Motorola Solutions, Inc. Q3 FY2024 earnings call

• Greg Brown noted Q3 was an outstanding quarter with record Q3 revenue and earnings per share exceeding guidance, 9% revenue growth, 11% growth in Products and SI, 7% in Software and Services, expanded operating margins for the ninth consecutive quarter, increased EPS by 17%, and generated record Q3 operating cash flow of over $750 million. • Jason Winkler discussed revenue growth, GAAP and non-GAAP earnings, cash flow, segment results including Products and SI up 11% and Software and Services up 7% (excluding U.K. Home Office), backlog details, and updated full-year guidance with revenue growth expected at 8.25%, non-GAAP EPS between $13.63-$13.68, and operating cash flow expected ~$2.3B. • Greg Brown emphasized strong execution, continued investment in leading-edge technologies, adoption of command center and video applications, and strong cash generation.

Products and SI: Sales were up 11% versus last year, driven primarily by growth in LMR. Operating earnings were $522 million or 29.3% of sales, up from 26.1% in the prior year. Revenue from acquisitions in the quarter was $11 million, while FX headwinds were $1 million. Software and Services: Revenue was up 7% compared to last year. When excluding the U.K. Home Office revenue grew 13% with growth in all three technologies. Operating earnings in this segment were $308 million or 30.6% of sales, down from 34% last year due to the impact of the Airwave charge control. Revenue from acquisitions was $25 million in the quarter and FX headwinds were $3 million.

• Full-year revenue growth expected at 8.25%, up from prior guidance of approximately 8%. • Non-GAAP earnings per share expected between $13.63 and $13.68 per share, up from prior guidance of $13.22 per share to $13.30 per share. • Full-year operating cash flow expected approximately $2.3 billion, up from previous guide of $2.25 billion. • Full-year OpEx expected approximately $2.4 billion, driven by higher employee incentives, legal spend, and acquisitions.

Forward-looking statements are subject to a variety of risks and uncertainties. Actual results could differ materially from forward-looking statements. Information about factors that could cause such differences can be found in today's earnings news release and the comments made during this conference call in the Risk Factors section of our 2023 Annual report on Form 10-K or any quarterly report on Form 10-Q and in our other reports and filings with the SEC.

Q: Ben Bollin asked about 2025 outlook and recurring revenue.

A: Greg Brown said revenue growth for 2025 is expected to be 5%-6%, software and services growing about 2x Products and SI, recurring revenue is healthy with strong backlog in S&S.

Q: Adam Tindle inquired about potential impact of public sector spending rhetoric.

A: Greg Brown stated state and local budgets are healthy, Trump administration is positive for public safety, minimal revenue exposure to China, and favorable M&A environment.

Q: Alyssa Shreves asked about gross margins.

A: Jason Winkler said PPV relief is largely behind us, continued opportunities for favorable mix with APX NEXT devices, and operating margins expected to continue growing.

Q: Amit Daryanani asked about video product line decline.

A: John Molloy and Jack Molloy mentioned higher software content, lumpy comp from mobile video growth, and aggressive adoption of cloud.

Q: Rodney McFall asked about acquisition of 3tc.

A: Mahesh Saptharishi said 3tc provides CAD and enables in-house control room solutions, improving margins and growth.

Q: Tomer Zilberman asked about product backlog and LMR growth.

A: Greg Brown said total backlog expected to grow, LMR has record orders but details to be updated in February.

Q: Bryce Sandberg asked about M&A focus.

A: Greg Brown said focus is primarily on video software and services areas.