BLACKBERRY Ltd 10-Q

ITEM 1. FINANCIAL STATEMENTS 4 BlackBerry Limited Incorporated under the Laws of Ontario (United States dollars, in millions) (unaudited) Consolidated Balance Sheets As at August 31, 2026 February 28, 2026 Assets Current Cash and cash equivalents (note 2) $ 266.2 $ 274.7 Short-term investments (note 2) 111.3 85.2 Accounts receivable, net of allowance of $ 1.3 and $ 1.0 , respectively (note 3) 141.0 156.0 Other receivables (note 3) 4.5 7.5 Income taxes receivable 2.4 2.6 Other current assets (note 3) 36.5 42.2 561.9 568.2 Restricted cash equivalents (note 2) 14.1 14.2 Long-term investments (note 2) 55.5 58.3 Other long-term assets (note 3) 73.8 56.3 Operating lease right-of-use assets, net 22.6 16.7 Property, plant and equipment, net (note 3) 12.2 12.3 Intangible assets, net (note 3) 44.9 40.1 Goodwill (note 3) 478.0 479.1 $ 1,263.0 $ 1,245.2 Liabilities Current Accounts payable $ 8.6 $ 5.5 Accrued liabilities (note 3) 101.5 111.7 Income taxes payable (note 4) 9.8 12.4 Deferred revenue, current (note 10) 116.6 138.5 236.5 268.1 Deferred revenue, non-current (note 10) 11.8 14.1 Operating lease liabilities 23.9 18.8 Other long-term liabilities 2.1 1.7 Long-term notes (note 5) 197.1 196.5 471.4 499.2 Commitments and contingencies (note 9) Shareholders’ equity Capital stock and additional paid-in capital Preferred shares: authorized unlimited number of non-voting, cumulative, redeemable and retractable — — Common shares: authorized unlimited number of non-voting, redeemable, retractable Class A common shares and unlimited number of voting common shares Issued and outstanding - 587,032,279 voting common shares (February 28, 2026 - 587,431,120 ) 2,926.8 2,924.4 Deficit ( 2,121.9 ) ( 2,167.2 ) Accumulated other comprehensive loss (note 8) ( 13.3 ) ( 11.2 ) 791.6 746.0 $ 1,263.0 $ 1,245.2 See notes to consolidated financial statements. On behalf of the Board: John Giamatteo Lisa Disbrow Director Director 5 BlackBerry Limited (United States dollars, in millions) (unaudited) Consolidated Statements of Shareholders’ Equity Three Months Ended August 31, 2026 Capital Stock and Additional Paid-in Capital Deficit Accumulated Other Comprehensive Loss Total Balance as at May 31, 2026 $ 2,919.3 $ ( 2,155.8 ) $ ( 12.8 ) $ 750.7 Net income — 33.9 — 33.9 Other comprehensive loss — — ( 0.5 ) ( 0.5 ) Stock-based compensation 7.5 — — 7.5 Balance as at August 31, 2026 $ 2,926.8 $ ( 2,121.9 ) $ ( 13.3 ) $ 791.6 Three Months Ended August 31, 2025 Capital Stock and Additional Paid-in Capital Deficit Accumulated Other Comprehensive Loss Total Balance as at May 31, 2025 $ 2,970.5 $ ( 2,232.6 ) $ ( 12.8 ) $ 725.1 Net income — 13.3 — 13.3 Other comprehensive income — — 0.8 0.8 Stock-based compensation 5.9 — — 5.9 Share repurchase ( 25.1 ) 5.1 — ( 20.0 ) Balance as at August 31, 2025 $ 2,951.3 $ ( 2,214.2 ) $ ( 12.0 ) $ 725.1 See notes to consolidated financial statements. 6 BlackBerry Limited (United States dollars, in millions) (unaudited) Consolidated Statements of Shareholders’ Equity Six Months Ended August 31, 2026 Capital Stock and Additional Paid-in Capital Deficit Accumulated Other Comprehensive Loss Total Balance as at February 28, 2026 $ 2,924.4 $ ( 2,167.2 ) $ ( 11.2 ) $ 746.0 Net income — 42.4 — 42.4 Other comprehensive loss — — ( 2.1 ) ( 2.1 ) Stock-based compensation (note 6) 14.0 — — 14.0 Share repurchase (note 6) ( 12.9 ) 2.9 — ( 10.0 ) Shares issued: Employee share purchase plan (note 6) 1.3 — — 1.3 Balance as at August 31, 2026 $ 2,926.8 $ ( 2,121.9 ) $ ( 13.3 ) $ 791.6 Six Months Ended August 31, 2025 Capital Stock and Additional Paid-in Capital Deficit Accumulated Other Comprehensive Loss Total Balance as at February 28, 2025 $ 2,976.4 $ ( 2,237.3 ) $ ( 19.2 ) $ 719.9 Net income — 15.2 — 15.2 Other comprehensive income — — 7.2 7.2 Stock-based compensation 11.6 — — 11.6 Share repurchase ( 37.9 ) 7.9 — ( 30.0 ) Shares issued: Employee share purchase plan 1.2 — — 1.2 Balance as at August 31, 2025 $ 2,951.3 $ ( 2,214.2 ) $ ( 12.0 ) $ 725.1 See notes to consolidated financial statements. 7 BlackBerry Limited (United States dollars, in millions, except per share data) (unaudited) Consolidated Statements of Operations Three Months Ended Six Months Ended August 31, 2026 August 31, 2025 August 31, 2026 August 31, 2025 Revenue (note 10) $ 163.3 $ 129.6 $ 316.2 $ 251.3 Cost of sales 36.2 33.0 69.4 64.4 Gross margin 127.1 96.6 246.8 186.9 Operating expenses Research and development 33.2 25.6 66.2 50.6 Sales and marketing 25.3 24.4 54.8 53.1 General and administrative 31.8 31.5 71.1 62.0 Amortization 2.5 3.1 5.0 7.1 Impairment of long-lived assets (note 2) 0.7 0.5 0.8 0.6 93.5 85.1 197.9 173.4 Operating income 33.6 11.5 48.9 13.5 Investment income, net (note 2 and note 5) 1.6 1.9 2.7 4.8 Income before income tax 35.2 13.4 51.6 18.3 Provision for income taxes (note 4) 1.3 0.1 9.2 3.1 Net income $ 33.9 $ 13.3 $ 42.4 $ 15.2 Earnings per share (note 7) Basic $ 0.06 $ 0.02 $ 0.07 $ 0.03 Diluted $ 0.05 $ 0.02 $ 0.07 $ 0.03 See notes to consolidated financial statements. 8 BlackBerry Limited (United States dollars, in millions) (unaudited) Consolidated Statements of Comprehensive Income (Loss) Three Months Ended Six Months Ended August 31, 2026 August 31, 2025 August 31, 2026 August 31, 2025 Net income $ 33.9 $ 13.3 $ 42.4 $ 15.2 Other comprehensive income (loss) Net change in unrealized losses on available-for-sale debt securities (note 8) — — ( 0.1 ) — Net change in fair value and amounts reclassified to net income from derivative instruments designated as cash flow hedges during the period, net of income taxes of nil for the three and six months ended August 31, 2026 and August 31, 2025 (note 8) 0.1 ( 0.2 ) ( 0.4 ) 2.2 Foreign currency translation adjustment ( 0.6 ) 1.0 ( 1.6 ) 5.0 Other comprehensive income (loss) ( 0.5 ) 0.8 ( 2.1 ) 7.2 Comprehensive income $ 33.4 $ 14.1 $ 40.3 $ 22.4 See notes to consolidated financial statements. 9 BlackBerry Limited (United States dollars, in millions) (unaudited) Consolidated Statements of Cash Flows Six Months Ended August 31, 2026 August 31, 2025 Cash flows from operating activities Net income $ 42.4 $ 15.2 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Amortization 8.2 10.3 Stock-based compensation 14.0 11.6 Impairment of long-lived assets (note 2) 0.8 0.6 Non-cash consideration received from contracts with customer ( 6.7 ) — Operating leases ( 0.8 ) ( 5.7 ) Other 2.4 ( 0.3 ) Net changes in working capital items Accounts receivable, net of allowance 15.0 48.7 Other receivables 5.3 ( 0.3 ) Income taxes receivable 0.2 ( 1.0 ) Other assets ( 13.1 ) 16.0 Accounts payable 3.8 ( 27.1 ) Accrued liabilities ( 10.8 ) ( 38.5 ) Income taxes payable ( 2.6 ) ( 11.7 ) Deferred revenue ( 24.2 ) ( 31.9 ) Net cash provided by (used in) operating activities 33.9 ( 14.1 ) Cash flows from investing activities Proceeds on sale, maturity or distribution from long-term investments — 0.1 Acquisition of property, plant and equipment ( 4.1 ) ( 1.7 ) Acquisition of intangible assets ( 3.0 ) ( 2.6 ) Acquisition of short-term investments ( 174.9 ) ( 34.7 ) Proceeds on sale or maturity of short-term investments 148.8 91.7 Net cash provided by (used in) investing activities ( 33.2 ) 52.8 Cash flows from financing activities Issuance of common shares (note 6) 1.3 1.2 Common shares repurchased (note 6) ( 10.0 ) ( 30.0 ) Net cash used in financing activities ( 8.7 ) ( 28.8 ) Effect of foreign exchange gain (loss) on cash, cash equivalents, and restricted cash equivalents ( 0.6 ) 0.4 Net increase (decrease) in cash, cash equivalents, and restricted cash equivalents during the period ( 8.6 ) 10.3 Cash, cash equivalents, and restricted cash equivalents, beginning of period 288.9 280.3 Cash, cash equivalents, and restricted cash equivalents, end of period $ 280.3 $ 290.6 See notes to consolidated financial statements. 10 BlackBerry Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES Basis of Presentation and Preparation These interim consolidated financial statements have been prepared by management in accordance with United States generally accepted accounting principles (“U.S. GAAP”). They do not include all the disclosures required by U.S. GAAP for annual financial statements and should be read in conjunction with the audited consolidated financial statements of BlackBerry Limited (the “Company”) for the year ended February 28, 2026 (the “Annual Financial Statements”), which have been prepared in accordance with U.S. GAAP. In the opinion of management, all normal recurring adjustments considered necessary for fair presentation have been included in these interim consolidated financial statements. Operating results for the three and six months ended August 31, 2026 are not necessarily indicative of the results that may be expected for the full year ending February 28, 2027. The consolidated balance sheets as at February 28, 2026 were derived from the audited Annual Financial Statements but do not contain all of the footnote disclosures from the Annual Financial Statements. The preparation of the consolidated financial statements requires management to make estimates and assumptions with respect to the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent liabilities. Actual results could differ from these estimates and any such differences may be material to the Company’s consolidated financial statements. Certain of the comparative figures have been reclassified to conform to the current year’s presentation. The Company is organized and managed as three reportable operating segments: QNX, Secure Communications, and Licensing, as further discussed in Note 10. Significant Accounting Policies and Critical Accounting Estimates There have been no material changes to the Company’s accounting policies or critical accounting estimates from those described in the Annual Financial Statements, with the exception of the below updates: Revenue recognition Non-cash consideration received is measured at fair value at contract inception. The estimated fair value is determined utilizing multiple valuation techniques, principally a discounted cash flow model and a market-based approach. Key inputs and assumptions include forecasted cash flows over a projection period and a discount rate applied to those cash 11 BlackBerry Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited) flows and the market-based approach relies on valuation multiples and quoted prices derived from comparable transactions. Significant judgments in 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. Accounting Standards Adopted During Fiscal 2027 In July 2025, the FASB issued ASU 2025-05 to amend the guidance in “Financial Instruments—Credit Losses” (Topic 326). The amendment provides guidance for entities that elect to apply the practical expedient when estimating expected credit losses on current accounts receivable and current contract assets arising from transactions under Topic 606, including those assets acquired in a transaction accounted for under Topic 805, business combinations. Under the practical expedient, entities assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years. The Company adopted ASU 2025-05 in the first quarter of fiscal 2027 and has elected to apply the practical expedient prospectively. The adoption of this guidance did not have, and is not expected to have, a material impact on the Company’s consolidated financial statements. Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued ASU 2024-03 to amend the codification on “Expense Disaggregation Disclosure” (Subtopic 220-40): Income Statement - Reporting Comprehensive Income”. The standard requires additional disclosure on specific expense categories included in the expense captions presented on the statements of operations. The guidance is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company will adopt this guidance in fiscal 2028 and is in process of evaluating the new requirements. The Company expects the adoption of this guidance to result in additional disaggregation and disclosure of certain expenses within the existing expense captions in the consolidated statements of operations and does not expect any impact on its results of operations or consolidated financial position. In November 2025, the FASB issued ASU 2025-09 to amend the guidance in “Derivatives and Hedging” (Topic 815). The update provides targeted improvements intended to enhance the application of hedge accounting, including expanded eligibility of forecasted transactions, additional flexibility in measuring hedge effectiveness, and clarifications related to hedging non-financial items. The guidance is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. The Company will adopt this guidance in fiscal 2028 and does not expect the guidance to have a material impact on its results of operations, financial position and disclosures. In December 2025, the FASB issued ASU 2025-10 to amend the guidance in “Government Grants” (Topic 832). The update provides recognition, measurement, presentation, and disclosure requirements for government grants, including guidance for grants related to an asset and grants related to income. The amendments introduce two permitted approaches for asset-related grants: a deferred income approach or a cost accumulation approach. The guidance is effective for fiscal years beginning after December 15, 2028, including interim periods within those fiscal years. The Company will adopt this guidance in fiscal 2030 and has not yet determined the impact on its results of operations, financial position and disclosures. 2. FAIR VALUE MEASUREMENTS, CASH, CASH EQUIVALENTS AND INVESTMENTS Fair Value The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use in pricing the asset or liability, such as inherent risk, non-performance risk and credit risk. The Company applies the following fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value into three levels: • Level 1 - Unadjusted quoted prices at the measurement date for identical assets or liabilities in active markets. 12 BlackBerry Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited) • Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. • Level 3 - Significant unobservable inputs that are supported by little or no market activity. The fair value hierarchy also requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company’s cash and cash equivalents, accounts receivable, other receivables, accounts payable and accrued liabilities are carried at amounts that approximate their fair values (Level 2 measurement) due to their short maturities. Recurring Fair Value Measurements In determining the fair value of investments, the Company primarily relies on an independent third-party valuator for the fair valuation of securities. The Company also reviews the inputs used in the valuation process and assesses the pricing of the securities for reasonableness after conducting its own internal collection of quoted prices from brokers. Fair values for all investment categories provided by the independent third-party valuator that are in excess of 0.5 % from the fair values determined by the Company are communicated to the independent third-party valuator for consideration of reasonableness. The independent third-party valuator considers the information provided by the Company before determining whether a change in their original pricing is warranted. When the Company concludes that there is a significant financing component included within a contract with a customer due to timing differences between the fulfillment of certain performance obligations and the receipt of payment for those performance obligations, the Company determines the present value of the future consideration utilizing the discount rate that would be reflected in a separate financing transaction between the customer and the Company at contract inception based upon the credit characteristics of the customer receiving financing in the contract. Non-Recurring Fair Value Measurements Upon the occurrence of certain events, the Company re-measures the fair value of non-marketable equity investments for which it utilizes the measurement alternative, and long-lived assets, including property, plant and equipment, operating lease ROU assets, intangible assets and goodwill if an impairment or observable price adjustment is recognized in the current period. Non-Marketable Equity Investments Measured Using the Measurement Alternative Non-marketable equity investments measured using the measurement alternative include investments in privately-held companies without readily determinable fair values in which the Company does not own a controlling interest or have significant influence. Investments in privately-held companies are recorded at fair value on a non-recurring basis. The fair values of non-marketable equity investments are classified as Level 3 when the Company estimates fair value using significant unobservable inputs, such as when the investment is remeasured due to impairment or observable price changes in the equity of an investee resulting from an orderly transaction for identical or similar investments of the same issuer. Impairment of Long-Lived Assets During the three and six months ended August 31, 2026, the Company recorded a pre-tax and after-tax impairment charge of $ 0.7 million and $ 0.8 million, respectively , relating to operating lease right-of-use (“ROU”) assets and property, plant and equipment associated with exiting certain leased facilities (three and six months ended August 31, 2025 - $ 0.5 million and $ 0.6 million, respectively ). The impairment was determined by comparing the fair value of the impacted long-lived assets to the carrying value of the asset as of the impairment measurement date, as required under ASC Topic 360, Property, Plant, and Equipment, using Level 3 inputs. The fair value of the ROU asset was based on the estimated sublease income for certain facilities taking into consideration the estimated time period it will take to obtain a sublessor, the applicable discount rate and the sublease rate, which are considered unobservable inputs. The Company conducts an evaluation of the related liabilities and expenses and revises its assumptions and estimates as appropriate as new or updated information becomes available. The fair value measurement of ROU impaired assets is classified as Level 3 of the fair value hierarchy. 13 BlackBerry Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited) Cash, Cash Equivalents and Investments The components of cash, cash equivalents, restricted cash equivalents and investments by fair value level and balance sheet classification as at August 31, 2026 were as follows: Cost Basis (1) Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Short-term Investments Long-term Investments Restricted Cash Equivalents Bank balances $ 111.8 $ — $ — $ 111.8 $ 111.8 $ — $ — $ — Investments in privately-held companies 48.8 6.7 — 55.5 — — 55.5 — 160.6 6.7 — 167.3 111.8 — 55.5 — Level 2: Term deposits, and certificates of deposits 59.6 — — 59.6 30.1 20.0 — 9.5 Bearer deposit notes 18.4 — — 18.4 18.4 — — — Commercial paper 147.1 — ( 0.1 ) 147.0 72.4 70.0 — 4.6 Non-U.S. promissory notes 44.1 — — 44.1 33.5 10.6 — — Non-U.S. treasury bills 10.7 — — 10.7 — 10.7 — — 279.9 — ( 0.1 ) 279.8 154.4 111.3 — 14.1 $ 440.5 $ 6.7 $ ( 0.1 ) $ 447.1 $ 266.2 $ 111.3 $ 55.5 $ 14.1 ______________________________ (1) Cost basis for investments in privately-held companies includes the effect of returns of capital and impairment. 14 BlackBerry Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited) The components of cash, cash equivalents, restricted cash equivalents and investments by fair value level and balance sheet classification as at February 28, 2026 were as follows: Cost Basis (1) Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Short-term Investments Long-term Investments Restricted Cash Equivalents Bank balances $ 168.6 $ — $ — $ 168.6 $ 168.6 $ — $ — $ — Investments in privately-held companies 51.5 2.4 ( 1.2 ) 52.7 — — 52.7 — 220.1 2.4 ( 1.2 ) 221.3 168.6 — 52.7 — Level 2: Term deposits, and certificates of deposits 49.7 — — 49.7 20.1 20.0 — 9.6 Bearer deposit notes 24.9 — — 24.9 11.0 13.9 — — Commercial paper 93.2 — — 93.2 37.3 51.3 — 4.6 Non-U.S. promissory notes 24.4 — — 24.4 24.4 — — — Non-U.S. treasury bills/notes 13.3 — — 13.3 13.3 — — — 205.5 — — 205.5 106.1 85.2 — 14.2 Level 3: Investments in privately-held companies 1.3 4.3 — 5.6 — — 5.6 — $ 426.9 $ 6.7 $ ( 1.2 ) $ 432.4 $ 274.7 $ 85.2 $ 58.3 $ 14.2 ______________________________ (1) Cost basis for investments in privately-held companies includes the effect of returns of capital and impairment. As at August 31, 2026, the Company had non-marketable equity investments without readily determinable fair value of $ 55.5 million (February 28, 2026 - $ 58.3 million) including common shares of Arctic Wolf Networks, Inc. (“Arctic Wolf”) received as partial consideration for the sale of its Cylance endpoint sec urity assets and liabilities to Arctic Wolf in the fourth quarter of fiscal 2025 . During the three and six months ended August 31, 2026 and August 31, 2025, the Company did not record any observable price adjustments to the carrying value of non-marketable equity investments without readily determinable fair value. During the three and six months ended August 31, 2026, the Company recorded an impairment of nil and $ 0.5 million, respectively, on a certain non-marketable equity investment without readily determinable fair value. The investment impaired during the first quarter of fiscal 2027 was subsequently sold during the three months ended August 31, 2026, at the carrying amount with no gain or loss recognized ( three and six months ended August 31, 2025 - nil ). As of August 31, 2026, the Company has recorded a cumulative impairment of nil to the carrying value of the non-marketable equity investments without readily determinable fair value (February 28, 2026 - $ 3.0 million). There w ere no realize d gains or losses on available-for-sale debt securities for the three and six months ended August 31, 2026 and August 31, 2025. The Company has restricted cash equivalents, consisting of securities pledged as collateral to major banking partners in support of the Company’s requirements for letters of credit and a performance bond tha t the Company was required to post to support a government contract. These letters of credit support certa in leasing arrangements entered in the ordinary course of business and are for terms ranging fro m one month to approximately five years. The Company is contractually restricted from accessing these funds during the term of the leases for which the letters of credit have been issued and during the term of the government contract; however, the Company can continue to invest the funds and receive investment income thereon. 15 BlackBerry Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited) The following table provides a reconciliation of cash, cash equivalents and restricted cash equivalents as at August 31, 2026 and February 28, 2026 from the consolidated balance sheets to the consolidated statements of cash flows: As at August 31, 2026 February 28, 2026 Cash and cash equivalents $ 266.2 $ 274.7 Restricted cash equivalents 14.1 14.2 Total cash, cash equivalents and restricted cash equivalents presented in the consolidated statements of cash flows $ 280.3 $ 288.9 The contractual maturities of available-for-sale investments as at August 31, 2026 and February 28, 2026 were as follows: As at August 31, 2026 February 28, 2026 Cost Basis Fair Value Cost Basis Fair Value Due in one year or less $ 279.9 $ 279.8 $ 205.5 $ 205.5 As at August 31, 2026 and February 28, 2026, the Company had no available-for-sale debt securities with con tinuous unrealized losses . 3. CONSOLIDATED BALANCE SHEET DETAILS Accounts Receivable, Net of Allowance The current estimated credit losses (“CECL”) for accounts receivable as at August 31, 2026 was $ 3.5 million (February 28, 2026 - $ 3.4 million), which includes $ 2.2 million included in Other long-term assets (February 28, 2026 - $ 2.4 million). The Company also has long-term accounts receivable included in Other long-term assets. The CECL for long-term accounts receivable is estimated using the probability of default method and the default exposure due to limited historical information. The exposure to default is represented by the assets’ amortized carrying amount at the reporting date. The following table sets forth the activity in the Company’s allowance for credit losses: Carrying Amount Beginning balance as of February 28, 2025 $ 6.6 Prior period recovery of expected credit losses ( 2.4 ) Write-offs charged against the allowance ( 0.8 ) Ending balance of the allowance for credit loss as at February 28, 2026 3.4 Current period provision for expected credit losses 0.2 Write-offs charged against the allowance ( 0.1 ) Ending balance of the allowance for credit loss as at August 31, 2026 $ 3.5 The allowance for credit losses as at August 31, 2026 consists of $ 1.3 million (February 28, 2026 - $ 1.0 million) relating to CECL estimated based on days past due and region and $ 2.2 million (February 28, 2026 - $ 2.4 million) relating to specific customers that were evaluated separately. There were three customers that comprised more than 10% of accounts receivable as at August 31, 2026 (February 28, 2026 - two customers comprised more than 10%). Other Receivables As at August 31, 2026, other receivables included items such as proceeds receivable from the sale of a long-term investment , among other items, none of which were greater than 5% of the current assets balance as at the balance sheet date. 16 BlackBerry Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited) As at February 28, 2026, other receivables included items such as claims filed by QNX with the Ministry of Innovation, Science and Economic Development Canada relating to its Strategic Innovation Fund (“SIF”), among other items, none of which were greater than 5% of the current assets balance as at the balance sheet date. Other Current Assets As at August 31, 2026 and February 28, 2026, other current assets included items such as the current portion of deferred commissions and prepaid expenses, among other items, none of which were greater than 5% of the current assets balance as at the balance sheet dates. Property, Plant and Equipment, Net Property, plant and equipment comprised the following: As at August 31, 2026 February 28, 2026 Cost BlackBerry operations and other information technology $ 79.1 $ 78.0 Leasehold improvements and other 13.2 12.9 Furniture and fixtures 4.4 4.8 Research and development equipment 2.7 2.5 99.4 98.2 Accumulated amortization and impairment 87.2 85.9 Net book value $ 12.2 $ 12.3 Intangible Assets, Net Intangible assets comprised the following: As at August 31, 2026 Cost Accumulated Amortization and Impairment Net Book Value Acquired technology $ 29.8 $ 29.8 $ — Other acquired intangibles 40.4 40.4 — Intellectual property 112.1 67.2 44.9 $ 182.3 $ 137.4 $ 44.9 As at February 28, 2026 Cost Accumulated Amortization and Impairment Net Book Value Acquired technology $ 29.8 $ 29.8 $ — Other acquired intangibles 40.4 40.4 — Intellectual property 105.3 65.2 40.1 $ 175.5 $ 135.4 $ 40.1 For the six months ended August 31, 2026, amortization expense related to intangible assets amoun ted to $ 4.6 million (six months ended August 31, 2025 - $ 7.6 million). For the six months ended August 31, 2026, the Company held acquired technology and other acquired intangibles that were fully amortized but still in use. Total additions to intangible assets for the six months ended August 31, 2026 amounted to $ 9.5 million (six months ended August 31, 2025 - $ 2.6 million). During the six months ended August 31, 2026, additions to intangible assets primarily consisted of patents received as non-cash consideration under a contract with a customer and payments for intellectual property relating to patent maintenance and registration fees. 17 BlackBerry Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited) Based on the carrying value of the identified intangible assets as at August 31, 2026, and assuming no subsequent impairment of the underlying assets, the annual amortization expense for the remainder of fiscal 2027 and each of the five succeeding years is expected to be as follows: fiscal 2027 - $ 4.7 million; fiscal 2028 - $ 7.8 million; fiscal 2029 - $ 6.1 million; fiscal 2030 - $ 5.3 million; fiscal 2031 - $ 4.5 million and fiscal 2032 - $ 3.7 million. Goodwill Changes to the carrying amount of goodwill during the six months ended August 31, 2026 and fiscal year ended February 28, 2026 were as follows: Carrying Amount Carrying amount as at February 28, 2025 $ 472.4 Effect of foreign exchange on non-U.S. dollar denominated goodwill 6.7 Carrying amount as at February 28, 2026 479.1 Effect of foreign exchange on non-U.S. dollar denominated goodwill ( 1.1 ) Carrying amount as at August 31, 2026 $ 478.0 Other Long-term Assets As at August 31, 2026 and February 28, 2026, other long-term assets included long-term receivables related to intellectual property sold, Secure Communication contracts and minimum royalty commitments from QNX customers and the long-term portion of deferred commissions, among other items, none of which were greater than 5% of the total assets balance. Accrued Liabilities Accrued lia bilities is comprised of the following: As at August 31, 2026 February 28, 2026 Variable incentive accrual $ 20.3 $ 36.5 Deferred share unit liability (1) 15.6 6.0 Indirect taxes accrual 12.3 9.7 Other 53.3 59.5 $ 101.5 $ 111.7 ______________________________ (1) The Company has a Deferred Share Unit Plan under which each independent director is credited with Deferred Share Units (“DSUs”) in satisfaction of all or a portion of the cash fees otherwise payable to them for serving as a director of the Company. DSUs are accounted for as liability-classified awards and are awarded on a quarterly basis. These awards are measured at their fair value on the date of issuance and remeasured at each reporting period until settlement. Other accrued liabilities include the accrued current portion of the operating lease liability, the current portion of the restructuring programs, accrued vendor liabilities, and payroll withholding taxes, among other items, none of which were greater than 5% of the current liabilities balance in any of the periods presented. Restructuring During fiscal 2025 and fiscal 2024, the Company commenced restructuring programs with the objective of reducing its annual costs and expenses. Other charges and cash costs may occur as programs are implemented or changes are completed. 18 BlackBerry Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited) The following table sets forth the activity in the Company’s restructuring program liabilities: Employee Termination Benefits Facilities and Other Charges Total Balance as at February 28, 2025 $ 7.1 3.3 10.4 Charges incurred 11.9 3.8 15.7 Cash payments made ( 12.7 ) ( 5.1 ) ( 17.8 ) Balance as at February 28, 2026 6.3 2.0 8.3 Charges incurred 2.8 0.2 3.0 Cash payments made ( 6.9 ) ( 0.3 ) ( 7.2 ) Balance as at August 31, 2026 $ 2.2 $ 1.9 $ 4.1 Current portion $ 2.2 $ 0.2 $ 2.4 Long-term portion — 1.7 1.7 $ 2.2 $ 1.9 $ 4.1 The long-term portion of the restructuring liabilities is re corded by measuring the remaining payments at present value u sing an effective interest rate of 6.0 %, and the Company recorded interest expense over time to arrive at the total face value of the remaining payments. The restructuring charges included employee termination benefits, facilities and other charges primarily associated with system transformation to streamline corporate functions into QNX and Secure Communications. Total charges incurred for the three and six months ended August 31, 2026 were $ 2.7 million and $ 3.0 million, respectively, recorded within General and administrative on the Consolidated Statements of Operations (three and six months ended August 31, 2025 - $ 3.4 million and $ 6.3 million). 19 BlackBerry Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited) 4. INCOME TAXES For the six months ended August 31, 2026, the Company’s net effective income tax expense rate was approximately 18 % compared to a net effective income tax expense rate of 17 % for the six months ended August 31, 2025. The Company’s income tax rate reflects the change in unrecognized income tax benefit, if any, and the fact that the Company has a sign ificant valuation allowance against its deferred income tax assets; in particular, any change in loss carry forwards or research and development credits, amongst other items, is 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 records a valuation allowance to reduce deferred income tax assets to the amount that is more likely than not to be realized. The Company assesses the need for a valuation allowance on its deferred tax assets each reporting period. In assessing the realizability of deferred tax assets, the Company considers both positive and negative evidence, to determine whether, based upon the weight of that evidence, it is more likely than not that the Company’s deferred tax assets will not be realized and a valuation allowance is required. This assessment involves significant judgment, particularly with respect to the relative impact of such evidence. All available evidence, both positive and negative, that may affect the realization of deferred tax assets must be identified and considered in determining the appropriate amount of the valuation allowance. The Company has recently generated cumulative pre-tax income in certain jurisdictions and continues to evaluate whether sufficient positive evidence exists to support the realization of its deferred tax assets. This evaluation is performed on a jurisdiction-by-jurisdiction basis, and the conclusions reached may vary based on the sustainability of earnings in each jurisdiction. Based on recent operating profits and current forecasts, it is reasonably possible that the Company’s assessment of the realizability of its deferred tax assets may change in a future period, including within the current fiscal year, as additional positive evidence becomes available in relation to the realizability of deferred tax assets. Such a change could result in the release of a significant portion of the Company’s valuation allowance of $ 1,512.8 million in Canada and the United States, which could have a material impact on income tax expense in the period of release. The Company’s total unrecognized income tax benefits as at August 31, 2026 were $ 19.8 million (February 28, 2026 - $ 19.7 million). As at August 31, 2026, $ 19.7 million of the unrecognized income tax benefits have been netted against deferred income tax assets and $ 0.1 million has been recorded within income taxes payable on the Company’s consolidated balance sheets. The Company is subject to ongoing examination by tax authorities in certain jurisdictions in which it operates. The Company regularly assesses the status of these examinations and the potential for adverse outcomes to determine the adequacy of the provision for income taxes as well as the provisions for indirect and other taxes and related penalties and interest. While the final resolution of audits is uncertain, the Company believes the ultimate resolution of these audits will not have a material adverse effect on its consolidated financial position, liquidity or results of operations. 5. LONG-TERM NOTES On January 29, 2024, the Company issued $ 200.0 million aggregate principal amount of 3.00 % senior convertible unsecured notes (the “Notes”) in an offering to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended. The Notes are due on February 15, 2029 unless earlier converted, redeemed, or repurchased. Each $ 1,000 principal amount of the Notes is convertible into 257.5826 common shares of the Company based on the initial conversion rate, for a total of 51.5 million common shares at a price of $ 3.88 per share, subject to adjustments. Covenants associated with the Notes include general corporate maintenance, existence and reporting requirements. The Notes bear interest at a rate of 3.00 % per annum, payable semi-annually in arrears on February 15 and August 15 of each year, beginning on August 15, 2024. Prior to the close of business on the business day immediately preceding November 15, 2028, the Notes will be convertible only upon satisfaction of specified conditions, including the trading price of the Company’s common shares. The trading price condition is met during any calendar quarter commencing after March 31, 2024, if 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 calendar 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. Satisfaction of the condition, allows the holders to convert their Notes in the subsequent calendar quarter. On and after November 15, 2028, the Notes may be converted at any time until the close of business on the second scheduled trading day immediately preceding February 15, 2029 , regardless of the foregoing conditions. The Company may satisfy any conversions of the Notes by paying or 20 BlackBerry Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited) delivering, as the case may be, cash, its common shares or a combination of cash and its common shares, at the Company’s election (or, in the case of any Notes called for redemption that are converted during the related redemption period, solely its common shares). 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. The Company recorded the Notes, including the debt itself and all embedded derivatives, at cost less debt issuance costs of $ 6.0 million and presents the Notes as a single hybrid financial instrument. Debt issuance costs related to the Notes have been recorded as a direct deduction from the face amount of the Notes and are amortized using the effective interest method. No portion of the embedded derivatives required bifurcation from the host debt contract. The following table summarizes the change in the Notes for the six months ended August 31, 2026: Carrying Amount Balance as at February 28, 2026 $ 196.5 Amortization of debt issuance costs 0.6 Balance as at August 31, 2026 $ 197.1 The Company’s estimate of the fair value of the Notes as at August 31, 2026 is $ 450.3 million (February 28, 2026 - $ 241.7 million). For the three and six months ended August 31, 2026, the Company recorded interest expense related to the Notes of $ 1.5 million and $ 3.0 million, respectively, which has been included in investment income, net on the Company’s consolidated statements of operations (three and six months ended August 31, 2025 - $ 1.5 million and $ 3.0 million, respectively). 6. CAPITAL STOCK The following details the changes in issued and outstanding common shares for the six months ended August 31, 2026: Capital Stock and Additional Paid-in Capital Stock Outstanding (000s) Amount Common shares outstanding as at February 28, 2026 587,431 $ 2,924.4 Common shares issued for restricted share unit settlements 1,788 — Stock-based compensation — 14.0 Common shares issued for employee share purchase plan 400 1.3 Share repurchase ( 2,587 ) ( 12.9 ) Common shares outstanding as at August 31, 2026 587,032 $ 2,926.8 The Company had 587 million voting common shares outstanding, 18.9 million restricted share units (“RSUs”) and 1.9 million deferred share units (“DSUs”) outstanding as at September 21, 2026. In addition, 51.5 million common shares are issuable upon conversion in full of the Notes as described in Note 5. On May 8, 2025, the Company received acceptance from the Toronto Stock Exchange (“TSX”) with respect to a normal course issuer bid (“2025 NCIB”) share buyback program to purchase for cancellation up to 27.9 million common shares of the Company, or approximately 4.7 % of the outstanding public float as of May 5, 2025. The 2025 NCIB share buyback program commenced on May 12, 2025, and expired on May 11, 2026. On May 8, 2026, the Company received acceptance from the TSX for the renewal of its normal course issuer bid (“2026 NCIB”) share buyback program. The 2026 NCIB share buyback program allows for the repurchase of up to 26.8 million of the Company’s common shares, representing approximately 4.58 % of the outstanding public float as of April 30, 2026. The 2026 NCIB share buyback program commenced on May 12, 2026, and will expire on May 11, 2027, such date as the Company may determine, or the date on which the maximum number of common shares that may be purchased under the 21 BlackBerry Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited) 2026 NCIB share buyback program has been reached. The Company is not obligated to repurchase any common shares under the 2026 NCIB share buyback program . During the six months ended August 31, 2026, the Company repurchased 2.6 million common shares, at a cost of $ 10.0 million. All shares were repurchased under the 2025 NCIB share buyback program. The Company recorded a reduction of $ 12.9 million to capital stock and the amount paid below the per share paid-in capital of the common shares of $ 2.9 million was recorded to deficit. All common shares repurchased by the Company pursuant to the 2025 NCIB sha re buyback program have been canceled. 7. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended Six Months Ended August 31, 2026 August 31, 2025 August 31, 2026 August 31, 2025 Net income for basic and diluted earnings per share available to common shareholders $ 33.9 $ 13.3 $ 42.4 $ 15.2 Add: Interest and amortization of debt issuance cost (2) 1.8 — 3.6 $ — Adjusted income for diluted earnings per share available to common shareholders $ 35.7 $ 13.3 $ 46.0 $ 15.2 Weighted average number of shares outstanding (000’s) - basic 586,627 592,938 586,684 594,624 Effect of dilutive securities (000’s) Stock-based compensation (1) 11,482 4,431 9,311 4,073 Conversion of the Notes (2) (3) 51,546 — 51,546 — Weighted average number of shares and assumed conversions (000’s) diluted 649,655 597,369 647,541 598,697 Earnings per share - reported Basic $ 0.06 $ 0.02 $ 0.07 $ 0.03 Diluted $ 0.05 $ 0.02 $ 0.07 $ 0.03 ______________________________ (1) The Company has presented the dilutive effect of in-the-money options and RSUs that will be settled upon vesting by the issuance of new common shares in the calculation of diluted earnings per share for the three and six months ended August 31, 2026 and August 31, 2025. (2) The Company has presented the dilutive effect of the Notes using the if-converted method in the calculation of diluted earnings per share for the three and six months ended August 31, 2026. Under the if-converted method, interest expense, including amortization of debt issuance costs, net of applicable tax effects, is added back to net income and the weighted-average shares issuable upon conversion are included in diluted weighted-average shares outstanding. See Note 5 for details on the Notes. (3) The Company has not presented the dilutive effect of the Notes using the if-converted method in the calculation of diluted earnings per share for the three and six months ended August 31, 2025, as to do so would be antidilutive. See Note 5 for details on the Notes. 22 BlackBerry Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited) 8. ACCUMULATED OTHER COMPREHENSIVE LOSS The changes in AOCL by component, net of tax, for the three and six months ended August 31, 2026 and August 31, 2025 were as follows: Three Months Ended Six Months Ended August 31, 2026 August 31, 2025 August 31, 2026 August 31, 2025 Available-for-Sale Debt Securities Balance, beginning of period $ ( 0.1 ) $ — $ — $ — Other comprehensive loss before reclassification — — ( 0.1 ) — Accumulated net unrealized loss on available-for-sale debt securities $ ( 0.1 ) $ — $ ( 0.1 ) $ — Cash Flow Hedges Balance, beginning of period $ ( 0.2 ) $ 0.5 $ 0.3 $ ( 1.9 ) Other comprehensive income (loss) before reclassification ( 0.3 ) ( 0.1 ) ( 0.8 ) 1.9 Amounts reclassified from AOCL into net income 0.4 ( 0.1 ) 0.4 0.3 Accumulated net unrealized income (loss) on derivative instruments designated as cash flow hedges $ ( 0.1 ) $ 0.3 $ ( 0.1 ) $ 0.3 Foreign Currency Cumulative Translation Adjustment Balance, beginning of period $ ( 11.9 ) $ ( 12.7 ) $ ( 10.9 ) $ ( 16.7 ) Other comprehensive income (loss) ( 0.6 ) 1.0 ( 1.6 ) 5.0 Foreign currency cumulative translation adjustment $ ( 12.5 ) $ ( 11.7 ) $ ( 12.5 ) $ ( 11.7 ) Other Post-Employment Benefit Obligations Actuarial losses associated with other post-employment benefit obligations $ ( 0.6 ) $ ( 0.6 ) $ ( 0.6 ) $ ( 0.6 ) Accumulated Other Comprehensive Loss, End of Period $ ( 13.3 ) $ ( 12.0 ) $ ( 13.3 ) $ ( 12.0 ) 9. COMMITMENTS AND CONTINGENCIES (a) Letters of Credit The Company had $ 14.1 million in collateralized outstanding letters of credit in support of certain leasing arrangements entered into in the ordinary course of business as of August 31, 2026. The Company has posted a performance bond as collateral to support a government contract for the term of the agreement. See the discussion of restricted cash equivalents in Note 2. (b) Contingencies Litigation The Company is involved in litigation in the normal course of its business, both as a defendant and as a plaintiff. The Company is subject to a variety of claims (including claims related to patent infringement, purported class actions and other claims in the normal course of business) and may be subject to additional claims either directly or through indemnities against claims that it provides to certain of its partners and customers. In particular, the industry in which the Company competes has many participants that own, or claim to own, intellectual property, including participants that have been issued patents and may have filed patent applications or may obtain additional patents and proprietary rights for technologies similar to those used by the Company in its products. The Company has received, and may receive in the future, assertions and claims from third parties that the Company’s products infringe on their patents or other intellectual property rights. Litigation has been, and will likely continue to be, necessary to determine the scope, enforceability and validity of third-party proprietary rights or to establish the Company’s proprietary rights. Regardless of whether claims 23 BlackBerry Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited) against the Company have merit, those claims could be time-consuming to evaluate and defend, result in costly litigation, divert management’s attention and resources and subject the Company to significant liabilities. Management reviews all of the relevant facts for each claim and applies judgment in evaluating the likelihood and, if applicable, the amount of any potential loss. Where a potential loss is considered probable and the amount is reasonably estimable, provisions for loss are made based on management’s assessment of the likely outcome. Where a range of loss can be reasonably estimated with no best estimate in the range, the Company records the minimum amount in the range. The Company does not provide for claims for which the outcome is not probable or claims for which the amount of the loss cannot be reasonably estimated. Any settlements or awards under such claims are provided for when reasonably determinable. As of August 31, 2026, there are no material claims for which the Company has assessed the potential loss as both probable to result and reasonably estimable; therefore, no accrual has been made. Further, there are claims outstanding for which the Company has assessed the potential loss as reasonably possible to result; however, an estimate of the amount of loss cannot reasonably be made. There are many reasons that the Company cannot make these assessments, including, among others, one or more of the following: the early stages of a proceeding does not require the claimant to specifically identify the patent claims that have allegedly been infringed or the products that are alleged to infringe; damages sought are unspecified, unsupportable, unexplained or uncertain; discovery has not been started or is incomplete; the facts that are in dispute are highly complex; the difficulty of assessing novel claims; the parties have not engaged in any meaningful settlement discussions; the possibility that other parties may share in any ultimate liability; and the often slow pace of litigation. The Company has included the following summaries of certain of its legal proceedings though they do not meet the test for accrual described above. Between October and December 2013, several purported class action lawsuits were filed against the Company and certain of its former officers in various jurisdictions in Canada alleging that certain of the Company’s financial statements contain material misstatements. On July 23, 2014, the plaintiff in the putative Ontario class action (Swisscanto Fondsleitung AG v. BlackBerry Limited, et al.) filed a motion for class certification and for leave to pursue statutory misrepresentation claims. On November 17, 2015, the Ontario Superior Court of Justice issued an order granting the plaintiffs’ motion for leave to file a statutory claim for misrepresentation. On December 2, 2015, the Company filed a notice of motion seeking leave to appeal this ruling. On November 15, 2018, the Court denied the Company’s motion for leave to appeal the order granting the plaintiffs leave to file a statutory claim for misrepresentation. On February 5, 2019, the Court entered an order certifying a class comprised persons (a) who purchased BlackBerry common shares between March 28, 2013, and September 20, 2013, and still held at least some of those shares as of September 20, 2013, and (b) who acquired those shares on a Canadian stock exchange or acquired those shares on any other stock exchange and were a resident of Canada when the shares were acquired. Notice of class certification was published on March 6, 2019. The Company filed its Statement of Defence on April 1, 2019. A mediation took place on April 21 and 22, 2026, during which no settlement was reached. A pretrial conference was held on September 16, 2026. Trial is set for January 11, 2027. Other contingencies As at August 31, 2026, the Company has re cogn ized $ 28.6 million (February 28, 2026 - $ 28.6 million) in funds from claims filed by QNX with the Ministry of Innovation, Science and Econ omic Development Canada relating to its SIF. A portion of this amount may be repayable in the future under certain circumstances if certain terms and conditions are not met by the Company, which is not probable at this time. (c) Indemnifications The Company enters into certain agreements that contain indemnification provisions under which the Company could be subject to costs and damages, including in the event of an infringement claim against the Company or an indemnified third party. Such intellectual property infringement indemnification clauses are generally not subject to any dollar limits and remain in effect for the term of the Company’s agreements. To date, the Company has not encountered material costs as a result of such indemnifications. The Company has entered into indemnification agreements with its current and former directors and executive officers. Under these agreements, the Company agreed, subject to applicable law, to indemnify its current and former directors and executive officers against all costs, charges and expenses reasonably incurred by such individuals in respect of any civil, criminal or administrative action that could arise by reason of their status as directors or officers. The Company maintains liability insurance coverage for the benefit of the Company, and its current and former directors and executive officers. The Company has not encountered material costs as a result of such indemnifications in the current period. 24 BlackBerry Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited) 10. REVENUE AND SEGMENT DISCLOSURES The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by the CODM for making decisions and assessing performance as a source of the Company’s reportable operating segments. The CODM, who is the CEO of the Company, makes decisions and assesses the performance of the Company using three operating segments. The CODM does not evaluate operating segments using discrete asset information. The Company does not specifically allocate assets to operating segments for internal reporting purposes. Segment Disclosures The Company is organized and managed as three operating segments: QNX, Secure Communications, and Licensing. The following tables show information by reportable operating segment for the three and six months ended August 31, 2026 and August 31, 2025: For the Three Months Ended QNX Secure Communications Licensing Segment Totals August 31, August 31, August 31, August 31, 2026 2025 2026 2025 2026 2025 2026 2025 Segment revenue $ 80.3 $ 63.1 $ 60.9 $ 59.9 $ 22.1 $ 6.6 $ 163.3 $ 129.6 Segment cost of sales 10.6 10.7 23.5 20.2 1.5 1.5 Segment adjusted gross margin (1) $ 69.7 $ 52.4 $ 37.4 $ 39.7 $ 20.6 $ 5.1 $ 127.7 $ 97.2 For the Six Months Ended QNX Secure Communications Licensing Segment Totals August 31, August 31, August 31, August 31, 2026 2025 2026 2025 2026 2025 2026 2025 Segment revenue $ 152.6 $ 120.6 $ 134.5 $ 119.4 $ 29.1 $ 11.3 $ 316.2 $ 251.3 Segment cost of sales 21.0 21.9 44.3 38.3 3.0 3.1 Segment adjusted gross margin (1) $ 131.6 $ 98.7 $ 90.2 $ 81.1 $ 26.1 $ 8.2 $ 247.9 $ 188.0 ______________________________ (1) A reconciliation of total segment adjusted gross margin to consolidated pre-tax income is set forth below. QNX consists of BlackBerry® QNX®, BlackBerry Radar®, BlackBerry® Certicom®, and other QNX applications. QNX revenue is generated predominantly through software licenses, commonly bundled with support, maintenance and professional services and through royalties which are volume-based, but may also be fixed based upon customers committing to certain minimum volumes. Secure Communications consists of BlackBerry® UEM, BlackBerry® AtHoc® and BlackBerry® SecuSUITE®. The Company’s endpoint management platform includes BlackBerry® UEM, BlackBerry® Dynamics™, and BlackBerry® Workspaces solutions. Secure Communications revenue is generated predominantly through software licenses, commonly bundled with support, maintenance and professional services. Licensing consists of the Company’s intellectual property arrangements and settlement awards. 25 BlackBerry Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited) The following table reconciles total segment adjusted gross margin for the three and six months ended August 31, 2026 and August 31, 2025 to the Company’s consolidated totals: Three Months Ended Six Months Ended August 31, 2026 August 31, 2025 August 31, 2026 August 31, 2025 Total segment adjusted gross margin $ 127.7 $ 97.2 $ 247.9 $ 188.0 Adjustments (1) : Less: Stock compensation 0.6 0.6 1.1 1.1 Less: Research & development 33.2 25.6 66.2 50.6 Sales and marketing 25.3 24.4 54.8 53.1 General and administrative 31.8 31.5 71.1 62.0 Amortization 2.5 3.1 5.0 7.1 Impairment of long-lived assets 0.7 0.5 0.8 0.6 Add: Investment income, net 1.6 1.9 2.7 4.8 Consolidated income before income tax $ 35.2 $ 13.4 $ 51.6 $ 18.3 ______________________________ (1) The CODM reviews segment adjusted gross margin information on an adjusted basis, which excludes Stock compensation expenses - a non-cash expense that is not included in the CODM’s measure of segment adjusted gross margin when evaluating performance and allocating resources to the segment. Revenue The Compan y disaggregates revenue from contracts with customers based on geographical regions, timing of revenue recognition, and segment revenue, as discussed above in “Segment Disclosures”. The Company’s revenue, classified by major geographic region in which the Company’s customers are located, was as follows: Three Months Ended Six Months Ended August 31, 2026 August 31, 2025 August 31, 2026 August 31, 2025 North America (1) $ 72.6 $ 62.3 $ 146.4 $ 117.1 Europe, Middle East and Africa 58.3 39.9 102.8 82.4 Other regions 32.4 27.4 67.0 51.8 Total $ 163.3 $ 129.6 $ 316.2 $ 251.3 North America (1) 44.5 % 48.1 % 46.3 % 46.6 % Europe, Middle East and Africa 35.7 % 30.8 % 32.5 % 32.8 % Other regions 19.8 % 21.1 % 21.2 % 20.6 % Total 100.0 % 100.0 % 100.0 % 100.0 % ______________________________ (1) North America includes all revenue from Licensing, due to the global applicability of the patent portfolio and licensing arrangements thereof . 26 BlackBerry Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited) Revenue, classified by timing of recognition, was as follows: Three Months Ended Six Months Ended August 31, 2026 August 31, 2025 August 31, 2026 August 31, 2025 Products and services transferred over time $ 59.2 $ 60.2 $ 115.8 $ 118.7 Products and services transferred at a point in time 104.1 69.4 200.4 132.6 Total $ 163.3 $ 129.6 $ 316.2 $ 251.3 Revenue contract balances The following table sets forth the activity in the Company’s revenue contract balances for the six months ended August 31, 2026: Accounts Receivable Deferred Revenue Deferred Commissions Opening balance as at February 28, 2026 $ 202.6 $ 152.6 $ 14.3 Increases due to invoicing of new or existing contracts, associated contract acquisition costs, or other 282.8 260.3 7.6 Decrease due to payment, fulfillment of performance obligations, or other ( 276.9 ) ( 284.5 ) ( 9.1 ) Increase (decrease), net 5.9 ( 24.2 ) ( 1.5 ) Closing balance as at August 31, 2026 $ 208.5 $ 128.4 $ 12.8 Current portion $ 141.0 $ 116.6 $ 6.6 Long-term portion 67.5 11.8 6.2 $ 208.5 $ 128.4 $ 12.8 Transaction price allocated to the remaining performance obligations The table below discloses the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as at August 31, 2026 and the time frame in which the Company expects to recognize this revenue. The disclosure includes estimates of variable consideration, except when the variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property. The disclosure excludes estimates of variable consideration relating to future royalty revenues from the sale of certain non-core patent assets to Malikie Innovations Limited in May 2023, which have been constrained based on the Company’s accounting policies and critical accounting estimates. As at August 31, 2026 Less than 12 Months 12 to 24 Months Thereafter Total Remaining performance obligations $ 116.6 $ 3.4 $ 8.4 $ 128.4 Revenue recognized for performance obligations satisfied in prior periods For the three and six months ended August 31, 2026, revenue of $ 2.3 million and $ 2.8 million, respectively, was recognized relating to performance obligations satisfied in a prior period (three and six months ended August 31, 2025 - nil ). Information About Major Customers There were two customers that each comprised 10 % of the Company’s revenue during the three months ended August 31, 2026. There were no customers that comprised more than 10% of the Company’s revenue during the six months ended August 31, 2026. (three and six months ended August 31, 2025 - no customer that comprised more than 10% of the Company’s revenue and one customer that comprised 11 % of the Company’s revenue). 27 BlackBerry Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited) 11. CASH FLOW AND ADDITIONAL INFORMATION (a) The following table sets forth the supplemental cash flow information for the three and six months ended August 31, 2026 and August 31, 2025: Three Months Ended Six Months Ended August 31, 2026 August 31, 2025 August 31, 2026 August 31, 2025 Interest paid during the period $ 1.5 $ 1.5 $ 3.0 $ 3.0 Income taxes paid during the period 14.0 16.4 15.7 18.1 Income tax refunds received during the period 4.5 0.2 4.7 0.2 Property, plant and equipment included in accounts payable and accrued liabilities 0.2 — 0.4 — Intangibles included in accounts payable and accrued liabilities 0.5 — 0.5 — Sale of long-term investment included in other receivables 2.3 — 2.3 — (b) Additional Information Foreign exchange The Company is exposed to foreign exchange risk as a result of transactions in currencies other than its functional currency, the U.S. dollar. The majority of the Company’s revenue in the second quarter of fiscal 2027 was transacted in U.S. dollars. Portions of the revenue were denominated in Canadian dollars, euros and British pounds. Other expenses, consisting mainly of salaries and certain other operating costs, were incurred primarily in Canadian dollars, but were also incurred in U.S. dollars, euros and British pounds. At August 31, 2026, approximately 10 % of cash and cash equivalents, 44 % of accounts receivable and 71 % of accounts payable were denominated in foreign currencies (February 28, 2026 – 15 %, 22 % and 46 %, respectively). These foreign currencies primarily include the Canadian dollar, euro and British pound. As part of its risk management strategy, the Company maintains net monetary asset and/or liability balances in foreign currencies and engages in foreign currency hedging activities using derivative financial instruments, including currency forward contracts and currency options. The Company does not use derivative instruments for speculative purposes. Interest rate risk Cash and cash equivalents and investments are invested in certain instruments with fixed interest rates of varying maturities. Consequently, the Company is exposed to interest rate risk as a result of holding investments of varying maturities and the significant financing components within certain revenue contracts with customers. The fair value of investments, as well as the investment income derived from the investment portfolio, will fluctuate with changes in prevailing interest rates. The Company also has significant financing components within certain revenue contracts with customers and is exposed to interest rate risk as a result of discounting the future payments from customers with a fixed interest rate. The Company also has outstanding Notes with a fixed interest rate, as described in Note 5. The Company is exposed to interest rate risk as a result of the Notes. The Company does not currently utilize interest rate derivative instruments. Credit risk The Company is exposed to market and credit risk on its investment portfolio. The Company is also exposed to credit risk with customers, as described in Note 3. The Company reduces this risk from its investment portfolio by investing in liquid, investment-grade securities and by limiting exposure to any one entity or group of related entities. As at August 31, 2026, no single issuer represented more than 19 % of the total c ash, cash equivalents and investments (February 28, 2026 - no single issuer represented more than 34 % of the total cash, cash equivalents and investments), wi th the largest such issuer representing bearer deposits, term deposits and cash balances with one of the Company’s banking counterparties. 28 BlackBerry Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited) Liquidity risk Cash, cash equivalents, and investments were $ 447.1 million as at August 31, 2026. The Company holds certain equity investments in privately-held companies that are illiquid securities without a public market and, as such, they cannot be readily sold or exchanged for cash. The Company may not be able to sell these shares at desired times or prices, which could negatively impact its financial condition and results of operations. The Company’s management remains focused on 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 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. Equity Investments Risk The Company holds non-marketable equity investments in privately-held companies in which the Company does not own a controlling interest or have significant influence. The Company's equity investments in privately-held companies are subject to a wide variety of market-related risks that could substantially reduce or increase the fair value of its holdings. The Company's equity investments in privately-held companies are recorded using the measurement alternative and are assessed each reporting period for observable price changes and impairments, which may involve estimates and judgments given the lack of readily available market data. Certain equity investments in privately-held companies are in the early stages of development and are inherently risky due to their lack of operational history. The Company has a high concentration of risk associated with a small number of non-marketable equity investments that are impacted by fluctuations in their fair values or by observable changes or impairments. 29