BlackBerry’s (BB) Secure Communications and QNX businesses both have multiple, powerful, positive catalysts ahead, while the valuation of BB stock is quite attractive at this point.
Moreover, the risk posed by the shares is low. Given all of these points, I believe that the shares are well-suited for all long-term investors.
Secure Communications’ Growth Is Likely to accelerate significantly
BB CEO John Giamatteo, speaking on the company’s third-quarter earnings call held on December 18, indicated that the firm’s Secure Communications unit would generate significant additional revenue from Canada, where the company is based, in the coming quarters.
Citing “great momentum…with the Canadian government,” the CEO noted that the country is looking to buy more products that are made in Canada. Giamatteo suggested that the firm, which is now mainly providing offerings within its Unified Endpoint Management (UEM) portfolio to Canada, was holding “some really good discussions” about selling its AtHoc, SecuSUITE, and SecuSmart solutions to the Canadian government.
Among the other positive developments cited by Giamatteo were decisions by the U.S. Navy and the Department of Justice to meaningfully increase their utilization of AtHoc. Further, the National University of Malaysia, Australia’s Department of Foreign Affairs and Trade, and Scottish and Southern Energy, described by Giamatteo as a “key U.K. energy infrastructure provider,” all decided to use the emergency service during BB’s Q3. Finally, the CEO stated that Germany had agreed to increase the extent to which it uses BB’s UEM offerings.
Since BB’s UEM earlier this year “became the first solution to be certified by Germany’s Federal Office for Information Security,” according to Giamatteo, many more such deals with Europe’s largest economy could be on the way for BB.
Speaking of deals on the way, the CEO said that the Secure Communications unit has “a really strong pipeline, one of the stronger pipelines that we’ve had in a long time, so that bodes well for us.”
QNX Really Looks Poised to Take Off
BlackBerry’s guidance for its current quarter indicates that QNX’s revenue will jump 15% versus the same period a year earlier, up from a 10% year-over-year increase during the previous quarter.
And CFO Tim Foote suggested that QNX’s growth, powered by its backlog, would accelerate meaningfully during the company’s FY2027 which kicks off in March 2026.
QNX’s backlog has “actually accelerated pretty well (and) conversion of that backlog into revenue, which will start in FY2027, is going to really drive that business forward,” Foote said.
Meanwhile, QNX, in addition to the increased revenue that it will generate as autos use more software, is well-positioned to benefit from two other major trends that are just getting started: the proliferation of humanoid robots and the stepped-up exploitation of space.
Because humanoid robots require “more compute power” and “more performance,” they are “a sweet spot for QNX,” Giamatteo said. More specifically, robot makers looking for “high compute and high performance” can benefit from utilizing QNX’s Software Development Platform (SDP) 8.0, the CEO stated.
Since advanced humanoid robots certainly require “high compute and high performance,” SDP8 should become very popular in the space. Additionally, BB’s partnership with AMD (AMD) could also help lift the revenue that QNX generates from robot makers.
Finally, QNX could start to acquire many customers in the space sector. That’s because NASA is going to start utilizing SDP8, Giamatteo disclosed. If NASA believes that SDP8 is a valuable tool for developing systems for space, many private companies may also adopt that position.
Valuation and Risk
BB stock has a very low price-book ratio of 3.2 times. And because the company expects to generate $43 million to $48 million of operational cash flow during its current fiscal year, while it had cash of over $300 million and just $228 million of debt as of the end of last quarter, it poses little risk to investors.
*This article is intended to be informational only; it is not financial advice.
