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    MSI
    Earnings call· Sep 2025(Q3 FY25)

    Motorola Solutions, Inc. MSI

    Oct 30, 2025 Source

    Executive summary

    Motorola Solutions Q3 FY25 — Strong Growth in Software & Services and Record Backlog

    Motorola Solutions delivered a strong Q3 FY25, driven by robust software and services growth and record orders, leading to an all-time high backlog. The company raised its full-year EPS guidance, demonstrating confidence in its portfolio and operational leverage, despite potential short-term impacts from the government shutdown and ongoing tariff headwinds. Management anticipates continued strong revenue and earnings growth into FY26, fueled by strategic investments in AI and new technologies like Silvus.

    Highlights

    6

    • Revenue grew 8% in Q3 FY25, exceeding guidance.

    • Software and Services revenue increased 11% YoY in Q3 FY25.

    • Non-GAAP operating margin expanded 80 basis points to 30.5% in Q3 FY25.

    • Record Q3 orders with double-digit growth in both segments.

    • Record Q3 ending backlog of $14.6 billion, up $467 million YoY.

    • Record Q3 operating cash flow of $799 million.

    Concerns

    2

    • Potential revenue timing impact in Q4 FY25 from the ongoing government shutdown on federal business.

    • Higher tariffs of $70-$80 million impacted operating earnings in H2 FY25, partially offset by other factors.

    Guidance & targets

    14
    CategoryTargetConfidence
    Q4 FY25 Revenue Growth
    approximately 11%
    high materiality
    High
    Q4 FY25 Non-GAAP EPS
    $4.30 and $4.36 per share
    high materiality
    High
    Full-year FY25 Revenue
    approximately $11.65 billion
    high materiality
    High
    Full-year FY25 Revenue Growth
    7.7%
    high materiality
    High
    Full-year FY25 Non-GAAP EPS
    $15.09 and $15.15 per share
    high materiality
    High
    Full-year FY25 Operating Cash Flow
    $2.75 billion
    medium materiality
    High
    Full-year FY25 Effective Tax Rate
    approximately 22.5%
    low materiality
    High
    FY26 Revenue
    approximately $12.6 billion
    high materiality
    Medium
    FY26 Operating Margin
    continuing to grow
    high materiality
    High
    FY26 Operating Cash Flow
    continue to grow
    medium materiality
    High
    Silvus FY25 Revenue
    more like $500 million
    high materiality
    High
    Silvus FY26 Revenue Growth
    20%
    high materiality
    High
    Silvus FY26 EPS Accretion
    $0.30 to $0.40
    high materiality
    High
    APX NEXT Devices Online
    300,000
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Products and SI
    Sales were up 6% versus last year, driven by growth in MCN and Video. Operating earnings were flat compared to the prior year as a percentage of sales, primarily driven by higher sales and improved operating leverage, offset by higher tariffs.
    Acquisition revenue: $111 millionFX tailwinds: $11 millionQ3 P25 device order (U.S. federal): $40 millionQ3 P25 device and mobile video order (Arlington, TX): $14 millionQ3 Silvus order (NATO country): $10 millionQ3 P25 system upgrade (Colorado): $110 millionQ3 P25 system upgrade (Tennessee): $84 millionQ3 P25 system upgrade (U.S. state and local): $82 million
    		—6%—$555 million (29.3% of sales)
    Software and Services
    Revenue was up 11% compared to last year, driven by strong growth across all 3 technologies. Operating earnings in the segment were up 200 basis points from last year, driven by higher sales and improved operating leverage, partially offset by acquisitions.
    Acquisition revenue: $12 millionFX tailwinds: $10 millionQ3 P25 services order (Louisiana): $57 millionQ3 Command Center order (Idaho): $25 millionQ3 P25 services order (U.S. state and local): $20 millionQ3 Mobile video order (NY State Park Police): $14 millionQ3 P25 services order (Buenos Aires Police): $13 millionQ3 Mobile video order (Bulgarian MOI): $10 million
    		—11%—$363 million (32.6% of sales)
    North America
    Q3 revenue was up 6% versus last year, with growth across both segments and all three technologies.
    		$2.1 billion6%——
    International
    Q3 revenue was up 13% versus last year, with growth across both segments and all three technologies.
    		$888 million13%——

    Operational metrics

    21
    Non-GAAP Operating Earnings
    $918 millionup 11% YoY
    Q3 FY25
    Non-GAAP Operating Margin
    30.5%up 80 bps YoY
    Q3 FY25
    Non-GAAP EPS
    $4.06up 9% YoY
    Q3 FY25
    GAAP Operating Earnings
    $770 million
    Q3 FY25
    GAAP EPS
    $3.33up from $3.29 YoY
    Q3 FY25
    Operating Expenses (OpEx)
    $652 millionup $35 million YoY
    Q3 FY25
    Cash and investments balance
    $900 million
    Q3 FY25 end
    Cash Dividends
    $182 million
    Q3 FY25
    Share Repurchases
    $121 million
    Q3 FY25
    Capital Expenditure (CapEx)
    $66 million
    Q3 FY25
    Diluted Share Count
    169 million
    Q4 FY25 outlook
    Effective Tax Rate
    24%
    Q4 FY25 outlook
    Effective Tax Rate
    22.5%
    FY25 outlook
    Silvus Revenue
    $500 millionup from $475 million
    FY25

    Raised expectation for Silvus revenue for the full year.

    Silvus Revenue Growth
    20%
    FY26

    Expected revenue growth for Silvus in the next fiscal year.

    Silvus EPS Accretion
    $0.30 - $0.40up from $0.20
    FY26

    Raised EPS accretion expectation for Silvus in the next fiscal year.

    APX NEXT Devices Online
    300,000up from 200,000 (end of FY25)
    end of FY26

    Updated target for APX NEXT device adoption.

    Video Growth
    7%YoY
    Q3 FY25
    Avigilon Alta (cloud video) Growth
    >4x faster than 7%
    Q3 FY25
    Cybersecurity Services Growth
    22%
    Q3 FY25
    Tariff Impact
    $70-$80 million
    H2 FY25

    Impact of tariffs on the P&L in the second half of the fiscal year.

    Industry KPIs

    8
    MetricValueDetails
    Capital return$182 million cash dividends; $121 million share repurchasesUSD
    Backlog order book$14.6 billionUSD
    Orders backlog qualityRecord Q3 orders
    Product orders order growthDouble-digit growth%
    Ai cloud infrastructure orders$10 million Silvus order for NATO countryUSD
    Recurring software service revenue11%%
    Revenue mix by product customer typeNorth America: $2.1 billion; International: $888 millionUSD
    Design wins product cycle transitions3 large orders for P25 system upgrades

    Orderbook & backlog

    5
    Total Ending Backlog$14.6 billionQ3 FY25 end

    up $467 million YoY (3% YoY); up $452 million QoQ (3% QoQ)

    Driven by strong demand in multiyear software and services agreements and favorable FX, partially offset by strong MCN shipments and revenue recognition from U.K. Home Office.

    Software and Services Backlog$11 billionQ3 FY25 end

    up $1.1 billion YoY; up $304 million QoQ

    All-time record for the segment, driven by strong demand for multiyear contracts across all 3 technologies and favorable FX, partially offset by revenue recognition for the U.K. Home Office.

    Products and SI Backlog$3.6 billionQ3 FY25 end

    up $148 million QoQ; down $604 million YoY

    Sequential increase driven by MCN. Year-over-year decrease due to strong MCN shipments. Calculated as Total Backlog - Software and Services Backlog.

    Silvus Backlog~$200 millionQ3 FY25 end

    One-time addition from the acquisition.

    Product Ending Backlog (FY25 outlook)mid- to high $3 billionFY25 end

    Upgraded from prior expectation of 'mid-$3 billion' due to strong product orders.

    Product announcements

    2
    ProductTypeDetails
    SVX (body-worn assistant)update
    D-Series Infrastructure (P25 system upgrades)update

    Deals & partnerships

    1
    SilvusAcquisition of a company specializing in high-speed, low-latency mobile ad hoc networking.$4.4 billion

    Positions Motorola as a leader in mission-critical data, expanding into defense, autonomous systems, and drone infrastructure. Strong cultural fit and technical lead validated. No senior debt maturities until 2028, and payment schedule of $1.5 billion term loans provides flexibility for M&A.

    Risks & headwinds

    2
    Government ShutdownQ4 FY25

    Potential revenue timing impact for Q4 FY25.

    Mitigation: Monitoring closely; underlying demand remains strong, potential revenue shift to FY26.

    TariffsH2 FY25, Q1/Q2 FY26

    $70-$80 million impact in H2 FY25. Expected headwinds in Q1 and Q2 FY26 (more moderated than H2 FY25).

    Mitigation: Product mix favorability, inventory acceleration, dual sourcing, load balancing, USMCA compliant manufacturing.

    What to watch in Q4 FY25

    5

    Federal business revenue impact from government shutdown

    Q4 FY25 / early FY26
    CurrentPotential timing impact in Q4 FY25
    TargetResolution of shutdown and revenue recognition in Q4 FY25 or early FY26

    Why it matters

    The government shutdown could shift federal revenue, impacting Q4 FY25 results and potentially adding to FY26.

    As the extended shutdown continues, we will monitor the potential revenue timing impact📎 to this part of the business closely as it relates to Q4.

    Q&A highlights

    6

    What drives sustained high-single-digit growth into FY26, and how are SPX and APX NEXT applications performing?

    Management expects ~$12.6B revenue in FY26, driven by strong orders and backlog, and continued operating margin/cash flow growth. SPX is exceeding expectations with 70 agencies purchasing, and APX NEXT devices online target increased to 300k by end of FY26.

    “We'd now like to update you that we'll have 300,000 APX NEXT devices by the end of '26.”

    asked by Tim Long · answered by Gregory Brown

    2 min read6 chapters

    Detailed Narrative

    01

    Q3 Performance Highlights

    Motorola Solutions reported strong Q3 FY25 results, with revenue up 8% to $3 billion and non-GAAP EPS increasing 9% to $4.06. Software and Services revenue grew 11%, while Products and SI grew 6%. The company achieved record Q3 operating earnings in both segments, record Q3 operating cash flow of $799 million, and record Q3 orders, leading to an all-time high backlog of $14.6 billion.

    02

    Silvus Integration and Impact

    The acquisition of Silvus is off to a strong start, with FY25 revenue expectations raised to $500 million (from $475 million) and FY26 EPS accretion projected at $0.30-$0.40 (up from $0.20). Silvus is seen as highly complementary, expanding Motorola's leadership into mission-critical data and new markets like defense, autonomous systems, and drone infrastructure, with significant international growth opportunities. Management plans increased investment in Silvus's sales and R&D.

    03

    LMR Infrastructure and APX NEXT Momentum

    The company is seeing strong demand for its next-generation LMR infrastructure, with large multi-year orders for P25 system upgrades, including $110 million from the State of Colorado, $84 million from the Tennessee Department of Safety, and $82 million from a U.S. state and local customer for D-Series infrastructure. The APX NEXT platform continues to gain traction, with an updated target of 300,000 devices online by the end of FY26, driving growth in both devices and associated software applications.

    04

    AI and New Technologies as Growth Drivers

    Motorola Solutions is making significant investments in integrating AI into its solutions to improve first responder safety, reduce incident response times, and automate tasks. The SVX body-worn assistant, with real-time translation and AI-driven capabilities, is showing strong early adoption with 70 police departments, positioning the company for long-term growth in public safety and defense. The company also announced SVX integration with Assist chat and BRINC drone DFR capabilities.

    05

    Operating Margin Expansion and Tariff Mitigation

    Despite facing $70-$80 million in tariffs in H2 FY25, the company expanded non-GAAP operating margin by 80 basis points to 30.5% in Q3. Management attributes this to strong top-line growth, favorable product mix, and judicious expense management, including strategic AI deployment for operational efficiencies. They expect continued operating margin expansion in FY26, even with anticipated tariff headwinds🌐 in Q1 and Q2 FY26.

    06

    Balance Sheet Strength and Capital Allocation

    The company ended Q3 with approximately $900 million in cash and is on track for $2.75 billion in operating cash flow for FY25, marking the third consecutive year of double-digit growth. It maintains significant balance sheet flexibility, with no senior debt maturities until 2028, supporting M&A priorities and capital returns, including $182 million in cash dividends and $121 million in share repurchases in Q3.

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