BlackBerry Limited (NYSE: BB) saw its stock surge on Thursday, adding roughly $1 billion to its market capitalization and closing at $10.34 per share. The rally was fueled by stronger-than-expected QNX revenue and an upward revision to fiscal 2027 guidance, signaling growing investor confidence in the company's embedded-AI strategy. In Friday's premarket, the stock slipped 2.8% to $10.05, reflecting some profit-taking after the sharp move.
The company reported first-quarter revenue of $152.9 million, a 26% increase year-over-year. Adjusted EBITDA soared 144% to $36.3 million, while GAAP net income reached $8.5 million. Notably, BlackBerry posted a cash-positive fiscal first quarter for the first time in nine years, excluding the fiscal 2024 patent sale, with operating cash flow of $4.6 million.
QNX Drives the Narrative
QNX, BlackBerry's embedded operating system unit, generated $72.3 million in revenue, up 26% from the prior year. The unit's adjusted gross margin stood at 86%, and adjusted EBITDA came in at $19.3 million. CEO John Giamatteo told Reuters that demand for QNX is "really healthy," with customers increasingly moving toward software-defined vehicles and partnering with BlackBerry. The company's QNX royalty backlog is approaching $1 billion, underscoring the long-term potential.
Secure Communications revenue also rose 24% to $73.6 million, with annual recurring revenue of $220 million and a dollar-based net retention rate of 92%. The company's updated fiscal 2027 revenue forecast now stands at $594 million to $621 million, a $10 million increase at the midpoint from the prior range of $584 million to $611 million.
Analysts React to Faster Operating Leverage
Canaccord Genuity maintained a Hold rating but raised its price target to $10.30 from $8.20, noting that operating leverage materialized sooner than anticipated. Raymond James also kept its Market Perform rating while boosting its target to $9.50 from $4.75, citing near-term wins for Alloy Kore and raising its standalone QNX growth forecast to approximately 20% annually over the next few years, up from 15%.
CFO Tim Foote highlighted the path to margin expansion, stating, "As higher margin QNX royalties become a larger part of our revenue mix, we expect more of our revenue to translate into margin expansion, profitability, and cash generation."
Share Buyback and Market Context
During the quarter, BlackBerry repurchased 2.6 million shares for a total of $10.0 million, or roughly $3.85 per share. With the stock closing at $10.34, those shares would now be worth about $26.9 million, illustrating the impact of buyback timing. The stock now trades at nearly 10 times the updated fiscal-year revenue midpoint, reflecting the market's willingness to pay a premium for QNX's growth and AI optionality.
Early Friday, S&P/TSX futures eased 0.2%, with weaker oil and tech shares weighing on the market. BlackBerry's next session will test whether buyers continue to embrace the QNX narrative and the embedded-AI premium, following a rally that added significant market value in a single day.
