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- BB - F2Q26 - Beat and raise. What's next?
BB - F2Q26 - Beat and raise. What's next?
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BLACKBERRY (BB)
🚗💻 Intelligent Software & Secure Communications | QNX Automotive Leadership
Q2 2026 Results | $129.6M Revenue, +3% YoY, Strong Profitability Returns
💰 Market Cap: $2.54B | 📱 QNX Revenue: $63.1M | 📈 Revenue: +3% YoY ($129.6M)
👨💼 CEO John Giamatteo | 📊 QNX Growth: +15% YoY | 💎 EBITDA Margin: 20%
$4.33
📈 +$0.06 (+1.41%) Today
Current Price
Price Target Scenarios
18-Month Horizon (2026 Targets)
$8.50
Bull Case (+96%)
QNX Expansion
Software Leadership
📊 Valuation Calculation:
• 2026E Revenue: $600M × P/S: 4.2x = $8.50
🚀 Key Assumptions:
QNX automotive dominance • General embedded market (GEM) expansion • Strong royalty growth • Design wins acceleration • Software-defined vehicles adoption • Secure comms government wins
$6.25
Base Case (+44%)
Steady Growth
Market Leader
📊 Valuation Calculation:
• 2026E Revenue: $530M × P/S: 3.0x = $6.25
⚖️ Key Assumptions:
Continued QNX growth • Modest GEM expansion • Stable secure communications • Automotive market recovery • Profitability maintained
$2.80
Bear Case (-35%)
Market Disruption
Competition Risk
📊 Valuation Calculation:
• 2026E Revenue: $480M × P/S: 1.5x = $2.80
🔻 Key Assumptions:
Automotive market downturn • QNX competitive pressure • Software complexity challenges • Government spending cuts • Macro headwinds persist
Bottom Line for Retail Investors
🚗
QNX Automotive Leadership
Mission-critical OS for automotive, safety-certified, BMW/Qualcomm/NVIDIA partnerships, software-defined vehicle platform
🔒
Secure Communications
Government/enterprise security, SecuSmart German contracts, UEM leadership, critical event management, FedRAMP certified
📈
Strong Profitability
GAAP net income $13.3M, 20% EBITDA margin, positive cash flow, $363.5M cash position, share buybacks
⚠️
Execution Risks
Automotive market volatility, software complexity challenges, competitive pressure, macro uncertainty
📊 Q2 2026 "Exceeded Expectations" Results
$129.6M Revenue, +3% YoY, $0.04 EPS Beat 300% vs Forecast
💵
$129.6M
Q2 2026 Revenue
+3% YoY
📊
$0.04
EPS (Non-GAAP)
vs $0.01 Forecast
🚗
+15%
QNX Revenue Growth
YoY Growth
💰
32%
QNX EBITDA Margin
Record High
📞 Key Q2 2026 Earnings Highlights
📈
Record QNX Quarter
$63.1M revenue (+15% YoY), 32% EBITDA margin (division record), 83% gross margins, strong royalty growth, Q2 design wins ahead of plan after weak Q1
🏆
Strong Cash Generation
GAAP net income $13.3M (vs -$19.7M prior year), operating cash flow $3.4M despite $19M tax payments, free cash flow $2.6M
🎯
Strategic Wins & Partnerships
Mid-eight-figure China ADAS tier-one win, BMW/Qualcomm Snapdragon RidePilot, top 5 automaker Cabin win, North American robotics breakthrough, MIT partnership
💎
Secure Comms Growth
$59.9M revenue (beat guidance), ARR +$4M to $213M, DBNRR improved to 93%, German 5-year hosted services deal, reduced UEM churn, State Department renewal
📍 CEO Commentary: "We delivered year-over-year top-line growth and expanded gross margins while simultaneously decreasing OpEx. QNX delivered a rule of 40 quarter" - John Giamatteo
🌏 China Market Shift: "Due to some high-profile accidents, that market is shifting more towards safety-critical software where maybe a few years ago, the demand wasn't quite as rich" - positioning for QNX strength
📊 CFO Insights: "I see a lot of leverage in the QNX model. 83% gross margins should improve as royalty mix increases when bigger programs move into production" - Tim Foote
🔮 H2 Outlook: "April, May, June felt like pause button was pressed, but we feel it's being unpressed with more momentum for second half" - automotive market recovery signals
🎯 FY26 Guidance Raised: Revenue $519-541M (+$7M midpoint), EBITDA $82-101M (+$12M midpoint), QNX solid pipeline for H2, positive cash flow expected remainder of year
📊 Q2 2026 Performance & Key Metrics
| Metric | Q2 2026 | Performance |
|---|---|---|
| Total Revenue | $129.6M | +3% YoY |
| QNX Revenue | $63.1M | +15% YoY |
| Secure Comms Revenue | $59.9M | Beat Guidance |
| Adjusted Gross Margin | 75% | +4% YoY, Flat Sequential |
| Operating Expenses | $74.8M | -5% YoY Despite Growth Investment |
| Adjusted EBITDA | $25.9M | +72% YoY |
| GAAP Net Income | $13.3M | vs -$19.7M Prior Year |
Operating Cash Flow$3.4M
Share Repurchases$20M
🎯 Management Commentary & Strategic Priorities
"We delivered year-over-year top-line growth and expanded gross margins while simultaneously decreasing OpEx" - CEO John Giamatteo. Key priorities: QNX automotive leadership expansion, General Embedded Market (GEM) growth in medical/industrial/robotics, vehicle software platform development, Secure Communications government wins. Full-year guidance raised: Revenue $519-541M, EBITDA $82-101M. QNX delivered 'rule of 40' quarter with 15% growth and 32% EBITDA margin. Strong design win pipeline for H2, positive cash flow expected for remainder of FY26.
🚀 Why BB Bulls Are Right
🚗
QNX Automotive Dominance
Safety-critical market shift in China, BMW/Qualcomm/NVIDIA partnerships, QNX-8 pipeline 50/50 auto/general industry, back-end loaded revenue seasonality
📈
Operating Leverage Model
83% QNX gross margins expanding with royalty mix, OpEx decreasing despite growth investments, "lot of leverage in the QNX model" - CFO
🤖
GEM Market Expansion
Robotics breakthrough with North American supplier, medical instrumentation growth, industrial automation wins, QNX Everywhere with 4,000+ students
💰
Cash Generation Power
$3.4M operating cash flow despite $19M tax payments, $20M share buybacks at $3.97, $38M Cylance proceeds Q4, strong balance sheet
🐻 Why BB Bears Have Valid Concerns
🌊
Automotive Market Volatility
"Programs shifted to the right," not "totally out of the woods," Q1 pause button effect, OEM reluctance to commit to new designs during uncertainty
🎢
Revenue Seasonality Risk
Back-end loaded pattern, "wild volatility" in design win timing, Q1 always lowest quarter, dependence on development seat licensing timing
🏭
Development Complexity
"Challenges of developing software remain complex," long sales cycles persist, tariff uncertainty now "certain tariff headwind"
⚖️
Policy & Macro Risks
DOGE threats, government policy changes, weaker USD FX headwinds, reduced government spending risks, macro uncertainty impact
This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial advisor before making investment decisions.
