Group 1: Company Overview - BlackBerry Limited (NYSE:BB) is a Canadian cybersecurity and embedded software company, recognized for its QNX operating system used in advanced driver assistance systems and secure solutions for government and enterprise clients [1][2] Group 2: Financial Performance - As of September 2025, BlackBerry is preparing to release its Q2 fiscal 2026 results, with analysts expecting an EPS of $0.01 and revenues around $122 million, reflecting a 13.8% year-over-year decline due to macroeconomic pressures and challenges in the automotive sector [2] Group 3: Growth Drivers - Key growth drivers for BlackBerry include the expanding adoption of the QNX platform and the launch of QNX Hypervisor 8.0, which allows multiple guest operating systems to run alongside safety-critical workloads, essential for autonomous vehicle production [2] - The Secure Communications segment is gaining momentum through products like Secusmart and AtHoc, with AtHoc achieving FedRAMP High authorization for U.S. federal clients, supported by a strong deal pipeline and major government contracts [4] Group 4: Competitive Positioning - BlackBerry has achieved a significant milestone as the first mobile device management vendor certified by Germany's BSI for its BlackBerry Unified Endpoint Management (UEM) with Apple Indigo and Samsung Knox devices, enhancing its competitive edge in government and critical infrastructure markets [3][4] - The company has raised its full-year revenue guidance, further solidifying its position as a notable player in the cybersecurity and secure communications space [4]

Core Insights - BlackBerry Limited reported a non-GAAP EPS of 4 cents for Q2 fiscal 2026, exceeding its breakeven estimate and last year's breakeven result [1][9] - Total revenues reached $129.6 million, surpassing guidance and reflecting a 3% year-over-year increase, driven by strong performance in the QNX and Secure Communications divisions [2][9] Financial Performance - QNX revenues totaled $63.1 million, exceeding guidance and showing a 15.4% year-over-year growth [5] - Secure Communications revenues declined 9.9% year over year to $59.9 million but beat guidance due to reduced customer churn [6][7] - Licensing revenues increased to $6.6 million from $5 million in the previous year, surpassing guidance [10] Margin and EBITDA - Adjusted gross margin improved to 75% from 70.7% year over year, with QNX maintaining a gross margin of 83% [11] - Adjusted EBITDA for the quarter was $25.9 million, up from $15.1 million in the prior year, with QNX and Secure Communications both exceeding expectations [12] Cash Flow and Liquidity - The company generated $3.4 million in net cash from operating activities, a significant improvement from cash used in the prior year [13] - As of August 31, BlackBerry had $290.5 million in cash and investments, down from $381.9 million, and returned $20 million to shareholders through buybacks [14] Future Guidance - For Q3 fiscal 2026, BlackBerry anticipates revenues between $132 million and $140 million, with adjusted EBITDA projected at $13 million to $17 million for QNX and $12 million to $16 million for Secure Communications [15][16]

Group 1 - The core viewpoint of the article is that the Royal Bank of Canada has raised the target stock price for BlackBerry from $4 to $4.5 [1]

BlackBerry Summary - BlackBerry reported an adjusted earnings of four cents US per share for the quarter, compared to zero cents US per share a year earlier [1] - The company's revenue for the latest quarter totaled US$129.6 million, an increase from US$126.2 million a year earlier. The QNX segment revenue rose to US$63.1 million from US$54.7 million, while secure communications revenue fell to US$59.9 million from US$66.5 million. Licensing revenue increased to US$6.6 million from US$5.0 million [2] - For the full year, BlackBerry expects revenue between US$519 million and US$541 million, up from previous guidance of US$508 million to US$538 million. The adjusted earnings per share guidance was raised to between 11 cents US and 15 cents US, from earlier expectations of eight cents US to 10 cents US [3] Air Canada Summary - Air Canada lowered its full-year guidance due to an estimated $375 million hit from a flight attendant strike [6] - The airline now expects adjusted EBITDA for the full year to be between $2.9 billion and $3.1 billion, down from previous guidance of $3.2 billion to $3.6 billion [7][11] - For the third quarter, Air Canada anticipates a 2% decline in operating capacity compared to the same period last year, with an expected operating income between $250 million and $300 million [8] - The financial impact of the strike included an estimated $430 million revenue hit from refunds and lower travel bookings, $90 million in incremental costs, but a savings of $145 million due to lower fuel costs [9] - The strike lasted three days and ended on August 19, with ongoing negotiations regarding wage offers [10]

Market Overview - The stock market experienced a downturn, with the S&P 500 and Nasdaq closing lower, and the Dow Jones declining over 170 points [1] - Major U.S. indices saw the Dow Jones Industrial Average down nearly 0.4% to 45,947.32, the S&P 500 off 0.5% to 6,604.72, and the Nasdaq lower by 0.5% at 22,384.69 [1] Costco Wholesale Corporation - Costco reported better-than-expected fourth-quarter results, with revenue rising 8% year-over-year to $86.16 billion and adjusted earnings at $5.87 per share [2] - Comparable sales increased by 5.7%, and membership fee revenue rose to $1.72 billion following the first fee hike since 2017 [2] - Costco shares dipped 0.88% to $935.04 in after-hours trading [2] Oracle Corporation - Oracle's stock fell by 5.55% to close at $291.33, with a high of $298.75 and a low of $288.55 [3] - The stock rose 0.44% to $292.60 in after-hours trading [3] - An executive order by President Trump approved a $14 billion deal for Oracle to manage TikTok's U.S. security operations and provide cloud services [4] International Business Machines Corporation (IBM) - IBM shares surged 5.20% to $281.44, with an intraday peak at $284.23 and a low of $271.15 [5] - The rise followed IBM's announcement of a quantum computing breakthrough in collaboration with HSBC, enhancing bond trading predictions [5] CarMax Inc - CarMax shares plummeted 20.07% to $45.60, marking a new 52-week low [6] - The decline followed disappointing second-quarter results, with EPS falling to $0.64 versus expectations of $1.09, and sales dropping 6% year-over-year to $6.59 billion [6] BlackBerry Limited - BlackBerry's stock rose 8.90% to $4.65, reaching a high of $4.66 and a low of $4.19 [7] - The company reported strong second-quarter results, with earnings of $0.04 per share, surpassing the consensus estimate of $0.01, and revenue rose 3% year-over-year to $129.6 million [8]

```markdown [PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents BlackBerry Limited's unaudited consolidated financial statements, including balance sheets, statements of shareholders' equity, operations, comprehensive income (loss), and cash flows, supported by detailed explanatory notes [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show a decrease in total assets from **$1,295.6 million** as of February 28, 2025, to **$1,184.1 million** as of August 31, 2025, primarily driven by a reduction in current assets Consolidated Balance Sheet Data (in millions) | Category | August 31, 2025 (in millions) | February 28, 2025 (in millions) | Change (in millions) | | :------- | :---------------------------- | :------------------------------ | :------------------- | | Total Assets | $1,184.1 | $1,295.6 | $(111.5) | | Total Liabilities | $459.0 | $575.7 | $(116.7) | | Shareholders' Equity | $725.1 | $719.9 | $5.2 | [Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Shareholders' equity increased from **$719.9 million** at February 28, 2025, to **$725.1 million** at August 31, 2025, primarily due to net income and stock-based compensation, partially offset by share repurchases Shareholders' Equity Changes (in millions) | Item | Six Months Ended August 31, 2025 (in millions) | Six Months Ended August 31, 2024 (in millions) | | :-------------------------- | :----------------------------------- | :----------------------------------- | | Balance as at Feb 28/29 | $2,976.4 | $2,947.7 | | Net income (loss) | $15.2 | $(61.1) | | Other comprehensive income | $7.2 | $1.8 | | Stock-based compensation | $11.6 | $14.8 | | Share repurchase | $(37.9) | — | | Employee share purchase plan | $1.2 | $1.5 | | Balance as at Aug 31 | $2,951.3 | $2,964.0 | [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) For the three months ended August 31, 2025, BlackBerry reported net income of **$13.3 million**, a significant improvement from a net loss of **$19.7 million** in the prior-year period, with revenue increasing slightly to **$129.6 million** and gross margin improving to **$96.6 million** Statements of Operations Summary (in millions, except EPS) | Metric | Three Months Ended Aug 31, 2025 (in millions) | Three Months Ended Aug 31, 2024 (in millions) | Six Months Ended Aug 31, 2025 (in millions) | Six Months Ended Aug 31, 2024 (in millions) | | :---------------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Revenue | $129.6 | $126.2 | $251.3 | $249.6 | | Gross margin | $96.6 | $88.6 | $186.9 | $178.6 | | Operating income (loss) | $11.5 | $2.2 | $13.5 | $(10.7) | | Net income (loss) | $13.3 | $(19.7) | $15.2 | $(61.1) | | Basic EPS | $0.02 | $(0.03) | $0.03 | $(0.10) | | Diluted EPS | $0.02 | $(0.03) | $0.03 | $(0.10) | [Consolidated Statements of Comprehensive Income (Loss)](index=9&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Comprehensive income for the three months ended August 31, 2025, was **$14.1 million**, a significant improvement from a comprehensive loss of **$17.6 million** in the prior-year period, driven by net income and positive foreign currency translation adjustments Comprehensive Income (Loss) Summary (in millions) | Metric | Three Months Ended Aug 31, 2025 (in millions) | Three Months Ended Aug 31, 2024 (in millions) | Six Months Ended Aug 31, 2025 (in millions) | Six Months Ended Aug 31, 2024 (in millions) | | :---------------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Net income (loss) | $13.3 | $(19.7) | $15.2 | $(61.1) | | Other comprehensive income | $0.8 | $2.1 | $7.2 | $1.8 | | Comprehensive income (loss) | $14.1 | $(17.6) | $22.4 | $(59.3) | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended August 31, 2025, net cash used in operating activities decreased to **$14.1 million** from **$31.1 million** in the prior-year period, with net cash provided by investing activities significantly increasing to **$52.8 million** Cash Flow Summary (in millions) | Cash Flow Activity | Six Months Ended Aug 31, 2025 (in millions) | Six Months Ended Aug 31, 2024 (in millions) | | :---------------------------------- | :------------------------------------ | :------------------------------------ | | Net cash used in operating activities | $(14.1) | $(31.1) | | Net cash provided by investing activities | $52.8 | $16.6 | | Net cash provided by (used in) financing activities | $(28.8) | $1.5 | | Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents | $10.3 | $(12.8) | | End of period cash, cash equivalents, restricted cash, and restricted cash equivalents | $290.6 | $187.7 | [Notes to the Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and breakdowns of the figures presented in the consolidated financial statements, covering accounting policies, discontinued operations, fair value measurements, specific balance sheet accounts, income taxes, long-term debt, capital stock, earnings per share, comprehensive loss, commitments, contingencies, segment reporting, and cash flow information [1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES](index=11&type=section&id=1.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES%20AND%20CRITICAL%20ACCOUNTING%20ESTIMATES) The financial statements are prepared in accordance with U.S. GAAP, with no material changes to accounting policies or critical accounting estimates from the annual statements, and new accounting pronouncements are being evaluated for future adoption - The Company reclassified all expenses associated with its facilities to General and administrative expenses in the third quarter of fiscal **2025**, impacting prior period comparatives[33](index=33&type=chunk) - No material changes to the Company's accounting policies or critical accounting estimates have occurred during fiscal **2026**[35](index=35&type=chunk) - The Company is evaluating new FASB ASUs on income tax disclosures (ASU **2023-09**, effective FY**26**) and expense disaggregation (ASU **2024-03**, effective FY**28**), and does not expect ASU **2025-05** on credit losses (effective FY**28**) to have a material impact[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) [2. DISCONTINUED OPERATIONS](index=12&type=section&id=2.%20DISCONTINUED%20OPERATIONS) The Cylance business, acquired in **2019**, was classified as held for sale in Q3 fiscal **2025** and subsequently sold to Arctic Wolf Networks, Inc. on February 3, **2025**, with its financial results now presented as 'loss from discontinued operations, net of tax' - The Cylance business was sold to Arctic Wolf Networks, Inc. on February 3, **2025**, resulting in a gain on disposal of **$10.4 million** in Q4 fiscal **2025**[42](index=42&type=chunk) Discontinued Operations Financials (in millions) | Metric | Three Months Ended Aug 31, 2024 (in millions) | Six Months Ended Aug 31, 2024 (in millions) | | :---------------------------------- | :------------------------------------ | :------------------------------------ | | Revenue | $20.3 | $41.2 | | Gross margin | $8.2 | $16.2 | | Operating loss | $(23.2) | $(48.1) | | Loss from discontinued operations, net of tax | $(23.2) | $(48.1) | | Basic loss per share from discontinued operations | $(0.04) | $(0.08) | [3. FAIR VALUE MEASUREMENTS, CASH, CASH EQUIVALENTS AND INVESTMENTS](index=13&type=section&id=3.%20FAIR%20VALUE%20MEASUREMENTS,%20CASH,%20CASH%20EQUIVALENTS%20AND%20INVESTMENTS) The Company uses a three-level fair value hierarchy for its investments, with cash, cash equivalents, and short-term investments totaling **$276.4 million** and **$14.1 million** respectively as of August 31, 2025, and recorded impairment charges for long-lived assets - During the three and six months ended August 31, 2025, the Company recorded a pre-tax impairment charge of **$0.5 million** and **$0.6 million**, respectively, for operating lease ROU assets and property, plant and equipment[53](index=53&type=chunk) Cash, Investments, and Fair Value Summary (in millions) | Category | August 31, 2025 (in millions) | February 28, 2025 (in millions) | | :---------------------------------------------------------------- | :---------------------------- | :------------------------------ | | Cash and cash equivalents | $276.4 | $266.7 | | Short-term investments | $14.1 | $71.1 | | Long-term investments (including equity investments in private companies) | $58.8 | $58.9 | | Restricted cash and cash equivalents | $14.2 | $13.6 | | **Total Cash, Cash Equivalents and Investments** | **$363.5** | **$410.3** | - As of August 31, 2025, the Company had non-marketable equity investments without readily determinable fair value of **$58.8 million**, including common shares of Arctic Wolf[59](index=59&type=chunk) [4. CONSOLIDATED BALANCE SHEET DETAILS](index=17&type=section&id=4.%20CONSOLIDATED%20BALANCE%20SHEET%20DETAILS) Accounts receivable, net of allowance, decreased to **$125.0 million** as of August 31, 2025, with a CECL of **$5.4 million**, while intangible assets, net, decreased to **$42.0 million** due to amortization, and goodwill increased to **$478.5 million** due to foreign exchange effects Balance Sheet Details (in millions) | Item | August 31, 2025 (in millions) | February 28, 2025 (in millions) | | :-------------------------------- | :---------------------------- | :------------------------------ | | Accounts receivable, net | $125.0 | $173.7 | | Allowance for credit losses (CECL) | $5.4 | $6.6 | | Other receivables | $48.7 | $48.4 | | Intangible assets, net | $42.0 | $47.3 | | Goodwill | $478.5 | $472.4 | | Accrued liabilities | $83.9 | $126.2 | | Restructuring program liabilities | $5.2 | $10.4 | - Other receivables include a **$38.1 million** delayed cash payment from Arctic Wolf related to the Cylance sale[69](index=69&type=chunk) - Amortization expense for intangible assets was **$7.6 million** for the six months ended August 31, 2025, down from **$22.0 million** in the prior year[74](index=74&type=chunk) [5. INCOME TAXES](index=21&type=section&id=5.%20INCOME%20TAXES) The Company's net effective income tax expense rate remained approximately **17%** for both the six months ended August 31, 2025, and 2024, reflecting changes in unrecognized income tax benefits and a significant valuation allowance against deferred income tax assets - The net effective income tax expense rate was approximately **17%** for the six months ended August 31, 2025 and 2024[84](index=84&type=chunk) - Total unrecognized income tax benefits were **$19.6 million** as of August 31, 2025, with **$19.2 million** netted against deferred income tax assets[85](index=85&type=chunk) [6. LONG-TERM NOTES](index=21&type=section&id=6.%20LONG-TERM%20NOTES) The Company has **$200.0 million** aggregate principal amount of **3.00%** senior convertible unsecured notes due February 15, 2029, with a carrying amount of **$195.9 million** and an estimated fair value of **$249.0 million** as of August 31, 2025 - The Company issued **$200.0 million** aggregate principal amount of **3.00%** senior convertible unsecured notes due February 15, 2029[87](index=87&type=chunk)[88](index=88&type=chunk) Long-Term Notes Summary (in millions) | Metric | August 31, 2025 (in millions) | February 28, 2025 (in millions) | | :-------------------------------- | :---------------------------- | :------------------------------ | | Carrying amount of Notes | $195.9 | $195.3 | | Fair value of Notes | $249.0 | $289.5 | | Interest expense (3 months) | $1.5 | $1.5 | | Interest expense (6 months) | $3.0 | $3.0 | [7. CAPITAL STOCK](index=22&type=section&id=7.%20CAPITAL%20STOCK) As of August 31, 2025, the Company had **590,361,084** common shares issued and outstanding, having repurchased **7.6 million** common shares at a cost of **$30.0 million** under its Normal Course Issuer Bid (NCIB) share buyback program Capital Stock Activity (000s, in millions) | Item | August 31, 2025 (000s) | February 28, 2025 (000s) | | :-------------------------------- | :--------------------- | :--------------------- | | Common shares outstanding | 590,361 | 596,231 | | Common shares repurchased (6 months) | (7,595) | — | | Cost of share repurchase (6 months) | $(30.0) | — | - The NCIB share buyback program, commenced on May 12, 2025, authorizes the repurchase of up to **27.9 million** common shares[93](index=93&type=chunk) [8. EARNINGS (LOSS) PER SHARE](index=23&type=section&id=8.%20EARNINGS%20(LOSS)%20PER%20SHARE) Basic and diluted earnings per share from continuing operations for the three months ended August 31, 2025, were **$0.02**, an increase from **$0.01** in the prior-year period, with the dilutive effect of convertible notes excluded as it was anti-dilutive Earnings Per Share Data (in millions, except EPS) | Metric | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | | :------------------------------------------------ | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Net income (loss) from continuing operations | $13.3 | $3.5 | $15.2 | $(13.0) | | Basic EPS from continuing operations | $0.02 | $0.01 | $0.03 | $(0.02) | | Diluted EPS from continuing operations | $0.02 | $0.01 | $0.03 | $(0.02) | | Total basic EPS | $0.02 | $(0.03) | $0.03 | $(0.10) | | Total diluted EPS | $0.02 | $(0.03) | $0.03 | $(0.10) | | Weighted average shares outstanding (basic, 000s) | 592,938 | 590,549 | 594,624 | 590,188 | | Weighted average shares outstanding (diluted, 000s) | 597,369 | 591,610 | 598,697 | 590,188 | [9. ACCUMULATED OTHER COMPREHENSIVE LOSS](index=24&type=section&id=9.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20LOSS) Accumulated Other Comprehensive Loss (AOCL) decreased from **$(19.2) million** at February 28, 2025, to **$(12.0) million** at August 31, 2025, primarily driven by positive foreign currency translation adjustments and net changes in fair value of cash flow hedges Accumulated Other Comprehensive Loss Breakdown (in millions) | Component | Three Months Ended Aug 31, 2025 (in millions) | Three Months Ended Aug 31, 2024 (in millions) | Six Months Ended Aug 31, 2025 (in millions) | Six Months Ended Aug 31, 2024 (in millions) | | :---------------------------------------------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Cash Flow Hedges (net unrealized gains) | $0.3 | $0.9 | $0.3 | $0.9 | | Foreign Currency Cumulative Translation Adjustment | $(11.7) | $(12.8) | $(11.7) | $(12.8) | | Other Post-Employment Benefit Obligations (actuarial losses) | $(0.6) | $(0.6) | $(0.6) | $(0.6) | | **Accumulated Other Comprehensive Loss, End of Period** | **$(12.0)** | **$(12.5)** | **$(12.0)** | **$(12.5)** | [10. COMMITMENTS AND CONTINGENCIES](index=24&type=section&id=10.%20COMMITMENTS%20AND%20CONTINGENCIES) The Company has **$14.1 million** in collateralized outstanding letters of credit and is involved in various litigations, including a Canadian employment class action that settled for **$2.8 million** (CAD **$4.0 million**) in February 2025, with other claims ongoing - The Company had **$14.1 million** in collateralized outstanding letters of credit as of August 31, 2025[100](index=100&type=chunk) - A Canadian employment class action settled for **$2.8 million** (CAD **$4.0 million**) in February 2025, with Court approval in July 2025[110](index=110&type=chunk) - The Company recognized **$29.0 million** in funds from QNX's Strategic Innovation Fund (SIF) claims, which may be repayable if certain terms are not met[108](index=108&type=chunk) [11. REVENUE AND SEGMENT DISCLOSURES](index=26&type=section&id=11.%20REVENUE%20AND%20SEGMENT%20DISCLOSURES) BlackBerry operates through three reportable segments: QNX, Secure Communications, and Licensing, with total revenue of **$129.6 million** for the three months ended August 31, 2025, and North America remaining the largest geographic region - The Company is organized into three operating segments: QNX, Secure Communications, and Licensing, following the sale of the Cylance business[116](index=116&type=chunk) Segment Revenue Breakdown (in millions) | Segment | Three Months Ended Aug 31, 2025 (in millions) | Three Months Ended Aug 31, 2024 (in millions) | Six Months Ended Aug 31, 2025 (in millions) | Six Months Ended Aug 31, 2024 (in millions) | | :-------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | QNX Revenue | $63.1 | $54.7 | $120.6 | $107.9 | | Secure Communications Revenue | $59.9 | $66.5 | $119.4 | $130.7 | | Licensing Revenue | $6.6 | $5.0 | $11.3 | $11.0 | | **Total Segment Revenue** | **$129.6** | **$126.2** | **$251.3** | **$249.6** | Revenue by Geographic Region (%) | Region | Three Months Ended Aug 31, 2025 (%) | Three Months Ended Aug 31, 2024 (%) | Six Months Ended Aug 31, 2025 (%) | Six Months Ended Aug 31, 2024 (%) | | :---------------------------- | :---------------------------------- | :---------------------------------- | :-------------------------------- | :-------------------------------- | | North America | 48.1% | 46.1% | 46.6% | 45.8% | | Europe, Middle East and Africa | 30.8% | 34.5% | 32.8% | 35.0% | | Other regions | 21.1% | 19.4% | 20.6% | 19.2% | | **Total** | **100.0%** | **100.0%** | **100.0%** | **100.0%** | Remaining Performance Obligations (in millions) | Time Frame | Remaining Performance Obligations (as at Aug 31, 2025, in millions) | | :-------------------- | :------------------------------------------------ | | Less than 12 Months | $128.5 | | 12 to 24 Months | $3.1 | | Thereafter | $3.6 | | **Total** | **$135.2** | [12. CASH FLOW AND ADDITIONAL INFORMATION](index=30&type=section&id=12.%20CASH%20FLOW%20AND%20ADDITIONAL%20INFORMATION) Interest paid for the six months ended August 31, 2025, was **$3.0 million**, while income taxes paid were **$18.1 million**, and the Company is exposed to foreign exchange, interest rate, and credit risks, including a **$38.1 million** deferred cash payment from Arctic Wolf Cash Flow Details (in millions) | Item | Six Months Ended Aug 31, 2025 (in millions) | Six Months Ended Aug 31, 2024 (in millions) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Interest paid | $3.0 | $3.0 | | Income taxes paid | $18.1 | $9.8 | | Income tax refunds received | $0.2 | — | - The Company is exposed to foreign exchange risk, with approximately **10%** of cash and cash equivalents, **25%** of accounts receivable, and **71%** of accounts payable denominated in foreign currencies as of August 31, 2025[134](index=134&type=chunk) - The Company is owed a **$38.1 million** delayed cash payment from Arctic Wolf, exposing it to credit risk related to potential non-payment[137](index=137&type=chunk) - Equity investments in private companies, including Arctic Wolf shares (**$24.6 million**), are illiquid securities, posing liquidity risk[140](index=140&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on BlackBerry's financial condition and results of operations for the three and six months ended August 31, 2025, covering business overview, summary results, and an assessment of liquidity and capital resources [Business Overview](index=33&type=section&id=Business%20Overview) BlackBerry Limited is a leading provider of intelligent software and services, with two core divisions: QNX for embedded software and Secure Communications for highly secure solutions, complemented by a Licensing division - BlackBerry's QNX division is a leader in embedded software, serving top automotive OEMs, Tier 1 suppliers, EV OEMs, and medical OEMs, with a focus on safety-critical foundational software[150](index=150&type=chunk) - The Secure Communications division provides operational resiliency with secure solutions for mobile fortification, mission-critical communications, and critical event management, targeting government and strategic industries[151](index=151&type=chunk) - Recent product innovations include the launch of QNX OS for Safety **8** and BlackBerry UEM achieving BSI certification[168](index=168&type=chunk) [Second Quarter Fiscal 2026 Summary Results of Operations](index=35&type=section&id=Second%20Quarter%20Fiscal%202026%20Summary%20Results%20of%20Operations) For the second quarter of fiscal 2026, BlackBerry reported revenue of **$129.6 million** and net income of **$13.3 million** (**$0.02** basic and diluted EPS), a significant improvement from a net loss of **$19.7 million** in the prior-year period Q2 FY26 Summary Results (in millions, except EPS) | Metric | Q2 FY26 (in millions, except EPS) | Q2 FY25 (in millions, except EPS) | Change (in millions) | | :---------------------------------- | :-------------------------------- | :-------------------------------- | :------------------- | | Revenue | $129.6 | $126.2 | $3.4 | | Gross margin | $96.6 | $88.6 | $8.0 | | Operating expenses | $85.1 | $86.4 | $(1.3) | | Net income (loss) | $13.3 | $(19.7) | $33.0 | | Basic EPS | $0.02 | $(0.03) | | | Diluted EPS | $0.02 | $(0.03) | | | Adjusted Net Income (Loss) | $24.2 | $(2.6) | | | Adjusted EPS | $0.04 | $0.00 | | - The significant improvement in net income is primarily due to the absence of loss from discontinued operations (Cylance) in Q2 FY**26**, which was **$(23.2) million** in Q2 FY**25**[169](index=169&type=chunk)[259](index=259&type=chunk) [Non-GAAP Financial Measures](index=39&type=section&id=Non-GAAP%20Financial%20Measures) BlackBerry uses non-GAAP financial measures such as adjusted gross margin, adjusted operating expense, adjusted net income (loss), adjusted EPS, and adjusted EBITDA to provide a consistent basis for comparison and to help understand underlying operational trends - Non-GAAP measures exclude restructuring charges, stock compensation expenses, amortization of acquired intangible assets, and long-lived asset impairment charges[187](index=187&type=chunk) Non-GAAP Financial Metrics (in millions) | Metric | Q2 FY26 (in millions) | Q2 FY25 (in millions) | H1 FY26 (in millions) | H1 FY25 (in millions) | | :-------------------------------- | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Adjusted Gross Margin | $97.2 | $89.2 | $188.0 | $179.9 | | Adjusted Operating Expense | $74.8 | $78.5 | $153.2 | $163.3 | | Adjusted EBITDA | $25.9 | $15.1 | $42.3 | $25.6 | | Adjusted Net Income (Loss) | $24.2 | $(2.6) | $36.5 | $(16.9) | | Adjusted Basic EPS | $0.04 | $0.00 | $0.06 | $(0.03) | [Key Metrics](index=44&type=section&id=Key%20Metrics) Secure Communications Annual Recurring Revenue (ARR) increased to **$213 million** as of August 31, 2025, up from **$209 million** in the prior year, with the Dollar-Based Net Retention Rate (DBNRR) remaining consistent at **93%** Key Operational Metrics (in millions) | Metric | August 31, 2025 (in millions) | August 31, 2024 (in millions) | Change | | :------------------------------------ | :---------------------------- | :---------------------------- | :----- | | Secure Communications ARR | $213 | $209 | $4 | | Secure Communications DBNRR | 93% | 93% | —% | [Results of Operations - Three months ended August 31, 2025 compared to the three months ended August 31, 2024](index=45&type=section&id=Results%20of%20Operations%20-%20Three%20months%20ended%20August%2031,%202025%20compared%20to%20the%20three%20months%20ended%20August%2031,%202024) This section details the financial performance for the second quarter of fiscal 2026, highlighting revenue growth in QNX and Licensing, improved consolidated gross margin and operating income, and updated guidance reflecting stronger-than-expected performance [Revenue](index=45&type=section&id=Revenue) Total revenue for Q2 FY26 was **$129.6 million**, exceeding expectations, with QNX revenue increasing by **$8.4 million** to **$63.1 million**, while Secure Communications revenue decreased by **$6.6 million** to **$59.9 million** Q2 Revenue by Segment (in millions) | Segment | Q2 FY26 Revenue (in millions) | Q2 FY25 Revenue (in millions) | Change (in millions) | | :-------------------- | :---------------------------- | :---------------------------- | :------------------- | | QNX | $63.1 | $54.7 | $8.4 | | Secure Communications | $59.9 | $66.5 | $(6.6) | | Licensing | $6.6 | $5.0 | $1.6 | | **Total Revenue** | **$129.6** | **$126.2** | **$3.4** | - QNX revenue of **$63.1 million** exceeded expectations due to better-than-expected royalty revenue[209](index=209&type=chunk) - The Company now expects QNX revenue to be in the range of **$256 million** to **$270 million** for fiscal 2026, up from **$250 million** to **$270 million**[210](index=210&type=chunk) - Total BlackBerry revenue is now expected to be in the range of **$519 million** to **$541 million** for fiscal 2026, up from **$508 million** to **$538 million**[217](index=217&type=chunk) [Gross Margin](index=47&type=section&id=Gross%20Margin) Consolidated gross margin increased by **$8.0 million** to **$96.6 million** in Q2 FY26, with the gross margin percentage rising to **74.5%** from **70.2%**, primarily due to a higher contribution from Secusmart and QNX - Consolidated gross margin increased by **$8.0 million** to **$96.6 million** in Q2 FY**26**, with gross margin percentage increasing by **4.3%** to **74.5%**[222](index=222&type=chunk)[223](index=223&type=chunk) Q2 Adjusted Gross Margin and EBITDA by Segment (in millions) | Segment | Q2 FY26 Adjusted Gross Margin (in millions) | Q2 FY25 Adjusted Gross Margin (in millions) | Change (in millions) | | :-------------------- | :------------------------------------ | :------------------------------------ | :------------------- | | QNX | $52.4 | $45.4 | $7.0 | | Secure Communications | $39.7 | $40.4 | $(0.7) | | Licensing | $5.1 | $3.4 | $1.7 | | **Total Adjusted Gross Margin** | **$97.2** | **$89.2** | **$8.0** | | Segment | Q2 FY26 Adjusted EBITDA (in millions) | Q2 FY25 Adjusted EBITDA (in millions) | Change (in millions) | | :-------------------- | :------------------------------------ | :------------------------------------ | :------------------- | | QNX | $20.5 | $13.1 | $7.4 | | Secure Communications | $9.7 | $7.9 | $1.8 | | Licensing | $5.6 | $4.0 | $1.6 | | **Total Adjusted EBITDA** | **$35.8** | **$25.0** | **$10.8** | - QNX adjusted EBITDA of **$20.5 million** exceeded the expected range of **$10 million** to **$13 million** due to strong revenue and SIF claims[228](index=228&type=chunk) - Secure Communications adjusted EBITDA of **$9.7 million** exceeded the expected range of **$3 million** to **$6 million** due to revenue performance and increased gross margin percentage[232](index=232&type=chunk) [Operating Expenses](index=49&type=section&id=Operating%20Expenses) Total U.S. GAAP operating expenses decreased by **$1.3 million** year-over-year to **$85.1 million** in Q2 FY26, primarily due to SIF claims benefits, lower infrastructure costs, and reduced amortization, partially offset by increased restructuring costs and salaries Q2 Operating Expenses Breakdown (in millions) | Operating Expense Category | Q2 FY26 (in millions) | Q2 FY25 (in millions) | Change (in millions) | | :-------------------------------- | :-------------------- | :-------------------- | :------------------- | | Research and development | $25.6 | $27.1 | $(1.5) | | Sales and marketing | $24.4 | $21.3 | $3.1 | | General and administrative | $31.5 | $32.8 | $(1.3) | | Amortization | $3.1 | $4.6 | $(1.5) | | Impairment of long-lived assets | $0.5 | $0.6 | $(0.1) | | **Total Operating Expenses** | **$85.1** | **$86.4** | **$(1.3)** | - Operating expenses decreased year-over-year by **$1.3 million**, primarily due to **$3.8 million** in SIF claims benefits, **$1.6 million** in lower infrastructure costs, and **$1.5 million** in reduced amortization[239](index=239&type=chunk) - Investment income, net, decreased by **$0.8 million** to **$1.9 million** in Q2 FY26, mainly due to a non-recurring interest income in the prior year, partially offset by higher returns on cash and investments[257](index=257&type=chunk) - The Company now expects adjusted EBITDA for fiscal 2026 to be in the range of **$82 million** to **$101 million** (previously **$72 million** to **$87 million**) and non-GAAP EPS to be **$0.11** to **$0.15** (previously **$0.08** to **$0.10**)[264](index=264&type=chunk)[265](index=265&type=chunk) [Results of Operations - Six months ended August 31, 2025 compared to the six months ended August 31, 2024](index=53&type=section&id=Results%20of%20Operations%20-%20Six%20months%20ended%20August%2031,%202025%20compared%20to%20the%20six%20months%20ended%20August%2031,%202024) This section reviews the financial performance for the first six months of fiscal 2026, showing a slight increase in total revenue and a significant improvement in net income from a loss to a positive figure, driven by QNX segment growth and reduced operating expenses [Consolidated Financial Performance](index=53&type=section&id=Consolidated%20Financial%20Performance) For the six months ended August 31, 2025, BlackBerry reported revenue of **$251.3 million** and net income of **$15.2 million** (**$0.03** basic and diluted EPS), a substantial improvement from a net loss of **$61.1 million** in the prior-year period H1 FY26 Consolidated Financial Performance (in millions, except EPS) | Metric | H1 FY26 (in millions, except EPS) | H1 FY25 (in millions, except EPS) | Change (in millions) | | :---------------------------------- | :-------------------------------- | :-------------------------------- | :------------------- | | Revenue | $251.3 | $249.6 | $1.7 | | Gross margin | $186.9 | $178.6 | $8.3 | | Operating income (loss) | $13.5 | $(10.7) | $24.2 | | Net income (loss) | $15.2 | $(61.1) | $76.3 | | Basic EPS | $0.03 | $(0.10) | $0.13 | | Diluted EPS | $0.03 | $(0.10) | $0.13 | - The **$76.3 million** increase in net income is primarily due to the absence of a **$48.1 million** loss from discontinued operations in H1 FY**25**[270](index=270&type=chunk)[309](index=309&type=chunk) [Revenue](index=53&type=section&id=Revenue) Total revenue for the six months ended August 31, 2025, increased slightly to **$251.3 million**, with QNX revenue growing by **$12.7 million** to **$120.6 million**, while Secure Communications revenue decreased by **$11.3 million** to **$119.4 million** H1 Revenue by Segment (in millions) | Segment | H1 FY26 Revenue (in millions) | H1 FY25 Revenue (in millions) | Change (in millions) | | :-------------------- | :---------------------------- | :---------------------------- | :------------------- | | QNX | $120.6 | $107.9 | $12.7 | | Secure Communications | $119.4 | $130.7 | $(11.3) | | Licensing | $11.3 | $11.0 | $0.3 | | **Total Revenue** | **$251.3** | **$249.6** | **$1.7** | H1 Revenue by Segment and Region (in millions) | Region | H1 FY26 Revenue (in millions) | H1 FY25 Revenue (in millions) | Change (in millions) | | :---------------------------- | :---------------------------- | :---------------------------- | :------------------- | | North America | $117.1 | $114.4 | $2.7 | | Europe, Middle East and Africa | $82.4 | $87.3 | $(4.9) | | Other regions | $51.8 | $47.9 | $3.9 | | **Total** | **$251.3** | **$249.6** | **$1.7** | [Gross Margin](index=55&type=section&id=Gross%20Margin) Consolidated gross margin increased by **$8.3 million** to **$186.9 million** for the first six months of fiscal 2026, with the gross margin percentage rising to **74.4%** from **71.6%**, primarily due to increased revenue from QNX and a favorable mix - Consolidated gross margin increased by **$8.3 million** to **$186.9 million** in H1 FY**26**, with gross margin percentage increasing by **2.8%** to **74.4%**[281](index=281&type=chunk)[282](index=282&type=chunk) H1 Adjusted Gross Margin and EBITDA by Segment (in millions) | Segment | H1 FY26 Adjusted Gross Margin (in millions) | H1 FY25 Adjusted Gross Margin (in millions) | Change (in millions) | | :-------------------- | :------------------------------------ | :------------------------------------ | :------------------- | | QNX | $98.7 | $89.1 | $9.6 | | Secure Communications | $81.1 | $82.8 | $(1.7) | | Licensing | $8.2 | $8.0 | $0.2 | | **Total Adjusted Gross Margin** | **$188.0** | **$179.9** | **$8.1** | | Segment | H1 FY26 Adjusted EBITDA (in millions) | H1 FY25 Adjusted EBITDA (in millions) | Change (in millions) | | :-------------------- | :------------------------------------ | :------------------------------------ | :------------------- | | QNX | $33.2 | $22.0 | $11.2 | | Secure Communications | $19.3 | $17.2 | $2.1 | | Licensing | $9.4 | $8.7 | $0.7 | | **Total Adjusted EBITDA** | **$61.9** | **$47.9** | **$14.0** | - QNX adjusted EBITDA increased by **$11.2 million**, primarily due to revenue growth and benefits from SIF claims[286](index=286&type=chunk) [Operating Expenses](index=56&type=section&id=Operating%20Expenses) Total U.S. GAAP operating expenses decreased by **$15.9 million** to **$173.4 million** for the first six months of fiscal 2026, driven by SIF claims benefits, lower impairment charges, reduced amortization, and decreased infrastructure and restructuring costs H1 Operating Expenses Breakdown (in millions) | Operating Expense Category | H1 FY26 (in millions) | H1 FY25 (in millions) | Change (in millions) | | :-------------------------------- | :-------------------- | :-------------------- | :------------------- | | Research and development | $50.6 | $57.7 | $(7.1) | | Sales and marketing | $53.1 | $45.1 | $8.0 | | General and administrative | $62.0 | $73.1 | $(11.1) | | Amortization | $7.1 | $9.3 | $(2.2) | | Impairment of long-lived assets | $0.6 | $4.1 | $(3.5) | | **Total Operating Expenses** | **$173.4** | **$189.3** | **$(15.9)** | - Operating expenses decreased by **$15.9 million**, primarily due to **$8.3 million** in SIF claims benefits, **$3.5 million** lower impairment charges, and **$2.2 million** reduced amortization[292](index=292&type=chunk) - Investment income, net, decreased by **$1.9 million** to **$4.8 million**, mainly due to non-recurring unrealized gains and interest income in the prior year, partially offset by higher returns on cash and investments[307](index=307&type=chunk) [Financial Condition](index=59&type=section&id=Financial%20Condition) This section details BlackBerry's liquidity and capital resources, showing a decrease in cash, cash equivalents, and investments to **$363.5 million** as of August 31, 2025, with working capital increasing to **$277.0 million** [Liquidity and Capital Resources](index=59&type=section&id=Liquidity%20and%20Capital%20Resources) Cash, cash equivalents, and investments decreased by **$46.8 million** to **$363.5 million** as of August 31, 2025, primarily due to changes in working capital, while net cash used in operating activities decreased by **$17.0 million** Liquidity and Capital Resources Summary (in millions) | Item | August 31, 2025 (in millions) | February 28, 2025 (in millions) | Change (in millions) | | :------------------------------------ | :---------------------------- | :------------------------------ | :------------------- | | Cash, cash equivalents, and investments | $363.5 | $410.3 | $(46.8) | | Current assets | $507.2 | $591.5 | $(84.3) | | Current liabilities | $230.2 | $344.3 | $(114.1) | | Working capital | $277.0 | $247.2 | $29.8 | Cash Flow Activities (in millions) | Cash Flow Activity | H1 FY26 (in millions) | H1 FY25 (in millions) | Change (in millions) | | :------------------------------------ | :-------------------- | :-------------------- | :------------------- | | Net cash used in operating activities | $(14.1) | $(31.1) | $17.0 | | Net cash provided by investing activities | $52.8 | $16.6 | $36.2 | | Net cash used in financing activities | $(28.8) | $1.5 | $(30.3) | - The increase in cash flows used in financing activities was primarily due to **$30.0 million** in common share repurchases under the NCIB share buyback program[326](index=326&type=chunk) Contractual Obligations (in millions) | Obligation Type | Total (in millions) | Short-term (next 12 months, in millions) | Long-term (>12 months, in millions) | | :-------------------------- | :------------------ | :--------------------------------------- | :---------------------------------- | | Operating lease obligations | $39.3 | $12.6 | $26.7 | | Purchase obligations and commitments | $53.0 | $53.0 | — | | Debt interest and principal payments | $221.0 | $6.0 | $215.0 | | **Total** | **$313.3** | **$71.6** | **$241.7** | [Accounting Policies and Critical Accounting Estimates](index=61&type=section&id=Accounting%20Policies%20and%20Critical%20Accounting%20Estimates) There have been no changes to the Company's accounting policies or critical accounting estimates from those described in the Annual MD&A - No changes to the Company's accounting policies or critical accounting estimates have occurred[333](index=333&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=61&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) BlackBerry is exposed to foreign exchange risk, interest rate risk, and credit and customer concentration risk, which are managed through hedging activities and monitored for potential impacts - The Company is exposed to foreign exchange risk, with significant portions of cash, accounts receivable, and accounts payable denominated in foreign currencies (Canadian dollar, euro, British pound)[334](index=334&type=chunk) - Interest rate risk stems from investments with varying maturities and fixed-rate convertible notes[337](index=337&type=chunk) - Credit risk includes an allowance for credit losses of **$5.4 million** and exposure to a **$38.1 million** deferred cash payment from Arctic Wolf[338](index=338&type=chunk) [Item 4. Controls and Procedures](index=62&type=section&id=Item%204.%20Controls%20and%20Procedures) As of August 31, 2025, the Company's Chief Executive Officer and Chief Financial Officer concluded that its disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The Company's disclosure controls and procedures were effective as of August 31, 2025[340](index=340&type=chunk) - No material changes were made to the Company's internal control over financial reporting during the three months ended August 31, 2025[341](index=341&type=chunk) [PART II - OTHER INFORMATION](index=63&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=63&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings in which the Company is involved can be found in Note **10** to the Consolidated Financial Statements - Refer to Note **10** for details on legal proceedings[343](index=343&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company initiated a Normal Course Issuer Bid (NCIB) share buyback program on May 12, 2025, to repurchase up to **27,855,153** common shares, with **5,024,926** shares repurchased during July and August 2025 - The NCIB share buyback program commenced on May 12, 2025, authorizing the repurchase of up to **27,855,153** common shares[344](index=344&type=chunk)[345](index=345&type=chunk) Share Repurchase Program Activity | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :----------------------- | :----------------------------- | :--------------------------- | | July 1, 2025 - July 31, 2025 | 2,387,128 | $4.19 | | Aug 1, 2025 - Aug 31, 2025 | 2,637,798 | $3.77 | | **Total (July-Aug 2025)** | **5,024,926** | **$3.97 (approx)** | | Maximum Shares Remaining | 20,260,268 | | [Item 5. Other Information](index=63&type=section&id=Item%205.%20Other%20Information) During the three months ended August 31, 2025, no officers or directors of the Company adopted or terminated Rule **10b5-1** or non-Rule **10b5-1** trading arrangements for the purchase or sale of the Company's common shares - No officers or directors adopted or terminated Rule **10b5-1** trading arrangements during the three months ended August 31, 2025[348](index=348&type=chunk) [Item 6. Exhibits](index=63&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form **10-Q**, including certifications from the Chief Executive Officer and Chief Financial Officer, as well as XBRL-related documents - Exhibits include CEO and CFO certifications (**31.1**, **31.2**, **32.1**, **32.2**) and various XBRL documents (**101**, **104**)[349](index=349&type=chunk)[350](index=350&type=chunk) [Signatures](index=65&type=section&id=Signatures) The report is duly signed on behalf of BlackBerry Limited by John Giamatteo, Chief Executive Officer, and Tim Foote, Chief Financial Officer, on September 25, 2025 - The report was signed by John Giamatteo (CEO) and Tim Foote (CFO) on September 25, 2025[354](index=354&type=chunk) ```

Core Insights - BlackBerry Limited has successfully transitioned from a mobile communications leader to a cybersecurity-focused company, competing with firms like Palo Alto Networks and CrowdStrike [1] Financial Performance - For the second quarter of fiscal year 2026, BlackBerry reported earnings per share of $0.04, exceeding the estimated $0.01, and revenue of approximately $131.1 million, surpassing the estimated $122 million [2][6] - The company experienced year-over-year revenue growth and expanded adjusted EBITDA margins, with its QNX division achieving a "Rule of 40" quarter, prompting an increase in full-year guidance [3] Financial Ratios - BlackBerry maintains a healthy current ratio of about 2.15, indicating sufficient current assets to cover current liabilities [4][6] - The price-to-sales ratio stands at approximately 4.80, suggesting investors are willing to pay $4.80 for every dollar of sales [4] - The enterprise value to sales ratio is around 4.31, while the enterprise value to operating cash flow ratio is notably high at approximately 176.92, indicating relatively low cash flow compared to its enterprise value [5]

Group 1 - Proactive provides fast, accessible, informative, and actionable business and finance news content to a global investment audience [2][3] - The company focuses on medium and small-cap markets while also covering blue-chip companies, commodities, and broader investment stories [3] - Proactive's news team delivers insights across various sectors including biotech, pharma, mining, natural resources, battery metals, oil and gas, crypto, and emerging technologies [3] Group 2 - Proactive employs technology to enhance workflows and has a forward-looking approach to technology adoption [4] - The company utilizes automation and software tools, including generative AI, while ensuring all content is edited and authored by humans [5]

Financial Data and Key Metrics Changes - Company revenue for Q2 fiscal year 2026 was $129.6 million, a 3% year-over-year increase [5] - Adjusted EBITDA reached 20% of revenue, with total company adjusted EBITDA growing 72% year-over-year to $25.9 million [16] - GAAP net income was positive at $13.3 million, marking a significant turnaround from a $19.7 million loss in the prior year [16] - Non-GAAP EPS was positive at $0.04, beating guidance [5][16] Business Line Data and Key Metrics Changes - QNX revenue was $63.1 million, representing a 15% year-over-year growth, with an adjusted EBITDA margin of 32% [5][17] - Secure Communications division reported quarterly revenue of $59.9 million, with annual recurring revenue (ARR) growing by $4 million to $213 million [11][12] - Licensing division generated revenue of $6.6 million, exceeding expectations [14][18] Market Data and Key Metrics Changes - QNX design wins were ahead of plan in Q2, with a solid pipeline for the second half of the fiscal year [6][10] - The Secure Communications division saw reduced customer churn and secured significant contracts with government entities [12][13] Company Strategy and Development Direction - The company is focusing on growth in the QNX business, particularly in automotive and safety-critical software [10][32] - Investment in R&D and sales and marketing is expected to drive future growth, particularly in the GEM opportunity [28] - The company is exploring new recurring revenue models, such as hosted services for SecuSmart [12] Management's Comments on Operating Environment and Future Outlook - Management noted a decrease in uncertainty regarding tariffs and government policies, which is expected to positively impact guidance [20] - The company anticipates continued growth in QNX and Secure Communications, raising full-year revenue and adjusted EBITDA guidance [21][22] - Positive cash flow is expected for the remainder of fiscal year 2026, with operating cash flow projected between $10 to $20 million for Q3 [23] Other Important Information - The company repurchased approximately $20 million worth of shares during the quarter, totaling 5 million shares [18] - The QNX division is expanding its developer community through educational initiatives [10] Q&A Session Summary Question: Operating leverage in QNX - Management sees significant leverage in the QNX model, with expectations for improved gross margins as royalty mix increases [28] Question: Approach to the China market - The company is focusing on safety-critical software in China, capitalizing on market shifts towards higher performance capabilities [31] Question: Drivers of QNX's back-end loaded revenue - Revenue trends for QNX have historically been back-end loaded, driven by the timing of design work and development seat licenses [36] Question: Backlog growth in QNX - Management indicated that Q2 showed a recovery in backlog growth after a weaker Q1, with a solid pipeline for the second half [44]

Financial Data and Key Metrics Changes - Company revenue for Q2 fiscal year 2026 was $129.6 million, a 3% year-over-year increase [5] - Adjusted EBITDA reached 20% of revenue, with total company adjusted EBITDA growing 72% year-over-year to $25.9 million [5][16] - GAAP net income was positive at $13.3 million, marking a significant turnaround from a $19.7 million loss in the prior year [16] - Non-GAAP EPS was positive at $0.04, beating guidance [5][16] Business Line Data and Key Metrics Changes - QNX revenue was $63.1 million, representing a 15% year-over-year growth, with an adjusted EBITDA margin of 32% [5][17] - Secure Communications revenue was $59.9 million, with annual recurring revenue (ARR) growing by $4 million to $213 million [11][12] - Licensing division revenue was $6.6 million, exceeding expectations [14][18] Market Data and Key Metrics Changes - QNX design wins were ahead of plan in Q2, with a solid pipeline for the second half of the fiscal year [6][10] - The Secure Communications division saw reduced customer churn and improved dollar-based net retention rate (DVNRR) to 93% [11][13] Company Strategy and Development Direction - The company is focusing on growth in the QNX division, particularly in automotive and safety-critical software [10][25] - Strategic partnerships with companies like BMW and Qualcomm are being leveraged to enhance product offerings [6][9] - The introduction of a new recurring revenue business model through hosted services is expected to create a more predictable revenue profile for the SecuSmart business [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of the fiscal year, citing a stronger than expected first half and reduced uncertainty in the market [20][23] - The company anticipates continued growth in QNX and Secure Communications, with raised full-year revenue and adjusted EBITDA guidance [21][22] Other Important Information - The company repurchased approximately $20 million worth of shares during the quarter, totaling 5 million shares at an average price of $3.97 [18][19] - The company expects to generate between $35 and $40 million in operating cash flow for the full fiscal year [23] Q&A Session Summary Question: Insights on QNX operating leverage and guidance - Management highlighted strong operating leverage in QNX, with expectations for improved gross margins as royalty mix increases [28] Question: Strategic approach to the China market - Management noted a shift in the China market towards safety-critical software, which aligns with the company's strengths [31][33] Question: Drivers of QNX's back-end loaded revenue outlook - Management indicated that the revenue pattern for QNX has historically been back-end loaded, driven by the timing of design work and development seat licenses [36][38] Question: Update on backlog and growth sustainability for QNX - Management confirmed a solid pipeline of opportunities for QNX, with optimism for maintaining double-digit growth [44][45]