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Motorola Beats Q3 Earnings Estimates on Strong Demand, Record Orders
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Key Takeaways
MSI's Q3 adjusted EPS rose 15.5% to $4.69, beating estimates, while revenues grew 12.2% to $3.38B.
MSI's record backlog reached $16.6B, up 14%, fueled by strong demand and major public safety contracts.
Motorola raised its 2026 revenue outlook to $13.05B and adjusted EPS guidance to $17.94-$17.99.
Motorola Solutions, Inc. (MSI - Free Report) reported solid third-quarter 2026 results, with adjusted earnings increasing 15.5% year over year to $4.69 per share, beating the Zacks Consensus Estimate of $4.41 by 6.35%. The improvement was driven by higher operating margins, partially offset by increased interest expenses and taxes. GAAP earnings declined to $512 million or $3.06 per share from $562 million or $3.33 per share, primarily reflecting the Silvus earnout adjustment.
Quarterly revenues rose 12.2% to $3.38 billion, surpassing the consensus estimate of $3.27 billion by 3.40%. Double-digit growth across both segments and all three technologies, coupled with record orders and an all-time high backlog, underscored strong demand for the company's safety and security solutions.
Motorola Solutions, Inc. Price, Consensus and EPS Surprise
Quarterly sales benefited from growth across mission-critical networks (MCN), video security and command center solutions. MCN revenues increased 12% year over year, while video security and access control revenues improved 11%. Command center revenues climbed 16%, reflecting healthy demand for integrated public safety solutions.
Region-wise, North American revenues increased 10% to $2.33 billion, driven by growth across all three technologies. International revenues surged 18% to $1.05 billion, supported by double-digit growth in each technology. Acquisitions contributed $211 million to quarterly revenues, while favorable foreign exchange movements added $11 million.
Segmental Performance Remains Strong
Net sales from Products and Systems Integration increased 12% year over year to $2.12 billion, driven by double-digit growth in MCN and video security. Non-GAAP operating earnings rose 21% to $671 million, while operating margin expanded 240 basis points (bps) to 31.7%, aided by higher sales and improved operating leverage.
Software and Services revenues increased 13% to $1.26 billion, supported by double-digit growth across all three technologies. Non-GAAP operating earnings improved 17% to $425 million. Operating margin expanded 120 bps to 33.8%, reflecting higher revenues and improved operating efficiency.
Operating Margins Improve Despite Cost Pressures
GAAP operating earnings increased marginally to $777 million from $770 million in the prior-year quarter. However, GAAP operating margin contracted to 23% from 25.6%, primarily due to an increased contingent earnout provision related to the Silvus acquisition.
Excluding non-recurring items, non-GAAP operating earnings increased 19% to $1.10 billion. The corresponding margin expanded 200 bps to 32.5%, driven by favorable operating leverage despite higher supply chain costs.
Record Backlog Highlights Robust Demand
Motorola ended the quarter with a record backlog of $16.6 billion, increasing 14% or $2.1 billion year over year. Products and Systems Integration backlog rose $635 million to approximately $4.2 billion, while Software and Services backlog increased $1.4 billion to roughly $12.4 billion.
Significant contract wins included a $140 million P25 systems and device order from the Federal Bureau of Prisons and a $98 million federal customer order. Software and Services secured a $139 million, 10-year contract with Louisiana and a $78 million, eight-year mobile video award from a U.S. federal customer.
Cash Flow Declines, Capital Deployment Continues
Motorola generated $662 million in operating cash flow during the reported quarter compared with $799 million a year ago. Free cash flow declined to $589 million from $733 million, primarily due to higher tax and interest payments, partially offset by higher earnings excluding non-cash charges.
During the quarter, the company paid $200 million in dividends, repurchased $94 million of shares and incurred $73 million in capital expenditures. It also completed the $1.3 billion D-Fend acquisition. As of Oct. 3, 2026, cash and cash equivalents totaled $774 million, while long-term debt stood at $9.36 billion.
Outlook Raised
For the fourth quarter of 2026, Motorola expects revenue growth of approximately 13% year over year. Non-GAAP earnings are projected between $5.47 and $5.52 per share, assuming an effective tax rate of roughly 22.5%.
For 2026, the company raised its revenue guidance to around $13.05 billion from $12.98 billion. Non-GAAP earnings guidance increased to $17.94-$17.99 per share from $17.62-$17.72. Management also raised operating cash flow expectations by $50 million to $3.05 billion.
Looking ahead to 2027, management indicated preliminary revenue expectations of approximately $14.25 billion, supported by sustained demand, acquisitions and expanding opportunities in mission-critical communications. Motorola expects stronger organic growth and further operating margin expansion despite anticipated increases in memory costs and other supply chain headwinds.
Keysight Technologies, Inc. (KEYS - Free Report) is scheduled to release fourth-quarter fiscal 2026 earnings on Nov. 19. The Zacks Consensus Estimate for earnings is pegged at $3.36 per share, suggesting growth of 75.9% from the year-ago reported figure.
Keysight has a long-term earnings growth expectation of 30.7%. It delivered an average earnings surprise of 15.1% in the last four reported quarters.
Workday, Inc. (WDAY - Free Report) is slated to release third-quarter fiscal 2027 earnings on Nov. 24. The Zacks Consensus Estimate for earnings is pegged at $2.74 per share, indicating 18.1% growth from the year-ago reported figure.
Workday has a long-term earnings growth expectation of 18.7%. It delivered an average earnings surprise of 7% in the last four reported quarters.
Anterix Inc. (ATEX - Free Report) is set to release second-quarter fiscal 2027 earnings on Nov. 10. The Zacks Consensus Estimate for loss is pegged at 45 cents per share, implying a decline of 221.4% from the year-ago reported figure.
Anterix delivered an average earnings surprise of 36.9% in the last four reported quarters.
View the Zacks #1 Rank List
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Motorola Beats Q3 Earnings Estimates on Strong Demand, Record Orders
Key Takeaways
Motorola Solutions, Inc. (MSI - Free Report) reported solid third-quarter 2026 results, with adjusted earnings increasing 15.5% year over year to $4.69 per share, beating the Zacks Consensus Estimate of $4.41 by 6.35%. The improvement was driven by higher operating margins, partially offset by increased interest expenses and taxes. GAAP earnings declined to $512 million or $3.06 per share from $562 million or $3.33 per share, primarily reflecting the Silvus earnout adjustment.
Quarterly revenues rose 12.2% to $3.38 billion, surpassing the consensus estimate of $3.27 billion by 3.40%. Double-digit growth across both segments and all three technologies, coupled with record orders and an all-time high backlog, underscored strong demand for the company's safety and security solutions.
Motorola Solutions, Inc. Price, Consensus and EPS Surprise
Motorola Solutions, Inc. price-consensus-eps-surprise-chart | Motorola Solutions, Inc. Quote
Revenue Growth Spans All Technologies
Quarterly sales benefited from growth across mission-critical networks (MCN), video security and command center solutions. MCN revenues increased 12% year over year, while video security and access control revenues improved 11%. Command center revenues climbed 16%, reflecting healthy demand for integrated public safety solutions.
Region-wise, North American revenues increased 10% to $2.33 billion, driven by growth across all three technologies. International revenues surged 18% to $1.05 billion, supported by double-digit growth in each technology. Acquisitions contributed $211 million to quarterly revenues, while favorable foreign exchange movements added $11 million.
Segmental Performance Remains Strong
Net sales from Products and Systems Integration increased 12% year over year to $2.12 billion, driven by double-digit growth in MCN and video security. Non-GAAP operating earnings rose 21% to $671 million, while operating margin expanded 240 basis points (bps) to 31.7%, aided by higher sales and improved operating leverage.
Software and Services revenues increased 13% to $1.26 billion, supported by double-digit growth across all three technologies. Non-GAAP operating earnings improved 17% to $425 million. Operating margin expanded 120 bps to 33.8%, reflecting higher revenues and improved operating efficiency.
Operating Margins Improve Despite Cost Pressures
GAAP operating earnings increased marginally to $777 million from $770 million in the prior-year quarter. However, GAAP operating margin contracted to 23% from 25.6%, primarily due to an increased contingent earnout provision related to the Silvus acquisition.
Excluding non-recurring items, non-GAAP operating earnings increased 19% to $1.10 billion. The corresponding margin expanded 200 bps to 32.5%, driven by favorable operating leverage despite higher supply chain costs.
Record Backlog Highlights Robust Demand
Motorola ended the quarter with a record backlog of $16.6 billion, increasing 14% or $2.1 billion year over year. Products and Systems Integration backlog rose $635 million to approximately $4.2 billion, while Software and Services backlog increased $1.4 billion to roughly $12.4 billion.
Significant contract wins included a $140 million P25 systems and device order from the Federal Bureau of Prisons and a $98 million federal customer order. Software and Services secured a $139 million, 10-year contract with Louisiana and a $78 million, eight-year mobile video award from a U.S. federal customer.
Cash Flow Declines, Capital Deployment Continues
Motorola generated $662 million in operating cash flow during the reported quarter compared with $799 million a year ago. Free cash flow declined to $589 million from $733 million, primarily due to higher tax and interest payments, partially offset by higher earnings excluding non-cash charges.
During the quarter, the company paid $200 million in dividends, repurchased $94 million of shares and incurred $73 million in capital expenditures. It also completed the $1.3 billion D-Fend acquisition. As of Oct. 3, 2026, cash and cash equivalents totaled $774 million, while long-term debt stood at $9.36 billion.
Outlook Raised
For the fourth quarter of 2026, Motorola expects revenue growth of approximately 13% year over year. Non-GAAP earnings are projected between $5.47 and $5.52 per share, assuming an effective tax rate of roughly 22.5%.
For 2026, the company raised its revenue guidance to around $13.05 billion from $12.98 billion. Non-GAAP earnings guidance increased to $17.94-$17.99 per share from $17.62-$17.72. Management also raised operating cash flow expectations by $50 million to $3.05 billion.
Looking ahead to 2027, management indicated preliminary revenue expectations of approximately $14.25 billion, supported by sustained demand, acquisitions and expanding opportunities in mission-critical communications. Motorola expects stronger organic growth and further operating margin expansion despite anticipated increases in memory costs and other supply chain headwinds.
Zacks Rank
Motorola currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Keysight Technologies, Inc. (KEYS - Free Report) is scheduled to release fourth-quarter fiscal 2026 earnings on Nov. 19. The Zacks Consensus Estimate for earnings is pegged at $3.36 per share, suggesting growth of 75.9% from the year-ago reported figure.
Keysight has a long-term earnings growth expectation of 30.7%. It delivered an average earnings surprise of 15.1% in the last four reported quarters.
Workday, Inc. (WDAY - Free Report) is slated to release third-quarter fiscal 2027 earnings on Nov. 24. The Zacks Consensus Estimate for earnings is pegged at $2.74 per share, indicating 18.1% growth from the year-ago reported figure.
Workday has a long-term earnings growth expectation of 18.7%. It delivered an average earnings surprise of 7% in the last four reported quarters.
Anterix Inc. (ATEX - Free Report) is set to release second-quarter fiscal 2027 earnings on Nov. 10. The Zacks Consensus Estimate for loss is pegged at 45 cents per share, implying a decline of 221.4% from the year-ago reported figure.
Anterix delivered an average earnings surprise of 36.9% in the last four reported quarters.