Motorola Solutions ((MSI)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Motorola Solutions painted a positive picture, showcasing robust revenue growth, a record backlog, and the successful integration of Silvus. Despite facing challenges such as tariffs and potential impacts from a government shutdown, the company remains optimistic about its future prospects.
Strong Revenue and Earnings Growth
Motorola Solutions reported an impressive 8% increase in revenue for the third quarter, with notable growth in its Software and Services segment at 11% and a 6% rise in Products and Systems Integration. The company also achieved an 80 basis point expansion in operating margins, leading to record Q3 operating earnings and operating cash flow nearing $800 million.
Record Backlog and Orders
The company reached a milestone with record Q3 orders, experiencing double-digit growth in both segments. The backlog at the end of the quarter was the highest ever for Q3 at $14.6 billion, with Software and Services contributing a record $11 billion.
Successful Integration of Silvus
The acquisition of Silvus has been a success story for Motorola Solutions, adding $200 million to the backlog and projected to generate $500 million in revenue with a 20% growth rate next year.
Positive Outlook for 2026
Looking ahead, Motorola Solutions anticipates continued revenue growth, projecting approximately $12.6 billion by 2026. This growth is expected to be driven by strong demand and a robust backlog.
Command Center Growth
The Command Center segment saw a 16% revenue increase in Q3, fueled by APX NEXT applications and strong international demand for control rooms.
Tariff Challenges
Higher tariffs have posed a challenge, impacting operating margins with an expected $70 million to $80 million hit in the second half of the year.
Potential Impact from Government Shutdown
There is some uncertainty regarding the ongoing government shutdown, which could affect revenue timing related to federal government agencies. However, the impact is anticipated to be more about timing rather than demand.
Interest Expense Increase
The growth in EPS was partially offset by higher interest expenses, attributed to debt issued for the Silvus acquisition.
Guidance
During the earnings call, Motorola Solutions provided optimistic guidance, highlighting strong financial metrics across various areas. The company reported an 8% year-over-year revenue increase, with significant growth in software and services. Non-GAAP operating earnings rose by 11% to $918 million, with an improved non-GAAP operating margin of 30.5%. Despite higher tariffs, strategic actions helped mitigate their impact. The company achieved record third-quarter operating cash flow of $799 million and free cash flow of $733 million. Motorola Solutions also raised its full-year non-GAAP EPS guidance to between $15.09 and $15.15. The backlog at the end of the quarter reached a record $14.6 billion, indicating strong demand and future revenue potential. Looking forward, the company projected fourth-quarter revenue growth of approximately 11% and non-GAAP EPS between $4.30 and $4.36, expressing confidence in continued strong growth in 2026.
In conclusion, Motorola Solutions’ earnings call conveyed a positive sentiment, underscored by strong revenue growth, a record backlog, and successful strategic integrations. Despite challenges such as tariffs and potential government shutdown impacts, the company remains confident in its future growth prospects, driven by robust demand and strategic initiatives.