Motorola Solutions, Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Greg Brown highlights Q3 was a strong quarter with revenue and earnings per share exceeding guidance, robust growth in software and services, strong demand for safety and security solutions, record orders, and a record backlog. He also mentions raising full-year earnings per share guidance.
• Jason Winkler discusses revenue growth, GAAP and non-GAAP operating earnings, cash flow, segment results (Products and SI and Software and Services), regional results, backlog, and outlook. He notes Q4 revenue growth expectation and full-year guidance adjustments.
• Greg Brown emphasizes the strength of the portfolio, customer meetings at trade shows, Silvus acquisition momentum, and investments in public safety technologies like AI and video solutions.

Segment Performance

• Products and SI Segment: Sales were up 6% versus last year, driven by growth in MCN and Video. Operating earnings were $555 million or 29.3% of sales, flat compared to the prior year, primarily driven by higher sales and improved operating leverage, offset by higher tariffs. Notable Q3 wins include a $40 million P25 device order for a U.S. federal customer, etc.
• Software and Services Segment: Revenue was up 11% compared to last year, driven by strong growth across all 3 technologies. Operating earnings in the segment were $363 million or 32.6% of sales, up 200 basis points from last year, driven by higher sales, improved operating leverage, partially offset by acquisitions. Notable Q3 highlights include a $57 million P25 services order for the State of Louisiana, etc.

Guidance

• For Q4, expects revenue growth of approximately 11% and non-GAAP EPS between $4.30 and $4.36 per share.
• For the full year, continues to expect revenue of approximately $11.65 billion or 7.7% growth and increases non-GAAP EPS guidance to between $15.09 and $15.15 per share, assuming a weighted average diluted share count of approximately 169 million shares and an effective tax rate of approximately 22.5%.

Risks

• Forward-looking statements are subject to various risks and uncertainties, including factors that could cause actual results to differ materially from expectations. These include risks related to government shutdown impact on federal business, tariffs, and other market and operational uncertainties as detailed in the company's reports and filings with the SEC.

Question and Answer

Q: Tim Long asks about the sustainability of growth into 2026 and SPX/APX NEXT app.

A: Greg Brown mentions expected revenue of $12.6 billion in 2026, with potential additive impact from government shutdown resolution. John Molloy talks about SPX early traction and APX NEXT app updates.

Q: Tomer Zilberman asks about Silvus growth vs outline and government shutdown impact.

A: Jason Winkler states Silvus is off to a strong start with revenue expectations increased, and discusses monitoring government shutdown timing impact on business.

Q: Joseph Cardoso asks about Silvus contribution and product backlog.

A: Jason Winkler comments on Silvus backlog addition and product segment growth drivers, and Greg Brown mentions expected product backlog exiting the year.

Q: Andrew Spinola asks about tariffs and margin expansion.

A: Jason Winkler and John Molloy discuss margin expansion driven by mix, product portfolio, and software growth, and future margin expectations.

Q: George Notter asks about SVX traction.

A: Mahesh Saptharishi talks about SVX features like Assist for DEMS and translation capabilities and their impact on customers.

Q: Adam Tindle asks about Q3 operating line and margin confidence.

A: Greg Brown and Jason Winkler discuss operating leverage, software growth, Silvus impact, and future margin expectations.

Q: Keith Housum asks about Silvus learnings and command center growth.

A: Greg Brown and John Molloy talk about Silvus acquisition learnings and command center growth drivers.

Q: James Fish asks about SVX competitive nature.

A: John Molloy and Mahesh Saptharishi discuss SVX market position, competitive pricing, and mission-critical audio quality capabilities.

Q: Jyhhaw Liu asks about Silvus software potential and APX NEXT installed base.

A: Jason Winkler and Mahesh Saptharishi talk about Silvus software development and APX NEXT installed base expansion potential.

Q: Meta Marshall asks about OBAAA impact and tariff mitigation.

A: Jason Winkler and John Molloy discuss tax rate impact and tariff mitigation strategies.

Q: Benjamin Bollin asks about Silvus sales motion and backlog.

A: John Molloy talks about Silvus sales efforts across different facets and backlog contribution.

Q: Louie DiPalma asks about Silvus in major Army programs.

A: John Molloy discusses Silvus involvement in next-generation command and control and soldier borne mission command projects.