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BlackBerry(BB) - 2025 Q4 - Annual Report
BBBlackBerry(BB)2025-04-02 21:24
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Financial Transactions - The Company completed the sale of its Cylance endpoint security assets for 160.0millionincashand5.5millioncommonsharesofArcticWolf,withadjustmentsofapproximately160.0 million in cash and 5.5 million common shares of Arctic Wolf, with adjustments of approximately 39.1 million[21]. - The Company expects to receive approximately 40millionincashfromArcticWolfoneyearfollowingtheclosingofthesaleofitsCylanceendpointsecurityassets[156].−ThefinancialresultsofCylancearenowreportedasdiscontinuedoperations,affectingthepresentationofresultsfromcontinuingoperations[217].−TheCybersecuritysegmenthasbeenrestructured,withUEM,SecuSuite,andAtHocreportedseparatelyfromCylanceastheSecureCommunicationssegment[217].TechnologyandInnovation−QNXtechnologyisembeddedinover255millionvehicles,representingayear−over−yearincreaseof20millionandanincreaseof80millionsince2020[59].−TheQNXdivision′sstrategicroadmapfocusesoninnovationattheedge,safetyandsecurity,andreductionofdeveloperfriction,supportedbyacloud−firstembeddeddevelopmentstrategy[60].−QNXannouncedamulti−yearcollaborationtodevelopafoundationalvehiclesoftwareplatform,certifiedtothehighestfunctionalsafety(ISO26262ASILD)andsecurity(ISO21434)standards,aimedatreducingsoftwareintegrationcostsforautomakers[61].−TheintroductionofQNX®Cabinprovidesapre−integrateddigitalcockpitsoftwarereferenceimplementation,builtonISO26262ASILD−certifiedsoftware,toacceleratetime−to−marketforOEMs[62].−QNXEverywhereinitiativelaunchedtoprovideeasyaccesstoQNXsoftwarefornon−commercialuse,supportingtheglobaldeveloperecosystemandadvancingembeddedautomotivesoftwareinnovation[63].MarketPresenceandStrategy−TheCompanyiscollaboratingwith16ofthetop20globalOEMsforcockpitsolutionsand15ofthetop20globalOEMsforAdvancedDriverAssistanceSystems(ADAS),coveringover8040 million in cash from Arctic Wolf one year following the closing of the sale of its Cylance endpoint security assets[156]. - The financial results of Cylance are now reported as discontinued operations, affecting the presentation of results from continuing operations[217]. - The Cybersecurity segment has been restructured, with UEM, SecuSuite, and AtHoc reported separately from Cylance as the Secure Communications segment[217]. Technology and Innovation - QNX technology is embedded in over 255 million vehicles, representing a year-over-year increase of 20 million and an increase of 80 million since 2020[59]. - The QNX division's strategic roadmap focuses on innovation at the edge, safety and security, and reduction of developer friction, supported by a cloud-first embedded development strategy[60]. - QNX announced a multi-year collaboration to develop a foundational vehicle software platform, certified to the highest functional safety (ISO 26262 ASIL D) and security (ISO 21434) standards, aimed at reducing software integration costs for automakers[61]. - The introduction of QNX® Cabin provides a pre-integrated digital cockpit software reference implementation, built on ISO 26262 ASIL D-certified software, to accelerate time-to-market for OEMs[62]. - QNX Everywhere initiative launched to provide easy access to QNX software for non-commercial use, supporting the global developer ecosystem and advancing embedded automotive software innovation[63]. Market Presence and Strategy - The Company is collaborating with 16 of the top 20 global OEMs for cockpit solutions and 15 of the top 20 global OEMs for Advanced Driver Assistance Systems (ADAS), covering over 80% of global light passenger vehicle volumes[59]. - The Company’s revenue generation is primarily from licensing enterprise software and associated services, focusing on strategic industries such as automotive, government, and healthcare[51]. - The Company has a strong presence in the secure communications market, driven by increasing cyber threats and the need for secure communication solutions[30]. - The Company focuses on software and services to grow revenue and achieve sustainable profitability, requiring continual growth in its customer base[98]. Research and Development - The Company invests significantly in R&D for QNX and Secure Communications solutions, focusing on security capabilities for enterprise IT departments and end users[69]. - The Company owns approximately 6,300 worldwide patents and applications as of February 28, 2025, which provide a competitive advantage in core product areas[50]. - As of February 28, 2025, the Company owned approximately 6,300 worldwide patents and applications, enhancing its competitive advantage in core product areas[76]. Employee and Workplace - The Company employs 1,820 regular employees across 16 countries, with approximately 58% in Canada and 15% in the U.S.[89]. - The Company offers a range of financial and benefit programs to support employee wellness, including retirement savings plans and family-friendly leave policies[90]. - The Company is committed to maintaining a diverse and inclusive workplace, ensuring a respectful environment free from discrimination and harassment[91]. Risks and Challenges - The company faces intense competition, with competitors potentially implementing new technologies and products faster[101][102]. - The company must obtain and maintain product approvals and certifications to remain competitive, particularly in government markets[106]. - The company’s sales cycles can be long and unpredictable, especially with government and large enterprise customers[111]. - The company is exposed to cyber threats, and any breach could significantly harm its business and reputation[113][115]. - Adverse macroeconomic conditions, including geopolitical events and changes in trade policies, have negatively impacted the company's business[123]. - The company’s products and services are complex and may contain vulnerabilities that could impair their effectiveness and market acceptance[121][122]. - The imposition of new tariffs by the U.S. administration since February 2025 may adversely affect the Company's operations and customer demand[124]. - The Company faces potential litigation claims that could lead to adverse outcomes, impacting financial results and market volatility[125]. - The Company is exposed to product liability risks as it commercializes software innovations for autonomous and connected vehicles[126]. - Network disruptions or business interruptions could materially affect the Company's operations and reputation[128]. - The Company may struggle to foster an ecosystem of third-party application developers, which is crucial for product desirability and revenue[130]. - The Company's success is partly dependent on maintaining relationships with resellers and channel partners, which could impact market reach[131]. - The Company relies on interoperability with rapidly changing third-party systems, and failure to support timely integrations could harm its business[135]. - The introduction of generative AI technologies may expose the Company to operational challenges and regulatory scrutiny[136]. - The Company faces risks related to open source software that could impose unanticipated conditions on its ability to commercialize products[143]. - The Company has incurred 200 million in aggregate principal amount of 3.00% Senior Convertible Notes maturing on February 15, 2029, which may adversely affect its operating flexibility and financial condition[152]. Financial Performance - The Company experiences seasonal revenue patterns, with higher orders from QNX customers in the second half of the fiscal year[55]. - The Company's revenues can fluctuate significantly from quarter to quarter due to unexpected developments, including lower-than-anticipated demand for products and services[177]. - The Company is subject to various taxes in Canada, the United States, and other jurisdictions, and changes in tax provisions could materially impact its financial condition[159]. - The Company’s long-lived assets are subject to impairment reviews, and failure to generate sufficient cash flows could result in impairment charges[157]. - The Company’s goodwill is tested for impairment annually, and adverse changes in business conditions could lead to impairment charges[158]. - The Company's gross margins on products and services can vary significantly due to product transitions, pricing changes, and cost fluctuations[178]. - The market price of the Company's common shares has been volatile, influenced by factors such as new product announcements and quarterly operating results[179]. - The cumulative total shareholder return for the Company's common shares was 91.10asofFebruary28,2025,comparedto91.10 as of February 28, 2025, compared to 100.00 at the base period[202]. - The Company did not repurchase any shares during fiscal 2025 and currently has no share repurchase program[198]. Cybersecurity Measures - The Company has implemented a cybersecurity risk management program to safeguard its information assets, including monitoring and responding to threats[182]. - The Company's incident response team is responsible for addressing security threats and incidents, with processes for crisis management and post-incident recovery[185]. - The Board oversees the Company's enterprise risk management program, including cybersecurity risks, with quarterly updates provided by the Chief Information Security Officer[190]. - The Company has not identified any security threats that materially affected its business strategy or financial condition during the reporting period[188].