A month has gone by since the last earnings report for BlackBerry (BB Quick QuoteBB - Free Report) . Shares have lost about 15.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is BlackBerry due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

BlackBerry's Q1 Earnings Top Estimates

BlackBerry reported first quarter fiscal 2026 non-GAAP earnings per share (EPS) of 2 cents. The figure beat the company’s estimate of a loss of 1 cent to breakeven. In the year-ago quarter, it reported a non-GAAP loss of 2 cents. The Zacks Consensus Estimate was pegged at breakeven.

Quarterly total revenues of $121.7 million exceeded its guidance ($107-$115 million) but fell 1.4% year over year, mainly due to soft sales in Secure Communications and Licensing units amid continued strength in the QNX division.

BlackBerry continues to operate in a challenging macro environment, with some customers delaying guidance amid ongoing uncertainty. While automotive tariffs have not had a direct impact, they have contributed to delays in customer purchasing decisions. Potential supply chain disruptions for OEMs may also affect production volumes and, in turn, royalty revenues. These factors are reflected in its guidance, which will be continuously reviewed throughout fiscal 2026. Despite market fluctuations, it has maintained its full-year revenue guidance of $250–$270 million and adjusted EBITDA of $55–$60 million for the QNX unit.

It exceeded fiscal first-quarter Secure Comms expectations by closing major Secusmart deals earlier than planned. With a strong pipeline ahead, it has raised full-year revenue guidance by $4 million to $234–$244 million and adjusted EBITDA to $37–$47 million (16–19%). It continues to project Licensing & Other revenues to be around $24 million. Non-GAAP loss per share is expected to be between 8 cents and 10 cents, the same as the prior view. 

With a stronger outlook for Secure Communications revenues and EBITDA, the company has also raised its fiscal 2026 revenue guidance. It now projects total revenues of $508–$538 million and adjusted EBITDA of $72–$87 million. Previously, it estimated revenues to be between $504 million and $534 million and adjusted EBITDA of $69–$84 million.

Fiscal Q1 in Details

Revenues from the QNX business totaled $57.5 million, surpassing the high end of guidance ($51-$55 million). This reflects 8% year-over-year growth, despite ongoing uncertainty in the auto market and recent tariff announcements. The growth was mainly driven by a 9% increase in royalties and a 23% rise in development seat license revenues. During the quarter, the company continued its design win momentum in the core digital cockpit and ADAS. GEM now makes up 43% of the total SDP 8.0 pipeline, which grew 55% in the quarter.

Secure Communication revenues declined 7.3% year over year to $59.5 million. It, however, beat the top limit of guidance ($50-$54 million) driven by steady traction in its Secusmart product. It was a strong quarter for German government sales, with some large deals closing early. The global pipeline is growing, especially in defense, as governments seek more secure tools. Despite long government sales cycles, it anticipates more Secusmart deals this year. Increasing design wins for AtHoc and UEM are another positive.

Licensing revenues reached $4.7 million compared with $6 million in the previous-year quarter, due to lower revenues from existing licensing deals. Malikie, which bought its noncore patents, is exploring new licensing opportunities. While no extra revenues are expected this year, management expects healthy performance in fiscal 2027 and fiscal 2028.

Margin Performance

Adjusted gross margin was 74.6%, up from 73.5% in the year-ago period. QNX’s gross margin fell 1% year over year to 81% due to adverse forex impacts. Secure Comms' gross margin was 70%, up both sequentially and year over year, driven by a higher share of Secusmart software sales.

Adjusted EBITDA was $16.4 million, up from $10.5 million in the year-ago quarter, owing to effective cost management. The company expected adjusted EBITDA to be breakeven to $7 million. 

QNX’s adjusted EBITDA for the quarter came in above the high end of guidance ($2-$6 million) at $12.7 million. Strong leverage in the Secure Communications model helped the division beat expectations ($3-$6 million) with adjusted EBITDA of $9.6 million. Licensing adjusted EBITDA lagged projection (around $5 million) at $3.8 million.

Adjusted operating expenses were $78.4 million, down 7.5%.

Cash Flow & Liquidity

For the quarter that ended on May 31, 2025, BlackBerry used $18 million of net cash in operating activities compared with $15 million in the prior-year quarter. Management had guided the usage of $20-$30 million.

As of May 31, BlackBerry had $381.9 million in cash, cash equivalents, short-term and long-term investments, down from $410 million as of Feb. 28, 2025.  The company returned $10 million to shareholders during the quarter via a buyback of 2.57 million common shares.

Fiscal Q2 Guidance

The company expects fiscal second-quarter 2026 revenues to be in the $115-$125 million range. Non-GAAP EPS is expected to range between breakeven and 1 cent. It forecasts an operating cash usage of $5-$15 million band and adjusted EBITDA to be between $8 million and $14 million.

It is taking a cautious stance on QNX due to possible impacts from tariffs and slower buying decisions, mostly for fresh products like QNX Cabin. It expects revenues of $55–$60 million and adjusted EBITDA of $10–$13 million.

Driven by a strong Secure Communications' pipeline, it expects revenues of $54–$59 million and adjusted EBITDA of $3–$6 million. BlackBerry continues to expect licensing revenues of about $6 million and adjusted EBITDA of about $5 million per quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -100% due to these changes.

VGM Scores

At this time, BlackBerry has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock has a score of F on the value side, putting it in the lowest quintile for value investors.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, BlackBerry has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

BlackBerry belongs to the Zacks Internet - Software industry. Another stock from the same industry, GitLab Inc. (GTLB Quick QuoteGTLB - Free Report) , has gained 10.6% over the past month. More than a month has passed since the company reported results for the quarter ended April 2025.

Gitlab reported revenues of $214.51 million in the last reported quarter, representing a year-over-year change of +26.8%. EPS of $0.17 for the same period compares with $0.03 a year ago.

Gitlab is expected to post earnings of $0.16 per share for the current quarter, representing a year-over-year change of +6.7%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Gitlab. Also, the stock has a VGM Score of C.