BlackBerry raised its full-year sales and profit forecast on Thursday, June 25, after its embedded-software division turned in one of its strongest quarters in years and Chief Executive John Giamatteo told shareholders the company is pursuing new business tied to artificial intelligence. In a statement accompanying the fiscal first-quarter results, Giamatteo pointed to “multi-year growth opportunities” in software-defined vehicles and what the industry calls physical AI—the software that powers robots, factory machines and medical devices.

For the quarter ended May 31, BlackBerry reported revenue of $152.9 million, up 26% from a year earlier. The result exceeded the company’s own guidance of up to $140 million and topped Wall Street expectations of roughly $134 million. Adjusted earnings came in at 4 cents per share, ahead of both the company’s forecast of 2 to 3 cents and the 3-cent analyst consensus.

On the strength of the quarter, management raised its outlook for the full fiscal year. BlackBerry now expects revenue of $594 million to $621 million, up from a previous forecast of $584 million to $611 million, with adjusted earnings of 16 to 20 cents per share. The company also lifted its adjusted EBITDA forecast to $119 million to $139 million. For the current fiscal second quarter, it expects revenue between $137 million and $148 million.

The standout performer was QNX, the division whose software powers vehicles and other mission-critical systems where reliability is essential. QNX revenue climbed 26% to $72.3 million, while adjusted EBITDA for the business jumped 52% to $19.3 million. The division now holds a royalty backlog approaching $1 billion in contracted future revenue. Reflecting that momentum, BlackBerry increased its full-year QNX revenue forecast to $295 million to $312 million.

Much of the company’s AI strategy centers on QNX. BlackBerry said safety-certified, real-time operating software is becoming increasingly important as robotics and automation expand. Management expects software-defined vehicles, industrial automation, robotics and medical devices to remain key long-term growth drivers. Markets outside the automotive sector already account for about 20% of QNX revenue, with recent wins including an AI-enabled heart-pump project for Johnson & Johnson. Giamatteo also highlighted expansion through the company’s Alloy Kore platform as another avenue for future growth.

The Secure Communications business, which provides encrypted messaging and crisis-management software to governments and highly regulated industries, generated $73.6 million in quarterly revenue. Companywide adjusted EBITDA more than doubled to $36.3 million, a 144% increase, while the adjusted EBITDA margin expanded from 12% to 24%. On a GAAP basis, net income rose to $8.5 million, compared with $1.9 million a year earlier, marking the company’s fifth consecutive profitable quarter.

BlackBerry also generated positive operating cash flow of $4.6 million, the first time in nine years it has achieved positive operating cash flow during a fiscal first quarter, excluding the effect of a 2024 patent sale. The company ended the quarter with $422.9 million in cash and investments and repurchased 2.6 million shares for approximately $10 million.

Investors responded enthusiastically. BlackBerry shares surged more than 20% after U.S. markets opened Thursday, trading around $10.40 and approaching the company’s 52-week high of $10.93. The stock has roughly doubled in value this year, giving the company a market capitalization of approximately $6.1 billion.

The results also prompted renewed interest from Wall Street analysts. Stifel initiated coverage the previous evening with a Buy rating and a $12 price target, arguing that investors continue to undervalue BlackBerry by viewing it as a former smartphone maker rather than a provider of mission-critical enterprise software. CIBC raised its price target to $10 and maintained an Outperform rating, citing improving fundamentals across both QNX and Secure Communications. Canaccord Genuity analyst Kingsley Crane increased his target to $8.20 while maintaining a Hold recommendation. RBC Capital, however, remained more cautious with a $4.50 target, arguing the recent rally may have outpaced the company’s financial performance.

Chief Financial Officer Tim Foote said the latest quarter marks a turning point in BlackBerry’s transformation, with the company shifting from restructuring and cash preservation to profitable growth. Management expects to generate approximately $100 million in operating cash flow during the full fiscal year.

JBizNews Desk
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