BlackBerry reported fiscal second-quarter results that exceeded Wall Street expectations, delivering adjusted earnings per share of 7 cents versus an estimated 4 cents — a 75% surprise — while revenue rose 26% year-over-year to $163.3 million, above the $142.55 million consensus.
The company posted adjusted EBITDA of $47 million, nearly doubling the prior-year period, and achieved what it termed a "Rule of 50" quarter, with revenue growth of 26% plus an adjusted EBITDA margin of 29%. Adjusted gross margin climbed 3 percentage points to 78%.
GAAP net income was $34 million, the company's strongest quarterly result since fiscal fourth quarter of 2022. Operating cash flow came in at $29 million and free cash flow at $28 million, with cash and investments totaling approximately $447 million and a net cash position of roughly $247 million.
QNX, the embedded software business, generated record quarterly revenue of $80 million, up 27% year-over-year, with adjusted gross margin reaching 87%, a milestone level for the division. Adjusted EBITDA for the segment rose 41% to $29 million.
A key strategic development was BlackBerry's first Alloy Kore design win with Coretura, a joint venture between Volvo Group and Daimler Truck. The deal is valued at over $100 million in future royalties and marks the largest design win in QNX history, with an average selling price per instance roughly three times that of current QNX OS deployments. Additional wins included Uber, as well as selections by Momenta and XHEART for QNX OS for Safety built on SDP 8.0, alongside engagements from more than 20 companies around NVIDIA-based platforms.
Secure Communications revenue grew 2% year-over-year to $61 million, with first-half growth of 13%. Annual recurring revenue reached approximately $221 million, up 4%, while dollar-based net retention remained stable at 91%.
Licensing revenue totaled approximately $22 million, driven primarily by a new arrangement signed during the quarter.
Full-year guidance was raised across most metrics. Total revenue guidance was lifted to $616 million to $636 million, and adjusted EBITDA guidance was raised to $141 million to $158 million. QNX revenue guidance was increased to $315 million to $325 million, with adjusted EBITDA guidance raised to $95 million to $105 million. Adjusted basic EPS guidance was set at 19 cents to 22 cents, and operating cash flow guidance was set at about $115 million.
Secure Communications guidance was trimmed to $260 million to $270 million in revenue, with adjusted EBITDA of $50 million to $58 million, citing caution around government deal timing and geopolitical uncertainty. Licensing revenue guidance was raised to about $41 million, though management cautioned that Q2 strength should not be treated as a run rate.
Shares slipped 0.84% in premarket trading to $8.31, from a previous close of $8.38. The stock remains well above its 52-week low of $3.12 and below its high of $13.59, having surged 159% over the past six months and 121% year-to-date.
