BlackBerry (NYSE:BB) reported second-quarter fiscal 2027 revenue growth of 26% year over year, record QNX revenue and a higher full-year outlook, as the company cited expanding automotive software demand, growing royalty contributions and a strong licensing quarter.
Chief Executive Officer John Giamatteo said the company generated $163 million in total revenue during the quarter, delivered $29 million in operating cash flow and posted its sixth consecutive quarter of positive GAAP net income. BlackBerry reported GAAP net income of $34 million and adjusted net income of $43 million, while adjusted earnings per share reached $0.07.
QNX Reaches Record Revenue as Royalties Increase
QNX, BlackBerry’s embedded software business, generated a record $80 million of quarterly revenue, up 27% from a year earlier and above the high end of the company’s guidance range. Adjusted gross margin rose four percentage points to 87%, while adjusted EBITDA increased 41% to $29 million, or 36% of segment revenue.
Chief Financial Officer Tim Foote said QNX benefited from revenue growth and favorable mix, particularly higher-margin royalty revenue. During the question-and-answer session, Foote said some of the company’s larger historical design wins are moving into production, allowing its previously reported $950 million backlog to begin converting into revenue.
Giamatteo said QNX’s strongest activity came from its core automotive business, where the industry is shifting toward software-defined vehicles and centralized compute architectures. He said about one-third of the approximately 90 million vehicles produced globally each year currently use the type of high-performance centralized architecture most relevant to QNX, while industry forecasts indicate that share could reach roughly three-quarters over the next five years.
The company said it expects to grow through greater penetration of addressable vehicles and more QNX software content per vehicle, rather than relying on higher overall global vehicle production. It also highlighted growing adoption of its SDP 8.0 platform, which is designed for higher-performance compute architectures.
For new commercial arrangements, BlackBerry said it is increasingly obtaining contractual minimum volume commitments rather than relying on non-contractual customer forecasts. Foote said the revised approach could provide greater certainty, accelerate cash receipts and potentially allow a portion of revenue to be recognized earlier, though the company is still “feeling” its way into the model for new contracts.
Alloy Kore Secures First Design Win
BlackBerry announced its first Alloy Kore design win, selecting Coretura, a commercial-vehicle software joint venture between Volvo Group and Daimler Truck, as a customer. Coretura plans to use Alloy Kore as the foundational software platform for its next-generation high-performance compute architecture across multiple software domains.
Giamatteo said the estimated future royalty value from the win exceeds $100 million, making it QNX’s largest design win to date. The company said the average selling price per instance is approximately three times higher than the customer’s current QNX operating-system deployment.
Alloy Kore combines QNX foundational software, common automotive services and Vector middleware into a pre-integrated, safety-certified platform. According to BlackBerry, the platform is intended to reduce the cost and complexity of integrating foundational software stacks, allowing vehicle manufacturers to focus engineering resources on differentiated applications.
Management said the Coretura award is not expected to materially alter revenue during the current fiscal year because production royalties will require lead time. However, Giamatteo described the deal as commercial validation of Alloy Kore and said the company has a “very healthy” pipeline involving global original equipment manufacturers and tier-one suppliers, particularly in Europe and Asia.
Physical AI, Secure Communications and Licensing
BlackBerry said its general embedded markets, or GEM, business represents approximately 20% of QNX revenue. The company is targeting opportunities in robotics, industrial automation, medical devices, aerospace and defense, rail and Physical AI applications.
During the quarter, Uber selected QNX as the software foundation for its next generation of vehicles. Momenta and XHEART also selected QNX OS for Safety, built on SDP 8.0, for a production-ready autonomous-driving platform certified to ISO 26262. Giamatteo said BlackBerry has more than 20 companies engaging with it around NVIDIA-based platforms, including developers of humanoid robots, surgical robots, autonomous mobile robots, tractors, drones and planes.
Secure communications revenue was $61 million, up 2% year over year and within guidance. Annual recurring revenue was approximately $221 million, up 4%, while dollar-based net retention was 91%. The segment generated $8 million in adjusted EBITDA, representing a 13% margin.
Foote said BlackBerry remains cautious about the secure communications outlook because of geopolitical developments and trade tensions between Canada and the United States. The company said it has not yet seen a material effect from those issues, but larger government opportunities can have long sales cycles and create variability in quarterly results.
Licensing revenue totaled $22 million, above management’s expectations, driven primarily by a new licensing arrangement. BlackBerry said it does not view the quarter’s licensing performance as a new run rate and expects revenue of approximately $6 million in each of the third and fourth quarters.
Outlook Raised for Second Consecutive Quarter
BlackBerry raised its full-year QNX revenue outlook to between $315 million and $325 million and its adjusted EBITDA outlook to between $95 million and $105 million. For the third quarter, it projected QNX revenue of $82 million to $88 million and adjusted EBITDA of $27 million to $32 million.
The company reduced its full-year secure communications revenue outlook to between $260 million and $270 million, with adjusted EBITDA expected between $50 million and $58 million. Third-quarter secure communications revenue is projected at $55 million to $60 million.
BlackBerry increased its full-year licensing outlook to approximately $41 million in revenue and approximately $36 million in adjusted EBITDA. At the company level, it raised full-year revenue guidance to $616 million to $636 million and adjusted EBITDA guidance to $141 million to $158 million. It expects adjusted EPS of $0.19 to $0.22 for the full year and operating cash flow of approximately $115 million.
BlackBerry ended the quarter with approximately $447 million in cash and investments, or net cash of roughly $247 million. Foote said the company intends to continue investing in QNX, evaluate share repurchases under its existing program and selectively consider acquisitions that could accelerate its GEM strategy, though he said the strategic and financial bar for deals remains high.
About BlackBerry (NYSE:BB)
BlackBerry Limited is a Canadian software company headquartered in Waterloo, Ontario, that provides cybersecurity and Internet of Things (IoT) solutions to enterprises, governments and other organizations worldwide. Its cybersecurity offerings include endpoint protection, endpoint management, identity and access controls, secure communications, and tools designed to help organizations monitor and respond to cyber threats.
The company’s IoT business is built around QNX, a software platform used in automotive systems and other embedded applications.
