BlackBerry Limited

What they do

BlackBerry operates two divisions: QNX, which develops safe, reliable software for embedded systems in automotive, medical devices, robotics and industrial automation, and Secure Communications, which sells government-grade secure, certified solutions for mobile fortification, critical communications and crisis management. The company was founded in 1984, is incorporated in Ontario, and its common shares trade on the NYSE and TSX under the ticker BB. QNX technology enables more than 275 million vehicles, per the 10-K.

Revenue drivers

• QNX — Embedded software for automotive OEMs, Tier 1 suppliers and other verticals; QNX revenue was $72.3 million in the quarter ended May 31, 2026, up 26% year-over-year, with segment adjusted gross margin of 86% and adjusted EBITDA of $19.3 million (27% margin).
• Secure Communications — Government-grade secure mobile, critical communications and crisis management products including SecuSUITE and AtHoc; revenue was $73.6 million in the quarter ended May 31, 2026, up 24% year-over-year, with adjusted gross margin of 72% and adjusted EBITDA of $20.2 million (27% margin).
• Licensing — Licensing revenue was $7.0 million in the quarter ended May 31, 2026, with segment adjusted EBITDA of $6.2 million; the company sold its non-core patent portfolio to Malikie in fiscal 2024.

Recent performance

For the quarter ended May 31, 2026 (first quarter fiscal 2027), total revenue was $152.9 million, up 26% year-over-year. Total company adjusted gross margin was 78.6% and GAAP gross margin was 78.3%, both up about 4 percentage points year-over-year. Adjusted EBITDA rose 144% to $36.3 million, GAAP operating income improved $13.3 million to $15.3 million, and GAAP net income was positive for a fifth consecutive quarter at $8.5 million. Operating cash flow was $4.6 million, and the company ended the quarter with $422.9 million in cash and investments after repurchasing 2.6 million shares for $10.0 million.

Strategy

Management is pursuing profitable growth through QNX and Secure Communications, with emphasis on software-defined vehicles and the Alloy Kore vehicle software platform for content expansion. The company is also targeting the general embedded market, particularly physical AI, and expanded its QNX collaboration with NVIDIA to advance safety-critical edge AI across robotics, medical and industrial systems. In Secure Communications, it announced a TKMS collaboration supporting Canada's submarine program, achieved FedRAMP Class D (High) re-certification for BlackBerry AtHoc, and formed a partnership with The IP Company. It also continued share repurchases, buying back 2.6 million shares for $10.0 million in the quarter.

Risks

• Customer renewal and expansion — Existing customers have no contractual obligation to renew subscriptions or purchase additional solutions after the initial term, so expansion and renewal rates can decline or fluctuate.
• Need to grow the customer base — The company's software and services strategy depends on continually attracting new customers and selling additional software and services to existing ones to grow revenue or achieve sustained profitability.
• Embedded and secure communications market growth — Future success depends in part on growth, if any, in the markets for embedded solutions and secure communications.
• Cybersecurity and exit of Cylance — The Cylance endpoint security assets and related liabilities were sold to Arctic Wolf on February 3, 2025 for $160.0 million of cash subject to adjustments of approximately $42.1 million, plus 5.5 million Arctic Wolf common shares, and Cylance results are now reported as discontinued operations.

Outlook

Management said first quarter results exceeded expectations for revenue, profitability and cash generation, and described multi-year growth opportunities in software-defined vehicles, including content expansion with the Alloy Kore platform, and broad opportunities in the general embedded market, especially physical AI. The company provided forward-looking expectations for total and segment revenue, adjusted EBITDA, non-GAAP EPS and operating cash flow for the second quarter of fiscal 2027 and for fiscal 2027 as a whole, though detailed figures were not included in the excerpts provided. Management also reiterated expectations regarding the sufficiency of its financial resources.