BlackBerry Earnings Call Highlights Record QNX Momentum

Blackberry ((TSE:BB)) has held its Q3 earnings call. Read on for the main highlights of the call.

BlackBerry’s Earnings Call Strikes Confident, Upbeat Tone on Strong Q3 Results

Record QNX Revenue Underscores Core Growth Engine

BlackBerry’s QNX division was the star of the quarter, posting an all‑time record revenue of $68.7 million, up 10% year over year and ahead of expectations. Management highlighted that growth was driven largely by higher royalties, confirming QNX’s position as a critical, recurring-revenue engine at the heart of BlackBerry’s turnaround story. Even as some legacy areas mature, QNX’s performance signals strong demand for its embedded software platform in automotive and other mission‑critical applications.

Profitability and Cash Flow Show Operating Discipline

Beyond top‑line growth, BlackBerry delivered meaningful improvements in profitability and cash generation. Adjusted EBITDA came in at $28.7 million, translating into a solid 20% margin and showcasing improving operating leverage. Operating cash flow of $17.9 million was triple last year’s level, signaling better cost control and more efficient conversion of earnings into cash. For investors, these metrics suggest the business is becoming more sustainable and less dependent on external funding.

Secure Communications Revenue Beats Despite Macro Headwinds

Secure Communications also outperformed, generating $67 million in revenue and surpassing the upper end of guidance. Management emphasized that this was achieved despite disruptions related to the U.S. government shutdown, highlighting the resilience and mission‑critical nature of BlackBerry’s secure communications offerings. The strong showing from this segment helps diversify the company’s revenue base beyond QNX and provides added stability.

FedRAMP High Certification Unlocks Government Upside

A key strategic milestone was Ad hoc achieving FedRAMP High certification, a stringent U.S. government standard. This certification significantly expands BlackBerry’s ability to serve sensitive government workloads, and executives pointed to material expansion opportunities already realized in the quarter. For shareholders, this opens the door to deeper penetration of the U.S. federal market, which tends to be sticky and long‑lived once relationships are established.

Consistent GAAP Profitability Bolsters Credibility

BlackBerry’s GAAP net income improved by $24.2 million year over year to $13.7 million, marking the third straight quarter of GAAP profitability. This consistency matters for investors who have watched the company navigate a multiyear transition away from its legacy handset business. Sustained GAAP profits demonstrate that BlackBerry’s software‑focused model is not just growing but doing so on a solid financial footing.

Raised Full-Year Guidance Reflects Management Confidence

Reflecting the strong quarter, BlackBerry raised its full‑year guidance. The midpoint of total company revenue was lifted by $6 million to a range of $531 million to $541 million, while adjusted EBITDA guidance increased by $7.5 million to a range of $94 million to $104 million. This upward revision signals management’s growing confidence in both QNX and Secure Communications, and suggests that underlying demand trends remain favorable heading into the final quarter of the fiscal year.

Secure Communications Faces Tough Year-Over-Year Comparison

While Secure Communications exceeded expectations this quarter, not all comparisons were favorable. SecuSmart, a component of the segment, grew sequentially but declined year over year due to a difficult comparison against last year’s unusually strong upgrade cycle from the German government. Management framed this decline as a timing issue rather than a structural problem, indicating that demand remains intact but is lumpy due to large government contracts.

QNX Gross Margin Pressure from Funding Shift

QNX’s gross margin dipped by two percentage points year over year to a still‑robust 84%. The decline was attributed primarily to the absence of prior‑year P&L benefits from Canada’s Strategic Innovation Fund, rather than any deterioration in the business itself. For investors, the message was that margins remain high by software standards, and that the modest compression is more about funding optics than underlying pricing or cost pressure.

Guidance and Outlook Point to Solid Q4 Momentum

Management’s forward-looking commentary remained constructive. BlackBerry expects Q4 total revenue between $138 million and $148 million and adjusted EBITDA between $22 million and $32 million, building on a Q3 that already exceeded the high end of guidance. With QNX at record levels, secure communications holding up despite macro challenges, and three consecutive quarters of GAAP profitability, the company is positioning itself as a more predictable software and services player. The upgraded full‑year outlook underscores the view that current momentum can carry into the remainder of the fiscal year.

In summary, BlackBerry’s latest earnings call painted a picture of a software company gaining traction on multiple fronts: record QNX revenue, strong secure communications performance, improving profitability, and rising guidance. While there are pockets of year‑over‑year softness and some margin normalization, the overall tone was optimistic, with management emphasizing recurring growth, disciplined execution, and expanding government opportunities that could support further upside for investors watching the stock.