Motorola Solutions Q2 Earnings Call Highlights

Key Points

• Motorola Solutions reported a record second quarter, with revenue up 13%, non-GAAP EPS rising 24% to $4.41, and non-GAAP operating margin expanding to 32.9%. Growth was broad-based across Products and Systems Integration, Software and Services, LMR systems, Silvus and safety-security offerings.
• The company raised its 2026 outlook to approximately $12.975 billion in revenue and $17.62–$17.72 in non-GAAP EPS. Backlog reached a record $15.6 billion, while Silvus revenue expectations increased to about $850 million for the year.
• Motorola expects continued growth from the D-Series P25 infrastructure upgrade cycle and plans to close its $1.5 billion D-Fend Solutions counter-drone acquisition in the second half, funded partly with roughly $1 billion in new debt.

Motorola Solutions NYSE: MSI reported record second-quarter sales and earnings for 2026, with revenue rising 13% as demand increased across its Products and Systems Integration and Software and Services segments. The company raised its full-year revenue and earnings outlook, citing continued strength in land mobile radio, or LMR, systems, the Silvus business and its broader safety and security portfolio.

Chairman and CEO Greg Brown called the quarter “exceptional,” saying growth was supported by double-digit increases in both operating segments and across the company’s three technologies. He said mission-critical network sales exceeded expectations in public-safety LMR, while Silvus continued to perform strongly.

Second-Quarter Results and Margins

Second-quarter revenue increased 13%, with acquisitions contributing $243 million and favorable foreign exchange contributing $35 million. GAAP operating earnings were $809 million, or 25.8% of sales, compared with 25% in the prior-year period.

Non-GAAP operating earnings totaled just over $1 billion, rising 26% from a year earlier. Non-GAAP operating margin was 32.9%, an increase of 330 basis points. The result included a $60 million benefit from refunds related to the International Emergency Economic Powers Act, or IEEPA. Excluding that benefit, non-GAAP operating margin expanded 140 basis points.

GAAP earnings per share rose to $3.33 from $3.04 a year earlier. Non-GAAP EPS increased 24% to $4.41, up from $3.57. CFO Jason Winkler said the increase reflected higher operating earnings and a $0.25-per-share benefit from the IEEPA refunds, partly offset by higher interest expense.

Operating cash flow was $469 million, up $197 million from the prior year, while free cash flow increased $190 million to $414 million. The company attributed the gains primarily to higher earnings, partly offset by increased inventory investment.

Segment Growth and Major Orders

Products and Systems Integration revenue grew 15% year over year, led by mission-critical networks and video. Segment operating earnings reached $599 million, or 31.4% of sales, compared with 26.7% a year earlier. Excluding the IEEPA refunds, segment operating margin expanded 150 basis points.

The company highlighted several major Products and Systems Integration awards, including:

• A $36 million P25 device and SVX order from a U.S. federal customer.
• A $20 million P25 device order from Atlanta and a $17 million device order from Miami-Dade Corrections.
• Next-generation P25 infrastructure awards valued at $52 million, $34 million and $22 million for a U.S. federal customer, a Southeastern state and local customer, and St. Louis County, Missouri, respectively.

Software and Services revenue increased 10%, with growth across all three technologies. Segment operating earnings were $433 million, or 35.3% of revenue, compared with 33.8% in the prior-year quarter. Notable wins included a $24 million P25 services order from a North American energy company, a $20 million command center order from the Montana Department of Justice, and mobile video orders valued at $25 million from the Florida Highway Patrol and $24 million from the Kansas City Police Department.

Brown said the Florida Highway Patrol and Kansas City Police Department were first-time users of Motorola Solutions’ body-worn camera and in-car video products. The awards included the company’s responder AI Assist capabilities.

Backlog, Silvus and Infrastructure Demand

Ending backlog reached a record $15.6 billion, up 11% or $1.5 billion from a year earlier. Backlog declined $71 million sequentially, primarily due to revenue recognition for the U.K. Home Office program. Software and Services backlog rose $1.2 billion from the prior year, driven by demand for multiyear contracts across the company’s technologies.

Winkler said Silvus generated approximately $210 million of revenue in the first quarter and $230 million in the second quarter. Motorola Solutions now expects Silvus to generate about $850 million of revenue for the full year. COO Jack Molloy said the company has expanded capacity at Silvus’ Los Angeles site and is constructing a manufacturing facility in Salt Lake City, with benefits expected in 2027. Motorola Solutions has also doubled the Silvus sales force, executives said.

The company expects its D-Series P25 infrastructure platform to contribute to second-half growth. Molloy said UHF products are expected to begin shipping in the fourth quarter. Executives described the D-Series upgrade cycle as a multiyear opportunity, noting that infrastructure upgrades and associated long-term software and services agreements could continue into the 2030s.

Raised Outlook and Cost Considerations

Motorola Solutions raised its full-year revenue outlook to approximately $12.975 billion from $12.8 billion previously. It now expects non-GAAP EPS of $17.62 to $17.72, compared with prior guidance of $16.87 to $16.99.

The company expects third-quarter sales growth of approximately 8% and non-GAAP EPS of $4.39 to $4.44. For the full year, it expects Products and Systems Integration revenue to grow 11% and Software and Services revenue to grow 11%. By technology, management forecasts mission-critical networks growth of 10% to 11%, video growth of 11%, and command center growth of about 15%.

Winkler said the $175 million increase in full-year revenue guidance is expected to come from mission-critical networks, including about $100 million from Silvus and the remaining amount from public-safety LMR demand. The company expects tariff impacts to be neutral for the year, as the second-quarter IEEPA refunds offset its previously anticipated $60 million of tariff headwinds.

Motorola Solutions now expects direct memory spending of roughly $150 million in 2026, compared with $50 million in 2025. The company has increased inventory and worked with suppliers to secure supply continuity. Despite higher memory costs, management expects full-year gross margin to be comparable with last year and operating margin to expand by approximately 170 basis points.

The company also said it expects to close its $1.5 billion acquisition of counter-drone company D-Fend Solutions during the second half, subject to regulatory approvals. Motorola Solutions plans to finance the acquisition with approximately $1 billion of incremental debt and expects year-end net debt to EBITDA leverage of about two times.

About Motorola Solutions (NYSE:MSI)

Motorola Solutions, Inc is a provider of mission-critical communications and analytics solutions for public safety and commercial customers. The company designs, manufactures and supports a range of communications equipment and software aimed at enabling first responders, government agencies and enterprises to coordinate and operate reliably in high-pressure environments. Its offerings emphasize secure, resilient connectivity and situational awareness for organizations that require dependable voice, data and video communications.

Product lines include land mobile radio (LMR) systems and handheld and vehicle-mounted radios used by police, fire and emergency medical services; broadband push-to-talk and LTE-based solutions; command-and-control center software for incident management and records; and video security and analytics systems.

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