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BLACKBERRY PROVIDES LONG-TERM FINANCIAL TARGETS

BlackBerry Ltd. has provided its long-term financial targets in connection with its annual analyst summit event.

The company released the following guidance:

The company is targeting:

• An average 200-plus-basis-point increase in non-GAAP (generally accepted accounting principles) gross margin per year to fiscal 2026;
• To deliver significant improvements in non-GAAP EPS (earnings per share) loss and cash flow usage in fiscal 2024 and to achieve non-GAAP profitability in Q4 fiscal 2024;
• To generate positive full-year non-GAAP EPS and cash flow beginning in fiscal 2025.

IoT (Internet of Things):

• Based on long-term averages, approximately 20 per cent of BlackBerry QNX's revenue is generated from development seats and 20 per cent from professional services (collectively, design phase revenue) and 60 per cent from production-based royalties (production phase revenue).
• Given the strong year for new design wins in fiscal 2023 and the macroeconomic headwinds for production-based royalties, design phase revenues currently form a larger percentage of revenue relative to production phase revenue than the long-term average.
• Production-based royalties have historically generated higher gross margins than design phase revenues, and, therefore, as they return toward the long-term average proportion of total IoT revenue, it is expected that gross margins for the IoT business unit will increase.
• BlackBerry is targeting additional Ivy design wins in fiscal 2024.
• Management considers BlackBerry QNX royalty backlog to be the most relevant key metric for the IoT business.

Cybersecurity:

• Gross margin for the cybersecurity business unit is expected to increase by between 400 basis points and 600 basis points by fiscal 2026.
• The total addressable market (TAM) for the end point security market is expected to grow at 15 per cent per year to 2026, and the TAM for the managed security services market is expected to grow at 14 per cent per year to 2026 (source: IDC Worldwide Security Forecast -- 2022 to 2026).
• Annual recurring revenue (ARR) for the cybersecurity business unit is expected to return to sequential growth in the second half of the current fiscal year.
• Total contract value (TCV) billings are expected to be in the range of $430-million to $480-million for fiscal 2024.
• Management considers ARR and TCV billings to be the most relevant key metrics for the cybersecurity business.

The long-term financial targets included in this press release replace those provided at the prior-year analyst summit and included in the press release issued on May 18, 2022.

The presentation used during the financial session of the analyst summit, held at 3 p.m. ET today, can be found on the BlackBerry investor website.

A replay will also be available on the BlackBerry investor website shortly after the conclusion of the event.

About BlackBerry Ltd.

BlackBerry provides intelligent security software and services to enterprises and governments around the world. The company secures more than 500 million end points, including over 215 million vehicles. Based in Waterloo, Ont., the company leverages AI (artificial intelligence) and machine learning to deliver innovative solutions in the areas of cybersecurity, safety and data privacy solutions and is a leader in the areas of end point security, end point management, encryption and embedded systems. BlackBerry's vision is clear -- to secure a connected future you can trust.

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