BlackBerry, the Canadian communications company, is set to release its 2026 fiscal year second-quarter earnings report before the U.S. stock market opens on September 25. According to analysts' expectations compiled by Bloomberg, BlackBerry's Q2 revenue is projected to reach $123 million, with adjusted net profit of $9.255 million and adjusted earnings per share (EPS) of $0.01.
Q1 Earnings Review
BlackBerry's total revenue in Q1 reached $121.7 million, exceeding the upper end of expectations, with a gross margin of 74% and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $16.4 million. The company reported GAAP net profit of $1.9 million in Q1, marking its first GAAP profitability since the fourth quarter of fiscal 2022; non-GAAP EPS stood at $0.02, outperforming forecasts.
QNX, an embedded software platform widely used in automotive systems, saw its revenue increase by 8% year-over-year to $57.5 million. The segment's adjusted EBITDA reached $12.7 million, accounting for 22% of total revenue, indicating sustained growth in demand for automotive technology solutions.
The Secure Communications segment also outperformed expectations in both revenue and profitability, generating $59.5 million in revenue and $9.6 million in adjusted EBITDA. The segment's adjusted gross margin rose to 70%, representing a 6-percentage-point sequential increase and a 4-percentage-point year-over-year gain.
Company Guidance for Q2
BlackBerry expects Q2 revenue to range between $115 million and $125 million, compared with the market consensus estimate of $122.5 million. Adjusted EBITDA for the quarter is projected to be $8 million to $14 million, with adjusted basic EPS of $0.00 to $0.01. Additionally, the company maintains its full-year guidance for adjusted EBITDA of $72 million to $87 million and reaffirms its forecast for full-year adjusted basic EPS of $0.08 to $0.10.
Q2 Earnings Forecast
QNX Delivery Density and Revenue Recognition Timeline
QNX's penetration in key automotive modules such as intelligent cockpits, gateways, and domain controllers continues to grow. Its Q1 revenue performance and mid-to-high gross margin structure underscore the value of its product portfolio and pricing power. The core variable for Q2 lies in the pace of converting orders into revenue, including production ramp-up for existing projects, recognition of fees from functional upgrade authorizations, and the timeline for confirming additional license purchases during the transition period of new vehicle model mass production.
Given that the management's revenue guidance of $115 million-$125 million overlaps with the market consensus range of $118 million-$122 million, revenue is more likely to land near the upper end of the range as long as there are no significant delays in the production ramp-up of existing projects. If customer acceptance for individual vehicle models is delayed or the start of production (SOP) is pushed back, the impact will primarily manifest as cross-quarter revenue delays rather than changes in demand structure—meaning short-term fluctuations will not alter the full-year revenue realization path.
Gross Margin Leverage and Product Portfolio Flexibility
The QNX segment's positive impact on overall gross margin became evident in Q1. The consensus forecast for Q2 gross margin ranges from 70% to 73%, driven by the trade-off between the high gross margins of automotive software and the relatively balanced but price-sensitive nature of secure communications. If QNX delivery density increases and the share of authorization upgrades rises during the quarter, overall gross margin could see upward flexibility and potentially approach the upper end of the expected range.
Conversely, if the Secure Communications segment concedes on pricing to secure contract renewals for scale and stability, short-term gross margins may come under pressure. However, this impact can be partially offset through disciplined cost control and improved delivery efficiency. Over a longer horizon, the platform-based reuse of QNX in new vehicle models and optimization of authorization structures will help consolidate support for an overall gross margin of over 70% in the coming quarters.
Secure Communications: Renewal Quality and Payment Collection Rhythm
The Secure Communications segment generated approximately $59.5 million in Q1 revenue, reflecting a stable customer base and profit improvement driven by optimized cost structures. Key focus areas for Q2 include renewal rates and the pricing structure of new contracts. If renewal rates rise and discounts stabilize, the segment is expected to strike a balance between revenue resilience and an overall gross margin of around 70%.
Prudent macroeconomic IT budgets and extended procurement cycles may cause minor monthly fluctuations, but market sentiment generally holds that uncertainties for this segment are more pronounced at the full-year level rather than in a single quarter. If renewal quality exceeds expectations and the scale of new contracts improves, non-GAAP EPS could shift from breakeven to a small positive value, while also boosting free cash flow. If renewal progress is slow, EPS may remain around $0.00, though this will not change the full-year profit improvement trajectory. From a cash collection perspective, the management of renewal payment terms and implementation milestones will influence the smoothness of operating cash flow during the quarter.
Marginal Signals from External Demand and Industry Chain Collaboration
Despite cautious macroeconomic conditions and downstream budgets, several institutions raised their price targets to the $5-$5.5 range following Q1 results. The core rationale lies in the resilience of QNX's order backlog, delivery visibility, and resulting revenue and gross margin stability. In Q2, increased pre-installation of QNX in new vehicle platforms and greater cross-model reuse of domain control and cockpit platforms would strengthen the continuity of order-to-revenue conversion.
Deeper collaboration with automakers and tier-1 suppliers in functional safety, real-time performance, and middleware compatibility could shorten integration and testing cycles, improving the pace and quality of revenue recognition. These marginal improvements, combined with disciplined expense management, create conditions for upward momentum in non-GAAP profit margins.
Wall Street Analysts' Views
Recent institutional opinions show that the proportion of "Buy/Overweight/Outperform" ratings is higher than that of "Neutral/Hold" and "Underweight" ratings. Proponents of BlackBerry emphasize the mid-to-short-term support from QNX's order backlog, installation penetration, and delivery pace for revenue and gross margins, while acknowledging the management's improved execution in cost structure and capital allocation. Representative views include:
CIBC maintained its "Buy" rating and set a $6 price target, arguing that QNX's order momentum and cash flow improvement form the core pillars of this fiscal year's profit growth. It expects Q2 results to fall within the achievable range and views the full-year guidance as executable.
Multiple institutions raised their price targets to $5-$5.5 and maintained "Buy/Overweight" ratings after Q1. Their reasoning focused on enhanced QNX delivery visibility, resilient overall gross margins, and verifiable non-GAAP profit trajectory. At the same time, they emphasized cautious tracking of the Secure Communications segment's recovery pace, noting that its impact on single-quarter volatility is less significant than that of the Automotive Software segment.
Skeptical analysts primarily focus on competition and budget constraints in the cybersecurity/secure communications space. Those maintaining "Neutral/Hold" or lower ratings argue that further valuation upside will require stronger signals of renewal recovery and sustained improvements in free cash flow. However, against the backdrop of upwardly revised Q1 guidance and relatively manageable Q2 consensus expectations, the market tends to prioritize execution and delivery data.
This content is generated based on Tiger AI and Bloomberg data, for reference only.