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Motorola Solutions(MSI) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Q4 revenue grew by 6%, exceeding guidance, with contributions from both segments and all three technologies [14] - GAAP operating earnings were 814million,representing27814 million, representing 27% of sales, an increase from 25.9% year-over-year [15] - Non-GAAP EPS was 4.04, up 4% from 3.90lastyear,drivenbyhighersalesandfavorablemix[15][18]Fullyearrevenuereached3.90 last year, driven by higher sales and favorable mix [15][18] - Full-year revenue reached 10.8 billion, an 8% increase, with strong growth across all segments [16] - Operating cash flow for Q4 was 1.1billion,downfrom1.1 billion, down from 1.2 billion in the prior year, but full-year operating cash flow was a record 2.4billion,up172.4 billion, up 17% year-over-year [19] Business Line Data and Key Metrics Changes - In the Products and SI segment, Q4 sales increased by 3%, driven by growth in LMR and video [20] - Software and services revenue in Q4 was up 11%, with notable growth in all three technologies [22] - Full-year Products and SI revenue was 6.9 billion, up 10% from the prior year [21] - Full-year SNS revenue was 3.9billion,up53.9 billion, up 5% compared to last year, with a 13% increase when excluding the UK Home Office [24] Market Data and Key Metrics Changes - North America revenue for Q4 was 2.2 billion, up 9%, and 7.8billionforthefullyear,up137.8 billion for the full year, up 13% [25] - International Q4 revenue was 807 million, down 3%, primarily due to lower Ukraine revenue and the exit from ESN [25][26] - Full-year international revenue was 3billion,down23 billion, down 2%, but up mid-single digits when excluding the UK Home Office [26] Company Strategy and Development Direction - The company plans to continue strong investments in software and services, expecting high single-digit or double-digit growth in the SNS segment when normalized for FX [31] - The company anticipates another year of double-digit growth in video and command center technologies [33] - The acquisition of Theatro is expected to enhance capabilities in AI and voice-powered communication for frontline workers [72][74] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operating environment, citing a strong pipeline and record backlog as indicators of growth potential [60][61] - The company expects Q1 sales to increase between 5% and 5.5%, with non-GAAP EPS between 2.98 and 3.03pershare[28]Forthefullyear,revenuegrowthisexpectedtobeapproximately5.53.03 per share [28] - For the full year, revenue growth is expected to be approximately 5.5%, with non-GAAP EPS between 14.64 and 14.74[29]OtherImportantInformationThecompanyendedtheyearwitharecordbacklogof14.74 [29] Other Important Information - The company ended the year with a record backlog of 14.7 billion, up 438millionyearoveryear[10][26]Theeffectivetaxratefor2024was22438 million year-over-year [10][26] - The effective tax rate for 2024 was 22%, compared to 21.9% in the prior year [18] Q&A Session Summary Question: Impact of federal spending shifts on customer behavior - Management indicated no changes in customer behavior due to recent federal spending shifts [44] Question: Growth rate for video with cloud adoption - Management noted that cloud adoption is seen as a favorable trend, with continued double-digit growth expected [46] Question: Federal budget approval and expectations for Ukraine revenue - Management does not expect any Ukrainian revenue for 2025, with previous revenue being around 80 million [51] Question: Insights on federal spending and public safety - Management expressed optimism about the federal government's focus on public safety and security, which is expected to drive spending [63] Question: Theatro acquisition details - The acquisition is expected to enhance AI capabilities for frontline workers, particularly in retail [72][74] Question: Local and state spending environment - Management described the current funding environment for local and state spending as strong, with public safety technology being prioritized [86] Question: AI applications in LMR - Management confirmed that AI is being used to improve audio quality and background noise cancellation in LMR networks [94]