Why were Mission-Critical Networks revenues down year-over-year, and what's the outlook for LMR?

The Q1 LMR performance was as expected, facing tough prior-year comps from strong Q1s. The company anticipates stronger growth in the second half of the year for MCN and LMR, similar to the previous year, as it moves past the normalization of semiconductor supply. Double-digit product orders growth for four consecutive quarters supports this outlook. “Our Q1 is pretty strong in the LMR business. And so we were expecting that, prepared for that.”

How is the opportunity pipeline for Silvus building, and is manufacturing capacity a gating factor for further upside?

Silvus is exceeding expectations, with increased investment in go-to-market (sales force doubled) and R&D. Demand is increasing internationally, driving the raised guidance to $750 million. Manufacturing capacity has been increased in California, and a redundant site will add incremental capacity in 2027, indicating it's not a gating factor for current growth. “we're going to be adding a GO redundant site that will bring on incremental capacity in 2027.”

Given the strong Q1 product backlog, how does management feel about achieving its goal of expanding product backlog exiting 2026 compared to 90 days ago?

Management feels "stronger" about expanding product backlog, as it increased sequentially in Q1 (a pleasant surprise) rather than declining as previously anticipated. Record Q1 backlog and orders, combined with strong performance in Video and Command Center, provide high confidence in the full-year outlook and the durability of LMR. “From 90 days ago, stronger. Stronger because, as you recall, Joe, I guided last call, I gave color that I actually thought product backlog would decline. It didn't decline. It increased sequentially.”

MSI

Motorola Solutions (MSI) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Information Technology· May 7, 2026

Source: earnings call transcript

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

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

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

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

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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 billion	flat	—	—
International Growth driven by Mission Critical Networks, Video, and Command Center.	$857 million	27%	—	—

MSI operating KPIs by quarter

MSI operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q4 FY24	Mar 2025 Q1 FY25	Jun 2025 Q2 FY25	Sep 2025 Q3 FY25	Dec 2025 Q4 FY25	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Backlog	$14.7B Additionally, we generated Q4 record operating earnings in both segments and ended the year with record backlog of $14.7 billion, up $438 million, inclusive of $226 million of unfavorable currency rates. Source: earnings call transcript	$14.1B Ending backlog for Q1 was $14.1 billion, down $306 million or 2% versus last year, driven by strong LMR shipments and revenue recognition from the UK Home Office, partially offset by strong growth across all 3 technologies within software and services. Source: earnings call transcript	$14.1B Ending backlog for Q2 was $14.1 billion, up $150 million versus last year and up $19 million sequentially driven by strong demand, including record Q2 orders, which were up double digits in both of our segments. Source: earnings call transcript	$14.6B We also ended the quarter with our highest Q3 ending backlog ever of $14.6 billion, up $467 million versus last year, which included a record $11 billion of S&S backlog that is increasingly driven by our Command Center and video solutions. Source: earnings call transcript	$15.7B We also grew orders by 26% and ended the year with our highest ever backlog of $15.7 billion, up $1 billion year-over-year. Source: earnings call transcript	$15.7B Our record Q1 orders grew 38%, contributing to a record Q1 ending backlog position of $15.7 billion, up 11% versus a year ago. Source: earnings call transcript	$15.6B As a result, we achieved a record Q2 ending backlog of $15.6 billion, which is up 11% versus a year ago. Source: earnings call transcript	-0.6%
Backlog Software and Services	$10.6B We also finished the year with S&S backlog of $10.6 billion, up 14%, including record backlog in all three technologies, which is informing our guide for another strong year of growth in 2025. Source: earnings call transcript	—	$10.7B Second, investments in public safety and security continue to be a priority for our customers, highlighted by our record Q2 orders, up 27% versus last year, inclusive of 10% growth in products, we also ended the quarter with over $14.1 billion of backlog, including $10.7 billion of software and services backlog, which is our highest S&S backlog ever and up $1 billion versus last year. Source: earnings call transcript	$11B We also ended the quarter with our highest Q3 ending backlog ever of $14.6 billion, up $467 million versus last year, which included a record $11 billion of S&S backlog that is increasingly driven by our Command Center and video solutions. Source: earnings call transcript	—	—	—	+2.8%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Q1 Orders 38% Q1 FY26

growth

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

Ending Backlog $15.7 billion Q1 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 Backlog null Q1 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 Backlog null Q1 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 million Q1 FY26

For the U.S. federal government.

P25 Device Order $16 million Q1 FY26

For a U.S. state and local customer.

Fixed Video Order $14 million Q1 FY26

For a large U.S. fitness company.

Fixed Video Order $10 million Q1 FY26

For Duke Energy.

Silvus Orders $78 million Q1 FY26

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

P25 Services Renewal $41 million Q1 FY26

5-year contract for the Minnesota Department of Transportation.

Command Center Order $24 million Q1 FY26

For Denver, Colorado.

Command Center Order $16 million Q1 FY26

For Anne Arundel County in Maryland.

P25 Services Order $10 million Q1 FY26

For Paraíba, Brazil Department of Social Services.

Mobile Video Order $9 million Q1 FY26

For a U.S. state and local customer.

Product announcements

Product	Type	Timeline
APX NEXT integration with T-Mobile and Starlink	expansion	—
StreamCaster 5200	launch	January
Command Center Missions	launch	—
Command Center Records Management	launch	—

Deals & partnerships

Exacom acquisition

Integrates critical radio and 911 audio into digital evidence management.

Hyper acquisition

Injects agentic AI into 911 call handling.

Bell Canada acquisition

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

Capital programs

Silvus Capacity Expansion underway

Benefit:incremental capacity

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

Risks & headwinds

GAAP operating earnings declined Q1 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 decreased Q1 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 tariffs FY26, primarily H1

$60 million

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

Direct memory spend expected to increase significantly FY26

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-year Q1 FY26

null

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

Q&A highlights

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 read 6 chapters

Detailed narrative

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%.

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.