There is a particular kind of business obituary that gets written too early. BlackBerry’s was drafted years ago, back when the iPhone turned its keyboard phones into museum pieces. The company stopped making phones. The brand became a punchline. Wall Street moved on.
On Thursday, BlackBerry reported second-quarter results that suggest the obituary needs a rewrite. Revenue rose 26 percent from a year earlier to $163.3 million, beating both the company’s own guidance and Wall Street’s expectations. It was the kind of quarter that forces a second look, not because the numbers are enormous, but because of what they say about how a fallen giant rebuilt itself.
The headline figures first. For the quarter ended August 31, BlackBerry posted non-GAAP earnings of 7 cents a share, up 75 percent from a year earlier and well ahead of the 4-cent consensus, according to Zacks. Revenue of $163.3 million topped the roughly $145 million analysts expected and the company’s own $137 million to $148 million guidance range. On a GAAP basis, net income was $33.9 million, or 5 cents a share, up from $13.3 million a year ago, the sixth straight quarter of positive GAAP net income. Gross margin widened to 77.8 percent from 74.5 percent, and adjusted EBITDA nearly doubled to $47 million from $25.9 million, a margin of about 29 percent, pulse2 reported.
The engine is QNX, the embedded operating system most people have never heard of and probably use every day. QNX revenue hit a record $80.3 million, up 27.3 percent, beating the company’s own $70 million to $75 million guidance. The division’s adjusted gross margin expanded four percentage points to 87 percent, and adjusted EBITDA rose 41.5 percent to $29 million. QNX software now runs in more than 275 million vehicles, along with medical devices, robotics, and industrial equipment, per pulse2.
The quarter’s signature moment was a single deal. Coretura, the commercial-vehicle software joint venture between Volvo Group and Daimler Truck, gave QNX its first design win for Alloy Kore, the company’s newer vehicle software platform. The award adds more than $100 million to QNX’s royalty backlog, the largest design win in the division’s history, and management said the average selling price is about three times what the customer pays for its current QNX deployment, Zacks reported. In plain terms: BlackBerry’s best customer just agreed to pay triple for the next generation of the product.
Management raised its full-year guidance across the board. Fiscal 2027 revenue is now expected at $616 million to $636 million, up from $594 million to $621 million. Adjusted earnings per share guidance rose to 19 to 22 cents from 16 to 20 cents, and adjusted EBITDA to $141 million to $158 million. The full-year operating cash flow forecast was raised by $15 million to approximately $115 million, per Zacks. For the current third quarter, the company expects revenue of $143 million to $154 million, Dow Jones Newswires reported. “Our strong second-quarter performance provides further evidence that BlackBerry’s profitable growth model is working,” CEO John Giamatteo said in a statement, via Stocktwits.
So how did a phone company become a car software company? The short version: it found the one asset that still worked and built the whole company around it. QNX predates the iPhone era; BlackBerry bought it in 2010, back when the company was still called Research In Motion. While the handset business collapsed, QNX quietly became an industry standard for the software inside cars, the unglamorous operating layer that runs dashboards, driver-assistance systems, and now the centralized computers of software-defined vehicles. As cars turn into computers on wheels, the company that owns the operating system collects royalties on every unit. That is an 87-percent-margin business, the kind hardware companies dream about. First-half design-win value already exceeded BlackBerry’s previous record for any full fiscal year, Zacks noted, which means the royalty backlog converting into revenue in the quarters ahead is the largest the company has ever booked.
The transition was not painless, and it is not finished. Secure Communications, the cybersecurity division, grew revenue just 2 percent to $60.9 million, and management lowered its guidance for that unit, citing geopolitical and trade uncertainty. Annual recurring revenue there reached $221 million, up 4 percent, respectable but not exciting. The market’s verdict on Thursday was also muted: shares fell as much as 1.5 percent at the open as traders took profits, Stocktwits reported, and the consensus analyst price target of $8.92 sits only modestly above recent trading levels, suggesting Wall Street sees limited near-term upside.
But step back and the arc is remarkable. A company the market left for dead now generates nearly 30 percent EBITDA margins, grows its core division at 27 percent, converts design wins into decade-long royalty streams, and raises guidance while much of tech braces for a slowdown. The sixth straight profitable quarter matters more than any single beat: it says the model works when nobody is watching, not just when the numbers surprise.
The lesson is an old one, freshly illustrated. Turnarounds rarely come from a bold new vision. They come from an honest inventory: what do we own that the world still needs? BlackBerry owned the software inside a quarter-billion cars. Everything else, the phones, the brand nostalgia, the comeback attempts, was noise. The company survived by shrinking itself down to the one thing it did better than anyone and then doing more of it. There are worse strategies, and most failed companies never find theirs.
