Skip to content
    MSI
    Earnings call· Jun 2026(Q2 FY26)

    Motorola Solutions Q2 FY26 earnings call MSI

    Aug 5, 2026 Source

    Executive summary

    Motorola Solutions Q2 FY26 — Record Sales, Earnings, and Backlog Drive Raised Full-Year Guidance

    Motorola Solutions delivered an exceptional Q2 FY26, marked by record sales, earnings, and backlog, leading to a significant raise in full-year guidance. The company's robust performance was fueled by broad-based demand across its safety and security ecosystem, particularly in mission-critical networks and video solutions, alongside strong contributions from Silvus. Management expressed confidence in continued double-digit growth for both segments and all technologies in the second half, driven by strategic product releases and effective supply chain management despite rising memory costs.

    Highlights

    5

    • Q2 revenue grew 13% YoY, exceeding guidance, driven by double-digit growth in both segments and all three technologies.

    • Non-GAAP operating margin expanded 140 basis points (excluding IEEPA refunds) to 32.9%, reflecting improved operating leverage.

    • Achieved record Q2 orders and an ending backlog of $15.6 billion, up 11% YoY, providing strong momentum for H2.

    • Non-GAAP EPS increased 24% YoY to $4.41, driven by higher operating earnings.

    • Full-year revenue guidance raised by $175 million to $12.975 billion, and non-GAAP EPS guidance raised to $17.62-$17.72.

    Concerns

    2

    • Memory costs are expected to increase significantly, from $50 million in FY25 to $150 million in FY26, with a large portion impacting H2.

    • Sequential product backlog decreased by $99 million in Products and SI segment, driven by strong MCN shipments.

    Guidance & targets

    16
    CategoryTargetConfidence
    Q3 Sales Growth
    approximately 8%
    high materiality
    High
    Q3 Non-GAAP EPS
    $4.39 and $4.44 per share
    high materiality
    High
    Full-year FY26 Revenue
    approximately $12.975 billion
    high materiality
    High
    Full-year FY26 Non-GAAP EPS
    $17.62 and $17.72 per share
    high materiality
    High
    Full-year FY26 Products and SI Growth
    11%
    medium materiality
    High
    Full-year FY26 Software and Services Growth
    11%
    medium materiality
    High
    Full-year FY26 MCN Growth
    between 10% and 11%
    high materiality
    High
    Full-year FY26 Video Growth
    11%
    medium materiality
    High
    Full-year FY26 Command Center Growth
    approximately 15%
    medium materiality
    High
    Full-year FY26 Tariff Impact
    neutral
    medium materiality
    High
    Full-year FY26 Gross Margins
    comparable to last year
    high materiality
    High
    Full-year FY26 Operating Margins
    approximately 170 basis points of expansion
    high materiality
    High
    Full-year FY26 Net Debt-to-EBITDA Leverage
    approximately 2x
    medium materiality
    High
    Full-year FY26 Silvus Revenue
    approximately $850 million
    high materiality
    High
    H2 FY26 LMR Business Growth
    10%
    medium materiality
    High
    APX NEXT Subscribers
    300,000
    low materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Products and SI
    Strong growth driven by MCN and Video, with MCN exceeding expectations in public safety LMR and continued strength in Silvus. Operating margin expanded 150 basis points excluding IEEPA refunds.
    MCN exceeding expectations in public safety LMRcontinued strength in Silvusrevenue from acquisitions: $210 millionforeign currency tailwinds: $19 million
    		$1.907 billion15%—31.4% of sales
    Software and Services
    Revenue growth across all three technologies, with operating earnings driven by higher sales and favorable mix.
    growth across all 3 technologiesrevenue from acquisitions: $33 millionforeign currency tailwinds: $16 millionfavorable mix
    		$1.229 billion10%—35.3% of sales
    North America
    Solid revenue growth across all three technologies in the North American region.
    growth across all 3 technologies
    		$2.2 billion9%——
    International
    Strong double-digit revenue growth across all three technologies in the International region.
    strong double-digit growth across all 3 technologies
    		$923 million25%——

    Operational metrics

    39
    Non-GAAP operating earnings
    $1 billionup 26% YoY
    Q2 FY26

    Non-GAAP operating earnings for the quarter.

    Non-GAAP operating margin
    32.9%up 330 bps YoY
    Q2 FY26

    Non-GAAP operating margin, with and without the IEEPA refunds benefit.

    Non-GAAP EPS
    $4.41up 24% YoY
    Q2 FY26

    Non-GAAP diluted earnings per share, including the benefit from IEEPA refunds.

    Operating expenses (OpEx)
    $673 millionup $58 million YoY
    Q2 FY26

    Increase primarily due to acquisitions.

    Share repurchases
    $326 million
    Q2 FY26

    Amount of shares repurchased during the quarter.

    Cash dividends
    $201 million
    Q2 FY26

    Cash dividends paid during the quarter.

    Capital expenditure (CapEx)
    $55 million
    Q2 FY26

    Capital expenditures for the quarter.

    Revenue from acquisitions
    $243 million
    Q2 FY26

    Contribution to revenue from acquisitions.

    Foreign currency tailwinds
    $35 million
    Q2 FY26

    Positive impact from foreign currency fluctuations.

    IEEPA refunds benefit
    $60 million
    Q2 FY26

    Benefit recorded from IEEPA refunds, impacting operating margin.

    Memory spend
    $150 millionup from $50 million last year
    FY26

    Anticipated direct memory spend for the full year.

    Q2 Consensus Beat
    $130 million
    Q2 FY26

    Amount by which Q2 revenue exceeded consensus expectations.

    Weighted average diluted share count
    168 million
    Q3 FY26

    Assumed share count for Q3 and full-year FY26 guidance.

    Effective tax rate
    23%
    Q3 FY26

    Assumed effective tax rate for Q3 guidance.

    Effective tax rate
    22% to 22.5%
    FY26

    Assumed effective tax rate for full-year FY26 guidance.

    Silvus Q1 revenue
    $210 million
    Q1 FY26

    Silvus revenue in the first quarter.

    Silvus Q2 revenue
    $230 million
    Q2 FY26

    Silvus revenue in the second quarter.

    P25 device and SVX order
    $36 million
    Q2 FY26

    Notable Q2 win in Products and SI segment.

    P25 device order
    $20 million
    Q2 FY26

    Notable Q2 win in Products and SI segment.

    P25 device order
    $17 million
    Q2 FY26

    Notable Q2 win in Products and SI segment.

    P25 infrastructure order
    $52 million
    Q2 FY26

    Large award for next-generation P25 infrastructure.

    P25 infrastructure order
    $34 million
    Q2 FY26

    Large award for next-generation P25 infrastructure.

    P25 infrastructure order
    $22 million
    Q2 FY26

    Large award for next-generation P25 infrastructure.

    P25 services order
    $24 million
    Q2 FY26

    Notable Q2 highlight in Software and Services segment.

    Command Center order
    $20 million
    Q2 FY26

    Notable Q2 highlight in Software and Services segment.

    P25 services order
    $16 million
    Q2 FY26

    Notable Q2 highlight in Software and Services segment.

    Command Center order
    $14 million
    Q2 FY26

    Notable Q2 highlight in Software and Services segment.

    Mobile video ecosystem order
    $25 million
    Q2 FY26

    Large win for mobile video ecosystem, converting a high-profile agency.

    Mobile video ecosystem order
    $24 million
    Q2 FY26

    Large win for mobile video ecosystem, converting a high-profile agency.

    LMR growth
    10%
    H2 FY26

    Expected growth for the LMR business in the second half of the year.

    Infrastructure as % of LMR business
    less than 1/4
    current

    Proportion of the LMR business represented by infrastructure.

    D-Fend revenue
    $185 million
    FY26

    Expected revenue contribution from D-Fend acquisition.

    D-Fend CAGR revenue growth
    50%
    last 3 years

    Historical compound annual growth rate for D-Fend.

    D-Fend FIFA drones detected
    over 700
    FIFA World Cup

    Number of drones detected by D-Fend during the FIFA World Cup.

    DHS unmanned aircraft contract
    $1.5 billion
    last 7 days

    Contract announced by DHS, with D-Fend selected for cyber mitigation.

    Public safety budgets growth
    growing faster than government budgets
    2027

    Outlook for public safety budgets in state and local governments.

    Software for public safety budgets growth
    growing even faster than public safety budgets
    2027

    Outlook for software spending within public safety budgets.

    Orders growth
    double-digit orders growth
    Q2 FY26

    Q2 was a double-digit orders quarter.

    Orders growth
    double digits
    H2 FY26

    Expected orders growth for the second half of the year.

    Industry KPIs

    8
    MetricValueDetails
    Capital return$326 million share repurchases; $201 million cash dividendsUSD
    Backlog order book$15.6 billionUSD
    Orders backlog qualitydouble-digit orders growth%
    Product orders order growthdouble-digit orders growth%
    Ai cloud infrastructure orders$1.5 billionUSD
    Recurring software service revenuealmost $100 millionUSD
    Revenue mix by product customer typeNorth America $2.2 billion; International $923 millionUSD
    Design wins product cycle transitionsAPX NEXT XN

    Orderbook & backlog

    3
    Ending backlog$15.6 billionQ2 FY26

    up 11% YoY, down $71 million sequentially

    Record Q2 ending backlog, driven by record Q2 orders. Sequential decline primarily due to revenue recognition for the U.K. Home Office.

    Products and SI backlog$8.6 billionQ2 FY26

    increased $329 million YoY, decreased $99 million sequentially

    Increase YoY due to strong demand in MCN and Video. Sequential decrease driven by strong MCN shipments during the quarter.

    Software and Services backlog$7.0 billionQ2 FY26

    increased $1.2 billion YoY, increased $28 million sequentially

    Increase YoY driven by strong demand for multiyear contracts across all three technologies. Sequential increase primarily driven by strong demand in Command Center and Video, partially offset by revenue recognition for the U.K. Home Office.

    Product announcements

    1
    ProductTypeDetails
    APX NEXT XNlaunch

    Deals & partnerships

    2
    D-Fend SolutionsAcquisition of an industry leader in counter-drone solutions.$1.5 billion

    Entered into a definitive agreement to acquire D-Fend Solutions, specializing in non-kinetic cyber takeover mitigation capabilities for counter-drone technology.

    Bell CanadaAcquisition of Bell Canada's LMR networks services business.

    Targeting to close the previously announced acquisition of Bell Canada's LMR networks services business.

    Capital programs

    1
    Silvus manufacturing facilityunderway

    Benefit: increased manufacturing capacity

    New manufacturing facility in Salt Lake City to increase Silvus capacity, with benefits expected to be seen in 2027.

    Risks & headwinds

    2
    Memory cost increaseFY26, with large part faced in H2

    direct memory spend to be approximately $150 million this year, up from $50 million last year

    Mitigation: Carrying higher inventory, collaborating closely with key suppliers, ability to substitute simpler RAM forms, surgical price increases on high memory content items like video servers.

    Challenging supply environmentongoing

    not quantified

    Mitigation: Carrying higher inventory and collaborating closely with key suppliers to secure continuity of supply.

    What to watch in Q3 FY26

    5

    Silvus capacity expansion impact

    Q1 FY27
    CurrentNew Salt Lake City facility under construction, benefit expected in 2027.
    TargetUpdate on Salt Lake City facility progress and any earlier-than-expected capacity benefits.

    Why it matters

    Silvus is a key growth driver, and capacity is a limiting factor for its rapid expansion.

    I think you read, Tim, that we announced the construction of a facility, a new manufacturing facility in Salt Lake City, which we're very excited about. And consistent with what we said before, we'll start to see the benefit of that in 2027.

    Q&A highlights

    8

    Inquired about capacity increases for Silvus and its implications for future growth, given strong demand.

    Management detailed capacity expansion at the Los Angeles site and the new Salt Lake City facility (benefiting in 2027), noting the increased guide for Silvus already accounts for current capacity. They also highlighted doubling the sales force.

    “But the increased guide for Silvus this year takes into account our current capacity, and we'll live within that. I think one of the things we're also pleased with, Tim, is we've doubled the size of the sales force.”

    asked by Tim Long · answered by John Molloy

    2 min read5 chapters

    Detailed Narrative

    01

    Strong Q2 Performance and Momentum

    Motorola Solutions reported an exceptional Q2 FY26 with 13% revenue growth and significant operating margin expansion, driven by double-digit growth across all segments and technologies. The company achieved record Q2 orders and an 11% YoY increase in backlog to $15.6 billion, positioning it for continued strong performance in the second half of the year. This momentum is supported by broad-based demand for its safety and security ecosystem.

    02

    Strategic Acquisitions and Unmanned Systems Focus

    The company is advancing its strategy in unmanned systems and counter-drone solutions. Silvus, acquired previously, continues to outperform expectations, with its MANET connectivity powering defense applications. The pending acquisition of D-Fend Solutions, an industry leader in non-kinetic cyber takeover mitigation for counter-drone technology, is expected to close in H2 FY26 and further strengthens Motorola's position in critical public safety and defense areas.

    03

    LMR and D-Series Modernization

    Public safety LMR (Mission-Critical Networks) demonstrated strong demand, exceeding expectations in Q2. The latest APX NEXT devices, now LEO compatible, and the next-generation D-Series infrastructure are driving this growth. The D-Series, the first infrastructure upgrade in over a decade, is seeing significant customer interest and is expected to be a multi-year growth driver, with new product releases like UHF shipping in Q4.

    04

    Video and Command Center Growth

    The Video business grew 12% in Q2, with strong mobile video sales and significant wins with Florida Highway Patrol and Kansas City Police Department, both new customers for Motorola's body-worn camera and in-car video solutions. Command Center also maintained strong momentum, with customers increasingly adopting its software and AI assist solutions to streamline emergency response workflows, with 100% of VESTA solutions in Q2 including AI capabilities.

    05

    Capital Allocation and Financial Strength

    Motorola Solutions' strong balance sheet and robust operating cash flow of $469 million in Q2 provide flexibility for capital deployment. The company executed $326 million in share repurchases and $201 million in dividends. Despite plans to raise $1 billion in debt for the D-Fend acquisition, net debt-to-EBITDA leverage is expected to remain around 2x by year-end.

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