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BlackBerry (BB) delivered another modest EPS beat for 1Q26, staying true to recent form, while reporting upside revenue of $121.7 mln and issuing a better-than-expected FY26 revenue outlook of $508-$538 mln. The improved guidance, particularly for QNX and Secure Communications, signals resilience in key markets like automotive and cybersecurity, bolstering confidence in BB’s ongoing turnaround efforts despite macroeconomic headwinds.

• The QNX segment, which provides real-time operating systems and software for automotive applications (e.g., digital cockpits and Advanced Driver Assistance Systems) and other embedded systems like industrial automation, remains BB’s growth engine, posting 8% yr/yr revenue growth to $57.5 mln in Q1, exceeding the top end of guidance. The segment’s performance was driven by a growing royalty backlog, reflecting contracted future revenue from design wins in automotive and the General Embedded Market.
• Key developments, such as the launch of QNX Hypervisor 8.0 and partnerships with WeRide and Leapmotor for autonomous driving and digital cockpit platforms, underscore QNX’s momentum. BB forecasts QNX revenue of $55-$60 mln for Q2 and $250-$270 mln for FY26, though management noted caution due to potential production slowdowns from recent tariff changes impacting Q2 royalty revenues.   They clarified that while tariffs haven't had a direct impact on QNX, they have contributed to delays in customer purchasing decisions, particularly for newer products like QNX Cabin.
• The Secure Communications segment, encompassing secure communication solutions like Secusmart for government and enterprise clients, AtHoc for critical event management, and Unified Endpoint Management, delivered $59.5 mln in revenue, surpassing guidance, driven by strong renewals in Secusmart’s core German market. The segment’s adjusted gross margin improved significantly to 70%, up 6 percentage points sequentially and 4 percentage points yr/yrr, reflecting operational efficiencies and a shift toward recurring revenue streams, though Annual Recurring Revenue (ARR) remained relatively flat at $209 mln.
• BB guided Secure Communications revenue at $54-$59 mln for Q2 and $234-$244 mln for FY26, with growth propelled by demand for on-premise and data-sovereignty-centric solutions in government and defense sectors, as well as FedRAMP High authorization for AtHoc, positioning it as a leader in secure critical event management.

BB’s better-than-feared demand environment, driven by secular tailwinds in automotive software-defined vehicles and cybersecurity for government and enterprise applications, has fueled investor optimism, as evidenced by the stock’s sharp rise post-earnings. However, with total revenue down year-over-year in four of the past five quarters, BB must sustain QNX’s design win momentum and improve Secure Communications’ ARR growth to achieve consistent profitability and validate its turnaround thesis.