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Item 2. Management’s Discussion and Analysis

2025-09-25 compared with 2025-06-25 · 502 added, 204 removed, 390 unchanged (64% 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 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 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 six months ended August 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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• 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 expectations with respect to its total and segment revenue and adjusted EBITDA, adjusted Corporate operating costs, non-GAAP EPS and operating cash flow in the third quarter of fiscal 2026 and for fiscal 2026 as a whole;

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

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

The words “expect”, “anticipate”, “estimate”, “may”, “will”, “should”, “could”, “intend”, “believe”, “target”, “plan” and similar expressions are intended to identify forward-looking statements in this 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”.

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 August 31, 2025 compared to the three months ended August 31, 2024 - Revenue - Revenue by Segment”, “Results of Operations - Three months ended August 31, 2025 compared to the three months ended August 31, 2024 - Revenue - Adjusted Gross Margin and Adjusted EBITDA by Segment”, “Results of Operations - Three months ended August 31, 2025 compared to the three months ended August 31, 2024 - Revenue - Operating Expenses - Adjusted Operating Expenses” , “Results of Operations - Three months ended August 31, 2025 compared to the three months ended August 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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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.

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 and other mission-critical applications (collectively, the general embedded market or “GEM”).

QNX is a vendor to 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.

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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.

The QNX Hypervisor for Safety prevents safety systems from potential impact of malfunction in other systems.

The QNX Hypervisor for Safety protects safety systems from potential impact of malfunction in other systems.

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

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.

In fiscal 2026, QNX ’s priorities in the automotive space include promoting increased adoption of its recently-released 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.

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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.

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, improve personnel accountability and facilitate the bidirectional collection and sharing of data within and between organizations.

As a critical event management and crisis communications platform, BlackBerry AtHoc unifies communications during emergencies, providing secure, two-way messaging and incident response tools.

The platform, which is FedRAMP High authorized for highly secure government communications, combines secure mass notification capabilities with the ability to coordinate emergency response across multiple public and private 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.

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Products and Innovation:

• 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.

• QNX launched its foundational, safety-certified QNX® OS for Safety 8 to streamline the development and certification of safety- and security-critical embedded systems;

• BlackBerry became the first Mobile Device Management (MDM) vendor to achieve BSI certification for BlackBerry UEM deployment with Apple Indigo and Samsung Knox.

Customers and Partners:

• 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.

• QNX and NVIDIA announced general availability of NVIDIA DRIVE AGX Thor development kit, integrated with QNX OS for Safety 8 to enable developers to accelerate development of next-generation autonomous drive systems;

• BlackBerry, Global Affairs Canada, and Toronto Metropolitan University’s Rogers Cybersecure Catalyst expanded cybersecurity training in Malaysia.

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.

• BlackBerry appointed Barry Mainz to its Board of Directors.

Second Quarter Fiscal 2026 Summary Results of Operations

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

For the Three Months Ended

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

May 31, 2025 May 31, 2024 Change

August 31, 2025 August 31, 2024 Change

Revenue $ 129.6 $ 126.2 $ 3.4

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Investment income, net 1.9 2.7 (0.8)

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

Income before income taxes 13.4 4.9 8.5

Provision for income taxes 0.1 1.4 (1.3)

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

Income from continuing operations 13.3 3.5 9.8

Loss from discontinued operations (1)

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(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 first quarter of fiscal 2025 does not include the dilutive effect of stock-based compensation as to do so would be anti-dilutive.

GAAP basis for the second 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.

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 months ended May 31, 2025 and May 31, 2024.

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

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

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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.

Additionally, the following tables include 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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QNX Secure Communications Licensing Segment Totals

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

August 31, Change August 31, Change August 31, Change August 31, Change

2025 2024 2025 2024 2025 2024 2025 2024

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Segment adjusted EBITDA $ 20.5 $ 13.1 $ 7.4 $ 9.7 $ 7.9 $ 1.8 $ 5.6 $ 4.0 $ 1.6 $ 35.8 $ 25.0 $ 10.8

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

For the Six Months Ended

(in millions)

QNX Secure Communications Licensing Segment Totals

August 31, Change August 31, Change August 31, Change August 31, Change

2025 2024 2025 2024 2025 2024 2025 2024

Segment revenue $ 120.6 $ 107.9 $ 12.7 $ 119.4 $ 130.7 $ (11.3) $ 11.3 $ 11.0 $ 0.3 $ 251.3 $ 249.6 $ 1.7

Segment cost of sales 21.9 18.8 3.1 38.3 47.9 (9.6) 3.1 3.0 0.1 63.3 69.7 (6.4)

Segment adjusted gross margin $ 98.7 $ 89.1 $ 9.6 $ 81.1 $ 82.8 $ (1.7) $ 8.2 $ 8.0 $ 0.2 $ 188.0 $ 179.9 $ 8.1

Segment research and development 25.6 31.1 (5.5) 22.4 24.0 (1.6) — — — 48.0 55.1 (7.1)

Segment sales and marketing 24.1 20.5 3.6 25.7 23.3 2.4 — — — 49.8 43.8 6.0

Segment general and administrative 17.1 16.6 0.5 14.8 20.1 (5.3) 3.2 3.8 (0.6) 35.1 40.5 (5.4)

Less amortization included in the above 1.3 1.1 0.2 1.1 1.8 (0.7) 4.4 4.5 (0.1) 6.8 7.4 (0.6)

Segment adjusted EBITDA $ 33.2 $ 22.0 $ 11.2 $ 19.3 $ 17.2 $ 2.1 $ 9.4 $ 8.7 $ 0.7 $ 61.9 $ 47.9 $ 14.0

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

GAAP results:

For the Three Months Ended May 31, 2025

For the Three Months Ended August 31, 2025

(in millions)

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Income before income taxes $ 13.4

For the Six Months Ended August 31, 2025

(in millions)

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

Revenue $ 120.6 $ 119.4 $ 11.3 $ 251.3 $ — $ 251.3

Cost of sales 21.9 38.3 3.1 63.3 1.1 64.4

Gross margin (1)

$ 98.7 $ 81.1 $ 8.2 $ 188.0 $ (1.1) $ 186.9

Operating expenses 173.4 173.4

Investment income, net 4.8 4.8

Income before income taxes $ 18.3

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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 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-based measures to adjusted measures for the three and six months ended August 31, 2025.

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

GAAP results:

For the Three Months Ended May 31, 2024

For the Three Months Ended August 31, 2024

(in millions)

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Investment income, net 2.7 2.7

Income before income taxes $ 4.9

For the Six Months Ended August 31, 2024

(in millions)

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

Revenue $ 107.9 $ 130.7 $ 11.0 $ 249.6 $ — $ 249.6

Cost of sales 18.8 47.9 3.0 69.7 1.3 71.0

Gross margin (1)

$ 89.1 $ 82.8 $ 8.0 $ 179.9 $ (1.3) $ 178.6

Operating expenses 189.3 189.3

Investment income, net 6.7 6.7

Loss before income taxes $ (4.0)

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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 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

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

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

Three Months Ended Six Months Ended

August 31, 2025 August 31, 2024 August 31, 2025 August 31, 2024

Total Segment Adjusted EBITDA $ 35.8 $ 25.0 $ 61.9 $ 47.9

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Restructuring charges 3.4 0.9 6.3 8.2

Corporate general and administrative expense 9.7 12.4

Adjusted Corporate operating costs excluding amortization (2)

9.9 9.9 19.6 22.3

Amortization 4.6 6.1 10.3 12.5

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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.

(2) See “Non-GAAP Financial Measures” for a reconciliation of adjusted measures for the three and six months ended August 31, 2025 and August 31, 2024.

Financial Highlights

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).

The Company had $363.5 million in cash, cash equivalents and investments as of August 31, 2025 (February 28, 2025 - $410.3 million).

In the second quarter of fiscal 2026, the Company recognized revenue of $129.6 million and net income of $13.3 million, or $0.02 basic and diluted earnings per share, on a U.S.

GAAP basis (second quarter of fiscal 2025 - revenue of $126.2 million and net loss of $19.7 million, or $0.03 basic and diluted loss per share).

The Company recognized adjusted net income of $24.2 million, and adjusted earnings of $0.04 per share, on a non-GAAP basis in the second quarter of fiscal 2026 (second quarter of fiscal 2025 - adjusted net loss of $2.6 million, and adjusted loss of $0.00 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 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).

On September 25, 2025, the Company announced financial results for the three and six months ended August 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, adjusted EBITDA, adjusted segment EBITDA, adjusted operating income 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.

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• Restructuring charges .

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.

The Company believes that restructuring charges relating to employee termination benefits, facilities, streamlining many of the Company’s centralized corporate functions into QNX and Secure Communications 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 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 based measures for the three months ended August 31, 2025 and August 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, adjusted EBITDA, adjusted segment EBITDA, adjusted operating income 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 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

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

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

Gross margin $ 96.6 $ 88.6

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Reconciliation of U.S.

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

GAAP operating expense for the thr ee months ended August 31, 2025, May 31, 2025 and August 31, 2024 to adjusted operating expense is reflected in the table below:

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

Operating expense $ 85.1 $ 88.3 $ 86.4

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LLA impairment charge 0.5 0.1 0.6

Litigation settlement — 2.8 —

Adjusted operating expense $ 74.8 $ 78.4 $ 78.5

Reconciliation of U.S.

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

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

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

Corporate operating costs

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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

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

Basic earnings

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Reconciliation of U.S.

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

GAAP research and development, sales and marketing, general and administrative, and amortization expense for the three months ended August 31, 2025 and August 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) August 31, 2025 August 31, 2024

Research and development $ 25.6 $ 27.1

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Adjusted amortization expense $ 2.0 $ 2.9

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.

Adjusted operating income, adjusted EBITDA, adjusted operating income margin percentage and adjusted EBITDA margin percentage for the three months ended August 31, 2025 and August 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 Three Months Ended (in millions) May 31, 2025 May 31, 2024

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

Operating income $ 11.5 $ 2.2

Non-GAAP adjustments to operating income

Restructuring charges 3.4 0.9

Stock compensation expense 5.9 5.3

Acquired intangibles amortization 1.1 1.7

LLA impairment charge 0.5 0.6

Total non-GAAP adjustments to operating income 10.9 8.5

Adjusted operating income 22.4 10.7

Amortization 4.6 6.1

Acquired intangibles amortization (1.1) (1.7)

Adjusted EBITDA $ 25.9 $ 15.1

Revenue $ 129.6 $ 126.2

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.

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

GAAP based measures for the six months ended August 31, 2025 and August 31, 2024.

A reconciliation of the most directly comparable U.S.

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

For the Six Months Ended (in millions) August 31, 2025 August 31, 2024

Gross margin $ 186.9 $ 178.6

Stock compensation expense 1.1 1.3

Adjusted gross margin $ 188.0 $ 179.9

Gross margin % 74.4 % 71.6 %

Stock compensation expense 0.4 % 0.5 %

Adjusted gross margin % 74.8 % 72.1 %

Reconciliation of U.S.

GAAP operating expense for the six months ended August 31, 2025 and August 31, 2024 to adjusted operating expense is reflected in the table below:

For the Six Months Ended (in millions) August 31, 2025 August 31, 2024

Operating expense $ 173.4 $ 189.3

Restructuring charges 6.3 8.2

Stock compensation expense 10.5 10.2

Acquired intangibles amortization 2.8 3.5

LLA impairment charge 0.6 4.1

Adjusted operating expense $ 153.2 $ 163.3

Reconciliation of U.S.

GAAP Corporate operating costs for the six months ended August 31, 2025 and August 31, 2024 to adjusted Corporate operating costs excluding amortization is reflected in the table below:

For the Six Months Ended (in millions) August 31, 2025 August 31, 2024

Corporate operating costs

$ 31.2 $ 38.5

Restructuring charges 6.3 8.2

Stock compensation expense 4.0 2.3

LLA impairment charge 0.6 4.1

Adjusted Corporate operating costs 20.3 23.9

Amortization 0.7 1.6

Adjusted Corporate operating costs excluding amortization $ 19.6 $ 22.3

Reconciliation of U.S.

GAAP net income (loss) and U.S.

GAAP basic earnings (loss) per share for the six months ended August 31, 2025 and August 31, 2024 to the adjusted net income (loss) and adjusted basic earnings (loss) per share is reflected in the table below:

For the Six Months Ended (in millions, except per share amounts) August 31, 2025 August 31, 2024

Basic earnings per share Basic loss per share

Net income (loss) $ 15.2 $ 0.03 $ (61.1) $ (0.10)

Restructuring charges 6.3 8.2

Stock compensation expense 11.6 14.8

Acquired intangibles amortization 2.8 17.1

LLA impairment charge 0.6 4.1

Adjusted net income (loss) $ 36.5 $ 0.06 $ (16.9) $ (0.03)

Reconciliation of U.S.

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

For the Six Months Ended (in millions) August 31, 2025 August 31, 2024

Research and development $ 50.6 $ 57.7

Stock compensation expense 2.7 3.0

Adjusted research and development expense $ 47.9 $ 54.7

Sales and marketing $ 53.1 $ 45.1

Stock compensation expense 2.7 1.5

Adjusted sales and marketing expense $ 50.4 $ 43.6

General and administrative $ 62.0 $ 73.1

Restructuring charges 6.3 8.2

Stock compensation expense 5.1 5.7

Adjusted general and administrative expense $ 50.6 $ 59.2

Amortization $ 7.1 $ 9.3

Acquired intangibles amortization 2.8 3.5

Adjusted amortization expense $ 4.3 $ 5.8

Adjusted operating income, adjusted EBITDA, adjusted operating income margin percentage and adjusted EBITDA margin percentage for the six months ended August 31, 2025 and August 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 Six Months Ended (in millions) August 31, 2025 August 31, 2024

Operating income (loss) $ 13.5 $ (10.7)

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LLA impairment charge 0.6 4.1

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

Total non-GAAP adjustments to operating income 21.3 27.3

Adjusted operating income 34.8 16.6

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Reconciliation of U.S.

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)

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

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

Net cash provided by (used in) operating activities $ 3.4 $ (16.0)

Acquisition of property, plant and equipment (0.8) (0.5)

Free cash usage $ (18.9) $ (16.5)

Free cash flow (usage) $ 2.6 $ (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 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

Comparative breakdowns of certain key metrics for the three months ended or as at August 31, 2025 and August 31, 2024 are set forth below.

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

Secure Communications Annual Recurring Revenue

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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 ARR was approximately $213 million as at August 31, 2025 and increased compared to $209 million as at May 31, 2025 and $209 million as at August 31, 2024.

Secure Communications Dollar-Based Net Retention Rate

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

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

Secure Communications DBNRR was 93% as at August 31, 2025 and increased compared to 92% as at May 31, 2025 and was consistent with 93% as at August 31, 2024.

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

Revenue by Segment

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(in millions)

May 31, 2025 May 31, 2024 Change

August 31, 2025 August 31, 2024 Change

Revenue by Segment

8 unchanged sentences

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.

The increase in QNX revenue of $8.4 million was primarily due to an increase of $3.6 million in royalty revenue, an increase of $2.7 million in BlackBerry Radar revenue and an increase of $2.6 million in development seat revenue, partially offset by a decrease of $0.4 million in professional services.

The Company previously stated that it expected QNX revenue to be in the range of $55 million to $60 million in the second quarter of fiscal 2026.

QNX revenue in the second quarter of fiscal 2026 was $63.1 million due to better-than-expected royalty revenue.

The Company expects QNX revenue to be in the range of $66 million to $70 million in the third quarter of fiscal 2026.

The Company previously stated that it expected QNX revenue to be in the range of $250 million to $270 million in fiscal 2026 as a whole.

The Company now expects QNX revenue to be in the range of $256 million to $270 million in fiscal 2026 as a whole due to stronger than expected performance in the first half of fiscal 2026.

Secure Communications

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 decrease in Secure Communications revenue of $6.6 million was primarily due to a decrease of $5.6 million in Secusmart product revenue, a decrease of $1.0 million in BlackBerry UEM product revenue and a decrease of $0.5 million in BlackBerry AtHoc, partially offset by an increase of $0.5 million in professional services.

The Company previously stated that it expected Secure Communications revenue to be in the range of $54 million to $59 million in the second quarter of fiscal 2026.

Secure Communications revenue in the second quarter of fiscal 2026 was $59.9 million.

The Company expects Secure Communications revenue to be in the range of $60 million to $64 million in the third quarter of fiscal 2026.

The Company previously stated that it expected Secure Communications revenue to be in the range of $234 million to $244 million in fiscal 2026 as a whole.

The Company now expects Secure Communications revenue to be in the range of $239 million to $247 million in fiscal 2026 as a whole due to stronger than expected performance in the first half of fiscal 2026.

The increase in Licensing revenue of $1.6 million was primarily due to an increase in revenue from the Company’s 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.

Licensing revenue in the second quarter of fiscal 2026 was $6.6 million due to the reason stated above.

The Company continues to expect Licensing revenue to be approximately $6 million in each of the third quarter and fourth quarter of fiscal 2026.

Total BlackBerry Revenue

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.

The Company previously stated that it expected total BlackBerry revenue to be approximately $115 million to $125 million in the second quarter of fiscal 2026.

Total BlackBerry revenue was $129.6 million in the second 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 $132 million to $140 million in the third quarter of fiscal 2026.

The Company previously stated that it expected total BlackBerry revenue to be in the range of $508 million to $538 million in fiscal 2026 as a whole.

The Company now expects total BlackBerry revenue to be in the range of $519 million to $541 million in fiscal 2026 as a whole due to stronger than expected performance in the first half of fiscal 2026.

Revenue by Geography

2 unchanged sentences

(in millions)

May 31, 2025 May 31, 2024 Change

August 31, 2025 August 31, 2024 Change

Revenue by Geography

9 unchanged sentences

North America Revenue

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.

The increase in North America revenue of $4.1 million was primarily due to an increase of $2.7 million in QNX development seat revenue, an increase of $2.7 million in BlackBerry Radar revenue and an increase of $1.7 million in Licensing revenue, partially offset by a decrease of $2.4 million in QNX royalty revenue and a decrease of $1.1 million in BlackBerry UEM product revenue.

Europe, Middle East and Africa 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.

The decrease in Europe, Middle East and Africa revenue of $3.7 million was primarily due to a decrease of $5.3 million relating to Secusmart product revenue and a decrease of $0.3 million in professional services revenue, partially offset by an increase of $1.6 million in QNX development seat revenue.

Other Regions 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.

The increase in Other regions revenue of $3.0 million was primarily due to an increase of $5.9 million in QNX royalty revenue, partially offset by a decrease of $1.7 million in QNX development seat revenue and a decrease of $0.4 million in professional services revenue.

Consolidated Gross Margin

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 increased by $8.0 million to $96.6 million in the second quarter of fiscal 2026 (second quarter of fiscal 2025 - $88.6 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 BlackBerry UEM , 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 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.

Consolidated gross margin percentage increased by 4.3% to 74.5% in the second quarter of fiscal 2026 ((second quarter of fiscal 2025 -70.2%).

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

Adjusted Gross Margin and Adjusted EBITDA by Segment

See “Second 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

1 unchanged sentence

QNX Secure Communications Licensing Segment Totals

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

August 31, Change August 31, Change August 31, Change August 31, Change

2025 2024 2025 2024 2025 2024 2025 2024

1 unchanged sentence

Segment cost of sales 10.7 9.3 1.4 20.2 26.1 (5.9) 1.5 1.6 (0.1) 32.4 37.0 (4.6)

Segment 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 gross margin % 81 % 82 % (1 %) 70 % 66 % 4 % 66 % 77 % (11 %) 75 % 74 % 1 %

Segment adjusted gross margin $ 52.4 $ 45.4 $ 7.0 $ 39.7 $ 40.4 $ (0.7) $ 5.1 $ 3.4 $ 1.7 $ 97.2 $ 89.2 $ 8.0

Segment adjusted gross margin % 83 % 83 % — % 66 % 61 % 6 % 77 % 68 % 9 % 75 % 71 % 4 %

Segment research and development 13.2 14.7 (1.5) 11.1 11.7 (0.6) — — — 24.3 26.4 (2.1)

3 unchanged sentences

Segment adjusted EBITDA $ 20.5 $ 13.1 $ 7.4 $ 9.7 $ 7.9 $ 1.8 $ 5.6 $ 4.0 $ 1.6 $ 35.8 $ 25.0 $ 10.8

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.

The increase in QNX adjusted gross margin of $7.0 million was primarily due to the reasons discussed above in “Revenue by Segment”, partially offset by an increase in cost of sales related to Radar hardware devices.

QNX adjusted gross margin percentage of 83% in the first three months of fiscal 2026 was consistent with the first three months of fiscal 2025.

The increase in QNX adjusted EBITDA of $7.4 million was primarily due to the reasons discussed above in “Revenue by Segment” and a benefit from claims filed by QNX with the Ministry of Innovation, Science and Economic Development Canada relating to its Strategic Innovation Fund (“SIF”), partially offset by an increase in cost of sales related to Radar hardware devices and an increase in salaries and benefits expense.

The Company previously stated that it expected QNX adjusted EBITDA to be in the range of $10 million to $13 million in the second quarter of fiscal 2026.

QNX adjusted EBITDA was $20.5 million in the second quarter of fiscal 2026 due to the reasons discussed above in “Revenue by Segment” and from SIF claims filed.

The Company expects QNX adjusted EBITDA to be in the range of $13 million to $17 million in the third quarter of fiscal 2026.

The Company previously stated that it expected QNX adjusted EBITDA to be in the range of $55 million to $60 million in fiscal 2026 as a whole.

The Company now expects QNX adjusted EBITDA to be in the range of $64 million to $73 million in fiscal 2026 as a whole due to stronger than expected performance in the first half 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 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 decrease in Secure Communications adjusted gross margin of $0.7 million was primarily due to the reasons discussed above in “Revenue by Segment”.

The increase in Secure Communications adjusted gross margin percentage of 6% 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 $1.8 million was primarily due to a decrease in salaries and benefits expense and a benefit relating to the recovery in expected credit loss provision, 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 second quarter of fiscal 2026.

Secure Communications adjusted EBITDA was $9.7 million in the second quarter of fiscal 2026 due to the reasons discussed above in “Revenue by Segment” and an increase in gross margin percentage due the the reasons discussed above.

The Company expects Secure Communications adjusted EBITDA to be in the range of $12 million to $16 million in the third quarter of fiscal 2026.

The Company previously stated that it expected Secure Communications adjusted EBITDA to be in the range of $37 million to $47 million in fiscal 2026 as a whole.

The Company now expects Secure Communications adjusted EBITDA to be in the range of $38 million to $48 million in fiscal 2026 as a whole due to stronger than expected performance in the first half of fiscal 2026.

The increase in Licensing adjusted gross margin of $1.7 million was primarily due to the reasons discussed above in “Revenue by Segment”.

The increase in Licensing adjusted gross margin percentage of 9% was due to the same reasons discussed above.

The increase in Licensing adjusted EBITDA of $1.6 million was primarily due to the reasons discussed above in “Revenue by Segment”.

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.

Licensing adjusted EBITDA was $5.6 million in the second quarter of fiscal 2026.

The Company continues to expect Licensing adjusted EBITDA to be approximately $5 million in each of the third quarter and fourth 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 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.

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

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

For the Three Months Ended

(in millions)

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

August 31, 2025 May 31, 2025 August 31, 2024

Revenue $ 129.6 $ 121.7 $ 126.2

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Impairment of long-lived assets 0.5 0.1 0.6

Litigation settlement — 2.8 —

Total $ 85.1 $ 88.3 $ 86.4

5 unchanged sentences

Impairment of long-lived assets 0.4 % 0.1 % 0.5 %

Litigation settlement — % 2.0 % — %

Total 65.7 % 72.6 % 68.5 %

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

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

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

GAAP Operating Expenses

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.

Operating expenses decreased by $3.2 million sequentially, or 3.6%, in the second quarter of fiscal 2026, compared to the first quarter of fiscal 2026 primarily due to a decrease of $3.9 million in salaries and benefits expense, a decrease of $1.8 million in sales incentive plan costs, a decrease of $1.3 million in marketing expense and a decrease of $0.9 million in amortization costs, partially offset by an increase of $1.5 million in the Company’s deferred share unit costs, an increase of $1.4 million in variable incentive plan costs, a decrease in benefit of $0.9 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 and an increase of $0.7 million in consulting costs.

Operating expenses decreased by $1.3 million year-over-year, or 1.5%, in the second quarter of fiscal 2026, compared to the second quarter of fiscal 2025 primarily due to an increase in benefits of $3.8 million from SIF claims filed, a decrease of $1.6 million in infrastructure costs and a decrease of $1.5 million in amortization costs, partially offset by an increase of $2.5 million in restructuring costs, an increase of $1.0 million in salaries and benefits expense, an increase of $0.8 million in stock compensation expense and an increase of $0.6 million in the Company’s deferred share unit costs.

Adjusted Operating Expenses

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 operating expenses decreased by $3.6 million sequentially, or 4.6%, to $74.8 million in the second quarter of fiscal 2026 compared to $78.4 million in the first quarter of fiscal 2026.

The decrease was primarily due to a decrease of $3.9 million in salaries and benefits expense, a decrease of $1.8 million in sales incentive plan costs and a decrease of $1.3 million in marketing expense, partially offset by an increase of $1.5 million in the Company’s deferred share unit costs, an increase of $1.4 million in variable incentive plan costs, a decrease in benefit of $0.9 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 and an increase of $0.7 million in consulting costs.

Adjusted operating expenses decreased by $3.7 million year-over-year, or 4.7%, to $74.8 million in the second quarter of fiscal 2026, compared to $78.5 million in the second quarter of fiscal 2025.

The decrease was primarily due to an increase in benefits of $3.8 million from SIF claims filed, a decrease of $1.6 million in infrastructure costs and a decrease of $0.9 million in

amortization costs, partially offset by an increase of $1.0 million in salaries and benefits expense and an increase of $0.6 million in the Company’s deferred share unit 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.

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

Adjusted Corporate operating costs excluding amortization were $9.9 million in the second quarter of fiscal 2026.

The Company continues to expect adjusted Corporate operating costs excluding amortization to be approximately $10 million in each of the third quarter and fourth quarter of fiscal 2026.

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 $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.

Research and development expenses decreased by $1.5 million, or 5.5%, in the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025 primarily due to an increase in benefits of $3.8 million from SIF claims filed, partially offset by an increase of $1.1 million in salaries and benefits expense and an increase of $0.3 million in variable incentive plan costs.

Adjusted research and development expenses decreased by $1.7 million, or 6.6%, to $24.2 million in the second quarter of fiscal 2026 compared to $25.9 million the second 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 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.

Sales and marketing expenses increased by $3.1 million, or 14.6%, in the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025, primarily due to an increase of $1.5 million in salaries and benefits expense, an increase of $0.7 million in stock compensation expense and an increase of $0.2 million in marketing expense.

Adjusted sales and marketing expenses increased by $2.5 million, or 12.1%, to $23.1 million in the second quarter of fiscal 2026 compared to $20.6 million in the second quarter of fiscal 2025.

The increase was primarily due to an increase of $1.5 million in salaries and benefits expense and an increase of $0.2 million in marketing expense.

General and Administrative Expenses

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.

General and administrative expenses decreased by $1.3 million, or 4.0%, in the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025.

The decrease was primarily due to a decrease of $1.6 million in salaries and benefits expense, a decrease of $1.5 million in infrastructure costs and a decrease of $1.4 million in facilities cost, partially offset by an increase of $2.5 million in restructuring costs and an increase of $0.6 million in the Company’s deferred share unit costs.

Adjusted general and administrative expenses decreased by $3.6 million, or 12.4%, to $25.5 million in the second quarter of fiscal 2026 compared to $29.1 million in the second quarter of fiscal 2025.

The decrease was primarily due to a decrease of $1.6 million in salaries and benefits expense, a decrease of $1.5 million in infrastructure costs and a decrease of $1.4 million in facilities cost, partially offset by an increase of $0.6 million in the Company’s deferred share unit costs.

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 May 31, 2025 compared to the quarter ended May 31, 2024.

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 August 31, 2025 compared to the quarter ended August 31, 2024.

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

2 unchanged sentences

Included in Operating Expense

May 31, 2025 May 31, 2024 Change

August 31, 2025 August 31, 2024 Change

Property, plant and equipment $ 1.2 $ 1.9 $ (0.7)

2 unchanged sentences

Included in Cost of Sales

May 31, 2025 May 31, 2024 Change

August 31, 2025 August 31, 2024 Change

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

2 unchanged sentences

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 $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.

The decrease in amortization expense included in operating expense of $1.5 million was primarily due to the lower cost base of assets.

Adjusted amortization expense decreased by $0.9 million to $2.0 million in the second quarter of fiscal 2026 compared to $2.9 million in the second quarter of fiscal 2025 primarily due to the lower cost base of assets.

Amortization 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.

Amortization expense relating to certain intangible assets employed in the Company’s licensing operations was $1.5 million in the second quarter of fiscal 2026 and was consistent with the second quarter of fiscal 2025.

Investment Income, Net

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%).

Investment income, net, which includes the interest expense from the Notes (as defined below), was $1.9 million in the second quarter of fiscal 2026 and decreased by $0.8 million from investment income, net of $2.7 million in the second quarter of fiscal 2025.

The decrease was primarily due to interest income on a delayed tax refund in the second quarter of fiscal 2025 which did not recur, partially offset by a higher return on cash and investments due to the higher cash and investment balance.

For the second quarter of fiscal 2026, the Company’s net effective income tax expense rate was approximately 1% (second quarter of fiscal 2025 - net effective income tax expense rate of approximately 8%).

2 unchanged sentences

Net Income (Loss)

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 Company’s net income for the second quarter of fiscal 2026 was $13.3 million, or $0.02 basic and diluted earnings per share on a U.S.

GAAP basis (second quarter of fiscal 2025 - net loss $19.7 million, or $0.03 basic and diluted loss per share).

The period over period change of $33.0 million was primarily due to a loss from discontinued operations in the second quarter of fiscal 2025 which did not recur, an increase in gross margin percentage, as described above in “Consolidated Gross Margin Percentage ” , an increase in revenue, as described above in “Revenue by Segment” and a decrease in operating expenses, as described above in “Operating Expenses”.

Adjusted net income was $24.2 million in the second quarter of fiscal 2026, or $0.04 adjusted basic earnings per share (second quarter of fiscal 2025 - adjusted net loss of $2.6 million, or 0.00 adjusted basic loss per share).

The increase in adjusted net income of $26.8 million was primarily due to the same reasons described above on a U.S.

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 $8 to $14 million in the second quarter of fiscal 2026 .

Adjusted EBITDA was $25.9 million in the second quarter of fiscal 2026 due to QNX and Secure Communications exceeding the top end of their expected adjusted EBITDA ranges as discussed above in “Adjusted Gross Margin and Adjusted EBITDA by Segment”.

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

Non-GAAP EPS was $0.04 in the second quarter of fiscal 2026 primarily due to QNX and Secure Communications exceeding the top end of their expected adjusted EBITDA ranges as discussed above in “Adjusted Gross Margin and Adjusted EBITDA by Segment”.

The Company previously stated that it expected operating cash usage to be in the range of $5 million to $15 million in the second quarter of fiscal 2 026.

Operating cash flow was $3.4 million in the second quarter of fiscal 2026 due to better than expected conversion of profit into cash.

The Company expects adjusted EBITDA to be in the range of $20 million to $28 million in the third quarter of fiscal 2026.

The Company previously stated that it expected adjusted EBITDA to be in the range of $72 million to $87 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.

The Company now expects adjusted EBITDA to be in the range of $82 million to $101 million in fiscal 2026 as a whole due to stronger than expected performance in the first half of fiscal 2026, as described above in “Adjusted Gross Margin and Adjusted EBITDA by Segment”.

The Company expects non-GAAP EPS to be in the range of $0.02 per share to $0.04 per share in the third quarter of fiscal 2026.

The Company previously stated that it expected non-GAAP EPS to be in the range of $0.08 per share to $0.10 per share in fiscal 2026 as a whole.

The Company now expects non-GAAP EPS to be in the range of $0.11 per share to $0.15 per share in fiscal 2026 as a whole due to stronger than expected performance in the first half of fiscal 2026.

The Company expects operating cash flow to be in the range of $10 million to $20 million in the third quarter of fiscal 2026.

The Company previously stated that it expected operating cash flow to be approximately $35 million for fiscal 2026 as a whole.

The Company now expects operating cash flow to be in the range of $35 million to $40 million for fiscal 2026 as a whole due to stronger than expected operating cash flow in the first half of fiscal 2026.

The Company does not provide a reconciliation of expected adjusted EBITDA and expected non-GAAP basic EPS for the third quarter of fiscal year 2026, and for fiscal 2026 as a whole, 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 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.

The weighted average number of shares outstanding was 592.9 million common shares for basic earnings per share and 597.4 million common shares for diluted earnings per share for the second quarter of fiscal 2026 (second quarter of fiscal 2025 - 590.5 million common shares for basic and 591.6 million common shares for 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) share buyback program during the quarter ended August 31, 2025.

Results of Operations - Six months ended August 31, 2025 compared to the six months ended August 31, 2024

The following section sets forth certain consolidated statements of operations data for the six months ended August 31, 2025 and August 31, 2024:

For the Six Months Ended

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

August 31, 2025 August 31, 2024 Change

Revenue $ 251.3 $ 249.6 $ 1.7

Gross margin 186.9 178.6 8.3

Operating expenses 173.4 189.3 (15.9)

Investment income, net 4.8 6.7 (1.9)

Income (loss) before income taxes 18.3 (4.0) 22.3

Provision for income taxes 3.1 9.0 (5.9)

Income (loss) from continuing operations 15.2 (13.0) 28.2

Loss from discontinued operations — (48.1) 48.1

Net income (loss) $ 15.2 $ (61.1) $ 76.3

Earnings (loss) per share - reported

Basic $ 0.03 $ (0.02) $ 0.05

Diluted $ 0.03 $ (0.02) $ 0.05

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

Basic 594,624 590,188

598,697 590,188

______________________________

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

GAAP basis for the first six months of fiscal 2026 does not include the dilutive effect of the Notes as to do so would be anti-dilutive.

Diluted loss per share on a U.S.

GAAP basis for the first six months 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.

Revenue by Segment

Comparative breakdowns of revenue by segment are set forth below.

For the Six Months Ended

(in millions)

August 31, 2025 August 31, 2024 Change

Revenue by Segment

QNX $ 120.6 $ 107.9 $ 12.7

Secure Communications 119.4 130.7 (11.3)

Licensing 11.3 11.0 0.3

$ 251.3 $ 249.6 $ 1.7

% Revenue by Segment

QNX 48.0 % 43.2 %

Secure Communications 47.5 % 52.4 %

Licensing 4.5 % 4.4 %

100.0 % 100.0 %

The increase in QNX revenue of $12.7 million was primarily due to an increase of $6.0 million in development seat revenue, an increase of $5.4 million in royalty revenue and an increase of $3.8 million in BlackBerry Radar revenue, partially offset by a decrease of $2.4 million in professional services revenue .

Secure Communications

The decrease in Secure Communications revenue of $11.3 million primarily due to a decrease of $8.5 million in Secusmart product revenue and a decrease of $3.7 million in BlackBerry UEM license revenue, partially offset by an increase of $1.3 million in professional services revenue.

The increase in Licensing revenue of $0.3 million was primarily due to an increase 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 Six Months Ended

(in millions)

August 31, 2025 August 31, 2024 Change

Revenue by Geography

North America $ 117.1 $ 114.4 $ 2.7

Europe, Middle East and Africa 82.4 87.3 (4.9)

Other regions 51.8 47.9 3.9

$ 251.3 $ 249.6 $ 1.7

% Revenue by Geography

North America 46.6 % 45.8 %

Europe, Middle East and Africa 32.8 % 35.0 %

Other regions 20.6 % 19.2 %

100.0 % 100.0 %

North America Revenue

The increase in North America revenue of $2.7 million was primarily due to an increase of $5.6 million in BlackBerry QNX development seat revenue and an increase of $3.7 million in BlackBerry Radar revenue, partially offset by a decrease of $4.7 million in BlackBerry QNX royalty revenue and a decrease of $2.6 million in BlackBerry UEM revenue.

Europe, Middle East and Africa Revenue

The decrease in Europe, Middle East and Africa revenue of $4.9 million was primarily due to a decrease of $8.6 million relating to product revenue in Secusmart, partially offset by an increase of $2.3 million BlackBerry QNX development seat revenue and an increase of $2.2 million in BlackBerry QNX royalty revenue.

Other Regions Revenue

The increase in other regions of $3.9 million was primarily due to an increase of $7.8 million relating to BlackBerry QNX royalty revenue, partially offset by a decrease of $1.9 million in BlackBerry QNX development seat revenue, a decrease of $0.7 million in professional services revenue and a decrease of $0.6 million in BlackBerry UEM revenue.

Consolidated Gross Margin

Consolidated gross margin increased by $8.3 million to approximately $186.9 million in the first six months of fiscal 2026 (first six months of fiscal 2025 - $178.6 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 BlackBerry UEM 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 increased by 2.8%, to approximately 74.4% of consolidated revenue in the first six months of fiscal 2026 (first six months of fiscal 2025 - 71.6%).

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

Adjusted Gross Margin and adjusted EBITDA by Segment

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

For the Six Months Ended

(in millions)

QNX Secure Communications Licensing Segment Totals

August 31, Change August 31, Change August 31, Change August 31, Change

2025 2024 2025 2024 2025 2024 2025 2024

Segment revenue $ 120.6 $ 107.9 $ 12.7 $ 119.4 $ 130.7 $ (11.3) $ 11.3 $ 11.0 $ 0.3 $ 251.3 $ 249.6 $ 1.7

Segment cost of sales 21.9 18.8 3.1 38.3 47.9 (9.6) 3.1 3.0 0.1 63.3 69.7 (6.4)

Segment adjusted gross margin $ 98.7 $ 89.1 $ 9.6 $ 81.1 $ 82.8 $ (1.7) $ 8.2 $ 8.0 $ 0.2 $ 188.0 $ 179.9 $ 8.1

Segment adjusted gross margin % 82 % 83 % (1 %) 68 % 63 % 5 % 73 % 73 % — % 75 % 72 % 3 %

Segment research and development 25.6 31.1 (5.5) 22.4 24.0 (1.6) — — — 48.0 55.1 (7.1)

Segment sales and marketing 24.1 20.5 3.6 25.7 23.3 2.4 — — — 49.8 43.8 6.0

Segment general and administrative 17.1 16.6 0.5 14.8 20.1 (5.3) 3.2 3.8 (0.6) 35.1 40.5 (5.4)

Less amortization included in the above 1.3 1.1 0.2 1.1 1.8 (0.7) 4.4 4.5 (0.1) 6.8 7.4 (0.6)

Segment adjusted EBITDA $ 33.2 $ 22.0 $ 11.2 $ 19.3 $ 17.2 $ 2.1 $ 9.4 $ 8.7 $ 0.7 $ 61.9 $ 47.9 $ 14.0

The increase in QNX adjusted gross margin of $9.6 million was primarily due to the reasons discussed above in “Revenue by Segment”, partially offset by an increase in cost of sales related to Radar hardware devices.

The decrease in QNX adjusted gross margin percentage of 1% was primarily due to the same reasons discussed above.

The increase in QNX adjusted EBITDA of $11.2 million was primarily due to the reasons discussed above in “Revenue by Segment” and a benefit from SIF claims, partially offset by an increase in costs of sales related to Radar hardware devices and an increase in salaries and benefits expense .

The Company does not expect to receive additional benefits from SIF claims in the second half of fiscal 2026.

Secure Communications

The decrease of Secure Communications adjusted gross margin of $1.7 million was primarily due to the reasons discussed above in “Revenue by Segment”.

The increase in Secure Communications adjusted gross margin percentage of 5% was primarily due to a change in mix, specifically an increased gross margin contribution from Secusmart software licenses.

The increase of Secure Communications adjusted EBITDA of $2.1 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 increase in Licensing adjusted gross margin of $0.2 million was primarily due to the reasons discussed above in “Revenue by Segment”.

Licensing adjusted gross margin percentage of 73% in the first six months of fiscal 2026 was consistent with the first six months of fiscal 2025.

The increase in Licensing adjusted EBITDA of $0.7 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 six months ended August 31, 2025, compared to the six months ended August 31, 2024.

For the Six Months Ended

(in millions)

August 31, 2025 August 31, 2024 Change

Revenue $ 251.3 $ 249.6 $ 1.7

Operating expenses

Research and development 50.6 57.7 (7.1)

Sales and marketing 53.1 45.1 8.0

General and administrative 62.0 73.1 (11.1)

Amortization 7.1 9.3 (2.2)

Impairment of long-lived assets 0.6 4.1 (3.5)

Total $ 173.4 $ 189.3 $ (15.9)

Operating Expense as % of Revenue

Research and development 20.1 % 23.1 %

Sales and marketing 21.1 % 18.1 %

General and administrative 24.7 % 29.3 %

Amortization 2.8 % 3.7 %

Impairment of long-lived assets 0.2 % 1.6 %

Total 69.0 % 75.8 %

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

GAAP-based measures to adjusted measures for the six months ended August 31, 2025 and August 31, 2024.

GAAP Operating Expenses

Operating expenses decreased by $15.9 million, or 8.4%, in the first six months of fiscal 2026, compared to the first six months of fiscal 2025.

The decrease was primarily due to an increase in benefits of $8.3 million from SIF claims filed, a decrease of $3.5 million in impairment of long-lived asset impairment, a decrease of $2.2 million in amortization expense, a decrease of $2.2 million in infrastructure costs and a decrease of $1.9 million in restructuring cost, partially offset by an increase of $0.9 million in sales incentive plan cost and an increase of $0.8 million in stock compensation expense.

Adjusted Operating Expenses

Adjusted operating expenses decreased by $10.1 million, or 6.2%, to $153.2 million in the first six months of fiscal 2026, compared to $163.3 million the first six months of 2025.

The decrease was primarily due to an increase in benefits of $8.3 million from SIF claims filed and a decrease of $2.2 million in infrastructure costs, partially offset by an increase of $0.9 million in sales 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 $7.1 million, or 12.3%, in the first six months of fiscal 2026, compared to the first six months of fiscal 2025.

The decrease was primarily due to an increase in benefits of $8.3 million from SIF claims filed, partially offset by an increase of $0.4 million in salaries and benefits expense.

Adjusted research and development expenses decreased by $6.8 million, or 12.4%, to $47.9 million in the first six months of fiscal 2026, compared to $54.7 million in the first six months of fiscal 2025.

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 increased by $8.0 million, or 17.7%, in the first six months of fiscal 2026 compared to the first six months of fiscal 2025.

The increase was primarily due to an increase of $4.0 million in salaries and benefits cost, an increase of $1.2 million in stock compensation expense, an increase of $1.0 million in sales incentive plan cost, an increase of $0.6 million in variable incentive plan cost and an increase of $0.6 million in marketing cost.

Adjusted sales and marketing expenses increased by $6.8 million, or 15.6%, to $50 million in the first six months of fiscal 2026 compared to $43.6 million in the first six months of fiscal 2025.

The increase was primarily due to an increase of $4.0 million in salaries and benefits expense, an increase of $1.0 million in sales incentive plan cost, an increase of $0.6 million in variable incentive plan cost and an increase of $0.6 million in marketing cost.

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 $11.1 million, or 15.2%, in the first six months of fiscal 2026 compared to the first six months of fiscal 2025.

The decrease was primarily due to a decrease of $3.3 million in salaries and benefits expense, a decrease of $2.6 million in facilities cost, a decrease of $2.2 million in infrastructure costs, a decrease of $1.9 million in restructuring 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 $8.6 million, or 14.5%, to $50.6 million in the first six months of fiscal 2026 compared to $59.2 million in the first six months of fiscal 2025.

The decrease was primarily due to a decrease of $3.3 million in salaries and benefits expense, a decrease of $2.6 million in facilities cost, a decrease of $2.2 million in infrastructure costs 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.

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 six months ended August 31, 2025 compared to the six months ended August 31, 2024.

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

For the Six Months Ended

(in millions)

Included in Operating Expense

August 31, 2025 August 31, 2024 Change

Property, plant and equipment $ 2.6 $ 3.9 $ (1.3)

Intangible assets 4.5 5.4 (0.9)

Total $ 7.1 $ 9.3 $ (2.2)

Included in Cost of Sales

August 31, 2025 August 31, 2024 Change

Property, plant and equipment $ 0.1 $ 0.3 $ (0.2)

Intangible assets 3.1 3.0 0.1

Total $ 3.2 $ 3.3 $ (0.1)

Amortization included in Operating Expense

The decrease in amortization expense included in operating expense of $2.2 million was primarily due to the lower cost base of assets.

Adjusted amortization expense decreased by $1.5 million to $4.3 million in the first six months of fiscal 2026 compared to $5.8 million in the first six months of fiscal 2025 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 decreased by $0.1 million in the first six months of fiscal 2026 compared to the first six months of fiscal 2025 due to a lower cost base of assets.

Investment Income, Net

Investment income, net, which includes the interest expense from the Notes, was $4.8 million in the first six months of fiscal 2026 and decreased by $1.9 million from $6.7 million in the first six months of fiscal 2025.

The decrease was primarily due to unrealized gains recognized from observable price changes on non-marketable equity investments without readily determinable fair value in the first six months of fiscal 2025 which did not recur, interest income on a delayed tax refund in the first six months of fiscal 2025 which did not recur, partially offset by a higher return on cash and investments due to the higher cash and investment balance.

For the first six months of fiscal 2026, the Company’s net effective income tax expense rate was approximately 17% (first six months of fiscal 2025 - net effective income tax expense rate of approximately 17%).

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 income for the first six months of fiscal 2026 was $15.2 million, or $0.03 basic and diluted earnings per share on a U.S.

GAAP basis (first six months of fiscal 2025 - net loss $61.1 million, or $0.10 basic and diluted loss per share).

The increase in net income of $76.3 million was primarily due to a loss from discontinued operations in the first six months of fiscal 2025 which did not recur, a decrease in operating expenses, as described above in “Operating Expenses”, an increase in gross margin percentage, as described above in “Consolidated Gross Margin Percentage” and an increase in revenue as described above in “Revenue by Segment”.

Adjusted net income was $36.5 million in the first six months of fiscal 2026 or $0.06 adjusted basic earnings per share (first six months of fiscal 2025 - adjusted net loss of $16.9 million, or $0.03 adjusted basic loss per share).

The increase in adjusted net income of $53.4 million was primarily due to the same reasons described above on a U.S.

The weighted average number of shares outstanding was 595 million for basic earnings per share and 599 million for basis diluted earnings per share for the first six months of August 31, 2025.

The weighted average number of shares outstanding was 590 million for basic and diluted loss per share for the first six months of August 31, 2024.

Common Shares Outstanding

On September 22, 2025, there were 590 million voting common shares, 17.6 million restricted share units and 1.5 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.

Financial Condition

Liquidity and Capital Resources

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.

Cash, cash equivalents, and investments decreased by $46.8 million to $363.5 million as at August 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)

May 31, 2025 February 28, 2025 Change

August 31, 2025 February 28, 2025 Change

Cash and cash equivalents $ 276.4 $ 266.7 $ 9.7

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(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.

(1) Includes equity investments in private companies, including common shares of Arctic Wolf that were received as partial consideration for the sale of its Cylance endpoint security assets and liabilities to Arctic Wolf.

Equity investments in private companies are considered 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)

May 31, 2025 February 28, 2025 Change

August 31, 2025 February 28, 2025 Change

Current assets $ 507.2 $ 591.5 $ (84.3)

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Current Assets

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 decrease in current assets of $84.3 million at the end of the second quarter of fiscal 2026 from the end of the fourth quarter of fiscal 2025 was primarily due to a decrease of $57.0 million in short term investments, a decrease of $48.7 million in accounts receivable, net of allowance, partially offset by an increase of $10.4 million in other current assets, an increase of $9.7 million in cash and cash equivalents, an increase of $1.0 million in income taxes receivable and an increase of $0.3 million in other receivables.

At August 31, 2025, accounts receivable, net of allowance was $125 million, a decrease of $48.7 million from February 28, 2025.

The decrease was prim arily due to the collection of a significant receivable from the Government of Malaysia and a decrease in days sales outstanding to 90 days at the end of t he second quarter of fiscal 2026 from 102 days at the end of the fourth quarter of fiscal 2025, partially offset by a reclassification of a licensing receivable from long-term receivable to accounts receivable.

At August 31, 2025, other current assets were $40.4 million, an increase of $10.4 million from February 28, 2025.

The increase was primarily due to an increase of $5.8 million in prepaid professional services and an increase of $2.0 million in prepaid software.

At August 31, 2025, income taxes receivable were $2.6 million, an increase of $1 million from February 28, 2025.

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

At August 31, 2025, other receivables were $48.7 million, an increase of $0.3 million from February 28, 2025.

The increase was primarily due to an increase of $1.5 million in SIF claims, partially offset by a decrease of $0.5 million in sublease receivable.

Current Liabilities

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.

The decrease in current liabilities of $114.1 million at the end of the second quarter of 2026 from the end of the fourth quarter of fiscal 2025 was primarily due to a decrease of $42.3 million in accrued liabilities, a decrease of $33 million in deferred revenue, current, a decrease of $27.1 million in accounts payable and a decrease of $11.7 million in income taxes payable.

Accrued liabilities were $83.9 million at the end of the second quarter of 2026, reflecting a decrease of $42.3 million compared to February 28, 2025, which was primarily due to a decrease of $14.6 million in variable incentive plan accrual, a decrease of $4.8 million in restructuring cost accrual, a decrease of $4.2 million in litigation accruals, a decrease of $3.8 million in operating lease lia bility, current, a decrease of $2.0 million in deferred share unit liability, a decrease of $1.7 million in professional services accrual, a decrease of $1.6 million related to a lease termination fee accrual, a decrease of $1.4 million in inventory accrual and a decrease of $1.0 million in HST accruals related to the Company’s sale of Cylance in the fourth quarter of fiscal 2025.

Deferred revenue, current was $128.5 million, which reflects a decrease of $33.0 million compared to February 28, 2025 that was attributable to a decrease of $28.5 million in deferred revenue, current related to BlackBerry UEM, a decrease of $4.0 million in deferred revenue, current related to QNX and a decrease of $2.8 million in deferred revenue, current related to BlackBerry AtHoc.

Accounts payable were $4.0 million, reflecting a decrease of $27.1 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.

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

Income taxes payable were $13.8 million, reflecting a decrease of $11.7 million from February 28, 2025, which was primarily due to changes in the quarterly tax provision and tax payments.

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

For the Six Months Ended

(in millions)

May 31, 2025 May 31, 2024 Change

August 31, 2025 August 31, 2024 Change

Net cash flows provided by (used in):

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Operating Activities

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

The decrease in net cash flows used in operating activities of $17 million primarily reflects the changes in working capital.

Investing Activities

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.

During the six months ended August 31, 2025, cash flows provided by investing activities were $52.8 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 $57.1 million, offset by cash used in the acquisition of intangible assets of $2.6 million and the acquisition of property, plant and equipment of $1.7 million .

For the same period in the prior fiscal year, cash flows provided by investing activities were $16.6 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 $22.2 million, offset by cash used i n the acquisition of intangible assets of $3.8 million, the acquisition of property, plant and equipment $1.9 million, and the proceeds on sale of property, plant and equipment of $0.1 million.

Financing Activities

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.

The increase in cash flows used in financing activities was $30.3 million for the first six months of fiscal 2026 primarily due to a repurchase of common shares of $30.0 million pursuant to the NCIB share buyback program 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 share buyback program 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 share buyback program 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 share buyback program has been reached.

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

During the six months ended August 31, 2025, the Company repurchased 7.6 million common shares at a cost of $30.0 million.

Debt Financing and Other Funding Sources

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See Note 3 to the Consolidated Financial Statements for further information concerning the Company’s restricted cash.

Cash, cash equivalents, and investments were $381.9 million as at May 31, 2025.

Cash, cash equivalents, and investments were $363.5 million as at August 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 May 31, 2025:

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 August 31, 2025:

(in millions)

5 unchanged sentences

Total $ 313.3 $ 71.6 $ 241.7

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.

Total contractual and other obligations as at August 31, 2025 increased by $0.5 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.

2 unchanged sentences

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