Mr. John Giamatteo reports

BLACKBERRY PROVIDES UPDATE ON PROGRESS IN SEPARATION OF DIVISIONS AND PATH TO PROFITABILITY

BlackBerry Ltd. has provided an update on the previously announced process to separate its Internet of Things and cybersecurity businesses as stand-alone divisions and drive the company toward profitability and positive cash flow.

Progress on path to profitability

As previously outlined, in the prior quarter, BlackBerry took actions that, once fully realized, will reduce the annual cost run rate by approximately $50-million. These actions were largely focused on the cybersecurity business and included approximately 200 head count reductions.

During the current quarter, BlackBerry is taking further actions to streamline its cost structure. Within the cybersecurity business, additional head count reductions are expected to generate annualized savings of approximately $27-million and non-head-count actions an incremental $8-million. Efficiencies have been identified in all functions, but in particular within cost of goods sold and research and development. Backed by solid, industry-typical levels of R&D investment, the cybersecurity business is executing on its exciting product road map in a focused and efficient manner.

Within general and administrative functions, actions are being taken during the current quarter to realize annualized run rate savings of approximately $20-million. As part of these savings, BlackBerry has exited six of its 36 global office locations, including San Ramon, Calif., which are expected to realize annualized savings of approximately $7-million. Other reductions in force are expected to realize annualized savings of approximately $13-million.

Costs associated with these actions in the current quarter are expected to total approximately $12-million.

Expected return to positive cash flow

In the current fiscal year, operating cash usage in second quarter was $56-million and improved significantly to $31-million in third quarter. As previously outlined, BlackBerry expects a further sequential reduction in operating cash usage for the current fourth quarter.

Given the cost reduction actions taken, as outlined above, and anticipated further operating efficiencies during fiscal 2025, BlackBerry expects to maintain a positive net cash position throughout the coming fiscal year, despite the first fiscal quarter being a seasonal low for cash, and to be operating cash flow positive by fourth quarter fiscal 2025.

Progress with separation

BlackBerry has made material progress toward establishing both the IoT and cybersecurity business units as fully stand-alone divisions. The company has established a project management office, and appointed leading management consultant, Alvarez & Marsal, to assist with the process.

Divisional chief financial officers, chief people officers and general counsel for both the IoT and cybersecurity businesses have been appointed and are in the process of establishing divisional back office teams that will complement the already stand-alone sales, marketing and R&D functions for each business.

Solid balance sheet

As previously disclosed, BlackBerry secured long-term financing last month through the issuance of convertible senior notes in the aggregate principal amount of $200-million. The board was pleased by the significant level of interest in the offering, and the company will use the net proceeds primarily to repay $150-million of short-term debentures due on Feb. 15, 2024. Following this repayment, BlackBerry will have reduced its debt by 45 per cent compared with November, 2023, and, with the planned return to positive operating cash flow, expects to be well positioned with a solid balance sheet.

"I'd like to thank the BlackBerry team for the significant progress made towards separating our core businesses and achieving profitability and positive cash flow. The steps taken have required difficult decisions, and I appreciate the thoughtful, rigorous approach that has been adopted," said John J. Giamatteo, chief executive officer, BlackBerry. "The company is fully focused and working with urgency towards our goals. We're directing our resources where we believe we can maximize returns and continue to delight our customers. Our balance sheet is solid following the refinancing, and we believe BlackBerry is well positioned to execute on our strategy."

Investor briefing call

An investor briefing conference call and live webcast will be held tomorrow, Tuesday, Feb. 13, 2024, beginning at 8 a.m. ET, which will be available through the company's investor web page (investors) or by dialling toll-free 1-844-512-2926 and entering Elite entry No. 6312676. Slides used during the presentation will be available for download through the company's investor web page.

A replay of the conference call will be available at approximately 12 p.m. ET on Feb. 13, 2024, by dialling Canada toll-free 1-855-669-9658 or U.S. toll-free 1-877-344-7529 and entering replay access code 3593353.

About BlackBerry Ltd.

BlackBerry (New York Stock Exchange: BB and Toronto Stock Exchange: BB) provides intelligent security software and services to enterprises and governments around the world. The company's software powers over 235 million vehicles. Based in Waterloo, Ont., the company leverages artificial intelligence and machine learning to deliver innovative solutions in the areas of cybersecurity, safety and data privacy, and is a leader in the areas of end point security management, encryption and embedded systems. BlackBerry's vision is clear: to secure a connected future you can trust.

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