BlackBerry’s (BB) fiscal fourth-quarter results and the accompanying comments by its management team show that the company has begun generating strong growth, while its medium-to-long term future looks quite bright.
Specifically, the firm’s QNX software is continuing to gain traction among both automakers and the developers of other, advanced offerings. Moreover, the firm’s Secure Communications unit has made a comeback and has powerful, positive catalysts.
Another factor making BB stock attractive at this point is its low valuation. In light of all of these factors, medium-to-long-term investors should consider buying the shares. BB reported its Q4 results on April 9.
QNX Is Expanding Rapidly and Benefiting From Multiple, Key Trends
In a previous column, I reported that QNX , in terms of its auto business, was well-positioned to benefit a great deal from its reputation as “being very reliable and secure,” its ability to reduce automakers’ costs, and “the proliferation of software within vehicles in general and the increased utilization of ADAS and self-driving systems in particular.”
Further, I pointed out that the unit had made key “technical improvements” and had become widely used among medical device makers. In another article, I theorized that BB could benefit from Tesla’s (TSLA) market-share losses.
These trends appear to be enabling the unit’s growth to accelerate considerably, as its revenue soared 19.6% versus the same period a year earlier in Q4, versus year-over-year increases of 10.3%, 15.4%, 8.1% and 0% in the previous four quarters. Also importantly, during BlackBerry’s fiscal 2026 that ended in February QNX’s backlog advanced 10%, versus a 6% gain in FY25.
Among the division’s key design wins last quarter were a deal “with one of the world’s top five automakers based in North America” to utilize QNX’s digital cockpit and a decision by a Chinese chipmaker to utilize QNX in its smart sensors that will be sold to a number of “leading” Chinese automakers, BB CEO John Giamatteo reported on the firm’s Q4 earnings call.
Meanwhile, the CEO stated that BB was in talks with several top automakers about providing them with Alloy Core, its combined OS and middleware product, provided in partnership with another firm, Vector, which has a great deal of experience in dealing with automakers.
BlackBerry could charge “many multiples” more for Alloy Kore than its other offerings, said Giamatteo, indicating that the product can save automakers large amounts of time and money when it comes to developing software apps.
Finally, suggesting that QNX is continuing to gain ground among medical -device makers, Johnson & Johnson (JNJ) agreed to incorporate QNX in its “new AI-driven heart pump,” Giamatteo noted. The CEO added that the operating system was developing momentum in the robotics space.
Secure Communications Is Also Progressing Well
The unit’s revenue climbed 7.7% last quarter versus the same period a year earlier, compared with year-over-year (YOY) declines of 10.2%, 9.9%, and 7.3% during the previous three quarters. What’s more, its EBITDA, excluding certain items, jumped 55% year-over-year to $19.5 million, and BB expects the unit’s top line for all of the current year to come in at $270 million to $280 million, up from $258.9 million last year.
As I alluded to in a previous column, Secure Communications got a lift in Q4 from its home country of Canada, as the nation meaningfully expanded its use of Secusmart, BB’s “military-grade encrypted voice and data platform.” Secusmart also made new deals last quarter with NATO and Malaysia, while the offering has “strong ..opportunities” in Germany, the CEO noted.
Secure Communications’ standout performer for the quarter, though, was its critical events management offering, AtHoc, whose sales jumped at least 10% YOY in Q4. Among the customers that renewed and/or expanded their use of the product were the U.S. Air Force, the U.S. Treasury Department, and Australia’s Department of Foreign Affairs and Trade.
Lagging was BB’s Unified Enterprise Management offerings, as UEM’s revenue dropped YOY in Q4. But encouragingly, “the value of (its) multi-year deals” soared 47% YOY, while it obtained new projects with the IRS, Germany’s central bank, and the Council of the European Union.
In general, countries’ increased desire to safeguard their own critical data within their geographic borders, along with higher defense spending, is improving Secure Communications’ performance, Giamatteo said.
BB’s Valuation Is Attractive
Based on the midpoint of the company’s adjusted earnings per share guidance range for its current fiscal year, BB stock was changing hands at a price-earnings ratio of 22.6 times as of the market close on April 10. And that does not take into account its $232 million of cash net of debt at the end of Q4 or share buybacks that it may undertake going forward.
Given the firm’s strong growth and powerful, positive catalysts, its valuation is quite low.
*This article is intended to be informational only; it is not financial advice.
