Sep 24, 2026 earnings call — QNX record quarter and Alloy Core design win
QNX revenue was $80 million (record) and Alloy Core secured a design win with value estimated to be more than $100 million.
Revenue $0.2B (est $0.1B) · EPS $0.07 (est $0.04)
Key quotes
"QNX delivered record quarterly revenue of $80 million representing 27 percent year over year growth."
"Annual recurring revenue or ARR was approximately $221 million up 4 percent year over year while our dollar based net retention rate or DBNRR remained relatively stable at 91 percent."
"We generated $29 million of operating cash flow in Q2, significantly above our guidance range."
Analyst Q&A 5
royalties converting and GEM revenue model
Q (Suthan Sukumar · Stifel): He asked how the mix of royalty revenues converting from backlog has been trending and how much the profitability guide raise was driven by licensing. He also asked how the GEM/physical AI revenue model compares to typical automotive programs and whether there is an Alloy Core opportunity in GEM.
A: Management said QNX — and royalties within QNX — were the quarter's star, and that backlog conversion is starting as some design wins move to production (they referenced the 950 million backlog). They said the GEM model is fundamentally the same: a volume-based royalty model with preproduction royalties and services; lower volumes can mean higher per-unit economics but prices may fall as volumes scale. They said Alloy Core in physical AI is early days; they are using an ecosystem approach (QNX everywhere, QNX Launchpad, NVIDIA partnership) and expect the broader platform opportunity to develop over time.
"And that backlog, the 950 million that we last reported is starting to convert." — Tim Foote (CFO)
QNX cadence and minimum royalties
Q (Paul Treiber · RBC): He asked about QNX's quarter-by-quarter cadence and why growth appears to slow in Q4. He also asked about the contracted minimum royalties: when these started to appear more and how much they contributed in Q2.
A: Management said the business has long sales cycles and long production, so they focus on long-term trends rather than quarter-to-quarter lumpiness; at the midpoint they are projecting 19 percent growth year over year. They explained that moving to SDP8 and contractual fixed minimums gives greater certainty, accelerates cash, and allows some revenue to be recognized earlier; customers are making minimum commitments, which is a new dynamic.
"As part of that, there is potential for a portion of revenue to be recognized earlier." — Tim Foote (CFO)
Alloy Core pipeline and federal timing
Q (Todd Coupland · CIBC): He asked whether the Alloy Core pipeline is commercial or passenger vehicles and what to expect in the second half for future design wins. He also asked when they would get visibility on whether federal deals would materialize.
A: Management said the Alloy Core pipeline is really healthy and spans commercial and passenger vehicles; Cortica (commercial) was the first win, and they are engaging many global OEMs and tier ones, especially in Europe and Asia. On federal deals, they said the secure communications business is durable — "220-plus million dollars" of it is ARR — but geopolitical uncertainty and the longer sales cycle for government deals make timing less certain, so they are taking a cautious tone on timing.
"A lot of we think about the secure communications business, 220-plus million dollars of it is ARR." — John Joseph Giamatteo
robotaxi exposure and M&A plans
Q (John Chao · TD Cowen): He asked whether robotaxi exposure is direct or indirect, the content per vehicle, and the pipeline. He also asked about M&A: what deals are in the pipeline, how they evaluate targets, and whether they'd pay a premium.
A: Management said robotaxis are a tremendous opportunity; the Uber partnership puts them in a strong position but the market is early and ASP per vehicle is uncertain because many variables remain. On M&A, they said they are generating lots of cash, will invest and consider buybacks, and would pursue acquisitions in JEM/physical AI if a deal fast-tracks their strategy; the bar is high — strategic fit and financial profile must be strong and the deal must move them meaningfully down the field.
"It really does have to move us further down the field quite meaningfully." — Tim Foote (CFO)
Cortica deal value and secure communications timing
Q (Kingsley Crane · Canaccord Genuity): He asked how much larger the Cortica Alloy Core engagement is versus a basic BaseOS/Hypervisor deal, and whether the conservatism in guidance is concentrated in Q3 due to federal concerns.
A: Management said the Cortica Alloy Core win likely increases ASP materially — about 3x a normal ASP versus a traditional SDP8-alone approach — because they moved up the stack into more domains and added middleware and services. On guidance, they said Secure Communications is stable and cash-generating with roughly 80 percent of that business as ARR, while the remaining 20 percent depends on larger government opportunities whose timing is less certain, so they are taking a prudent view.
"It probably adds probably 3x a normal ASP of what it would be on a traditional SDP 8 alone type of approach." — John Joseph Giamatteo