Blackberry is trading near $7.81, approximately 43% below its 52-week high of $13.59. The company’s Q1 FY2027 revenue reached $152.90 million, beating the estimated $137.75 million, with earnings of $0.04 per share, exceeding the expected $0.03.
The QNX segment reported a 26% year-over-year growth, with revenue of $72.3 million and a royalty backlog of $950 million. This backlog is a key indicator of the company’s future revenue, as QNX is a real-time operating system used in vehicles, and the royalties are contracted for years in advance.
They view the QNX royalty backlog as the most important disclosure, as it represents contracted future revenue with visibility measured in model cycles rather than quarters. The current backlog of $950 million is more than three years of forward coverage, providing a stable source of revenue for the company.
Blackberry’s financials have improved significantly, with a gross margin of 76.2%, an operating margin of 10.6%, and a net margin of 10.32%. The company has also reported a turnaround in its operations.
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The recent rally in Blackberry’s stock was driven by momentum rather than fundamentals, with the stock price increasing by nearly 19% in a single day without any clear catalyst. The subsequent decline was also driven by sentiment, with the stock giving back the entire rally and more.
It has a strong royalty backlog and a growing customer base. The segment’s revenue has been increasing, with a 26% year-over-year growth in the first quarter of FY2027.
Blackberry has spent three years converting itself from a declining handset legacy into an embedded operating system franchise with a defensible position in automotive and a credible extension into robotics.
The Secure Communications segment has also shown signs of growth, driven by demand for digital sovereignty solutions and expanding defense budgets.
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Blackberry’s product portfolio supporting this theme includes SecuSUITE, which provides multi-OS secure voice and text messaging, and AtHoc, a critical event management and mission orchestration platform.
The company’s valuation is a concern, with a forward multiple. This is a full software multiple, which may be defensible if QNX royalties accelerate.
Insider activity has been notable, with approximately $3.9 million of stock sold by three executives over the three months to mid-July, with no offsetting purchases.
No purchases were made.
Management views the low teens as expensive.
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