Sign in
MS

Motorola Solutions, Inc. (MSI)·Q3 2025 Earnings Summary

Executive Summary

  • Record Q3 results with Sales $3.01B (+8% Y/Y), Non-GAAP EPS $4.06 (+9% Y/Y), and record operating cash flow $799M; backlog reached a record $14.6B (+$467M Y/Y). Management raised full-year non-GAAP EPS guidance to $15.09–$15.15 while maintaining revenue outlook at ~$11.65B .
  • Both segments grew: Products & Systems Integration (+6% Y/Y) and Software & Services (+11% Y/Y), with non-GAAP operating margin expanding 80 bps to 30.5% despite tariff headwinds; FX tailwind was $21M and acquisitions added $123M in revenue .
  • Consensus comparison: MSI delivered an EPS beat and revenue beat versus S&P Global consensus for Q3; EBITDA under consensus per SPGI; Q4 guidance implies continued double-digit revenue growth and EPS strength (11% Y/Y growth; $4.30–$4.36) .
  • Stock catalysts: durable backlog and multi-year upgrade cycle (D-series infrastructure), accelerating AI/software adoption (Assist, SBX/SVX, APX NEXT apps), and strong early performance from Silvus positioning MSI across defense/unmanned systems; watch tariff impacts and potential timing effects from the U.S. federal government shutdown into Q4 .

What Went Well and What Went Wrong

What Went Well

  • Record Q3 revenue, earnings, cash flow and backlog; Greg Brown: “Our Q3 was outstanding, with record third-quarter revenue, earnings and cash flow… we’re again raising our earnings expectations for the year.” .
  • Strong segment execution: Products & SI sales +6% (MCN and Video), S&S +11% (MCN, Command Center, Video); non-GAAP operating margin expanded to 30.5% (+80 bps) on higher sales and operating leverage .
  • Notable wins underpin pipeline: Colorado/Tennessee P25 upgrades ($110M/$84M), large multi-year orders, and mobile video successes in U.S. and Europe; Silvus off to strong start and accretive trajectory discussed on call .

What Went Wrong

  • Tariff headwinds increased material/component costs; while mitigated, management highlighted elevated volatility across the global supply chain and macro trade actions in 2025 .
  • GAAP effective tax rate rose to 22.2% vs 19.0% Y/Y due to non-deductible Silvus transaction costs and prior-year foreign tax audit benefits, modestly pressuring GAAP EPS Y/Y (+1%) .
  • Products & SI backlog down 14% Y/Y due to strong MCN shipments; while a positive for revenue conversion, it reduces segment backlog optics versus prior year .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Billions)$2.79 $2.765 $3.009
GAAP EPS ($)$3.29 $3.04 $3.33
Non-GAAP EPS ($)$3.74 $3.57 $4.06
GAAP Operating Margin (%)25.5% 25.0% 25.6%
Non-GAAP Operating Margin (%)29.7% 29.6% 30.5%

Segment breakdown (Q3 2025 vs Q3 2024; trend versus Q2 2025 shown where available)

SegmentQ3 2024 Sales ($MM)Q2 2025 Sales ($MM)Q3 2025 Sales ($MM)Q3 2024 Non-GAAP OE ($MM)Q3 2025 Non-GAAP OE ($MM)Q3 2024 Non-GAAP OE Margin (%)Q3 2025 Non-GAAP OE Margin (%)
Products & Systems Integration$1,784 $1,653 $1,897 $522 $555 29.3% 29.3%
Software & Services$1,006 $1,112 $1,112 $308 $363 30.6% 32.6%

KPIs and Operating metrics

KPIQ3 2024Q3 2025
Operating Cash Flow ($MM)$759 $799
Free Cash Flow ($MM)$702 $733
Ending Backlog ($B)$14.1 $14.6
Acquisition Revenue Contribution ($MM)—$123
FX Tailwind ($MM)—$21
GAAP Effective Tax Rate (%)19.0% 22.2%

Consensus versus actual (Q3 2025) and forward (Q4 2025)

MetricQ3 2025 ConsensusQ3 2025 ActualBeat/MissQ4 2025 Consensus
Revenue ($USD)$2,988,797,180*$3,009,000,000 Beat$3,344,934,350*
EPS ($)$3.85*$4.06 Beat$4.35*
EBITDA ($MM)$993.1*$914.0*Miss$1,128.6*

Values with asterisks (*) retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue GrowthQ4 2025—~11% Y/Y New
Non-GAAP EPSQ4 2025—$4.30–$4.36; assumes ~169M diluted shares; ~24% non-GAAP tax rate New
RevenueFY 2025~$11.65B (+7.7% Y/Y) ~$11.65B (+7.7% Y/Y) Maintained
Non-GAAP EPSFY 2025$14.88–$14.98 $15.09–$15.15 Raised
Non-GAAP Tax RateFY 2025~23.0% ~22.5% Lowered
Diluted Share Count AssumptionFY 2025~169M ~169M Maintained
DividendsFY 2025Ongoing quarterly dividends; $182M paid in Q2 $182M paid in Q3; program ongoing Maintained capital return posture

Earnings Call Themes & Trends

TopicQ1 2025 (Prior)Q2 2025 (Prior)Q3 2025 (Current)Trend
AI/Technology initiativesLaunched SVX and Assist; focus on AI in incident workflow and report writing; cloud video growth (Alta) Continued AI differentiation; video software +25% in Q2; Assist rollout; APX NEXT app monetization ($300/device/yr) Assist gains “Assisted Narrative,” policy search via SVX; drone dispatch workflows; AI labels transparency Rising adoption and breadth
Supply chain/tariffsEstimated up to ~$100M tariff impact mitigated via dual sourcing, USMCA, pricing/cost controls ~$80M tariff impact concentrated H2; margins expanding despite tariffs Non-GAAP margin expansion +80 bps; continued mitigation actions; macro trade volatility acknowledged Manageable headwind
Product performance (LMR/APX NEXT/D-series)APX NEXT margin expansion; device refresh driving mix D-series refresh orders (St. Louis, Michigan); pipeline of multi-year upgrades D-series wins (Colorado $110M; Tennessee $84M); APX NEXT apps attach strengthening Multi-year upgrade cycle
Unmanned/Defense (Silvus)Strategy laid out; TAM expansion into MANET/defense Closed Silvus; strong profile; ~$185M stub rev; MCN added Silvus performing above plan; FY Silvus $500M; 20% growth next year; EPS accretion $0.30–$0.40 Accelerating
Regional trendsNA revenue +9%; Intl modest FX headwinds NA +6%; Intl +4% NA +6%; Intl +13% and broad-based growth Improving
Regulatory/legalAirwave pricing control and UK proceedings context Hytera gains release ($20M) and litigation updates Court determined Hytera continues using MSI trade secrets; ~$70M more royalties+interest ordered; continued collections Favorable legal momentum
Macro/governmentCRs manageable historically OBBB funding tailwinds expected into Q4 (borders, defense) Potential timing impact from U.S. federal government shutdown; underlying demand intact Watch timing in Q4

Management Commentary

  • “Record Q3 operating earnings in both segments, record Q3 operating cash flow… and record Q3 backlog of $14.6B that puts us in a strong position as we move into next year.” – Greg Brown, CEO .
  • “Non-GAAP operating margin was 30.5% of sales, up 80 basis points, driven by higher sales and improved operating leverage, partially offset by higher tariffs.” – Jason Winkler, CFO .
  • “Silvus is off to a strong start… we expect $500M this year and 20% next year, EPS accretion more like $0.30 to $0.40.” – Greg Brown .
  • “APX NEXT applications are exceeding expectations; we now outlook ~300,000 devices connected/subscribed by end of next year.” – Management .

Q&A Highlights

  • Silvus trajectory and accretion: FY25 revenue now ~$500M (from $475M), next-year EPS accretion $0.30–$0.40; strong unmanned/border defense demand; international focus and program-of-record positioning .
  • Tariffs and margins: ~$70–$80M tariff impact in H2; despite this, mix (APX NEXT, software/apps) supports margin expansion; mitigation via USMCA compliance, dual sourcing, load balancing .
  • Product backlog: Expect “mid to high threes” ($B) product ending backlog by year end; double-digit product orders growth in Q4 .
  • APX NEXT/SBX traction: SBX adoption growing; competitive wins; APX NEXT application attach rates increasing, driving recurring revenue in S&S .
  • Government shutdown: Majority of business state/local; federal shutdown may create revenue timing shifts into early 2026, not demand destruction .

Estimates Context

  • MSI beat revenue and EPS vs consensus; EBITDA was below SPGI consensus. Forward Q4 consensus implies double-digit revenue growth consistent with company guidance; we expect estimates to drift higher on FY EPS given raised guidance and strong backlog conversion .
  • S&P Global consensus values used for comparisons; any future estimate revisions should reflect stronger S&S margin trajectory and Silvus accretion into 2026.
    Values retrieved from S&P Global.
MetricQ3 2025 ConsensusQ3 2025 ActualBeat/Miss
Revenue ($USD)$2,988,797,180*$3,009,000,000 Beat
EPS ($)$3.85*$4.06 Beat
EBITDA ($MM)$993.1*$914.0*Miss

Values with asterisks (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Quarter quality: Broad-based strength across MCN, Command Center, and Video, with margin expansion despite tariffs; backlog and orders momentum should support into 2026 .
  • Guidance and estimate path: Raised FY non-GAAP EPS to $15.09–$15.15; Q4 outlook (11% Y/Y growth, $4.30–$4.36 EPS) supports near-term estimate upgrades; watch EBITDA mix and tariff effects .
  • Strategic positioning: Silvus widens MSI’s moat in mission-critical data/unmanned systems; D-series infrastructure refresh and APX NEXT/SVX attach create multi-year revenue and recurring software runway .
  • AI flywheel: Assist (Assisted Narrative, policy search) and SBX/SVX integration enhance monetization and stickiness; cloud video (Alta) growth outpacing category averages .
  • Risk monitor: U.S. federal government shutdown could push timing of select federal revenues; tariff regime remains fluid; UK Airwave legal backdrop and Hytera collections continue to trend favorable .
  • Capital allocation: Continued dividends and buybacks ($182M dividends; $121M buybacks in Q3); strong cash generation gives flexibility post-Silvus financing .
  • Trading implication: Near-term bias positive on EPS/revenue beats and guidance raise; momentum in S&S and defense/unmanned should support multiple; monitor tariff/EBITDA dynamics and shutdown timing into Q4 .