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Revenue and Segment Disclosures
 6 Months Ended
Aug. 31, 2024
Segment Reporting [Abstract]  
Revenue and Segment Disclosures REVENUE AND SEGMENT DISCLOSURES
The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by the CODM for making decisions and assessing performance as a source of the Company’s reportable operating segments. The CODM, who is the CEO of the Company, makes decisions and assesses the performance of the Company using three operating segments.
The CODM does not evaluate operating segments using discrete asset information. The Company does not specifically allocate assets to operating segments for internal reporting purposes.
Segment Disclosures
The Company is organized and managed as three operating segments: Cybersecurity, IoT, and Licensing.
The following table shows information by operating segment for the three and six months ended August 31, 2024 and August 31, 2023:
 For the Three Months Ended
CybersecurityIoTLicensingSegment Totals
August 31,August 31,August 31,August 31,
20242023202420232024202320242023
Segment revenue$87 $79 $55 $49 $3 $4 $145 $132 
Segment cost of sales39 36 10 8 1 2 50 46 
Segment gross margin (1)
$48 $43 $45 $41 $2 $2 $95 $86 
For the Six Months Ended
CybersecurityIoTLicensingSegment Totals
August 31,August 31,August 31,August 31,
20242023202420232024202320242023
Segment revenue$172 $172 $108 $94 $9 $239 $289 $505 
Segment cost of sales74 73 20 17 3 149 97 239 
Segment gross margin (1)
$98 $99 $88 $77 $6 $90 $192 $266 
______________________________
(1) A reconciliation of total segment gross margin to consolidated totals is set forth below.
Cybersecurity consists of BlackBerry® UEM and Cylance® cybersecurity solutions, BlackBerry® AtHoc® and BlackBerry® SecuSUITE®. The Company’s Cylance AI and machine learning-based platform consists of CylanceENDPOINT™, CylanceMDR™, CylanceEDGE™ and other cybersecurity applications. The Company’s endpoint management platform includes BlackBerry® UEM, BlackBerry® Dynamics™, and BlackBerry® Workspaces solutions. Cybersecurity revenue is generated predominantly through software licenses, commonly bundled with support, maintenance and professional services.
IoT consists of BlackBerry® QNX®, BlackBerry® Certicom®, BlackBerry Radar®, BlackBerry IVY® and other IoT applications. IoT revenue is generated predominantly through software licenses, commonly bundled with support, maintenance and professional services.
Licensing consists of the Company’s intellectual property arrangements and settlement awards.
The following table reconciles total segment gross margin for the three and six months ended August 31, 2024 and August 31, 2023 to the Company’s consolidated totals:
 Three Months EndedSix Months Ended
August 31, 2024August 31, 2023August 31, 2024August 31, 2023
Total segment gross margin$95 $86 192 $266 
Adjustments (1):
Less: Stock compensation1 1 2 2 
Less:
Research & development37 50 79 104 
Sales and marketing34 43 72 88 
General and administrative33 30 73 84 
Amortization11 14 23 29 
Impairment of long-lived assets— 1 3 1 
Debentures fair value adjustment— (6)— 16 
Investment income, net(3)(7)(8)(10)
Loss before income taxes$(18)$(40)$(52)$(48)
______________________________
(1) The CODM reviews segment information on an adjusted basis, which excludes certain amounts as described below:
Stock compensation expenses - Equity compensation is a non-cash expense and does not impact the ongoing operating decisions taken by the Company’s management.
Patent Sale
On May 11, 2023, the Company completed the sale of certain non-core patent assets to Malikie Innovations Limited for $170 million in cash on closing, an additional $30 million in fixed consideration due by no later than the third anniversary of closing and variable consideration in the form of future royalties in the aggregate amount of up to $700 million (the “Malikie Transaction”). Pursuant to the terms of the Malikie Transaction, the Company received a license back to the patents sold, which relate primarily to mobile devices, messaging and wireless networking.
In the first quarter of fiscal 2024, the Company recognized revenue of $218 million and cost of sales of $147 million related to intellectual property sold. As at August 31, 2024, the remaining financing component on the patent sale was $8 million and will be recognized as interest income over the payment terms.
The Company estimated variable consideration from future royalty revenues using an expected value method including inputs from both internal and external sources related to patent monetization activities and cash flows, and constrained the recognition of that variable consideration based on the Company’s accounting policies and critical accounting estimates as described in Note 1. The present value of variable consideration recognized as revenue was $23 million and the amount of variable consideration constrained was $210 million. The Company evaluates its conclusions as to whether the constraints are still applicable on an ongoing basis, and will make updates when it observes a sufficient amount of evidence that amounts of variable consideration are no longer subject to constraint or the estimated amount of variable consideration has changed.
Revenue
The Company disaggregates revenue from contracts with customers based on geographical regions, timing of revenue recognition, and the major product and service types, as discussed above in “Segment Disclosures”.
The Company’s revenue, classified by major geographic region in which the Company’s customers are located, was as follows:
 Three Months EndedSix Months Ended
 August 31, 2024August 31, 2023August 31, 2024August 31, 2023
North America (1)
$69 $72 $137 $389 
Europe, Middle East and Africa47 39 94 76 
Other regions29 21 58 40 
Total $145 $132 $289 $505 
North America (1)
47.6 %54.5 %47.4 %77.0 %
Europe, Middle East and Africa32.4 %29.6 %32.5 %15.1 %
Other regions20.0 %15.9 %20.1 %7.9 %
Total 100.0 %100.0 %100.0 %100.0 %
______________________________
(1) North America includes all revenue from the Company’s intellectual property arrangements, due to the global applicability of the patent portfolio and licensing arrangements thereof.
Revenue, classified by timing of recognition, was as follows:
 Three Months Ended Six Months Ended
August 31, 2024August 31, 2023August 31, 2024August 31, 2023
Products and services transferred over time$79 $79 $156 $165 
Products and services transferred at a point in time66 53 133 340 
Total$145 $132 $289 $505 
Revenue contract balances
The following table sets forth the activity in the Company’s revenue contract balances for the six months ended August 31, 2024:
Accounts and Other ReceivableDeferred RevenueDeferred Commissions
Opening balance as at February 29, 2024$255 $222 $21 
Increases due to invoicing of new or existing contracts, associated contract acquisition costs, or other272 248 11 
Decrease due to payment, fulfillment of performance obligations, or other(317)(281)(12)
Decrease, net(45)(33)(1)
Closing balance as at August 31, 2024$210 $189 $20 
Transaction price allocated to the remaining performance obligations
The table below discloses the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as at August 31, 2024 and the time frame in which the Company expects to recognize this revenue. The disclosure includes estimates of variable consideration, except when the variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property.
The disclosure excludes estimates of variable consideration relating to potential future royalty revenues from the Malikie Transaction, which have been constrained based on the Company’s accounting policies and critical accounting estimates and as described under “Patent Sale” in this Note 10.
As at August 31, 2024
Less than 12 Months12 to 24 MonthsThereafterTotal
Remaining performance obligations$161 $13 $15 $189 
Revenue recognized for performance obligations satisfied in prior periods
For the three and six months ended August 31, 2024, revenue of $2 million and $2 million respectively, was recognized relating to performance obligations satisfied in a prior period (three and six months ended August 31, 2023 - $1 million and $12 million respectively).
Assets by Geography
Property, plant and equipment, intangible assets, operating lease ROU assets and goodwill, classified by geographic region in which the Company’s assets are located, were as follows:
 As at
 August 31, 2024February 29, 2024
Property, Plant and Equipment, Intangible Assets, Operating Lease ROU Assets and GoodwillTotal AssetsProperty, Plant and Equipment, Intangible Assets, Operating Lease ROU Assets and GoodwillTotal Assets
Canada$79 $323 $78 $342 
United States640 886 662 923 
Other29 90 29 130 
$748 $1,299 $769 $1,395 
Information About Major Customers
There was one customer that comprised 11% of the Company’s revenue and one customer that comprised 12% of the Company’s revenue in the three and six months ended August 31, 2024, respectively (three and six months ended August 31, 2023 - no customer that comprised more than 10% of the Company’s revenue and one customer that comprised 45% of the Company’s revenue, due to the completed Malikie Transaction