BB 10-K & 10-Q changes, risk factors and insider trading

Further, the Company’s future success depends in part on the growth, if any, in the markets for embedded solutions and secure communications software and embedded solutions.software. If growth trends in the Company’s target markets do not continue or are delayed due to security incidents, technological challenges, lack of customer acceptance, weakening economic conditions or other reasons, demand for the Company’s products, and those of its competitors, could be negatively affected.

The Company is engaged in markets that are highly competitive and rapidly evolving, and both the nature of the competition and the scope of the business opportunities afforded by the markets in which the Company competes are uncertain. The Company’s competitors, including new market entrants, may implement new technologies before the Company does, deliver new products and services earlier, or provide products and services that are disruptive or that are attractively priced or enhanced or better quality compared to those of the Company, making it more difficult for the Company to win or preserve market share.

Some of the Company’s competitors have greater name recognition, larger customer bases and significantly greater financial, technical, marketing, public relations, sales, distribution and other resources than the Company does. InSome particular,of the Company’s OEM and Tier 1 customers have advanced the internal development of embedded solutions, and are exploring the use of open source software that is perceived to be free to use. Further, some of the Company’s competitors may be able to leverage their relationships with enterprise customers based on other products or incorporate functionality into existing products to gain business in a manner that discourages users from purchasing the Company’s solutions, including by selling at zero or negative margins, product bundling or offering closed technology platforms. In 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 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 its customers to meet their certification needs. Failure to obtain or maintain such approvals or certifications for the Company’s products on a timely basis, or at all, could have a material adverse effect on the Company’s competitive position, particularly in government markets. In addition, independent industry analysts often issue reports regarding endpoint security solutions and the perception of the Company’s solutions in the marketplace, especially as compared to those of the Company’s competitors, may be significantly influenced by these reports. If these reports are negative, less frequent or less positive than reports on the Company’s competitors’ products, the Company’s competitive position may be harmed.

The 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,regulations, to address competing technologies and evolving security threats, and to continue to develop and introduce new products and services offering enhanced performance and functionality on a timely basis at competitive prices The process of developing new technology is complex and uncertain, and involves time, substantial costs and risks, which are further magnified when the development process integrations with third-party platforms. The development of next-generation technologies that utilize new and advanced features involves making predictions regarding market adoption of such technologies. The Company may be required to commit significant resources to developing new products, software and services before knowing whether such investment will result in products or services that the market will accept.prices.

The Company’s inability, for technological or other reasons, some of which may be beyondIf the Company’sCompany control,is unable to enhance, develop, introduce and monetize products and services in a timely manner, or at all,manner 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,requirements, or if the features of itsthe Company’s new products and services do not meet the demands of its customers or are not sufficiently differentiated from those of its competitors, the Company’s products and services may not achieve market acceptance and the Company’s business, results of operations and financial condition could be materially harmed.

The Company’s Secure Communications business depends, to a significant degree, on sales to government organizations. DemandGovernment fromdemand for communications solutions that support digital sovereignty and can be hosted on-premise, such as the Company’s Secure Communications products, has increased in recent months; however, government organizationsprocurement is often unpredictable and subject to budgetary uncertainty and to reductions or delays in funding authorizations or procurement processes. Government demand and payment for the Company’s products and services may also be impacted by changes in the political and administrative environment, including cost-cutting initiatives and changes in leadership, policies or priorities, and by shifting government attitudes towards the Company and the territories in which it operates. Such changes could cause governments and governmental agencies to delay or refrain from purchasing the Company’s solutions or otherwise have an adverse effect on the Company’s business and results of operations.

Sales to government entities and performance on classified contracts may require the Company to obtain personnel security clearances and facility clearances, and there is no guarantee that the Company will be able to obtain or maintain such clearances. In addition, government product requirements are often technically complex and the Company may be required to make costly changes to its products to meet such requirements without any assurance that such changes will generate a salepositive return or improve the efficacy of its products.

For many customers, licensing the Company’s solutions represents a significant strategic decision and, as a result, sales cycles can be long and unpredictable, particularly during times of rising economic or geopolitical uncertainty. When dealing with automotive, government or large regulated enterprise customers, the Company is subject to risks related to increased customer bargaining power and pricing pressure, extended evaluation periods, regulatory changes, compliance with procurement requirements, complex approval systems, and unanticipated administrative delays. QNX revenue recognition is also subject to delays in the advancement of software-defined vehicle programs and the manufacturetime to the start of production of new vehiclesdesigns by automotive and GEM OEMs.

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.security, which may be further enhanced in frequency or effectiveness through threat actors’ use of AI. 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.reliability.

Although to date the Company has not experienced any material financial or other losses relating to technology failure, cyberattacks or security breaches, there is no assurance that the Company will not experience material loss or damage in the future. If the network and product security measures implemented by the Company or its partners, including third-party data center operators, cloud service providers and product manufacturers are breached, or perceived to be breached, or if the confidentiality, integrity or availability of the Company’s data, including intellectual property and legally protected personal data, is compromised, the Company could be exposed to significant litigation, service disruptions, investigation and remediation costs, regulatory sanctions, fines and contractual penalties. In addition, any such event could materially damage the Company’s reputation, which is built in large measure on the security and reliability of BlackBerry products and services, and could result in the loss of investor confidence, channel partners, competitive advantages, revenues and customers, including the Company’s most significant OEM, 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 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 centrecenter 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 centrecenter 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.the Company. Any future outage in a network or system or other unanticipated problem that leads to an interruption or disruption of BlackBerry services, however, could have a material adverse effect on the Company’s business, results of operations and financial condition, and could adversely affect the Company’s reputation.

The Company believes decisions by customers to purchase its products depend and will depend in part on the availability of developers with experience in using the Company’s QNX platform and on the compatibility of software applications and services that are developed and maintained by third-party developers. The Company may not be able to convince third parties to develop and maintain applications for its secure communications software andQNX embedded solutions platforms.platforms and secure communications software. The loss of, or inability to maintain these developer relationships may materially and adversely affect the desirability of the Company’s products and, hence, the Company’s revenue from the sale of its products.

The Company’s ability to maintain and expand its market reach depends in part on establishing, developing and maintaining relationships with third party resellers and channel partners, especially silicon providers and hardware platform vendors in its SecureQNX Communicationsembedded software business. 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.

The Company’s platform depends on interoperability with solutions offered by silicon and hardware platform vendors and other software vendors, such as those provided by Apple, Google and Microsoft, as well as by automotive OEMs. If the Company fails to support timely integrations with third-party solutions, the Company’s business and reputation could suffer. 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 from other vendors, and if these vendors decide to restrict the Company’s access to their APIs, that functionality would be lost and the Company’s business could be impaired.

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.

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. In addition, ongoing commercial relationships with potential licensees may limit the Company’s ability to optimize its patent licensing revenue. Finally, the royalties the Company can obtain to monetize its intellectual property may decline because of the evolution of technology, changes in the selling price of products using licensed patents, or the difficulty of discovering infringements.

The consideration payable to the Company from the sale of its non-core patent portfolio in theto Malikie Innovations Limited in fiscal 2024 (the “Malikie Transaction”) is expected to include potential future royalty payments. The royalties, if any, that may be earned by the Company from the Malikie Transaction in any particular fiscal year or in the aggregate over the term of the royalty arrangement are difficult to predict, particularly given that any such royalties will depend entirely upon the business success of a third party. The aggregate proceeds that the Company ultimately receives from the Malikie Transaction are expected to be less than $900 million.

As partial consideration for the sale of its Cylance endpoint security assets and liabilities to Arctic Wolf, the Company received common shares of Arctic Wolf as well as a covenant from Arctic Wolf to make a subsequent cash payment to the Company of approximately $40 million one year following the closing.Wolf. The common shares of Arctic Wolf are illiquid securities without a public market and, as such, they cannot be readily sold or exchanged for cash and they may be difficult to value accurately. The Company may not be able to sell these shares at desired times or prices, which could negatively impact its financial condition and results of operations. Additionally, the Company is exposed to risk related to potential non-payment of the deferred cash consideration from Arctic Wolf.

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.

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 or margins in one or more jurisdictions andor adverselyimpact affectwhether the Company’sCompany revenues.enters, maintains or expands its presence in a particular market. Complying with such regulations could also require the Company to devote additional research and development resources to change the Company’s software or services or alter the methods by which the Company makes them available, which could be costly. 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.

As business circumstances dictate, the Company may also decide to divest itself of assets or businesses, as in the case of the sale of the Cylance endpoint security assets to Arctic Wolf.businesses. The Company may not be successful in identifying or managing the risks involved in any divestiture, including its ability to negotiate or collect a reasonable purchase price for the assets, potential liabilities that may continue to apply to the Company following the divestiture, potential tax implications, business disruption, employee issues or other matters. The Company’s inability to address these risks could adversely affect the Company’s business, results of operations and financial condition.

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, divestitures, share buybacks, customer wins or strategic partnerships; (ii) forward-looking financial guidance provided by the Company, any updates to this guidance, or the Company’s failure to meet this guidance; (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.

On February 3, 2025, the Company completed the sale of its Cylance endpoint security assets and related liabilities to Arctic Wolf Network,Networks, Inc. (“Arctic Wolf”) for $160.0 million of cash, subject to certain adjustments of approximately $39.1$42.1 million, and 5.5 million common shares of Arctic Wolf. As a result of the Cylance sale, it is no longer reported alongside UEM, SecuSuiteSecuSUITE and AtHoc as the Cybersecurity segment,segment. andEffective from the fiscal year ended February 28, 2025, those three businesses are now reported separately from Cylance as the Secure Communications segment. The financial results of Cylance are presented as discontinued operations and are included in “loss from discontinued operations, net of tax” in the Consolidated Statements of OperationsOperations. andFor havea beendiscussion removedon “loss from thediscontinued presentationoperations, net of resultstax” fromfor continuingthe operations.fiscal Prioryear periodended comparativesFebruary 28, 2025 compared to our fiscal 2024 financial results, please refer to our MD&A included in the financial statements, and throughout thisour Annual Report on Form 10-K wherefor applicable,the havefiscal beenyear recastended toFebruary reflect28, this2025, changewhich is incorporated herein by reference.

•the Company’s plans, strategies and objectives, including its intentions to increase and enhance its product and service offeringsofferings, and to patent new innovations;

•the Company’s expectations with respect to its revenue,total and segment revenue and adjusted EBITDA, adjusted Corporate general and administrativeoperating costs, adjusted EBITDA, non-GAAP EPS and operating cash flow in the first quarter of fiscal 2026,2027 and these items for fiscal 20262027 as a whole;

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 “The Company: A heritage of innovation”, “Industry Background - QNX”, “Competition and Competitive Strengths - QNX”, “Intellectual Property” and “Human Capital”, and in the sections of this MD&A entitled, “Results of Operations - Fiscal year ended February 28, 20252026 compared to fiscal year ended February 29,28, 20242025 - Revenue - Revenue by Segment”, “Results of Operations - Fiscal year ended February 28, 20252026 compared to fiscal year ended February 29,28, 20242025 - Gross Margin and Adjusted EBITDA by Segment”, “Results of Operations - Fiscal year ended February 28, 20252026 compared to fiscal year ended February 29,28, 20242025 - Operating Expenses - General and Administrative Expenses”, “Results of Operations - Fiscal year ended February 28, 20252026 compared to fiscal year ended February 29,28, 20242025 - Net LossIncome (loss)”, and “Financial Condition - Contractual and Other Obligations”. Forward-looking statements are based on estimates and assumptions made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors that the Company believes are appropriate in the circumstances, including but not limited to, the Company’s expectations regarding its business, strategy, opportunities and prospects, the launch of new products and services, general economic conditions, competition, and the Company’s expectations regarding its financial performance, and the Company’s expectations regarding the planned separation of its businesses.performance. 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.

The Company provides enterprises and governments the intelligent software and services that power the world around us. Based in Waterloo, Ontario, the Company’s high-performance foundational software enables major automakers and industrial giants alike to unlock transformative applications, drive new revenue streams and launch innovative business models, all without sacrificing safety, security, and reliability. With a deep heritage in Secure Communications, BlackBerrythe Company delivers operational resiliency with a comprehensive, highly secure, and extensively certified portfolio for mobile fortification, mission-critical communications, and critical events management. 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 has continued to execute on its strategy in fiscal 20252026 and announced the following significant achievements:

•The Company announced that BlackBerry AtHoc is “in process” to becomebecame the first critical eventsevent management solutionprovider to obtainachieve FedRAMP highHigh authorization.authorization; and

Environmental, SustainabilityStrategy and Corporate Governance:

(1)As a result of the Cylance sale, it is no longer reported alongside UEM, SecuSuiteSecuSUITE and AtHoc as the Cybersecurity segment,segment. andEffective from the fiscal year ended February 28, 2025, those three businesses are now reported separately from Cylance as the Secure Communications segment. The financial results of Cylance are presented as “loss from discontinued operations, net of tax” in the Consolidated Statements of Operations and have been removed from the presentation of results from continuing operations. Prior period comparatives have been recast to reflect this change.Operations.

(2)Diluted earnings (loss) per share on a U.S. GAAP basis for fiscal 2026, 2025 and 2024 do not include the dilutive effect of the Debentures (as defined below in “Debt Financing and Other Funding Sources”) as to do so would be anti-dilutive. Diluted loss per share on a U.S. GAAP basis for fiscal 2025 and fiscal 2023 dodoes not include the dilutive effect of stock-based compensation as to do so would be anti-dilutive. See Note 9 to the Consolidated Financial Statements for the fiscal year ended February 28, 20252026 for calculation of the dilutive weighted average number of shares outstanding.

(1)As a result of the Cylance sale, it is no longer reported alongside UEM, SecuSuiteSecuSUITE and AtHoc as the Cybersecurity segment,segment. andEffective from the fiscal year ended February 28, 2025, those three businesses are now reported separately from Cylance as the Secure Communications segment. The financial results of Cylance are presented as “loss from discontinued operations, net of tax” in the Consolidated Statements of Operations and have been removed from the presentation of results from continuing operations. Prior period comparatives have been recast to reflect this change.Operations.

(2)Diluted loss per share on a U.S. GAAP basis in the fourth quarterquarters of 2025 and 2024 do not include the dilutive effect of the Debentures as to do so would be anti-dilutive. Diluted loss per share on a U.S. GAAP basis in the fourth quarterquarters of 2025, 20242025 and 20232024 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 segmentsegments for the three months and years ended February 28, 20252026 and February 29,28, 2024.2025. The Company reports segment information in accordance with U.S. GAAPGAAP, ASCpursuant Sectionto 280the Financial Accounting Standards Board’s Accounting Standard Codification Topic 280, Segment Reporting, based on the “management” approach. The management approach designates the internal reporting used by the Chief Operating Decision Maker (“CODM”) for making decisions and assessing performance of the Company’s reportable operating segments. The measure of segment profit or loss disclosed by the Company in the Consolidated Financial Statements under the “management” approach in reviewing the results of the Company’s operating segments is segment adjusted gross margin. AdditionallyAdditionally, below,the managementfollowing usestables include the additional measures of segment profit or loss used by the CODM which is segment adjusted EBITDAEBITDA, a non-GAAP financial measure.measure, Alsowhich noteexcludes amounts related to investment income, taxes, amortization, restructuring charges, stock compensation expenses and long-lived asset impairment charge. For the changethree months and year ended February 28, 2026, the Company presented segment adjusted EBITDA results excluding amortization in presentationsegment relatingresearch and development, segment sales and marketing and segment general and administrative to expense reclassification as disclosed in Note 1align to the operating expense presentation on the Consolidated FinancialStatement Statements.of SeeOperations. NoteFor 13purposes of comparability, the Company’s segment adjusted EBITDA for the three months and years ended February 28, 2025 and February 29, 2024 have been updated to conform to the Consolidatedcurrent Financialyear’s Statements for a description of the Company’s operating segments.presentation.

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

RestructuringLong-lived expensesasset impairment charge - RestructuringLong-lived costsasset relateimpairment to employee termination benefits, facilities, streamlining many of the Company’s centralized corporate functions into Secure Communications (formerly “Cybersecurity”) and QNX (formerly “IoT”) specific teams, and other costs pursuant to programs to reduce the Company’s annual expenses amongst R&D, infrastructure and other functionscharges 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.

In fiscal 2025,2026, the Company recognized revenue of $534.9$549.1 million and incurred a net lossincome of $79.0$53.2 million, or 0.13$0.09 basic and diluted lossearnings per share on a U.S. GAAP basis (fiscal 20242025 - revenue of $759.1$534.9 million and net loss of $130.2,$79.0 million, or 0.22$0.13 basic loss and diluted loss per share). The Company recognized income from continuing operations of $53.2 million, or $0.09 basic and diluted earnings per share on a U.S. GAAP basis for fiscal 2026 (fiscal 2025 - net loss from continuing operations of $8.5 million, or $0.01 basic and diluted loss per share on a U.S. GAAP basis for fiscal 2025 (fiscal 2024 - net income from continuing operations of $5.6 million, or $0.01 basic and diluted earnings per share).

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read together with the unaudited interim consolidated financial statements and the accompanying notes (the “Consolidated Financial Statements”) of BlackBerry Limited for the three and six months ended MayAugust 31, 2026, included in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as the Company’s audited consolidated financial statements and accompanying notes and MD&A for the fiscal year ended February 28, 2026 (the “Annual MD&A”) included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2026 (the “Annual Report”). The Consolidated Financial Statements are presented in U.S. dollars and have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”). All financial information in this MD&A is presented in U.S. dollars, unless otherwise indicated.

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

The words “expect”, “anticipate”, “estimate”, “may”, “will”, “should”, “could”, “intend”, “believe”, “target”, “plan” and similar expressions are intended to identify forward-looking statements in this MD&A, including in the sections entitled “Business Overview”, “Business Overview - Products and Services”, “Results of Operations - Three months ended MayAugust 31, 2026 compared to the three months ended MayAugust 31, 2025 - Revenue - Revenue by Segment”, “Results of Operations - Three months ended MayAugust 31, 2026 compared to the three months ended MayAugust 31, 2025 - Revenue - Adjusted Gross Margin and Adjusted EBITDA by Segment”, “Results of Operations - Three months ended MayAugust 31, 2026 compared to the three months ended MayAugust 31, 2025 - Net Income” and “Financial Condition - Contractual and Other Obligations”. Forward-looking statements are based on estimates and assumptions made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors that the Company believes are appropriate in the circumstances, including but not limited to, the Company’s expectations regarding its business, strategy, opportunities and prospects, the launch of new products and services, general economic conditions, competition, and the Company’s expectations regarding its financial performance. 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 the Annual Report.

QNX and Vector Informatik GmbH recently introduced Alloy Kore, a foundational vehicle software platform designed to simplify and accelerate the development of software-defined vehicles. Alloy Kore integrates QNX’s safety-certified RTOS and virtualization capabilities and Vector’s safe middleware modules to deliver a lightweight, scalable foundation for deploying applications across vehicle domains. The Company believes that Alloy Kore has the potential to expand average selling prices by multiples on a per-vehicle basis and drive meaningful backlog growth. Subsequent to the end of the quarter, the Company announced an Alloy Kore design win with Coretura, the commercial vehicle software joint venture between Volvo Group and Daimler Truck. The design win is the largest in QNX history and added more than $100 million to the QNX royalty backlog.

FirstSecond Quarter Fiscal 2027 Summary Results of Operations

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

(1)Diluted earnings per share on a U.S. GAAP basis for the firstsecond quarter of fiscal 2027 and fiscal 2026 does not includeincludes the dilutive effect of the Notes (as defined in “Financial Condition - Debt Financing and Other Funding Sources”), as to do so would be anti-dilutive.. Diluted earnings per share on a U.S. GAAP basis for the firstsecond quarter of fiscal 2027 and fiscal 2026 includes the dilutive effect of stock-based compensation. See Note 7 to the Consolidated Financial Statements for the Company’s calculation of the diluted weighted average number of shares outstanding.

The following tabletables showsshow information by operating segments for the three and six months ended MayAugust 31, 2026 and MayAugust 31, 2025. The Company reports segment information in accordance with U.S. GAAP, pursuant to the Financial Accounting Standards Board’s Accounting Standard Codification Topic 280, Segment Reporting, based on the “management” approach. The management approach designates the internal reporting used by the Chief Operating Decision Maker (“CODM”) for making decisions and assessing performance of the Company’s reportable operating segments. The measure of segment profit or loss disclosed by the Company in the Consolidated Financial Statements under the “management” approach in reviewing the results of the Company’s operating segments is segment adjusted gross margin. Additionally, the following tables include the additional measures of segment profit or loss used by the CODM which is segment adjusted EBITDA, a non-GAAP financial measure, which excludes amounts related to investment income, taxes, amortization, restructuring charges, stock compensation expenses and long-lived asset impairment charge. For the three and six months ended MayAugust 31, 2026, the Company presented segment adjusted EBITDA results excluding amortization in segment research and development, segment sales and marketing and segment general and administrative to align to the operating expense presentation on the Consolidated Statement of Operations. For purposes of comparability, the Company’s segment adjusted EBITDA for the three and six months ended MayAugust 31, 2025 has been updated to conform to the current year’s presentation. See Note 10 to the Consolidated Financial Statements for a description of the Company’s operating segments.

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

The Company had approximately $422.9$447.1 million in cash, cash equivalents and investments as of MayAugust 31, 2026 (February 28, 2026 - $432.4 million).

In the firstsecond quarter of fiscal 2027, the Company recognized revenue of $152.9$163.3 million and net income of $8.5$33.9 million, or $0.01$0.06 basic earnings per share and $0.05 diluted earnings per share, on a U.S. GAAP basis (firstsecond quarter of fiscal 2026 - revenue of $121.7$129.6 million and net income of $1.9$13.3 million, or $0.00$0.02 basic and diluted earnings per share).

The Company recognized adjusted net income of $25.4$43.2 million, and adjusted basic earnings per share of $0.04 per share,$0.07, on a non-GAAP basis in the firstsecond quarter of fiscal 2027 (firstsecond quarter of fiscal 2026 - adjusted net income of $10.8$24.2 million and adjusted basic earnings of $0.02 per share of $0.04). See “Non-GAAP Financial Measures” below.

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 JuneSeptember 25,24, 2026, the Company announced financial results for the three and six months ended MayAugust 31, 2026, which included certain non-GAAP financial measures and non-GAAP ratios, including adjusted gross margin, adjusted gross margin percentage, adjusted operating expenses, adjusted net income, adjusted basic earnings per share, adjusted research and development expense, adjusted sales and marketing expense, adjusted general and administrative expense, adjusted amortization expense, adjusted operating income, adjusted EBITDA, segment adjusted EBITDA, adjusted operating income margin percentage, adjusted EBITDA margin percentage and free cash flow (usage). These non-GAAP financial measures and non-GAAP ratios do not have any standardized meaning as prescribed by U.S. GAAP and are therefore unlikely to be comparable to similar measures presented by other companies.

•Deferred share units revaluation adjustment. The Company measures its deferred share units (“DSUs”) at fair value as liability-classified awards in accordance with U.S. GAAP. Each period, the fair value of the DSUs is remeasured and the resulting gain and loss from the change in fair value of these liability-classified awards areis recognized in income. The amount varies each period depending on changes in the Company’s share price, which is influenced by market factors in addition to Company performance. 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.

Reconciliation of non-GAAP based measures with most directly comparable U.S. GAAP based measures for the three months ended MayAugust 31, 2026 and MayAugust 31, 2025

Readers are cautioned that adjusted gross margin, adjusted gross margin percentage, adjusted operating expenses, adjusted net income, adjusted basic earnings per share, adjusted research and development expense, adjusted sales and marketing expense, adjusted general and administrative expense, adjusted amortization expense, adjusted operating income, adjusted EBITDA, segment adjusted EBITDA, adjusted operating income margin percentage, adjusted EBITDA margin percentage and free cash flow (usage) and similar measures do not have any standardized meaning prescribed by U.S. GAAP and are therefore unlikely to be comparable to similarly titled measures reported by other companies. 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.

A reconciliation of the most directly comparable U.S. GAAP gross margin and gross margin percentage for the three months ended MayAugust 31, 2026 and MayAugust 31, 2025 to both adjusted gross margin and adjusted gross margin percentage areis reflected in the table below:

Reconciliation of U.S. GAAP operating expenses for the three months ended MayAugust 31, 2026 and MayAugust 31, 2025 to adjusted operating expenses is reflected in the table below:

Reconciliation of U.S. GAAP net income and U.S. GAAP basic earnings per share for the three months ended MayAugust 31, 2026 and MayAugust 31, 2025 to adjusted net income and adjusted basic earnings per share is reflected in the table below:

Reconciliation of U.S. GAAP research and development, sales and marketing, general and administrative, and amortization expense for the three months ended MayAugust 31, 2026 and MayAugust 31, 2025 to adjusted research and development, sales and marketing, general and administrative, and amortization expense is reflected in the table below:

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

The CODM also uses the segment metric of segment adjusted EBITDA, which is a non-GAAP measure including segment expenses that exclude amounts related to investment income, taxes, amortization, restructuring charges, stock compensation expenses and long-lived asset impairment. The following table reconciles the U.S. GAAP measures of segment profit or loss disclosed by the Company in the Consolidated Financial Statements from segment adjusted gross margin to segment adjusted EBITDA for the three months ended MayAugust 31, 2026 and MayAugust 31, 2025.

The Company uses free cash flow (usage) when assessing its sources of liquidity, capital resources, and quality of earnings. The Company defines free cash flow (usage) as net cash provided by (used in) operating activities less acquisitions of property, plant and equipment. The Company believes that free cash flow (usage) is helpful in understanding the Company’s capital requirements and provides an additional means to reflect the cash flow (usage) trends in the Company’s business.

Reconciliation of U.S. GAAP net cash provided by (used in) operating activities for the three and six months ended MayAugust 31, 2026 and MayAugust 31, 2025 to free cash flow (usage) is reflected in the table below:

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

Secure Communications ARR was approximately $221 million as at August 31, 2026 and increased by $1 million sequentially compared to $220 million as at May 31, 2026 and increased by $8 million year-over-year compared to $218$213 million as at February 28, 2026 and $209 million as at MayAugust 31, 2025.

Secure Communications DBNRR was 91% as at August 31, 2026 and decreased by 1% sequentially compared to 92% as at May 31, 2026 and decreased2% year-over-year compared to 94%93% as at February 28, 2026 and was consistent with 92% as at MayAugust 31, 2025.

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

The increase in QNX revenue of $14.8$17.2 million was primarily due to an increase of $7.5 million in development license revenue, an increase of $4.2$10.4 million in royalty revenue, an increase of $1.5$3.9 million in BlackBerrydevelopment Radarlicense revenue and an increase of $1.2$2.6 million in professional services revenue.

The Company previously stated that it expected QNX revenue to be in the range of $60$70 million to $64$75 million in the firstsecond quarter of fiscal 2027. QNX revenue in the firstsecond quarter of fiscal 2027 was $72.3$80.3 million primarily due to stronger than expected royalty revenue.

The Company expects QNX revenue to be in the range of $70$82 million to $75$88 million in the secondthird quarter of fiscal 2027. The Company previously stated that it expected QNX revenue to be in the range of $290$295 million to $307$312 million in fiscal 2027 as a whole. The Company now expects QNX revenue to be in the range of $295$315 million to $312$325 million in fiscal 2027 as a wholewhole, due to a strong first-half performance, including stronger than expected QNXroyalty revenuerevenue, inas well as continued momentum across the firstbusiness, quartersupported ofby fiscalstrong 2027.design win activity and demand for its products and services.

The increase in Secure Communications revenue of $14.1$1.0 million was primarily due to an increase of $15.3$5.5 million in BlackBerry SecuSUITE product revenue, partially offset by a $0.8decrease of $3.3 million decrease in BlackBerry UEM product revenue and a decrease of $1.3 million in professional services revenue.