BlackBerry (BB) Q2 FY2027 earnings: QNX royalties drive beat, raise outlook

BlackBerry (BB) reported fiscal 2027 second-quarter earnings on September 24, 2026, for the quarter ended August 31, 2026, in its earnings release and Form 10-Q. Revenue, profit and operating cash flow all came in above the company's prior guidance [1][2]. The QNX royalty business drove the beat. Earlier coverage of BlackBerry focused on three questions: whether QNX, its automotive software business, could keep growing at double-digit rates and turn that growth into profit; whether Secure Communications could hold steady; and whether the company could keep generating operating cash. This quarter confirmed QNX growth and profitability. Secure Communications revenue held up, but its profit fell and its full-year guidance was cut. Operating cash flow was positive for a second straight quarter, though part of it came from one-time items. Overall, BlackBerry now depends more on QNX, and its recurring cash-generating ability still needs to be tested next quarter.

BlackBerry has moved from making phones to selling software, and it now runs three businesses [2][3]. QNX supplies safety-critical operating systems to automotive and industrial customers. It earns development licenses, engineering services and royalties that customers pay per unit once their products enter production. Secure Communications sells endpoint management and encrypted calling products to governments and regulated organizations. The patent Licensing business is small.

QNX royalties lift revenue and profit above guidance

QNX revenue was $80.3 million in the quarter, up 27% year over year and above the company's prior guidance of $70 million to $75 million [1][2]. Of the $17.2 million year-over-year increase, royalties contributed $10.4 million, while development licenses and professional services together added $6.5 million [2]. The company attributed the beat to stronger-than-expected royalty revenue [2].

Royalties add almost no cost of sales, so the revenue growth lifted margins directly. QNX segment adjusted gross margin rose to 87% from 83% a year earlier, and segment adjusted EBITDA was $29.0 million, above guidance of $16 million to $21 million [1][2]. Segment research and development spending rose to $19.6 million from $13.0 million, yet the segment adjusted EBITDA margin still reached 36% [1][2].

BlackBerry then raised its full-year QNX outlook. The company expects third-quarter QNX revenue of $82 million to $88 million, and it raised full-year QNX revenue guidance to $315 million to $325 million from $295 million to $312 million. It also raised full-year segment adjusted EBITDA guidance to $95 million to $105 million [2]. After the quarter ended, the first Alloy Kore design win added more than $100 million to the QNX royalty backlog [2]. That figure is management's estimate of future royalties based on projected volumes, and it will only turn into revenue gradually after the customer starts production.

Secure Communications slows as the cash beat leans on one-time items

Secure Communications revenue held steady, but its profit declined. Revenue was $60.9 million, up 2% year over year and within guidance of $57 million to $63 million [1][2]. A larger share of lower-margin SecuSUITE hardware cut the segment adjusted gross margin to 61% from 66%, and segment adjusted EBITDA fell 18% to $8.0 million [1][2]. Annual recurring revenue was $221 million, up $8 million year over year [2].

BlackBerry lowered its full-year guidance for Secure Communications. It cut full-year revenue guidance to $260 million to $270 million from $270 million to $280 million, and segment adjusted EBITDA guidance to $50 million to $58 million, citing a more cautious outlook for certain government opportunities in the second half [2]. On the earnings call, management said trade tensions had not yet had a material impact [4].

Company-wide profit and cash beat guidance by a wide margin, but Secure Communications did not drive that beat. Adjusted EBITDA was $47.0 million against guidance of $20 million to $30 million, and the company attributed the beat to QNX and Licensing [2]. Licensing revenue was $22.1 million because of a new intellectual property licensing arrangement, and the company expects it to fall back to about $6 million per quarter in the second half [2]. Operating cash flow was $29.3 million, above guidance of breakeven to $10 million, which the company attributed to better-than-expected Licensing revenue and the resolution of certain income tax filings [1][2]. First-half operating cash flow was $33.9 million, compared with an outflow of $14.1 million a year earlier [2].

Conclusion

This quarter confirmed QNX as BlackBerry's growth engine, with high-margin royalties lifting both revenue and profit. Secure Communications has become a steady business the company needs to defend, and hardware mix is weighing on its profit. Operating cash flow has been positive for two straight quarters, but this quarter's excess is unlikely to repeat. The company guided third-quarter operating cash flow to $20 million to $30 million [4]. If QNX revenue meets guidance next quarter and operating cash flow stays within guidance after Licensing falls back, this assessment will be strengthened. If Secure Communications revenue falls below $55 million, the caution around government programs will have turned into an actual shortfall.

Sources

[1] BB FY2027 Q2 release (8-K Exhibit 99.1, 2026-09-24), 2026-09-24, BlackBerry 8-K earnings release, https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001070235&type=8-K [2] BB FY2027 Q2 10-Q (2026-09-24), 2026-09-24, BlackBerry Form 10-Q, https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001070235&type=10-Q [3] BB FY2026 10-K p.41, 2026-04-09, BlackBerry Form 10-K, https://www.sec.gov/Archives/edgar/data/1070235/000107023526000039/bbry-20260228.htm [4] BlackBerry Q2 FY2027 Earnings Call Summary (2026-09-24), 2026-09-24, Earnings call summary, https://www.blackberry.com/us/en/company/investors