BB Software · Turnaround · Auto software · Secure comms · Thesis updated September 27, 2026

QNX momentum builds, but trade tensions drag the turnaround

Written by Finn ResearchReviewed by Shivam BharukaReviewed September 27, 2026

QNX achieved a record $80M in Q2 FY27 revenue, driving 49% of the total mix.
The first Alloy Kore design win with Cortica is valued at over $100M.
Management lowered the full-year outlook for Secure Communications due to US-Canada trade tensions.
Secure Communications DBNRR ticked down further to 91%, showing persistent churn.
New QNX deals are shifting toward minimum volume commitments to improve cash visibility.

01 Running thesis

A tale of two segments

BlackBerry is a focused software company built around two main pieces: QNX for connected cars and other machines, and Secure Communications for governments and enterprises that need locked-down messaging, device control, and alerts.

The bull case centers on QNX firing on all cylinders. In Q2 FY27, QNX posted a record $80 million in revenue and secured its first Alloy Kore design win with Cortica. Management estimates this win is worth over $100 million in future royalties and brings an average selling price approximately three times higher than a standard operating system deployment. The company is also moving toward minimum contractual volume commitments for new QNX deals, which provides earlier cash flow certainty.

The bear case revolves around the struggling Secure Communications segment. Despite holding an annual recurring revenue base of $221 million, the segment's dollar-based net retention rate ticked down to 91% in Q2 FY27, indicating persistent churn in the enterprise base. Management lowered the full-year revenue outlook for this segment, blaming US-Canada trade tensions for delaying large US federal government deals. The business remains highly vulnerable to geopolitical lumpiness.

Sep 2026→Q2 FY27 showed a sharp divergence. QNX posted a record $80M quarter and secured a massive Alloy Kore design win. However, management lowered the full-year outlook for Secure Communications due to US-Canada trade tensions.

Jun 2026▲Q1 FY27 revenue beat guidance at $153M, and management raised full-year revenue guidance to $594M to $621M. The view also got more cautious on Secure Communications because the beat leaned on a large Shared Services Canada contract and DBNRR was 92%.

Apr 2026▲The FY26 10-K showed the turnaround gaining credibility, with QNX technology embedded in more than 275 million vehicles. New AI, trade policy, and ESG risks were added to the watch list.

Dec 2025▲Q3 FY26 marked another beat-and-raise quarter. Secure Communications ARR reached $216M, but DBNRR dipped to 92%, keeping retention on the risk list.

Sep 2025▲Q2 FY26 results beat expectations again, and management raised full-year revenue guidance. QNX revenue benefited from better-than-expected royalties, while Secure Communications ARR improved to $213M.

Jun 2025▲Q1 FY26 revenue beat management's prior range, helped by both QNX and Secure Communications. Secure Communications ARR grew sequentially, a possible sign that the segment was stabilizing.

Apr 2025→The FY25 10-K kept the bull case centered on QNX, which grew revenue in fiscal 2025. The view was tempered by continued Secure Communications decline and tariff risk tied to auto customers.

Dec 2024▲BlackBerry agreed to sell the Cylance endpoint security assets to Arctic Wolf. That made the company more focused on QNX and the remaining Secure Communications portfolio.

02 Business model

Royalties, seats, and secure contracts

QNX makes money from development seats and royalties. A development seat is paid access for engineers building on BlackBerry software. A royalty is paid later when a car, robot, or other device ships with QNX inside it. QNX is evolving its model by increasingly securing minimum contractual volume commitments, rather than relying on loose forecasts. This shift provides earlier cash flow and revenue recognition.

Secure Communications sells software and services for device management, secure calls and texts, file control, and emergency alerts. Its customers include governments and large organizations where security matters more than cheap software. That can make contracts sticky, but sales cycles can be long and uneven.

Licensing is smaller. It earns money from BlackBerry's patent portfolio. The Cylance endpoint security assets are treated as a discontinued operation, which removes a major cash drain and makes the remaining story easier to judge.

The model breaks if QNX design activity does not become future royalty revenue, if Secure Communications keeps losing spend inside older products, or if trade tensions continue to freeze government budgets.

03 Product portfolio

What BlackBerry sells now

Growth engine

QNX

QNX is real-time operating system software for cars and other embedded devices. It is embedded in more than 275 million vehicles.

Growth engine

Alloy Kore

Alloy Kore is the next generation platform. The first design win with Cortica proved it can expand the average selling price by multiples.

Steady

BlackBerry UEM and Dynamics

These tools help companies manage phones, laptops, apps, and secure work data. They sit inside Secure Communications, where some older products are still weighing on net retention.

Cash cow

SecuSUITE and Secusmart

These products protect voice and text communications for high-security users, relying heavily on sovereign government demand.

Steady

BlackBerry AtHoc

AtHoc sends critical alerts during emergencies. It fits customers that need reliable, secure communication during crises.

Option

Radar, Certicom, and IVY

These are smaller IoT assets around asset monitoring, cryptography, and vehicle data. They help BlackBerry expand outside core auto markets.

Cash cow

Patent Licensing

Licensing monetizes BlackBerry's patent portfolio. It is small compared with QNX and Secure Communications, but it still adds revenue.

04 Business segments

Q2 FY27 revenue mix

QNX49%growing fast

Secure Communications37%declining

Licensing14%flat

This mix is from the second quarter ended August 31, 2026. Licensing had an unusually strong quarter driven by a new one-time arrangement.

05 Risk factors

What could break the turn

Trade policy and geopolitical risk

High impact · High odds

Management explicitly lowered the full-year revenue outlook for Secure Communications in Q2 FY27. They cited trade tensions between Canada and the United States that are complicating the timing of deals with US federal government customers.

We watchResolution of US-Canada trade tensions and closure of delayed US Federal deals.

Weak net retention inside Secure Communications

Medium impact · High odds

Secure Communications ARR rose to $221M, but DBNRR dropped to 91%. That means the existing customer base is spending less overall after churn and expansion. Management has noted inherent headwinds in parts of the portfolio.

We watchDBNRR moving back above 100%, plus disclosure on which products are dragging it down.

Alloy Kore momentum stalling

High impact · Medium odds

The bull case depends on QNX moving from an operating system role to a wider platform role. The Cortica win is a great start, but BlackBerry needs more design wins, especially in passenger vehicles, to prove the higher average selling price is sustainable.

We watchFurther Alloy Kore design wins and any stated average selling price uplift.

Auto cycle pressure

Medium impact · Medium odds

QNX depends heavily on automotive customers. If automakers slow programs due to macro conditions or trade barriers, QNX royalties and development work could feel it.

We watchAuto production outlooks and QNX royalty revenue.

Cylance sale consideration stays illiquid

Low impact · Medium odds

BlackBerry received Arctic Wolf shares as part of the Cylance divestiture. Those shares are illiquid securities without a public market. The strategic story is cleaner, but the final value of that consideration is still uncertain.

We watchAny Arctic Wolf liquidity event, impairment, or change in the value assigned to the shares.

AI product and operations risk

Medium impact · Low odds

BlackBerry says its use of AI in operations and product development brings risks such as errors, bias, flawed training methods, privacy, security, and data provenance issues. For a company selling trust and safety, a bad AI mistake could hurt its brand.

We watchSecurity incidents, customer claims, regulatory action, or new AI risk disclosures.

06 Quick answers

In one breath

Is BlackBerry still a phone company?

No. BlackBerry now sells software, mainly QNX for embedded systems and Secure Communications tools for governments and enterprises. The old phone brand is no longer the core business.

Why does QNX matter so much to BlackBerry?

QNX is the main growth engine. It is embedded in more than 275 million vehicles, and new platforms like Alloy Kore can significantly increase the software revenue per vehicle.

What is the biggest concern for BlackBerry stock?

The turnaround is uneven. While QNX is setting revenue records, Secure Communications is losing existing customer spend and facing delays on government contracts due to trade tensions.

What should investors watch next?

Watch for more Alloy Kore design wins, progress on delayed US Federal deals, and whether the Secure Communications net retention rate can stop declining.

07 Research standards

Sources and research notes

This page combines Finn's company research with public filings and other cited materials. The thesis is reviewed when material company information changes; Finn Scores use the latest available scoring data.

Thesis reviewed: September 27, 2026
Score data: September 27, 2026
Reviewed by: Shivam Bharuka

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