The Company previously stated that it expected its average quarterly non-GAAP operating expense run rate to be approximately $110 million in fiscal 2025. Non-GAAP operating expense was $101 million in the third quarter of fiscal 2025. Due to the reporting of the Cylance business as a discontinued operation, the Company is retracting this guidance.
Research and Development Expenses
Research and development expenses consist primarily of salaries and benefits costs for technical personnel, new product development costs, travel expenses, office and building costs, infrastructure costs and other employee costs.
Research and development expenses decreased by $2 million, or 6.9%, in the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024 primarily due to a decrease of $4 million in salaries and benefits expense, and a decrease of $1 million in consulting expenses, and a decrease of $1 million in infrastructure costs, partially offset by an increase of $4 million in variable incentive plan costs.
Adjusted research and development expenses decreased by $1 million, or 3.7%, to $26 million in the third quarter of fiscal 2025 compared to $27 million the third quarter of fiscal 2025, 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 decreased by $2 million, or 8.0%, in the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024, primarily due to a decrease of $2 million in salaries and benefits expense and a decrease of $1 million in marketing and advertising costs.
Adjusted sales and marketing expenses decreased by $3 million, or 12.0%, to $22 million in the third quarter of fiscal 2025 compared to $25 million in the third quarter of fiscal 2024. The decrease was primarily due to the same reasons described above on a U.S. GAAP basis.
General and Administrative Expenses
General and administration expenses consist primarily of salaries and benefits, external advisory fees, information technology costs, office and related staffing infrastructure costs.
General and administrative expenses decreased by $7 million, or 15.6%, in the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024. The decrease was primarily due to a decrease of $6 million in legal expense, a decrease of $5 million in salaries and benefits, a decrease of $2 million in facilities cost, and a decrease of $2 million in stock compensation expense, partially offset by an increase of $4 million in the Company’s deferred share unit costs, and an increase of $3 million in variable incentive plan cost.
Adjusted general and administrative expenses decreased by $3 million, or 9.4%, to $29 million in the third quarter of fiscal 2025 compared to $32 million in the third quarter of fiscal 2024. The decrease was primarily due to a decrease of $6 million in legal expense, a decrease of $4 million in salaries and benefits expense, and a decrease of $2 million in facilities cost, partially offset by an increase of $4 million in the Company’s deferred share unit costs, and an increase of $3 million in variable incentive plan cost.
54
Amortization Expense
The table below presents a comparison of amortization expense relating to property, plant and equipment and intangible assets recorded as amortization or cost of sales for the quarter ended November 30, 2024 compared to the quarter ended November 30, 2023. Intangible assets are comprised of patents, licenses and acquired technology.
For the Three Months Ended
(in millions)
Included in Operating Expense
November 30, 2024
November 30, 2023
Change
Property, plant and equipment
$
2
$
2
$
—
Intangible assets
2
4
(2)
Total
$
4
$
6
$
(2)
Included in Cost of Sales
November 30, 2024
November 30, 2023
Change
Intangible assets
$
2
$
1
$
1
Amortization included in Operating Expense
The decrease in amortization expense included in operating expense of $2 million was primarily due to the lower cost base of acquired technology assets.
Adjusted amortization expense decreased by $2 million to $2 million in the third quarter of fiscal 2025 compared to $4 million in the third quarter of fiscal 2024 was primarily due to the lower cost base of assets.
Amortization included in Cost of Sales
Amortization expense relating to certain property, plant and equipment and certain intangible assets employed in the Company’s service operations decreased by $2 million to $2 million in the third quarter of fiscal 2025 compared to $1 million in the third quarter of fiscal 2024 due to an increase in patent amortization expense included in cost of sales.
Investment Income, Net
Investment income, net, which includes the interest expense from the Debentures (as defined in “Financial Condition - Debt Financing and Other Funding Sources”), was nil in the third quarter of fiscal 2025 and decreased by $5 million from investment income, net of $5 million in the third quarter of fiscal 2024 primarily due to unrealized losses recognized from observable price changes on non-marketable equity investments without readily determinable fair value in the third quarter of fiscal 2025 and a lower yield on cash and investments.
Income Taxes
For the third quarter of fiscal 2025, the Company’s net effective income tax expense rate was approximately 175% (third quarter of fiscal 2024 - net effective income tax expense rate of approximately 250%). The Company’s net effective income tax rate reflects the change in unrecognized income tax benefits, if any, and the fact that the Company has a significant valuation allowance against its deferred tax assets; in particular, any change in loss carry forwards or research and development credits, amongst other items, was offset by a corresponding adjustment of the valuation allowance. 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 from continuing operations for the third quarter of fiscal 2025 was $12 million, or $0.02 basic and diluted earnings per share on a U.S. GAAP basis (third quarter of fiscal 2024 - net income from continuing operations of $8 million, or $0.01 basic earnings per share and $0.01 diluted loss per share). The increase in net income of $4 million was primarily due to a decrease in operating expenses, as described above in “Operating Expenses”, partially offset by a decrease in revenue, as described above in “Revenue by Segment”.
The Company’s net loss from discontinued operations for the third quarter of fiscal 2025 was $23 million, or $0.04 basic and diluted loss per share on a U.S. GAAP basis (third quarter of fiscal 2024 - net loss from discontinued operations of $29 million, or $0.05 basic loss per share and $0.06 diluted loss per share). The decrease in net loss of $6 million was primarily due to a decrease in operating expenses primarily due to a decrease in salaries and benefits expense, partially offset by a decrease in revenue in Cylance cybersecurity solutions.
55
Adjusted net income was $12 million in the third quarter of fiscal 2025, or $0.02 adjusted basic loss per share (third quarter of fiscal 2024 - adjusted net income of $3 million, or $0.01 adjusted basic loss per share). The increase in adjusted net income of $9 million was primarily due to the same reasons described above on a U.S. GAAP basis.
The Company previously stated that it expected a sequential improvement in operating cash flow in the third quarter of fiscal 2025. Operating cash flow usage was $3 million in the third quarter of fiscal 2025 and improved sequentially compared to the second quarter of fiscal 2025.
The Company previously stated that it expected non-GAAP EPS to be in the range of ($0.01) to $0.01, adjusted EBITDA to be in the range of breakeven to $10 million and adjusted EBITDA to improve sequentially in the third quarter of fiscal 2025. Non-GAAP EPS was $0.02 and adjusted EBITDA was $23 million in the third quarter of fiscal 2025 due to strong revenue and lower-than-expected operating costs and improved sequentially in the third quarter of fiscal 2025.
The Company previously stated it expected adjusted EBITDA to be in the range of $0 million to $10 million in fiscal 2025, to be in the range of $50 million to $65 million in fiscal 2026 and to be in the range of $80 million to $95 million in fiscal 2027. Due to the reporting of the Cylance business as a discontinued operation, the Company is retracting this guidance. The Company now expects total Company adjusted EBITDA from continuing operations to be in the range of $60 million to $70 million in fiscal 2025 and total Company adjusted EBITDA from continuing operations to be in the range of $10 million to $20 million in the fourth quarter of fiscal 2025.
The Company previously stated it expected adjusted EBITDA margin percentage to be 2% in fiscal 2025, 10% in fiscal 2026 and 14% in fiscal 2027. Due to the reporting of the Cylance business as a discontinued operation, the Company is retracting this guidance.
The Company expects the impact to adjusted EBITDA from its Corporate functions to be approximately $48 million in fiscal 2025, $40 million in fiscal 2026, and $35 million in fiscal 2027.
The Company expects non-GAAP EPS to be in the range of ($0.01) and $0.01 in the fourth quarter of fiscal 2025. The Company previously stated that it expected non-GAAP EPS to be in the range of ($0.05) to ($0.02) for fiscal 2025 as a whole. Due to the reporting of the Cylance business as a discontinued operation, the Company is retracting this guidance and now expects non-GAAP EPS to be in the range of ($0.02) to breakeven for fiscal 2025.
The Company does not provide a reconciliation of expected adjusted EBITDA and expected Non-GAAP basic EPS for the fourth quarter and full fiscal year 2025 to the most directly comparable expected GAAP measures because it is unable to predict with reasonable certainty, among other things, restructuring charges and impairment charges and, accordingly, a reconciliation is not available without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the guidance period.
The weighted average number of shares outstanding was 591 million common shares for basic and diluted loss per share for the third quarter of fiscal 2025 (third quarter of fiscal 2024 - 584 million common shares for basic and diluted loss per share).
56
Results of Operations - Nine months ended November 30, 2024 compared to the nine months ended November 30, 2023
The following section sets forth certain consolidated statements of operations data, which is expressed in millions of dollars, except for share and per share amounts and as a percentage of revenue, for the nine months ended November 30, 2024 and November 30, 2023:
For the Nine Months Ended
(in millions, except for share and per share amounts)
November 30, 2024
November 30, 2023
Change
Revenue
$
391
$
606
$
(215)
Gross margin
289
367
(78)
Operating expenses
282
342
(60)
Investment income, net
8
15
(7)
Loss before income taxes
15
40
(25)
Provision for income taxes
16
20
(4)
Income from continuing operations
(1)
20
(21)
Loss from discontinued operations
(71)
(94)
23
Net loss
$
(72)
$
(74)
$
2
Earnings per share - reported
Basic
$
—
$
0.03
$
(0.03)
Diluted
$
—
$
0.03
$
(0.03)
Weighted-average number of shares outstanding (000’s)
Basic
590,537
583,559
Diluted (1)
590,537
590,013
______________________________
(1)Diluted loss per share on a U.S. GAAP basis for the first nine months of fiscal 2025 does 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 for the first nine months of fiscal 2024 does not include the dilutive effect of the 2020 Debentures as to do so would be anti-dilutive. Diluted loss per share on a U.S. GAAP basis for the first nine months of fiscal 2025 does not include the dilutive effect of stock-based compensation as to do so would be anti-dilutive.
Revenue
Revenue by Segment
Comparative breakdowns of revenue by segment are set forth below.
For the Nine Months Ended
(in millions)
November 30, 2024
November 30, 2023
Change
Revenue by Segment
Secure Communications
$
205
$
212
$
(7)
IoT
170
149
21
Licensing
16
245
(229)
$
391
$
606
$
(215)
% Revenue by Segment
Secure Communications
52.4
%
35.0
%
IoT
43.5
%
24.6
%
Licensing
4.1
%
40.4
%
100.0
%
100.0
%
57
Secure Communications
The decrease in Secure Communications revenue of $7 million was primarily due to a decrease of $15 million in BlackBerry UEM license revenue, partially offset by an increase of $5 million in professional services revenue, an increase of $2 million in BlackBerry AtHoc, and an increase of $2 million relating to product revenue in Secusmart.
IoT
The increase in IoT revenue of $21 million was primarily due to an increase of $20 million in BlackBerry QNX royalty revenue, and an increase of $4 million in BlackBerry Radar, partially offset by a decrease of $2 million in BlackBerry QNX development seat revenue.
Licensing
The decrease in Licensing revenue of $229 million was primarily due to $218 million associated with the Company’s patent sale in the first quarter of fiscal 2024, which was a one-time event, and a decrease of $11 million in revenue from the Company’s intellectual property licensing arrangements.
U.S. GAAP Revenue by Geography
Comparative breakdowns of the geographic regions on a U.S. GAAP basis are set forth in the following table:
For the Nine Months Ended
(in millions)
November 30, 2024
November 30, 2023
Change
Revenue by Geography
North America
$
177
$
418
$
(241)
Europe, Middle East and Africa
141
116
25
Other regions
73
72
1
$
391
$
606
$
(215)
% Revenue by Geography
North America
45.3
%
69.0
%
Europe, Middle East and Africa
36.0
%
19.2
%
Other regions
18.7
%
11.9
%
100.0
%
100.0
%
North America Revenue
The decrease in North America revenue of $241 million was primarily due to a decrease of $228 million associated with the Company’s patent sale in the nine months ended fiscal 2024, which was a one-time event, a decrease of $15 million in BlackBerry UEM license revenue, and a decrease of $3 million relating to product revenue in Secusmart, partially offset by an increase of $4 million in BlackBerry Radar and an increase of $1 million in BlackBerry AtHoc.
Europe, Middle East and Africa Revenue
The increase in Europe, Middle East and Africa revenue of $25 million was primarily due to an increase of $26 million relating to product revenue in Secusmart, an increase of $1 million in BlackBerry QNX royalty revenue, an increase of $1 million in BlackBerry AtHoc, and an increase of $1 million in professional services revenue, partially offset by a decrease of $3 million BlackBerry UEM license revenue.
Other Regions Revenue
The increase in other regions of $1 million was primarily due to an increase of $10 million in professional services, an increase of $9 million relating to BlackBerry QNX royalty revenue, an increase of $4 million in BlackBerry QNX development seat revenue, and an increase of $2 million in BlackBerry UEM license revenue, partially offset by a decrease of $24 million relating to the Company’s agreement with the Government of Malaysia in third quarter of fiscal 2024 which did not recur.
58
Consolidated Gross Margin
Consolidated gross margin decreased by $78 million to approximately $289 million in the first nine months of fiscal 2025 (first nine months of fiscal 2024 - $367 million). The decrease was primarily due to the patent sale in the first quarter of fiscal 2024, which was a one-time event, and a decrease in product revenue in Secusmart, partially offset by an increase in revenue from BlackBerry QNX due to the reasons discussed above in “Revenue by Segment”, as the cost of sales for most software and services products does not significantly fluctuate based on business volume.
Consolidated Gross Margin Percentage
Consolidated gross margin percentage increased by 13.3%, to approximately 73.9% of consolidated revenue in the first nine months of fiscal 2025 (first nine months of fiscal 2024 - 60.6%). The increase was primarily due to a change in mix, specifically a higher gross margin contribution from BlackBerry QNX, and a lower gross margin contribution from Licensing, which had a lower relative gross margin percentage in the first nine months of fiscal 2024 due to the patent sale.
Gross Margin by Segment
See “Business Overview” and “Third Quarter Fiscal 2025 Summary Results of Operations” for information about the Company’s operating segments and the basis of operating segment results.
For the Nine Months Ended
(in millions)
Secure Communications
IoT
Licensing
Segment Totals
November 30,
Change
November 30,
Change
November 30,
Change
November 30,
Change
2024
2023
2024
2023
2024
2023
2024
2023
Segment revenue
$
205
$
212
$
(7)
$
170
$
149
$
21
$
16
$
245
$
(229)
$
391
$
606
$
(215)
Segment cost of sales
67
62
5
28
24
4
5
150
(145)
100
236
(136)
Segment gross margin
$
138
$
150
$
(12)
$
142
$
125
$
17
$
11
$
95
$
(84)
$
291
$
370
$
(79)
Segment gross margin %
67
%
71
%
(4
%)
84
%
84
%
—
%
69
%
39
%
30
%
74
%
61
%
13
%
Segment research and development
36
44
(8)
47
49
(2)
—
—
—
83
93
(10)
Segment sales and marketing
34
45
(11)
32
31
1
—
—
—
66
76
(10)
Segment general and administrative
30
35
(5)
25
32
(7)
5
19
(14)
60
86
(26)
Less amortization included in the above
3
4
(1)
2
2
—
6
8
(2)
11
14
(3)
Segment EBITDA
$
41
$
30
$
11
$
40
$
15
$
25
$
12
$
84
$
(72)
$
93
$
129
$
(36)
Secure Communications
The decrease in Secure Communications gross margin of $12 million was primarily due to a change in mix, specifically a decrease in gross margin contribution from Secusmart software licenses, which had a higher relative gross margin percentage in the first nine months of fiscal 2024 due to revenue recognized on the Company’s agreement with the Government of Malaysia that did not recur.
The decrease in Secure Communications gross margin percentage of 4% was primarily due to the same reasons discussed above.
The increase in Secure Communications EBITDA of $11 million was primarily due primarily due to the decreases in salaries and benefits expense in research and development and sales and marketing, partially offset by the reasons discussed above in “Revenue by Segment”.
IoT
The increase of IoT gross margin of $17 million was primarily due to the reasons discussed above in “Revenue by Segment”, partially offset by an increase in cost of sales related to Radar hardware devices.
IoT gross margin percentage of 84% was consistent with the first nine months of fiscal 2024.
The increase of IoT EBITDA of $25 million was primarily due to the reasons discussed above in “Revenue by Segment” and a decrease in facilities costs and a decrease in consulting costs.
59
Licensing
The decrease in Licensing gross margin of $84 million was primarily due to the patent sale in the first quarter of fiscal 2024, which had a lower relative gross margin percentage due to the cost basis of the sold assets which was de-recognized.
The increase in Licensing gross margin percentage of 30% was primarily due to the same reason discussed above.
The decrease in Licensing EBITDA of $72 million was primarily due to the same reason discussed above, partially offset by a decrease in legal expense.
Operating Expenses
The table below presents a comparison of research and development, selling, marketing and administration, and amortization expense for the nine months ended November 30, 2024, compared to the nine months ended November 30, 2023.
For the Nine Months Ended
(in millions)
November 30, 2024
November 30, 2023
Change
Revenue
$
391
$
606
$
(215)
Operating expenses
Research and development
85
98
(13)
Sales and marketing
68
77
(9)
General and administrative
111
133
(22)
Amortization
14
22
(8)
Impairment of long-lived assets
4
9
(5)
Prior Debentures fair value adjustment
—
3
(3)
Total
$
282
$
342
$
(60)
Operating Expense as % of Revenue
Research and development
21.7
%
16.2
%
Sales and marketing
17.4
%
12.7
%
General and administrative
28.4
%
21.9
%
Amortization
3.6
%
3.6
%
Impairment of long-lived assets
1.0
%
1.5
%
Prior Debentures fair value adjustment
—
%
0.5
%
Total
72.1
%
56.4
%
See “Non-GAAP Financial Measures” for a reconciliation of selected U.S. GAAP-based measures to adjusted measures for the nine months ended November 30, 2024 and November 30, 2023.
U.S. GAAP Operating Expenses
Operating expenses decreased by $60 million, or 17.5%, in the first nine months of fiscal 2025, compared to the first nine months of fiscal 2024. The decrease was primarily due to a decrease of $31 million in salaries and benefits expense, a decrease of $11 million in legal expense, a decrease of $8 million in amortization costs, a decrease of $8 million in stock compensation costs, a decrease of $8 million in facilities costs, a decrease of $5 million in impairment of long-lived assets, a decrease of $7 million in consulting expense, and a decrease of $4 million in credit loss provision, partially offset by an increase of $17 million related to the release of an accrued liability relating to the Company’s legacy mobile device business in the first nine months of fiscal 2024 which did not recur and an increase of $10 million in variable incentive plan cost.
60
Adjusted Operating Expenses
Adjusted operating expenses decreased by $40 million, or 14.2%, to $242 million in the first nine months of fiscal 2025, compared to $282 million the first nine months of 2024. The decrease was primarily due to a decrease of $31 million in salaries and benefits expense, a decrease of $11 million in legal expense, a decrease of $8 million in facilities costs, a decrease of $7 million in consulting expense, a decrease of $4 million in amortization costs, and a decrease of $4 million in credit loss provision, partially offset by an increase of $17 million related to the release of an accrued liability relating to the Company’s legacy mobile device business in the first nine months of fiscal 2024 which did not recur and an increase of $10 million in variable incentive plan cost.
Research and Development Expenses
Research and development expenses consist primarily of salaries and benefits for technical personnel, new product development costs, travel, office and building costs, infrastructure costs and other employee costs.
Research and development expenses decreased by $13 million, or 13.3%, in the first nine months of fiscal 2025, compared to the first nine months of fiscal 2024. The decrease was primarily due to a decrease of $10 million in salaries and benefits expenses, and a decrease of $6 million in consulting costs, partially offset by an increase of $7 million in variable incentive plan cost.
Adjusted research and development expenses decreased by $11 million, or 12.0%, to $81 million in the first nine months of fiscal 2025, compared to $92 million in the first nine months of fiscal 2024. The decrease 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 decreased by $9 million, or 11.7%, in the first nine months of fiscal 2025 compared to the first nine months of fiscal 2024. The decrease was primarily due to a decrease of $8 million in salaries, and benefits and a decrease of $1 in variable incentive plan cost.
Adjusted sales and marketing expenses decreased by $9 million, or 12.0%, to $66 million in fiscal 2025 compared to $75 million in fiscal 2024. The decrease was primarily due to the same reasons described above on a U.S. GAAP basis.
General and Administrative Expenses
General and administration expenses consist primarily of salaries and benefits, external advisory fees, information technology costs, office and related staffing infrastructure costs.
General and administrative expenses decreased by $22 million, or 16.5%, in the first nine months of fiscal 2025 compared to the first nine months of fiscal 2024. The decrease was primarily due to a decrease of $13 million in salaries and benefits expenses, a decrease of $11 million in legal expense, a decrease of $6 million in stock compensation costs, a decrease of $8 million in facilities cost, a decrease of $4 million in credit loss provision, and a decrease of $1 million in restructuring costs, partially offset by an increase of $17 million related to the release of an accrued liability relating to the Company’s legacy mobile device business in the first nine months of fiscal 2024 which did not recur.
Adjusted general and administrative expenses decreased by $15 million, or 14.7%, to $87 million in fiscal 2025 compared to $102 million in fiscal 2024. The decrease was primarily due to a decrease of $13 million in salaries and benefits expenses, a decrease of $11 million in legal expense, a decrease of $8 million in facilities cost, and a decrease of $4 million in credit loss provision, partially offset by an increase of $17 million related to the release of an accrued liability relating to the Company’s legacy mobile device business in the first nine months of fiscal 2024, which did not recur.
Amortization Expense
The table below presents a comparison of amortization expense relating to property, plant and equipment and intangible assets recorded as amortization or cost of sales for the nine months ended November 30, 2024 compared to the nine months ended November 30, 2023. Intangible assets are comprised of patents, licenses and acquired technology.
61
For the Nine Months Ended
(in millions)
Included in Operating Expense
November 30, 2024
November 30, 2023
Change
Property, plant and equipment
$
6
$
6
$
—
Intangible assets
8
16
(8)
Total
$
14
$
22
$
(8)
Included in Cost of Sales
November 30, 2024
November 30, 2023
Change
Property, plant and equipment
$
—
$
2
$
(2)
Intangible assets
5
2
3
Total
$
5
$
4
$
1
Amortization included in Operating Expense
The decrease in amortization expense included in operating expense of $8 million was primarily due to the lower cost base of acquired technology assets.
Adjusted amortization expense decreased by $5 million to $8 million in the first nine months of fiscal 2025 compared to $13 million in the first nine months of fiscal 2024 due to the same reasons described above.
Amortization included in Cost of Sales
Amortization expense relating to certain property, plant and equipment and certain intangible assets employed in the Company’s service operations increased by $1 million to $5 million in the first nine months of fiscal 2025 compared to $4 million in the first nine months of fiscal 2024 due to an increase in patent amortization expense included in cost of sales.
Investment Income, Net
Investment income, net, which includes the interest expense from the Debentures, was $8 million in the first nine months of fiscal 2025 and decreased by $7 million from $15 million in the first nine months of fiscal 2024 primarily due to a lower average cash and investment balance.
Income Taxes
For the first nine months of fiscal 2025, the Company’s net effective income tax expense rate was approximately 29% (first nine months of fiscal 2024 - net effective income tax expense rate of approximately 37%). The Company’s net effective income tax rate reflects the change in unrecognized income tax benefits, if any, and the fact that the Company has a significant valuation allowance against its deferred tax assets, and in particular, the change in loss carry forwards, research and development credits, amongst other items, was offset by a corresponding adjustment of the valuation allowance. The Company’s net effective income tax rate also reflects the geographic mix of earnings in jurisdictions with different income tax rates.
Net Income (loss)
The Company’s net loss from continuing operations for the first nine months of fiscal 2025 was $1 million, or $0.00 basic and diluted loss per share on a U.S. GAAP basis (first nine months of fiscal 2024 - net income from continuing operations of $20 million, or $0.03 basic and diluted earnings per share). The decrease in net income of $21 million was primarily due to a decrease in revenue as described above in “Revenue by Segment”, partially offset by a decrease in operating expenses, as described above in “Operating Expenses” and an increase in gross margin percentage, as described above in “Consolidated Gross Margin Percentage”.
The Company’s net loss from discontinued operations for the first nine months of fiscal 2025 was $71 million, or $0.12 basic and diluted loss per share on a U.S. GAAP basis (first nine months of fiscal 2024 - net loss from discontinued operations of $94 million, or $0.16 basic and diluted loss per share). The decrease in net loss of $21 million was primarily due to a decrease in operating expenses primarily due to a decrease in salaries and benefits expense, partially offset by a decrease in revenue.
Adjusted net loss was $5 million in the first nine months of fiscal 2025 or $0.01 adjusted basic loss per share (first nine months of fiscal 2024 - adjusted net income of $14 million, or $0.02 adjusted basic earnings per share). The decrease in adjusted net income of $19 million was primarily due to the same reasons described above on a U.S. GAAP basis.
62
The weighted average number of shares outstanding was 591 million for basic and diluted loss per share for the first nine months of November 30, 2024. The weighted average number of shares outstanding was 584 million for basic and 590 million for diluted loss per share for the first nine months of November 30, 2023.
Common Shares Outstanding
On December 17, 2024, there were 592 million voting common shares, options to purchase 0.2 million voting common shares, 17 million restricted share units and 2 million deferred share units outstanding. In addition, 51.5 million common shares are issuable upon conversion in full of the Notes as described in Note 6 to the Consolidated Financial Statements.
The Company has not paid any cash dividends during the last three fiscal years.
Financial Condition
Liquidity and Capital Resources
Cash, cash equivalents, and investments decreased by $32 million to $266 million as at November 30, 2024 from $298 million as at February 29, 2024, primarily due to changes in working capital.
A comparative summary of cash, cash equivalents, and investments is set out below:
As at
(in millions)
November 30, 2024
February 29, 2024
Change
Cash and cash equivalents
$
189
$
175
$
14
Restricted cash and cash equivalents
11
25
(14)
Short-term investments
31
62
(31)
Long-term investments
35
36
(1)
Cash, cash equivalents, and investments
$
266
$
298
$
(32)
The table below summarizes the current assets, current liabilities, and working capital of the Company:
As at
(in millions)
November 30, 2024
February 29, 2024
Change
Current assets
$
455
$
508
$
(53)
Current liabilities
332
356
(24)
Working capital
$
123
$
152
$
(29)
Current Assets
The decrease in current assets of $53 million at the end of the third quarter of fiscal 2025 from the end of the fourth quarter of fiscal 2024 was primarily due to a decrease in short term investments of $31 million, a decrease in accounts receivable, net of allowance of $18 million, and a decrease in other receivables of $13 million, partially offset by an increase in cash and cash equivalents of $14 million, an increase in other current assets of $7 million and an increase in income taxes receivable of $1 million.
At November 30, 2024, accounts receivable, net of allowance was $161 million, a decrease of $18 million from February 29, 2024. The decrease was primarily due to lower revenue recognized over the three months ended November 30, 2024 compared to the three months ended February 29, 2024 and a decrease in days sales outstanding to 91 days at the end of the third quarter of fiscal 2025 from 100 days at the end of the fourth quarter of fiscal 2024.
At November 30, 2024, other receivables were $6 million, a decrease of $13 million from February 29, 2024. The decrease was primarily due to the reclassification of $13 million in other receivables to long-term assets.
At November 30, 2024, other current assets were $39 million, an increase of $7 million from February 29, 2024. The increase was primarily due to an increase of $2 million in inventory and an increase of $1 million in prepaid software maintenance.
At November 30, 2024, income taxes receivables were $5 million, an increase of $1 million from February 29, 2024. The increase was primarily due to tax installments and prepayments required in certain taxable jurisdictions.
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Current Liabilities
The decrease in current liabilities of $24 million at the end of the third quarter of 2025 from the end of the fourth quarter of fiscal 2024 was primarily due to a decrease in deferred revenue, current of $15 million, a decrease in accounts payable of $7 million, partially offset by an increase in income taxes payable of $5 million and a decrease in accrued liabilities of $3 million.
Deferred revenue, current was $133 million, which reflects a decrease of $15 million compared to February 29, 2024 that was attributable to a decrease of $8 million in deferred revenue, current related to BlackBerry UEM, a decrease in $4 million in deferred revenue, current related to BlackBerry QNX, and a decrease of $2 million in deferred revenue, current related to Secusmart.
Accounts payable were $9 million, reflecting a decrease of $7 million from February 29, 2024, which was primarily due to timing of payments.
Income taxes payable were $33 million, reflecting an increase of $5 million from February 29, 2024, which was primarily due to changes in the quarterly tax provision.
Accrued liabilities were $97 million at the end of the third quarter of 2025, reflecting a decrease of $3 million compared to February 29, 2024, which was primarily due to a decrease of $13 million in accrued restructuring costs and a decrease of $3 million in operating lease liability, current, partially offset by an increase of $10 million in variable incentive plan accrual and an increase of $2 million in vacation accrual.
Cash flows for the nine months ended November 30, 2024 compared to the nine months ended November 30, 2023 were as follows:
For the Nine Months Ended
(in millions)
November 30, 2024
November 30, 2023
Change
Net cash flows provided by (used in):
Operating activities
$
(25)
$
12
$
(37)
Investing activities
22
112
(90)
Financing activities
3
(211)
214
Net increase (decrease) in cash and cash equivalents
$
—
$
(87)
$
87
Operating Activities
The increase in net cash flows used in operating activities of $37 million was primarily a result of the Company’s patent sale in the first quarter of fiscal 2024, which was a one-time event, and changes in working capital.
Investing Activities
During the nine months ended November 30, 2024, cash flows provided by investing activities were $22 million and included cash provided by transactions involving the acquisitions of short-term and long-term investments, net of the proceeds on sale or maturity in the amount of $31 million, offset by cash used in the acquisition of intangible assets of $6 million, and the acquisition of property, plant and equipment of $3 million. For the same period in the prior fiscal year, cash flows provided by investing activities were $112 million and included cash used in transactions involving the acquisitions of short-term and long-term investments, net of the proceeds on sale or maturity in the amount of $129 million, offset by cash used in the acquisition of intangible assets of $12 million, and the acquisition of property, plant and equipment of $5 million.
Financing Activities
The increase in cash flows provided by financing activities was $214 million for the first nine months of fiscal 2025 primarily due the net effect of redemption of the 2020 Debentures and the issuance of the Extension Debentures, as defined below, which did not recur.
Debt Financing and Other Funding Sources
See Note 6 to the Consolidated Financial Statements for a description of the Company’s $200 million aggregate principal amount of 3.00% senior convertible unsecured notes issued in January 2024 (the “Notes”), the $365 million aggregate principal amount of convertible debentures issued in September 2020, which matured in November 2023 (the “2020 Debentures”), and the $150 million aggregate principal amount of convertible debentures issued in November 2023, which matured in February
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2024 (the “Extension Debentures” and, collectively with the Notes and the 2020 Debentures, the “Debentures” and the “2020 Debentures” and, collectively with the Extension Debentures, the “Prior Debentures”).
The Company has $11 million in collateralized outstanding letters of credit in support of certain leasing arrangements entered into in the ordinary course of business. See Note 3 to the Consolidated Financial Statements for further information concerning the Company’s restricted cash.
Cash, cash equivalents, and investments were approximately $266 million as at November 30, 2024. The Company’s management remains focused on maintaining appropriate cash balances, efficiently managing working capital balances and managing the liquidity needs of the business. Based on its current financial projections, the Company believes its financial resources, together with expected future operating cash generating and operating expense reduction activities, should be sufficient to meet funding requirements for current financial commitments and future operating expenditures not yet committed, and should provide the necessary financial capacity for the foreseeable future.
Contractual and Other Obligations
The following table sets out aggregate information about the Company’s contractual and other obligations and the periods in which payments are due as at November 30, 2024:
(in millions)
Total
Short-term (next 12 months)
Long-term (>12 months)
Operating lease obligations
$
57
$
20
$
37
Purchase obligations and commitments
56
56
—
Debt interest and principal payments
227
6
221
Total
$
340
$
82
$
258
Total contractual and other obligations as at November 30, 2024 decreased by approximately $4 million as compared to the February 29, 2024 balance of approximately $344 million, which was attributable to a decrease in operating lease obligations, partially offset by an increase in purchase obligations and commitments.
The Company does not have any material off-balance sheet arrangements.
Accounting Policies and Critical Accounting Estimates
There have been no changes to the Company’s accounting policies or critical accounting estimates from those described under “Accounting Policies and Critical Accounting Estimates” in the Annual MD&A, other than as described in Note 1 to the Consolidated Financial Statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is engaged in operating and financing activities that generate risk in three primary areas:
Foreign Exchange
The Company is exposed to foreign exchange risk as a result of transactions in currencies other than its functional currency, the U.S. dollar. The majority of the Company’s revenue in the third quarter of fiscal 2025 was transacted in U.S. dollars. Portions of the revenue were denominated in Canadian dollars, euros and British pounds. Expenses, consisting mainly of salaries and certain other operating costs, were incurred primarily in Canadian dollars, but were also incurred in U.S. dollars, euros and British pounds. At November 30, 2024, approximately 23% of cash and cash equivalents, 24% of accounts receivables and 88% of accounts payable were denominated in foreign currencies (February 29, 2024 – 19%, 25% and 59%, respectively). These foreign currencies primarily include the Canadian dollar, euro and British pound. As part of its risk management strategy, the Company maintains net monetary asset and/or liability balances in foreign currencies and engages in foreign currency hedging activities using derivative financial instruments, including currency forward contracts and currency options. The Company does not use derivative instruments for speculative purposes. If overall foreign currency exchange rates to the U.S. dollar uniformly weakened or strengthened by 10% related to the Company’s net monetary asset or liability balances in foreign currencies at November 30, 2024 (after hedging activities), the impact to the Company would be immaterial.
The Company regularly reviews its currency forward and option positions, both on a stand-alone basis and in conjunction with its underlying foreign currency exposures. Given the effective horizons of the Company’s risk management activities and the anticipatory nature of the exposures, there can be no assurance these positions will offset more than a portion of the financial impact resulting from movements in currency exchange rates. Further, the recognition of the gains and losses related to these instruments may not coincide with the timing of gains and losses related to the underlying economic exposures and, therefore, may adversely affect the Company’s financial condition and operating results.
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Interest Rate
Cash and cash equivalents and investments are invested in certain instruments with fixed interest rates of varying maturities. Consequently, the Company is exposed to interest rate risk as a result of holding investments of varying maturities and the significant financing components within certain revenue contracts with customers. The fair value of investments, as well as the investment income derived from the investment portfolio, will fluctuate with changes in prevailing interest rates. The Company also has significant financing components within certain revenue contracts with customers and is exposed to interest rate risk as a result of discounting the future payments from customers with a fixed interest rate. The Company has also issued Notes with a fixed interest rate, as described in Note 6 to the Consolidated Financial Statements. The Company is exposed to interest rate risk as a result of the Notes. The Company does not currently utilize interest rate derivative instruments.
Credit and Customer Concentration
The Company, in the normal course of business, monitors the financial condition of its customers and reviews the credit history of each new customer. The Company establishes an allowance for credit losses (“ACL”) that corresponds to the specific credit risk of its customers, historical trends and economic circumstances. The ACL as at November 30, 2024 was $6 million (February 29, 2024 - $6 million). There were two customers that comprised more than 10% of accounts receivable as at November 30, 2024 (February 29, 2024 - two customers that comprised more than 10%). During the third quarter of fiscal 2025, the percentage of the Company’s receivable balance that was past due decreased by 13.8% compared to the fourth quarter of fiscal 2024. Although the Company actively monitors and attempts to collect on its receivables as they become due, the risk of further delays or challenges in obtaining timely payments of receivables from resellers and other distribution partners exists. The occurrence of such delays or challenges in obtaining timely payments could negatively impact the Company’s liquidity and financial condition. There was one customer that comprised 18% of the Company’s revenue and 15% of the Company’s revenue in the three and nine months ended November 30, 2024, respectively (three and nine months ended November 30, 2023 - two customers that comprised 29% of the Company’s revenue and one customer that comprised 37% of the Company’s revenue, respectively, due to the completed patent sale transaction).
Market values are determined for each individual security in the investment portfolio. The Company assesses declines in the value of individual investments for impairment to determine whether the decline is other-than-temporary. The Company makes this assessment by considering available evidence including changes in general market conditions, specific industry and individual company data, the length of time and the extent to which the fair value has been less than cost, the financial condition, the near-term prospects of the individual investment and the Company’s ability and intent to hold the debt securities to maturity.
ITEM 4. CONTROLS AND PROCEDURES
As of November 30, 2024, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and its Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of such date, the Company’s disclosure controls and procedures were effective to give reasonable assurance that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
During the three months ended November 30, 2024, no changes were made to the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 10 to the Consolidated Financial Statements for information regarding certain legal proceedings in which the Company is involved.
ITEM 5. OTHER INFORMATION
Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements
During the three months ended November 30, 2024, neither the Company or any of its officers or directors adopted or terminated trading arrangements for the sale of the Company’s common shares.
Cover Page Interactive Data File – formatted as Inline XBRL and contained in Exhibit 101
______________________________
* Filed herewith
† Furnished (and not filed) herewith pursuant to Item 601(b)(32)(ii) of the SEC’s Regulation S-K
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.