BlackBerry Ltd. (NYSE: BB) released its second-quarter financial results before Thursday’s opening bell.
Below are the transcripts from the Q2 earnings call.
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OPERATOR
Good morning and welcome to the BlackBerry second quarter fiscal year 2026 results conference call. My name is Michael and I will be your conference moderator for today’s call. During the presentation, all participants will be in a listen-only mode. We will be facilitating a brief question-and-answer session towards the end of the conference. Should you need assistance during the call, please signal a conference specialist by pressing 0. As a reminder, this conference is being recorded for replay purposes. I would now like to turn today’s call over to Martha Gonder, Director of Investor Relations, BlackBerry. Please go ahead.
Martha Gonder (Director of Investor Relations)
Thank you Michael Good morning everyone and welcome to BlackBerry’s second quarter fiscal year 2026 earnings conference call. Joining me on today’s call is BlackBerry’s Chief Executive Officer John Giamatteo and Chief Financial Officer Tim Foote. After I read our cautionary note regarding forward-looking statements, John will provide a business update, and Tim will review the financial results. We will then open the call for a brief Q&A session. This call is available to the general public via call in numbers and via webcast in the Investor information section@BlackBerry.com A replay will also be available on the BlackBerry.com website. Some of the statements we’ll be making today constitute forward-looking statements and are made pursuant to the safe harbor provisions of applicable U.S. and Canadian securities laws. We’ll indicate forward looking statements by using words such as expect, will, should, model, intend, believe and similar expressions. Forward looking statements are based on estimates and assumptions made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors that the Company believes are relevant. Many factors could cause the Company’s actual results or performance to differ materially from those expressed or implied by the forward looking statements. These factors include the risk factors that are discussed in the Company’s annual filings and MD&A. You should not place undue reliance on the Company’s forward looking statements. Any forward looking statements are made only as of today and the Company has no intention and undertakes no obligation to update or revise any of them except as required by law. As is customary during the call, John and Tim will reference non GAAP numbers in their summary of our quarterly results. For a reconciliation between our GAAP and non GAAP numbers, please see the Earnings Press release published earlier today which is available on the Edgar, Cedar+ and BlackBerry.com websites. And with that let me turn the call over to John.
John Giamatteo (Chief Executive Officer)
Well, thanks Martha and thanks to everyone for joining today’s call. Q2 was another strong quarter for BlackBerry with all three of our divisions beating the top end of Guidance. The company revenue for the quarter was stronger than expected, growing 3% year over year to 129.6 million. BlackBerry delivered another quarter of solid profitability with total company adjusted EBITDA reaching 20% of revenue and GAAP net income being positive for the second consecutive quarter of at 13.3 million. Likewise, non GAAP EPS beat guidance at positive 4 cents. Despite the headwinds of significant tax payments in the quarter, we were able to return to positive cash flow earlier than anticipated with operating cash flow at 3.4 million. At a divisional level, QNX beat expectations for both revenue and adjusted EBITDA to achieve a rule of 40 quarter. We delivered 15% year over year revenue growth and a 32% adjusted EBITDA margin for Q2. QNX revenue for the quarter was 63.1 million, primarily driven by strong royalties. These solid results are a testament to how the QNX team continues to successfully navigate what remains an uncertain macro environment. This is further evidenced by QNX Design Wins being Ahead of plan in Q2 after a slower start to the year in Q1, the pipeline for potential design wins in the second half of this fiscal year looks solid. In the quarter we secured a number of noteworthy design wins including a mid eight figure design win in the Chinese market with a leading global Tier one supplier to power ADAS applications. QNX is also progressing with ecosystem partners. BMW and Qualcomm announced that they have jointly developed a scalable platform called Snapdragon Ride Pilot which is built on qnx. This product, offered by Qualcomm to all global automakers and Tier one suppliers, enables an active safety system that is continually updated with cloud based information from global fleets. We secured another win for our cloud based development platform Cabin with one of the top five global automakers. This was also a significant quarter for our QNX sound product where we had a pivotal win to deliver software defined audio. With a leading domestic Chinese automaker and a leading branded audio partner, this marks a significant step forward in adoption of this product. Like in Auto, we continue to see growth in a number of high performance safety critical use cases in the general embedded space. In particular, we’re seeing progress in the verticals where we’ve been increasing focus and investment, namely medical instrumentation, industrial automation and robotics. During this past quarter we secured a significant win with a leading North American camera and vision module supplier for QNX to be used globally in automated mobile robots and subsequently in humanoid robotics. This is another data point that our investment strategy is showing returns during the quarter the latest version of our QNX operating system passed the safety and security audits conducted by TUV Rheinland and QNX OS for Safety 8.0 was formally released on July 31st. Having the product fully certified by arguably the the leading body in this space allows customers to demonstrate the product’s compliance with rigorous international standards. The QNX8 pipeline continues to grow and remains approximately 5050 between auto and GEM and this pipeline is being converted in Q2. A top global automaker purchased new QNX8 development seat licenses we also announced that qnx OS for safety 8 will power Nvidia’s drive AGX Thor Development Kit. This kit enables software development on the Nvidia AGX Thor SoC, a truly powerful next generation chip that facilitates generative AI. QNX forms the foundation for Nvidia’s Drive OS that is often used in conjunction with Nvidia chipsets in the car. There was also meaningful progress for the vehicle software platform that we’re investing in and have partnered with Vector Informatik to develop. The platform pre integrates our operating system with a number of middleware components. We believe that this platform will help automakers accelerate their path to software defined vehicles, greatly expanding QNX’s addressable market and increasing our overall software content in the car. We were excited to launch the first early access version of this product this past quarter and we’re working closely with Vector to to implement and accelerate our go to market strategy. We continue to see momentum with QNX everywhere, our initiative to accelerate the growth of the QNX developer and ecosystem community through the availability of our products for non commercial use and the development of QNX centric training programs. We see this as a strategically important program that aims to significantly strengthen the position of QNX in the market for the long term. This past quarter, MIT was one of six universities to sign up to using QNX in their engineering curriculums, with more than 4,000 students having already attended QNX learning sessions globally. So in summary, despite the continued uncertainty in the automotive market, BlackBerry’s QNX division delivered strong results in Q2 and progress across all our key growth initiatives and we have a solid pipeline of opportunities for the second half of the fiscal year. Moving now onto Secure Communications Division, which had another solid quarter, beating the top end of our guidance range and and finishing higher sequentially with quarterly revenue of 59.9 million. The better than expected results were driven by a combination of slowing customer churn for UEM as well as some upside for both ad hoc and secusmart annual recurring revenue or ARR grew by 4 million in the quarter to 213 million and the dollar base net retention rate or DBNRR improved to 93%, although the revenue was down year over year due to a significant device refresh cycle last fiscal year. This was a good quarter for sales of SecuSmart to the German government, including a five year deal with a key government agency for hosted secure voice services. Offering a hosted service is a new recurring revenue business model for BlackBerry that together with more software only sales can help create a more predictable revenue profile for the SECHI smart business. This deal can serve as a test case and open the door for future deals of this nature. We also saw traction with deployment of SecuSmart on iOS devices. In the past SecuSmart was largely limited to Android. The R and D effort to add support for iOS has significantly increased the size of our potential opportunity within the German government outside of Germany. This quarter we secured a deal with a Canadian government entity and the pipeline of opportunities globally remains robust. During Q2 we secured a large renewal and upsell with the US State Department for our ad hoc critical events …