BlackBerry raised its annual revenue forecast after reporting first-quarter results that comfortably beat expectations, with its QNX automotive-software business and secure-communications unit driving a sharp improvement in profitability. The update extended a turnaround at the former smartphone pioneer, now reinvented as an embedded-software and cybersecurity company.
For the quarter ended in May, the company reported revenue of about $153 million, up 26% from a year earlier and ahead of analysts' forecasts. Profitability improved markedly: adjusted earnings before interest, taxes, depreciation and amortization rose sharply, and GAAP operating income swung to a positive figure of around $15 million. The company said it had now posted positive GAAP net income for a fifth consecutive quarter, and generated positive operating cash flow for the first time in nine years, excluding the effect of an earlier patent sale.
On the strength of that start, BlackBerry lifted its outlook for the full fiscal year, pointing to momentum in its core businesses. Chief executive John Giamatteo said the results reflected continued progress following the company's transformation, with both the QNX and secure-communications teams exceeding expectations on revenue, profitability and cash generation.
QNX remains the centerpiece of the growth story. The operating system is embedded in hundreds of millions of vehicles worldwide, powering systems such as infotainment, digital cockpits, advanced driver-assistance features and telematics, and the company sees multi-year opportunities as the industry shifts toward software-defined vehicles. Management also highlighted expansion beyond automotive into the broader embedded market, including what it described as physical AI applications, which it believes enhance QNX's long-term potential. The royalty backlog tied to QNX has been a closely watched measure of future revenue visibility.
The secure-communications arm, which sells encrypted messaging and crisis-management tools to enterprises and governments, has benefited from rising demand tied to digital-sovereignty concerns and expanding defense budgets, adding a second pillar to the company's recurring-revenue base. Both segments, the company said, reached a profitability-and-growth benchmark known in the software industry as the Rule of 40, a sign that they are balancing expansion with margins.
The report lands after a remarkable run in the shares, which had surged over the prior months as investors grew more confident in the company's pivot away from its legacy operations. That rally had also drawn a split of opinion among analysts, with some crediting improved management messaging and better visibility, and others cautioning that the upside case depends on the company proving that growth in newer parts of QNX is durable and that its backlog converts into actual revenue.
For now, the combination of a first-quarter beat and a raised full-year outlook offered evidence that the turnaround is gaining traction. The company struck a measured tone, noting that it remains early in the fiscal year while emphasizing that the foundation of the business is stronger than it has been in years. Investors will be watching subsequent quarters to gauge whether the embedded-software and secure-communications momentum can be sustained at the pace the early results suggest.