BlackBerry (BB) Q3 2026: QNX Revenue Hits $68.7M Record, Embedded Expansion Accelerates
QNX, BlackBerry’s embedded software division, delivered its highest-ever quarterly revenue, driven by auto and industrial design wins and robust royalty growth. Secure Communications stabilized on stronger renewals and government wins, despite macro uncertainty. Management raised full-year profit and cash flow guidance, signaling confidence in multi-year embedded and critical communications momentum.
Summary
- QNX Embedded Momentum: Record auto and industrial wins power all-time high QNX revenue.
- Secure Communications Stabilizes: Renewal rates and government adoption offset shutdown headwinds.
- Profitability Leverage: Raised full-year margin and cash flow guidance as operating discipline persists.
Performance Analysis
BlackBerry’s Q3 2026 results underscore a decisive pivot toward embedded software scale and recurring security revenue. Total revenue reached $141.8 million, above guidance, with QNX contributing $68.7 million, or nearly half of company sales. QNX’s 10% year-over-year growth was fueled by royalty expansion and a surge in design wins across auto, industrial, and aerospace verticals. Secure Communications delivered $67 million, exceeding expectations despite the U.S. government shutdown, with annual recurring revenue (ARR) rising sequentially and dollar-based net retention at 92%.
Profitability improved materially, with adjusted EBITDA margin at 20% and GAAP net income positive for the third straight quarter. Operating cash flow tripled year-over-year to $17.9 million, reflecting disciplined cost management and improved revenue mix. Gross margin stability (company-wide at 78%) and segment margin expansion (QNX at 84%, Secure Communications at 72%) point to operating leverage as product mix shifts toward higher-value contracts.
- QNX Record Revenue: Embedded software wins in automotive and industrials drove QNX to its best quarter ever, now powering 275 million vehicles globally.
- Secure Communications Resilience: Division outperformed despite shutdown, aided by government renewals and certifications (FedRAMP High, BSI).
- Cash Flow Acceleration: Operating cash flow up 200%+ YoY, supporting share buybacks and organic investment.
Segment performance divergence is narrowing as both core businesses deliver improving margin and cash conversion. QNX’s royalty ramp and product stack expansion (Sound, Cabin, GEDP) are translating design wins into future revenue visibility, while Secure Communications’ improved renewal rates and international wins are stabilizing its base.
Executive Commentary
"Q3 was another quarter of solid results, adding to our track record of consistently meeting or beating guidance. Once again, we delivered across the three core metrics of revenue, profitability, and cash."
John Giammatteo, Chief Executive Officer
"Q3 had the strongest level of quarterly gap net income at any time since the fourth quarter of fiscal year 2022, almost four years ago. Our balance sheet remains solid, with total cash and investments up $111 million year-over-year."
Tim Foote, Chief Financial Officer
Strategic Positioning
1. QNX: Expanding Embedded Platform and Royalty Streams
QNX’s record quarter reflects BlackBerry’s deepening penetration in automotive and broader embedded markets. The division secured major design wins with European and Asian auto OEMs for advanced driver-assistance systems (ADAS) and cockpit domains, all on the latest SDP-8 platform. Product stack expansion (Sound, Cabin, GEDP) is unlocking higher average selling prices (ASP) per vehicle and broadening reach into industrial automation, medical, and aerospace, with NASA and Bentley Nevada among recent adopters. Early access for the co-developed vehicle software platform with Vector is set for January, targeting higher per-vehicle pricing and OEM resource savings.
2. Secure Communications: Government and Certification-Led Stabilization
Secure Communications showed improved renewal rates and pipeline strength, with ARR rising to $216 million and net retention at 92%. FedRAMP High and BSI certifications enabled new U.S. and European government wins, including the Navy and Department of Justice. International expansion continued with contracts in Malaysia, Australia, and the UK. UEM, the unified endpoint management solution, saw multi-year renewal from the Dutch government and UK defense agencies, anchoring the division’s recurring revenue.
3. Capital Allocation: Buybacks and Organic Investment
BlackBerry continued to deploy capital for growth and shareholder return. QNX investment is focused on go-to-market expansion and scaling partnerships, particularly for general embedded markets. The company repurchased $5 million of shares this quarter, offsetting dilution and reflecting confidence in intrinsic value. Cash and investments rose to $377.5 million, supporting further organic and inorganic initiatives.
4. Execution Discipline: Margin and Cash Conversion
Margin discipline and operating leverage are visible across both segments. QNX and Secure Communications both delivered sequential margin expansion, with cost structure optimized despite increased investment. The company’s ability to translate profitability into cash is enabling both reinvestment and buybacks without balance sheet strain.
Key Considerations
BlackBerry’s Q3 marks a strategic inflection as embedded and security franchises both show improved growth and profitability signals. The company is leveraging its QNX installed base and product innovation to drive higher-value design wins and royalty streams, while Secure Communications benefits from government demand for certified, mission-critical solutions.
Key Considerations:
- Automotive Software Platform Upside: Early customer pull for QNX-Vector platform could materially raise per-vehicle economics if design wins convert in FY27.
- Industrial and Robotics Traction: New wins in industrial automation and robotics (e.g., NASA, Bentley Nevada) diversify QNX’s revenue base beyond auto.
- Certification as Moat: FedRAMP High and BSI certifications are enabling government expansion and higher win rates in regulated markets.
- Buyback and Cash Generation: Share repurchases and rising cash flow reflect balance sheet strength and management’s confidence in long-term value creation.
Risks
Macro headwinds remain, particularly in government procurement cycles and global auto production volatility, which could affect both Secure Communications and QNX royalty conversion. Execution risk exists in scaling general embedded and industrial markets, where go-to-market expansion and partnership integration are still in early stages. Prolonged government shutdowns or regulatory delays could also impact renewal and expansion momentum, while competitive pressure in embedded software and security remains elevated.
Forward Outlook
For Q4, BlackBerry guided to:
- QNX revenue of $71 to $77 million, targeting another record quarter
- Secure Communications revenue of $61 to $65 million, with raised full-year guidance
For full-year 2026, management raised guidance:
- Total revenue midpoint up $6 million to $531–$541 million
- Adjusted EBITDA midpoint up $7.5 million to $94–$104 million
- Operating cash flow guidance raised to $43–$48 million, excluding $38 million from Silance sale
Management cited strong QNX backlog, robust Secure Communications pipeline, and continued cash flow acceleration as drivers of the improved outlook.
- Backlog conversion in QNX expected to drive FY27 growth
- Secure Communications pipeline at multi-year highs
Takeaways
BlackBerry’s Q3 results mark a meaningful step forward in embedded and government-grade security execution.
- QNX Royalty and Design Win Engine: Auto, industrial, and robotics traction is translating into record revenue and backlog, setting up multi-year growth.
- Secure Communications Recovery: Improved renewals, certifications, and pipeline strength are stabilizing the division and unlocking new government opportunities.
- FY27 Setup: Investors should watch for QNX backlog conversion, general embedded expansion, and government pipeline execution as key drivers into next year.
Conclusion
BlackBerry’s embedded and security franchises are both showing improved growth, profitability, and cash flow. QNX’s record quarter and Secure Communications’ stabilization underpin management’s raised full-year outlook and reinforce the company’s pivot to higher-value, recurring software revenue streams.
Industry Read-Through
BlackBerry’s results highlight intensifying demand for certified, mission-critical embedded software in automotive, industrial, and government markets. The QNX installed base (now 275 million vehicles) and expansion into robotics and industrial automation signal a broadening market for real-time operating systems (RTOS) and platform solutions. Government and regulated sector buyers are prioritizing certified, resilient communications and event management platforms, raising the competitive bar for security vendors. For peers in embedded software and secure communications, multi-product stack expansion, certification investment, and backlog visibility are emerging as key levers for sustained growth and margin improvement.