UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 10-K
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended February 29, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
Commission file number 001-38232
______________________________________________________
BlackBerry Limited
(Exact name of registrant as specified in its charter)
Canada
98-0164408
(State or other jurisdiction of incorporation or
organization)
(I.R.S. Employer Identification No.)
2200 University Ave East
Waterloo
Ontario
Canada
N2K 0A7
(Address of Principal Executive Offices)
(Zip Code)
(519) 888-7465
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Shares
BB
New York Stock Exchange
Common Shares
BB
Toronto Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes x No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o No x
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit such files).
Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”,
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
x
Accelerated filer
☐
Non-accelerated filer
o
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued its audit report. x
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements. o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-
based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b). o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x
The aggregate market value of voting stock held by non-affiliates of the registrant on August 31, 2023, the last business day of
the registrant’s most recently completed second fiscal quarter, based on the closing price of the common shares as reported by
the New York Stock Exchange, was approximately $3.2 billion. The registrant had 589,233,606 shares of common shares
issued and outstanding as of April 1, 2024.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s proxy statement for its 2024 Annual Meeting of Shareholders are incorporated by reference into Part
III of this Annual Report on Form 10-K to the extent stated herein. Such proxy statement will be filed with the Securities and
Exchange Commission within 120 days after the registrant’s fiscal year ended February 29, 2024.
BLACKBERRY LIMITED
TABLE OF CONTENTS
Page No.
PART I
Item 1
Business
4
Item 1A
Risk Factors
12
Item 1B
Unresolved Staff Comments
24
Item 1C
Cybersecurity
24
Item 2
Properties
25
Item 3
Legal Proceedings
25
Item 4
Mine Safety Disclosures
25
PART II
Item 5
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
26
Item 6
[Reserved]
28
Item 7
Management's Discussion and Analysis of Financial Condition and Results of Operation
28
Item 7A
Quantitative and Qualitative Disclosures about Market Risk
58
Item 8
Financial Statements and Supplementary Data
60
Item 9
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
109
Item 9A
Controls and Procedures
109
Item 9B
Other Information
109
Item 9C
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
109
Part III
Item 10
Directors, Executive Officers and Corporate Governance
110
Item 11
Executive Compensation
112
Item 12
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
112
Item 13
Certain Relationships and Related Transactions, and Director Independence
112
Item 14
Principal Accounting Fees and Services
113
PART IV
Item 15
Exhibit and Financial Statement Schedules
114
Item 16
Form 10-K Summary
115
Signatures
116
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Unless the context otherwise requires, all references to the “Company” and “BlackBerry” include BlackBerry Limited and its
subsidiaries.
PART I
ITEM 1. BUSINESS
The Company: A heritage of innovation
Founded in 1984, the Company is a leading provider of intelligent security software and services to enterprises, governments
and leading OEMs around the world. Its products secure 17 of the G20 governments and enable more than 235 million vehicles.
Based in Waterloo, Ontario, the Company has two core divisions, each addressing large and growing market opportunities.
Its Cybersecurity division is a pioneer in the use of artificial intelligence (“AI”) and machine learning to deliver innovative
solutions in the areas of cybersecurity and data privacy. It is a leader in endpoint security, endpoint management, secure
communications and critical event management.
The Company’s IoT division is a leader in embedded software where the Company believes it is the world’s leading automotive
foundational software supplier. Its customers include leading automotive OEMs and Tier 1 suppliers that use its products in
vehicles, as well as top medical OEMs. The Company’s solutions are implemented into all the top 10 automotive OEMs, top 7
Tier 1 suppliers, 24 of the 25 top EV OEMs, and 9 of the 10 top medical OEMs.
The Company was incorporated under the Business Corporations Act (Ontario) (“OBCA”) and has amalgamated with several
of its wholly-owned subsidiaries, the last occurring through the filing of articles of amalgamation under the OBCA on
November 4, 2013. The Company’s common shares trade under the ticker symbol “BB” on the New York Stock Exchange
(“NYSE”) and the Toronto Stock Exchange (“TSX”).
Intercorporate Relationships
The Company has four material subsidiaries, all of which are wholly-owned, directly or indirectly, by the Company in each
case as at February 29, 2024.
Name of Subsidiary
Jurisdiction of Incorporation or Organization
BlackBerry Corporation
Delaware, U.S.A.
BlackBerry UK Limited
England and Wales
Cylance Inc.
Delaware, U.S.A.
Secusmart GmbH
Duesseldorf, Germany
Industry Background: Large and growing market opportunities
Cybersecurity
As the digital transformation of enterprises continues to advance, workforces are becoming more decentralized, mobile and
remote, and data and applications are increasingly migrating to the cloud. As part of this trend, the number of connected
endpoints is growing rapidly, as is their complexity and the volume of sensitive data that they process and store. These
endpoints, which include smartphones, laptops, desktops, servers, vehicles, industrial equipment and other connected devices in
the Internet of Things (“IoT”), increasingly operate beyond the traditional network security perimeter and present an expanding
attack surface to cyber adversaries.
At the same time, the threat environment for enterprises and manufacturers has become increasingly hostile as the number of
adversaries grows and the scale and sophistication of their attacks, increasingly focused on the endpoint, continue to develop.
Today’s malicious actors are often well-trained and well-funded criminal organizations, state-sponsored agents and
international hacking collectives with the capability of employing advanced techniques to penetrate endpoints and encrypt,
destroy or exfiltrate data. These groups have been responsible for highly publicized breaches that have exposed personal
information and intellectual property, disrupted operations and infrastructure, extracted ransoms and caused significant
reputational damage to organizations across a broad range of industries.
Against this backdrop, regulators are enacting new measures to ensure that enterprises are held accountable for their
management of cybersecurity risk. In particular, changes to data privacy laws in the United States, Europe and other
jurisdictions are compounding the challenges faced by organizations by increasing their responsibilities for securing their data
as well as that of their customers. At the same time, a shortage of talented cybersecurity professionals means that existing
security operations teams struggle to contend with the velocity of cyberattacks and the complexity and demands of many
available solutions.
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This landscape of growing vulnerability and accountability has created opportunities for secure communications platforms,
endpoint cybersecurity and management solutions, embedded systems, enterprise applications, analytic tools and related
services that help enterprises to secure their connected endpoints, enhance functional safety, maintain data privacy and
demonstrate compliance with applicable regulations.
IoT
The world is rapidly moving to one where everyone and everything can be intelligently connected at the edge. This evolution is
being enabled by the proliferation of IoT devices, increasing device sophistication and compute power, and powerful software
that can bring these devices to life. Industries of all types, from automotive and manufacturing to healthcare and robotics, are
experiencing the profound impact of this evolution, as intelligent edge devices deliver unprecedented capabilities by making
immediate, context-aware decisions locally. The Company believes the benefits of the intelligent edge are real and immense,
promising enhanced security, reduced latency, and rigorous efficiency, and position the intelligent edge as a technological pillar
that it expects will shape the digital landscape of the future.
This rapid evolution can be attributed to increasing connectivity, decreasing sensor and hardware component costs, and
continuous innovation that leverages edge data. The associated surge in data generation and computing power at the edge is
creating new ways for businesses to provide impactful applications that rely on real-time data processing and insights. As a
result, software-defined IoT devices are improving safety, security, and reliability by allowing for dynamic updates, which
enables greater flexibility to scale and adapt to evolving customer demands or industry requirements.
While all industries are experiencing the shift toward the intelligent edge, the Company believes these trends are most prevalent
in the automotive industry, as evidenced by the growth and complexity of software-defined vehicles (“SDVs”). Powered by
continual advancements in IoT hardware such as the move from microcontrollers to microprocessors, modern vehicles
increasingly operate on highly sophisticated and interconnected software stacks and the data produced by vehicles is
proliferating at a rapid rate. The entire automotive value chain, from OEMs to Tier 1 suppliers, will need foundational software
to capture, synthesize, analyze and monetize this massive volume of real-time data to develop innovative solutions that deliver
safer, more efficient and more fulfilling driving experiences. These trends are not just present in automotive, but are also being
seen in industrial automation, healthcare and robotics. The Company further believes that increased and evolving regulatory
requirements as well as consumer expectations will create further demand for high-performance SDVs and other IoT devices.
With increasing compute capabilities and system complexity, there is an imperative for high-performance foundational software
that maintains the highest level of functional safety and security of systems at the edge.
Products and Services: Addressing market needs and opportunities
The Company has a rich pedigree in innovation and has developed a range of products and services that assist customers in
addressing their needs as their industries evolve, which are structured in three groups: Cybersecurity, IoT (collectively with
Cybersecurity, “Software & Services”) and Licensing and Other.
Cybersecurity
The Cybersecurity business consists of Cylance® cybersecurity and BlackBerry unified endpoint management (“UEM”)
solutions, collectively known as BlackBerry Spark, SecuSUITE® and BlackBerry® AtHoc®.
BlackBerry’s Cylance cybersecurity solutions include: CylanceENDPOINT™, an integrated endpoint security solution that
leverages the Cylance AI model and OneAlert EDR console, to prevent, detect and remediate cyber threats at the endpoint,
including on mobile; CylanceGUARD®, a managed detection and response solution that provides 24/7 threat hunting and
monitoring, as well as integrated critical event management communications during a cyber incident; CylanceEDGE™, an AI-
powered continuous authentication zero trust network access solution that provides secure access to applications and data loss
prevention; and CylanceINTELLIGENCE™, a contextual cyber threat intelligence service. The Company also offers incident
response, compromise assessment and containment services to assist clients with forensic analysis, state of existing systems and
remediation of attacks. These solutions are designed to provide a continuous state of resilience for the Company’s customers
and support the outcomes they require by: (i) complementing, extending, or fully managing security capabilities with the
Company’s experts and extended technology ecosystem, (ii) enabling the workforce in a way that is fast, easy and satisfying,
while providing security visibility, controls and peace of mind; and (iii) reducing complexity and overhead costs associated
with security operations.
The Company’s UEM offerings include BlackBerry® UEM, BlackBerry® Dynamics™, BlackBerry® Workspaces, and
BlackBerry Messenger (BBM®) Enterprise. BlackBerry UEM employs a containerized approach to manage and secure devices,
third party and custom applications, identity, content and endpoints across all leading operating systems, as well as providing
regulatory compliance tools. BlackBerry Dynamics offers a best-in-class development platform and secure container for mobile
applications, including the Company’s own enterprise applications such as BlackBerry® Work and BlackBerry® Connect for
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secure collaboration. BlackBerry Workspaces is a secure Enterprise File Sync and Share (EFSS) solution. BBM Enterprise is an
enterprise-grade secure instant messaging solution for messaging, voice and video.
BlackBerry SecuSUITE is a certified, multi-OS voice and text messaging solution with advanced encryption, anti-
eavesdropping and continuous authentication capabilities, providing a maximum level of security on conventional mobile
devices for government and businesses.
BlackBerry AtHoc is a secure, networked critical event management solution that enables people, devices and organizations to
exchange critical information in real time during business continuity and life safety operations. The platform securely connects
with a diverse set of endpoints to distribute emergency mass notifications, improve personnel accountability and facilitate the
bidirectional collection and sharing of data within and between organizations.
IoT
The IoT business consists of BlackBerry Technology Solutions (“BTS”), BlackBerry Radar® and BlackBerry IVY®.
The principal component of BTS is BlackBerry QNX, a global provider of real-time operating systems, hypervisors,
middleware, development tools, and professional services for connected embedded systems in the automotive, medical,
industrial automation and other markets. A recognized leader in automotive software, BlackBerry QNX offers a growing
portfolio of safety-certified, secure and reliable platform solutions and is focused on achieving design wins with automotive
OEMs, Tier 1 vendors and automotive semiconductor suppliers. These solutions include the BlackBerry QNX real-time
operating system, QNX® Hypervisor for Safety and QNX® Software Development Platform (SDP), as well as other products
designed to alleviate the challenges of compliance with ISO 26262, the automotive industry’s functional safety standard. The
QNX pre-certified microkernel operating system is specifically tailored for safety-critical embedded systems and toolchains that
are pre-qualified for building these systems. The QNX Hypervisor for Safety prevents safety systems from potential impact of
malfunction in other systems. These products help drive a faster time to market and also reduce developer friction.
BlackBerry QNX is also a preferred supplier of embedded systems for companies building medical devices, train-control
systems, industrial robots, hardware security modules, building automation systems, green energy solutions, and other mission-
critical applications.
The Company believes its close collaboration with customers has provided it with significant industry expertise, enabling it to
understand specific customer requirements and more quickly and effectively develop high impact solutions to meet the evolving
needs of its customers.
In addition to BlackBerry QNX, BTS includes BlackBerry® Certicom® cryptography and key management products.
BlackBerry Certicom leverages patented elliptic curve cryptography to provide device security, anti-counterfeiting and product
authentication solutions. BlackBerry Certicom’s offerings include its managed public key infrastructure (“PKI”) platform, key
management and provisioning technology that helps customers to protect the integrity of their silicon chips and devices from
the point of manufacturing through the device life cycle. BlackBerry Certicom’s secure key provisioning, code signing and
security credential management system services protect next-generation connected cars, critical infrastructure and IoT
deployments from product counterfeiting, re-manufacturing and unauthorized network access.
BlackBerry Radar is a family of asset monitoring and telematics solutions for the transportation and logistics industry. The
BlackBerry Radar solution includes devices and secure cloud-based dashboards for tracking containers, trailers, chassis,
flatbeds and heavy machinery, for reporting locations and sensor data, and for enabling custom alerts and fleet management
analytics.
The Company has partnered with Amazon Web Services, Inc. (“AWS”) to develop and market BlackBerry IVY, an intelligent
vehicle data platform leveraging BlackBerry QNX’s automotive capabilities. BlackBerry IVY allows automakers to safely
access a vehicle’s sensor data, normalize it, and apply machine learning at the edge to generate and share predictive insights and
inferences. Automakers and developers will be able to use this information to create responsive in-vehicle applications and
services that enhance driver and passenger experiences. BlackBerry IVY supports multiple operating systems and hardware
platforms, as well as multi-cloud deployments, in order to ensure compatibility across vehicle models and brands. The
Company announced the first design win for BlackBerry IVY in January 2023 and released the platform for general availability
in May 2023.
The BlackBerry Cybersecurity and IoT groups are complemented by the enterprise and cybersecurity consulting services
offered by the Company’s BlackBerry® Professional Services business. BlackBerry Professional Services provides platform-
agnostic strategies to address mobility-based challenges, providing expert deployment support, end-to-end delivery (from
system design to user training), application consulting, and experienced project management. The Company’s cybersecurity
consulting services and tools, combined with its other security solutions, help customers identify the latest cybersecurity threats,
test for vulnerabilities, develop risk-appropriate mitigations, maintain IT security standards and techniques, and defend against
the risk of future attacks.
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Licensing and Other
Licensing and Other consists primarily of the Company’s patent licensing business and legacy service access fees (“SAF”).
The Company’s Licensing business is responsible for the management and monetization of the Company’s global patent
portfolio. The patent portfolio continues to provide a competitive advantage in the Company’s core product areas as well as
providing leverage in the development of future technologies and licensing programs in both core and adjacent vertical markets.
The Company owns rights to an array of patented and patent pending technologies which include, but are not limited to,
operating systems, networking infrastructure, acoustics, messaging, enterprise software, automotive subsystems, cybersecurity,
cryptography and wireless communications. As of February 29, 2024, the Company owned approximately 6,200 worldwide
patents and applications.
In May 2023, the Company completed the sale of a portfolio of non-core patent assets to Malikie Innovations Limited for $170
million in cash on closing, an additional $30 million in cash by no later than the third anniversary of closing and potential future
royalties in the aggregate amount of up to $700 million (the “Malikie Transaction”).
The Company’s Other business generated revenue from SAF charged to subscribers using the Company’s legacy BlackBerry 7
and prior BlackBerry operating systems, for which support and maintenance ceased as of January 4, 2022.
Go to Market
The Company primarily generates revenue from the licensing of enterprise software and sales of associated services, including
its endpoint management and cybersecurity solutions, BlackBerry QNX software for the embedded market, technology
licensing and professional consulting services. The Company focuses on strategic industries with vertical-specific use cases,
including regulated enterprise markets such as financial services, government, healthcare, professional services and
transportation, and other markets where embedded software and critical infrastructure are important, such as utilities, mining
and manufacturing.
Cybersecurity
The Company licenses its Cybersecurity products, including complementary third-party applications, through a geographically-
dispersed direct sales force, value-added resellers, managed security service providers and alliance partners. The Company
continues to build its global partner programs to bolster its direct sales and marketing efforts.
IoT
The Company licenses BlackBerry QNX and BlackBerry Certicom technology and provides professional engineering services
to OEM customers in the automotive, mobile and other embedded software markets via a direct sales force and indirectly
through channel partnerships. The licenses are primarily monetized as royalties on units shipped and through project
development seats, tools and maintenance fees.
The Company markets and sells its BlackBerry Radar secure asset monitoring products and services to enterprise users through
its internal sales force as well as through third party distribution channels.
Seasonality
The Company experiences seasonal patterns in its revenue, primarily due to Cybersecurity customers placing a higher
percentage of renewal orders in the second half of the fiscal year as compared to the first half of the fiscal year. This gives rise,
in turn, to similar seasonality in the Company’s operating margin and operating cash flow, the latter of which is also impacted
by variable incentive plan payments in the first half of the fiscal year.
Competition and Competitive Strengths
The Company is engaged in markets that are highly competitive and rapidly evolving. Frequent new product introductions and
changes to endpoints, operating systems, applications, security threats, industry standards and the overall technology landscape
result in continuously evolving customer requirements for mobile solutions. The Company competes with a broad range of
vendors in each of its businesses.
Key competitive factors important to the Company across its businesses include product features (including security features),
relative price and performance, product quality and reliability, compatibility across ecosystems, service and support, and
corporate reputation. The Company believes that it delivers the broadest set of security capabilities and visibility in the market,
covering users, devices, networks, apps and data.
Cybersecurity
The Company’s Cybersecurity portfolio includes comprehensive security controls for any connected IoT environment, across
all endpoints. The portfolio is differentiated through its use of a zero-trust architecture that uniquely combines intelligent
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security with a user experience that requires little to no support from end users or IT administrators, simplifying management
and reducing costs.
The Cylance cybersecurity solutions leverage Cylance AI, machine learning and automation to provide improved cyber threat
prevention and remediation, and can help users to understand risks, make contextual decisions and dynamically apply policy
controls with no user interruption, mitigating risks before they materialize. The Company trains its AI model against data lakes
containing billions of files so that it learns to autonomously convict, or not convict, files prior to their execution. Unlike
traditional signature-based cybersecurity technology, this prevention-oriented approach is able to protect enterprises from
malicious zero-day payloads before they are deployed, and even when protected endpoints are offline. Additionally, detection
and response decisions are pushed down to the endpoint, minimizing response latency so that a minor security event can be
addressed before it becomes a widespread incident. CylanceENDPOINT’s Endpoint Protection Platform (EPP) has earned
Federal Risk and Authorization Management Program (“FedRAMP”) authorization. The Company’s Cylance cybersecurity
technology competes with various types of providers, including: traditional signature-based antivirus vendors and identity
management; vendors whose business focuses almost solely on EPP; EDR vendors, which primarily focus on continuous
monitoring and human response to advanced security threats; companies that provide endpoint systems management; and large
network security providers, which have entered the market primarily through acquisition.
BlackBerry UEM endpoint management includes leading unified endpoint management, secure business productivity,
application containerization, secure collaboration and digital rights management capabilities. BlackBerry UEM has earned
National Information Assurance Partnership (“NIAP”) certification and is an approved mobile device management solution on
the U.S. Department of Defense Information Network’s Approved Product List. With the BlackBerry UEM Suite, the
Company competes with other MDM and UEM providers.
The Company’s Cybersecurity portfolio is also differentiated by the inclusion of a sophisticated network operations center in its
infrastructure. The Company pioneered the use of this architecture to route messages reliably and efficiently to and from mobile
devices, and over time has expanded capabilities to enable end-to-end secure communications between endpoints and
applications and enterprise networks.
BlackBerry SecuSUITE technology has been certified to be compliant with the Common Criteria protection profile for VoIP
applications and SIP servers. It has also earned NIAP certification and NATO Communications and Information Agency
security accreditation, and has been placed on the National Security Agency’s Commercial Solutions for Classified Program
component list of products certified for use on classified systems.
The BlackBerry AtHoc platform is both mobile and scalable, integrating with legacy systems and supporting on-premise and
cloud-based deployments. With available incident management and encrypted end-to-end instant messaging capabilities, the
platform offers a suite of secure crisis communication services to meet the growing number of use cases for emergency or mass
notifications. BlackBerry AtHoc has received FedRAMP certification and is the leading provider of network-centric, interactive
crisis communication to the U.S. Department of Defense and the U.S. Department of Homeland Security, among other
governmental bodies. BlackBerry AtHoc helps to protect more than 75% of U.S. government personnel.
IoT
BlackBerry QNX is recognized for attaining the highest levels of security certifications and approvals for many of its embedded
products and is the leader in safety-certified, secure and reliable software for the automotive industry. BlackBerry QNX is a
trusted supplier of operating systems, hypervisors, development tools and support to automotive OEMs and Tier 1 vendors and
to the general embedded market.
The Company recently announced a number of new products that it believes will enable it to maintain its strong market position
and open up new potential revenue streams.
The QNX Software Development Platform (SDP) 8.0 is a new, high performance, highly scalable real time operating system.
The fifth-generation kernel architecture builds on decades of development and a field-proven safe and secure platform, while
maintaining its POSIX API to provide an instantly productive environment for both QNX and Linux® developers. QNX SDP
8.0 adds support for ARM v9 and GCC 12 and delivers near-linear performance scaling with CPU core counts, enabling
developers to fully realize the power and opportunities of increasingly advanced processors for generations to come.
The QNX Accelerate portfolio of cloud-based tools, including the QNX RTOS and Hypervisor, enables developers to develop
mission-critical embedded systems and applications from anywhere worldwide, accelerating development cycles and reducing
time to market for new, innovative solutions. The QNX Accelerate portfolio offers little to no difference between running in
the cloud versus on real hardware.
QNX® Sound is an innovative development platform that decouples audio and acoustics software from the vehicle hardware to
give audio designers and engineers complete creative freedom to deliver new and exciting in-vehicle sound experiences.
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The BlackBerry QNX automotive business competes principally with other providers of embedded foundational software,
including Linux open-source operating systems. See Part 1, Item 1A “Risk Factors - The Company faces intense competition”.
Product Design, Engineering and Research and Development
The Company’s research and development (“R&D”) strategy seeks to drive innovation to continuously enhance the Company’s
product portfolio and introduce exciting solutions to the market.
The Company dedicates a major portion of its R&D investments to the development of software products and services for its
Cybersecurity and IoT solutions. Solutions include leading security capabilities at each level of the platform in order to address
the needs of enterprise IT departments and end users for securing devices, applications, content and work data at rest and in
transit.
The Company makes significant investments to support its cybersecurity solutions and is committed to hiring and retaining top
data scientists and engineers in the areas of artificial intelligence and machine learning. R&D investments at BlackBerry QNX
are increasingly focused on software innovations for autonomous and connected vehicles.
The Company’s investment in longer term research is, in part, supported by taking advantage of specific government financial
assistance programs where available. For additional information, see Note 10 to the Consolidated Financial Statements.
Third Party Software Developers
The Company offers the BlackBerry Development Platform, an enterprise-grade toolset which enables application developers
and ISVs to build secure, powerful and customized solutions for almost every use case and to commercialize them on the
BlackBerry® Marketplace for Enterprise Software, which contains over 130 enterprise applications and solutions. The platform
includes the BlackBerry Dynamics software development kit (“SDK”), which allows developers to integrate BlackBerry
security into their enterprise applications, resulting in a managed application where corporate data is protected. The platform
also includes SDKs for BlackBerry UEM, BlackBerry Workspaces, BlackBerry AtHoc and other products.
To support Cylance Cybersecurity products, the Company offers the BlackBerry Endpoint ISV Technology Integration program
featuring an application programming interface (“API”) development platform that enables developers and ISVs to develop
robust extensible security integrations, creating results-based offerings for targeted use cases. Completed integrations are shared
with the user community and promoted to market partners and AWS Marketplace opportunities.
In addition, the Company maintains the BlackBerry AtHoc Development Partner Program, which invites partners to integrate
with the BlackBerry AtHoc service and allows them to create alerts based on more event types or to leverage alerting
capabilities based on critical events from within other systems.
The primary development platform for BlackBerry QNX-based systems is the QNX Software Development Platform, which
includes the QNX Neutrino real-time operating system and the QNX Momentics® Tool Suite. The QNX SDP is complemented
by QNX Hypervisor, QNX® OS for Safety, QNX® Hypervisor for Safety, QNX Sound and other QNX products.
Expanding the Company’s automotive product portfolio, the BlackBerry IVY platform includes an in-vehicle runtime for cost-
efficient data processing and a set of SDKs which enables developers to process vehicle signals and generate meaningful
insights that are used to unlock new use cases on both BlackBerry QNX and Linux-based vehicle platforms.
Intellectual Property
The protection of intellectual property is an important part of the Company’s operations. The policy of the Company is to apply
for patents and to acquire or seek other appropriate proprietary or statutory protection when it develops valuable new or
improved technology. The Company believes that the rapid pace of technological change in the industries in which the
Company operates makes patent and trade secret protection important, and that this protection must be supported by other
means including the ability to attract and retain qualified personnel, new product introductions and frequent product
enhancements.
The Company believes that its patent portfolio continues to provide a competitive advantage in its core product areas as well as
provide leverage in the development of future technologies. The Company does not believe that it is dependent upon a single
patent or even a few patents and instead primarily depends upon its extensive know-how, innovative culture, and technical
leadership.
The Company protects its technology through a combination of patents, designs, copyrights, trade secrets, confidentiality
procedures and contractual arrangements. The Company seeks to patent key concepts, components, protocols, processes and
other inventions that it considers to have commercial value or that will likely give the Company a technological advantage.
Although the Company applies for patent protection primarily in Canada, Europe and the United States, the Company has filed,
and will continue to file, patent applications in other countries where there exists a strategic technological or business reason to
do so. To broadly protect the Company’s inventions, the Company has a team of in-house patent attorneys and also consults
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with outside patent attorneys who interact with employees, review invention disclosures and prepare patent applications on a
broad array of core technologies and competencies. As a result, the Company owns rights to an array of patented and patent
pending technologies which include, but are not limited to, cybersecurity, cryptography, machine learning, artificial
intelligence, operating systems, acoustics, messaging, enterprise software, automotive subsystems, networking infrastructure
and wireless communications. As of February 29, 2024, the Company owned approximately 6,200 worldwide patents and
applications. The Company does not expect that the sale of its portfolio of primarily legacy patents under the Malikie
Transaction negatively impacted its strategy of protecting its new innovations through patent filings.
It is the Company’s general practice to enter into confidentiality and non-disclosure agreements with its employees, consultants,
contract manufacturers, customers, potential customers and others to attempt to limit access to, and distribution of, its
proprietary information. In addition, the Company generally enters into agreements with employees that include an assignment
to the Company of all intellectual property developed in the course of employment.
The Company does not rely primarily on patents or other intellectual property rights to protect or establish its market position;
however, it is prepared to enforce its intellectual property rights in certain technologies when attempts to negotiate mutually
agreeable licenses are not successful. The Company also enters into inbound licensing agreements related to technology and
intellectual property rights, including agreements to obtain rights that may be necessary to produce and sell products.
Environmental, Social and Governance
The Company observes the highest ethical standards in its operations and has adopted policies and practices that require the
same of its business partners. The Company’s business is based on trust, and the Company maintains its position as a global
leader in data security and privacy by developing new technologies, complying with established and evolving regulatory
frameworks, acting with integrity and adhering to responsible business practices. See also “Ethical Business Conduct and Code
of Business Standards and Principles” in this Annual Report on Form 10-K.
The Company is committed to operating in a sustainable way that respects the environment, the Company’s employees and
business partners, and the communities in which the Company operates around the world. To honor this commitment, the
Company maintains a variety of programs to identify, execute and maintain sustainable initiatives and to reduce its direct and
indirect environmental impact. In fiscal 2022, these programs enabled the Company to achieve carbon neutrality across its
Scope 1, Scope 2 and calculated Scope 3 greenhouse gas emissions and the Company maintained its carbon neutral status as at
the end of fiscal 2024.
In its procurement activities, the Company engages with its suppliers to conduct due diligence into the source of the so-called
“conflict minerals” (which currently include the minerals from which gold, tantalum, tin, and tungsten are derived) that are
necessary to the functionality or production of the Company’s hardware products, principally for the BlackBerry Radar
business. The Company also seeks to make a positive impact in the communities in which it operates by investing in strategic
charitable partnerships, supporting charitable endeavours by employees, and building community relationships through local
offices.
The Company has formalized a number of policies to reflect its commitment to responsible business practices, including a
Privacy Policy, Supplier Code of Conduct, Human Rights Policy, Supplier Diversity Policy, Health and Safety Policy and
Environment and Sustainability Policy, and periodically issues an ESG report. Through the report, the Company provides
visibility on its environmental, social and governance initiatives such as mitigating its corporate carbon footprint and reducing
greenhouse gas emissions, improving water sanitation and fostering diversity. These documents and policies relating to the
Company’s corporate responsibility initiatives can be viewed on the Company’s website at https://www.blackberry.com/us/en/
company/corporate-responsibility and are not incorporated by reference in this Annual Report on Form 10-K.
Foreign and domestic laws and regulations apply to many aspects of the Company’s business.
The Company collects and uses a wide variety of information for various purposes in its business, including to help ensure the
integrity of its services and to provide features and functionality to customers. This aspect of the Company’s business is subject
to a broad array of evolving privacy and data protection laws, including the European Union’s General Data Protection
Regulation, the proposed Canadian Consumer Privacy Protection Act, regional privacy frameworks such as the Asia-Pacific
Economic Cooperation Privacy Framework, and national and state laws within the United States, including the California
Privacy Rights Act. These laws impose strict operational requirements and can provide for significant penalties for non-
compliance. Elements of these evolving laws and regulations, as well as their interpretation and enforcement, remain unclear
and the Company may be required to modify its practices to comply with them in the future.
The Company is also subject to numerous international trade laws and regulations, including, without limitation, tariffs, trade
sanctions, export controls and technology transfer restrictions, as well as anti-corruption legislation such as the U.S. Foreign
Corrupt Practices Act and Canada’s Corruption of Foreign Public Officials Act.
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Additionally, the Company is subject to domestic and international laws relating to environmental protection and the
proliferation of hazardous substances. In parts of Europe, North America, Latin America and the Asia-Pacific region, the
Company is obligated to comply with substance restrictions, packaging regulations, energy efficiency ratings and certain
product take-back and recycling requirements, principally for the BlackBerry Radar business. The U.S. Dodd-Frank Wall
Street Reform and Consumer Protection Act also requires the Company to comply with certain due diligence and disclosure
obligations with respect to the use of conflict minerals. Furthermore, the Company may be subject to a variety of local laws
unknown to the Company in foreign jurisdictions where customers are located.
Any actual or perceived failure to comply with these requirements may result in, among other things, revocation of required
licenses or registrations, loss of approved status, private litigation, regulatory or governmental investigations, administrative
enforcement actions, sanctions, civil and criminal liability, and constraints on the Company’s operations. It is also possible that
current or future laws or regulations could be interpreted or applied in a manner that would prohibit, alter, or impair the
Company’s existing or planned products and services, or that could require the Company to undertake costly, time-consuming
or otherwise burdensome compliance measures.
Information about our Executive Officers
The Company made two executive officer appointments during fiscal 2024, naming John Giamatteo as Chief Executive Officer
and President, Cybersecurity and Jennifer Armstrong-Owen as Senior Vice President and Chief People Officer.
The following table sets forth the name, province or state, and country of residence of each executive officer of the Company
and their respective positions and offices held with the Company and their principal occupations during the last five years.
Name and Residence
Current Position with
Company
Principal Occupation During the Last Five Years (other
than Current Position with Company)
Jennifer Armstrong-Owen
Washington, USA
Senior Vice President and
Chief People Officer
Senior Vice President, People, OfferUp (2023-2024); Senior
Vice President, People, SeekOut (2021-2023); Vice President,
People, Chef Software (2018-2020)
Marjorie Dickman
Washington D.C., USA
Chief Government Affairs
and Public Policy Officer
Global Director and Associate General Counsel, IoT and
Automated Driving Policy, Intel (2017-2020)
Mattias Eriksson
Illinois, USA
President, IoT
Senior Vice President and Head of Product, HERE
Technologies (2019-2020)
John Giamatteo
Texas, USA
Chief Executive Officer;
President, Cybersecurity;
Director
President and Chief Revenue Officer, McAfee (2013-2020)
Phil Kurtz
Ontario, Canada
Chief Legal Officer and
Corporate Secretary
Vice President, Deputy General Counsel and Corporate
Secretary (2021-2022); Vice President, Deputy General
Counsel and Assistant Corporate Secretary (2015-2021)
Steve Rai
Ontario, Canada
Chief Financial Officer
Deputy Chief Financial Officer (2019)
Human Capital
The Company’s 2,647 regular employees, contract workers and student workers as of February 29, 2024 work as a team in 18
countries worldwide, with approximately 55% in Canada, 19% in the U.S., and 26% outside of North America. None of the
Company’s employees in Canada or the United States are represented by a labour union; however, employees of certain foreign
subsidiaries in Europe are represented by works councils.
The Company offers employees an equitable and competitive total rewards program, designed to recognize and reward both
individual and company performance. The Company provides a range of financial and benefit programs such as its employee
share purchase program, employee recognition programs, retirement savings plans, family-friendly leave policies, health and
wellness programs, employee and family assistance program, as well as corporate discounts, all designed to support the overall
wellness of the Company’s employees and their families.
The Company embraces a diverse and inclusive workplace, providing a welcoming environment in which every individual is
valued and respected, regardless of race, gender, sexual orientation, gender identity, religion, age, veteran status, disability
status or any other protected element of diversity. The Company recognizes diversity, equity and inclusion as business
imperatives and commits to attract, develop, and retain the best and brightest talent. The Company strives to maintain an
environment where people are valued, have a sense of belonging, and feel they can bring their authentic selves to work, every
day. The Company is committed to maintaining a respectful and productive work environment free from discrimination and
harassment, supported by training in unconscious bias and inclusive language. The Company does not tolerate, condone, or
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ignore workplace discrimination or harassment or any unlawful behavior and investigates all complaints regarding such conduct
in a timely manner.
The Company believes career development is unique and personal for each employee. The Company offers career development
and growth in many forms such as job shadowing, job rotation, stretch assignments, enhanced scope or responsibility,
networking, lateral movement, promotions, and volunteering. The Company encourages employees to broaden their scope and
understanding of the business, and to build additional skills to attain their career aspirations. Employees are supported in their
growth and development through the Company’s tuition and educational reimbursement programs, subsidies for professional
association memberships, a global mentorship program, career planning resources, and various training programs.
The Company is honored to have the efforts of our talented and dedicated employees recognized through numerous awards,
including Forbes Canada’s Best Employers (2022-2023), Best & Brightest Companies to Work for in the Nation (2016-2023),
Best & Brightest Companies to Work for in Wellness (2016-2023), Canada’s Top Employers for Young People (2021-2024),
and Canada’s Greenest Employers (2016-2023), among others. The Company also takes pride in its award-winning paid co-op
and intern student program, through which the Company invests in the personal and professional development of the next
generation of BlackBerry talent.
Building upon its culture of teamwork, the Company is a proud and committed civic leader. BlackBerry employees are
passionate regarding their involvement in corporate-run community initiatives to actively participate in volunteer activities and
environmentally friendly initiatives where they live and work. Together with its team of community-minded employees, the
Company believes there is great potential to make lasting local impacts.
Available Information
Our internet address is www.blackberry.com. Our website is included in this Annual Report on Form 10-K as an inactive
textual reference only. Information contained on our website is not incorporated by reference in this Annual Report on Form
10-K.
As of March 1, 2020, the Company began reporting with the Securities and Exchange Commission (“SEC”) as a domestic
issuer instead of a foreign private issuer. Prior to that date, the Company was a foreign private issuer and, in compliance with
SEC regulations, furnished its interim financial statements on Form 6-K and filed its Annual Report on Form 40-F. The
Company continues to be a reporting issuer subject to continuous disclosure obligations under applicable Canadian securities
laws.
Access to our Annual Reports on Form 10-K and 40-F, Quarterly Reports on Form 10-Q and 6-K, Current Reports on Form 8-
K, supplemental financial information, earnings press releases, and amendments to these reports filed with or furnished to the
SEC may be obtained free of charge as soon as is reasonably practical after we electronically file or furnish them through the
Investors section of our website at www.blackberry.com/ca/en/company/investors. In addition, our filings with the SEC may be
accessed through the SEC’s website at www.sec.gov and our filings with the Canadian Securities Administrators (“CSA”) may
be accessed through the CSA’s System for Electronic Document Analysis and Retrieval (“SEDAR+”) at www.sedarplus.ca.
Except for the documents specifically incorporated by reference in this Annual Report on Form 10-K, information contained on
the SEC or CSA websites is not incorporated by reference in this Annual Report on Form 10-K and should not be considered to
be a part of the Annual Report. All statements made in any of our securities filings, including all forward-looking statements or
information, are made as of the date of the document in which the statement is included, and we do not assume or undertake
any obligation to update any of those statements or documents unless we are required to do so by applicable law.
ITEM 1A. RISK FACTORS
Investors in the Company’s securities should carefully consider the following risks, as well as the other information contained
in MD&A (as defined below) and elsewhere in this Annual Report on Form 10-K for the fiscal year ended February 29, 2024.
Any of the following risks, in whole or in part, could materially and adversely impact the Company’s business, financial
condition and operating results. The risks and uncertainties described below are not the only ones the Company faces.
Additional risks and uncertainties, including those of which the Company is unaware or the Company currently deems
immaterial, may also have a material adverse effect on the Company’s business, financial condition and results of operations.
Risks Related to the Company’s Business
The Company may not be able to maintain or expand its customer base for its software and services offerings to grow
revenue or achieve sustained profitability.
The Company has focused its strategy on software and services to grow revenue and generate sustainable profitability. For the
Company to increase its software and services revenues, it must continually grow its customer base by attracting new customers
or, in the case of existing customers, deploying software and services across more endpoints or attracting additional users in
such existing customers’ businesses. The Company also needs to sell additional software and services over time to the same
customers, or have customers upgrade their level of service. If the Company is unable to promote a compelling value
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proposition to customers and its efforts to sell or upsell software or services as described above are not successful, its results of
operations could be materially impacted.
Existing customers that purchase the Company’s software and services have no contractual obligation to renew their
subscriptions or purchase additional solutions after the initial subscription or contract period. The Company’s customers’
expansion and renewal rates may decline or fluctuate as a result of a number of factors, including the perceived need for such
additional software and services, the level of satisfaction with the Company’s software and services, features or functionality,
the reliability of the Company’s software and services, the Company’s customer support, customer budgets and other
competitive factors, such as pricing and competitors’ offerings. For smaller or simpler deployments, the switching costs and
time are relatively minor compared to traditional enterprise software deployments and as such a customer may more easily
decide not to renew with the Company and switch to a competitor’s offerings.
Further, the Company’s future success depends in part on the growth, if any, in the markets for endpoint security software and
embedded solutions, including in software-defined vehicles. If the recent growth trends in these markets do not continue due to
security incidents, technological challenges, lack of customer acceptance, weakening economic conditions or other reasons,
demand for the Company’s products, and those of its competitors, could be negatively affected.
The Company’s sales cycles can be long and unpredictable and its sales efforts require considerable time and expense.
For many customers, licensing the Company’s Cybersecurity or IoT solutions represents a significant strategic decision and, as
a result, sales cycles can be long and unpredictable, particularly during times of economic uncertainty. When dealing with
automotive, government or large regulated enterprise customers in particular, the Company is subject to risks related to
increased customer bargaining power and pricing pressure, extended evaluation periods, regulatory changes, compliance with
procurement requirements, complex approval systems, and unanticipated administrative delays. IoT revenue recognition is also
subject to delays in the development of embedded software platforms and the manufacture of new vehicles by automotive
OEMs.
The Company’s ability to grow software and services revenue is dependent in part on its ability to maintain a qualified direct
sales force, which requires significant time and resources, including investment in systems and training. From time to time, the
Company may choose to reorganize its go-to-market teams in an effort to better leverage its sales resources and improve
customer service. These reorganizations, which may include investments in educating the Company’s sales force, can cause
short-term disruptions and may negatively impact sales. There can be no assurance that the Company will be successful in
implementing its sales and distribution strategy. See also the Risk Factor entitled “The Company’s success depends on its
relationships with resellers and distributors”.
The Company faces intense competition.
The Company is engaged in markets that are highly competitive and rapidly evolving, and has experienced, and expects to
continue to experience, intense competition from a number of companies. No technology has been exclusively or commercially
adopted as the industry standard for many of the products and services offered by the Company. Accordingly, both the nature of
the competition and the scope of the business opportunities afforded by the markets in which the Company competes are
uncertain.
The Company’s competitors, including new market entrants, may implement new technologies before the Company does,
deliver new products and services earlier, or provide products and services that are disruptive or that are attractively priced or
enhanced or better quality compared to those of the Company, making it more difficult for the Company to win or preserve
market share.
Some of the Company’s competitors have greater name recognition, larger customer bases and significantly greater financial,
technical, marketing, public relations, sales, distribution and other resources than the Company does. In particular, some of the
Company’s competitors may be able to leverage their relationships with enterprise customers based on other products or
incorporate functionality into existing products to gain business in a manner that discourages users from purchasing the
Company’s solutions, including by selling at zero or negative margins, product bundling or offering closed technology
platforms. In the automotive sector, some of the Company’s OEM and Tier 1 customers have accelerated internal development
of embedded solutions. In addition, competition may intensify as the Company’s competitors enter into business combinations
or alliances and established companies in other market segments expand to become competitive with the Company’s business.
The impact of the competition described above could result in fewer customer orders, loss of market share, pressure to reduce
prices, commoditization of product and service categories in which the Company participates, reduced revenue and reduced
margins. If the Company is unable to compete successfully, there could be a material adverse effect on the Company’s business,
results of operations and financial condition.
The Company must obtain and maintain certain product approvals and certifications from governmental authorities, regulated
enterprise customers and third-party standards bodies in order to remain competitive, meet contractual requirements and enable
13
its customers to meet their certification needs. Failure to maintain such approvals or certifications for the Company’s current
products or to obtain such approvals or certifications for any new products on a timely basis could have a material adverse
effect on the Company’s competitive position. In addition, independent industry analysts often issue reports regarding endpoint
security solutions and the perception of the Company’s solutions in the marketplace, especially as compared to those of the
Company’s competitors, may be significantly influenced by these reports. If these reports are negative, less frequent or less
positive than reports on the Company’s competitors’ products, the Company’s competitive position may be harmed.
The Company may not be able to enhance, develop, introduce or monetize products and services for the enterprise
market in a timely manner with competitive pricing, features and performance.
The industries in which the Company competes are characterized by rapid technological change, frequent new product
introductions, frequent market price reductions, constant improvements in features and short product life cycles. The
Company’s future success depends upon its ability to enhance and integrate its current products and services, to provide for
their compatibility with evolving industry standards and operating systems, to address competing technologies and evolving
security threats, and to continue to develop and introduce new products and services offering enhanced performance and
functionality on a timely basis at competitive prices.
The process of developing new technology is complex and uncertain, and involves time, substantial costs and risks, which are
further magnified when the development process involves multiple operating platforms. The development of next-generation
technologies that utilize new and advanced features, including artificial intelligence and machine learning, involves making
predictions regarding the willingness of the market to adopt such technologies over legacy solutions. The Company may be
required to commit significant resources to developing new products, software and services before knowing whether such
investment will result in products or services that the market will accept.
The Company’s inability, for technological or other reasons, some of which may be beyond the Company’s control, to enhance,
develop, introduce and monetize products and services in a timely manner, or at all, in response to changing market conditions
or customer requirements could have a material adverse effect on the Company’s business, results of operations and financial
condition or could result in its products and services not achieving market acceptance or becoming obsolete. In addition, if the
Company fails to deliver a compelling customer experience or accurately predict emerging technological trends and the
changing needs of customers and end users, or if the features of its new products and services do not meet the demands of its
customers or are not sufficiently differentiated from those of its competitors, the Company’s business, results of operations and
financial condition could be materially harmed.
The occurrence or perception of a breach of the Company’s network cybersecurity measures or an inappropriate
disclosure of confidential or personal information could significantly harm its business.
The Company is continuously exposed to cyber threats through the actions of outside parties, such as hacking, viruses, and
other malicious software, denial of service attacks, industrial espionage and other methods designed to breach the Company’s
network or data security. The Company is also exposed to risk as a result of process, coding or human errors and through
attempts by third parties to fraudulently induce employees to provide access to confidential or personal information. Although
malicious attempts to gain unauthorized access to such information affect many companies across various industries, the
Company is at a relatively greater risk of being specifically targeted because of its reputation for security and the nature of its
network operations, and because the Company has been involved in the identification of organized cyber adversaries.
The Company devotes significant resources to network security, encryption and authentication technologies and other
measures, including security policies and procedures, vulnerability testing and awareness training, to mitigate cyber risk to its
systems, endpoints and data. In addition, the Company engineers novel security and reliability features, deploys software
updates to address vulnerabilities, and maintains a security infrastructure that protects the integrity of the Company’s network,
products and services. The Company also mitigates risk by actively monitoring external threats, reviewing best practices and
implementing appropriate internal controls, including incident response plans. However, the techniques used to obtain
unauthorized access or to disable or degrade service are constantly evolving and becoming more sophisticated in nature, and
frequently are not recognized or identified until after they have been deployed against a target. The Company may not be able
to anticipate these techniques, to implement adequate preventative measures or to identify and respond to them in a timely
manner, and the Company’s efforts to do so may have a material adverse impact on the Company’s operating margins, the user
experience or compatibility with third party products and services.
Although to date the Company has not experienced any material financial or other losses relating to technology failure,
cyberattacks or security breaches, there is no assurance that the Company will not experience material loss or damage in the
future. If the network and product security measures implemented by the Company or its partners, including third-party data
center operators, cloud service providers and product manufacturers are breached, or perceived to be breached, or if the
confidentiality, integrity or availability of the Company’s data, including intellectual property and legally protected personal
data, is compromised, the Company could be exposed to significant litigation, service disruptions, investigation and
remediation costs, regulatory sanctions, fines and contractual penalties. In addition, any such event could materially damage the
14
Company’s reputation, which is built in large measure on the security and reliability of BlackBerry products and services, and
could result in the loss of investor confidence, channel partners, competitive advantages, revenues and customers, including the
Company’s most significant government and regulated enterprise customers. While the Company maintains cybersecurity
insurance, the Company’s coverage may be insufficient to cover all losses or types of claims that may arise from cyber
incidents, and any incidents may result in the loss of, or increased costs of, the Company’s insurance.
The Company’s business could be negatively affected as a result of its business unit separation and cost reduction
initiatives.
The separation of the Company’s IoT and Cybersecurity businesses into standalone divisions and the streamlining of the
Company’s centralized functions is intended to enhance operational focus and flexibility for each business, to drive improved
profitability, and to increase optionality for the Company to optimize shareholder value. If the separation is not managed
effectively, it may not provide these intended benefits and may result in a disruption of the Company’s operations, an inability
to retain or recruit key personnel, and the impairment of customer relationships.
Further, if the separation is not conducted in manner or on a timeline that meets investor expectation, the Company may be
subject to shareholder activism advocating for governance or strategic changes at the Company. Responding to proxy contests,
media campaigns and other tactics by activist shareholders would be costly and time-consuming, disrupt the Company’s
operations and divert the attention of the Board and senior management from the pursuit of the Company’s strategies, which
could adversely affect the Company’s business. Perceived uncertainties as to the Company’s future direction as a result of
shareholder activism could also result in the loss of potential business opportunities and may make it more difficult to attract
and retain qualified personnel and partners.
The business separation is expected to result in each division performing corporate functions that have historically been
performed on a centralized basis, including certain legal, finance, human resources, marketing and IT functions, which may
require each division to increase its investment in these administrative functions. Additionally, the integration of the
Cybersecurity and IoT businesses has enabled them to share economies of scope and scale in costs, systems and vendor
relationships, and their separation may result in each division paying higher charges for third-party services.
The Company’s success depends on its continuing ability to attract new personnel, retain existing key personnel and
manage its staffing effectively.
The Company’s success is largely dependent on its continuing ability to identify, attract, develop, motivate and retain skilled
employees, including members of its executive team, top research developers and experienced salespeople with specialized
knowledge. Competition for such people is intense, continuous, and increasing in the industries in which the Company
participates, and the Company has experienced solicitations of its employees by its competitors.
Competition for highly skilled personnel is intense, especially in the Waterloo and Ottawa, Ontario areas, where the Company
has a substantial presence and need for highly skilled personnel. The Company is also substantially dependent on the continued
service of its existing engineering personnel because of the complexity and specialization of its products and services. Also, to
the extent that the Company hires employees from mature public companies with significant financial resources, the Company
may be subject to allegations that such employees have been improperly solicited, or that they have divulged proprietary or
other confidential information or that their former employers own such employees’ inventions or other work product.
To attract and retain critical personnel, the Company may experience increased compensation costs that are not offset by
increased productivity or higher prices for our products and services. Also, the Company’s financial results and share price
performance (particularly for senior employees for whom equity-based compensation is a key element of their total
compensation), among other factors, may impact the Company’s ability to attract new, and retain existing, employees. Any
failure by the Company to attract and retain key employees could have a material adverse effect on the Company’s business,
results of operations and financial condition.
In addition, during periods of internal reorganization, such as the Company’s ongoing business separation, the Company may
experience losses of business continuity and accumulated knowledge, internal compliance gaps or other inefficiencies,
including litigation claims by terminated employees. If the Company does not maintain appropriate staffing, develop effective
business continuity and succession programs, mitigate turnover and effectively utilize employees with the right mix of skills
and experience across the functions necessary to meet the current and future needs of its business, the financial and operational
performance of the Company could suffer.
A failure or perceived failure of the Company’s solutions to detect or prevent security vulnerabilities could materially
adversely affect the Company’s reputation, financial condition and results of operations.
The techniques used by cyber adversaries to breach network and endpoint security measures are sophisticated and change
frequently, and the Company’s products and services may not protect users against all cyberattacks. At the same time, the
Company’s products and services are highly complex and may contain design defects, bugs or security vulnerabilities that are
15
difficult to detect and correct. Such internal defects and a variety of external factors, including misconfigurations, errors
introduced through collaborations with the Company’s engineering partners or the failure of customers to address risks
identified by our platform, could impair the effectiveness of the Company’s solutions and cause them to fail to secure endpoints
and prevent attacks or function as intended. In addition, the Company’s solutions may falsely indicate a cyber threat that does
not actually exist, which may negatively impact customers’ trust in the Company’s solutions.
Real or perceived defects, errors or vulnerabilities in the Company’s software and services, or the failure of the Company’s
platform solutions to detect or prevent cyber incidents, could result in the delay or denial of their market acceptance and may
harm the Company’s financial condition, results of operations and reputation as a security solutions vendor. If errors are
discovered, correcting them could require significant expenditures by the Company and the Company may not be able to
successfully correct them in a timely manner or at all.
The Company’s products and services frequently involve the transmission, processing and storage of data, including
proprietary, confidential and personally-identifiable information, and a security compromise, misconfiguration or malfunction
involving the Company’s software could result in such information being accessible to attackers or other third parties. Real or
perceived security breaches against a customer using the Company’s solutions could cause damage or disruption to the
customer and subject the Company to liability, and may result in the customer and the public believing that the Company’s
solutions are ineffective, even if they were not implicated in failing to block the attack. Further, a breach of an artificial
intelligence and machine learning-based solution offered by another endpoint security provider could cause the market to lose
confidence in next-generation security software generally, including the Company’s solutions.
The Company’s success depends on its relationships with resellers and channel partners.
The Company’s ability to maintain and expand its market reach, particularly with small and medium-sized businesses, is
increasingly dependent on establishing, developing and maintaining relationships with third party resellers and channel
partners, especially in its Cybersecurity business. The Company makes training available to its partners and develops sales
programs to incentivize them to promote and deliver the Company’s current and future products and services and to grow its
user base.
If the Company is not able to effectively identify and establish new relationships with successful resellers and channel partners,
or to maintain or enhance existing relationships without giving rise to conflicts between channels, or if the Company’s partners
do not act in a manner that will promote the success of the Company’s products and services, the Company’s business, results
of operations and financial condition could be materially adversely affected.
Many resellers and channel partners sell products and services of the Company’s competitors and may terminate their
relationships with the Company with limited or no notice and limited or no penalty. If the Company’s competitors offer their
products and services to the resellers and channel partners on more favorable contractual or business terms, have more products
and services available, or those products and services are, or are perceived to be, in higher demand by end users, or are more
lucrative for the resellers and channel partners, there may be continued pressure on the Company to reduce the price of its
products and services, or those resellers and channel partners may stop offering the Company’s products or de-emphasize the
sale of its products and services in favor of the Company’s competitors, which could have a material adverse effect on the
Company’s business, results of operations and financial condition.
Litigation against the Company may result in adverse outcomes.
In the course of its business, the Company is subject to potential litigation claims and enforcement actions arising from its
public disclosure. The Company is committed to providing a high level of disclosure and transparency and provides
commentary that highlights the trends and uncertainties that the Company anticipates. Given the highly competitive and
dynamic industry in which the Company operates and the evolution of the Company’s business strategy over time, the
Company’s financial results may not follow any past trends, making it difficult to predict the Company’s financial results.
Consequently, actual results may differ materially from those expressed or implied by the Company’s forward-looking
statements and may not meet the expectations of analysts or investors, which can contribute to the volatility of the market price
of the Company’s common shares.
In addition, the Company receives general commercial claims related to the conduct of its business and the performance of its
products and services, including product liability and warranty claims, employment claims, claims for breaches of contractual
covenants and other litigation claims, which may potentially include claims relating to improper use of, or access to, personal
data. Liability claims related to product defects, bugs or vulnerabilities could give rise to class action litigation or to the
withdrawal of certifications, and the Company may be subject to such claims either directly or indirectly through indemnities
that it provides to certain of its customers. The Company’s exposure to product liability risk may increase as the Company
continues to commercialize its software innovations for autonomous and connected vehicles.
Litigation resulting from these claims and from actions asserted by the Company could be costly and time-consuming and could
divert the attention of management and key personnel from the Company’s business operations. The complexity of the
16
technology involved and the inherent uncertainty of commercial, class action, securities, employment and other litigation
increases these risks. In recognition of these considerations, the Company may enter into settlements resulting in material
expenditures, the payment of which could have a material adverse effect on the Company’s business, results of operation and
financial condition. Similarly, if the Company is unsuccessful in its defense of material litigation claims, the Company may be
faced with significant monetary damages or injunctive relief against it that could have a material adverse effect on the
Company’s business, BlackBerry brand, results of operations and financial condition. Administrative or regulatory actions
against the Company or its employees could also have a material adverse effect on the Company’s business, BlackBerry brand,
results of operations and financial condition. See Note 10 to the Consolidated Financial Statements for information regarding
certain legal proceedings in which the Company is involved.
Adverse macroeconomic and geopolitical conditions have had and may continue to have a material adverse effect on the
Company’s business, results of operations and financial condition.
Challenging macroeconomic conditions, including as a result of geopolitical events, public health crises, automotive labor
disruptions, disruptions in global supply chains, increases in inflation and interest rates, have negatively impacted and may in
the future negatively impact consumer demand for automobiles and sales cycles and spending on cybersecurity solutions, and in
turn have materially affected the Company’s business, results of operations and financial condition in certain periods. Because
all components of the Company’s budgeting and forecasting are dependent upon estimates of economic activity in the markets
that the Company serves and demand for its products and services, economic uncertainties make it difficult to estimate future
income and expenditures.
Network disruptions or other business interruptions could have a material adverse effect on the Company’s business
and harm its reputation.
The Company’s operations rely to a significant degree on the efficient and uninterrupted operation of complex technology
systems and networks, which are in some cases integrated with those of cloud service providers and third-party data centre
operators. The Company’s network operations and technology systems are potentially vulnerable to damage or interruption
from a variety of sources, including by fire, earthquake, power loss, telecommunications or computer systems failure,
cyberattack, human error, terrorist acts, war, and the threatened or actual suspension of BlackBerry services at the request of a
government for alleged non-compliance with local laws or other events. The increased number of third-party applications on the
Company’s network may also enhance the risk of network disruption or cyberattack for the Company. There may also be
system or network interruptions if new or upgraded systems are defective or not installed properly, or if data centre operators
fail to meet agreed service levels.
The Company has experienced network events, including those arising from third-party applications, in the past, none of which
had a material impact on us. Any future outage in a network or system or other unanticipated problem that leads to an
interruption or disruption of BlackBerry services, however, could have a material adverse effect on the Company’s business,
results of operations and financial condition, and could adversely affect the Company’s reputation.
The Company may not be successful in fostering an ecosystem of third-party application developers.
The Company believes decisions by customers to purchase its products, including the BlackBerry IVY platform, depend and
will depend in part on the availability and compatibility of software applications and services that are developed and maintained
by third-party developers. The Company may not be able to convince third parties to develop and maintain applications for its
cybersecurity software and embedded solutions platforms. The loss of, or inability to maintain these developer relationships
may materially and adversely affect the desirability of the Company’s products and, hence, the Company’s revenue from the
sale of its products.
The Company’s products and services are dependent upon interoperability with rapidly changing systems provided by
third parties.
The Company’s platform depends on interoperability with operating systems, such as those provided by Apple, Google and
Microsoft, as well as automotive OEMs. Operating systems are upgraded frequently in response to consumer demand and, in
order to maintain the interoperability of its platform, the Company may need to release new software updates at a much greater
pace than a traditional enterprise software company that supports only a single platform. In addition, the Company typically
receives limited advance notice of changes in features and functionality of operating systems and platforms, and therefore the
Company may be forced to divert resources from its preexisting product roadmap to accommodate these changes.
If the Company fails to enable IT departments to support operating system upgrades upon release, the Company’s business and
reputation could suffer. This could further disrupt the Company’s product roadmap and cause it to delay introduction of planned
products and services, features and functionality, which could harm the Company’s business. Furthermore, some of the
features and functionality in the Company’s products and services require interoperability with APIs of other operating systems,
and if operating system providers decide to restrict the Company’s access to their APIs, that functionality would be lost and the
Company’s business could be impaired.
17
Operating system providers have included, and may continue to include, features and functionality in their operating systems
that are comparable to elements of the Company’s products and services, thereby making the Company’s platform less
valuable. The inclusion of, or the announcement of an intent to include, functionality perceived to be similar to that offered by
the Company’s products and services in mobile or embedded operating systems may have an adverse effect on the Company’s
ability to market and sell its products and services.
Risks Related to Intellectual Property and Technology Licensing
Failure to protect the Company’s intellectual property could harm its ability to compete effectively and the Company
may not earn the revenues it expects from intellectual property rights.
The Company’s commercial success is highly dependent upon its ability to protect its proprietary technology. The Company
relies on a combination of patents, copyrights, trademarks, trade secrets, confidentiality procedures and contractual provisions
to protect its proprietary rights, all of which offer only limited protection. Despite the Company’s efforts, the steps taken to
protect its proprietary rights may not be adequate to preclude misappropriation of its proprietary information or infringement of
its intellectual property rights. Detecting and protecting against the unauthorized use of the Company’s products, technology
proprietary rights, and intellectual property rights is expensive, difficult and, in some cases, impossible. Litigation may be
necessary in the future to enforce or defend the Company’s intellectual property rights and could result in substantial costs and
diversion of management resources, either of which could harm the Company’s business, financial condition and results of
operations, and there is no assurance that the Company will be successful. Further, the laws of certain countries in which the
Company’s products and services are sold or licensed do not protect intellectual property rights to the same extent as the laws
of Canada or the United States.
With respect to patent rights, the Company cannot be certain whether any of its pending patent applications will result in the
issuance of patents or whether the examination process will require the Company to narrow its claims. Furthermore, any patents
issued could be challenged, invalidated or circumvented and may not provide proprietary protection or a competitive advantage.
In addition, a number of the Company’s competitors and other third parties have been issued patents, and may have filed patent
applications or may obtain additional patents and proprietary rights, for technologies similar to those that the Company has
made or may make in the future. Public awareness of new technologies often lags behind actual discoveries, making it difficult
or impossible to know all relevant patent applications at any particular time. Consequently, the Company cannot be certain that
it was the first to develop the technology covered by its pending patent applications or that it was the first to file patent
applications for the technology. In addition, the disclosure in the Company’s patent applications may not be sufficient to meet
the statutory requirements for patentability in all cases. As a result, there can be no assurance that the Company’s patent
applications will result in patents being issued.
While the Company enters into confidentiality and non-disclosure agreements with its employees, consultants, contract
manufacturers, customers, potential customers and others to attempt to limit access to, and distribution of, proprietary and
confidential information, it is possible that:
•
some or all of its confidentiality agreements will not be honored;
•
third parties will independently develop equivalent technology or misappropriate the Company’s technology or
designs;
•
disputes will arise with the Company’s strategic partners, customers or others concerning the ownership of intellectual
property;
•
unauthorized disclosure or use of the Company’s intellectual property, including source code, know-how or trade
secrets will occur; or
•
contractual provisions may not be enforceable.
In addition, the Company expends significant resources to patent and manage the intellectual property it creates with the
expectation that it will generate revenues by incorporating that intellectual property in its products or services. The Company
also monetizes its patent assets through outbound licensing. Changes in the law may weaken the Company’s ability to collect
royalty revenue for licensing its patents. Similarly, licensees of the Company’s patents may fail to satisfy their obligations to
pay royalties, or may contest the scope and extent of their obligations. Finally, the royalties the Company can obtain to
monetize its intellectual property may decline because of the evolution of technology, changes in the selling price of products
using licensed patents, or the difficulty of discovering infringements.
The consideration payable to the Company from the sale of its non-core patent portfolio in the Malikie Transaction is expected
to include potential future royalty payments. The royalties, if any, that may be earned by the Company from the Malikie
Transaction in any particular fiscal year or in the aggregate over the term of the royalty arrangement are difficult to predict,
particularly given that any such royalties will depend entirely upon the business success of a third party. The aggregate
proceeds that the Company ultimately receives from the Malikie Transaction are expected to be less than $900 million.
18
The Company may not be able to obtain rights to use third-party software and is subject to risks related to the use of
open source software.
Many of the Company’s products include intellectual property which must be licensed from third parties. The termination of
any of these licenses, or the failure of such third parties to adequately maintain, protect or update their software or intellectual
property rights, could delay the Company’s ability to offer its products while the Company seeks to implement alternative
technology offered by other sources (which may not be available on commercially reasonable terms) or develop such
technology internally (which would require significant unplanned investment on the Company’s part). The use of third-party
software in the Company’s products could also expose the Company and its customers to security vulnerabilities.
In addition, certain software that the Company uses may be subject to open source licenses. Use and distribution of open source
software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide
warranties or other contractual protections regarding infringement claims or the quality of the code. Some open source licenses
contain requirements that the Company make available source code for modifications or derivative works created by the
Company based upon the type of open source software used. If the Company combines its proprietary solutions with open
source software in a certain manner, the Company could, under certain of the open source licenses, face claims from third
parties claiming ownership of or demanding the public release of the source code of the Company’s proprietary solutions, or
demanding that the Company offer its solutions to users at no cost. This could allow the Company’s competitors to create
similar solutions with lower development effort and time and ultimately could result in a loss of revenue to the Company. The
Company could also be subject to litigation by parties claiming that what the Company believes to be licensed open source
software infringes their intellectual property rights.
The terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that such licenses could be
construed in a manner that could impose unanticipated conditions or restrictions on the Company’s ability to commercialize its
products and services. In such an event, the Company could be exposed to litigation or reputational damage, and could be
required to obtain licenses from third parties in order to continue offering its products and services or to re-engineer its products
or services, or discontinue their sale in the event re-engineering cannot be accomplished on a timely basis, any of which could
materially and adversely affect the Company’s business and operating results.
The Company could be found to have infringed on the intellectual property rights of others.
Companies in the software and technology industries, including some of the Company’s current and potential competitors, own
large numbers of patents, copyrights, trademarks and trade secrets and frequently engage in litigation based on allegations of
infringement or other violations of intellectual property rights. Although the Company believes that third-party software
included in the Company’s products is licensed from the entity holding the intellectual property rights and that its products do
not infringe on the rights of third parties, third parties have and are expected to continue to assert infringement claims against
the Company in the future. The Company may be subject to these types of claims either directly or indirectly through
indemnities that it provides to certain of its customers, partners and suppliers against these claims. As the Company continues
to develop software products and expand its portfolio using new technology and innovation, its exposure to threats of
infringement may increase.
Many intellectual property infringement claims are brought by entities whose business model is to obtain patent-licensing
revenues from operating companies such as the Company. Because such entities do not typically generate their own products
or services, the Company cannot deter their claims based on counterclaims that they infringe patents in the Company’s portfolio
or by entering into cross-licensing arrangements.
Regardless of whether patent or other intellectual property infringement claims against the Company have any merit, they
could:
•
adversely affect the Company’s relationships with its customers;
•
be time-consuming and expensive to evaluate and defend, including in litigation or other proceedings;
•
result in negative publicity for the Company;
•
divert management’s attention and resources;
•
cause product delays or stoppages;
•
subject the Company to significant liabilities;
•
require the Company to develop possible workaround solutions that may be costly and disruptive to implement; and
•
require the Company to cease certain activities or to cease selling its products and services in certain markets.
19
In addition, any such claim may require the Company to enter into costly royalty agreements or obtain a license for the
intellectual property rights of third parties. Such licenses may not be available or they may not be available on commercially
reasonable terms.
Any of the foregoing infringement claims and related litigation could have a significant adverse impact on the Company’s
business and operating results, as well as the Company’s ability to generate future revenues and profits. See also “Legal
Proceedings” in this Annual Report on Form 10-K.
Risks Related to Assets, Indebtedness and Taxation
The Company has incurred indebtedness, which could adversely affect its operating flexibility and financial condition.
The Company has, and may from time to time in the future have, third-party debt service obligations pursuant to its outstanding
indebtedness, which currently includes $200 million aggregate principal amount of 3.00% Senior Convertible Notes maturing
on February 15, 2029 (the “Notes”). The degree to which the Company is leveraged could have important consequences,
including that:
•
the Company’s ability to obtain additional debt financing may be limited;
•
a portion of the Company’s cash flow from operations or other capital resources will be dedicated to the payment of
the principal of, and/or interest on, indebtedness, thereby reducing funds available for working capital, capital
expenditures, strategic initiatives or other business purposes; and
•
the Company’s earnings under U.S. GAAP may be negatively affected to the extent that any indebtedness is accounted
for by the Company at fair value and includes embedded derivatives which fluctuate in value from period to period.
If the Company cannot maintain an adequate cash balance or positive cash flow from operations, the Company may be unable
to pay amounts due under its outstanding indebtedness or to fund other liquidity needs and it may be required to refinance all or
part of its then existing indebtedness, sell assets, reduce or delay capital expenditures or seek to raise additional capital, any of
which could have a material adverse effect on the Company’s business, results of operations and financial condition. There can
be no assurance that the Company would be able to restructure or refinance the Notes on terms as favourable as those currently
in place.
The Notes are subject to restrictive and other covenants that may limit the discretion of the Company and its subsidiaries with
respect to certain business matters. A breach of any of these covenants could result in a default under the Company’s
outstanding indebtedness, which would have a material adverse effect on the Company’s business, results of operations and
financial condition.
The Company faces substantial asset risk, including the potential for charges related to its long-lived assets and
goodwill.
The Company’s long-lived assets include items such as the Company’s network infrastructure, operating lease right-of-use
assets and certain intellectual property. Under United States generally accepted accounting principles (“U.S. GAAP”), the
Company reviews its long-lived assets for impairment when events or changes in circumstances indicate the carrying value may
not be recoverable. The Company’s ability to generate sufficient cash flows to fully recover the current carrying value of these
assets depends on the successful execution of its strategies. If it is determined that sufficient future cash flows do not exist to
support the current carrying value, the Company will be required to record an impairment charge for long-lived assets in order
to adjust the value of these assets to the newly established estimated value.
Goodwill represents the excess of the acquisition price over the fair value of identifiable net assets acquired. Under U.S. GAAP,
the Company tests goodwill for impairment annually, during the fourth quarter, or more frequently if events or changes in
circumstances indicate that the asset may be impaired. These events and circumstances may include a significant change in
legal factors or in the business climate, a significant decline in the Company’s share price, an adverse action or assessment by a
regulator, unanticipated competition, a loss of key personnel, significant disposal activity and the testing of recoverability for a
significant asset group. If any such events or circumstances arise, the Company may be required to record an impairment charge
in the value of its goodwill.
In the fourth quarter of fiscal 2024, the Company recorded the Fiscal 2024 Goodwill Impairment Charge. For additional
information, see Note 3 to the Consolidated Financial Statements.
Tax provision changes, the adoption of new tax legislation or exposure to additional tax liabilities could materially
impact the Company’s financial condition.
The Company is subject to income, indirect (such as sales tax, sales and use tax and value-added tax) and other taxes in Canada
and numerous foreign jurisdictions. Significant judgment is required in determining its worldwide liability for income, indirect
and other taxes, as well as potential penalties and interest. In the ordinary course of the Company’s business, there are many
20
transactions and calculations where the ultimate tax determination is uncertain. Although the Company believes that its tax
estimates are reasonable, there can be no assurance that the final determination of any tax audits will not be materially different
from that which is reflected in historical income, indirect and other tax provisions and accruals. Should additional taxes or
penalties and interest be assessed as a result of an audit, litigation or changes in tax laws, there could be a material adverse
effect on the Company’s current and future results and financial condition. In addition, there is a risk of recoverability of future
deferred tax assets.
The Company’s future effective tax rate will depend on the relative profitability of the Company’s domestic and foreign
operations, the statutory tax rates and taxation laws of the related tax jurisdictions, the tax treaties between the countries in
which the Company operates, the timing of the release, if any, of the valuation allowance, and the relative proportion of
research and development incentives to the Company’s profitability.
Canada, together with approximately 140 other countries comprising the Organization for Economic Co-Operation and
Development (“OECD”) and the G20 Inclusive Framework on Base Erosion and Profit Shifting (“BEPS”), approved in
principle in 2021 certain base erosion tax initiatives, including the introduction of a 15% global minimum tax which is intended
to be effective in 2023. In August 2023, the Department of Finance (Canada) released for public comment draft legislative
proposals to implement the global minimum tax. The draft legislative proposals are generally intended to apply in respect of
fiscal years beginning on or after December 31, 2023. In November 2023, the Department of Finance (Canada) released revised
draft legislative proposals which, if enacted, may limit the deductibility of interest and financing expenses for Canadian tax
purposes. The revised draft legislative proposals are generally intended to apply in respect of taxation years beginning on or
after October 1, 2023. The Company will continue to monitor the BEPS and interest deductibility limitation proposals and any
impact on the Company, which may result in an increase in future taxes and an adverse effect on the Company.
Under U.S. federal income tax laws, if a company is, or for any past period was, a passive foreign investment company
(“PFIC”), there could be adverse U.S. federal income tax consequences to U.S. shareholders even if the Company is no longer a
PFIC. While the Company does not believe that it is currently a PFIC, there can be no assurance that the Company was not a
PFIC in the past and will not be a PFIC in the future.
Risks Related to Regulation
The use and management of user data and personal information could give rise to liabilities as a result of legal,
customer and other third-party requirements.
User data and personal information is increasingly subject to new and amended legislation and regulations in numerous
jurisdictions around the world that are intended to protect the privacy and security of personal information, as well as the
collection, storage, transmission, use and disclosure of such information.
The interpretation of privacy and data protection laws and their application to the Internet and mobile communications in a
number of jurisdictions is unclear and evolving. There is a risk that these laws may be interpreted and applied in conflicting
ways from country to country and in a manner that is not consistent with the Company’s current data protection practices.
Complying with these varying international requirements could cause the Company to incur additional costs and change the
Company’s business practices. In addition, because the Company’s services are accessible worldwide, certain foreign
jurisdictions may claim that the Company is required to comply with their laws, even where the Company has no local entity,
employees, or infrastructure. Non-compliance could result in penalties or significant legal liability and the Company’s
business, results of operations and financial condition may be adversely affected.
The Company’s customers, partners and members of its ecosystem may also have differing expectations or impose particular
requirements for the collection, storage, processing and transmittal of user data or personal information in connection with
BlackBerry products and services. Such expectations or requirements could subject the Company to additional costs, liabilities
or negative publicity, and limit its future growth. In addition, governmental authorities may require access to limited data stored
by the Company through lawful access demands and capabilities, which could subject the Company to legal liability,
unforeseen compliance cost and negative publicity. Even a perception that the Company’s products or practices do not
adequately protect users’ privacy or data collected by the Company, made available to the Company or stored in or through the
Company’s products, or that they are being used by third parties to access personal or consumer data, could impair the
Company’s sales or its reputation and brand value.
Government regulations applicable to the Company’s products and services, including products containing encryption
capabilities, could negatively impact the Company’s business.
Certain government regulations applicable to the Company’s products and services may provide opportunities for competitors
or limit growth. The impact of potential incremental obligations may vary based on the jurisdiction, but regulatory changes
could impact whether the Company enters, maintains or expands its presence in a particular market, and whether the Company
must dedicate additional resources to comply with these obligations.
21
Various countries have enacted laws and regulations, adopted controls, license or permit requirements, and restrictions on the
export, import, and use of products or services that contain encryption technology. In addition, from time to time, governmental
agencies have proposed additional regulations relating to encryption technology, such as requiring certification, notifications,
review of source code, or the escrow and governmental recovery of private encryption keys. Governmental regulation of
encryption technology, including the regulation of imports or exports, could harm the Company’s sales in one or more
jurisdictions and adversely affect the Company’s revenues. Complying with such regulations could also require the Company
to devote additional research and development resources to change the Company’s software or services or alter the methods by
which the Company makes them available, which could be costly. In addition, failure to comply with such regulations could
result in penalties, costs and restrictions on import or export privileges or adversely affect sales to government agencies or
government funded projects.
Environmental, social and governance (“ESG”) expectations and standards expose the Company to risks that could
adversely affect the Company’s reputation and performance.
Standards for identifying, measuring and reporting ESG matters continue to evolve, including regulatory requirements such as
the Securities and Exchange Commission’s recently-published final rules on climate-related disclosures . If the Company’s
ESG practices or disclosures do not meet evolving investor or other stakeholder expectations and standards, then the reputation
of the Company, its ability to attract or retain employees, and its attractiveness as an investment, business partner, acquiror or
service provider could be negatively impacted. Further, the Company’s failure or perceived failure to pursue or fulfill ESG
objectives or to satisfy applicable reporting standards on a timely basis, or at all, could have similar negative impacts or expose
the Company to government enforcement actions and private litigation.
Failure of the Company’s suppliers, subcontractors, channel partners and representatives to use acceptable ethical
business practices or to comply with applicable laws could negatively impact the Company’s business.
The Company expects its suppliers, subcontractors, licensees and other partners to operate in compliance with applicable laws,
rules and regulations regarding working conditions, labour and employment practices, environmental compliance, anti-
corruption, and patent and trademark licensing, as detailed in the Company’s Supplier Code of Conduct. However, the
Company does not directly control their labour and other business practices. If one of the Company’s suppliers or
subcontractors violates applicable labour, anti-corruption or other laws, or implements labour or other business practices that
are regarded as unethical, or if a supplier or subcontractor fails to comply with procedures designed by the Company to adhere
to existing or proposed regulations, the delivery of BlackBerry products could be interrupted, orders could be canceled,
relationships could be terminated, the Company’s reputation could be damaged, and the Company may be subject to liability.
Any of these events could have a negative impact on the Company’s business, results of operations and financial condition.
General Risk Factors
Acquisitions, divestitures, investments and other business initiatives may negatively affect the Company’s results of
operations.
The Company has acquired and continues to seek out opportunities to acquire or invest in, businesses, assets, products, services
and technologies that expand, complement or are otherwise related to the Company’s business or provide opportunities for
growth. In addition, the Company is increasingly collaborating and partnering with third parties to develop technologies,
products and services, as well as seek new revenue through partnering arrangements.
These activities involve significant challenges and risks, including: that they may not advance the Company’s strategic
objectives or generate satisfactory synergies or return on investment; that the Company may have difficulty integrating and
managing new employees, business systems, development teams and product offerings; the potential loss of key employees of
an acquired business; additional demands on the Company’s management, resources, systems, procedures and controls;
disruption of the Company’s ongoing business; and diversion of management’s attention from other business concerns.
Acquisitions, investments or other strategic collaborations or partnerships may involve significant commitments of financial
and other resources of the Company. If these fail to perform as expected, or if the Company fails to enter into and execute the
transactions or arrangements needed to succeed, the Company may not be able to bring its products, services or technologies to
market successfully or in a timely manner, which would have a material adverse impact on results of operations.
In addition, the acquisitions may involve unanticipated costs and liabilities, including possible litigation and new or increased
regulatory exposure, which are not covered by the indemnity or escrow provisions, if any, of the relevant acquisition
agreements.
As business circumstances dictate, the Company may also decide to divest itself of assets or businesses. The Company may not
be successful in identifying or managing the risks involved in any divestiture, including its ability to obtain a reasonable
purchase price for the assets, potential liabilities that may continue to apply to the Company following the divestiture, potential
tax implications, employee issues or other matters. The Company’s inability to address these risks could adversely affect the
Company’s business, results of operations and financial condition.
22
The Company’s business is subject to risks inherent in foreign operations, including fluctuations in foreign currencies.
Sales outside of North America account for a significant portion of the Company’s revenue. The Company maintains offices in
a number of foreign jurisdictions and intends to continue to pursue growth in select international markets. The Company is
subject to a number of risks associated with its foreign operations that may increase liability and costs, lengthen sales cycles and
require significant management attention. These risks include:
•
compliance with the laws of the United States, Canada and other countries that apply to the Company’s international
operations, including import and export legislation, trade sanctions, lawful access, and privacy, anti-corruption and
consumer protection laws;
•
unexpected changes in foreign regulatory requirements;
•
reliance on third parties to establish and maintain foreign operations;
•
instability in economic or political conditions;
•
foreign exchange controls and cash repatriation restrictions;
•
tariffs and other trade barriers;
•
increased credit risk and difficulties in collecting accounts receivable;
•
potential adverse tax consequences;
•
uncertainties of laws and enforcement relating to the protection of intellectual property or secured technology;
•
litigation in foreign court systems;
•
cultural and language differences; and
•
difficulty in managing a geographically dispersed workforce.
In addition, the Company is exposed to foreign exchange risk as a result of transactions in currencies other than its U.S. dollar
functional currency. The majority of the Company’s revenue is denominated in U.S. dollars; however, some revenue, and a
substantial portion of operating costs and capital expenditures are incurred in other currencies, primarily Canadian dollars,
euros and British Pounds. For more details, please refer to the discussion of foreign exchange and income taxes in the
Company’s MD&A for the fiscal year ended February 29, 2024.
All of the above factors may have a material adverse effect on the Company’s business, results of operations and financial
condition and there can be no assurance that the policies and procedures implemented by the Company to address or mitigate
these risks will be successful, that Company personnel will comply with them, or that the Company will not experience these
factors in the future.
Environmental events may negatively affect the Company.
The Company has operations in numerous locations around the world that expose the Company to additional diverse
environmental risks. A significant natural disaster, such as an earthquake, fire or flood could have a material adverse impact on
the Company’s business and operations and could cause the Company to incur costs to repair damages to its facilities,
equipment and infrastructure. From time to time, the Company’s offices and remote working locations have historically
experienced, and are projected to continue to experience, climate-related events including drought, heat waves, ice storms,
power shortages, and wildfires and resultant air quality impacts. The increasing frequency and impact of extreme weather
events on the infrastructure of the Company and its suppliers, as well as public infrastructure, have the potential to disrupt the
business of the Company, its suppliers and its customers.
Although the Company maintains incident management and disaster response plans, they may prove to be inadequate in the
event of a major disruption caused by a natural disaster or geopolitical incident and the Company may be unable to continue its
operations and may endure system interruptions, reputational harm, delays in its development activities, lengthy interruptions in
service, breaches of data security and loss of critical data, and the Company’s insurance may not cover such events or may be
insufficient to compensate the Company for the potentially significant losses it may incur.
The Company expects its quarterly revenue and operating results to fluctuate.
The Company’s revenues can change from one quarter to the next, including due to unexpected developments late in a quarter,
such as lower-than-anticipated demand for the Company’s products and services, issues with new product or service
23
introductions, an internal systems failure, or challenges with one of the Company’s distribution channels or other partners
(including licensees and manufacturers).
Gross margins on the Company’s products and services vary across product lines and can change over time as a result of
product transitions, pricing and configuration changes, and cost fluctuations. In addition, the Company’s gross margin and
operating margin percentages, as well as overall profitability, may be materially adversely impacted as a result of a shift in
product/service, geographic or channel mix, component cost increases, price competition, or the introduction of new products
and services, including those that have higher cost structures or reduced pricing.
The market price of the Company’s common shares is volatile.
The market price of the Company’s outstanding common shares has been and continues to be volatile. The market price of the
Company’s shares may fluctuate significantly in response to the risks described elsewhere in these Risk Factors, as well as
numerous other factors, many of which are beyond the Company’s control, including: (i) announcements by the Company or its
competitors of new products and services, acquisitions, customer wins or strategic partnerships; (ii) forward-looking financial
guidance provided by the Company, any updates to this guidance, or the Company’s failure to meet this guidance; (iii) quarterly
and annual variations in operating results, which are difficult to forecast, and the Company’s financial results not meeting the
expectations of analysts or investors; (iv) recommendations by securities analysts or changes in earnings estimates; (v) the
performance of other technology companies or the increasing market share of such companies; (vi) results of existing or
potential litigation; (vii) market rumours; (viii) trading in derivative securities based on the Company’s common shares; or (ix)
speculative trading that is not primarily motivated by Company announcements or the condition of the Company’s business. In
addition, dilutive share issuances could adversely affect the market price of the Company’s outstanding common shares.
In addition, broad market and industry factors may decrease the market price of the Company’s common shares, regardless of
the Company’s operating performance. The stock market in general, and the securities of technology companies in particular,
have often experienced extreme price and volume fluctuations. Periods of volatility in the market price of the Company’s
securities may prompt securities class action litigation against the Company which, if not resolved swiftly, can result in
substantial costs and a diversion of management’s attention and resources. See also the Risk Factor entitled “Litigation against
the Company may result in adverse outcomes” and the “Legal Proceedings” section in this Annual Report on Form 10-K.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Cybersecurity Risk Management and Strategy
The Company’s cybersecurity risk management program is an integral part of its overall enterprise risk management efforts.
The Company manages cybersecurity risks within its products and services, infrastructure and corporate resources using a
framework that is based on applicable regulations, industry standards and recognized best practices. Through this framework,
the Company devotes significant resources to identifying, monitoring, assessing and responding to cybersecurity threats and
incidents, including those associated with its use of third-party software, applications, services, and cloud infrastructure.
To mitigate risk to its systems, endpoints and data, the Company evaluates internal and external threat intelligence, deploys
encryption and authentication technologies and other protective measures, maintains security policies and procedures, and
conducts vulnerability testing and awareness training. The Company also conducts penetration testing and other risk
assessments, implements appropriate internal controls, and engages independent third-party auditors to evaluate its compliance
with security compliance standards.
The Company’s incident response team, comprised of representatives from the Company’s information technology, information
security, product security, engineering, privacy and legal groups, is responsible for addressing data breaches, intrusions, and
other security incidents and implementing the Company’s incident response plan. The Company’s incident response plan
includes processes and procedures for assessing internal and external threats, escalation and activation, crisis management, and
post-incident recovery.
The readiness of the incident response team is promoted through table-top exercises and threat simulations. The Company also
conducts mandatory training of all employees on its security practices and policies and periodically sends simulated phishing
emails to employees to build resilience.
In addition, the Company maintains specific policies and practices to mitigate third party security risks, including a process for
evaluating the security controls of vendors and service providers who exchange data with the Company or have access to or
integrate with the Company’s systems. At the same time, the Company’s control over the security posture of third parties is
limited and there can be no assurance that any partner of the Company will not experience a compromise or failure in the
information assets under its control.
24
For the years covered by this report, the Company did not identify any security threats or incidents that have materially affected
or are reasonably likely to materially affect its business strategy, results of operations or financial condition. However, like all
other enterprises, the Company faces known and unknown cybersecurity risks and threats that are not fully mitigated. While
the Company works continuously to enhance its security programs and risk management efforts, it discovers vulnerabilities
from time to time and there can be no assurance that the Company has not experienced an undetected cybersecurity incident or
that it will not experience material loss or damage from an incident in the future.
Cybersecurity Governance
The Board has overall responsibility for the Company’s enterprise risk management program, and the Audit and Risk
Management Committee assists the Board with this oversight. The Company’s internal audit function reports to the Audit and
Risk Management Committee and, among other things, provides independent assurance on the Company’s risk management
activities and internal controls related to cybersecurity risk. For more information, see Part 3, Item 10 “Directors, Executive
Officers and Corporate Governance – Enterprise Risk Management”.
Management’s cybersecurity programs operate under the leadership of the Company’s Chief Information Security Officer
(“CISO”), who receives reports from his team of information and product security professionals and monitors the prevention,
detection, mitigation and remediation of cybersecurity risks. The CISO provides quarterly updates to the Board on the
advancing maturity of the Company’s cybersecurity program, including reports on security controls coverage and effectiveness,
secure software development and product security, vulnerability testing and remediation, and security operations. The updates
also include reports on improvements to processes, technology and governance to mitigate residual cybersecurity risk.
ITEM 2. PROPERTIES
The Company’s headquarters are located in Waterloo, Ontario, where the campus consists of one leased building with
approximately 148,000 square feet. The remaining lease term is approximately one year with the option to renew for an
additional five years. The Company’s other significant leased property is its Ottawa, Ontario facility at approximately 147,000
square feet. The remaining lease term is approximately three years with the option to renew for an additional three years.
Company also operates facilities in the United States, Asia-Pacific, Europe and the Middle East for engineering, sales,
marketing, research and development, our data center, and operations, among other general and administrative purposes.
The following table sets forth the location and approximate square footage of the Company’s leased facilities as of February 29,
2024:
(Square feet in thousands)
Location
North America
899
Europe, Middle East and Africa
42
Asia Pacific
66
Total
1,007
ITEM 3. LEGAL PROCEEDINGS
See Note 10 to the Consolidated Financial Statements for information regarding certain legal proceedings in which the
Company is involved.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
25
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
The Company’s common shares are listed and posted for trading on the NYSE and the TSX under the symbol “BB”.
On February 29, 2024, there were 1,049 registered holders of record of our common shares.
Unregistered Sales of Equity Securities
The Company had no unregistered sales of equity securities during fiscal 2024 that were not previously reported.
Share Repurchases
The Company did not repurchase any shares during fiscal 2024.
Stock Performance Graph
In fiscal 2024, the Company adopted a total shareholder return metric for performance-based restricted share unit awards
granted in the fourth quarter of fiscal 2024 and the S&P Software & Services Select Industry Index was selected as the most
appropriate comparator index for the Company based on the characteristics of its constituents.
The following graph shows the cumulative total shareholder return of $100 invested in the common shares compared to the
S&P/TSX Capped Composite index, the peer group index (S&P Software & Services Select Industry Index) and the previous
peer group index (S&P 500 Information Technology Index) for the period of February 28, 2019 to February 29, 2024.
The performance of the Company’s common shares as set out in the graph is based upon historical data and is not indicative of,
nor intended to forecast, future performance of our common shares. The graph lines merely connect measurement dates and do
not reflect fluctuations between those dates.
Base
Period
2/28/2019
2/28/2020
2/28/2021
2/26/2022
2/28/2023
2/29/2024
BlackBerry Limited
$
100.00
$
59.43
115.52
78.97
44.60
31.95
S&P TSX Capped
Composite
100.00
101.65
112.88
132.05
126.39
133.53
S&P Software & Services
Select Industry Index
100.00
106.99
174.50
157.20
130.57
168.21
S&P 500 Information
Technology Index
100.00
124.92
184.92
217.79
191.92
302.25
26
This performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the
“Exchange Act”) or otherwise subject to the liabilities of that section nor shall it be deemed incorporated by reference in any
filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.
Ownership and Exchange Controls
There is currently no law, governmental decree or regulation in Canada that restricts the export or import of capital, or which
would affect the remittance of dividends, interest or other payments by us to non-resident holders of the Company’s common
shares, other than withholding tax requirements.
There is currently no limitation imposed by Canadian law or by the Company’s articles or by-laws on the right of non-residents
to hold or vote the Company’s common shares, other than those imposed by the Investment Canada Act (Canada) and the
Competition Act (Canada). These acts will generally not apply except where control of an existing Canadian business or
company, which has Canadian assets or revenue, or enterprise value (as applicable) over a certain threshold, is acquired and
will not apply to trading generally of securities listed on a stock exchange.
Certain Canadian Federal Income Tax Considerations for U.S. Residents
The following is a summary of the principal Canadian federal income tax considerations generally applicable under the Income
Tax Act (Canada) (together with the regulations thereto, the “Tax Act”) to a beneficial holder of the Company’s common shares
who, for the purposes of the Tax Act and the Canada-United States Income Tax Convention (1980) (the “Treaty”), and at all
relevant times, (i) is not and is not deemed to be a resident in Canada, (ii) is a resident of the United States for the purposes of
the Treaty and is entitled to the full benefits thereunder, (iii) holds all common shares as capital property, (iv) deals at arm’s
length with and is not affiliated with the Company, and (v) does not use or hold and is not deemed to use or hold the common
shares in connection with a business carried on in Canada (each such holder, a “U.S. Resident Holder”). This summary is not
generally applicable to a U.S. Resident Holder that is: (i) an insurer carrying on an insurance business in Canada and elsewhere,
or (ii) an “authorized foreign bank,” each as defined in the Tax Act. Such U.S. Resident Holders should consult their own tax
advisors.
Generally, a U.S. Resident Holder’s common shares will be considered to be capital property of a U.S. Resident Holder
provided the U.S. Resident Holder does not hold such shares in the course of carrying on a business of trading or dealing in
securities and has not acquired them in one or more transactions considered to be an adventure or concern in the nature of trade.
This summary is based upon the current provisions of the Tax Act, the current administrative policies and assessing practices of
the Canada Revenue Agency published in writing prior to the date hereof, and the Treaty. This summary takes into account all
specific proposals to amend the Tax Act publicly announced by or on behalf of the Minister of Finance (Canada) prior to the
date hereof (the “Tax Proposals”), and assumes that all Tax Proposals will be enacted in the form proposed. However, no
assurances can be given that the Tax Proposals will be enacted as proposed, or at all. This summary does not otherwise take into
account or anticipate any changes in law or administrative policy or assessing practice whether by legislative, administrative or
judicial action or decision, nor does it take into account tax legislation or considerations of any province, territory or foreign
jurisdiction, which may differ from those discussed herein.
This summary is of a general nature only and is not intended to be, and should not be construed to be, legal, business or tax
advice to any particular holder or prospective holder of the Company’s common shares, and no opinion or representation with
respect to the tax consequences to any holder or prospective holder of the common shares is made. Accordingly, holders and
prospective holders of the Company’s common shares should consult their own tax advisors with respect to the income tax
consequences of purchasing, owning and disposing of the common shares in their particular circumstances.
Dividends
Dividends paid or credited, or deemed to be paid or credited, on the Company’s common shares to a U.S. Resident Holder will
be subject to Canadian withholding tax at the rate of 25% of the gross amount of the dividends, subject to reduction under the
provisions of the Treaty. Under the Treaty, the rate of Canadian withholding tax applicable to a U.S. Resident Holder that is the
beneficial owner of dividends is generally reduced to 15% of the gross amount of the dividends, and, if such U.S. Resident
Holder is a company that owns at least 10% of the Company’s voting shares at the time of the dividends, the rate of Canadian
withholding tax is reduced to 5% of the gross amount of the dividends. U.S. Resident Holders who may be eligible for a
reduced rate of withholding tax on dividends pursuant to the Treaty should consult with their own tax advisors with respect to
taking all appropriate steps in this regard.
Disposition of Common Shares
A U.S. Resident Holder who disposes or is deemed to dispose of a common share will not be subject to tax under the Tax Act
on any capital gain realized on such disposition, unless the common share constitutes “taxable Canadian property,” within the
meaning of the Tax Act, of the U.S. Resident Holder at the time of the disposition and the U.S. Resident Holder is not entitled
to relief under the Treaty.
27
Generally, a common share of a particular U.S. Resident Holder will not be “taxable Canadian property” of such U.S. Resident
Holder at any time at which such common share is listed on a “designated stock exchange,” within the meaning of the Tax Act
(which includes the TSX and NYSE) unless, at any particular time during the 60-month period that ends at that time, both of the
following conditions are met concurrently: (a) 25% or more of the issued shares of any class of the capital stock of the
Company were owned by or belonged to one or any combination of (i) the U.S. Resident Holder, (ii) persons with whom the
U.S. Resident Holder did not deal at arm’s length for purposes of the Tax Act, and (iii) partnerships in which the U.S. Resident
Holder or a person described in (ii) holds a membership interest directly or indirectly through one or more partnerships; and (b)
more than 50% of the fair market value of the common share was derived, directly or indirectly, from one or any combination
of: (i) real or immovable property situated in Canada, (ii) “Canadian resource properties” (as defined in the Tax Act), (iii)
“timber resource properties” (as defined in the Tax Act), and (iv) options in respect of, or interests in, or for civil law rights in,
property described in any of (b)(i) to (iii), whether or not the property exists. A common share may also be deemed to be
“taxable Canadian property” in certain circumstances as set out in the Tax Act. In the case of a U.S. Resident Holder to whom a
common share of the Company represents “taxable Canadian property”, under the Treaty, such a U.S. Resident Holder will
generally not be subject to tax under the Tax Act on a capital gain realized on the disposition of such share unless the value of
such share is derived principally from real property situated in Canada (within the meaning of the Treaty).
In the event that a common share is “taxable Canadian property,” within the meaning of the Tax Act, to a U.S. Resident Holder
at the time of disposition, such U.S. Resident Holder should consult its own tax advisor as to the Canadian federal income tax
consequences of the disposition.
ITEM 6. [RESERVED]
ITEM 7. 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 consolidated financial statements and the accompanying notes (the “Consolidated Financial Statements”)
of BlackBerry Limited, for the fiscal year ended February 29, 2024. The Consolidated Financial Statements are presented in
U.S. dollars and have been prepared in accordance with U.S. GAAP. All financial information in this MD&A is presented in
U.S. dollars, unless otherwise indicated.
Readers should carefully review Part I, Item 1A “Risk Factors” and other documents filed by the Company from time to time
with the Securities and Exchange Commission (“SEC”) and other securities regulators. A number of factors may materially
affect our business, financial condition, operating results and prospects. These factors include but are not limited to those set
forth in Part I, Item 1A “Risk Factors” and elsewhere in this Annual Report on Form 10-K. Any one of these factors, and other
factors that we are unaware of, or currently deem immaterial, may cause our actual results to differ materially from recent
results or from our anticipated future results. Please refer to our MD&A included in our Annual Report on 10-K for the fiscal
year ended February 28, 2023 for a comparative discussion of our fiscal 2023 financial results as compared to our fiscal 2022
financial results, which is incorporated herein by reference. Additional information about the Company can be found on
SEDAR+ at www.sedarplus.ca and on the SEC’s website at www.sec.gov.
Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements within the meaning of certain securities laws, including
under the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws, including statements
relating to:
•
the Company’s plans, strategies and objectives, including its intentions to increase and enhance its product and
service offerings and to patent new innovations;
•
the Company’s expectations with respect to enhancing operational focus and flexibility, driving improved
profitability, and increasing optionality for optimizing shareholder value through the full separation of its principal
business units;
•
the Company’s expectations with respect to its revenue, non-GAAP EPS and adjusted EBITDA in the first quarter of
fiscal 2025 and fiscal 2025 as a whole, annual recurring revenue of the Company’s Cybersecurity division and cash
usage in the first quarter of fiscal 2025, non-GAAP operating expenses for fiscal 2025 and non-GAAP EPS and cash
flow in the fourth quarter fiscal 2025;
•
the Company’s estimates of purchase obligations and other contractual commitments; and
•
the Company’s expectations with respect to the sufficiency of its financial resources.
28
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 Annual Report on Form 10-K, including in the
sections in Part I, Item 1 “Business” entitled “Products and Services - IoT”, “Products and Services - Licensing and Other”,
“Intellectual Property” and “Human Capital”, and in the sections of this MD&A entitled, “Non-GAAP Financial Measures -
Key Metrics - Cybersecurity Annual Recurring Revenue”, “Results of Operations - Fiscal year ended February 29, 2024
compared to fiscal year ended February 28, 2023 - Revenue - Revenue by Segment”, “Results of Operations - Fiscal year ended
February 29, 2024 compared to fiscal year ended February 28, 2023 - Operating Expenses”, “Results of Operations - Fiscal year
ended February 29, 2024 compared to fiscal year ended February 28, 2023 - Net Income (Loss)” and “Financial Condition -
Contractual and Other Obligations”. Forward-looking statements are based on estimates and assumptions made by the
Company in light of its experience and its perception of historical trends, current conditions and expected future developments,
as well as other factors that the Company believes are appropriate in the circumstances, including but not limited to, the
Company’s expectations regarding its business, strategy, opportunities and prospects, the launch of new products and services,
general economic conditions, competition, the Company’s expectations regarding its financial performance, and the Company’s
expectations regarding the planned separation of its businesses. Many factors could cause the Company’s actual results,
performance or achievements to differ materially from those expressed or implied by the forward-looking statements, including,
without limitation, the risk factors discussed in Part I, Item 1A “Risk Factors” in this Annual Report on Form 10-K.
All of these factors should be considered carefully, and readers should not place undue reliance on the Company’s forward-
looking statements. Any statements that are forward-looking statements are intended to enable the Company’s shareholders to
view the anticipated performance and prospects of the Company from management’s perspective at the time such statements are
made, and they are subject to the risks that are inherent in all forward-looking statements, as described above, as well as
difficulties in forecasting the Company’s financial results and performance for future periods, particularly over longer periods,
given changes in technology and the Company’s business strategy, evolving industry standards, intense competition and short
product life cycles that characterize the industries in which the Company operates. See the “Strategy” subsection in Part I, Item
1 “Business” of this Annual Report on Form 10-K.
The Company has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as required by applicable law.
Business Overview
The Company provides intelligent security software and services to enterprises and governments around the world. The
Company secures more than 235 million vehicles. Based in Waterloo, Ontario, the Company leverages artificial intelligence
(“AI”) and machine learning to deliver innovative solutions in the areas of cybersecurity, safety and data privacy, and is a
leader in the areas of endpoint security, endpoint management, encryption, and embedded systems. The Company’s common
shares trade under the ticker symbol “BB” on the New York Stock Exchange and the Toronto Stock Exchange. The Company
was incorporated under the Business Corporations Act (Ontario) on March 7, 1984.
The Company continued to execute on its strategy in fiscal 2024 and announced the following significant achievements:
Products and Innovation:
•
Announced general availability of QNX® Software Development Platform (SDP) 8.0, the Company’s scalable, high-
performance foundation for next generation automotive and IoT systems;
•
Launched an enhanced AI-based Cylance® cybersecurity solutions portfolio, including a major update to its patented
Cylance AI engine;
•
Launched QNX® Sound, an audio and acoustics innovation platform for software-defined vehicles;
•
Announced enhancements to SecuSUITE® for Government, including encrypted video and group audio calls;
•
Announced an integration of CylanceGUARD® and BlackBerry® AtHoc® technologies for secure bi-directional
response communications during cyber incidents;
•
Announced that CylanceENDPOINT™ received Gartner® Peer Insights™ 2023, Customers’ Choice designation for
Endpoint Protection Platforms, based on customer feedback, placing in the upper-right quadrant;
•
Released a Global Threat Intelligence Report, highlighting that the Company’s AI-driven cybersecurity solutions
stopped 55,000 individual cyber-attacks between March and May 2023;
•
Launched a generative AI-powered cybersecurity assistant to increase efficiency and reduce fatigue for CISO teams;
and
•
Announced that BlackBerry is the first Mobile Device Management vendor to receive BSI clearance for BlackBerry®
UEM Brightsite usage with Apple iNDIGO.
29
Customers and Partners:
•
Announced a significant, multi-year deal to provide full suite of cybersecurity solutions to the Government of
Malaysia;
•
Stellantis, BlackBerry QNX and AWS launched the world’s first virtual cockpit, leveraging the QNX® Hypervisor in
the cloud to transform in-vehicle software engineering;
•
Mobility in Harmony (MIH) consortium, a Foxconn initiative, selected BlackBerry IVY® to power its next-generation
electric production vehicles;
•
Announced the Company’s new Cybersecurity Center of Excellence (CCoE) in Kuala Lumpur will offer SANS
training courses to help grow and upskill cyber workforces in Malaysia;
•
Announced that the United States Department of Homeland Security awarded a new PENS (personal emergency
notification system) contract to BlackBerry, utilizing BlackBerry® AtHoc® critical event management (CEM)
solution;
•
Announced that Mitsubishi’s enhanced automotive in-cabin system, FlexConnect.X, will be powered by BlackBerry
IVY to deliver AI data-driven experiences;
•
Announced that BlackBerry QNX software is embedded in over 235 million vehicles;
•
Announced an extended partnership with leading managed security services provider (MSSP) Solutions Granted,
enabling better scale to address small and medium-sized businesses (SMBs); and
•
Announced a strategic partnership with McLeod Software, a leading Transportation Management System (TMS)
provider, delivering enterprise software solutions to the transportation and logistics industry.
Environmental, Sustainability and Corporate Governance:
•
Appointed Philip Brace, an IoT technology industry veteran, to the Board of Directors (the “Board”); and
•
Appointed John Giamatteo, President of BlackBerry’s Cybersecurity division, as Chief Executive Officer.
Goodwill Impairment
During the fourth quarter of fiscal 2024, as part of its process for setting the annual operating plan for fiscal 2025, the Company
updated its estimates of long-term future cash flows to reflect lower revenue and EBITDA growth rate expectations and a
reduction in revenue multiples used in the valuation of the BlackBerry Spark reporting unit. These changes in estimates,
combined with the continued global economic uncertainty, customer budgetary constraints, and inflation, as well as higher
interest rates implemented in response to inflation, and a broad-based stock market decline impacting the Company’s market
capitalization, resulted in the recognition of a goodwill impairment charge of $35 million (the “Fiscal 2024 Goodwill
Impairment Charge”) in the BlackBerry Spark reporting unit, which is included within the Company’s Cybersecurity segment.
For additional information, see Note 3 to the Consolidated Financial Statements. The estimated fair values of the Company’s
other reporting units substantially exceeded their carrying values as at the annual goodwill impairment test date, with the
exception of the Intellectual Property reporting unit.
Business Separation
On May 1, 2023, the Company announced that the Board would initiate a review of the Company’s portfolio of businesses,
with the assistance of its financial advisors, as the Board considered strategic alternatives to drive enhanced shareholder value.
On October 4, 2023, the Company announced its intention to separate the IoT and Cybersecurity business units with a view to
pursuing a subsidiary initial public offering (“Sub-IPO”) for the IoT business. On December 11, 2023, the Company announced
that it had reassessed its strategy and would no longer pursue a Sub-IPO but intends to pursue a full separation of the IoT and
Cybersecurity businesses, including the separation and streamlining of the Company’s centralized corporate functions into
business-unit specific teams, with a view to establishing each business as an independently-operated, profitable and cashflow-
positive division. The Company intends for the separation to enhance the operational focus and flexibility for each business,
drive improved profitability, and increase optionality for the Company to optimize shareholder value. On February 12, 2024,
the Company announced its progress in separation and provided targets in respect to annualized net profit improvements to be
achieved through a combination of cost reductions and margin expansion, identified previously achieved annualized cost
savings in the third quarter of fiscal 2024, and provided guidance regarding expected improvements in operating cash flow in
fiscal 2025. On April 3, 2024, the Company stated that it had taken action in fiscal 2024 to reduce annualized expenditures by
approximately $105 million and is working towards further run rate reductions.
Patent Sale
On May 11, 2023, the Company completed its previously announced patent sale with Malikie Innovations Limited and sold
certain non-core patent assets for $170 million in cash on closing, an additional $30 million in cash by no later than the third
anniversary of closing and potential future royalties in the aggregate amount of up to $700 million (the “Malikie Transaction”).
In the first quarter of fiscal 2024, the Company recognized revenue of $218 million and cost of sales of $147 million related to
non-core intellectual property sold. The revenue recognized reflects the application of the Company’s accounting policies and
30
critical accounting estimates, as described in Note 1 to the Consolidated Financial Statements, which resulted in a substantial
majority of the potential future royalties from the Malikie Transaction being constrained until future periods. In evaluating the
Malikie Transaction, the Company considered estimates of value, among other factors, which are not fully reflected when
applying the principles of revenue recognition, such as the variable consideration constraint that is recognized at the inception
of the Malikie Transaction. Accordingly, amounts initially recognized in the first quarter of fiscal 2024 do not reflect the full
fair value of the overall transaction as determined by the Company. Additional variable consideration is expected to be
recognized in future quarters, as determined quarterly based on the revenue recognition accounting framework. See Note 12 to
the Consolidated Financial Statements.
Debt Repayment and New Issuance
On November 13, 2023, the Company repaid all amounts due upon the maturity of its outstanding 1.75% unsecured convertible
debentures (the “2020 Debentures”) for an aggregate amount of $365 million. On November 17, 2023, the Company issued an
aggregate of $150 million principal amount of new 1.75% extendable unsecured convertible debentures maturing on February
15, 2024 (the “Extension Debentures” and collectively with the 2020 Debentures, the “Debentures”), with an option for the
parties to extend the maturity date to May 15, 2024 by mutual agreement, to certain controlled affiliates of Fairfax Financial
Holdings Limited (“Fairfax”) on a private placement basis. The Extension Debentures had terms that were substantially similar
to those of the 2020 Debentures. Interest expense on the Extension Debentures was approximately $1 million for the period
from issuance to maturity on February 15, 2024.
On January 29, 2024, the Company issued $200 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 Company used the net proceeds of the issuance of the Notes principally to repay the Extension
Debentures at maturity on February 15, 2024. The Notes are due on February 15, 2029 unless earlier converted, redeemed, or
repurchased. Interest expense on the Notes will be approximately $6 million per year.
See Note 6 to the Consolidated Financial Statements for a description of the terms of the Notes.
Refer to Part I, Item 1A “Risk Factors” in this Annual Report on form 10-K for a discussion of these factors and other risks.
Fiscal 2024 Summary Results of Operations
The following table sets forth certain consolidated statements of operations data for the fiscal years ended February 29,
2024, February 28, 2023, and February 28, 2022:
As at and for the Fiscal Years Ended
(in millions, except for share and per share amounts)
February 29, 2024
February 28, 2023
Change
February 28, 2022
Change
Revenue
$
853 $
656 $
197 $
718 $
(62)
Gross margin
520
419
101
467
(48)
Operating expenses
645
1,144
(499)
469
675
Investment income, net
19
5
14
21
(16)
Income (loss) before income taxes
(106)
(720)
614
19
(739)
Provision for income taxes
24
14
10
7
7
Net income (loss)
$
(130) $
(734) $
604 $
12 $
(746)
Earnings (loss) per share - reported
Basic
$
(0.22) $
(1.27)
$
0.02
Diluted
$
(0.22) $
(1.35)
$
(0.31)
Weighted-average number of shares
outstanding (000’s)
Basic
584,543
578,654
570,607
Diluted (1)
584,543
639,487
631,440
______________________________
(1) Diluted loss per share on a U.S. GAAP basis for fiscal 2024 does not include the dilutive effect of the Debentures and the
Notes as to do so would be anti-dilutive. Diluted loss per share on a U.S. GAAP basis for fiscal 2024, fiscal 2023, and fiscal
2022 does not include the dilutive effect of stock-based compensation as to do so would be anti-dilutive. See Note 8 to the
31
Consolidated Financial Statements for the fiscal year ended February 29, 2024 for calculation of the diluted weighted
average number of shares outstanding.
The following section sets forth certain unaudited consolidated statements of operations data for the three months ended
February 29, 2024, February 28, 2023 and February 28, 2022:
For the Three Months Ended
(in millions, except for share and per share amounts)
February 29, 2024
February 28, 2023
Change
February 28, 2022
Change
Revenue
$
173 $
151 $
22 $
185 $
(34)
Gross margin
129
100
29
124
(24)
Operating expenses
185
599
(414)
(22)
621
Investment income (loss), net
4
6
(2)
(1)
7
Income (loss) before income taxes
(52)
(493)
441
145
(638)
Provision for income taxes
4
2
2
1
1
Net income (loss)
$
(56) $
(495) $
439 $
144 $
(639)
Earnings (loss) per share - reported
Basic
$
(0.10) $
(0.85) $
0.75 $
0.25 $
(1.10)
Diluted (1)
$
(0.10) $
(0.85) $
0.75 $
(0.03) $
(0.82)
Weighted-average number of shares
outstanding (000’s)
Basic
587,523
581,493
575,883
Diluted (1)
587,523
581,493
636,716
______________________________
(1)
Diluted loss per share on a U.S. GAAP basis in the fourth quarter of 2024 and 2023 do not include the dilutive effect
of the Debentures or Notes as to do so would be anti-dilutive. Diluted loss per share on a U.S. GAAP basis in the
fourth quarter of 2024, 2023 and 2022 do not include the dilutive effect of stock-based compensation as to do so would
be anti-dilutive.
The following tables show information by operating segment for the three months and year ended February 29, 2024 and
February 28, 2023. The Company reports segment information in accordance with U.S. GAAP Accounting Standards
Codification Section 280 based on the “management” approach. The management approach designates the internal reporting
used by the CODM for making decisions and assessing performance of the Company’s reportable operating segments. See Note
12 to the Consolidated Financial Statements for a description of the Company’s operating segments.
For the Three Months Ended
(in millions)
Cybersecurity
IoT
Licensing and Other
Segment Totals
Feb 29
Feb 28
Change
Feb 29
Feb 28
Change
Feb 29
Feb 28
Change
Feb 29
Feb 28
Change
2024
2023
2024
2023
2024
2023
2024
2023
Segment revenue
$
92 $
88 $
4 $
66 $
53 $ 13 $
15 $
10 $
5 $ 173 $ 151 $ 22
Segment cost of sales
32
36
(4)
10
10
—
2
4
(2)
44
50
(6)
Segment gross margin $
60 $
52 $
8 $
56 $
43 $ 13 $
13 $
6 $
7 $ 129 $ 101 $ 28
For the Year Ended
(in millions)
Cybersecurity
IoT
Licensing and Other
Segment Totals
Feb 29
Feb 28
Change
Feb 29
Feb 28
Change
Feb 29
Feb 28
Change
Feb 29
Feb 28
Change
2024
2023
2024
2023
2024
2023
2024
2023
Segment revenue
$ 378
$ 418
$ (40)
$ 215
$ 206
$
9
$ 260
$ 32
$ 228
$ 853
$ 656
$ 197
Segment cost of sales
142
185
(43)
36
37
(1)
152
12
140
330
234
96
Segment gross margin $ 236
$ 233
$
3
$ 179
$ 169
$ 10
$ 108
$ 20
$ 88
$ 523
$ 422
$ 101
32
The following tables reconcile the Company’s segment results for the three months and year ended February 29, 2024 to
consolidated U.S. GAAP results:
For the Three Months Ended February 29, 2024
(in millions)
Cybersecurity
IoT
Licensing and
Other
Segment Totals
Reconciling
Items
Consolidated
U.S. GAAP
Revenue
$
92 $
66 $
15 $
173 $
— $
173
Cost of sales
32
10
2
44
—
44
Gross margin (1)
$
60 $
56 $
13 $
129 $
— $
129
Operating expenses
185
185
Investment income, net
4
4
Loss before income taxes
$
(52)
For the Year Ended February 29, 2024
(in millions)
Cybersecurity
IoT
Licensing and
Other
Segment Totals
Reconciling
Items
Consolidated
U.S. GAAP
Revenue
$
378 $
215 $
260 $
853 $
— $
853
Cost of sales
142
36
152
330
3
333
Gross margin (1)
$
236 $
179 $
108 $
523 $
(3) $
520
Operating expenses
645
645
Investment income, net
19
19
Loss before income taxes
$
(106)
______________________________
(1) See “Non-GAAP Financial Measures” for a reconciliation of selected U.S. GAAP-based measures to adjusted measures for
the three months and year ended February 29, 2024.
The following tables reconcile the Company’s segment results for the three months and year ended February 28, 2023 to
consolidated U.S. GAAP results:
For the Three Months Ended February 28, 2023
(in millions)
Cybersecurity
IoT
Licensing and
Other
Segment Totals
Reconciling
Items
Consolidated
U.S. GAAP
Revenue
$
88 $
53 $
10 $
151 $
— $
151
Cost of sales
36
10
4
50
1
51
Gross margin (1)
$
52 $
43 $
6 $
101 $
(1) $
100
Operating expenses
599
599
Investment income, net
6
6
Loss before income taxes
$
(493)
33
For the Year Ended February 28, 2023
(in millions)
Cybersecurity
IoT
Licensing and
Other
Segment Totals
Reconciling
Items
Consolidated
U.S. GAAP
Revenue
$
418 $
206 $
32 $
656 $
— $
656
Cost of sales
185
37
12
234
3
237
Gross margin (1)
$
233 $
169 $
20 $
422 $
(3) $
419
Operating expenses
1,144
1,144
Investment income, net
5
5
Loss before income taxes
$
(720)
______________________________
(1) See “Non-GAAP Financial Measures” for a reconciliation of selected U.S. GAAP-based measures to adjusted measures for
the three months and year ended February 28, 2023.
Financial Highlights
The Company had approximately $298 million in cash, cash equivalents and investments as of February 29, 2024 (Fiscal 2023 -
$487 million).
In fiscal 2024, the Company recognized revenue of $853 million and incurred a net loss of $130 million, or $0.22 basic and
diluted loss per share on a U.S. GAAP basis (fiscal 2023 - revenue of $656 million and net loss of $734 million, or $1.27 basic
loss per share and $1.35 diluted loss per share).
The Company recognized adjusted net income of $31 million, or adjusted income of $0.05 per share, on a non-GAAP basis in
fiscal 2024 (fiscal 2023 - adjusted net loss of $103 million and adjusted loss of $0.18 per share). See “Non-GAAP Financial
Measures” below.
Debentures Fair Value Adjustment
As previously disclosed, the Company elected the fair value option to account for the Debentures; therefore, periodic
revaluation was required under U.S. GAAP. The fair value adjustment did not impact the terms of the Debentures such as the
face value, the redemption features or the conversion price.
In fiscal 2024, the Company recorded non-cash income relating to changes in fair value of the 2020 Debentures of $2 million
(pre-tax and after tax) and realized a non-cash charge relating to changes in fair value from non-credit components released
from AOCL on maturity of the Extension Debentures and 2020 Debentures of $6 million (the “Fiscal 2024 Debentures Fair
Value Adjustment”) in the Company’s consolidated statements of operations. See Note 6 to the Consolidated Financial
Statements for further details on the Debentures.
Non-GAAP Financial Measures
The Consolidated Financial Statements have been prepared in accordance with U.S. GAAP, and information contained in this
MD&A is presented on that basis. On April 3, 2024, the Company announced financial results for the three months and fiscal
year ended February 29, 2024, which included certain non-GAAP financial measures and non-GAAP ratios, including adjusted
gross margin, adjusted gross margin percentage, adjusted operating expense, adjusted net income (loss), adjusted earnings (loss)
per share, adjusted research and development expense, adjusted sales and marketing expense, adjusted general and
administrative expense, adjusted amortization expense, adjusted operating income (loss), adjusted EBITDA, adjusted operating
income (loss) margin percentage, adjusted EBITDA margin percentage and free cash flow (usage). Commencing with this
MD&A and consistent with the presentation of the corresponding U.S. GAAP measures, the Company is presenting adjusted
sales and marketing expense and adjusted general and administrative expense separately, whereas they were previously
aggregated.
In the Company’s internal reports, management evaluates the performance of the Company’s business on a non-GAAP basis by
excluding the impact of certain items from the Company’s U.S. GAAP financial results. The Company believes that these non-
GAAP financial measures and non-GAAP ratios provide management, as well as readers of the Company’s financial
statements, with a consistent basis for comparison across accounting periods and are useful in helping management and readers
understand the Company’s operating results and underlying operational trends. For purposes of comparability, the Company’s
non-GAAP financial measures for the three months ended and years ended February 28, 2023 and February 28, 2022 have been
updated to conform to the current year’s presentation.
34
•
Debentures fair value adjustment. The Company elected to measure the Debentures at fair value in accordance with
the fair value option under U.S. GAAP. Each period, the fair value of the Debentures was recalculated and the
resulting non-cash income and charges from the change in fair value from non-credit components of the Debentures
were recognized in income. The amount varied each period depending on changes to the Company’s share price, share
price volatility and credit indices. This was not indicative of the Company’s core operating performance, and may not
be meaningful when comparing the Company’s operating performance against that of prior periods.
•
Restructuring charges. The Company believes that restructuring costs relating to employee termination benefits,
facilities, streamlining the Company’s centralized corporate functions into Cybersecurity and IoT specific teams and
other costs pursuant to the programs to reduce its annual expenses amongst R&D, infrastructure and other functions do
not reflect expected future operating expenses, are not indicative of the Company’s core operating performance, and
may not be meaningful when comparing the Company’s operating performance against that of prior periods
•
Stock compensation expenses. Equity compensation is a non-cash expense and does not impact the ongoing operating
decisions taken by the Company’s management.
•
Amortization of acquired intangible assets. When the Company acquires intangible assets through business
combinations, the assets are recorded as part of purchase accounting and contribute to revenue generation. Such
acquired intangible assets depreciate over time and the related amortization will recur in future periods until the assets
have been fully amortized. This is not indicative of the Company’s core operating performance, and may not be
meaningful when comparing the Company’s operating performance against that of prior periods.
•
Long-lived asset impairment charge. The Company believes that long-lived asset impairment charges do not reflect
expected future operating expenses, are not indicative of the Company’s core operating performance, and may not be
meaningful when comparing the Company’s operating performance against that of prior periods.
•
Goodwill impairment charge. The Company believes that goodwill impairment charges do not reflect expected future
operating expenses, are non-cash, and may not be meaningful when comparing the Company’s operating performance
against that of prior periods.
•
Litigation settlement. The Company believes that litigation settlements do not reflect expected future operating
expenses, are not indicative of the Company’s core operating performance, and may not be meaningful when
comparing the Company’s operating performance against that of prior periods.
On a U.S. 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. As a result, the Company considers it appropriate and reasonable to provide, in addition to U.S. GAAP measures,
supplementary non-GAAP financial measures that exclude certain items from the presentation of its financial results.
Reconciliation of non-GAAP based measures with most directly comparable U.S. GAAP based measures for the three
months ended February 29, 2024, February 28, 2023 and February 28, 2022
Readers are cautioned that adjusted gross margin, adjusted gross margin percentage, adjusted operating expense, adjusted net
income (loss), adjusted earnings (loss) per share, adjusted research and development expense, adjusted sales and marketing
expense, adjusted general and administrative expense, adjusted amortization expense, adjusted operating income (loss), adjusted
EBITDA, adjusted operating income (loss) margin percentage, adjusted EBITDA margin percentage and free cash flow (usage)
and similar measures do not have any standardized meaning prescribed by U.S. GAAP and are therefore unlikely to be
comparable to similarly titled measures reported by other companies. Commencing with this MD&A and consistent with the
presentation of the corresponding U.S. GAAP measures, the Company is presenting adjusted sales and marketing expense and
adjusted general and administrative expense separately. These non-GAAP financial measures should be considered in the
context of the U.S. GAAP results, which are described in this MD&A and presented in the Consolidated Financial Statements.
35
A reconciliation of the most directly comparable U.S. GAAP financial measures for the three months ended February 29, 2024,
February 28, 2023 and February 28, 2022 to adjusted financial measures is reflected in the table below:
For the Three Months Ended (in millions)
February 29, 2024
February 28, 2023
February 28, 2022
Gross margin
$
129
$
100
$
124
Stock compensation expense
—
1
1
Adjusted gross margin
$
129
$
101
$
125
Gross margin %
74.6 %
66.2 %
67.0 %
Stock compensation expense
— %
0.7 %
0.6 %
Adjusted gross margin %
74.6 %
66.9 %
67.6 %
Reconciliation of U.S. GAAP operating expense (income) for the three months ended February 29, 2024, November 30, 2023,
February 28, 2023 and February 28, 2022 to adjusted operating expense is reflected in the table below:
For the Three Months Ended (in millions)
February 29, 2024
November 30, 2023
February 28, 2023
February 28, 2022
Operating expense (income)
$
185 $
138 $
599 $
(22)
Restructuring charges
20
9
7
—
Stock compensation expense
5
7
9
4
Debentures fair value adjustment (1)
—
(13)
(26)
(165)
Acquired intangibles amortization
8
9
15
22
Goodwill impairment charge
35
—
245
—
LLA impairment charge
4
11
231
—
Adjusted operating expense
$
113 $
115 $
118 $
117
______________________________
(1) See “Fiscal 2024 Summary Results of Operations - Financial Highlights - Debentures Fair Value Adjustment”.
Reconciliation of U.S. GAAP net income (loss) and U.S. GAAP basic earnings (loss) per share for the three months ended
February 29, 2024, February 28, 2023 and February 28, 2022 to adjusted net income (loss) and adjusted basic earnings (loss)
per share is reflected in the table below:
For the Three Months Ended (in millions, except per share amounts)
February 29, 2024
February 28, 2023
February 28, 2022
Basic
earnings
(loss)
per share
Basic loss
per share
Basic
earnings
per share
Net income (loss)
$
(56)
$(0.10)
$
(495)
$(0.85)
$
144
$0.25
Restructuring charges
20
7
—
Stock compensation expense
5
10
5
Debentures fair value adjustment
—
(26)
(165)
Acquired intangibles amortization
8
15
22
Goodwill impairment charge
35
245
—
LLA impairment charge
4
231
—
Adjusted net income (loss)
$
16
$0.03
$
(13)
$(0.02)
$
6
$0.01
Reconciliation of U.S. GAAP research and development, sales and marketing, general and administrative, and amortization
expense for the three months ended February 29, 2024, February 28, 2023 and February 28, 2022 to adjusted research and
development, sales and marketing, general and administrative, and amortization expense is reflected in the table below:
36
For the Three Months Ended (in millions)
February 29, 2024
February 28, 2023
February 28, 2022
Research and development
$
40 $
48 $
47
Stock compensation expense
2
3
2
Adjusted research and development
$
38 $
45 $
45
Sales and marketing
$
41 $
48 $
45
Stock compensation expense
1
2
1
Adjusted sales and marketing
$
40 $
46 $
44
General and administrative
$
53 $
35 $
19
Restructuring charges
20
7
—
Stock compensation expense
2
4
1
Adjusted general and administrative
$
31 $
24 $
18
Amortization
$
12 $
18 $
32
Acquired intangibles amortization
8
15
22
Adjusted amortization
$
4 $
3 $
10
Reconciliation of non-GAAP based measures with most directly comparable U.S. GAAP based measures for the years
ended February 29, 2024, February 28, 2023 and February 28, 2022
A reconciliation of the most directly comparable U.S. GAAP financial measures for the years ended February 29, 2024,
February 28, 2023 and February 28, 2022 to adjusted financial measures is reflected in the table below:
For the Fiscal Years Ended (in millions)
February 29, 2024
February 28, 2023
February 28, 2022
Gross margin
$
520
$
419
$
467
Stock compensation expense
3
3
4
Adjusted gross margin
$
523
$
422
$
471
Gross margin %
61.0 %
63.9 %
65.0 %
Stock compensation expense
0.3 %
0.4 %
0.6 %
Adjusted gross margin %
61.3 %
64.3 %
65.6 %
Operating expense
$
645
$
1,144
$
469
Restructuring charges
37
11
—
Stock compensation expense
30
28
26
Debentures fair value adjustment (1)
3
(138)
(212)
Acquired intangibles amortization
38
82
115
Goodwill impairment charge
35
245
—
LLA impairment charge
15
235
—
Litigation settlement
—
165
—
Adjusted operating expense
$
487
$
516
$
540
______________________________
(1) See “Fiscal 2024 Summary Results of Operations - Financial Highlights - Debentures Fair Value Adjustment”.
37
Reconciliation of U.S. GAAP net income (loss) and U.S. GAAP basic earnings (loss) per share for the years ended February 29,
2024, February 28, 2023 and February 28, 2022 to the adjusted net income (loss) and adjusted basic earnings (loss) per share is
reflected in the table below:
For the Fiscal Years Ended (in millions, except per share amounts)
February 29, 2024
February 28, 2023
February 28, 2022
Basic
earnings
(loss) per
share
Basic
loss per
share
Basic
earnings
(loss) per
share
Net income (loss)
$
(130) $ (0.22) $
(734) $ (1.27) $
12 $
0.02
Restructuring charges
37
11
—
Stock compensation expense
33
31
30
Debentures fair value adjustment
3
(138)
(212)
Acquired intangibles amortization
38
82
115
Goodwill impairment charge
35
245
—
LLA impairment charge
15
235
—
Litigation settlement
—
165
—
Adjusted net income (loss)
$
31
$0.05
$
(103)
$(0.18)
$
(55)
$(0.10)
Reconciliation of U.S GAAP research and development, sales and marketing, general and administrative, and amortization
expense for the years ended February 29, 2024, February 28, 2023 and February 28, 2022 to adjusted research and
development, sales and marketing, general and administrative, and amortization expense is reflected in the table below:
For the Fiscal Years Ended (in millions)
February 29, 2024
February 28, 2023
February 28, 2022
Research and development
$
186 $
207 $
219
Stock compensation expense
8
9
8
Adjusted research and development
$
178 $
198 $
211
Sales and marketing
$
171 $
176 $
183
Stock compensation expense
6
5
5
Adjusted sales and marketing
$
165 $
171 $
178
General and administrative
$
181 $
164 $
114
Restructuring charges
37
11
—
Stock compensation expense
16
14
13
Adjusted general and administrative
$
128 $
139 $
101
Amortization
$
54 $
96 $
165
Acquired intangibles amortization
38
82
115
Adjusted amortization
$
16 $
14 $
50
38
Adjusted operating income (loss), adjusted EBITDA, adjusted operating income (loss) margin percentage and adjusted
EBITDA margin percentage for the three months ended February 29, 2024, February 28, 2023 and February 28, 2022 are
reflected in the table below. These are non-GAAP financial measures and non-GAAP ratios that do not have any standardized
meaning as prescribed by U.S. GAAP and are therefore unlikely to be comparable to similar measures presented by other
companies.
For the Three Months Ended (in millions)
February 29, 2024
February 28, 2023
February 28, 2022
Operating income (loss)
$
(56) $
(499) $
146
Non-GAAP adjustments to operating income (loss)
Restructuring charges
20
7
—
Stock compensation expense
5
10
5
Debentures fair value adjustment
—
(26)
(165)
Acquired intangibles amortization
8
15
22
Goodwill impairment charge
35
245
—
LLA impairment charge
4
231
—
Total non-GAAP adjustments to operating income (loss)
72
482
(138)
Adjusted operating income (loss)
16
(17)
8
Amortization
13
20
34
Acquired intangibles amortization
(8)
(15)
(22)
Adjusted EBITDA
$
21
$
(12) $
20
Revenue
$
173
$
151 $
185
Adjusted operating income (loss) margin % (1)
9%
(11%)
4%
Adjusted EBITDA margin % (2)
12%
(8%)
11%
______________________________
(1) Adjusted operating income (loss) margin % is calculated by dividing adjusted operating income (loss) by revenue.
(2) Adjusted EBITDA margin % is calculated by dividing adjusted EBITDA by revenue.
39
Adjusted operating income (loss), adjusted EBITDA, adjusted operating income (loss) margin percentage and adjusted
EBITDA margin percentage for the fiscal years ended February 29, 2024, February 28, 2023 and February 28, 2022 are
reflected in the table below.
For the Fiscal Years Ended (in millions)
February 29, 2024
February 28, 2023
February 28, 2022
Operating loss
$
(125)
$
(725)
$
(2)
Non-GAAP adjustments to operating loss
Restructuring charges
37
11
—
Stock compensation expense
33
31
30
Debentures fair value adjustment
3
(138)
(212)
Acquired intangibles amortization
38
82
115
Goodwill impairment charge
35
245
—
LLA impairment charge
15
235
—
Litigation settlement
—
165
—
Total non-GAAP adjustments to operating loss
161
631
(67)
Adjusted operating income (loss)
36
(94)
(69)
Amortization
59
105
176
Acquired intangibles amortization
(38)
(82)
(115)
Adjusted EBITDA
$
57
$
(71)
$
(8)
Revenue
$
853
$
656
$
718
Adjusted operating income (loss) margin % (1)
4%
(14%)
(10%)
Adjusted EBITDA margin % (2)
7%
(11%)
(1%)
______________________________
(1) Adjusted operating income (loss) margin % is calculated by dividing adjusted operating income (loss) by revenue.
(2) Adjusted EBITDA margin % is calculated by dividing adjusted EBITDA by revenue.
The Company uses free cash flow (usage) when assessing its sources of liquidity, capital resources, and quality of earnings. 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 trends in the Company’s business.
Reconciliation of U.S. GAAP net cash provided by (used in) operating activities for the three months ended February 29, 2024,
February 28, 2023 and February 28, 2022 to free cash flow (usage) is reflected in the table below:
For the Three Months Ended (in millions)
February 29, 2024
February 28, 2023
February 28, 2022
Net cash provided by (used in) operating activities
$
(15) $
(7) $
10
Acquisition of property, plant and equipment
(2)
(2) $
(2)
Free cash flow (usage)
$
(17) $
(9) $
8
40
Reconciliation of U.S. GAAP net cash provided by (used in) operating activities for the years ended February 29, 2024,
February 28, 2023 and February 28, 2022 to free cash flow (usage) is reflected in the table below:
For the Fiscal Years Ended (in millions)
February 29, 2024
February 28, 2023
February 28, 2022
Net cash used in operating activities
$
(3) $
(263) $
(28)
Acquisition of property, plant and equipment
(7)
(7)
(8)
Free cash usage
$
(10) $
(270) $
(36)
For the year ended February 28, 2023, free cash usage includes $165 million paid in relation to a legal settlement.
Key Metrics
The Company regularly monitors a number of financial and operating metrics, including the following key metrics, in order to
measure the Company’s current performance and estimated future performance. Readers are cautioned that Cybersecurity
annual recurring revenue (“ARR”), Cybersecurity dollar-based net retention rate (“DBNRR”), Cybersecurity total contract
value (“TCV”) billings, recurring software product revenue percentage and QNX royalty backlog 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 February 29, 2024 and February 28, 2023 are set
forth below.
For the Three Months Ended (in millions)
February 29, 2024
February 28, 2023
Change
Cybersecurity Annual Recurring Revenue
$
280
$
298
$
(18)
Cybersecurity Dollar-Based Net Retention Rate
85 %
81 %
4%
Cybersecurity Total Contract Value Billings
$
91
$
107
$
(16)
Recurring Software Product Revenue Percentage
~ 90%
~ 90 %
—%
QNX Royalty Backlog
$
815
$
640
$
175
Cybersecurity Annual Recurring Revenue
The Company defines ARR as the annualized value of all subscription, term, maintenance, services, and royalty contracts that
generate recurring revenue as of the end of the reporting period. The Company uses ARR as an indicator of business
momentum for the Cybersecurity business.
Cybersecurity ARR was approximately $280 million in the fourth quarter of fiscal 2024 and increased compared to
$273 million in the third quarter of fiscal 2024 and decreased compared to $298 million in the fourth quarter of fiscal 2023
primarily due to customer churn in the BlackBerry Spark business.
The Company previously stated that it expected ARR in the fourth quarter of fiscal 2024 to be broadly consistent with the third
quarter of fiscal 2024. Cybersecurity ARR increased by 3% compared to the third quarter of fiscal 2024.
The Company expects Cybersecurity ARR to be flat sequentially in the first quarter of fiscal 2025.
Cybersecurity Dollar-Based Net Retention Rate
The Company calculates the Cybersecurity DBNRR as of period end by first calculating the Cybersecurity ARR from the
customer base as at 12 months prior to the current period end (“Prior Period ARR”). The Company then calculates the
Cybersecurity ARR for the same cohort of customers as at the current period end (“Current Period ARR”). The Company then
divides the Current Period ARR by the Prior Period ARR to calculate the DBNRR.
Cybersecurity DBNRR was 85% in the fourth quarter of fiscal 2024 and increased compared to 82% in the third quarter of
fiscal 2024 and 81% in the fourth quarter of fiscal 2023.
Cybersecurity Total Contract Value Billings
The Company defines Cybersecurity TCV billings as amounts invoiced less credits issued. The Company considers
Cybersecurity TCV billings to be a useful metric because billings drive deferred revenue, which is an important indicator of the
health and visibility of the business, and represents a significant percentage of future revenue.
Cybersecurity TCV billings was $91 million in the fourth quarter of fiscal 2024 and decreased compared to $109 million in the
third quarter of fiscal 2024 and $107 million in the fourth quarter of fiscal 2023 primarily due to the timing of closing large
customer contracts and churn in the BlackBerry Spark business.
The Company previously stated that it expected Cybersecurity TCV billings to continue to exceed Cybersecurity revenue in
fiscal 2024. Cybersecurity TCV billings exceeded Cybersecurity revenue in fiscal 2024.
41
Recurring Software Product Revenue Percentage
The Company defines recurring software product revenue percentage as recurring software product revenue divided by total
Software & Services revenue. Recurring software product revenue is comprised of subscription and term licenses, maintenance
arrangements, royalty arrangements and perpetual licenses recognized ratably under ASC 606. Total Software & Services
revenue is comprised of recurring product revenue, non-recurring product revenue and professional services. The Company
uses recurring software product revenue percentage to provide visibility into the revenue expected to be recognized in the
current and future periods.
Total Software & Services product revenue, excluding professional services, was approximately 90% recurring in the fourth
quarter of fiscal 2024 and increased compared to approximately 70% recurring in the third quarter of fiscal 2024 due to product
mix and was consistent with the fourth quarter of fiscal 2023.
QNX Royalty Backlog
The Company defines the royalty backlog of its QNX business as estimated future revenue from variable forecasted royalties
related to the QNX business. The estimation of forecasted royalties is based on QNX’s royalty rates and on projections of
anticipated volumes that are based on historical shipping experience and current customer projections that management believes
are reasonable over the lifetime of a design. The QNX royalty backlog is calculated annually based on current projections of
volumes and may not be indicative of actual future revenue. The revenue that the Company will recognize is subject to several
factors, including actual volumes and potential terminations or modifications to customer contracts.
The Company’s QNX royalty backlog was approximately $815 million at the end of the fourth quarter of fiscal 2024 and
increased compared to approximately $640 million at the end of the fourth quarter of fiscal 2023.
Results of Operations - Fiscal year ended February 29, 2024 compared to fiscal year ended February 28, 2023
Revenue
Revenue by Segment
Comparative breakdowns of revenue by segment are set forth below.
For the Fiscal Years Ended
(in millions)
February 29, 2024
February 28, 2023
Change
February 28, 2022
Change
Revenue by Segment
Cybersecurity
$
378
$
418
$
(40) $
477
$
(59)
IoT
215
206
9
178
28
Licensing and Other
260
32
228
63
(31)
$
853
$
656
$
197 $
718
$
(62)
% Revenue by Segment
Cybersecurity
44.3 %
63.7 %
66.4 %
IoT
25.2 %
31.4 %
24.8 %
Licensing and Other
30.5 %
4.9 %
8.8 %
100.0 %
100.0 %
100.0 %
Cybersecurity
The decrease in Cybersecurity revenue of $40 million was primarily due to a decrease of $28 million relating to product
revenue in BlackBerry Spark, a decrease of $8 million relating to product revenue in Secusmart and a decrease of $3 million in
professional services.
42
The Company previously stated that it expected Cybersecurity revenue for fiscal 2024 as a whole to be in the range of $369
million to $374 million. Cybersecurity revenue for fiscal 2024 as a whole was $378 million.
The Company expects Cybersecurity revenue to be in the range of $78 million to $82 million in the first quarter of fiscal 2025,
and for the full year to be in the range of $350 million to $365 million in fiscal 2025.
IoT
The increase in IoT revenue of $9 million was primarily due to an increase of $12 million in BlackBerry QNX royalty revenue
and an increase of $3 million in product revenue from BlackBerry Radar, partially offset by a decrease of $6 million in
professional services.
The Company previously stated that it expected IoT revenue to be in the range of $211 million to $215 million for fiscal 2024
as a whole. IoT revenue for fiscal 2024 was $215 million.
The Company expects IoT revenue to be in the range of $48 million to $52 million in the first quarter of fiscal 2025, and for the
full year to be in the range of $220 million to $235 million in fiscal 2025.
The Company previously stated that it expected total Software & Services revenue, excluding potential revenue from
BlackBerry IVY, to be in the range of $580 million and $589 million for fiscal 2024 as a whole. Total Software & Services
revenue, excluding potential revenue from BlackBerry IVY for fiscal 2024 was $593 million due to higher revenue in
Cybersecurity as described above.
Licensing and Other
The increase in Licensing and Other revenue of $228 million was primarily due to an increase of $218 million related to the
completed Malikie Transaction and an increase of $10 million in revenue from the Company’s intellectual property licensing
arrangements.
The Company expects Licensing and Other revenue to be approximately $4 million in each of the four quarters of fiscal 2025.
The Company expects total Company revenue to be approximately $130 million to $138 million in the first quarter of fiscal
2025 and total Company revenue to be approximately $586 million to $616 million in fiscal 2025.
Revenue by Geography
Comparative breakdowns of the geographic regions are set forth in the following table:
For the Fiscal Years Ended
(in millions)
February 29, 2024
February 28, 2023
Change
February 28, 2022
Change
Revenue by Geography
North America
$
556
$
350
$
206 $
413
$
(63)
Europe, Middle East and Africa
172
222
(50)
234
(12)
Other regions
125
84
41
71
13
$
853
$
656
$
197 $
718
$
(62)
% Revenue by Geography
North America
65.2 %
53.4 %
57.5 %
Europe, Middle East and Africa
20.2 %
33.8 %
32.6 %
Other regions
14.6 %
12.8 %
9.9 %
100.0 %
100.0 %
100.0 %
North America Revenue
The increase in North America revenue of $206 million was primarily due to an increase of $228 million in Licensing and
Other revenue due to the reasons discussed above in “Revenue by Segment”, an increase of $4 million in BlackBerry QNX
development seat revenue and an increase of $4 million relating to product revenue in AtHoc, partially offset by a decrease of
$20 million in product revenue in BlackBerry Spark and a decrease of $13 million in professional services.
43
Europe, Middle East and Africa Revenue
The decrease in Europe, Middle East and Africa revenue of $50 million was primarily due to a decrease of $38 million relating
to product revenue in Secusmart, a decrease of $15 million in product revenue in BlackBerry Spark and a decrease of $3 million
in BlackBerry QNX development seat revenue, partially offset by an increase of $6 million in BlackBerry QNX royalty
revenue.
Other Regions Revenue
The increase in Other regions revenue of $41 million was primarily due to an increase of $27 million relating to product
revenue in Secusmart, an increase of $7 million in product revenue in BlackBerry Spark, an increase of $6 million in
professional services and an increase of $2 million in BlackBerry QNX royalty revenue.
Gross Margin
Consolidated Gross Margin
Consolidated gross margin increased by $101 million to approximately $520 million in fiscal 2024 (fiscal 2023 - $419 million).
The increase was primarily due to the completed Malikie Transaction and an increase in revenue from Secusmart, partially
offset by a decrease in revenue from BlackBerry Spark due to the reasons discussed above in “Revenue by Segment”, as much
of the Company’s cost of sales does not significantly fluctuate based on business volume.
Consolidated Gross Margin Percentage
Consolidated gross margin percentage decreased by 2.9%, to approximately 61.0% of consolidated revenue in fiscal 2024
(fiscal 2023 - 63.9%). The decrease was primarily due to a change in mix, specifically higher contribution from Licensing and
Other, which had a lower gross margin percentage due to the completed Malikie Transaction, partially offset by a higher gross
margin contribution from Secusmart software licenses, which had a higher relative gross margin percentage.
Gross Margin by Segment
See “Business Overview” and “Fiscal 2024 Summary Results of Operations” for information about the Company’s operating
segments and the basis of operating segment results.
For the Years Ended
(in millions)
Cybersecurity
IoT
Licensing and Other
Segment Totals
Feb 29
Feb 28
Change
Feb 29
Feb 28
Change
Feb 29
Feb 28
Change
Feb 29
Feb 28
Change
2024
2023
2024
2023
2024
2023
2024
2023
Segment revenue
$ 378
$ 418
$ (40)
$ 215
$ 206
$
9
$ 260
$ 32
$ 228
$ 853
$ 656
$ 197
Segment cost of sales
142
185
(43)
36
37
(1)
152
12
140
330
234
96
Segment gross margin
$ 236
$ 233
$
3
$ 179
$ 169
$ 10
$ 108
$ 20
$ 88
$ 523
$ 422
$ 101
Segment gross margin
%
62%
56%
6%
83%
82%
1%
42%
63%
(21%)
61%
64%
(3%)
Cybersecurity
The increase in Cybersecurity gross margin of $3 million was primarily due to the reasons discussed above in “Revenue by
Segment”, a decrease of $13 million in network infrastructure costs and a change in mix, specifically a higher gross margin
contribution from Secusmart software licenses, which had a higher relative gross margin percentage.
The increase in Cybersecurity gross margin percentage of 6% was primarily due to the same reasons discussed above.
IoT
The increase in IoT gross margin of $10 million was primarily due to the reasons discussed above in “Revenue by Segment”, as
the Company’s cost of sales does not significantly fluctuate based on business volume.
The increase in IoT gross margin percentage of 1% was primarily due to the reasons discussed above in “Revenue by
Segment”, as the Company’s cost of sales does not significantly fluctuate based on business volume.
Licensing and Other
The increase in Licensing and Other gross margin of $88 million was primarily due to the completed Malikie Transaction.
The increase in Licensing and Other gross margin percentage of 27% was primarily due to the completed Malikie Transaction,
which had a lower relative gross margin percentage due to the cost basis of the sold assets which were de-recognized.
44
Operating Expenses
The table below presents a comparison of research and development, sales and marketing, general and administrative, and
amortization expense for fiscal 2024 compared to fiscal 2023 and fiscal 2023 compared to fiscal 2022.
For the Fiscal Years Ended
(in millions)
February 29, 2024
February 28, 2023
Change
February 28, 2022
Change
Revenue
$
853
$
656
$
197 $
718
$
(62)
Operating expenses
Research and development
186
207
(21)
219
(12)
Sales and marketing
171
176
(5)
183
(7)
General and administrative
181
164
17
114
50
Amortization
54
96
(42)
165
(69)
Impairment of goodwill
35
245
(210)
—
245
Impairment of long-lived assets
15
235
(220)
—
235
Gain on sale of property, plant and
equipment, net
—
(6)
6
—
(6)
Debentures fair value adjustment
3
(138)
141
(212)
74
Litigation settlement
—
165
(165)
—
165
Total
$
645
$
1,144
$
(499) $
469
$
675
Operating Expense as % of Revenue
Research and development
21.8%
31.6%
30.5%
Sales and marketing
20.0%
26.8%
25.5%
General and administrative
21.2%
25.0%
15.9%
Amortization
6.3%
14.6%
23.0%
Impairment of goodwill
4.1%
37.3%
—%
Impairment of long-lived assets
1.8%
35.8%
—%
Gain on sale of property, plant and
equipment, net
—%
(0.9%)
—%
Debentures fair value adjustment
0.4%
(21.0%)
(29.5%)
Litigation settlement
—%
25.2%
—%
Total
75.6%
174.4%
65.3%
See “Non-GAAP Financial Measures” for a reconciliation of selected U.S. GAAP-based measures to adjusted measures for the
years ended February 29, 2024, February 28, 2023 and February 28, 2022.
45
U.S. GAAP Operating Expenses
Operating expenses decreased by $499 million, or 43.6% in fiscal 2024 compared to fiscal 2023. The decrease was primarily
due to a decrease of $220 million in impairment of long-lived assets, a decrease of $210 million in goodwill impairment, a $165
million litigation settlement in fiscal 2023 that did not recur, a decrease of $42 million in amortization expense and a decrease
in $20 million in salaries and benefits expenses, partially offset by the difference between the Fiscal 2024 Debentures Fair
Value Adjustment and the fair value adjustment related to the Debentures incurred in fiscal 2023 of $141 million, an increase of
$27 million in restructuring costs, a decrease in benefits of $4 million in government subsidies resulting from claims filed for
the Canada Emergency Wage Subsidy and Hardest-Hit Business Recovery Program programs (“COVID-19 subsidies”) to
support the business through the COVID-19 pandemic and an increase of $2 million in the Company’s deferred share unit costs.
Adjusted Operating Expenses
Adjusted operating expenses decreased by $29 million, or 5.6%, to $487 million in fiscal 2024, compared to $516 million in
fiscal 2023. The decrease was primarily attributable to a decrease of $20 million in salaries and benefits expenses and a benefit
of $17 million related to the release of an accrued liability relating to the Company’s legacy mobile device business, partially
offset by a decrease in benefits of $4 million in COVID-19 subsidies, an increase of $2 million in amortization expense and an
increase of $2 million in the Company’s deferred share unit costs.
The Company expects its average quarterly non-GAAP operating expense run rate to be approximately $110 million in fiscal
2025.
Research and Development Expenses
Research and development expenses consist primarily of salaries and benefits for technical personnel, new product
development costs, travel, office and building costs, infrastructure costs and other employee costs.
Research and development expenses decreased by $21 million, or 10.1% in fiscal 2024 compared to fiscal 2023. The decrease
was primarily attributable to a decrease of $11 million in salaries and benefits expenses and a decrease of $3 million in
consulting costs, a decrease of $3 million in variable incentive plan costs and a decrease of $2 million in stock based
compensation expense.
Adjusted research and development expenses decreased by $20 million, or 10.1%, to $178 million in fiscal 2024 compared to
$198 million in fiscal 2023. The decrease was primarily due to the same reasons described above on a U.S. GAAP basis,
excluding the decrease in stock based compensation expense.
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of marketing, advertising and promotion, salaries and benefits, information
technology costs and travel expenses.
Sales and marketing expenses decreased by $5 million, or 2.8% in fiscal 2024 compared to fiscal 2023. The decrease was
primarily due to a decrease of $6 million in salaries and benefits and a decrease of $4 million in marketing and advertising
costs, partially offset by an increase of $3 million in consulting costs and an increase of $1 million in stock based compensation
expense.
Adjusted sales and marketing expenses decreased by $6 million, or 3.5%, to $165 million in fiscal 2024 compared to $171
million in fiscal 2023. The decrease was primarily due to same reasons described above on a U.S. GAAP basis, excluding the
increase in stock based compensation expense.
General and Administrative Expenses
General and administration expenses consist primarily of salaries and benefits, external advisory fees, information technology
costs, office and related staffing infrastructure costs.
General and administrative expenses increased by $17 million, or 10.4%, in fiscal 2024 compared to fiscal 2023. The increase
was primarily due to an increase of $27 million in restructuring costs, a decrease in benefits of $4 million in COVID-19
subsidies, an increase of $2 million in variable incentive plan costs and an increase of $2 million in stock based compensation
expense, partially offset by a benefit of $17 million related to the release of an accrued liability relating to the Company’s
legacy mobile device business.
Adjusted general and administrative expenses decreased by $11 million, or 7.9%, to $128 million in fiscal 2024 compared to
$139 million in fiscal 2023. The decrease was primarily due a benefit of $17 million related to the release of an accrued liability
relating to the Company’s legacy mobile device business, a decrease of $3 million in consulting costs, partially offset by a
decrease in benefits of $4 million in COVID-19 subsidies, an increase of $2 million in variable incentive plan costs and a
decrease of $2 million in the Company’s deferred share unit cost.
46
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 fiscal 2024 compared to fiscal 2023 and fiscal 2023 compared to fiscal 2022.
Intangible assets are comprised of patents, licenses and acquired technology.
For the Fiscal Years Ended
(in millions)
Included in Operating Expense
February 29, 2024
February 28, 2023
Change
February 28, 2022
Change
Property, plant and equipment
$
8 $
9 $
(1) $
12 $
(3)
Intangible assets
46
87
(41)
153
(66)
Total
$
54 $
96 $
(42) $
165 $
(69)
Included in Cost of Sales
February 29, 2024
February 28, 2023
Change
February 28, 2022
Change
Property, plant and equipment
$
2 $
3 $
(1) $
3 $
—
Intangible assets
3
6
(3)
8
(2)
Total
$
5 $
9 $
(4) $
11 $
(2)
Amortization included in Operating Expense
The decrease in amortization expense included in operating expense of $42 million was primarily due to the lower cost base of
acquired technology assets due to the impairment of long-lived assets in fiscal 2023.
Adjusted amortization expense increased by $2 million to $16 million in fiscal 2024 compared to $14 million in fiscal 2023 due
to an increase in patent amortization expense included in operating expenses as a result of the decrease in revenue from the
Company’s intellectual property licensing arrangements.
Amortization included in Cost of Sales
The decrease in amortization expense relating to certain property, plant and equipment and certain intangible assets employed
in the Company’s service operations of $4 million was due to the lower cost base of assets.
Investment Income, Net
Investment income, net, which includes the interest expense from the Debentures and the Notes, increased by $14 million to
investment income, net of $19 million in fiscal 2024 compared to investment income, net of $5 million in fiscal 2023. The
increase in investment income, net was primarily due to a higher yield on cash and investments and interest income on
significant financing components within certain revenue contracts with customers, partially offset by lower average cash and
investment balances.
Income Taxes
For fiscal 2024, the Company’s net effective income tax expense rate was approximately 23% (fiscal 2023 - net effective
income tax expense rate of approximately 2%). The Company’s net effective income tax rate reflects the change in
unrecognized income tax benefits, if any, and the fact that the Company has a significant valuation allowance against its
deferred tax assets, and in particular, the change in loss carry forwards, research and development credits, amongst other items,
was offset by a corresponding adjustment of the valuation allowance. The Company’s net effective income tax rate also reflects
the geographic mix of earnings in jurisdictions with different income tax rates.
Net Income (Loss)
The Company’s net loss for fiscal 2024 was $130 million, or $0.22 basic and diluted loss per share on a U.S. GAAP basis
(fiscal 2023 - net loss of $734 million, or $1.27 basic loss per share and $1.35 diluted loss per share). The decrease in net loss of
$604 million was primarily due to a decrease in operating expenses, as described above in “Operating Expenses” and an
increase in revenue as described above in “Revenue by Segment”, partially offset by a decrease in gross margin percentage, as
described above in “Consolidated Gross Margin Percentage”.
Adjusted net income for fiscal 2024 was $31 million (fiscal 2023 - adjusted net loss of $103 million). The increase in adjusted
net income of $134 million was primarily due to an increase in revenue as described above in “Revenue by Segment” and a
47
decrease in operating expenses as described above in “Operating Expenses”, partially offset by a decrease in gross margin
percentage, as described above in “Consolidated Gross Margin Percentage”.
The Company expects a sequential increase in operating cash usage in the first quarter of fiscal 2025, but a year-on-year
improvement in fiscal 2025 after adjusting for the impact of the sale of our legacy patent portfolio in the first quarter of fiscal
2025.
The Company expects non-GAAP EPS to be in the range of ($0.04) to ($0.06), and adjusted EBITDA to be in the range of
negative $15 million to negative $25 million in the first quarter of fiscal 2025.
The Company expects non-GAAP EPS to be in the range of ($0.02) to ($0.06), and adjusted EBITDA to be in the range of
breakeven to $10 million in fiscal 2025.
The Company expects to return to positive non-GAAP EPS and positive cash flow in the fourth quarter of fiscal 2025.
The Company does not provide a reconciliation of expected adjusted EBITDA and expected Non-GAAP basic EPS for the first
quarter and full fiscal year 2025 to the most directly comparable expected GAAP measures because it is unable to predict with
reasonable certainty, among other things, restructuring charges and impairment charges and, accordingly, a reconciliation is not
available without unreasonable effort. 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 585 million common shares for basic loss and diluted loss per share
for the fiscal year ended February 29, 2024. The weighted average number of shares outstanding was 579 million common
shares for basic loss per share and 639 million common shares for diluted loss per share for the fiscal year ended February 28,
2023.
Common Shares Outstanding
On April 1, 2024, there were 589 million voting common shares, options to purchase 0.2 million voting common shares, 19
million restricted share units and 1 million deferred share units outstanding. In addition, 51.5 million common shares are
issuable upon conversion in full of the Notes, as described in Note 6 to the Consolidated Financial Statements.
The Company has not paid any cash dividends during the last three fiscal years.
Results of Operations - Three months ended February 29, 2024 compared to the three months ended February 28, 2023
Revenue
Revenue by Segment
Comparative breakdowns of revenue by product and service on a U.S. GAAP basis are set forth below.
For the Three Months Ended
(in millions)
February 29, 2024
February 28, 2023
Change
February 28, 2022
Change
Revenue by Segment
Cybersecurity
$
92
$
88
$
4 $
122
$
(34)
IoT
66
53
13
52
1
Licensing and Other
15
10
5
11
(1)
$
173
$
151
$
22 $
185
$
(34)
% Revenue by Segment
Cybersecurity
53.2 %
58.3 %
65.9 %
IoT
38.2 %
35.1 %
28.1 %
Licensing and Other
8.6 %
6.6 %
6.0 %
100.0 %
100.0 %
100.0 %
48
Cybersecurity
The increase in Cybersecurity revenue of $4 million was primarily due to an increase of $5 million relating to product revenue
in Secusmart and an increase of $1 million in professional services, partially offset by a decrease of $2 million relating to
product revenue in BlackBerry Spark.
The Company previously stated that it expected Cybersecurity revenue in the fourth quarter of fiscal 2024 to be in the range of
$83 million to $88 million. Cybersecurity revenue in the fourth quarter of fiscal 2024 was $92 million.
IoT
The increase in IoT revenue of $13 million was primarily due to an increase of $8 million in BlackBerry QNX development
seat revenue, an increase of $2 million in BlackBerry QNX royalty revenue and an increase of $2 million in professional
services.
The Company previously stated that it expected IoT revenue in the fourth quarter of fiscal 2024 to be in the range of $62
million to $66 million and to be higher than in any previous quarter. IoT revenue in the fourth quarter of fiscal 2024 was $66
million and was higher than any previous quarter.
Licensing and Other
The increase in Licensing and Other revenue of $5 million was primarily due to an increase of $5 million in revenue from the
Company’s intellectual property licensing arrangements.
The Company previously stated that it expected revenue from intellectual property licensing to be approximately $5 million per
quarter in fiscal 2024, excluding the Malikie Transaction. Revenue from intellectual property licensing was approximately $15
million excluding the Malikie Transaction due to higher licensing program royalty revenue.
The Company previously stated that it expected total BlackBerry revenue in the fourth quarter of fiscal 2024 to be in the range
of $150 million to $159 million. Total BlackBerry revenue in the fourth quarter of fiscal 2024 was $173 million due to higher
revenue in Cybersecurity and Licensing and Other as described above.
U.S. 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 Three Months Ended
(in millions)
February 29, 2024
February 28, 2023
Change
February 28, 2022
Change
Revenue by Geography
North America
$
91
$
84
$
7 $
100
$
(16)
Europe, Middle East and Africa
45
46
(1)
66
(20)
Other regions
37
21
16
19
2
$
173
$
151
$
22 $
185
$
(34)
% Revenue by Geography
North America
52.6 %
55.6 %
54.0 %
Europe, Middle East and Africa
26.0 %
30.5 %
35.7 %
Other regions
21.4 %
13.9 %
10.3 %
100.0 %
100.0 %
100.0 %
North America Revenue
The increase in North America revenue of $7 million was primarily due to an increase of $5 million in Licensing and Other
revenue due to the reasons discussed above in “Revenue by Segment”, an increase of $3 million in BlackBerry QNX
development seats revenue, an increase of $2 million in BlackBerry QNX royalty revenue and an increase of $2 million in
product revenue in Radar, partially offset by a decrease of $7 million in product revenue in BlackBerry Spark.
Europe, Middle East and Africa Revenue
Europe, Middle East and Africa revenue in the fourth quarter of fiscal 2024 was consistent with revenue in the fourth quarter of
fiscal 2023. The increase of $3 million in product revenue in Secusmart and the increase of $2 million in BlackBerry QNX
development seat revenue was offset by the decrease of $5 million relating to product revenue in BlackBerry Spark.
49
Other Regions Revenue
The increase in Other regions revenue of $16 million was primarily due to an increase of $10 million in product revenue in
BlackBerry Spark, an increase of $3 million in BlackBerry QNX development seat revenue and an increase of $2 million in
professional services.
Gross Margin
Consolidated Gross Margin
Consolidated gross margin increased by $29 million to approximately $129 million in the fourth quarter of fiscal 2024 (fourth
quarter of fiscal 2023 - $100 million). The increase was primarily due to an increase in revenue from BlackBerry QNX and
Licensing and Other due to the reasons discussed above in “Revenue by Segment” as much of the Company’s cost of sales does
not significantly fluctuate based on business volume.
Consolidated Gross Margin Percentage
Consolidated gross margin percentage increased by 8.4%, to approximately 74.6% of consolidated revenue in the fourth quarter
of fiscal 2024 (fourth quarter of fiscal 2023 - 66.2%). The increase was primarily due to a higher gross margin percentage in
Licensing and Other due to the reasons discussed below in “Gross Margin by Segment” and higher gross margin contribution
from Secusmart software licenses, which had a higher relative gross margin percentage.
Gross Margin by Segment
See “Business Overview - Segment Reporting” and “Fiscal 2024 Summary Results of Operations” for information about the
Company’s operating segments and the basis of operating segment results.
For the Three Months Ended
(in millions)
Cybersecurity
IoT
Licensing and Other
Segment Totals
Feb 29
Feb 28
Change
Feb 29
Feb 28
Change
Feb 29
Feb 28
Change
Feb 29
Feb 28
Change
2024
2023
2024
2023
2024
2023
2024
2023
Segment revenue
$ 92
$ 88
$
4
$ 66
$ 53
$ 13
$ 15
$ 10
$
5
$ 173
$ 151
$ 22
Segment cost of sales
32
36
(4)
10
10
—
2
4
(2)
44
50
(6)
Segment gross margin
$ 60
$ 52
$
8
$ 56
$ 43
$ 13
$ 13
$
6
$
7
$ 129
$ 101
$ 28
Segment gross margin
%
65%
59%
6%
85%
81%
4%
87%
60%
27%
75%
67%
8%
Cybersecurity
The increase in Cybersecurity gross margin of $8 million was primarily due to the reasons discussed above in “Revenue by
Segment”, a decrease of $2 million in network infrastructure costs and a change in mix, specifically a higher gross margin
contribution from Secusmart product revenue, which had a higher relative gross margin percentage.
The increase in Cybersecurity gross margin percentage of 6% was primarily due to the same reasons discussed above.
IoT
The increase in IoT gross margin of $13 million was primarily due to the reasons discussed above in “Revenue by Segment”, as
the Company’s cost of sales does not significantly fluctuate based on business volume.
The increase in IoT gross margin percentage of 4% was primarily due to the same reasons discussed above.
Licensing and Other
The increase in Licensing and Other gross margin of $7 million was primarily due to the reasons discussed above in “Revenue
by Segment” and a decrease of $1 million in patent costs included in cost of sales in the fourth quarter of fiscal 2023, which did
not recur.
The increase in Licensing and Other gross margin percentage of 27% was primarily due to the same reasons discussed above.
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 February 29, 2024, compared to the quarter ended November 30, 2023 and the
quarter ended February 28, 2023. The Company believes it is meaningful to provide a sequential comparison between the fourth
quarter of fiscal 2024 and the third quarter of fiscal 2024.
50
For the Three Months Ended
(in millions)
February 29, 2024
November 30, 2023
February 28, 2023
February 28, 2022
Revenue
$
173
$
175
$
151
$
185
Operating expenses
Research and development
40
42
48
47
Sales and marketing
41
42
48
45
General and administrative
53
43
35
19
Amortization
12
13
18
32
Impairment of long-lived assets
4
11
231
—
Impairment of goodwill
35
—
245
—
Debentures fair value adjustment
—
(13)
(26)
(165)
Total
$
185
$
138
$
599
$
(22)
Operating Expense as % of Revenue
Research and development
23.1%
24.0%
31.8%
25.4%
General and administrative
23.7%
24.0%
31.8%
24.3%
Sales and marketing
30.6%
24.6%
23.2%
10.3%
Amortization
6.9%
7.4%
11.9%
17.3%
Impairment of long-lived assets
2.3%
6.3%
153.0%
—%
Impairment of goodwill
20.2%
—%
162.3%
—%
Debentures fair value adjustment
—%
(7.4%)
(17.2%)
(89.2%)
Total
106.9%
78.9%
396.7%
(11.9%)
See “Non-GAAP Financial Measures” for a reconciliation of selected U.S. GAAP-based measures to adjusted measures for the
three months ended February 29, 2024, November 30, 2023, February 28, 2023 and February 28, 2022.
U.S. GAAP Operating Expenses
Operating expenses increased by $47 million, or 34.1% in the fourth quarter of fiscal 2024, compared to $138 million in the
third quarter of fiscal 2024 primarily due to the goodwill impairment charge of $35 million in the fourth quarter of fiscal 2024,
the benefit of the fair value adjustment related to the 2020 Debentures incurred in the third quarter of fiscal 2024 of $13 million
that did not recur and an increase of $11 million in restructuring costs, partially offset by a decrease of $7 million in impairment
of long-lived assets and a decrease of $5 million in legal expenses.
Operating expenses decreased by $414 million, or 69.12% in the fourth quarter of fiscal 2024, compared to $599 million in the
fourth quarter of fiscal 2023. The decrease was primarily attributable to a decrease of $227 million in impairment of long-lived
assets, a decrease of $210 million in goodwill impairment and a decrease of $6 million in amortization costs, partially offset by
the benefit of the fair value adjustment related to the 2020 Debentures incurred in the fourth quarter of fiscal 2024 of $26
million that did not recur and an increase of $14 million in restructuring costs.
Adjusted Operating Expenses
Adjusted operating expenses decreased by $2 million, or 1.7%, to $113 million in the fourth quarter of fiscal 2024 compared to
$115 million in the third quarter of fiscal 2024. The decrease was primarily due to a decrease of $5 million in legal expenses,
and a decrease of $1 million in marketing and advertising costs, partially offset by an increase of $3 million in variable
incentive plan costs and a benefit of $3 million related to a legal settlement in the third quarter of fiscal 2024 that did not recur.
Adjusted operating expenses decreased by $5 million, or 4.2%, to $113 million in the fourth quarter of fiscal 2024, compared to
$118 million in the fourth quarter of fiscal 2023. The decrease was primarily attributable to a decrease of $8 million in salaries
51
and benefits costs and a decrease of $5 million in marketing and advertising costs, partially offset by an increase of $8 million
in variable incentive plan costs.
The Company previously stated that it expected non-GAAP sales and marketing expense to be approximately 27% of revenue,
research and development to be approximately 30% of revenue, and general and administration, excluding amortization, to be
approximately 20% of revenue in the fourth quarter of fiscal 2024. Adjusted sales and marketing expense was 23% of revenue,
adjusted research and development expense was 22% of revenue and adjusted general and administrative expense was 18% of
revenue due to the expectation being based on achievement of the mid-point of the Company’s expected range for total revenue.
Research and Development Expenses
Research and development expenses consist primarily of salaries and benefits costs for technical personnel, new product
development costs, travel expenses, office and building costs, infrastructure costs and other employee costs.
Research and development expenses decreased by $8 million, or 16.7%, in the fourth quarter of fiscal 2024 compared to the
fourth quarter of fiscal 2023, primarily due to a decrease of $5 million in salaries and benefit costs, a decrease of $2 million in
consulting costs and a decrease of $1 million in stock compensation expense.
Adjusted research and development expenses decreased by $7 million, or 15.6%, to $38 million in the fourth quarter of fiscal
2024 compared to $45 million in the fourth quarter of fiscal 2023, was primarily due to the same reasons described above on a
U.S. GAAP basis, excluding the decrease in stock based compensation expense.
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of marketing, advertising and promotion, salaries and benefits, information
technology costs and travel expenses.
Sales and marketing expenses decreased by $7 million, or 14.6% in fiscal 2024, in the fourth quarter of fiscal 2024 compared to
the fourth quarter of fiscal 2023, primarily due to a decrease of $4 million in advertising and marketing costs, a decrease of $3
million in salaries and benefit costs, partially offset by an increase $1 million in sales incentive plan costs.
Adjusted sales and marketing expenses decreased by $6 million, or 13.0%, to $40 million in the fourth quarter of fiscal 2024
compared to $46 million in the fourth quarter of fiscal 2023. The decrease was primarily due to the same reasons described
above on a U.S. GAAP basis.
General and Administrative Expenses
General and administration expenses consist primarily of salaries and benefits, external advisory fees, information technology
costs, office and related staffing infrastructure costs.
General and administrative expenses increased by $18 million, or 51.4%, in the fourth quarter of fiscal 2024 compared to the
fourth quarter of fiscal 2023. The increase was primarily due to an increase of $14 million in restructuring costs and an increase
of $8 million in variable incentive plan costs, partially offset by a decrease of $2 million in stock compensation expense.
Adjusted general and administrative expenses increased by $7 million, or 29.2%, to $31 million in the fourth quarter of fiscal
2024 compared to $24 million in the fourth quarter of fiscal 2023. The increase was primarily due to an increase of $8 million
in variable incentive plan costs.
52
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 February 29, 2024 compared to the quarter ended February 28,
2023 and for the quarter ended February 28, 2023 compared to the quarter ended February 28, 2022. Intangible assets are
comprised of patents, licenses and acquired technology.
For the Three Months Ended
(in millions)
Included in Operating Expense
February 29, 2024
February 28, 2023
Change
February 28, 2022
Change
Property, plant and equipment
$
2 $
2 $
— $
2 $
—
Intangible assets
10
16
(6)
30
(14)
Total
$
12 $
18 $
(6) $
32 $
(14)
Included in Cost of Sales
February 29, 2024
February 28, 2023
Change
February 28, 2022
Change
Property, plant and equipment
$
— $
1 $
(1) $
1 $
—
Intangible assets
1
1
—
1
—
Total
$
1 $
2 $
(1) $
2 $
—
Amortization included in Operating Expense
The decrease in amortization expense included in operating expense of $6 million was primarily due to the lower cost base of
acquired technology assets.
Adjusted amortization expense increased by $1 million to $4 million in the fourth quarter of fiscal 2024 compared to $3 million
in the fourth quarter of fiscal 2023 due to an increase in patent amortization expense included in operating expenses as a result
of the decrease in revenue from the Company’s intellectual property licensing arrangements.
Amortization included in Cost of Sales
The decrease in amortization expense relating to certain property, plant and equipment and intangible assets employed in the
Company’s service operations of $1 million was primarily due to the lower cost base assets.
Investment Income (Loss), Net
Investment income, net, which includes the interest expense from the Debentures and Notes, decreased by $2 million to
investment income, net of $4 million in the fourth quarter of fiscal 2024 compared to investment income, net of $6 million in
the fourth quarter of fiscal 2023. The decrease in investment income, net is primarily due to observable price changes on non-
marketable equity investments without readily determinable fair value in the fourth quarter of fiscal 2023 that did not recur and
lower cash and investment balances, partially offset by interest income on significant financing components within certain
revenue contracts with customers and a higher yield on cash and investments.
Income Taxes
For the fourth quarter of fiscal 2024, the Company’s net effective income tax expense rate was approximately 8% (fourth
quarter of fiscal 2023 - net effective income tax expense rate of approximately 0%). The Company’s net effective income tax
rate reflects the change in unrecognized income tax benefits, if any, and the fact that the Company has a significant valuation
allowance against its deferred tax assets, and in particular, the change in loss carry forwards, research and development credits,
amongst other items, was offset by a corresponding adjustment of the valuation allowance. The Company’s net effective
income tax rate also reflects the geographic mix of earnings in jurisdictions with different income tax rates.
Net Income (Loss)
The Company’s net loss for the fourth quarter of fiscal 2024 was $56 million, or $0.10 basic and diluted loss per share on a U.S.
GAAP basis (fourth quarter of fiscal 2023 - net loss of $495 million, or $0.85 basic and diluted loss per share). The decrease in
net loss of $439 million was primarily due to a decrease in operating expenses, as described above in “Operating Expenses”,
partially offset by 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”.
Adjusted net income was $16 million in the fourth quarter of fiscal 2024 (fourth quarter of fiscal 2023 - adjusted net loss of $13
million). The increase in adjusted net income of $29 million was primarily due to an increase in revenue as described above in
53
“Revenue by Segment”, an increase in gross margin percentage, as described above in “Consolidated Gross Margin Percentage”
and a decrease in operating expenses, as described above in “Operating Expenses”.
The weighted average number of shares outstanding was 588 million common shares for basic and diluted loss per share for the
fourth quarter of fiscal 2024. The weighted average number of shares outstanding was 581 million common shares for basic and
diluted loss per share for the fourth quarter of fiscal 2023.
Financial Condition
Liquidity and Capital Resources
Cash, cash equivalents, and investments decreased by $189 million to $298 million as at February 29, 2024 from $487 million
as at February 28, 2023, primarily due to the repayment of the 2020 Debentures and Extension Debentures at maturity, partially
offset by the issuance of the Notes, the completed Malikie Transaction and changes in working capital.
A comparative summary of cash, cash equivalents, and investments is set out below:
As at
(in millions)
February 29, 2024
February 28, 2023
Change
February 28, 2022
Change
Cash and cash equivalents
$
175 $
295 $
(120) $
378 $
(83)
Restricted cash and cash equivalents
25
27
(2)
28
(1)
Short-term investments
62
131
(69)
334
(203)
Long-term investments
36
34
2
30
4
Cash, cash equivalents, and investments
$
298 $
487 $
(189) $
770 $
(283)
The table below summarizes the current assets, current liabilities, and working capital of the Company:
As at
(in millions)
February 29, 2024
February 28, 2023
Change
February 28, 2022
Change
Current assets
$
508 $
743 $
(235) $
1,043 $
(300)
Current liabilities
356
729
(373)
397
332
Working capital
$
152 $
14 $
138 $
646 $
(632)
Current Assets
The decrease in current assets of $235 million at the end of fiscal 2024 from the end of fiscal 2023 was primarily due to a
decrease in other current assets of $135 million, a decrease in cash and cash equivalents of $120 million and a decreases in short
term investments of $69 million, partially offset an increase in accounts receivable, net of allowance of $79 million, an increase
of $9 million in other receivables and an increase of income taxes receivable of $1 million.
At February 29, 2024, other current assets was $47 million, a decrease of $135 million from February 28, 2023. The decrease
was primarily due to a decrease in intellectual property of $141 million as a result of the completed Malikie Transaction,
partially offset by an increase of $6 million in prepaid cloud services.
At February 29, 2024, income taxes receivable was $4 million, an increase of $1 million from February 28, 2023. The increase
was primarily due to tax installments and prepayments required in certain taxable jurisdictions.
At February 29, 2024, accounts receivable, net of allowance was $199 million, an increase of $79 million from February 28,
2023. The increase was primarily due to higher revenue recognized over the three months ended February 29, 2024 compared
to the three months ended February 28, 2023, and an increase in days sales outstanding to 100 days at the end of the fourth
quarter of fiscal 2024 from 75 days at the end of the fourth quarter of fiscal 2023.
At February 29, 2024, other receivables was $21 million, an increase of $9 million from February 28, 2023. The increase was
primarily due to an increase of $12 million related to accretion of interest on the significant financing components within
certain revenue contracts with customers, partially offset by a decrease of $3 million relating to GST/VAT receivables.
54
Current Liabilities
The decrease in current liabilities of $373 million at the end of fiscal 2024 from the end of fiscal 2023 was primarily due to a
decrease in the amounts payable in respect of the 2020 Debentures of $367 million, a decrease in accrued liabilities of $26
million, and a decrease in accounts payable of $7 million, partially offset by an increase in deferred revenue, current of $19
million, and an increase in income taxes payable of $8 million.
Accrued liabilities was $117 million, reflecting a decrease of $26 million compared to February 28, 2023, which was primarily
attributable to a decrease of $17 million in liabilities from the release of a legacy mobile device business accrual and a decrease
in $12 million in payroll accruals.
As at February 29, 2024, accounts payable were $17 million, reflecting a decrease of $7 million from February 28, 2023, which
was primarily due to timing of payments of accounts payable.
Deferred revenue, current was $194 million, which reflects an increase of $19 million compared to February 28, 2023 that was
attributable to a $12 million increase in deferred revenue, current related to AtHoc, a $4 million increase in deferred revenue,
current related to BlackBerry Spark and a $3 million increase in deferred revenue, current related to Secusmart.
Income taxes payable was $28 million, reflecting an increase of $8 million compared to February 28, 2023, which was
primarily due to income earned in taxable jurisdictions.
Cash flows for the fiscal year ended February 29, 2024 compared to the fiscal year ended February 28, 2023 were as follows:
For the Fiscal Years Ended
(in millions)
February 29, 2024
February 28, 2023
Change
February 28, 2022
Change
Net cash flows provided by (used in):
Operating activities
$
(3) $
(263) $
260 $
(28) $
(235)
Investing activities
46
176
(130)
207
(31)
Financing activities
(165)
6
(171)
10
(4)
Effect of foreign exchange loss on cash
and cash equivalents
—
(3)
3
(1)
(2)
Net increase (decrease) in cash and cash
equivalents
$
(122) $
(84) $
(38) $
188 $
(272)
Operating Activities
The decrease in net cash flows used in operating activities of $260 million primarily reflects the net changes in working capital
and includes the payment of the $165 million U.S. securities class actions settlement in fiscal 2023.
Investing Activities
During the fiscal year ended February 29, 2024, cash flows provided by investing activities were $46 million and included cash
provided by transactions involving the acquisitions of restricted short-term, short-term and long-term investments, net of the
proceeds on sale or maturity in the amount of $67 million, partially offset by intangible asset additions of $14 million, and
acquisitions of property, plant and equipment of $7 million. During fiscal 2023, cash flows provided by investing activities
were $176 million and included cash flows used in transactions involving the acquisitions of short-term and long-term
investments, net of the proceeds on sale or maturity in the amount of $200 million and proceeds on sale of property, plant and
equipment of $17 million, partially offset by intangible asset additions of $34 million and acquisitions of property, plant and
equipment of $7 million.
Financing Activities
The decrease in cash flows used in financing activities was $171 million for fiscal 2024 due to the maturity of the 2020
Debentures and Extension Debentures, partially offset by the issuance of the Notes as described above in “Business Overview -
Debt Repayment and New Issuance”.
Debt Financing and Other Funding Sources
See Note 6 to the Consolidated Financial Statements for a description of the Debentures and the Notes.
The Company has $25 million in collateralized outstanding letters of credit in support of certain leasing arrangements entered
into in the ordinary course of business. See Note 3 to the Consolidated Financial Statements for further information concerning
the Company’s restricted cash and restricted short-term investments.
55
Cash, cash equivalents, and investments were approximately $298 million as at February 29, 2024. 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.
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 February 29, 2024:
(in millions)
Total
Short-term
(next 12 months)
Long-term
(>12 months)
Operating lease obligations
$
65 $
23 $
42
Purchase obligations and commitments
49
49
—
Debt interest and principal payments
230
6
224
Total
$
344 $
78 $
266
Contractual and other obligations amounted to approximately $344 million as at February 29, 2024, including future principal
and interest payments of $230 million on the Notes and operating lease obligations of $65 million. The remaining balance
consists of purchase orders for goods and services utilized in the operations of the Company. Total aggregate contractual
obligations as at February 29, 2024 decreased by approximately $212 million as compared to the February 28, 2023 balance of
approximately $556 million, which was attributable to a decreases in debt interest and principal payments as a result of the
repayment of the 2020 Debentures at maturity on November 13, 2023, partially offset by the issuance of the Notes as described
above in “Business Overview - Debt Repayment and New Issuance”, a decrease in purchase obligations and commitments and
a decrease in operating lease obligations.
The Company does not have any material off-balance sheet arrangements.
Accounting Policies and Critical Accounting Estimates
Accounting Policies
See Note 1 to the Consolidated Financial Statements for a description of the Company’s significant accounting policies.
Critical Accounting Estimates
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 assets and liabilities.
The Company’s critical accounting estimates are those estimates that involve a significant level of uncertainty at the time the
estimate was made, and changes in them have had or are reasonably likely to have a material effect on the Company’s financial
condition or results of operations. Accordingly, actual results could differ materially from the Company’s estimates. The
Company’s estimates are based on past experience and other assumptions that it believes is reasonable under the circumstances,
and the Company evaluates these estimates on an ongoing basis. The Company’s critical accounting estimates have been
reviewed and discussed with the Company’s Audit & Risk Management Committee and are set out below.
Valuation of Long-Lived Assets
The Company’s determination of its asset groups, its primary asset and its remaining useful life, and estimated cash flows are
significant factors in assessing the recoverability of the Company’s assets for the purposes of LLA impairment testing. The
current macroeconomic environment and competitive dynamics continue to be challenging to the Company’s business and the
Company cannot be certain of the duration of these conditions and their potential impact on the Company’s future financial
results and cash flows. During the fiscal year ended February 29, 2024, the Company continued to experience varying levels of
decline in performance amongst the businesses associated with its asset groups, as well as a decline in market capitalization;
however, it did not identify any indicators which would indicate an impairment in its LLA and there were no critical estimates
pertaining to the valuation of its LLA during fiscal 2024. Continued declines in the Company’s performance, the Company’s
market capitalization and future changes to the Company’s assumptions and estimates used in the LLA impairment test,
particularly the expected future cash flows, remaining useful life of the primary asset and terminal value of the asset group, may
result in further impairment charges in future periods of some or all of the assets on the Company’s balance sheet. Although it
does not affect the Company’s cash flow, an impairment charge to earnings has the effect of decreasing the Company’s
earnings or increasing the Company’s losses, as the case may be.
56
Valuation of Goodwill Reporting Units
In the annual impairment test, the analysis requires significant judgment, including estimation of future cash flows, which is
dependent on internal forecasts, estimation of the long-term rates of revenue growth for the Company’s reporting units,
estimation of the useful life over which cash flows will occur, terminal growth rates, profitability measures, and determination
of the discount rates for the reporting units. The carrying value of the Company’s assets was assigned to reporting units using
reasonable methodologies based on the asset type. When the carrying value of a reporting unit exceeds its fair value, goodwill
of the reporting unit is considered to be impaired and written down to its fair value. Different judgments could yield different
results.
For the year-ended February 29, 2024, the Company recognized an impairment charge of $35 million in the BlackBerry Spark
reporting unit. The fair value of all remaining reporting units, with the exception of the Intellectual Property reporting unit,
substantially exceeded their carrying values. The fair value of Intellectual Property exceeded its carrying value by
approximately 5%. The Company has $97 million of goodwill related to Intellectual Property at risk of potential future
impairment.
The estimated fair values were determined utilizing multiple approaches based on the nature of the reporting units being valued.
In its analysis, the Company utilized multiple valuation techniques, including the income approach using a discounted future
cash flow model and the market-based approach.
The market approach estimates fair value by applying multiples to the reporting unit’s projected operating performance. The
multiples are derived from comparable publicly traded companies with similar characteristics to the reporting unit.
Assumptions and estimates about future cash flows and discount rates are complex and often subjective. The analysis requires
significant judgment, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-
term rates of revenue growth for the Company’s reporting units, estimation of the useful life over which cash flows will occur,
estimation of the total amount of variable consideration to be received under royalty arrangements, terminal growth rates,
profitability measures, and determination of the discount rates for the reporting units.
These forecasted cash flows took into consideration management’s outlook for the future and were compared to historical
performance to assess reasonableness. A discount rate was applied to the forecasted cash flows. The discount rate considered
market and industry data, as well as the specific risk profile of the reporting unit. A terminal value was calculated, which
estimates the value of annual cash flow to be received after the discrete forecast periods.
It is reasonably possible that future judgements, assumptions and estimates of cash flows may change, resulting in the need to
write down those assets to fair value. Reductions in the Company’s estimates of long-term revenue growth rates, operating
margins, and variable consideration could potentially result in impacts that would be material to the consolidated financial
statements, including the fair value of the Company’s goodwill.
As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual goodwill impairment
test will prove to be accurate predictions of the future. Although management believes the assumptions and estimates made are
reasonable and appropriate, different assumptions and estimates could materially impact the reported financial results.
If the Company’s expectations of future results and cash flows decrease significantly or other economic conditions deteriorate,
goodwill may be further impaired. As a measure of sensitivity, a 10% decrease in the fair value of the Intellectual Property
reporting unit as of December 31, 2023, would result in the carrying amount exceeding its fair value by approximately $9
million or 5%.
Examples of events or circumstances that could negatively affect the underlying key assumptions and ultimately impact the
estimated fair value of the aforementioned reporting unit may include such items as the following:
•
volatility in the equity and debt markets or other macroeconomic factors
•
an increase in the weighted-average cost of capital due to further increases in interest rates
•
decreases in future cash flows due to lower than forecast licensing revenue and/or lower than estimated variable
consideration received under existing royalty arrangements
•
a failure to align the costs associated with maintaining the Company’s patent portfolio to its realized revenues
•
failure to protect the Company’s intellectual property could harm its ability to compete effectively and the Company
may not earn the revenues it expects from intellectual property rights
The Company intends to continue to monitor the performance of its reporting units for potential indicators of impairment. If
impairment indicators exist, the Company will perform an interim goodwill impairment analysis.
57
Valuation Allowance Against Deferred Tax Assets
The Company regularly assesses the need for a valuation allowance against its deferred tax assets. A valuation allowance is
required for deferred tax assets if it is more likely than not that all or some portion of the asset will not be realized. 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. There have been no changes in the Company’s judgement in
determining the valuation allowance for the fiscal year ended February 29, 2024. Additionally, for interim periods, the
estimated annual effective tax rate should include the valuation allowance for current year changes in temporary differences and
losses or income arising during the year. For interim periods, the Company needs to consider the valuation allowance that it
expects to recognize at the end of the fiscal year as part of the estimated annual effective tax rate. During interim quarters, the
Company uses estimates including pre-tax results and ending position of temporary differences as at the end of the fiscal year to
estimate the valuation allowance that it expects to recognize at the end of the fiscal year. This accounting treatment has no
effect on the Company’s actual ability to utilize deferred tax assets to reduce future cash tax payments. Different judgments
could yield different results. There have been no changes to the method with which the Company estimates the valuation
allowance for the interim quarters during the fiscal year ended February 29, 2024.
Revenue Recognition
Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future
reversal of cumulative revenue recognized under the contract will not occur. Any estimates, including any constraints on
variable consideration, are evaluated at each reporting period. To the extent the transaction price in a contract with a customer
includes variable consideration, the Company estimates the amount of variable consideration that should be included in the
price utilizing either the expected value method or the most likely amount method, depending on the nature of the variable
consideration. The Company also estimates whether and how much variable consideration is subject to constraint if it cannot
conclude it is probable that a significant reversal in revenue will not occur, due to factors such as: the consideration being
highly susceptible to factors outside the Company’s influence, the period of time before the variable consideration is resolved,
the Company’s previous experience with similar contracts, the Company’s history of price concessions or changing of payment
terms, and whether there is a large number and broad range of possible variable consideration amounts. Apart from future
revenues from the Malikie Transaction which are constrained, there have been no changes to the Company’s assumptions or
estimates on any material variable consideration for the fiscal year ended February 29, 2024.
Judgment is required to determine the SSP for each distinct performance obligation. The Company’s products and services
often have observable SSP when the Company sells a promised product or service separately to similar customers. A
contractually stated price or list price for a good or service may be the SSP of that good or service. However, in instances where
SSP is not directly observable, the Company determines the SSP by maximizing observable inputs and using an adjusted
market assessment approach using information that may include market conditions and other observable inputs from the
Company’s pricing team, including historical SSP.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is engaged in operating and financing activities that generate risk in three primary areas:
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 fiscal 2024 was transacted in U.S. dollars. Portions of the revenue were
denominated in Canadian dollars, euros and British pounds. 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 February
29, 2024, approximately 19% of cash and cash equivalents, 25% of accounts receivables and 59% of accounts payable were
denominated in foreign currencies (February 28, 2023 – 19%, 24% and 36%, 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. If overall foreign currency exchange rates to the U.S. dollar uniformly
weakened or strengthened by 10% related to the Company’s net monetary asset or liability balances in foreign currencies at
February 29, 2024 or February 28, 2023 (after hedging activities), the impact to the Company would be immaterial.
The Company regularly reviews its currency forward and option positions, both on a stand-alone basis and in conjunction with
its underlying foreign currency exposures. Given the effective horizons of the Company’s risk management activities and the
anticipatory nature of the exposures, there can be no assurance these positions will offset more than a portion of the financial
impact resulting from movements in currency exchange rates. Further, the recognition of the gains and losses related to these
instruments may not coincide with the timing of gains and losses related to the underlying economic exposures and, therefore,
may adversely affect the Company’s financial condition and operating results.
58
Interest Rate
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 has also issued Notes with
a fixed interest rate, as described in Note 6 to the Consolidated Financial Statements. 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 and Customer Concentration
The Company, in the normal course of business, monitors the financial condition of its customers and reviews the credit history
of each new customer. The Company establishes an allowance for credit losses (“ACL”) that corresponds to the specific credit
risk of its customers, historical trends and economic circumstances. The ACL as at February 29, 2024 was $6 million (February
28, 2023 - $1 million). There were two customers that comprised more than 10% of accounts receivable as at February 29, 2024
(February 28, 2023 - two customers comprised more than 10%). As at February 29, 2024, the percentage of the Company’s
receivable balance that was past due increased by 7.3% compared to February 28, 2023. Although the Company actively
monitors and attempts to collect on its receivables as they become due, the risk of further delays or challenges in obtaining
timely payments of receivables from resellers and other distributor partners exists. The occurrence of such delays or challenges
in obtaining timely payments could negatively impact the Company’s liquidity and financial condition. There was one customer
that comprised 27% of the Company’s revenue in fiscal 2024 due to the completed Malikie Transaction (fiscal 2023 - one
customer that comprised 12%).
Market values are determined for each individual security in the investment portfolio. The Company assesses declines in the
value of individual investments for impairment. The Company makes this assessment by considering available evidence
including changes in general market conditions, specific industry and individual company data, the length of time and the extent
to which the fair value has been less than cost, the financial condition, the near-term prospects of the individual investment and
the Company’s ability and intent to hold the debt securities to maturity.
59
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page No.
Report of Independent Registered Public Accounting Firm
(PCAOB ID 271)
61
Consolidated Balance Sheets
For the Years Ended February 29, 2024 and February 28, 2023
64
Consolidated Statements of Shareholders’ Equity
For the Years Ended February 29, 2024, February 28, 2023 and February 28, 2022
65
Consolidated Statements of Operations
For the Years Ended February 29, 2024, February 28, 2023 and February 28, 2022
66
Consolidated Statements of Comprehensive Income (Loss)
For the Years Ended February 29, 2024, February 28, 2023 and February 28, 2022
67
Consolidated Statements of Cash Flows
For the Years Ended February 29, 2024, February 28, 2023 and February 28, 2022
68
Notes to the Consolidated Financial Statements
69
60
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of BlackBerry Limited
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of BlackBerry Limited and its subsidiaries
(together, the Company) as of February 29, 2024 and February 28, 2023, and the related consolidated statements
of operations, comprehensive income (loss), shareholders’ equity and cash flows for each of the three years in the
period ended February 29, 2024, including the related notes (collectively referred to as the consolidated financial
statements). We also have audited the Company’s internal control over financial reporting as of February 29, 2024,
based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of February 29, 2024 and February 28, 2023, and the results of its operations
and its cash flows for each of the three years in the period ended February 29, 2024 in conformity with accounting
principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of February 29, 2024, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting, included in Management’s Report on Internal Control over Financial Reporting, appearing under Item 9A.
Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s
internal control over financial reporting based on our audits. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free
of material misstatement, whether due to error or fraud, and whether effective internal control over financial
reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of
the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
61
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that (i)
relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Impairment Test of Goodwill for the BlackBerry Spark Reporting Unit
As described in Notes 1, 3 and 4 to the consolidated financial statements, the Company’s goodwill balance was
$562 million as of February 29, 2024. A significant portion of the goodwill relates to the BlackBerry Spark reporting
unit. Management conducts a goodwill impairment test annually on December 31, or more frequently if events or
changes in circumstances indicate goodwill may be impaired. In the impairment test, management compares the
carrying value of a reporting unit, including goodwill, to its fair value. When the carrying value of a reporting unit
exceeds its fair value, goodwill of the reporting unit is considered to be impaired and written down to its fair value.
Management utilizes multiple valuation techniques, which include the income approach using a discounted future
cash flow model, among others in determining the fair value of a reporting unit. Estimating the fair value of a
reporting unit using a discounted future cash flow model requires significant judgment by management, including
estimation of future cash flows, which is dependent on estimation of the long-term rates of revenue growth, terminal
growth rate, profitability measures, and determination of the discount rate. Based on the result of the impairment
test related to goodwill, management concluded that the carrying value of the BlackBerry Spark reporting unit
exceeded its fair value. Management recorded a goodwill impairment charge of $35 million relating to the
BlackBerry Spark reporting unit.
The principal considerations for our determination that performing procedures relating to the impairment test of
goodwill for the BlackBerry Spark reporting unit is a critical audit matter are (i) the significant judgment by
management when determining the fair value of the BlackBerry Spark reporting unit using a discounted future cash
flow model; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating
management’s significant assumptions related to long-term rates of revenue growth, terminal growth rate,
profitability measures and the discount rate; and (iii) the audit effort involved the use of professionals with
specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of
controls relating to management’s goodwill impairment test for the BlackBerry Spark reporting unit, including
controls over the determination of its fair value. These procedures also included, among others, (i) testing
management’s process for determining the fair value of the BlackBerry Spark reporting unit; (ii) testing the
completeness and accuracy of underlying data used in the discounted future cash flow model; (iii) evaluating the
appropriateness of the discounted future cash flow model; and (iv) evaluating the reasonableness of the significant
assumptions used by management related to long-term rates of revenue growth, terminal growth rate, profitability
measures and the discount rate. Evaluating management’s assumptions related to long-term rates of revenue
growth and profitability measures involved assessing whether the assumptions used by management were
reasonable considering consistency with (i) the current and past performance of the BlackBerry Spark reporting unit;
(ii) external market and industry data; and (iii) evidence obtained in other areas of the audit. Professionals with
specialized skill and knowledge were used to assist in the evaluation of the (i) appropriateness of the Company’s
discounted future cash flow model and (ii) reasonableness of the discount rate and terminal growth rate.
62
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants, Licensed Public Accountants
Toronto, Canada
April 4, 2024
We have served as the Company's auditor since 2020.
63
BlackBerry Limited
Incorporated under the Laws of Ontario
(United States dollars, in millions)
Consolidated Balance Sheets
As at
February 29, 2024
February 28, 2023
Assets
Current
Cash and cash equivalents (note 3)
$
175
$
295
Short-term investments (note 3)
62
131
Accounts receivable, net of allowance of $6 and $1, respectively (note 4 and note 12)
199
120
Other receivables (note 4)
21
12
Income taxes receivable
4
3
Other current assets (note 4)
47
182
508
743
Restricted cash and cash equivalents (note 3)
25
27
Long-term investments (note 3)
36
34
Other long-term assets (note 4)
57
8
Operating lease right-of-use assets, net (note 11)
32
44
Property, plant and equipment, net (note 4)
21
25
Intangible assets, net (note 3 and note 4)
154
203
Goodwill (note 3 and note 4)
562
595
$
1,395
$
1,679
Liabilities
Current
Accounts payable
$
17
$
24
Accrued liabilities (note 4)
117
143
Income taxes payable (note 5)
28
20
Debentures (note 6)
—
367
Deferred revenue, current (note 12)
194
175
356
729
Deferred revenue, non-current (note 12)
28
40
Operating lease liabilities (note 11)
38
52
Other long-term liabilities
3
1
Long-term notes (note 6)
194
—
619
822
Commitments and contingencies (note 10)
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 - 589,232,539 voting common shares (February 28, 2023 - 582,157,203)
2,948
2,909
Deficit
(2,158)
(2,028)
Accumulated other comprehensive loss (note 9)
(14)
(24)
776
857
$
1,395
$
1,679
See notes to consolidated financial statements.
On behalf of the
Board:
John Giamatteo
Lisa Disbrow
Director
Director
64
BlackBerry Limited
(United States dollars, in millions)
Consolidated Statements of Shareholders’ Equity
Capital Stock
and Additional
Paid-in Capital
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Balance as at February 28, 2021
$
2,823 $
(1,306) $
(13) $
1,504
Net income
—
12
—
12
Other comprehensive loss
—
—
(6)
(6)
Stock-based compensation (note 7)
36
—
—
36
Shares issued:
Exercise of stock options (note 7)
3
—
—
3
Employee share purchase plan (note 7)
7
—
—
7
Balance as at February 28, 2022
2,869
(1,294)
(19)
1,556
Net loss
—
(734)
—
(734)
Other comprehensive loss
—
—
(5)
(5)
Stock-based compensation (note 7)
34
—
—
34
Shares issued:
Employee share purchase plan (note 7)
6
—
—
6
Balance as at February 28, 2023
2,909
(2,028)
(24)
857
Net loss
—
(130)
—
(130)
Other comprehensive income
—
—
10
10
Stock-based compensation (note 7)
33
—
—
33
Shares issued:
Employee share purchase plan (note 7)
5
—
—
5
Redemption of deferred share units ("DSUs") (note 7)
1 $
— $
—
1
Balance as at February 29, 2024
$
2,948 $
(2,158) $
(14) $
776
See notes to consolidated financial statements.
65
BlackBerry Limited
(United States dollars, in millions, except per share data)
Consolidated Statements of Operations
For the Years Ended
February 29, 2024
February 28, 2023
February 28, 2022
Revenue (note 12)
$
853 $
656 $
718
Cost of sales
333
237
251
Gross margin
520
419
467
Operating expenses
Research and development
186
207
219
Sales and marketing
171
176
183
General and administrative
181
164
114
Amortization
54
96
165
Impairment of goodwill (note 3)
35
245
—
Impairment of long-lived assets (note 3)
15
235
—
Gain on sale of property, plant and equipment, net (note 4)
—
(6)
—
Debentures fair value adjustment (note 6)
3
(138)
(212)
Litigation settlement (note 10)
—
165
—
645
1,144
469
Operating loss
(125)
(725)
(2)
Investment income, net (note 3 and note 6)
19
5
21
Income (loss) before income taxes
(106)
(720)
19
Provision for income taxes (note 5)
24
14
7
Net income (loss)
$
(130) $
(734) $
12
Earnings (loss) per share (note 8)
Basic
$
(0.22) $
(1.27) $
0.02
Diluted
$
(0.22) $
(1.35) $
(0.31)
See notes to consolidated financial statements.
66
BlackBerry Limited
(United States dollars, in millions)
Consolidated Statements of Comprehensive Income (Loss)
For the Years Ended
February 29, 2024
February 28, 2023
February 28, 2022
Net income (loss)
$
(130) $
(734) $
12
Other comprehensive income (loss)
Net change in fair value and amounts reclassified to net income (loss)
from derivatives designated as cash flow hedges during the year (note
9)
1
(1)
(1)
Foreign currency translation adjustment
2
(6)
(6)
Actuarial gains associated with other post-employment benefit
obligations
1
—
—
Net change in fair value from instrument-specific credit risk on the
Debentures during the year (note 6)
6
2
1
Other comprehensive income (loss)
10
(5)
(6)
Comprehensive income (loss)
$
(120) $
(739) $
6
See notes to consolidated financial statements.
67
BlackBerry Limited
(United States dollars, in millions)
Consolidated Statements of Cash Flows
For the Years Ended
February 29, 2024
February 28, 2023
February 28, 2022
Cash flows from operating activities
Net income (loss)
$
(130) $
(734) $
12
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Amortization
59
105
176
Stock-based compensation
33
34
36
Gain on sale of investment (note 3)
—
—
(22)
Impairment of goodwill (note 3)
35
245
—
Impairment of long-lived assets (note 3)
15
235
—
Intellectual property disposed of by sale (note 4)
147
—
—
Gain on sale of property, plant and equipment, net (note 4)
—
(6)
—
Debentures fair value adjustment (note 6)
3
(138)
(212)
Operating leases
(13)
(16)
(16)
Other
3
5
(3)
Net changes in working capital items
Accounts receivable, net of allowance
(79)
18
44
Other receivables
(9)
13
—
Income taxes receivable
(1)
6
1
Other assets
(53)
(1)
15
Accounts payable
(7)
2
2
Accrued liabilities
(21)
(11)
(16)
Income taxes payable
8
9
5
Deferred revenue
7
(29)
(50)
Net cash used in operating activities
(3)
(263)
(28)
Cash flows from investing activities
Acquisition of long-term investments
(2)
(3)
(1)
Proceeds on sale, maturity or distribution from long-term investments
—
—
35
Acquisition of property, plant and equipment
(7)
(7)
(8)
Proceeds on sale of property, plant and equipment (note 4)
—
17
—
Acquisition of intangible assets
(14)
(34)
(31)
Acquisition of short-term investments
(154)
(514)
(916)
Proceeds on sale or maturity of restricted short-term investments
—
—
24
Proceeds on sale or maturity of short-term investments
223
717
1,104
Net cash provided by investing activities
46
176
207
Cash flows from financing activities
Issuance of common shares
6
6
10
Maturities of 2020 Debentures and Extension Debentures (note 6)
(515)
—
—
Proceeds from issuance of Extension Debentures and Notes, net (note 6)
344
—
—
Net cash provided by (used in) financing activities
(165)
6
10
Effect of foreign exchange loss on cash, cash equivalents, restricted cash, and restricted cash
equivalents
—
(3)
(1)
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash
equivalents during the period
(122)
(84)
188
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period
322
406
218
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period
$
200
$
322
$
406
See notes to consolidated financial statements.
68
1.
BLACKBERRY LIMITED AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL
ACCOUNTING ESTIMATES
BlackBerry Limited (the “Company”) provides intelligent security software and services to enterprises and governments
around the world. The Company secures more than 235 million vehicles. Based in Waterloo, Ontario, the Company
leverages artificial intelligence (“AI”) and machine learning to deliver innovative solutions in the areas of cybersecurity,
safety and data privacy, and is a leader in the areas of endpoint security, endpoint management, encryption, and embedded
systems. The Company’s common shares trade under the ticker symbol “BB” on the New York Stock Exchange and the
Toronto Stock Exchange.
Basis of Presentation and Preparation
The consolidated financial statements include the accounts of all subsidiaries of the Company with intercompany
transactions and balances eliminated on consolidation. All of the Company’s subsidiaries are wholly owned. These
consolidated financial statements have been prepared by management in accordance with United States generally accepted
accounting principles (“U.S. GAAP”) on a basis consistent for all periods presented, except as described in Note 2.
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: Cybersecurity, IoT (collectively,
“Software & Services”), and Licensing and Other, as further discussed in Note 12.
Risks and Uncertainties
In fiscal 2024, assumptions and estimates about future cash flows, economic uncertainty, customer budgetary constraints,
auto industry labor disruptions and inflation, development timelines for automotive OEM embedded software platforms,
as well as higher interest rates implemented in response to inflation and resulting fears of recession, resulted in the
Company making significant judgments related to its estimates and assumptions concerning the impairment of goodwill,
indefinite-lived intangible assets, certain operating lease right-of-use (“ROU”) assets and associated property, plant and
equipment.
As of the date of issuance of the financial statements, the Company is not aware of any additional events or circumstances
which would require it to update its estimates, judgments, or revise the carrying value of its assets or liabilities. These
estimates may change, as new events occur and additional information is obtained, and such changes will be recognized in
the consolidated financial statements as soon as they become known. Actual results could differ from these estimates and
any such differences may be material to the Company’s financial statements.
Accounting Policies and Critical Accounting Estimates
Use of estimates
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 assets and
liabilities. Significant areas requiring the use of management estimates relate to revenue-related estimates including
variable consideration, standalone selling price (“SSP”), estimated customer life, right of return and customer incentive
commitments, fair value of reporting units in relation to actual or potential goodwill impairment, fair value of the
Debentures (as defined in Note 6), fair value of share-based liability awards, fair value of long-lived assets in relation to
actual or potential impairment, the Company’s long-lived asset groupings, estimated useful lives of property, plant and
equipment and intangible assets, provision (or recovery) of income taxes, realization of deferred income tax assets and the
related components of the valuation allowance, allowance for credit losses, incremental borrowing rates in determining
the present value of lease liabilities and the determination of reserves for various litigation claims. Actual results could
differ from these estimates, which were based upon circumstances that existed as of the date of the consolidated financial
statements, February 29, 2024.
The significant accounting policies used in these U.S. GAAP consolidated financial statements are as follows:
Foreign currency translation
The U.S. dollar is the functional and reporting currency of the Company and substantially all of the Company’s
subsidiaries.
Foreign currency denominated assets and liabilities of the Company and its U.S. dollar functional currency subsidiaries
are translated into U.S. dollars. Accordingly, monetary assets and liabilities are translated using the exchange rates in
effect as at the consolidated balance sheet dates, and revenue and expenses are translated at the rates of exchange
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
69
prevailing when the transactions occurred. Remeasurement adjustments are included in income. Non-monetary assets and
liabilities are translated at historical exchange rates.
Foreign currency denominated assets and liabilities of the Company’s non-U.S. dollar functional currency subsidiary is
translated into U.S. dollars at the exchange rates in effect as at the consolidated balance sheet dates. Revenue and
expenses are translated using daily exchange rates. Exchange gains or losses arising from the translation of foreign
currency denominated assets and liabilities are included as a currency translation adjustment within accumulated other
comprehensive loss (“AOCL”).
Cash and cash equivalents
Cash and cash equivalents consist of balances with banks and liquid investments with maturities of three months or less at
the date of acquisition.
Accounts receivable, net of allowance
The accounts receivable balance reflects invoiced and accrued revenue and is presented net of an allowance for credit
losses. The Company expects the majority of its accounts receivable balances to continue to come from large customers as
it sells the majority of its software products and services through resellers and other distribution partners, rather than
directly to end users. The Company establishes current expected credit losses (“CECL”) for pools of assets with similar
risk characteristics by evaluating historical levels of credit losses, current economic conditions that may affect a
customer’s ability to pay, and creditworthiness of significant customers. When specific customers are identified as no
longer sharing the same risk profile as their current pool, they are removed from the pool and evaluated separately. The
Company, in the normal course of business, monitors the financial condition of its customers and reviews the credit
history of each new customer. When the Company becomes aware of a specific customer’s inability to meet its financial
obligations to the Company (such as in the case of bankruptcy filings or material deterioration in the customer’s operating
results or financial position, and payment experiences), the Company records a specific credit loss provision to reduce the
customer’s related accounts receivable to its estimated net realizable value. If circumstances related to specific customers
change, the Company’s estimates of the recoverability of accounts receivable balances could be further adjusted.
Investments
The Company’s cash equivalents and investments, other than publicly issued equity securities and non-marketable equity
investments without readily determinable fair value, consist of money market and other debt securities, which are
classified as available-for-sale for accounting purposes and are carried at fair value. Unrealized gains and losses, net of
related income taxes, are recorded in AOCL until such investments mature or are sold. The Company uses the specific
identification method of determining the cost basis in computing realized gains or losses on available-for-sale
investments, which are recorded in investment income. The Company does not exercise significant influence with respect
to any of these investments. Publicly issued equity securities are recorded at fair value and revalued at each reporting
period with changes in fair value recorded through investment income. The Company elects to record non-marketable
equity investments without readily determinable fair value at cost minus impairment, and adjusted for any changes
resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. The
Company reassesses each reporting period that its non-marketable equity investments without readily determinable fair
value continue to qualify for this treatment.
Investments with maturities at the time of purchase of three months or less are classified as cash equivalents. Investments
with maturities of one year or less (but which are not cash equivalents), public equity investments and any investments
that the Company intends to hold for less than one year are classified as short-term investments. Investments with
maturities in excess of one year, non-marketable equity investments without readily determinable fair value and
investments that the Company does not intend to sell are classified as long-term investments.
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
70
Allowance for Credit Losses on Available-for-sale Debt Securities
At each reporting period, the Company evaluates its available-for-sale debt securities at the individual security level to
determine whether there is a decline in the fair value below its amortized cost basis (an impairment). In circumstances
where the Company intends to sell, or is more likely than not required to sell, the security before it recovers its amortized
cost basis, the difference between fair value and amortized cost is recognized as a loss in the consolidated statement of
operations, with a corresponding write-down of the security’s amortized cost. In circumstances where neither condition
exists, the Company then evaluates whether a decline is due to credit-related factors. The factors considered in
determining whether a credit loss exists can include the extent to which fair value is less than the amortized cost basis,
changes in the credit quality of the underlying issuer, credit ratings actions, as well as other factors. To determine the
portion of a decline in fair value that is credit-related, the Company compares the present value of the expected cash flows
of the security discounted at the security’s effective interest rate to the amortized cost basis of the security. A credit-
related impairment is limited to the difference between fair value and amortized cost, and recognized as an allowance for
credit loss on the consolidated balance sheet with a corresponding adjustment to net income. Any remaining decline in fair
value that is non-credit related is recognized in other comprehensive income (loss), net of tax. Improvements in expected
cash flows due to improvements in credit are recognized through reversal of the credit loss and corresponding reduction in
the allowance for credit loss.
Derivative financial instruments
The Company uses derivative financial instruments, including forward contracts and options, to hedge certain foreign
currency exposures. The Company does not use derivative financial instruments for speculative purposes.
The Company records all derivative instruments at fair value on the consolidated balance sheets. The fair value of these
instruments is calculated based on notional and exercise values, transaction rates, market quoted currency spot rates,
forward points, volatilities and interest rate yield curves. The accounting for changes in the fair value of a derivative
depends on the intended use of the derivative instrument and the resulting designation.
For derivative instruments designated as cash flow hedges, the derivative’s gain or loss is initially reported as a
component of AOCL, net of tax, and subsequently reclassified into income in the same period or periods in which the
hedged item affects income. In order for the Company to receive hedge accounting treatment, the cash flow hedge must be
highly effective in offsetting changes in the fair value of the hedged item and the relationship between the hedging
instrument and the associated hedged item must be formally documented at the inception of the hedge relationship. Hedge
effectiveness is formally assessed, both at hedge inception and on an ongoing basis, to determine whether the derivatives
used in hedging transactions are highly effective in offsetting changes in the value of the hedged items and whether they
are expected to continue to be highly effective in future periods.
The Company formally documents relationships between hedging instruments and associated hedged items. This
documentation includes: identification of the specific foreign currency asset, liability or forecasted transaction being
hedged; the nature of the risk being hedged; the hedge objective; and the method of assessing hedge effectiveness. If an
anticipated transaction is deemed no longer likely to occur, the corresponding derivative instrument is de-designated as a
hedge and any associated unrealized gains and losses in AOCL are recognized in income at that time. Any future changes
in the fair value of the instrument are recognized in current income.
For any derivative instruments that do not meet the requirements for hedge accounting, or for any derivative instruments
for which hedge accounting is not elected, the changes in fair value of the instruments are recognized in income in the
current period and will generally offset the impact to income as a result of changes in the U.S. dollar value of the
associated asset, liability or forecasted transaction.
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
71
Property, plant and equipment, net
Property, plant and equipment are stated at cost, less accumulated amortization and impairment. Amortization is provided
using the following rates and methods:
Leasehold improvements and other
Straight-line over terms between 5 and 15 years
BlackBerry operations and other information technology
Straight-line over terms between 3 and 5 years
Manufacturing, repair and research and development
equipment
Straight-line over terms between 1 and 5 years
Furniture and fixtures
Declining balance at 30% per annum
For amortization on ROU assets, see the Company’s accounting policy on leases below and Note 11 for the remaining
lease terms of leases.
Leases
Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future
minimum lease payments over the lease term at the commencement date. As most of the Company’s leases do not provide
an implicit discount rate, the Company primarily uses its incremental borrowing rate, based on the information available
at the commencement date of the lease, in determining the present value of future payments. The Company’s incremental
borrowing rate requires significant judgment and is determined based on the rate of interest that the Company would have
to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic
environment. The operating lease ROU asset includes any lease payments made, lease incentives and initial direct costs
incurred. The lease terms include options to extend or terminate the lease when it is reasonably certain that the Company
will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease
term. In some cases, the Company has index-based variable lease payments for which an estimated rate is applied to the
initial lease payment to determine future lease payment amounts.
The Company has building, car and data center lease agreements with lease and non-lease components that are accounted
for separately. For lease terms of 12 months or less on the commencement date, the Company recognizes the lease
payments as lease cost on a straight-line basis over the lease term.
See Note 11 for additional information related to the Company’s leases.
Goodwill
Goodwill represents the excess of the acquisition price in a business combination over the fair value of identifiable net
assets acquired. Goodwill is allocated at the date of the business combination. Goodwill is not amortized but is tested for
impairment annually on December 31 or more frequently if events or changes in circumstances indicate the asset may be
impaired. These events and circumstances may include a significant change in legal factors or in the business climate, a
significant decline in the Company’s share price, an adverse action or assessment by a regulator, unanticipated
competition, a loss of key personnel, significant disposal activity and the testing of recoverability for a significant asset
group.
In the annual impairment test, the carrying value of the reporting unit, including goodwill, was compared with its fair
value. The estimated fair value was determined utilizing multiple approaches based on the nature of the reporting units
being valued. In its analysis, the Company utilized multiple valuation techniques, including the income approach using a
discounted future cash flow model, market-based approaches, and the asset value approach. The analysis requires
significant judgment, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the
long-term rates of revenue growth for the Company’s reporting units, estimation of the useful life over which cash flows
will occur, terminal growth rates, profitability measures, and determination of the discount rates for the reporting units.
The carrying value of the Company’s assets was assigned to reporting units using reasonable methodologies based on the
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
72
asset type. When the carrying value of a reporting unit exceeds its fair value, goodwill of the reporting unit is considered
to be impaired and written down to its fair value. Different judgments could yield different results.
Intangible assets
Intangible assets with definite lives are stated at cost, less accumulated amortization and impairment. Amortization is
provided on a straight-line basis over the following terms:
Acquired technology
Between 3 and 10 years
Intellectual property
Between 1 and 25 years
Other acquired intangibles
Between 2 and 10 years
Acquired technology consists of intangible assets acquired through business acquisitions. Intellectual property consists of
patents (including purchased and internally generated patents and maintenance fees). Other acquired intangibles include
items such as customer relationships and brand. The useful lives of intangible assets are evaluated at least annually to
determine if events or circumstances warrant a revision to their remaining period of amortization. Legal, regulatory and
contractual factors, the effects of obsolescence, demand, competition and other economic factors are potential indicators
that the useful life of an intangible asset may be revised.
Impairment of long-lived assets
The Company reviews long-lived assets (“LLA”) such as property, plant and equipment, intangible assets with finite
useful lives and ROU assets for impairment whenever events or changes in circumstances indicate that the carrying value
of the asset or asset group may not be recoverable. These events and circumstances may include significant decreases in
the market price of an asset or asset group, significant changes in the extent or manner in which an asset or asset group is
being used by the Company or in its physical condition, a significant change in legal factors or in the business climate, a
history or forecast of future operating or cash flow losses, significant disposal activity, a significant decline in the
Company’s share price, a significant decline in revenue or adverse changes in the economic environment.
The LLA impairment test requires the Company to identify its asset groups and test impairment of each asset group
separately. Determining the Company’s asset groups and related primary assets requires significant judgment by
management. Different judgments could yield different results. The Company’s determination of its asset groups, its
primary asset and its remaining useful life, and estimated cash flows are significant factors in assessing the recoverability
of the Company’s assets for the purposes of LLA impairment testing. The Company’s share price can be affected by,
among other things, changes in industry or market conditions, including the effect of competition, changes in the
Company’s results of operations, changes in the Company’s forecasts or market expectations relating to future results, and
the Company’s strategic initiatives and the market’s assessment of any such factors.
When indicators of impairment exist, LLA impairment is tested using a two-step process. The Company performs a cash
flow recoverability test as the first step, which involves comparing the asset group’s estimated undiscounted future cash
flows to the carrying value of its net assets. If the net cash flows of the asset group exceed the carrying value of its net
assets, LLA are not considered to be impaired. If the carrying value exceeds the net cash flows, there is an indication of
potential impairment and the second step of the LLA impairment test is performed to measure the impairment amount.
The second step involves determining the fair value of the asset group. Fair values are determined using valuation
techniques that are in accordance with U.S. GAAP, including the market approach, income approach and cost approach. If
the carrying value of the asset group’s net assets exceeds its fair value, then the excess represents the maximum amount of
potential impairment that will be allocated to LLA in the asset group, with the limitation that the carrying value of each
separable asset cannot be reduced to a value lower than its individual fair value. The total impairment amount allocated is
recognized as a non-cash impairment loss.
The Company reviews any changes in events and circumstances that have occurred on a quarterly basis to determine if
indicators of LLA impairment exist.
Convertible debentures
The Company has recognized the Notes (as defined in Note 6) as a single liability instrument measured at amortized cost.
Debt issuance costs related to the Notes have been recorded as a direct deduction from the face amount of the Notes and
will be amortized using the effective interest method.
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
73
The Company elected to measure its Extension Debentures (as defined in Note 6) and 2020 Debentures (as defined in
Note 6) at fair value in accordance with the fair value option. Each period, the fair value of the Extension Debentures and
2020 Debentures was recalculated and resulting gains and losses from the change in fair value of the Extension
Debentures and 2020 Debentures associated with non-credit components were recognized in income, while the change in
fair value associated with credit components were recognized in AOCL.
Extension Debentures
The fair value of the Extension Debentures was determined using the significant inputs of principal value, interest rate
spreads and curves, and the market price and volatility of the Company’s common shares.
2020 Debentures
The fair value of the 2020 Debentures was determined using the significant inputs of principal value, interest rate spreads
and curves, any observable trades of the 2020 Debentures that occurred during the period, the market price and volatility
of the Company’s common shares, and the significant Level 3 inputs related to credit spread and the implied discount of
the 2020 Debentures at issuance.
Revenue recognition
The Company recognizes revenue when control of the promised products or services are transferred to customers, in an
amount that reflects the consideration that the Company expects to receive in exchange for those products and services.
Revenue is recognized through the application of the following steps: (i) identification of the contract, or contracts, with a
customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv)
allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when (or
as) the Company satisfies a performance obligation.
A contract exists with a customer when both parties have approved the contract, commitments to performance and rights
of each party (including payment terms) are identified, the contract has commercial substance and collection of
substantially all consideration is probable for goods and services that are transferred.
Performance obligations promised in a contract are identified based on the goods and services that will be transferred to
the customer that are both capable of being distinct, whereby the customer can benefit from the good or service either on
its own or together with other available resources, and are distinct in the context of the contract, whereby the transfer of
the good or service is separately identifiable from other promises in the contract. If these criteria are not met, the promised
goods and services are accounted for as a combined performance obligation.
The transaction price is determined based on the consideration the Company expects to be entitled to in exchange for
transferring promised goods and services to the customer, excluding amounts collected on behalf of third parties such as
sales taxes. Determining the transaction price requires significant judgment. To the extent the transaction price includes
variable consideration, the Company estimates the amount of variable consideration that should be included in the
transaction price utilizing either the expected value method or the most likely amount method depending on the nature of
the variable consideration.
Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance
obligation based on a relative SSP. The Company’s method for allocation of consideration to be received and its method
of estimation of SSP are described below under “Significant judgments”.
For each of the Company’s major categories of revenue, the following paragraphs describe the applicable specific revenue
recognition policy, and when the Company satisfies its performance obligations.
Nature of products and services
The Company is organized and managed as three operating segments. The Company has multiple products and services
from which it derives revenue, which are structured in three groups: Cybersecurity, IoT and Licensing and Other.
Cybersecurity
Cybersecurity includes revenue from Cylance® cybersecurity and BlackBerry unified endpoint management (“UEM”)
solutions (collectively, BlackBerry Spark®), BlackBerry® AtHoc® and SecuSUITE®. Cybersecurity revenue is
generated predominantly through software licenses, commonly bundled with support, maintenance and professional
services.
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
74
Cylance Cybersecurity
The BlackBerry Spark platform is a comprehensive offering of security software products and services, including the
Cylance cybersecurity solutions and BlackBerry Unified Endpoint Management, offering the Company’s broadest range
of tailored cybersecurity and endpoint management options.
The Cylance cybersecurity solutions include revenue from the Company’s artificial intelligence and machine learning-
based platform consisting of CylanceENDPOINT™, CylanceGUARD®, CylanceEDGE™, CylanceINTELLIGENCE™
and other cybersecurity applications. The Company generates software license revenue from term subscription products,
which includes technical support, and any updates and upgrades.
The Company recognizes the license revenue over the term of the contract beginning on the commencement date of each
contract, the date that services are made available to customers. The Company’s software license and updates, to the
extent made available, are not distinct in the context of the contract as they are critical to the ongoing usability of the
solution and so fulfill a single promise to the customer in the contract. The typical subscription term is one to three years.
The technical support is recognized over the support period, which will normally be the same term as the software license.
Revenue for hourly rate professional services arrangements is recognized as services are performed and revenue for fixed
fee professional services is recognized on a proportional performance basis as the services are performed.
BlackBerry UEM
The Company’s endpoint management platform includes BlackBerry® UEM, BlackBerry® Dynamics™ and
BlackBerry® Workspaces solutions (which are often sold together as part of the BlackBerry UEM Suite), and BlackBerry
Messenger (BBM®) Enterprise. The Company generates software license revenue from both term subscription and
perpetual license contracts, both of which are commonly bundled with support, maintenance and professional services.
If the licensed software in a contract requires access to the Company’s proprietary secure network infrastructure in order
to function, revenue from term subscription contracts is recognized over time, ratably over the term, and revenue from
perpetual license contracts is recognized over time, ratably over the expected customer life, which in most cases the
Company has estimated to be four years. If access to the Company’s proprietary network infrastructure is not required for
the software to function, revenue associated with both term subscription and perpetual licenses contracts is recognized at a
point in time upon delivery of the software. Generally, most of the Company’s UEM software products sold require
access to the Company’s proprietary secure network infrastructure in order to function, and therefore the associated
revenue is recognized over time, ratably over either the subscription term or expected customer life as described above.
BlackBerry SecuSUITE
SecuSUITE revenue is generated from software license products associated with secure communications and the
associated hardware. Similar to the Cylance cybersecurity and BlackBerry UEM products, if the licensed software
requires access to the Company’s proprietary secure network infrastructure, revenue from the contract is recognized over
time, ratably over the expected term or over the customer life, if licensed on a perpetual basis. If access to the Company’s
proprietary network infrastructure is not required, revenue associated with the license is recognized at a point in time upon
delivery of the software. Revenue from the hardware is recognized once title and the significant risks and rewards of
ownership of the products are transferred to the customer, which occurs after the product has shipped.
BlackBerry AtHoc
BlackBerry AtHoc generates revenue from networked critical event management solutions through perpetual and term
subscriptions which include technical support, as well as associated professional services. The licensed software in most
contracts requires access to the Company’s proprietary secure network infrastructure in order to function, specifically
through AtHoc’s secure platform which is included within the Company’s data center. The Company recognizes the
license revenue over the term of the contract beginning on the commencement date of each contract, the date that services
are made available to customers.
IoT
IoT consists of BlackBerry Technology Solutions, BlackBerry Radar® and BlackBerry IVY™. BlackBerry Technology
Solutions includes revenue from BlackBerry® QNX®, BlackBerry Certicom® and other IoT applications. IoT revenue is
generated predominantly through software licenses, commonly bundled with support, maintenance and professional
services.
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
75
BlackBerry® QNX® software license revenue from both term subscription and perpetual contracts is recognized at a
point in time when the software is made available to the customer for use, as the software has standalone functionality and
the license is distinct in the context of the contract. The licenses for certain software embedded into hardware such as
automotive digital cockpit systems and advanced driver-assistance systems are sold as a sales-based royalty where
intellectual property is the predominant item to which the royalty relates, and are recognized based on actual volumes and
underlying sales by the customer of the hardware with the embedded software shipped by the customer, except in cases
where the customer makes a non-refundable prepayment related to its future royalties, in which case consideration is fixed
and recognized immediately.
Revenue from technical support is recognized over the support period. Revenue from professional services is recognized
as the customer simultaneously receives and consumes the benefits provided by the Company’s performance as the
services are provided. This can be on a proportional performance basis, or over the term of the contract. Revenue from
software maintenance services is recognized over the length of the maintenance period, with an average term of one year.
Licensing and Other
Licensing and Other includes revenue from the Company’s intellectual property licensing arrangements and settlement
awards. Other revenue consists of revenue associated with the Company’s legacy service access fees (“SAF”) business.
The Company’s outbound patent licensing agreements provide for license fees that may be a single upfront payment or
multiple payments representing all or a majority of the licensing revenue that will be payable to the Company. These
agreements may be perpetual or term in nature and grant (i) a limited non-exclusive, non-transferable license to certain of
the Company’s patents, (ii) a covenant not to enforce patent rights against the licensee, and (iii) the release of the licensee
from certain claims.
The Company examines intellectual property agreements on a case-by-case basis to determine whether the intellectual
property contains distinct performance obligations with standalone functionality and whether the Company is the principal
or agent in the transaction. Significant judgment is applied in assessing contractual terms which could impact the timing
and amount of revenue recognition. Revenue from patent licensing agreements is often recognized for the transaction
price either when the license has been transferred to the customer or based upon subsequent sales by the customer in the
case of sales-based royalty licenses where the license of intellectual property is the predominant item to which the royalty
relates. As part of these agreements the Company may also recognize revenue relating to the sale and assignment of
patents.
The Company recognizes revenue related to consideration that may result from a negotiated agreement with a licensee
that utilized the Company’s IP prior to signing a patent license agreement with the Company or from the resolution of a
disagreement or arbitration with a licensee over the specific terms of an existing license agreement. The Company may
also recognize revenue related to consideration for past patent royalties in connection with the settlement of patent
litigation where there was no prior patent license agreement.
Other includes revenue associated with the Company’s legacy SAF business, relating to subscribers utilizing the
Company’s legacy BlackBerry 7 and prior operating systems, for which the Company ended support and maintenance as
of January 4, 2022. SAF revenue was recognized over time as the monthly service was provided. In instances where the
Company invoiced the SAF customer prior to performing the service, the pre-billing was recorded as deferred revenue.
See Note 12 for further information, including revenue by major product and service types.
Significant judgments in revenue recognition
The Company’s contracts with customers often include promises to transfer multiple products and services to a customer.
Determining whether products and services are considered distinct performance obligations that should be accounted for
separately versus together may require significant judgment.
Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant
future reversal of cumulative revenue recognized under the contract will not occur. Any estimates, including any
constraints on variable consideration, are evaluated at each reporting period. To the extent the transaction price in a
contract with a customer includes variable consideration, the Company estimates the amount of variable consideration that
should be included in the price utilizing either the expected value method or the most likely amount method, depending on
the nature of the variable consideration. The Company also estimates whether and how much variable consideration is
subject to constraint if it cannot conclude it is probable that a significant reversal in revenue will not occur, due to factors
such as: the consideration being highly susceptible to factors outside the Company’s influence, the period of time before
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
76
the variable consideration is resolved, the Company’s previous experience with similar contracts, the Company’s history
of price concessions or changing of payment terms, and whether there is a large number and broad range of possible
variable consideration amounts.
Judgment is required to determine the SSP for each distinct performance obligation. The Company’s products and
services often have observable SSP when the Company sells a promised product or service separately to similar
customers. A contractually stated price or list price for a good or service may be the SSP of that good or service.
However, in instances where SSP is not directly observable, the Company determines the SSP by maximizing observable
inputs and using an adjusted market assessment approach using information that may include market conditions and other
observable inputs from the Company’s pricing team, including historical SSP.
Judgment is required to determine in certain agreements if the Company is the principal or agent in the arrangement. The
Company considers factors such as, but not limited to, which party can direct the usage of the product or service, which
party obtains substantially all the remaining benefits and which party has the ability to establish the selling price.
Significant judgment is required to determine the estimated customer life used in perpetual license contracts that require
access to the Company’s proprietary secure network infrastructure to function. The Company uses historical experience
regarding the length of the technology upgrade cycle and the expected life of the product to draw this conclusion.
Revenue contract balances
Timing of revenue recognition may differ from the timing of invoicing to customers. Contract assets are generated when
contractual billing schedules differ from revenue recognition timing. An unbilled receivable is recorded in instances when
revenue is recognized prior to invoicing, and amounts collected in advance of services being provided are recorded as
deferred revenue. Contract assets and liabilities are presented net as either a single contract asset or contract liability.
Certain sales commissions are considered incremental and recoverable costs of obtaining a contract with a customer. The
Company’s capitalized commissions are recorded as other current assets and other long-term assets and are recognized
immediately or amortized proportionally, based on the satisfaction of the related performance obligations, and are
included in sales and marketing expenses. The Company has applied the practical expedient to expense sales commission
as incurred if the amortization period would have been for one year or less. The practical expedient was applied to sales
commissions allocated to professional services, as these contracts are generally for one year or less. See Note 12 for
further information on the Company’s contract balances.
Payment terms and conditions vary by contract type although standard billing terms are that payment is due upon receipt
of invoice, payable within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of
invoicing, the Company has determined that contracts generally do not include a significant financing component if the
period between when the payment is received and when the Company transfers the promised goods or services to the
customer will be one year or less. To the extent the Company determines that there is a significant financing component in
a contract with a customer, it determines the impact of the time value of money in adjusting the transaction price to
account for the income associated with the financing component by estimating 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.
Income taxes
The Company uses the liability method of income tax allocation to account for income taxes. Deferred income tax assets
and liabilities are recognized based upon temporary differences between the financial reporting and income tax bases of
assets and liabilities and measured using enacted income tax rates and tax laws that will be in effect when the differences
are expected to reverse. 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 considers both positive evidence and negative evidence, to
determine whether, based upon the weight of that evidence, a valuation allowance is required. Judgment is required in
considering the relative impact of negative and positive evidence.
Significant judgment is also required in evaluating the Company’s uncertain income tax positions and provisions for
income taxes. Liabilities for uncertain income tax positions are recognized based on a two-step approach. The first step is
to evaluate whether an income tax position has met the recognition threshold by determining if the weight of available
evidence indicates that it is more likely than not to be sustained upon examination. The second step is to measure the
income tax position that has met the recognition threshold as the largest amount that is more than 50% likely of being
realized upon settlement. The Company continually assesses the likelihood and amount of potential adjustments and
adjusts the income tax provisions, income taxes payable and deferred income taxes in the period in which the facts that
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
77
give rise to a revision become known. The Company recognizes interest and penalties related to uncertain income tax
positions as interest expense, which is then netted and reported within investment income.
The Company uses the flow-through method to account for investment tax credits (“ITCs”) earned on eligible scientific
research and experimental development expenditures. Under this method, the ITCs are recognized as a reduction to
income tax expense.
Research and development
Research costs are expensed as incurred. Development costs for licensed software to be sold, leased or otherwise
marketed are subject to capitalization beginning when a product’s technological feasibility has been established and
ending when a product is available for general release to customers. The Company’s products are generally released soon
after technological feasibility has been established and therefore costs incurred subsequent to achievement of
technological feasibility are not significant and have been expensed as incurred. The Company does not currently have
any capitalized research and development costs other than those identified through business combinations as in-process
research and development included within intangible assets, net, which were recorded at their fair values and began
amortizing when the related technology became available for general release to customers.
Comprehensive income (loss)
Comprehensive income (loss) is defined as the change in net assets of a business enterprise during a period from
transactions and other events and circumstances from non-owner sources and includes all changes in equity during a
period, except those resulting from investments by owners and distributions to owners. The Company’s reportable items
of comprehensive income (loss) are the cumulative translation adjustment resulting from its non-U.S. dollar functional
currency subsidiary as described under the foreign currency translation policy above, cash flow hedges as described above
in derivative financial instruments, changes in the fair value of available-for-sale investments as described in Note 3,
changes in fair value from instrument-specific credit risk on the 2020 Debentures and Extension Debentures as described
in Note 6 and Note 9, and actuarial gains or losses associated with certain other post-employment benefit obligations.
Realized gains or losses on available-for-sale investments are reclassified into investment income using the specific
identification basis.
Earnings (loss) per share
Earnings (loss) per share is calculated based on the weighted average number of common shares outstanding during the
fiscal year. The treasury stock method is used for the calculation of the dilutive effect of stock options. The if-converted
method is used for the calculation of the dilutive effect of the Debentures.
Stock-based compensation plans
The Company has stock-based compensation plans. Awards granted under the plans are detailed in Note 7(b).
The Equity Incentive Plan (the “Equity Plan”) was adopted during fiscal 2014. The Equity Plan provides for grants of
incentive stock options and restricted share units (“RSUs”) to officers and employees of the Company or its subsidiaries.
RSUs may be either time-based (“TBRSUs”) or time- and performance-based (“PBRSUs”). The number of common
shares authorized for awards under the Equity Plan is 45,875,000 common shares. Any shares that are subject to options
granted under the Equity Plan are counted against this limit as 0.625 shares for every one option granted, any shares that
are subject to TBRSUs granted under the Equity Plan are counted against this limit as one share for every TBRSU, and
any shares that are subject to PBRSUs granted under the Equity Plan are counted against this limit at the maximum
performance attainment (which is generally 1.5 shares for every PBRSU). Awards previously granted under the Equity
Plan that expire or are forfeited, or settled in cash, are added to the shares available under the Equity Plan. Options
forfeited will be counted as 0.625 shares to the shares available under the Equity Plan. Shares issued as awards other than
options that expire or are forfeited (i.e., RSUs), settled in cash or sold to cover withholding tax requirements are counted
as one share added to the shares available under the Equity Plan. There are approximately 8 million shares in the equity
pool available for future grants under the Equity Plan as at February 29, 2024.
RSUs are redeemed for common shares issued by the Company or the cash equivalent on the vesting dates established by
the Board or the Compensation, Nomination and Governance Committee of the Board. The RSUs granted under the
Equity Plan generally vest over a three-year period, either in equal annual installments or on the third anniversary date.
For PBRSUs, the Company estimates its achievement against the performance goals, which are based on the Company’s
business plan approved by the Board and total shareholder return. The estimated achievement is updated for the
Company’s outlook for the fiscal year as at the end of each fiscal quarter. Compensation cost will only be recognized to
the extent that performance goals are expected to be achieved. The Company classifies RSUs as equity instruments as the
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
78
Company has the ability and intent to settle the awards in common shares. The compensation expense for standard RSUs
is calculated based on the fair value of each RSU as determined by the closing value of the Company’s common shares on
the business day of the grant date. The Company recognizes compensation expense over the vesting period of the RSU.
The Company expects to settle RSUs, upon vesting, through the issuance of new common shares from treasury.
The Company has a Deferred Share Unit Plan (the “DSU Plan”), originally approved by the Board on December 20, 2007,
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. Each independent director’s annual
retainer will be entirely satisfied in the form of DSUs. Within a specified period after a director ceases to be a member of
the Board, DSUs will be redeemed for cash with the redemption value of each DSU equal to the weighted average trading
price of the Company’s shares over the five trading days preceding the redemption date. Alternatively, the Company may
elect to redeem DSUs by way of shares purchased on the open market or issued by 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.
Advertising costs
The Company expenses all advertising costs as incurred. These costs are included in sales and marketing expenses.
Government subsidies
The Company recognizes government subsidies as a reduction to operating expenses in the consolidated statement of
operations when there is reasonable assurance the Company will receive the amount and has complied with the
conditions, if any, attached to the government subsidies.
2.
ADOPTION OF ACCOUNTING POLICIES
Accounting Standards Adopted During Fiscal 2024
The Company did not adopt any accounting standards during fiscal 2024.
Accounting Pronouncements Not Yet Adopted
In November 2023, the Financial Accounting Standards Board (the “FASB”) issued ASU 2023-07 on the topic of segment
reporting. The standard requires additional disclosures for segment reporting. These requirements include: (i) disclosure
of significant expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within
each reported measure of segment profit or loss (collectively referred to as the “significant expense principle”); (ii)
disclosure of an amount for other segment items (equal to the difference between segment revenue less segment expenses
disclosed under the significant expense principle and each reported measure of segment profit or loss) by reportable
segment and a description of their composition; (iii) annual disclosure of a reportable segment’s profit or loss and assets
currently required by Topic 280 in interim periods; (iv) clarification that, if the CODM uses more than one measure of a
segment's profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may
report those additional measures of segment profit or loss; (v) disclosure of the title and position of the CODM and an
explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance
and deciding how to allocate resources; (vi) requiring a public entity that has a single reportable segment provide all the
disclosures required by the amendments in this ASU, and all existing segment disclosures in Topic 280. The guidance is
effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after
December 15, 2024. The Company will adopt this guidance in fiscal 2025 and is in the process of evaluating the new
requirements. As a result, the Company has not yet determined the impact this new ASU will have on its disclosures.
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
79
In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax
Disclosures” on the topic of income taxes. The standard requires additional disclosure for income taxes. These
requirements include: (i) requiring a public entity to disclose specific categories in the rate reconciliation; (ii) disclosure of
additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is
equal to or greater than 5% of the amount computed by multiplying pretax income or loss by the applicable statutory
income tax rate); (iii) annual disclosure of the amount of income taxes paid (net of refunds received) disaggregated by
federal (national), state, and foreign taxes; (iv) annual disclosure of the amount of income taxes paid (net of refunds
received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or
greater than 5% of total income taxes paid (net of refunds received); (v) annual disclosure of income (or loss) from
continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign; and (vi) annual
disclosure of income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and
foreign. For public entities, the guidance is effective for annual periods beginning after December 15, 2024. The Company
will adopt this guidance in fiscal 2026 and is in the process of evaluating the new requirements. As a result, the Company
has not yet determined the impact this new ASU will have on its disclosures.
3.
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.
•
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 held, 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.
For a description of how the fair values of the Extension Debentures and 2020 Debentures were determined, see the
“Convertible debentures” accounting policies in Note 1. The Extension Debentures are classified as Level 2 and the 2020
Debentures are classified as Level 3.
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
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
80
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. The estimation of fair value used in the fair value measurements required the use of significant
unobservable inputs, and as a result, the fair value measurements were classified as Level 3.
Goodwill Impairment
During the fourth quarter of fiscal 2024, as part of its process for setting the annual operating plan for fiscal 2025, the
Company updated its estimates of long-term future cash flows to reflect lower revenue and EBITDA growth rate
expectations and a reduction in revenue multiples used in the valuation of the BlackBerry Spark reporting unit. These
changes in estimates, combined with the continued global economic uncertainty, customer budgetary constraints, and
inflation, as well as higher interest rates implemented in response to inflation, and a broad-based stock market decline
impacting the Company’s market capitalization, resulted in the recognition of a goodwill impairment charge of $35
million in the BlackBerry Spark reporting unit, which is included within the Company’s Cybersecurity segment as
disclosed in Note 12. Based on the results of the annual goodwill impairment test for the BlackBerry Spark reporting unit,
based on the income approach using a discounted future cash flow model and market-based approaches, it was concluded
that the carrying value exceeded its fair value, necessitating an impairment charge for the amount of excess and reducing
the carrying value of goodwill. The estimated fair values of the Company’s other reporting units substantially exceeded
their carrying values as at the annual goodwill impairment test date, with the exception of the Intellectual Property
reporting unit.
Assumptions and estimates about future cash flows and discount rates are complex and often subjective and require
significant judgement. The analysis is dependent on internal forecasts, estimation of the long-term rates of revenue growth
for the Company’s reporting units, estimation of the useful life over which cash flows will occur, terminal growth rates,
profitability measures, and determination of the discount rates for the reporting units.
During the year ended February 28, 2023, the Company recorded a goodwill impairment charge of $245 million in the
BlackBerry Spark reporting unit, which is included within the Company’s Cybersecurity segment as disclosed in Note 12.
The estimated fair values of the Company’s other reporting units substantially exceeded their carrying values as at the
annual goodwill impairment test date.
During the year ended February 28, 2022, there were no goodwill impairment charges. In its annual goodwill impairment
test in the fourth quarter of fiscal 2022, the Company’s estimates indicated the fair values of all its reporting units
substantially exceeded their carrying values, such carrying values were expected to be recovered, and there was no
goodwill impairment.
Impairment of Long-Lived Assets (“LLA”)
During the year ended February 29, 2024, the Company exited certain leased facilities and recorded a pre-tax and after-tax
impairment charge of $7 million, related to the ROU assets for those facilities. The impairment was determined by
comparing the fair value of the impacted ROU asset 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. These ROU impaired assets are classified
within Level 3 of the fair value hierarchy.
The Company conducts regular reviews of the individual patents, both organically generated and acquired, comprising its
patent portfolio. As a result of this review, for the year ended February 29, 2024, the Company determined it had an
indicator of impairment, as it had ceased enforcement and abandoned the legal right and title to patents with a cost of
$15 million, accumulated amortization of $7 million, and a net book value of $8 million, which is classified as an
impairment of long-lived assets on the Company’s consolidated statements of operations.
During the year ended February 28, 2023, the Company recorded a non-cash, pre-tax and after-tax impairment charge of
$235 million consisting of $231 million related to the Company’s UES asset group, which is primarily composed of
intangible assets recognized on the acquisition of Cylance and is included within the Company’s Cybersecurity segment
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
81
as disclosed in Note 12 and $4 million related to operating lease ROU assets for certain leased facilities that were exited
during the fiscal year. None of the Company’s other asset groups demonstrated indicators of potential impairment.
During the year ended February 28, 2022, there were no LLA impairment charges.
Cash, Cash Equivalents and Investments
The components of cash, cash equivalents and investments by fair value level as at February 29, 2024 were as follows:
Cost Basis (1)
Unrealized
Gains
Unrealized
Losses
Fair Value
Cash and
Cash
Equivalents
Short-term
Investments
Long-term
Investments
Restricted
Cash and
Cash
Equivalents
Bank balances
$
96 $
— $
— $
96 $
96 $
— $
— $
—
Other investments
30
6
—
36
—
—
36
—
126
6
—
132
96
—
36
—
Level 1:
Equity securities
10
—
(10)
—
—
—
—
—
Level 2:
Term deposits, and
certificates of deposits
21
—
—
21
—
—
—
21
Bearer deposit notes
53
—
—
53
28
25
—
—
Commercial paper
47
—
—
47
15
32
—
—
Non-U.S. promissory notes
35
—
—
35
30
5
—
—
U.S. treasury bills
10
—
—
10
6
—
—
4
166
—
—
166
79
62
—
25
$
302 $
6 $
(10) $
298 $
175 $
62 $
36 $
25
______________________________
(1) Cost basis for other investments includes the effect of returns of capital and impairment.
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
82
The components of cash, cash equivalents and investments by fair value level as at February 28, 2023 were as follows:
Cost Basis (1)
Unrealized
Gains
Unrealized
Losses
Fair Value
Cash and
Cash
Equivalents
Short-term
Investments
Long-term
Investments
Restricted
Cash and
Cash
Equivalents
Bank balances
$
89 $
— $
— $
89 $
87 $
— $
— $
2
Other investments
26
2
—
28
—
—
28
—
115
2
—
117
87
—
28
2
Level 1:
Equity securities
10
—
(10)
—
—
—
—
—
Level 2:
Term deposits, and
certificates of deposits
33
—
—
33
8
—
—
25
Bearer deposit notes
82
—
—
82
82
—
—
—
Commercial paper
159
—
—
159
108
51
—
—
Non-U.S. promissory notes
45
—
—
45
—
45
—
—
Non-U.S. government
sponsored enterprise notes
30
—
—
30
10
20
—
—
Corporate notes/bonds
15
—
—
15
—
15
—
—
364
—
—
364
208
131
—
25
Level 3:
Other investments
2
4
—
6
—
—
6
—
$
491 $
6 $
(10) $
487 $
295 $
131 $
34 $
27
______________________________
(1) Cost basis for other investments includes the effect of returns of capital and impairment.
As at February 29, 2024, the Company had non-marketable equity investments without readily determinable fair value of
$36 million (February 28, 2023 - $34 million). During the year ended February 29, 2024, there was no impairment
recognized relating to non-marketable equity investments without readily determinable fair value (February 28, 2023 and
February 28, 2022 - nil). As of February 29, 2024, the Company has recorded a cumulative impairment of $3 million to
the carrying value of certain other non-marketable equity investments without readily determinable fair value (February
28, 2023 - $3 million).
During the year ended February 28, 2022, the Company received a distribution from a non-marketable equity investment
without readily determinable fair value in the amount of $35 million, which for accounting purposes, consisted of a return
of capital of $13 million and a realized gain of $22 million included in investment income, net on the Company’s
consolidated statements of operations.
There were no realized gains or losses on available-for-sale securities for the year ended February 29, 2024 (February 28,
2023 and February 28, 2022 - nil).
The Company has restricted cash and cash equivalents, consisting of cash and securities pledged as collateral to major
banking partners in support of the Company’s requirements for letters of credit. These letters of credit support certain
leasing arrangements entered into in the ordinary course of business. The letters of credit are for terms ranging from one
month to two years. The Company is legally restricted from accessing these funds during the term of the leases for which
the letters of credit have been issued; however, the Company can continue to invest the funds and receive investment
income thereon.
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
83
The following table provides a reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents as
at February 29, 2024, February 28, 2023 and February 28, 2022 from the consolidated balance sheets to the consolidated
statements of cash flows:
As at
February 29,
2024
February 28,
2023
February 28,
2022
Cash and cash equivalents
$
175 $
295 $
378
Restricted cash and cash equivalents
25
27
28
Total cash, cash equivalents, restricted cash, and restricted cash
equivalents presented in the consolidated statements of cash flows
$
200 $
322 $
406
The contractual maturities of available-for-sale investments as at February 29, 2024 and February 28, 2023 were as
follows:
As at
February 29, 2024
February 28, 2023
Cost Basis
Fair Value
Cost Basis
Fair Value
Due in one year or less
$
166 $
166 $
364 $
364
No fixed maturity
10
—
10
—
$
176 $
166 $
374 $
364
As at February 29, 2024 and February 28, 2023, the Company had no available-for-sale debt securities with continuous
unrealized losses.
4. CONSOLIDATED BALANCE SHEET DETAILS
Accounts Receivable, Net of Allowance
The allowance for credit losses as at February 29, 2024 was $6 million (February 28, 2023 - $1 million).
The Company recognizes current estimated credit losses (“CECL”) for accounts receivable. The CECL for accounts
receivable are estimated based on days past due and region for each customer in relation to a representative pool of assets
consisting of a large number of customers with similar risk characteristics that operate under similar economic
environments. The Company determined the CECL by estimating historical credit loss experience based on the past due
status and region of the customers, adjusted as appropriate to reflect current conditions and estimates of future economic
conditions. When specific customers are identified as no longer sharing the same risk profile as their current pool, they are
removed from the pool and evaluated separately. 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 of 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, 2022
$
4
Prior period provision for expected credit losses
1
Write-offs charged against the allowance
(4)
Ending balance of the allowance for credit loss as at February 28, 2023
1
Current period provision for expected credit losses
5
Ending balance of the allowance for credit loss as at February 29, 2024
$
6
The allowance for credit losses as at February 29, 2024 consists of $1 million (February 28, 2023 - $1 million) relating to
CECL estimated based on days past due and region and $5 million (February 28, 2023 - nil) relating to specific customers
that were evaluated separately.
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
84
There were two customers that comprised more than 10% of accounts receivable as at February 29, 2024 (February 28,
2023 - two customers comprised more than 10%).
Other Receivables
As at February 29, 2024 and February 28, 2023, other receivables included items such as claims filed with the Ministry of
Innovation, Science and Economic Development Canada relating to its Strategic Innovation Fund program’s investment in
BlackBerry QNX, among other items, none of which were greater than 5% of the current assets balance.
Other Current Assets
Other current assets comprised the following:
As at
February 29, 2024
February 28, 2023
Intellectual property
$
— $
141
Other
47
41
$
47 $
182
As described in Note 12, on May 11, 2023, the Company completed its previously announced patent sale with Malikie
Innovations Limited (“Malikie”) and recognized revenue of $218 million and cost of sales of $147 million, which is
comprised of the carrying value of the intellectual property of $141 million referred to above and $6 million of capitalized
costs during the first quarter of fiscal 2024 related to patent maintenance. See Note 12 under the heading “Patent Sale”.
Other current assets also included 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
February 29, 2024
February 28, 2023
Cost
BlackBerry operations and other information technology
$
85 $
84
Leasehold improvements and other
15
19
Furniture and fixtures
6
9
Manufacturing, repair and research and development equipment
3
2
109
114
Accumulated amortization
88
89
Net book value
$
21 $
25
For the year ended February 29, 2024, amortization expense related to property, plant and equipment amounted to
$10 million (February 28, 2023 - $12 million; February 28, 2022 - $15 million).
Sale of Property, Plant and Equipment, Net
During the year ended February 29, 2024, the Company had no sale of property, plant and equipment, net.
During the year ended February 28, 2023, the Company sold its corporate aircraft. As a result, the Company recorded
proceeds of approximately $17 million and incurred a gain on disposal of approximately $6 million (cost of $29 million,
accumulated amortization of $18 million, and a net book value of approximately $11 million).
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
85
Intangible Assets, Net
Intangible assets comprised the following:
As at February 29, 2024
Cost
Accumulated
Amortization
Net Book
Value
Acquired technology
$
900 $
846 $
54
Other acquired intangibles
386
334
52
Intellectual property
111
63
48
$
1,397 $
1,243 $
154
As at February 28, 2023
Cost
Accumulated
Amortization
Net Book
Value
Acquired technology
$
900 $
824 $
76
Other acquired intangibles
386
318
68
Intellectual property
123
64
59
$
1,409 $
1,206 $
203
For the year ended February 29, 2024, amortization expense related to intangible assets amounted to $49 million
(February 28, 2023 - $93 million; February 28, 2022 - $161 million).
Total additions to intangible assets in fiscal 2024 amounted to $14 million (fiscal 2023 - $34 million) and included
additions related to patent maintenance classified as other current assets on the Company’s consolidated balance sheets.
During fiscal 2024, additions to intangible assets primarily consisted of payments for intellectual property relating to
patent maintenance, registration and license fees.
For the year ended February 29, 2024, the Company recorded $8 million in impairment charges related to patent
abandonments (fiscal 2023 - $231 million related to intangible assets previously recognized from the acquisition of
Cylance), see Note 3 for further details.
Based on the carrying value of the identified intangible assets, as at February 29, 2024, and assuming no subsequent
impairment of the underlying assets, the annual amortization expense for each of the five succeeding years is expected to
be as follows: fiscal 2025 - $42 million; fiscal 2026 - $36 million; fiscal 2027 - $31 million; fiscal 2028 - $18 million and
fiscal 2029 - $6 million.
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
86
The weighted average remaining useful lives of the intangible assets are as follows:
As at
February 29, 2024
February 28, 2023
Acquired technology
3.3 years
4.0 years
Other acquired intangibles
3.6 years
4.5 years
Intellectual property
6.1 years
6.8 years
Goodwill
Changes to the carrying amount of goodwill during the fiscal years ended February 29, 2024, February 28, 2023 and
February 28, 2022 were as follows:
Carrying Amount
Carrying amount as at February 29, 2021
$
849
Effect of foreign exchange on non-U.S. dollar denominated goodwill
(5)
Carrying amount as at February 28, 2022
844
Goodwill impairment charge (note 3)
(245)
Effect of foreign exchange on non-U.S. dollar denominated goodwill
(4)
Carrying amount as at February 28, 2023
595
Effect of foreign exchange on non-U.S. dollar denominated goodwill
2
Goodwill impairment charge (note 3)
(35)
Carrying amount as at February 29, 2024
$
562
Other Long-term Assets
As at February 29, 2024, other long-term assets included long-term receivables related to intellectual property sold (see
Note 12 under the heading “Patent Sale”), long-term receivables, and the long-term portion of deferred commission,
among other items, none of which were greater than 5% of the total assets balance.
As at February 28, 2023, other long-term assets included the long-term portion of deferred commission and long-term
receivables, among other items, none of which were greater than 5% of the total assets balance.
Accrued Liabilities
Accrued liabilities comprised the following:
As at
February 29, 2024
February 28, 2023
Operating lease liabilities, current (note 11)
20
24
Restructuring programs, current portion
20
3
Other
77
116
$
117 $
143
Other accrued liabilities include accrued director fees, accrued vendor liabilities, variable incentive accrual, payroll
withholding taxes and accrued royalties, among other items, none of which were greater than 5% of the current liabilities
balance in any of the periods presented.
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
87
Restructuring
During fiscal 2023 and fiscal 2024, the Company commenced restructuring programs with the objectives of reducing its
annual costs and expenses relating to the Cybersecurity business, and later separating and streamlining the Company’s
centralized corporate functions into Cybersecurity and IoT specific teams such that the businesses may operate
independently and on a profitable and cash flow positive basis. The reduction of overall Company costs will include
rationalizing and streamlining existing central administrative functions, right-sizing cost structures within both business
units including R&D and outsourced contracting, changes to overall product portfolio offerings and geographies the
Company operates in, and optimizing related support functions and organizational structure. Other charges and cash costs
may occur as programs are implemented or changes are completed.
The following table sets forth the activity in the Company’s restructuring program liabilities for fiscal 2024 and fiscal
2023:
Employee
Termination
Benefits
Facilities
Costs
Total
Balance as at February 28, 2022
$
— $
— $
—
Charges incurred
8
2
10
Cash payments made
(6)
(1)
(7)
Balance as at February 28, 2023
2
1
3
Charges incurred
31
6
37
Cash payments made
(16)
(3)
(19)
Balance as at February 29, 2024
$
17 $
4 $
21
Current portion
$
17 $
3 $
20
Long-term portion
—
1
1
$
17 $
4 $
21
The long-term portion of the restructuring liabilities is recorded at fair value, determined by measuring the remaining
payments at present value using an effective interest rate of 5.0%, 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 and facilities costs to better align the Company’s
general and administrative and R&D cost profiles to its market competitors, create a more focused sales force and
improve profitability and cash flow. Total charges incurred in fiscal 2024 and fiscal 2023 were $37 million and
$10 million respectively, recorded within General and administrative on the Consolidated Statements of Operations.
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
88
5.
INCOME TAXES
The difference between the amount of the provision for (recovery of) income taxes and the amount computed by
multiplying income (loss) before income taxes by the statutory Canadian tax rate is reconciled as follows:
For the Years Ended
February 29, 2024
February 28, 2023
February 28, 2022
Statutory Canadian tax rate
26.5 %
26.5 %
26.5 %
Expected provision for (recovery of) income taxes
$
(28)
$
(191)
$
5
Differences in income taxes resulting from:
Valuation allowance
28
125
(9)
Investment tax credits
(11)
(10)
7
Change in unrecognized income tax benefits
(1)
1
(2)
Foreign tax rate differences
4
10
3
Non-deductible permanent differences
8
5
3
Goodwill impairment
9
65
—
Prior period adjustments
9
4
(1)
Other differences
6
5
1
$
24
$
14
$
7
For the Years Ended
February 29, 2024
February 28, 2023
February 28, 2022
Income (loss) before income taxes:
Canadian
$
(18) $
(128) $
133
Foreign
(88)
(592)
(114)
$
(106) $
(720) $
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
89
The provision for (recovery of) income taxes consists of the following:
For the Years Ended
February 29, 2024
February 28, 2023
February 28, 2022
Current
Canadian
$
2 $
1 $
(1)
Foreign
22
13
8
$
24 $
14 $
7
Deferred income tax assets and liabilities consist of the following temporary differences:
As at
February 29, 2024
February 28, 2023
Assets
Property, plant, equipment and intangibles assets
$
258 $
264
Non-deductible reserves
37
44
Minimum taxes
207
207
Debentures (note 6)
—
1
Research and development
402
390
Tax loss carryforwards
514
495
Other
125
122
Deferred income tax assets
1,543
1,523
Valuation allowance
1,520
1,492
Deferred income tax assets net of valuation allowance
23
31
Liabilities
Property, plant, equipment and intangibles assets
(23)
(31)
Deferred income tax liabilities
(23)
(31)
Net deferred income tax asset (liability)
$
— $
—
The Company regularly assesses the need for a valuation allowance against its deferred tax assets. In making that
assessment, the Company considers both positive and negative evidence related to the likelihood of realization of the
deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or
all of the deferred tax assets will be realized.
In evaluating the need for a valuation allowance, the Company noted that there had been three years of cumulative losses,
including fiscal 2024. In fiscal 2024, the Company saw an increase in the deferred tax valuation allowance of $28 million
(February 28, 2023 - increase of $125 million). As a result, the deferred tax valuation allowance had an ending balance of
$1,520 million (February 28, 2023 - $1,492 million). This accounting treatment has no effect on the Company’s ability to
utilize deferred tax assets to reduce future cash tax payments. The Company will continue to assess the likelihood that the
deferred tax assets will be realizable at each reporting period and the valuation allowance will be adjusted accordingly.
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
90
The Company’s total unrecognized income tax benefits as at February 29, 2024 and February 28, 2023 were $20 million
and $21 million, respectively. A reconciliation of the beginning and ending amount of unrecognized income tax benefits
that, if recognized, would affect the Company’s effective income tax rate is as follows:
For the Years Ended
February 29, 2024
February 28, 2023
February 28, 2022
Unrecognized income tax benefits, opening balance
$
21 $
20 $
24
Increase for income tax positions of current year
1
1
—
Settlement of tax positions
(2)
—
(4)
Unrecognized income tax benefits, ending balance
$
20 $
21 $
20
As at February 29, 2024, $20 million of the unrecognized tax benefits have been netted against deferred income taxes and
nil has been recorded within income taxes payable on the Company’s consolidated balance sheets.
A summary of open tax years by major jurisdiction is presented below:
Jurisdiction
Canada (1)
Fiscal 2016 - 2024
United States (2)
Fiscal 2021 - 2024
United Kingdom
Fiscal 2023 - 2024
______________________________
(1) Includes federal as well as provincial jurisdictions, as applicable.
(2) Pertains to federal tax years. Certain state jurisdictions remain open from fiscal 2020 through fiscal 2024.
The Company is subject to ongoing examination by tax authorities in the 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. The
Company believes it is reasonably possible that approximately nil of its gross unrecognized income tax benefits will be
realized in the next twelve months. While the final resolution of these 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.
The Company recognizes interest and penalties related to unrecognized income tax benefits as interest expense that is
netted and reported within investment income, net. The amount of interest accrued as at February 29, 2024 was
approximately $3 million (February 28, 2023 - approximately $3 million). The amount of penalties accrued as at February
29, 2024 was nil (February 28, 2023 - nil).
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
91
As at February 29, 2024, the Company has the following net operating loss carryforwards and tax credits, which are
scheduled to expire in the following years:
Year of Expiry
Net Operating Losses
Research and Development
Tax Credits (1)
Minimum Taxes
2029
$
10 $
— $
1
2030
—
—
108
2031
1
12
72
2032
28
1
22
2033
88
133
—
2034
96
124
—
2035
92
52
4
2036
326
40
—
2037
492
23
—
2038
199
17
—
2039
13
14
—
2040
3
13
—
2041
—
8
—
2042
—
11
—
2043
182
14
—
2044
—
12
—
Indefinite
422
22
—
$
1,952 $
496 $
207
______________________________
(1) Includes federal, provincial and state balances.
6.
DEBENTURES
3.00% Convertible Senior Notes
On January 29, 2024, the Company issued $200 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 Company used the net proceeds of the issuance of the Notes principally to repay
its outstanding $150 million aggregate principal amount of 1.75% extendible convertible unsecured debentures (the
“Extension Debentures” and, collectively with the “2020 Debentures” (as defined below) and the Notes, the
“Debentures”) at maturity on February 15, 2024.
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 52 million common shares at a price of $3.88 per share, subject to adjustments. Prior to the close of business on
the business day immediately preceding November 15, 2028, the Notes will be convertible only upon satisfaction of
certain conditions and during certain periods, and thereafter, at any time until the close of business on the second
scheduled trading day immediately preceding February 15, 2029. The Company may satisfy any conversions of the Notes
by paying or 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). Covenants associated with the Notes include general corporate
maintenance, existence and reporting requirements. The Notes will 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.
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
92
Under specified events of default, the outstanding principal and any accrued and unpaid interest on the Notes will become
immediately due and payable upon request of holders holding not less than 25% of the principal amount of the Notes then
outstanding. During the occurrence of certain specific events of default, the Company may elect to cure such events of
default by increasing the 3.00% interest rate on the Notes by 0.25% to 0.50% per annum.
The Company may not redeem the Notes prior to February 22, 2027, except in the event of certain tax law changes. On or
after February 22, 2027, the Company may redeem for cash all or a portion of the Notes, at the Company’s election, if the
last reported sale price of the Company’s common shares has been at least 130% of the conversion price then in effect on
each of at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period (including the
last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the
Company provides notice of redemption at a cash redemption price equal to 100% of the aggregate principal amount of
the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If the Company
undergoes a fundamental change, as defined in the indenture governing the Notes, subject to certain conditions the
Company will be required to make an offer to repurchase for cash all of the outstanding Notes (or any portion thereof that
a holder determines to sell to the Company) at a repurchase price equal to 100% of the principal amount of the Notes to be
repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. In
connection with certain corporate events or if the Company calls the Notes for redemption, the Company will, under
certain circumstances, increase the conversion rate for noteholders who elect to convert their Notes in connection with
such corporate event or convert their Notes called for redemption.
The Company has recorded the Notes, including the debt itself and all embedded derivatives, at cost less debt issuance
costs of $6 million and present the Notes as a single hybrid financial instrument. No portion of the embedded derivatives
required bifurcation from the host debt contract.
The following table summarizes the change in the Notes for the fiscal year ended February 29, 2024 from their date of
issuance:
As at
February 29, 2024
Principal received as of January 29, 2024
200
Debt issuance costs paid
(6)
Balance as at February 29, 2024
$
194
Extension Debentures and 2020 Debentures
On November 17, 2023, the Company issued the Extension Debentures in a private placement to certain controlled
affiliates of Fairfax Financial Holdings Limited (“Fairfax”). The Company used the net proceeds from the issuance of the
Extension Debentures, together with cash on hand, to repay its outstanding $365 million aggregate principal amount of
1.75% unsecured convertible debentures (the “2020 Debentures”) at maturity on November 13, 2023. Aside from the
maturity date, the terms of the Extension Debentures were substantially identical to those of the 2020 Debentures, except
that the Extension Debentures were not listed on any stock exchange and did not involve an indenture trustee. The
Company used a portion of the proceeds from the issuance of the Notes to repay the Extension Debentures at maturity on
February 15, 2024.
Each $1,000 principal amount of Extension Debentures was convertible at any time prior to the third business day prior to
the maturity date into 166.67 common shares of the Company, for a total of 25 million common shares at a price of $6.00
per share, subject to adjustments. Covenants associated with the Extension Debentures included limitations on the
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
93
Company’s total indebtedness. Interest on the Extension Debentures was payable on the maturity date in arrears at a rate
of 1.75% per annum.
Under specified events of default, the outstanding principal and any accrued interest on the Extension Debentures become
immediately due and payable upon request of holders holding not less than 25% of the principal amount of the Extension
Debentures then outstanding. During an event of default, the interest rate would increase to 5.75% per annum.
The Extension Debentures were subject to a change of control provision whereby the Company would be required to
make an offer to repurchase the Extension Debentures at 115% of par value if a person or group (not affiliated with
Fairfax) acquired 35% of the Company’s outstanding common shares, acquired all or substantially all of its assets, or if
the Company merged with another entity and the Company’s existing shareholders hold less than 50% of the common
shares of the surviving entity. Additionally, the Extension Debentures could not be converted to the extent that, after
giving effect to the conversion, the holder would beneficially own or exercise control or direction over more than 19.99%
of the Company’s then issued and outstanding common shares.
Due to the conversion option and other embedded derivatives within the Extension Debentures, and consistent with the
Company’s accounting for the 2020 Debentures, the Company had elected to record the Extension Debentures, including
the debt itself and all embedded derivatives, at fair value and present the Extension Debentures as a single hybrid financial
instrument. No portion of the fair value of the Extension Debentures had been recorded as equity, nor would be if the
embedded derivatives were bifurcated from the host debt contract.
Each period, the fair value of the Extension Debentures and 2020 Debentures were recalculated and resulting gains and
losses from the changes in fair value of the Extension Debentures and 2020 Debentures associated with non-credit
components were recognized in income, while the change in fair value associated with credit components was recognized
in accumulated other comprehensive loss (“AOCL”). The fair value of the Extension Debentures was determined using
observable interest rate curves, and the market price and volatility of the Company’s common shares.
The following table summarizes the change in fair value of the Extension Debentures from their date of issuance, which
also represents the total changes through earnings of items classified as Level 2 in the fair value hierarchy:
February 29, 2024
Principal received as of November 17, 2023
$
150
Change in fair value of the Extension Debentures
—
Maturity of the Extension Debentures on February 15, 2024
(150)
Balance as at February 29, 2024
$
—
The following table summarizes the change in fair value of the 2020 Debentures for the years ended February 29, 2024
and February 28, 2023 which also represents the total changes through earnings of items classified as Level 3 in the fair
value hierarchy:
February 29, 2024
Balance as at February 28, 2022
$
507
Change in fair value of the 2020 Debentures
(140)
Balance as at February 28, 2023
367
Change in fair value of the 2020 Debentures
(2)
Maturity of the 2020 Debentures on November 13, 2023
(365)
Balance as at February 29, 2024
$
—
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
94
The following table shows the impact of the changes in fair value of the Extension Debentures and 2020 Debentures for
the years ended February 29, 2024, February 28, 2023 and February 28, 2022:
For the Years Ended
February 29,
2024
February 28,
2023
February 28,
2022
Income associated with the change in fair value from non-credit components
recorded in the consolidated statements of operations
$
2 $
138
$
212
Income associated with the change in fair value from instrument-specific credit
components recorded in AOCL
—
2
1
Realized losses associated with the change in fair value from credit
components recorded in the consolidated statements of operations on maturity
of the Extension Debentures and 2020 Debentures
(6)
—
—
Realized losses associated with the change in fair value from credit
components released from AOCL on maturity of the Extension Debentures and
2020 Debentures
6
—
—
Total decrease in the fair value of the Extension Debentures and 2020
Debentures
$
2 $
140
$
213
For the year ended February 29, 2024, the Company recorded interest expense related to the Debentures of $6 million,
which has been included in investment income, net on the Company’s consolidated statements of operations (fiscal 2023 -
$6 million; fiscal 2022 - $6 million). The Company is required to make semi-annual interest-only payments of
approximately $3 million during the remaining term the Notes are outstanding.
Fairfax, a related party under U.S. GAAP due to its beneficial ownership of common shares in the Company after taking
into account potential conversion of the Extension Debentures, owned $330 million principal amount of the 2020
Debentures and $150 million principal amount of the Extension Debentures. As such, the payment of interest on the
Extension Debentures and such portion of the 2020 Debentures, and their repayment, to Fairfax represented related party
transactions.
7.
CAPITAL STOCK
(a)
Capital Stock
The Company is authorized to issue an unlimited number of voting common shares, an unlimited number of non-voting,
redeemable, retractable Class A common shares and an unlimited number of non-voting, cumulative, redeemable,
retractable preferred shares. As at February 29, 2024 and February 28, 2023, there were no Class A common shares or
preferred shares outstanding.
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
95
The following details the changes in issued and outstanding common shares for the years ended February 29, 2024,
February 28, 2023 and February 28, 2022:
Capital Stock and
Additional Paid-in Capital
Stock
Outstanding
(000s)
Amount
Common shares outstanding as at February 28, 2021
565,505 $
2,823
Exercise of stock options
555
3
Common shares issued for restricted share unit settlements
8,011
—
Stock-based compensation
—
36
Common shares issued related to Exchange Shares
1,422
—
Common shares issued for employee share purchase plan
735
7
Common shares outstanding as at February 28, 2022
576,228
2,869
Exercise of stock options
97
—
Common shares issued for restricted share unit settlements
4,872
—
Stock-based compensation
—
34
Common shares issued for employee share purchase plan
960
6
Common shares outstanding as at February 28, 2023
582,157
2,909
Exercise of stock options
106
—
Common shares issued for restricted share unit settlements
5,636
—
Stock-based compensation
—
33
Common shares issued on the redemption of deferred share units
297
1
Common shares issued for employee share purchase plan
1,037
5
Common shares outstanding as at February 29, 2024
589,233 $
2,948
Common shares (the “Exchange Shares”) were issued in connection with the Cylance acquisition, which was completed
on February 21, 2019. In lieu of cash, a portion of the consideration owed to certain Cylance shareholders was paid in
equal installments of Exchange Shares on the first three anniversary dates of the closing.
The Company had 589 million voting common shares outstanding, 0.2 million options to purchase voting common shares,
19 million RSUs and 1 million DSUs outstanding as at April 1, 2024. In addition, 51.5 million common shares are
issuable upon conversion in full of the Notes as described in Note 6.
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
96
(b)
Stock-based Compensation
Restricted share units
The Company recorded compensation expense with respect to RSUs of approximately $33 million in the year ended
February 29, 2024 (February 28, 2023 - $34 million; February 28, 2022 - $35 million).
A summary of RSU activity during fiscal 2024 is shown below:
RSUs Outstanding
Number
(000’s)
Weighted
Average
Grant Date
Fair Value
Average
Remaining
Contractual
Life in Years
Aggregate
Intrinsic
Value
(millions)
Balance as at February 28, 2023
19,640 $
5.92
Granted during the year
8,097
3.51
Vested during the year
(5,636)
6.76
Forfeited/cancelled during the year
(5,800)
6.31
Balance as at February 29, 2024
16,301 $
4.30
1.68
$
45
Expected to vest February 29, 2024
13,491 $
4.29
1.66
$
38
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the aggregate closing share
price of the Company’s common shares on February 29, 2024 that would have been received by RSU holders if all RSUs
had been vested on February 29, 2024).
Tax deficiencies incurred by the Company related to the RSUs vested were nil for the year ended February 29, 2024
(February 28, 2023 - tax deficiency of nil; February 28, 2022 - tax deficiency of nil).
As at February 29, 2024, there was $53 million of unrecognized compensation expense related to RSUs that will be
expensed over the vesting period, which, on a weighted average basis, results in a period of approximately 1.63 years.
During the year ended February 29, 2024, there were 8,097,408 RSUs granted (February 28, 2023 - 11,882,500), all of
which will be settled upon vesting by the issuance of new common shares.
During the year ended February 29, 2024, the weighted average fair value for RSUs granted was $3.51 (February 28, 2023
- $4.29; February 28, 2022 - $9.72). During the year ended February 29, 2024, the fair value of RSUs that vested was $38
million (February 28, 2023 - $40 million; February 28, 2022 - $69 million).
Deferred share units (“DSUs”)
The Company issued 381,073 DSUs and redeemed 602,753 DSUs during the year ended February 29, 2024. There were
$1 million of DSUs redeemed for shares. There were 1.4 million DSUs outstanding as at February 29, 2024 (February 28,
2023 - 1.6 million). The Company had a liability of $4 million in relation to the DSU Plan as at February 29, 2024
(February 28, 2023 - $6 million) included in accrued liabilities.
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
97
8.
EARNINGS (LOSS) PER SHARE
The following table sets forth the computation of basic and diluted earnings (loss) per share:
For the Years Ended
February 29, 2024
February 28, 2023
February 28, 2022
Net income (loss) for basic earnings (loss) per share available to
common shareholders
$
(130) $
(734) $
12
Less: Debentures fair value adjustment (1) (2)
—
(138)
(212)
Add: interest expense on Debentures (1) (2)
—
6
6
Net loss for diluted loss per share available to common shareholders
$
(130) $
(866) $
(194)
Weighted average number of shares outstanding (000’s) - basic (1)(3)
584,543
578,654
570,607
Effect of dilutive securities (000’s)
Conversion of 2020 Debentures (1) (2)
—
60,833
60,833
Weighted average number of shares and assumed conversions (000’s)
diluted
584,543
639,487
631,440
Earnings (loss) per share - reported
Basic
$
(0.22) $
(1.27) $
0.02
Diluted
$
(0.22) $
(1.35) $
(0.31)
______________________________
(1) The Company has not presented the dilutive effect of the Notes, Extension Debentures or 2020 Debentures using the
if-converted method in the calculation of diluted loss per share for the year ended February 29, 2024, as to do so would
be antidilutive. See Note 6 for details on the Debentures.
(2) The Company has presented the dilutive effect of the 2020 Debentures using the if-converted method, assuming
conversion at the beginning of the fiscal year for the years ended February 28, 2023 and February 28, 2022.
Accordingly, to calculate diluted loss per share, the Company adjusted net income (loss) by eliminating the fair value
adjustment made to the 2020 Debentures and interest expense incurred on the 2020 Debentures in the years ended
February 28, 2023 and February 28, 2022, and added the number of shares that would have been issued upon
conversion to the diluted weighted average number of shares outstanding. See Note 6 for details on the 2020
Debentures.
(3) The Company has not 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 loss per share for the years ended February 29,
2024, February 28, 2023 and February 28, 2022 as to do so would be antidilutive.
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
98
9.
ACCUMULATED OTHER COMPREHENSIVE LOSS
The changes in AOCL by component net of tax, for the years ended February 29, 2024, February 28, 2023 and February
28, 2022 were as follows:
As At
February 29, 2024
February 28, 2023
February 28, 2022
Cash Flow Hedges
Balance, beginning of period
$
(1) $
— $
1
Other comprehensive loss before reclassification
—
(3)
—
Amounts reclassified from AOCL into net income (loss)
1
2
(1)
Accumulated net unrealized losses on derivative instruments
designated as cash flow hedges
$
— $
(1) $
—
Foreign Currency Cumulative Translation Adjustment
Balance, beginning of period
$
(16) $
(10) $
(4)
Other comprehensive income (loss)
2
(6)
(6)
Foreign currency cumulative translation adjustment
$
(14) $
(16) $
(10)
Change in Fair Value From Instrument-Specific Credit Risk On
Debentures
Balance, beginning of period
$
(6) $
(8) $
(9)
Other comprehensive income before reclassification
—
2
1
Amounts reclassified from AOCL into net income (loss)
6
—
—
Change in fair value from instruments-specific credit risk on
Debentures
$
— $
(6) $
(8)
Other Post-Employment Benefit Obligations
Balance, beginning of period
$
(1) $
(1) $
(1)
Other comprehensive income
1
—
—
Actuarial losses associated with other post-employment benefit
obligations
$
— $
(1) $
(1)
Accumulated Other Comprehensive Loss, End of Period
$
(14) $
(24) $
(19)
During the year ended February 29, 2024, $1 million in losses (pre-tax and post-tax) associated with cash flow hedges
were reclassified from AOCL into general and administrative expenses (February 28, 2023 - $2 million in losses).
10.
COMMITMENTS AND CONTINGENCIES
(a)
Letters of Credit
The Company had $25 million in collateralized outstanding letters of credit in support of certain leasing arrangements
entered into in the ordinary course of business as of February 29, 2024. See the discussion of restricted cash in Note 3.
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
99
(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
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 February 29, 2024, there are no material claims outstanding 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 and one individual lawsuit were filed
against the Company and certain of its former officers in various jurisdictions in the U.S. and Canada alleging that the
Company and certain of its officers made materially false and misleading statements regarding the Company’s financial
condition and business prospects and that certain of the Company’s financial statements contain material misstatements.
The individual lawsuit was voluntarily dismissed and the consolidated U.S. class actions was settled; see “Litigation
Settlement” below in this Note 10.
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. Discovery is proceeding and the Court has not set a trial date.
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
100
On March 17, 2017, a putative employment class action was filed against the Company in the Ontario Superior Court of
Justice (Parker v. BlackBerry Limited). The Statement of Claim alleges that actions the Company took when certain of its
employees decided to accept offers of employment from Ford Motor Company of Canada amounted to a wrongful
termination of the employees’ employment with the Company. The claim seeks (i) an unspecified quantum of statutory,
contractual, or common law termination entitlements; (ii) punitive or breach of duty of good faith damages of CAD$20
million, or such other amount as the Court finds appropriate, (iii) pre- and post- judgment interest, (iv) attorneys’ fees and
costs, and (v) such other relief as the Court deems just. The Court granted the plaintiffs’ motion to certify the class action
on May 27, 2019. The Company commenced a motion for leave to appeal the certification order on June 11, 2019. The
Court denied the motion for leave to appeal on September 17, 2019. The Company filed its Statement of Defence on
December 19, 2019. The parties participated in a mediation on November 9, 2022, which did not result in an agreement.
The Court has set a trial date of June 2, 2025, and scheduled a pre-trial conference on December 4, 2024. Discovery is
proceeding.
Other contingencies
As at February 29, 2024, the Company has recognized $17 million (February 28, 2023 - $17 million) in funds from claims
filed with the Ministry of Innovation, Science and Economic Development Canada relating to its Strategic Innovation
Fund (“SIF”) program’s investment in BlackBerry QNX. 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) Litigation Settlement
On April 6, 2022, through a mediator, the Company agreed in principle to pay $165 million to settle the consolidated U.S.
class actions (see “Litigation” above in this Note 10). The Stipulation of Settlement was executed effective June 7, 2022.
On June 29, 2022, the Company paid $1 million of the settlement amount and the remaining $164 million was paid on
September 6, 2022. On September 29, 2022, the Court granted final approval of the settlement and entered final judgment.
(d) 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 fiscal 2024.
11.
LEASES
The Company has operating and finance leases primarily for corporate offices, research and development facilities, data
centers and certain equipment. The Company’s leases have remaining lease terms of between one year and six years, some
of which may include options to extend the lease for up to 10 years, and some of which may include options to terminate
the lease within one month.
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
101
The components of lease expense were as follows:
For the Years Ended
February 29, 2024
February 28, 2023
February 28, 2022
Operating lease cost, included in general and administrative
$
18 $
20 $
23
Supplemental cash flow information related to leases was as follows:
For the Years Ended
February 29, 2024
February 28, 2023
February 28, 2022
Cash used in operating activities related to operating lease
payments
$
28 $
32 $
37
During the year ended February 29, 2024, the Company entered into $13 million (February 28, 2023 - $15 million) in
lease obligations and recognized a corresponding ROU asset of $13 million (February 28, 2023 - $15 million).
During the year ended February 29, 2024, the Company incurred losses of $7 million (February 28, 2023 - $4 million;
February 28, 2022 - nil) on LLA impairment of ROU assets, as described in Note 3. The Company also had sublease
income during the year ended February 29, 2024 of $4 million (February 28, 2023 - $3 million; February 28, 2022 -
$3 million) and incurred short-term lease costs of $3 million (February 28, 2023 - $2 million; February 28, 2022 -
$2 million).
Supplemental consolidated balance sheet information related to leases was as follows:
As at
February 29, 2024
February 28, 2023
Operating leases
Operating lease assets
Operating lease ROU assets
$
32 $
44
Operating lease liabilities
Accrued liabilities
$
20 $
24
Operating lease liabilities
38
52
Total operating lease liabilities
$
58 $
76
As at
February 29, 2024
February 28, 2023
Weighted average remaining lease term
Operating leases
3.2 years
3.8 years
Weighted average discount rate
Operating lease
3.9 %
3.4 %
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
102
Maturities of undiscounted lease liabilities were as follows:
As at
February 29, 2024
Operating Leases
Fiscal year 2025
$
23
Fiscal year 2026
18
Fiscal year 2027
12
Fiscal year 2028
10
Fiscal year 2029
1
Thereafter
1
Total future minimum lease payments
65
Less:
Imputed interest
(7)
Total
$
58
12. 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: Cybersecurity, IoT, and Licensing and Other.
The Company disaggregates revenue from contracts with customers based on geographical regions, timing of revenue
recognition, and the major product and service types as described in Note 1.
The following table shows information by operating segment for the fiscal year ended February 29, 2024:
Cybersecurity
IoT
Licensing and Other
Segment Totals
Segment revenue
$
378 $
215 $
260 $
853
Segment cost of sales
142
36
152
330
Segment gross margin (1)
$
236 $
179 $
108 $
523
______________________________
(1) A reconciliation of total segment gross margin to consolidated totals is set forth below.
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
103
The following table shows information by operating segment for the fiscal year ended February 28, 2023 and February 28,
2022:
For the Year Ended
February 28, 2023
February 28, 2022
Cybersecurity
IoT
Licensing
and Other
Segment
Totals
Cybersecurity
IoT
Licensing
and Other
Segment
Totals
Segment revenue
$
418 $
206 $
32 $
656 $
477 $
178 $
63 $
718
Segment cost of sales
185
37
12
234
194
30
23
247
Segment gross margin (1)
$
233 $
169 $
20 $
422 $
283 $
148 $
40 $
471
______________________________
(1) A reconciliation of total segment gross margin to consolidated totals is set forth below.
Cybersecurity consists of BlackBerry® UEM and Cylance® cybersecurity solutions (collectively, BlackBerry Spark®),
BlackBerry® AtHoc® and BlackBerry® SecuSUITE®. The Company’s Cylance AI and machine learning-based platform
consists of CylanceENDPOINT™, CylanceGUARD®, CylanceEDGE™, CylanceINTELLIGENCE™ and other
cybersecurity applications. The Company’s endpoint management platform includes BlackBerry® UEM, BlackBerry®
Dynamics™, and BlackBerry® Workspaces solutions. Cybersecurity revenue is generated predominantly through
software licenses, commonly bundled with support, maintenance and professional services.
IoT consists of BlackBerry® QNX®, BlackBerry® Certicom®, BlackBerry Radar®, BlackBerry IVY® and other IoT
applications. IoT revenue is generated predominantly through software licenses, commonly bundled with support,
maintenance and professional services.
Licensing and Other consists of the Company’s intellectual property arrangements and settlement awards. Other consists
of the Company’s legacy SAF business, which ceased operations on January 4, 2022.
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
104
The following table reconciles total segment gross margin for the fiscal year ended February 29, 2024, February 28, 2023
and February 28, 2022 to the Company’s consolidated totals:
For the Years Ended
February 29, 2024
February 28, 2023
February 28, 2022
Total segment gross margin
523 $
422 $
471
Adjustments (1):
Less: Stock compensation
3
3
4
Less:
Research & development
186
207
219
Sales and marketing
171
176
183
General and administrative
181
164
114
Amortization
54
96
165
Impairment of long-lived assets
15
235
—
Impairment of goodwill
35
245
—
Gain on sale of property, plant and equipment, net
—
(6)
—
Debentures fair value adjustment
3
(138)
(212)
Litigation settlement
—
165
—
Investment income, net
(19)
(5)
(21)
Consolidated income (loss) before income taxes
$
(106) $
(720) $
19
______________________________
(1) The CODM reviews segment information on an adjusted basis, which excludes certain amounts as described below:
Stock compensation expenses - Equity compensation is a non-cash expense and does not impact the ongoing
operating decisions taken by the Company’s management.
Patent Sale
On May 11, 2023, the Company completed its previously announced patent sale with Malikie and sold certain non-core
patent assets for $170 million in cash on closing, an additional $30 million in fixed consideration due by no later than the
third anniversary of closing and variable consideration in the form of future royalties in the aggregate amount of up to
$700 million (the “Malikie Transaction”). Pursuant to the terms of the Malikie Transaction, the Company received a
license back to the patents sold, which relate primarily to mobile devices, messaging and wireless networking.
In the first quarter of fiscal 2024, the Company recognized revenue of $218 million and cost of sales of $147 million
related to intellectual property sold. As at February 29, 2024, the remaining financing component on the patent sale was
$10 million and will be recognized as interest income over the payment terms.
The Company estimated variable consideration from future royalty revenues using an expected value method including
inputs from both internal and external sources related to patent monetization activities and cash flows, and constrained the
recognition of that variable consideration based on the Company’s accounting policies and critical accounting estimates as
described in Note 1. The present value of variable consideration recognized as revenue was $23 million and the amount of
variable consideration constrained was $210 million. The Company evaluates its conclusions as to whether the constraints
are still applicable on an ongoing basis, and will make updates when it observes a sufficient amount of evidence that
amounts of variable consideration are no longer subject to constraint or the estimated amount of variable consideration has
changed.
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
105
Revenue
The Company disaggregates revenue from contracts with customers based on geographical regions, timing of revenue
recognition, and the major product and service types, 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:
For the Years Ended
February 29, 2024
February 28, 2023
February 28, 2022
North America (1)
$
556
65.2 % $
350
53.4 % $
413
57.5 %
Europe, Middle East and Africa
172
20.2 %
222
33.8 %
234
32.6 %
Other regions
125
14.6 %
84
12.8 %
71
9.9 %
Total
$
853
100.0 % $
656
100.0 % $
718
100.0 %
______________________________
(1) North America includes all revenue from the Company’s intellectual property arrangements, due to the global
applicability of the patent portfolio and licensing arrangements thereof.
Revenue, classified by timing of recognition, was as follows:
For the Year Ended
February 29, 2024
February 28, 2023
February 28, 2022
Products and services transferred over time
$
279 $
364 $
428
Products and services transferred at a point in time
574
292
290
Total
$
853 $
656 $
718
Revenue contract balances
The following table sets forth the activity in the Company’s revenue contract balances for the fiscal year ended February
29, 2024:
Accounts
Receivable
Deferred
Revenue
Deferred
Commissions
Opening balance as at February 28, 2023
$
120 $
215 $
17
Increases due to invoicing of new or existing contracts, associated
contract acquisition costs, or other
939
605
32
Decrease due to payment, fulfillment of performance obligations, or
other
(804)
(598)
(28)
Increase, net
135
7
4
Closing balance as at February 29, 2024
$
255 $
222 $
21
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 February 29, 2024 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 Malikie
Transaction, which have been constrained based on the Company’s accounting policies and critical accounting estimates
as described in Note 1 and under “Patent Sale” in this Note 12.
As at February 29, 2024
Less than 12
Months
12 to 24 Months
Thereafter
Total
Remaining performance obligations
$
194 $
14 $
14 $
222
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
106
Revenue recognized for performance obligations satisfied in prior periods
For the fiscal year ended February 29, 2024, $12 million in revenue was recognized relating to performance obligations
satisfied in a prior period as a result of certain variable consideration no longer being subject to constraint (fiscal year
ended February 28, 2023 - $1 million; fiscal year ended February 28, 2022 - $1 million).
Property, plant and equipment, intangible assets, operating lease ROU assets and goodwill, classified by geographic
region in which the Company’s assets are located, were as follows:
As at
February 29, 2024
February 28, 2023
Property, Plant and
Equipment, Intangible
Assets, Operating
Lease ROU Assets and
Goodwill
Total Assets
Property, Plant and
Equipment, Intangible
Assets, Operating
Lease ROU Assets and
Goodwill
Total Assets
Canada
$
78 $
342 $
98 $
375
United States
662
923
742
1,208
Other
29
130
27
96
$
769 $
1,395 $
867 $
1,679
Information About Major Customers
There was one customer that comprised 27% of the Company’s revenue in fiscal 2024 due to the completed Malikie
Transaction (fiscal 2023 - one customer that comprised 12%; fiscal 2022 - one customer that comprised 11%).
13. CASH FLOW AND ADDITIONAL INFORMATION
(a)
Certain consolidated statements of cash flow information related to interest and income taxes paid is summarized as
follows:
For the Years Ended
February 29, 2024
February 28, 2023
February 28, 2022
Interest paid during the year
$
6 $
6 $
6
Income taxes paid during the year
10
2
5
Income tax refunds received during the year
1
5
6
(b)
Additional Information
Advertising expense, which includes media, agency and promotional expenses totaling $22 million is included in sales
and marketing expenses for the fiscal year ended February 29, 2024. (February 28, 2023 - $29 million; February 28, 2022
- $25 million)
General and administrative expenses for the fiscal year ended February 29, 2024 included nil with respect to foreign
exchange gain, net of foreign exchange hedging (February 28, 2023 - nil; February 28, 2022 - $1 million).
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 fiscal 2024 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 February 29, 2024, approximately 19% of cash and cash equivalents, 25% of
accounts receivable and 59% of accounts payable were denominated in foreign currencies (February 28, 2023 – 19%, 24%
and 36%, 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.
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
107
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 has also issued Notes with a fixed interest rate, as described in Note 6. 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 4. 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 February
29, 2024, no single issuer represented more than 30% of the total cash, cash equivalents and investments (February 28,
2023 - no single issuer represented more than 12% of the total cash, cash equivalents and investments), with the largest
such issuer representing bearer deposits, term deposits and cash balances with one of the Company’s banking
counterparties.
The Company maintains Credit Support Annexes (“CSAs”) with several of its counterparties. These CSAs require the
outstanding net position of all contracts be made whole by the paying or receiving of collateral to or from the
counterparties on a daily basis, subject to exposure and transfer thresholds. As at February 29, 2024, the Company had no
collateral posted or held with counterparties (February 28, 2023 - $1 million in collateral held).
Liquidity risk
Cash, cash equivalents, and investments were approximately $298 million as at February 29, 2024. 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 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.
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
108
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES.
As of February 29, 2024, the Company carried out an evaluation, under the supervision and with the participation of the
Company’s management, including the Company’s Chief Executive Officer and its Chief Financial Officer, of the effectiveness
of the design and operation of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
under the U.S. Exchange Act. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have
concluded that, as of such date, the Company’s disclosure controls and procedures were effective to give reasonable assurance
that the information required to be disclosed by the Company in reports that it files or submits under the U.S. Exchange Act is
(i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and
(ii) accumulated and communicated to management, including its principal executive and principal financial officers, or persons
performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting.
Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the U.S. Exchange Act as a process
designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the
Board, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with U.S. GAAP and includes those policies and
procedures that:
•
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and
dispositions of the assets of the Company;
•
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with U.S. GAAP, and that receipts and expenditures of the Company are being made
only in accordance with authorizations of management and directors of the Company; and
•
provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisitions, use or
dispositions of the Company’s assets that could have a material effect on the Company’s financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of February 29, 2024. In
making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in its Internal Control-Integrated Framework (2013). Based on this assessment, management concludes
that, as of February 29, 2024, the Company’s internal control over financial reporting was effective.
The effectiveness of the Company’s internal control over financial reporting as of February 29, 2024 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.
Changes in Internal Control Over Financial Reporting
During the three months ended February 29, 2024, no changes were made to the Company’s internal control over financial
reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over
financial reporting.
ITEM 9B. OTHER INFORMATION
Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements
During the three months ended February 29, 2024, neither the Company or any of its officers or directors adopted or terminated
trading arrangements for the sale of the Company’s common shares.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
109
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
A list of our executive officers appears in Part I, Item 1 to this Annual Report on Form 10-K.
The information required by this item will be included in our 2024 Proxy Statement, which will be filed with the SEC within
120 days after the end of our fiscal year ended February 29, 2024, and is incorporated herein by reference.
Audit and Risk Management Committee
The Audit and Risk Management Committee’s purpose is to provide assistance to the Board in fulfilling its legal and fiduciary
obligations with respect to matters involving the accounting, auditing, financial reporting, internal control, and legal compliance
and risk management functions of the Company and its subsidiaries. It is the objective of the Audit and Risk Management
Committee to maintain free and open means of communications among the Board, the independent auditors and the financial
and senior management of the Company. The full text of the Audit and Risk Management Committee’s Charter can be viewed
on the Company’s website at https://www.blackberry.com/ca/en/company/investors/corporate-governance-global.
Applicable securities laws require that, subject to certain exceptions, all members of the Audit and Risk Management
Committee be “independent” under Sections 1.4 and 1.5 of National Instrument 52-110 of the Canadian Securities
Administrators - Audit Committees and the rules and regulations of the NYSE, and “financially literate”, meaning that the
committee member has the ability to read and understand a set of financial statements that present a breadth and level of
complexity of accounting issues that are generally comparable to those issues reasonably expected to be raised by the
Company’s financial statements. Ms. Disbrow (Chair), Ms., Dr. Smaldone Alsup and Mr. Wouters are the members of the
Audit and Risk Management Committee, and each is an independent director of the Company and financially literate, based on
his or her education and experience as described below. The Audit and Risk Management Committee has also developed, in
conjunction with the Company’s Chief Financial Officer and other accounting personnel, an orientation and continuing
education program that will provide the new members of the Audit and Risk Management Committee with additional
information and understanding about the accounting and financial presentation issues underlying the Company’s financial
statements.
The members of the Audit and Risk Management Committee bring significant skill and experience to their responsibilities
including professional experience in accounting, business, management and governance, and finance. The specific education
and experience of each member that is relevant to the performance of his or her responsibilities as such member of the Audit
and Risk Management Committee are set out below:
Lisa Disbrow (Chair) – Ms. Disbrow has a BA from the University of Virginia, an MA from The George Washington
University in International Relations, and an MS from The National War College in National Strategy. Ms. Disbrow serves on
the President’s Export Council and is a Commissioner on the Congressional Planning, Programming, Budgeting & Execution
Reform Commission. Ms. Disbrow is also the Chair of the NobleReach Foundation, as well as a director of CACI International
Inc, Mercury Systems and SparkCognition, Inc. In addition, she is a Senior Fellow at the Johns Hopkins University Applied
Physics Lab and the Vice Chair of the National Defense Industrial Association. Previously, she served over 30 years in senior
civilian and military positions in the U.S. government, and was the Senate-confirmed Under Secretary of the United States Air
Force. She also served as Acting Secretary of the U.S. Air Force and was the Senate-confirmed chief financial officer of the Air
Force, as the Assistant Secretary for Financial Management and Comptroller.
Dr. Laurie Smaldone Alsup – Dr. Smaldone Alsup has an MD from Yale University, where she completed her residency in
Internal Medicine and fellowship in Medical Oncology. She is Chief Scientific Officer and Chief Medical Officer of NDA
Group AB (which merged in 2016 with PharmApprove, where Dr. Smaldone Alsup was President and Chief Scientific Officer),
a leading drug development consulting company. She was previously Chief Executive Officer of Phytomedics, an early-stage
biopharmaceutical company focused on arthritis and inflammation, prior to which she held clinical and regulatory leadership
roles at Bristol Myers Squibb, including Senior Vice President of Global Regulatory Science, where she also developed and led
Business Risk Management for the company. Dr. Smaldone Alsup is a director of Arvinas, Inc., Kinnate Biopharma Inc. and
Theravance Biopharma, Inc.
The Hon. Wayne Wouters – Mr. Wouters has a BComm (Honours) from the University of Saskatchewan and an MA in
economics from Queen’s University. From 2009 to 2014, Mr. Wouters was the Clerk of the Privy Council of Canada and held
the roles of Deputy Minister to the Prime Minister, Secretary to the Cabinet and Head of the Public Service. Prior to his tenure
as Clerk, Mr. Wouters was Secretary of the Treasury Board of Canada and served in deputy ministerial and other senior
positions in the Canadian public service. He is currently Strategic and Policy Advisor to McCarthy Tétrault LLP and a director
of Champion Iron Limited, Canadian Utilities Limited and Foran Mining Corporation. He was inducted by the Prime Minister
as a member of the Privy Council in 2014 and was he was invested into the Order of Canada as an officer in 2017. Mr. Wouters
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has extensive experience with economic policy and international trade matters, which included oversight of multi-billion dollar
budgets on behalf of the Government of Canada.
The Board has also determined that Ms. Disbrow is an audit committee financial expert within the meaning of General
Instruction B(8)(a) of Form 10-K under the U.S. Securities Exchange Act of 1934, as amended. The SEC has indicated that the
designation of a person as an audit committee financial expert does not make such person an “expert” for any purpose, impose
any duties, obligations or liability on such person that are greater than those imposed on members of the Audit Committee and
the Board who do not carry this designation or affect the duties, obligations or liability of any other member of the audit
committee or the Board.
Enterprise Risk Management
The Company recognizes that risks are associated with delivering on its strategy and achieving its corporate objectives.
Managing these risks is an essential part of the Company’s business and the Company aims to promote a culture of risk
management and compliance at all levels in the organization. The Company has defined and implemented an approach to
manage its exposure to risk, consisting of: (i) a risk management framework to regularly identify, assess, treat, monitor and
report on current and potential risks, and (ii) a governance structure that clearly defines the responsibilities of the Board, the
senior leadership team, employees and other stakeholders to support the risk management framework. This approach to
enterprise risk management is integral to the Company’s business activities and is designed to:
•
promote effective corporate governance and decision-making by enabling the consistent identification and evaluation
of risk on a consolidated basis;
•
ensure that risks are managed proactively and appropriately in the context of the Company’s strategy and objectives;
•
support the development of internal controls;
•
facilitate the reliability and transparency of financial and operational reporting;
•
assist in compliance with laws, regulations, policies, and contracts; and
•
reduce harm to financial performance and safeguard the Company’s assets.
Risk Management Framework Policy and Risk Appetite
The Company’s risk management framework policy defines responsibilities for the identification, assessment, management and
reporting of risks, and sets out expectations for ownership, resource assignment and compliance. The scope of the framework
embraces internal functions as well as those activities for which the Company engages support from third parties.
To support the risk management framework and risk oversight activities, the Company maintains a risk appetite statement that
defines, by category of risk, the Company’s tolerance for risk-taking having regard to potential rewards and overall business
strategies and objectives. The Company’s four risk categories are: (i) strategy and innovation, (ii) operations, (iii) legal,
compliance and reputation, and (iv) financial management and reporting. The Company’s risk profile is assessed against the
risk appetite statement, which is reviewed and updated as the Company’s business strategy and operating environment evolve.
Risk Governance and Oversight
The Company utilizes a “three lines of defense” governance structure to define how the responsibility for risk management
activities is assigned:
•
The first line of defense for managing risks resides with the management of each business group. Risk exposures are
identified and mitigated at a granular level through various ongoing management activities including business
planning, operations management, reporting, and process improvement projects.
•
Oversight of business unit management is provided by the second line of defense, the Security Risk and Compliance
Committee (“SRCC”), which meets at least quarterly and is supported by various compliance, security and control
functions. The SRCC is composed of manager representatives from each major business group and provides strategic
direction by defining key policies, identifying emerging risk trends, and sponsoring training.
•
The internal audit function comprises the third line of defense, providing independent assurance of the effectiveness of
the Company’s risk management activities and internal controls related to (i) financial reporting and integrity and (ii)
other areas of risk as assigned by the Audit and Risk Management Committee from time to time, including
cybersecurity risk. The internal audit function may also review the governance structures and mandates of the first two
lines of defense.
Additional governance and oversight is provided by the Risk Management and Compliance Council (“RMCC”), a council of
internal senior leaders which oversee the risk management activities undertaken by business group management and the SRCC.
The RMCC reviews the Company’s risk dashboard and monitors remediation activities to address gaps. The RMCC also
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approves the risk appetite statement and promotes a culture of risk management and compliance across the Company. The
RMCC meets at least quarterly with the Chief Risk Officer serving as the Chair. Phil Kurtz, the Company’s Chief Legal
Officer and Corporate Secretary, serves as the Chief Risk Officer and reports to the Audit and Risk Management Committee, at
least quarterly, on the activities of the RMCC.
The Board is ultimately responsible for overseeing the Company’s risk identification, assessment, management, monitoring and
reporting activities. The Audit and Risk Management Committee assists the Board with the oversight of enterprise risk
management at the Company, including risk assessment, risk compliance, the internal audit function and the controls, processes
and policies used to manage the Company’s risk. The Compensation, Nomination and Governance Committee of the Board also
assists the Board with the oversight of risk management and controls with respect to the Company’s compensation policies and
practices, including the administration of the Company’s equity-based compensation plans.
The Company also includes risks related to climate change and other environmental, social and governance considerations as
part of its enterprise risk management process.
Ethical Business Conduct and Code of Business Standards and Principles
The Company maintains and follows a written code of business standards and principles (the “Code”) that applies to, and is
acknowledged annually by, all of the directors, officers and employees of the Company. The Code is a statement of principles
designed to promote a culture of integrity and to help ensure that the Company operates its business in an ethical and legally-
compliant manner. The Code incorporates by reference a number of policies and guidelines, including the Company’s
Prevention of Improper Payments Policy and Insider Trading Policy, that provide guidance to employees concerning business
choices, decisions and behaviours. The Code expressly provides that acknowledgment of the Code is a condition of
employment, as is completion of all assigned training related to the Code and related policies and guidelines.
The Board, through the Audit and Risk Management Committee, receives reports on compliance with the Code, including
regarding the Company’s annual program to have employees acknowledge that they have read, understand and will comply
with the Code. The Company maintains a whistleblower program and makes whistleblower reporting available to employees
and external parties via a web and telephone hotline-based system supplied and operated by a third party that specializes in such
reporting systems. The system allows individuals to make whistleblower reports, including anonymously, to the Company or
directly to the Chair of the Audit and Risk Management Committee via the BlackBerry EthicsLink system and enables the
Company or the Chair of the Audit and Risk Management Committee, as appropriate, to follow up directly with the reporter
while maintaining his or her anonymity. Employees are advised of the whistleblower program as part of the Company’s annual
Code acknowledgement program. Management reports on the status of whistleblower reports to the Audit and Risk
Management Committee at its quarterly meetings.
In addition, the Board is responsible for overseeing, directly and through its committees, an appropriate compliance program for
the Company. The RMCC and SRCC oversee and assist management in maintaining the Company’s compliance program and
policies. Phil Kurtz, the Company’s Chief Legal Officer and Corporate Secretary, reports to the Audit and Risk Management
Committee at least quarterly on compliance matters in his capacity as Chair of the RMCC.
The Code is available on the Company’s website at https://www.blackberry.com/us/en/company/corporate-responsibility, or
upon request to the Corporate Secretary of the Company at its executive office, 2200 University Avenue East, Waterloo,
Ontario, N2K 0A7. If the Company makes any substantive amendments to the Code or grants any waiver, including any
implicit waiver, from a provision of the Code to the Chief Executive Officer or Chief Financial Officer, the Company will
disclose the nature of the amendment or waiver on that website or in a report on Form 8-K. The Company did not grant any
such waiver in fiscal 2024.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item will be included in our 2024 Proxy Statement, which will be filed with the SEC within
120 days after the end of our fiscal year ended February 29, 2024, and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this item will be included in our 2024 Proxy Statement, which will be filed with the SEC within
120 days after the end of our fiscal year ended February 29, 2024, and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item will be included in our 2024 Proxy Statement, which will be filed with the SEC within
120 days after the end of our fiscal year ended February 29, 2024, and is incorporated herein by reference.
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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this item will be included in our 2024 Proxy Statement, which will be filed with the SEC within
120 days after the end of our fiscal year ended February 29, 2024, and is incorporated herein by reference.
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PART IV
ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES
Financial Statements and Schedules
The financial statements filed as part of this filing are listed on the Index to Consolidated Financial Statements in Item 8.
Financial statement schedules have been omitted since they either are not required, not applicable, or the information is
otherwise included in the Consolidated Financial Statements and accompanying notes in Item 8.
Exhibits
Exhibit
Number
Description of Exhibit
3.1
Articles of Amalgamation of the Registrant (incorporated by reference to Exhibit 4.2 to the Registrant’s
Registration Statement on Form S-8 (File No. 333-192986), filed with the SEC on December 20, 2013)
3.2
Amended and Restated By-law No. A3 of the Registrant (incorporated by reference to Document 1 in the
Registrant’s Report on Form 6-K, furnished to the SEC on May 15, 2014)
3.3
Amended and Restated By-law No. A4 of the Registrant (incorporated by reference to Document 2 in the
Registrant’s Report on Form 6-K, furnished to the SEC on June 13, 2014)
4.1
Specimen Common Share Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration
Statement on Form S-8 (File No. 333-192986), filed with the SEC on December 20, 2013)
4.2
Description of Registered Securities (incorporated by reference to Exhibit 4.3 to the Registrant’s Annual
Report on Form 10-K (File No. 001-38232), filed with the SEC on April 7, 2020)
4.3
Indenture dated January 29, 2024 (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K
filed by the Company on January 29, 2024)
4.4
Form of 3.00% Convertible Senior Note due February 15, 2029 (included in Exhibit 4.3)
10.1*
Amended and Restated BlackBerry Limited Equity Incentive Plan
10.2†
Amended and Restated Deferred Share Unit Plan for Directors (incorporated by reference to Exhibit 10.2 to
the Registrant’s Annual Report on Form 10-K (File No. 001-38232), filed with the SEC on April 7, 2020)
10.3*
Form of restricted share unit agreement (included in Exhibit 10.1)
10.4*
Form of performance based restricted share unit agreement (included in Exhibit 10.1)
10.5†
Form of indemnification agreement for directors and executive officers (incorporated by reference to Exhibit
10.5 to the Registrant’s Annual Report on Form 10-K (File No. 001-38232), filed with the SEC on April 7,
2020)
10.6†
Employment agreement with John J. Giamatteo, dated December 8, 2023 (incorporated by reference to
Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-38232), filed with the SEC on
December 12, 2023)
10.7†
Employment agreement with Steve Rai, dated September 23, 2019 (incorporated by reference to Exhibit 10.7
to the Registrant’s Annual Report on Form 10-K (File No. 001-38232), filed with the SEC on April 7, 2020)
10.8†
Employment agreement with Mattias Eriksson, dated April 13, 2021 (incorporated by reference to Exhibit
10.3 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on June 24, 2022)
10.9*†
Employment agreement with Phil Kurtz, dated April 13, 2021
10.10*
Patent Sale Agreement with Malikie Innovations Limited, dated March 20, 2023, including Exhibit A-1
thereto, Exhibit A-2 thereto and Exhibit B-1 thereto (incorporated by reference to Exhibits 10.11, 10.11 1,
10.11 2 and 10.11 3 to the Registrant’s Annual Report on Form 10-K (File No. 001-38232) filed with the SEC
on April 4, 2023)
21*
List of subsidiaries
23.1*
Consent of PricewaterhouseCoopers LLP
31.1*
Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a)
31.2*
Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a)
32.1††
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
32.2††
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
114
97.1*
Clawback Policy
101*
XBRL Instance Document – the document does not appear in the interactive data file because its XBRL tags
are embedded within the Inline XBRL document
101*
Inline XBRL Taxonomy Extension Schema Document
101*
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101*
Inline XBRL Taxonomy Extension Definition Linkbase Document
101*
Inline XBRL Taxonomy Extension Label Linkbase Document
101*
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File – formatted as Inline XBRL and contained in Exhibit 101
______________________________
* Filed herewith
† Management contract or compensatory plan or arrangement
†† Furnished (and not filed) herewith pursuant to Item 601(b)(32)(ii) of the SEC’s Regulation S-K
ITEM 16. FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereto duly authorized.
BLACKBERRY LIMITED
Date: April 4, 2024
By:
/s/ John Giamatteo
Name:
John Giamatteo
Title:
Chief Executive Officer
By:
/s/ Steve Rai
Name:
Steve Rai
Title:
Chief Financial Officer (Principal Financial and
Accounting Officer)
116
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates indicated.
DIRECTORS
SIGNATURE
CAPACITY
DATE
/s/ PHILIP BRACE
Director
April 4, 2024
Philip Brace
/s/ MICHAEL DANIELS
Director
April 4, 2024
Michael Daniels
/s/ LISA DISBROW
Director
April 4, 2024
Lisa Disbrow
/s/ JOHN J. GIAMATTEO
Director and Chief Executive Officer (Principal
Executive Officer)
April 4, 2024
John J. Giamatteo
/s/ RICHARD LYNCH
Chair and Director
April 4, 2024
Richard Lynch
/s/ LAURIE SMALDONE ALSUP
Director
April 4, 2024
Laurie Smaldone Alsup
/s/ WAYNE WOUTERS
Director
April 4, 2024
Wayne Wouters
117