The paragraph is an introduction to Motorola Solutions' 2024 fourth quarter earnings call. The webcast replay of the call will be accessible on their website shortly after the call ends. Participants can ask questions following the presentation by pressing star five on their phone. Tim Yocum, Vice President of Investor Relations, introduces the call and is joined by Greg Brown (CEO), Jason Winkler (CFO), Jack Molloy (COO), and Mahesh Saptharishi (CTO). Greg and Jason will discuss financial results, while Jack and Mahesh will be available for Q&A. The company has provided an earnings presentation and news release on their website. The call will include non-GAAP financial results and forward-looking statements, which involve risks and uncertainties, detailed in various official reports and filings.

In the paragraph, Greg Brown discusses the company's strong Q4 performance and overall yearly achievements. The company saw record revenue in both business segments and all three technology areas, particularly in video and command center, leading to significant growth in their safety and security ecosystem. Greg highlights a record backlog of $14.7 billion and excellent full-year results, including a 10% increase in Product and SI revenue, improved operating margins, and a 5% rise in software and services revenue, excluding some UK effects. The company also made four acquisitions in video and command center technologies and announced an agreement to acquire Theatro for enhanced communication software. As they enter 2025, they are well-positioned for continued robust demand and financial growth.

During the quarter, revenue grew by 6%, surpassing guidance, with contributions from acquisitions and favorable foreign currency impacts. GAAP operating earnings increased to $814 million (27% of sales), influenced by the Hi Terra litigation recovery, while non-GAAP operating earnings rose to $916 million. GAAP earnings per share improved to $3.56, and non-GAAP EPS to $4.04, driven by higher sales and a favorable mix. Operating expenses rose due to employee incentives, video investments, and acquisition-related costs. For the full year 2024, revenue reached $10.8 billion, an 8% increase, with GAAP and non-GAAP operating earnings also rising. GAAP EPS was $9.23, impacted by a pretax loss on convertible notes, but non-GAAP EPS improved to $13.84, driven by higher earnings.

In 2024, operating expenses for the company rose to $2.4 billion due to higher employee incentives, acquisition-related costs, and legal expenses. The effective tax rate increased slightly to 22%. Operating cash flow for Q4 was $1.1 billion, a slight decrease from the previous year, but the full-year operating cash flow reached a record $2.4 billion, marking a 17% increase from the prior year. Capital allocation included dividends, acquisitions, share repurchases, and capital expenditures. Noteworthy sales in Q4 increased by 3%, with significant orders for public safety devices and systems from various clients, contributing to improved operating earnings and efficiency. Key orders included major contracts with law enforcement and energy companies for P25 systems and devices.

The paragraph discusses the financial performance of a company, highlighting its full-year and Q4 revenues and operating earnings. For the full year, the company's Products and SI segment generated $6.9 billion in revenue, a 10% increase, with notable LMR and video sales growth. Acquisitions contributed $43 million, with a $2 million negative impact from currency rates. Operating earnings improved to $1.9 billion or 28.1% of sales. The Software and Services segment saw an 11% Q4 revenue increase, with acquisitions adding $26 million and a positive $5 million currency rate impact. Operating margins decreased to 30.3% due to acquisitions. Key Q4 contracts included deals in Australia, Norway, the U.S., Scotland, and Brazil. Full-year SNS revenue was $3.9 billion, a 5% increase, with a 13% rise excluding UK Home Office. Acquisitions contributed $52 million, but operating earnings fell due to higher expenses. North America's Q4 revenue was $2.2 billion, up 9%, and $7.8 billion for the full year, up 13%.

The paragraph discusses the financial performance and outlook for a company's international operations for the fourth quarter and full year. Q4 international revenue was $807 million, a 3% decline primarily due to reduced Ukraine revenue and exit from ESN, but offset by growth in video and command center sectors. Full-year international revenue was $3 billion, a 2% decline, but up in mid-single digits excluding the UK Home Office, driven by growth in three technologies. The Q4 backlog increased to $14.7 billion, despite foreign currency headwinds, with changes outlined by segment and factors like LMR shipments and software/services demand. The company's outlook includes a Q1 sales increase of 5-5.5%, non-GAAP EPS of $2.98-$3.03, and a full-year revenue growth expectation of 5.5%, facing FX headwinds of $120 million. Non-GAAP EPS is forecasted at $14.64-$14.74, assuming certain tax rates, FX impacts, and current tariffs.

The paragraph provides a financial and operational outlook for the company. It anticipates generating $2.7 billion in operating cash flow in 2025, marking a third consecutive year of double-digit growth. The UK Home Office challenges have been resolved, and with strong momentum in cloud and SaaS adoption, the SNS segment is expected to grow by high single digits or double digits, while the product segment anticipates low to mid-single-digit growth following a record 2024. Video technology expects 10% to 12% growth, command center 12% growth, and LMR low to mid-single-digit growth, all considering FX factors. The company also highlights financial strength with over $2 billion in cash, no significant debt maturities until 2028, and a solid credit rating, providing flexibility in capital allocation. Greg Brown wraps up by noting that 2024 was exceptional with record sales, expanded operating margins, EPS growth, and record operating cash flow.

The company effectively returned nearly $1.5 billion to shareholders through dividends, share buybacks, and settling a convertible note. It also completed four acquisitions in the video and command center technology sectors. Investments in software and services have led to strong recurring revenue growth, with a 13% increase excluding UK Home Office contributions, largely due to rising demand for software solutions in various technologies. The company ended the year with a $10.6 billion backlog, up 14%, and expects continued growth in 2025. Customer investment in long-term LMR projects and strong interest in the D series Astro infrastructure are driving opportunities, while the APEX Next family of devices is boosting revenue growth. Demand for video and command center technologies remains strong with anticipated double-digit growth. The company’s financial health, with a low net debt to EBITDA ratio, allows for flexible capital deployment to enhance shareholder value in a $72 billion market.

In a Q&A session, Alyssa Shreves, on behalf of Tim Long from Barclays, inquires about the impact of recent federal spending shifts under the Trump administration and an initiative named Doge on customer behavior and project deployment. Greg Brown responds that there hasn't been any noticeable change in customer behavior due to these factors. Alyssa further asks about video service growth related to cloud migration. Greg states that they welcome the shift to cloud services and provide solutions for both on-premises and cloud, noting an acceleration in cloud adoption compared to the previous year.

The paragraph discusses the company's positive growth momentum, particularly in cloud adoption, which they view favorably as it strengthens their platform. The integration of video and command center into their portfolio is highlighted. The conversation transitions to questions about federal budget approval, immigration efforts, and potential revenue from Ukraine, with Greg Brown noting there are no expectations for Ukrainian revenue in 2025 after $80 million last year, primarily in PCR. Most federal engagement is with DOJ, DHS, and DOD for base security and P25 systems. The company has received FedRAMP high classification approval, allowing them to sell APEX Next services and high-tier devices to federal agencies. Additionally, video security growth in government sectors is outpacing the rest of the company.

The paragraph discusses the positive outlook for the federal government as a strong area for growth, particularly in the video sector, which generated over $550 million in the government vertical last year. The expectation is that video growth will exceed 10% to 12% by 2025. Joseph Cardoso from JPMorgan seeks clarification on spending and focus areas like police and border patrol following post-election interviews where Greg Brown expressed optimism about the operating environment. Greg Brown responds by noting that since their last discussion in November, there's been a stronger outlook for 2025, supported by a record backlog and a growing pipeline, despite some challenges from foreign exchange impacts.

The company is optimistic about their growth prospects, expecting a 5.5% increase in revenue while maintaining or slightly improving gross margins, despite facing $25 million in challenges from higher interest and tax rates. They view the Trump administration's focus on public safety and border security positively, as it aligns with their efforts in improving workflow efficiencies in this sector. In response to a question about tariffs, Jason Winkler explains that despite supply chain challenges and tariffs, the company feels confident due to their flexible operations outside the USA, primarily in Mexico, Malaysia, and Canada, minimizing risks associated with China.

The paragraph provides an update on tariff rates, supply chain management, and a financial benefit achieved from PPV (Purchase Price Variance). It mentions a $65 to $70 million benefit achieved last year and an expected $25 million benefit this year as part of the company's financial guidance. Joe appreciates the detailed information provided. The discussion then shifts to the recent acquisition of Theatro. Jason Winkler and Mahesh Saptharishi explain that Theatro's technology, which focuses on AI-enhanced solutions for frontline workers, will be integrated into the company's offerings. The acquisition aims to leverage Theatro's strengths in retail and expand into other markets. The revenue contribution from this acquisition is expected to be small initially but is seen as a strategic move for future growth.

The paragraph is part of a conference call discussing tariffs and their impact on a company's operations. Jason Winkler explains that they are analyzing existing and potential tariffs to determine their effects, with current guidance based on present tariffs. The company has a flexible global manufacturing strategy but changing operations might require investment and time. Keith Housum questions them during the call, and Greg Brown and Jack Molloy provide further notes, discussing state and local spending in the US. Jack mentions that public safety technology continues to be a priority in urban areas, sustaining strong local and state spending in this sector.

The paragraph discusses the favorable funding environment for state and local revenues, which benefit from income, sales, and property taxes, as well as strong 911 funding. This positive outlook is supported by increased sales activity and customer demand in the municipal sector, as noted by Jack and agreed upon by others. Additionally, the conversation shifts to Motorola's investment in AI technologies for applications like video preventive alerts and 911 transcription, and whether the company plans to expand AI applications in their radio systems. Mahesh Saptharishi explains the challenges of implementing AI in mission-critical scenarios due to the complexity and uniqueness of these situations.

The paragraph discusses the use of AI in a company's video and radio technology products. It highlights that over 90% of their cameras have edge intelligence for computer vision applications, utilizing technologies like vision transformers. On the audio side, they combine generative AI with existing products like APEX Next to enhance capabilities, especially in audio quality and background noise cancellation. The use of AI also extends to improving audio codecs and implementing beam steering for multiple microphones. Later, there's a shift in focus to a discussion on the financial performance of their video security business, noting an increase in product sales, with mention of NVIDIA's role in product and software solutions.

The paragraph discusses the growth dynamics within the company's video and product divisions, highlighting that the software growth in video outpaced product growth in 2024. Tomer Zilberman inquires about the future of the product backlog, especially regarding the historical $3 billion level, considering the increasing video security contribution. Jason Winkler explains that the video segment is growing, expected to surpass $2 billion, and operates on a quick turnaround basis, affecting backlog expectations. Despite the changes, demand remains strong, demonstrated by both the backlog position and a growing pipeline. Greg Brown, Chairman and CEO, concludes by expressing gratitude to the team's efforts, emphasizing the company's priority on safety and security for customers, and conveying optimism for the upcoming year.

The speaker anticipates another year of record revenue, earnings, and double-digit operating cash flow, while expressing gratitude to those involved in responding to the LA fires and the New Orleans terrorist attack, acknowledging the impact on some employees. They commend the employees' selflessness in such events, emphasizing the importance of their public safety and mission-critical communication solutions. The speaker looks forward to future discussions and concludes the teleconference, directing listeners to a replay available on the company's investor website.

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