- Revenue: Q2 revenue grew 13% year-over-year, with double-digit growth in both segments and all three technologies.
- GAAP Operating Earnings: $809 million, or 25.8% of sales, up from 25.0% in the year-ago quarter.
- Non-GAAP Operating Earnings: Just over $1 billion, up 26% year-over-year, with non-GAAP operating margin of 32.9%, up 330 basis points.
- GAAP EPS: $3.33, up from $3.04 in the year-ago quarter.
- Non-GAAP EPS: $4.41, up $0.84, or 24%, from $3.57 last year.
- Operating Cash Flow: $469 million in Q2, up $197 million from last year.
- Free Cash Flow: $414 million, up $190 million year-over-year.
- Products and SI Segment Sales: Up 15% versus last year, driven by growth in MCN and video.
- Products and SI Operating Earnings: $599 million, or 31.4% of sales, up 470 basis points from 26.7% in the prior year.
- Software and Services Revenue: Up 10% compared to last year, driven by growth across all three technologies.
- Software and Services Operating Earnings: $433 million, or 35.3% of sales, up from 33.8% last year.
- Backlog: Record Q2 ending backlog of $15.6 billion, up 11% versus a year ago.
- North America Revenue: $2.2 billion in Q2, up 9%.
- International Revenue: $923 million in Q2, up 25% versus last year.
- OpEx: $673 million in Q2, up $58 million versus last year, primarily due to acquisitions.
- Share Repurchases: $326 million in Q2 at an average price of $413.53 per share.
- Cash Dividends: $201 million in Q2.
- CapEx: $55 million in Q2.
- Full-Year Revenue Guidance: Approximately $12.975 billion, up from prior guidance of $12.8 billion.
- Full-Year Non-GAAP EPS Guidance: Between $17.62 and $17.72 per share, up from prior guidance of $16.87 to $16.99.
Release Date: August 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Motorola Solutions Inc MSI delivered record Q2 sales and earnings, with revenue up 13% driven by double-digit growth in both segments and all three technologies.
- The company raised its full-year guidance for both sales and EPS, reflecting strong momentum and confidence in the second half of the year.
- Record Q2 ending backlog of $15.6 billion, up 11% year-over-year, provides strong visibility into future revenue.
- Silvus continues to outperform, with full-year revenue expectations raised to approximately $850 million, driven by strong demand in defense and unmanned systems.
- The pending acquisition of D-Fend, a leader in counter-drone solutions, is expected to further strengthen MSI's position in the rapidly growing public safety and security ecosystem.
Negative Points
- The company faces increased memory costs, with direct memory spend expected to rise to approximately $150 million this year, up from $50 million last year.
- Tariff headwinds, although offset by IEEPA refunds in Q2, remain a factor that could impact future results.
- Sequential backlog declined by $71 million, primarily due to revenue recognition for the UK Home Office, which may raise concerns about near-term growth sustainability.
- The acquisition of D-Fend is pending regulatory approvals, and there is uncertainty regarding the timing and successful completion of the deal.
- Higher interest expense partially offset EPS growth in the quarter, and the company expects to issue additional debt to finance the D-Fend acquisition, which could increase financial leverage.
Q & A Highlights
Q: Silvus continues to outperform, with another raise in guidance. Can you touch on the capacity increases being undertaken and what that means for the flow of this business over the next year or two?
A: Greg Brown (Chairman and CEO) and John Molloy (COO): Silvus generated approximately $230 million in Q2 revenue, and full-year guidance was raised to about $850 million. To support growth, capacity was added at the Los Angeles site, and a new manufacturing facility in Salt Lake City is under construction, with benefits expected in 2027. The sales force has been doubled to drive further demand. The growth is driven by a macro global defense modernization trend, with strong demand from NATO countries, EU defense spending, and the US and Indo-Pacific regions.
Q: The implied fourth-quarter revenue outlook embeds a nice acceleration. Can you help me think through the drivers behind that uptick and clarify if unclosed acquisitions are included in the guidance?
A: Greg Brown (Chairman and CEO): The full-year guidance raise of $175 million reflects only current assets, with approximately $100 million from Silvus and $75 million from LMR. The confidence is informed by Q2 overperformance, which beat consensus by $130 million due to better conversion and strong demand. The second-half ramp is driven by specific ship acceptances and product releases around D-Series infrastructure in Q4, coupled with continued double-digit orders growth. LMR is expected to grow 10% in the second half.
Q: Gross margin stepped up meaningfully in Q2, even excluding the tariff benefit, but you are still guiding to a stable gross margin outlook for the full year. Can you bridge the Q2 performance against that?
A: Jason Winkler (CFO): Favorable mix has been a growth driver, as customers adopt more feature-rich solutions. The key headwind is memory costs, which are now expected to be $150 million for the year, up from $50 million last year and up from prior expectations. A large part of this increase will be faced in the second half due to timing and inventory positions. Despite this, the company expects to maintain comparable gross margins for the year and expand operating earnings by 170 basis points.
Q: There is a lot of interest in the second-half ramp in the LMR business. How are we looking in terms of drivers that can sustain an accelerated growth rate over the medium term?
A: Greg Brown (Chairman and CEO) and Jason Winkler (CFO): Public safety LMR growth is being driven by the modernization cycle. The new APX NEXT devices incorporate broadband and are LEO satellite-compatible, while the D-Series infrastructure is the first upgrade in a dozen years. The second-half ramp is planned around D-Series deployments and the release of UHF, which begins shipping in Q4. The company expects LMR growth this year to be better than last year, with a strong foundation for future software and services growth.
Q: AI has been in the market for a couple of quarters. How is the industry accepting AI, and is it performing to expectations?
A: Greg Brown (Chairman and CEO) and Mahesh Saptharishi (CTO): AI is performing well and is embedded in everything the company does, particularly for public safety personas like responders, dispatchers, and real-time crime centers. It is no longer a nice-to-have but a need-to-have. 100% of VESTA emergency call handling solutions in Q2 were at the assist tier, which includes all AI capabilities. The company has introduced AI labels for transparency and offers free training, which is driving strong acceptance and raising ASPs.
Q: Can you walk through the drivers that led to the huge rebound in PSI operating margins on a sequential basis, and how are you thinking about pricing as a lever given increasing memory costs?
A: Jason Winkler (CFO): The Q2 improvement was driven by stronger conversion of orders, particularly for devices, which were able to be turned within the quarter. The company has a higher inventory position that is helping with quick-turn levels and navigating memory challenges. On pricing, surgical price increases have been made on high-memory-content items like video servers, and the company will continue to look at pricing as an offset for the portfolio.
Q: Investors are looking at product backlog being down sequentially but also your positive commentary on the outlook. What are investors missing if they over-fixate on the backlog trend?
A: Greg Brown (Chairman and CEO) and Jason Winkler (CFO): The revenue story is becoming more one of conversion than backlog. Q2 was another double-digit orders quarter, and the back half is expected to see double-digit orders growth. Product backlog is expected to be up at the end of the year versus last year. The strong backlog of high threes, complemented by double-digit orders, provides a strong setup for the second half.
Q: Can you dig into the Silvus progress more? Where are you seeing opportunities in terms of geos and applications, and what is driving the demand?
A: Greg Brown (Chairman and CEO) and John Molloy (COO): Demand is driven by international markets and a macro global defense modernization trend, with growth from NATO countries, EU defense spending, Germany, Ukraine, and the US and Indo-Pacific. The "secret sauce" is the Spectrum Dominance 2.0 software, which is high-bandwidth, anti-jam, and has low probability of intercept. Silvus received exceptional scoring in recent US DOW anti-jam trials. The company is investing in additional capacity and go-to-market, and the team is "firing on all cylinders."
Q: Can you provide an update on APX NEXT software subscriptions and the traction with SVX?
A: Jason Winkler (CFO) and John Molloy (COO): The company expects 300,000 APX NEXT subscribers by year-end 2026, up from about 200,000 at the end of 2025. The pricing of apps is around $300, and it is now almost a $100 million ARR business. Popular apps include SmartConnect, SmartProgramming, and location services. On SVX, there are now 150 customers operational, including competitive flips like Florida Highway Patrol and Kansas City Police Department, which were new RFPs won against competition. Internationally, there are over 20 countries using body-worn cameras.
Q: On the drone side, any pickup in pipeline post-World Cup? And how are you feeling
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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