BlackBerry (BB) stock pulled back in Friday's premarket session, slipping about 2.4% to $10.09 after surging nearly 20% the day before. Investors took some profits following the cybersecurity company's better-than-expected quarterly results and a higher full-year outlook.
The company reported fiscal first-quarter revenue of $152.9 million, up 26% from a year earlier and ahead of analyst estimates. Adjusted earnings came in at 4 cents per share. Growth was driven by its QNX and Secure Communications businesses, while adjusted EBITDA jumped 144% year over year to $36.3 million.
BlackBerry also raised its fiscal 2027 guidance. The company now expects adjusted earnings of 16 cents to 20 cents per share on revenue of $594 million to $621 million. For the fiscal second quarter, it forecast revenue of $137 million to $148 million and adjusted earnings of 3 cents to 4 cents per share.
QNX Royalties and Alloy Core: The Big Upside
On the earnings call, management highlighted that higher-margin QNX royalties are becoming a larger part of the revenue mix, which should support operating leverage and margin expansion. Development license revenue hit its highest level in eight quarters — an early signal of future royalty growth, since customers typically buy those tools years before production begins.
But the real headline-grabber was Alloy Core. Management said the platform could lift average selling prices per vehicle by "hundreds of percent," not just 10% or 20%, as BlackBerry expands beyond operating-system software into broader vehicle platforms. And Alloy Core may not be limited to new programs — some existing programs could shift to the platform, potentially boosting the backlog.
Secure Communications and GEM: Patience Required
Secure Communications continues to benefit from government demand tied to digital sovereignty and cybersecurity modernization. But management cautioned that large government deals "don't happen every quarter," so outsized growth and profitability usually give way to more normalized quarters. ARR remains a useful base-level indicator, though large government contracts could drive upside beyond recurring revenue.
BlackBerry also highlighted opportunities in robotics, medical instrumentation, and industrial automation. The GEM (General Embedded Market) segment is growing "materially faster" than automotive, though from a smaller base. Management said it would be "disappointed" if the company did not announce "a couple of big GEM wins" later this year.
What Analysts Are Saying
The stock carries a Buy rating with an average price target of $8.68. Recent analyst moves include:
- Canaccord Genuity: Hold, raised forecast to $8.20 (June 24)
- Stifel: Initiated with Buy, forecast $12.00 (June 24)
- CIBC: Outperformer, raised forecast to $10.00 (June 17)
With a strong quarter, raised guidance, and a compelling story around QNX and Alloy Core, BlackBerry is giving investors plenty to think about — even if Friday's pullback is just a natural pause after a big move.
