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Introduction & Market Context
BlackBerry Ltd (NYSE:BB) released its Q1 FY2026 investor presentation on June 24, 2025, highlighting a return to GAAP profitability for the first time since FY22. The company reported solid performance across its business segments, with particularly strong results from its QNX division. BlackBerry shares closed at $4.32, up 0.23% on the day, with after-hours trading showing a 1.39% increase to $4.38.
The presentation emphasized BlackBerry’s ongoing transformation from a hardware-focused company to a software and services provider specializing in cybersecurity and embedded systems for automotive and IoT applications.
Quarterly Performance Highlights
BlackBerry reported Q1 FY26 revenue of $121.7 million with a non-GAAP gross margin of 75%. The company achieved GAAP net income of $1.9 million, marking a significant $43 million year-over-year improvement driven by cost reduction initiatives. Non-GAAP earnings per share reached $0.02, while adjusted EBITDA was $16.4 million.
As shown in the following financial summary:
The company ended the quarter with $381.9 million in cash and investments, while operating cash usage was $18 million. BlackBerry also initiated a share buyback program during the quarter, returning $10 million to shareholders.
The return to GAAP profitability represents a significant milestone in BlackBerry’s financial recovery, as illustrated in this chart showing the progression from significant losses to positive income:
QNX Segment Performance
The QNX segment continued to be BlackBerry’s growth engine, with revenue of $57.5 million in Q1, exceeding the top end of guidance and growing 8% year-over-year. Both development seat and royalty revenue increased compared to the previous year, though gross margin decreased slightly by 1% to 81%.
The detailed QNX segment performance is shown here:
BlackBerry highlighted the expanding QNX royalty backlog, which has grown from $460 million in Q4 FY22 to approximately $865 million in Q1 FY26. This metric is particularly important as it represents contracted future revenue that will be recognized as customers ship products containing QNX technology.
The growth in QNX’s backlog is visualized in this chart showing the steady upward trend:
The company continues to secure design wins in automotive applications, particularly in digital cockpit and Advanced Driver Assistance Systems (ADAS). The SDP 8.0 pipeline grew 55% during the quarter, with 43% of the pipeline coming from adjacent verticals beyond automotive, referred to as General Embedded Market (GEM).
Secure Communications Performance
BlackBerry’s Secure Communications segment reported revenue of $59.5 million, also beating the top end of guidance. The segment’s performance was driven by strong renewals in Secusmart’s core German market, while AtHoc revenue remained flat year-over-year and UEM revenue declined slightly.
Gross margin for the Secure Communications segment improved to 70% in Q1, up both sequentially and year-over-year due to favorable revenue mix. Annual Recurring Revenue (ARR) was largely flat at $209 million, down $2 million year-over-year but up $1 million sequentially. Dollar-Based Net Retention Rate (DBNRR) was 92%, down 1% year-over-year.
A notable achievement for the segment was BlackBerry AtHoc becoming the first critical event management provider to achieve FedRAMP High authorization, strengthening its position in the government sector.
Financial Outlook and Capital Allocation
BlackBerry provided guidance for Q2 FY26 and the full fiscal year, projecting total revenue between $508-538 million for FY26, with QNX expected to contribute $250-270 million and Secure Communications $234-244 million.
The detailed financial outlook is presented in this table:
For the full year FY26, BlackBerry expects non-GAAP basic EPS of $0.08-0.10 and approximately $35 million in cash from operations. The company’s improved cash flow profile was highlighted as a significant achievement, with Q3 FY25 marking the first positive operating cash flow in three years.
The transformation in BlackBerry’s cash flow profile is illustrated here:
BlackBerry initiated a share buyback program in May 2025 and repurchased $10 million worth of shares in Q1 FY26, demonstrating confidence in its financial position and commitment to returning value to shareholders.
Strategic Positioning and Growth Opportunities
BlackBerry emphasized the significant market opportunity for QNX, projecting a 34% CAGR for its total addressable market between CY24 and CY28. The company is positioning QNX to capitalize on powerful industry trends, including increasing vehicle complexity, growing computing power in vehicles, and a shift in focus to safety-critical domains.
The expanding addressable market for QNX is visualized in this chart:
In the Secure Communications segment, BlackBerry is building on its foundation with three key products: BlackBerry UEM (described as a profit driver with a $0.8 billion market), BlackBerry AtHoc (a growth driver with a $1.8 billion market), and BlackBerry SecuSuite (a growth driver with a $2.0 billion market).
The company continues to strengthen its portfolio by relaunching the QNX brand and increasing focus on Secure Communications. BlackBerry’s customer base remains strong, with 80% of government and large enterprise customers having $250,000+ in Annual Recurring Revenue.
BlackBerry’s investment thesis centers around four key pillars: strength of portfolio, fundamental business strength, enhanced cash flow profile, and strategic capital allocation. With its return to profitability and growing QNX backlog, the company appears to be making progress on its transformation journey while positioning itself for future growth in the automotive software and cybersecurity markets.
Full presentation:
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