BlackBerry fiscal Q2 2027 revenue rose 26% to $163.3M and net income reached $33.9M, driven by QNX royalties and a one-time patent license, while Secure Communications stalled and its outlook was cut.
Revenue
$163M
+26.0% YoY
Net income
$34M
+154.9% YoY
Diluted EPS
$0.05
+150.0% YoY
Operating margin
20.6%
Overview
BlackBerry's fiscal Q2 2027 (the three months ended August 31, 2026) beat its own guidance on every line it guides to. Revenue rose 26.0% to $163.3 million, against the company's earlier forecast of $137–148 million. GAAP net income rose to $33.9 million from $13.3 million. Two things drove it. QNX, the car and embedded-software business, grew revenue 27.3% on royalties. The patent-licensing unit booked $22.1 million from a new licensing deal, against the roughly $10 million it had guided to. The weaker spot was Secure Communications, the government-focused unit: revenue was nearly flat, profit fell, and management cut its full-year outlook for the segment.
BlackBerry now reports three segments: QNX (embedded operating systems for vehicles and industrial devices), Secure Communications (SecuSUITE encrypted calling, UEM device management and AtHoc crisis alerting) and Licensing (its patent portfolio). BlackBerry's fiscal year ends in late February, so this quarter falls in calendar 2026.
Key metrics
Metric
Q2 FY2027 (Aug 31, 2026)
Q2 FY2026 (Aug 31, 2025)
YoY Change
Revenue
$163.3M
$129.6M
+26.0%
Gross margin %
77.8%
74.5%
+3.3 pts
Operating income
$33.6M
$11.5M
+192.2%
Operating margin
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20.6%
8.9%
+11.7 pts
Net income
$33.9M
$13.3M
+154.9%
Diluted EPS
$0.05
$0.02
+150.0%
Adjusted EBITDA (non-GAAP)
$47.0M
$25.9M
+81.5%
Operating cash flow
$29.3M
$3.4M
+$25.9M
Secure Communications ARR
$221M
$213M
+3.8%
Secure Communications net retention (DBNRR)
91%
93%
−2 pts
Operating margin is the share of revenue left after running the business, before interest and tax. Adjusted EBITDA is the company's own measure. It excludes stock-based pay, restructuring, impairment, depreciation/amortization and the revaluation of deferred share units. The diluted EPS change is calculated from rounded cents: $0.05 against $0.02.
Segment performance
Segment
Revenue
YoY
Segment gross margin % (prior year)
Segment adj. EBITDA (prior year)
QNX
$80.3M
+27.3%
87% (83%)
$29.0M ($20.5M)
Secure Communications
$60.9M
+1.7%
61% (66%)
$8.0M ($9.7M)
Licensing
$22.1M
+234.8%
93% (77%)
$20.0M ($5.6M)
QNX. Revenue grew by $17.2 million. The 10-Q breaks that into $10.4 million more in royalties, $3.9 million more in development licenses and $2.6 million more in professional services. Royalties are per-vehicle fees paid once QNX software ships in production cars. Management had guided to $70–75 million and says the beat was "primarily due to stronger than expected royalty revenue." Royalties carry a higher margin, so the richer mix lifted segment gross margin from 83% to 87%. Segment EBITDA rose less than gross margin: $8.5 million, against $17.3 million more gross margin. Segment R&D rose from $13.0 million to $19.6 million. Part of that is an accounting comparison, not new spending. In the prior-year quarter QNX booked Canadian Strategic Innovation Fund claim benefits that reduced its costs; company-wide, $3.8 million of these credits did not repeat this year. After the quarter, QNX and Vector won the first design win for Alloy Kore, their joint vehicle-software platform. The customer is Coretura, the commercial-vehicle software venture of Volvo Group and Daimler Truck. BlackBerry calls it the largest design win in QNX history, adding more than $100 million to the royalty backlog. Royalty backlog is revenue expected from future vehicle shipments, not cash already received.
Secure Communications. Revenue rose only $1.0 million. SecuSUITE product revenue grew $5.5 million, while UEM product revenue fell $3.3 million and professional services fell $1.3 million. The mix hurt profitability. More of the revenue came from SecuSUITE hardware devices, which carry lower margins than software, so segment gross margin fell 5 points to 61%. Segment EBITDA slipped to $8.0 million from $9.7 million, though that is within the $5–10 million guidance. The recurring-revenue measures point the same way. ARR (the annualized value of subscription, maintenance and similar recurring contracts) was $221 million, up just $1 million from the previous quarter. Dollar-based net retention fell to 91%, which means last year's customers now pay 9% less in total than they did a year ago.
Licensing. Revenue more than tripled to $22.1 million, "primarily due to a new intellectual property licensing arrangement entered into during the quarter." That is a lumpy item, not a new baseline. Management expects about $6 million a quarter in Q3 and Q4. The segment contributed $14.4 million of the $21.1 million increase in company-wide adjusted EBITDA.
Takeaway: Much of the headline beat comes from a one-time patent deal. Without Licensing, revenue grew about 15% ($141.2M vs. $123.0M), and QNX supplied nearly all of that growth. QNX is the part of the business that is compounding. Secure Communications is flat, and its customer-retention numbers are getting worse.
Costs, profit and cash
GAAP operating expenses rose 9.9% to $93.5 million, much slower than revenue. So operating expenses fell from 65.7% to 57.3% of revenue. The filing lists the drivers: the $3.8 million prior-year SIF credit that did not repeat, $2.6 million more in variable incentive pay, $2.3 million more in legal costs and $1.7 million more in salaries. A $1.3 million drop in deferred share unit costs and $0.8 million lower consulting costs partly offset these. Because cost of sales barely moves with volume in software and patent licensing, most of the extra revenue fell through to profit. Operating income nearly tripled to $33.6 million.
Net income was $33.9 million, with an effective tax rate of about 4%. The rate is low because BlackBerry holds a $1.51 billion valuation allowance against its deferred tax assets, which absorbs most tax effects. If that allowance is released one day, it would create a large one-time non-cash tax gain. Adjusted net income was $43.2 million, or $0.07 per basic share, against guidance of $0.03–0.04.
Diluted EPS ($0.05) is lower than basic EPS ($0.06). The diluted share count, 649.7 million against 586.6 million basic, includes the roughly 51.5 million shares the $200 million 3% convertible notes due 2029 could convert into.
Operating cash flow was $29.3 million, against guidance of breakeven to $10 million. Management credits the licensing revenue and "the resolution of certain income tax filings." Free cash flow (operating cash flow minus equipment purchases) was $28.1 million, up from $2.6 million. Cash, cash equivalents and investments reached $447.1 million, up from $432.4 million at February 28, 2026, after $10.0 million of share buybacks in the first half (2.6 million shares).
Outlook
Management raised full-year fiscal 2027 guidance overall but cut the Secure Communications outlook:
Item
Q3 FY2027 guidance
Prior FY2027 guidance
New FY2027 guidance
Total revenue
$143–154M
$594–621M
$616–636M
QNX revenue
$82–88M
$295–312M
$315–325M
Secure Communications revenue
$55–60M
$270–280M
$260–270M
Licensing revenue
~$6M
~$29M
~$41M
Adjusted EBITDA
$28–37M
$119–139M
$141–158M
Non-GAAP EPS
$0.04–0.05
$0.16–0.20
$0.19–0.22
Operating cash flow
$20–30M
~$100M
~$115M
The Secure Communications cut reflects "a more cautious outlook for certain government opportunities in the second half." Its segment EBITDA guide falls to $50–58 million from $57–65 million.
Our read: The Q3 revenue guide ($143–154M) sits below this quarter's $163.3 million because Licensing returns to about $6 million. Q3 will look like a step down even if the core business holds up. The trend to watch is QNX. Its Q3 revenue guide of $82–88 million sits above this quarter's $80.3 million. The full-year QNX EBITDA guide rose to $95–105 million from $74–86 million, and the Coretura win adds backlog that turns into revenue as vehicles ship over the coming years. In Secure Communications, ARR is nearly flat, retention is falling and government demand is weaker. That unit looks like a steady cash source, not a growth engine. The full-year revenue raise (about $18.5 million at the midpoint) is slightly smaller than this quarter's beat against the midpoint of its own Q2 guidance (about $21 million). Most of that beat came from Licensing. So the second-half outlook is roughly unchanged overall: stronger QNX offsets weaker Secure Communications.