BlackBerry Q1 2026 Earnings Report

BlackBerry EPS Results

• Actual EPS: $0.02
• Consensus EPS: -$0.01
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: -$0.03

BlackBerry Revenue Results

• Actual Revenue: $121.26 million
• Expected Revenue: $112.18 million
• Beat/Miss: Beat by +$9.07 million
• YoY Revenue Growth: -15.50%

BlackBerry Announcement Details

• Quarter: Q1 2026
• Date: 6/24/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, June 24, 2025
• Conference Call Time: 5:30PM ET

BlackBerry (NYSE:BB) provides intelligent security software and services to enterprises and governments worldwide. The company operates through three segments: Cybersecurity, IoT, and Licensing and Other. The company offers CylanceENDPOINT, an integrated endpoint security solution; CylanceGUARD, a managed detection and response solution; CylanceEDGE, an AI-powered continuous authentication zero trust network access solution; CylanceINTELLIGENCE, a contextual cyber threat intelligence service; BlackBerry Dynamics offers a development platform and secure container for mobile applications; BlackBerry Workspaces a secure Enterprise File Sync and Share (EFSS) solution; BlackBerry Messenger (BBM) Enterprise, an enterprise-grade secure instant messaging solution for messaging, voice and video; BlackBerry SecuSUITE is a certified, multi-OS voice and text messaging solution; BlackBerry AtHoc, a secure networked critical event management solution; and BlackBerry unified endpoint management (UEM) solutions. It also provides BlackBerry Technology Solutions (BTS); BlackBerry Certicom, a patented elliptic curve cryptography, which provides device security, anti-counterfeiting and product authentication solutions; BlackBerry Radar offers monitoring and telematics solutions; BlackBerry Professional; and cyber security consulting services. In addition, the company is involved in the patent licensing and legacy service access fees business. The company was formerly known as Research In Motion Limited and changed its name to BlackBerry Limited in July 2013. BlackBerry Limited was incorporated in 1984 and is headquartered in Waterloo, Canada.

BlackBerry Q1 2026 Earnings Call Transcript

Key Takeaways

• BlackBerry reported Q1 revenue of $121.7M, adjusted EBITDA of $16.4M (+55% YoY), and non-GAAP EPS of 2¢, all beating the top end of guidance while using just $18M of operating cash.
• The QNX division grew 8% YoY to $57.5M, driven by royalties and development seat licenses, and is expanding into robotics, industrial automation, and medical devices with a 55% pipeline increase and 43% non-automotive mix for SDP 8.0.
• Secure Communications revenue hit $59.5M, ARR held at $209M, DBNRR at 92%, with strong SecuSmart deals in Germany and U.S. government wins post-FedRAMP High authorization for ad hoc, boosting its mission-critical moat.
• BlackBerry launched a $100M share buyback program, repurchasing $10M of stock in Q1, and ended the quarter with $382M in cash and investments, about $100M above last year.
• Due to potential auto market headwinds from tariffs and macro uncertainty, Q2 guidance for QNX was conservatively set at $55–60M in revenue, signaling possible royalty volatility despite full-year targets remaining unchanged.

Presentation

[Operator]

Good afternoon, welcome to the BlackBerry First Quarter Fiscal Year twenty twenty six Results Conference Call. My name is Julian, 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. As a reminder, this conference is being recorded for replay purposes.

[Operator]

I would now like to turn the call over to Martha Gonder, Director of Investor Relations with BlackBerry. Thank you. You may begin.

[Martha Gonder, Director - IR at Blackberry]

Thank you, Julian. Good afternoon, everyone, and welcome to BlackBerry's first quarter fiscal year twenty twenty six 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 and A session.

[Martha Gonder, Director - IR at Blackberry]

This call is available to the general public via call in numbers and via webcast in the Investor Information section at 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.

[Martha Gonder, Director - IR at Blackberry]

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 and A. You should not place undue reliance on the company's forward looking statement.

[Martha Gonder, Director - IR at Blackberry]

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 EDGAR, SEDAR Plus, and blackberry.com websites. And with that, let me now turn the call over to John.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

Thanks, Martha, and thanks to everyone for joining today's call. We made a very solid start to fiscal year twenty twenty six with our results beating the top end of guidance almost entirely across the board. Total company revenue for the quarter was stronger than expected beating guidance at 121,700,000.0. BlackBerry delivered solid profitability with adjusted EBITDA growing over 55% year over year and beating the top end of the guidance range at 16,400,000.0. Likewise, non GAAP earnings per share beat guidance at positive 2¢.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

And despite seasonality in our cash flow for the first half of the year, this stronger profitability helped to deliver better than expected operating cash usage of 18,000,000. In May, we announced a $100,000,000 share buyback program based on our confidence in our plan to both continue generating cash as well as driving increased shareholder value. During the quarter, we started to utilize the capital allocation optionality that this facility brings by repurchasing $10,000,000 worth of shares. Tim will provide more details on this later in the call. I'll now give some color on how we executed at a divisional level, starting with q and x.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

Q and x revenue for q one beat the upper end of our guidance range at 57,500,000.0. This represents 8% year over year growth, despite the uncertainty facing the auto market, including the impact of various tariff announcements. Royalties and development seat licenses were the main drivers of year over year revenue growth for the quarter, 923% respectively. We have a strong plan for profitable growth in q and x, capitalizing on both our market position and the multi year secular tailwinds that are driving this business forward. As part of this for fiscal year twenty six, we have two key strategies that we believe will help drive future growth.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

These are to both increase diversification of the business beyond automotive into adjacent verticals, and to increase our share of the automotive software stack by offering pre integrated middleware as part of a vehicle platform. Starting with increasing diversification beyond automotive, we believe this has a number of benefits. First, we see a very significant addressable market in the general embedded space, which we believe could be larger than the auto opportunity. Second, although we're very diversified across auto OEMs and geographies, diversification into other markets can reduce cyclical exposures. We're targeting substantial expansion of our beachheads in robotics, industrial automation, and medical devices and equipment.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

Similar to automotive, these verticals are seeing significant growth in compute and safety critical software at the edge, which is where qNX really excels. With minimal adaptations to the core q n x code base, we are able to meet the needs of customers. And therefore, we see this as primarily a go to market task. Accordingly, we're also we're adding industry expertise in growing our gem focused Salesforce. We're also working towards engaging new channel partners that will greatly increase our reach in these markets.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

SDP eight point zero, our next generation version of the QNX operating system is progressing well in this market, and we have a strong non automotive mix in the pipeline. In fact, JEM currently represents 43% of our total SDP eight point zero pipeline, with the overall pipeline having grown by 55% in the quarter. Further, our largest SDP eight point o design win to date was with a leading industrial automation OEM. They will deploy the latest version of QNX across multiple applications. These are clear data points that show how our increased investment in JEM is already starting to generate real returns.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

The second focus is the QNX vehicle platform that was announced earlier this year at CES. We're developing this product in response to requests from some leading OEMs who have identified the importance of focusing their teams on customer facing applications, rather than spending time on undifferentiated parts of the software stack. Yesterday, we announced a memorandum of understanding with a leading middleware provider vector to provide a highly integrated hardware agnostic solution that customers can leverage across the vehicle. This builds on an earlier announcement with both Vector and TT Tech at CES in January. The goal is to help our customers simplify development and shorten time to market.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

We are in conversations with several OEMs for this solution and are targeting delivery of an early access version of the product this calendar year. We continue to refine the business model for this platform, but should it be successful, directionally, we expect it to provide a significant uplift to our royalty ASP once deployed in vehicles. We were excited to announce the launch of QNX hypervisor 8.0 at the end of the quarter. The hypervisor is an important part of our portfolio, allowing customers to virtually host guest operating systems like Android and Linux, alongside safety critical applications running on QNX, all on the same chip. Upgrading the hypervisor to the next generation performance standards of our SDP eight point zero operating system can help cement our leadership position within mixed criticality domains, like the digital cockpit.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

QNX thrives in high performance safety critical use cases. Autonomous drive is a great example. This past quarter, we announced that WeRide, a global leader in autonomous drive technology, is using QNX as the foundation for l two plus passenger vehicles. In fact, this technology is already being deployed in a couple of Sherry's vehicle models that are on the road in China today. As autonomous drive continues to ramp worldwide, we see this as an exciting opportunity for BlackBerry.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

We're working to build the QNX ecosystem through the availability of QNX products for noncommercial use and the development of QNX centric training programs. We believe that having a stronger community of developers and partners with QNX experience will help drive adoption across OEMs, especially in the general embedded market. This quarter, we initiated a program in India with more than 30 educational institutions developing or currently offering QNX focused courses. We're also working with institutions in North America with the goal of launching additional courses this calendar year. In terms of the macro, there is clearly uncertainty in the market, which we are currently having to navigate with some of our customers pulling guidance until market conditions become clearer.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

While we have not seen any direct impacts from the automotive tariffs, there have been some delays to customer buying decisions due to this macro uncertainty. As the OEMs navigate possible disruption to supply chains, there could also potentially be impacts on production volumes, which could impact royalty revenue. We're taking these factors into account in our guidance, and we'll continue to monitor closely as we head through this fiscal year. Moving now to our secure communications division. This was a strong quarter for the division, beating the top end of our guidance range with quarterly revenue of 59,500,000.0.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

Annual recurring revenue or ARR was stable at 209,000,000. Our dollar based net retention rate or DBNRR also remained relatively flat at 92. These stable fundamentals position the secure communications division well as a solid source of EBITDA and cash flow for BlackBerry. The stronger than expected revenue number was in large part driven by the strength of our SecuSmart product. This was another strong quarter for sales to the German government where we closed some large deals earlier than expected.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

In addition to the core German market, the pipeline of potential deals with customers around the world continues to grow, especially where we're seeing significantly increased budgets, particularly in defense. Governments are increasingly evaluating the tools they use in the wake of vulnerability seen in using consumer focused platforms for critical communications. While sales cycles in governments are typically long, we are optimistic about our ability to close additional deals for SecuSmart this fiscal year. During q one, ad hoc earned FedRAMP high authorization, the highest level of attainment for safe care safeguarding mission critical sensitive data within the US federal government. As the first critical event management platform to achieve FedRAMP high, this further strengthens our moat and further expands our addressable market.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

During the quarter, we secured wins for ad hoc with several US federal organizations, including the US Marine Corps, US Air Force, Senate, FEMA, the White House communications agencies, as well as other organizations in Germany and Canada. Moving on to our unified endpoint management product, BlackBerry UEM. UEM continues to perform as expected with some ongoing churn with customers moving to a cloud based architecture, partially offset by a deepening of our on premise mode for those customers who particularly value data sovereignty. One of the legacy players in this market has signaled the end of life for their on premise solution. In contrast, we continue to make targeted investments.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

This quarter, we secured deals for UEM with a broad spectrum of customers, including the US Special Operations Command, US Air Force, the UK Cell Field Nuclear Power Establishment and National Grid, the Qatar National Bank, leading US Bank Oppenheimer, and the Netherlands Government Shared Services. These data points increase our confidence in both defending and expanding our UEM on premise customer base. Touching briefly on IP licensing, this was a solid quarter where revenue from pre existing licensing deals drove the quarterly result of 4,700,000.0. We understand that Maliki, the party that purchased our non core patents in 2024, is pursuing a number of potential licensing opportunities. Should they be successful, BlackBerry will participate in the profit they generate.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

While we do not expect incremental revenue this current year, it could provide upside in fiscal year twenty seven and fiscal year twenty eight. With that, let me now turn the call over to Tim, who will provide further details on our financials.

[Tim Foote, CFO at Blackberry]

Thank you, John, and good afternoon, everyone. As John mentioned, revenue for the total company in the quarter exceeded the top end of guidance at £121,700,000 On the cost side, this was a quarter of puts and takes. We saw OpEx headwinds from FX due to a weakening US dollar. A significant portion of our costs are denominated in other currencies, especially the Canadian dollar and euro. However, we also had some items go our way, including approximately £4,500,000 of grant funding as a result of our newly reinvigorated partnership with the Canadian Government's Strategic Innovation Fund.

[Tim Foote, CFO at Blackberry]

The fund is to support the development of cutting edge technology in Canada, and it helped offset some of our incremental R and D investment in QNX during the quarter. Total company adjusted gross margin expanded by 1% year over year to 75% and total company adjusted EBITDA beat expectations at 16,400,000.0. Overall the hard work the team has done over the past year to implement tight cost controls is really showing benefits. Adjusted net income for Q1 was 12,300,000.0 and BlackBerry achieved positive quarterly GAAP net income for the first time in over three years at $1,900,000 Adjusted EPS also beat expectations at 2¢. QNX revenue beat the top end of the guidance range at 57,500,000.0.

[Tim Foote, CFO at Blackberry]

QNX gross margins were slightly down 81%, primarily as a result of the effects of unfavorable exchange rates. Adjusted EBITDA for QNX in the quarter exceeded the top end of guidance at £12,700,000 Revenue for Secure Communications exceeded the top end of guidance in the quarter at 59,500,000.0 primarily as a result of strong performance from SecuSmart. This higher than expected revenue helped drive sequential and year over year gross margin expansion in Q1 to 70%. Leverage in the secure communications model helped the division to exceed expectations for adjusted EBITDA at £9,600,000 Finally, our Licensing division delivered revenue of 4,700,000.0 and adjusted EBITDA of £3,800,000 both slightly below expectations due to lower revenue from existing licensing arrangements in the quarter. Adjusted corporate operating costs, excluding amortization, came in at £9,700,000 in Q1, in line with guidance.

[Tim Foote, CFO at Blackberry]

As previously outlined, Q1 is a seasonal low for cash for BlackBerry. The combination of our billings profile and timing of certain annual cash payments means that the first quarter is always a burn quarter. That said cash used by operations was better than guidance with the usage of £18,000,000 This includes approximately £11,000,000 of cash relating to restructuring costs including £6,000,000 of employee severance and £5,000,000 for lease payments for properties that we have exited. We expect the cash commitments for these leases to reduce as the fiscal year goes on. In addition to cash used by operations, we returned £10,000,000 to shareholders as part of the share buyback programme.

[Tim Foote, CFO at Blackberry]

Therefore, total cash and investments decreased by 28,000,000 during the quarter to $382,000,000 which remains almost $100,000,000 better than this time last year when the number was $283,000,000. As John mentioned, we received approval for a share buyback program during the quarter. The program allows for the repurchase of up to $100,000,000 of shares, or approximately 4.7% of the number outstanding at the time of approval. I'm pleased to report that we took solid first steps in this programme and repurchased approximately $10,000,000 or 2,600,000.0 shares at an average price per share of $3.89 before the quiet period commenced. These shares have been subsequently cancelled.

[Tim Foote, CFO at Blackberry]

These actions illustrate our belief that BlackBerry shares are undervalued and that we have a strong plan to continue to generate cash on an annual basis. While we are not obliged to repurchase shares, the programme will continue to provide capital allocation optionality as we continue through the rest of the year, allowing for further repurchases if the conditions are favourable. Turning now to financial outlook for the second fiscal quarter and the full fiscal year. Overall, we are not getting carried away with what was a better than expected first quarter. While we are of course very pleased to have beaten expectations almost across the board, we don't expect the remainder of the year to look very different to how it did ninety days We are taking a prudent position for QNX in Q2, given that any slowdown in production volumes in the first calendar quarter, as a result of recent tariff changes, are likely to impact Q2 royalty revenues.

[Tim Foote, CFO at Blackberry]

We are also allowing for elongated buying decisions for new design wins, especially newer products like QNX Cabin. As a result, we expect revenue for QNX in Q2 to be in the range of $55,000,000 to $60,000,000 and for adjusted EBITDA to be in the range of 10,000,000 to 13,000,000 Despite the uncertainty in the market, we continue to hold our full year revenue guidance range at £250,000,000 to £270,000,000 and adjusted EBITDA between £55,000,000 and 60,000,000 For secure communications, we are optimistic around the pipeline of opportunities we see for the division. We expect revenue for Q2 to be in the range of 54,000,000 to 59,000,000 and for Adjusted EBITDA to be between 3,000,000 and £6,000,000 We performed better than expected in Q1, primarily due to closing some large Circusmart deals earlier than expected. We see those deals being replaced in later quarters by an increased pipeline of opportunities. Therefore, we are raising our full year revenue guidance by 4,000,000, such that the range is now $234,000,000 to $244,000,000, and for adjusted EBITDA to be between 37 and 47,000,000 or 16 to 19%.

[Tim Foote, CFO at Blackberry]

For licensing, we reiterate our guidance for revenue to be approximately 6,000,000 and adjusted EBITDA to be approximately 5,000,000 per quarter. For the full fiscal year, we are holding guidance for £24,000,000 of revenue and adjusted EBITDA of approximately £20,000,000 We continue to expect adjusted corporate OpEx, excluding amortization, to be approximately £10,000,000 a quarter or £40,000,000 for the full fiscal year. At the total company level, we expect revenue for Q2 be in the range of £115,000,000 to £125,000,000 and adjusted EBITDA to be between £8,000,000 and £14,000,000 Given the increased guidance for both Secure Communications revenue and adjusted EBITDA, we are raising guidance for the total company as well. For the full fiscal year 2026, we now expect total company revenue to be between $5.00 8 and $538,000,000, and adjusted EBITDA to be in the range of 72,000,000 to 87,000,000. For non GAAP EPS, we expect it to be between breakeven and $01 in the second quarter and to remain between $08 and $0.10 for the full fiscal year.

[Tim Foote, CFO at Blackberry]

As mentioned during the Q4 earnings announcement, we expected the first half of fiscal twenty twenty six to be lower than the second half of the year for cash flow as a result of the billings and payments profile, including a number of one time factors that will drop off as we get further into the year, Due primarily to tax payments falling during the quarter, which relate to a number of prior years for countries outside of North America, we expect another quarter of cash usage, albeit sequentially lower. We expect an operating cash usage for Q2 in the range of £5,000,000 to £15,000,000 But, as before, we still expect BlackBerry to be operating cash flow positive for the full fiscal year, generating approximately £35,000,000 which is in addition to the second tranche of cash from Arctic Wolf relating to the sale of Cylance. With that, let me now turn the call back to John.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

Thanks for the summary, Tim. And before we move to q and a, let me quickly summarize. Q one was a good quarter for BlackBerry with total company revenue, adjusted EBITDA, EPS, and cash usage beating guidance. QNX delivered a better than expected quarter, despite the challenging landscape in the automotive industry, as our solid strategy to both help our customers execute on their software development goals, and to diversify into non automotive verticals continues to show positive signs of traction. Secure communications performed better than expected from both a top and bottom line perspective in the quarter, and we're raising our guidance for the full year.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

With both these divisions performing well, we believe BlackBerry is in a strong position to continue to generate profit and cash over the long term. With this solid foundation, we started to execute on repurchasing shares and have significant runway should it be appropriate to continue buying more. So let's now move to Q and A. Operator, could you please open up the lines?

[Operator]

Thank you. We will now begin the question and answer session. And our first question comes from the line of Todd Coupland with CIBC Capital Markets. Please proceed with your question.

[Tim Foote, CFO at Blackberry]

Hi, Todd. How are

[Todd Coupland, Managing Director at CIBC World Markets]

you I'm doing great. So I wanted to ask a question on Kunix and the macro environment. You talked about how you hadn't seen changes to production schedules, but you're anticipating that that's going to happen in this current quarter. Is that assumption already being realized in the production schedules you're seeing? Or are you just building in that downside protection into the guide?

[Tim Foote, CFO at Blackberry]

Yes. So great question, Todd. Ultimately, the Q2 or our fiscal Q2 royalty revenue is a function of production that happens in Q1. So we don't get the final production numbers by model, which obviously impacts how much royalty we're going to get until into Q2. So we priced in a reasonable amount of risk there in the guidance that we've given at 55 to 60 to allow for some potential disruption that we haven't yet fully seen in those numbers.

[Todd Coupland, Managing Director at CIBC World Markets]

Yeah. Great. And is is there enough clarity in the market at this point to give you more confidence for the rest of the year? Or are you still concerned beyond this quarter about possible production disruptions?

[Tim Foote, CFO at Blackberry]

Mean, it's it's very it's a very fluid situation. I think, John mentioned that some of our customers have actually stood down their guidance. So the fact that we've still got our guidance up shows that we do have a certain level of visibility, but you know, things can change. It's very fluid. I think we priced in a reasonable amount of risk.

[Tim Foote, CFO at Blackberry]

And when we look at the year who knows what's going to happen Todd, well just like you and everyone else we're gonna have to see how things pan out but we feel pretty confident that we're not entirely reliant on royalties we do have other streams as well you know the professional services and also the development seats, so we feel pretty good where we're at.

[Operator]

Thank you and our next question comes from the line of Paul Treiber with RBC Capital Markets. Please proceed with your question.

[Tim Foote, CFO at Blackberry]

Hello, Paul. We lost Paul?

[Operator]

Ms. Trevor, your line is up for questioning.

[Tim Foote, CFO at Blackberry]

No.

[Operator]

Okay.

[Tim Foote, CFO at Blackberry]

We may have lost Paul then.

[Operator]

No worries. The next question comes from the line of Luke Junk with Baird. Please proceed with your question.

[Luke Junk, Senior Research Analyst at Robert W. Baird & Co]

Good afternoon. Thanks for taking the questions. I guess, John, I want to start with the comments you made on SDP eight point zero, the strong auto non auto mix in the pipeline and the overall pipeline grew by, I think you said, 55% in the quarter. Can you just help us size that big numbers in percentage terms, understand how material that is and maybe if you'd be able to square that with the backlog disclosures that you've you've made for QNX? Thank you.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

Yeah. We I don't think we've updated the backlog at all. A little bit, you know, from the last, you know, numbers that we where we're at 865, you know, million. I without getting into the the granularity of the size of the dollar size of s t p dot o, I could tell you it is, you know, one of the, you know, the hottest products where we're getting the most interest and the most demand. And it's encouraging to see that it's not just in the automotive space with some of the, you know, next generation applications for but also as we turn more of our attention towards towards Jan, towards robotics, towards industrial automation, We're seeing quite a bit of appetite, you know, for for it.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

So it's hard to share, you know, too much granularity with it other than we're just happy to see that not only is the total pie growing in terms of overall pipeline, but each of the respective pieces of the pie across automotive and the GEM space as well.

[Luke Junk, Senior Research Analyst at Robert W. Baird & Co]

Okay. Got it. And then on the share buyback, that being new here, am I I think I'm hearing you saying that the approach here is going to be more opportunistic and that there's not necessarily a strict mandate timing wise around the $100,000,000 but to the extent that the stock gives you opportunities, you lean into that. Can you maybe just talk about your approach to buybacks?

[Tim Foote, CFO at Blackberry]

Yeah. It's a great question. I mean, we're delighted that we're in a position now to be able to to do a buyback. It shows the strength of our balance sheet and the plan going forward. We're feeling good about that.

[Tim Foote, CFO at Blackberry]

We ultimately, as good stewards of capital, we'll consider a number of different factors like cash flow in the quarter, share price, you know, other alternative uses of capital that we might have available, that type of thing. So, you know, it's not going to be a linear thing, I would say. It would just be whatever we think makes the best sense for shareholder value.

[Operator]

Okay. Thank you. And our next question comes from the line of Trip Choudhry with Global Equities Research. Please proceed with your question.

[Trip Chowdhry, Director - Equity Research at Global Equities Research]

Thanks. So congratulations on very good execution. Two questions here. First, I will ask about your wins in The US or the federal defense spending. I was wondering what kind of trends are you seeing and what specific products from BlackBerry are having traction in the defense spend?

[Trip Chowdhry, Director - Equity Research at Global Equities Research]

And the second question I have is regarding a very solid execution and pipeline in QNX. Are there any specific categories of automotive where you are seeing more strength versus the rest? For example, are EVs still having more traction, or is it hybrid? So is it ICE? Any color on that will also be appreciated. Thank you so much.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

Thanks, Trip. Thanks thanks for the thoughts and and the questions. On the the secure comm side of it, it really has been an interesting, you know, four or five months of the of the first year with a lot of the geopolitical dynamics around the world. You know, secure communications and having mission critical capabilities. We're finding, you know, more interest and more use cases than than than we had, say, this time last year.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

A lot of it, we're seeing governments not only in The US, but in other markets around the world looking at data sovereignty becoming more of a concern for them, turning while many, I think governments in the past have been embracing the cloud and move utilizing the crowd more more significantly. We're seeing a little bit of a kind of pullback from that on on premise solutions and and how they're protecting the data and the privacy of of all their communications across their organizations. So certainly seen the pipeline growing with these types of on premise data sovereignty focus, mission critical communications is is it's encouraging to see the level of interest and how our product portfolio really is a is a hand and glove fit for some of these new demands. I'll turn it over to Tim maybe to talk a little bit about the the the QNX momentum.

[Tim Foote, CFO at Blackberry]

Sure. Yeah. No. Great question, Trip. Ultimately, we we're seeing demand across the board.

[Tim Foote, CFO at Blackberry]

But ultimately, QNX thrives where we got high performance compute in the vehicles that typically tends to be towards the top end of the range, the higher kind of higher trims. But EV versus ICE, we tend to be fairly agnostic to that. But one of the really interesting things that John was talking about is autonomous drive. Obviously, there's a fair amount of buzz around that right now. QNX, this is great for QNX because safety critical use case, very high compute is perfect, like ready made for QNX.

[Tim Foote, CFO at Blackberry]

So as we see further advances in that, we're hoping to see some increased demand as well. But generally speaking, it's across the board, the trends are secular tailwinds for the business, multi year secular tailwinds, we feel pretty confident about despite any near term noise and volatility that that may come in the market.

[Trip Chowdhry, Director - Equity Research at Global Equities Research]

Thank you so much. Congratulations again.

[Tim Foote, CFO at Blackberry]

Thanks, Trev.

[Operator]

Thank you. And our next question comes from the line of Paul Treiber with RBC Capital Markets. Please proceed with your question.

[Tim Foote, CFO at Blackberry]

Hey, Paul.

[Paul Treiber, Director & Research Analyst at RBC Capital Markets]

Thanks very much. Hopefully, you can hear me now.

[Tim Foote, CFO at Blackberry]

Yes. We got you. We got you, Paul.

[Paul Treiber, Director & Research Analyst at RBC Capital Markets]

Yes. Great. Just a question on the U. S. Federal government.

[Paul Treiber, Director & Research Analyst at RBC Capital Markets]

The did you see any churn related to DOGE or any of the the reduced procurement decisions there?

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

You know, Paul, we we were on high alert on that, as you can imagine, since, such a significant part of our business does come from the US government. But we really, you know, didn't see any any kind of material impact from a doge. As we work through a lot of the different opportunities and a lot of the different renewals, I think one kind of common theme seem to come back and forth every time we we engage with them is that mission critical communications didn't seem to be at the top of their list of things to slash and burn on, you know? So it was encouraging to see that. I think that's one of the reasons why our, you know, DBNRR or ARR, things like that held up pretty nicely in the quarter as we really didn't find any kind of meaningful impact from a Doge perspective.

[Paul Treiber, Director & Research Analyst at RBC Capital Markets]

That's good to hear. And second question, just on QNX and the growth that you're seeing in SDP-eight, the pipeline there, is that on the automotive side, is that additive to the existing pipeline for QNX? Or are you seeing some transition from the prior generations of QNX to STP eight?

[Tim Foote, CFO at Blackberry]

Yeah, I mean, ultimately, we want everyone to migrate over to STP eight because it's a future proof platform and also it's got an uplift as you can imagine it's high performance so there's an uplift for us. I'd say we're still in the early innings. It's a new product, we're pleasantly surprised by the amount of traction we've already had. But you know, in this market, things tend to tend to move relatively slow, because they're very long life cycle type projects. So we're pleased with what we've seen so far and it is a better ASP than the previous versions.

[Operator]

Thank you. And our next question comes from the line of Kengzi Crane with Canaccord. Please proceed with your question.

[Tim Foote, CFO at Blackberry]

Kengzi.

[Kingsley Crane, MD - Equity Research at Canaccord Genuity - Global Capital Markets]

Hi, Tim. Hi, John. How's it going? I want to echo my congrats on a really strong Q1.

[Kingsley Crane, MD - Equity Research at Canaccord Genuity - Global Capital Markets]

I just wanna ask one thematic one to start out. Just curious how you're thinking about the balance between more tightly integrated systems versus more open systems in the software defined vehicle space right now. Maybe you could compare what you're doing with Vector and TT Tech with with S Corp? Thanks.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

I'll start, and Tim, you trip in. Yeah. I I think, Kisa, as it from a, you know, q and x perspective, kind of, you know, what we announced at CES is us Because we have such a pivotal role in the overall operating system for the software defined vehicle, us expanding our role into, you know, middleware into integration into serve, to help them handle the plumbing. And, you know, regardless of who that's interacting, what applications inevitably are interacting with, that's something that, we just think it's a natural place for us to to play in and for us to add value in terms of helping our customers from a time to market perspective. So, you know, that's that's that's one aspect of it.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

I think QNX everywhere is a is another initiative that we think really, you know, our, our ecosystem and expands our partnerships with other players, having them embrace our technology design around our technology, both within the automotive space and outside of the automotive space from a gym perspective, we think is another just kind of part of our vision of really making QNX available more broadly across all the markets that we serve. So kind of feel like it's all coming together, you know, the operating system, moving up the stack into middleware, creating an ecosystem of technology partners, I think is is is part of a more comprehensive approach to the markets that we serve.

[Kingsley Crane, MD - Equity Research at Canaccord Genuity - Global Capital Markets]

Right. Yep. Makes perfect sense. And I wanna circle back as well to the stp8.0 pipeline. You know, Jim is 43%.

[Kingsley Crane, MD - Equity Research at Canaccord Genuity - Global Capital Markets]

That's that's really encouraging. I guess, like, you know, how would you characterize the quality maturity of of that Jim pipeline versus automotive? I say that just because, you know, I know you're moving more, to make more serious moves, get more beachheads in those those markets. So it's it's great that it's already 40%.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

Yeah. It's, hey. To see the whole pipeline grow 55%, that that makes us that makes us feel good. Naturally, you know, we've we've got a deeper presence in the auto OEMs and and with their designs and and the the gem space is a little more. I don't wanna say fluid, but it's certainly it's a newer pipeline.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

These are newer qualified opportunities. It's it's actually been very encouraging to see, you know, some of these mission critical gem kind of applications wanting to lean into the performance characteristics of 8 dot o. We actually feel that that helps qualify the pipeline even further. So both angles from an auto perspective and the gem perspective, we're really seeing good traction on all of it. Gem's probably got a little more a little more ways to go in terms of know, developing that pipeline, closing that pipeline, converting it to revenue.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

But the fact that we're seeing that much appetite, that much demand this early as we really, double down on our go to market initiatives in JEM is, certainly an encouraging sign.

[Operator]

Thank you. And with that, there are no further questions at this time. I'd like to turn the call back over to John Giamattel, CEO of BlackBerry for closing remarks.

[John Giamatteo, CEO & President - Cybersecurity division at Blackberry]

Terrific. Thanks, Julian. And just as, before we wrap up, a quick reminder to everyone for, that we're gonna be holding our annual meet, meeting of shareholders tomorrow at 10AM Eastern. And details for how to join the virtual event can be found on blackberry.com website. So thank you all for joining the call today, and look forward to seeing you next time. Bye for now.

[Operator]

Thank you. With that, this does conclude today's call. We thank you for your participation. You may disconnect your lines at this time.

Participants

Executives

• John Giamatteo, CEO & President - Cybersecurity division
• Tim Foote, CFO

Analysts

• Martha Gonder, Director - IR at Blackberry
• Todd Coupland, Managing Director at CIBC World Markets
• Luke Junk, Senior Research Analyst at Robert W. Baird & Co
• Trip Chowdhry, Director - Equity Research at Global Equities Research
• Paul Treiber, Director & Research Analyst at RBC Capital Markets
• Kingsley Crane, MD - Equity Research at Canaccord Genuity - Global Capital Markets