The open

Today's theme: the business hiding inside a familiar name is often the one that decides the outcome.

• $MSFT: Q1 FY27 revenue rose 19% to $92.3B and Azure grew 48%. Microsoft's results​
• $GEN: revenue grew 12% to $1.369B and the FY27 outlook went up. Gen's results​
• $BB: QNX went from 28.4% of revenue in fiscal 2024 to 48.8% in fiscal 2026.
• Payroll without the hiring: $ADP revenue grew 6.74% while client employment grew 1%, and $PAYX PEO and Insurance grew 11.70% against 4.28% for the core.

$BB: The takeover story ended when QNX became the company

For years the case for BlackBerry was what a buyer might pay for the pieces. That framing is out of date. QNX, the embedded operating system business, went from 28.4% of revenue in fiscal 2024 to 48.8% in fiscal 2026. In Q2 it was $80.3M of $163.3M of revenue, grew 27.26%, and ran at an 86.80% adjusted gross margin. It also earns the most segment EBITDA of BlackBerry's three businesses.

The rest of the company is not keeping pace. Secure messaging barely moved in Q2, and a one-off patent licensing deal lifted total growth to 26.00%. Set that deal aside and the growth story is almost entirely QNX.

Our thesis: BlackBerry is now an embedded software royalty business with a legacy security arm attached. QNX carries a royalty backlog of about $950M, revenue that arrives as the software it sits in ships. That changes the question an owner should ask. It is no longer what a buyer would pay for the parts. It is how durable the QNX royalty stream is, how fast it compounds, and what the rest of the company costs to carry while it does.

What to watch: QNX's share of revenue in the next print, whether growth holds without one-off licensing help, and whether the backlog keeps converting. If secure messaging stays flat, the mix shift does the work by itself.

​Read the $BB takeover research Read the $BB QNX research​

Quick hits

• $NAVN grew Q2 revenue 35.38% to $232.79M, 90.81% of it per-booking usage fees, and gross booking volume rose 45%. Stock pay was 27.29% of revenue and owner cash is negative. Read the research​
• $RBBN Q2 revenue fell 12.80% to $192.34M. Lenders waived the June 30 leverage test and raised the margin to 7.00%. The next test is 4.50x at Sep 30. Read the research​
• $PRGS turned $246.71M of twelve-month owner cash out of $999.93M of revenue, nearly a third, but ARR rose only 1.39% to $873M. Read the research​
• $ROP Q2 revenue was $2.11B, up 8.50%, and software was 77.11% of it. Read the research​
• $GEN Q2 FY27 revenue grew 12% to $1.369B, another double-digit quarter, and it raised its FY27 outlook. Gen's results​

$PAYX: The faster engine now carries Paycor's debt

Paychex grew Q1 revenue 5.88% to $1.63B. The headline hides two businesses moving at different speeds. Management Solutions, the payroll and HR core, grew 4.28%. PEO and Insurance grew 11.70%, nearly three times as fast. This is the first quarter that the whole company carries the Paycor debt, so the split between the two engines matters more than it did a year ago.

That gap matters because the core is the part with the toll. Payroll is sticky, mission critical and painful to switch. The PEO line grows faster, but it bundles benefits and insurance into the relationship, so it is a different kind of revenue with a different kind of risk.

Our thesis: Paychex is leaning on its faster engine while it absorbs a large acquisition. All of it now carries $4.56B of Paycor debt. A company growing its core in the low single digits has less room for error while it carries acquisition debt, so the PEO line has to keep doing the heavy lifting. The margin is holding so far: operating margin rose to 37.98% from 35.19% as SG&A fell while revenue grew. Paychex paid $424.1M of dividends in Q1 and made no buybacks.

What to watch: whether Management Solutions growth holds at Q1's 4.28% or slips, whether PEO and Insurance keeps growing at double digits, and how quickly the Paycor debt comes down. The payroll toll is intact. The open question is how much of the growth now depends on the line with the thinner toll.

​Read the $PAYX research​

$ADP: Payroll growth without the hiring

ADP grew fiscal 2026 revenue 6.74% to $21.95B. Employment at its clients grew only 1%. For a business that has long grown alongside the number of paychecks it processes, that gap is the story. Employer Services retention was 92.1% and new business bookings grew 6%.

The filing shows where the rest came from: pricing, new bookings, $1.35B of interest on client funds, and a PEO line that includes pass-through costs. Each source has a different quality. Pricing and bookings are the franchise at work. Interest on client funds depends on rates. Pass-through costs lift revenue without lifting much profit. The client funds interest alone, $1.35B against $21.95B of revenue, is about 6.17% of the total. PEO pass-throughs, which carry zero margin, rose $318.3M in the year.

Our thesis: ADP and Paychex are telling the same story from two sides. Payroll is a toll road, but the traffic is barely growing, so growth comes from raising the toll, selling more lanes and earning interest on the float. That works, but it leaves growth more exposed to rates and to pricing pushback than the headline number suggests.

What to watch: how much of next year's growth comes from client funds interest versus pricing and new bookings, and whether employment at clients stays near 1%. When the float and the price increases carry the year, the toll is still being paid, just by a different lever. A drop in Employer Services retention below 92% would be the first sign of pressure.

​Read the $ADP research​

By the numbers

6.74% vs 1%

$ADP fiscal 2026 revenue growth against employment growth at its clients. The gap is pricing, bookings and float, not hiring.

The model's read, not advice.