Motorola Solutions Inc Q3 2024 Earnings Call Transcript

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

Question: Benjamin Bollin - Cleveland Research - Analyst : Greg, if I recall, I think in prior years, at the end of 3Q, you've given some thoughts into subsequent to forward year. You shared some thoughts, big picture on funding and growth overall. Curious if you have any more granularity about how you're thinking about '25 as we're going into it and any individual perspectives within LMR surveillance command center within that? And then I just have a follow-up.

Question: Benjamin Bollin - Cleveland Research - Analyst : That's great. One follow-up for me would be, where are your thoughts, where we stand today on mix of recurring revenue and how you feel about that going forward? That's it for me.

Question: Adam Tindle - Raymond James - Analyst : Okay. I just wanted to ask now that we're post election, I think there's been some confusion from investors on rhetoric regarding potentially reducing public sector spending and the potential impact to MSI. I'm just recalling the last Trump regime was actually fairly helpful to state and local and your core customer base. But it might be a good opportunity to clear the air here. I'm sure you reviewed potential impacts from a variety of outcomes just expected results and impact on your business from the election, understanding it will be a dynamic situation. And I have a follow-up.

Question: Joseph Cardoso - JPMorgan - Analyst : Just apologies, I've been jumping on a couple of calls this evening. But maybe just one question for me, and maybe you already had this asked, but curious if you could flesh out any color if it was already asked. Can you just provide an update on where you're expecting the backlog to exit this year from last quarter, I think you said to slightly up? And maybe more specifically, curious if you could flush out any color on contribution from product and services and maybe more specifically on the product side, how you're thinking about the drivers from a portfolio perspective there, just given the easing of the supply chain you're seeing and the drawdown in the backlog you're seeing today?

Question: Alyssa Shreves - Barclays - Analyst : This is Alyssa Shreves on for Tim Long. I had just two quick questions. Gross margins were, I think, a record for this quarter. How should we kind of think about gross margins now moving forward, kind of giving supply chain normalization, you have the APX NEXT product cycle is there kind of anything we should be aware of in terms of Q4 and kind of moving into next year? And then I have a follow-up.

Question: Alyssa Shreves - Barclays - Analyst : That's helpful. And then just a quick follow-up. You noticed some nice federal wins in products and SI this quarter. Can you kind of dimensionalize how large is the federal business now? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 10:00PM, MSI.N - Q3 2024 Motorola Solutions Inc Earnings Call

Question: Amit Daryanani - Evercore ISI - Analyst : I have two as well. I guess, first off on the video product line item, I think your product revenues in video were down like 3% year over year. Can you just talk about what drove the decline? Because one of your peers, I think, reported recently in that number was recorded up double digits in that segment. So I'm just trying to reconcile the difference. Is it mostly just regions or markets? Or maybe just talk about what drove the decline in the video side.

Question: Amit Daryanani - Evercore ISI - Analyst : Perfect. That's really helpful. And then Greg, when you were talking about just things post election, you sort of talked about a more favorable M&A environment, I think, in your answer. I'd love to understand as you think about '25 and maybe even beyond that. This capital allocation do you change fundamentally under a different administration versus what you've had before. And how do you sort of think about M&A going forward versus what you've done in the past? I'm really wondering like are there larger deals that you are perhaps hesitant to do because you thought you're going to get them through the finish line that you might be more open to do now? Let me just understand how this cap allocation, M&A appetite change under a different administration.

Question: Rodney McFall - Northcoast Research - Analyst : Just a quick one on the recent acquisition of 3TC. I don't believe this is your first UK control room software acquisition. So just curious, what does this provide for you? And how does this work with your prior acquisitions?

Question: Rodney McFall - Northcoast Research - Analyst : Got it. I guess just a quick follow-up. Just curious on command center adoption in the US. What's the penetration rate there? And what is the barrier to growing that business faster? And maybe just some color on how that business is going internationally.

Question: Rodney McFall - Northcoast Research - Analyst : Got you.

Question: Tomer Zilberman - Bank of America - Analyst : Maybe going back to some of the earlier backlog questions that were asked. When you think about -- and maybe I'm getting ahead of myself here, but when you think about the '25 guide for 5% to 6% growth, what do you think the product backlog contribution is if we assume that we get to maybe a $4 billion level this year, will this go back to your historical $3 billion level. And how does that impact your thoughts around the LMR

Question: Tomer Zilberman - Bank of America - Analyst : Sure. No worries. And maybe asking another question, shifting gears a bit. You've talked before about getting more aggressive on subscription sales. And if I'm not mistaken, I think you've informed your sales force to try and sell everything now as a subscription. Just wanted to talk about how that's going. Any changes in the go-to-market that you're making to enable that? I believe you put the Rave CEO as Head of Subscription Sales. So just any commentary you can give on trends you see there?

Question: Meta Marshall - Morgan Stanley - Analyst : You guys noted strong traction with the MXP660 earlier in the call kind of ramping in 2025. But just any way to kind of contextualize that versus some of the ramps we've seen throughout the APX NEXT portfolio? And then just as a second question, any kind of change to how you guys are viewing kind of resolution of kind of the U.K. Home Office Airwave type situations?

Question: Bryce Sandberg - William Blair - Analyst : Another one on M&A. As you look out at the market, are there any particular product or market areas that you're focusing on or they look particularly attractive? Or is it kind of broad-based across the portfolio?