Motorola Solutions, Inc. (MSI) Earnings & Analysis

Latest quarter

Motorola Solutions reported Q2 FY2026 revenue of $3.1 billion, compared with the consensus of $3.0 billion; revenue as the consensus counts it was 4.36% above that benchmark. The company reported adjusted EPS, as the consensus counts it, of $4.41 against consensus adjusted EPS of $3.86, or 14.2% above the consensus.

The filing shows revenue rose 13.3% from $2.8 billion in Q2 FY2025, led by a 15% increase in Products and Systems Integration and a 10% increase in Software and Services. Motorola Solutions attributed growth in both segments to higher Mission Critical Networks and Video sales, while Software and Services also benefited from Command Center growth. The filing reported International revenue rose 25% and North America revenue rose 9%.

The company’s gross margin was 53.6%, versus 51.1% a year earlier, and it attributed the increase to higher sales, favorable mix and IEEPA tariff refunds, partly offset by higher direct-material costs. Operating margin was 25.8%, compared with 25.0%. Motorola Solutions reported diluted EPS of $3.33, versus $3.04, and free cash flow of $414.0 million, compared with $225.0 million.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

On the earnings call, Chairman and Chief Executive Officer Greg Brown said the company’s increased full-year revenue outlook reflected the assets it had at the time, stronger conversion and demand. Brown said the guidance increase was primarily related to Mission Critical Networks, including Sylvus and LMR, and that the company continued to expect double-digit orders growth in the second half. He said planned infrastructure ship acceptances and product releases were expected to support a stronger fourth quarter.

Brown said Motorola Solutions expected LMR revenue to grow 10.0% in the second half of FY2026. Executive Vice President, Safety & Security Rick Cuttler told an analyst that D-Series infrastructure deployments, a new UHF offering and continued device conversion were expected to support the second-half ramp. Cuttler also said customers selecting APX NEXT contributed a premium at sale and subscription revenue.

Addressing profitability, Cuttler said customer adoption of more feature-rich solutions was supporting favorable mix. He said higher memory costs were expected to be concentrated in the second half because of timing, inventory and positions at the start of the year. Cuttler said the company had made targeted price increases on high-memory video products while continuing to secure supply, and he said Motorola Solutions expected comparable gross margins and operating-margin expansion for FY2026.

President, Unmanned & Robotics Solutions Jack Molloy said the company added capacity at its Los Angeles site and was constructing a Salt Lake City manufacturing facility expected to provide benefits in 2027. Molloy said the company had expanded its sales force and continued to invest in capacity, go-to-market activities, research and development, waveform technology and software.

In response to questions about software and product performance, Cuttler said Safety & Security software was up double digits in the first half and that software was expected to rise double digits in the second half. He cited camera sales as part of the driver of product results and said mobile-video expectations were positive. Cuttler also said Motorola Solutions expected 300,000 APX NEXT subscribers by the end of FY2026, with the applications business approaching $100.0 million of annual recurring revenue.

Guidance

Motorola Solutions raised its FY2026 revenue outlook to approximately $12.975 billion from $12.8 billion and raised its FY2026 non-GAAP EPS outlook to $17.62 to $17.72 per share from $16.87 to $16.99 per share. The company expects Q3 FY2026 revenue growth of approximately 8.00% and non-GAAP EPS of $4.39 to $4.44 per share.