The paragraph is an introduction to the Motorola Solutions Third Quarter 2024 Earnings Conference Call. The operator informs participants about the availability of presentation materials and a webcast replay on the company's investor relations website. Tim Yocum, the Vice President of Investor Relations, then introduces key executives, including Greg Brown, Chairman and CEO, and Jason Winkler, CFO, who will review the financial results. The paragraph emphasizes that non-GAAP financial results will be referenced, and it cautions that forward-looking statements made during the call are subject to risks and uncertainties that could cause actual results to differ.

In the paragraph, Greg Brown highlights the company's strong performance in Q3, noting record revenue and earnings per share that exceeded expectations. Revenue increased by 9%, with 11% growth in Products and SI and 7% in software and services, despite a reduction in U.K. Home Office revenue. Operating margins improved for the ninth consecutive quarter, and earnings per share rose by 17%, with record operating cash flow of over $750 million. There was strong demand for the company's solutions, leading to record Q3 orders across all technologies. Brown also mentions that long-term investments by customers, particularly in software upgrades and device purchases, contributed to the growth. Given these results and ongoing momentum, the company has raised its full-year estimates for revenue, earnings per share, and cash flow.

In the quarter, the company's revenue increased by 9%, surpassing guidance, with growth across all segments, regions, and technologies. Acquisitions contributed $36 million, while foreign exchange posed a $4 million challenge. GAAP operating earnings rose to $711 million, 25.5% of sales, while non-GAAP operating earnings reached $830 million, reflecting a 12% increase and a 29.7% margin. This growth was driven by higher sales, a favorable mix, and reduced material costs, but offset by certain charges and expenses. GAAP and non-GAAP EPS increased significantly to $3.29 and $3.74, respectively. Operating expenses rose due to investment in video and employee incentives. Operating cash flow improved to $759 million, raising the full-year forecast to $2.3 billion. Capital allocation during the quarter included dividends, share repurchases, and CapEx, along with closing two acquisitions for $223 million, settling senior notes, and acquiring 3tc for $22 million. The segment results followed.

In the Products and SI segment, sales increased by 11% compared to the previous year, largely due to growth in LMR. Revenue from acquisitions was $11 million, while FX headwinds were $1 million. Operating earnings rose to $522 million, representing 29.3% of sales, up from 26.1% last year, driven by higher sales, a favorable mix, and lower material costs. Notable Q3 orders include significant P25 system deals and device orders across North America and Africa. In the Software and Services segment, revenue grew 7%, or 13% when excluding U.K. Home Office revenue, with acquisitions contributing $25 million and FX headwinds $3 million. Operating earnings decreased to $308 million, or 30.6% of sales, down from 34% due to an Airwave charge control. Key achievements included major command center orders and LMR contract renewals, demonstrating strong demand for new technologies and services.

The company reports that less than $30 million of a $375 million contract backlog will impact Q3, with the rest spread over the contract terms. North America saw a 13% revenue growth to $2 billion, while international revenue rose 1% to $783 million, partly affected by reduced U.K. Home Office revenue. Excluding this, international growth was in the high single digits. The Q3 ending backlog was $14.1 billion, down 1% from last year due to strong LMR shipments but up 1% sequentially due to software and service contracts and favorable FX. The Products and SI segment backlog decreased significantly, while Software and Services increased due to multiyear contracts. The company revised its full-year revenue growth outlook to 8.25%, with non-GAAP earnings per share expected between $13.63 and $13.68. The outlook factors in a 171 million share count and a 22.5% tax rate.

The company anticipates full-year operating expenses of around $2.4 billion, influenced by employee incentives, legal spending, and acquisitions. There is strong demand for their technologies, reflected in improved margins and customer delivery times. Their segments are performing well, with double-digit growth in the S&S segment and continued investment by LMR customers in their networks. Video and Command Center cloud solutions are growing rapidly. The company has a robust cash generation and liquidity profile, with a net debt to EBITDA ratio of 1.4, providing flexibility in capital allocation. Overall, they have achieved strong revenue growth, expanded margins, increased EPS by 17%, generated substantial cash flow, and reached record Q3 orders across their technologies.

The paragraph discusses the positive business performance and growth opportunities related to the adoption of their command center and video applications, which are enhanced by cloud and AI technologies. The company is experiencing strong adoption of broadband-enabled applications in their APX NEXT radios and received positive feedback at the IACP Conference. They anticipate another record year, with a focus on safety, security, and customer value through new offerings. Their markets are resilient, and they have a strong balance sheet with the lowest net debt-to-EBITDA ratio in nearly a decade, positioning them well for future investments to enhance shareholder value. The speaker then invites Tim Yocum to handle questions, starting with Ben Bollin from Cleveland Research, who asks about future growth expectations.

The paragraph discusses the company's optimistic outlook for revenue growth and operating margin expansion in the coming years. For the next year, they anticipate a revenue growth of 5% to 6%, thanks to normalized supply chain lead times and strong demand, which contributed to a successful 2024. The company achieved record Q3 orders across all technologies and expects an increased backlog moving into the next year. Software and services (S&S) are projected to grow at twice the rate of products and systems integration (SI) by 2025. Operating margin expansion is expected within S&S due to the removal of Airwave price control comparison effects, while a reduction in semiconductor costs should also aid product margins. Overall, the company is more confident about 2024 and its momentum heading into the next year. Detailed financials will be provided in February.

The paragraph discusses a conversation among Ben Bollin, Greg Brown, and Jason Winkler about the company's growth expectations and recurring revenue. They anticipate a 5% to 6% growth, with software and services growing twice as fast as products, and expect continued operating margin expansion and cash flow growth. Ben Bollin asks about the mix of recurring revenue, and Greg Brown explains they see software and services as proxies for recurring revenue, with growth expected in cloud adoption for video and command centers. Jason Winkler adds that their backlog for recurring revenue in software and services is at record levels. In a subsequent question from Adam Tindle, he inquires about the potential impact of post-election rhetoric on public sector spending and its effect on the company, referencing past experiences with the Trump administration.

The paragraph discusses the positive financial outlook for state and local budgets, highlighting their strength and stability. Greg Brown expresses optimism due to the revenue composition heavily reliant on North America and public safety government sectors. He views the Trump administration's focus on public safety, crime mitigation, and immigration control as beneficial for business, while minimal exposure to China and consistent corporate tax rates provide a stable capital allocation environment. Furthermore, John Molloy notes that increased income, property, and sales tax revenues have bolstered state and local budgets, creating favorable conditions for spending and potential mergers and acquisitions.

In the paragraph, during a financial call, Joseph Cardoso from JPMorgan asks for an update on the company's backlog expectations for the year. Jason Winkler responds, stating that the backlog is expected to increase, with strong Q3 orders contributing to this growth. He mentions that the backlog will end the year higher than last year's record levels, supported by a strong demand environment and sales efforts. Winkler notes that the composition of the backlog remains consistent, with product backlog healthy at over $4 billion and S&S (support and services) at record levels.

Alyssa Shreves inquires about future gross margins considering the normalization of the supply chain and the launch of the APX NEXT product cycle. Jason Winkler responds by noting that a significant $70 million price variance relief seen in Q3 is largely over, and there will be around $20 million next year, suggesting a positive margin profile due to favorable product mix and backlog. He also mentions increased operating expenses due to incentives aligned with higher performance. Shreves follows up with a question about the federal business, which Winkler states was around $900 million last year and is growing, split between DoD and DHS law enforcement. John Molloy notes strong Q3 performance driven by service orders and a device refresh supporting the transition from APX to APX NEXT.

The paragraph discusses a strong performance and growth prospects related to the B Series shipping and U.S. federal government orders, highlighting over $900 million in expected revenue. Orders from the U.S. Navy and law enforcement amount to $275 million, with most not yet reflected in the backlog. Additionally, there's a focus on the success and diversity of the video business, despite a $40 million headwind anticipated for 2024 due to a customer shift to the cloud. Further insights into the video business are expected in February.

The paragraph discusses a company's future expectations and current performance concerning its cloud transition and device shipments. They anticipate meeting their full-year video guidance for 2024 and mention a $40 million headwind, interpreted positively as indicating customer movement toward the cloud. An analyst inquires about the device shipments, particularly if 25% is still from the APX NEXT line. Jason Winkler confirms this, suggesting a long-term opportunity to increase APX NEXT shipments. John Molloy adds this marks a multi-year growth opportunity, with shifts expected through 2025 and 2026, including the international launch of the MXP660. In another query, Amit Daryanani points out a 3% year-over-year decline in their video product revenues, seeking clarity on the reason for this drop.

The paragraph is a discussion involving John and Jack Molloy, Mahesh Saptharishi, and Amit Daryanani about the video security segment's market performance. They highlight unchanged full-year expectations despite recent fluctuations, attributed to increased software attachment rates and the adoption of cloud-based services like AI-related cameras and cloud analytics platforms. There was significant growth in mobile video products last year, presenting a challenging comparison this year. Additionally, Mahesh mentions that 60% of their customers use services as a key component. Amit then asks Greg about potential changes in capital allocation and M&A strategies post-election, considering the broader political environment.

In the paragraph, Greg Brown discusses the company's approach to mergers and acquisitions (M&A) under the current and previous U.S. administrations, noting that their strategy hasn't significantly changed despite only completing a couple of deals. He emphasizes that their M&A engagement is strong, with numerous opportunities available. Their capital allocation framework dedicates a portion of operating cash flow to M&A or share repurchases. The company focuses on ensuring long-term value, cultural compatibility, synergy delivery, minimizing technical debt, cloud integration, and talent retention. They have invested over $6 billion in acquisitions over nine years and maintain a strong balance sheet, indicating optimism about future opportunities.

In the article paragraph, Mahesh Saptharishi discusses the recent acquisition of 3tc, a U.K. control room software company, and how it complements their existing U.S. control room solutions, particularly in CAD (Computer-Aided Dispatch). The acquisition is set to enhance margins and foster growth. In response to Rodney McFall's query on U.S. command center adoption, Saptharishi mentions their top position in CAD and Records in North America, noting a growing trend towards cloud solutions and subscription models, evidenced by deals like the one with Maricopa County Sheriff's office. Over 60% of customers have integrated cloud components, and they anticipate a 9% growth in their command center business, outpacing overall market growth. Jason Winkler adds that market growth is slower than their business growth.

The paragraph discusses a financial outlook and expectations for a company's growth and products. The command center outlook is projected at 10% for the year, with Q3 at 9%. The speaker mentions taking market share as the market isn't growing at those rates and expresses positivity about cloud investments. Tomer Zilberman from Bank of America asks about expectations for growth in 2025, specifically concerning product backlog and LMR (Land Mobile Radio) growth rates. Greg Brown responds that LMR is expected to grow and product backlog remains healthy at over $4 billion. He notes record orders as a positive sign and promises more detailed updates in February. Zilberman then shifts the conversation to subscription sales, asking about the company's initiative to focus on selling everything as a subscription model.

The paragraph discusses the company's strategic approach towards transitioning to cloud and subscription-based offerings, particularly highlighting trends in SaaS and video services. Greg Brown clarifies that the company isn't forcing all its products into subscriptions but is focusing on growing areas like cloud video (especially Avigilon Alta) and the command center, which offers a hybrid solution. He praises the increased adoption of cloud-based command center solutions and mentions that while less than 25% of APX NEXT device shipments, many include broadband apps, providing recurring revenue and connectivity with critical applications. Brown emphasizes meeting customers' needs at their pace and is optimistic about the growth in video, cloud, command center adoption, and APX NEXT applications. The paragraph concludes with an operator prompting a question from Meta Marshall, who asks about the MXP660's traction compared to other APX NEXT products.

The paragraph includes a discussion led by Greg Brown regarding the MXP660 and its early-stage positioning in European markets, highlighting features like broadband integration with LMR and 4G. Concerning the U.K., a hearing is scheduled regarding their challenge to a ruling by the CMA and CAT. No updates are available, but a decision is expected by the end of the year or early 2025. Brown also addresses M&A interests, indicating a focus on video software and services, with ongoing engagements with multiple companies. The operator introduces a question from Bryce Sandberg about M&A focus areas.

In the closing remarks, Greg Brown, Chairman and CEO of Motorola, expresses gratitude to the company's employees and channel partners for their efforts in achieving record Q3 orders, particularly noting their hard work during recent hurricanes. He is optimistic about the remainder of the year and anticipates strong momentum continuing into the next year, with an increase in backlog and sustained high demand globally.

This summary was generated with AI and may contain some inaccuracies.