Image source: The Motley Fool. DATETuesday, June 24, 2025 at 5:30 p.
ETCALL PARTICIPANTSChief Executive Officer — John GiamatteoChief Financial Officer — Tim FooteVice President, Investor Relations — Martha GonderNeed a quote from one of our analysts.
[ tected] RISKSManagement noted macroeconomic uncertainty affecting customer buying decisions, with some automotive customers pulling guidance and potential duction volume impacts, which "could impact royalty revenue.
"QNX gross margin declined to 81%, attributed to unfavorable exchange rates, specifically due to a weakening US dollar against the Canadian dollar and euro.
Licensing revenue and adjusted EBITDA were both "slightly below expectations due to lower revenue from existing licensing arrangements. "TAKEAWAYSTotal Revenue: $121.
7 million, surpassing the top end of guidance in Q1 fiscal year 2026. Adjusted EBITDA: Adjusted EBITDA was $16. 4 million, up over 55% year over year and exceeding guidance in Q1 FY2026.
Adjusted Net Income: $12. 3 million in Q1 fiscal year 2026. GAAP Net Income: Positive $1. 9 million GAAP net income, the first positive quarterly GAAP net income in over three years, in Q1 FY2026.
Adjusted EPS: $0. 02 non-GAAP earnings per, above guidance in Q1 FY2026.
Cash Used by Operations: $18 million, including $11 million in restructuring costs (comprised of $6 million employee severance and $5 million for lease payments for exited perties) in Q1 FY2026.
Repurchase: $10 million (2. 6 million s at an average price of $3. 89 each) repurchased, with a new $100 million buyback gram apved in Q1 FY2026.
Cash and Investments Balance: $382 million total cash and investments at quarter end, down $28 million sequentially but almost $100 million higher than the prior year in Q1 FY2026.
Total Company Adjusted Gross Margin: 75%, up 1% year over year in Q1 fiscal year 2026. QNX Revenue: $57.
5 million, representing 8% year-over-year growth and surpassing guidance (non-GAAP) in Q1 FY2026. QNX Adjusted EBITDA: $12. 7 million, above guidance in Q1 fiscal year 2026.
QNX Gross Margin: 81%, slightly decreased due to unfavorable FX in Q1 FY2026. QNX Pipeline Mix: General Embedded Market (GEM) comprises 43% of the SDP8.
0 pipeline, with the overall pipeline growing 55% in Q1 FY2026. Largest SDP8. 0 Design Win: Secured with a leading industrial automation OEM for multiple applications. QNX Hypervisor 8.
0: Launched, viding support for mixed-criticality domains digital cockpit and virtualized guest OS hosting. Secure Communications Revenue: $59.
5 million, above guidance and driven by SecuSmart sales in Q1 FY2026. Secure Communications Adjusted EBITDA: Adjusted EBITDA for secure communications was $9. 6 million in Q1 FY2026.
Secure Communications Gross Margin: 70%, higher sequentially and year over year in Q1 fiscal year 2026.
Secure Communications ARR: Stable at $209 million, with dollar-based net retention rate (DBNRR) held flat at 92% in Q1 FY2026.
SecuSmart: Drove stronger revenue with early large deals in Germany and pipeline momentum in global defense sectors in Q1 FY2026.
AtHoc: Achieved FedRAMP High authorization and secured multiple US federal and international wins.
UEM: Stable performance; new deals with major clients despite cloud migration churn, maintaining on-premise market strength. Licensing Revenue: $4. 7 million in Q1 fiscal year 2026.
Licensing Adjusted EBITDA: $3. 8 million in Q1 fiscal year 2026. Adjusted Corporate OpEx: $9. 7 million, aligned with guidance and excluding amortization in Q1 FY2026.
D Secure Communications Full-Year Guidance: Revenue for secure communications is now guided to $234-$244 million for FY2026, up $4 million; adjusted EBITDA to $37-$47 million (16%-19%).
Total Company Full-Year Guidance: Revenue is jected at $508-$538 million; adjusted EBITDA at $72-$87 million; non-GAAP EPS expected at $0. 10 for FY2026.
Q2 Guidance: QNX revenue is expected in the $55-$60 million range, secure communications $54-$59 million, total company revenue $115-$125 million, adjusted EBITDA $8-$14 million, and operating cash usage of $5-$15 million for Q2 FY2026.
Cash Flow Outlook: Operating cash flow is expected to be positive for the full FY2026 at apximately $35 million. SUMMARYBlackBerry Limited (BB 2.
84%) achieved higher-than-guided top-line and fitability metrics on a non-GAAP basis for Q1 FY2026, driven by outperformance in both QNX and secure communications.
The QNX segment expanded into non-automotive verticals, notably industrial automation, as evidenced by a record SDP8. 0 design win and a 43% GEM pipeline mix in Q1 FY2026.
Management launched Hypervisor 8. 0 and executed a $10 million buyback as part of a $100 million authorization in Q1 FY2026.
Guidance for secure communications and total company revenue and fitability was raised for FY2026, while the near-term outlook for QNX incorporates caution over possible duction and royalty headwinds.
Chief Financial Officer Foote said, "QNX gross margins were slightly down at 81%, primarily as a result of the effects of unfavorable exchange rates.
"Chief Executive Officer Giamatteo emphasized QNX's traction in autonomous drive, citing the WeRide L2+ passenger vehicle launch and Chery deployments in China.
Management described the growing opportunity in government/defense communications, noting heightened demand for on-premise and data-sovereignty-centric solutions.
Chief Financial Officer Foote stated, "we expect another quarter of cash usage, albeit sequentially lower," but reaffirmed the jection of positive full-year operating cash flow for FY2026.
Management expects licensing upside from Maliki patent monetization no earlier than FY2027.
Guidance ary included, "We are taking a prudent position for QNX in Q2, given that any slowdown in duction volumes in the first calendar quarter as a result of recent tariff changes are ly to impact Q2 royalty revenues.
"INDUSTRY GLOSSARYGEM (General Embedded Market): Refers to non-automotive applications for embedded software solutions, such as robotics, industrial automation, and medical devices.
0: The generation of the QNX operating system, designed for enhanced performance in high-compute and safety-critical embedded use cases.
SecuSmart: BlackBerry's voice and text encryption solution, frequently used for securing government communications. AtHoc: Critical event management software platform, now FedRAMP High certified.
FedRAMP High: The highest level of US federal risk authorization for cloud ducts, required when managing the government's most sensitive unclassified data.
Full Conference Call TranscriptMartha Gonder: Thank you, Julian. Good afternoon, everyone, and welcome to BlackBerry's first quarter fiscal year 2026 Earnings Conference Call.
Joining me on today's call is BlackBerry's Chief Executive Officer, John Giamatteo, and Chief Financial Officer, Tim Foote.
After I read our cautionary note regarding forward-looking statements, John will vide a, and Tim will review the financial results. We will then open the call for a brief Q&A session.
This call is available to the general public via call-in numbers and via webcast in the Investor Information section at blackberry. A replay will also be available on the blackberry. Com website.
Some of the statements we'll be making today constitute forward-looking statements, made pursuant to the Safe Harbor visions of applicable U. And Canadian securities laws.
We'll indicate forward-looking statements by using words such as expect, will, should, model, intend, believe, and similar expressions.
Forward-looking statements are based on estimates and assumptions made by the company in light of its experience and its perception of historical trends, current conditions, and expected future developments, as well as other factors that the company believes are relevant.
Many factors could cause the company's actual results or performance to differ materially from those expressed or implied by the forward-looking statements.
These factors include the risk factors that are discussed in the company's annual filings. You should not place undue reliance on the company's forward-looking statements.
Any forward-looking statements are made only as of today, and the company has no intention and undertakes no obligation to or revise any of them, except as required by law.
As is customary during the call, John and Tim will reference non-GAAP numbers in their summary of our quarterly results.
For a reconciliation between our GAAP and non-GAAP numbers, please see the earnings press release published earlier today, which is available on EDGAR, SEDAR Plus, and blackberry. Com websites.
And with that, let me now turn the call over to John. John Giamatteo: Thanks, Martha, and thanks to everyone for joining today's call.
We made a very solid start to fiscal year 2026 with our results beating the top end of guidance almost entirely across the board.
Total company revenue for the quarter was stronger than expected, beating guidance at $121.
BlackBerry dered solid fitability with adjusted EBITDA growing over 55% year over year, and beating the top end of the guidance range at $16. Wise, non-GAAP earnings per beat guidance at positive 2¢.
And despite seasonality in our cash flow for the first half of the year, this stronger fitability helped to der better than expected operating cash usage of $18 million.
In May, we announced a $100 million buyback gram based on our confidence in our plan to both continue generating cash as well as driving increased holder value.
During the quarter, we started to utilize the capital allocation optionality that this facility brings by repurchasing $10 million worth of s. Tim will vide more details on this later in the call.
I'll now give some color on how we executed at a divisional level starting with QNX. QNX revenue for Q1 beat the upper end of our guidance range at $57.
This represents 8% year over year growth despite the uncertainty facing the auto market, including the impact of various tariff announcements.
Royalties and development seat licenses were the main drivers of year over year revenue growth for the quarter, growing 923% respectively.
We have a strong plan for fitable growth in QNX, capitalizing on both our market position and the multiyear secular tailwinds that are driving this forward.
As part of this, for fiscal year 2026, we have two key strategies that we believe will help drive future growth.
These are to both increase the beyond automotive into adjacent verticals and to increase our of the automotive software stack by offering pre-integrated middleware as part of a vehicle platform.
Starting with increasing diversification beyond automotive, we believe this has a number of benefits.
First, we see a very significant addressable market in the general embedded space, which we believe could be larger than the auto opportunity.
Second, although we're very diversified across auto OEMs and geographies, diversification into other can reduce cyclical exposures.
We're targeting substantial expansion of our beachheads in robotics, industrial automation, and medical devices and equipment.
Similar to automotive, these verticals are seeing significant growth in compute and safety-critical software at the edge, which is where QNX really excels.
With minimal adaptations to the core QNX code base, we are able to meet the needs of customers, and therefore, we see this as primarily a go-to-market task.
Accordingly, we're adding industry and growing our GEM-focused Salesforce. We're also working towards engaging new channel partners that will greatly increase our reach in these.
0, our next-generation version of the QNX operating system, is gressing well in this market, and we have a strong non-automotive mix in the pipeline.
In fact, GEM currently represents 43% of our total SDP8. 0 pipeline, with the overall pipeline having grown by 55% in the quarter. Further, our largest SDP8.
0 design win to date was with a leading industrial automation OEM. They will deploy the version of QNX across multiple applications.
These are data points that show how our increased investment in GEM is already starting to generate real returns.
The second focus is the QNX vehicle platform that was announced earlier this year at CES.
We are this duct in response to requests from some leading OEMs who have identified the importance of focusing their teams on customer-facing applications rather than spending time on undifferentiated parts of the software stack.
Yesterday, we announced a memorandum of understanding with a leading middleware vider, Vector, to vide a highly integrated hardware-agnostic solution that customers can leverage across the vehicle.
This builds on an earlier announcement with both Vector and TT at CES in January. The goal is to help our customers simplify development and shorten time to market.
We are in conversations with several OEMs for this solution and are targeting dery of an early access version of the duct this calendar year.
We continue to refine the model for this platform, but should it be successful, directionally, we expect it to vide a significant uplift to our royalty ASP once deployed in vehicles.
We were excited to announce the launch of QNX Hypervisor 8. 0 at the end of the quarter.
The hypervisor is an important part of our portfolio, allowing customers to virtually host guest operating systems Android and Linux alongside safety-critical applications running on QNX, all on the same chip.
Upgrading the hypervisor to the next-generation performance standards of our SDP8. 0 operating system can help cement our leadership position within mixed criticality domains the digital cockpit.
QNX thrives in high-performance safety-critical use cases. Autonomous drive is a great example.
This past quarter, we announced that WeRide, a global leader in autonomous drive nology, is using QNX as the foundation for L2+ passenger vehicles.
In fact, this nology is already being deployed in a couple of Chery's vehicle models that are on the road in China today.
As autonomous drive continues to ramp worldwide, we see this as an exciting opportunity for BlackBerry.
We're working to build the QNX ecosystem through the availability of QNX ducts for non-commercial use and the development of QNX-centric training grams.
We believe that having a stronger community of developers and partners with QNX experience will help drive adoption across OEMs, especially in the general embedded market.
This quarter, we initiated a gram in India with more than 30 educational institutions or currently offering QNX-focused courses.
We're also working with institutions in North America with the goal of launching additional courses this calendar year.
In terms of the macro, there is ly uncertainty in the market, which we are currently having to navigate with some of our customers pulling guidance until market conditions become er.
While we have not seen any direct impacts from the automotive tariffs, th.