Motorola Solutions Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Alyssa Shreves - Barclays - Analyst : Hi, this is Alyssa Shreves on for Tim Long. Just two quick questions, you mentioned the strength and the software services as a service. Can you kind of walk us through the video product revenue performance in the quarter? Was the product weakness kind of driven by the shift to the cloud? And then I have one follow up.

Question: Alyssa Shreves - Barclays - Analyst : You. And then just a quick one on tariffs, are you seeing any change in customer behavior, with this kind of uncertainty? Are you seeing any pullback, any kind of elongation of deals, any color there would be great. Thank you.

Question: Joseph Cardoso - JPMorgan - Analyst : Hey, good afternoon, thanks for the question. So maybe the first one here just wanted to touch on the demand trends that you're seeing. I appreciate it sounded like you're not seeing any change in the environment, but if I take a step back and look at the full-year revenue guide and kind of strip out the FX impact that was embedded. 90 days ago versus what you're embedding today, it does look like there's a bit softness embedded there relative to what you're originally expecting and maybe I'm pulling out hairs here, but maybe you could just touch on that with some of the moving pieces what you're seeing across demand in the pipeline. And particularly just curious just given kind of what we're seeing in terms of concerns on the macro, can you maybe differentiate between what you're seeing and maybe your core public safety vertical versus maybe on the enterprise side of the business? And then I have a follow up. Thank you.

Question: Joseph Cardoso - JPMorgan - Analyst : Fair, guys, and I appreciate the details. Maybe just as a quick follow up on the tariff commentary, like you obviously mentioned Malaysia, but curious if you could just touch on Mexico manufacturing footprint there and any details around whether you're USMCA compliant there and so a little bit less of a concern nowadays. And then the second, part of that question on tariffs is just more around the mitigation that you're embedding in the guide, like is the expectation or the assumption that you're making is that $100 million eventually goes to zero or how should we think about the impact of that as we kind of progress through the year and the mitigation efforts that you're putting in? Thanks for the questions.

Question: Joseph Cardoso - JPMorgan - Analyst : No, that's great to hear. I appreciate the color, Greg and Jason.

Question: Keith Housum - Northcoast Research - Analyst : Thank you. Good afternoon, gentlemen. I appreciate it. In terms of like the federal, the business, obviously federal's a fairly important part of your business, especially on the video side. Can you give us any commentary about what you're hearing from your federal customers in terms of bookings in the first quarter and their expectations for the second quarter and the rest of the year based on efforts from Doge and everything else going on right now.

Question: Keith Housum - Northcoast Research - Analyst : Okay, great. And then just a secondary question for you guys, I understand that seasonality in terms of the backlog, but I look at your backlog over the past several years. You still have growth year over year in the first quarter, and looked at your notable wins also appear, somewhat lower than what we usually see. Was there any weakness in closing those deals during the quarter, or you're not concerned at all with the prior seasonality here?

Question: Keith Housum - Northcoast Research - Analyst : Great, thank you.

Question: Louie DiPalma - William Blair & Company - Analyst : Greg, Jason, Jack, Mahesh, and Tim, good afternoon. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 9:00PM, MSI.N - Q1 2025 Motorola Solutions Inc Earnings Call

Question: Louie DiPalma - William Blair & Company - Analyst : Great, congrats on the launch of SVX and Assist. One of my questions, can you provide more detail in terms of how you are able to attain the superior audio quality for your microphones relative to competitors and does it come from your decades of heritage as a as a radio provider and are there like codecs and AI and software involved or how are you able to achieve that? Thanks.

Question: Louie DiPalma - William Blair & Company - Analyst : Great, and secondly, for anybody, are you able to share what AI provider you are partnering with for AI Assist? I know that you have a significant cloud partnership with Google, but are you using like an open source like a language learning model generative AI provider or is there like a particular vendor you're using?

Question: Louie DiPalma - William Blair & Company - Analyst : Great, and one final one. You announced a partnership with Brink for drones as a first responder, and I was wondering how do you view the TAM and the market roll out for that new product, two of your competitors have been very vocal about the market opportunity and you guys have also invested with your cap software but I was wondering how does Brink expand your existing you know Cape software and platform.

Question: Louie DiPalma - William Blair & Company - Analyst : Excellent. Thanks, everyone.

Question: Ben Bollin - Cleveland Research - Analyst : Good afternoon, everyone. Thanks for taking the question. I guess a two-parter. I'm interested in your thoughts on What you're seeing, into the current kind of state budget cycle with respect to federal grant awards, if it looks similar, different versus prior years. And then, the second part. Any thoughts as the majority of states go into the new fiscal year in the back half. Any thoughts on what state budgets are looking like into their fiscal '26?

Question: Ben Bollin - Cleveland Research - Analyst : If I could add one follow up. Greg, back in 2013, you guys saw this narrow-banding effort that, kind of supported a bunch of incremental funding and urgency. And I guess I'm curious if you draw any compares to what you've seen with respect to like ARPA for instance or any of the stimulus over the last few years if you see any similarities between the current environment and kind of where we are in that cycle versus what we saw then and that's it for me. Thank you.

Question: Ben Bollin - Cleveland Research - Analyst : That's great thanks guys have a great night.

Question: Tomer Zilberman - BofA Global Research - Analyst : Hey guys, I want to continue the line of questioning from earlier. If I look at the 2Q guidance, the revenue growth of 4% was, I think, give or take 30 million below the street. Can you just take us through the puts and takes of the growth next quarter? Is there anything in the demand environment that's driving any conservatism?

Question: Tomer Zilberman - BofA Global Research - Analyst : Got it. And as a follow up, if we look at the rest of the year, the second half now that you're maintaining the guidance, can you maybe just share with us some indicators that you're seeing that are giving you the confidence to maintain that full year, especially as we think about as we enter 3Q, that 90-day tariff pause comes to an end.

Question: Tomer Zilberman - BofA Global Research - Analyst : Got it. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 9:00PM, MSI.N - Q1 2025 Motorola Solutions Inc Earnings Call

Question: Matt Niknam - Deutsche Bank - Analyst : Hey guys, thank you so much for getting me on. So if I could, I guess first, if you can comment on the latest you're seeing on the M&A front just in terms of opportunities and private market valuations, and then secondly, with Europe, I know there's been some talk of increasing defense spend. I know you primarily focused on more state and local, but I'm wondering if the opportunity or prospect of increased. Defense spend in Europe presents any incremental opportunities for the company. Thanks.

Question: Matt Niknam - Deutsche Bank - Analyst : Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 9:00PM, MSI.N - Q1 2025 Motorola Solutions Inc Earnings Call

Question: Irvin Liu - Evercore ISI - Analyst : Hi, thank you. This is Irvin Liu on for Amit. I had one in a follow up. First, I hate to be a dead horse, but on the topic of tariffs, you mentioned pricing as a component of your mitigation strategy. Contractually, are you able to pass through some of your higher costs on current backlog or would this more apply to new orders? And then can you share with us any sort of customer feedback as it relates to potential price increases?

Question: Irvin Liu - Evercore ISI - Analyst : Got it. Thank you for the color there. And then for my second question, it's great to see our AI innovation address real world use cases out in the field. So I appreciate the color on your monetization efforts as well. I think it's great for your TAM. It's great for your pipeline. But maybe from a customer perspective as it relates to budgets, do you anticipate, budget dollars shifting higher for some of the technology investments that your public safety customers are looking at? I mean, just kind of curious because, yeah, any color on budgets as it relates to AI spend would be helpful. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 9:00PM, MSI.N - Q1 2025 Motorola Solutions Inc Earnings Call

Question: Irvin Liu - Evercore ISI - Analyst : Got it. Thanks for the color.