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BlackBerry's Rising Cash Flow Supports Strategic Investment Options

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Key Takeaways

  • BB ended fiscal Q2 with $447 million in cash and investments, including nearly $247 million in net cash.
  • BB generated $28 million in quarterly free cash flow and raised its fiscal 2027 operating cash flow outlook.
  • BlackBerry is prioritizing QNX investments, disciplined share buybacks and selective M&A to support growth.

BlackBerry Limited’s (BB - Free Report) improving profitability and cash generation have strengthened its balance sheet. The company ended the second quarter of fiscal 2027 with approximately $447 million in cash and investments, representing net cash of nearly $247 million.

A stronger balance sheet reduces financial pressure while giving BlackBerry options to support its growth initiatives.

Strong Cash Generation Bolsters Financial Flexibility

BlackBerry generated $29.3 million in operating cash flow in the fiscal second quarter, above management's guidance. For the first half of fiscal 2027, operating cash flow totaled $34 million, while cash usage was $14 million in the year-ago period. Free cash flow reached $28 million in the quarter and $30 million in the first half, supported by the company's capex-light operating model.

This improvement reflects stronger operating leverage and revenue growth. Fiscal second-quarter revenues of $163.3 million rose 26% and came in 14.2% above the Zacks Consensus Estimate. Adjusted gross margin improved to 78.2% from 75% a year earlier. Adjusted EBITDA increased 81% to $47 million and represented 29% of revenues.

Management also raised its fiscal 2027 operating cash flow outlook by $15 million to approximately $115 million, signaling confidence in sustained cash generation.

QNX, Buybacks and M&A in Focus

BlackBerry has identified three capital allocation priorities: investing in QNX growth, disciplined share repurchases and selective M&A.

The company is prioritizing organic investments focused on QNX's core automotive business, the Alloy Kore platform and General Embedded Markets (“GEM”).

BlackBerry also retains significant capacity under its existing normal course issuer bid share repurchase program. However, management intends to evaluate buybacks against alternative investment opportunities and repurchase shares when attractive relative to other opportunities.

Meanwhile, BlackBerry is assessing potential acquisitions that could accelerate expansion into the GEM space.

Though improving cash position provides room to pursue multiple growth initiatives, the pace of acquisitions and repurchases will depend on available opportunities and management's disciplined capital allocation approach.

Cash Profile for Peers

Aptiv PLC (APTV - Free Report) is an automotive technology peer for BlackBerry's QNX business. At the end of the second quarter of 2026, Aptiv had $761 million in cash and cash equivalents. It generated $12 million in free cash flow during the quarter and expects full-year 2026 free cash flow of $625 million to $725 million.

Aptiv repurchased $250 million worth of shares in the quarter, bringing first-half buybacks to $325 million. On the last earnings call, management said that it intends to return approximately half of its free cash flow to shareholders through repurchases over the next few years. Meanwhile, smaller bolt-on acquisitions remain a priority to diversify operations.

Cybersecurity peer CrowdStrike Holdings (CRWD - Free Report) is also leveraging its financial strength to pursue strategic growth opportunities.

The company ended second-quarter fiscal 2027 with $5.01 billion in cash and cash equivalents. It generated operating cash flow of $530 million and free cash flow of $377 million in the quarter. CrowdStrike expects a free cash flow margin of at least 30% for fiscal 2027. Long-term debt was about $746.2 million as of July 31, 2026, leaving the company with ample financial flexibility. CrowdStrike’s capital deployment strategy includes acquiring XM Cyber's technology assets to strengthen exposure management capabilities. The transaction is expected to close in the second half of fiscal 2027.

BB Price Performance, Valuation & Estimates

BlackBerry’s shares have gained 14.5% in the past month compared with the Internet-Software industry’s 8.3% growth.

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The stock is trading at a forward 12-month price-to-earnings multiple of 38.84X, higher than the industry’s multiple of 30.61X.

Zacks Investment Research
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for BB earnings for fiscal 2027 has been revised upward over the past 60 days.

Zacks Investment Research
Image Source: Zacks Investment Research

BlackBerry currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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