BB · Research
BlackBerry Is Now Half QNX, and QNX Grew 27.26% While Secure Messaging Barely Moved
QNX was $80.3M of $163.3M Q2 revenue with an 86.80% adjusted gross margin. A one-off patent licensing deal lifted total growth to 26.00%.
| Scorecard | Read |
|---|---|
| Thesis | QNX becomes the operating system inside software-defined cars, and its royalty backlog turns into revenue as models ship |
| What proves it wrong | QNX growth falls back to single digits outside one-off deals, or Secure Communications keeps losing UEM revenue |
| Next catalyst | Q3 fiscal 2027 results in December 2026, with QNX royalty revenue and progress against the $315M to $325M QNX outlook |
| Key multiple | 55.70x EV / GAAP EBITDA of $99.40M |
| Debt | $197.10M carrying: $200.0M of 3.00% convertible notes due Feb 15, 2029, the only borrowing |
| Stock pay | $25.60M from the cash flow line, 4.17% of revenue |
What BlackBerry sells now
BlackBerry no longer makes phones. It has three segments: QNX, the operating system and tools used in cars and industrial machines; Secure Communications, which sells secure voice, messaging and device management; and Licensing, which licenses its patents [1].
Q2 fiscal 2027 revenue, the quarter to Aug 31, 2026, was $163.3M against $129.6M, up 26.00% [1]. Six-month revenue was $316.2M against $251.3M.
QNX was $80.3M, or 49.17% of revenue, up 27.26%. Secure Communications was $60.9M, or 37.29%, up 1.67%.
Licensing was $22.1M, or 13.53%, against $6.6M [1].
There is no hardware revenue. QNX and Secure Communications are software and services, and Licensing is patent income [1].
The plain split is 49.17% car and industrial software, 37.29% security software and 13.53% patent licensing.
Of Q2 revenue, $104.1M was recognized at a point in time and $59.2M over time [1]. Royalties and licenses are point-in-time revenue, which makes quarterly totals uneven.
QNX is the engine
QNX revenue grew by $17.2M in Q2. The filing ties $10.4M of it to higher royalties, $3.9M to development licenses and $2.6M to professional services [1].
QNX adjusted gross margin was $69.7M, or 86.80% of segment revenue, against $52.4M, or 83.04% [1]. QNX segment R&D rose to $19.6M from $13.0M.
After quarter end, the Coretura Alloy Kore design win added more than $100 million to the QNX royalty backlog, as the filing describes it [1]. Royalties follow car production, so that backlog turns into revenue over several model years.
The fiscal 2027 outlook in the filing is QNX revenue of $315M to $325M and total revenue of $616M to $636M [1].
Secure Communications is flat, Licensing is lumpy
Secure Communications grew $1.0M. SecuSUITE added $5.5M, while unified endpoint management fell $3.3M [1].
Its ARR was approximately $221M against $213M, and dollar-based net retention was 91% against 93%.
Adjusted gross margin in Secure Communications fell to $37.4M from $39.7M, or 61.41% of segment revenue against 66.28% [1].
Licensing jumped on a new IP licensing arrangement [1]. Six-month revenue included $6.7M of non-cash consideration from a customer contract.
In our reading, a patent deal of this kind can recur but is not a base to project.
Profit turns
Q2 operating income was $33.6M, or 20.58% of revenue, against $11.5M, or 8.87% [1]. Net income was $33.9M.
Six-month operating income was $48.9M against $13.5M.
Twelve-month GAAP EBITDA is $99.40M, operating income of $83.70M plus D&A of $15.70M [1]. Part of the Q2 lift is Licensing, so the run rate is lower than Q2 alone suggests.
Thesis to verify: is BlackBerry doing much better?
The thesis to test is that BlackBerry has moved from phone hardware to security and embedded software, and that the business is now doing much better. The filings support the move away from hardware: there is no device revenue, and the segments are QNX, Secure Communications and Licensing [1].
The old Cybersecurity segment is gone in its earlier form. Cylance was sold to Arctic Wolf, and BlackBerry now holds Arctic Wolf shares in long-term investments [1].
What remains of security is Secure Communications, which grew 1.67% in Q2 with net retention of 91%.
On revenue, the numbers support the thesis: Q2 revenue rose 26.00% and six-month revenue 25.83% [1]. On margin, operating income rose to $33.6M from $11.5M in Q2 and to $48.9M from $13.5M over six months.
On cash, six-month operating cash flow was $33.9M against negative $14.1M.
On debt, nothing has changed: the $200.0M of 3.00% notes due Feb 15, 2029 remain the only borrowing, against $447.1M of cash and investments [1].
The plain answer is that the numbers support doing better, and QNX supports doing much better. The caveat is that Licensing went from $6.6M to $22.1M on one new arrangement, and Secure Communications is flat [1].
Excluding Licensing, Q2 revenue was $141.2M against $123.0M, up 14.80% rather than 26.00%, so the claim rests mostly on QNX.
The toll-gate test
A toll gate owns the record, owns the connection, prices on outcomes and spends R&D on the gate. QNX comes closest of BlackBerry's businesses.
QNX is built into a car's systems before production and paid per unit shipped [1]. Our reading is that replacing it mid-model is rare, which makes the royalty stream sticky.
The connection test is partial. Secure Communications handles secure government calls and messages, but net retention of 91% shows customers are not all staying [1].
Superintelligence in cars needs a safe, certified base to run on. In our reading, that favors operating systems like QNX that already carry safety certifications, though the filing does not tie revenue to it.
The owner-cash staircase
Start with GAAP EBITDA of $99.40M: operating income of $83.70M plus D&A of $15.70M over the twelve months [1]. Each step down the staircase removes one thing an owner cannot spend.
Step one is operating cash flow of $98.30M, below EBITDA by $1.10M. Operating cash ran close to EBITDA.
Six-month operating cash flow was $33.9M against negative $14.1M a year earlier [1].
Step two subtracts stock pay of $25.60M, taken from the cash flow line. That leaves $72.70M.
Stock pay is 26.04% of operating cash flow [1].
Step three subtracts all capex of $12.30M, including capitalized software. Owner cash is $60.40M, or 9.84% of revenue and 60.76% of EBITDA.
Capex here adds intangible assets acquired, $6.10M over twelve months, to property and equipment of $6.20M, because the cash flow statement lists both [1].
| Step | Twelve months | What the gap is |
|---|---|---|
| GAAP EBITDA | $99.40M | Operating income plus D&A |
| Operating cash flow | $98.30M | Working capital, cash taxes, interest and non-cash items |
| After stock pay | $72.70M | Stock pay treated as a real cost |
| After all capex | $60.40M | What an owner could take out |
Balance sheet and debt
The only borrowing is $200.0M of 3.00% convertible senior unsecured notes due Feb 15, 2029, carried at $197.1M [1]. The notes are convertible into 51.5 million shares.
Cash and equivalents were $266.2M, short-term investments $111.3M, long-term investments $55.5M and restricted cash $14.1M, for total cash and investments of $447.1M [1]. Long-term investments include Arctic Wolf shares received in the Cylance sale.
BlackBerry bought back $10.0M of shares over six months under its normal course issuer bid, and the 2026 bid allows up to 26.8 million shares [1].
The cover-page share count was 587,032,279 at Sep 21, 2026 [1].
What the multiple measures
EV is $5.54B: equity value at the Oct 27, 2026 close on 587.03M cover-page shares, plus debt of $197.10M at carrying value, less cash and equivalents of $266.20M.
On GAAP EBITDA of $99.40M that is 55.70x. On operating cash flow of $98.30M it is 56.33x.
Owner cash of $60.40M is 1.09% of EV.
Cash exceeds debt by $69.10M, so the balance sheet adds no leverage to the multiple. Cash and equivalents only are counted here; adding the investments would lower EV further.
What gets overlooked
EV / EBITDA of 55.70x is high because twelve-month EBITDA is still small [1]. If QNX keeps growing and Secure Communications holds steady, the multiple falls quickly; if Licensing does not repeat, it does not.
Six-month QNX revenue was $152.6M, so the QNX outlook implies second-half revenue of $162.4M to $172.4M [1]. In our reading, that is steady growth, not a step up.
Remaining performance obligations were $116.6M due within twelve months, $3.4M within 12 to 24 months and $8.4M after that [1]. The QNX royalty backlog is separate and is not in that figure.
Peers
The peer set is NetScout, Akamai and F5: security and network software companies with large installed bases.
Peer figures come from each company's latest periodic filing [2][3][4]. Figures are derived from filed statements, and nothing here is a price view.
BlackBerry's EV / GAAP EBITDA is the highest in the set and its latest-quarter growth is the fastest, but that growth includes the Licensing deal [1][2][3][4].
Bull, base and bear
| Case | What happens | What the filings would show |
|---|---|---|
| Bull | QNX royalties compound as design wins ship | QNX growth above 20% and backlog rising |
| Base | QNX grows mid-teens, Secure Communications flat | Revenue in the outlook range of $616M to $636M |
| Bear | Licensing does not repeat and UEM keeps falling | Total growth in single digits and EBITDA back near break-even |
The base case is the company outlook: total revenue of $616M to $636M with QNX at $315M to $325M [1].
The bull case needs QNX royalties to keep rising as backlog becomes production, including the more than $100 million added after the quarter.
The bear case is that the Q2 jump was mostly Licensing, and the core is a slower QNX plus a shrinking device-management line.
What to watch
Watch QNX royalty revenue, which drove $10.4M of Q2 growth [1].
Watch Licensing. A quarter near the old $6.6M level would show how much of Q2 was one-off [1].
Watch Secure Communications net retention, which fell to 91% [1].
Watch the convertible notes. They are due Feb 15, 2029, and cash and investments of $447.1M already exceed them [1].
Watch Arctic Wolf. The shares sit in long-term investments, and any sale would add cash [1].
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