BlackBerry Q2 FY2027: Revenue Up 26% to $163M, a Record QNX Quarter and a Sixth Straight Profit

BlackBerry stopped being a phone company years ago. In the quarter ended August 31, 2026, it sold $163.3 million of software and patent licenses, 26% more than a year earlier, and kept $33.9 million of it as net income. QNX, the operating system inside more than 275 million vehicles, had its largest quarter ever at $80.3 million. It was the sixth quarter in a row with a GAAP profit. The four fiscal years before that streak began, fiscal 2022 through fiscal 2025, add up to a net loss of about $932 million. This post is about how one company produced both of those facts, and how much of the new one repeats.

BlackBerry filed its Form 10-Q on September 24, 2026, the same day as its earnings release. Every second-quarter figure below is from that filing. The fiscal year ends on the last day of February, so fiscal 2027 began on March 1, 2026 and the second quarter ran from June 1 to August 31. The company reports in U.S. dollars, in millions to one decimal.

The Headline Numbers​

Start with the first two rows. Revenue rose $33.7 million and cost of sales rose $3.2 million. That is what a software company looks like when it grows: the 10-Q says "the cost of sales for most software and services products and for intellectual property licensing arrangements does not significantly fluctuate based on business volume." Nine of every ten new dollars of revenue reached gross margin.

Operating expenses did rise, by $8.4 million, and most of that was research and development. Half of the R&D increase is not new spending. A year ago the company booked $3.8 million of benefits from Canadian government funding claims, which reduced R&D expense, and there was no such benefit this quarter. The rest is pay.

The tax line needs a note. BlackBerry paid $1.3 million of tax on $35.2 million of pre-tax income, a rate of about 4%. The 10-Q explains that the company holds "a significant valuation allowance against its deferred tax assets," $1,512.8 million of it. Years of losses left tax shields that the balance sheet does not carry as assets. So the net margin of 20.8% is higher than a full taxpayer would report on the same operating result.

Revenue Deep Dive​

BlackBerry has three segments, and they did three different things.

QNX is the growth business. It sells a real-time operating system and related software to carmakers and their suppliers, and it is paid a royalty when a vehicle ships. Of the $17.2 million increase, $10.4 million was royalty revenue, $3.9 million was development licenses and $2.6 million was professional services. Management had guided to $70 million to $75 million for the quarter. The 10-Q says revenue came in at $80.3 million "primarily due to stronger than expected royalty revenue." Royalties depend on cars actually being built, so this is demand that already happened, not a booking.

The release leads with a product milestone: "The first Alloy Kore design win, the largest design win in QNX history, marks an important commercial milestone." Alloy Kore is a vehicle software platform built with a partner. The win adds more than $100 million to a royalty backlog that stood at about $950 million at the end of fiscal 2026. Two cautions belong beside that sentence. The win was announced after the quarter ended, so none of it is in these numbers. And the backlog is the company's own estimate of future royalties over the life of each design, which the fiscal 2026 10-K says "may not be indicative of actual future revenue."

The release adds: "We also continue to build momentum beyond automotive in the General Embedded Markets and Physical AI." The filing gives no revenue figure for those markets, so the ledger cannot test it.

Secure Communications holds the old enterprise business: device management, encrypted voice and messaging for governments, and emergency notification. It grew 1.7%. Inside that, encrypted-communications product revenue rose $5.5 million and device-management revenue fell $3.3 million. The release calls the segment "a stable and profitable contributor." The filing's own retention metric is less comfortable. The dollar-based net retention rate was 91%, down from 93% a year ago. A number below 100% means the same customers paid less this year than last. Annual recurring revenue was $221 million, up $8 million, so new customers are covering the shrinkage for now.

Licensing is the patent portfolio, and it is the swing factor. Management had guided to about $10 million. Revenue was $22.1 million, which the 10-Q attributes to "a new intellectual property licensing arrangement entered into during the quarter," adding that "the timing and amount of larger licensing transactions can vary from quarter to quarter." This one line supplied 46% of the quarter's revenue growth.

So take Licensing out. QNX and Secure Communications together grew from $123.0 million to $141.2 million. That is 14.8%, a good number and about half the headline.

Nothing in the release or the filing says demand exceeds supply, and nothing describes a supply constraint or an industry upcycle. Those themes are absent, which is normal for software. The claims management does make are about results beating its own guidance, and the 10-Q confirms each one with the prior range beside the actual figure.

The Margin Story​

All five columns are continuing operations as the company last presented them. Fiscal 2024 looks odd because its revenue included a one-time patent sale, which carried a high cost of sales and inflated the base under every expense ratio.

Read the general and administrative row. It fell from 32.7% of revenue to 19.5%. BlackBerry spent three years cutting a corporate structure built for a much larger company. The filings state how much of that line was restructuring: $10.2 million in fiscal 2023, $35.9 million in fiscal 2024, $26.1 million in fiscal 2025, $15.7 million in fiscal 2026 and $2.7 million this quarter. The charges are shrinking.

Gross margin rose 3.3 points in the quarter. The 10-Q says the increase "was primarily due to a change in mix, specifically higher relative gross margin contributions from Licensing and QNX." A patent license carries very little cost of sales. So part of the margin gain is the same Licensing deal counted a second time.

On price, the filing contains one forward-looking sentence and no realized number. "The Company believes that Alloy Kore has the potential to expand average selling prices by multiples on a per-vehicle basis." That is a belief about a product with one design win. The revenue increase the filing actually reports is royalty volume, development licenses and services. There is no statement that prices rose.

Inside Secure Communications, the margin went the other way. Segment adjusted gross margin fell 5 points to 61%, because more of the revenue was encrypted-communications hardware, "which have a lower relative gross margin percentage."

The One Big Question: How Much of This Quarter Repeats?​

The company answers part of this itself, in its guidance for the next quarter.

Management expects total revenue to fall next quarter, by somewhere between 6% and 12%. QNX is guided up. Secure Communications is guided flat to down. Licensing is guided to about $6 million, a drop of $16 million from this quarter. The decline in the total is the Licensing deal not recurring.

That frames the earnings. The Licensing segment's adjusted EBITDA was $20.0 million in a quarter when the whole company's GAAP operating income was $33.6 million. Those two numbers are measured differently, so one cannot be subtracted from the other. But the direction is plain: a patent deal that management did not forecast, and does not expect next quarter, sits behind a large share of the record profit.

The full-year view is steadier. The guidance implies fiscal 2027 revenue growth of 12% to 16%, and QNX growth of 18% to 21%. Management raised its operating cash flow outlook from about $100 million to about $115 million, "primarily due to stronger than expected revenue recognized in the first half of fiscal 2027."

The release also reports non-GAAP figures, and the 10-Q reconciles them:

The gap between GAAP and adjusted is small, and most of it is stock compensation. Three years ago the same bridge carried hundreds of millions of dollars of impairments and a litigation settlement. A short reconciliation is its own kind of good news.

BlackBerry left the endpoint-security market when it sold Cylance in February 2025. For what that market looks like from a company that stayed in it, see CrowdStrike's fiscal second quarter.

Tracking a $163M Quarter in Plain Text​

A recap can quote net income and stop. A ledger has to show every line that produced it, in one column that sums to zero. The conventions are the ones we use for every company in this series: how we model every company. Income postings are negative (credits) and expense postings are positive (debits).

; Check: −163.3 + 36.2 + 33.2 + 25.3 + 29.1 + 2.7 + 2.5 + 0.7 + −1.6 + 1.3 + 33.9 = 0 ✓
2026-08-31 * "BlackBerry Limited" "FY2027Q2 Income Statement"
  Income:Revenue                              -163.3 MUSD  ; revenue: QNX 80.3 + Secure Communications 60.9 + Licensing 22.1
  Expenses:CostOfRevenue                        36.2 MUSD  ; cost of sales
  Expenses:ResearchAndDevelopment               33.2 MUSD  ; research and development
  Expenses:SellingGeneralAdministrative         25.3 MUSD  ; sales and marketing
  Expenses:SellingGeneralAdministrative         29.1 MUSD  ; general and administrative, before restructuring (filed line 31.8)
  Expenses:SellingGeneralAdministrative          2.7 MUSD  ; restructuring charges, recorded within general and administrative
  Expenses:SellingGeneralAdministrative          2.5 MUSD  ; amortization
  Income:OtherNet                                0.7 MUSD  ; impairment of long-lived assets
  Income:OtherNet                               -1.6 MUSD  ; investment income, net
  Expenses:IncomeTax                             1.3 MUSD  ; provision for income taxes
  Equity:Adjustments                            33.9 MUSD  ; net income

The comments are shortened here; the amounts and accounts are the ledger's. This is the standalone quarter, not the six-month statement the 10-Q prints beside it. The restructuring charge is a figure the filing prints and places inside general and administrative, so it gets its own posting, and the posting beside it is the rest of the filed line. The two add back to the $31.8 million BlackBerry reported.

Now compare it with the same transaction for fiscal 2023, taken from the fiscal 2025 10-K, which recast that year after the Cylance sale:

2023-02-28 * "BlackBerry Limited" "FY2023 Income Statement"
  Income:Revenue                              -526.3 MUSD  ; revenue, continuing operations
  Expenses:CostOfRevenue                       159.7 MUSD  ; cost of sales
  Expenses:ResearchAndDevelopment              134.2 MUSD  ; research and development
  Expenses:SellingGeneralAdministrative        102.6 MUSD  ; sales and marketing
  Expenses:SellingGeneralAdministrative        161.8 MUSD  ; general and administrative, before restructuring (filed line 172.0)
  Expenses:SellingGeneralAdministrative         10.2 MUSD  ; restructuring charges
  Expenses:SellingGeneralAdministrative         27.4 MUSD  ; amortization
  Expenses:OtherNet                            112.1 MUSD  ; impairment of goodwill
  Expenses:OtherNet                              3.5 MUSD  ; impairment of long-lived assets
  Expenses:OtherNet                             -6.0 MUSD  ; gain on sale of property, plant and equipment, net
  Expenses:OtherNet                           -137.4 MUSD  ; fair value adjustment on the convertible debentures (a credit)
  Expenses:OtherNet                            165.0 MUSD  ; litigation settlements
  Expenses:OtherNet                             -5.0 MUSD  ; investment income, net
  Expenses:IncomeTax                            13.7 MUSD  ; provision for income taxes
  Expenses:DiscontinuedOperations              518.9 MUSD  ; loss from discontinued operations, net of tax (Cylance)
  Equity:Adjustments                          -734.4 MUSD  ; net loss

Sixteen postings against eleven. The five that fiscal 2027 no longer has are the story of the turnaround: a goodwill impairment, a gain on a property sale, a fair value swing on convertible debt, a litigation settlement and a discontinued business. Each is its own labeled line with the value the filing prints. None is folded into a total.

One of them deserves a second look. The $137.4 million credit is not a gain from doing anything. BlackBerry carried its old convertible debentures at fair value, so when the debentures became worth less, the company booked income. In fiscal 2022 that credit was $212 million, and reported net income was $12 million. Without the debt revaluation, that year was a large loss.

The balance sheet shows what was written off:

2022-02-28 balance Assets:NonCurrent:Goodwill                         844 MUSD  ; goodwill
2026-08-31 balance Assets:NonCurrent:Goodwill                       478.0 MUSD  ; goodwill
2022-02-28 balance Assets:NonCurrent:IntangibleAssets                 522 MUSD  ; intangible assets, net
2026-08-31 balance Assets:NonCurrent:IntangibleAssets                44.9 MUSD  ; intangible assets, net
2022-02-28 balance Equity:RetainedEarnings                           1294 MUSD  ; deficit (debit balance)
2026-08-31 balance Equity:RetainedEarnings                         2121.9 MUSD  ; deficit (debit balance)

Goodwill and intangible assets were $1,366 million at the end of fiscal 2022. They are $522.9 million now. Most of the difference is Cylance, the security business bought in 2019, impaired in fiscal 2023 and fiscal 2024, and sold in fiscal 2025. The deficit grew by $827.9 million over the same period. The earlier balances are in whole millions because that is how the company reported them until fiscal 2025.

The Multi-Year Arc​

A warning about the first column. BlackBerry recast fiscal 2023 and fiscal 2024 after it sold Cylance, so those years show continuing operations only. It never recast fiscal 2022, because the last annual report to include that year was filed before the sale. Fiscal 2022 revenue of $718 million still includes Cylance. The drop to $526.3 million is partly a real decline and partly a change in what is being counted. The ledger records each year as the company last presented it and says so in each file. Net income is consolidated in every year, so that row is comparable all the way across.

Fiscal 2023 is the year the bill arrived. The net loss was $734.4 million. Of that, $518.9 million was Cylance, including $364.3 million of impairments. Another $165.0 million was the settlement of U.S. securities class actions, and $112.1 million was goodwill written off in the business BlackBerry kept.

Fiscal 2024 revenue of $759.1 million is not a recovery. Licensing revenue was $259.9 million that year, against $32.4 million the year before, and the filing attributes most of it to the sale of a portfolio of non-core patents. Take Licensing out of both years and revenue went from $493.9 million to $499.2 million.

The deferred revenue row at the end of fiscal 2024 excludes $58.8 million that had moved to liabilities held for sale. Even so, the direction is down. At August 31, 2026 it was $128.4 million, 5.0% below the $135.2 million of a year earlier, in a quarter when revenue grew 26%. For a subscription company that is a warning, and here it is at least a yellow light. The 10-Q says most of the six-month decline in current deferred revenue came from device management and emergency notification, two of the older Secure Communications products.

The debt row is the quiet success. The company owed $507 million on convertible debentures at fair value in fiscal 2022. It now owes $200 million of principal on 3.00% notes due in February 2029, carried at $197.1 million, against $447.1 million of cash and investments. The notes convert at $3.88 a share into 51.5 million shares, which is most of why diluted earnings per share is a cent lower than basic.

The Verdict: Bull vs. Bear​

Bull Case

• QNX revenue was $80.3 million, up 27.3%, and the beat came from royalties, which are paid on vehicles already built. Full-year QNX guidance of $315 million to $325 million implies growth of 18% to 21%.
• Operating margin was 20.6% in the quarter, against 8.8% for all of fiscal 2026 and 0.1% in fiscal 2025. General and administrative expense has fallen from 32.7% of revenue in fiscal 2023 to 19.5%.
• Restructuring charges have faded: $2.7 million this quarter, against $35.9 million in fiscal 2024. The GAAP to non-GAAP bridge is $9.3 million wide and mostly stock compensation.
• Cash and investments are $447.1 million and the only debt is $200 million of 3.00% notes due in 2029. Operating cash flow was $29.3 million in the quarter and is guided to about $115 million for the year.
• A $1,512.8 million valuation allowance sits off the balance sheet. The 10-Q says releasing a significant portion would produce "a material non-cash income tax benefit." Sustained profit is what makes that possible.

Bear Case

• Licensing was $22.1 million against guidance of about $10 million, and is guided to about $6 million next quarter. It supplied 46% of the revenue growth. Without it, revenue grew 14.8%, and management itself guides total revenue down 6% to 12% sequentially.
• Secure Communications is 37.3% of revenue and its net retention rate is 91%, down from 93%. Existing customers are spending less every year, and the segment's adjusted gross margin fell 5 points to 61%.
• The 4% tax rate flatters net income. It rests on past losses, and the first-quarter rate shows how unstable it is: $7.9 million of tax on $16.4 million of pre-tax income.
• Deferred revenue is $128.4 million, 5.0% lower than a year ago and 47% below the fiscal 2022 level, which still included Cylance. The numbers do not yet support a claim that the recurring base is growing.
• The Alloy Kore claim is the least supported signal in the release. One design win, announced after the quarter, feeds a backlog the company describes as an estimate. The statement about higher selling prices per vehicle is a belief, and no reported figure tests it.

Our Take

BlackBerry has finished the hard part. Five years of impairments, a settlement, a discontinued business and a restructuring are behind it, and the ledger shows them leaving one labeled line at a time. What remains is a profitable company with half a billion dollars of annual revenue, real cash, little debt and one segment that is growing. We think the second quarter overstates the run rate, and the company agrees: its own guidance has revenue lower next quarter because the patent deal will not repeat. The number to watch is not net income, which carries a 4% tax rate and a lumpy Licensing line. It is QNX revenue against the $82 million to $88 million guided for the third quarter. If royalties keep beating the range, the Alloy Kore backlog becomes believable. If they do not, this was a very good quarter for a company growing in the low-to-mid teens.