BlackBerry BB Q1 2026 Earnings Call Transcript

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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

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

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

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

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

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

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

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

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

Wise, non-GAAP earnings per beat guidance at positive 2¢

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

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

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

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

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.