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BlackBerry (TSX: BB) rose 8% on Tuesday and gained more than 6% on Wednesday as investors responded positively to the strong momentum in its QNX business. The division announced that its royalty backlog had surpassed US$1.2 billion for the first time, highlighting the growing commercial potential of its embedded software portfolio and its expanding position in next-generation automotive computing.
The latest backlog is up more than US$250 million, or over 26%, from about US$950 million at the end of fiscal 2026. This growth indicates that demand for QNX technology is strengthening, supported by adoption of the QNX Software Development Platform (SDP) 8.0 and the division’s first design win for Alloy Kore, its foundational automotive operating system. The growing royalty backlog is encouraging because it provides greater visibility into future revenue and represents high-margin revenue that helps support the company’s profitability.
What Is Driving QNX’s Growth?
A key growth driver is the increasing use of QNX SDP 8.0 in advanced vehicle computing systems. Automakers are shifting toward centralized computing platforms that can manage multiple vehicle functions and applications through a single system. This shift is driving demand for reliable software to support complex automotive technologies, creating new opportunities for QNX as vehicles become increasingly software-driven. Beyond the automotive market, BlackBerry is also expanding its foundational software capabilities into general embedded markets and emerging Physical AI applications. As demand for reliable, specialized software continues to evolve, these areas could provide additional growth opportunities.
Is BlackBerry Stock a Buy?
BlackBerry shares have risen more than 155% year-to-date, driven largely by QNX’s strong performance and improving profitability. Despite the sharp share price increase, BlackBerry’s fundamentals remain solid, and its expanding royalty backlog, expansion into high-growth markets and improving financial performance suggest the stock still has upside potential.
The Canadian technology company reported second-quarter revenue of US$163 million, up 26% year over year. Adjusted gross margin improved by 3 percentage points, while adjusted EBITDA nearly doubled to US$47 million, representing 29% of revenue. Adjusted net income reached US$43 million, with adjusted earnings per share (EPS) of US$0.07. QNX remains BlackBerry’s biggest growth engine, generating quarterly revenue of US$80 million, up 27% year over year; its adjusted gross margin reached 87%, while adjusted EBITDA rose 41%. As demand for embedded software grows across the automotive industry and other sectors, QNX could become an even bigger contributor to BlackBerry’s earnings. Its growing royalty backlog also provides better visibility into future revenue.
BlackBerry’s relatively capital-light business model supports positive free cash flow, giving it more flexibility to invest in growth, strengthen its finances and pursue strategic opportunities. The company plans to continue investing in QNX, its automotive business, Alloy Kore and GEM, while exploring acquisitions that could accelerate expansion. Overall, BlackBerry’s outlook appears promising, making it a “Buy” option. Revenue growth, improving margins and stronger cash flow point to a healthier business, with QNX playing a key role in its growth.
