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Item 1A. Risk Factors

2026-04-09 compared with 2025-04-02 · 85 added, 88 removed, 234 unchanged (43% of the section changed)

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The Company’s customers’ expansion and renewal rates may decline or fluctuate as a result of a number of factors, including the perceived need for such additional software and services, the level of satisfaction with the Company’s software and services, features or functionality, the reliability of the Company’s software and services, the Company’s customer support, customer budgets and other competitive factors, such as pricing and competitors’ offerings.

Further, the Company’s future success depends in part on the growth, if any, in the markets for secure communications software and embedded solutions.

If growth trends in the Company’s target markets do not continue or are delayed due to security incidents, technological challenges, lack of customer acceptance, weakening economic conditions or other reasons, demand for the Company’s products, and those of its competitors, could be negatively affected.

Further, the Company’s future success depends in part on the growth, if any, in the markets for embedded solutions and secure communications software.

If growth trends in the Company’s target markets do not continue or are delayed due to security

incidents, technological challenges, lack of customer acceptance, weakening economic conditions or other reasons, demand for the Company’s products, and those of its competitors, could be negatively affected.

The Company faces intense competition.

The Company is engaged in markets that are highly competitive and rapidly evolving, and has experienced, and expects to continue to experience, intense competition from a number of companies.

No technology has been exclusively or commercially adopted as the industry standard for many of the products and services offered by the Company.

Accordingly, both the nature of the competition and the scope of the business opportunities afforded by the markets in which the Company competes are uncertain.

The Company is engaged in markets that are highly competitive and rapidly evolving, and both the nature of the competition and the scope of the business opportunities afforded by the markets in which the Company competes are uncertain.

The Company’s competitors, including new market entrants, may implement new technologies before the Company does, deliver new products and services earlier, or provide products and services that are disruptive or that are attractively priced or enhanced or better quality compared to those of the Company, making it more difficult for the Company to win or preserve market share.

Some of the Company’s competitors have greater name recognition, larger customer bases and significantly greater financial, technical, marketing, public relations, sales, distribution and other resources than the Company does.

In particular, some of the Company’s competitors may be able to leverage their relationships with enterprise customers based on other products or incorporate functionality into existing products to gain business in a manner that discourages users from purchasing the Company’s solutions, including by selling at zero or negative margins, product bundling or offering closed technology platforms.

In the automotive sector, some of the Company’s OEM and Tier 1 customers have accelerated internal development of embedded solutions.

Some of the Company’s OEM and Tier 1 customers have advanced the internal development of embedded solutions, and are exploring the use of open source software that is perceived to be free to use.

Further, some of the Company’s competitors may be able to leverage their relationships with enterprise customers based on other products or incorporate functionality into existing products to gain business in a manner that discourages users from purchasing the Company’s solutions, including by selling at zero or negative margins, product bundling or offering closed technology platforms.

In addition, competition may intensify as the Company’s competitors enter into business combinations or alliances and established companies in other market segments expand to become competitive with the Company’s business.

The impact of the competition described above could result in fewer customer orders, loss of market share, pressure to reduce prices, commoditization of product and service categories in which the Company participates, reduced revenue and reduced

If the Company is unable to compete successfully, there could be a material adverse effect on the Company’s business, results of operations and financial condition.

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Failure to obtain or maintain such approvals or certifications for the Company’s products on a timely basis, or at all, could have a material adverse effect on the Company’s competitive position, particularly in government markets.

In addition, independent industry analysts often issue reports regarding endpoint security solutions and the perception of the Company’s solutions in the marketplace, especially as compared to those of the Company’s competitors, may be significantly influenced by these reports.

If these reports are negative, less frequent or less positive than reports on the Company’s competitors’ products, the Company’s competitive position may be harmed.

The Company may not be able to enhance, develop, introduce or monetize its products and services in a timely manner with competitive pricing, features and performance.

The industries in which the Company competes are characterized by rapid technological change, frequent new product introductions, frequent market price reductions, constant improvements in features and short product life cycles.

The Company’s future success depends upon its ability to enhance and integrate its current products and services, to provide for their compatibility with evolving industry standards and operating systems, to address competing technologies and evolving security threats, and to continue to develop and introduce new products and services offering enhanced performance and functionality on a timely basis at competitive prices

The process of developing new technology is complex and uncertain, and involves time, substantial costs and risks, which are further magnified when the development process integrations with third-party platforms.

The development of next-generation technologies that utilize new and advanced features involves making predictions regarding market adoption of such technologies.

The Company may be required to commit significant resources to developing new products, software and services before knowing whether such investment will result in products or services that the market will accept.

The Company’s inability, for technological or other reasons, some of which may be beyond the Company’s control, to enhance, develop, introduce and monetize products and services in a timely manner, or at all, in response to changing market conditions or customer requirements could have a material adverse effect on the Company’s business, results of operations and financial condition or could result in its products and services not achieving market acceptance or becoming obsolete.

In addition, if the Company fails to deliver a compelling customer experience or accurately predict emerging technological trends and the changing needs of customers and end users, or if the features of its new products and services do not meet the demands of its customers or are not sufficiently differentiated from those of its competitors, the Company’s business, results of operations and financial condition could be materially harmed.

The Company’s future success depends upon its ability to enhance and integrate its current products and services, to provide for their compatibility with evolving industry standards and regulations, to address competing technologies and evolving security threats, and to continue to develop and introduce new products and services offering enhanced performance and functionality on a timely basis at competitive prices.

Rapid advances in generative AI and automated coding tools are reducing the time and cost required to design, test, and deploy software applications.

As these technologies become widely accessible, existing and emerging competitors may accelerate their development cycles, release new features more quickly, or replicate functionality comparable to that of the Company’s products with materially lower investment.

Similarly, the use of AI technologies or increasingly pervasive open source tools by the Company’s customers to support development internally could have a negative impact on the Company’s business, including the revenues derived from the number of user licenses and the provision of professional services.

If the Company is unable to integrate AI-enabled development at a competitive pace, its market position, customer acquisition, and renewal rates could be adversely affected.

The successful introduction of new software platforms, such as the Alloy Kore™ platform recently launched by QNX with Vector Informatik, is inherently uncertain and involves numerous costs and risks, including delays in development, unforeseen technical challenges, integration complexities, and lower‑than‑expected customer adoption.

If a new platform fails to perform as intended, fails to drive market adoption, or generates unanticipated maintenance and support costs, the Company’s competitive position, brand reputation and financial results could be materially adversely affected.

If the Company is unable to enhance, develop, introduce and monetize products and services in a timely manner in response to changing market conditions or customer requirements, or if the features of the Company’s new products and services do not meet the demands of its customers or are not sufficiently differentiated from those of its competitors, the Company’s products and services may not achieve market acceptance and the Company’s business, results of operations and financial condition could be materially harmed.

Significant changes in government customer demand or procurement requirements could have an adverse effect on the Company’s business and results of operations.

The Company’s Secure Communications business depends, to a significant degree, on sales to government organizations.

Demand from government organizations is often unpredictable and subject to budgetary uncertainty and to reductions or delays in funding authorizations or procurement processes.

Government demand for communications solutions that support digital sovereignty and can be hosted on-premise, such as the Company’s Secure Communications products, has increased in recent months;

however, government procurement is unpredictable and subject to budgetary uncertainty and to reductions or delays in funding authorizations or processes.

Government demand and payment for the Company’s products and services may also be impacted by changes in the political and administrative environment, including cost-cutting initiatives and changes in leadership, policies or priorities, and by shifting government attitudes towards the Company and the territories in which it operates.

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Sales to government entities and performance on classified contracts may require the Company to obtain personnel security clearances and facility clearances, and there is no guarantee that the Company will be able to obtain or maintain such clearances.

In addition, government product requirements are often technically complex and the Company may be required to make costly changes to its products to meet such requirements without any assurance that such changes will generate a sale or improve the efficacy of its products.

The Company’s sales cycles can be long and unpredictable and its sales efforts require considerable time and expense.

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When dealing with automotive, government or large regulated enterprise customers, the Company is subject to risks related to increased customer bargaining power and pricing pressure, extended evaluation periods, regulatory changes, compliance with procurement requirements, complex approval systems, and unanticipated administrative delays.

QNX revenue recognition is also subject to delays in the advancement of software-defined vehicle programs and the manufacture of new vehicles by automotive OEMs.

QNX revenue recognition is also subject to delays in the advancement of software-defined vehicle programs and the time to the start of production of new designs by automotive and GEM OEMs.

The Company’s ability to grow software and services revenue is dependent in part on its ability to maintain a qualified direct sales force, which requires significant time and resources, including investment in systems and training.

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The occurrence or perception of a breach of the Company’s network cybersecurity measures or an inappropriate disclosure of confidential or personal information could significantly harm its business

The Company is continuously exposed to cyber threats through the actions of outside parties, such as hacking, viruses, and other malicious software, denial of service attacks, industrial espionage and other methods designed to breach the Company’s network or data security.

The Company is also exposed to risk as a result of process, coding or human errors and through attempts by third parties to fraudulently induce employees to provide access to confidential or personal information.

Although malicious attempts to gain unauthorized access to such information affect many companies across various industries, the Company is at a relatively greater risk of being specifically targeted because of its reputation for security and the nature of its network operations.

The Company devotes significant resources to network security, encryption and authentication technologies and other measures, including security policies and procedures, vulnerability testing and awareness training, to mitigate cyber risk to its systems, endpoints and data.

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Although to date the Company has not experienced any material financial or other losses relating to technology failure, cyberattacks or security breaches, there is no assurance that the Company will not experience material loss or damage in the future.

If the network and product security measures implemented by the Company or its partners, including third-party data center operators, cloud service providers and product manufacturers are breached, or perceived to be breached, or if the confidentiality, integrity or availability of the Company’s data, including intellectual property and legally protected personal data, is compromised, the Company could be exposed to significant litigation, service disruptions, investigation and remediation costs, regulatory sanctions, fines and contractual penalties.

In addition, any such event could materially damage the Company’s reputation, which is built in large measure on the security and reliability of BlackBerry products and services, and could result in the loss of investor confidence, channel partners, competitive advantages, revenues and customers, including the Company’s most significant government and regulated enterprise customers.

remediation costs, regulatory sanctions, fines and contractual penalties.

While the Company maintains cybersecurity insurance, the Company’s coverage may be insufficient to cover all losses or types of claims that may arise from cyber incidents, and any incidents may result in the loss of, or increased costs of, the Company’s insurance.

The Company’s success depends on its continuing ability to attract new personnel, retain existing key personnel and manage its staffing effectively.

The Company’s success is largely dependent on its continuing ability to identify, attract, develop, motivate and retain skilled employees, including members of its executive team, top research developers and experienced salespeople with specialized knowledge.

Competition for such people is intense, continuous, and increasing in the industries in which the Company participates, and the Company has experienced solicitations of its employees by its competitors.

Competition for highly skilled personnel is intense, especially in the Waterloo and Ottawa, Ontario areas, where the Company has a substantial presence and need for highly skilled personnel.

The Company is also substantially dependent on the continued service of its existing engineering personnel because of the complexity and specialization of its products and services.

To attract and retain critical personnel, the Company may experience increased compensation costs that are not offset by increased productivity or higher prices for the Company’s products and services.

Also, the Company’s financial results and share price performance (particularly for senior employees for whom equity-based compensation is a key element of their total compensation), among other factors, may impact the Company’s ability to attract new, and retain existing, employees.

Any failure by the Company to maintain appropriate staffing, develop effective business continuity and succession programs, mitigate turnover and effectively utilize employees with the right mix of skills and experience across the functions necessary to

meet the current and future needs of its business could have a material adverse effect on the Company’s business, results of operations and financial condition.

A failure or perceived failure of the security features of the Company’s solutions could materially adversely affect the Company’s reputation, financial condition and results of operations.

The Company’s use of AI technology and tools in its operations and in product development may expose the Company to reputational harm, operational challenges, legal liability, and regulatory concerns

The Company is increasingly incorporating AI technologies, including generative AI, into its operations to make business processes more efficient.

The introduction of generative AI into the Company’s operations may result in new or enhanced governmental or regulatory scrutiny, litigation, confidentiality, ethical concerns, or other complications that could adversely affect the Company’s business, reputation, or financial results.

Known risks of generative AI currently include risks related to errors, algorithmic bias, flawed training methodologies, privacy and security, and data provenance.

For example, generative AI may create content that appears to be correct but is factually inaccurate or contains copyrighted or other protected material.

If the Company uses such flawed or protected content to its detriment or the owners of such copyrighted material seek to enforce their rights, the Company may be exposed to brand or reputational harm, competitive harm and/or legal liability.

The evolving AI regulatory environment may, among other impacts, result in inconsistencies among AI regulations and frameworks across jurisdictions, increase the Company’s compliance, governance and research and development costs, or increase the Company’s exposure to regulatory scrutiny, proceedings and claims with the potential to result in significant penalties and reputational harm.

The Company has begun to rely on commercial AI models to support elements of its software development lifecycle.

Any failure by our employees, contractors, or partners to adhere to our policies regarding the appropriate use of AI in development could result in violations of confidentiality obligations, laws, or regulations, jeopardize the Company’s intellectual property rights, or expose the Company’s products or business systems to defects and malware, any of which could adversely affect the Company’s business, financial condition, results of operations, and prospects.

Additionally, the integration of these models into engineering workflows may expose the Company to heightened regulatory scrutiny with respect to products that are classified as high‑risk under emerging global AI and safety‑critical regulations.

Failure to demonstrate adequate human review and testing or explainability of AI‑assisted development processes could delay product approvals or impair the Company’s ability to offer solutions in regulated markets.

Changes in model performance, licensing terms, training‑data provenance, or vendor compliance with applicable AI regulations may impair the Company’s ability to validate and certify its products.

Adverse macroeconomic and geopolitical conditions, including trade policies and national security concerns, have had and may in the future have a material adverse effect on the Company’s business, results of operations and financial condition.

Challenging macroeconomic conditions, including as a result of geopolitical events, changes to international trade policies, public health crises, changes in inflation and interest rates, and disruptions in government operations, automotive labour and global supply chains have negatively impacted and may in the future negatively impact market demand for automobiles and other intelligent edge devices, as well as secure communications solutions.

Sales cycles, in turn, have been materially affected and may in the future materially affect the Company’s business, results of operations and financial condition.

Such economic factors and uncertainties are beyond the Company’s control and the Company has no comparative advantage in forecasting their effects.

Additionally, the imposition of tariffs and national security policies relating to technology supply chains or other barriers to trade that directly or indirectly impact the Company’s automotive customers, or the Company’s ability to transact business with certain customers, could have a material adverse effect on the Company’s results of operations.

For example, since 2025 the U.S.

presidential administration has imposed or threatened to impose new tariffs on imported products from Canada, Mexico, China and other countries, including most notably tariffs on imports of steel, aluminum and automobiles.

The administration has also proposed or is in the process of imposing additional tariffs and has indicated that it intends to pursue significant renegotiations of the Canada–United States–Mexico Agreement (known as the U.S.–Mexico–Canada Agreement in the United States) beginning later in 2026.

tariffs, any retaliatory tariffs, or trade negotiations may adversely affect the operations of the Company’s customers and, consequently, demand for the Company’s solutions.

There can be no assurance that the Company will be able to mitigate the impacts of any trade measures, which could be material to the Company’s business operations or harm the Company’s competitive position.

A failure or perceived failure of the security features or functionality of the Company’s solutions could materially adversely affect the Company’s reputation, financial condition and results of o perations.

The Company’s products and services frequently involve the transmission, processing and storage of data, including proprietary, confidential and personally-identifiable information, and a security compromise, misconfiguration or malfunction involving the Company’s software could result in such information being accessible to attackers or other third parties.

Real or perceived security breaches against a customer using the Company’s solutions could cause damage or disruption to the customer and subject the Company to liability, and may result in the customer and the public believing that the Company’s solutions are ineffective.

Additionally, the Company’s products and services are highly complex and may contain design defects, bugs or security vulnerabilities that are difficult to detect and correct.

Real or perceived defects, errors or vulnerabilities in the Company’s software and services could result in the delay or denial of their market acceptance and may harm the Company’s financial condition, results of operations and reputation as a security solutions vendor.

Additionally, the Company’s products and services are highly complex and may contain design defects, bugs or security vulnerabilities impacting reliability and performance that are difficult to detect and correct.

Such internal defects and a variety of external factors, including misconfigurations or errors introduced through collaborations with the Company’s engineering partners, could impair the effectiveness of the Company’s solutions or result in the delay or denial of their market acceptance and may harm the Company’s financial condition, results of operations and reputation as a security solutions vendor.

If errors are discovered, correcting them could require significant expenditures by the Company and the Company may not be able to successfully correct them in a timely manner or at all.

Adverse macroeconomic and geopolitical conditions, including trade policies, have had and may continue to have a material adverse effect on the Company’s business, results of operations and financial condition.

Challenging macroeconomic conditions, including as a result of geopolitical events, changes to international trade policies, public health crises, automotive labour disruptions, disruptions in global supply chains, and changes in inflation and interest rates, have negatively impacted and may in the future negatively impact consumer demand for automobiles and secure communications solutions, as well as sales cycles, and in turn have materially affected and may continue to materially affect the Company’s business, results of operations and financial condition.

Such economic factors and uncertainties are beyond the Company’s control and the Company has no comparative advantage in forecasting their effects.

Additionally, the imposition of new tariffs, border taxes or other barriers to trade that directly or indirectly impact the Company’s automotive or other customers could have a material adverse effect on the Company’s results of operations.

For example, since February 2025, the U.S.

The administration has also proposed, or is in the process of, increasing current tariffs and imposing additional tariffs on other imported goods.

tariffs, and any new or additional retaliatory tariffs that may be taken by Canada or other countries in response, may adversely affect the operations of the Company’s customers and, consequently, demand for the Company’s solutions.

The Company is closely monitoring this evolving situation but there can be no assurance that the Company will be able to mitigate the impacts of any trade measures, which could be material to the Company’s business operations or harm the Company’s competitive position.

Litigation against the Company may result in adverse outcomes.

In the course of its business, the Company is subject to potential litigation claims and enforcement actions arising from its public disclosure.

Given the highly competitive and dynamic industry in which the Company operates and the evolution of the Company’s business strategy over time, the Company’s financial results may not follow any past trends, making it difficult to predict the Company’s financial results.

In the course of its business, the Company faces the risk of litigation claims and enforcement actions arising from its public disclosure.

Given the highly competitive and dynamic industry in which the Company operates and the evolution of the Company’s business strategy over time, the Company’s financial results may not follow past trends, making it difficult to predict the Company’s financial results.

Consequently, actual results may differ materially from those expressed or implied by the Company’s forward-looking statements and may not meet the expectations of analysts or investors, which can contribute to the volatility of the market price of the Company’s common shares.

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Liability claims related to product defects, bugs or vulnerabilities could give rise to class action litigation or to the withdrawal of certifications, and the Company may be subject to such claims either directly or indirectly through indemnities that it provides to certain of its customers.

The Company’s exposure to product liability risk may increase as the Company continues to commercialize its software innovations for autonomous and connected vehicles.

The Company’s exposure to product liability risk may increase as the Company continues to commercialize its software innovations for autonomous and connected vehicles, as well as physical AI robotics.

Litigation resulting from these claims and from actions asserted by the Company could be costly and time-consuming and could divert the attention of management and key personnel from the Company’s business operations.

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Similarly, if the Company is unsuccessful in its defence of material litigation claims, the Company may be faced with significant monetary damages or injunctive relief against it that could have a material adverse effect on the Company’s business, BlackBerry brand, results of operations and financial condition.

Administrative or regulatory actions against the Company or its employees could also have a material adverse effect on the Company’s business, BlackBerry brand, results of operations and financial condition.

Administrative or regulatory actions against the Company or its employees could also have a material adverse effect on the Company’s business, reputation, results of operations and financial condition.

See Note 11 to the Consolidated Financial Statements for information regarding certain legal proceedings in which the Company is involved.

The Company’s success depends on its continuing ability to attract new personnel, retain existing key personnel and manage its staffing effectively.

Competition for highly skilled personnel is intense, especially in the Waterloo and Ottawa, Ontario areas, where the Company has a substantial presence and need for highly skilled personnel.

The Company is also substantially dependent on the continued service of its existing engineering personnel because of the complexity and specialization of its products and services.

meet the current and future needs of its business could have a material adverse effect on the Company’s business, results of operations and financial condition.

Network disruptions or other business interruptions could have a material adverse effect on the Company’s business and harm its reputation.

The Company’s operations rely to a significant degree on the efficient and uninterrupted operation of complex technology systems and networks, which are in some cases integrated with those of cloud service providers and third-party data centre operators.

The Company’s network operations and technology systems are potentially vulnerable to damage or interruption from a variety of sources, including by fire, earthquake, power loss, telecommunications or computer systems failure, cyberattack, human error, terrorist acts, war, and the threatened or actual suspension of BlackBerry services at the request of a government for alleged non-compliance with local laws or other events.

The increased number of third-party applications on the Company’s network may also enhance the risk of network disruption or cyberattack for the Company.

There may also be system or network interruptions if new or upgraded systems are defective or not installed properly, or if data centre operators fail to meet agreed service levels.

The Company has experienced network events, including those arising from third-party applications, in the past, none of which had a material impact on us.

There may also be system or network interruptions if new or upgraded systems are defective or not installed properly, or if data center operators fail to meet agreed service levels.

The Company has experienced network events, including those arising from third-party applications, in the past, none of which had a material impact on the Company.

Any future outage in a network or system or other unanticipated problem that leads to an interruption or disruption of BlackBerry services, however, could have a material adverse effect on the Company’s business, results of operations and financial condition, and could adversely affect the Company’s reputation.

The Company may not be successful in fostering an ecosystem of third-party application developers.

The Company believes decisions by customers to purchase its products depend and will depend in part on the availability and compatibility of software applications and services that are developed and maintained by third-party developers.

The Company may not be able to convince third parties to develop and maintain applications for its secure communications software and embedded solutions platforms.

The Company believes decisions by customers to purchase its products depend and will depend in part on the availability of developers with experience in using the Company’s QNX platform and on the compatibility of software applications and services that are developed and maintained by third-party developers.

The Company may not be able to convince third parties to develop and maintain applications for its QNX embedded solutions platforms and secure communications software.

The loss of, or inability to maintain these developer relationships may materially and adversely affect the desirability of the Company’s products and, hence, the Company’s revenue from the sale of its products.

The Company’s success depends in part on its relationships with resellers and channel partners.

The Company’s ability to maintain and expand its market reach depends in part on establishing, developing and maintaining relationships with third party resellers and channel partners, especially in its Secure Communications business.

If the Company is not able to effectively identify and establish new relationships with successful resellers and channel partners, or to maintain or enhance existing relationships without giving rise to conflicts between channels, or if the Company’s partners do not act in a manner that will promote the success of the Company’s products and services, the Company’s business, results of operations and financial condition could be materially adversely affected.

Many resellers and channel partners sell products and services of the Company’s competitors and may terminate their relationships with the Company with limited or no notice and limited or no penalty.

If the Company’s competitors offer their products and services to the resellers and channel partners on more favorable contractual or business terms, have more products and services available, or those products and services are, or are perceived to be, in higher demand by end users, or are more lucrative for the resellers and channel partners, there may be continued pressure on the Company to reduce the price of its products and services, or those resellers and channel partners may stop offering the Company’s products or de-emphasize the sale of its products and services in favor of the Company’s competitors, which could have a material adverse effect on the Company’s business, results of operations and financial condition.

The Company’s products and services are dependent upon interoperability with rapidly changing systems provided by third parties.

The Company’s platform depends on interoperability with solutions offered by silicon vendors and other software vendors, such as those provided by Apple, Google and Microsoft, as well as by automotive OEMs.

The Company’s platform depends on interoperability with solutions offered by silicon and hardware platform vendors and other software vendors, such as those provided by Apple, Google and Microsoft, as well as by automotive OEMs.

If the Company fails to support timely integrations with third-party solutions, the Company’s business and reputation could suffer.

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Furthermore, some of the features and functionality in the Company’s products and services require interoperability with APIs from other vendors, and if these vendors decide to restrict the Company’s access to their APIs, that functionality would be lost and the Company’s business could be impaired.

The Company uses artificial intelligence solutions, which may expose it to operational challenges, legal liability, reputational harm and regulatory concerns .

The Company incorporates novel uses of artificial intelligence (“AI”) technologies, including generative AI, into its operations.

The introduction of generative AI, an emerging technology in the early stages of commercial use, into the Company’s operations may result in new or enhanced governmental or regulatory scrutiny, litigation, confidentiality, ethical concerns, or other complications that could adversely affect the Company’s business, reputation, or financial results.

Known risks of generative AI currently include risks related to accuracy, bias, toxicity, privacy and security and data provenance.

For example, AI technologies, including generative AI, may create content that appears correct but is factually inaccurate or flawed, or contains copyrighted or other protected material, and if the Company uses this flawed or protected content to its detriment or the owners of such copyrighted material seek to enforce their rights, the Company may be exposed to brand or reputational harm, competitive harm and/or legal liability.

The technologies underlying AI and its uses are the subject of ongoing review by various governmental and regulatory agencies, and various jurisdictions in the U.S., the European Union and elsewhere are applying, or are considering applying, their cybersecurity and data protection laws to AI or are considering general legal frameworks for AI.

Any actual or perceived failure to comply with these laws, regulations or ethical standards could include significant penalties and reputational harm.

Risks Related to Intellectual Property and Technology Licensing

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Detecting and protecting against the unauthorized use of the Company’s products, technology proprietary rights, and intellectual property rights is expensive, difficult and, in some cases, impossible.

Litigation may be necessary in the future to enforce or defend the Company’s intellectual property rights and could result in substantial costs and diversion of management resources, either of which could harm the Company’s business, financial condition and results of operations, and there is no assurance that the Company will be successful.

Litigation may be necessary in the future to enforce or defend the Company’s intellectual property rights and could result in substantial costs and

diversion of management resources, either of which could harm the Company’s business, financial condition and results of operations, and there is no assurance that the Company will be successful.

Further, the laws of certain countries in which the Company’s products and services are sold or licensed do not protect intellectual property rights to the same extent as the laws of Canada or the United States.

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In addition, the disclosure in the Company’s patent applications may not be sufficient to meet the statutory requirements for patentability in all cases.

As a result, there can be no assurance that the Company’s patent applications will result in patents being issued.

While the Company enters into confidentiality and non-disclosure agreements with its employees, consultants, contract manufacturers, customers, potential customers and others to attempt to limit access to, and distribution of, proprietary and confidential information, it is possible that:

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• contractual provisions may not be enforceable.

In addition, the Company expends significant resources to patent and manage the intellectual property it creates with the expectation that it will generate revenues by incorporating that intellectual property in its products or services.

The Company also monetizes its patent assets through outbound licensing.

In addition, the Company monetizes its patent assets through outbound licensing.

Changes in the law may weaken the Company’s ability to collect royalty revenue for licensing its patents.

Similarly, licensees of the Company’s patents may fail to satisfy their obligations to pay royalties, or may contest the scope and extent of their obligations.

In addition, ongoing commercial relationships with potential licensees may limit the Company’s ability to optimize its patent licensing revenue.

Finally, the royalties the Company can obtain to monetize its intellectual property may decline because of the evolution of technology, changes in the selling price of products using licensed patents, or the difficulty of discovering infringements.

The consideration payable to the Company from the sale of its non-core patent portfolio in the Malikie Transaction is expected to include potential future royalty payments.

The consideration payable to the Company from the sale of its non-core patent portfolio to Malikie Innovations Limited in fiscal 2024 (the “Malikie Transaction”) is expected to include potential future royalty payments.

The royalties, if any, that may be earned by the Company from the Malikie Transaction in any particular fiscal year or in the aggregate over the term of the royalty arrangement are difficult to predict, particularly given that any such royalties will depend entirely upon the business success of a third party.

The aggregate proceeds that the Company ultimately receives from the Malikie Transaction are expected to be less than $900 million.

The Company is subject to risks related to the use of open source software may not be able to obtain rights to use third-party software.

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courts, and there is a risk that such licenses could be construed in a manner that could impose unanticipated conditions or restrictions on the Company’s ability to commercialize its products and services.

In such an event, the Company could be exposed to litigation or reputational damage, and could be required to obtain licenses from third parties in order to continue offering its products and services or to re-engineer its products or services, or discontinue their sale in the event re-engineering cannot be accomplished on a timely basis, any of which could materially and adversely affect the Company’s business and operating results.

or services, or discontinue their sale in the event re-engineering cannot be accomplished on a timely basis, any of which could materially and adversely affect the Company’s business and operating results.

Certain of the Company’s products include intellectual property that is licensed from third parties.

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Companies in the software and technology industries, including some of the Company’s current and potential competitors, own large numbers of patents, copyrights, trademarks and trade secrets and frequently engage in litigation based on allegations of infringement or other violations of intellectual property rights.

Although the Company believes that third-party software included in the Company’s products is licensed from the entity holding the intellectual property rights and that its products do not infringe on the rights of third parties, third parties have and are expected to continue to assert infringement claims against

the Company in the future.

The Company may be subject to these types of claims either directly or indirectly through indemnities that it provides to certain of its customers, partners and suppliers against these claims.

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The Company faces asset risk, including the potential for charges related to certain investments, long-lived assets and goodwill.

As partial consideration for the sale of its Cylance endpoint security assets and liabilities to Arctic Wolf, the Company received common shares of Arctic Wolf as well as a covenant from Arctic Wolf to make a subsequent cash payment to the Company of

approximately $40 million one year following the closing.

As partial consideration for the sale of its Cylance endpoint security assets and liabilities to Arctic Wolf, the Company received common shares of Arctic Wolf.

The common shares of Arctic Wolf are illiquid securities without a public market and, as such, they cannot be readily sold or exchanged for cash and they may be difficult to value accurately.

The Company may not be able to sell these shares at desired times or prices, which could negatively impact its financial condition and results of operations.

Additionally, the Company is exposed to risk related to potential non-payment of the deferred cash consideration from Arctic Wolf.

The Company’s long-lived assets include items such as the Company’s network infrastructure, operating lease right-of-use assets and certain intellectual property.

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GAAP, the Company tests goodwill for impairment annually, during the fourth quarter, or more frequently if events or changes in circumstances indicate that the asset may be impaired.

These events and circumstances may include a significant change in legal factors or in the business climate, a significant decline in the Company’s share price, an adverse action or assessment by a regulator, unanticipated competition, a loss of key personnel, significant disposal activity and the testing of recoverability for a significant asset group.

If any such events or circumstances arise, the Company may be required to record an impairment charge in the value of its goodwill.

Tax provision changes, the adoption of new tax legislation or exposure to additional tax liabilities could materially impact the Company’s financial condition.

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Government regulations applicable to the Company’s products and services, including products containing encryption capabilities, could negatively impact the Company’s business.

Certain government regulations applicable to the Company’s products and services may provide opportunities for competitors or limit growth.

The impact of potential incremental obligations may vary based on the jurisdiction, but regulatory changes could impact whether the Company enters, maintains or expands its presence in a particular market, and whether the Company must dedicate additional resources to comply with these obligations.

Various countries have enacted laws and regulations, adopted controls, license or permit requirements, and restrictions on the export, import, and use of products or services that contain encryption technology.

In addition, from time to time, governmental agencies have proposed additional regulations relating to encryption technology, such as requiring certification, notifications, review of source code, or the escrow and governmental recovery of private encryption keys.

Governmental regulation of encryption technology, including the regulation of imports or exports, could harm the Company’s sales in one or more jurisdictions and adversely affect the Company’s revenues.

Governmental regulation of encryption technology, including the regulation of imports or exports, could harm the Company’s sales or margins in one or more jurisdictions or impact whether the Company enters, maintains or expands its presence in a particular market.

Complying with such regulations could also require the Company to devote additional research and development resources to change the Company’s software or services or alter the methods by which the Company makes them available, which could be costly.

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In addition, acquisitions may involve unanticipated costs and liabilities, including possible litigation and new or increased regulatory exposure, which are not covered by the indemnity or escrow provisions, if any, of the relevant acquisition agreements.

As business circumstances dictate, the Company may also decide to divest itself of assets or businesses, as in the case of the sale of the Cylance endpoint security assets to Arctic Wolf.

As business circumstances dictate, the Company may also decide to divest itself of assets or businesses.

The Company may not be successful in identifying or managing the risks involved in any divestiture, including its ability to negotiate or collect a reasonable purchase price for the assets, potential liabilities that may continue to apply to the Company following the divestiture, potential tax implications, business disruption, employee issues or other matters.

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The Company has operations in numerous locations around the world that expose the Company to additional diverse environmental risks.

A significant natural disaster, such as an earthquake, fire or flood could have a material adverse impact on the Company’s business and operations and could cause the Company to incur costs to repair damages to its facilities,

equipment and infrastructure.

From time to time, the Company’s offices and remote working locations have historically experienced, and are projected to continue to experience, climate-related events including drought, heat waves, ice storms, power shortages, and wildfires and resultant air quality impacts.

From time to time, the Company’s offices and remote working locations have historically

experienced, and are projected to continue to experience, climate-related events including drought, heat waves, ice storms, power shortages, and wildfires and resultant air quality impacts.

The increasing frequency and impact of extreme weather events on the infrastructure of the Company and its suppliers, as well as public infrastructure, have the potential to disrupt the business of the Company, its suppliers and its customers.

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The market price of the Company’s shares may fluctuate significantly in response to the risks described elsewhere in these Risk Factors, as well as numerous other factors, many of which are beyond the Company’s control, including:

(i) announcements by the Company or its competitors of new products and services, acquisitions, customer wins or strategic partnerships;

(i) announcements by the Company or its competitors of new products and services, acquisitions, divestitures, share buybacks, customer wins or strategic partnerships;

(ii) forward-looking financial guidance provided by the Company, any updates to this guidance, or the Company’s failure to meet this guidance;

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

What changed 10-K

Item 1A. Risk Factors