A：BlackBerry's Q1 fiscal year 2027 results highlighted a strong start to the fiscal year with a focus on profitable growth through value creation. The company saw robust execution across QNX and secure communications, both delivering Rule of 40 performance with growth and profitability. Total company revenue came in at $153 million, exceeding the high end of guidance, and adjusted EBIT more than doubled year over year. The company also reported positive GAAP net income for the fifth consecutive quarter and continued generating positive operating and free cash flow.

A：The QNX business delivered another Rule of 40 quarter in Q1, with revenue coming in at approximately $72 million, representing 26% year-over-year growth. This performance was driven by strength across development licenses, professional services, and royalties, with development license revenue being the highest in 8.4 years. This is an important indicator of future growth as customers invest in tools for developing new software platforms on QNX. The business secured new design wins across automotive and embedded markets and made a strategically important sale of SDP 8 development tools to a U.S. based software developer. These results demonstrate solid progress in expanding QNX adoption and the value delivered per deployment.

A：Beyond its current revenue and backlog, QNX has several long-term growth drivers. One is the expansion into non-automotive sectors such as robotics, industrial automation, medical devices, and other safety-critical applications, which is supported by its fast-growing segment in industrial embedded systems (Gem). Another growth driver is the increasing demand for physical AI, where QNX's deterministic and safety-certified technology is well-suited for increasingly autonomous machines. The strategic partnerships with major technology companies like Nvidia, Qualcomm, and Arm are expected to strengthen QNX's position in next-generation intelligent systems and expand its role from operating system provider to platform provider.

A：QNX technology is significant in physical AI due to its deterministic and safety-certified nature, which is crucial for systems where failure is not an option. In the automotive sector, modern vehicles are essentially robots on wheels, and QNX has established itself as a trusted platform for supporting advanced autonomous and safety-critical systems. This technology is trusted for applications requiring high levels of safety, security, reliability, and real-time determinism, such as in modern vehicles.

A：BlackBerry's strategic partnership with Nvidia, along with other silicon ecosystem leaders like Qualcomm and Arm, is expected to strengthen its position in next-generation intelligent systems. These partnerships serve as important sales channels for QNX and position the company for future growth across various markets, including physical AI and industrial embedded systems (Gem). While the company is not ready to declare victory on securing its first design win with Alloy Core, it remains confident in the potential of this relationship to drive long-term growth by expanding its role from operating system provider to platform provider.

A：The government's prioritization of secure communications is contributing to significant revenue from large government deals, such as the multi-year extension with Shared Services Canada.

A：Recent wins include a significant expansion and multi-year extension with Shared Services Canada, deals with the US Air Force, the UK's National Crime Agency, the Metropolitan Police Service, the Bavarian State Tax Office, giz's German Society for International Cooperation, the Saudi National Bank, and the Bank de France.

A：The adjusted EBITDA for QNX in the first quarter was approximately $19 million, representing approximately 27% of revenue for the quarter.

A：QNX revenue exceeded the top end of the guidance range at approximately $72 million, growing 26% year over year. The adjusted gross margin expanded by approximately 5 percentage points year over year to 86%, driving adjusted EBITDA growth of 52% to approximately $19 million.

A：At the end of the first quarter, the company reported $423 million of cash and investments, representing net cash of approximately $223 million. They bought back 2.6 million shares for approximately $10 million as part of their share buyback program, and later announced a renewal and upscaling of the program to repurchase approximately 27 million additional shares.

A：The outlook for the QNX business is strong, with full year revenue and Adjusted EBITDA outlook raised to a range of $295 to 312 million and $74 to 86 million, respectively. The company remains very confident in the trajectory of the QNX business and the pipeline of opportunities.

A：The updated total company forecast for the full fiscal year is revenue in a range of 594 to 621 million and adjusted EBITDA in a range of 119 to 139 million.

A：The current geopolitical environment emphasizes digital sovereignty, presenting new opportunities for QNX that are expected to be sticky and generate long-term revenue.

A：The expected increase in the addressable market for QNX, due to repositioning, is significant with the potential for generating much higher revenue per car, in the hundreds of percent increase.

A：The trust established by QNX with industry partners, such as Vector, indicates strong potential for future business opportunities and integration of the QNX platform.

A：Future new models are likely to be more geared towards SDP 8 and advanced chip sets, operating systems, and middleware capabilities, with a tendency leaning towards these advanced features.

A：There is potential for some current programs to be moved to alloy core sooner, which could result in an uplift on existing backlog, representing a significant impact for the company.

A：Competitive win rates in all verticals outside of auto are comparable to those in the automotive sector where the company has strong leadership. However, the competitive backdrop may differ, particularly in non-automotive sectors where there's a prevalence of open source, but it's not clear if that's a factor.

A：Outside of the automotive industry, the company focuses on sectors such as robotics, medical instrumentation, and industrial automation, which are areas where their strength in real-time determinism, safety, security, and reliability provides an edge.

A：The pipeline is strong, especially in EMEA and Asia Pacific regions, due to the increased interest in digital sovereignty solutions, such as encrypted data, voice, and video solutions, driven by geopolitical realities and the need for more secure communication channels.

A：Net dollar retention is expected to improve and possibly reach closer to 100% as the business stabilizes and grows consistently. Although there are some headwinds that currently keep it around 92%, the company is confident in moving towards higher retention rates.

A：On the QNX side, as the company shifts more towards royalties, which have a high margin, there is potential for further margin expansion. For Secure Communication, the margin varies, with around 80% of the business being ARR and the potential for significant expansion in quarters with substantial big deals, especially when software is the predominant element of revenue.

A：BlackBerry's relationship with Nvidia has evolved over time, starting with work in the automotive sector and standardizing Nvidia's architecture on QNX. This relationship grew closer and led to partnering on physical AI safety stack, which is set to be rolled out and standardized on QNX.

A：China currently manufactures the most robotics and has a strong presence that BlackBerry interacts with through deep roots in Shanghai. BlackBerry's business in China benefits from strong partnerships and the need for safety certification and unique capabilities that BlackBerry provides, which are in line with China's ambitions of exporting technology globally.

A：BlackBerry manages geopolitical risks by having a deep presence in China, interacting closely with teams, customers, partners, and government officials. The company works closely with the Canadian government to facilitate business continuity and expansion beyond China into other global markets.

A：Jan's potential wins are expected to be more in volume in terms of the number of wins, with a slightly smaller dollar value compared to QNX. The nature of Jan's business tends to be less financially impactful per model but offers opportunities for growth, especially in the emerging geospatial space.

A：There is an expectation of meaningful Geospatial contract awards this year as the uptake on BlackBerry's Secureworks (SDP) has been tremendous. The company is pleased with the pipeline and is confident in delivering significant wins in both Geospatial and QNX.

A：The exact mix of developers' license between the automotive and Geospatial sectors is not typically broken out, but it is fairly representative of the company's overall business, which is roughly a 80/20 split in favor of automotive.

A：The long-term growth outlook for QNX is considered to be stronger than what was initially forecast at the Investor Day in 2024. The company is highly excited about the prospects, especially in the Geospatial segment, and potential growth from Alloy Core, which could be transformative for the business. While the company is not ready to provide a specific growth number, it feels confident about the business trajectory and its execution capabilities.

A：The Geospatial segment has been growing faster than the automotive sector, although both are expanding. The shift in the mix of growth does not happen rapidly because both business segments are growing, and the addition of potential growth from Alloy Core could further accelerate the automotive sector's growth.