilutive effect of stock-based compensation as to do so would be anti-dilutive.

See Note 9 to the Consolidated Financial Statements for the fiscal year ended February 28, 2025 for calculation of the dilutive weighted average number of shares outstanding.

The following section sets forth certain consolidated statements of operations data for the three months ended February 28, 2025, February 29, 2024 and February 28, 2023:

For the Three Months Ended

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Operating expenses 112.1 134.7 (22.6) 191.0 (56.3)

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

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

Investment income, net 1.6 4.0 (2.4) 6.2 (2.2)

Loss before income taxes (6.4) (8.5) 2.1 (95.0) 86.5

Provision for income taxes 1.4 3.9 (2.5) 1.9 2.0

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

Loss from continuing operations (7.8) (12.4) 4.6 (96.9) 84.5

Income (loss) from discontinued operations (1)

0.4 (43.8) 44.2 (398.0) 354.2

Net loss $ (7.4) $ (56.2) $ 48.8 $ (494.9) $ 438.7

Earnings (loss) per share - reported

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Prior period comparatives have been recast to reflect this change.

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

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

GAAP basis in the fourth quarter of 2025 and 2024 do not include the dilutive effect of the Debentures as to do so would be anti-dilutive.

Diluted loss per share on a U.S.

GAAP basis in the fourth quarter of 2025, 2024 and 2023 do not include the dilutive effect of stock-based compensation as to do so would be anti-dilutive.

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

The following tables show information by operating segment for the three months and years ended February 28, 2025 and February 29, 2024.

The Company reports segment information in accordance with U.S.

GAAP Accounting Standards Codification Section 280 based on the “management” approach.

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

GAAP ASC Section 280 based on the “management” approach.

The management approach designates the internal reporting used by the Chief Operating Decision Maker (“CODM”) for making decisions and assessing performance of the Company’s reportable operating segments.

The measure of segment profit or loss disclosed by the Company in the Consolidated Financial Statements under the “management” approach in reviewing the results of the Company’s operating segments is segment adjusted gross margin.

Additionally below, management uses the additional measures of segment profit or loss used by the CODM which is segment adjusted EBITDA a non-GAAP financial measure.

Also note the change in presentation relating to expense reclassification as disclosed in Note 1 to the Consolidated Financial Statements.

See Note 13 to the Consolidated Financial Statements for a description of the Company’s operating segments.

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(in millions)

Cybersecurity IoT Licensing and Other Segment Totals

Secure Communications QNX Licensing Segment Totals

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

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Segment cost of sales 24.5 18.9 5.6 11.1 9.7 1.4 1.6 1.4 0.2 37.2 30.0 7.2

Segment gross margin $ 60 $ 52 $ 8 $ 56 $ 43 $ 13 $ 13 $ 6 $ 7 $ 129 $ 101 $ 28

For the Year Ended

Segment adjusted gross margin $ 42.8 $ 52.7 $ (9.9) $ 54.7 $ 56.2 $ (1.5) $ 7.0 $ 14.0 $ (7.0) $ 104.5 $ 122.9 $ (18.4)

Segment research and development 9.1 11.6 (2.5) 13.1 16.0 (2.9) — — — 22.2 27.6 (5.4)

Segment sales and marketing 12.0 13.4 (1.4) 14.5 12.3 2.2 — — — 26.5 25.7 0.8

Segment general and administrative 9.7 11.6 (1.9) 8.5 10.8 (2.3) 7.8 3.6 4.2 26.0 26.0 —

Less amortization included in the above 0.6 1.0 (0.4) 0.6 0.6 — 2.2 2.3 (0.1) 3.4 3.9 (0.5)

Segment adjusted EBITDA $ 12.6 $ 17.1 $ (4.5) $ 19.2 $ 17.7 $ 1.5 $ 1.4 $ 12.7 $ (11.3) $ 33.2 $ 47.5 $ (14.3)

For the Years Ended

(in millions)

Cybersecurity IoT Licensing and Other Segment Totals

Secure Communications QNX Licensing Segment Totals

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

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Segment cost of sales 92.7 80.7 12.0 38.8 33.8 5.0 6.1 150.9 (144.8) 137.6 265.4 (127.8)

Segment gross margin $ 236 $ 233 $ 3 $ 179 $ 169 $ 10 $ 108 $ 20 $ 88 $ 523 $ 422 $ 101

The following tables reconcile the Company’s segment results for the three months and year ended February 29, 2024 to consolidated U.S.

Segment adjusted gross margin $ 179.9 $ 203.1 $ (23.2) $ 197.2 $ 181.6 $ 15.6 $ 20.2 $ 109.0 $ (88.8) $ 397.3 $ 493.7 $ (96.4)

Segment research and development 44.2 56.1 (11.9) 59.9 64.5 (4.6) — — — 104.1 120.6 (16.5)

Segment sales and marketing 46.4 58.2 (11.8) 46.6 43.4 3.2 — — — 93.0 101.6 (8.6)

Segment general and administrative 40.2 47.2 (7.0) 33.9 43.1 (9.2) 13.4 23.2 (9.8) 87.5 113.5 (26.0)

Less amortization included in the above 3.2 4.4 (1.2) 2.3 2.9 (0.6) 9.0 9.7 (0.7) 14.5 17.0 (2.5)

Segment adjusted EBITDA $ 52.3 $ 46.0 $ 6.3 $ 59.1 $ 33.5 $ 25.6 $ 15.8 $ 95.5 $ (79.7) $ 127.2 $ 175.0 $ (47.8)

The following tables reconcile the Company’s segment gross margin for the three months and year ended February 28, 2025 to consolidated U.S.

GAAP results:

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(in millions)

Cybersecurity IoT Licensing and Other Segment Totals Reconciling Items Consolidated U.S.

Secure Communications QNX Licensing Segment Totals Reconciling Items Consolidated U.S.

Revenue $ 67.3 $ 65.8 $ 8.6 $ 141.7 $ — $ 141.7

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(in millions)

Cybersecurity IoT Licensing and Other Segment Totals Reconciling Items Consolidated U.S.

Secure Communications QNX Licensing Segment Totals Reconciling Items Consolidated U.S.

Revenue $ 272.6 $ 236.0 $ 26.3 $ 534.9 $ — $ 534.9

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Investment income, net 7.7 7.7

Loss before income taxes $ (106)

Income before income taxes $ 8.5

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GAAP-based measures to adjusted measures for the three months and year ended February 28, 2025.

The following tables reconcile the Company’s segment results for the three months and year ended February 28, 2023 to consolidated U.S.

The following tables reconcile the Company’s segment gross margin results for the three months and year ended February 29, 2024 to consolidated U.S.

GAAP results:

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(in millions)

Cybersecurity IoT Licensing and Other Segment Totals Reconciling Items Consolidated U.S.

Secure Communications QNX Licensing Segment Totals Reconciling Items Consolidated U.S.

Revenue $ 71.6 $ 65.9 $ 15.4 $ 152.9 $ — $ 152.9

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(in millions)

Cybersecurity IoT Licensing and Other Segment Totals Reconciling Items Consolidated U.S.

Secure Communications QNX Licensing Segment Totals Reconciling Items Consolidated U.S.

Revenue $ 283.8 $ 215.4 $ 259.9 $ 759.1 $ — $ 759.1

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Investment income, net 18.8 18.8

Loss before income taxes $ (720)

Income before income taxes $ 29.8

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GAAP-based measures to adjusted measures for the three months and year ended February 29, 2024.

The following table reconciles total segment adjusted EBITDA for the three months and year ended February 28, 2025 and February 29, 2024 to the Company’s consolidated totals:

Three Months Ended For the Years Ended

February 28, 2025 February 29, 2024 February 28, 2025 February 29, 2024

Total Segment Adjusted EBITDA $ 33.2 $ 47.5 $ 127.2 $ 175.0

Adjustments (1) :

Stock compensation expense 4.3 4.8 20.6 28.8

Restructuring expenses 11.4 18.4 26.1 35.9

Corporate general and administrative expense 12.1 9.3 43.0 33.3

Amortization 5.7 6.4 24.3 31.3

Impairment of long-lived assets 4.9 4.7 9.6 15.3

Impairment of goodwill — 15.9 — 15.9

Prior Debentures fair value adjustment — 0.5 — 3.5

Litigation settlement 2.8 — 2.8 —

Investment income (1.6) (4.0) (7.7) (18.8)

Consolidated income (loss) from continuing operations before income taxes $ (6.4) $ (8.5) $ 8.5 $ 29.8

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(1) The CODM reviews segment information on an adjusted EBITDA 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 (formerly “Cybersecurity”) and QNX (formerly “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 Company’s core operating performance, and may not be meaningful when comparing the Company’s operating performance against that of prior periods.

Financial Highlights

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In fiscal 2025, the Company recognized revenue of $534.9 million and incurred a net loss of $79.0 million, or 0.13 basic and diluted loss per share on a U.S.

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

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

GAAP basis (fiscal 2024 - revenue of $759.1 million and net loss of $130.2, or 0.22 basic loss and diluted loss per share).

The Company recognized net loss from continuing operations of $8.5 million, or $0.01 basic and diluted loss per share on a U.S.

GAAP basis for fiscal 2025 (fiscal 2024 - net income from continuing operations of $5.6 million, or $0.01 basic and diluted earnings per share).

The Company recognized adjusted net income of $12.5 million, or adjusted income of $0.02 per share, on a non-GAAP basis in fiscal 2025 (fiscal 2024 - adjusted net income of $30.6 million and adjusted income of $0.05 per share).

See “Non-GAAP Financial Measures” below.

Debentures Fair Value Adjustment

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

therefore, periodic revaluation was required under U.S.

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

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

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

Adjusted net income from continuing operations was $57.6 million in fiscal 2025 or $0.10 adjusted basic earnings per share from continuing operations (fiscal 2024 - adjusted net income from continuing operations of $116.0 million, or $0.20 adjusted basic earnings per share from continuing operations).

Non-GAAP Financial Measures

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

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

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

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

On April 2, 2025, the Company announced financial results for the three months and fiscal year ended February 28, 2025, which included certain non-GAAP financial measures and non-GAAP ratios, including adjusted gross margin, adjusted gross margin percentage, adjusted operating expense, adjusted income (loss) from continuing operations, adjusted net income (loss), adjusted earnings (loss) per share, adjusted research and development expense, adjusted sales and marketing expense, adjusted general and administrative expense, adjusted amortization expense, adjusted operating income (loss), adjusted EBITDA, adjusted EBITDA from continuing and discontinued operations, adjusted segment EBITDA, adjusted operating income (loss) margin percentage, adjusted EBITDA margin percentage and free cash flow (usage).

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

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

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

• Debentures fair value adjustment .

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

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

For purposes of comparability, the Company’s non-GAAP financial measures for the three months ended and years ended February 29, 2024 and February 28, 2023 have been updated to conform to the current year’s presentation and discontinued operations.

• Prior Debentures fair value adjustment .

The Company elected to measure the Prior Debentures (as defined below) at fair value in accordance with the fair value option under U.S.

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

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

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• Restructuring charges .

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

The Company believes that restructuring costs relating to employee termination benefits, facilities, streamlining many of the Company’s centralized corporate functions into Secure Communications (formerly “Cybersecurity”) and QNX (formerly “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 Company’s core operating performance, and may not be meaningful when comparing the Company’s operating performance against that of prior periods.

• Stock compensation expenses .

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• Long-lived asset impairment charge.

The Company believes that long-lived asset impairment charges do not reflect expected future operating expenses, are not indicative of the Company’s core operating performance, and may not be meaningful when comparing the Company’s operating performance against that of prior periods.

The Company believes that long-lived asset impairment charges (“LLA impairment charge”) do not reflect expected future operating expenses, are not indicative of the Company’s core operating performance, and may not be meaningful when comparing the Company’s operating performance against that of prior periods.

• Goodwill impairment charge.

The Company believes that goodwill impairment charges do not reflect expected future operating expenses, are non-cash, and may not be meaningful when comparing the Company’s operating performance against that of prior periods.

• Litigation settlement.

• Litigation settlements.

The Company believes that litigation settlements do not reflect expected future operating expenses, are not indicative of the Company’s core operating performance, and may not be meaningful when comparing the Company’s operating performance against that of prior periods.

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GAAP based measures for the three months ended February 28, 2025, February 29, 2024 and February 28, 2023

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

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

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

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

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

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

GAAP results, which are described in this MD&A and presented in the Consolidated Financial Statements.

A reconciliation of the most directly comparable U.S.

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Reconciliation of U.S.

GAAP operating expense (income) for the three months ended February 29, 2024, November 30, 2023, February 28, 2023 and February 28, 2022 to adjusted operating expense is reflected in the table below:

GAAP operating expense for the three months ended February 28, 2025, November 30, 2024, February 29, 2024 and February 28, 2023 to adjusted operating expense is reflected in the table below:

For the Three Months Ended (in millions) February 28, 2025 November 30, 2024 February 29, 2024 February 28, 2023

Operating expense (income) $ 185 $ 138 $ 599 $ (22)

Operating expense $ 112.1 $ 92.7 $ 134.7 $ 191.0

Restructuring charges 11.4 6.1 18.4 5.9

Stock compensation expense 3.9 4.1 4.1 7.1

Debentures fair value adjustment (1)

— (13) (26) (165)

Prior Debentures fair value adjustment — — 0.5 (25.4)

Acquired intangibles amortization 1.7 1.8 1.8 3.5

Litigation settlements 2.8 — — —

Goodwill impairment charge — — 15.9 112.1

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Adjusted operating expense $ 87.4 $ 79.7 $ 89.3 $ 87.8

______________________________

(1) See “Fiscal 2024 Summary Results of Operations - Financial Highlights - Debentures Fair Value Adjustment”.

Reconciliation of U.S.

GAAP loss from continuing operations, U.S.

GAAP net income (loss) and U.S.

GAAP basic earnings (loss) per share for the three months ended February 29, 2024, February 28, 2023 and February 28, 2022 to adjusted net income (loss) and adjusted basic earnings (loss) per share is reflected in the table below:

GAAP basic earnings (loss) per share for the three months ended February 28, 2025, February 29, 2024 and February 28, 2023 to adjusted income (loss) from continuing operations, adjusted net income (loss) and adjusted basic earnings (loss) per share is reflected in the table below:

For the Three Months Ended (in millions, except per share amounts) February 28, 2025 February 29, 2024 February 28, 2023

Basic earnings (loss)

per share Basic loss per share Basic earnings

per share Basic earnings (loss)

Loss from continuing operations $ (7.8) $(0.01) $ (12.4) $(0.02) $ (96.9) $(0.17)

Restructuring charges 11.4 18.4 5.9

Stock compensation expense 4.3 4.8 7.8

Prior Debentures fair value adjustment — 0.5 (25.4)

Acquired intangibles amortization 1.7 1.8 3.5

Litigation settlements 2.8 — —

Goodwill impairment charge — 15.9 112.1

LLA impairment charge 4.9 4.7 —

Adjusted income from continuing operations $ 17.3 $0.03 $ 33.7 $0.06 $ 7.0 $0.01

Net income (loss) $ (7.4) $(0.01) $ (56.2) $(0.10) $ (494.9) $(0.85)

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Stock compensation expense 4.3 5.6 10.5

Debentures fair value adjustment — (26) (165)

Prior Debentures fair value adjustment — 0.5 (25.4)

Acquired intangibles amortization 1.7 8.6 14.4

Litigation settlements 2.8 — —

Goodwill impairment charge — 34.8 245.4

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Stock compensation expense 1.2 1.6 1.8

Adjusted research and development $ 38 $ 45 $ 45

Adjusted research and development expense $ 22.0 $ 27.3 $ 31.3

Sales and marketing $ 27.1 $ 26.0 $ 28.7

Stock compensation expense 0.7 0.3 0.9

Adjusted sales and marketing $ 40 $ 46 $ 44

Adjusted sales and marketing expense $ 26.4 $ 25.7 $ 27.8

General and administrative $ 50.0 $ 54.0 $ 35.8

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Stock compensation expense 2.0 2.2 4.4

Adjusted general and administrative $ 31 $ 24 $ 18

Adjusted general and administrative expense $ 36.6 $ 33.4 $ 25.5

Amortization $ 4.1 $ 4.7 $ 6.7

Acquired intangibles amortization 1.7 1.8 3.5

Adjusted amortization $ 4 $ 3 $ 10

Adjusted amortization expense $ 2.4 $ 2.9 $ 3.2

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

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Stock compensation expense 18.2 25.8 24.4

Debentures fair value adjustment (1)

3 (138) (212)

Prior Debentures fair value adjustment — 3.5 (137.4)

Acquired intangibles amortization 7.0 11.0 13.8

Litigation settlements 2.8 — 165.0

Goodwill impairment charge — 15.9 112.1

LLA impairment charge 9.6 15.3 3.5

Litigation settlement — 165 —

Adjusted operating expense $ 330.4 $ 372.3 $ 381.8

______________________________

(1) See “Fiscal 2024 Summary Results of Operations - Financial Highlights - Debentures Fair Value Adjustment”.

Reconciliation of U.S.

GAAP income (loss) from continuing operations, U.S.

GAAP net income (loss) and U.S.

GAAP basic earnings (loss) per share for the years ended February 29, 2024, February 28, 2023 and February 28, 2022 to the adjusted net income (loss) and adjusted basic earnings (loss) per share is reflected in the table below:

GAAP basic earnings (loss) per share for the years ended February 28, 2025, February 29, 2024 and February 28, 2023 to adjusted income (loss) from continuing operations, adjusted net income (loss) and adjusted basic earnings (loss) per share is reflected in the table below:

For the Fiscal Years Ended (in millions, except per share amounts) February 28, 2025 February 29, 2024 February 28, 2023

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

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

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

Income (loss) from continuing operations $ (8.5) $ (0.01) $ 5.6 $ 0.01 $ (215.5) $ (0.37)

Restructuring charges 26.1 35.9 10.2

Stock compensation expense 20.6 28.8 27.4

Debentures fair value adjustment 3 (138) (212)

Prior Debentures fair value adjustment — 3.5 (137.4)

Acquired intangibles amortization 7.0 11.0 13.8

Litigation settlements 2.8 — 165.0

Goodwill impairment charge — 15.9 112.1

LLA impairment charge 9.6 15.3 3.5

Litigation settlement — 165 —

Adjusted income (loss) from continuing operations $ 57.6 $0.10 $ 116.0 $0.20 $ (20.9) $(0.04)

Net loss $ (79.0) $(0.13) $ (130.2) $(0.22) $ (734.4) $(1.27)

Restructuring charges 26.1 35.9 10.2

Stock compensation expense 25.6 33.1 31.4

Prior Debentures fair value adjustment — 3.5 (137.4)

Acquired intangibles amortization 27.4 38.2 82.0

Litigation settlements 2.8 — 165.0

Goodwill impairment charge — 34.8 245.4

LLA impairment charge 9.6 15.3 234.5

Adjusted net income (loss) $ 12.5 $0.02 $ 30.6 $0.05 $ (103.3) $(0.17)

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Stock compensation expense 5.3 7.3 7.4

Adjusted research and development $ 178 $ 198 $ 211

Adjusted research and development expense $ 103.5 $ 119.8 $ 126.8

Sales and marketing $ 95.5 $ 104.0 $ 102.6

Stock compensation expense 2.8 2.5 2.7

Adjusted sales and marketing $ 165 $ 171 $ 178

Adjusted sales and marketing expense $ 92.7 $ 101.5 $ 99.9

General and administrative $ 159.7 $ 187.2 $ 172.0

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Stock compensation expense 10.1 16.0 14.3

Adjusted general and administrative $ 128 $ 139 $ 101

Adjusted general and administrative expense $ 123.5 $ 135.3 $ 147.5

Amortization $ 17.7 $ 26.7 $ 27.4

Acquired intangibles amortization 7.0 11.0 13.8

Adjusted amortization $ 16 $ 14 $ 50

Adjusted operating income (loss), adjusted EBITDA, adjusted operating income (loss) margin percentage and adjusted EBITDA margin percentage for the three months ended February 29, 2024, February 28, 2023 and February 28, 2022 are reflected in the table below.

These are non-GAAP financial measures and non-GAAP ratios that do not have any standardized meaning as prescribed by U.S.

GAAP and are therefore unlikely to be comparable to similar measures presented by other companies.

Adjusted amortization expense $ 10.7 $ 15.7 $ 13.6

Adjusted operating income, adjusted EBITDA, adjusted operating income margin percentage and adjusted EBITDA margin percentage for the three months ended February 28, 2025, February 29, 2024 and February 28, 2023 are reflected in the table below.

For the Three Months Ended (in millions) February 28, 2025 February 29, 2024 February 28, 2023

Operating income (loss) $ (56) $ (499) $ 146

Non-GAAP adjustments to operating income (loss)

Operating loss $ (8.0) $ (12.5) $ (101.2)

Non-GAAP adjustments to operating loss

Restructuring charges 11.4 18.4 5.9

Stock compensation expense 4.3 4.8 7.8

Debentures fair value adjustment — (26) (165)

Prior Debentures fair value adjustment — 0.5 (25.4)

Acquired intangibles amortization 1.7 1.8 3.5

Litigation settlements 2.8 — —

Goodwill impairment charge — 15.9 112.1

LLA impairment charge 4.9 4.7 —

Total non-GAAP adjustments to operating income (loss) 72 482 (138)

Adjusted operating income (loss) 16 (17) 8

Total non-GAAP adjustments to operating loss 25.1 46.1 103.9

Adjusted operating income 17.1 33.6 2.7

Amortization 5.7 6.4 9.0

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Revenue $ 141.7 $ 152.9 $ 123.6

Adjusted operating income (loss) margin % (1)

Adjusted operating income margin % (1)

Adjusted EBITDA margin % (2)

______________________________

(1) Adjusted operating income (loss) margin % is calculated by dividing adjusted operating income (loss) by revenue.

(1) Adjusted operating income margin % is calculated by dividing adjusted operating income by revenue.

(2) Adjusted EBITDA margin % is calculated by dividing adjusted EBITDA by revenue.

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For the Fiscal Years Ended (in millions) February 28, 2025 February 29, 2024 February 28, 2023

Operating loss $ (125) $ (725) $ (2)

Non-GAAP adjustments to operating loss

Operating income (loss) $ 0.8 $ 11.0 $ (206.8)

Non-GAAP adjustments to operating income (loss)

Restructuring charges 26.1 35.9 10.2

Stock compensation expense 20.6 28.8 27.4

Debentures fair value adjustment 3 (138) (212)

Prior Debentures fair value adjustment — 3.5 (137.4)

Acquired intangibles amortization 7.0 11.0 13.8

Litigation settlements 2.8 — 165.0

Goodwill impairment charge — 15.9 112.1

LLA impairment charge 9.6 15.3 3.5

Litigation settlement — 165 —

Total non-GAAP adjustments to operating loss 161 631 (67)

Total non-GAAP adjustments to operating income (loss) 66.1 110.4 194.6

Adjusted operating income (loss) 66.9 121.4 (12.2)

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(2) Adjusted EBITDA margin % is calculated by dividing adjusted EBITDA by revenue.

Adjusted EBITDA from continuing and discontinued operations for the fiscal years ended February 28, 2025, February 29, 2024 and February 28, 2023 are reflected in the table below.

For the Fiscal Years Ended (in millions) February 28, 2025 February 29, 2024 February 28, 2023

Net loss $ (79.0) $ (130.2) $ (734.4)

Non-GAAP adjustments to operating loss

Restructuring charges 26.1 35.9 10.2

Stock compensation expense 25.6 33.1 31.4

Prior Debentures fair value adjustment

— 3.5 (137.4)

Acquired intangibles amortization 27.4 38.2 82.0

Litigation settlements 2.8 — 165.0

Goodwill impairment charge — 34.8 245.4

LLA impairment charge 9.6 15.3 234.5

Total non-GAAP adjustments to net loss 91.5 160.8 631.1

Adjusted operating income (loss) 12.5 30.6 (103.3)

Amortization 44.7 58.5 104.7

Acquired intangibles amortization (27.4) (38.2) (82.0)

Investment income, net (7.7) (18.8) (5.0)

Provision for income taxes from continuing and discontinued operations 17.2 24.2 13.7

Adjusted EBITDA from continuing and discontinued operations $ 39.3 $ 56.3 $ (71.9)

The Company uses free cash flow (usage) when assessing its sources of liquidity, capital resources, and quality of earnings.

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For the Fiscal Years Ended (in millions) February 28, 2025 February 29, 2024 February 28, 2023

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

Net cash provided by (used in) operating activities $ 16.5 $ (3.5) $ (262.2)

Acquisition of property, plant and equipment (3.1) (7.1) (7.3)

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

Free cash flow (usage) $ 13.4 $ (10.6) $ (269.5)

For the year ended February 28, 2023, free cash usage includes $165.0 million paid in relation to a legal settlement.

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

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

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

Comparative breakdowns of certain key metrics for the three months ended February 28, 2025 and February 29, 2024 are set forth below.

For the Three Months Ended (in millions) February 28, 2025 February 29, 2024 Change

Cybersecurity Annual Recurring Revenue $ 280 $ 298 $ (18)

Cybersecurity Dollar-Based Net Retention Rate 85 % 81 % 4 %

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

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

Secure Communications Annual Recurring Revenue $ 208 $ 202 $ 6

Secure Communications Dollar-Based Net Retention Rate 93 % 91 % 2 %

QNX Royalty Backlog $ 865 $ 815 $ 50

Cybersecurity Annual Recurring Revenue

Secure Communications Annual Recurring Revenue

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

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

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

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

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

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

Cybersecurity Dollar-Based Net Retention Rate

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

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

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

Secure Communications ARR was approximately $208 million in the fourth quarter of fiscal 2025 and decreased compared to $215 million in the third quarter of fiscal 2025 and increased compared to $202 million in the fourth quarter of fiscal 2024 primarily due to customer churn in the UEM business.

Secure Communications Dollar-Based Net Retention Rate

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

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

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

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

Cybersecurity Total Contract Value Billings

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

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

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

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

Cybersecurity TCV billings exceeded Cybersecurity revenue in fiscal 2024.

Recurring Software Product Revenue Percentage

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

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

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

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

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

The Company uses DBNRR as an indicator of business momentum for the Secure Communications business.

Secure Communications DBNRR was 93% in the fourth quarter of fiscal 2025 and decreased compared to 95% in the third quarter of fiscal 2025 and increased compared to 91% in the fourth quarter of fiscal 2024.

QNX Royalty Backlog

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

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

QNX royalty backlog was approximately $865 million at the end of the fourth quarter of fiscal 2025 and increased compared to approximately $815 million at the end of the fourth quarter of fiscal 2024.

Results of Operations - Fiscal year ended February 28, 2025 compared to fiscal year ended February 29, 2024

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Revenue by Segment

Cybersecurity $ 378 $ 418 $ (40) $ 477 $ (59)

IoT 215 206 9 178 28

Licensing and Other 260 32 228 63 (31)

Secure Communications $ 272.6 $ 283.8 $ (11.2) $ 288.2 $ (4.4)

QNX 236.0 215.4 20.6 205.7 9.7

Licensing 26.3 259.9 (233.6) 32.4 227.5

$ 534.9 $ 759.1 $ (224.2) $ 526.3 $ 232.8

% Revenue by Segment

Cybersecurity 44.3 % 63.7 % 66.4 %

IoT 25.2 % 31.4 % 24.8 %

Licensing and Other 30.5 % 4.9 % 8.8 %

Secure Communications 51.0 % 37.4 % 54.8 %

QNX 44.1 % 28.4 % 39.1 %

Licensing 4.9 % 34.2 % 6.1 %

100.0 % 100.0 % 100.0 %

Cybersecurity

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

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

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

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

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

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

IoT revenue for fiscal 2024 was $215 million.

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

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

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

Licensing and Other

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

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

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

Secure Communications

The decrease in Secure Communications revenue of $11.2 million was primarily due to a decrease of $34.9 million relating to up-front components of revenue recognized in fiscal 2024 on the Company’s long term agreement with the Government of Malaysia and a decrease of $19.1 million in BlackBerry UEM product revenue, partially offset by an increase of $32.1 million relating to product revenue in Secusmart, an increase of $7.9 million increase in professional services revenue and an increase of $2.7 million in BlackBerry AtHoc.

The Company previously stated that it expected Secure Communications revenue to be in the range of $267 million to $271 million for fiscal 2025 as a whole.

Secure Communications revenue was $272.6 million for fiscal 2025.

The Company expects Secure Communications revenue to be in the range of $50 million to $54 million in the first quarter of fiscal 2026, and for the full year to be in the range of $230 million to $240 million in fiscal 2026.

The increase in QNX revenue of $20.6 million was primarily due to an increase of $22.1 million in BlackBerry QNX royalty revenue and an increase of $6.3 million in BlackBerry Radar revenue, partially offset by a decrease of $4.9 million in BlackBerry QNX development seat revenue and a decrease of $1.7 million in professional services.

The Company previously stated that it expected QNX revenue to be in the range of $230 million to $235 million for fiscal 2025 as a whole.

QNX revenue for fiscal 2025 was $236.0 million.

The Company expects QNX revenue to be in the range of $51 million to $55 million in the first quarter of fiscal 2026.

The Company previously stated that it expects QNX revenue to be in the range of $260 million to $270 million for fiscal 2026 as a whole.

The Company now expects QNX revenue to be in the range of $250 million to $270 million for fiscal 2026 as a whole due to the uncertain impact of new U.S.

tariffs and global retaliatory tariffs on QNX’s automotive customers.

The decrease in Licensing revenue of $233.6 million was primarily due to $217.7 million associated with the Company’s patent sale in the first quarter of fiscal 2024, which was a one time-event, and a decrease of $15.9 million in revenue from the Company’s other intellectual property licensing arrangements.

The Company previously stated that it expected Licensing revenue to be approximately $20 million for fiscal 2025 as a whole.

Licensing revenue was $26.3 million for fiscal 2025 due to the timing of new licensing deals.

The Company expects Licensing revenue to be approximately $6 million in each of the four quarters of fiscal 2026.

Total BlackBerry Revenue

The Company previously stated that it expected total BlackBerry revenue to be in the range of $517 million to $526 million in fiscal 2025 as a whole.

Total BlackBerry revenue was $534.9 million and was higher due to the total impact of each of the Company’s operating segments exceeding the top end of the Company’s expectation ranges.

The Company expects total BlackBerry revenue to be approximately $107 million to $115 million in the first quarter of fiscal 2026, and for the full year to be in the range of $504 million to $534 million in fiscal 2026.

Revenue by Geography

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North America Revenue

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

The decrease in North America revenue of $248.2 million was primarily due to $217.7 million associated with the Company’s patent sale in the first quarter of fiscal 2024, which was a one time-event, a decrease of $17.6 BlackBerry UEM licensing revenue, a decrease of $15.9 million in revenue from the Company’s other intellectual property licensing arrangements and a decrease of $8.4 million in BlackBerry QNX development seat revenue, partially offset by an increase of $8.8 million in BlackBerry QNX royalty revenue and an increase of $5.8 million in BlackBerry Radar.

Europe, Middle East and Africa Revenue

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

The increase in Europe, Middle East and Africa revenue of $29.6 million was primarily due to an increase of $32.0 million relating to product revenue in Secusmart and an increase of $3.2 million in BlackBerry QNX royalty revenue, partially offset by a decrease of $4.3 million in professional services revenue.

Other Regions Revenue

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

The decrease in Other regions revenue of $5.6 million was primarily due to a decrease of $34.9 million relating to up-front components of revenue recognized in fiscal 2024 on the Company’s long term agreement with the Government of Malaysia, partially offset by an increase of $11.7 million professional services revenue, an increase of $10.2 million in BlackBerry QNX royalty revenue and an increase of $3.3 million in BlackBerry QNX development seat revenue.

Consolidated Gross Margin

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

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

Consolidated gross margin decreased by $95.8 million to approximately $394.9 million in fiscal 2025 (fiscal 2024 - $490.7 million).

The decrease was primarily due to the patent sale in the first quarter of fiscal 2024, which was a one-time event, and a lower gross margin from Secusmart due to change in product mix, partially offset by an increase in revenue from BlackBerry QNX due to the reasons discussed above in “Revenue by Segment”, as the cost of sales for most software and services products does not significantly fluctuate based on business volume.

Consolidated Gross Margin Percentage

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

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

Gross Margin by Segment

Consolidated gross margin percentage increased by 9.2%, to approximately 73.8% of consolidated revenue in fiscal 2025 (fiscal 2024 - 64.6%).

The increase was primarily due to a change in mix specifically a lower gross margin contribution from Licensing, which had a lower relative gross margin percentage in fiscal 2024 due to the patent sale, and a higher gross margin contribution from BlackBerry QNX.

Gross Margin and Adjusted EBITDA by Segment

See “Business Overview” and “Fiscal 2025 Summary Results of Operations” for information about the Company’s operating segments and the basis of operating segment results.

For the Years Ended

For the Year Ended

(in millions)

Cybersecurity IoT Licensing and Other Segment Totals

Secure Communications QNX Licensing Segment Totals

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

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Segment gross margin $ 179.9 $ 203.1 $ (23.2) $ 197.2 $ 181.6 $ 15.6 $ 20.2 $ 109.0 $ (88.8) $ 397.3 $ 493.7 $ (96.4)

Segment gross margin % 62 % 56 % 6 % 83 % 82 % 1 % 42 % 63 % (21 %) 61 % 64 % (3 %)

Cybersecurity

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

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

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

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

Licensing and Other

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

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

Segment research and development 44.2 56.1 (11.9) 59.9 64.5 (4.6) — — — 104.1 120.6 (16.5)

Segment sales and marketing 46.4 58.2 (11.8) 46.6 43.4 3.2 — — — 93.0 101.6 (8.6)

Segment general and administrative 40.2 47.2 (7.0) 33.9 43.1 (9.2) 13.4 23.2 (9.8) 87.5 113.5 (26.0)

Less amortization included in the above 3.2 4.4 (1.2) 2.3 2.9 (0.6) 9.0 9.7 (0.7) 14.5 17.0 (2.5)

Segment adjusted EBITDA $ 52.3 $ 46.0 $ 6.3 $ 59.1 $ 33.5 $ 25.6 $ 15.8 $ 95.5 $ (79.7) $ 127.2 $ 175.0 $ (47.8)

Secure Communications

The decrease in Secure Communications gross margin of $23.2 million was primarily due to a change in mix, specifically a decrease in gross margin contribution from Secusmart software licenses, which had a higher relative gross margin percentage in fiscal 2024 due to up-front components of revenue recognized on the Company’s long-term agreement with the Government of Malaysia.

The decrease in Secure Communications gross margin percentage of 6% was primarily due to the same reasons discussed above.

The increase in Secure Communications adjusted EBITDA of $6.3 million was primarily due to decreases in salaries and benefits expense, partially offset by the reasons discussed above in “Revenue by Segment”.

The Company previously stated that it expected Secure Communications adjusted EBITDA to be in the range of $43 million to $45 million for fiscal 2025 as a whole.

Secure Communications adjusted EBITDA was $52.3 million for fiscal 2025 as a whole due to lower than expected salaries and benefits expense and revenue exceeding the top end of the Company’s expectation ranges.

The Company expects Secure Communications adjusted EBITDA to be in the range of $34 million to $44 million in fiscal 2026 and to be in the range of $3 million to $6 million in the first quarter of fiscal 2026.

The increase in QNX gross margin of $15.6 million was primarily due to the reasons discussed above in “Revenue by Segment”, partially offset by an increase in cost of sales related to Radar hardware devices.

QNX gross margin percentage of 84% was consistent with fiscal 2024.

The increase in QNX adjusted EBITDA of $25.6 million was primarily due to the reasons discussed above in “Revenue by Segment”, a decrease in facilities costs, a decrease in consulting costs and a benefit from claims filed with the Ministry of Innovation, Science and Economic Development Canada relating to its Strategic Innovation Fund (“SIF”) program’s investment in BlackBerry QNX.

The Company previously stated that it expected QNX adjusted EBITDA to be in the range of $48 million to $50 million in fiscal 2025.

QNX adjusted EBITDA was $59.1 million in fiscal 2025 due to SIF claims, lower than expected salaries and benefits expense, lower cost of sales due to product mix and revenue exceeding the top end of the Company’s expectation ranges.

The Company previously stated that it expected QNX adjusted EBITDA margin percentage to be approximately 18% in fiscal 2025.

QNX adjusted EBITDA margin percentage was 25% due to the reasons noted above.

The Company expects QNX adjusted EBITDA to be in the range of $55 million to $60 million in fiscal 2026 and to be in the range of $2 million to $6 million in the first quarter of fiscal 2026.

The decrease in Licensing gross margin of $88.8 million was primarily due to the patent sale in the first quarter of fiscal 2024, which had a lower relative gross margin percentage due to the cost basis of the sold assets which was de-recognized.

The increase in Licensing gross margin percentage of 35% was primarily due to the same reason discussed above.

The decrease in Licensing adjusted EBITDA of $79.7 million was primarily due to the same reason discussed above and an increase in credit loss provision that was subsequently written off, partially offset by a decrease in legal expense.

The Company previously stated that it expected Licensing adjusted EBITDA to be approximately $16 million in fiscal 2025.

Licensing adjusted EBITDA was $15.8 million in fiscal 2025.

The Company previously stated that it expected Licensing adjusted EBITDA margin percentage to be approximately 65% in fiscal 2025.

Licensing adjusted EBITDA was 60% in fiscal 2025 due to the reasons noted above.

The Company expects Licensing adjusted EBITDA to be approximately $20 million in fiscal 2026 and to be approximately $5 million in each of the four quarters of fiscal 2026.

The Company previously stated that it expected the negative impact to adjusted EBITDA from its Corporate functions to be approximately $48 million in fiscal 2025.

The negative impact to adjusted EBITDA from the Corporate functions was $43.0 million in fiscal 2025 and $12.1 million in the fourth quarter of fiscal 2025.

Operating Expenses

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Debentures fair value adjustment — 3.5 (3.5) (137.4) 140.9

Litigation settlement — 165 (165) — 165

Litigation settlements 2.8 — 2.8 165.0 (165.0)

Total $ 394.1 $ 479.7 $ (85.6) $ 573.4 $ (93.7)

8 unchanged sentences

Debentures fair value adjustment — % 0.5 % (26.1 %)

Litigation settlement — % 25.2 % — %

Litigation settlements 0.5 % — % 31.4 %

Total 73.7 % 63.2 % 108.9 %

3 unchanged sentences

Operating expenses decreased by $85.6 million, or 17.8% in fiscal 2025 compared to fiscal 2024.

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

The decrease was primarily due to a decrease of $34.9 million in salaries and benefits, a decrease of $15.9 million in goodwill impairment, a decrease of $9.9 million in facilities costs, a decrease of $9.8 million in restructuring costs, a decrease of $9.0 million in amortization expense, a decrease of $8.9 million in legal expenses, a decrease of $8.7 million in consulting cost, a decrease of $7.6 million in stock compensation expense and a decrease of $5.7 million in impairment of long-lived assets, partially offset by an increase of $19.1 million related to the release of an accrued liability relating to the Company’s legacy mobile device business in fiscal 2024 which did not recur and an increase of $10.8 million in variable incentive plan cost, and an increase of $5.3 million in the Company’s deferred share unit costs.

Adjusted Operating Expenses

Adjusted operating expenses decreased by $41.9 million, or 11.3%, to $330.4 million in fiscal 2025, compared to $372.3 million in fiscal 2024.

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

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

The decrease was primarily attributable to a decrease of $34.9 million in salaries and benefits, a decrease of $11.7 million in legal expenses, a decrease of $9.9 million in facilities costs, a decrease of $8.9 million in amortization expense and a decrease of $8.7 million in consulting cost, partially offset by an increase of $19.1 million related to the release of an accrued liability relating to the Company’s legacy mobile device business in fiscal 2024 which did not recur, an increase of $10.8 million in variable incentive plan cost, an increase of $5.3 million in the Company’s deferred share unit costs.

Research and Development Expenses

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Research and development expenses decreased by $18.3 million, or 14.4% in fiscal 2025 compared to fiscal 2024.

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

The decrease was primarily attributable to a decrease of $9.4 million in salaries and benefits expenses, a decrease of $7.1 million in consulting cost, and an increase in benefits of $3.0 million from SIF claims filed.

Adjusted research and development expenses decreased by $16.3 million, or 13.6%, to $103.5 million in fiscal 2025 compared to $119.8 million in fiscal 2024.

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

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

Sales and Marketing Expenses

1 unchanged sentence

Sales and marketing expenses decreased by $8.5 million, or 8.2% in fiscal 2025 compared to fiscal 2024.

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

The decrease was primarily due to a decrease of $8.1 million in salaries and benefits and a decrease of $2.5 million in sales incentive plan costs.

Adjusted sales and marketing expenses decreased by $8.8 million, or 8.7%, to $92.7 million in fiscal 2025 compared to $101.5 million in fiscal 2024.

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

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

General and Administrative Expenses

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

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

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

General and administrative expenses decreased by $27.5 million, or 14.7%, in fiscal 2025 compared to fiscal 2024.

The decrease was primarily due to a decrease of $17.4 million in salaries and benefits expenses, a decrease of $9.9 million in facilities cost, a decrease of $9.8 million in restructuring costs, a decrease of $8.6 million in legal expenses and a decrease of $5.9 million in stock based compensation expense, partially offset by an increase of $19.1 million related to the release of an accrued liability relating to the Company’s legacy mobile device business in fiscal 2024 which did not recur and an increase of $5.3 million in the Company’s deferred share unit cost.

Adjusted general and administrative expenses decreased by $11.8 million, or 8.7%, to $123.5 million in fiscal 2025 compared to $135.3 million in fiscal 2024.

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

The decrease was primarily due to a decrease of $17.4 million in salaries and benefits expenses, a decrease of $11.3 million in legal expenses, and a decrease $9.9 million in facilities costs, partially offset an increase of $19.1 million related to the release of an accrued liability relating to the Company’s legacy mobile device business in fiscal 2024 which did not recur and an increase of $5.3 million in the Company’s deferred unit share cost.

The Company expects adjusted Corporate general and administrative costs to be approximately $10 million in the first quarter of fiscal 2026 and approximately $40 million in fiscal 2026 as a whole.

Amortization Expense

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Amortization included in Operating Expense

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

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

The decrease in amortization expense included in operating expense of $9.0 million was primarily due to the lower cost base of acquired technology assets.

Adjusted amortization expense decreased by $5.0 million to $10.7 million in fiscal 2025 compared to $15.7 million in fiscal 2024 due to the same reasons described above.

Amortization included in Cost of Sales

The decrease in amortization expense relating to certain property, plant and equipment and certain intangible assets employed in the Company’s service operations of $4 million was due to the lower cost base of assets.

The increase in amortization expense relating to certain property, plant and equipment and certain intangible assets employed in the Company’s service operations of $2.0 million was due to an increase in patent amortization expense included in cost of sales.

Investment Income, Net

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

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

Investment income, net, which includes the interest expense from the Debentures, decreased by $11.1 million to investment income, net of $7.7 million in fiscal 2025 compared to investment income, net of $18.8 million in fiscal 2024.

The decrease in investment income, net was primarily due to a lower yield on cash and investments and the impact of observable price changes on non-marketable equity investments without readily determinable fair value.

For fiscal 2025, the Company’s net effective income tax expense rate was approximately 27% (fiscal 2024 - net effective income tax expense rate of approximately 23%).

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.

Net Income (Loss)

Net Loss From Continuing Operations

The Company’s loss from continuing operations for fiscal 2025 was $8.5 million, or $0.01 basic and diluted loss per share from continuing operations on a U.S.

GAAP basis (fiscal 2024 - income from continuing operations of $5.6 million, or $0.01 basic and diluted earnings per share from continuing operations).

The decrease in income of $14.1 million from continuing operations was primarily due to a decrease in revenue as described above in “Revenue by Segment”, partially offset by a decrease in operating expenses, as described above in “Operating Expenses” and an increase in gross margin percentage, as described above in “Consolidated Gross Margin Percentage”.

Adjusted income from continuing operations was $57.6 million in fiscal 2025 or $0.10 adjusted basic earnings per share from continuing operations (fiscal 2024 - adjusted income from continuing operations of $116.0 million, or $0.20 adjusted basic earnings per share from continuing operations).

The decrease in adjusted income from continuing operations of $58.4 million was primarily due to the same reasons described above on a U.S.

The Company’s net loss for fiscal 2025 was $79.0 million, or $0.13 basic and diluted loss per share on a U.S.

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

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

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

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

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

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

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

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

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

GAAP basis (fiscal 2024 - net loss of $130.2 million, or $0.22 basic and diluted loss per share).

The decrease in net loss of $51.2 million was primarily due to a decrease in loss from discontinued operations, a decrease in operating expenses, as described above in “Operating Expenses” and an increase in gross margin percentage, as described above in “Consolidated Gross Margin Percentage”, partially offset by a decrease in revenue as described above in “Revenue by Segment”.

Adjusted net income was $12.5 million in fiscal 2025 or $0.02 adjusted basic earnings per share (fiscal 2024 - adjusted net income of $30.6 million, or $0.05 adjusted basic earnings per share).

The decrease in adjusted net income of $18.1 million was primarily due to the same reasons described above on a U.S.

The Company previously stated that it expected total Company adjusted EBITDA from continuing operations to be in the range of $60 million to $70 million in fiscal 2025 and total Company adjusted EBITDA from continuing operations to be in the range of $10 million to $20 million in the fourth quarter of fiscal 2025.

Total Company adjusted EBITDA from continuing operations was $84.2 million fiscal 2025 due to each of the Company’s operating segments exceeding the top end of the Company’s expectation ranges and lower than expected salaries and benefits expense.

Total Company adjusted EBITDA from continuing operations was $21.1 million in the fourth quarter of fiscal 2025.

The Company previously stated that it expected non-GAAP EPS to be in the range of ($0.01) and $0.01 in the fourth quarter of fiscal 2025 and non-GAAP EPS to be in the range of ($0.02) to breakeven for fiscal 2025.

Non-GAAP EPS was $0.03 in the fourth quarter of fiscal 2025 and $0.02 for fiscal 2025.

The Company expects adjusted EBITDA to be in the range of break-even to $7 million in the first quarter of fiscal 2026 and to be in the range of $69 million to $84 million in fiscal 2026 as a whole.

The Company expects non-GAAP EPS to be in the range of ($0.01) to breakeven in the first quarter of fiscal 2026 and to be in the range of $0.08 to $0.10 in fiscal 2026 as a whole.

The Company expects operating cash usage to be in the range of $20 million to $30 million in the first quarter of fiscal 2026 and to deliver positive operating cash flow of approximately $35 million for fiscal 2026.

The Company does not provide a reconciliation of expected adjusted EBITDA and expected non-GAAP basic EPS for the first quarter and full fiscal year 2026 to the most directly comparable expected GAAP measures because it is unable to predict with reasonable certainty, among other things, restructuring charges and impairment charges and, accordingly, a reconciliation is not available without unreasonable effort.

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

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

The weighted average number of shares outstanding was 591 million common shares for basic and diluted loss per share for the fiscal year ended February 28, 2025.

The weighted average number of shares outstanding was 585 million common shares for basic loss per share and 592 million common shares for diluted loss per share for the fiscal year ended February 29, 2024.

Common Shares Outstanding

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

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

On March 28, 2025, there were 596 million voting common shares, options to purchase 0.1 million voting common shares, 11 million restricted share units and 1.6 million deferred share units outstanding.

In addition, 51.5 million common shares are issuable upon conversion in full of the Notes (as defined below), as described in Note 7 to the Consolidated Financial Statements.

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

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Revenue by Segment

Cybersecurity $ 92 $ 88 $ 4 $ 122 $ (34)

IoT 66 53 13 52 1

Licensing and Other 15 10 5 11 (1)

Secure Communications $ 67.3 $ 71.6 $ (4.3) $ 60.8 $ 10.8

QNX 65.8 65.9 (0.1) 52.2 13.7

Licensing 8.6 15.4 (6.8) 10.7 4.7

$ 141.7 $ 152.9 $ (11.2) $ 123.7 $ 29.2

% Revenue by Segment

Cybersecurity 53.2 % 58.3 % 65.9 %

IoT 38.2 % 35.1 % 28.1 %

Licensing and Other 8.6 % 6.6 % 6.0 %

Secure Communications 47.5 % 46.8 % 49.2 %

QNX 46.4 % 43.1 % 42.2 %

Licensing 6.1 % 10.1 % 8.6 %

100.0 % 100.0 % 100.0 %

Cybersecurity

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

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

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

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

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

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

Licensing and Other

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

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

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

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

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

Secure Communications

The decrease in Secure Communications revenue of $4.3 million was primarily due to a decrease of $11.9 million relating to BlackBerry UEM product revenue, partially offset by an increase of $2.9 million in professional services revenue, an increase of $2.1 million relating to product revenue in Secusmart and an increase of $0.9 million in BlackBerry AtHoc.

The Company previously stated that it expected Secure Communications revenue in the fourth quarter of fiscal 2025 to be in the range of $62 million to $66 million.

Secure Communications revenue in the fourth quarter of fiscal 2025 was $67.3 million.

QNX revenue in the fourth quarter of fiscal 2025 was consistent with the revenue in the fourth quarter of fiscal 2024.

The increase of $1.9 million in BlackBerry QNX royalty revenue and the increase of $2.1 million in BlackBerry Radar was offset by a decrease of $2.7 million in BlackBerry QNX development seat revenue and $1.3 million in professional services revenue.

The Company previously stated that it expected QNX revenue in the fourth quarter of fiscal 2025 to be in the range of $60 million to $65 million.

QNX revenue in the fourth quarter of fiscal 2025 was $65.8 million.

The decrease in Licensing revenue of $6.8 million was primarily due to a decrease in revenue from the Company’s intellectual property licensing arrangements.

The Company previously stated that it expected revenue from intellectual property licensing to be approximately $4 million in each of the four quarters of fiscal 2025.

Revenue from intellectual property licensing was approximately $8.6 million in fourth quarter of fiscal 2025 due to the timing of new licensing deals.

Total BlackBerry Revenue

The Company previously stated that it expected the total BlackBerry revenue to be in the range of $126 million to $135 million in the fourth quarter of fiscal 2025.

Total BlackBerry revenue was $141.7 million in the fourth quarter of fiscal 2025 primarily due to better than expected Licensing revenue.

GAAP Revenue by Geography

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North America Revenue

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

The decrease in North America revenue of $8.2 million was primarily due to a decrease of $6.8 million in the Company’s intellectual property licensing arrangements, a decrease of $2.9 million in BlackBerry UEM product revenue and a decrease of $2.2 million in BlackBerry QNX development seats revenue, partially offset by an increase of $2.0 million in BlackBerry Radar and an increase of $1.4 million in BlackBerry AtHoc.

Europe, Middle East and Africa Revenue

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

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

The increase in Europe, Middle East and Africa revenue of $5.0 million was primarily due to an increase of $2.5 million relating to product revenue in Secusmart and an increase of $2.2 million in BlackBerry QNX royalty revenue.

Other Regions Revenue

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

The decrease in Other regions revenue of $8.0 million was primarily due to a decrease of $9.3 million in BlackBerry UEM product revenue and a decrease of $0.9 million in BlackBerry QNX development seats revenue, partially offset by an increase of $2.0 million in professional services.

Consolidated Gross Margin

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

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

Consolidated gross margin decreased by $18.1 million to approximately $104.1 million in the fourth quarter of fiscal 2025 (fourth quarter of fiscal 2024 - $122.2 million).

The decrease was primarily due to a decreases in revenue from Licensing due to the reasons discussed above in “Revenue by Segment” and lower gross margin from Secusmart due to change in product mix, as the cost of sales for most software and services products does not significantly fluctuate based on business volume.

Consolidated Gross Margin Percentage

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

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

Gross Margin by Segment

Consolidated gross margin percentage decreased by 6.4%, to approximately 73.5% of consolidated revenue in the fourth quarter of fiscal 2025 (fourth quarter of fiscal 2024 - 79.9%).

The decrease was primarily due to a lower gross margin contribution

from Secusmart due to change in product mix and a decrease in contribution in gross margin from Licensing due to the reasons discussed above in “Revenue by Segment”.

Gross Margin and Adjusted EBITDA by Segment

See “Business Overview - Segment Reporting” and “Fiscal 2025 Summary Results of Operations” for information about the Company’s operating segments and the basis of operating segment results.

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(in millions)

Cybersecurity IoT Licensing and Other Segment Totals

Secure Communications QNX Licensing Segment Totals

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

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Segment gross margin $ 42.8 $ 52.7 $ (9.9) $ 54.7 $ 56.2 $ (1.5) $ 7.0 $ 14.0 $ (7.0) $ 104.5 $ 122.9 $ (18.4)

Segment gross margin % 65 % 59 % 6 % 85 % 81 % 4 % 87 % 60 % 27 % 75 % 67 % 8 %

Cybersecurity

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

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

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

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

Licensing and Other

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

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

Segment research and development 9.1 11.6 (2.5) 13.1 16.0 (2.9) — — — 22.2 27.6 (5.4)

Segment sales and marketing 12.0 13.4 (1.4) 14.5 12.3 2.2 — — — 26.5 25.7 0.8

Segment general and administrative 9.7 11.6 (1.9) 8.5 10.8 (2.3) 7.8 3.6 4.2 26.0 26.0 —

Less amortization included in the above 0.6 1.0 (0.4) 0.6 0.6 — 2.2 2.3 (0.1) 3.4 3.9 (0.5)

Segment adjusted EBITDA $ 12.6 $ 17.1 $ (4.5) $ 19.2 $ 17.7 $ 1.5 $ 1.4 $ 12.7 $ (11.3) $ 33.2 $ 47.5 $ (14.3)

Secure Communications

The decrease in Secure Communications gross margin of $9.9 million was primarily due to the reasons discussed above in “Revenue by Segment” and a lower gross margin contribution from Secusmart due to change in product mix.

The decrease in Secure Communications gross margin percentage of 10% was due to the same reasons discussed above.

The decrease in Secure Communications adjusted EBITDA of $4.5 million was primarily due to the reasons discussed above in “Revenue by Segment”, partially offset by the decreases in salaries and benefits expense.

The Company previously stated that it expected Secure Communications adjusted EBITDA to be in the range of $4 million to $6 million in the fourth quarter of fiscal 2025.

Secure Communications adjusted EBITDA was $12.6 million in the fourth quarter of fiscal 2025 due to decreases in salaries and benefits expense, lower cost of sales due to product mix and revenue exceeding the top end of the Company’s expectation ranges.

The decrease in QNX gross margin of $1.5 million was primarily due to an increase in cost of sales related to BlackBerry Radar hardware devices.

The decrease in QNX gross margin percentage of 2% was due to the same reason discussed above.

The increase in QNX adjusted EBITDA of $1.5 million was primarily due to the reasons discussed above in “Revenue by Segment” and a benefit from SIF claims.

The Company previously stated that it expected QNX adjusted EBITDA to be in the range of $8 million to $10 million in the fourth quarter of fiscal 2025.

QNX adjusted EBITDA was $19.2 million in the fourth quarter of fiscal 2025 due to SIF claims, lower than expected salaries and benefits expense and revenue exceeding the top end of the Company’s expectation ranges.

The decrease in Licensing gross margin of $7.0 million was primarily due to the reasons discussed above in “Revenue by Segment”.

The decrease in Licensing gross margin percentage of 10% was due to the same reasons discussed above.

The decrease in Licensing adjusted EBITDA of $11.3 million was primarily due to the reasons discussed above in “Revenue by Segment” and an increase in credit loss provision that was subsequently written off.

The Company previously stated that it expected Licensing adjusted EBITDA to be approximately $3 million in the fourth quarter of fiscal 2025.

Licensing adjusted EBITDA was $1.4 million in the fourth quarter of fiscal 2025 due to the reasons noted above.

Operating Expenses

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Debentures fair value adjustment — — 0.5 (25.4)

Litigation settlements 2.8 — — —

Total $ 112.1 $ 92.7 $ 134.7 $ 191.0

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Debentures fair value adjustment — % — % 0.3 % (20.6 %)

Litigation settlements 2.0 % — % — % — %

Total 79.1 % 64.6 % 88.1 % 154.5 %

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GAAP Operating Expenses

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

Operating expenses increased by $19.4 million, or 20.9% in the fourth quarter of fiscal 2025, compared to $92.7 million in the third quarter of fiscal 2025 primarily due to an increase of $5.3 million in restructuring cost, an increase of $4.9 million credit loss provision that was subsequently written off, an increase of $4.3 million in impairment of long-lived assets, an increase of $2.9 million in the Company’s deferred share unit cost and an increase of $2.8 million in legal expense, partially offset by a decrease of $4.7 million in variable incentive plan costs.

Operating expenses decreased by $22.6 million, or 16.8% in the fourth quarter of fiscal 2025, compared to $134.7 million in the fourth quarter of fiscal 2024.

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

The decrease was primarily attributable to a decrease of $15.9 million in goodwill impairment, a decrease of $7.0 million in restructuring costs, decrease of $5.3 million salaries and benefits, the increase in benefits of $3.0 million in SIF claims filed, a decrease of $1.6 million in consulting cost, and a decrease of $1.6 million in facilities costs, partially offset by an increase of $4.7 million in credit loss provision that was subsequently written off and an increase of $4.7 million in the Company’s deferred share unit cost.

Adjusted Operating Expenses

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

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

Adjusted operating expenses increased by $7.7 million, or 9.7%, to $87.4 million in the fourth quarter of fiscal 2025 compared to $79.7 million in the third quarter of fiscal 2025.

The increase was primarily due to an increase of $4.9 million in credit loss provision that was subsequently written off, an increase of $2.9 million in the Company’s deferred share unit cost and an increase of $0.9 million in marketing and advertising cost, partly offset by a decrease of $1 million in salaries and benefits.

Adjusted operating expenses decreased by $1.9 million, or 2.1%, to $87.4 million in the fourth quarter of fiscal 2025, compared to $89.3 million in the fourth quarter of fiscal 2024.

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

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

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

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

The decrease was primarily attributable to a decrease of $5.3 million in salaries and benefits costs, the increase in benefits of $3.0 million in SIF claims filed, a decrease of $1.6 million in consulting cost and a decrease of $1.6 million in facilities costs, partially offset by an increase of $4.7 million in credit loss provision that was subsequently written off and an increase of $4.7 million in the Company’s deferred share unit cost.

Research and Development Expenses

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

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

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

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

Research and development expenses decreased by $5.7 million, or 19.7%, in the fourth quarter of fiscal 2025 compared to the fourth quarter of fiscal 2024, primarily due to the increase in benefits of $3.0 million in SIF claims filed, a decrease of $1.4 million in consulting cost and a decrease of $1.2 million in salaries and benefit cost.

Adjusted research and development expenses decreased by $5.3 million, or 19.4%, to $22.0 million in the fourth quarter of fiscal 2025 compared to $27.3 million in the fourth quarter of fiscal 2024, primarily due to the same reasons described above on a U.S.

Sales and Marketing Expenses

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

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

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

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

Sales and marketing expenses increased by $1.1 million, or 4.2% in fiscal 2025, in the fourth quarter of fiscal 2025 compared to the fourth quarter of fiscal 2024, primarily due to an increase of $0.7 million in variable incentive plan costs and an increase of $0.4 million in stock compensation expense.

Adjusted sales and marketing expenses increased by $0.7 million, or 2.7%, to $26.4 million in the fourth quarter of fiscal 2025 compared to $25.7 million in the fourth quarter of fiscal 2024, primarily due to an increase of $0.7 million in variable incentive plan costs.

General and Administrative Expenses

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

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

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

General and administrative expenses decreased by $4.0 million, or 7.4%, in the fourth quarter of fiscal 2025 compared to the fourth quarter of fiscal 2024.

The decrease was primarily due to a decrease of $7.0 million in restructuring costs, a decrease of $4.1 million in salaries and benefits costs and a decrease of $1.6 million in facilities costs, partially offset by an increase of $4.7 million in credit loss provision that was subsequently written off and an increase of $4.7 million in the Company’s deferred share unit cost.

Adjusted general and administrative expenses increased by $3.2 million, or 9.6%, to $36.6 million in the fourth quarter of fiscal 2025 compared to $33.4 million in the fourth quarter of fiscal 2024.

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

The increase was primarily due to an increase of $4.7 million in credit loss provision that was subsequently written off and an increase of $4.7 million in the Company’s deferred share unit cost, partially offset by a decrease of $4.1 million in salaries and benefits costs and a decrease of $1.6 million in facilities costs.

Amortization Expense

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The decrease in amortization expense included in operating expense of $0.7 million was primarily due to the lower cost base of acquired technology assets.

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

Adjusted amortization expense decreased by $0.5 million to $2.4 million in the fourth quarter of fiscal 2025 compared to $2.9 million in the fourth quarter of fiscal 2024 due to the same reasons discussed above on a U.S.

Amortization included in Cost of Sales

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

Investment Income (Loss), Net

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

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

Amortization expense relating to certain property, plant and equipment and intangible assets employed in the Company’s service operations was $1.6 million in the fourth quarter of fiscal 2025 and was consistent with the fourth quarter of fiscal 2024.

Investment Income, Net

Investment income, net, which includes the interest expense from the Debentures, decreased by $2.4 million to investment income, net of $1.6 million in the fourth quarter of fiscal 2025 compared to investment income, net of $4.0 million in the fourth quarter of fiscal 2024.

The decrease in investment income, net is primarily due to a lower yield on cash and investments.

For the fourth quarter of fiscal 2025, the Company’s net effective income tax expense rate was approximately 23% (fourth quarter of fiscal 2024 - net effective income tax expense rate of approximately 7%).

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

Net Income (Loss)

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

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

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

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

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

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

Net Loss From Continuing Operations

The Company’s loss from continuing operations for the fourth quarter of fiscal 2025 was $7.8 million, or $0.01 basic and diluted loss from continuing operations per share on a U.S.

GAAP basis (fourth quarter of fiscal 2024 - loss from continuing operations of $12.4 million, or $0.02 basic and diluted loss from continuing operations per share).

The increase in loss from continuing operations of $4.6 million was primarily due to a decrease in revenue, as described above in “Revenue by Segment” and a decrease in gross margin percentage, as described above in “Consolidated Gross Margin Percentage”, partially offset by a decrease in operating expenses, as described above in “Operating Expenses”.

Adjusted income from continuing operations was $17.3 million in the fourth quarter of fiscal 2025 or $0.03 adjusted basic earnings from continuing operations per share (fourth quarter of fiscal 2024 - adjusted income from continuing operations of $33.7 million or $0.06 adjusted basic earnings from continuing operations per share).

The decrease in adjusted income from continuing operations of $16.4 million was primarily due to the same reasons describe above on a U.S.

The Company’s net loss for the fourth quarter of fiscal 2025 was $7.4 million, or $0.01 basic and diluted net loss per share on a U.S.

GAAP basis (fourth quarter of fiscal 2024 - net loss of $56.2 million, or $0.10 basic and diluted net loss per share).

The decrease in net loss of $48.8 million was primarily due to a decrease in loss from discontinued operations and a decrease in operating expenses, as described above in “Operating Expenses”, partially offset by a decrease in revenue, as described above in “Revenue by Segment” and a decrease in gross margin percentage, as described above in “Consolidated Gross Margin Percentage”.

Adjusted net income was $17.7 million in the fourth quarter of fiscal 2025 or $0.03 adjusted basic earnings per share (fourth quarter of fiscal 2024 - adjusted net income of $16.4 million or $0.03 adjusted basic earnings per share).

The decrease in adjusted net income of $1.3 million was primarily due to the same reasons describe above on a U.S.

The weighted average number of shares outstanding was 594 million common shares for basic and diluted loss per share for the fourth quarter of fiscal 2025.

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Liquidity and Capital Resources

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

Cash, cash equivalents, and investments increased by $112.1 million to $410.3 million as at February 28, 2025 from $298.2 million as at February 29, 2024, primarily due to the cash proceeds received from the sale of the Company’s Cylance business to Arctic Wolf and cash generated from operations.

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

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Current Assets

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

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

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

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

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

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

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

The increase in current assets of $84.0 million at the end of fiscal 2025 from the end of fiscal 2024 was primarily due to an increase in cash and cash equivalents of $91.6 million, an increase in other receivable of $27.0 million and an increase of $9.1 million in short-term investments, partially offset by a decrease of $25.0 million in account receivable, net of credit loss, a decrease of $11.6 million in assets held for sale, current, a decrease of $5.1 million in other current assets and a decrease of $2.0 million in income taxes receivable.

At February 28, 2025, other receivables was $48.4 million, an increase of $27.0 million from February 29, 2024.

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

The increase was primarily due to an increase of $38.6 million related to the present value of the Arctic Wolf delayed cash payment consideration, partially offset by a decrease of $13.2 million related to a certain receivable reclassified from short-term to long-term receivables.

At February 28, 2025, accounts receivable, net of allowance was $173.7 million, a decrease of $25.0 million from February 29, 2024.

The decrease was primarily due to lower revenue recognized over the three months ended February 28, 2025 compared to the three months ended February 29, 2024, partially offset by an increase in days sales outstanding to 102.1 days at the end of the fourth quarter of fiscal 2025 from 100.4 days at the end of the fourth quarter of fiscal 2024.

At February 28, 2025, other current assets was $30.0 million, a decrease of $5.1 million from February 29, 2024.

The decrease was primarily due to a decrease of $2.2 million in prepaid software maintenance.

At February 28, 2025, income taxes receivable was $1.6 million, a decrease of $2.0 million from February 29, 2024.

The decrease was primarily due to tax refunds received.

Current Liabilities

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

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

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

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

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

The decrease in current liabilities of $12.6 million at the end of fiscal 2025 from the end of fiscal 2024 was primarily due to a decrease in the deferred revenue associated with the sale of Cylance of $49.3 million and a decrease of $2.9 million in income taxes payable, partially offset by an increase of $14.3 million in accounts payable, an increase of $12.8 million in deferred revenue, current, and an increase in accrued liabilities of $12.5 million.

At February 28, 2025, income taxes payable was $25.5 million, reflecting a decrease of $2.9 million compared to February 29, 2024, which was primarily due to a change in the quarterly tax provision and installments made during the period.

At February 28, 2025, accounts payable was $31.1 million, reflecting an increase of $14.3 million from February 29, 2024, which was primarily due to timing of payments of accounts payable.

At February 28, 2025, deferred revenue, current was $161.5 million, which reflects an increase of $12.8 million compared to February 29, 2024 that was attributable to a $7.6 million increase in deferred revenue, current related to BlackBerry UEM, and an increase of $6.9 million in deferred revenue, current related to BlackBerry QNX.

At February 28, 2025, accrued liabilities was $126.2 million, reflecting an increase of $12.5 million compared to February 29, 2024, which was primarily attributable to an increase of $16.3 million in variable incentive plan accrual, partially offset by a decrease of $4.6 million in operating lease liability, current.

Cash flows for the fiscal year ended February 28, 2025 compared to the fiscal year ended February 29, 2024 were as follows:

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Operating Activities

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

securities class actions settlement in fiscal 2023.

The increase in net cash flows provided by operating activities of $20 million primarily reflects the net changes in working capital.

Investing Activities

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

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

During the fiscal year ended February 28, 2025, cash flows provided by investing activities were $60.7 million and included cash proceeds of $79.8 million from disposal of discontinued operations, partially offset by cash flows used in transactions involving the acquisitions of short-term and long-term investments, net of the proceeds on sale or maturity in the amount of $9.0 million, intangible asset additions of $7.0 million, and acquisitions of property, plant and equipment of $3.1 million.

During fiscal 2024, cash flows provided by investing activities were $46.6 million and included cash flows used in transactions involving the acquisitions of short-term and long-term investments, net of the proceeds on sale or maturity in the amount of $67.5 million, partially offset by intangible asset additions of $13.8 million and acquisitions of property, plant and equipment of $7.1 million.

Financing Activities

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

The increase in cash flows provided by financing activities was $168.2 million for fiscal 2025 due to the net effect of redemption of the 2020 Debentures and issuance of Extension Debentures partially offset by the issuance of the Notes, each as defined below, which did not recur.

Debt Financing and Other Funding Sources

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

See Note 7 to the Consolidated Financial Statements for a description of the Company’s $200.0 million aggregate principal amount of 3.00% senior convertible unsecured notes issued in January 2024 (the “Notes”), the $365.0 million aggregate principal amount of convertible debentures issued in September 2020, which matured in November 2023 (the “2020 Debentures”), and the $150.0 million aggregate principal amount of convertible debentures issued in November 2023, which matured in February 2024 (the “Extension Debentures” and, collectively with the Notes and the 2020 Debentures, the “Debentures” and the “2020 Debentures” and, collectively with the Extension Debentures, the “Prior Debentures”).

The Company has $13.5 million in collateralized outstanding letters of credit in support of certain leasing arrangements entered into in the ordinary course of business.

See Note 3 to the Consolidated Financial Statements for further information concerning the Company’s restricted cash and restricted short-term investments.

See Note 4 to the Consolidated Financial Statements for further information concerning the Company’s restricted cash.

Cash, cash equivalents, and investments were approximately $410.3 million as at February 28, 2025.

The Company’s management remains focused on maintaining appropriate cash balances, 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.

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

Contractual and Other Obligations

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Total $ 312.8 $ 64.4 $ 248.4

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

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

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

Total contractual and other obligations as at February 28, 2025 decreased by approximately $31.4 million as compared to the February 29, 2024 balance of approximately $344.2 million, which was attributable to a decrease in operating lease obligations and a decrease in purchase obligations and commitments.

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

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

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

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

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

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

of any such factors.

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

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

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

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Different judgments could yield different results.

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

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

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

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

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

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

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

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

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

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

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

A discount rate was applied to the forecasted cash flows.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

During the third quarter of fiscal 2025 and in connection with the plans to sell the Cylance business, 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 the income approach using a discounted future cash flow model, a market-based approach, and estimated exit value approaches for Cylance using the same critical accounting estimates as disclosed in Note 1 to the Consolidated Financial Statements.

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

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.

Different judgments could yield different results.

Valuation Allowance Against Deferred Tax Assets

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

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

Apart from future revenues from the Malikie Transaction which are constrained, there have been no material changes to the Company’s assumptions or estimates on any material variable consideration for the fiscal year ended February 28, 2025.

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

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

What changed 10-K

Item 7. Management’s Discussion and Analysis