The paragraph outlines the introduction to Motorola Solutions' First Quarter 2025 Earnings Conference Call. Key executives involved in the call include Tim Yocum, Greg Brown, Jason Winkler, Jack Molloy, and Mahesh Saptharishi. The call includes a presentation of financial results led by Greg and Jason, with Jack and Mahesh participating in the Q&A session. Participants are in a listen-only mode until the Q&A, and all materials, including a webcast replay, are available on the Motorola Solutions Investor Relations website. The call will feature discussions on non-GAAP financial results and forward-looking statements.

The paragraph discusses the company's positive Q1 performance with record revenue, operating earnings, and cash flow. Sales in Software and Services increased by 9% due to strong software application adoption, while Products and SI sales rose by 4% with significant margin expansion. Investments in video and software contributed to significant revenue growth, with Command Center and Video Technologies achieving double-digit growth and record orders. The company recently acquired RapidDeploy and Theatro to enhance software offerings, and launched new technologies, SVX and Assist, to improve public safety. The company remains optimistic about its position as customers prioritize safety and security investments.

The company experienced strong financial performance in the quarter, with a 6% increase in revenue that exceeded guidance. FX headwinds were $25 million, while acquisitions contributed $32 million. GAAP operating earnings rose to $582 million, representing 23% of sales, and non-GAAP operating earnings increased by 12% to $716 million, with a margin of 28.3%. GAAP EPS was $2.53, a significant rise from last year's $0.23 due to a previous non-operating loss, while non-GAAP EPS increased 13% to $3.18. Operating expenses grew by $35 million due to investments in video and acquisitions. Cash flow also improved, with operating cash flow at $510 million, up by $128 million, and free cash flow at $473 million, a $137 million increase. The company maintains expectations for double-digit operating cash flow growth for the year, with capital allocation including share repurchases, cash dividends, and capital expenditures.

During the quarter, two acquisitions were completed for a total of $414 million: RapidDeploy and Theatro, both added to the Command Center in the Software and Services segment. The Products and Systems Integration segment saw a 4% sales increase driven by LMR growth, with operating earnings of $434 million, or 28.1% of sales. Key achievements included significant orders from international and U.S. clients. The Software and Services segment experienced a 9% revenue increase with $32 million from acquisitions, although operating earnings decreased slightly to 28.7% of sales due to acquisitions. Notable achievements included substantial service extensions and renewals. North America reported a 9% revenue rise to $1.9 billion, reflecting growth across all technologies.

The paragraph discusses the financial performance and outlook of the company for the first quarter and the upcoming periods. International Q1 revenue decreased by 3% to $676 million due to foreign currency headwinds and lower LMR revenue from Ukraine, despite growth in video and Command Center sectors. The ending backlog for Q1 was $14.1 billion, down 2% from the previous year, primarily because of strong LMR shipments and revenue recognition from the UK Home Office, partially offset by growth in Software and Services. Sequentially, the backlog decreased by 4%, influenced by LMR shipments, UK Home Office revenue, and typical first-quarter order seasonality. The Products and SI segment saw a significant backlog decrease, while Software and Services experienced a yearly increase in backlog driven by demand for multi-year contracts, although it decreased sequentially due to UK Home Office revenue. The company anticipates a 4% sales growth in Q2, with non-GAAP EPS between $3.32 and $3.37, relying on a share count of about 170 million and an effective tax rate of 23.5%. For the full year, revenue growth is projected at 5.5%, with EPS between $14.64 and $14.74, considering $40 million in foreign currency headwinds and a tax rate of 23%.

The company is maintaining its full-year guidance despite up to $100 million in additional costs from tariffs, by employing supply chain adjustments and cost-saving measures, as well as identifying pricing opportunities. Investments in software are driving strong growth in cloud and SaaS offerings, with significant adoption of APX NEXT devices expected to generate substantial recurring revenue. Additionally, the company renewed a $2.25 billion revolving credit facility, enhancing its financial flexibility, along with $1.6 billion in available cash and anticipated operating cash flow of $2.7 billion, which supports flexible capital allocation.

The company reported exceptional Q1 results with record sales, earnings, and cash flow despite tariff-related cost increases. They discussed their new product launches, SVX and Assist, which are significant advancements in public safety technology. The SVX is a novel video remote P25 speaker mic that combines secure voice, video, and AI, eliminating the need for body-worn cameras and enhancing first responders' capabilities. Assist is an AI platform that provides actionable information to the public safety sector. SVX's integration with the APX NEXT radio family is expected to boost adoption and software app opportunities. Early feedback from the public safety community has been promising, and the company is optimistic about continued prioritization of safety and security solutions by customers for the rest of the year.

The paragraph discusses the company's strong growth in its software and services segment, which is expected to account for nearly 40% of their revenue this year. They have already allocated over $800 million towards acquisitions and share repurchases, supported by a robust balance sheet and cash flow, allowing for strategic investments. In the call, Tim Yocum introduces question-and-answer instructions, followed by a question from Alyssa Shreves regarding video product revenue. Greg Brown responds by confirming strong video growth for the quarter, driven by software, particularly their cloud video offering, Alta, which is performing well and contributing to the expected annual video growth of 10% to 12%.

In the paragraph, Jason Winkler and Alyssa Shreves discuss the growth expectations for both cloud and product segments, with an emphasis on cloud's stronger growth. Alyssa inquires about any changes in customer behavior or deal elongation due to tariff uncertainties. Greg Brown responds, stating there are no significant changes in customer behavior internationally or in North America. The company is managing a $100 million impact from increased tariffs, which affect production in Malaysia and involve some components still sourced from China despite no manufacturing there. They are employing strategies like dual sourcing, cost controls, and pricing opportunities to navigate the situation. The paragraph ends with operator announcing a question from Joseph Cardoso of JP Morgan.

The paragraph discusses the company's financial outlook, addressing concerns about potential revenue softness due to foreign exchange (FX) impacts. Greg Brown explains that while FX changes have impacted the revenue guidance, the company remains cautious due to market volatility and uncertainty. Despite these factors, they are not seeing a decline in demand overall. Jason Winkler adds that improvements are expected in the second half of the year. Brown also notes record orders in North America for their public safety vertical, indicating strong demand in that region.

The paragraph discusses the company's revenue resilience, highlighting their strong market presence in EMEA and Australia, driven by managed service agreements. It mentions robust performance in the commercial and enterprise market segments, particularly in video security, and optimistic projections for their PCR business in 2025, excluding foreign exchange impacts in Ukraine. The discussion also touches on their stable enterprise security business, largely supported by healthcare, critical infrastructure, and education markets. Responding to Joseph Cardoso's inquiry about tariffs, Greg Brown highlights that their manufacturing in Mexico is USMCA compliant, minimizing tariff concerns. Malaysia is identified as a significant factor in their external production concerning potential tariff impacts of up to $100 million.

In the paragraph, Jason Winkler addresses concerns about tariff impacts estimated at up to $100 million, stating that their mitigation strategies will fully cover these costs. These strategies include managing discretionary costs, adjusting the supply chain to avoid tariffs, and implementing some pricing strategies across their portfolio. Greg Brown adds that despite these adjustments, they still anticipate an expansion in operating margin for the full year, with gross margins expected to remain comparable. An unidentified analyst, Jamie, asks about early demand and monetization for the new SVX product and Assist feature. Jason Winkler expresses excitement about high interest from both customers and competitors' customers, sharing an example of a positive meeting with a Midwest police department interested in their products.

The paragraph discusses a new plan involving the SVX, which aims to unify body-worn camera solutions and upgrade to the APX NEXT family of radios. This integration eliminates the need for two separate devices and data plans, delivering world-class audio, ambient noise reduction, and swappable batteries for extended product life. The focus is on customer benefits, such as reducing the total cost of ownership for first responders by consolidating devices and enhancing software opportunities. The strategy emphasizes P25 secure voice for first responders and combines front-end body-worn technology with backend evidence management. The integration is also expected to gather more critical information through the Assist feature, enhancing functionality and value.

The paragraph discusses the advantages of the SVX in helping officers create more accurate reports after incidents by capturing comprehensive audio input, including everything the officer hears and radio communications. This includes metadata and CAD data, which enhances the report's authenticity compared to traditional body-worn cameras. An unidentified analyst then thanks the speaker for their detailed explanation before the conversation shifts to Keith Housum from Northcoast Research inquiring about the federal business's video segment, asking for insights on bookings and future expectations amid current circumstances. Jason Winkler responds, noting the federal government is operating under a continuing resolution through September 30 and that the team has previously performed well under such conditions.

The paragraph discusses strong demand in the federal market, particularly for video technology, next-generation LMR communications, and body-worn technology, with a focus on law enforcement. It notes alignment with federal law enforcement agencies and anticipates a strong year both domestically and internationally. In response to a question about backlog and notable wins appearing lower than usual, the speaker is not concerned, explaining that seasonality is part of the business. Despite challenges in supply chains, Q1 orders hit a record $1.9 billion, up 5% from the prior quarter, similar to Q4's growth.

In this transcript, Greg Brown discusses anticipated growth in product orders for the year, despite indexing more towards quick turn, and predicts the product backlog will stabilize around the mid-$300 million range by year-end. Louie DiPalma congratulates the team on the launch of SVX and Assist and inquires about how they achieved superior audio quality in their microphones. Jack Molloy attributes their success to decades of experience in audio and microphone design, as well as the effective use of AI for ambient noise cancellation to enhance understanding of human speech. Louie also asks which AI provider they are partnering with for AI Assist, but the text does not reveal this information.

The paragraph discusses the company's use of Anthropics Cloud for its Assist platform, emphasizing the importance of safety and safeguards in using large language models (LLMs), especially in report authoring and cognitive psychology integration. The company also highlights its partnership with BRINC for drones as first responders, complementing its CAPE software, and its broader drone strategy including counter-drone measures with SkySafe.

The paragraph discusses BRINC's position as a progressive and agile company, leading in the public safety domain, particularly in Drone First Responder (DFR) technology, with all products made in the U.S. It highlights BRINC's advanced technical capabilities, strong partnerships, and versatility, including the ability to deliver items like EpiPens or Narcan, setting it apart from competitors. Additionally, there's been a noticeable increase in FAA waivers for DFR, expected to continue into 2025. The company is working on integrating assistive technologies with their DFR program, including the SVX platform and APX NEXT. Jack Molloy comments on the favorable public safety technology funding situation, noting that federal grant awards are typically supplementary, and state and local budgets appear strong as states enter their new fiscal year.

The paragraph discusses the positive state of state and local budgets, largely funded by income, sales, and property taxes, which have seen increased receipts. The public safety sector is experiencing excitement and robust pipeline growth, particularly in upgrading LMR systems with new D series technology that offers enhanced features like smaller geographic footprint and more capacity. The conversation touches on financial support similarities between current funding due to the "Inflation Reduction Act" and past efforts like narrow banding. The public safety sector is getting significant attention due to advancements in technology and current R&D investments. Greg Brown notes that while past federal stimulus efforts in response to COVID, such as the $1.9 trillion package, are unmatched, the current environment still offers significant funding opportunities.

The paragraph discusses the consistency and stability in the business environment, especially related to state and local budgets and taxes. The speaker notes that the business has reached a more steady state, partly due to resolving issues like the semiconductor supply chain backlog. Jack Molloy compares current business conditions to those in 2013, highlighting that the narrow banding mandate from that time was a unique externality. The American Rescue Plan Act (ARPA) orders last year accounted for less than 1% of North American orders, indicating a different market dynamic compared to the past. Tomer Zilberman then asks about the revenue growth guidance for the second quarter, which is $30 million below expectations, seeking clarity on any cautious factors affecting demand.

In the paragraph, Jason Winkler and Greg Brown discuss the firm's consistent growth expectations for Q1 and Q2, noting that supply chain normalization impacted their guidance. They affirm a 5.5% growth forecast for the year, with Q2 expected at 4%. Despite a favorable foreign exchange (FX) tailwind, they emphasize prudence in maintaining full-year guidance. Greg Brown highlights record Q1 orders and a robust pipeline as indicators supporting their confidence, even as a 90-day tariff pause nears its end. They aim to continue executing effectively and avoiding any operational missteps.

The paragraph discusses the company's positive outlook on cloud and software adoption, highlighting a trend towards recurring revenue. It mentions expectations for earnings growth and responds to questions about mergers and acquisitions (M&A) and opportunities from increased defense spending in Europe. The company indicates that M&A discussions are active, despite a generally slower environment for deals. They have closed notable acquisitions, including RapidSOS and Theatro, and are engaged in share repurchase activities, reflecting strong investment opportunities. The company also observes that private market valuations have become more reasonable compared to the previous year.

The paragraph discusses opportunities for growth, particularly in European defense spending, with a focus on Germany's increased defense spending as NATO countries aim for a 3% GDP target. Jack Molloy highlights successful collaborations with the German MOD in military and naval operations and mentions opportunities to expand these programs. He also notes interest in border security technologies, like thermal video assets from their Silent Sentinel acquisition. The importance of local teams working with customers is emphasized. Later in the paragraph, Irvin Liu asks about the company's strategy for addressing tariffs through pricing adjustments, inquiring if these can be applied to existing contracts or just new orders. Jason Winkler responds that pricing opportunities primarily exist within new orders in their pipeline.

In the paragraph, Jack Molloy discusses opportunities related to services and renewals, noting that there are two major contractual periods in June and January. They have enhanced their service offerings by adding cybersecurity capabilities, following last year's price increase, and are currently evaluating new opportunities. Customers and partners anticipate near-term pricing actions due to previous price hikes. Greg Brown clarifies that they are mitigating around $100 million primarily through cost reductions rather than pricing. Irvin Liu then inquires about budget allocations for AI technology investments, particularly in public safety, and seeks insights on how customer budgets might shift to accommodate these investments.

The paragraph discusses the integration of advanced technology in major city police forces in the U.S., particularly focusing on command center software enhancements. Greg Brown highlights the use of technology like APX NEXT and SVX devices to improve mobile capabilities for officers. Mahesh Saptharishi expands on this by explaining how AI is transforming user interaction with software. He describes the introduction of "Assist," a feature embedded in their command center software, available in three tiers (starter, standard, plus). Assist enhances functionalities like search and information summarization across incident timelines and can proactively surface information, improving cross-selling of their products. An example is given of a 911 call where Assist helped confirm the location of a caller’s mother needing medical assistance.

The paragraph discusses advancements in emergency response technology, emphasizing the integration of automated systems to improve efficiency, such as during Amber alerts. It mentions the embedding of three levels of automation into products to enhance their power and connectivity, rather than viewing them as separate monetizable entities. Greg Brown, the CEO of Motorola Solutions, expresses gratitude to the team and partners for their efforts, stressing the company's focus on innovation and customer-centered development.

The paragraph outlines Motorola Solutions' focus on safety and security through innovative products and a supportive ecosystem, highlighting its commitment to enhancing user productivity and situational awareness. It welcomes new employees from RapidSOS and Theatro and discusses excitement around drone technology. The text also mentions record product introductions, a shift toward recurring revenue from software and services, and appreciation for the team's execution. The call ends with information on accessing a replay of the teleconference.

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