BlackBerry’s Revenue Climbs 26% as QNX Car Software and Secure Communications Drive a Profit Turnaround

A turnaround quarter for the former phone maker

BlackBerry (NYSE: BB), the Canadian company that pioneered the smartphone two decades ago and now sells software, reported one of its strongest quarters in years. Revenue for the fiscal first quarter, the three months ended May 31, climbed 26% to $152.9 million from $121.7 million a year earlier, according to its earnings release. Profit improved faster. Operating income reached $15.3 million, up from $2.0 million, and net income was positive for a fifth straight quarter at $8.5 million. Adjusted EBITDA, a measure of operating profit before interest, taxes, and certain non-cash costs, jumped 144% to $36.3 million. Gross margin, the share of revenue left after the direct cost of delivering the software, was 78.3%. Investors reacted quickly, sending the shares up about 20% on the day.

Two engines: car software and secure messaging

BlackBerry now runs on two businesses of roughly equal size. The first is QNX, a real-time operating system embedded in vehicles, and increasingly in robots, medical devices, and industrial machines. QNX revenue grew 26% to $72.3 million, and its adjusted gross margin reached 86%. During the quarter BlackBerry expanded a partnership with Nvidia to bring safety-certified edge artificial intelligence to robotics, medical, and industrial systems, and a Chinese electric-vehicle maker, Leapmotor, chose QNX as the software foundation for a coming premium SUV. The second business, Secure Communications, sells encrypted messaging and emergency-alert tools to governments and militaries. Its revenue rose 24% to $73.6 million, annual recurring revenue held at $220 million, and the unit added naval-defense partnerships tied to Canada’s submarine program. A smaller Licensing business, which collects patent royalties, contributed $7.0 million. Both main units cleared the industry’s Rule of 40, a benchmark that adds revenue growth to profit margin and looks for a total of 40 or more.

Higher guidance and a cash milestone

BlackBerry raised its outlook for the year. It now expects revenue of $594 million to $621 million for the fiscal year ending in February 2027, with adjusted EBITDA of $119 million to $139 million, and it guided to revenue of $137 million to $148 million for the current quarter. The company also reached a cash milestone, generating $4.6 million from operations, its first cash-positive fiscal first quarter in nine years once a one-time patent sale in 2024 is set aside. BlackBerry ended the period with $422.9 million in cash and investments, repurchased 2.6 million shares for $10 million, and renewed a buyback program for up to 26.8 million shares. Chief Executive John Giamatteo tied the improved results to growth in software-defined vehicles and what he called physical AI, the use of artificial intelligence in machines that move and act in the real world. More detail is available in the company’s investor materials.

What to watch

1. QNX design wins turning into royalties. QNX revenue grew 26% and the unit keeps signing automakers and an expanded Nvidia robotics tie-up. Watch whether those wins convert into steady royalty revenue, since the full-year QNX target is $295 million to $312 million.

2. The raised full-year target. BlackBerry lifted its fiscal 2027 revenue guidance to a range of $594 million to $621 million. The next quarterly report, covering the period ending in August, will show whether the momentum behind the beat is holding.

3. Durability of the profit turnaround. The quarter produced positive operating cash flow and a fifth straight profitable quarter. Watch whether margins and cash generation hold as BlackBerry keeps investing in QNX and competition for embedded software intensifies.