BlackBerry Q3 Earnings & Revenues Beat Estimates Despite Headwinds

Core Insights - BlackBerry Limited (BB) reported a non-GAAP EPS of 5 cents for Q3 fiscal 2026, exceeding its estimate of 2-4 cents and the Zacks Consensus Estimate of 4 cents [1][10] - The company achieved quarterly revenue of $141.8 million, surpassing the upper end of its guidance ($132-$140 million) but reflecting a 1.3% year-over-year decline due to weaker sales in Secure Communications and Licensing [2][10] Financial Performance - For fiscal 2026, BlackBerry raised its total revenue outlook by $6 million to a range of $531 million–$541 million and increased the adjusted EBITDA midpoint by $7.5 million to $94 million–$104 million [3] - QNX division reported record revenue of $68.7 million, a 10% year-over-year increase, driven by higher royalties and growth in development seats and professional services [5][10] - Secure Communications revenue reached $67 million, exceeding guidance ($60-$64 million) and driven by strong UEM renewals despite the U.S. government shutdown [6][10] - Licensing revenues were $6.1 million, slightly down from $6.7 million in the previous year but meeting expectations [7] Margin and Expense Analysis - Adjusted gross margin remained steady at 78%, while QNX gross margin improved sequentially to 84% but declined year-over-year [8] - Adjusted operating expenses rose 7% year-over-year to $85.4 million as the company continued to invest in QNX growth [9] Cash Flow and Shareholder Returns - Operating cash flow for Q3 was $17.9 million, more than doubling year-over-year, with free cash flow at $17 million compared to $5 million in the previous quarter [12] - The company returned $5 million to shareholders through share repurchases, indicating management's confidence in its trajectory [13] Q4 Guidance - For Q4, BlackBerry expects QNX revenue of $71 million–$77 million and adjusted EBITDA of $17 million–$23 million, along with raised expectations for Secure Communications revenue of $61 million–$65 million [14] - Total revenues are projected to be between $138 million and $148 million, with adjusted EBITDA between $22 million and $32 million [15] - Operating cash flow for Q4 is anticipated to rise to $40 million–$45 million, strengthening the balance sheet further [16]