Motorola Solutions (MSI) Q4 FY25 earnings call: guidance and Q&A

Update on Silvus' performance and potential for upward bias given unmanned systems demand, and how recent FedRAMP certifications and SVX/APX NEXT traction are impacting growth in the federal segment.

Silvus has performed exceptionally well since acquisition, with 2026 revenue expectations raised to $675 million due to international and unmanned systems demand. FedRAMP approvals for SVX and APX NEXT, along with strong interest and shipments of SVX devices, are significantly enhancing the company's position and addressable market in the federal space, moving beyond traditional state and local focus.

“We're raising our expectations again for revenue this year in 2026. We expect Silvus' revenue of $675 million in 2026. That's $75 million higher from expectations a quarter ago, and it continues to be a critical litmus test in Ukraine for critical defense -- new defense technology in unmanned.”

asked by Tim Long · answered by Gregory Brown

Inquire about the margin outlook for 2026, including puts and takes like tariffs and memory costs, and the drivers behind the acceleration in the Command Center business, particularly regarding the 911 market and competitive positioning.

The company expects 100 basis points of operating margin expansion in 2026, driven by customer adoption of feature-rich devices, mix shift to higher-growth services/software, and prudent cost management, despite a $60 million tariff headwind in H1 and increased memory costs. Command Center growth is fueled by APX NEXT applications uptake and embedded AI capabilities within core workflows, with VESTA NXT gaining traction and the company holding a market-leading position in CAD and 911.

“That's what's included in our outlook for '26 is 100 basis points of operating margin expansion. With operating margin expansion in both segments as well.”

asked by Andrew Spinola · answered by Jason Winkler

Question the strong backlog performance, particularly product backlog, given prior doubts about ARPA funding expiration, and ask for insights into why previous assumptions were wrong and the general direction of product backlog for 2026.

The strong backlog reflects a return to a quick-turn business model, with over half of 2025 revenues being quick-turn. The company achieved its product backlog target of $3.8 billion for 2025 and expects double-digit product orders in Q1 and for the full year 2026. Product backlog is anticipated to be up by the end of 2026 compared to 2025, despite typical Q1 seasonality, driven by consistent demand and strong execution.

“When I look out a year from now, I think product backlog will likely be up versus the 3.8% exiting '25. It's going to bounce around as it normally did as it did last year. I think product backlog will decline in Q1 as it typically does from a normal seasonality standpoint. But I'm just thrilled with not just the backlog position, I'm more thrilled with the order performance and the pipeline and the consistency of execution by Molloy's team.”

asked by Adam Tindle · answered by Gregory Brown

Seek clarification on the Q1 guide's sequential decline, which appears above seasonal, and inquire about the cadence of new product introductions for the Assist Suites, whether annual or more frequent, and if they will be additions to existing suites or new monetization avenues.

The Q1 seasonal decline is within historical pre-COVID patterns, and the full-year outlook is stronger than previously guided. The company expects double-digit product orders in Q1, supporting the full-year strength. For Assist Suites, new capabilities are launched frequently, almost quarterly, and the company will continue to fill out Dispatcher and Responder suites while also targeting new personas. The suites leverage the full public safety ecosystem to connect applications and improve workflows, offering flexibility to customers.

“What you can expect as we fill out dispatcher and responder is a similar sort of cadence going forward. And as Greg had already indicated, there are more personas we are going to attack as well.”

asked by Joseph Cardoso · answered by Mahesh Saptharishi

Ask about early adoption and success of the AI solutions, particularly before the Assist Suites launch, and how the company plans to compete with alternatives, especially given its competitive pricing.

Assist for 911 has been available for over 18 months, assisting 33 million calls last year. The company's AI strategy focuses on embedding AI within core workflow applications and linking applications across the public safety ecosystem, rather than just point solutions. The Responder Assist suite is comprehensive and competitively priced at $99 per user per month, about half the cost of alternatives, offering a better total cost of ownership and platform unification, especially with the SVX body-worn assistant.

“But what -- where the magic is, is in being able to connect applications across workflows. And so -- very specifically, what we have done is leverage AI in this context to not just be something that is resident within a single application for supporting a particular user, but also linking applications across the board.”

asked by Keith Housum · answered by Mahesh Saptharishi

Inquire about the drivers behind the consistent low-teens growth in the software and services side of the LMR business, specifically regarding cyber protection and 24/7 monitoring services, and the outlook for sustaining these growth rates.

Growth in Software and Services is driven by expanding offerings for customers, including network monitoring and managed services. On the software side, applications like Command Center and Video software are strong drivers. Cybersecurity, particularly managed detection and response, is a significant contributor with 77% YoY customer growth, leveraging AI-driven automation. The D-Series infrastructure upgrade also leads to more software and longer-duration agreements, contributing to the segment's 10-11% growth guidance for 2026.

“So we've seen a 77% year-over-year customer growth in our managed detection and response platform for cybersecurity. And 1 of the key drivers there, by the way, is also the fact that we have AI-driven automation within our cybersecurity platform, where we process 1 billion security transactions on a daily basis and 99% of that is actually handled automatically with AI.”

asked by George Notter · answered by Mahesh Saptharishi

Ask if the Silvus guidance raise is primarily due to non-Ukraine deployments, referencing a large order for Taiwan loitering missiles, and inquire about the drivers of strong Video segment growth, specifically if it's linked to increased demand for camera density in public venues following tragic incidents.

The Silvus guidance raise is attributed to a mix of international and unmanned systems demand, with strong performance in Ukraine, UK, and Germany. The company is deepening relationships with partners like Anduril, whose products frequently incorporate Silvus radios. Video growth is driven by AI-driven analytics, the cloud Alta platform, and a hybrid approach, with camera deployments expected to increase in 2026. Demand is influenced by the need for safety and security in public and private sectors, with generative AI capabilities expanding use cases beyond security to safety and compliance.

“I'd tell you, I was really -- first of all, I'm really impressed with what Anduril does and how they get product to market. But I was so proud of Babak and his team because when I looked -- went around their products alone and I looked and I was doing some quick math, and I think 2/3 of their products are -- have a -- or incorporate Silvus radio into their design.”

asked by Louie Dipalma · answered by Gregory Brown