BlackBerry Surges on Strong QNX Software Growth, Raises Full-Year Forecast
BlackBerry, once synonymous with business smartphones, is now experiencing significant growth driven by its QNX operating system, which powers in-car and truck systems for major manufacturers. In the second fiscal quarter ending August, the Canadian company's revenue jumped 26% to $163.3 million, prompting an upward revision of its full-year outlook.
The QNX division was the standout performer, achieving record quarterly revenue of $80.3 million, a 27% increase, with adjusted EBITDA up 41% to $29 million, representing a 36% profit margin. Revenue from QNX primarily comes from royalties paid by automakers for each vehicle equipped with the software, a stream that grows as cars become more technologically advanced.
QNX secured its largest deal to date with Qortra, a joint venture between Volvo Group and Daimler Truck, selecting the QNX platform for its next generation of commercial vehicles. This deal is projected to add over $100 million to BlackBerry's future royalty backlog. Additionally, two autonomous driving and robotics companies adopted QNX, and the operating system now supports Hailo's Israeli AI processor.
While QNX thrives, BlackBerry's secure communications and cybersecurity division saw only a 2% revenue increase to $60.9 million, with adjusted EBITDA declining 18% to $8 million. Customer retention at 91% suggests existing clients are spending less upon contract renewal. The patent licensing division brought in $22.1 million, mostly profit, but its full-year forecast indicates a significant drop in the second half.
Overall, BlackBerry's adjusted EBITDA surged 81% to $47 million, with profit margins at 29%. Operating profit rose 192% to $33.6 million, and net profit reached $33.9 million, marking the sixth consecutive profitable quarter. The company's strong performance, exceeding the "Rule of 40" metric for software companies, led it to raise its full-year revenue forecast to $616-$636 million and adjusted EBITDA to $141-$158 million. BlackBerry now appears to be a car software company with a stagnant cybersecurity business, with QNX contributing nearly half of its revenue and poised to become the larger part of the company.
