BlackBerry Q2 FY26 slides: Second consecutive quarter of profitability

Introduction & Market Context

BlackBerry Ltd (NYSE:BB) released its Q2 FY2026 investor presentation on September 25, 2025, highlighting the company’s second consecutive quarter of GAAP profitability and continued momentum in its transformation strategy. The company’s stock was up 1.17% in premarket trading, reflecting positive market sentiment toward the results.

The former smartphone giant, now focused on cybersecurity and IoT solutions, reported year-over-year revenue growth, expanded adjusted EBITDA margins, and positive operating cash flow as it continues to strengthen its position in the automotive software and secure communications markets.

Quarterly Performance Highlights

BlackBerry reported Q2 FY26 revenue of $129.6 million with an adjusted gross margin of 75%. The company achieved non-GAAP earnings per share of $0.04 and GAAP net income of $13.3 million, marking a significant $33 million improvement year-over-year. Adjusted EBITDA reached $25.9 million, while the company maintained a strong cash position of $363.5 million.

As shown in the following financial summary from the presentation:

The company’s return to GAAP profitability represents a notable milestone in BlackBerry’s financial transformation. This marks the second consecutive quarter of positive GAAP net income, demonstrating the effectiveness of the company’s cost control measures and revenue growth initiatives.

The following chart illustrates BlackBerry’s GAAP Net Income improvement over recent quarters:

During the quarter, BlackBerry continued its share repurchase program, returning $20 million to shareholders. This reflects management’s confidence in the company’s financial position and future prospects.

Segment Performance

BlackBerry’s business is organized into three segments: QNX, Secure Communications, and Licensing. Each segment showed positive performance during the quarter.

The QNX division, focused on embedded software for automotive and IoT applications, delivered particularly strong results with revenue of $63.1 million, representing 15% year-over-year growth and exceeding guidance. The segment achieved an impressive 32% adjusted EBITDA margin, with segment adjusted gross margin remaining flat year-over-year at 83%.

BlackBerry’s Secure Communications segment, which includes UEM, SecuSUITE, and AtHoc products, generated revenue of $59.9 million, beating the top end of guidance and growing sequentially. The segment’s adjusted gross margin was 66%, up 5% year-over-year. Annual recurring revenue (ARR) increased by $4 million both year-over-year and sequentially to $213 million.

The Licensing segment contributed $6.6 million in revenue, also exceeding guidance and growing sequentially, with segment adjusted EBITDA of $5.6 million.

Strategic Initiatives & Market Position

BlackBerry continues to strengthen its market position through strategic initiatives and partnerships. During Q2, the company announced the general availability of the NVIDIA DRIVE AGX Thor development kit, integrated with QNX OS for Safety 8. This collaboration underscores BlackBerry’s commitment to advancing autonomous driving technologies.

The company also achieved a significant milestone by becoming the first Mobile Device Management (MDM) vendor to receive BSI certification for BlackBerry UEM, enhancing its competitive position in the secure communications market.

BlackBerry’s snapshot reveals its global reach and diversified revenue streams:

The company has built a strong foundation in the automotive sector, with QNX software deployed in over 255 million vehicles worldwide. BlackBerry works with all top 10 automakers, 7 of 7 top Tier 1 OEMs, and 24 of 25 top EV makers, positioning it well to capitalize on the growing automotive software market.

The QNX addressable market is projected to grow at 8-12% CAGR from 2024 to 2026, reaching $2.1 billion by CY26. BlackBerry expects QNX to grow at approximately 34% CAGR, significantly outpacing the market.

Cash Flow Transformation & Capital Allocation

One of the most notable aspects of BlackBerry’s transformation has been the improvement in its cash flow profile. The company has moved from negative operating cash flow of $262 million in FY23 to positive $17 million in FY25, with Q2 FY26 contributing $3.4 million in operating cash flow.

The following chart illustrates this significant transformation:

BlackBerry’s capital allocation strategy prioritizes organic investments in growth areas while also returning value to shareholders through its share buyback program. The company repurchased $30 million worth of shares in the first half of FY26, demonstrating its commitment to enhancing shareholder returns.

The company’s three profitable divisions are leveraging their strengths to accelerate value creation:

Forward-Looking Statements & Guidance

Looking ahead, BlackBerry provided guidance for Q3 FY26 and the full fiscal year. For Q3, the company expects total revenue between $132-140 million, with QNX revenue of $66-70 million, Secure Communications revenue of $60-64 million, and Licensing revenue of approximately $6 million. Adjusted EBITDA is projected to be $20-28 million, with non-GAAP basic EPS of $0.02-0.04.

For the full fiscal year FY26, BlackBerry forecasts total revenue of $519-541 million and adjusted EBITDA of $82-101 million. The company expects non-GAAP basic EPS of $0.11-0.15 and operating cash flow of $35-40 million.

The detailed outlook is presented in the following table:

Conclusion

BlackBerry’s Q2 FY26 presentation demonstrates the company’s continued progress in its transformation journey. With two consecutive quarters of GAAP profitability, strong performance across all segments, and improving cash flow, BlackBerry appears to be successfully executing its strategy of focusing on high-growth areas like automotive software and secure communications.

The company’s strong market position in the automotive sector, with QNX software in over 255 million vehicles, provides a solid foundation for future growth as vehicle software content continues to increase. Meanwhile, the share buyback program reflects management’s confidence in the company’s financial health and future prospects.

As BlackBerry continues to innovate and expand its partnerships, investors will be watching closely to see if the company can maintain its positive momentum and deliver on its full-year guidance.

Full presentation:

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