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 28, 2026. 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 additional users. 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 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.
Further, the Company’s future success depends in part on the growth, if any, in the markets for embedded solutions and secure communications software. If growth trends in the Company’s target markets do not continue or are delayed due to security
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incidents, technological challenges, lack of customer acceptance, weakening economic conditions or other reasons, demand for the Company’s products, and those of its competitors, could be negatively affected.
The Company faces intense competition.
The Company is engaged in markets that are highly competitive and rapidly evolving, and 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. Some of the Company’s OEM and Tier 1 customers have advanced the internal development of embedded solutions, and are exploring the use of open source software that is perceived to be free to use. Further, some of the Company’s competitors may be able to leverage their relationships with enterprise customers based on other products or incorporate functionality into existing products to gain business in a manner that discourages users from purchasing the Company’s solutions, including by selling at zero or negative margins, product bundling or offering closed technology platforms. In addition, competition may intensify as the Company’s competitors enter into business combinations or alliances and established companies in other market segments expand to become competitive with the Company’s business.
The impact of the competition described above could result in fewer customer orders, loss of market share, pressure to reduce prices, commoditization of product and service categories in which the Company participates, reduced revenue and reduced 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 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.
The Company may not be able to enhance, develop, introduce or monetize its products and services in a timely manner with competitive pricing, features and performance.
The industries in which the Company competes are characterized by rapid technological change, frequent new product introductions, frequent market price reductions, constant improvements in features and short product life cycles. The Company’s future success depends upon its ability to enhance and integrate its current products and services, to provide for their compatibility with evolving industry standards and regulations, to address competing technologies and evolving security threats, and to continue to develop and introduce new products and services offering enhanced performance and functionality on a timely basis at competitive prices.
Rapid advances in generative AI and automated coding tools are reducing the time and cost required to design, test, and deploy software applications. As these technologies become widely accessible, existing and emerging competitors may accelerate their development cycles, release new features more quickly, or replicate functionality comparable to that of the Company’s products with materially lower investment. Similarly, the use of AI technologies or increasingly pervasive open source tools by the Company’s customers to support development internally could have a negative impact on the Company’s business, including the revenues derived from the number of user licenses and the provision of professional services. If the Company is unable to integrate AI-enabled development at a competitive pace, its market position, customer acquisition, and renewal rates could be adversely affected.
The successful introduction of new software platforms, such as the Alloy KoreTM platform recently launched by QNX with Vector Informatik, is inherently uncertain and involves numerous costs and risks, including delays in development, unforeseen technical challenges, integration complexities, and lower‐than‐expected customer adoption. If a new platform fails to perform as intended, fails to drive market adoption, or generates unanticipated maintenance and support costs, the Company’s competitive position, brand reputation and financial results could be materially adversely affected.
If the Company is unable to enhance, develop, introduce and monetize products and services in a timely manner in response to changing market conditions or customer requirements, or if the features of the Company’s new products and services do not meet the demands of its customers or are not sufficiently differentiated from those of its competitors, the Company’s products and services may not achieve market acceptance and the Company’s business, results of operations and financial condition could be materially harmed.
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Significant changes in government customer demand or procurement requirements could have an adverse effect on the Company’s business and results of operations.
The Company’s Secure Communications business depends, to a significant degree, on sales to government organizations. Government demand for communications solutions that support digital sovereignty and can be hosted on-premise, such as the Company’s Secure Communications products, has increased in recent months; however, government procurement is unpredictable and subject to budgetary uncertainty and to reductions or delays in funding authorizations or processes. Government demand and payment for the Company’s products and services may also be impacted by changes in the political and administrative environment, including cost-cutting initiatives and changes in leadership, policies or priorities, and by shifting government attitudes towards the Company and the territories in which it operates. 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 positive return or improve the efficacy of its products.
The Company’s sales cycles can be long and unpredictable and its sales efforts require considerable time and expense.
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 time to the start of production of new designs by automotive and GEM OEMs.
The Company’s ability to grow software and services revenue is dependent in part on its ability to maintain a qualified direct sales force, which requires significant time and resources, including investment in systems and training. 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 in part on its relationships with resellers and distributors”.
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, 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 reliability.
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
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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 use of AI technology and tools in its operations and in product development may expose the Company to reputational harm, operational challenges, legal liability, and regulatory concerns
The Company is increasingly incorporating AI technologies, including generative AI, into its operations to make business processes more efficient. The introduction of generative AI into the Company’s operations may result in new or enhanced governmental or regulatory scrutiny, litigation, confidentiality, ethical concerns, or other complications that could adversely affect the Company’s business, reputation, or financial results. Known risks of generative AI currently include risks related to errors, algorithmic bias, flawed training methodologies, privacy and security, and data provenance. For example, generative AI may create content that appears to be correct but is factually inaccurate or contains copyrighted or other protected material. If the Company uses such flawed or protected content to its detriment or the owners of such copyrighted material seek to enforce their rights, the Company may be exposed to brand or reputational harm, competitive harm and/or legal liability.
The evolving AI regulatory environment may, among other impacts, result in inconsistencies among AI regulations and frameworks across jurisdictions, increase the Company’s compliance, governance and research and development costs, or increase the Company’s exposure to regulatory scrutiny, proceedings and claims with the potential to result in significant penalties and reputational harm.
The Company has begun to rely on commercial AI models to support elements of its software development lifecycle. Any failure by our employees, contractors, or partners to adhere to our policies regarding the appropriate use of AI in development could result in violations of confidentiality obligations, laws, or regulations, jeopardize the Company’s intellectual property rights, or expose the Company’s products or business systems to defects and malware, any of which could adversely affect the Company’s business, financial condition, results of operations, and prospects. Additionally, the integration of these models into engineering workflows may expose the Company to heightened regulatory scrutiny with respect to products that are classified as high‐risk under emerging global AI and safety‐critical regulations. Failure to demonstrate adequate human review and testing or explainability of AI‐assisted development processes could delay product approvals or impair the Company’s ability to offer solutions in regulated markets. Changes in model performance, licensing terms, training‐data provenance, or vendor compliance with applicable AI regulations may impair the Company’s ability to validate and certify its products.
Adverse macroeconomic and geopolitical conditions, including trade policies and national security concerns, have had and may in the future have a material adverse effect on the Company’s business, results of operations and financial condition.
Challenging macroeconomic conditions, including as a result of geopolitical events, changes to international trade policies, public health crises, changes in inflation and interest rates, and disruptions in government operations, automotive labour and global supply chains have negatively impacted and may in the future negatively impact market demand for automobiles and other intelligent edge devices, as well as secure communications solutions. Sales cycles, in turn, have been materially affected and may in the future materially affect the Company’s business, results of operations and financial condition. Such economic factors and uncertainties are beyond the Company’s control and the Company has no comparative advantage in forecasting their effects.
Additionally, the imposition of tariffs and national security policies relating to technology supply chains or other barriers to trade that directly or indirectly impact the Company’s automotive customers, or the Company’s ability to transact business with certain customers, could have a material adverse effect on the Company’s results of operations. For example, since 2025 the U.S. presidential administration has imposed or threatened to impose new tariffs on imported products from Canada, Mexico, China and other countries, including most notably tariffs on imports of steel, aluminum and automobiles. The administration has also proposed or is in the process of imposing additional tariffs and has indicated that it intends to pursue significant renegotiations of the Canada–United States–Mexico Agreement (known as the U.S.–Mexico–Canada Agreement in the United States) beginning later in 2026. Such U.S. tariffs, any retaliatory tariffs, or trade negotiations may adversely affect the operations of the Company’s customers and, consequently, demand for the Company’s solutions. There can be no assurance that the Company will be able to mitigate the impacts of any trade measures, which could be material to the Company’s business operations or harm the Company’s competitive position.
A failure or perceived failure of the security features or functionality of the Company’s solutions could materially adversely affect the Company’s reputation, financial condition and results of operations.
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The Company’s products and services frequently involve the transmission, processing and storage of data, including proprietary, confidential and personally-identifiable information, and a security compromise, misconfiguration or malfunction involving the Company’s software could result in such information being accessible to attackers or other third parties. Real or perceived security breaches against a customer using the Company’s solutions could cause damage or disruption to the customer and subject the Company to liability, and may result in the customer and the public believing that the Company’s solutions are ineffective.
Additionally, the Company’s products and services are highly complex and may contain design defects, bugs or security vulnerabilities impacting reliability and performance that are difficult to detect and correct. Such internal defects and a variety of external factors, including misconfigurations or errors introduced through collaborations with the Company’s engineering partners, could impair the effectiveness of the Company’s solutions or result in the delay or denial of their market acceptance and may harm the Company’s financial condition, results of operations and reputation as a security solutions vendor. If errors are discovered, correcting them could require significant expenditures by the Company and the Company may not be able to successfully correct them in a timely manner or at all.
Litigation against the Company may result in adverse outcomes.
In the course of its business, the Company faces the risk of litigation claims and enforcement actions arising from its public disclosure. Given the highly competitive and dynamic industry in which the Company operates and the evolution of the Company’s business strategy over time, the Company’s financial results may not follow past trends, making it difficult to predict the Company’s financial results. Consequently, actual results may differ materially from those expressed or implied by the Company’s forward-looking statements and may not meet the expectations of analysts or investors, which can contribute to the volatility of the market price of the Company’s common shares.
In addition, the Company receives general commercial claims related to the conduct of its business and the performance of its products and services, including 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, as well as physical AI robotics.
Litigation resulting from these claims and from actions asserted by the Company could be costly and time-consuming and could divert the attention of management and key personnel from the Company’s business operations. The complexity of the technology involved and the inherent uncertainty of commercial, class action, securities, employment and other claims 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 defence of material litigation claims, the Company may be faced with significant monetary damages or injunctive relief against it that could have a material adverse effect on the Company’s business, BlackBerry brand, results of operations and financial condition. Administrative or regulatory actions against the Company or its employees could also have a material adverse effect on the Company’s business, reputation, results of operations and financial condition. See Note 11 to the Consolidated Financial Statements for information regarding certain legal proceedings in which the Company is involved.
The Company’s success depends on its continuing ability to attract new personnel, retain existing key personnel and manage its staffing effectively.
The Company’s success is largely dependent on its continuing ability to identify, attract, develop, motivate and retain skilled employees, including members of its executive team, top research developers and experienced salespeople with specialized knowledge. Competition for such people is intense, continuous, and increasing in the industries in which the Company participates, and the Company has experienced solicitations of its employees by its competitors.
Competition for highly skilled personnel is intense, especially in the Waterloo and Ottawa, Ontario areas, where the Company has a substantial presence and need for highly skilled personnel. The Company is also substantially dependent on the continued service of its existing engineering personnel because of the complexity and specialization of its products and services.
To attract and retain critical personnel, the Company may experience increased compensation costs that are not offset by increased productivity or higher prices for the Company’s products and services. Also, the Company’s financial results and share price performance (particularly for senior employees for whom equity-based compensation is a key element of their total compensation), among other factors, may impact the Company’s ability to attract new, and retain existing, employees. Any failure by the Company to maintain appropriate staffing, develop effective business continuity and succession programs, mitigate turnover and effectively utilize employees with the right mix of skills and experience across the functions necessary to
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meet the current and future needs of its business could have a material adverse effect on the Company’s business, results of operations and financial condition.
Network disruptions or other business interruptions could have a material adverse effect on the Company’s business and harm its reputation.
The Company’s operations rely to a significant degree on the efficient and uninterrupted operation of complex technology systems and networks, which are in some cases integrated with those of cloud service providers and third-party data center 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 center operators fail to meet agreed service levels.
The Company has experienced network events, including those arising from third-party applications, in the past, none of which had a material impact on the Company. Any future outage in a network or system or other unanticipated problem that leads to an interruption or disruption of BlackBerry services, however, could have a material adverse effect on the Company’s business, results of operations and financial condition, and could adversely affect the Company’s reputation.
The Company may not be successful in fostering an ecosystem of third-party application developers.
The Company believes decisions by customers to purchase its products depend and will depend in part on the availability of developers with experience in using the Company’s QNX platform and on the compatibility of software applications and services that are developed and maintained by third-party developers. The Company may not be able to convince third parties to develop and maintain applications for its QNX embedded solutions platforms and secure communications software. The loss of, or inability to maintain these developer relationships may materially and adversely affect the desirability of the Company’s products and, hence, the Company’s revenue from the sale of its products.
The Company’s success depends in part on its relationships with resellers and channel partners.
The Company’s ability to maintain and expand its market reach depends in part on establishing, developing and maintaining relationships with third party resellers and channel partners, especially silicon providers and hardware platform vendors in its QNX embedded 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.
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.
The Company’s products and services are dependent upon interoperability with rapidly changing systems provided by third parties.
The Company’s platform depends on interoperability with solutions offered by silicon 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.
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
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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.
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 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 to Malikie Innovations Limited in fiscal 2024 (the “Malikie Transaction”) is expected to include potential future royalty payments. The royalties, if any, that may be earned by the Company from the Malikie Transaction in any particular fiscal year or in the aggregate over the term of the royalty arrangement are difficult to predict, particularly given that any such royalties will depend entirely upon the business success of a third party.
The Company is subject to risks related to the use of open source software may not be able to obtain rights to use third-party software.
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
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or services, or discontinue their sale in the event re-engineering cannot be accomplished on a timely basis, any of which could materially and adversely affect the Company’s business and operating results.
Certain of the Company’s products include intellectual property that is licensed from third parties. 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.
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.
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.
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; and
•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.
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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 asset risk, including the potential for charges related to certain investments, long-lived assets and goodwill.
As partial consideration for the sale of its Cylance endpoint security assets and liabilities to Arctic Wolf, the Company received common shares of Arctic Wolf. 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.
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 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.
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, the United States and numerous other 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 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.
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.
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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 territorial or other requirements for the collection, hosting, 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.
Government regulations applicable to the Company’s products and services, including products containing encryption capabilities, could negatively impact the Company’s business.
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. Governmental regulation of encryption technology, including the regulation of imports or exports, could harm the Company’s sales or margins in one or more jurisdictions or impact whether the Company enters, maintains or expands its presence in a particular market. Complying with such regulations could also require the Company to devote additional research and development resources to change the Company’s software or services or alter the methods by which the Company makes them available, which could be costly. 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.
Regulatory requirements and standards for identifying, measuring and reporting ESG matters continue to evolve in many of the jurisdictions in which the Company operates. 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
At the same time, “anti-ESG” sentiment has recently gained momentum across the U.S., as evidenced most notably by state legislative actions, investor initiatives, and an executive order opposing diversity, equity and inclusion (“DEI”) programs in the private sector. Anti-ESG and anti-DEI-related policies, legislation, initiatives, litigation, and scrutiny could result in the Company facing additional compliance obligations, becoming the subject of investigations or enforcement actions, or sustaining reputational harm.
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.
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General Risk Factors
Acquisitions, divestitures, investments and other business initiatives may negatively affect the Company’s results of operations.
The Company actively evaluates opportunities to acquire or invest in businesses, assets, products, services and technologies. Any such strategic transactions 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; and disruption of the Company’s ongoing business. In addition, acquisitions may involve unanticipated costs and liabilities, including possible litigation and new or increased regulatory exposure, which are not covered by the indemnity or escrow provisions, if any, of the relevant acquisition agreements.
As business circumstances dictate, the Company may also decide to divest itself of assets or businesses. 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 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 and regulations of Canada, the United States 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;
•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;
•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 28, 2026.
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
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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 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, 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.
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 designed to safeguard the confidentiality, integrity, and availability of its information assets. Through this framework, the Company devotes appropriate resources to monitoring, identifying, 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 awareness training. The Company also conducts penetration and vulnerability testing and other risk assessments,
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implements appropriate internal controls, and engages independent third-party auditors to evaluate its compliance with security industry standards.
The Company’s incident response team, comprised of representatives from the Company’s information technology, information security, product security, engineering, communications, privacy and legal groups, is responsible for addressing potential and actual security threats and other security incidents and implementing the Company’s incident response plan. The Company’s incident response plan includes processes and procedures for assessing potential internal and external threats, activation, escalation, crisis management, notifications, post-incident recovery and after-action review.
The readiness of the incident response team is promoted through table-top exercises and threat simulations, including during the fiscal year ended February 28, 2026. The Company also conducts mandatory training of all employees on its security and data privacy 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 vendor or service provider of the Company will not experience a compromise or failure in the information assets under its control.
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 oversees the Company’s enterprise risk management program, including cybersecurity risk. The Audit and Risk Management Committee assist the Board in this oversight. The Company’s internal audit function reports to the Audit and Risk Management Committee and provides independent assurance on the design and operating effectiveness of 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”.
The Company’s cybersecurity program is managed by the Chief Information Security Officer (“CISO”), who leads a team of information security professionals and is responsible for activities to prevent, detect, mitigate, and remediate cybersecurity risk.The CISO provides quarterly updates to the Board on the program, including security control coverage and effectiveness, vulnerability testing and remediation, and security operations. These updates also address improvements to processes, technology, and governance intended to reduce 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 148,200 square feet. The remaining lease term is approximately five years 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 two years with the option to renew for an additional three years. The Company also operates facilities in the United States, Asia-Pacific, Europe and the Middle East for engineering, sales, marketing, research and development 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 28, 2026:
(Square feet in thousands)
Location
North America 534
Europe, Middle East and Africa 36
Asia Pacific 61
ITEM 3. LEGAL PROCEEDINGS
See Note 11 to the Consolidated Financial Statements for information regarding certain legal proceedings in which the Company is involved.
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ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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 28, 2026, there were 1,051 registered holders of record of the Company’s common shares.
Unregistered Sales of Equity Securities
The Company had no unregistered sales of equity securities during fiscal 2026 that were not previously reported.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Share repurchase activity during the three months ended February 28, 2026 was as follows:
On May 8, 2025, the Company announced the initiation of its normal course issuer bid (“NCIB”) share buyback program, which was approved by the Toronto Stock Exchange. The program allows for the repurchase of up to 27,855,153 of the Company’s common shares, representing approximately 4.7% of the outstanding public float as of the close of business on May 5, 2025.
The NCIB share buyback program commenced on May 12, 2025, and will terminate on the earliest of May 11, 2026, such date as the Company may determine, or the date on which the maximum number of common shares that may be purchased under the NCIB share buyback program has been reached.
Purchases under the NCIB share buyback program may be made through the Toronto Stock Exchange, other Canadian stock exchanges, the New York Stock Exchange, and/or alternative trading systems in Canada and the United States. Subject to regulatory approval, purchases may also be made by the Company by way of private agreements or share repurchase programs under issuer bid exemption orders issued by securities regulatory authorities.
Common shares purchased through the NCIB share buyback program are cancelled as they are purchased.
Stock Performance Graph
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 and the peer group index (S&P Software & Services Select Industry Index) for the period of February 26, 2021 to February 28, 2026.
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 the Company’s common shares. The graph lines merely connect measurement dates and do not reflect fluctuations between those dates.
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Base Period
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 of the Company 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 Company’s common shares in connection with a business carried on in Canada (each such holder, a “U.S. Resident Holder”). Generally, a U.S. Resident Holder’s common shares of the Company will be considered to be capital property of the 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.
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This summary is not 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,” (as defined in the Tax Act). Such U.S. Resident Holders should consult their own tax advisors.
This summary is based upon the provisions of the Tax Act and the Treaty in force on the date hereof, and the current administrative policies and assessing practices of the Canada Revenue Agency published in writing prior to the date hereof. 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 U.S. Resident Holder or prospective U.S. Resident Holder, and no opinion or representation with respect to the tax consequences to any U.S. Resident Holder or prospective U.S. Resident Holder is made. Accordingly, U.S. Resident Holders and prospective U.S. Resident Holders should consult their own tax advisors with respect to the income tax consequences of purchasing, owning and disposing of the Company’s 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 under Part XIII of the Tax Act at the rate of 25% of the gross amount of the dividends, subject to a possible 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 beneficially owns at least 10% of the Company’s voting shares at the time the dividends are paid or credited, or deemed to be paid or credited to such U.S. Resident Holder, 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 the Company’s Common Shares
A U.S. Resident Holder who disposes or is deemed to dispose of a common share of the Company will not be subject to tax under the Tax Act on any capital gain realized on such disposition, unless the common share of the Company constitutes “taxable Canadian property,” within the meaning of the Tax Act, of the U.S. Resident Holder at the time of the disposition or deemed disposition and the U.S. Resident Holder is not entitled to relief under the Treaty.
Generally, a common share of the Company will not be “taxable Canadian property” of a 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 Company’s 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 of the Company 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 of the Company is “taxable Canadian property,” within the meaning of the Tax Act, of 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, including potential compliance requirements and withholding under section 116 of the Tax Act.
ITEM 6. [RESERVED]
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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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 28, 2026. 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, 2025 for a comparative discussion of our fiscal 2025 financial results as compared to our fiscal 2024 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.
Cylance Sale
On February 3, 2025, the Company completed the sale of its Cylance endpoint security assets and related liabilities to Arctic Wolf Networks, Inc. (“Arctic Wolf”) for $160.0 million of cash, subject to certain adjustments of approximately $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, SecuSUITE and AtHoc as the Cybersecurity segment. Effective from the fiscal year ended February 28, 2025, those three businesses are 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 Operations. For a discussion on “loss from discontinued operations, net of tax” for the fiscal year ended February 28, 2025 compared to our fiscal 2024 financial results, please refer to our MD&A included in our Annual Report on 10-K for the fiscal year ended February 28, 2025, which is incorporated herein by reference.
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 patent new innovations;
•the Company’s expectations with respect to its total and segment revenue and adjusted EBITDA, adjusted Corporate operating costs, non-GAAP EPS and operating cash flow in the first quarter of fiscal 2027 and for fiscal 2027 as a whole;
•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.
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, 2026 compared to fiscal year ended February 28, 2025 - Revenue - Revenue by Segment”, “Results of Operations - Fiscal year ended February 28, 2026 compared to fiscal year ended February 28, 2025 - Gross Margin and Adjusted EBITDA by Segment”, “Results of Operations - Fiscal year ended February 28, 2026 compared to fiscal year ended February 28, 2025 - Operating Expenses - General and Administrative Expenses”, “Results of Operations - Fiscal year ended February 28, 2026 compared to fiscal year ended February 28, 2025 - 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, 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 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
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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 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, the 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 2026 and announced the following significant achievements:
Products and Innovation:
•QNX announced that more than 275 million vehicles on the road are being powered by QNX’s embedded technology;
•QNX launched QNX Hypervisor 8.0, built on the next-generation SDP 8.0 architecture, facilitating high-performance virtualization of multiple operating systems on a single system-on-a-chip;
•QNX launched its foundational, safety-certified QNX OS for Safety 8.0 to streamline the development and certification of safety- and security-critical embedded systems;
•QNX SDP 8.0 was updated to add support for AMD Ryzen Embedded x86 processors;
•BlackBerry became the first Mobile Device Management (MDM) vendor to achieve BSI certification for BlackBerry UEM deployment with Apple Indigo and Samsung Knox;
•BlackBerry AtHoc became the first critical event management provider to achieve FedRAMP High authorization; and
•BlackBerry announced the expansion of BlackBerry SecuSUITE to Windows devices, extending sovereign-grade protection across the digital workplace.
Customers and Partners:
•Mercedes-Benz among automakers trialing early access version of QNX and Vector’s Alloy Kore platform;
•QNX technology to be integrated in BMW Group's next-generation ‘Neue Klasse’ software-defined vehicle architecture;
•QNX and NVIDIA announced general availability of NVIDIA DRIVE AGX Thor development kit, integrated with QNX OS for Safety 8 to enable developers to accelerate development of next-generation autonomous drive systems;
•QNX and Haleytek were chosen to enable software-defined audio using QNX Sound for the Volvo EX60 electric SUV;
•Leapmotor selected QNX technology as the foundation of its intelligent digital cockpit and autonomous drive domain controllers in its new B10 electric SUV;
•WeRide launched its next-generation ADAS platform for L2++ autonomous drive, built upon QNX OS for Safety;
•QNX announced that a leading Chinese automaker selected QNX Sound for their luxury EV lineup;
•Direct ChassisLink Inc (DCLI) announced the deployment of BlackBerry Radar across 100,000 chassis;
•BlackBerry, Global Affairs Canada, and Toronto Metropolitan University’s Rogers Cybersecure Catalyst expanded cybersecurity training in Malaysia;
•BlackBerry and Universiti Kebangsaan Malaysia announced a strategic partnership to advance Malaysia's future cyber-defenders and embedded software talent; and
•Malaysia expanded the deployment of BlackBerry Secure Communications software for the 46th and 47th ASEAN Summits.
Strategy and Governance:
•BlackBerry appointed Barry Mainz to its Board of Directors;
•BlackBerry appointed John Wall as President of QNX Division; and
•BlackBerry announced a share buyback program for the repurchase of up to 27,855,153 of its common shares.
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Fiscal 2026 Summary Results of Operations
The following table sets forth certain consolidated statements of operations data for the fiscal years ended February 28, 2026, February 28, 2025 and February 29, 2024:
Income (loss) from continuing operations 53.2 (8.5) 61.7 5.6 (14.1)
Earnings (loss) per share - reported
Weighted-average number of shares outstanding (000’s)
______________________________
(1)As a result of the Cylance sale, it is no longer reported alongside UEM, SecuSUITE and AtHoc as the Cybersecurity segment. Effective from the fiscal year ended February 28, 2025, those three businesses are 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.
(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 does 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, 2026 for calculation of the dilutive weighted average number of shares outstanding.
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The following section sets forth certain consolidated statements of operations data for the three months ended February 28, 2026, February 28, 2025 and February 29, 2024:
For the Three Months Ended(in millions, except for share and per share amounts)
Income (loss) from continuing operations 24.3 (7.8) 32.1 (12.4) 4.6
Income (loss) from discontinued operations (1) — 0.4 (0.4) (43.8) 44.2
Earnings (loss) per share - reported
Weighted-average number of shares outstanding (000’s)
______________________________
(1)As a result of the Cylance sale, it is no longer reported alongside UEM, SecuSUITE and AtHoc as the Cybersecurity segment. Effective from the fiscal year ended February 28, 2025, those three businesses are 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.
(2)Diluted loss per share on a U.S. GAAP basis in the fourth quarters 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 quarters of 2025 and 2024 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 segments for the three months and years ended February 28, 2026 and February 28, 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 months and year ended February 28, 2026, the Company presented segment adjusted EBITDA results excluding amortization in segment research and development, segment sales and marketing and segment general and administrative to align to the operating expense presentation on the Consolidated Statement of Operations. For purposes of comparability, the Company’s segment adjusted EBITDA for the three months and years ended February 28, 2025 and February 29, 2024 have been updated to conform to the current year’s presentation.
See Note 13 to the Consolidated Financial Statements for a description of the Company’s operating segments.
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For the Three Months Ended(in millions)
QNX Secure Communications Licensing
February 28, Change February 28, Change February 28, Change
Less amortization included in segment cost of sales — — — — — — 1.5 1.5 —
For the Three Months Ended(in millions)
QNX Secure Communications Licensing
Feb 28 Feb 29 Change Feb 28 Feb 29 Change Feb 28 Feb 29 Change
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For the Years Ended
(in millions)
QNX Secure Communications Licensing
February 28, Change February 28, Change February 28, Change
For the Years Ended
(in millions)
QNX Secure Communications Licensing
Feb 28 Feb 29 Change Feb 28 Feb 29 Change Feb 28 Feb 29 Change
______________________________
(1) The CODM also reviews segment information on an adjusted EBITDA basis, which excludes certain amounts as described below:
Restructuring charges - Restructuring charges relate to employee termination benefits, facilities, streamlining many of the Company’s centralized corporate functions into QNX and Secure Communications specific teams, and other costs pursuant to programs to reduce the Company’s annual expenses amongst R&D, infrastructure and other functions and 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.
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Long-lived asset impairment charge - 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.
Financial Highlights
The Company had approximately $432.4 million in cash, cash equivalents and investments as of February 28, 2026 (Fiscal 2025 - $410.3 million).
In fiscal 2026, the Company recognized revenue of $549.1 million and net income of $53.2 million, or $0.09 basic and diluted earnings per share on a U.S. GAAP basis (fiscal 2025 - revenue of $534.9 million and net loss of $79.0 million, or $0.13 basic 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).
The Company recognized adjusted net income of $97.3 million, or adjusted income of $0.16 per share, on a non-GAAP basis in fiscal 2026 (fiscal 2025 - adjusted net income of $12.5 million and adjusted income of $0.02 per share). See “Non-GAAP Financial Measures” below. Adjusted net income from continuing operations was $97.3 million in fiscal 2026 or $0.16 adjusted basic earnings per share from continuing operations (fiscal 2025 - adjusted net income from continuing operations of $57.6 million, or $0.10 adjusted basic earnings per share from continuing operations).
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 9, 2026, the Company announced financial results for the three months and fiscal year ended February 28, 2026, which included certain non-GAAP financial measures and non-GAAP ratios, including adjusted gross margin, adjusted gross margin percentage, adjusted operating expenses, adjusted Corporate operating costs, adjusted Corporate operating costs excluding amortization, adjusted net income, adjusted earnings per share, adjusted research and development expense, adjusted sales and marketing expense, adjusted general and administrative expense, adjusted amortization expense, adjusted operating income, adjusted EBITDA, segment adjusted EBITDA, adjusted operating income margin percentage, adjusted EBITDA margin percentage and free cash flow (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.
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 below 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. Non-GAAP financial measures and non-GAAP ratios exclude certain amounts as described below:
•Prior Debentures fair value adjustment. The Company elected to measure the Prior Debentures (as defined below) at fair value in accordance with the fair value option under U.S. GAAP. Each period, the fair value of the Prior Debentures was recalculated and the resulting non-cash income and charges from the change in fair value from non-credit components of the Prior 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 charges relating to employee termination benefits, exiting facilities, streamlining many of the Company’s centralized corporate functions into QNX and Secure Communications specific teams, and other costs pursuant to programs to reduce the Company’s 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.
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•Long-lived asset impairment charge. The Company believes that long-lived asset impairment charges (“LLA impairment charge”) 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 settlements. 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 28, 2026, February 28, 2025 and February 29, 2024
Readers are cautioned that adjusted gross margin, adjusted gross margin percentage, adjusted operating expenses, adjusted Corporate operating costs, adjusted Corporate operating costs excluding amortization, adjusted net income, adjusted earnings per share, adjusted research and development expense, adjusted sales and marketing expense, adjusted general and administrative expense, adjusted amortization expense, adjusted operating income, adjusted EBITDA, segment adjusted EBITDA, adjusted operating income margin percentage, adjusted EBITDA margin percentage and free cash flow (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.
A reconciliation of the most directly comparable U.S. GAAP gross margin and gross margin percentage for the three months ended February 28, 2026, February 28, 2025 and February 29, 2024 to both adjusted gross margin and adjusted gross margin percentage are reflected in the table below:
Stock compensation expense 0.6 0.4 0.7
Stock compensation expense 0.4 % 0.2 % 0.5 %
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Reconciliation of U.S. GAAP operating expenses for the three months ended February 28, 2026, November 30, 2025, February 28, 2025 and February 29, 2024 to adjusted operating expenses is reflected in the table below:
Stock compensation expense 4.9 5.6 3.9 4.1
Prior Debentures fair value adjustment — — — 0.5
Acquired intangibles amortization — 0.3 1.7 1.8
Litigation settlements — — 2.8 —
Goodwill impairment charge — — — 15.9
Reconciliation of U.S. GAAP Corporate operating costs for the three months ended February 28, 2026 and February 28, 2025 to adjusted Corporate operating costs excluding amortization is reflected in the table below:
Corporate operating costs $ 17.6 $ 31.1 $ 50.5
Stock compensation expense 2.1 1.3 1.5
Litigation settlements — 2.8 —
Goodwill impairment charge — — 15.9
LLA impairment charge 0.9 2.9 4.7
Adjusted Corporate operating costs 11.3 12.7 10.0
Adjusted Corporate operating costs excluding amortization $ 11.1 $ 12.1 $ 9.3
Reconciliation of U.S. GAAP net income (loss) and U.S. GAAP basic earnings (loss) per share for the three months ended February 28, 2026, February 28, 2025 and February 29, 2024 to adjusted net income and adjusted basic earnings per share is reflected in the table below:
Stock compensation expense 5.5 4.3 5.6
Prior Debentures fair value adjustment — — 0.5
Acquired intangibles amortization — 1.7 8.6
Litigation settlements — 2.8 —
Goodwill impairment charge — — 34.8
LLA impairment charge 0.9 4.9 4.7
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Reconciliation of U.S. GAAP research and development, sales and marketing, general and administrative, and amortization expense for the three months ended February 28, 2026, February 28, 2025 and February 29, 2024 to adjusted research and development, sales and marketing, general and administrative, and amortization expense is reflected in the table below:
Stock compensation expense 1.3 1.2 1.6
Adjusted research and development expense $ 32.1 $ 22.0 $ 27.3
Stock compensation expense 1.2 0.7 0.3
Adjusted sales and marketing expense $ 30.4 $ 26.4 $ 25.7
General and administrative $ 30.7 $ 50.0 $ 54.0
Stock compensation expense 2.4 2.0 2.2
Adjusted general and administrative expense $ 25.0 $ 36.6 $ 33.4
Acquired intangibles amortization — 1.7 1.8
Adjusted amortization expense $ 1.9 $ 2.4 $ 2.9
Reconciliation of U.S. GAAP operating income (loss) to adjusted operating income, adjusted EBITDA, adjusted operating income margin percentage and adjusted EBITDA margin percentage for the three months ended February 28, 2026, February 28, 2025 and February 29, 2024 are reflected in the table below.
Operating income (loss) $ 22.9 $ (8.0) $ (12.5)
Non-GAAP adjustments to operating income (loss)
Stock compensation expense 5.5 4.3 4.8
Prior Debentures fair value adjustment — — 0.5
Acquired intangibles amortization — 1.7 1.8
Litigation settlements — 2.8 —
Goodwill impairment charge — — 15.9
LLA impairment charge 0.9 4.9 4.7
Total non-GAAP adjustments to operating income 9.7 25.1 46.1
Acquired intangibles amortization — (1.7) (1.8)
Adjusted operating income margin % (1) 21% 12% 22%
Adjusted EBITDA margin % (2) 23% 15% 25%
______________________________
(1) Adjusted operating income margin % is calculated by dividing adjusted operating income by revenue.
(2) Adjusted EBITDA margin % is calculated by dividing adjusted EBITDA by revenue.
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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, stock compensation expenses, long-lived asset impairment and restructuring charges. The following table reconciles the U.S. GAAP measures of segment profit or loss disclosed by the Company in the Consolidated Financial Statements of segment adjusted gross margin to segment adjusted EBITDA for the three months ended February 28, 2026, February 28, 2025 and February 29, 2024.
For the Three Months Ended
(in millions)
QNX Secure Communications Licensing
Less amortization included in segment cost of sales — — — — — 0.2 1.5 1.5 1.4
Reconciliation of non-GAAP based measures with most directly comparable U.S. GAAP based measures for the years ended February 28, 2026, February 28, 2025 and February 29, 2024
A reconciliation of the most directly comparable U.S. GAAP gross margin and gross margin percentage for the years ended February 28, 2026, February 28, 2025 and February 29, 2024 to both adjusted gross margin and adjusted gross margin percentage are reflected in the table below:
Stock compensation expense 2.2 2.4 3.0
Stock compensation expense 0.4 % 0.5 % 0.4 %
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Reconciliation of U.S. GAAP operating expenses for the years ended February 28, 2026, February 28, 2025 and February 29, 2024 to adjusted operating expenses is reflected in the table below:
Prior Debentures fair value adjustment — — 3.5
Acquired intangibles amortization 3.1 7.0 11.0
Litigation settlements — 2.8 —
Goodwill impairment charge — — 15.9
Reconciliation of U.S. GAAP Corporate operating costs for the years ended February 28, 2026, February 28, 2025 and February 29, 2024 to adjusted Corporate operating costs excluding amortization is reflected in the table below:
Stock compensation expense 8.2 4.3 14.4
Litigation settlements — 2.8 —
Goodwill impairment charge — — 15.9
Adjusted Corporate operating costs 42.1 45.8 36.6
Adjusted Corporate operating costs excluding amortization $ 41.0 $43.0 $33.5
Reconciliation of U.S. GAAP net income (loss) and U.S. GAAP basic earnings (loss) per share for the years ended February 28, 2026, February 28, 2025 and February 29, 2024 to adjusted net income and adjusted basic earnings per share is reflected in the table below:
Basic earnings per share Basic earnings (loss) per share Basic loss per share
Prior Debentures fair value adjustment — — 3.5
Acquired intangibles amortization 3.1 27.4 38.2
Litigation settlements — 2.8 —
Goodwill impairment charge — — 34.8
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Reconciliation of U.S GAAP research and development, sales and marketing, general and administrative, and amortization expense for the years ended February 28, 2026, February 28, 2025 and February 29, 2024 to adjusted research and development, sales and marketing, general and administrative, and amortization expense is reflected in the table below:
Stock compensation expense 5.4 5.3 7.3
Adjusted research and development expense $ 108.2 $ 103.5 $ 119.8
Stock compensation expense 5.1 2.8 2.5
Adjusted sales and marketing expense $ 108.9 $ 92.7 $ 101.5
Adjusted general and administrative expense $ 102.6 $ 123.5 $ 135.3
Acquired intangibles amortization 3.1 7.0 11.0
Adjusted amortization expense $ 8.3 $ 10.7 $ 15.7
Reconciliation of U.S. GAAP operating income (loss) to adjusted operating income, adjusted EBITDA, adjusted operating income margin percentage and adjusted EBITDA margin percentage for the years ended February 28, 2026, February 28, 2025 and February 29, 2024 are reflected in the table below.
Non-GAAP adjustments to operating income
Prior Debentures fair value adjustment — — 3.5
Acquired intangibles amortization 3.1 7.0 11.0
Litigation settlements — 2.8 —
Goodwill impairment charge — — 15.9
Total non-GAAP adjustments to operating income 44.1 66.1 110.4
Acquired intangibles amortization (3.1) (7.0) (11.0)
Adjusted operating income margin % (1) 17 % 13 % 16 %
Adjusted EBITDA margin % (2) 20 % 16 % 19 %
______________________________
(1) Adjusted operating income margin % is calculated by dividing adjusted operating income by revenue.
(2) Adjusted EBITDA margin % is calculated by dividing adjusted EBITDA by revenue.
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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, stock compensation expenses, long-lived asset impairment and restructuring charges. The following table reconciles the U.S. GAAP measures of segment profit or loss disclosed by the Company in the Consolidated Financial Statements of segment adjusted gross margin to segment adjusted EBITDA for the years ended February 28, 2026, February 28, 2025 and February 29, 2024.
For the Years Ended
(in millions)
QNX Secure Communications Licensing
February 28, Feb 29, February 28, Feb 29, February 28, Feb 29,
Free cash flow (usage)
The Company uses free cash flow (usage) when assessing its sources of liquidity, capital resources, and quality of earnings. The Company 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 and years ended February 28, 2026, February 28, 2025 and February 29, 2024 to free cash flow (usage) is reflected in the table below:
Net cash provided by (used in) operating activities $ 45.6 $ 42.0 $ (14.7)
Acquisition of property, plant and equipment (1.2) (0.5) $ (1.6)
Net cash provided by (used in) operating activities $ 50.3 $ 16.5 $ (3.5)
Acquisition of property, plant and equipment (3.8) (3.1) (7.1)
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 Secure Communications annual recurring revenue (“ARR”), Secure Communications dollar-based net retention rate (“DBNRR”) 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 or as at February 28, 2026 and February 28, 2025 are set forth below.
Secure Communications Annual Recurring Revenue $ 218 $ 208 $ 10
Secure Communications Dollar-Based Net Retention Rate 94 % 93 % 1 %
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Secure Communications 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 Secure Communications business.
Secure Communications ARR was approximately $218 million in the fourth quarter of fiscal 2026 and increased compared to $216 million in the third quarter of fiscal 2026 and increased compared to $208 million in the fourth quarter of fiscal 2025.
Secure Communications Dollar-Based Net Retention Rate
The Company calculates the Secure Communications DBNRR as of period end by first calculating the Secure Communications ARR from the customer base as at 12 months prior to the current period end (“Prior Period ARR”). The Company then calculates the Secure Communications 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. The Company uses DBNRR as an indicator of business momentum for the Secure Communications business.
Secure Communications DBNRR was 94% in the fourth quarter of fiscal 2026 and increased compared to 92% in the third quarter of fiscal 2025 and increased compared to 93% in the fourth quarter of fiscal 2025.
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.
QNX royalty backlog was approximately $950 million at the end of the fourth quarter of fiscal 2026 and increased compared to approximately $865 million at the end of the fourth quarter of fiscal 2025.
Results of Operations - Fiscal year ended February 28, 2026 compared to fiscal year ended February 28, 2025
Revenue
Revenue by Segment
Comparative breakdowns of revenue by segment are set forth below.
For the Fiscal Years Ended(in millions)
Revenue by Segment
% Revenue by Segment
QNX
The increase in QNX revenue of $32.0 million was primarily due to an increase of $18.0 million in royalty revenue, an increase of $9.1 million in development seat revenue and an increase of $5.9 million in BlackBerry Radar revenue, partially offset by a decrease of $1.3 million in professional services.
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The Company previously stated that it expected QNX revenue to be in the range of $260 million to $266 million for fiscal 2026 as a whole. QNX revenue was $268 million for fiscal 2026.
The Company expects QNX revenue to be in the range of $60 million to $64 million in the first quarter of fiscal 2027, and for the full year to be in the range of $290 million to $307 million in fiscal 2027.
Secure Communications
The decrease in Secure Communications revenue of $13.7 million was primarily due to a decrease of $11.8 million in Secusmart product revenue, and a decrease of $5.2 million in BlackBerry UEM product revenue, partially offset by an increase of $3.5 million in BlackBerry AtHoc product revenue.
The Company previously stated that it expected Secure Communications revenue to be in the range of $247 million to $251 million for fiscal 2026 as a whole. Secure Communications revenue for fiscal 2026 was $258.9 million due to higher than expected Secusmart product revenue in the fourth quarter of fiscal 2026.
The Company expects Secure Communications revenue to be in the range of $66 million to $70 million in the first quarter of fiscal 2027 and for the full year to be in the range of $270 million to $280 million in fiscal 2027.
Licensing
The decrease in Licensing revenue of $4.1 million was primarily due to a decrease in revenue from the Company’s intellectual property licensing arrangements.
The Company previously stated that it expected Licensing revenue to be approximately $24 million for fiscal 2026 as a whole. Licensing revenue was $22.2 million for fiscal 2026 due to the timing of new licensing deals.
The Company expects Licensing revenue to be approximately $6 million in each of the four quarters of fiscal 2027.
Total BlackBerry Revenue
The Company previously stated that it expected total BlackBerry revenue to be in the range of $531 million to $541 million in fiscal 2026 as a whole. Total BlackBerry revenue was $549.1 million and was higher due to Secure Communications revenue exceeding previously provided guidance for the reasons described above.
The Company expects total BlackBerry revenue to be in the range of $132 million to $140 million in the first quarter of fiscal 2027 and for the full year to be in the range of $584 million to $611 million in fiscal 2027.
Revenue by Geography
Comparative breakdowns of the geographic regions are set forth in the following table:
For the Fiscal Years Ended(in millions)
Revenue by Geography
% Revenue by Geography
Europe, Middle East and Africa 35.3 % 35.3 % 20.9 %
North America Revenue
The decrease in North America revenue of $3.5 million was primarily due to a decrease of $11.6 million in BlackBerry UEM product revenue and a decrease of $4.5 million in Licensing revenue, partially offset by an increase of $5.8 million in BlackBerry Radar revenue, an increase of $3.2 million in BlackBerry AtHoc product revenue and an increase of $3.0 million in BlackBerry QNX royalty revenue.
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Europe, Middle East and Africa Revenue
The increase in Europe, Middle East and Africa revenue of $5.1 million was primarily due to an increase of $6.9 million in BlackBerry QNX development seat revenue, an increase of $5.6 million in BlackBerry UEM product revenue and an increase of $2.8 million in BlackBerry QNX royalty revenue, partially offset by a decrease of $11.4 million in Secusmart product revenue.
Other Regions Revenue
The increase in Other regions revenue of $12.6 million was primarily due to an increase of $12.2 million in BlackBerry QNX royalty revenue.
Gross Margin
Consolidated Gross Margin
Consolidated gross margin increased by $23.3 million to approximately $418.2 million in fiscal 2026 (fiscal 2025 - $394.9 million). The increase was primarily due to an increase in revenue from QNX due to the reasons discussed above in “Revenue by Segment”.
Consolidated Gross Margin Percentage
Consolidated gross margin percentage increased by 2.4%, to approximately 76.2% of consolidated revenue in fiscal 2026 (fiscal 2025 - 73.8%). The increase was primarily due to a change in mix, specifically a higher relative gross margin contribution from Secusmart software licenses and QNX.
Gross Margin and Adjusted EBITDA by Segment
See “Business Overview” and “Fiscal 2026 Summary Results of Operations” for information about the Company’s operating segments and the basis of operating segment results.
For the Year Ended
(in millions)
QNX Secure Communications Licensing
Feb 28 Feb 28 Change Feb 28 Feb 28 Change Feb 28 Feb 28 Change
Segment adjusted gross margin % 83 % 84 % (1) % 70 % 66 % 4 % 73 % 77 % (4) %
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QNX
The increase in QNX segment adjusted gross margin of $25.4 million was primarily due to the reasons discussed above in “Revenue by Segment”, partially offset by an increase in cost of sales related to BlackBerry Radar hardware devices.
The decrease in QNX segment adjusted gross margin percentage of 1% was primarily due to a change in mix, specifically an increased gross margin contribution from BlackBerry Radar which has a lower relative gross margin percentage.
The increase in QNX segment adjusted EBITDA of $11.9 million was primarily due to the reasons discussed above in “Revenue by Segment” and a benefit from the claims of Strategic Innovation Fund (SIF) grant funding, partially offset by an increase in cost of sales related to BlackBerry Radar hardware devices and an increase in salaries and benefits expense. The Company does not expect to receive any further benefits from SIF claims.
The Company previously stated that it expected QNX segment adjusted EBITDA to be in the range of $67 million to $73 million in fiscal 2026. QNX segment adjusted EBITDA was $71.0 million in fiscal 2026.
The Company expects QNX segment adjusted EBITDA to be in the range of $69 million to $81 million in fiscal 2027 and to be in the range of $4 million to $8 million in the first quarter of fiscal 2027.
Secure Communications
The increase in Secure Communications segment adjusted gross margin of $1.8 million was due to a change in mix, specifically an increased gross margin contribution from Secusmart software licenses.
The increase in Secure Communications segment adjusted gross margin percentage of 4% was primarily due to the same reason discussed above.
The increase in Secure Communications segment adjusted EBITDA of $3.8 million was primarily due to an increase in segment adjusted gross margin percentage discussed above and a decrease in salaries and benefits expense, partially offset by a decrease in revenue due to the reasons discussed above in “Revenue by Segment”.
The Company previously stated that it expected Secure Communications segment adjusted EBITDA to be in the range of $47 million to $51 million for fiscal 2026 as a whole. Secure Communications segment adjusted EBITDA was $56.1 million for fiscal 2026 as a whole due to Secure Communications revenue exceeding previously provided guidance for the reasons described above in “Revenue by Segment”.
The Company expects Secure Communications adjusted EBITDA to be in the range of $57 million to $65 million in fiscal 2027 and to be in the range of $14 million to $18 million in the first quarter of fiscal 2027.
Licensing
The decrease in Licensing segment adjusted gross margin of $4.1 million was primarily due to the reasons discussed above in “Revenue by Segment”.
The decrease in Licensing segment adjusted gross margin percentage of 4% was primarily due to the same reason discussed above.
The increase in Licensing segment adjusted EBITDA of $5.2 million was primarily due to a recovery of expected credit losses and a decrease in legal expense, partially offset by a decrease in revenue due to the reasons discussed above in “Revenue by Segment”.
The Company previously stated that it expected Licensing segment adjusted EBITDA to be approximately $20 million in fiscal 2026. Licensing segment adjusted EBITDA was $21 million in fiscal 2026.
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The Company expects Licensing segment adjusted EBITDA to be approximately $20 million in fiscal 2027 and to be approximately $5 million in each of the four quarters of fiscal 2027.
Operating Expenses
The table below presents a comparison of research and development, sales and marketing, general and administrative, and amortization expense for fiscal 2026 compared to fiscal 2025 and fiscal 2025 compared to fiscal 2024.
For the Fiscal Years Ended(in millions)
Operating expenses
Impairment of goodwill — — — 15.9 (15.9)
Impairment of long-lived assets 2.1 9.6 (7.5) 15.3 (5.7)
Debentures fair value adjustment — — — 3.5 (3.5)
Litigation settlements — 2.8 (2.8) — 2.8
Operating Expense as % of Revenue
General and administrative 23.5 % 29.9 % 24.7 %
Impairment of goodwill — % — % 2.1 %
Impairment of long-lived assets 0.4 % 1.8 % 2.0 %
Debentures fair value adjustment — % — % 0.5 %
Litigation settlements — % 0.5 % — %
See “Non-GAAP Financial Measures” for a reconciliation of selected U.S. GAAP-based measures to adjusted measures for the years ended February 28, 2026, February 28, 2025 and February 29, 2024.
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U.S. GAAP Operating Expenses
Operating expenses decreased by $24.2 million, or 6.1% in fiscal 2026 compared to fiscal 2025. The decrease was primarily due to a decrease of $10.4 million in restructuring costs, a recovery of $7.9 million of previously recognized credit losses, a decrease of $7.5 million in impairment of long-lived assets, a decrease of $6.3 million in amortization expense, a decrease of $5.3 million in the Company’s deferred share unit costs and an increase in benefits of $5.2 million from SIF claims filed, partially offset by an increase of $8.7 million in salaries and benefits expense and an increase of $7.6 million in variable incentive plan costs.
Adjusted Operating Expenses
Adjusted operating expenses decreased by $2.4 million, or 0.7%, to $328 million in fiscal 2026, compared to $330.4 million in fiscal 2025. The decrease was primarily attributable to a recovery of $7.9 million of previously recognized credit losses, a decrease of $6.3 million in amortization expense, and a decrease of $5.3 million in the Company’s deferred share unit costs, partially offset by an increase of $8.7 million in salaries and benefits expense and an increase of $7.6 million in variable incentive plan costs.
Research and Development Expenses
Research and development expenses consist primarily of salaries and benefits for technical personnel, new product development costs, travel, office and building costs, infrastructure costs and other employee costs.
Research and development expenses increased by $4.8 million, or 4.4% in fiscal 2026 compared to fiscal 2025. The increase was primarily attributable to an increase of $4.5 million in salaries and benefits expense, an increase of $3.8 million in variable incentive plan costs and an increase of $2.0 million in consulting costs, partially offset by an increase in benefits of $5.2 million from SIF claims filed.
Adjusted research and development expenses increased by $4.7 million, or 4.5%, to $108.2 million in fiscal 2026 compared to $103.5 million in fiscal 2025. The increase was primarily due to the same reasons described above on a U.S. GAAP basis.
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of marketing, advertising and promotion, salaries and benefits, information technology costs and travel expenses.
Sales and marketing expenses increased by $18.5 million, or 19.4% in fiscal 2026 compared to fiscal 2025. The increase was primarily due to an increase of $9.4 million in salaries and benefits expense, an increase of $2.6 million in sales incentive plan costs, an increase of $2.4 million in stock-based compensation expense, an increase of $1.9 million in variable incentive plan costs and an increase of $0.8 million in infrastructure costs.
Adjusted sales and marketing expenses increased by $16.2 million, or 17.5%, to $108.9 million in fiscal 2026 compared to $92.7 million in fiscal 2025. The increase was primarily due to an increase of $9.4 million in salaries and benefits expense, an increase of $2.6 million in sales incentive plan costs, an increase of $1.9 million in variable incentive plan costs and an increase of $0.8 million in infrastructure costs.
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 decreased by $30.9 million, or 19.3%, in fiscal 2026 compared to fiscal 2025. The decrease was primarily due to a decrease of $10.4 million in restructuring costs, a recovery of $7.9 million of previously recognized credit losses, a decrease of $5.3 million in the Company’s deferred share unit costs and a decrease of $5.3 million in salaries and benefits expense.
Adjusted general and administrative expenses decreased by $20.9 million, or 16.9%, to $102.6 million in fiscal 2026 compared to $123.5 million in fiscal 2025. The decrease was primarily due to a recovery of $7.9 million of previously recognized credit losses, a decrease of $5.3 million in the Company’s deferred share unit cost and a decrease of $5.3 million in salaries and benefits expense.
Adjusted Corporate operating costs is defined as the portion of the Company’s total adjusted operating costs that is not attributable to any of the three operating segments.
The Company previously stated that it expected adjusted Corporate operating costs excluding amortization to be approximately $10 million in the fourth quarter of fiscal 2026. Adjusted Corporate operating costs excluding amortization were $11.1 million in the fourth quarter of fiscal 2026.
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The Company expects adjusted Corporate operating costs excluding amortization to be approximately $36 million in fiscal 2027 as a whole.
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 2026 compared to fiscal 2025 and fiscal 2025 compared to fiscal 2024. Intangible assets are comprised of patents, licenses and acquired technology.
For the Fiscal Years Ended(in millions)
Included in Operating Expense
Property, plant and equipment $ 5.1 $ 7.1 $ (2.0) $ 9.1 $ (2.0)
Included in Cost of Sales
Property, plant and equipment $ 0.3 $ 0.5 $ (0.2) $ 0.8 $ (0.3)
Amortization included in Operating Expense
The decrease in amortization expense included in operating expense of $6.4 million was primarily due to the lower cost base of acquired technology assets.
Adjusted amortization expense decreased by $2.4 million to $8.3 million in fiscal 2026 compared to $10.7 million in fiscal 2025 due to the same reasons described above.
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 $0.1 million was due to a lower cost base of assets.
Investment Income, Net
Investment income, net, which includes the interest expense from the Debentures, increased by $3.0 million to investment income, net of $10.7 million in fiscal 2026 compared to investment income, net of $7.7 million in fiscal 2025. The increase in investment income, net was primarily due to net unrealized losses recognized from observable price changes on non-marketable equity investments without readily determinable fair value in fiscal 2025 which did not recur and a higher return on cash and investments due to a higher cash and investments balance, partially offset by interest income on a delayed tax refund in fiscal 2025 which did not recur.
Income Taxes
For fiscal 2026, the Company’s net effective income tax expense rate was approximately 10% (fiscal 2025 - net effective income tax expense rate of approximately 27%). 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 income for fiscal 2026 was $53.2 million, or $0.09 basic and diluted earnings per share on a U.S. GAAP basis (fiscal 2025 - net loss of $79.0 million, or $0.13 basic and diluted loss per share). The year over year change of $132.2 million was primarily due to a loss from discontinued operations in the fiscal 2025 which did not recur, a decrease in operating expenses, as described above in “Operating Expenses”, an increase in gross margin percentage, as described above in “Consolidated Gross Margin Percentage” and an increase in revenue as described above in “Revenue by Segment”.
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Adjusted net income was $97.3 million in fiscal 2026 or $0.16 adjusted basic earnings per share (fiscal 2025 - adjusted net income of $12.5 million, or $0.02 adjusted basic earnings per share). The increase in adjusted net income of $84.8 million was primarily due to the same reasons described above on a U.S. GAAP basis.
The Company previously stated that it expected total Company adjusted EBITDA to be in the range of $94 million to $104 million in fiscal 2026 and total Company adjusted EBITDA to be in the range of $22 million to $32 million in the fourth quarter of fiscal 2026. Total Company adjusted EBITDA was $107.1 million in fiscal 2026 due to Secure Communications revenue exceeding previously provided guidance for the reasons described above in “Revenue by Segment”. Total Company adjusted EBITDA was $36.1 million in the fourth quarter of fiscal 2026 due to the same reason described above for fiscal 2026.
The Company previously stated that it expected non-GAAP EPS to be in the range of $0.03 and $0.05 in the fourth quarter of fiscal 2026 and non-GAAP EPS to be in the range of $0.14 to $0.16 for fiscal 2026. Non-GAAP EPS was $0.06 in the fourth quarter of fiscal 2026 and $0.16 for fiscal 2026.
The Company expects adjusted EBITDA to be in the range of $14 million to $22 million in the first quarter of fiscal 2027 and to be in the range of $110 million to $130 million in fiscal 2027 as a whole.
The Company expects non-GAAP EPS to be in the range of $0.02 to $0.03 in the first quarter of fiscal 2027 and to be in the range of $0.15 to $0.19 in fiscal 2027 as a whole.
The Company expects operating cash flow to be in the range of breakeven to $10 million in the first quarter of fiscal 2027 and to be approximately $100 million for fiscal 2027.
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 2027 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 592 million common shares for basic earnings per share and 598 million common shares for diluted earnings per share for the fiscal year ended February 28, 2026. The weighted average number of shares outstanding was 591 million common shares for basic and diluted loss per share for the fiscal year ended February 28, 2025.
Common Shares Outstanding
On April 6, 2026, there were 588 million voting common shares, 14 million restricted share units and 1.8 million deferred share units outstanding. In addition, 51.5 million common shares are issuable upon conversion in full of the Notes (as defined below), as described in Note 7 to the Consolidated Financial Statements.
The Company has not paid any cash dividends during the last three fiscal years.
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Results of Operations - Three months ended February 28, 2026 compared to the three months ended February 28, 2025
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)
Revenue by Segment
% Revenue by Segment
QNX
The increase in QNX revenue of $12.9 million was primarily due to an increase of $10.0 million in royalty revenue and an increase of $2.3 million in development seat revenue.
The Company previously stated that it expected QNX revenue in the fourth quarter of fiscal 2026 to be in the range of $71 million to $77 million. QNX revenue in the fourth quarter of fiscal 2026 was $78.7 million.