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    MSI
    Earnings call· Mar 2026(Q1 FY26)

    Motorola Solutions Q1 FY26 earnings call MSI

    May 7, 2026 Source

    Executive summary

    Motorola Solutions Q1 FY26 — Record Revenue and Backlog Driven by Strong Demand

    Motorola Solutions delivered a strong Q1 FY26, marked by record revenue and backlog, driven by robust demand across its public safety and enterprise security portfolio. The company raised its full-year outlook, reflecting continued momentum and the outperformance of its Silvus acquisition. Despite some cash flow headwinds from inventory investments and rising memory costs, management remains confident in its ability to expand operating margins and capitalize on sustained global prioritization of safety and defense spending.

    Highlights

    5

    • Revenue grew 7% in Q1 FY26, reaching a record.

    • Software and Services revenue grew 18% year-over-year.

    • Q1 orders grew 38%, contributing to a record ending backlog of $15.7 billion, up 11% year-over-year.

    • Non-GAAP operating margin expanded 50 basis points to 28.8%.

    • Full-year revenue guidance raised by $100 million to $12.8 billion, and non-GAAP EPS guidance raised to $16.87-$16.99.

    Concerns

    4

    • GAAP operating earnings declined to $525 million (19.3% of sales) from 23% year-over-year, due to a $75 million noncash charge for Silvus earnout and increased intangible amortization.

    • Q1 operating cash flow decreased $59 million to $451 million, and free cash flow decreased $84 million to $389 million, primarily due to increased inventory investments and higher interest.

    • Expected $60 million in tariff headwinds for FY26, primarily in the first half.

    • Direct memory spend is expected to more than double in FY26 from $50 million in FY25.

    Guidance & targets

    10
    CategoryTargetConfidence
    Q2 Sales Growth
    approximately 8.5%
    high materiality
    High
    Q2 Non-GAAP Earnings Per Share
    between $3.82 and $3.88 per share
    high materiality
    High
    Full Year FY26 Revenue
    approximately $12.8 billion
    high materiality
    High
    Full Year FY26 Non-GAAP Earnings Per Share
    between $16.87 and $16.99 per share
    high materiality
    High
    Full Year FY26 Operating Cash Flow
    approximately $3 billion
    high materiality
    High
    Full Year FY26 Silvus Revenue
    $750 million
    medium materiality
    High
    Full Year FY26 Products and SI Growth
    between 8% and 9%
    medium materiality
    High
    Full Year FY26 Mission Critical Networks Growth
    between 8% and 9%
    medium materiality
    High
    Full Year FY26 Operating Margin Expansion
    100 basis points
    high materiality
    High
    Full Year FY26 Product Orders Growth
    double-digit growth
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Products and SI
    Growth driven by video, but operating margin down from 28.1% YoY due to unfavorable mix and higher supply chain costs, partially offset by improved operating leverage.
    Operating earnings: $386 millionRevenue from acquisitions: $181 millionForeign currency tailwinds: $30 million
    		—1%—24.8%
    Software and Services
    Strong growth across all three technologies. Operating margin up from 28.7% YoY due to higher sales, favorable mix, and improved operating leverage.
    Operating earnings: $395 millionRevenue from acquisitions: $38 millionCurrency tailwinds: $30 million
    		—18%—34.2%
    North America
    Revenue flat compared to prior year, with growth in Video and Command Center.
    		$1.9 billionflat——
    International
    Growth driven by Mission Critical Networks, Video, and Command Center.
    		$857 million27%——

    Operational metrics

    24
    Non-GAAP Operating Earnings
    $781 millionup 9% from year ago quarter
    Q1 FY26

    Driven by higher sales and improved operating leverage, partially offset by higher supply chain costs.

    Non-GAAP Operating Margin
    28.8%up 50 basis points
    Q1 FY26

    Driven by higher sales and improved operating leverage, partially offset by higher supply chain costs.

    Non-GAAP EPS
    $3.37up 6% from $3.18 last year
    Q1 FY26

    Growth driven by higher operating margins, partially offset by higher interest expense.

    Operating Expenses
    $607 millionup $4 million versus last year
    Q1 FY26

    Due to acquisitions.

    Cash Dividends
    $201 million
    Q1 FY26

    Part of Q1 capital allocation.

    Share Repurchases
    $118 million
    Q1 FY26

    Part of Q1 capital allocation.

    Capital Expenditures
    $62 million
    Q1 FY26

    Part of Q1 capital allocation.

    Silvus Earnout Noncash Charge
    $75 million
    Q1 FY26

    Aligned to stronger performance of the business and increased intangible amortization. Resulted in a $0.45 EPS impact.

    Silvus Earnout Expected Payout
    just over $100 millionincreased
    FY26

    Reflects the increased expected performance of the business under the earn-out structure.

    FX Tailwinds
    $60 million
    Q1 FY26

    Included in Q1 revenue.

    Full Year FY26 FX Tailwinds
    about $100 millionunchanged from prior outlook
    FY26

    Assumed in full year outlook.

    Full Year FY26 Tariff Headwinds
    $60 million
    FY26

    Primarily in the first half of the year.

    Full Year FY26 Direct Memory Spend
    more than doublefrom $50 million last year
    FY26

    Expected increase in memory costs.

    Weighted Average Diluted Share Count
    approximately 168 million shares
    Q2 FY26 / FY26

    Assumed for Q2 and full year EPS guidance.

    Effective Tax Rate
    approximately 23%
    Q2 FY26

    Assumed for Q2 EPS guidance.

    Effective Tax Rate
    approximately 22.5%
    FY26

    Assumed for full year EPS guidance.

    Net Debt to EBITDA
    a little over 2
    Q1 FY26

    Indicates financial flexibility.

    Share Buyback to Date
    just under $250 million
    YTD FY26

    As of May 7, 2026.

    Capital Allocation Framework
    60-30-10
    ongoing

    General framework for capital deployment.

    SVX Customers
    100
    Q1 FY26

    Momentum in the SVX product line.

    911 PSAP Coverage
    over 60%
    Q1 FY26

    Market position in the 911 call-center market.

    Narrative Assist Reports Generated
    800% increasecompared to December
    Q1 FY26

    Adoption of AI-assisted reporting in Command Center Records Management.

    VESTA NXT Sales with Assist Dispatcher Suite
    100%
    Q1 FY26

    Indicates strong product market fit for new AI solutions.

    World Cup Business Generated
    $40 million
    YTD FY26

    Total business generated across World Cup City sites.

    Industry KPIs

    8
    MetricValueDetails
    Capital return$118 millionUSD
    Backlog order book$15.7 billionUSD
    Orders backlog quality—
    Product orders order growth38%%
    Ai cloud infrastructure orders$78 millionUSD
    Recurring software service revenue18%%
    Revenue mix by product customer type—
    Design wins product cycle transitions—

    Orderbook & backlog

    14
    Q1 Orders38%Q1 FY26

    growth

    Contributed to record Q1 ending backlog. Fourth consecutive quarter of double-digit orders growth in both segments.

    Ending Backlog$15.7 billionQ1 FY26

    up 11% versus a year ago

    Record Q1 ending backlog. Sequentially declined $60 million due to U.K. Home Office revenue recognition, partially offset by strong demand in Video and Command Center.

    Products and SI Ending BacklognullQ1 FY26

    increased $255 million versus last year

    Due to strong demand in video and Mission Critical Networks. Sequentially increased $45 million, driven by strong demand in video.

    Software and Services Ending BacklognullQ1 FY26

    increased $1.3 billion compared to last year

    Driven by strong demand for multiyear contracts across all three technologies and favorable foreign currency impacts. Sequentially declined $105 million, primarily due to U.K. Home Office revenue recognition, partially offset by strong demand in Command Center and Video.

    P25 Device and SVX Body-Worn Assistant Orders$148 millionQ1 FY26

    For the U.S. federal government.

    P25 Device Order$16 millionQ1 FY26

    For a U.S. state and local customer.

    Fixed Video Order$14 millionQ1 FY26

    For a large U.S. fitness company.

    Fixed Video Order$10 millionQ1 FY26

    For Duke Energy.

    Silvus Orders$78 millionQ1 FY26

    From an unmanned systems provider in Germany with an expected delivery schedule over the next few quarters.

    P25 Services Renewal$41 millionQ1 FY26

    5-year contract for the Minnesota Department of Transportation.

    Command Center Order$24 millionQ1 FY26

    For Denver, Colorado.

    Command Center Order$16 millionQ1 FY26

    For Anne Arundel County in Maryland.

    P25 Services Order$10 millionQ1 FY26

    For Paraíba, Brazil Department of Social Services.

    Mobile Video Order$9 millionQ1 FY26

    For a U.S. state and local customer.

    Product announcements

    4
    ProductTypeDetails
    APX NEXT integration with T-Mobile and Starlinkexpansion
    StreamCaster 5200launch
    Command Center Missionslaunch
    Command Center Records Managementlaunch

    Deals & partnerships

    3
    Exacomacquisition

    Integrates critical radio and 911 audio into digital evidence management.

    Hyperacquisition

    Injects agentic AI into 911 call handling.

    Bell Canadaacquisition

    Acquisition of Bell Canada's LMR network services business, expanding mission-critical managed services footprint into the Canadian public safety customer base.

    Capital programs

    1
    Silvus Capacity Expansionunderway

    Benefit: incremental capacity

    Increased supply capacity in California already, with a GO redundant site planned to add incremental capacity in 2027.

    Risks & headwinds

    5
    GAAP operating earnings declinedQ1 FY26

    Down from 23% to 19.3% of sales, or $525 million.

    Mitigation: Driven by a $75 million noncash charge for Silvus earnout and increased intangible amortization, which is aligned to stronger performance of the business.

    Operating and free cash flow decreasedQ1 FY26

    Operating cash flow down $59 million to $451 million; free cash flow down $84 million to $389 million.

    Mitigation: Primarily driven by increased investments in inventory and higher interest, partially offset by higher earnings.

    Tariff headwinds due to Section 122 tariffsFY26, primarily H1

    $60 million

    Mitigation: Monitoring IEEPA refund process; included in full year outlook.

    Direct memory spend expected to increase significantlyFY26

    More than double from $50 million in FY25.

    Mitigation: Actively pursuing mitigation strategies including accelerating inventory, deeper strategic partnerships, and surgical price adjustments. Still expect to expand operating margins by 100 bps.

    LMR product area revenue down year-over-yearQ1 FY26

    null

    Mitigation: Expected due to tough prior-year comps and normalization of semiconductor supply; stronger growth anticipated in H2 FY26.

    Q&A highlights

    8

    What drove the strong growth in Video and Command Center, were there one-time factors, and what's the outlook?

    Video growth (16%) was broad-based, driven by body-worn cameras, ALPR, Unity, and Alta cloud platform, with no single deal being the primary driver. Command Center growth (27%) was due to Tier 1 cities adopting next-gen 911 and successful hybrid subscription models for CAD/record solutions, with 100% of VESTA NXT sales including Assist dispatcher suite.

    “Alta has been a game changer in terms of vertical markets served. We weren't really in retail before.”

    asked by Timothy Long · answered by Jason Winkler

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Q1 Performance and Outlook Raise

    Motorola Solutions reported a strong start to 2026, with Q1 revenue up 7% and non-GAAP EPS up 6%. This performance led to a raise in full-year revenue guidance to $12.8 billion and non-GAAP EPS guidance to $16.87-$16.99. The increased outlook is primarily driven by the continued outperformance of the Silvus acquisition and strength in the core public safety business, with Products and SI and Mission Critical Networks growth expectations both raised to 8-9%.

    02

    Record Orders and Backlog

    The company achieved record Q1 orders, growing 38%, which contributed to a record Q1 ending backlog of $15.7 billion, an 11% increase year-over-year. This strong demand across the portfolio, including double-digit product orders growth for the fourth consecutive quarter, provides excellent visibility and a solid foundation for the remainder of 2026. Management expressed increased confidence in building product backlog through the year.

    03

    Strategic Acquisitions and Portfolio Expansion

    Motorola Solutions continued its strategic M&A activity, acquiring Exacom and Hyper to enhance its digital evidence management and 911 call handling with AI capabilities. The planned acquisition of Bell Canada's LMR network services business will further expand its mission-critical managed services footprint in Canada. These acquisitions, alongside internal R&D, are aimed at strengthening the company's ecosystem and delivering purpose-built AI workflows.

    04

    Innovation in Public Safety Solutions

    The company highlighted significant innovation, particularly in Command Center and Video. New offerings like 'Missions' and 'Records Management' leverage AI Assist to simplify complex public safety workflows, unifying records and accelerating case closure. In Mission Critical Networks, the APX NEXT integration with T-Mobile and Starlink provides direct-to-device satellite connectivity, enhancing network resiliency for first responders.

    05

    Silvus Outperformance and Strategic Importance

    The Silvus acquisition continues to exceed expectations, with its full-year revenue guidance raised by $75 million to $750 million. This growth is driven by increased international demand and investments in go-to-market and R&D. Silvus' resilient broadband connectivity is critical for unmanned systems and defense operations, positioning Motorola Solutions at the center of new defense and electronic warfare communications.

    06

    Navigating Supply Chain and Cost Pressures

    Despite strong demand, the company is navigating a dynamic supply chain environment, including $60 million in expected tariff headwinds🌐 and a projected doubling of direct memory spend in 2026 from $50 million in 2025. Management is implementing mitigation strategies such as accelerating inventory, strategic partnerships, and surgical price adjustments to offset these costs and still expects to expand operating margins by 100 basis points for the full year.

    AI-generated summary of the company’s earnings call. Not investment advice.