BlackBerry Secure Comms Business Rebounds: Inflection Ahead?

BlackBerry’s BB Secure Communications business is showing signs of resurgence, delivering 8% year-over-year growth in the fiscal fourth quarter and approaching “Rule of 40” performance. Annual recurring revenues rose 1% sequentially to $218 million, up 5% year over year, while DBNRR improved to 94%, gaining 2 points sequentially.

Rising NATO and global defense spending is driving strong momentum in BlackBerry’s Secure Communications unit. Secusmart, the military-grade encrypted platform, posted solid year-over-year growth, led by demand from the German government, where it meets strict BSI standards.

The growth is also fueled by a powerful macro trend — digital sovereignty. Governments and enterprises increasingly demand secure, sovereign communication systems that protect sensitive data from foreign access. A major validation came from the Government of Canada expanding its partnership and increasing adoption of BlackBerry’s Secusmart licenses across federal agencies. This deal is expected to drive a strong start to fiscal 2027 with meaningful revenue contributions.

Recently, BB’s AtHoc secured a 2026 FedRAMP High recertification. AtHoc is already trusted by 80% of U.S. federal agencies, law enforcement, defense organizations, emergency services and critical infrastructure operators. It remains the only CEM platform to hit this bar recently.

BlackBerry expects Secure Communications to return to full-year growth in fiscal 2027 for the first time in six years, marking a crucial inflection point. Fiscal 2027 revenues are projected to grow 4-8% to $270-$280 million, with adjusted EBITDA forecasted at $57-$65 million. However, BlackBerry faces serious competition from CrowdStrike CRWD and Palo Alto Networks PANW and a host of other companies in the rapidly evolving cybersecurity space.

Mapping the Competitive Terrain

CrowdStrike specializes in next-generation endpoint protection, threat intelligence and cyberattack response services. The company recently reported results for the first quarter of fiscal 2027, wherein revenues surged 26% year over year to $1.39 billion. Management emphasized that as enterprises rapidly adopt AI, cybersecurity has become a critical component, creating a massive demand pipeline.

CrowdStrike is seeing strong adoption across cloud, identity, and next-gen SIEM, with these newer categories exceeding $2 billion in ARR. Another important catalyst is Falcon Flex, the company’s subscription model. CRWD added more than 300 Falcon Flex accounts in the fiscal first quarter. The company expects current quarter revenues to be between $1.436 billion and $1.442 billion.

Palo Alto Networks offers a wide range of cybersecurity solutions across Security Operations, Network, Cloud, AI and Identity. Revenues for the third quarter of fiscal 2026 surged 31% year over year to $3 billion, including $388 million from Chronosphere and CyberArk. Next-Generation Security ARR was up 60% year over year to $8.1 billion. Like CRWD, Palo Alto Networks also noted structural tailwinds emerging from higher cybersecurity needs amid rapid AI adoption.

In the fiscal third quarter, PANW secured 110 net new platformizations, expanding its footprint into the identity and observability addressable markets. It had 2,280 total platformized customers at the quarter-end.

BB Price Performance, Valuation & Estimates

Shares of BlackBerry have surged 122.2% in the past month against the Internet-Software industry’s decline of 8.3%.

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Regarding the price/book ratio, BB is trading at 8.02, higher than the industry’s multiple of 4.74.

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The Zacks Consensus Estimate for BB earnings for fiscal 2027 has been revised upward over the past 60 days.

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BlackBerry currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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