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BlackBerry to Report Q2 Results: Should Investors Hold or Fold?
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Key Takeaways
BlackBerry expects Q2 revenues of $137-$148M, with non-GAAP EPS of 3-4 cents.
QNX revenues are guided to $70-$75M as software-defined vehicles and embedded markets support growth.
QNX revenues are guided to $70-$75M as software-defined vehicles and embedded markets support growth.
BlackBerry Limited (BB - Free Report) is set to report second-quarter fiscal 2027 results on Sept. 24.
The Zacks Consensus Estimate for the bottom line currently stands at 4 cents and has remained unchanged over the past 60 days. The company expects non-GAAP EPS to be in the range of 3-4 cents.
The company expects fiscal second-quarter revenues to be in the $137-$148 million range. The Zacks Consensus Estimate for revenues currently stands at $143 million.
BlackBerry’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, with the average beat being 94.6%.
Image Source: Zacks Investment Research
What Our Model Unveils for BB
Our proven model does not conclusively predict an earnings beat for BlackBerry this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
BlackBerry enters this earnings season from a position of improving operational strength along with growing momentum across its QNX and Secure Communications divisions. The company expects fiscal second-quarter revenues of $70-$75 million for QNX. Adjusted EBITDA is projected between $16 million and $21 million.
QNX is likely to have benefited from continued adoption across software-defined vehicles, centralized compute, digital cockpits and advanced driver assistance systems. Beyond automotive, General Embedded Markets is a fast-growing opportunity, expanding QNX’s reach into robotics, industrial automation and medical devices, while Physical AI represents another significant growth avenue.
In August, QNX announced support for the Hailo-8 AI Accelerator on QNX SDP 8.0. This will expand the hardware options available to customers building AI-powered edge systems. Before that, QNX OS for Safety (built on QNX SDP 8.0) was selected by Momenta, a Physical AI company, and XHEART as the operating-system foundation for their Physical AI-defined autonomous driving platform.
In the last reported quarter, QNX revenues surged 26% year over year to $72 million, driven by broad-based strength, particularly in development licenses, professional services and royalties. Development-license revenues reached their highest level in eight quarters. This metric serves as an early indicator of future royalty streams, reflecting customer investments in new software platforms that will take years to reach production. Management emphasized that these tools are tied to new platforms, including its SDP 8 architecture, which positions the company for multi-year revenue visibility.
BlackBerry Limited Price, Consensus and EPS Surprise
Alloy Kore will also remain a key investor focus. The platform is expected to significantly increase software content per vehicle, boost average selling price by multiples and drive backlog. While still early, management remains positive about securing a design win within the current fiscal year.
Nonetheless, QNX’s automotive exposure remains a factor to watch. The QNX platform remains exposed to vehicle production cycles and OEM spending, which, in turn, are dependent on macro conditions. Newer opportunities such as Physical AI and Alloy Kore remain at relatively early stages, with design wins and backlog likely to precede a more meaningful build-up in royalty revenues.
Secure Communications business continues to stabilize. Its revenues increased 24% year over year to $74 million in the last reported quarter. The segment has been witnessing improved performance anchored by government demand, recurring revenues and customer retention. Rising demand for digital sovereignty and cybersecurity modernization by governments across the globe has been creating a powerful tailwind.
BlackBerry expects fiscal second-quarter Secure Communications revenues of $57-$63 million. Adjusted EBITDA is anticipated between $5 million and $10 million.
Management specifically cautioned that large government transactions have long sales cycles and do not occur every quarter, making the exceptional fiscal first-quarter growth and profitability unlikely to repeat in a straight line. The fiscal first-quarter performance benefited materially from the expansion and multi-year extension of BlackBerry's agreement with Shared Services Canada.
Underlying metrics such as annual recurring revenues (“ARR”) and customer retention indicate a steady base. ARR grew more than 5% to $220 million, with a healthy dollar-based net retention rate, or DBNRR, at 92%.
Licensing should be another positive contributor. BlackBerry raised its fiscal second-quarter Licensing revenue expectation to approximately $10 million, well above the $6.6 million reported a year ago.
The quality of BlackBerry's revenue mix will be critical to fiscal second-quarter profitability. QNX's adjusted gross margin reached 86% in the fiscal first quarter. Management noted that QNX royalties carry high incremental margins, and expects increasing royalty contribution over time to support margin expansion, operating leverage and cash generation.
For the fiscal second quarter, BlackBerry expects adjusted EBITDA of $20-$30 million and operating cash flow between breakeven and $10 million.
BB Stock vs. Industry
BB’s shares are up 157% in the past six months, significantly outpacing the Internet Software industry’s 19% growth. The broader Zacks Computer & Technology sector and the S&P 500 composite have gained 26.2% and 16%, respectively.
Image Source: Zacks Investment Research
The company has also outperformed some of its peers as well. BlackBerry faces increasing competitive pressures in both QNX and cybersecurity businesses. Within QNX, it faces Aptiv PLC’s (APTV - Free Report) Wind River (VxWorks) and Alphabet’s Android Automotive OS. BlackBerry operates alongside CrowdStrike (CRWD - Free Report) , Palo Alto Networks (PANW - Free Report) and a host of other companies in the broader cybersecurity market.
CRWD and PANW have gained 141.4% and 126.7%, respectively, while APTV has declined 38.6% over the same period.
Valuation After Recent Gains
BB is trading at a forward 12-month price-to-earnings multiple of 42.23, higher than the industry’s multiple of 29.2.
Image Source: Zacks Investment Research
APTV, PANW and CrowdStrike are trading at forward 12-month price/earnings multiple of 6.89X, 86.75X and 167.85X, respectively.
Investment Outlook: Hold or Fold?
BlackBerry’s improving fundamentals and QNX momentum provide a solid backdrop heading into the fiscal second-quarter report.
However, the stock’s sharp run-up and premium valuation leave limited room for execution missteps.
Existing investors may prefer to stay invested, while new investors are better off waiting for clearer evidence that earnings growth can keep pace with the recent share-price gains.
View the Zacks #1 Rank List
Image: Bigstock
BlackBerry to Report Q2 Results: Should Investors Hold or Fold?
Key Takeaways
BlackBerry Limited (BB - Free Report) is set to report second-quarter fiscal 2027 results on Sept. 24.
The Zacks Consensus Estimate for the bottom line currently stands at 4 cents and has remained unchanged over the past 60 days. The company expects non-GAAP EPS to be in the range of 3-4 cents.
The company expects fiscal second-quarter revenues to be in the $137-$148 million range. The Zacks Consensus Estimate for revenues currently stands at $143 million.
BlackBerry’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, with the average beat being 94.6%.
Image Source: Zacks Investment Research
What Our Model Unveils for BB
Our proven model does not conclusively predict an earnings beat for BlackBerry this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
BB has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Key Catalysts for BB’s Q2 Earnings
BlackBerry enters this earnings season from a position of improving operational strength along with growing momentum across its QNX and Secure Communications divisions. The company expects fiscal second-quarter revenues of $70-$75 million for QNX. Adjusted EBITDA is projected between $16 million and $21 million.
QNX is likely to have benefited from continued adoption across software-defined vehicles, centralized compute, digital cockpits and advanced driver assistance systems. Beyond automotive, General Embedded Markets is a fast-growing opportunity, expanding QNX’s reach into robotics, industrial automation and medical devices, while Physical AI represents another significant growth avenue.
In August, QNX announced support for the Hailo-8 AI Accelerator on QNX SDP 8.0. This will expand the hardware options available to customers building AI-powered edge systems. Before that, QNX OS for Safety (built on QNX SDP 8.0) was selected by Momenta, a Physical AI company, and XHEART as the operating-system foundation for their Physical AI-defined autonomous driving platform.
In the last reported quarter, QNX revenues surged 26% year over year to $72 million, driven by broad-based strength, particularly in development licenses, professional services and royalties. Development-license revenues reached their highest level in eight quarters. This metric serves as an early indicator of future royalty streams, reflecting customer investments in new software platforms that will take years to reach production. Management emphasized that these tools are tied to new platforms, including its SDP 8 architecture, which positions the company for multi-year revenue visibility.
BlackBerry Limited Price, Consensus and EPS Surprise
BlackBerry Limited price-consensus-eps-surprise-chart | BlackBerry Limited Quote
Alloy Kore will also remain a key investor focus. The platform is expected to significantly increase software content per vehicle, boost average selling price by multiples and drive backlog. While still early, management remains positive about securing a design win within the current fiscal year.
Nonetheless, QNX’s automotive exposure remains a factor to watch. The QNX platform remains exposed to vehicle production cycles and OEM spending, which, in turn, are dependent on macro conditions. Newer opportunities such as Physical AI and Alloy Kore remain at relatively early stages, with design wins and backlog likely to precede a more meaningful build-up in royalty revenues.
Secure Communications business continues to stabilize. Its revenues increased 24% year over year to $74 million in the last reported quarter. The segment has been witnessing improved performance anchored by government demand, recurring revenues and customer retention. Rising demand for digital sovereignty and cybersecurity modernization by governments across the globe has been creating a powerful tailwind.
BlackBerry expects fiscal second-quarter Secure Communications revenues of $57-$63 million. Adjusted EBITDA is anticipated between $5 million and $10 million.
Management specifically cautioned that large government transactions have long sales cycles and do not occur every quarter, making the exceptional fiscal first-quarter growth and profitability unlikely to repeat in a straight line. The fiscal first-quarter performance benefited materially from the expansion and multi-year extension of BlackBerry's agreement with Shared Services Canada.
BlackBerry Limited Revenue (Quarterly)
BlackBerry Limited revenue-quarterly | BlackBerry Limited Quote
Underlying metrics such as annual recurring revenues (“ARR”) and customer retention indicate a steady base. ARR grew more than 5% to $220 million, with a healthy dollar-based net retention rate, or DBNRR, at 92%.
Licensing should be another positive contributor. BlackBerry raised its fiscal second-quarter Licensing revenue expectation to approximately $10 million, well above the $6.6 million reported a year ago.
The quality of BlackBerry's revenue mix will be critical to fiscal second-quarter profitability. QNX's adjusted gross margin reached 86% in the fiscal first quarter. Management noted that QNX royalties carry high incremental margins, and expects increasing royalty contribution over time to support margin expansion, operating leverage and cash generation.
For the fiscal second quarter, BlackBerry expects adjusted EBITDA of $20-$30 million and operating cash flow between breakeven and $10 million.
BB Stock vs. Industry
BB’s shares are up 157% in the past six months, significantly outpacing the Internet Software industry’s 19% growth. The broader Zacks Computer & Technology sector and the S&P 500 composite have gained 26.2% and 16%, respectively.
Image Source: Zacks Investment Research
The company has also outperformed some of its peers as well. BlackBerry faces increasing competitive pressures in both QNX and cybersecurity businesses. Within QNX, it faces Aptiv PLC’s (APTV - Free Report) Wind River (VxWorks) and Alphabet’s Android Automotive OS. BlackBerry operates alongside CrowdStrike (CRWD - Free Report) , Palo Alto Networks (PANW - Free Report) and a host of other companies in the broader cybersecurity market.
CRWD and PANW have gained 141.4% and 126.7%, respectively, while APTV has declined 38.6% over the same period.
Valuation After Recent Gains
BB is trading at a forward 12-month price-to-earnings multiple of 42.23, higher than the industry’s multiple of 29.2.
Image Source: Zacks Investment Research
APTV, PANW and CrowdStrike are trading at forward 12-month price/earnings multiple of 6.89X, 86.75X and 167.85X, respectively.
Investment Outlook: Hold or Fold?
BlackBerry’s improving fundamentals and QNX momentum provide a solid backdrop heading into the fiscal second-quarter report.
However, the stock’s sharp run-up and premium valuation leave limited room for execution missteps.
Existing investors may prefer to stay invested, while new investors are better off waiting for clearer evidence that earnings growth can keep pace with the recent share-price gains.