Revenue Radar: Blackberry
BlackBerry, the cybersecurity and IoT software provider, has delivered improved financial performance in Q2 2025, marking progress in its turnaround efforts and strengthening its position in the competitive software landscape. However, the company still faces challenges in overall profitability.
BlackBerry reported its Q2 2025 earnings on September 26, 2024.
“BlackBerry reached a significant milestone on our path to profitability by recording breakeven adjusted EBITDA and non-GAAP EPS,” said CEO John J. Giamatteo. “This result was achieved through a combination of stronger than expected, double-digit revenue growth for both IoT and Cybersecurity, as well as tremendous ongoing progress in rationalizing our cost structure. Operating expenses for the quarter were 24% lower than the baseline for the prior year.”
BlackBerry’s Q2 2025 results highlight strong performance across its two main business segments: IoT and Cybersecurity. Both segments demonstrated double-digit year-over-year growth, exceeding previously-provided guidance.
The IoT segment continued its upward trajectory, with revenue climbing 12% year-over-year to reach $55 million. This growth was primarily driven by strong QNX royalty revenue. The segment’s profitability also improved, with gross margin increasing by 1 percentage point to an impressive 82%.
In the Cybersecurity division, revenue grew by 10% compared to the same quarter last year, totaling $87 million. This growth was particularly notable in secure communications products. The segment’s gross margin also saw a modest improvement, rising 1 percentage point to 55%.
While the Licensing and Other segment contributed $3 million to the overall revenue, it played a minor role compared to the two main segments.
BlackBerry’s focus on recurring revenue in its Cybersecurity business is reflected in its key metrics. The Cybersecurity Annual Recurring Revenue (ARR) remained stable at $279 million year-over-year. More impressively, the Dollar-Based Net Retention Rate (DBNRR) increased to 88%, marking a 7 percentage point improvement both year-over-year and sequentially for the fourth consecutive quarter. This trend suggests growing customer loyalty and expanding relationships with existing clients.
Overall, BlackBerry’s total non-GAAP gross margin stood at 66%, with GAAP gross margin closely following at 65%. These figures underscore the company’s ability to maintain healthy profit margins while driving growth across its key business segments.
BlackBerry’s financial health showed signs of improvement in Q2 2025, particularly in its cash management and operational efficiency. The company ended the quarter with a total cash, cash equivalents, short-term and long-term investments position of $265 million. This robust cash reserve provides BlackBerry with a solid financial foundation to support its ongoing strategic initiatives and weather potential market uncertainties.
One of the most notable improvements came in the company’s operating cash usage. BlackBerry significantly reduced its cash burn, with operating cash usage improving by $43 million year-over-year to $13 million for the quarter. This substantial reduction in cash usage not only exceeded expectations but also demonstrates the company’s commitment to financial discipline and operational efficiency.
On the expense front, BlackBerry made significant strides in rationalizing its cost structure. Operating expenses for the quarter were 24% lower than the baseline for the prior year, a testament to the company’s ongoing efforts to streamline operations and improve profitability. This reduction in operating expenses played a crucial role in BlackBerry achieving breakeven adjusted EBITDA and non-GAAP EPS for the quarter.
The company’s focus on cost management is further reflected in its non-GAAP operating loss, which stood at $4 million, a substantial improvement from previous quarters. This near-breakeven operating performance, coupled with the reduced cash usage, suggests that BlackBerry is making tangible progress towards sustainable profitability.
These financial improvements have not come at the expense of innovation or market competitiveness. Despite the reduced operating expenses, BlackBerry continued to invest in key areas of its business, particularly in its IoT and Cybersecurity segments, which both saw double-digit revenue growth.
The company’s ability to balance cost reduction with strategic investments positions it well for future growth and profitability. However, achieving consistent profitability remains a key challenge for BlackBerry as it continues to navigate the competitive landscape of the cybersecurity and IoT markets.
In Q2 2025, BlackBerry continued to demonstrate its commitment to innovation and product development across its key business segments. The company’s strategic initiatives focused on enhancing its offerings in both the IoT and Cybersecurity sectors, aiming to strengthen its market position and drive future growth.
In the IoT segment, BlackBerry made significant strides in expanding its QNX platform capabilities. The company introduced QNX Containers, a new feature supporting operating system (OS) virtualization and containerization on QNX-based devices. This innovation provides highly secure and isolated embedded containers while maintaining the high performance and real-time nature of QNX OS 8. This development is particularly relevant for the automotive industry, where secure and efficient software solutions are increasingly in demand.
Further cementing its position in the automotive sector, BlackBerry announced a collaboration with HaleyTek AB. The partnership will see HaleyTek’s Generic Automotive Platform (GAP) cockpit software platform incorporate BlackBerry’s QNX Sound software-defined audio platform. This integration demonstrates BlackBerry’s ongoing efforts to expand its presence in the automotive software market and capitalize on the growing trend of software-defined vehicles.
On the Cybersecurity front, BlackBerry launched CylanceMDR Pro, a cutting-edge managed detection and response (MDR) service. Built on an Open XDR platform powered by AI, this new offering enhances BlackBerry’s cybersecurity portfolio, addressing the growing demand for advanced threat detection and response solutions in an increasingly complex digital security landscape.
The company’s efforts in the cybersecurity space received industry recognition, with BlackBerry’s endpoint protection platform (EPP), CylanceENDPOINT, being named a 2024 Customers’ Choice for endpoint protection platforms by Gartner Peer Insights. This accolade underscores the effectiveness and market acceptance of BlackBerry’s cybersecurity solutions.
These strategic initiatives and product developments align with BlackBerry’s long-term vision of securing and connecting the Internet of Things. By continuing to innovate in both IoT and Cybersecurity, BlackBerry is positioning itself to capitalize on the growing convergence of these two sectors, particularly in areas like automotive and industrial IoT where security is paramount.
BlackBerry’s Q2 2025 results have set a positive tone for the company’s future, and this is reflected in their guidance for the upcoming quarter and the full fiscal year 2025.
For the third quarter (ending November 30, 2024), BlackBerry expects:
For the full fiscal year 2025 (ending February 28, 2025), the company projects:
Notably, BlackBerry has raised the bottom end of its full-year guidance range for IoT, signaling confidence in the continued growth of this segment. The company’s outlook suggests a trajectory towards improved financial performance, with expectations of reaching breakeven or positive adjusted EBITDA for both the upcoming quarter and the full fiscal year.
The guidance reflects BlackBerry’s ongoing transition and its focus on its core IoT and Cybersecurity businesses. The projected revenue growth in these segments underscores the company’s strategy to capitalize on the increasing demand for secure, connected technologies in various industries, particularly automotive and enterprise security.
However, it’s important to note that challenges remain. The projected EPS range for the full year still includes the possibility of a loss, indicating that BlackBerry’s journey to consistent profitability is ongoing. The company will need to continue balancing its investments in growth and innovation with stringent cost management to achieve its financial targets.