What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-09-24 compared with 2026-06-25 · 480 added, 183 removed, 389 unchanged (63% 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, 2026, 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, 2026 (the “Annual MD&A”) included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2026 (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, 2026, 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, 2026 (the “Annual MD&A”) included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2026 (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 expectations regarding the Alloy Kore™ vehicle software platform;

• the Company’s expectations with respect to its total and segment revenue and adjusted EBITDA, non-GAAP EPS and operating cash flow in the second quarter of fiscal 2027 and for fiscal 2027 as a whole;

• the Company’s expectations with respect to its total and segment revenue and adjusted EBITDA, non-GAAP EPS and operating cash flow in the third quarter of fiscal 2027 and for fiscal 2027 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, 2026 compared to the three months ended May 31, 2025 - Revenue - Revenue by Segment”, “Results of Operations - Three months ended May 31, 2026 compared to the three months ended May 31, 2025 - Revenue - Adjusted Gross Margin and Adjusted EBITDA by Segment”, “Results of Operations - Three months ended May 31, 2026 compared to the three months ended May 31, 2025 - Net Income” 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, 2026 compared to the three months ended August 31, 2025 - Revenue - Revenue by Segment”, “Results of Operations - Three months ended August 31, 2026 compared to the three months ended August 31, 2025 - Revenue - Adjusted Gross Margin and Adjusted EBITDA by Segment”, “Results of Operations - Three months ended August 31, 2026 compared to the three months ended August 31, 2025 - Net Income” 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 Com pany 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 believes that Alloy Kore has the potential to expand average selling prices by multiples on a per-vehicle basis and drive meaningful backlog growth.

Subsequent to the end of the quarter, the Company announced an Alloy Kore design win with Coretura, the commercial vehicle software joint venture between Volvo Group and Daimler Truck.

The design win is the largest in QNX history and added more than $100 million to the QNX royalty backlog.

QNX is also a preferred supplier of embedded systems for companies building medical devices, robotics, physical AI solutions, rail systems, industrial automation solutions, aerospace and defence systems, and other mission-critical applications.

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The Company has continued to execute on its strategy in fiscal 2027 and announced the following significant achievements during the most recent quarter:

• The integration of QNX® OS for Safety 8.0 with NVIDIA IGX Thor and the NVIDIA Halos Safety Stack;

• The selection of QNX SDP 8.0 and QNX Hypervisor for Safety 8.0 by Leapmotor for its forthcoming premium electric SUV, the D19;

• A collaboration between QNX and TKMS in support of Canada’s patrol submarine program, including the adoption by TKMS of QNX’s trusted foundational software across its next‑generation naval platforms;

• The release of QNX Hypervisor 8.0 for Safety, the next-generation, safety-certified embedded virtualization platform from QNX;

• Expanded support for AMD Ryzen Embedded x86 processors on QNX SDP 8.0;

• The renewal and expansion of the Company’s multi-year agreement with the Government of Canada, including a significant increase in the deployment of BlackBerry SecuSUITE;

• Announced the achievement of FedRAMP Class D (High) re-certification for BlackBerry AtHoc;

• The renewal of the Company’s normal course issuer bid share buyback program for up to 26.8 million common shares.

First Quarter Fiscal 2027 Summary Results of Operations

The following table sets forth certain consolidated statements of operations data for the quarter ended May 31, 2026 compared to the quarter ended May 31, 2025 under U.S.

• QNX and Vector Informatik secured the first Alloy Kore design win, the largest design win in QNX history, with Coretura, the commercial vehicle software joint venture between Volvo Group and Daimler Truck, adding more than $100 million to the QNX royalty backlog;

• Announced that Momenta and XHEART selected QNX OS for Safety, built on SDP 8.0, as the foundation for a production-ready Physical AI-defined autonomous-driving platform certified to ISO 26262 ASIL D;

• QNX added support for the Hailo-8 AI Accelerator on SDP 8.0, expanding its Physical AI ecosystem;

benchmark testing demonstrated up to 14x greater performance consistency than the real-time Linux environment tested;

• BlackBerry® SecuSUITE® renewed its NIAP Common Criteria certification, reinforcing its sovereign-grade security credentials and position in government and mission-critical communications;

• BlackBerry® AtHoc® added Microsoft Teams and Entra ID integrations, strengthening mission-critical response and operational resilience for enterprise and government customers.

Second Quarter Fiscal 2027 Summary Results of Operations

The following table sets forth certain consolidated statements of operations data for the quarter ended August 31, 2026 compared to the quarter ended August 31, 2025 under U.S.

For the Three Months Ended

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

May 31, 2026 May 31, 2025 Change

August 31, 2026 August 31, 2025 Change

Revenue $ 163.3 $ 129.6 $ 33.7

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

GAAP basis for the first quarter of fiscal 2027 and fiscal 2026 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.

GAAP basis for the second quarter of fiscal 2027 includes the dilutive effect of the Notes (as defined in “Financial Condition - Debt Financing and Other Funding Sources”).

Diluted earnings per share on a U.S.

GAAP basis for the first quarter of fiscal 2027 and fiscal 2026 includes the dilutive effect of stock-based compensation.

GAAP basis for the second quarter of fiscal 2027 and fiscal 2026 includes the dilutive effect of stock-based compensation.

See Note 7 to the Consolidated Financial Statements for the Company’s calculation of the diluted weighted average number of shares outstanding.

The following table shows information by operating segments for the three months ended May 31, 2026 and May 31, 2025.

The following tables show information by operating segments for the three and six months ended August 31, 2026 and August 31, 2025.

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

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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, which excludes amounts related to investment income, taxes, amortization, restructuring charges, stock compensation expenses and long-lived asset impairment charge.

For the three months ended May 31, 2026, the Company presented segment adjusted EBITDA results excluding amortization in segment research and development, segment sales and marketing and segment general and administrative to align to the operating expense presentation on the Consolidated Statement of Operations.

For purposes of comparability, the Company’s segment adjusted EBITDA for the three months ended May 31, 2025 has been updated to conform to the current year’s presentation.

For the three and six months ended August 31, 2026, the Company presented segment adjusted EBITDA results excluding amortization in segment research and development, segment sales and marketing and segment general and administrative to align to the operating expense presentation on the Consolidated Statement of Operations.

For purposes of comparability, the Company’s segment adjusted EBITDA for the three and six months ended August 31, 2025 has been updated to conform to the current year’s presentation.

See Note 10 to the Consolidated Financial Statements for a description of the Company’s operating segments.

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QNX Secure Communications Licensing

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

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

2026 2025 2026 2025 2026 2025

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$ 29.0 $ 20.5 $ 8.5 $ 8.0 $ 9.7 $ (1.7) $ 20.0 $ 5.6 $ 14.4

For the Six Months Ended

(in millions)

QNX Secure Communications Licensing

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

2026 2025 2026 2025 2026 2025

Segment revenue $ 152.6 $ 120.6 $ 32.0 $ 134.5 $ 119.4 $ 15.1 $ 29.1 $ 11.3 $ 17.8

Segment cost of sales 21.0 21.9 (0.9) 44.3 38.3 6.0 3.0 3.1 (0.1)

Segment adjusted gross margin $ 131.6 $ 98.7 $ 32.9 $ 90.2 $ 81.1 $ 9.1 $ 26.1 $ 8.2 $ 17.9

Segment research and development 38.5 25.3 13.2 24.4 22.2 2.2 — — —

Segment sales and marketing 28.0 23.9 4.1 23.4 25.7 (2.3) — — —

Segment general and administrative 16.8 16.3 0.5 14.4 14.0 0.4 2.9 1.8 1.1

Less amortization included in segment cost of sales — — — 0.2 0.1 0.1 3.0 3.0 —

Segment adjusted EBITDA (1)

$ 48.3 $ 33.2 $ 15.1 $ 28.2 $ 19.3 $ 8.9 $ 26.2 $ 9.4 $ 16.8

_____________________________

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

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Financial Highlights

The Company h ad approximately $422.9 million in cash, cash equivalents and investments as of May 31, 2026 (February 28, 2026 - $432.4 million).

In the first quarter of fiscal 2027, the Company recognized revenue of $152.9 million and net income of $8.5 million, or $0.01 basic and diluted earnings per share, on a U.S.

GAAP basis (first quarter of fiscal 2026 - revenue of $121.7 million and net income of $1.9 million, or $0.00 basic and diluted earnings per share).

The Company recognized adjusted net income of $25.4 million , and adjusted basic earnings of $0.04 per share, on a non-GAAP basis in the first quarter of fiscal 2027 (first quarter of fiscal 2026 - adjusted net income of $10.8 million and adjusted basic earnings of $0.02 per share).

The Company h ad approximately $447.1 million in cash, cash equivalents and investments as of August 31, 2026 (February 28, 2026 - $432.4 million).

In the second quarter of fiscal 2027, the Company recognized revenue of $163.3 million and net income of $33.9 million, or $0.06 basic earnings per share and $0.05 diluted earnings per share, on a U.S.

GAAP basis (second quarter of fiscal 2026 - revenue of $129.6 million and net income of $13.3 million, or $0.02 basic and diluted earnings per share).

The Company recognized adjusted net income of $43.2 million , and adjusted basic earnings per share of $0.07, on a non-GAAP basis in the second quarter of fiscal 2027 (second quarter of fiscal 2026 - adjusted net income of $24.2 million and adjusted basic earnings per share of $0.04).

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 25, 2026, the Company announced financial results for the three months ended May 31, 2026, which included certain non-GAAP financial measures and non-GAAP ratios, including adjusted gross margin, adjusted gross margin percentage, adjusted operating expenses, adjusted net income, adjusted earnings 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, segment adjusted EBITDA, adjusted operating income margin percentage, adjusted EBITDA margin percentage and free cash flow (usag e).

On September 24, 2026, the Company announced financial results for the three and six months ended August 31, 2026, which included certain non-GAAP financial measures and non-GAAP ratios, including adjusted gross margin, adjusted gross margin percentage, adjusted operating expenses, adjusted net income, adjusted basic earnings 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, segment adjusted EBITDA, adjusted operating income margin percentage, adjusted EBITDA margin percentage and free cash flow (usage).

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

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The Company measures its deferred share units (“DSUs”) at fair value as liability-classified awards in accordance with U.S.

Each period, the fair value of the DSUs is remeasured and the resulting gain and loss from the change in fair value of these liability-classified awards are recognized in income.

Each period, the fair value of the DSUs is remeasured and

the resulting gain and loss from the change in fair value of these liability-classified awards is recognized in income.

The amount varies each period depending on changes in the Company’s share price, which is influenced by market factors in addition to Company performance.

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

However, the Company believes that the provision of supplemental non-GAAP measures allows investors to evaluate the financial performance of the

Company’s business using the same evaluation measures that management uses, and is therefore a useful indication of the Company’s performance or expected performance of future operations and facilitates period-to-period comparison of operating performance.

However, the Company believes that the provision of supplemental non-GAAP measures allows investors to evaluate the financial performance of the Company’s business using the same evaluation measures that management uses, and is therefore a useful indication of the Company’s performance or expected performance of future operations and facilitates period-to-period comparison of operating performance.

As a result, the Company considers it appropriate and reasonable to provide, in addition to U.S.

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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, 2026 and May 31, 2025

Readers are cautioned that adjusted gross margin, adjusted gross margin percentage, adjusted operating expenses, adjusted net income, adjusted earnings 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, segment adjusted EBITDA, adjusted operating income margin percentage, adjusted EBITDA margin percentage and free cash flow (usag e) and similar measures do not have any standardized meaning prescribed by U.S.

GAAP based measures for the three months ended August 31, 2026 and August 31, 2025

Readers are cautioned that adjusted gross margin, adjusted gross margin percentage, adjusted operating expenses, adjusted net income, adjusted basic earnings 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, segment adjusted 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 gross margin and gross margin percentage for the three months ended May 31, 2026 and May 31, 2025 to both adjuste d gross margin and adjusted gross margin percentage are reflected in the table below:

For the Three Months Ended (in millions) May 31, 2026 May 31, 2025

GAAP gross margin and gross margin percentage for the three months ended August 31, 2026 and August 31, 2025 to both adjuste d gross margin and adjusted gross margin percentage is reflected in the table below:

For the Three Months Ended (in millions) August 31, 2026 August 31, 2025

Gross margin $ 127.1 $ 96.6

Stock compensation expense 0.5 0.5

Stock compensation expenses 0.6 0.6

Adjusted gross margin $ 127.7 $ 97.2

Gross margin % 77.8 % 74.5 %

Stock compensation expense 0.3 % 0.4 %

Stock compensation expenses 0.4 % 0.5 %

Adjusted gross margin % 78.2 % 75.0 %

Reconciliation of U.S.

GAAP operating expenses for the thr ee months ended May 31, 2026 and May 31, 2025 to adjusted operating expenses is reflected in the table below:

For the Three Months Ended (in millions) May 31, 2026 May 31, 2025

GAAP operating expenses for the thr ee months ended August 31, 2026 and August 31, 2025 to adjusted operating expenses is reflected in the table below:

For the Three Months Ended (in millions) August 31, 2026 August 31, 2025

Operating expenses $ 93.5 $ 85.1

Restructuring charges 2.7 3.4

Stock compensation expense 6.0 5.2

Stock compensation expenses 6.9 5.3

Acquired intangibles amortization — 1.1

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GAAP net income and U.S.

GAAP basic earnings per share for the three months ended May 31, 2026 and May 31, 2025 to adjusted net income and adjusted basic earnings per share is reflected in the table below:

For the Three Months Ended (in millions, except per share amounts) May 31, 2026 May 31, 2025

GAAP basic earnings per share for the three months ended August 31, 2026 and August 31, 2025 to adjusted net income and adjusted basic earnings per share is reflected in the table below:

For the Three Months Ended (in millions, except per share amounts) August 31, 2026 August 31, 2025

Basic earnings

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Restructuring charges 2.7 3.4

Stock compensation expense 6.5 5.7

Stock compensation expenses 7.5 5.9

Acquired intangibles amortization — 1.1

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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, 2026 and May 31, 2025 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, 2026 May 31, 2025

GAAP research and development, sales and marketing, general and administrative, and amortization expense for the three months ended August 31, 2026 and August 31, 2025 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, 2026 August 31, 2025

Research and development $ 33.2 $ 25.6

Stock compensation expense 1.5 1.3

Stock compensation expenses 1.6 1.4

Adjusted research and development expense $ 31.6 $ 24.2

Sales and marketing $ 25.3 $ 24.4

Stock compensation expense 1.1 1.4

Stock compensation expenses 1.4 1.3

Adjusted sales and marketing expense $ 23.9 $ 23.1

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Restructuring charges 2.7 3.4

Stock compensation expense 3.4 2.5

Stock compensation expenses 3.9 2.6

Deferred share units revaluation adjustment (1.6) —

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Reconciliation of U.S.

GAAP operating income to adjusted operating income, adjusted EBITDA, adjusted operating income margin percentage and adjusted EBITDA margin percentage for the three months ended May 31, 2026 and May 31, 2025 is reflected in the table below.

For the Three Months Ended (in millions) May 31, 2026 May 31, 2025

GAAP operating income to adjusted operating income, adjusted EBITDA, adjusted operating income margin percentage and adjusted EBITDA margin percentage for the three months ended August 31, 2026 and August 31, 2025 is reflected in the table below.

For the Three Months Ended (in millions) August 31, 2026 August 31, 2025

Operating income $ 33.6 $ 11.5

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Restructuring charges 2.7 3.4

Stock compensation expense 6.5 5.7

Stock compensation expenses 7.5 5.9

Acquired intangibles amortization — 1.1

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

The CODM also uses the segment metric of segment adjusted EBITDA, which is a non-GAAP measure including segment expenses that exclude amounts related to investment income, taxes, amortization, restructuring charges, stock compensation expenses and long-lived ass et impairment.

The CODM also uses segment adjusted EBITDA, which is a non-GAAP measure including segment expenses that exclude amounts related to investment income, taxes, amortization, restructuring charges, stock compensation expenses and long-lived ass et impairment.

The following table reconciles the U.S.

GAAP measures of segment profit or loss disclosed by the Company in the Consolidated Financial Statements from segment adjusted gross margin to segment adjusted EBITDA for the three months ended May 31, 2026 and May 31, 2025.

For the Three Months Ended

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QNX Secure Communications Licensing

May 31, May 31, May 31,

August 31, August 31, August 31,

2026 2025 2026 2025 2026 2025

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Segment adjusted EBITDA $ 29.0 $ 20.5 $ 8.0 $ 9.7 $ 20.0 $ 5.6

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

GAAP based measures for the six months ended August 31, 2026 and August 31, 2025.

A reconciliation of the most directly comparable U.S.

GAAP gross margin and gross margin percentage for the six months ended August 31, 2026 and August 31, 2025 to both adjuste d gross margin and adjusted gross margin percentage is reflected in the table below:

For the Six Months Ended (in millions) August 31, 2026 August 31, 2025

Gross margin $ 246.8 $ 186.9

Stock compensation expenses 1.1 1.1

Adjusted gross margin $ 247.9 $ 188.0

Gross margin % 78.1 % 74.4 %

Stock compensation expenses 0.3 % 0.4 %

Adjusted gross margin % 78.4 % 74.8 %

Reconciliation of U.S.

GAAP operating expenses for the six months ended August 31, 2026 and August 31, 2025 to adjusted operating expenses is reflected in the table below:

For the Six Months Ended (in millions) August 31, 2026 August 31, 2025

Operating expenses $ 197.9 $ 173.4

Restructuring charges 3.0 6.3

Stock compensation expenses 12.9 10.5

Acquired intangibles amortization — 2.8

LLA impairment charge 0.8 0.6

Deferred share units revaluation adjustment 8.4 (1.5)

Adjusted operating expenses $ 172.8 $ 154.7

Reconciliation of U.S.

GAAP net income and U.S.

GAAP basic earnings per share for the six months ended August 31, 2026 and August 31, 2025 to adjusted net income and adjusted basic earnings per share is reflected in the table below:

For the Six Months Ended (in millions, except per share amounts) August 31, 2026 August 31, 2025

Basic earnings per share Basic earnings per share

Net income $ 42.4 $ 0.07 $ 15.2 $ 0.03

Restructuring charges 3.0 6.3

Stock compensation expenses 14.0 11.6

Acquired intangibles amortization — 2.8

LLA impairment charge 0.8 0.6

Deferred share units revaluation adjustment 8.4 (1.5)

Adjusted net income $ 68.6 $ 0.12 $ 35.0 $ 0.06

Reconciliation of U.S.

GAAP research and development, sales and marketing, general and administrative, and amortization expense for the six months ended August 31, 2026 and August 31, 2025 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, 2026 August 31, 2025

Research and development $ 66.2 $ 50.6

Stock compensation expenses 3.1 2.7

Adjusted research and development expense $ 63.1 $ 47.9

Sales and marketing $ 54.8 $ 53.1

Stock compensation expenses 2.5 2.7

Adjusted sales and marketing expense $ 52.3 $ 50.4

General and administrative $ 71.1 $ 62.0

Restructuring charges 3.0 6.3

Stock compensation expenses 7.3 5.1

Deferred share units revaluation adjustment 8.4 (1.5)

Adjusted general and administrative expense $ 52.4 $ 52.1

Amortization $ 5.0 $ 7.1

Acquired intangibles amortization — 2.8

Adjusted amortization expense $ 5.0 $ 4.3

Reconciliation of U.S.

GAAP operating income to adjusted operating income, adjusted EBITDA, adjusted operating income margin percentage and adjusted EBITDA margin percentage for the six months ended August 31, 2026 and August 31, 2025 are reflected in the table below.

For the Six Months Ended (in millions) August 31, 2026 August 31, 2025

Operating income $ 48.9 $ 13.5

Non-GAAP adjustments to operating income

Restructuring charges 3.0 6.3

Stock compensation expense 14.0 11.6

Acquired intangibles amortization — 2.8

LLA impairment charge 0.8 0.6

Deferred share units revaluation adjustment 8.4 (1.5)

Total non-GAAP adjustments to operating income 26.2 19.8

Adjusted operating income 75.1 33.3

Amortization 8.2 10.3

Acquired intangibles amortization — (2.8)

Adjusted EBITDA $ 83.3 $ 40.8

Revenue $ 316.2 $ 251.3

Adjusted operating income margin % (1)

Adjusted EBITDA margin % (2)

______________________________

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

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

The following table reconciles the U.S.

GAAP measures of segment profit or loss disclosed by the Company in the Consolidated Financial Statements from segment adjusted gross margin to segment adjusted EBITDA for the six months ended August 31, 2026 and August 31, 2025.

For the Six Months Ended

(in millions)

QNX Secure Communications Licensing

August 31, August 31, August 31,

2026 2025 2026 2025 2026 2025

Segment adjusted gross margin $ 131.6 $ 98.7 $ 90.2 $ 81.1 $ 26.1 $ 8.2

Segment research and development 38.5 25.3 24.4 22.2 — —

Segment sales and marketing 28.0 23.9 23.4 25.7 — —

Segment general and administrative 16.8 16.3 14.4 14.0 2.9 1.8

Less amortization included in segment cost of sales — — 0.2 0.1 3.0 3.0

Segment adjusted EBITDA $ 48.3 $ 33.2 $ 28.2 $ 19.3 $ 26.2 $ 9.4

Free cash flow (usage)

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

The Company defines free cash flow (usage) as net cash provided by (used in) operating activities less acquisitions of property, plant and equipment.

The Company believes that free cash flow (usage) is helpful in understanding the Company’s capital requirements and provides an additional means to reflect the cash flow (usage) trends in the Company’s business.

Reconciliation of U.S.

GAAP n et cash provided by (used in) operating activities for the three months ended May 31, 2026 and May 31, 2025 to free cash flow (usage) is reflected in the table b elow:

For the Three Months Ended (in millions) May 31, 2026 May 31, 2025

GAAP net cash provided by (used in) operating activities for the three and six months ended August 31, 2026 and August 31, 2025 to free cash flow (usage) is refle cted in the table b elow:

For the Three Months Ended (in millions) August 31, 2026 August 31, 2025

Net cash provided by operating activities $ 29.3 $ 3.4

Acquisition of property, plant and equipment (1.2) (0.8)

Free cash flow $ 28.1 $ 2.6

For the Six Months Ended (in millions) August 31, 2026 August 31, 2025

Net cash provided by (used in) operating activities $ 33.9 $ (14.1)

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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, 2026 and May 31, 2025 are set forth below.

For the Three Months Ended (in millions) May 31, 2026 May 31, 2025 Change

Comparative breakdowns of certain key metrics for the three months ended or as at August 31, 2026 and August 31, 2025 are set forth below.

For the Three Months Ended (in millions) August 31, 2026 August 31, 2025 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 $220 million as at May 31, 2026 and increased compared to $218 million as at February 28, 2026 and $209 million as at May 31, 2025.

Secure Communications ARR was approximately $221 million as at August 31, 2026 and increased by $1 million sequentially compared to $220 million as at May 31, 2026 and increased by $8 million year-over-year compared to $213 million as at August 31, 2025.

Secure Communications Dollar-Based Net Retention Rate

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

Secure Communications DBNRR was 92% as at May 31, 2026 and decreased compared to 94% as at February 28, 2026 and was consistent with 92% as at May 31, 2025.

Results of Operations - Three months ended May 31, 2026 compared to the three months ended May 31, 2025

Secure Communications DBNRR was 91% as at August 31, 2026 and decreased by 1% sequentially compared to 92% as at May 31, 2026 and 2% year-over-year compared to 93% as at August 31, 2025.

Results of Operations - Three months ended August 31, 2026 compared to the three months ended August 31, 2025

Revenue by Segment

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(in millions)

May 31, 2026 May 31, 2025 Change

August 31, 2026 August 31, 2025 Change

Revenue by Segment

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100.0 % 100.0 %

The increase in QNX revenue of $14.8 million was primarily due to an increase of $7.5 million in development license revenue, an increase of $4.2 million in royalty revenue, an increase of $1.5 million in BlackBerry Radar revenue and an increase of $1.2 million in professional services revenue.

The Company previously stated that it expected QNX revenue to be in the range of $60 million to $64 million in the first quarter of fiscal 2027.

QNX revenue in the first quarter of fiscal 2027 was $72.3 million due to stronger than expected royalty revenue.

The Company expects QNX revenue to be in the range of $70 million to $75 million in the second quarter of fiscal 2027.

The increase in QNX revenue of $17.2 million was primarily due to an increase of $10.4 million in royalty revenue, an increase of $3.9 million in development license revenue and an increase of $2.6 million in professional services revenue.

The Company previously stated that it expected QNX revenue to be in the range of $70 million to $75 million in the second quarter of fiscal 2027.

QNX revenue in the second quarter of fiscal 2027 was $80.3 million primarily due to stronger than expected royalty revenue.

The Company expects QNX revenue to be in the range of $82 million to $88 million in the third quarter of fiscal 2027.

The Company previously stated that it expected QNX revenue to be in the range of $295 million to $312 million in fiscal 2027 as a whole.

The Company now expects QNX revenue to be in the range of $295 million to $312 million in fiscal 2027 as a whole due to stronger than expected QNX revenue in the first quarter of fiscal 2027.

The Company now expects QNX revenue to be in the range of $315 million to $325 million in fiscal 2027 as a whole, due to a strong first-half performance, including stronger than expected royalty revenue, as well as continued momentum across the business, supported by strong design win activity and demand for its products and services.

Secure Communications

The increase in Secure Communications revenue of $14.1 million was primarily due to an increase of $15.3 million in BlackBerry SecuSUITE product revenue, partially offset by a $0.8 million decrease in BlackBerry UEM product revenue.

The Company previously stated that it expected Secure Communications revenue to be in the range of $66 million to $70 million in the first quarter of fiscal 2027.

Secure Communications revenue in the first quarter of fiscal 2027 was $73.6 million due to stronger than expected BlackBerry SecuSUITE product revenue.

The Company expects Secure Communications revenue to be in the range of $57 million to $63 million in the second quarter of fiscal 2027.

The increase in Secure Communications revenue of $1.0 million was primarily due to an increase of $5.5 million in BlackBerry SecuSUITE product revenue, partially offset by a decrease of $3.3 million in BlackBerry UEM product revenue and a decrease of $1.3 million in professional services revenue.

The Company previously stated that it expected Secure Communications revenue to be in the range of $57 million to $63 million in the second quarter of fiscal 2027.

Secure Communications revenue in the second quarter of fiscal 2027 was $60.9 million.

The Company expects Secure Communications revenue to be in the range of $55 million to $60 million in the third quarter of fiscal 2027.

The Company previously stated that it expected Secure Communications revenue to be in the range of $270 million to $280 million in fiscal 2027 as a whole.

The Company now expects Secure Communications revenue to be in the range of $260 million to $270 million in fiscal 2027 as a whole due to a more cautious outlook for certain government opportunities in the second half of fiscal 2027.

The increase in Licensing revenue of $15.5 million w as 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 2027.

Licensing revenue in the first quarter of fiscal 2027 was $7 million.

The Company now expects Licensing revenue to be approximately $10 million in the second quarter of fiscal 2027 due to improvement in the pipeline of direct licensing opportunities.

The Company previously stated that it expected Licensing revenue to be approximately $24 million for fiscal 2027 as a whole.

The Company now expects licensing revenue to be approximately $29 million for fiscal 2027 as a whole due to the reason noted above regarding the second quarter of fiscal 2027.

The Company previously stated that it expected Licensing revenue to be approximately $10 million in the second quarter of fiscal 2027.

Licensing revenue in the second quarter of fiscal 2027 was $22.1 million primarily due to a new intellectual property licensing arrangement entered into during the quarter and was higher than originally expected as the timing and amount of larger licensing transactions can vary from quarter to quarter.

The Company expects Licensing revenue to be approximately $6 million in the third and fourth quarters of fiscal 2027.

The Company previously stated that it expected Licensing revenue to be approximately $29 million in fiscal 2027 as a whole.

The Company now expects licensing revenue to be approximately $41 million in fiscal 2027 as a whole due to stronger than expected licensing revenue recognized in the first half of fiscal 2027.

Total BlackBerry Revenue

The Company previously stated that it expected total BlackBerry revenue to be approximately $132 million to $140 million in the first quarter of fiscal 2027.

Total BlackBerry revenue was $152.9 million in the first quarter of fiscal 2027, 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 $137 million to $148 million in the second quarter of fiscal 2027.

The Company previously stated that it expected total BlackBerry revenue to be approximately $137 million to $148 million in the second quarter of fiscal 2027.

Total BlackBerry revenue was $163.3 million in the second quarter of fiscal 2027, better than expected due to an increase in revenue from QNX and Licensing due to the reasons discussed above in “Revenue by Segment”.

The Company expects total BlackBerry revenue to be in the range of $143 million to $154 million in the third quarter of fiscal 2027.

The Company previously stated that it expected total BlackBerry revenue to be in the range of $594 million to $621 million in fiscal 2027 as a whole.

The Company now expects total BlackBerry revenue to be in the range of $594 million to $621 million in fiscal 2027 as a whole due to stronger than expected QNX revenue in the first quarter of fiscal 2027 and the stronger than expected Licensing revenue for fiscal 2027 as a whole.

The Company now expects total BlackBerry revenue to be in the range of $616 million to $636 million in fiscal 2027 as a whole, due to a strong first-half performance and changes to fiscal 2027 outlook for the business units due to the reasons noted above.

GAAP Revenue by Geography

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(in millions)

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Revenue by Geography

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North America Revenue

The increase in North America revenue of $19.0 million was primarily due to an increase of $17.6 million in BlackBerry SecuSUITE product revenue, an increase of $2.3 million in Licensing revenue and an increase of $1.7 million in BlackBerry Radar revenue, partially offset by a decrease of $2.8 million in BlackBerry UEM product revenue and a decrease of $0.5 million in QNX development license revenue.

The increase in North America revenue of $10.3 million was primarily due to an increase of $15.5 million in Licensing revenue, partially offset by a decrease of $4.5 million in BlackBerry UEM product revenue.

Europe, Middle East and Africa Revenue

The increase in Europe, Middle East and Africa revenue of $2.0 million was primarily due to an increase of $1.8 million in BlackBerry UEM product revenue, an increase of $0.7 million in QNX development license revenue and an increase of $0.3 million in professional services revenue, partially offset by a decrease of $1.2 million relating to BlackBerry SecuSUITE product revenue.

The increase in Europe, Middle East and Africa revenue of $18.4 million was primarily due to an increase of $8.0 million in QNX royalty revenue, an increase of $5.4 million relating to BlackBerry SecuSUITE product revenue, an increase of $3.4 million in QNX development license revenue and an increase of $1.3 million in BlackBerry UEM product revenue.

Other Regions Revenue

The increase in Other regions revenue of $10.2 million was primarily due to an increase of $7.3 million in QNX development license revenue and an increase of $3.7 million in QNX royalty revenue, partially offset by a decrease of $0.5 million in professional services revenue.

The increase in Other regions revenue of $5.0 million was primarily due to an increase of $3.3 million in QNX royalty revenue and an increase of $2.0 million in QNX development license revenue, partially offset by a decrease of $0.6 million in professional services revenue.

Consolidated Gross Margin

Consolidated gross margin increased by $29.4 million to approximately $119.7 million in the first quarter of fiscal 2027 (first quarter of fiscal 2026 - $90.3 million).

The increase was primarily due to an increase in revenue from QNX and BlackBerry SecuSUITE software licenses due to the reasons discussed above in “Revenue by Segment”.

Consolidated gross margin increased by $30.5 million to approximately $127.1 million in the second quarter of fiscal 2027 (second quarter of fiscal 2026 - $96.6 million).

The increase was primarily due to an increase in revenue from QNX and Licensing due to the reasons discussed above in “Revenue by Segment”, as the cost of sales for most software and services products and for intellectual property licensing arrangements does not significantly fluctuate based on business volume.

Consolidated Gross Margin Percentage

Consolidated gross margin percentage increased by 4.1% to approximately 78.3% of consolidated revenue in the first quarter of fiscal 2027 (first quarter of fiscal 2026 -74.2%).

The increase was primarily due to a change in mix, specifically a higher relative gross margin contributions from QNX and BlackBerry SecuSUITE software licenses.

Consolidated gross margin percentage increased by 3.3% to approximately 77.8% of consolidated revenue in the second quarter of fiscal 2027 (second quarter of fiscal 2026 -74.5%).

The increase was primarily due to a change in mix, specifically higher relative gross margin contributions from Licensing and QNX, partially offset by a decrease in gross margin contributions from BlackBerry SecuSUITE software licenses.

Adjusted Gross Margin and Adjusted EBITDA by Segment

See “First Quarter Fiscal 2027 Summary Results of Operations” for information about the Company’s operating segments and the basis of operating segment results.

See “Second Quarter Fiscal 2027 Summary Results of Operations” for information about the Company’s operating segments and the basis of operating segment results.

For the Three Months Ended

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QNX Secure Communications Licensing

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

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The increase in QNX segment adjusted gross margin of $17.3 million was primarily due to the reasons discussed above in “Revenue by Segment”.

The increase in QNX segment adjusted gross margin percentage of 5% was primarily due to a change in mix, specifically an increased gross margin contribution from development license revenue .

The increase in QNX segment adjusted EBITDA of $6.6 million was primarily due to the reasons discussed above in “Revenue by Segment”, partially offset by a decrease in benefits from claims filed by QNX with the Ministry of Innovation, Science and Economic Development Canada relating to its Strategic Innovation Fund (“SIF”) filed in the first quarter of fiscal 2026 which did not recur and an increase in salaries and benefits expense.

The Company previously stated that it expected QNX segment adjusted EBITDA to be in the range of $4 million to $8 million in the first quarter of fiscal 2027.

QNX segment adjusted EBITDA was $19.3 million in the first quarter of fiscal 2027 due to revenue exceeding previously provided guidance for the reasons described above in “Revenue by Segment”.

The Company expects QNX segment adjusted EBITDA to be in the range of $16 million to $21 million in the second quarter of fiscal 2027.

The increase in QNX segment adjusted gross margin percentage of 4% was primarily due to a change in mix, specifically an increased gross margin contribution from royalty revenue .

The increase in QNX segment adjusted EBITDA of $8.5 million was primarily due to the reasons discussed above in “Revenue by Segment”, p artially offset by the absence of benefits from claims filed by QNX with the Ministry of Innovation, Science and Econo mic Development Canada relating to its Strategic Innovation Fund (“SIF”) filed in the prior year period and an increase in salaries and benefits costs.

The Company previously stated that it expected QNX segment adjusted EBITDA to be in the range of $16 million to $21 million in the second quarter of fiscal 2027.

QNX segment adjusted EBITDA was $29.0 million in the second quarter of fiscal 2027 due to revenue exceeding previously provided guidance for the reasons described above in “Revenue by Segment”.

The Company expects QNX segment adjusted EBITDA to be in the range of $27 million to $32 million in the third quarter of fiscal 2027.

The Company previously stated that it expected QNX segment adjusted EBITDA to be in the range of $74 million to $86 million in fiscal 2027 as a whole.

The Company now expects QNX segment adjusted EBITDA to be in the range of $74 million to $86 million in fiscal 2027 as a whole due to stronger than expected QNX revenue in the first quarter of fiscal 2027.

The Company now expects QNX segment adjusted EBITDA to be in the range of $95 million to $105 million in fiscal 2027 as a whole due to the reasons described above in “Revenue by Segment”.

Secure Communications

The increase in Secure Communications segment adjusted gross margin of $11.4 million was primarily due to the reasons discussed above in “Revenue by Segment”, partially offset by an increase in cost of sales related to BlackBerry SecuSUITE hardware devices.

The increase in Secure Communications segment adjusted gross margin percentage of 2% was primarily due to a change in mix, specifically an increase in gross margin contribution from BlackBerry SecuSUITE software licenses, partially offset by a decrease in gross margin contribution from BlackBerry AtHoc.

The increase in Secure Communications segment adjusted EBITDA of $10.6 million was primarily due to an increase in revenue due to the reasons discussed above in “Revenue by Segment” and a decrease in salaries and benefits expense, partially offset by an increase in provision for expected credit losses.

The Company previously stated that it expected Secure Communications segment adjusted EBITDA to be in the range of $14 million to $18 million in the first quarter of fiscal 2027.

Secure Communications segment adjusted EBITDA was $20.2 million in the first quarter of fiscal 2027 due to revenue exceeding previously provided guidance for the reasons described above in “Revenue by Segment”.

The Company expects Secure Communications segment adjusted EBITDA to be in the range of $5 million to $10 million in the second quarter of fiscal 2027.

The decrease in Secure Communications segment adjusted gross margin of $2.3 million was primarily due to an increase in cost of sales related to BlackBerry SecuSUITE hardware devices, partially offset by an increase in revenue due to the reasons discussed above in “Revenue by Segment”.

The decrease in Secure Communications segment adjusted gross margin percentage of 5% was primarily due to a change in mix, specifically a higher proportion of revenue from BlackBerry SecuSUITE hardware devices, which have a lower relative gross margin percentage.

The decrease in Secure Communications segment adjusted EBITDA of $1.7 million was primarily due to a decrease in segment adjusted gross margin due to the reasons discussed above, partially offset by a decrease in facilities cost.

The Company previously stated that it expected Secure Communications segment adjusted EBITDA to be in the range of $5 million to $10 million in the second quarter of fiscal 2027.

Secure Communications segment adjusted EBITDA was $8.0 million in the second quarter of fiscal 2027.

The Company expects Secure Communications segment adjusted EBITDA to be in the range of $6 million to $10 million in the third quarter of fiscal 2027.

The Company previously stated that it expected Secure Communications adjusted EBITDA to be in the range of $57 million to $65 million in fiscal 2027 as a whole.

The Company now expects Secure Communications segment adjusted EBITDA to be in the range of $50 million to $58 million in fiscal 2027 as a whole due to the reasons described above in “Revenue by Segment”.

The increase in Licensing segment adjusted gross margin of $15.5 million was primarily due to the reasons discussed above in “Revenue by Segment”.

The increase in Licensing segment adjusted gross margin percentage of 16% was due to the same reasons discussed above.

The increase in Licensing segment adjusted EBITDA of $2.4 million was primarily due to the reasons discussed above in “Revenue by Segment”.

The Company previously stated that it expected Licensing segment adjusted EBITDA to be approximately $5 million in each of the four quarters of fiscal 2027.

Licensing segment adjusted EBITDA was $6.2 million in the first quarter of fiscal 2027.

The Company now expects the Licensing segment adjusted EBITDA to be approximately $9 million in the second quarter of fiscal 2027 for the reason described above in “Revenue by Segment”.

The Company previously stated that it expected Licensing segment adjusted EBITDA to be approximately $20 million for fiscal 2027 as a whole.

The Company now expects Licensing segment adjusted EBITDA to be approximately $25 million for fiscal 2027 as a whole for the reason described above in “Revenue by Segment”.

The increase in Licensing segment adjusted EBITDA of $14.4 million was primarily due to the reasons discussed above in “Revenue by Segment”, partially offset by an increase in legal costs.

The Company previously stated that it expected Licensing segment adjusted EBITDA to be approximately $9 million in the second quarter of fiscal 2027.

Licensing segment adjusted EBITDA was $20.0 million in the second quarter of fiscal 2027 due to revenue exceeding previously provided guidance for the reasons described above in “Revenue by Segment”.

The Company expects the Licensing segment adjusted EBITDA to be approximately $5 million in the third and fourth quarters of fiscal 2027.

The Company previously stated that it expected Licensing segment adjusted EBITDA to be approximately $25 million in fiscal 2027 as a whole.

The Company now expects Licensing segment adjusted EBITDA to be approximately $36 million in fiscal 2027 as a whole for the reason described above in “Revenue by Segment”.

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, 2026, compared to the quarter ended May 31, 2025.

The table below presents a comparison of research and development, sales and marketing, and general and administrative expenses, amortization, and impairment of long-lived assets for the quarter ended August 31, 2026, compared to the quarter ended August 31, 2025.

For the Three Months Ended

(in millions)

May 31, 2026 May 31, 2025 Change

August 31, 2026 August 31, 2025 Change

Revenue $ 163.3 $ 129.6 $ 33.7

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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, 2026 and May 31, 2025.

GAAP-based measures to adjusted measures for the three months ended August 31, 2026 and August 31, 2025.

GAAP Operating Expenses

Operating expenses increased by $16.1 million y ear-over-year, or 18.2%, in the first quarter of fiscal 2027, compared to the first quarter of fiscal 2026 primarily due to an increase of $11.5 million in deferred share unit cost s, a benefit of $4.5 million from SIF claims filed in the first quarter of fiscal 2026 which did not recur, an increase of $1.6 million in legal costs and an increase of $1.4 million in variable incentive plan costs, partially offset by a decrease of $2.6 million in restructuring costs and a d ecrease of $1.5 million in amortization expense.

Operating expenses increased by $8.4 million y ear-over-year, or 9.9%, in the second quarter of fiscal 2027, compared to the second quarter of fiscal 2026 primarily due to the absence of $3.8 million of SIF claim benefits recognized in the prior-year period, a n increase of $2.6 million in variable incentive plan costs, an increase of $2.3 million in legal costs and an increase of $1.7 million in salaries and benefits costs , partially offset by a decrease of $1.3 million in deferred share unit costs and a d ecrease of $0.8 million in consulting costs.

Adjusted Operating Expenses

Adjusted operating expenses increased by $8.1 million year-over-year, or 10.1%, to $88.0 million in the first quarter of fiscal 2027, compared to $79.9 million in the first quarter of fiscal 2026.

The increase was primarily due to a benefit of $4.5 million from SIF claims filed in the first quarter of fiscal 2026 which did n ot recur, an increase of $1.6 million in legal costs and an increase of $1.4 million in variable incentive plan costs.

Adjusted operating expenses increased by $10.0 million year-over-year, or 13.4%, to $84.8 million in the second quarter of fiscal 2027, compared to $74.8 million in the second quarter of fiscal 2026.

The increase was primarily due to the absence of $3.8 million of SIF claim benefits recognized in the prior-year period, an increase of $2.6 million in variable incentive plan costs, an increase of $2.4 million in legal costs and an increase of $1.7 million in salaries and benefits costs, partially offset by a decrease of $0.8 million in consulting costs.

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 increased by $8.0 million, or 32.0%, in the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026 primarily due to a benefit of $4.5 million from SIF claims filed in the first quarter of fiscal 2026 which did n ot recur, an increase of $1.6 million in salaries and benefits expense, an increase of $0.9 million in variable incentive plan costs and an increase of $0.4 million in infrastructure costs.

Adjusted research and development expenses increased by $7.8 million, or 32.9%, to $31.5 million in the first quarter of fiscal 2027 compared to $23.7 million in the first quarter of fiscal 2026, primarily due to the same reasons described above on a U.S.

Research and development expenses increased by $7.6 million, or 29.7%, in the second quarter of fiscal 2027 compared to the second quarter of fiscal 2026 primarily due to the absence of $3.8 million of SIF claim benefits recognized in the prior-year period, an increase of $1.7 million in salaries and benefits costs and an increase of $1.5 million in variable incentive plan costs.

Adjusted research and development expenses increased by $7.4 million, or 30.6%, to $31.6 million in the second quarter of fiscal 2027 compared to $24.2 million in the second quarter of fiscal 2026, 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 $0.8 million, or 2.8%, in the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026, primarily due to an increase of $0.3 million in consulting costs, an increase of $0.2 million in sales incentive plan costs and an increase of $0.2 million in salaries and benefits expense , partially offset by a decrease of $0.3 million in stock compensation expense .

Adjusted sales and marketing expenses increased by $1.1 million, or 4.0%, to $28.4 million in the first quarter of fiscal 2027 compared to $27.3 million in the first quarter of fiscal 2026, primarily due to an increase of $0.3 million in consulting costs, an increase of $0.2 million in sales incentive plan costs and an increase of $0.2 million in salaries and benefits expense.

Sales and marketing expenses increased by $0.9 million, or 3.7%, in the second quarter of fiscal 2027 compared to the second quarter of fiscal 2026, primarily due to an increase of $0.8 million in salaries and benefits costs and an increase of $0.4 million in marketing costs, partially offset by a decrease of $0.5 million in consulting costs.

Adjusted sales and marketing expenses increased by $0.8 million, or 3.5%, to $23.9 million in the second quarter of fiscal 2027 compared to $23.1 million in the second quarter of fiscal 2026, primarily due to the same reasons described above on a U.S.

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 increased by $8.8 million, or 28.9%, in the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026.

The increase was primarily due to an increase of $11.5 million in deferred share unit costs and an increase of $1.7 million in legal expenses, partially offset by a decrease of $2.6 million in restructuring costs, a decrease of $2.6 million in salaries and benefits expense.

Adjusted general and administrative expenses decreased b y $1.0 million, or 3.8%, to $25.6 million in the first quarter of fiscal 2027 compared to $26.6 million in the first quarter of fiscal 2026.

The decrease was primarily due to a decrease of $2.6 million in salaries and benefits expense, partially offset by an increase of $1.7 million in legal expense.

General and administrative expenses increased by $0.3 million, or 1.0%, in the second quarter of fiscal 2027 compared to the second quarter of fiscal 2026.

The increase was primarily due to an increase of $2.4 million in legal costs, an increase of $1.2 million in stock compensation expenses and an increase of $0.8 million in variable incentive plan costs, partially offset by a decrease of $1.3 million in deferred share unit costs, a decrease of $0.9 million in salaries and benefits costs, a decrease of $0.7 million in restructuring costs and a decrease of $0.6 million in infrastructure costs.

Adjusted general and administrative expenses increased b y $1.3 million, or 5.1%, to $26.8 million in the second quarter of fiscal 2027 compared to $25.5 million in the second quarter of fiscal 2026.

The increase was primarily due to an increase of $2.4 million in legal costs and an increase of $0.8 million in variable incentive plan costs, partially offset by a decrease of $0.9 million in salaries and benefits costs and a decrease of $0.6 million in infrastructure 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, 2026 compared to the quarter ended May 31, 2025.

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, 2026 compared to the quarter ended August 31, 2025.

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

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(in millions)

Included in Operating Expense

May 31, 2026 May 31, 2025 Change

Included in Operating Expenses

August 31, 2026 August 31, 2025 Change

Property, plant and equipment $ 1.6 $ 1.2 $ 0.4

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Included in Cost of Sales

May 31, 2026 May 31, 2025 Change

August 31, 2026 August 31, 2025 Change

Property, plant and equipment $ 0.1 $ — $ 0.1

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Total $ 1.6 $ 1.5 $ 0.1

Amortization included in Operating Expense

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 increased by $0.2 million to $2.5 million in the first quarter of fiscal 2027 compared to $2.3 million in the first quarter of fiscal 2026.

Amortization included in Operating Expenses

The decrease in amortization expense included in operating expenses of $0.6 million was primarily due to the lower cost base of assets.

Adjusted amortization expense increased by $0.5 million to $2.5 million in the second quarter of fiscal 2027 compared to $2.0 million in the second quarter of fiscal 2026.

Amortization included in Cost of Sales

The decrease in amortization expense relating to certain intangible assets employed in the Company’s licensing operations was $0.1 million in the first quarter of fiscal 2027 primarily due to the lower cost base of assets.

The increase in amortization expense relating to certain property, plant and equipment and certain intangible assets in the Company’s licensing operations was $0.1 million in the second quarter of fiscal 2027.

Investment Income, Net

Investment income, net, which includes the interest expense from the Notes (as defined in “Financial Condition - Debt Financing and Other Funding Sources”), was $1.1 million in the first quarter of fiscal 2027 and decreased by $1.8 million from

investment income, net of $2.9 million in the first quarter of fiscal 2026.

The decrease in investment income, net is primarily due to a decrease in interest income on significant financing components within certain revenue contracts with customers, an impairment on non-marketable equity investments without readily determinable fair value and lower return on cash and investments.

For the first quarter of fiscal 2027, the Company’s net effective income tax expense rate was approximately 48% (first quarter of fiscal 2026 - net effective income tax expense rate of approximately 61%).

Investment income, net, which includes the interest expense from the Notes, was $1.6 million in the second quarter of fiscal 2027 and decreased by $0.3 million from investment income, net of $1.9 million in the second quarter of fiscal 2026.

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

For the second quarter of fiscal 2027, the Company’s net effective income tax expense rate was approximately 4% (second quarter of fiscal 2026 - net effective income tax expense rate of approximately 1%).

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;

in particular, any change in loss carry forwards or research and development credits, amongst other items, was offset by a corresponding adjustment of the valuation allowance.

A future release of the valuation allowance would result in a material non-cash income tax benefit in the consolidated statement of operations and the recognition of deferred tax assets in the consolidated balance sheets.

A future release of a significant portion of the Company’s valuation allowance of $1,512.8 million would result in the recognition of deferred tax assets in the consolidated balance sheets and a material non-cash income tax benefit, which could materially impact income tax expense in the period of release.

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

The Company’s net income for the first quarter of fiscal 2027 was $8.5 million, or $0.01 basic and diluted earnings per share on a U.S.

GAAP basis (first quarter of fiscal 2026 - net income of $1.9 million, or $0.00 basic and diluted earning per share).

The Company’s net income for the second quarter of fiscal 2027 was $33.9 million, or $0.06 basic earnings per share and $0.05 diluted earnings per share on a U.S.

GAAP basis (second quarter of fiscal 2026 - net income of $13.3 million, or $0.02 basic and diluted earnings per share).

The period over period change of $20.6 million was primarily due to an increase in revenue, as described above in “Revenue by Segment” and an increase in gross margin percentage, as described above in “ Consolidated Gross Margin Percentage ”, partially offset by an increase in operating expenses, as described above in “ Operating Expenses ”.

Adjusted net income was $25.4 million in the first quarter of fiscal 2027, or $0.04 adjusted basic earnings per share ( first quarter of fiscal 2026 - adjusted net income of $10.8 million, or $0.02 adjusted basic earnings per share).

Adjusted net income was $43.2 million in the second quarter of fiscal 2027, or $0.07 adjusted basic earnings per share (second quarter of fiscal 2026 - adjusted net income of $24.2 million, or $0.04 adjusted basic earnings per share).

The increase in adjusted net income of $19.0 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 $14 million to $22 million in the first quarter of fiscal 2027.

Adjusted EBITDA was $36.3 million in the first quarter of fiscal 2027 primarily due to QNX and Secure Communication exceeding the top end of their expected adjusted EBITDA range 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 $0.02 to $0.03 in the first quarter of fiscal 2027.

Non-GAAP EPS was $0.04 in the first quarter of fiscal 2027 primarily due to QNX exceeding the top end of its expected adjusted EBITDA range as discussed above in “Adjusted Gross Margin and Adjusted EBITDA by Segment”.

The Company previously stated that it expected operating cash flow to be in the range of breakeven to $10 million in the first quarter of fiscal 2027.

Operating cash flow was $4.6 million in the first quarter of fiscal 2027.

The Company expects adjusted EBITDA to be in the range of $20 million to $30 million in the second quarter of fiscal 2027.

The Company previously stated that it expected adjusted EBITDA to be in the range of $20 million to $30 million in the second quarter of fiscal 2027.

Adjusted EBITDA was $47.0 million in the second quarter of fiscal 2027 primarily due to QNX and Licensing exceeding the top end of their expected adjusted EBITDA range 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 $0.03 to $0.04 in the second quarter of fiscal 2027.

Non-GAAP EPS was $0.07 in the second quarter of fiscal 2027 primarily due to QNX and Licensing exceeding the top end of their expected adjusted EBITDA range as discussed above in “Adjusted Gross Margin and Adjusted EBITDA by Segment”.

The Company previously stated that it expected operating cash flow to be in the range of breakeven to $10 million in the second quarter of fiscal 2027.

Operating cash flow was $29.3 million in the second quarter of fiscal 2027 due to better-than-expected Licensing revenue as described above in “Revenue by Segment” and the resolution of certain income tax filings.

The Company expects adjusted EBITDA to be in the range of $28 million to $37 million in the third quarter of fiscal 2027.

The Company previously stated that it expected adjusted EBITDA to be in the range of $119 million to $139 million in fiscal 2027 as a whole.

The Company now expects adjusted EBITDA to be in the range of $119 million to $139 million in fiscal 2027 as a whole due to QNX exceeding the top end of its expected adjusted EBITDA range and the stronger than expected Licensing segment adjusted EBITDA, each as discussed above in “Adjusted Gross Margin and Adjusted EBITDA by Segment”.

The Company expects non-GAAP EPS to be in the range of $0.03 per share to $0.04 per share in the second quarter of fiscal 2027.

The Company now expects adjusted EBITDA to be in the range of $141 million to $158 million in fiscal 2027 as a whole due to the reasons discussed above in “Revenue by Segment”.

The Company expects non-GAAP EPS to be in the range of $0.04 per share to $0.05 per share in the third quarter of fiscal 2027.

The Company previously stated that it expected non-GAAP EPS to be in the range of $0.16 to $0.20 in fiscal 2027 as a whole.

The Company now expects non-GAAP EPS to be in the range of $0.16 to $0.20 in fiscal 2027 as a whole for the reasons discussed above regarding adjusted EBITDA.

The Company expects operating cash flow to be in the range of breakeven to $10 million in the second quarter of fiscal 2027.

The Company does not provide a reconciliation of expected adjusted EBITDA and expected non-GAAP basic EPS for the second quarter of fiscal year 2027, an d for fiscal 2027 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, impairment charges and DSU revaluation adjustment and, accordingly, a reconciliation is not available without unreasonable effort.

The Company now expects non-GAAP EPS to be in the range of $0.19 to $0.22 in fiscal 2027 as a whole for the reasons discussed above in “Adjusted Gross Margin and Adjusted EBITDA by Segment”.

The Company expects operating cash flow to be in the range of $20 million to $30 million in the third quarter of fiscal 2027.

The Company previously stated that it expected operating cash flow to be approximately $100 million in fiscal 2027 as a whole.

The Company now expects operating cash flow to be approximately $115 million in fiscal 2027 as a whole primarily due to stronger than expected revenue recognized in the first half of fiscal 2027.

The Company does not provide a reconciliation of expected adjusted EBITDA and expected non-GAAP basic EPS for the third quarter of fiscal year 2027, and for fiscal 2027 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, impairment charges and DSU

revaluation adjustment 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 586.7 million common shares for basic earnings per share and 593.2 million common shares for diluted earnings per share for the first quarter of fiscal 2027 (first quarter of fiscal 2026 - 596.3 million common shares for basic earnings per share and 600.8 million common shares for diluted earnings per share).

The weighted average number of shares outstanding includes the cumulative effects of share repurchases pursuant to the NCIB share buyback program during the quarter ended May 31, 2026.

The weighted average number of shares outstanding was 586.6 million common shares for basic earnings per share and 649.7 million common shares for diluted earnings per share for the second quarter of fiscal 2027 (second quarter of fiscal 2026 - 592.9 million common shares for basic earnings per share and 597.4 million common shares for diluted earnings per share).

Results of Operations - Six months ended August 31, 2026 compared to the six months ended August 31, 2025

The following section sets forth certain consolidated statements of operations data for the six months ended August 31, 2026 and August 31, 2025:

For the Six Months Ended

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

August 31, 2026 August 31, 2025 Change

Revenue $ 316.2 $ 251.3 $ 64.9

Gross margin 246.8 186.9 59.9

Operating expenses 197.9 173.4 24.5

Investment income, net 2.7 4.8 (2.1)

Income before income taxes 51.6 18.3 33.3

Provision for income taxes 9.2 3.1 6.1

Net income $ 42.4 $ 15.2 $ 27.2

Earnings per share - reported

Basic $ 0.07 $ 0.03 $ 0.04

Diluted $ 0.07 $ 0.03 $ 0.04

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

Basic 586,684 594,624

647,541 598,697

______________________________

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

GAAP basis for the first six months of fiscal 2027 includes the dilutive effect of the Notes (as defined in “Financial Condition - Debt Financing and Other Funding Sources”).

Diluted earnings per share on a U.S.

GAAP basis for the first six months of fiscal 2027 and fiscal 2026 includes the dilutive effect of stock-based compensation.

See Note 7 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, 2026 August 31, 2025 Change

Revenue by Segment

QNX $ 152.6 $ 120.6 $ 32.0

Secure Communications 134.5 119.4 15.1

Licensing 29.1 11.3 17.8

$ 316.2 $ 251.3 $ 64.9

% Revenue by Segment

QNX 48.3 % 48.0 %

Secure Communications 42.5 % 47.5 %

Licensing 9.2 % 4.5 %

100.0 % 100.0 %

The increase in QNX revenue of $32.0 million was primarily due to an increase of $14.6 million in royalty revenue, an increase of $11.4 million in development license revenue, an increase of $3.8 million in professional services revenue and an increase of $1.7 million in BlackBerry Radar revenue.

Secure Communications

The increase in Secure Communications revenue of $15.1 million was primarily due to an increase of $20.7 million in BlackBerry SecuSUITE product revenue, partially offset by a decrease of $3.6 million in BlackBerry UEM license revenue and a decrease of $0.8 million in professional services.

The increase in Licensing revenue of $17.8 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, 2026 August 31, 2025 Change

Revenue by Geography

North America $ 146.4 $ 117.1 $ 29.3

Europe, Middle East and Africa 102.8 82.4 20.4

Other regions 67.0 51.8 15.2

$ 316.2 $ 251.3 $ 64.9

% Revenue by Geography

North America 46.3 % 46.6 %

Europe, Middle East and Africa 32.5 % 32.8 %

Other regions 21.2 % 20.6 %

100.0 % 100.0 %

North America Revenue

The increase in North America revenue of $29.3 million was primarily due to an increase of $18.1 million in BlackBerry SecuSUITE product revenue, an increase of $17.8 million in Licensing revenue, partially offset by a decrease of $6.6 million in BlackBerry UEM revenue.

Europe, Middle East and Africa Revenue

The increase in Europe, Middle East and Africa revenue of $20.4 million was primarily due to an increase of $8.3 million in QNX royalty revenue, an increase of $4.2 million in BlackBerry SecuSUITE product revenue, an increase of $4.1 million in QNX development license revenue and an increase of $3.2 million in BlackBerry UEM revenue.

Other Regions Revenue

The increase in other regions of $15.2 million was primarily due to an increase of $9.3 million in QNX development license revenue and an increase of $7.0 million in QNX royalty revenue, partially offset by a decrease of $0.9 million in professional services revenue.

Consolidated Gross Margin

Consolidated gross margin increased by $59.9 million to approximately $246.8 million in the first six months of fiscal 2027 (first six months of fiscal 2026 - $186.9 million).

The increase was primarily due to an increase in revenue from QNX, BlackBerry SecuSUITE product and Licensing due to the reasons discussed above in “Revenue by Segment”, as the cost of sales for most software, services products and licensing does not significantly fluctuate based on business volume.

Consolidated Gross Margin Percentage

Consolidated gross margin percentage increased by 3.7%, to approximately 78.1% of consolidated revenue in the first six months of fiscal 2027 (first six months of fiscal 2026 - 74.4%).

The increase was primarily due to a change in mix, specifically a higher relative gross margin contribution from QNX and Licensing, partially offset by a lower gross margin contribution from BlackBerry AtHoc.

Adjusted Gross Margin and Adjusted EBITDA by Segment

See “Business Overview” and “Second Quarter Fiscal 2027 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

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

2026 2025 2026 2025 2026 2025

Segment revenue $ 152.6 $ 120.6 $ 32.0 $ 134.5 $ 119.4 $ 15.1 $ 29.1 $ 11.3 $ 17.8

Segment cost of sales 21.0 21.9 (0.9) 44.3 38.3 6.0 3.0 3.1 (0.1)

Segment adjusted gross margin $ 131.6 $ 98.7 $ 32.9 $ 90.2 $ 81.1 $ 9.1 $ 26.1 $ 8.2 $ 17.9

Segment adjusted gross margin % 86 % 82 % 4 % 67 % 68 % (1 %) 90 % 73 % 17 %

Segment research and development 38.5 25.3 13.2 24.4 22.2 2.2 — — —

Segment sales and marketing 28.0 23.9 4.1 23.4 25.7 (2.3) — — —

Segment general and administrative 16.8 16.3 0.5 14.4 14.0 0.4 2.9 1.8 1.1

Less amortization included in segment cost of sales — — — 0.2 0.1 0.1 3.0 3.0 —

Segment adjusted EBITDA $ 48.3 $ 33.2 $ 15.1 $ 28.2 $ 19.3 $ 8.9 $ 26.2 $ 9.4 $ 16.8

The increase in QNX segment adjusted gross margin of $32.9 million was primarily due to the reasons discussed above in “Revenue by Segment” and a decrease in cost of sales related to BlackBerry Radar hardware devices.

The increase in QNX segment adjusted gross margin percentage of 4% was primarily due to the reasons discussed above .

The increase in QNX segment adjusted EBITDA of $15.1 million was primarily due to the reasons discussed above in “Revenue by Segment”, partially offset by the absence of SIF claim benefits recognized in the prior-year period and an increase in salaries and benefits costs.

Secure Communications

The increase in Secure Communications segment adjusted gross margin of $9.1 million was primarily due to the reasons discussed above in “Revenue by Segment”, partially offset by an increase in cost of sales related to BlackBerry SecuSUITE hardware devices.

The decrease in Secure Communications segment adjusted gross margin percentage of 1% was primarily due to a decrease in gross margin contribution from BlackBerry AtHoc.

The increase in Secure Communications segment adjusted EBITDA of $8.9 million was primarily due to the reasons discussed above.

The increase in Licensing segment adjusted gross margin of $17.9 million was primarily due to the reasons discussed above in “Revenue by Segment”.

The increase in Licensing segment adjusted gross margin percentage of 17% was due to the same reasons discussed above.

The increase in Licensing segment adjusted EBITDA of $16.8 million was due to the same reasons discussed above, partially offset by an increase in legal costs.

Operating Expenses

The table below presents a comparison of research and development, sales and marketing, and general and administrative expenses, amortization, and impairment of long-lived assets for the six months ended August 31, 2026, compared to the six months ended August 31, 2025.

For the Six Months Ended

(in millions)

August 31, 2026 August 31, 2025 Change

Revenue $ 316.2 $ 251.3 $ 64.9

Operating expenses

Research and development 66.2 50.6 15.6

Sales and marketing 54.8 53.1 1.7

General and administrative 71.1 62.0 9.1

Amortization 5.0 7.1 (2.1)

Impairment of long-lived assets 0.8 0.6 0.2

Total $ 197.9 $ 173.4 $ 24.5

Operating Expense as % of Revenue

Research and development 20.9 % 20.1 %

Sales and marketing 17.3 % 21.1 %

General and administrative 22.5 % 24.7 %

Amortization 1.6 % 2.8 %

Impairment of long-lived assets 0.3 % 0.2 %

Total 62.6 % 69.0 %

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, 2026 and August 31, 2025.

GAAP Operating Expenses

Operating expenses increased by $24.5 million, or 14.1%, in the first six months of fiscal 2027, compared to the first six months of fiscal 2026.

The increase was primarily due to an increase of $10.5 million in deferred share unit costs, the absence of $8.3 million of SIF claim benefits recognized in the prior-year period, an increase of $4.1 million in variable incentive plan costs and an increase of $4.0 million in legal costs, partially offset by a decrease of $3.3 million in restructuring costs.

Adjusted Operating Expenses

Adjusted operating expenses increased by $18.1 million, or 11.7%, to $172.8 million in the first six months of fiscal 2027, compared to $154.7 million in the first six months of fiscal 2026.

The increase was primarily due to the absence of $8.3 million of SIF claim benefits recognized in the prior-year period, an increase of $4.1 million in variable incentive plan costs, an increase of $4.0 million in legal costs, an increase of $1.0 million in provision for expected credit losses and an increase of $0.9 million in salaries and benefits costs, partially offset by a decrease of $1.6 million in infrastructure costs.

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 increased by $15.6 million, or 30.8%, in the first six months of fiscal 2027, compared to the first six months of fiscal 2026.

The increase was primarily due to the absence of $8.3 million of SIF claim benefits recognized in the prior-year period, an increase of $3.3 million in salaries and benefits costs, an increase of $2.4 million in variable incentive plan costs and an increase of $0.9 million in infrastructure costs.

Adjusted research and development expenses increased by $15.2 million, or 31.7%, to $63.1 million in the first six months of fiscal 2027, compared to $47.9 million in the first six months of fiscal 2026.

The increase 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 $1.7 million, or 3.2%, in the first six months of fiscal 2027 compared to the first six months of fiscal 2026.

The increase was primarily due to an increase of $1.0 million in salaries and benefits costs, an increase of $0.5 million in marketing costs and an increase of $0.4 million in variable incentive plan costs.

Adjusted sales and marketing expenses increased by $1.9 million, or 3.8%, to $52.3 million in the first six months of fiscal 2027 compared to $50.4 million in the first six months of fiscal 2026.

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

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 increased by $9.1 million, or 14.7%, in the first six months of fiscal 2027 compared to the first six months of fiscal 2026.

The increase was primarily due to an increase of $10.5 million in deferred share unit costs, an increase of $4.1 million in legal costs and an increase of $2.2 million in stock compensation expenses, partially offset by a decrease of $3.4 million in salaries and benefits costs and a decrease of $3.3 million in restructuring costs.

Adjusted general and administrative expenses increased by $0.3 million, or 0.6%, to $52.4 million in the first six months of fiscal 2027 compared to $52.1 million in the first six months of fiscal 2026.

The increase was primarily due to an increase of $4.1 million in legal costs, partially offset by a decrease of $3.4 million in salaries and benefits 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 six months ended August 31, 2026 compared to the six months ended August 31, 2025.

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

For the Six Months Ended

(in millions)

Included in Operating Expenses

August 31, 2026 August 31, 2025 Change

Property, plant and equipment $ 3.4 $ 2.6 $ 0.8

Intangible assets 1.6 4.5 (2.9)

Total $ 5.0 $ 7.1 $ (2.1)

Included in Cost of Sales

August 31, 2026 August 31, 2025 Change

Property, plant and equipment $ 0.2 $ 0.1 $ 0.1

Intangible assets 3.0 3.1 (0.1)

Total $ 3.2 $ 3.2 $ —

Amortization included in Operating Expenses

The decrease in amortization expense included in operating expenses of $2.1 million was primarily due to the lower cost base of assets.

Adjusted amortization expense increased by $0.7 million to $5.0 million in the first six months of fiscal 2027 compared to $4.3 million in the first six months of fiscal 2026.

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 was $3.2 million in the first six months of fiscal 2027 and was consistent with the first six months of fiscal 2026.

Investment Income, Net

Investment income, net, which includes the interest expense from the Notes, was $2.7 million in the first six months of fiscal 2027 and decreased by $2.1 million from $4.8 million in the first six months of fiscal 2026.

For the first six months of fiscal 2027, the Company’s net effective income tax expense rate was approximately 18% (first six months of fiscal 2026 - net effective income tax expense rate of approximately 17%).

in particular, any change in loss carry forwards or 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.

The Company’ s net income for the first six months of fiscal 2027 was $42.4 million, or $0.07 basic and diluted earnings per share on a U.S.

GAAP basis (first six months of fiscal 2026 - net income of $15.2 million, or $0.03 basic and diluted earnings per share).

The period over period change of $27.2 million was primarily due to an increase in revenue, as described above in “Revenue by Segment” and an increase in gross margin percentage, as described above in “Consolidated Gross Margin Percentage”, partially offset by an increase in operating expenses, as described above in “ Operating Expenses ”.

Adjusted net income was $68.6 million in the first six months of fiscal 2027 or $0.12 adjusted basic earnings per share (first six months of fiscal 2026 - adjusted net income of $35.0 million, or $0.06 adjusted basic earnings per share).

The increase in adjusted net income of $33.6 million was primarily due to the same reasons describe d above on a U.S.

The weighted average number of shares outstanding was 586.7 million for basic earnings per share and 647.5 million for diluted earnings per share for the first six months of August 31, 2026.

The weighted average number of shares outstanding was 594.6 million for basic earnings per share and 598.7 million for diluted earnings per share for the first six months of August 31, 2025.

The weighted average number of shares outstanding includes the cumulative effects of share repurchases pursuant to the NCIB share buyback program during the first six months of August 31, 2026.

Common Shares Outstanding

On September 21, 2026, there were 587 million voting common shares, 18.9 million restricted share units and 1.9 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 5 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 $9.5 million to $422.9 million as at May 31, 2026 from $432.4 million as at February 28, 2026, primarily due to repurchases of common shares of $10.0 million pursuant to the 2025 NCIB share buyback program.

Cash, cash equivalents, and investments increased by $14.7 million to $447.1 million as at August 31, 2026 from $432.4 million as at February 28, 2026, primarily due to cash generated from operating activities, partially offset by repurchases of common shares of $10.0 million pursuant to the 2025 NCIB share buyback program.

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

(in millions)

May 31, 2026 February 28, 2026 Change

August 31, 2026 February 28, 2026 Change

Cash and cash equivalents $ 266.2 $ 274.7 $ (8.5)

Restricted cash and cash equivalents 14.2 14.2 —

Restricted cash equivalents 14.1 14.2 (0.1)

Short-term investments 111.3 85.2 26.1

8 unchanged sentences

(in millions)

May 31, 2026 February 28, 2026 Change

August 31, 2026 February 28, 2026 Change

Current assets $ 561.9 $ 568.2 $ (6.3)

2 unchanged sentences

Current Assets

The decrease in current assets of $7.8 million at the end of the first quarter of fiscal 2027 from the end of the fourth quarter of fiscal 2026 was primarily due to a decrease of $17.9 million in cash and cash equivalents, a decrease of $2.0 million in other receivables, a decrease of $1.3 million in other current assets, and a decrease of $0.1 million in income taxes receivable, partially offset by an increase of $8.9 million in short term investments and an increase of $4.6 million in accounts receivable, net of allowance.

At May 31, 2026, other receivables were $5.5 million, a decrease of $2.0 million from February 28, 2026.

The decrease was primarily due to a decrease of $1.9 million in sales taxes receivable.

At May 31, 2026, other current assets were $40.9 million, a decrease of $1.3 million from February 28, 2026.

The decrease was primarily due to a decrease of $1.6 million in prepaid insurance, a decrease of $1.2 million in prepaid professional services, a decrease of $1.2 million in deferred commissions, a decrease of $1.0 in prepaid rent and a decrease of $0.9 million in prepaid sales conference, partially offset by an increase of $3.4 million in inventory and an increase of $1.9 million in prepaid software.

At May 31, 2026, income taxes receivable were $2.5 million, a decrease of $0.1 million from February 28, 2026.

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

At May 31, 2026, accounts receivable, net of allowance was $160.6 million, an increase of $4.6 million from February 28, 2026.

The increase was prim arily due to an increase in days sales outstanding to 95 days at the end of t he first quarter of fiscal 2027 from 88 days at the end of the fourth quarter of fiscal 2026.

The decrease in current assets of $6.3 million at the end of the second quarter of fiscal 2027 from the end of the fourth quarter of fiscal 2026 was primarily due to a decrease of $15.0 million in accounts receivable, net of allowance, a decrease of $8.5 million in cash and cash equivalents, a decrease of $5.7 million in other current assets, a decrease of $3.0 million in other receivables and a decrease of $0.2 million in income taxes receivable, partially offset by an increase of $26.1 million in short term investments.

At August 31, 2026, accounts receivable, net of allowance was $141.0 million, a decrease of $15.0 million from February 28, 2026.

The decrease was prim arily due to a decrease in days sales outstanding to 84 days at the end of the second quarter of fiscal 2027 from 88 days at the end of the fourth quarter of fiscal 2026, par tially offset by higher revenue recognized over the three months ended August 31, 2026 compared to th e three months ended February 28, 2026.

At August 31, 2026, other current assets were $36.5 million, a decrease of $5.7 million from February 28, 2026.

The decrease was primarily due to a decrease of $2.5 million in prepaid inventory, a decrease of $2.3 million in prepaid professional services, a decrease of $1.6 million in deferred commissions and a decrease of $1.2 million in prepaid rent, partially offset by an increase of $3.3 million in prepaid software.

At August 31, 2026, other receivables were $4.5 million, a decrease of $3.0 million from February 28, 2026.

The decrease was primarily due to the absence of $3.7 million of SIF claim benefits recognized in the prior-year period and a decrease of $1.8 million in indirect taxes receivable, partially offset by an increase of $2.3 million in proceeds receivable from the sale of a long-term investment.

At August 31, 2026, income taxes receivable were $2.4 million, a decrease of $0.2 million from February 28, 2026.

The decrease was primarily due to tax refunds and changes in the quarterly tax provisions.

Current Liabilities

The decrease in current liabilities of $13.0 million at the end of the first quarter of 2027 from the end of the fourth quarter of fiscal 2026 was primarily due to a decrease of $17.0 million in deferred revenue, current, a decrease of $12.7 million in accrued liabilities, partially offset by an increase of $10.8 million in accounts payable and an increase of $5.9 million in income taxes payable.

The decrease in current liabilities of $31.6 million at the end of the second quarter of 2027 from the end of the fourth quarter of fiscal 2026 was primarily due to a decrease of $21.9 million in deferred revenue, current, a decrease of $10.2 million in accrued liabilities and a decrease of $2.6 million in income taxes payable, partially offset by an increase of $3.1 million in accounts payable.

Deferred revenue, current was $116.6 million, which reflects a decrease of $21.9 million compared to February 28, 2026 that was attributable to a decrease of $9.5 million in deferred revenue, current related to BlackBerry UEM, a decrease of $8.5 million in deferred revenue, current related to BlackBerry AtHoc product revenue and a decrease of $5.2 million in deferred revenue, current related to QNX.

Accrued liabilities were $99.0 million at the end of the first quarter of 2027, reflecting a decrease of $12.7 million compared to February 28, 2026, w hich was primarily due to a decrease of $27.7 million in variable incentive plan accrual and a decrease of $2.8 million in restructuring cost accruals, partially offset by an increase of $10.6 million in deferred share unit liability, an increase of $2.8 million in payroll accruals a nd an increase of $2.5 million in operating lease liability, current.

Accrued liabilities were $101.5 million at the end of the second quarter of 2027, reflecting a decrease of $10.2 million compared to February 28, 2026, w hich was primarily due to a decrease of $16.1 million in variable incentive plan accrual, a decrease of $4.2 million in restructuring cost accruals and a decrease of $3.3 million in sales incentive plan accrual, partially offset by an increase of $9.6 million in deferred share unit liability, an increase of $2.6 million in indirect taxes accruals and an increase of $1.2 million in audit fees accruals.

Income taxes payable were $9.8 million, reflecting a decrease of $2.6 million from February 28, 2026, which was primarily due to changes in the quarterly tax provision and tax payments.

Accounts payable were $8.6 million, reflecting an increase of $3.1 million from February 28, 2026, which was primarily due to the timing of payments.

Income taxes payable were $18.3 million, reflecting an increase of $5.9 million from February 28, 2026, which was primarily due to changes in the quarterly tax provision and tax payments.

Cash flows for the three months ended May 31, 2026 compared to the three months ended May 31, 2025 were as follows:

For the Three Months Ended

Cash flows for the six months ended August 31, 2026 compared to the six months ended August 31, 2025 were as follows:

For the Six Months Ended

(in millions)

May 31, 2026 May 31, 2025 Change

August 31, 2026 August 31, 2025 Change

Net cash flows provided by (used in):

3 unchanged sentences

Effect of foreign exchange gain (loss) on cash and cash equivalents (0.6) 0.4 (1.0)

Net increase (decrease) in cash and cash equivalents $ (17.9) $ 12.2 $ (30.1)

Net increase (decrease) in cash, cash equivalents, and restricted cash equivalents $ (8.6) $ 10.3 $ (18.9)

Operating Activities

The increase in net cash flows provided by operating activities of $22.6 million primarily reflects the changes in working capital.

The increase in net cash flows provided by operating activities of $48.0 million primarily reflects higher net income and the changes in working capital.

Investing Activities

During the three months ended May 31, 2026, cash flows used in investing activities were $13.5 million and included cash used in acquisition of short-term investments, net of the proceeds on sale or maturity of short-term investments transactions, in the amount of $9.0 million, acquisition of property, plant and equipment of $2.9 million and the acquisition of intangible assets of $1.6 million.

For the same period in the prior fiscal year, cash flows provided by investing activities were $38.5 million an d included cash provided by p roceeds on sale or maturity of short-term and long-term investments transactions, net of acquisitions, in the amount of $40.6 million , offset by cash used i n the acquisition of intangible assets of $1.2 million, the acquisition of property, plant and equipment $0.9 million.

During the six months ended August 31, 2026, cash flows used in investing activities were $33.2 million and included cash used in acquisition of short-term investments, net of the proceeds on sale or maturity of short-term investments transactions, in the amount of $26.1 million, acquisition of property, plant and equipment of $4.1 million and the acquisition of intangible assets of $3.0 million.

For the same period in the prior fiscal year, cash flows provided by investing activities were $52.8 million an d included cash provided by p roceeds on sale or maturity of short-term and long-term investments transactions, net of acquisitions, in the amount of $57.1 million , offset by cash used i n the acquisition of intangible assets of $2.6 million and the acquisition of property, plant and equipment $1.7 million.

Financing Activities

During the three months ended May 31, 2026, cash used in financing activities was $8.7 million, primarily due to repurchases of common shares of $10.0 million pursuant to the 2025 NCIB share buyback program , offset by $1.3 million in common shares issued upon the exercise of stock options and under the employee share purchase plan.

During the three months ended May 31, 2026, the Company repurchased 2.6 million common shares at a cost of $10.0 million.

During the six months ended August 31, 2026, cash used in financing activities was $8.7 million, primarily due to repurchases of common shares of $10.0 million pursuant to the 2025 NCIB share buyback program , offset by $1.3 million in common shares issued under the employee share purchase plan.

During the six months ended August 31, 2026, the Company repurchased 2.6 million common shares at a cost of $10.0 million.

See Note 6 to the Consolidated Financial Statements for further information on the Company’s 2025 NCIB share buyback program.

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See Note 5 to the Consolidated Financial Statements for a description of the Company’s $200 million aggregate principal amount of 3.00% senior convertible unsecured notes issued in January 2024 (the “Notes”).

During the second calendar quarter of 2026, the conditions permitting holders of the Notes to convert their Notes were satisfied, as, for at least 20 trading days (whether or not consecutive) within the 30 consecutive trading-day period ending on the last trading day of the immediately preceding quarter, the last reported sale price of the Company’s common shares was greater than or equal to 130% of the applicable conversion price on each such trading day.

Accordingly, the Notes are eligible for conversion, at the option of the holders, from July 1, 2026 through September 30, 2026.

Upon receipt of a conversion request, the Company will settle its

conversion obligation, at its election, in cash, common shares, or a combination of cash and common shares, in accordance with the terms and conditions set forth in the indenture.

The closing price of the Company’s common shares exceeded 130% of the conversion price for at least 20 trading days within a period of 30 consecutive trading days ending on June 30, 2026, permitting holders to convert their Notes for a period beginning July 1, 2026 and ending September 30, 2026.

No holders converted their Notes during the three months ended August 31, 2026.

Subsequent to the end of the quarter the contingent condition was again satisfied on September 16, 2026.

Accordingly, the Notes will continue to be eligible for conversion, at the option of the holders, from October 1, 2026 through December 31, 2026.

Upon receipt of a

conversion request, the Company will settle its conversion obligation, at its election, in cash, common shares, or a combination of cash and common shares, in accordance with the terms and conditions set forth in the indenture.

The Company has $14.1 million in collateralized outstanding letters of credit in support of certain leasing arrangements entered into in the ordinary course of business.

See Note 2 to the Consolidated Financial Statements for further information concerning the Company’s restricted cash.

Cash, cash equivalents, and investments were $422.9 million as at May 31, 2026.

See Note 2 to the Consolidated Financial Statements for further information concerning the Company’s restricted cash equivalents.

Cash, cash equivalents, and investments were $447.1 million as at August 31, 2026.

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

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

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

Contractual and Other Obligations

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, 2026:

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, 2026:

(in millions)

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Total $ 309.0 $ 67.7 $ 241.3

Total contractual and other obligations as at May 31, 2026 increased by $7.6 million as compared to the February 28, 2026 balance of $317.1 million, which was attributable to an increase in operating lease obligations, partially offset by a decrease in purchase obligations and commitments.

Total contractual and other obligations as at August 31, 2026 decreased by $8.1 million as compared to the February 28, 2026 balance of $317.1 million, which wa s attributable to a decrease in purchase obligations and commitments and a decrease in debt interest and principal payments, partially offset by an increase in operating lease obligations.

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

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There have been no changes to the Company’s accounting policies or critical accounting estimates from those described under “Accounting Policies and Critical Accounting Estimates” in the Annual MD&A with the exception of the below:

Revenue Recognition

Judgment is required to determine the fair value of non-cash consideration at contract inception.

The Company engages an independent third-party valuation specialist to assist in this determination of the fair value of non-cash consideration.

Valuation Allowance Against Deferred Tax Assets

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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-Q

Item 2. Management’s Discussion and Analysis