What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-06-25 compared with 2024-12-20 · 293 added, 634 removed, 301 unchanged (75% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read together with the unaudited interim consolidated financial statements and the accompanying notes (the “Consolidated Financial Statements”) of BlackBerry Limited for the three and nine months ended November 30, 2024, included in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as the Company’s audited consolidated financial statements and accompanying notes and MD&A for the fiscal year ended February 29, 2024 (the “Annual MD&A”).

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read together with the unaudited interim consolidated financial statements and the accompanying notes (the “Consolidated Financial Statements”) of BlackBerry Limited for the three months ended May 31, 2025, included in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as the Company’s audited consolidated financial statements and accompanying notes and MD&A for the fiscal year ended February 28, 2025 (the “Annual MD&A”) included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2025 (the “Annual Report”).

The Consolidated Financial Statements are presented in U.S.

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dollars, unless otherwise indicated.

Additional information about the Company, which is included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 29, 2024 (the “Annual Report”), can be found on SEDAR+ at www.sedarplus.ca and on the SEC’s website at www.sec.gov.

Additional information about the Company, which is included in the Company’s Annual Report, can be found on SEDAR+ at www.sedarplus.ca and on the SEC’s website at www.sec.gov.

Cautionary Note Regarding Forward-Looking Statements

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Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws, including statements relating to:

• 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 the sale of its Cylance® endpoint security assets to Arctic Wolf Networks, Inc.

(“Arctic Wolf”);

• the Company’s expectations with respect to its revenue, segment EBITDA, adjusted EBITDA, non-GAAP EPS and operating cash flow in the fourth quarter of fiscal 2025, and these items for fiscal 2025 as a whole;

• the Company’s plans, strategies and objectives, including its intentions to increase and enhance its product and service offerings, benefit from changes in market demand, and patent new innovations;

• the Company’s expectations with respect to its revenue, segment adjusted EBITDA, adjusted Corporate operating costs, total and segment adjusted EBITDA, non-GAAP EPS and operating cash flow in the second quarter of fiscal 2026;

• the Company’s expectations with respect to its revenue, adjusted corporate operating costs, Secure Communications adjusted EBITDA and total adjusted EBITDA for fiscal 2026 and operating cash flow in the second half of fiscal 2026;

• 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 MD&A, including in the sections entitled “Business Overview”, “Business Overview - Products and Services”, “Results of Operations - Three months ended May 31, 2025 compared to the three months ended May 31, 2024 - Revenue - Revenue by Segment”, “Results of Operations - Three months ended May 31, 2025 compared to the three months ended May 31, 2024 - Revenue - Gross Margin and Adjusted EBITDA by Segment”, “Results of Operations - Three months ended May 31, 2025 compared to the three months ended May 31, 2024 - Revenue - Operating Expenses - Adjusted Operating Expenses” , “Results of Operations - Three months ended May 31, 2025 compared to the three months ended May 31, 2024 - Net Income (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, and the Company’s expectations regarding its financial performance.

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Business Overview

BlackBerry (NYSE:

BB) provides enterprises and governments the intelligent software and services that power the world around us.

Based in Waterloo, Ontario, the Company offers the embedded OS of choice across industries and powers the safety-critical systems of over 255M vehicles.

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

The Company is also a pioneer in leveraging Artificial Intelligence and Machine Learning to deliver advanced cybersecurity solutions to its customers .

The Company has two core divisions, Secure Communications and IoT, each addressing large and growing market opportunities.

The Company’s Secure Communications division delivers operational resiliency with the most comprehensive, highly secure, and extensively certified solutions for mobile fortification, mission-critical communications, and critical events management.

The Company’s IoT division provides embedded software solutions and the Company believes it is the world’s leading automotive foundational software supplier.

Its customers include major automotive original equipment manufacturers (“OEMs”) and Tier 1 suppliers that use its products in vehicles, as well as top medical OEMs.

The Company’s solutions are implemented into all of the top ten automotive OEMs, top seven Tier 1 suppliers, 24 of the 25 top EV OEMs, and nine of the ten top medical OEMs.

The Company primarily generates revenue from the licensing of enterprise software and sales of associated services, including its secure communications solutions, BlackBerry QNX® software for the embedded market, technology licensing and professional consulting services.

The Company focuses on strategic industries with vertical-specific use cases, including regulated enterprise markets such as financial services, government, healthcare, professional services and automotive, and other markets where embedded software and critical infrastructure are important, such as medical equipment and industrial automation.

Founded in 1984, BlackBerry Limited (the “Company”) is a leading provider of intelligent software and services to enterprises, governments and leading OEMs around the world.

Its products enable more than 255 million vehicles and secure 17 of the G20 governments.

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

Based in Waterloo, Ontario, the Company has two core divisions, each addressing large and growing market opportunities.

The Company’s QNX division is a leader in embedded software where the Company believes it is the world’s leading automotive foundational software vendor.

Its customers include leading automotive OEMs and Tier 1 suppliers that use its products in vehicles, as well as manufacturers in other markets where high-performance, safety-critical foundational embedded software platforms and solutions are important, such as robotics, medical devices, industrial automation solutions, rail systems, hardware security modules, and other mission-critical applications (collectively, the general embedded market or “GEM”).

QNX solutions are implemented into all the top 10 automotive OEMs, top 7 Tier 1 suppliers, 24 of the 25 top EV OEMs, and 9 of the 10 top medical OEMs.

The Company’s Secure Communications division delivers operational resiliency with a comprehensive, highly secure, and extensively certified product portfolio for mobile fortification, mission-critical communications and critical event management.

Secure Communications focuses on the government sector and on strategic industries with vertical-specific use cases, including regulated enterprise markets such as financial services.

Products and Services

The Company has a rich pedigree in innovation and has developed a range of products and services that assist customers in addressing their needs as their industries evolve, which are structured in three segments:

Secure Communications, IoT (collectively with Secure Communications, “software and services”) and Licensing.

Prior to the third quarter of fiscal 2025, the Company’s Secure Communications segment included the Company’s Cylance® cybersecurity solutions business and was reported as the Cybersecurity segment.

See “Business Overview - Cylance” below.

Secure Communications

The Secure Communications business consists of BlackBerry unified endpoint management (“UEM”) solutions, SecuSUITE® and BlackBerry® AtHoc®.

The Company’s UEM offerings include BlackBerry® UEM, BlackBerry® Dynamics™, BlackBerry® Workspaces, and BlackBerry Messenger (BBM®) Enterprise.

BlackBerry UEM employs a containerized approach to manage and secure devices, third party and custom applications, identity, content and endpoints across all leading operating systems, as well as providing regulatory compliance tools.

BlackBerry Dynamics offers a best-in-class development platform and secure container for mobile applications, including the Company’s own enterprise applications such as BlackBerry® Work and BlackBerry® Connect for secure collaboration.

BlackBerry Workspaces is a secure Enterprise File Sync and Share (EFSS) solution.

BBM Enterprise is an enterprise-grade secure instant messaging solution for messaging, voice and video.

BlackBerry SecuSUITE is a certified, multi-OS voice and text messaging solution with advanced encryption, anti-eavesdropping and continuous authentication capabilities, providing a maximum level of security on conventional mobile devices for government and businesses.

BlackBerry AtHoc is a secure, networked critical event management solution that enables people, devices and organizations to exchange critical information in real time during business continuity and life safety operations.

The platform securely connects with a diverse set of endpoints to distribute emergency mass notifications, improves personnel accountability and facilitates the bidirectional collection and sharing of data within and between organizations.

The IoT business consists of BlackBerry QNX, BlackBerry Radar®, BlackBerry® Certicom®, and BlackBerry IVY®.

BlackBerry QNX is a global provider of real-time operating systems, hypervisors, middleware, development tools, and professional services for connected embedded systems in the automotive, medical, industrial automation and other markets.

A recognized leader in automotive software, BlackBerry QNX offers a growing portfolio of safety-certified, secure and reliable platform solutions and is focused on achieving design wins with automotive OEMs, Tier 1 vendors and automotive

semiconductor suppliers.

These solutions include the BlackBerry QNX real-time operating system, QNX® Hypervisor for Safety and QNX® Software Development Platform (SDP), as well as other products designed to alleviate the challenges of compliance with ISO 26262, the automotive industry’s functional safety standard.

QNX, Secure Communications and Licensing.

The QNX division consists of the QNX® business (“ QNX”) , BlackBerry Radar® and BlackBerry® Certicom®.

With 45 years of embedded software expertise and a rich intellectual property portfolio, QNX is an industry leader whose 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.

QNX is a trusted supplier of operating systems, hypervisors, frameworks and development tools that help reduce hardware dependency while enabling new possibilities in high-performance compute, standards-based virtualization technologies, and cloud enablement.

QNX offers a growing portfolio of safety-certified, secure and reliable platform solutions and is focused on achieving design wins with automotive OEMs, Tier 1 vendors and automotive semiconductor suppliers.

These solutions include the QNX® real-time operating system, QNX® Hypervisor for Safety and QNX® Software Development Platform (SDP), as well as other products designed to alleviate the challenges of compliance with ISO 26262, the automotive industry’s functional safety standard.

The QNX® pre-certified microkernel operating system is specifically tailored for safety-critical embedded systems and toolchains that are pre-qualified for building these systems.

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These products help drive a faster time to market and also reduce developer friction.

BlackBerry QNX is also a preferred supplier of embedded systems for companies building medical devices, train-control systems, industrial robots, hardware security modules, building automation systems, green energy solutions, and other mission-critical applications.

BlackBerry QNX collaborates closely with customers to understand their specific requirements and more quickly and effectively develop solutions to meet their evolving needs.

In fiscal 2026, QNX ’s priorities in the automotive space include promoting increased adoption of QNX SDP 8.0 and also working with partners to develop a vehicle platform featuring pre-integrated middleware solutions with a view to capturing a larger share of the automotive software stack and increasing future royalties per vehicle.

QNX is also a preferred supplier of embedded systems for companies in the GEM space.

QNX collaborates closely with customers to understand their specific requirements and more quickly and effectively develop solutions to meet their evolving needs.

The Company is investing in initiatives to increase the revenue that it derives from GEM opportunities.

BlackBerry Radar is a family of asset monitoring and telematics solutions for the transportation and logistics industry.

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BlackBerry Certicom leverages patented elliptic curve cryptography to provide device security, anti-counterfeiting and product authentication solutions to protect vehicles, critical infrastructure and IoT deployments from product counterfeiting, re-manufacturing and unauthorized network access.

BlackBerry IVY is an emerging intelligent vehicle data platform that allows automakers to safely access a vehicle’s sensor data, normalize it, and apply machine learning at the edge to generate and share predictive insights and inferences.

Automakers and developers can use this information to create responsive in-vehicle applications and services that enhance driver and passenger experiences.

The BlackBerry Secure Communications and IoT divisions are complemented by the enterprise and cybersecurity consulting services offered by the Company’s BlackBerry® Professional Services business.

BlackBerry Professional Services provides platform-agnostic strategies to address mobility-based challenges, providing expert deployment support, end-to-end delivery (from system design to user training), application consulting, and experienced project management.

Licensing consists primarily of the Company’s patent licensing business.

The Company’s Licensing business is responsible for the management and monetization of the Company’s global patent portfolio.

The QNX division also provides engineering consulting services, including services to assist OEM customers to bring their products to market on time, as well as services to ensure compliance with relevant functional safety standards.

Secure Communications

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

The Company’s endpoint management offerings include BlackBerry® UEM, BlackBerry® Dynamics™, BlackBerry® Workspaces, and BlackBerry Messenger (BBM®) Enterprise.

BlackBerry Workspaces is a secure Enterprise File Sync and Share (EFSS) solution.

BBM Enterprise is an enterprise-grade secure instant messaging solution for messaging, voice and video.

BlackBerry SecuSUITE is a certified, multi-OS voice and data solution with advanced encryption, anti-eavesdropping and continuous authentication capabilities, providing a maximum level of security on conventional mobile devices for government and businesses.

The platform securely connects with a diverse set of endpoints to distribute emergency mass notifications, improve personnel accountability and facilitate the bidirectional collection and sharing of data within and between organizations.

In fiscal 2026, the Secure Communications division expects to benefit from an increase in government market demand for on-premise solutions that are designed to protect data sovereignty.

The Secure Communications division also provides enterprise consulting services, including platform-agnostic strategies to address mobility-based challenges, providing expert deployment support, end-to-end delivery (from system design to user training), application consulting, and experienced project management.

The Licensing division is responsible for the management and monetization of the Company’s global patent portfolio.

The patent portfolio continues to provide a competitive advantage in the Company’s core product areas as well as providing leverage in the development of future technologies and licensing programs in both core and adjacent vertical markets.

The Company owns rights to an array of patented and patent pending technologies which include, but are not limited to, operating systems, networking infrastructure, acoustics, messaging, enterprise software, automotive subsystems, cybersecurity, cryptography and wireless communications.

On October 16, 2024, the Company announced that it was revisiting capital allocation priorities, noting that estimates of the level of investment required to grow the Cylance business to scale and profitability would be substantial and would require a number of years and, as such, the Company would begin exploring opportunities for the business.

At November 30, 2024, the Company determined that the assets and liabilities constituting the Cylance business met the criteria requiring them to be classified as held for sale as specified in Accounting Standards Codification (“ASC”) 360 Property, Plant and Equipment, which in turn meant that the Cylance business met the criteria for presentation as a discontinued operations under ASC 205 Presentation of Financial Statements.

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

As a result of Cylance becoming a discontinued operation, 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.

On December 15, 2024, the Company entered into an agreement to sell the Company’s Cylance endpoint security assets to Arctic Wolf for a purchase price consisting of $160 million of cash, subject to certain purchase price adjustments (the “Cash Consideration”), and 5.5 million common shares in Arctic Wolf.

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

Cylance’s cybersecurity solutions include:

CylanceENDPOINT™, an integrated endpoint security solution that leverages the Cylance AI model and OneAlert EDR console, to prevent, detect and remediate cyber threats at the endpoint, including on mobile;

CylanceMDR™, a managed detection and response solution that provides 24/7 threat hunting and monitoring, as well as integrated critical event management communications during a cyber incident;

and CylanceEDGE™, an AI-powered

continuous authentication zero trust network access solution that provides secure access to applications and data loss prevention.

The Company also offers incident response, compromise assessment and containment services to assist clients with forensic analysis, state of existing systems and remediation of attacks.

Recent Developments

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Products and Innovation:

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

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

• Announced that BlackBerry AtHoc is "in process" to become the first critical events management solution to obtain FedRAMP high authorization.

• QNX launched QNX® Hypervisor 8.0, built on the next-generation SDP 8.0 architecture, facilitating high-performance virtualization of multiple operating systems on a single system-on-a-chip;

• BlackBerry AtHoc became the first critical event management provider to achieve FedRAMP High authorization.

Customers and Partners:

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

• Announced the Government of Canada's investment in the Malaysia Cybersecurity Center of Excellence to enhance cyber resilience in Southeast Asia.

Environmental, Sustainability and Corporate Governance:

• BlackBerry and Arctic Wolf announced that they have entered into a definitive agreement for Arctic Wolf to acquire BlackBerry’s Cylance endpoint security assets;

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

Third Quarter Fiscal 2025 Summary Results of Operations

The following table sets forth certain consolidated statements of operations data for the quarter ended November 30, 2024 compared to the quarter ended November 30, 2023 under U.S.

• WeRide launched its next-generation ADAS platform for L2++ autonomous drive, built upon QNX® OS for Safety;

• Leapmotor selected QNX® technology as the foundation of its intelligent digital cockpit and autonomous drive domain controllers in its new B10 electric SUV;

• Direct ChassisLink Inc (DCLI) announced the deployment of BlackBerry Radar across 100,000 chassis;

• Malaysia Cybersecurity Center of Excellence celebrated its first anniversary with new partnerships, scholarships and expanded education programs.

Environmental, Sustainability and Corporat e Governance:

• BlackBerry announced a share buyback program for the repurchase of up to 27,855,153 of its common shares.

First Quarter Fiscal 2026 Summary Results of Operations

The following table sets forth certain consolidated statements of operations data for the quarter ended May 31, 2025 compared to the quarter ended May 31, 2024 under U.S.

For the Three Months Ended

(in millions, except for share and per share amounts)

November 30, 2024 November 30, 2023 Change

May 31, 2025 May 31, 2024 Change

Revenue $ 121.7 $ 123.4 $ (1.7)

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Investment income, net 2.9 4.0 (1.1)

Income before income taxes 19 23 (4)

Income (loss) before income taxes 4.9 (8.9) 13.8

Provision for income taxes 3.0 7.6 (4.6)

Income from continuing operations 12 8 4

Income (loss) from continuing operations 1.9 (16.5) 18.4

Loss from discontinued operations (1)

Net loss $ (11) $ (21) $ 10

Loss per share - reported

— (24.9) 24.9

Net income (loss) $ 1.9 $ (41.4) $ 43.3

Earnings (loss) per share - reported

Basic $ 0.00 $ (0.07)

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______________________________

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

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

(1) Prior to the third quarter of fiscal 2025, the Company’s Secure Communications segment included the Company’s Cylance® cybersecurity solutions business and was reported as the Cybersecurity segment.

As a result of the Cylance sale in the fourth quarter of fiscal 2025, Cylance 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 earnings (loss) per share on a U.S.

GAAP basis for the first quarter of fiscal 2026 and fiscal 2025 does not include the dilutive effect of the Notes (as defined in “Financial Condition - 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 the third quarter of fiscal 2024 does not include the dilutive effect of stock-based compensation as to do so would be anti-dilutive.

GAAP basis for the first quarter of fiscal 2025 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 Company’s calculation of the diluted weighted average number of shares outstanding.

The following tables show information by operating segment for the three and nine months ended November 30, 2024 and November 30, 2023.

The following tables show information by operating segment for the three months ended May 31, 2025 and May 31, 2024.

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

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

GAAP, pursuant to the Financial Standards Accounting Board’s Accounting Standard Codification Topic 280, Segment Reporting, 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.

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

Prior period comparatives have been recast to reflect the change in metric along with the significant categories of operating expenses included within this metric, and the change in presentation relating to facilities reclassed as disclosed in Note 1 to the Consolidated Financial Statements.

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, the following table includes the additional measures of segment profit or loss used by the CODM which is segment adjusted EBITDA, a non-GAAP financial measure.

See Note 11 to the Consolidated Financial Statements for a description of the Company’s operating segments.

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(in millions)

Secure Communications IoT Licensing Segment Totals

November 30, Change November 30, Change November 30, Change November 30, Change

2024 2023 2024 2023 2024 2023 2024 2023

Segment revenue $ 74 $ 91 $ (17) $ 62 $ 55 $ 7 $ 7 $ 6 $ 1 $ 143 $ 152 $ (9)

Segment cost of sales 20 23 (3) 9 8 1 2 1 1 31 32 (1)

Segment gross margin $ 54 $ 68 $ (14) $ 53 $ 47 $ 6 $ 5 $ 5 $ — $ 112 $ 120 $ (8)

Segment research and development 11 12 (1) 16 15 1 — — — 27 27 —

Segment sales and marketing 12 15 (3) 11 10 1 — — — 23 25 (2)

Segment general and administrative 10 9 1 9 10 (1) 1 6 (5) 20 25 (5)

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

Segment EBITDA $ 22 $ 33 $ (11) $ 18 $ 12 $ 6 $ 6 $ 2 $ 4 $ 46 $ 47 $ (1)

For the Nine Months Ended

(in millions)

Secure Communications IoT Licensing Segment Totals

November 30, Change November 30, Change November 30, Change November 30, Change

QNX Secure Communications Licensing Segment Totals

May 31, Change May 31, Change May 31, Change May 31, Change

2025 2024 2025 2024 2025 2024 2025 2024

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Segment cost of sales 11.2 9.5 1.7 18.1 21.8 (3.7) 1.6 1.4 0.2 30.9 32.7 (1.8)

Segment gross margin $ 138 $ 150 $ (12) $ 142 $ 125 $ 17 $ 11 $ 95 $ (84) $ 291 $ 370 $ (79)

Segment adjusted gross margin $ 46.3 $ 43.7 $ 2.6 $ 41.4 $ 42.4 $ (1.0) $ 3.1 $ 4.6 $ (1.5) $ 90.8 $ 90.7 $ 0.1

Segment research and development 12.4 16.4 (4.0) 11.3 12.3 (1.0) — — — 23.7 28.7 (5.0)

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Less amortization included in the above 0.7 0.5 0.2 0.6 1.0 (0.4) 2.3 2.2 0.1 3.6 3.7 (0.1)

Segment EBITDA $ 41 $ 30 $ 11 $ 40 $ 15 $ 25 $ 12 $ 84 $ (72) $ 93 $ 129 $ (36)

The following tables reconcile the Company’s segment gross margin results for the three and nine months ended November 30, 2024 to consolidated U.S.

Segment adjusted EBITDA $ 12.7 $ 8.9 $ 3.8 $ 9.6 $ 9.3 $ 0.3 $ 3.8 $ 4.7 $ (0.9) $ 26.1 $ 22.9 $ 3.2

The following tables reconcile the Company’s segment adjusted gross margin results for the three months ended May 31, 2025 to consolidated U.S.

GAAP results:

For the Three Months Ended November 30, 2024

(in millions)

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

Revenue $ 74 $ 62 $ 7 $ 143 $ — $ 143

Cost of sales 20 9 2 31 — 31

Gross margin (1)

$ 54 $ 53 $ 5 $ 112 $ — $ 112

Operating expenses 93 93

Investment income, net — —

Income before income taxes $ 19

For the Nine Months Ended November 30, 2024

For the Three Months Ended May 31, 2025

(in millions)

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

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

Revenue $ 57.5 $ 59.5 $ 4.7 $ 121.7 $ — $ 121.7

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(1) See “Non-GAAP Financial Measures” for a reconciliation of selected U.S.

GAAP-based measures to adjusted measures for the three and nine months ended November 30, 2024.

The following tables reconcile the Company’s segment gross margin results for the three and nine months ended November 30, 2023 to consolidated U.S.

GAAP-based measures to adjusted measures for the three months ended May 31, 2025.

The following tables reconcile the Company’s segment adjusted gross margin results for the three months ended May 31, 2024 to consolidated U.S.

GAAP results:

For the Three Months Ended November 30, 2023

(in millions)

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

Revenue $ 91 $ 55 $ 6 $ 152 $ — $ 152

Cost of sales 23 8 1 32 1 33

Gross margin (1)

$ 68 $ 47 $ 5 $ 120 $ (1) $ 119

Operating expenses 101 101

Investment income, net 5 5

Income before income taxes $ 23

For the Nine Months Ended November 30, 2023

For the Three Months Ended May 31, 2024

(in millions)

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

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

Revenue $ 53.2 $ 64.2 $ 6.0 $ 123.4 $ — $ 123.4

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Investment income, net 4.0 4.0

Income before income taxes $ 40

Loss before income taxes $ (8.9)

______________________________

(1) See “Non-GAAP Financial Measures” for a reconciliation of selected U.S.

GAAP-based measures to adjusted measures for the three and nine months ended November 30, 2023.

The following tables reconcile the Company’s segment EBITDA results for the three and nine months ended November 30, 2024 and November 30, 2023 to consolidated U.S.

GAAP results:

For the Three Months Ended For the Nine Months Ended

(in millions) (in millions)

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

Total Segment EBITDA $ 46 $ 47 $ 93 $ 129

GAAP-based measures to adjusted measures for the three months ended May 31, 2024.

The following table reconciles total segment adjusted EBITDA for the three months ended May 31, 2025 and May 31, 2024 to the Company’s consolidated totals:

Three Months Ended

May 31, 2025 May 31, 2024

Total Segment Adjusted EBITDA $ 26.1 $ 22.9

Adjustments (1) :

Stock compensation expense 5.7 6.2

Restructuring expenses 7 9 16 17

Restructuring charges 2.9 7.3

Corporate general and administrative expense 9.7 12.4

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Impairment of long-lived assets 0.1 3.5

Prior Debentures fair value adjustment — (13) — 3

Investment income (2.9) (4.0)

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

Consolidated income (loss) from continuing operations before income taxes $ 4.9 $ (8.9)

______________________________

(1) See “Non-GAAP Financial Measures” for a reconciliation of selected U.S.

GAAP-based measures to adjusted measures for the three and nine months ended November 30, 2024 and November 30, 2023.

(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 charges - Restructuring charges relate to employee termination benefits, facilities, streamlining many of the Company’s centralized corporate functions into Secure Communications and QNX specific teams, and other costs pursuant to programs to reduce the Company’s annual expenses amongst R&D, infrastructure and other functions and 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

The Company had $266 million in cash, cash equivalents and investments as of November 30, 2024 (February 29, 2024 - $298 million).

In the third quarter of fiscal 2025, the Company recognized revenue from continuing operations of $143 million and incurred a net loss of $11 million, or $0.02 basic and diluted loss per share, on a U.S.

GAAP basis (third quarter of fiscal 2024 - revenue from continuing operations of $152 million and net loss of $21 million, or $0.04 basic loss per share and $0.05 diluted loss per share).

The Company recognized adjusted net income of $12 million, and adjusted earnings of $0.02 per share, on a non-GAAP basis in the third quarter of fiscal 2025 (third quarter of fiscal 2024 - adjusted net income of $3 million, and adjusted earnings of $0.01 per share).

The Company had $381.9 million in cash, cash equivalents and investments as of May 31, 2025 (February 28, 2025 - $410.3 million).

In the first quarter of fiscal 2026, the Company recognized revenue of $121.7 million and net income of $1.9 million, or $0.00 basic and diluted earnings per share, on a U.S.

GAAP basis (first quarter of fiscal 2025 - revenue of $123.4 million and net loss of $41.4 million, or $0.07 basic and diluted loss per share).

The Company recognized adjusted net income of $12.3 million, and adjusted earnings of $0.02 per share, on a non-GAAP basis in the first quarter of fiscal 2026 (first quarter of fiscal 2025 - adjusted net loss of $14.3 million, and adjusted loss of 0.02 per share).

See “Non-GAAP Financial Measures” below.

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

On December 19, 2024, the Company announced financial results for the three and nine months ended November 30, 2024, which included certain non-GAAP financial measures and non-GAAP ratios, including revenue from continuing and discontinued operation, Cybersecurity revenue from continuing and discontinued operations, adjusted gross margin, adjusted gross margin percentage, Cybersecurity gross margin from continuing and discontinued operations, adjusted gross margin from continuing and discontinued operations, adjusted gross margin percentage from continuing and discontinued operations, adjusted operating expense, adjusted operating expense from continuing and discontinued 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 from continuing and discontinued operations, adjusted Cybersecurity EBITDA from continuing and discontinued operations and free cash flow (usage).

On June 24, 2025, the Company announced financial results for the three months ended May 31, 2025, which included certain non-GAAP financial measures and non-GAAP ratios, including adjusted gross margin, adjusted gross margin percentage, adjusted operating expense, adjusted corporate operating costs, adjusted corporate operating costs excluding amortization, 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 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 below from the Company’s U.S.

GAAP financial results.

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.

Non-GAAP financial measures and non-GAAP ratios exclude certain amounts as described below:

• Prior Debentures fair value adjustment .

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

Each period, the fair value of the Prior Debentures were 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.

This was 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.

• Restructuring charges .

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

• 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.

GAAP basis, the impacts of these items are reflected in the Company’s income statement.

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

GAAP based measures for the three months ended November 30, 2024 and November 30, 2023

Readers are cautioned that revenue from continuing and discontinued operation, Cybersecurity revenue from continuing and discontinued operations, adjusted gross margin, adjusted gross margin percentage, Cybersecurity gross margin from continuing and discontinued operations, adjusted gross margin from continuing and discontinued operations, adjusted gross margin percentage from continuing and discontinued operations, adjusted operating expense, adjusted operating expense from continuing and discontinued 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 from continuing and discontinued operations, adjusted Cybersecurity EBITDA from continuing and discontinued operations and free cash flow (usage) and similar measures do not have any standardized meaning prescribed by U.S.

GAAP based measures for the three months ended May 31, 2025 and May 31, 2024

Readers are cautioned that adjusted gross margin, adjusted gross margin percentage, adjusted operating expense, adjusted corporate operating costs, adjusted corporate operating costs excluding amortization, 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 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.

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A reconciliation of the most directly comparable U.S.

GAAP financial measures for the three months ended November 30, 2024 and November 30, 2023 to adjusted financial measures is reflected in the table below:

For the Three Months Ended (in millions) November 30, 2024 November 30, 2023

Revenue $ 143 $ 152

Cylance revenue 19 23

Revenue from continuing and discontinued operations $ 162 $ 175

Secure Communication revenue $ 74 $ 91

Cylance revenue 19 23

Cybersecurity revenue from continuing and discontinued operations $ 93 $ 114

GAAP financial measures for the three months ended May 31, 2025 and May 31, 2024 to adjusted financial measures is reflected in the table below:

For the Three Months Ended (in millions) May 31, 2025 May 31, 2024

Gross margin $ 90.3 $ 90.0

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Adjusted gross margin % 74.6 % 73.5 %

Secure Communication gross margin $ 54 $ 68

Cylance gross margin 8 10

Cybersecurity gross margin from continuing and discontinued operations $ 62 $ 78

Gross margin $ 112 $ 119

Cylance gross margin 8 10

Stock compensation expense — 1

Adjusted gross margin from continuing and discontinued operations $ 120 $ 130

Gross margin % 78.3 % 78.3 %

Cylance gross margin (4.2) % (4.6) %

Stock compensation expense — % 0.6 %

Adjusted gross margin % from continuing and discontinued operations 74.1 % 74.3 %

Reconciliation of U.S.

GAAP operating expense for the three months ended November 30, 2024, August 31, 2024 and November 30, 2023 to adjusted operating expense and adjusted operating expense from continuing and discontinued operations is reflected in the table below:

For the Three Months Ended (in millions) November 30, 2024 August 31, 2024 November 30, 2023

GAAP operating expense for the three months ended May 31, 2025, February 28, 2025 and May 31, 2024 to adjusted operating expense is reflected in the table below:

For the Three Months Ended (in millions) May 31, 2025 February 28, 2025 May 31, 2024

Operating expense $ 88.3 $ 112.1 $ 102.9

1 unchanged sentence

Stock compensation expense 5.2 3.9 5.5

Prior Debentures fair value adjustment

Acquired intangibles amortization 1.7 1.7 1.8

LLA impairment charge 0.1 4.9 3.5

Litigation settlement — 2.8 —

Adjusted operating expense $ 78.4 $ 87.4 $ 84.8

For the Three Months Ended (in millions) November 30, 2024 August 31, 2024 November 30, 2023

Operating expense $ 93 $ 85 $ 101

Cylance operating expenses 31 31 39

Restructuring charges 7 1 9

Stock compensation expense 4 4 6

Prior Debentures fair value adjustment — — (13)

Acquired intangibles amortization 2 3 2

LLA impairment charge 1 — 9

Cylance stock compensation expense 2 2 1

Cylance acquired intangible amortization 7 6 7

Cylance LLA impairment charge — — 2

Adjusted operating expense from continuing and discontinued operations $ 101 $ 100 $ 117

Reconciliation of U.S.

GAAP net loss and U.S.

GAAP basic loss per share for the three months ended November 30, 2024 and November 30, 2023 to adjusted net income and adjusted basic earnings per share is reflected in the table below:

For the Three Months Ended (in millions, except per share amounts) November 30, 2024 November 30, 2023

Basic earnings (loss)

per share Basic earnings (loss)

Net loss $ (11) $ (0.02) $ (21) $ (0.04)

Restructuring charges 7 9

Stock compensation expense 6 8

Prior Debentures fair value adjustment

Acquired intangibles amortization 9 9

LLA impairment charge 1 11

Adjusted net income $ 12 $ 0.02 $ 3 $ 0.01

Reconciliation of U.S.

GAAP research and development, sales and marketing, general and administrative, and amortization expense for the three months ended November 30, 2024 and November 30, 2023 to adjusted research and development, sales and marketing, general and administrative, and amortization expense is reflected in the table below:

For the Three Months Ended (in millions) November 30, 2024 November 30, 2023

Research and development $ 27 $ 29

Stock compensation expense 1 2

Adjusted research and development expense $ 26 $ 27

Sales and marketing $ 23 $ 25

Stock compensation expense 1 —

Adjusted sales and marketing expense $ 22 $ 25

General and administrative $ 38 $ 45

Restructuring charges 7 9

Stock compensation expense 2 4

Adjusted general and administrative expense $ 29 $ 32

Amortization $ 4 $ 6

Acquired intangibles amortization 2 2

Adjusted amortization expense $ 2 $ 4

Adjusted EBITDA from continuing and discontinued operations, and adjusted Cybersecurity EBITDA from continuing and discontinued operations for the three months ended November 30, 2024 and November 30, 2023 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.

For the Three Months Ended (in millions) November 30, 2024 November 30, 2023

Net loss $ (11) $ (21)

Non-GAAP adjustments to net loss

Restructuring charges 7 9

Stock compensation expense 6 8

Prior Debentures fair value adjustment

Acquired intangibles amortization 9 9

LLA impairment charge 1 11

Total non-GAAP adjustments to net loss 23 24

Amortization 13 14

Acquired intangibles amortization (9) (9)

Investment income, net — (5)

Provision for income taxes 7 15

Adjusted EBITDA from continuing and discontinued operations $ 23 $ 18

For the Three Months Ended (in millions) November 30, 2024 November 30, 2023

Net loss $ (11) $ (21)

Non-GAAP adjustments to net loss

GAAP corporate operating costs for the three months ended May 31, 2025 and May 31, 2024 to adjusted corporate operating costs excluding amortization is reflected in the table below:

For the Three Months Ended (in millions) May 31, 2025 May 31, 2024

Corporate operating costs

$ 14.9 $ 25.4

Restructuring charges 2.9 7.3

Stock compensation expense 1.9 1.3

Prior Debentures fair value adjustment

Acquired intangibles amortization 9 9

LLA impairment charge — 3.5

Total non-GAAP adjustments to net loss 23 24

Adjusted corporate operating costs 10.1 13.3

Amortization 0.4 0.9

Acquired intangibles amortization (9) (9)

Investment income, net — (5)

Provision for income taxes 7 15

IoT Segment EBITDA 18 12

Licensing Segment EBITDA 6 2

Corporate general and administrative expense (9) (10)

Adjusted Cybersecurity EBITDA from continuing and discontinued operations $ 8 $ 14

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

GAAP based measures for the nine months ended November 30, 2024 and November 30, 2023.

A reconciliation of the most directly comparable U.S.

GAAP financial measures for the nine months ended November 30, 2024 and November 30, 2023 to adjusted financial measures is reflected in the table below:

For the Nine Months Ended (in millions) November 30, 2024 November 30, 2023

Gross margin $ 289 $ 367

Stock compensation expense 2 3

Adjusted gross margin $ 291 $ 370

Gross margin % 73.9 % 60.6 %

Stock compensation expense 0.5 % 0.5 %

Adjusted gross margin % 74.4 % 61.1 %

Reconciliation of U.S.

GAAP operating expense for the nine months ended November 30, 2024 and November 30, 2023 to adjusted operating expense is reflected in the table below:

For the Nine Months Ended (in millions) November 30, 2024 November 30, 2023

Operating expense $ 282 $ 342

Restructuring charges 16 17

Stock compensation expense 14 22

Prior Debentures fair value adjustment

Acquired intangibles amortization 6 9

LLA impairment charge 4 9

Adjusted operating expense $ 242 $ 282

Adjusted corporate operating costs excluding amortization $ 9.7 $ 12.4

Reconciliation of U.S.

GAAP net loss and U.S.

GAAP basic loss per share for the nine months ended November 30, 2024 and November 30, 2023 to the adjusted net income (loss) and adjusted basic earnings (loss) per share is reflected in the table below:

For the Nine Months Ended (in millions, except per share amounts) November 30, 2024 November 30, 2023

Basic loss per share Basic earnings (loss) per share

Net loss $ (72) $ (0.12) $ (74) $ (0.13)

GAAP net income (loss) and U.S.

GAAP basic earnings (loss) per share for the three months ended May 31, 2025 and May 31, 2024 to 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) May 31, 2025 May 31, 2024

Basic earnings

per share Basic loss

Net income (loss) $ 1.9 $ 0.00 $ (41.4) $ (0.07)

Restructuring charges 2.9 7.3

Stock compensation expense 5.7 7.7

Prior Debentures fair value adjustment

Acquired intangibles amortization 1.7 8.6

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Reconciliation of U.S.

GAAP research and development, sales and marketing, general and administrative, and amortization expense for the nine months ended November 30, 2024 and November 30, 2023 to adjusted research and development, sales and marketing, general and administrative, and amortization expense is reflected in the table below:

For the Nine Months Ended (in millions) November 30, 2024 November 30, 2023

GAAP research and development, sales and marketing, general and administrative, and amortization expense for the three months ended May 31, 2025 and May 31, 2024 to adjusted research and development, sales and marketing, general and administrative, and amortization expense is reflected in the table below:

For the Three Months Ended (in millions) May 31, 2025 May 31, 2024

Research and development $ 25.0 $ 30.6

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Adjusted amortization expense $ 2.3 $ 2.9

Adjusted EBITDA from continuing and discontinued operations for the nine months ended November 30, 2024 and November 30, 2023 are reflected in the table below.

Adjusted operating income, adjusted EBITDA, adjusted operating income margin percentage and adjusted EBITDA margin percentage for the three months ended May 31, 2025 and May 31, 2024 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.

For the Nine Months Ended (in millions) November 30, 2024 November 30, 2023

Net loss $ (72) $ (74)

Non-GAAP adjustments to operating loss

For the Three Months Ended (in millions) May 31, 2025 May 31, 2024

Operating income (loss) $ 2.0 $ (12.9)

Non-GAAP adjustments to operating income (loss)

Restructuring charges 2.9 7.3

Stock compensation expense 5.7 6.2

Prior Debentures fair value adjustment

Acquired intangibles amortization 1.7 1.8

LLA impairment charge 0.1 3.5

Total non-GAAP adjustments to net loss 67 88

Total non-GAAP adjustments to operating income (loss) 10.4 18.8

Adjusted operating income 12.4 5.9

Amortization 5.7 6.4

Acquired intangibles amortization (1.7) (1.8)

Investment income, net (8) (15)

Provision for income taxes 16 20

Adjusted EBITDA from continuing and discontinued operations $ 16 $ 36

Adjusted EBITDA $ 16.4 $ 10.5

Revenue $ 121.7 $ 123.4

Adjusted operating income margin % (1)

Adjusted EBITDA margin % (2)

______________________________

(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.

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

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Reconciliation of U.S.

GAAP net cash used in operating activities for the three months ended November 30, 2024 and November 30, 2023 to free cash flow (usage) is reflected in the table below:

For the Three Months Ended (in millions) November 30, 2024 November 30, 2023

Net cash provided by (used in) operating activities $ 3 $ (31)

GAAP net cash used in operating activities for the three months ended May 31, 2025 and May 31, 2024 to free cash flow (usage) is reflected in the table below:

For the Three Months Ended (in millions) May 31, 2025 May 31, 2024

Net cash used in operating activities $ (18.0) $ (15.1)

Acquisition of property, plant and equipment (0.9) (1.4)

Free cash flow (usage) $ 3 $ (33)

Free cash usage $ (18.9) $ (16.5)

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

Each of Cybersecurity ARR, DBNRR, and recurring revenue percentage includes both continuing operations and discontinued operations.

Comparative breakdowns of certain key metrics for the three months ended or as at November 30, 2024 and November 30, 2023 are set forth below.

For the Three Months Ended (in millions) November 30, 2024 November 30, 2023 Change

Cybersecurity Annual Recurring Revenue $ 281 $ 273 $ 8

Readers are cautioned that Secure Communications annual recurring revenue (“ARR”) and Secure Communications dollar-based net retention rate (“DBNRR”) 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 or as at May 31, 2025 and May 31, 2024 are set forth below.

For the Three Months Ended (in millions) May 31, 2025 May 31, 2024 Change

Secure Communications Annual Recurring Revenue

Cybersecurity Dollar-Based Net Retention Rate 90 % 82 % 8 %

$ 209 $ 211 $ (2)

Secure Communications Dollar-Based Net Retention Rate

Recurring Software Product Revenue Percentage 80 % ~ 70 % 10 %

Annual Recurring Revenue

92 % 93 % (1 %)

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 previously used ARR as an indicator of business momentum for the Cybersecurity business and currently uses ARR as an indicator of business momentum for the Secure Communications business.

Cybersecurity ARR was approximately $281 million as at November 30, 2024 and increased compared to $279 million as at August 31, 2024 and increased compared to $273 million as at November 30, 2023.

Secure Communications ARR was approximately $215 million as at November 30, 2024 and increased compared to $209 million as at August 31, 2024 and increased compared to $199 million as at November 30, 2023.

Dollar-Based Net Retention Rate

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

The Company then calculates the Cybersecurity and Secure Communications 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 $209 million as at May 31, 2025 and increased compared to $208 million as at February 28, 2025 and decreased compared to $211 million as at May 31, 2024.

Secure Communications Dollar-Based Net Retention Rate

The Company calculates the Secure Communications DBNRR as of period end by first calculating th e 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 90% as at November 30, 2024 and increased compared to 88% as at August 31, 2024 and increased compared to 82% as at November 30, 2023.

Secure Communications DBNRR was 95% as at November 30, 2024 and increased compared to 93% as at August 31, 2024 and increased compared to 91% as at November 30, 2023.

Recurring Software Product Revenue Percentage

The Company defines recurring software product revenue percentage as recurring software product revenue divided by total software and 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 and 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 and services product revenue, excluding professional services, was approximately 80% recurring for the three months ended November 30, 2024 and was consistent with approximately 80% recurring for the three months ended August 31, 2024 and increased from approximately 70% for the three months ended November 30, 2023 due to product mix.

Results of Operations - Three months ended November 30, 2024 compared to the three months ended November 30, 2023

Secure Communications DBNRR was 92% as at May 31, 2025 and decreased compared to 93% as at February 28, 2025 and 93% as at May 31, 2024.

Results of Operations - Three months ended May 31, 2025 compared to the three months ended May 31, 2024

Revenue by Segment

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(in millions)

November 30, 2024 November 30, 2023 Change

May 31, 2025 May 31, 2024 Change

Revenue by Segment

QNX $ 57.5 $ 53.2 $ 4.3

Secure Communications 59.5 64.2 (4.7)

2 unchanged sentences

% Revenue by Segment

QNX 47.2 % 43.1 %

Secure Communications 48.9 % 52.0 %

IoT 43.4 % 36.2 %

Licensing 3.9 % 4.9 %

100.0 % 100.0 %

The increase in QNX revenue of $4.3 million was primarily due to an increase of $3.4 million in development seat revenue, an increase of $1.7 million in royalty revenue and an increase of $1.2 million in BlackBerry Radar revenue, partially offset by a decrease of $2.0 million in professional services.

The Company previously stated that it expected QNX revenue to be in the range of $51 million to $55 million in the first quarter of fiscal 2026.

QNX revenue in the first quarter of fiscal 2026 was $57.5 million due to better than expected development seat revenue.

The Company expects QNX revenue to be in the range of $55 million to $60 million in the second quarter of fiscal 2026.

Secure Communications

The decrease in Secure Communications revenue of $17 million was primarily due to a decrease of $17 million in product revenue in Secusmart, a decrease of $1 million of BlackBerry UEM licenses revenue and a decrease of $1 million in BlackBerry AtHoc, partially offset by an increase of $2 million in professional services.

The Company previously stated that it expected Cybersecurity revenue to be in the range of $86 million to $90 million in the third quarter of fiscal 2025.

Cybersecurity revenue (consisting of Secure Communications plus Cylance) was $93 million in the third quarter of fiscal 2025, higher than expected due to strong Secusmart revenue.

The Company expects Secure Communications revenue to be in the range of $62 million to $66 million in the fourth quarter of fiscal 2025.

The Company previously stated that it expected Cybersecurity revenue to be in the range of $345 million to $365 million in each of fiscal years 2026 and 2027.

Due to the reporting of the Cylance business as a discontinued operation, the Company is retracting this guidance.

The increase in IoT revenue of $7 million was primarily due to an increase of $5 million in BlackBerry QNX royalty revenue, an increase of $2 million in BlackBerry QNX development seat revenue, and an increase of $1 million in BlackBerry Radar, partially offset by a decrease of $2 million in professional services revenue.

The Company previously stated that it expected IoT revenue to be in the range of $56 million to $60 million in the third quarter of fiscal 2025.

IoT revenue was $62 million due to stronger than expected BlackBerry QNX royalty revenue.

The Company expects IoT revenue to be in the range of $60 million to $65 million in the fourth quarter of fiscal 2025.

The Company previously stated that it expected IoT revenue to be in the range of $225 million to $235 million in fiscal 2025.

The Company now expects IoT revenue to be in the range of $230 million to $235 million in fiscal 2025 due to stronger than expected BlackBerry QNX revenue in the first nine months of fiscal 2025.

The Company expects IoT revenue to be in the range of $260 million to $270 million in fiscal 2026 and to be in the range of $295 million to $305 million in fiscal 2027.

The increase in Licensing revenue was $1 million.

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.

Intellectual property licensing revenue was $7 million in the third quarter of fiscal 2025.

The Company expects Licensing revenue of $16 million in each of fiscal 2026 and fiscal 2027.

The decrease in Secure Communications revenue of $4.7 million was primarily due to a decrease of $3.0 million in Secusmart product revenue and a decrease of $2.7 million in BlackBerry UEM product revenue, partially offset by an increase of $1.0 million in professional services and an increase of $0.5 million in BlackBerry AtHoc.

The Company previously stated that it expected Secure Communications revenue to be in the range of $50 million to $54 million in the first quarter of fiscal 2026.

Secure Communications revenue in the first quarter of fiscal 2026 was $59.5 million primarily due to a stronger than expected Secusmart product revenue.

The Company previously stated that it expected Secure Communications revenue to be in the range of $230 million to $240 million in fiscal 2026.

The Company now expects Secure Communications revenue to be in the range of $234 million to $244 million in fiscal 2026 due to stronger than expected performance in the first quarter of the fiscal year and an increase in the pipeline of opportunities.

The Company expects Secure Communications revenue to be in the range of $54 million to $59 million in the second quarter of fiscal 2026.

The decrease in Licensing revenue of $1.3 million was primarily due to a decrease in revenue from the Company’s existing intellectual property licensing arrangements.

The Company previously stated that it expected Licensing revenue to be approximately $6 million in each of the four quarters of fiscal 2026.

Licensing revenue in the first quarter of fiscal 2026 was $4.7 million due to the reason stated above.

The Company continues to expect Licensing revenue of $6 million in the second quarter of fiscal 2026.

Total BlackBerry Revenue

The Company previously stated that it expected total BlackBerry revenue to be in the range of $146 million to $154 million in the third quarter of fiscal 2025.

Total BlackBerry revenue from both continuing and discontinued operations was $162 million in the third quarter of fiscal 2025, better than expected due to the reasons noted above.

The Company expects total BlackBerry revenue from continuing operations to be in the range of $126 million to $135 million in the fourth quarter of fiscal 2025.

The Company previously stated that it expected total BlackBerry revenue to be in the range of $591 million to $616 million in fiscal 2025, to be in the range of $620 million to $650 million in fiscal 2026 and to be in the range of $655 million to $685 million in fiscal 2027.

Due to the reporting of the Cylance business as a discontinued operation, the Company is retracting this guidance, and expects total BlackBerry revenue from continuing operations to be in the range of $517 million and $526 million for fiscal 2025 as a whole.

The Company previously stated that it expected total BlackBerry revenue to be approximately $107 million to $115 million in the first quarter of fiscal 2026.

Total BlackBerry revenue was $121.7 million in the first quarter of fiscal 2026, better than expected due to the reasons noted above in “Revenue by Segment”.

The Company expects total BlackBerry revenue to be in the range of $115 million to $125 million in the second quarter of fiscal 2026.

The Company previously stated that it expected total BlackBerry revenue to be in the range of $504 million to $534 million in fiscal 2026.

The Company now expects total BlackBerry revenue to be in the range of $508 million to $538 million in fiscal 2026 due to the change in expectation for Secure Communications revenue stated above.

Revenue by Geography

2 unchanged sentences

(in millions)

November 30, 2024 November 30, 2023 Change

May 31, 2025 May 31, 2024 Change

Revenue by Geography

9 unchanged sentences

North America Revenue

The increase in North America revenue of $1 million was primarily due to an increase of $2 million in BlackBerry Radar, partially offset by a decrease of $1 million in BlackBerry AtHoc.

The decrease in North America revenue of $1.4 million was primarily due to a decrease of $2.2 million in QNX royalty revenue, a decrease of $2.1 million in BlackBerry UEM product revenue and a decrease of $0.7 million in professional services, partially offset by an increase of $2.9 million in QNX development seat revenue and an increase of $1.0 million in BlackBerry Radar.

Europe, Middle East and Africa Revenue

The increase in Europe, Middle East and Africa revenue of $6 million was primarily due to an increase of $9 million relating to product revenue in Secusmart, partially offset by a decrease of $2 million in BlackBerry QNX royalty revenue, and a decrease of $1 million in BlackBerry UEM license revenue.

The decrease in Europe, Middle East and Africa revenue of $1.2 million was primarily due to a decrease of $2.9 million relating to Secusmart product revenue, a decrease of $0.5 million in professional services and a decrease of $0.3 million in BlackBerry UEM product revenue, partially offset by an increase of $2.0 million in QNX royalty revenue and an increase of $0.7 million in QNX development seat revenue.

Other Regions Revenue

The decrease in Other regions revenue of $16 million was primarily due to a decrease of $25 million relating to revenue from the Company’s agreement with the Government of Malaysia in the third quarter of fiscal 2024 that did not recur, partially offset by an increase of $4 million in QNX royalty revenue, an increase of $2 million in professional services and an increase of $2 million in BlackBerry QNX development seat revenue.

The increase in Other regions revenue of $0.9 million was primarily due to an increase of $1.9 million in QNX royalty revenue, partially offset by a decrease of $0.5 million in BlackBerry UEM product revenue and a decrease of $0.3 million in professional services.

Consolidated Gross Margin

Consolidated gross margin decreased by $7 million to approximately $112 million in the third quarter of fiscal 2025 (third quarter of fiscal 2024 - $119 million).

The decrease was primarily due to a decrease in revenue from Secusmart, partially offset by an increase in revenue from BlackBerry UEM and 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 increased by $0.3 million to $90.3 million in the first quarter of fiscal 2026 (first quarter of fiscal 2025 - $90.0 million).

The increase was primarily due to an increase in revenue from QNX due to the reasons discussed above in “Revenue by Segment”, partially offset by a decrease in revenue from Secure Communications and Licensing revenue, 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 was consistent at 78.3% of consolidated revenue in the third quarter of fiscal 2025 (third quarter of fiscal 2024 - 78.3%).

The Company previously stated that it expected consolidated gross margin percentage to be 71% in fiscal 2025, 73% in fiscal 2026 and 74% in fiscal 2027.

Due to the reporting of the Cylance business as a discontinued operation, the Company is retracting this guidance.

Gross Margin and EBITDA by Segment

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

Consolidated gross margin percentage increased by 1.3% to 74.2% in the first quarter of fiscal 2026 ((first quarter of fiscal 2025 -72.9%).

The increase was primarily due to a change in mix specifically a higher gross margin contribution from QNX.

Gross Margin and Adjusted EBITDA by Segment

See “First Quarter Fiscal 2026 Summary Results of Operations” for information about the Company’s operating segments and the basis of operating segment results.

For the Three Months Ended

(in millions)

Secure Communications IoT Licensing Segment Totals

November 30, Change November 30, Change November 30, Change November 30, Change

QNX Secure Communications Licensing Segment Totals

May 31, Change May 31, Change May 31, Change May 31, Change

2025 2024 2025 2024 2025 2024 2025 2024

7 unchanged sentences

Less amortization included in the above 0.7 0.5 0.2 0.6 1.0 (0.4) 2.3 2.2 0.1 3.6 3.7 (0.1)

Segment EBITDA $ 22 $ 33 $ (11) $ 18 $ 12 $ 6 $ 6 $ 2 $ 4 $ 46 $ 47 $ (1)

Segment adjusted EBITDA $ 12.7 $ 8.9 $ 3.8 $ 9.6 $ 9.3 $ 0.3 $ 3.8 $ 4.7 $ (0.9) $ 26.1 $ 22.9 $ 3.2

The increase in QNX gross margin of $2.6 million was primarily due to the reasons discussed above in “Revenue by Segment”.

The decrease in QNX gross margin percentage of 1% was primarily due to an increase in cost of sales related to BlackBerry Radar hardware devices.

The increase in QNX adjusted EBITDA of $3.8 million was primarily due to the reasons discussed above in “Revenue by Segment” 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 QNX.

The Company previously stated that it expected QNX adjusted EBITDA to be in the range of $2 million to $6 million in the first quarter of fiscal 2026.

QNX adjusted EBITDA was $12.7 million in the first quarter of fiscal 2026 due to the reasons discussed above.

The Company expects QNX adjusted EBITDA to be in the range of $10 million to $13 million in the second quarter of fiscal 2026.

Secure Communications

The decrease in Secure Communications gross margin of $1.0 million was primarily due to the reasons discussed above in “Revenue by Segment”.

The decrease in Secure Communications gross margin percentage of 2% was due to a decrease in revenue from Secusmart, which had a higher gross margin percentage in the third quarter of fiscal 2024 due to revenue recognized on the Company’s agreement with the Government of Malaysia that did not recur.

The decrease in Secure Communications EBITDA of $11 million was primarily due to the reasons discussed above in “Revenue by Segment”, partially offset by the decreases in salaries and benefits expense in research and development and sales and marketing.

Cybersecurity gross margin (consisting of Secure Communications plus Cylance) was 67% in the third quarter of fiscal 2025.

The Company expects Secure Communications EBITDA to be approximately $52 million for fiscal 2025 as a whole.

The Company previously stated that Cybersecurity segment EBITDA was expected to be $0 in fiscal 2025 as a whole, in the range of $25 million to $35 million in fiscal 2026 and in the range of $30 million to $40 million in fiscal 2027.

Due to the reporting of the Cylance business as a discontinued operation, the Company is retracting this guidance.

The Company previously stated that Cybersecurity segment gross margin was expected to be 62% in fiscal 2025, 65% in fiscal 2026 and 66% in fiscal 2027.

Due to the reporting of the Cylance business as a discontinued operation, the Company is retracting this guidance.

The increase in IoT gross margin of $6 million was primarily due to the reasons discussed above in “Revenue by Segment”.

IoT gross margin percentage of 85% was consistent with the third quarter of fiscal 2024.

The increase in IoT EBITDA of $6 million was primarily due to the reasons discussed above in “Revenue by Segment”.

The Company expects IoT EBITDA to be in the range of $40 million to $45 million in fiscal 2025, $55 million to $65 million in fiscal 2026, and $75 million to $80 million in fiscal 2027.

The Company expects IoT EBITDA margin percentage to be approximately 18% in fiscal 2025, 22% in fiscal 2026 and 26% in fiscal 2027.

Licensing gross margin of $5 million was consistent with the third quarter of fiscal 2024.

The decrease in Licensing gross margin percentage of 12% was due to an increase in patent amortization expense included in cost of sales.

The increase in Licensing EBITDA of $4 million was primarily due to a decrease in legal expense.

The Company expects Licensing EBITDA margin percentage to be approximately 65% in each of fiscal 2025, fiscal 2026 and fiscal 2027.

The increase in Secure Communications gross margin percentage of 4% was primarily due to a change in mix, specifically an increased gross margin contribution from Secusmart software licenses.

The increase in Secure Communications adjusted EBITDA of $0.3 million was primarily due to a decrease in salaries and benefits expense, partially offset by a decrease in revenue due to 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 $3 million to $6 million in the first quarter of fiscal 2026.

Secure Communications adjusted EBITDA was $9.6 million in the first quarter of fiscal 2026 due to revenue exceeding the top end of the Company’s expected range.

The Company previously stated that it expected Secure Communications adjusted EBITDA to be in the range of $34 million to $44 million in fiscal 2026.

The Company now expects Secure Communications adjusted EBITDA to be in the range of $37 million to $47 million in fiscal 2026 due to stronger than expected performance in the first quarter of the fiscal year and an increase in the pipeline of opportunities.

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

The decrease in Licensing gross margin of $1.5 million was primarily due to the reasons discussed above in “Revenue by Segment”.

The decrease in Licensing gross margin percentage of 11% was due to the same reason discussed above.

The decrease in Licensing adjusted EBITDA of $0.9 million was primarily due to the reasons discussed above in “Revenue by Segment”, partially offset by a decrease in legal expense.

The Company previously stated that it expected 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.

Licensing adjusted EBITDA was $3.8 million in the first quarter of fiscal 2026.

The Company expects Licensing adjusted EBITDA to be approximately $5 million in the second quarter of fiscal 2026.

Operating Expenses

The table below presents a comparison of research and development, sales and marketing, general and administrative, and amortization expenses for the quarter ended November 30, 2024, compared to the quarter ended August 31, 2024 and the quarter ended November 30, 2023.

The Company believes it is meaningful to provide a sequential comparison between the third quarter of fiscal 2025 and the second quarter of fiscal 2025.

The table below presents a comparison of research and development, sales and marketing, general and administrative, and amortization expenses for the quarter ended May 31, 2025, compared to the quarter ended February 28, 2025 and the quarter ended May 31, 2024.

The Company believes it is meaningful to provide a sequential comparison between the first quarter of fiscal 2026 and the fourth quarter of fiscal 2025.

For the Three Months Ended

(in millions)

November 30, 2024 August 31, 2024 November 30, 2023

May 31, 2025 February 28, 2025 May 31, 2024

Revenue $ 121.7 $ 141.7 $ 123.4

5 unchanged sentences

Impairment of long-lived assets 0.1 4.9 3.5

Prior Debentures fair value adjustment — — (13)

Litigation settlement — 2.8 —

Total $ 88.3 $ 112.1 $ 102.9

5 unchanged sentences

Impairment of long-lived assets 0.1 % 3.5 % 2.8 %

Prior Debentures fair value adjustment — % — % (8.6 %)

Litigation settlement — % 2.0 % — %

Total 72.6 % 79.1 % 83.4 %

See “Non-GAAP Financial Measures” for a reconciliation of selected U.S.

GAAP-based measures to adjusted measures for the three months ended November 30, 2024, August 31, 2024 and November 30, 2023.

GAAP-based measures to adjusted measures for the three months ended May 31, 2025, February 28, 2025 and May 31, 2024.

GAAP Operating Expenses

Operating expenses increased by $8 million sequentially, or 9.4%, in the third quarter of fiscal 2025, compared to the second quarter of fiscal 2025 primarily due to an increase of $6 million in restructuring costs, an increase of $1 million in the Company’s deferred share unit costs, and an increase of $1 million in marketing and advertising costs.

Operating expenses decreased by $8 million year-over-year, or 7.9%, in the third quarter of fiscal 2025, compared to the third quarter of fiscal 2024 primarily due to a decrease of $10 million in salaries and benefits expenses, a decrease of $8 million in impairment of long-lived assets, a decrease of $2 million in facilities cost, a decrease of $2 million in marketing and advertising costs, and a decrease of $2 million in amortization expense, partially offset by the fair value adjustment related to the Prior Debentures incurred in the third quarter of fiscal 2024 of $13 million which did not recur, and an increase of $4 million in the Company’s deferred share unit costs.

Operating expenses decreased by $23.8 million sequentially, or 21.2%, in the first quarter of fiscal 2026, compared to the fourth quarter of fiscal 2025 primarily due to a decrease of $8.5 million in restructuring costs, a decrease of $5.5 million in credit loss provision, a decrease of $5.0 million in the Company’s deferred share unit costs, a decrease of $4.8 million in impairment of long-lived asset impairment, and a decrease of $2.8 million in litigation settlement, partially offset by an increase of $2.9 million in variable incentive plan costs.

Operating expenses decreased by $14.6 million year-over-year, or 14.2%, in the first quarter of fiscal 2026, compared to the first quarter of fiscal 2025 primarily due to a decrease of $4.4 million in restructuring costs, an increase in benefits of $4.5 million from SIF claims filed, a decrease of $3.4 million in impairment of long-lived asset impairment, a decrease of $2.0 million in variable incentive plan costs and a decrease of $1.5 million in the Company’s deferred share unit costs, partially offset by an increase of $1.1 million in sales incentive plan costs.

Adjusted Operating Expenses

Adjusted operating expenses increased by $2 million sequentially, or 2.6%, to $79 million in the third quarter of fiscal 2025 compared to $77 million in the second quarter of fiscal 2025.

The increase was primarily due to an increase of $1 million in the Company’s deferred share unit costs, an increase of $1 million in marketing and advertising costs, and an increase of $1 million in sales incentive plan costs.

Adjusted operating expenses decreased by $9 million year-over-year, or 10.2%, to $79 million in the third quarter of fiscal 2025, compared to $88 million in the third quarter of fiscal 2024.

The decrease was primarily due to a decrease of $10 million in salaries and benefits expenses, a decrease of $2 million in facilities cost, a decrease of $2 million in marketing and advertising costs, and a decrease of $1 million in amortization expense, partially offset by an increase of $4 million in the Company’s deferred share unit costs.

The Company previously stated that it expected its average quarterly non-GAAP operating expense run rate to be approximately $110 million in fiscal 2025.

Non-GAAP operating expense was $101 million in the third quarter of fiscal 2025.

Due to the reporting of the Cylance business as a discontinued operation, the Company is retracting this guidance.

Adjusted operating expenses decreased by $9.0 million sequentially, or 10.3%, to $78.4 million in the first quarter of fiscal 2026 compared to $87.4 million in the fourth quarter of fiscal 2025.

The decrease was primarily due to a decrease of $5.5 million in credit loss provision and a decrease of $5.0 million in the Company’s deferred share unit costs, partially offset by an increase of $2.9 million in variable incentive plan costs.

Adjusted operating expenses decreased by $6.4 million year-over-year, or 7.5%, to $78.4 million in the first quarter of fiscal 2026, compared to $84.8 million in the first quarter of fiscal 2025.

The decrease was primarily due to an increase in benefits of $4.5 million from SIF claims filed, a decrease of $2.0 million in variable incentive plan costs and a decrease of $1.5 million in the Company’s deferred share unit costs, partially offset by an increase of $1.1 million in sales incentive plan costs.

Adjusted Corporate operating costs is defined as the portion of the Company’s total adjusted operating costs that is not attributable to any of the three operating segments.

The Company previously stated that it expected adjusted Corporate operating costs to be approximately $10 million in the first quarter of fiscal 2026.

Adjusted Corporate operating costs including amortization was $10.1 million and adjusted Corporate operating costs excluding amortization was $9.7 million in the first quarter of fiscal 2026.

The Company expects adjusted Corporate operating costs excluding amortization to be approximately $10 million in the second quarter of fiscal 2026 and approximately $40 million in fiscal 2026 as a whole.

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 $2 million, or 6.9%, in the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024 primarily due to a decrease of $4 million in salaries and benefits expense, and a decrease of $1 million in consulting expenses, and a decrease of $1 million in infrastructure costs, partially offset by an increase of $4 million in variable incentive plan costs.

Adjusted research and development expenses decreased by $1 million, or 3.7%, to $26 million in the third quarter of fiscal 2025 compared to $27 million the third quarter of fiscal 2025, primarily due to the same reasons described above on a U.S.

Research and development expenses decreased by $5.6 million, or 18.3%, in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025 primarily due to an increase in benefits of $4.5 million from SIF claims filed and a decrease of $1.0 million in salaries and benefits expense.

Adjusted research and development expenses decreased by $5.1 million, or 17.7%, to $23.7 million in the first quarter of fiscal 2026 compared to $28.8 million the first quarter of fiscal 2025, 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 $2 million, or 8.0%, in the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024, primarily due to a decrease of $2 million in salaries and benefits expense and a decrease of $1 million in marketing and advertising costs.

Adjusted sales and marketing expenses decreased by $3 million, or 12.0%, to $22 million in the third quarter of fiscal 2025 compared to $25 million in the third quarter of fiscal 2024.

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

Sales and marketing expenses increased by $4.9 million, or 20.6%, in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025, primarily due to an increase of $1.9 million in salaries and benefits expense, an increase of $1.1 million in sales incentive plan costs and an increase of $1.1 million in marketing expense.

Adjusted sales and marketing expenses increased by $4.3 million, or 18.7%, to $27.3 million in the first quarter of fiscal 2026 compared to $23.0 million in the first quarter of fiscal 2025.

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

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 decreased by $7 million, or 15.6%, in the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024.

The decrease was primarily due to a decrease of $6 million in legal expense, a decrease of $5 million in salaries and benefits, a decrease of $2 million in facilities cost, and a decrease of $2 million in stock compensation expense, partially offset by an increase of $4 million in the Company’s deferred share unit costs, and an increase of $3 million in variable incentive plan cost.

Adjusted general and administrative expenses decreased by $3 million, or 9.4%, to $29 million in the third quarter of fiscal 2025 compared to $32 million in the third quarter of fiscal 2024.

The decrease was primarily due to a decrease of $6 million in legal expense, a decrease of $4 million in salaries and benefits expense, and a decrease of $2 million in facilities cost, partially offset by an increase of $4 million in the Company’s deferred share unit costs, and an increase of $3 million in variable incentive plan cost.

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

General and administrative expenses decreased by $9.8 million, or 24.3%, in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025.

The decrease was primarily due to a decrease of $4.4 million in restructuring costs, a decrease of $1.5 million in the Company’s deferred share unit costs, a decrease of $1.2 million in facilities cost and a benefit of $1.1 million relating to costs recovered under a transition service agreement related to the Company’s sale of Cylance in the fourth quarter of fiscal 2025.

Adjusted general and administrative expenses decreased by $5.0 million, or 16.6%, to $25.1 million in the first quarter of fiscal 2026 compared to $30.1 million in the first quarter of fiscal 2025.

The decrease was primarily due to a decrease of $1.5 million in the Company’s deferred share unit costs, a decrease of $1.2 million in facilities cost and a benefit of $1.1 million from expenses recovered under the transition service agreement mentioned above.

Amortization Expense

The table below presents a comparison of amortization expense relating to property, plant and equipment and intangible assets recorded as amortization or cost of sales for the quarter ended November 30, 2024 compared to the quarter ended November 30, 2023.

The table below presents a comparison of amortization expense relating to property, plant and equipment and intangible assets recorded as amortization or cost of sales for the quarter ended May 31, 2025 compared to the quarter ended May 31, 2024.

Intangible assets are comprised of patents, licenses and acquired technology.

2 unchanged sentences

Included in Operating Expense

November 30, 2024 November 30, 2023 Change

May 31, 2025 May 31, 2024 Change

Property, plant and equipment $ 1.4 $ 2.0 $ (0.6)

2 unchanged sentences

Included in Cost of Sales

November 30, 2024 November 30, 2023 Change

May 31, 2025 May 31, 2024 Change

Property, plant and equipment $ 0.1 $ 0.2 $ (0.1)

Intangible assets 1.6 1.5 0.1

Total $ 1.7 $ 1.7 $ —

Amortization included in Operating Expense

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 decreased by $2 million to $2 million in the third quarter of fiscal 2025 compared to $4 million in the third quarter of fiscal 2024 was primarily due to the lower cost base of assets.

Adjusted amortization expense decreased by $0.6 million to $2.3 million in the first quarter of fiscal 2026 compared to $2.9 million in the first quarter of fiscal 2025 primarily due to the lower cost base of assets.

Amortization included in Cost of Sales

Amortization expense relating to certain property, plant and equipment and certain intangible assets employed in the Company’s service operations decreased by $2 million to $2 million in the third quarter of fiscal 2025 compared to $1 million in the third quarter of fiscal 2024 due to an increase in patent amortization expense included in cost of sales.

Amortization expense relating to certain intangible assets employed in the Company’s licensing operations was $1.7 million in the first quarter of fiscal 2026 and was consistent with the first quarter of fiscal 2025.

Investment Income, Net

Investment income, net, which includes the interest expense from the Debentures (as defined in “Financial Condition - Debt Financing and Other Funding Sources”), was nil in the third quarter of fiscal 2025 and decreased by $5 million from investment income, net of $5 million in the third quarter of fiscal 2024 primarily due to unrealized losses recognized from observable price changes on non-marketable equity investments without readily determinable fair value in the third quarter of fiscal 2025 and a lower yield on cash and investments.

For the third quarter of fiscal 2025, the Company’s net effective income tax expense rate was approximately 175% (third quarter of fiscal 2024 - net effective income tax expense rate of approximately 250%).

Investment income, net, which includes the interest expense from the Notes, was $2.9 million in the first quarter of fiscal 2026 and decreased by $1.1 million from investment income, net of $4.0 million in the first quarter of fiscal 2025.

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

For the first quarter of fiscal 2026, the Company’s net effective income tax expense rate was approximately 61.2% (first quarter of fiscal 2025 - net effective income tax expense rate of approximately 22.5%).

2 unchanged sentences

Net Income (Loss)

The Company’s net income from continuing operations for the third quarter of fiscal 2025 was $12 million, or $0.02 basic and diluted earnings per share on a U.S.

GAAP basis (third quarter of fiscal 2024 - net income from continuing operations of $8 million, or $0.01 basic earnings per share and $0.01 diluted loss per share).

The increase in net income of $4 million was primarily due to 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”.

The Company’s net loss from discontinued operations for the third quarter of fiscal 2025 was $23 million, or $0.04 basic and diluted loss per share on a U.S.

GAAP basis (third quarter of fiscal 2024 - net loss from discontinued operations of $29 million, or $0.05 basic loss per share and $0.06 diluted loss per share).

The decrease in net loss of $6 million was primarily due to a decrease in operating expenses primarily due to a decrease in salaries and benefits expense, partially offset by a decrease in revenue in Cylance cybersecurity solutions.

Adjusted net income was $12 million in the third quarter of fiscal 2025, or $0.02 adjusted basic loss per share (third quarter of fiscal 2024 - adjusted net income of $3 million, or $0.01 adjusted basic loss per share).

The Company’s net income for the first quarter of fiscal 2026 was $1.9 million, or $0.00 basic and diluted earnings per share on a U.S.

GAAP basis (first quarter of fiscal 2025 - net loss $41.4 million, or $0.07 basic and diluted loss per share).

The period over period change of $43.3 million was primarily due to 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 $12.3 million in the first quarter of fiscal 2026, or $0.02 adjusted basic earnings per share (first quarter of fiscal 2025 - adjusted net loss of $14.3 million, or 0.02 adjusted basic loss per share).

The increase in adjusted net income of $26.6 million was primarily due to the same reasons described above on a U.S.

The Company previously stated that it expected a sequential improvement in operating cash flow in the third quarter of fiscal 2025.

Operating cash flow usage was $3 million in the third quarter of fiscal 2025 and improved sequentially compared to the second quarter of fiscal 2025.

The Company previously stated that it expected non-GAAP EPS to be in the range of ($0.01) to $0.01, adjusted EBITDA to be in the range of breakeven to $10 million and adjusted EBITDA to improve sequentially in the third quarter of fiscal 2025.

Non-GAAP EPS was $0.02 and adjusted EBITDA was $23 million in the third quarter of fiscal 2025 due to strong revenue and lower-than-expected operating costs and improved sequentially in the third quarter of fiscal 2025.

The Company previously stated it expected adjusted EBITDA to be in the range of $0 million to $10 million in fiscal 2025, to be in the range of $50 million to $65 million in fiscal 2026 and to be in the range of $80 million to $95 million in fiscal 2027.

Due to the reporting of the Cylance business as a discontinued operation, the Company is retracting this guidance.

The Company now expects 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.

The Company previously stated it expected adjusted EBITDA margin percentage to be 2% in fiscal 2025, 10% in fiscal 2026 and 14% in fiscal 2027.

Due to the reporting of the Cylance business as a discontinued operation, the Company is retracting this guidance.

The Company expects the impact to adjusted EBITDA from its Corporate functions to be approximately $48 million in fiscal 2025, $40 million in fiscal 2026, and $35 million in fiscal 2027.

The Company expects non-GAAP EPS to be in the range of ($0.01) and $0.01 in the fourth quarter of fiscal 2025.

The Company previously stated that it expected non-GAAP EPS to be in the range of ($0.05) to ($0.02) for fiscal 2025 as a whole.

Due to the reporting of the Cylance business as a discontinued operation, the Company is retracting this guidance and now expects non-GAAP EPS to be in the range of ($0.02) to breakeven for fiscal 2025.

The Company does not provide a reconciliation of expected adjusted EBITDA and expected Non-GAAP basic EPS for the fourth quarter and full fiscal year 2025 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.

The Company previously stated that it expected adjusted EBITDA to be in the range of break-even to $7 million in the first quarter of fiscal 2026.

Adjusted EBITDA was $16.4 million in the first quarter of fiscal 2026 due to QNX and Secure Communications exceeding the top end of their expected ranges.

The Company previously stated that it expected non-GAAP EPS to be in the range of ($0.01) to breakeven in the first quarter of fiscal 2026.

Non-GAAP EPS was $0.02 in the first quarter of fiscal 2026 due to QNX and Secure Communications exceeding the top end of their expected ranges.

The Company previously stated that it expected operating cash usage to be in the range of $20 million to $30 million in the first quarter of fiscal 2026.

Operating cash usage was $18.0 million in the first quarter of fiscal 2026.

The Company expects adjusted EBITDA to be in the range of $8 to $14 million in the second quarter of fiscal 2026.

The Company previously stated that it expected adjusted EBITDA to be in the range of $69 million to $84 million in fiscal 2026 as a whole.

The Company now expects adjusted EBITDA to be in the range of $72 million to $87 million in fiscal 2026 as a whole due to the change in expectation for Secure Communications adjusted EBITDA, as described above in “Gross Margin and Adjusted EBITDA by Segment”.

The Company expects non-GAAP EPS to be in the range of breakeven to $0.01 in the second quarter of fiscal 2026.

The Company expects operating cash usage to be in the range of $5 million to $15 million in the second quarter of fiscal 2026.

The Company expects to generate positive operating cash flow in the second half of the fiscal year.

The Company does not provide a reconciliation of expected adjusted EBITDA and expected non-GAAP basic EPS for the second quarter of 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 591 million common shares for basic and diluted loss per share for the third quarter of fiscal 2025 (third quarter of fiscal 2024 - 584 million common shares for basic and diluted loss per share).

Results of Operations - Nine months ended November 30, 2024 compared to the nine months ended November 30, 2023

The following section sets forth certain consolidated statements of operations data, which is expressed in millions of dollars, except for share and per share amounts and as a percentage of revenue, for the nine months ended November 30, 2024 and November 30, 2023:

For the Nine Months Ended

(in millions, except for share and per share amounts)

November 30, 2024 November 30, 2023 Change

Revenue $ 391 $ 606 $ (215)

Gross margin 289 367 (78)

Operating expenses 282 342 (60)

Investment income, net 8 15 (7)

Loss before income taxes 15 40 (25)

Provision for income taxes 16 20 (4)

Income from continuing operations (1) 20 (21)

Loss from discontinued operations (71) (94) 23

Net loss $ (72) $ (74) $ 2

Earnings per share - reported

Basic $ — $ 0.03 $ (0.03)

Diluted $ — $ 0.03 $ (0.03)

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

Basic 590,537 583,559

590,537 590,013

______________________________

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

GAAP basis for the first nine months of fiscal 2025 does 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 for the first nine months of fiscal 2024 does not include the dilutive effect of the 2020 Debentures as to do so would be anti-dilutive.

Diluted loss per share on a U.S.

GAAP basis for the first nine months of fiscal 2025 does not include the dilutive effect of stock-based compensation as to do so would be anti-dilutive.

Revenue by Segment

Comparative breakdowns of revenue by segment are set forth below.

For the Nine Months Ended

(in millions)

November 30, 2024 November 30, 2023 Change

Revenue by Segment

Secure Communications $ 205 $ 212 $ (7)

IoT 170 149 21

Licensing 16 245 (229)

$ 391 $ 606 $ (215)

% Revenue by Segment

Secure Communications 52.4 % 35.0 %

IoT 43.5 % 24.6 %

Licensing 4.1 % 40.4 %

100.0 % 100.0 %

Secure Communications

The decrease in Secure Communications revenue of $7 million was primarily due to a decrease of $15 million in BlackBerry UEM license revenue, partially offset by an increase of $5 million in professional services revenue, an increase of $2 million in BlackBerry AtHoc, and an increase of $2 million relating to product revenue in Secusmart.

The increase in IoT revenue of $21 million was primarily due to an increase of $20 million in BlackBerry QNX royalty revenue, and an increase of $4 million in BlackBerry Radar, partially offset by a decrease of $2 million in BlackBerry QNX development seat revenue.

The decrease in Licensing revenue of $229 million was primarily due to $218 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 $11 million in revenue from the Company’s intellectual property licensing arrangements.

GAAP Revenue by Geography

Comparative breakdowns of the geographic regions on a U.S.

GAAP basis are set forth in the following table:

For the Nine Months Ended

(in millions)

November 30, 2024 November 30, 2023 Change

Revenue by Geography

North America $ 177 $ 418 $ (241)

Europe, Middle East and Africa 141 116 25

Other regions 73 72 1

$ 391 $ 606 $ (215)

% Revenue by Geography

North America 45.3 % 69.0 %

Europe, Middle East and Africa 36.0 % 19.2 %

Other regions 18.7 % 11.9 %

100.0 % 100.0 %

North America Revenue

The decrease in North America revenue of $241 million was primarily due to a decrease of $228 million associated with the Company’s patent sale in the nine months ended fiscal 2024, which was a one-time event, a decrease of $15 million in BlackBerry UEM license revenue, and a decrease of $3 million relating to product revenue in Secusmart, partially offset by an increase of $4 million in BlackBerry Radar and an increase of $1 million in BlackBerry AtHoc.

Europe, Middle East and Africa Revenue

The increase in Europe, Middle East and Africa revenue of $25 million was primarily due to an increase of $26 million relating to product revenue in Secusmart, an increase of $1 million in BlackBerry QNX royalty revenue, an increase of $1 million in BlackBerry AtHoc, and an increase of $1 million in professional services revenue, partially offset by a decrease of $3 million BlackBerry UEM license revenue.

Other Regions Revenue

The increase in other regions of $1 million was primarily due to an increase of $10 million in professional services, an increase of $9 million relating to BlackBerry QNX royalty revenue, an increase of $4 million in BlackBerry QNX development seat revenue, and an increase of $2 million in BlackBerry UEM license revenue, partially offset by a decrease of $24 million relating to the Company’s agreement with the Government of Malaysia in third quarter of fiscal 2024 which did not recur.

Consolidated Gross Margin

Consolidated gross margin decreased by $78 million to approximately $289 million in the first nine months of fiscal 2025 (first nine months of fiscal 2024 - $367 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 decrease in product revenue in Secusmart, 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 increased by 13.3%, to approximately 73.9% of consolidated revenue in the first nine months of fiscal 2025 (first nine months of fiscal 2024 - 60.6%).

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

Gross Margin by Segment

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

For the Nine Months Ended

(in millions)

Secure Communications IoT Licensing Segment Totals

November 30, Change November 30, Change November 30, Change November 30, Change

2024 2023 2024 2023 2024 2023 2024 2023

Segment revenue $ 205 $ 212 $ (7) $ 170 $ 149 $ 21 $ 16 $ 245 $ (229) $ 391 $ 606 $ (215)

Segment cost of sales 67 62 5 28 24 4 5 150 (145) 100 236 (136)

Segment gross margin $ 138 $ 150 $ (12) $ 142 $ 125 $ 17 $ 11 $ 95 $ (84) $ 291 $ 370 $ (79)

Segment gross margin % 67 % 71 % (4 %) 84 % 84 % — % 69 % 39 % 30 % 74 % 61 % 13 %

Segment research and development 36 44 (8) 47 49 (2) — — — 83 93 (10)

Segment sales and marketing 34 45 (11) 32 31 1 — — — 66 76 (10)

Segment general and administrative 30 35 (5) 25 32 (7) 5 19 (14) 60 86 (26)

Less amortization included in the above 3 4 (1) 2 2 — 6 8 (2) 11 14 (3)

Segment EBITDA $ 41 $ 30 $ 11 $ 40 $ 15 $ 25 $ 12 $ 84 $ (72) $ 93 $ 129 $ (36)

Secure Communications

The decrease in Secure Communications gross margin of $12 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 the first nine months of fiscal 2024 due to revenue recognized on the Company’s agreement with the Government of Malaysia that did not recur.

The decrease in Secure Communications gross margin percentage of 4% was primarily due to the same reasons discussed above.

The increase in Secure Communications EBITDA of $11 million was primarily due primarily due to the decreases in salaries and benefits expense in research and development and sales and marketing, partially offset by the reasons discussed above in “Revenue by Segment”.

The increase of IoT gross margin of $17 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.

IoT gross margin percentage of 84% was consistent with the first nine months of fiscal 2024.

The increase of IoT EBITDA of $25 million was primarily due to the reasons discussed above in “Revenue by Segment” and a decrease in facilities costs and a decrease in consulting costs.

The decrease in Licensing gross margin of $84 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 30% was primarily due to the same reason discussed above.

The decrease in Licensing EBITDA of $72 million was primarily due to the same reason discussed above, partially offset by a decrease in legal expense.

Operating Expenses

The table below presents a comparison of research and development, selling, marketing and administration, and amortization expense for the nine months ended November 30, 2024, compared to the nine months ended November 30, 2023.

For the Nine Months Ended

(in millions)

November 30, 2024 November 30, 2023 Change

Revenue $ 391 $ 606 $ (215)

Operating expenses

Research and development 85 98 (13)

Sales and marketing 68 77 (9)

General and administrative 111 133 (22)

Amortization 14 22 (8)

Impairment of long-lived assets 4 9 (5)

Prior Debentures fair value adjustment — 3 (3)

Total $ 282 $ 342 $ (60)

Operating Expense as % of Revenue

Research and development 21.7 % 16.2 %

Sales and marketing 17.4 % 12.7 %

General and administrative 28.4 % 21.9 %

Amortization 3.6 % 3.6 %

Impairment of long-lived assets 1.0 % 1.5 %

Prior Debentures fair value adjustment — % 0.5 %

Total 72.1 % 56.4 %

See “Non-GAAP Financial Measures” for a reconciliation of selected U.S.

GAAP-based measures to adjusted measures for the nine months ended November 30, 2024 and November 30, 2023.

GAAP Operating Expenses

Operating expenses decreased by $60 million, or 17.5%, in the first nine months of fiscal 2025, compared to the first nine months of fiscal 2024.

The decrease was primarily due to a decrease of $31 million in salaries and benefits expense, a decrease of $11 million in legal expense, a decrease of $8 million in amortization costs, a decrease of $8 million in stock compensation costs, a decrease of $8 million in facilities costs, a decrease of $5 million in impairment of long-lived assets, a decrease of $7 million in consulting expense, and a decrease of $4 million in credit loss provision, partially offset by an increase of $17 million related to the release of an accrued liability relating to the Company’s legacy mobile device business in the first nine months of fiscal 2024 which did not recur and an increase of $10 million in variable incentive plan cost.

Adjusted Operating Expenses

Adjusted operating expenses decreased by $40 million, or 14.2%, to $242 million in the first nine months of fiscal 2025, compared to $282 million the first nine months of 2024.

The decrease was primarily due to a decrease of $31 million in salaries and benefits expense, a decrease of $11 million in legal expense, a decrease of $8 million in facilities costs, a decrease of $7 million in consulting expense, a decrease of $4 million in amortization costs, and a decrease of $4 million in credit loss provision, partially offset by an increase of $17 million related to the release of an accrued liability relating to the Company’s legacy mobile device business in the first nine months of fiscal 2024 which did not recur and an increase of $10 million in variable incentive plan cost.

Research and Development Expenses

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

Research and development expenses decreased by $13 million, or 13.3%, in the first nine months of fiscal 2025, compared to the first nine months of fiscal 2024.

The decrease was primarily due to a decrease of $10 million in salaries and benefits expenses, and a decrease of $6 million in consulting costs, partially offset by an increase of $7 million in variable incentive plan cost.

Adjusted research and development expenses decreased by $11 million, or 12.0%, to $81 million in the first nine months of fiscal 2025, compared to $92 million in the first nine months of fiscal 2024.

The decrease was 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 $9 million, or 11.7%, in the first nine months of fiscal 2025 compared to the first nine months of fiscal 2024.

The decrease was primarily due to a decrease of $8 million in salaries, and benefits and a decrease of $1 in variable incentive plan cost.

Adjusted sales and marketing expenses decreased by $9 million, or 12.0%, to $66 million in fiscal 2025 compared to $75 million in fiscal 2024.

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

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 decreased by $22 million, or 16.5%, in the first nine months of fiscal 2025 compared to the first nine months of fiscal 2024.

The decrease was primarily due to a decrease of $13 million in salaries and benefits expenses, a decrease of $11 million in legal expense, a decrease of $6 million in stock compensation costs, a decrease of $8 million in facilities cost, a decrease of $4 million in credit loss provision, and a decrease of $1 million in restructuring costs, partially offset by an increase of $17 million related to the release of an accrued liability relating to the Company’s legacy mobile device business in the first nine months of fiscal 2024 which did not recur.

Adjusted general and administrative expenses decreased by $15 million, or 14.7%, to $87 million in fiscal 2025 compared to $102 million in fiscal 2024.

The decrease was primarily due to a decrease of $13 million in salaries and benefits expenses, a decrease of $11 million in legal expense, a decrease of $8 million in facilities cost, and a decrease of $4 million in credit loss provision, partially offset by an increase of $17 million related to the release of an accrued liability relating to the Company’s legacy mobile device business in the first nine months of fiscal 2024, which did not recur.

Amortization Expense

The table below presents a comparison of amortization expense relating to property, plant and equipment and intangible assets recorded as amortization or cost of sales for the nine months ended November 30, 2024 compared to the nine months ended November 30, 2023.

Intangible assets are comprised of patents, licenses and acquired technology.

For the Nine Months Ended

(in millions)

Included in Operating Expense

November 30, 2024 November 30, 2023 Change

Property, plant and equipment $ 6 $ 6 $ —

Intangible assets 8 16 (8)

Total $ 14 $ 22 $ (8)

Included in Cost of Sales

November 30, 2024 November 30, 2023 Change

Property, plant and equipment $ — $ 2 $ (2)

Intangible assets 5 2 3

Total $ 5 $ 4 $ 1

Amortization included in Operating Expense

The decrease in amortization expense included in operating expense of $8 million was primarily due to the lower cost base of acquired technology assets.

Adjusted amortization expense decreased by $5 million to $8 million in the first nine months of fiscal 2025 compared to $13 million in the first nine months of fiscal 2024 due to the same reasons described above.

Amortization included in Cost of Sales

Amortization expense relating to certain property, plant and equipment and certain intangible assets employed in the Company’s service operations increased by $1 million to $5 million in the first nine months of fiscal 2025 compared to $4 million in the first nine months of fiscal 2024 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, was $8 million in the first nine months of fiscal 2025 and decreased by $7 million from $15 million in the first nine months of fiscal 2024 primarily due to a lower average cash and investment balance.

For the first nine months of fiscal 2025, the Company’s net effective income tax expense rate was approximately 29% (first nine months of fiscal 2024 - net effective income tax expense rate of approximately 37%).

The Company’s net effective income tax rate reflects the change in unrecognized income tax benefits, if any, and the fact that the Company has a significant valuation allowance against its deferred tax assets, and in particular, the change in loss carry forwards, research and development credits, amongst other items, was offset by a corresponding adjustment of the valuation allowance.

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

Net Income (loss)

The Company’s net loss from continuing operations for the first nine months of fiscal 2025 was $1 million, or $0.00 basic and diluted loss per share on a U.S.

GAAP basis (first nine months of fiscal 2024 - net income from continuing operations of $20 million, or $0.03 basic and diluted earnings per share).

The decrease in net income of $21 million 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”.

The Company’s net loss from discontinued operations for the first nine months of fiscal 2025 was $71 million, or $0.12 basic and diluted loss per share on a U.S.

GAAP basis (first nine months of fiscal 2024 - net loss from discontinued operations of $94 million, or $0.16 basic and diluted loss per share).

The decrease in net loss of $21 million was primarily due to a decrease in operating expenses primarily due to a decrease in salaries and benefits expense, partially offset by a decrease in revenue.

Adjusted net loss was $5 million in the first nine months of fiscal 2025 or $0.01 adjusted basic loss per share (first nine months of fiscal 2024 - adjusted net income of $14 million, or $0.02 adjusted basic earnings per share).

The decrease in adjusted net income of $19 million was primarily due to the same reasons described above on a U.S.

The weighted average number of shares outstanding was 591 million for basic and diluted loss per share for the first nine months of November 30, 2024.

The weighted average number of shares outstanding was 584 million for basic and 590 million for diluted loss per share for the first nine months of November 30, 2023.

Common Shares Outstanding

On December 17, 2024, there were 592 million voting common shares, options to purchase 0.2 million voting common shares, 17 million restricted share units and 2 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.

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

The weighted average number of shares outstanding was 596.3 million common shares for basic earnings per share and 600.8 million common shares for diluted earnings per share for the first quarter of fiscal 2026 (first quarter of fiscal 2025 - 589.8 million common shares for basic and diluted loss per share).

The weighted average number of shares outstanding includes the cumulative effects of share repurchases pursuant to the NCIB (as defined below) during the quarter ended May 31, 2025.

Financial Condition

Liquidity and Capital Resources

Cash, cash equivalents, and investments decreased by $32 million to $266 million as at November 30, 2024 from $298 million as at February 29, 2024, primarily due to changes in working capital.

Cash, cash equivalents, and investments decreased by $28.4 million to $381.9 million as at May 31, 2025 from $410.3 million as at February 28, 2025, primarily due to changes in working capital.

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

(in millions)

November 30, 2024 February 29, 2024 Change

May 31, 2025 February 28, 2025 Change

Cash and cash equivalents $ 276.0 $ 266.7 $ 9.3

2 unchanged sentences

Long-term investments (1)

58.8 58.9 (0.1)

Cash, cash equivalents, and investments $ 381.9 $ 410.3 $ (28.4)

______________________________

(1) Includes equity investments in private companies, including common shares of Arctic Wolf which are illiquid securities without a public market and, as such, they cannot be readily sold or exchanged for cash.

The table below summarizes the current assets, current liabilities, and working capital of the Company:

(in millions)

November 30, 2024 February 29, 2024 Change

May 31, 2025 February 28, 2025 Change

Current assets $ 533.2 $ 591.5 $ (58.3)

2 unchanged sentences

Current Assets

The decrease in current assets of $53 million at the end of the third quarter of fiscal 2025 from the end of the fourth quarter of fiscal 2024 was primarily due to a decrease in short term investments of $31 million, a decrease in accounts receivable, net of allowance of $18 million, and a decrease in other receivables of $13 million, partially offset by an increase in cash and cash equivalents of $14 million, an increase in other current assets of $7 million and an increase in income taxes receivable of $1 million.

At November 30, 2024, accounts receivable, net of allowance was $161 million, a decrease of $18 million from February 29, 2024.

The decrease was primarily due to lower revenue recognized over the three months ended November 30, 2024 compared to the three months ended February 29, 2024 and a decrease in days sales outstanding to 91 days at the end of the third quarter of fiscal 2025 from 100 days at the end of the fourth quarter of fiscal 2024.

At November 30, 2024, other receivables were $6 million, a decrease of $13 million from February 29, 2024.

The decrease was primarily due to the reclassification of $13 million in other receivables to long-term assets.

At November 30, 2024, other current assets were $39 million, an increase of $7 million from February 29, 2024.

The increase was primarily due to an increase of $2 million in inventory and an increase of $1 million in prepaid software maintenance.

At November 30, 2024, income taxes receivables were $5 million, an increase of $1 million from February 29, 2024.

The decrease in current assets of $58.3 million at the end of the first quarter of fiscal 2026 from the end of the fourth quarter of fiscal 2025 was primarily due to a decrease of $43.8 million in accounts receivable, net of allowance and a decrease of $40.5 million in short term investments, partially offset by an increase of $13.3 million in other current assets, an increase of $9.3 million in cash and cash equivalents, an increase of $3.3 million in other receivables and an increase of $0.1 million in income taxes receivable.

At May 31, 2025, accounts receivable, net of allowance was $129.9 million, a decrease of $43.8 million from February 28, 2025.

The decrease was primarily due to the collection of a significant receivable from the Government of Malaysia and lower revenue recognized over the three months ended May 31, 2025 compared to the three months ended February 28, 2025, partially offset by a reclassification from long-term receivable to accounts receivable and an increase in days sales outstand ing to 115 days at the end of the first quarter of fiscal 2026 from 102 days at the end of the fourth quarter of fiscal 2025.

At May 31, 2025, other current assets were $43.3 million, an increase of $13.3 million from February 28, 2025.

The increase was primarily due to an increase of $8.2 million in prepaid professional services, an increase of $1.9 million in prepaid rent, an increase of $1.6 million in prepaid software, an increase of $0.8 million in deferred commissions and an increase of $0.7 million in prepaid insurance.

At May 31, 2025, o ther receivables were $51.7 million, an increase of $3.3 million from February 28, 2025.

The increase was primarily due to an increase of $3.1 million in SIF claims.

At May 31, 2025, income taxes receivable were $1.7 million, an increase of $0.1 million from February 28, 2025.

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

Current Liabilities

The decrease in current liabilities of $24 million at the end of the third quarter of 2025 from the end of the fourth quarter of fiscal 2024 was primarily due to a decrease in deferred revenue, current of $15 million, a decrease in accounts payable of $7 million, partially offset by an increase in income taxes payable of $5 million and a decrease in accrued liabilities of $3 million.

Deferred revenue, current was $133 million, which reflects a decrease of $15 million compared to February 29, 2024 that was attributable to a decrease of $8 million in deferred revenue, current related to BlackBerry UEM, a decrease in $4 million in deferred revenue, current related to BlackBerry QNX, and a decrease of $2 million in deferred revenue, current related to Secusmart.

Accounts payable were $9 million, reflecting a decrease of $7 million from February 29, 2024, which was primarily due to timing of payments.

The decrease in current liabilities of $90.9 million at the end of the first quarter of 2026 from the end of the fourth quarter of fiscal 2025 was primarily due to a decrease of $42.9 million in accrued liabilities, a decrease of $25.9 million in accounts payable and a decrease of $25.2 million in deferred revenue, current, partially offset by an increase of $3.1 million in income taxes payable.

Accrued liabilities were $83.3 million at the end of the first quarter of 2026, reflecting a decrease of $42.9 million compared to February 28, 2025, which was primarily due to a decrease of $22.9 million in variable incentive plan accrual, a decrease of $4.2 million in restructuring cost accrual, a decrease of $3.8 million in legal costs accrual, a decrease of $2.9 million in output VAT accrual, a decrease of $2.9 million in operating lease liability, current and a decrease of $2.7 million in deferred share unit liability.

Accounts payable were $5.2 million, reflecting a decrease of $25.9 million from February 28, 2025, which was primarily due to the timing of payments.

Deferred revenue, current was $136.3 million, which reflects a decrease of $25.2 million compared to February 28, 2025 that was attributable to a decrease of $19.4 million in deferred revenue, current related to BlackBerry UEM, a decrease of $4.4 million in deferred revenue, current related to BlackBerry AtHoc, and a decrease of $1.4 million in deferred revenue, current related to QNX.

Income taxes payable were $28.6 million, reflecting an increase of $3.1 million from February 28, 2025, which was primarily due to changes in the quarterly tax provision.

Accrued liabilities were $97 million at the end of the third quarter of 2025, reflecting a decrease of $3 million compared to February 29, 2024, which was primarily due to a decrease of $13 million in accrued restructuring costs and a decrease of $3 million in operating lease liability, current, partially offset by an increase of $10 million in variable incentive plan accrual and an increase of $2 million in vacation accrual.

Cash flows for the nine months ended November 30, 2024 compared to the nine months ended November 30, 2023 were as follows:

For the Nine Months Ended

Cash flows for the three months ended May 31, 2025 compared to the three months ended May 31, 2024 were as follows:

For the Three Months Ended

(in millions)

November 30, 2024 November 30, 2023 Change

May 31, 2025 May 31, 2024 Change

Net cash flows provided by (used in):

2 unchanged sentences

Financing activities (8.8) 1.5 (10.3)

Effect of foreign exchange loss on cash and cash equivalents 0.5 — 0.5

Net increase (decrease) in cash and cash equivalents $ 12.2 $ (40.8) $ 53.0

Operating Activities

The increase in net cash flows used in operating activities of $37 million was primarily a result of the Company’s patent sale in the first quarter of fiscal 2024, which was a one-time event, and changes in working capital.

The increase in net cash flows used in operating activities of $2.9 million primarily reflects the changes in working capital.

Investing Activities

During the nine months ended November 30, 2024, cash flows provided by investing activities were $22 million and included cash provided by transactions involving the acquisitions of short-term and long-term investments, net of the proceeds on sale or maturity in the amount of $31 million, offset by cash used in the acquisition of intangible assets of $6 million, and the acquisition of property, plant and equipment of $3 million.

For the same period in the prior fiscal year, cash flows provided by investing activities were $112 million and included cash 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 $129 million, offset by cash used in the acquisition of intangible assets of $12 million, and the acquisition of property, plant and equipment of $5 million.

During the three months ended May 31, 2025, cash flows provided by investing activities were $38.5 million and included cash provided by transactions involving the acquisition of short-term and long-term investments, net of the proceeds on sale or maturity in the amount of $40.6 million, offset by cash used in the acquisition of intangible assets of $1.2 million and the acquisition of property, plant and equipment of $0.9 million .

For the same period in the prior fiscal year, cash flows used in investing activities were $27.2 million an d included cash 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 $24.4 million, offset by cash used i n the acquisition of intangible assets of $1.5 million, the acquisition of property, plant and equipment $1.4 million, and the proceeds on sale of property, plant and equipment of $0.1 million.

Financing Activities

The increase in cash flows provided by financing activities was $214 million for the first nine months of fiscal 2025 primarily due the net effect of redemption of the 2020 Debentures and the issuance of the Extension Debentures, as defined below, which did not recur.

The increase in cash flows used in financing activities was $10.3 million for the first three months of fiscal 2026 primarily due to a repurchase of common shares of $10.0 million pursuant to the NCIB and a decrease of $0.3 million in common shares issued upon the exercise of stock options and under the employee share purchase plan.

On May 8, 2025, the Company announced that it received acceptance from the Toronto Stock Exchange with respect to a normal course issuer bid to purchase for cancellation up to 27,855,153 common shares of the Company, or approximately 4.7% of the outstanding public float at May 5, 2025.

The NCIB commenced on May 12, 2025, and will terminate on the earliest of May 11, 2026, such date as the Company may determine, or the date on which the maximum number of common shares that may be purchased under the NCIB has been reached.

The Company is not obligated to repurchase any common shares under the NCIB.

During the three months ended May 31, 2025, the Company repurchased 2.6 million common shares at a cost of $10.0 million.

Debt Financing and Other Funding Sources

See Note 6 to the Consolidated Financial Statements for a description of the Company’s $200 million aggregate principal amount of 3.00% senior convertible unsecured notes issued in January 2024 (the “Notes”), the $365 million aggregate principal amount of convertible debentures issued in September 2020, which matured in November 2023 (the “2020 Debentures”), and the $150 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.

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

Cash, cash equivalents, and investments were $381.9 million as at May 31, 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.

1 unchanged sentence

Contractual and Other Obligations

The following table sets out aggregate information about the Company’s contractual and other obligations and the periods in which payments are due as at November 30, 2024:

The following table sets out aggregate information about the Company’s contractual and other obligations and the periods in which payments are due as at May 31, 2025:

(in millions)

5 unchanged sentences

Total $ 326.3 $ 80.5 $ 245.8

Total contractual and other obligations as at November 30, 2024 decreased by approximately $4 million as compared to the February 29, 2024 balance of approximately $344 million, which was attributable to a decrease in operating lease obligations, partially offset by an increase in purchase obligations and commitments.

Total contractual and other obligations as at May 31, 2025 increased by $13.5 million as compared to the February 28, 2025 balance of $312.8 million, which was attributable to an increase in purchase obligations and commitments, partially offset by a decrease in operating lease obligations.

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

Accounting Policies and Critical Accounting Estimates

There have been no changes to the Company’s accounting policies or critical accounting estimates from those described under “Accounting Policies and Critical Accounting Estimates” in the Annual MD&A, other than as described in Note 1 to the Consolidated Financial Statements.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis