BlackBerry (BB) Q2 2027 earnings review
BlackBerry's new automotive platform wins a major deal; cybersecurity shrinks
BlackBerry, the maker of automotive and cybersecurity software, is leaning entirely on its automotive unit while its older business goes backward. Total revenue grew 26%, and profit jumped on lower costs and an unexpected bump in patent licensing. Management raised its full-year plan for the automotive unit but lowered it for cybersecurity, and by our math the outlook has total growth slowing to about 3% by the fourth quarter.
| Total revenue | $163.3M +26% from a year ago |
|---|---|
| QNX revenue | $80.3M +27% from a year ago |
| Secure Communications net retention rate | 91% 93% a year ago |
| Full-year revenue outlook | Raised $18.5M middle of the range: $626 million |
⚖️ Verdict: 🟢 Bullish
The standing case got better because the company proved its next-generation automotive platform can win major contracts. A single deal added more than $100 million to the backlog, answering earlier doubts about whether customers would pay for the upgrade. The bad news: the promised turnaround in cybersecurity is fading, with the yearly plan cut and net retention falling.
The question now is whether cybersecurity can find a floor or will continue to drag on the company's overall results. It either stabilizes government contract renewals, or the bleeding continues. The net retention rate next quarter will show the direction.
🐂 Bull Case
The New Platform Landed a Huge Win
The company proved its next-generation automotive platform can win major contracts. Coretura chose the Alloy Kore software for commercial vehicles, adding more than $100 million to the automotive unit's royalty backlog.
Two quarters ago, management noted this platform had no design wins yet. The size of this single deal answers earlier doubts about whether automakers would pay higher prices for the upgrade.
What to watch: when the backlog translates into recognized revenue. The company's pipeline in physical artificial intelligence could yield similar large deals over the next year.
Software Growth Lifted Profit Margins
Higher revenue across the automotive unit dropped straight to the bottom line. Adjusted earnings before interest, taxes, depreciation and amortization rose 81% from a year ago.
The automotive software unit reached a 36% margin, carrying the company's overall profitability. The business met the Rule of 40 standard for a second straight quarter, keeping operating expenses flat while sales climbed.
What to watch: whether the company can maintain these margins while investing in new product sales. Next quarter's adjusted margin will show it.
🐻 Bear Case
The Cybersecurity Turnaround Faded
Management previously called the cybersecurity business a growth contributor with a digital sovereignty tailwind. This quarter contradicted that framing.
- Net retention rate: 91%, down from 93% a year ago
- New recurring revenue: just $1 million added this quarter, down from $4 million a year ago by our math
- Full-year outlook: cut by $10 million at the middle of the range
What to watch: whether the net retention rate stops falling. A figure below 90% means the business is shrinking faster than the sales team can replace lost contracts.
A Licensing Jump Inflated the Beat
Total revenue beat the company's plan by nearly $21 million, but more than half of that came from the volatile licensing segment. The company planned for about $10 million in licensing revenue and delivered $22 million.
Without that jump, the overall revenue beat would have looked much smaller. Management expects licensing revenue to return to normal levels for the rest of the year.
What to watch: the gap between the automotive unit's growth and total growth as licensing revenue falls back to the baseline.
The Plan Points to a Slower Fourth Quarter
The full-year outlook implies a sharp slowdown at the end of the year. By our math, the plan leaves about 3% total revenue growth for the fourth quarter, down from 26% this quarter.
The drop-off comes mostly from the cybersecurity segment and a normal decline in licensing. Even the fast-growing automotive unit is implied to slow to single-digit growth by the fourth quarter.
What to watch: whether the company raises its fourth-quarter plan when it reports next time, or if total growth really is grinding to a halt.
💲 Other KPIs
A vast improvement over the $2.6 million generated a year ago. The company held capital spending to just $1.2 million while bringing in more cash from operations, helping push the total cash balance to $447 million.
Up 3.2 percentage points from a year ago. The cost of delivering the software barely moved while revenue jumped, proving the business scales efficiently when sales volumes rise.
🔮 Guidance
Raised. The middle of the full-year range moved up $18.5 million. The plan calls for $143–154 million in Q3. By our math, the full-year outlook then leaves about 3% growth for Q4, the slowest quarter in more than a year. The raise marks the second upward revision in two quarters.
Raised. The full-year middle of the range moved up $20 million. The company expects $82–88 million in Q3, implying a sequential slowdown at the end of the year.
Cut. The full-year middle of the range moved down $10 million. The company expects $55–60 million in Q3, a step down from the $61 million it just delivered.
Raised. The full-year figure moved up $12 million. Management expects about $6 million in Q3, indicating this quarter's $22 million result was a one-time event.
Raised. The full-year middle of the range moved up $20.5 million. The Q3 plan calls for $28–37 million, a drop from the $47 million it just delivered.
Raised. The full-year middle of the range moved up. The Q3 plan calls for $0.04–0.05 per share.
Raised. The full-year figure moved up $15 million. The Q3 plan calls for $20–30 million, matching this quarter's output.
❓ Key Questions
Why did net retention drop?
The cybersecurity net retention rate fell to 91% when digital sovereignty was supposed to be a tailwind for government contracts.
When will the automotive backlog convert?
With the automotive backlog adding more than $100 million from a single deal, analysts need to know how quickly those design wins will turn into recognized revenue.
What drove the licensing surprise?
Licensing revenue beat the company's plan by $12 million this quarter. Investors need to know if any of that jump is recurring.