Motorola Solutions (MSI) 2025 Conference August 27, 2025 02:45 PM ET Company ParticipantsRobert Sanders - Head - Tech Hardware ResearchMahesh Saptharishi - EVP & CTORobert SandersHow'd you make that one? That's a lot of travel.Mahesh SaptharishiYes, home around four.Robert SandersWell, welcome back. Hi there, everyone. And we can just close the doors of the bag, that would be good. So I'm Rob Sanders. I'm the European Tech Hardware Analyst.And I'm delighted to welcome Mahesh here, the CTO of Motorola Soluti ...

Financial Data and Key Metrics Changes - Q1 revenue grew by 6%, exceeding guidance, with all three technologies contributing to growth [12] - GAAP operating earnings were $582 million, representing 23% of sales, an increase from 21.7% in the previous year [12] - Non-GAAP operating earnings rose to $716 million, up 12% year-over-year, with a non-GAAP operating margin of 28.3%, an increase of 160 basis points [12] - GAAP earnings per share (EPS) was $2.53, up from a loss of $0.23 in the prior year [12] - Non-GAAP EPS increased by 13% to $3.18 from $2.81 last year [12] - Operating cash flow for Q1 was $510 million, up $128 million year-over-year, while free cash flow was $473 million, an increase of $137 million [13] Business Line Data and Key Metrics Changes - Software and Services revenue increased by 9%, driven by strong adoption of software applications and LMR services [9] - Products and SI sales grew by 4%, with significant operating margin expansion due to higher-tier public safety devices and lower material costs [10] - In Products and SI, operating earnings were $434 million, or 28.1% of sales, up from 24.8% in the prior year [15] - Software and Services operating earnings were $282 million, or 28.7% of sales, down from 29.8% last year, primarily due to acquisitions [16] Market Data and Key Metrics Changes - North America Q1 revenue was $1.9 billion, up 9% across all technologies [16] - International Q1 revenue was $676 million, down 3% year-over-year, affected by foreign currency headwinds and lower LMR revenue from Ukraine [16] - Ending backlog for Q1 was $14.1 billion, down 2% year-over-year, driven by strong LMR shipments and revenue recognition [18] Company Strategy and Development Direction - The company is focused on expanding its public safety ecosystem with new products and solutions, including the recent acquisitions of RapidDeploy and Theatro [10] - Investments in video and software are expected to drive meaningful revenue growth, with a strong pipeline of new opportunities [23] - The launch of SVX and Assist technologies aims to transform public safety operations by integrating voice, video, and AI capabilities [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning, noting that customers continue to prioritize investments in safety and security [11] - The company expects strong revenue, earnings, and cash flow growth for the year, despite challenges from tariffs [11] - For Q2, sales growth is expected to be approximately 4%, with full-year revenue growth projected at 5.5% [19] Other Important Information - The company reaffirmed its full-year guidance despite anticipated tariff-related costs of up to $100 million [20] - The balance sheet remains strong, with $1.6 billion in cash on hand and a renewed $2.25 billion revolving credit facility [22] Q&A Session Summary Question: Can you walk us through the video product revenue performance in the quarter? - Video revenue grew nicely, with software leading that growth, and the cloud video offer, Alta, performing well [30][31] Question: Are you seeing any change in customer behavior due to tariff uncertainty? - There has been no noticeable change in customer behavior, and the company is proactively managing tariff impacts through dual sourcing and cost controls [34][35] Question: Can you comment on demand trends and the impact of foreign exchange? - Demand remains strong, with record orders in North America, and the company is cautious about FX impacts due to market volatility [40][41] Question: What are the early demand signals for the new SVX product? - There is high interest from customers, with some planning to upgrade to the APEX NEXT family of radios after seeing the SVX demonstration [50] Question: How is the company positioned regarding federal customers and defense spending? - Demand in the federal market remains strong, with expectations for increased spending on public safety technology [63][64] Question: What are the expectations for state budgets as they enter the new fiscal year? - State and local budgets are looking good, with public safety technology continuing to be prioritized [89][90]

Financial Data and Key Metrics Changes - The company reported record first quarter revenue, operating earnings, and cash flow, with revenue growth of 6% compared to the previous year [7][11] - GAAP operating earnings were $582 million, representing 23% of sales, an increase from 21.7% in the prior year [11] - Non-GAAP operating earnings were $716 million, up 12% year-over-year, with a non-GAAP operating margin of 28.3%, an increase of 160 basis points [11][12] - GAAP earnings per share (EPS) was $2.53, up from a loss of $0.23 in the year-ago quarter, while non-GAAP EPS was $3.18, a 13% increase from $2.81 [11][12] - Operating cash flow for Q1 was $510 million, up $128 million from last year, and free cash flow was $473 million, an increase of $137 million [12] Business Line Data and Key Metrics Changes - In the Software and Services segment, sales increased by 9%, driven by strong adoption of software applications [7][14] - The Products and SI segment saw a 4% increase in sales, with significant operating margin expansion due to growth in higher-tier public safety devices and lower material costs [8][14] - Notable achievements included various large orders in both segments, indicating strong demand across product lines [14][15] Market Data and Key Metrics Changes - North America Q1 revenue was $1.9 billion, up 9%, while international revenue was $676 million, down 3% due to currency headwinds and lower LMR revenue from Ukraine [15] - Ending backlog for Q1 was $14.1 billion, down 2% year-over-year, driven by strong LMR shipments and revenue recognition [16] Company Strategy and Development Direction - The company is focused on expanding its public safety ecosystem with new products and solutions, including recent acquisitions and product launches [8][24] - Investments in video and software are expected to drive meaningful revenue growth, with a strong emphasis on cloud and SaaS offerings [18][19] - The company is navigating tariff-related cost increases through supply chain actions and cost-saving measures [18][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning, noting that customers continue to prioritize investments in safety and security [9][21] - The outlook for Q2 includes expected sales growth of approximately 4% and non-GAAP EPS guidance between $3.32 and $3.37 [17] - For the full year, the company anticipates revenue growth of 5.5% and non-GAAP EPS between $14.64 and $14.74 [17] Other Important Information - The company successfully renewed its $2.25 billion revolving credit facility, enhancing its financial flexibility [20] - The introduction of new technologies like SVX and Assist is expected to transform public safety operations and drive further adoption of higher-tier radios [22][23] Q&A Session Summary Question: Can you walk us through the video product revenue performance in the quarter? - Video revenue grew nicely, with software leading that growth, and the cloud video offer, Alta, performing well [27][28] Question: Are you seeing any change in customer behavior due to tariffs? - There has been no significant change in customer behavior, and the company is proactively managing tariff impacts [30][31] Question: Can you comment on demand trends and the full-year revenue guide? - Demand remains strong, with record orders in Q1, and the company does not see any softening in demand [36][38] Question: What are the early demand signals for the new SVX product? - There is high interest from customers, with some planning to upgrade to the APEX NEXT family of radios after seeing the SVX demonstration [47][48] Question: How is the company navigating the current budget cycle and federal grant awards? - The public safety technology continues to be prioritized, and state and local budgets appear to be in good shape [84][85]

Financial Performance - Motorola Solutions' Q1 2025 sales reached $2.528 billion, a 6% increase year-over-year[4, 6] - Non-GAAP operating earnings increased by 12% to $716 million in Q1 2025[6] - Non-GAAP EPS grew by 13% year-over-year, reaching $3.18 in Q1 2025[5, 6] - The company achieved a record Q1 operating cash flow of $510 million, up by $128 million year-over-year[5] - Free cash flow for Q1 2025 was $473 million, compared to $336 million in Q1 2024, an increase of $137 million[7] Segment Performance - Products and Systems Integration revenue increased by 4%[5] - Software and Services revenue increased by 9%[5] - Land Mobile Radio Communications (LMR) grew by 4%[5] - Video Security and Access Control (Video) grew by 11%[5] - Command Center solutions grew by 10%[5] Regional Performance - North America revenue increased by 9%, reaching $1.852 billion in Q1 2025[15] - International revenue decreased by 3% to $676 million[15] Outlook - The company projects Q2 2025 revenue growth of approximately 4% and Non-GAAP EPS between $3.32 and $3.37[21] - For the full year 2025, Motorola Solutions anticipates revenue growth of approximately 5.5% and Non-GAAP EPS between $14.64 and $14.74[21]