Motorola Solutions, Inc. (NYSE:MSI) Q1 2025 Earnings Conference Call May 1, 2025 5:00 PM ET Company Participants Tim Yocum - VP of IR Greg Brown - Chairman and CEO Jason Winkler - EVP and CFO Jack Molloy - EVP and COO Mahesh Saptharishi - EVP and Chief Technology Officer Conference Call Participants Alyssa Shreves - Barclays Joseph Cardoso - JPMorgan Keith Housum - Northcoast Research Louie DiPalma - William Blair Ben Bollin - Cleveland Research Tomer Zilberman - Bank of America Matt Nicknam - Deutsche Bank ...

Motorola (MSI) reported $2.53 billion in revenue for the quarter ended March 2025, representing a year-over-year increase of 5.8%. EPS of $3.18 for the same period compares to $2.81 a year ago.The reported revenue represents a surprise of +0.53% over the Zacks Consensus Estimate of $2.51 billion. With the consensus EPS estimate being $3.01, the EPS surprise was +5.65%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expec ...

Core Viewpoint - Motorola reported quarterly earnings of $3.18 per share, exceeding the Zacks Consensus Estimate of $3.01 per share, and showing an increase from $2.81 per share a year ago, representing an earnings surprise of 5.65% [1][2] Financial Performance - The company achieved revenues of $2.53 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.53%, and up from $2.39 billion year-over-year [2] - Over the last four quarters, Motorola has consistently surpassed consensus EPS estimates and revenue estimates [2] Stock Performance - Motorola shares have declined approximately 4.7% since the beginning of the year, compared to a decline of 5.3% for the S&P 500 [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $3.49 on revenues of $2.77 billion, and for the current fiscal year, it is $14.68 on revenues of $11.4 billion [7] - The trend of estimate revisions for Motorola is mixed, which may change following the recent earnings report [6] Industry Context - The Wireless Equipment industry, to which Motorola belongs, is currently ranked in the top 25% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

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]

Motorola Solutions (MSI) Q1 2025 Earnings Call May 01, 2025 05:00 PM ET Company Participants Tim Yocum - Vice President-Investor RelationsGreg Brown - Chairman and Chief Executive OfficerJason Winkler - Executive VP & CFOAlyssa Shreves - Vice President - Equity ResearchJoseph Cardoso - Vice President, Equity ResearchJamie Reynolds - Senior Equity Research AssociateMahesh Saptharishi - Executive VP & CTOJack Molloy - Executive Vice President and Chief Operating OfficerTomer Zilberman - Equity Research Associ ...

Earnings Presentation Q1 2025 Results | May 1, 2025 Safe Harbor A number of forward-looking statements will be made during this presentation. Forward-looking statements are any statements that are not historical facts. These forward-looking statements are based on the current expectations of Motorola Solutions, and we can give no assurance that any future results or events discussed in these statements will be achieved. Any forward-looking statements represent our views only as of today and should not be re ...

Financial Performance - Q1 2025 sales reached $2.528 billion, a 6% increase from Q1 2024[2] - GAAP operating earnings were $582 million, up 12% year-over-year, with an operating margin of 23.0%[4] - Non-GAAP EPS increased by 13% to $3.18, compared to $2.81 in Q1 2024[3] - Operating cash flow for Q1 2025 was a record $510 million, up $128 million from the previous year[3] - Net sales increased to $2,528 million for the three months ended March 29, 2025, compared to $2,389 million for the same period in 2024, representing an increase of 5.8%[34] - Gross margin improved to 51.4% in Q1 2025, up from 49.9% in Q1 2024, indicating enhanced profitability[34] - Operating earnings rose to $582 million, a 12.1% increase from $519 million in the prior year[34] - Net earnings attributable to Motorola Solutions, Inc. reached $430 million, a significant recovery from a loss of $39 million in the same quarter last year[34] - Free cash flow for the quarter was $473 million, compared to $336 million in Q1 2024, reflecting strong cash generation[40] - The non-GAAP net earnings attributable to Motorola Solutions, Inc. was $540 million, compared to $482 million in Q1 2024, showing strong operational performance[41] - Net earnings attributable to Motorola Solutions, Inc. for the three months ended March 29, 2025, were $2.53 per share, a significant increase from a loss of $(0.23) per share in the same period last year[46] Revenue Growth Projections - The company expects approximately 4% revenue growth for Q2 2025 compared to Q2 2024[9] - Full-year 2025 revenue growth is projected at approximately 5.5%, with non-GAAP EPS guidance between $14.64 and $14.74[9] - Organic revenue growth was 4%, with organic revenue totaling $2.496 billion compared to $2.389 billion in the previous year[52] Legal Matters - Hytera was ordered to pay $56 million in royalties on September 1, 2023, following a court ruling related to the use of stolen trade secrets[22] - The total damages awarded to the company by the Court of Appeals amounted to $407.4 million, including exemplary damages, under the Defend Trade Secrets Act[23] - The District Court's award of $136.3 million in copyright infringement damages is currently under reconsideration[23] - The company recognized a gain of approximately $61 million from the release of escrow funds on November 26, 2024, related to Hytera litigation[22] - Hytera made a partial payment of approximately $10 million toward the judgment on March 4, 2025, which was also recorded as a gain[22] - Legal expenses associated with Hytera-related litigation are no longer considered "normal and recurring" by the company as of 2020[26] - The company anticipates further legal expenses related to Hytera litigation, which will be excluded from non-GAAP operating income[26] Cost and Tax Considerations - The GAAP effective tax rate for Q1 2025 was 21.0%, significantly down from 57.8% in the prior year[4] - The non-GAAP tax rate for the quarter was 21.1%, slightly lower than 22.1% in the same period last year[43] - The company anticipates increased costs on materials and components in 2025 due to global supply chain volatility[8] Shareholder and Compensation Information - Share-based compensation expenses are excluded from non-GAAP operating expenses and net income measurements due to their non-cash nature[27] - Intangible assets amortization expense is excluded from non-GAAP operating expenses as it is a non-cash expense and affects performance evaluation[28] - Share-based compensation expenses increased to $0.39 per share from $0.32 per share year-over-year[46] - The company reported a total of 169.8 million diluted weighted average common shares for the current quarter, compared to 166.3 million in the prior year[46] - The company incurred $0.08 per share in Hytera-related legal expenses, up from $0.01 per share in the same quarter last year[46] Operational Metrics - The backlog at the end of Q1 2025 was $14.1 billion, down 2% from the previous year[4] - Research and development expenditures increased to $233 million, up from $218 million year-over-year, highlighting continued investment in innovation[34] - Total assets decreased to $14,433 million as of March 29, 2025, down from $14,595 million at the end of 2024[36] - The company reported a net cash provided by operating activities of $510 million, compared to $382 million in the previous year[38] - Non-GAAP adjustments before income taxes totaled $0.82 per share, down from $4.14 per share in the same period last year[46] - The operating earnings margin as a percentage of net sales was 23.0% for the current quarter, compared to 21.7% in the prior year[49]

Core Viewpoint - Motorola Solutions, Inc. is expected to report higher revenues year over year due to growth in both segments, product innovation, and healthy AI traction across various sectors [1] Group 1: Product Innovations and Developments - Motorola launched its Pelco portfolio, featuring AI-powered devices for high-demand environments, including fixed cameras and smart sensors that withstand extreme conditions [2] - The company introduced the V200 body camera to enhance support for frontline workers in hostile situations, likely contributing positively to upcoming results [2] - Motorola equipped police forces in San Luis province, Argentina, with a TETRA system, enhancing communication capabilities [3] - A new digital radio communications system was deployed on the German Navy's F124 Sachsen frigate, improving command-and-control operations [3] - The acquisition of RapidDeploy, a cloud-native 911 solution provider, strengthens Motorola's public safety and emergency communication services [4] Group 2: Financial Expectations - The Zacks Consensus Estimate projects net sales in the Products and Systems Integration segment to be $1.57 billion, reflecting a 5.1% year-over-year growth [5] - Revenues from Software and Service are expected to reach $946.9 million, up from $899 million in the same quarter last year [5] - Total revenues for the March quarter are estimated at $2.51 billion, indicating a 5.26% year-over-year decline, with earnings projected at $3.01 per share, an increase from $2.81 per share in the prior year [5] Group 3: Earnings Predictions - The current Earnings ESP for Motorola is 0.00%, indicating uncertainty in predicting an earnings beat for the first quarter [6][7] - Motorola holds a Zacks Rank of 3, suggesting a neutral outlook [8]

Group 1: Product Launch and Features - Motorola Solutions, Inc. (MSI) launched the APX N70 XE smart radio aimed at enhancing mission-critical communication for firefighters and emergency medical services [1] - The smart radio includes features such as SmartMessaging for multimedia exchange, SmartMapping for locating crews, Smartincident for pushing vital information, and SmartLocate for real-time personnel tracking [2] - Advanced connectivity features like SmartConnect allow seamless switching between legacy radios and LTE, while the AI-Voice assistant, ViQi, simplifies device use in critical situations [3] Group 2: Market Demand and Positioning - The demand for advanced communication devices is increasing as security enterprises, police forces, and firefighter agencies focus on strengthening their security ecosystems [5] - Motorola is well-positioned to benefit from this trend due to its comprehensive portfolio of smart radios and security solutions [5] Group 3: Stock Performance - MSI's stock has increased by 20.6% over the past year, while the industry has seen a growth of 39.9% [6]

Core Insights - Motorola Solutions, Inc. (MSI) has partnered with Collin College Law Enforcement Academy to integrate its V700 body cameras into the training program for recruits, enhancing their preparedness for real-world policing challenges [1][5] Group 1: Product Features and Benefits - The V700 body-worn cameras provide live video streaming and real-time GPS location reporting, integrating seamlessly with in-car cameras to capture incidents from multiple angles [3] - The Record-After-The-Fact feature allows retrieval of crucial footage even if recording was not initiated at the time of an incident, offering valuable insights for training adjustments [4] - The solution facilitates wireless video uploads to VideoManager EL, enabling officers to send important footage back to headquarters while still in the field [4] Group 2: Market Position and Growth Potential - Motorola is a leading provider of mission-critical communication products, with a steady revenue stream from the body-worn camera market, which enhances police transparency and accountability [6] - The company experienced strong demand for video security products in Q4 2024 and is well-positioned for continued growth due to its diversified portfolio and innovative solutions [7] - The advanced features of the V700 camera improve real-time communication and decision-making processes, which are expected to bolster Motorola's future prospects in public safety solutions [7] Group 3: Stock Performance - MSI's stock has increased by 14.2% over the past year, while the industry has seen a growth of 30.8%, indicating a need for improved performance relative to peers [8]