BlackBerry's Q2 2026 Earnings Call: Contradictions Emerge on QNX Growth, China Strategy, and Automotive Delays

The above is the analysis of the conflicting points in this earnings call

Date of Call: None provided

Financials Results

• Revenue: $129.6M, up 3% YOY
• EPS: $0.04 non-GAAP, positive; YOY comparison not provided
• Gross Margin: 75%, up 4% YOY; flat sequentially

Guidance:

• Q3 total revenue expected $132–$140M; adjusted EBITDA $20–$28M; non-GAAP EPS $0.02–$0.04; operating cash flow $10–$20M.
• FY26 total revenue raised to $519–$541M; adjusted EBITDA to $82–$101M; non-GAAP EPS $0.11–$0.15; operating cash flow $35–$40M; cash-flow positive remainder of FY; +$38M investing inflow in Q4 (Cylance tranche).
• QNX Q3: revenue $66–$70M; adj. EBITDA $13–$17M. FY: revenue $256–$270M; adj. EBITDA $64–$73M.
• Secure Comms Q3: revenue $60–$64M; adj. EBITDA $12–$16M. FY: revenue $239–$247M; adj. EBITDA $38–$48M.
• Licensing: ~$6M revenue and ~$5M adj. EBITDA per quarter; FY ~$24M revenue and ~$20M adj. EBITDA.
• Corporate OpEx: ~$10M per quarter; ~$40M FY.

Business Commentary:

• Strong BlackBerry Q2 Performance:

  • BlackBerry's revenue for Q2 was $129.6 million, growing 3% year over year.
  • The company reported positive GAAP net income of $13.3 million and positive non-GAAP EPS of $0.04.
  • The growth was driven by strong performance in the QNX division, which achieved a rule of 40 quarter.

• QNX Division Growth and Expansion:

  • QNX reported revenue of $63.1 million, up 15% year-over-year, with a 32% adjusted EBITDA margin.
  • This growth was attributed to strong royalties and notable design wins, including a mid-eight-figure win in China.
  • BlackBerry's partnership with NVIDIA and Qualcomm for AI and vehicle software platforms also expanded QNX's addressable market.

• Secure Communications Division Improvement:

  • Secure Communications reported revenue of $59.9 million, with a 16% adjusted EBITDA margin.
  • The division saw an improvement in key metrics such as a 93% dollar-based net retention rate and $4 million increase in ARR.
  • Growth was driven by reduced customer churn for UEM and new deals with governments for secure voice services.

• Positive Cash Flow and Stock Repurchase:

  • The company achieved positive operating cash flow of $3.4 million and free cash flow of $2.6 million in Q2.
  • Despite paying $19 million in tax due from prior years, BlackBerry repurchased approximately 5 million shares at an average price per share of $3.97.
  • The positive cash flow was a result of strong top-line growth and effective cost control.

• Increased Full-Year Guidance:

  • BlackBerry raised its full-year revenue guidance by $3 million at the midpoint to $256 to $270 million.
  • The adjusted EBITDA guidance was raised by $11 million at the midpoint to be between $64 and $73 million.
  • The increased guidance reflects better-than-expected performance in Q1 and Q2, as well as reduced uncertainty in macro trends.

Sentiment Analysis:

• “Revenue…growing 3% year over year to $129.6 million.” “Adjusted gross margins expanded by 4% year over year to 75%.” “Total company adjusted EBITDA grew…72% year over year to $25.9 million.” “GAAP net income…positive…$13.3 million” vs prior-year loss. “All three…divisions meeting the top end of guidance.” “We’re…raising the midpoint for total company revenue… and…adjusted EBITDA.” “We expect to be cash flow positive for the remainder of fiscal 2026.”

Q&A:

• Question from Luke L. Junk (Baird): How should we think about QNX operating leverage from here given strong growth and OpEx trends; any one-timers or seasonality into Q3?
  Response: QNX has significant leverage: 83% gross margin should improve with higher royalty mix; R&D spend to stabilize and S&M investment to grow slower than revenue, supporting stronger adjusted EBITDA margins despite the Q2 $4M grant benefit.

• Question from Luke L. Junk (Baird): Strategy and traction in China following the mid–eight-figure ADAS design win; how does China’s shift affect you globally?
  Response: China’s pivot to safety-critical, high-performance software after safety incidents aligns with QNX strengths (e.g., SDP8), reinforced by Qualcomm/NVIDIA partnerships, driving improved momentum in China and globally.

• Question from Paul Michael Treiber (RBC Capital Markets): QNX outlook is back-end loaded—what drives the pickup (licenses/services vs. royalties)?
  Response: Seasonality: development seat licenses ramp as programs start later in the year; royalties are also gradually increasing as programs enter production, yielding sequential growth toward year-end.

• Question from Paul Michael Treiber (RBC Capital Markets): Are large auto programs back on track or still delayed?
  Response: Programs are coming online but remain shifted right; uncertainties have eased somewhat, and momentum is improving versus earlier pause, but headwinds (tariffs, software complexity) persist.

• Question from Todd Adair Coupland (CIBC): Update on QNX backlog growth and sustainability of double-digit growth?
  Response: Backlog is volatile quarter-to-quarter; Q1 was soft but Q2 exceeded plan and H2 pipeline is solid. Management expects sustained double-digit growth supported by booked wins, vehicle platform, SDP8, QNX Sound, and GEM/robotics diversification.