Motorola Solutions Stock

Awesome. Well, good morning, everybody. Jim Fish from Piper Sandler. I hope you had a good start to your day. We've got Mahesh from Motorola here. Mahesh, thanks for joining us, and welcome to Nashville.

Thank you for having me.

So one thing we've been asking every company kind of just to start is kind of lay of the land of where you guys see spending and budgets at this point. Obviously, you guys are a little bit more exposed to public safety kind of budget, state and local as well as government. So especially in the U.S. Fed and how is -- how are things looking?

I'd say things are looking reasonably good on the state and local level. I think Jack Molloy articulates the best thing that state and local budgets are continuing to be strong. And everything that we provide is a need to have more than a nice to have. So we get prioritization within that budget framework as well. And on the federal side, we're seeing good traction. So I think we are not seeing an issue there.

So as we kind of talked about it in April, you guys outlined kind of a, I'll say, a renewed AI strategy or a pivot rather than starting with that blank sheet of paper approach. What is Motorola doing now with helping responders via AI? And what makes Motorola's approach the right approach?

Yes. And maybe, Jim, if you allow me -- Motorola didn't enter the AI space this year or last year or even the year before. We've been in this space for a very long time. My entire career, as an example, has been really focused on machine learning and AI applications in security and in public safety. I came into Motorola through the acquisition of Avigilon. And the way Avigilon really took market share from its competitors and grew actively is applying computer vision machine learning techniques right into our video management systems, our cameras, et cetera. And one of the lessons that we learned in that process was that having AI capabilities as a sidecar or an over-the-top application that helps users outside their normal course of their workflows, initially makes for a good proof of concept, but doesn't have a sustainable legs to it where it becomes the thing that gets actively adopted.

So the tack we took at Avigilon that really led to our success early on is embedding a lot of these capabilities within our core applications. It is that same strategy and tactic we have taken into the public safety space as well. So as we think about our command center applications, be it 9-1-1, VESTA, Computer-Aided Dispatch CAD or even console applications across the board, that's the dispatcher suite that you were referring to. The more we thought about it, having stuff like transcription or translation capabilities be something that's an adjunct to the core workflows really didn't serve our users well.

So we redesigned our core applications, VESTA NXT, which we launched last year, has AI capabilities natively built into it. Native capabilities that actually facilitate transcription in real time as the user is -- the call taker is having a conversation with the caller, automatically recognizing that perhaps a call taker cannot understand the language that the caller is calling and being able to switch to a translated form immediately without having to wait for an interpreter to join the 9-1-1 call line, being able to fill out forms, summarize, send that summary to an APX NEXT device with a responder in the field, being able to communicate all those capabilities seamlessly behind the scenes, I think that is really where we see the embedded capacity of AI.

100% of the 9-1-1 orders that came in, in the past few quarters have gone with our AI capabilities. And literally, because it's embedded, customers choose a tier, the AI tier of our solution. That's the assist tier, that's the highest tier of our solution. And as a consequence, we have seen an ASP lift uplift across each one of our workflow applications because they are all choosing the assist tier. What the dispatcher suite and the responder suite allows us to do beyond the adoption of those individual applications is that when someone already has bought into VESTA or CAD to their portfolio and wants to be able to add assist capabilities into their CAD solution, this just makes it an easier purchase decision because it's available as a suite.

Got it. And look, you guys sit at a kind of a bit of a unique positioning between LMR, access control and that command center software. What's sort of the hardest engineering challenge in blending that voice communication with the high bandwidth real-time video streams?

Yes. I would say it's less of a network challenge. It's a user experience challenge, and it's an opportunity to how we can leverage data more effectively. So let me just maybe talk briefly about the data portion of the story. We launched SVX last year. And one of the key things that SVX enables along with the CommandCentral DEMS platform, digital evidence management platform in the background and also our records platform is the ability for officers to offer narratives in an AI-assisted manner. And one of the issues that we saw very early on as a challenge for officers is that as they use their body-worn camera to capture what they see and they hear, a good chunk of information gets missed out because they're using an ear piece attached to their radio and having conversations and listening to conversations via the ear piece, which the body-worn camera never captured.

So the officer is not actually capturing everything that he or she hears or sees within that body-worn camera recorded audio. By integrating all those pieces of information, audio both that's recorded by the body-worn camera, but also by the LMR audio streams that are captured in the background. And by the way, 9-1-1 audio, which also becomes relevant. All that information now comes together to offer a more accurate and more complete narrative prospect, so -- and that accurate narrative actually is what ends up saving the officer time. So not just the first draft, it's really through continued iteration where it's checked for accuracy or checked for making sure all details were included in it, the ability for us to make sure there are no holes in that incident time line via all the data points we're able to collect and correlate. That is the opportunity, and that's video data, with audio data, with other data streams, all bringing -- coming together in a particular application that makes that workflow much easier for them.

Yes. And maybe just on the LMR side before kind of diving into some of what you just actually brought up, but you guys are going through this base station refresh on the D-Series. I think you even just won a nice little refresh down in Louisiana. So how is that refresh going? Why do customers need to kind of upgrade to this latest and greatest D-Series?

Yes. So some of the cool things that D-Series really brings to the table here is, first, the -- there's the core and there's the base station, both of those together form the D-Series refresh. At the core, this new generation virtualizes a lot of the typical hardware-oriented capabilities that the customers deployed. And what that means is 80% less real estate footprint that they need to deploy the solution. And by the way, very significantly up to 90% reduction in energy costs in actually managing the solution, which is starting to become a significant. Separately, at the base station level, what D-Series allows you to do is we have introduced this new thing called sectorized antennas.

And what sectorized antennas does is allows us to customize coverage. And so, a, we can make sure our customers get the best possible coverage. Two, we can optimize it for where their needs are as opposed to just giving them a 360-degree blast of energy, which may not be useful in that particular circumstance. So effectively, from a TCO standpoint, this ends up being a much more significant advantage and benefit to the customer. We are seeing excellent engagement. St. Louis was our most recent win. It was a substantial win. And these customers, by the way, are not -- they're not getting -- renewing their infrastructure services with us for a year or so. It's multiyear, multi-decades in some cases as well. So it's a significant thing. Pipeline is great, but this is a long -- we're at the early stages of this, and it's going to take an extended period of time as customers slowly refresh their infrastructure.

So one of the questions we always get, and I'm sure you're ad nauseam for talking about this, why won't LTE just replace LMR over time, especially as we become a little bit more video-centric?

Yes. It's a good question. By the way, what public safety wants most from us is coverage and resilience, right? Those are the 2 things that really determine whether or not a particular technology is capable of serving the needs of our customers. Where LTE today has substantial weakness is one on coverage and coverage is not because of just raw, hey, is this area covered. It's because given the frequency at which typical cellular signals work, getting coverage right in a basement of a building or in the depths of some place where there's an urban canyon, there is questionable coverage irrespective of what other priority preemption and other things that the network starts to introduce. That remains a significant challenge.

Secondly, it's a resilience problem. The resilience problem is one where, let's say, a cell tower fails, everything fails, all communication goes down. If you think about how an LMR network works. An LMR network is private network. It's dedicated to that customer's use just for public safety. Secondly, if the main site fails, the main network fails, the site still operates. So everything that at the site level, everybody connected to that site can still continue to talk to each other. If the site fails, the devices can actually talk to each other. So if 2 officers are a mile apart, there's something called direct mode that our radio support, where they're able to have a conversation directly irrespective of what other infrastructure is alive.

So at the end of it, resilience means that we can operate either with infrastructure, with partially available infrastructure or with no infrastructure at all. And that is a significant difference and necessity compared to a typical cellular network. Now if I take a step back, this can't be a question of LMR versus LTE or even for that matter of fact, LEO satellite capabilities, right? One of our core advantages is across our LMR infrastructure and our devices, we have software-based abstraction. It's an application that's the most common application that gets bundled with our APX NEXT device is called SmartConnect. What SmartConnect does is in the eyes of the user, abstracts all their interactions with networks from what their needs are to communicate. So whether that's voice, whether that's video, whether that's messaging, whatever, we will choose the right most available carrier in the background to make sure that, that communication fits the need of the application and also is resilient across those different carriers.

So at the end of the day, when you think about resilience and coverage, by making sure that LMR is part of the story, LTE is part of the story, satellite is part of the story all within one device and also one infrastructure in the back end, D-Series sites also support LEO backhaul, by the way. You put all those pieces together, we are the solution that is maximally resilient while making sure the user never has to care whether they're using LMR, LTE or LEO, it just works.

So maybe on that end, you brought satellite here, LEO. Is it going to be this kind of -- like how do we think about that balance then between LMR and LEO? Why isn't satellite more of a threat?

So when you think about satellites today, the bandwidth download and the bandwidth upload is fairly limited when you -- especially when you're thinking about it in the direct-to-device fashion. So what LEO today can reasonably support are things like messaging type of applications, telemetry, location data, understanding where an officer is at a given moment. Today, the available QoS controls for audio are still in more or less in the nonexistent stages where it's not a reliable replacement for LMR. The other thing is it's also just physics of the frequencies that are being used for direct-to-device communication through satellite. There are higher frequencies and those frequencies don't penetrate structures, hard structures that easily.

So if you have clear line of sight to the sky, yes, you may have good connectivity. The moment you go within a building or in a sheltered area of any sort, which is where lots of incident responses happen, it ends up being unreliable even if you had the bandwidth to have audio being uploaded. We do use LEO. Where LEO is useful is in our base stations where we have an antenna that has a clear view of the sky, there's bandwidth upload. It's not a direct-to-device type of problem. It's not a device power problem. There, as a backup to effectively wired communication backhaul, LEO has a very clear role to play. It is like having fiber coming into your house and then using WiFi for all your devices. I think there's a similar complementary relationship between everything that we do with LMR, LTE, and LEO.

Got it. One of the things that's been going on in the space broadly on public safety is a lot of, I'll say, flak around some data privacy, if you kind of get the reference there, but especially as you think about automated license plate readers and analytics, how is Motorola proactively collaborating with some of these communities and agencies to build trust and transparency around being responsible with AI?

Yes. So any time we think about any sort of data or AI-oriented product capability or product itself, for us, it starts with -- should we do it question. And internally, we have a Motorola Technology Advisory Council. This bunch of people are cross-functional. So they are not just engineers, they're not product managers. They're not just in sales, it's across the entire organization. They represent a cross-section of the community that can come in and say, "Hey, we think that this is worthwhile to do there's clear benefit to it or no, this is probably something that we should not go after." So that's the first gate.

The second is, once we decide that we're actually going to do it, we also very carefully enumerate the risks associated with building the technology. There's almost always a clear benefit, which is why we engaged in the process. But then there may be some inadvertent things, could be misuse of the technology, could be whatever else that we say, okay, here are risks that we need to think about. And then we ask the question, can we figure out sufficiently good mitigation to these risks? And if the answer to that is yes, only then do we go continue. With quite a few things that are out there today in terms of data privacy and such, our first elements to mitigation is we have incredibly tight audit controls.

For one, public safety customers of ours, they own their data, 100%. We don't -- we use what we call a Zero-Trust Sharing philosophy in that customer data doesn't get automatically shared. We don't make that choice at all. Then we give customers policy level controls. If you're running an investigation, you need to first be able to enter things like case numbers associated with why you're running an investigation. Subsequently, you need to be able to enter a reason as to why you're running particular searches. That then allows for an audit log. That audit log can then be automatically sent to supervisors or other people who can verify to make sure that the reason why somebody used this capability was a justifiable reason within policy, et cetera.

We also support our customers by providing them a transparency portal. So many of our customers have a transparency site, a website where they say, these are the technologies that are in use. This is how the technology is being used. This is the data that's being collected. This is how that data is being used. This is when some data was accessed, and this is how it's being shared if they choose to share it. So from all that standpoint, that transparency element now is another tool for the -- for our customers to gain the confidence of their community.

We also offer free certification and training to all our customers to both help them use the technology appropriately, but also help them with community-based conversations. We're part of a bunch of different standards organizations, APCO, NEMA, iCERT, et cetera, to make sure that we are indeed making sure that from a policy framework, thinking standpoint, we are consistent with what our communities are asking for as well. So those are just a few ways separately. I think we also try to make absolutely sure that we are compliant with all the laws and regulations and the landscape is changing rapidly. So we make sure we are proactive in understanding where the law is heading to and implementing those controls in advance of anything actually that's taking shape. So that's how we end up hopefully doing this in a very responsible way for our customers.

Makes sense. Maybe just moving over to drones, which is kind of the hot topic in the space. What's Motorola's strategy here with Silvus and now D-Fend as part of the family here? How are you thinking about sort of the detection versus mitigation side of drones and counter drone DFR?

So to begin with, Silvus focused on defense. D-Fend, very much a public safety critical infrastructure play. But D-Fend sounds like defense, but D-Fend is not focused on defense. So in terms of Silvus and where Silvus is focused, it's really enablement for drone communications in the battlefield. It is making sure that when drones and autonomous vehicles of all sorts need to communicate in the battlefield where they could be jammed or the communication could be intercepted in some way, where you need to make sure that the communications should not be detected in the first place. That is where Silvus really shines. That is where the intellectual property that Silvus been brought to the table, is differentiated from everybody else in the space. That's why it's adopted as the default communication modality for MANET networks for unmanned systems as a whole.

As part of that, we also have spectrum monitoring capabilities, which is understanding what kind of RF emissions are happening in space to understand perhaps there's a drone that's coming in and enabling detection of that drone based upon RF emissions, but really focused on more defense-oriented problem sets. And that's also part of the Silvus portfolio. D-Fend extends that, but really from a public safety standpoint. This is our ability to not just detect drones based upon RF emissions, capture remote ID data from drones. And usually, most consumer drones group, what's called Group 1, Group 2 and Group 3 drones that are above 250 grams in weight, they all need to broadcast remote ID.

D-Fend can capture that. D-Fend can capture RF emissions, full-blown detection. But what sets D-Fend apart from everybody else is that they can -- they have a mitigation model. This mitigation model is one where it doesn't focus on destroying the drone or jamming our communication with the drone. We're able to take over control of the drone in populated areas and land it safely, which means that if you're trying to mitigate the presence of a malicious drone in a stadium or in a populated urban area, D-Fend is the only option you really have, which is why 11 out of the 12 FIFA stadiums, the stadiums that hosted FIFA leverage D-Fend as the key solution for mitigation and detection. So that is the D-Fend Counter-UAS story.

And separately, on the drone as a first responder solution, which is also squarely focused on the public safety market, we have our strategic alliance with BRINC. We recently increased our investment in BRINC, and we have an exclusive -- we are their exclusive channel into public safety in North America. We're tightly integrating that into our core solutions as well. And there, again, where we see the evolution here, much like D-Fend from a Contra-UA standpoint was not just detection. Detection, the problem that there are many solutions for is a mitigation that really sets D-Fend apart, especially mitigation in urban populated areas. In the case of BRINC, where we see the DFR advantage really becoming a big deal is not just getting eyes on site as quickly as possible, but D-Fend's next-generation drones can actually carry a payload. They can actually deliver things that are needed, whether that's a personal flotation device, a defibrillator, a Narcan canister, whatever else that you potentially may need, it is actually an active participant in the response as opposed to just being eyes on site as quickly as possible.

So when you think about that, Silvus really anti-jam, low probability of detection, low probability of intercept, really sets it apart in the battlefield scenario for defense applications, unmanned systems. If you think about D-Fend mitigation, unique capability for Group 1, 2 and 3 drones in urban populated environments, public safety focused and BRINC really from a DFR standpoint, not just being eyes on site, but giving us a path where the drones become an active participant of the response. That is where we see our drone strategy really taking shape.

Yes. And maybe just on the video side quickly. You guys have been with Alta moving from on-prem to cloud. How is that playing out? How is that conversion been? And what differentiates Alta versus some of the competitors out there?

Yes. So by the way, this week, there's a video security show called GSX that's in process right now in Atlanta. Actually, I think it ends today. And we introduced a new solution called Avigilon Extend. And one of the core things with Avigilon Extend is we are bringing together what historically used to be either strictly cloud, that is Alta or strictly on-premises with the community, close to a converging to one platform. And to your question about migration, we want to make it very easy for our customers to not just migrate from on-premises to cloud if they think it's appropriate. But in many cases, it's actually the case that some customers, especially international customers, who want to be on-premises, except in certain cases where they want to extend to the cloud. So we want to be as flexible as possible.

At the end of the day, their choice as to what's cloud hosted, they have -- they're free to make that choice. In many cases, they want to be fully cloud managed. And what Avigilon Extend does is it allows cloud management for their entire portfolio of products. And so we see this convergence between Alta and Unity actively happening. In terms of differentiation, first is Alta is an open platform. In other words, it allows us very flexibly to take over brownfield installation, customers who previously perhaps weren't thinking about cloud, perhaps who have a deep investment in existing cameras or infrastructure. Alta has the capacity to take all of that, ingest that into its system and offer a unified cloud-managed framework, along with all the analytics and AI capabilities that we offer on top of it.

Over the past few years, we've added a numerous set of modules that are either vertical-specific or specific to particular use cases. Visitor management is a very good example. All that complements the Alta story in a manner where it's a single pane of glass, our end users can manage everything that they have on site, add new capabilities without necessarily ripping and replacing everything that they already have spent money on in a time line that is, I think, sensible for them. So we think that, that is a powerful story. Operator, just a quick minute on that. Operator is our overall umbrella platform that then takes Alta video and now Avigilon Extend video.

Access control data integrates push-to-talk systems so that for customers that have a security operations center, now they have one pane of glass, a single platform that is AI native that orchestrates the response across everything that they're doing. And for customers who do not have a physical security operations center, Operator is the agentic platform that will handle a response for them and really make that something where you're not just getting video or access control as an insurance policy when something goes wrong, you have evidence after the fact, you can actually actively prevent, mitigate that incident as well in a fairly automated way, including, by the way, escalations to public safety. So when you look at all of that, that's how Alta and our video security portfolio is quite different from, I think, what other options in the market.

Awesome. Well, we're out of time, but we can talk about this for a long -- a lot more, if possible. But appreciate you joining us. Appreciate everybody in the audience, and have a good rest of your day.

Great. If everybody can go ahead and please take their seats. We're going to get started with the next session.

I'm Matt Niknam, comm infrastructure and networking analyst here at Truist. And we're very pleased to be joined by Jack Molloy, EVP and Chief Operating Officer at Motorola Solutions.

Jack, welcome to the conference.

Hey. Thanks for having me, Matt.

So maybe just to start from a high level for investors who may be less familiar with the company, how would you describe what Motorola Solutions is today? And how do your Mission Critical Networks, Video and Command Center businesses work together as one ecosystem rather than 3 distinct product lines?

Yes. So I think Motorola Solutions in a word, global leader in public safety, enterprise security, and now we're a provisioner of defense security solutions around the globe. You'll hear the term and you'll hear me reference the term ecosystem.

And I think it's a perfect example of we're focused on our end-user markets, providing outcomes that bring together not just the Mission Critical Networks solution, which was fundamentally the bedrock of our company, but the Command Center software as well as Video. It's really the culmination and convergence of voice, data, video, everything in terms of how you do incident response, if that's the NYPD, FDNY, resident here where we're at today, who are 2 great customers.

But really broadening what we do, Matt, to serve border security, ministry of defenses around the world, as well as critical infrastructure, places like Duke Energy, large-scale client in the critical infrastructure space, critical infrastructure. I think the way that we have to secure all things private and public are done in a much different way today. And I think we sit in the epicenter of solving a lot of those needs for our customers.

Got it. So maybe if we can hit top priorities, what are you most focused on in terms of top priorities for your organization over the next 12 to 18 months?

The thing I'm always focused on, we're focused, in a word, it's execution. So we think a lot about we have -- we're in the 3 businesses that I just alluded to. We've got -- we're global in scale, over 125 countries around the world, thousands of salespeople, over 10,000 partners. It's executing in the day, organic growth, as we say.

The second thing, that I'm personally very attuned to and very prioritized right now, is we've acquired Silvus just a little over 12 months ago, it was August 4 of 2025 we acquired. And it's all about a scale game there, not only scale from a go-to-market and the investments we made, research and development, but the supply investments we've made there.

And similarly, we just closed D-Fend, who's the leading provisioner of cyber mitigation counter-drone technology. In fact, most recently, they were used in 11 of 12 of the FIFA sites, focused in a similar way on bringing the revenue synergies and bringing them into the fold to make -- to help them thrive within the Motorola family as well.

So you've seen very strong order growth. That translated to reaccelerating revenue growth last quarter, and I think you've got more implied in the second half of the year relative to the first half. What's genuinely different about the demand backdrop today relative to maybe a year ago across your state and local, federal and enterprise customer sets?

Yes. So we go through an exercise midyear every year and we pull -- there's a lot of data, obviously, on state budgets. Some of those, by the way, some of those budgets started in July of this year and some run on a calendar year.

But the reality is, when we think about state budgets, we're in a good position. So we've seen budgets growth. But more importantly, we've seen public safety -- and technology within public safety grow faster than public safety in state budgets in general.

Similarly, you sit and you have city budgets, some cities are in a difficult fiscal situation. But I elevate that to say, we often talk about the fact, on our earnings calls and some of these meetings, Matt, you've heard me say it before, but we're a need-to-have and not a nice-to-have. That sounds like a great word, but the reality is, it is.

You look at next-gen 911 systems and the ability to ingest text messaging, videos, those kind of things, these are at the forefront of every urban command center and they're thinking about the investment there. You think about the investments we've made to refresh our Mission Critical Networks, particularly the P25 networks, and we've talked about the litany of D-Series upgrades, the APX NEXT upgrades that we've gone through, and we're really pleased with that.

But the last thing is, as great that we have those, but we also have the One Big Beautiful Bill, which is actually a multiyear tailwind to our business. And interestingly, the U.S. federal government had some of -- they had some older fleets in terms of not only devices but actually infrastructure as well. And I think as it lends itself into '27, we've had good success this year in '26, I think we're also in a good fiscal situation and budget situation as we play it forward federally as well.

So I think on the last call, you talked about 2027 state and local public safety budgets growing faster than overall government budgets. Software growing even faster within that. What are some of the proof points you've seen so far that inform that view?

Yes. I think -- so first of all, the here and now. We had record Q2 orders, just the print that we just had last quarter. We've had double-digit order growth on top of double-digit order growth in the first half. And we've also talked about the second half of the year product growth -- having double-digit product growth. So that's how we've guided, that's what's in the rearview mirror.

But I also think it's critical to look at request-for-proposal activity, quoting activity, things that I kind of thought, not in a typical marketing sense, top of the funnel, but things that drive. So it's the prospecting. And as you start to move these things through the funnel, what's the interest level and engagement? And what we're seeing there is obviously extremely positive across all 3 technologies.

And I think one of the things that we're most proud of as we look at this year, our Mission Critical Networks, we've guided the fact that we're going to grow 10% to 11%. Our Video Security business, both mobile and fixed, we've talked about that Video segment growing 11%. And then we've talked about command center software growing 15%.

It's also interesting the fact that Mission Critical Networks is where we actually report the APX NEXT device revenue. But remember, when we talk about the ecosystem and the kind of hand feeding the glove, Command Center Software, 15% growth, is now comprised of, it includes $100 million as we exit fiscal year '26 of APX NEXT applications.

And that, we talk about ecosystem, that's doing more. How do you connect your -- how do you extend your network? How do you get location information? Smart programming? Things that used to take weeks for a municipal radio administrator. Fleets that are now done instantaneously in hours.

And then we're obviously working on the next tranche of applications, things that we're doing to provide more actionable intelligence, drive more efficiency and outcome to the first responders. And so we're excited about what that brings into the future as well, Matt.

Let's talk about Silvus. So you're -- as you mentioned, been a little over a year post acquisition. They did about $210 million in 1Q sales, $230 million last quarter. You've guided the year at about $850 million. Are you still capacity-constrained in 2026? And what does the Salt Lake City facility actually add once that comes online?

Yes. So as you alluded to, we've guided up. So fiscal year '26, we've guided $850 million, and our current capacity is implied in there. And so I think that's the first thing. But we have, even subsequent to our acquisition of Silvus, we've added capacity in Los Angeles, we've added another line in Culver City. Salt Lake City will come online and we'll begin to get the benefit of Salt Lake City in Q1 '27.

And if you think about it, it's not -- it isn't like, hey, we've built this and this is the capacity we have, it's modular, and I think as we'll continue to have more room to invest and build on more lines within Salt Lake City. But as we think about the growth that we're creating with more than doubling our sales force, adding to R&D to continue to distance, not only the waveform, but to distance what they call the spectrum dominance, which is a secret sauce in terms of its ability to reject detection, interception and, ultimately, anti-jamming.

And I think that's been -- the inflection point of that has been in the Ukraine, but then all the testing that's being done in the Department of War, I think Silvus continues to be the best-of-breed as it relates to MANET technology, Matt.

But we're excited about what we're doing in Salt Lake City. We've already expanded in terms of L.A. And I think we're going to be very well-suited next year to continue the trend. Because what we're seeing not only here in the Department of War, but we're seeing particularly within NATO, within the Indo-Pacific, is people are thinking about, number one, they're thinking about securing their borders. They're thinking about modernizing their defense efforts. They're thinking about global conflict is not something that is on the horizon; it's something we're all dealing with today.

And then more importantly, unmanned systems, UVX (sic) [ UxV ], surface vessels on the water, aerial vessels and unmanned systems in the air, that's an area that continues to be invested in. And I think Silvus continually, in those congested and contested environments, exceeds expectations and I think continues to be the market leader there.

So there's a lot of benefits obviously that I think Silvus -- accrue to Silvus being part of the broader Motorola Solutions ecosystem. So maybe we can speak a little bit about some of the changes, some of the benefits that you've introduced. And then, I guess, perhaps from a revenue synergy perspective, is there an opportunity where Silvus and the public safety business can intersect commercially, if at all?

So let's take the first part. It's interesting because this is not the first kind of adjacent vertical we entered. Some of you remember, who you've been, know our story from 2018. We weren't in the Video Security and Access Control space until we acquired Avigilon.

So the first thing we thought about when we went into Silvus is, hey, defense, new market, but we've -- we had a $1 billion business with the federal government. So we were very familiar with Silvus, their story, what we did. In fact, before we acquired Silvus, we had been looking at them for over a year and meeting with their team.

First thing we did is we looked and said, hey -- they had representation in North America within the Department of Defense. But that was largely, Matt, just Army and some minimal coverage in the Marines. We've done a comprehensive investment in terms of taking on all 4 branches. And then we brought in some people who have branch-specific knowledge, meaning retired generals, recently-retired generals and colonels, who I think give us a more fulsome representation, not only into the day-to-day business, but to position us on programs of record. So that's the first thing.

We then have done some pretty expansive investment internationally. I think they had a couple of resources that lived outside the States when we acquired them. And now to my point, we've got a sales leader that we promoted within Motorola, who runs all international, and he's done an outstanding job. He's a German national, was actually in the Bundeswehr. And he's gone and systematically added to the team. So go-to-market, one piece of it.

We've dialed up pretty significantly the research and development, broadened their SKU level. So I talk -- we talk about size, weight and power in the waveform, but we've also added part of Culver City, Matt, as we've also added a lower cost with more -- with some -- a little bit more minimal software added on that to get into some of the different part of the market for more of the attritable space and drone dominance and those kind of things because we think there's a market for us to play in the broader market there as well.

And then last but not least, Matt, we talked about it and I won't belabor it, is just the supply capacity we've added. But as you think about it, one thing to note, we really think about Silvus categorically as defense. Public safety, we've had opportunities, things like the Super Bowl, Presidential inaugurations, the Ryder Cup last year, where they get what's called a special temporary authorization to operate. But largely, there's not a spectrum that's allocated today to Silvus.

So we think there's a lot of room to run in defense, both in the U.S. and internationally. That's where we've been focused. If at some point in time spectrum became available, we think there's a lot of applicable applications, but the focus today has been defense.

Got it. So we know that demand, you've talked about NATO, EU budgets, Germany, Ukraine, U.S., Indo-Pacific. How much of that is programs of record relative to maybe more urgent operational needs? And I guess what I'm getting at is how durable is the growth here if the conflict environment changes at all?

We think it's really durable. Because, obviously, when we bought it, if you remember, when we closed Silvus, it was just on the heels of really the new President and there was talk about, "Well, this war could end immediately." I think maybe it was weeks or months that we talked about. But the reality is we have built a business that is durable.

And a lot of that is, if you think about the Motorola philosophy, we've got really 2 tranches of approaches. We've got people that get up and think about long-tail visibility, programs of record, or in state and local governments, strategic project, setting up statewide and anchor tenants, that's critical. And that sets the foundation for future success.

And then there's the operating in the here and now. And some of these, to your point, things that are currently budgeted: conflicts, how quick can we spin something up for something that might be taking place in the Strait of Hormuz. We want to be able to meet both things.

And then if you think about it, we want to broaden capabilities everywhere. We didn't even talk about some of the things we're doing spinning up resources in Latin America and places who are also going through modernization -- platform modernization program.

So as we think about it, I think we're set up for sustained success, We're always going to think of things holistically and strategically and make sure we can act fast in the day. But really encouraged.

And I mean I would never say, hey, Silvus is a function of any isolated event. Actually, it's interesting, we think Ukraine -- one of the things we always talk about Ukraine is that this is the inflection point for the future of warfare, meaning electronic warfare. And the way that's been tested, I think, has been, quite frankly, one of the greatest -- it's been indicative of, I think, Silvus' success on all those who've witnessed the game of cat and mouse that is electronic warfare.

It's power -- inflecting different power, it's moving frequency, all the things that takes place. And I think we've seen those things. By the way, Matt, there's a lot of those tests that are happening right now within the DoW, and Silvus continues to perform exceedingly well.

So we talked about Silvus last August. This past August, about a month ago, you closed the D-Fend acquisition. So that deal specializes in counter-drone solutions. What are the first 90 days of integration priorities? And how does the platform sit organizationally alongside Silvus?

So Silvus, we still run as a standalone operation. And Babak, who is the founder and CEO, is a partner to me, and he and I work closely together. But very much like we did with Video. So we run that. We're doing the same play with D-Fend. Zohar, who came over, he has now, I think -- I believe this is his third company that he sold. Again, also very much like Babak, an incredible innovator. He and his team will come over and we're going to run that as a business.

It's very important to think about D-Fend being different. D-Fend is actually -- endpoint for D-Fend is public safety. So think about it as keeping the city safe. It's airports, it's critical infrastructure and it's entertainment venues. I mentioned FIFA, but also the U.S. Open. I was at the U.S. Open a couple of weeks ago, and it was great to see the D-Fend solution keeping Arthur Ashe Stadium and the adjacent stadium safe there.

So that's kind of the end markets. We're going to run them as a business. There is a significant and probably a different level of revenue synergy with our North America public safety team, led by John Zidar and Michael Kaae's international sales team. They've got relationships at every city, every county, every state who might be looking to invest in these counter-drone systems. We're going to leverage those relationships. And Zohar has got a really great sales team. But as we think about adding new resources, we can leverage the resources we have today there.

Similar story internationally where we've got relationships at International Police and all the international airports as well who are looking at these kind of things. So it's great.

There's 2 other things I'd highlight for D-Fend. As we were closing this, we got some really good news on the heels of the closure, and some of you may have read it, but the Department of Homeland Security had a $1.5 billion counter-drone grant program. And we were really proud of Zohar and his team.

There's 2 different tranches. There's essentially system players and then there's service providers. But Zohar's team was the only cyber mitigation C-UAS vendor that actually was awarded the solution. There was other vendors that can detect and identify. But think about it, if you can detect and identify something, knowledge is important, but being able to mitigate and nullify a threat without damaging or causing any injury to the public is more important. And that's what D-Fend does.

It has the ability to cyber-control, cyber-takeover, a drone, be it nefarious or if it's a hobbyist. But they protect the air space above the aforementioned critical infrastructure, entertainment venues, airports, et cetera, and they can land those. That's critically important as we're thinking about, here, nobody -- no police chief or anything, they don't want things flying in the sky, but they don't want people blowing things out of the sky and people getting injured. And I think that's where D-Fend has got a very elegant solution for what people are trying to do both here and abroad.

So let's pivot to the sort of core LMR business, D-Series. It's your first infrastructure refresh, I believe, in about 12 years. Infrastructure, I believe, is a little under 1/4 of the LMR business. Where are we in that cycle relative to the 40-plus statewide U.S. networks, 10 Canadian provincial networks? And at what pace can you actually deliver every year?

Yes. So as it relates to D, think about this as -- and I've always used D-Series example, we've got, to Matt's point, we have 40 statewide networks, 10 provincial networks. But remember, think of those as almost operators or carriers of public safety technology at the state and provincial level. Said differently, there's 1,300 P25 networks that essentially are underlying to those or connect to those statewide networks.

So you asked a question, Jack, what is it? We've talked about D-Series has really been -- I mean, I look at this as a multiyear. And I'm not talking about multiyear through the lens of 3 years. This is probably a 5 to 7-year refresh. Depending on the vintage of the system, and we just had -- we just recently, over the course of the last 12 months, State of Colorado, we've got part of the State of Michigan. The State of Michigan still has incremental D-Series that they're going to be buying in a different -- they're going to roll out the state kind of in regions. And so that's an example.

But everybody is funding these upgrades in a little bit different way. Everybody -- some of them are doing multiyear. Some of them, like State of Tennessee, did it, I think, in 2 phases. The City of Chicago upgraded all the radio consoles in 1 deal. But then there's a point in time where those cities and counties and states are then going to want to go upgrade to D-Series.

So it's a multiyear kind of opportunity for us. What I would also say, it's multiyear, those things, but also our incumbency is an advantage. Because if you think about if you're a competitor, you've now got to go identify radio sites. We may or may not have already structured long-term leases. Sometimes the customers own them, but then oftentimes those things are privatized.

So I think they put us in a good example to provide good value as our customers look to refresh. But I think we're in a very good competitive standpoint as it relates to refreshing these networks that are out there in existence, to your point, 40 in the States and then all the underlying systems, and then 10 provincial networks as well.

Is there a specific catalyst that triggers agencies to move, whether it's like coverage efficiency, energy consumption with sites, end of life? Like what actually get somebody to get moving?

So there's a few things. Like anything else, we introduced new features. So first of all, there's greater efficiency, channel efficiency. There's less power consumption. By the way, as any of our customers think about, they're thinking about the greening effect and how they use less energy. That's important.

But we've also developed features like ASTRO site resiliency. And think about it, P25 networks are purpose-built bespoke networks. And over the long time that I've been in this role, we've been asked different things. But the reality is they're built for -- we talked about coverage capacity, control, which is obviously important, but it's -- they're built for when things are really in the most difficult environments. It's hurricanes, it's flooding. It's things like that. You build them for the very most difficult situations.

And I've gone around early in my career and watched fire people go into basements of buildings. And firemen are hanging upside-down trying to make sure the radios still work. And so they're the toughest of tough networks. I say that to say resiliency. And so we've added our ASTRO site resiliency to say, hey, if you lose -- if we lose a site, how does the site tie to another -- how do we get back up, backhaul, and we can use low-Earth orbit and things like that? We're always thinking about resiliency and add those things.

So it's really a culmination of a lot of those different things, Matt. But interest level has been high. Engagement has been really good. And we think, as I said earlier, we're in a good funding situation as well.

Infrastructure wins typically come with a longer services wrapper. So maybe we can speak to some of the attach economics in terms of how much Software and Services revenue follows an incremental dollar of infrastructure, and if there's any sort of time period these come with, associated with.

Yes. So our services business, which has grown nicely, it's interesting. Think of customers as being at different tiers. We have certain states, like 2 of the states that I highlighted there, we actually own the Illinois network and the South Carolina network. So those are called build-own-operate networks for us. We've also got things where we build, transfer to the customer and then operate the network. And then we've also got build, transfer and maintain.

And you're asking the question, the managed services. So some customers say, hey, Motorola, we have -- we want to turn over all of our hardware maintenance, software maintenance, cybersecurity, we want 24/7 monitor. We want a customer support manager on site here. There's that level of service.

We've also got certain customers of ours who are maybe they have a union shop for various reasons. And they're saying, hey, we want a customer support manager, we want cyber, but we're going to do a lot of our own programming and those things, Matt. So they all come in different shapes and forms. But the reality is we've built a services business to meet our customers for what their needs are, how they need us.

But one of the things we're really -- we've seen a real substantial increase in is we're concerned about the threat surface, and I think we've seen those private networks. They've asked us to do more cyber monitoring. That's been an area of growth for us. We obviously invest in our network operation centers. And we have the ability to manage detect and respond to those networks with our partners, et cetera. I think that's critically important. And we've seen more and more of our customers uptake those things.

I want to pivot to the Video business. That business grew, I believe, 12% last quarter. You've talked about growth this year, about 11%. And it was pretty interesting, I think on the last call, you talked about some notable new wins that were competitive flips, new customers. What's helping you win those RFPs? If we can maybe speak a little bit about that.

Well, I'd be hard-pressed not to take the -- we're really proud. You're right. We talked about the State of Florida, Tier 1 state, Patrol. It was a competitive opportunity, competitive win for Motorola. Kansas City, NFL City, we secured that business in a highly competitive environment.

Just yesterday, we announced what I would call a critical ecosystem win. And to answer your question, Matt, State of Louisiana, Highway Patrol and a lot of adjacent agencies, Parks and Recreation, Transportation, et cetera. Body-worn, in-car video, P25 refresh. And we think about that, highly competitive. It was one of our Video competitors. First, State Patrols. And we were able to obviously go and influence that customer to put their future with Motorola for a few things.

Number one, the end-to-end ecosystem. APX -- how does an APX device work with body-worn camera? How does information flow? Workflow critically important. Also total cost of ownership. I mean, I think that's the one thing when you look at one device versus multiple devices. And I think when they looked at a partner they wanted to trust for the future, the next 10 years, they bet on Motorola. So really total cost of ownership, end-to-end ecosystem.

And I think also the AI, the embedded AI workflow, Matt, if you think about the SVX story with digital evidence management, how that ties into all things within the workflow, translation, transcription, all the things the first responders have to contend with today. I think our story, everybody is talking about AI, but we're very much embedding AI where it provides incremental value and different outcomes for our first responders. That's what we're thinking about every day.

And listen, I think customers have a choice. They've always wanted a choice. Maybe they didn't have a choice 7 or 8 years ago. But you've got a public safety and global security leader who's investing thoughtfully to make sure that they're getting the best value, not just -- as well as the best technology.

You referenced ecosystem. Obviously, now you've got counter-drone technology in the portfolio alongside radio, Video, Command Center. How often are you selling 3 technologies together? And I wonder, is there any procurement pushback you run into at all against municipalities or customers who are buying the entire stack from one vendor?

Listen, if a customer -- Louisiana is a great opportunity. And real credit to our team and the trusted adviser status that they built in there where they went in and really it was a full ecosystem sale over a long term. That's great.

Some customers want to buy, they may just have a Video opportunity. Like Kansas City was a Video opportunity. Arlington, Texas, it was a similar deal where they wanted multiple different things, DFR and the like.

We haven't had any issues because we're not -- our modus operandi is to meet customers and to enable the technologies the customers need at the time they do. And we think we go in, improve and execute for them, and we get incremental opportunities. We talk a lot about that as creating the flywheel and starts with trust. It was really built on our Mission Critical Networks, the legacy and heritage there.

But no, Matt, I mean, I think some of the things, the civil liberties and some of the cases that we've seen, I mean, we're not -- we don't go out and it's not "Bundle first, this is how you must buy." It's just not the way we do things. And so we think, ultimately, there will be enough opportunities for us. But we have not run into those issues with our customers.

I want to dig in a little bit to the cost structure. As your role in COO, we've read and heard about memory costs, a little bit of cost inflation. It's about a $150 million cost, I believe, this year. That was relative to $50 million a year ago. Hits a little bit harder in Video, I believe, relative to LMR. We know DRAM pricing has kept climbing on maybe forces outside of your control. What are the offsets that you're employing? Is it pricing? Is it redesign, pre-buys. Maybe we can start there?

Yes. So to your point, really the most -- the portion of our portfolio that's been most acutely kind of impacted is the Video business. And you're right, it's DRAM, it's flash. It's at the network video recorder for a lot of the on-prem opportunities. But it's also flash, which is at the device and the camera level.

So we've done, and really credit to Jason and the supply chain team and the work they've done, there's a few things. Number one, we've accelerated inventory purchases to put ourselves in a position. Because, reality, Matt, if you look back and you wind the tape back 9 months, it's actually just continues to get more expensive. So I think we've positioned ourselves well. We're taking out some more inventory to serve our customers in a way. That's the first thing.

We've also worked closely with our vendors on continuity of supply, making sure we had available supply. There's some people within our space who they might not have had the inventory, not might have had the relationships, and they've been unable to fulfill some opportunities.

The third thing, and this is really important, and we learned this through the legacy semiconductor thing that we went through with our Mission Critical Networks, but we have been very dynamic in terms of pricing increases. In fact, we've had 3 kind of substantial price increases in Video and we've continued to hold the line. I say all that to say we've kept gross margins comparable. We've still had an operating margin. We've had 170 bps expansion this year.

So I think all things being equal, it's an imperfect world, it's an imperfect market in terms of demand and price that we're dealing with, but I think we've reacted, been proactive with our customers and with our suppliers. And I think all things being equal, I really credit the team because I think we've navigated it fairly well.

You talked a little bit about carrying more inventory. Just curious, are there any implications for lead times, working capital? And then how should we read backlog and book-to-bill from here?

No. So I think -- it's interesting because we talked -- backlog was something in this business -- listen, we always have large-scale businesses. So first of all, in Video, it's never been a backlog-driven business. It's very much, pardon my French, it's kind of -- it's a quick turn. It's kind of a get a deal within a quarter and you're basically shipping it to our partners in the quarter. That's essentially the dynamic.

Our backlog function has always been the services business and our long-scale infrastructure, some of the D-Series, big statewide things. There'll be some of that that's in the backlog. But the reality is we've really -- demand from a demand standpoint, we've pivoted to more of a quick-turn thing. And when I say quick turn, I think about it as being, because we're in government and public safety and defense and kind of critical infrastructure, we have great visibility to these projects and the funding status of these projects.

And so it gives me great confidence. I'm more -- I always look at -- it's very important for us to be looking out the windshield all the time. And as I alluded to earlier, this double-digit orders growth, double-digit product orders growth in the second half and kind of the consecutive quarters we've spun up where we've kind of printed record orders, record orders, I mean, that's encouraging. That gives us great confidence as we enter '27.

You're not Jason, but I'm going to ask you a question on capital allocation. How do you and the team think about uses of free cash post dividend? And I say this in the context of a company that has done 2 fairly sizable deals. D-Fend maybe was a little bit smaller, but Silvus fairly sizable. As you think about M&A opportunities, share buybacks, deleveraging, and within M&A, I mean, is there a size limit you consider just given how active you've been of late?

Yes, Matt. So we've talked about our capital allocation framework is -- remains. First of all, 60% on M&A and share repo. There's some within quarters, you look, there's some fungibility in terms of if we're more active in M&A standpoint, 30% dividends and 10% OpEx. And the answer is really when you look at it, even though we did a debt issuance, and great work by Uygar and his team for the D-Fend, we'll exit this year, from a net debt-to-EBITDA standpoint ratio, very similar to where we exited fiscal year '25.

So when it comes to M&A, we're thinking about 2 things. Number one, it's -- all the good deals that we've done, and we've done over 50 since 2015, most of those are germinated and originate from the field. They're not brought by banks. We're always looking from we talk to our customers, we talk to our go-to-market teams and our engineers and say, what are the ideas we should be looking at? What are the companies that we think culturally, portfolio and from a vertical market, fit best within here.

And Matt, when I think about a deal that's too big, I don't think it's too big as long as it fits within those 3 things within our company. So we'll see. We're acquisitive. We're also innovative. And I think we'll just continue to scour and scan the market for the best possible opportunities.

So in the time we've got left, 2 questions I want to hit on. First, what do you think is most misunderstood from your vantage point by the investor community around Motorola Solutions and the story?

The durability, the longevity and the bedrock, which is the Mission Critical Networks business. It's enabled us to create the ecosystem that I mentioned earlier. And when I talked -- when we talked, and our teams are all talking, I met with a state DPS director 3 weeks ago in the Midwest. And when they're thinking about it, this is the lifeblood. And actually, they think about this is the lifeblood, their communication lifeblood. They had some forest fires they were contending with and some brushfires.

And they said, it's not just for us. But this is -- we have enabled every community, every fire department, every -- and we need this. This is something that it's not an if-to, it's a got-to. And the fact that Motorola, you guys are investing more thoughtfully how we can use this, and we had kind of shared with them some of the features that are under development. I think that's what's probably misunderstood. And I think more than anything, it's created a great trusted adviser position from us to build, acquire and do other things on top of those networks. There's more we can do.

And so last question, if we're sitting here a year from now, what would you like to look back on as key achievements or milestones you achieved at MSI over the next year?

Number one, the balance of growth that I talked about earlier, that's table stakes. We have to grow across, not only Mission Critical Networks, Command Center Software, Video Security. We've got the right leadership team in place to do that. Specifically as it speaks, I feel it's my role to make sure that we continue to operate the right playbook for Silvus, give Babak and his team what they need to grow to thrive, from an innovation standpoint, but also from a field and customer execution.

And I'd say the same thing for Silvus (sic) [ D-Fend ]. I mean, I think about how my job over the years and the job that Greg has asked me to do has evolved, and it's, number one, it started, as you know, Matt, a long time ago in running worldwide sales. And now it's making sure, when we bring these great companies in, that I put them in a position to scale up as quickly, as effectively as possible. And I think a year from now, I'll look back and I'll be proud of the fact that our team accomplished that.

Great. Thank you so much, Jack. Appreciate it.

[Audio Gap] Second Quarter 2026 Earnings Conference Call. Today's call is being recorded. If you have any objections, please disconnect at this time. The presentation material and additional financial tables are posted on the Motorola Solutions Investor Relations website.

In addition, a webcast replay of this call will be available on our website within hours after the conclusion of this call. The website address is www.motorolasolutions.com/investor. [Operator Instructions]

I would now like to introduce Mr. Brian Petrowsky, Vice President of Investor Relations. Mr. Petrowsky, you may begin your conference.

Good afternoon. Welcome to our 2026 Second Quarter Earnings Call. With me today are Greg Brown, Chairman and CEO; Jason Winkler, Executive Vice President and CFO; Jack Molloy, Executive Vice President and COO; and Mahesh Saptharishi, Executive Vice President and CTO.

Greg and Jason will review our results along with commentary, and Jack and Mahesh will join for Q&A.

We have posted an earnings presentation and news release at motorolasolutions.com/investor. These materials include GAAP to non-GAAP reconciliations for your reference.

During the call, we reference non-GAAP financial results, including those in our outlook, unless otherwise noted.

A number of forward-looking statements will be made during this presentation and during the Q&A portion of the call. These statements are based on current expectations and assumptions that are subject to a variety of risks and uncertainties.

Actual results could differ materially from these forward-looking statements. Information about factors that could cause such differences can be found in today's earnings news release, in the comments made during this conference call, in the Risk Factors section of our 2025 annual report on Form 10-K or any quarterly report on Form 10-Q and in our other reports and filings with the SEC.

We do not undertake any duty to update any forward-looking statements. I'll now turn it over to Greg.

Thanks, Brian. Good afternoon, and thanks for joining us today. I'll start off by sharing a few thoughts about the business before Jason takes us through our results and outlook.

First, Q2 was an exceptional quarter with record sales and earnings. Revenue was up 13%, driven by double-digit growth in both segments and all technologies.

Products and Systems Integration delivered an outstanding quarter growing 15%, highlighted by mission-critical network sales that exceeded our expectations in public safety LMR along with continued strength in Cillis.

And software and services also continues to perform well growing 10% in the quarter. Additionally, Q2 included operating margin of expansion of 140 basis points, excluding the benefit of the IEPA tariff refunds.

Second, our results and broad-based demand provides strong momentum for continued growth heading into the second half of this year, led by our Apex -- next devices and next-generation D-Series infrastructure.

Our latest generation Apex next devices continue to redefine mission-critical reliability and are increasingly integrated with new features that leverage our entire ecosystem.

On the P25 network side, interest in D Series is growing as agencies prioritize the modernization of their core mission-critical communications platforms. And finally, Demand for our safety and security ecosystem remains robust, fueled by record Q2 orders in all technologies.

As a result, we achieved a record Q2 ending backlog of $15.6 billion which is up 11% versus a year ago. As a result of the strong Q2 performance and growing momentum, we're again raising our full year guidance for both sales and EPS and with that, I'll now turn the call over to Jason.

Thank you, Greg. Revenue for the quarter grew 13% and was above our guidance with double-digit growth in both segments and in all technologies, primarily driven by strong LMR demand and accelerated quick turn conversion.

Revenue from acquisitions was $243 million, while foreign currency tailwinds were $35 million during the quarter, consistent with our expectations. GAAP operating earnings were $809 million or 25.8% of sales, up from 25% in the year ago quarter. Non-GAAP operating earnings were just over $1 billion, up 26% and from the year ago quarter and non-GAAP operating margin was 32.9%, up 330 basis points.

The increase in both GAAP and non-GAAP operating margin was driven by higher sales and improved operating leverage inclusive of higher direct material costs and a $60 million benefit from the IEFA refunds recorded during the quarter.

Excluding the refunds, non-GAAP operating margins expanded by 140 basis points. GAAP earnings per share was $3.33, up from $3.04 in the year ago quarter. Non-GAAP EPS was $4.41, up $0.84 or 24% from $3.57 last year. The growth in EPS was driven by higher operating earnings and a $0.25 benefit from the IEPA refunds, partially offset by higher interest expense in the current quarter. OpEx in Q2 was $673 million, up $58 million versus last year, primarily due to acquisitions.

Turning to cash flow. Q2 operating cash flow was $469 million, up $197 million from last year, and free cash flow was $414 million, up $190 million.

The increase in both operating and free cash flows was primarily driven by our higher earnings, partially offset by higher investments in inventory. Capital allocation for Q2 included $326 million in share repurchases and at an average price of [ $413.53 ] per share, $201 million in cash dividends and $55 million in CapEx.

During the quarter, we also entered into a definitive agreement to acquire Defend, an industry leader in counter-drone solutions for $1.5 billion, which we expect to close during the second half of this year.

And we are targeting to close the previously announced acquisition of Bell Canada's LMR network services business in late Q4.

Moving to segment results. In the Products and SI segment, sales were up 15% versus last year, driven by growth in MCN and video with MCN exceeding our expectations in public safety LMR and continued strength in Solvus. Revenue from acquisitions was $210 million and foreign currency tailwinds were $19 million during the quarter.

Operating earnings were $599 million or 31.4% of sales, up 470 basis points from 26.7% in the prior year, driven by higher sales and improved operating leverage inclusive of higher direct material costs and the IEPA refunds.

Excluding the refunds, operating margin expanded 150 basis points during the quarter. Some notable Q2 wins and achievements in this segment include a $36 million P25 device, an SVX order for a U.S. Federal customer, a $20 million P25 device order for Atlanta, Georgia, a $17 million P25 device order for Miami Dade corrections in Florida.

We also won 3 large awards for our next-generation P25 infrastructure, a $52 million order from a U.S. federal customer, a $34 million order with a state and local customer in the Southeast region and a $22 million order for St. Louis County, Missouri.

All of these demonstrate the continuing customer demand for D Series and a strong foundation for future software and services growth.

In Software and Services, revenue was up 10% compared to last year, driven by growth across all technologies. Revenue from acquisitions was $33 million and foreign currency tailwinds were $16 million in the quarter.

Operating earnings in the segment were $433 million or 35.3% of sales up from 33.8% last year driven by higher sales, inclusive of a favorable mix. Some notable Q2 highlights in this segment include a $24 million P25 services order for North America energy company, a $20 million command center order for the State of Montana Department of Justice, a $16 million P25 services order for Fulton County, Georgia; and a $14 million command center order for Hillsboro County, Florida.

During the quarter, we also secured 2 large wins for our mobile video ecosystem, a $25 million order with the Florida Highway Patrol and a $24 million order with the Kansas City police department successfully converting these 2 high-profile agencies inclusive of our core responder AI assist capabilities.

Looking at regional results. North America Q2 revenue was $2.2 billion, up 9% with growth across all 3 technologies, and international Q2 revenue was $923 million up 25% versus last year, driven by strong double-digit growth across all 3 technologies.

Moving to backlog. Ending backlog for Q2 was $15.6 billion, up $1.5 billion or 11% versus last year, driven by record Q2 orders. Sequentially, backlog declined $71 million, primarily driven by revenue recognition for the U.K. Home Office.

In the Products and SI segment backlog increased $329 million versus last year due to strong demand in MCN and video. Sequentially, backlog decreased $99 million driven by strong MCN shipments during the quarter.

In Software and Services backlog increased $1.2 billion compared to last year, driven by strong demand for multiyear contracts across all 3 technologies.

Sequentially, backlog increased $28 million primarily driven by strong demand in command center and video, partially offset by revenue recognition for the U.K. Home Office.

Turning next to our outlook. We expect Q3 sales growth of approximately 8% with non-GAAP earnings per share between $4.39 and $4.44 per share. This assumes a weighted average diluted share count of approximately 168 million shares and an effective tax rate of approximately 23%.

For the full year, we now expect revenue of approximately $12.975 billion up from our prior guidance of $12.8 billion, along with non-GAAP earnings per share between $17.62 and $17.72 per share, up from our prior guide of $16.87 to $16.99 per share.

This full year outlook assumes a weighted average diluted share count of approximately 168 million shares and an effective tax rate between 22% and 22.5%. It also assumes favorable FX of about $100 million, which is unchanged from our prior expectations.

The $175 million raise in our full year revenue expectations is driven by MCN, including approximately $100 million from Silvis, which we now expect to generate approximately $850 million in full year revenue.

The remainder of the increase we expect in MCN is a reflection of the continued strong demand for public safety LMR. With these increased top line expectations, we now expect double-digit growth for both segments and all 3 technologies for the full year.

Products and SI is expected to now grow 11%, up from our prior guidance of 8% to 9%, and and software and services is expected to grow 11%, up from our prior guidance of 10% to 11%. And from a technology perspective, MCN is now expected to grow between 10% and 11% up from our prior expectations of 8% to 9%.

Video is expected to grow 11%, while in Command Center, we continue to expect approximately 15% growth. Before I turn the call back to Greg, I wanted to provide an update around tariffs and memory costs.

We now expect the tariff impact to be neutral for the full year as the IEPA refunds we recorded in Q2 offsets the $60 million in tariff headwinds that we had planned for this year. And regarding memory, we now anticipate our direct memory spend to be approximately $150 million this year, up from $50 million last year.

Our teams continue to successfully navigate this challenging supply environment, carrying higher inventory and collaborating closely with our key suppliers to secure continuity of supply. We still expect gross margins to be comparable to last year as the now improved tariff outlook I mentioned offsets the increased memory cost expectations since our last call and for full year operating margins, we now expect approximately 170 basis points of expansion, up from 100 basis points previously.

Finally, our balance sheet remains strong and gives us plenty of headroom and flexibility on capital allocation. As we previously highlighted, we expect to raise approximately $1 billion of incremental debt in the form of senior notes and term loans to finance the Defend acquisition, and we still expect to finish the year with a net debt-to-EBITDA leverage at approximately 2x, which is similar to where we ended last year. With that, I would now like to turn the call back to Greg.

Thanks, Jason. I'd like to conclude with a few final thoughts before we open it up for Q&A.

First, Q2 was superb and I'm extremely pleased with our execution. Revenue was up 13%, with significant operating margin expansion, and we drove just under $500 million in operating cash flow.

Additionally, we achieved record Q2 orders and backlog, putting us in a strong position heading into the second half of this year. Second, we're seeing strength across our safety and security ecosystem. Our video business continues to perform well, particularly in mobile video, where as Jason mentioned, we secured 2 significant orders from Florida Highway Patrol and Kansas City Police Department.

These deals were highly competitive and what's most encouraging is that both of these large agencies are first-time users who are body-worn camera and in-car video solutions.

In addition, Command Center continues its strong momentum as customers are increasingly adopting our software and AI assist solutions to simplify their complex emergency response workloads.

Third, Silvis is performing exceptionally well, powering leading-edge Mine connectivity for unmanned systems and battlefield communications and pending regulatory approvals, we're also looking forward to the acquisition of Defend, an industry leader in counter drone solutions, which goes beyond simple detection and differentiating itself through nonkinetic cyber takeover mitigation capabilities that are increasingly critical for public safety.

When you consider Silvus' leading-edge Mana communications for defense and defends leading-edge detection and mitigation for public safety, I think we're very well positioned to address our customers' rapidly growing needs for unmanned systems in defense and counter drone solutions in public safety.

And finally, in addition to our strong results and momentum, our balance sheet and continued robust cash flow, enable us to be flexible in how we deploy capital and drive long-term value, both organically and through targeted acquisitions.

I feel very good about where we are, and the increased guidance for the year reflects our confidence. I'll now turn the call back over to Brian.

Thank you, Greg. Before we begin taking questions, I would like to remind callers to limit themselves to 1 question and 1 follow-up to accommodate as many participants as possible. Operator, would you please remind our callers on the line how to ask a question?

The floor is now open for questions. [Operator Instructions] Our first question will come from Tim Long with Barclays.

Got a question on Solvus, and then I'll follow up with 1 on video. For Solvus, obviously, another raise here that's great to see and demand seems really strong there. Greg or Jack, could you just touch upon some of the capacity increases you guys are undertaking.

What does that mean for the flow of this business? Are we still limited by capacity? And what would that mean for Solvus as we look out the next year or 2? And then I'll follow up after that.

Sure, Tim, let me just dimensionalize Cillis to in terms of its performance. It did about $210 million in Q1, about $230 million in Q2.

And as you heard us on the call, we raised the year to about [ 850 ]. And Jack can talk about some of the things we're doing around capacity expansion.

Yes, Tim. So the first thing we did was within our Los Angeles site, we added capacity there, specifically the second floor. And I think you read Tim, that we announced the construction of a facility, a new manufacturing facility in Salt Lake City, which we're very excited about and consistent with what we said before, we'll start to see the benefit of that in 2027, but the increased guide for Silvers this year takes into account our current capacity, and we'll live within that.

I think one of the things we're also pleased with, Tim, is we've doubled the size of the sales force, so it just continues to put more balls and players.

Okay. That's great. And then just wanted to touch on the video business. Pretty just looking actually look like a lot more [Audio Gap] a little bit about that mix and what that means in the quarter? And does that lead us towards a little bit more growth in the software side in the future. Anything on that mix and the take from that? I appreciate it.

You broke up a little bit, but I think you're asking about the mix and performance of software versus products in SI there? Video or -- so first of all, we're very pleased with where we're at, and we actually grew 12% during the quarter in total, and we bumped up our guide to 11% from 10% to 11%.

So overall, performing even better than we had expected. In terms of the mix at the half, both software and services and products are performing well. S&S software specifically for that part of the business is up double digits, and we expect software to be up double digits in the second half as well. We've seen strong camera sales. That's what's in part driving 2 quarters in a row now of strong products.

But the overall mix as we step back to the year, it reflects, what we expect, the investments that Mahesh and team are making in our cloud and hybrid offer and the increased sales coverage that Malloy has.

So we're happy with where we're at. By the way, mobile video, as we mentioned on the call, mobile video, also expectations are very good.

Your next question will come from Joseph Cardoso with JPMorgan.

Maybe for my person and perhaps maybe I'm jumping ahead here and looking at the fourth quarter. But when I do the back-of-the-envelope math on the implied fourth quarter revenue outlook, and embeds a pretty nice acceleration both sequentially and year-over-year.

So maybe you can just help me think through the drivers behind that uptick that you guys are embedding into the guide, maybe thinking about it from a demand perspective across the portfolio.

Is there anything in particular, that's driving kind of that acceleration here as we think about the exit trajectory for the year. And then also maybe just a quick clarification. Are you guys including acquisitions that haven't been closed yet into that guidance? And then I do have a follow-up.

So Joe, to answer the last part first, the guidance we're providing for the full year and the beat and the raise reflect the assets we have today. .

Love the fact that we're, as Jason mentioned, guiding the year up $175 million for the full year on top line revenue. All of that is pretty much MCN of which $100 million is Silvi $75 million of LMR.

The confidence is also informed by the overperformance in Q2, which we beat consensus by $130 million. Why did we do that? It's because of better conversion and strong demand.

That said, the second half as we look remains unchanged. We've always planned for a strong second half that's informed by the visibility of what we have. It's informed by double-digit orders growth again expected in Q2, expected double-digit orders in the second half and when you decompose kind of our expectations, there are some specific ship acceptance and product releases around the infrastructure D Series that are coming in Q4 that marry up with the conversion expectations of JAK's sales team, which informs that strong Q4 and lastly, I'd say LMR is strong.

LMR was stronger than we thought in Q2. But by the way, we still expect the LMR business to grow in the second half of this year, 10% as well.

So just really strong growth, great orders performance and feel good about where we are now with our expectations between now and the end of the year.

No. Awesome color, Greg. I really appreciate all of that. And then maybe as my second one here, gross margin stepped up meaningfully in the quarter, even excluding the tariff benefit it, but you guys are still guiding stable gross margin outlook for the full year.

Maybe can you bridge the 2Q performance against that? Like what are the puts and takes relative to the headwinds from the cost inflation that you're highlighting versus maybe the tailwinds from mix pricing levers? And how does that shake out as we progress through the year to kind of get us to this more stable gross margin outlook for the full year?

Sure. So favorable mix has been a growth driver for us for a number of quarters, and we expect that to continue.

Customers are adopting more feature-rich solutions, and that's in part what helps drive our growth. In terms of headwinds, I mentioned on the call that memory which last year was $50 million, we now expect to be $150 million. That's up from 90 days ago.

So that $100 million of increase, a large part of that is going to be faced in the second half because of timing, because of inventory and the positions we had to begin the year.

So that's a little color around the headwinds. And that's with the offsets were planned, we're still able to maintain comparable gross margins for the year and to grow OE for the company at 170 bps with contributions at OE from both segments.

Your next question will come from Andrew Spinola with UBS.

I think there's obviously a lot of interest in the second half ramp in the LMR business coming into this quarter. But the second question that I typically have been getting is trying to understand, if you put all this COVID backlog shifting behind us and the sharp ramp in the second half, how are we looking in terms of [Audio Gap] increases in officers or international markets, anything that can drive that or infrastructure D-Series, anything that can drive that business to an accelerated growth rate over the medium term?

Thanks for the question. So certainly coming out of the last call, there's been a lot of interest in LMR. We're pleased with where public safety LMR is, which is MCN, the technology minus Solvus. .

We had growth in the quarter. We had continued order strength as Greg mentioned, we overperformed in the quarter, and we increased the year $75 million, whereas now we expect this year's LMR growth to be better than last year's.

And we've always planned for a ramp in the second half, and that's consistent with, in part, product releases, the D-Series deals that we've been talking about, when we talked about 3 of them on the call, and more prior to that require staging and implementation and going and getting to sites. That's planned for the second half.

And in addition, Jack, you've got some product releases happening in D-Series that will make it available to more customers in the second half.

UHF will be -- should begin shipping in Q4, Jason. Yes.

So nothing's changed in our expectations for first half, second half contribution. If anything, we've overperformed our expectations in the first half.

And Andrew, I would say just kind of overall, when you think about the trend public safety system or, let's just call it, LMR and what those platforms afford our customers.

Historically, it was always around mission-critical voice. Now with the adoption of Apex Snacks, it incorporates broadband for 5G and broadband applications. Now our latest Apex -- next Radio is LEO compatible adding another band for rural coverage for low earth orbit satellite. You have the device refreshes with Apex Next.

Now we introduced the B Series, which is the first time we've upgraded the infrastructure in a dozen years and that's informing part of the strong growth in Q4 given ship release of new infrastructure.

And then look, we'll see -- you're going to see us continue to do things around this multidimensional multimodal platform called public safety LMR.

And I just think that more and more customers see the criticality of LMR. They're making investments in LMR and MCN, we too are as well both organically and inorganically.

And while we mentioned defend and the announcement of that deal, that defend was a highly sought-after asset. It's all about leading counter drone technology not just detect and track and identify but surgically do cyber takeover, which very, very few people do, and we think Defend does the best. We'll work the traps on the regulatory approvals, and there's still work to be done there.

But we're excited about that asset as well, which we had mentioned to you at the time we announced the deal. We expect it to be about $185 million in revenue. It has historically a CAGR revenue growth of 50% over the last 3 years.

But again, as you think about LMR, you think about critical networks, as you think about public safety platforms and the unique ecosystem and capability we're building, it's not just what we have today, but what we expect to have shortly, and that's exciting as well.

Appreciate that. One follow-up question, Greg. AI has been in the market now. You've had a product for maybe a couple of quarters.

Some of the competitors have had different types of products, similar to yours some more analytical. How is the industry accepting AI? Is it performing to expectations, both your product and across the industry in terms of acceptance and just performance.

I think it's performing well. We talk about AI in the context of embedding it in pretty much everything we do, specifically in the context of public safety around the individual personas.

So how does how does it get implemented and productized through the lens of a public safety responder law enforcement offer? How does it get instantiated with a dispatcher. How does it get implemented through a real-time crime center? And I think Mahesh has done a great job of building it out both on-prem as well as hybrid solutions, and I think our traction is quite good.

The other thing I would say and maybe echoing one of the key points that Greg just made is AI is no longer a nice to have, it's a need to have within each of applications.

And we have taken that philosophy right from the beginning where it's not an over-the-top solution. It is embedded deeply within each of our plants -- it's integrated.

And just to sort of punctuate that point, 100% of our VESTA emergency call handling solutions in Q2, we're at the assist tier, which is effectively the tier of our solution that includes all the AI capabilities.

The same is true across CAD records as well. So it is becoming something that is key and embedded within each of those platforms. And that, in turn, is meaningfully raising our ASPs across the board.

A couple of other things that I think that we have done and we take away pride in is we introduced this notion of AI labels. And that is, I think, quite important for our customers because they would like to know what the status of data ownership is, what type of models are being used? Does it run on-prem? Does it run on cloud? What elements of data are used to compute various things that they are seeing from a decision standpoint.

We are very transparent and open about what it is that they do. And across the board, we also offer free training on demand for our customers to effectively use those capabilities in whatever workflows that they choose to use it for.

And we are seeing great acceptance across the board with that.

Your next question will come from Adam Tindle with Raymond James.

Okay. I just wanted to maybe start this time last quarter, I think a lot of us were surprised by the PSI operating margin in Q1. SNS had an upside to offset, but I think the composition of that quarter was a little different than investors thought here we are 90 days later with a huge rebound in PSI margins on a sequential basis.

So maybe just as a starting point, Jason, could you walk through sort of the drivers that led to this level of improvement? And you've mentioned memory costs increasing. I know in the past, as you had cost increases, your -- it makes sense for you to start raising price to correspond with that. I wonder how you're thinking about pricing as a lever as well going forward?

Sure, Adam. So part of Q2, as we mentioned, was stronger conversion with orders brought in by the sales team that we were able to execute in.

A lot of that has to do with devices. And so we had more devices shipments. We have a higher inventory position, by the way, that's helping us get to strong quick turn levels. It's helping us navigate the memory challenges on pricing.

So part of the improvement in op margin quarter-over-quarter had to do with the mix towards devices, which we were able to turn within the quarter. That's a key driver as to the overperformance and the better margins.

The second part of your question around leverage that we have. I mean, memory as a content to LMR are pretty small. It's a more material contributor item in video.

We have made some surgical price increases on high memory content items in video, for example, like video servers. And we'll continue to look at that as an overall offset for the portfolio but continuing to secure the supply that we need, of course, paying higher prices, but it's enabling us to meet the demand that we're seeing. We'll continue to look at it as a possibility going forward.

Got it. Maybe just continuing that thought as a follow-up. Greg, investors are looking at the product backlog being down sequentially, but also your positive commentary on the outlook for the product business, in particular, I think Jason's guidance suggests that the back half is actually going to accelerate in terms of the product growth.

So with product backlog down sequentially versus this acceleration implied in revenue what are investors may be missing if they over-fixate on the backlog trends?

Look, we're thrilled. I know you're focused on the sequential, but we love the year-over-year performance.

And at the end of the day, this is more about, as Jason and we have said since the beginning of the year, the MSI revenue story becomes more of one of conversion than backlog.

Now having said that, love the fact that Q2 was another double-digit orders quarter. I love the fact that the back half on orders growth is expected to be double digits but if you want to specifically look at product backlog, look, as we sit here in August, at the end of the day, I expect product backlog to be up at the end of this year versus last year. So -- but I think it's more -- backlog is a component, but the story more about our growth is overall demand, which is stronger conversion, which is stronger and double-digit orders growth.

And Adam, to your point, the product backlog of the high 3s is a strong place to be complemented by the double-digit orders exactly that's in front of us and that we've been capturing and that the pipeline supports going forward, and that's the setup for how we expect things to play out in the second half of the year.

That's helpful. Congrats on Alcon quarter.

Yes. Thank you, Adam. Appreciate it.

Your next question will come from George Notter with Wolfe Research.

Thanks very much. I wanted to dig into the silos progress a bit more, obviously, continues to really do well.

I know -- I think you said, Jack, that you increased the sales force or doubled the size of the sales force, but I'm just curious, like as you look out where you're seeing opportunities, what geos, what applications? Anything more you can tell us about the underlying demand trends there and customer interest would be great.

We could tag team it. But contextually, George, I think the good news is the overall demand is driven by international demand and what I would characterize as kind of a macro global defense modernization. I think you see our growth driven by NATO countries, defense spending.

Germany is a theater in particular, that's strong. Obviously Ukraine that's in conflict and growing demand in the U.S. and into Pacific. You take that strong demand and couple it with the earlier question around capacity expansion.

Jack has done a great job more than doubling the sales force. I think you'll see supply chain efficiencies increase as well.

We have the new capacity facility in Salt Lake City that comes online in early Q1, could not be more pleased with that asset. It's been a year, I think a year tomorrow or a year the following day that we actually closed on it. It's performing better than we thought.

We knew demand would be strong. It's even stronger than we thought. And I think a tip of the hat to Jack and his team and Bubeck and the Silver team in L.A., it's been superb and thrilled to have it.

And look, it's proving out. I think the thesis behind we were very disciplined and intentional with that Sidus acquisition. I would say the same thing about Defend. We think in Silvis, it's the leading player and the leading edge technology in unmanned.

And similarly, once we run the traps on the regulatory approvals, we think defend is unique specifically around cyber takeover and mitigation, which is a unique characteristic, and we love both of those assets.

Yes. The only thing I'd build on is, listen, the secret sauce here is a spectrum dominance 2.0 software exactly. It's not only we talked about Mana technology being high bandwidth, which enables various forms of multimodal throughput on the battlefield, but it's anti-jam. It's a low probintercept and detect. .

But just specifically, the U.S. DOW just ran some trials and Silvers received exceptional scoring in terms of anti-jam testing results. And I think as we see in highly contested environments, when us versus our competition get put to the test.

I think it's just further testament to what Vivek and the technical team have built there. And then we've added, as we talked about being a scale player, we're invested in additional capacity go-to-market.

We continue to extend and invest in R&D, not only in the waveform, but in the software aspects of it. And they're firing in all cylinders. And I think just to echo that, Greg. So we're really proud of what they've accomplished.

Your next question will come from Meta Marshall with Morgan Stanley.

I wanted to ask a question on APX -- next and just the software subscriptions that you're seeing kind of attached to that.

In the past, you've noted somewhere around $300 per year. Just wanted to see what applications are either getting the most traction or if there's any update to that number? And then maybe as a follow-up question, just kind of any traction with SCR.

Sure. Thanks, Meta. And you're right. We expect 300,000 subscribers by the year-end '26. That would be up from about $200,000 by end of '25.

So strong growth -- the pricing of the apps is around $300 million. It's gone up a little bit with the advent of some new apps and I'll let Jack talk about where the apps that the customers like best, but they are definitely. It's a driver. It's now going to be almost $100 million ARR business by year's end.

Yes. I think just, Matt, in terms of those things, it's SmartConnect, which essentially enables a user who may be going out of their jurisdiction to expand their coverage capacity, smart programming and then location continues to be, as we think about accountability, location continues to be an application that gets consumed.

Related to SVX and Mahesh Behave something you want to add, SPX traction, we're really proud. We've now got 150 customers operational with SPX. You heard Greg and Jason talked about Florida Highway Patrol in Kansas City, Missouri. I want to point out that those -- we didn't go in and extend those customers. They're not existing customers we extended those were new RFPs that we secured against our competition.

In addition to St. Joseph County, Indiana, who used to deal with 1 of our competitors and now signed on because they love the story of our full ecosystem. That's just in North America in Q2. You look at what we've done internationally. We're over 20 countries right now in body-worn camera, name a couple of big ones, over 20,000 users with the Sao Paulo military police.

Moroccan Genomer, a Nordic national police department, and I think we continue to get momentum with our reach and trust that we have internationally. And those successes were competitive flips. They absolutely were right.

The other point I'd make around Apex -- next and SPX as they are paired together. So when we talk about an SPX win, that's paired with customers that are using APX NEXT. .

So it's yet another combination that's powerful for both parts of the portfolio.

Your next question will come from Tomer Zilberman from Bank of America.

Guys, I wanted to go back to the LMR discussion. I think you mentioned earlier that you expect the segment to grow 10% in the second half.

I mean that's a really strong number. That's on par with the growth that you were seeing a couple of years ago when you had the benefit of both the North American refresh cycle and also the supply chain environment, which is driving up orders.

So I guess the question is, as it pertains to your commentary around Apex Next, is that driving another cycle this time around.

And I think a while ago you gave us a disclosure that Apex next was about 25% of public safety shipments. Is there any update to that number you can give us?

Sure. So we talked about a growth driver of the second half ramp being infrastructure, which is D Series and the timing of the deployments and the new offer of UHS, which is coming to market. .

Conversion and quick turn for devices continues to be strong. It was stronger than we expected in Q2, and we expect it to be strong in the second half with continued momentum and customers choosing Apex Next, which comes to us at a premium at the time of sale and also with the ARR subscription that Meta just asked about.

Yes. I mean the only other thing that we haven't talked about is Apex -- next has historically been a police phenomenon and a credit to Mahesh and his team.

But in Q2, we announced the Apex the first Apex Next, XEN, which actually puts us in the first national fire protection, 1930 certification.

So we have an ApexNextdevice that we can now bring to the fire market as well.

Your next question will come from James Fish with Piper Sandler.

This is Ryan on for James Fish. On the drone side, any pickup in pipeline post hold cup? And now that you have defend and Solis' pillars here, how are you feeling about mitigation and prevention strategies that we could see MSI add organically or inorganically going forward?

Well, Ryan, we don't have defend yet. We are expecting that transaction to close in the second half.

But think about it, Silvers is unmanned defense, Defend is counter drone technology for public safety. So different technologies and different verticals of Anthes. I love Defend. I love -- it was an engagement that took multiple months, as I mentioned a few minutes ago, it's a leading-edge, highly sought-after asset because, look, we hear all these things about throes. It's one thing to detect them. A lot of people can do that.

Defend can detect, it can track it can identify, but then how do you mitigate it? And how do you mitigate it in a public safety context or critical infrastructure context without collateral damage.

You can't use bombs or bullets or kinetic you have to find a different way. What we loved about Defend and their creativity and ingenuity is they do it through surgical cyber takeover. So they track it, identify it, take it over and take the communications link over and then neutralize that threat with no residual damage, no threat to public safety communities. That's what we think is best-in-class.

So I think there's a lot of that -- by the way, if you look at FIFA, you mentioned Ryan World Cup. It was -- Defend was in virtually all of those theaters. All of those stadiums providing cyber mitigation, which played a critical role.

And I read a report several days ago that there was only over 700 different drones detected over multiple sites during the -- over the course of FIFA, I think Defend was a meaningful component to that detection and mitigation. So feel very good about it.

Yes. And if you look at just in the last 7 days, the Department of Homeland Security came out and announced a $1.5 billion unmanned aircraft contract 2 tiers First of which was systems, the second of which was comprehensive services. It's important to point out that there was multi-vendor selected on the systems, but only one Defend that actually provides cyber mitigation system to Greg, I think, eloquently pointed out, to keep the public safe to bring the drone down safely, there's only one way to do it, and that's cyber nd they were the company selected there. .

And then a quick follow-up. How are state and local municipal budgets holding up for 2026? And are you seeing any hesitation in large-scale APX next upgrades? Or is the funding environment still highly supportive.

No. So 2026, the budgets have been -- continue to be very good. We've actually -- what we do this time of year, midyear because we start to look at '27 budgets which have now been floated in some cases approved. The good news for us is in 2027 for state and local public safety budgets are growing faster than government budgets both state and local.

And then if we think about software as it relates to public safety and the the funding attributed to software for public safety, that's growing even faster than monies being allocated to public safety.

So we think all in for '27 generally conducive to our business.

Your next question will come from Matt Niknam with Truist.

Congrats on the quarter. I have 1 follow-up and 1 I guess, more main question. So the follow-up is we talked about double-digit order growth in the second half of the year.

I just want to clarify, is that for products in SI segment? Or is that for the total business? And then broadly speaking, around supply chain, just wondering if you can talk about the visibility you've got with your suppliers in terms of being able to procure what you need to accommodate demand and whether there could be upside to the guide if you're able to get access to more this year.

Matt, I'll answer the second question first. I think you're getting at memory. Memory for us is a challenge in what we're having to pay for it. We're paying more. .

This year, we're going to spend $150 million. Last year it was $50 million. The availability has been good and continues to be good because we're working with our vendors to secure the continuity of supply, we are carrying higher inventory and capturing its availability.

And I'd remind those on the call that our LMR, specifically MCN portfolio, does use a simpler form of ramp. It's not the latest, greatest high-speed DRAM and we can substitute it and so that's allowing us to have more shots on goal, and we are attaining and getting the continuity of supply we need.

We are having to pay more. That said, we're still growing operating margins 170 bps expected this year with comparable gross margins.

To answer the first part of your question, the double-digit growth is expected in products, specifically products in SI in the second half.

[Operator Instructions] Your next question will come from Irvin Liu with Evercore ISI.

Congrats on the nice set of numbers. I had 1 and a follow-up as well. Just given the continued outperformance of Silvus, I wanted to check whether you held an updated view on where the Silvers TAM stands today?

I think most recently, you indicated the TAM is currently about $3 billion and expected to double over the next 4 to 5 years. But I guess I just wanted to better understand whether your growth here on Civis was more TAM driven or share driven? I mean, it sounds like the latter to me.

I would say it's more share driven actually than TAM driven. We don't have any information that would materially change the TAM that you just outlined that we have quantified. I think the performance is still this is around share gain and execution and not addressable market expansion per se.

Got it. And for my follow-up, you discussed the D-Series infrastructure product as a contributor of LMR strengthening for Q4 looking ahead, just given that this is the first infrastructure product in 12 years, are you seeing any sort of benefits of a pent-up demand for infrastructure broadly that can potentially unlock multiyear infrastructure refresh cycle?

Yes, we are. And just to dimensionalize it, infrastructure is a little less than 1/4 of the LMR business.

And to have a D series, as Greg mentioned, that's new refreshed Jack can talk about the customer attributes they like the best and to have them investing in it means that it's expected to be a growth driver, not only for products and SI, by the way.

Most of the customers that are investing in this infrastructure are signing up for new 5-, 10-year software and services wrappers around it. So we'll see the benefit of that over time as well. Jack, in terms of features and what's really uptaking.

Yes. I think we've made coverage more efficient. It's more energy efficient at the site, which is critically important to a lot of customers right now as they think about kind of greening their networks.

We also introduced our ASTRO site satellite resiliency, which essentially improves the resiliency and redundancy of the networks. That incorporates low earth orbit satellite just as a backup to a backup, if you will, but I think the most important thing for us as we look at it is it's -- our customers are betting on us for the long term. It's Minnesota Department of Transportation for 5 years, Maryland, a 10-year renewal it's Australia.

We had a customer down in Australia, signing on for 10 years. So I think it's a continued validation. We've had 3 big states that have signed on with these series in the last 3, 4 quarters in 3 major American cities that have signed on.

We think there's more to come. Our customers are excited about it. And by the way, there's 2 rails. They're investing in the network, but they're also, as Jason pointed out earlier, continue to think about the refreshing of the devices.

And I think it's a testament to our product team on how they envision these things working together. And then obviously, the services that we provision for our customers a wrap around those things.

Your final question will come from Luke Dipalma with William Blair.

Greg, Jason, Jack, and Mahesh, good afternoon. Great. Following up on the last question, should the D-Series upgrade cycle be considered a onetime boost to the second half growth rate for this year? Or should it carry over into next year such that LMR will remain in positive growth territory.

So think of D-Series and infrastructure is a slower moving, building part of our growth story. It's because if you -- I just -- I talked about 3 states.

We have over 40 statewide networks in the United States, and we have 10 of the provincial networks in Canada. And so you can just do the math on that low. We've got a lot more to do.

And these are multiyear plan. And the reality of it is, a lot of these people sit down, particularly with infrastructure and look at a 10-year plan.

And so they're all not going to happen at once. It won't be just a fourth quarter thing. This will be something that we'll continue to refresh networks, quite frankly, into the 2030s.

So it should be a positive catalyst after for next year. Right. Great. And my second question, the Solvus acquisition has been a home run.

And many investors have wondered why the didn't go the IPO path rather than selling to you because the growth has been so exceptionally strong.

I wanted to ask about this Motorola effect and your ability to supercharge growth. So Dan has elite technology for radiofrequency counter drone mitigation? And do you expect the combination of defense technology with Motorola's brand and the cross-selling and the manufacturing capacity that you can replicate with Defend what you've done with silos.

Yes. And you hit on it. It's exactly right. So I think this -- we think Silvers is of 1 asset.

I mentioned that -- and that acquisition took a long time. We were really thorough. We had -- I mean, it was almost a year in its engagement.

We were very intentional. We were very thorough. What is it about Motorola Solutions that can make Silvis grow better than they can on their own. Number one is the brand equity and the installed base of the customers that we have in this case, particularly MODs internationally, will we immediately give that asset which is you called Elite, I agree.

Visibility into theaters, maybe they didn't have initially.

Second, it's go-to-market sales motion. Malloy has already more than doubled the sales force. Third is Kohl's on the fire and expansion and focus around government affairs, both in North America and internationally.

Fourth is being able to buy supply chain components, efficiency, capacity in a way that Motorola can bring to bear the back office, the IT, the systems, the manufacturing low unit cost component acquisition.

So net-net, we can have it grow -- it can grow faster through sales and it can scale faster with the infrastructure of Motorola Solutions and lastly, highly culturally compatible, RF centricity, different market, great product, they the Silver's team has been superb, not just because of the revenue and the growth, and we'll love all that. It's great. The people are outstanding.

The technical depth superb. They see around corners. They look and we look to extend the lead we believe we have even further from a technology expansion point and I think we feel very similarly about defend, the elite technology around cyber takeover around not just detection and tracking and identification, but unique mitigation once again.

By the way, an Israeli company, we've been in Israel over 60 years. We have 600 people there, plus or minus. So the density of our presence in Israel, the commonality around cultural innovation, not just in Israel, but in RF and that cultural creativity that Mahesh's LMR team and mission-critical team brings, I think it will be a similar story with Defend.

I think we can do more with defend than anyone else can or they could do on their own. And I think that was largely in part why the 2 companies decided to get together. I'm super excited about the opportunities in public safety counter drone for that asset once we're able to close it after regulatory approval.

This concludes our question-and-answer session. I will now turn the floor over to Mr. Greg Brown, Chairman and Chief Executive Officer for any additional comments or closing remarks.

I just want to say thank you to all the Motorola people listening in to our customers. Thank you to our partners. It was a great quarter, great quarter with double-digit orders, strong revenue growth, operating margin expansion, generating just under $500 million just in Q2 of cash flow.

We talked about the strength of mission-critical networks and land mobile radio specifically. That informed our beat in Q2, which was $130 million, which was $100 million from LMR and $30 million driven by Silver that's informing the full year raise of $175 million, $100 million from Silvers, generally $75 million from LMR, the business is strong.

The product refresh cycle is good, both on devices and on infrastructure. I think the supply chain team, I want to say thank you as well the Motorola. We made a conscious decision to carry more inventory.

We were thoughtful about getting ahead of memory and aligning that with conversion that allowed us to execute. We think that will continue in the back half.

And lastly, I just love the momentum we have as we sit here today for the rest of this year. Thanks for listening. Look forward to talking to you next November.

This does conclude today's teleconference. A replay of this call will be available over the Internet within 3 hours. The website address is www.motorolasolutions.com/investor. We thank you for your participation and ask that you please disconnect your lines at this time.

Good morning I guess, good early afternoon. My name is Tomer Zilberman. I cover 2 areas within the bank, software, networking and a little bit of public safety as well.

Today, I'm joined by Jason Winkler, CFO of Motorola Solutions. Jason, thank you for being here with us today.

Pleasure Tomer. Thanks for having us.

Yes, absolutely. Jason, maybe just a high-level question to kick off with here. Just for investors that are a little bit newer to the story, can you give us a brief background of Motorola Solutions, right? You have several different product lines from LMR, which is land mobile radio, very simply walkie-talkies for law enforcement agencies. Maybe it's a little too simple...

Very advanced.

Very advanced walkie-talkies. You have a video security portfolio for both fixed video and mobile video, which includes body-worn, which we will discuss about a little bit more in depth and the Command Center, which is 911 call center software. right?

And you also recently made an acquisition recent as of the last couple of quarters of Silvus, which is drone network technology and most recently, an acquisition as of the last few days for counter drone technology. So can you kind of just walk us through all the bits and pieces there?

Sure. So I'll start with the technologies, which is really what we sell and what our customers count on us for. So mission-critical networks, which includes purpose-built public safety networks for communications, police, fire, first responders is a significant business for us, which we lead in. We added to it Silvus, which we'll talk about in a minute, which is a mobile ad hoc infrastructure less networking protocol that's commonly used in defense. And then empowering drones in a defense and war like context.

And then we have also video solutions, which came to us through the acquisition of Avigilon 5 or 6 years ago, which is now over a $2 billion business for us. And then the last one that you mentioned is we are in the command center or 911 center, empowering the software for the workflows of the call takers, the call routers and the dispatchers that really important epicenter of calling 911.

The software there is generally ours, and we have strong presence there. So in terms of growth algorithm for this year, the mobile communications network technology, 8% to 9%; video, 10% to 11%; and the command center, 15%. Additionally, we record and report the business on 2 financial segments, full line P&Ls, products and the onetime integration to make those products perfect.

And then software and services, which is approaching 40% of the business, that's how we show profitability and the likes. But our customers count on us for an end-to-end video solution for an end-to-end networking solution for comms and an end-to-end solution for 911.

Right. Let's talk about the biggest segment first, mission-critical networks, as you described, a combination of the land mobile radio and Silvus.

If I take the growth outlook that you just gave, the 8% to 9%, we're seeing different growth rates upon the 2 segments, right? If I look at the history of the growth of the LMR segment over the last few years, it's grown anywhere from 7% to 9% for you guys in the last several years. It's now, I think you're guiding to about 3-ish percent growth for the core LMR business, and that's supplemented by Silvus that you have guided to grow 30%, right? Can you just think about the trajectory of each growth segment? Why are we seeing the deceleration in the LMR? And maybe on the Silvus side, how sustainable is that 30% growth target?

Yes. So Silvus, on our recent earnings call, we increased our outlook expectations to be $750 million for the year. So that's an important sign for them. But also the core business of MCN, which would have been called LMR previously, we also expect to do $25 million better than we thought in February. So -- and the growth characteristics, Tomer, are that the second half acceleration is implied in our guide. It's expected. We've talked about that since February. And the makeup of this year is really informed by prior period comps.

Q2 in MCN or LMR specifically will be the last of some very elevated comps, which were a result of the backlog that we had that was frankly stuck because we couldn't get the requisite supply. Once we did, we got that through, customers were happy. It is presenting us with significant comps. But as we look at the second half, several things inform why we think growth will accelerate.

First of all, demand -- forward-looking demand orders in MCN and in LMR have been up double digits 4 quarters in a row orders. We expect that double digits to continue. And with the opportunities ahead of us to turn that revenue in the second half is why we expect the characteristic of this year to be better growth in the second half.

By the way, that's not unusual. That's happened pre-supply chain crisis where the attributes of growth are faster in the second half. We have -- the other thing about our business that I think sometimes isn't totally understood is in public safety.

Our COO, Jack Molloy, likes to frame it and runs a very disciplined ship around deals, dates and desks. We know through quotations, through customers, through engagement, who has to approve it, when it needs to be approved, when the order is going to be received, when the supply is going to match it. All of that is a highly visible forecast through pipeline. That, too, is informing what we expect to happen in the second half. So MCN is in a very good spot. It's supplemented, as you mentioned, by Silvus. And both are strong and have good growth characteristics into the future.

Right. Maybe to continue the discussion on the core piece of the business first. I think you're right, there is mechanics of backlog and tough comps that are kind of distorting the growth levels. But if you actually remove that, there was maybe a little bit of a decline this quarter, but I think implicitly, the second half LMR is supposed to grow 6-ish percent, kind of upper or mid- to high single digits. Without giving specific guidance, right, the historical trajectory of the LMR market is about low-ish single-digit growth, maybe GDP type growth. As you think about the portfolio today and the customer demand today with things like APX NEXT, is there an opportunity to sustain growth above that historical market growth?

It's a great market, as you mentioned. Actually, in the second half, we expect products, the segment I mentioned, organically to grow almost 10% and even MCN or LMR as we would describe the core organically to drive that 10% growth as well. So strong attributes actually even stronger than you mentioned expected in the second half.

LMR is a market that we've led in. We lead in public safety for P25. We lead in TETRA, and we lead in PCR. Those are the 3 kind of standards globally that are deployed. And the opportunities for us to continue to grow through the incumbency that we have in serving our customers in deeper and richer ways is a growth driver. We have customers that are counting us to do more and more to serve and maintain their networks, upgrading their networks. The devices that they're using on their networks are an opportunity for refresh. For example, we have -- by year's end this year, we'll have 300,000 APX NEXT. That's our latest and greatest radio subscribed by year-end. That device is feature-rich. It comes to us at a premium when we sell it, and it comes at a $300 per year application revenue stream.

So entering in next year, we'll have about almost $100 million ARR business from the LMR incumbency that we have, which, by the way, we record in Command Center because it's apps, it's an extension into the Command Center, those applications. So we're creating growth, not even -- not just within the LMR of the category or MCN, but it's helping fuel growth within the Command Center technologies through the innovations and the applications that we're developing. So a great market, one we continue to lead.

We spend almost $1 billion in R&D. Half of that goes to LMR and continuing to advance the technology, which we think will be with -- and our customers have voted with their contracts. years and years to come. The networks are only getting more complicated and better as we develop them.

Understood. Maybe moving on quickly to the Silvus side of the growth equation. You did talk about how you just raised the Silvus guidance for the year. Maybe a 2-part question. One, if we look at the Silvus business over the last few years, even prior to when you acquired it, there was a strong connection to the Ukraine-Russia conflict. How tied are you still to that? Is the incremental growth opportunity coming from that? Or are you starting to finally realize more revenues from global contracts?

And the second part is you also talked last quarter about increasing manufacturing capacity. Now is this kind of future-proofing the capacity, meaning you're trying to get supply ahead of demand? Or are you already seeing the demand here and you're trying to get supply to catch up?

Sure. So the Silvus demand continues to be internationally led, not just Ukraine, but U.K., Germany and other NATO allies that are surely supporting Ukraine, but also preparing their own countries for the defense needed that drones empowered by Silvus can provide.

Additionally, we're seeing greater penetration in the U.S. armed services with that -- with the routes to market that we have there. So we're really pleased with Silvus. And I remind people, Silvus is really a defense technology empowering drones in a battlefield context.

If you look at their press release when they introduced a new product, they talk about how that product benefits the modern war fighter. That's the use case for Silvus. It's defense, and it's an increasingly important one. Silvus as a platform is empowering over 100 different drone manufacturers and 150 different drone platforms. It's the choice when you want to deploy communications network that cannot be intercepted, jammed, taken down, interfered with, it's resilient and it's the best. That's the Silvus technology. That's why we really like it. Of course, it's built around our RF capabilities, which is also at our core.

So the technologists in our companies are very excited about that opportunity. But the route to market is about defense and the investments that are happening there position it for growth.

On your question on supply, not only is demand strong, we are increasing supply. So we've helped them increase their capacity in California where they had been. But we also added a facility in Salt Lake, which is absolutely a future-proof facility. It's a large modular facility that we will use to meet the demand and grow into for many years to come. It provides us with duality of sites, which is always important. It provides us with more output to match what we see as increasing demand.

Got it. Maybe just one more point on the defense aspect, right? You have a close partnership with the U.S. Department of Defense. Where are you positioned with the UAS groups 1 through 5? First of all, I have very limited understanding of UAS groups 1 through 5. So if you can help us walk through what that means and smaller -- smaller...

I mean many of those categories are called attritable, meaning, right, if it doesn't come back, that's acceptable. So the lower profile cost point of a drone. And of course, that in the end needs to be matched with a lower cost option for empowering it from a communications protocol.

So Silvus, which is primarily at the higher tier, it's a very resilient robust offer, is also tiering into areas of smaller attritable drones with the StreamCaster 5200. So they're doing both. They're empowering the top larger side, but also tiering the portfolio in a way that meets some of the demand that you're mentioning around the smaller-sized form factor.

So growth in both places and taking that portfolio and expanding it is part of the strategy that Bob Beck and the founder who now works for us and Jack Molly have to expand that market in the DoD beyond army into other parts internationally, and we're seeing good interest in that Silvus investment for sure.

Got it. Maybe segueing into another part of the drone area. I would be remiss not to ask about your recent acquisition of D-Fend. First of all, it's counter drone technology. So can you talk about specifically what it does? And how does it fit into your overall drone portfolio considering you have one part, which is Silvus and another partnership with BRINC drones?

Sure. So while Silvus is defense, we covered that, you mentioned BRINC. We have a strategic partnership with them and a route to market where together, we enable drones as a first responders. Customers there are not battlefield war fighters, they're public safety. And DFR and BRINC and our solution is eyes in the skies to see what's happening in an incident fast and bringing back video to the Command Center.

It can also bring a payload to help somebody in need with maybe a medicine, et cetera. So it's an important tool for public safety, and we're well positioned with our DFR portfolio with BRINC.

The most recent acquisition is around counter drones, securing skies, securing the city, securing the stadiums, securing airports, keeping drones out of places, unauthorized drones and what we really like about D-Fend, and by the way, we've been working and have deep relationship with Zohar and team for 4 years.

We've admired the EnforceAir is their technology progression. They've had good success. We've routed to market with them on some federal law enforcement opportunities. And together, we think we can really take this deeper into public safety because they're the ones that are being expected to secure the sky. So it's an important solution to a pain point that our law enforcement agencies federally, domestically and internationally have. And what we like about their technology is it doesn't -- it does not just jamming airwaves and not just radar. But it does gracefully intercepts through cyber takeover a target, a drone and gets it out of the airspace, lands it carefully. That's their differentiator is that they can do not just jamming, not just radar, but intercept one drone or more in an area where other authorized drones might be desired to be.

So it's that property in that cyber takeover solution that really differentiates what Zohar and team have done and the need for our customers. It's not only a technology extension because, again, is a form of RF sensing, but also it's a route to market. We have a sizable customer base who are eager to deploy these. Yes, there's some policy, regulatory training certification to use these systems, and we're going to work with our customers to work through that as well.

The revenue profile that they're driving to year's end this year, we think they're going to achieve $185 million of revenue for D-Fend. And the last 3 years, they've grown 50% or more per year. That's more than 50% CAGR. And so we're really excited about the work they're doing and what we can do together. Not only is it growing, it's profitable. So from a financing standpoint, we have the close of Q4 for D-Fend as well as Bell Canada, an acquisition that we're excited about that we announced a while ago, that's a managed services operation of many networks in Canada.

So together, we're likely to introduce about $1 billion more of debt, which is well within our headroom of 2x EBITDA. EBITDA this year is going to grow over $400 million. So to add $1 billion of debt is well within our construct, and we'll continue to have room and capacity to do additional M&A, buybacks. We're already at $400 million quarter-to-date or through yesterday. So we want to maintain the flexibility to do our strategy around deployment of capital. And we're really excited about being in this drone space purposely, Silvus for Defense, DFR with BRINC, as well as now counter drone technology with D-Fend, all of them serving our customers with specific needs.

Yes. Maybe to ask you a follow-up on the competitive landscape. I want to go back maybe to the growth and profitability part. But when we think about the drone as a first responder market, you guys are the leaders there with BRINC as well as some other leaders such as Axon and Flock Safety that both have counter drone technology.

So is the way to win this market more about the differentiation about talking about how you can jam certain drones and not others? Or is it more about kind of building a holistic drone platform where there is a differentiation in the full capacity of the suite?

I think it comes down to the technology, but also how it's deployed. So if you think about the synergies we have within our LMR networks, our customers where we own and maintain and service LMR network towers. Those are prime candidates to launch DFR from. There are prime candidates that installed base to launch or configure D-Fend from. So there's a footprint opportunity as well as, of course, the consolidation of the technologies and all of them around RF sensing.

So we like our position. We like the investments we've made, and we like that it ultimately is serving customers with pain points we know they have. We're engaging with them. And to have that discussion and now have the technology and the partnership and the route to market is a great place to be.

Got it. Now maybe on the growth piece of the equation, right? You had mentioned, I think, the last 3 years, 50% CAGR. What's the sustainability of that growth? And alongside the $1 billion in debt that you're raising for the acquisition, what else can you tell us about profitability metrics?

Sure. So $185 million, we expect them to achieve this calendar year. We'll add the $1 billion of debt. We'll pay the financing associated with that. And yet still the opportunity, we believe, is that -- excuse me, D-Fend will be slightly accretive next year. So it has a good profitability base. It has a good growth outlook.

If I think about growth opportunities, mitigation of drones, detection and mitigation of drones brings to us an additional $1 billion TAM. And we think that, that TAM is going to triple by 2030. That's where the market opportunity is, and that's where D-Fend positions us to go after that opportunity. And with growth and profitability and some investments, we expect it to be slightly accretive next year.

Got it. Maybe last question on MCN, given we're starting to run a little bit long on time. Radio infrastructure, right? You guys have disclosed that, that accounts for about 1/4 of the total MCN business. What's the opportunity with D-Series?

So D-Series is specifically around P25, which is the standard common here in the U.S., Australia and a few other markets. D-Series is a new introduction of the infrastructure that powers these networks, these purpose-driven networks. It's a decade since its predecessor. It covers faster and better, consumes less power. It includes more network resiliencies with the addition of LEO for forms of backhaul connecting sites and providing yet another resiliency layer.

Customers are pretty excited about it. We've announced some pretty big deals. The infrastructure that's in the field is aged and customers are buying an upgrade. And with that, of course, comes more services, more software, likely an extension of their maintenance contracts. So it's not only going to help us grow in the next several years on the infrastructure or the products and [ SI ] side. It will also be a growth driver for services and software. So good receptivity from customers around the D-Series, and it's just beginning.

Got it. Let's move on to video security, and I want to specifically ask you about body-worn within the market because you announced, I believe it was last year, the SVX, which is an advanced body-worn camera, which you guys call a body-worn assistant. Can you first maybe take us through the TCO advantage of the SVX given if you take a law enforcement officer who has a radio on their hip, the body-worn camera in the middle of the RMS (sic) [ RSM ] -- when you remove the RSM as part of the SVX equation, what kind of cost savings does an agency get from that?

Well, Tomer, we're thinking about the other way, removing the body-worn camera from someone else from the equation, right? You're still -- the RSM, which was formerly a speaker mic is now a body-worn assistant paired with APX NEXT. So our cost synergy to the customer, our value proposition to the customer is, you have a body-worn assistant, you have an industry-leading radio.

Why do you need a third-party device to do exactly what's capable now on the SVX. It's not only a great audio assistant, it's a terrific video assistant along with the back end and digital evidence management and all the capabilities of redaction that aren't really critical for that market. So our cost advantage in our TCO is about anchoring around mission-critical voice, additional modalities with LTE included and the AI-assisted properties that are embedded in our device as well as the back end and the subscription that goes with it of $99 is priced at a discount to the incumbent. So we like our strategy here.

It's one that we think wins over time. We've deployed 100 customers have chosen the solution. 30% of them have activated the video capabilities, and we're selling more and more of them. The activity, the funnel is high. And by the way, it also helps customers really think through their next upgrade because in order to pair SVX and have that pipeline, you're going to choose APX NEXT.

Yet one more reason why customers are going to choose our industry-leading latest radio because they want the benefits of the SVX in [ greater ] together. So our strategy is one of to continue to meet customers, solve their pain points and offer them an alternative and one that's easy to contractually choose as well as physically. You've got the device on you, let's activate it and let's add that feature capability. That's really our strategy.

Yes. I mean I think if we look at the competitive marketplace for the body-worn, I mean, the incumbent Axon had something like 80% market share, right? And I think Motorola did a good job prior to the FCX of being an alternative for maybe the Tier 2, Tier 3 agencies, but I think Axon really had a strong foothold on the Tier 1s. So when you think about everything you just discussed, does that finally put you in the conversation with the Tier 1s?

Well, I think we've done a pretty good job being in the market as an alternative. I mean we've had through acquisitions, been in the body-worn and in-car video since 2018 or '19. Great portfolio internationally. We do quite well on greenfield. Most international customers are choosing their first-ever body-worn opportunity. When we go head-to-head, we do pretty well.

It's the incumbency in North America that we're working our way through. And yes, the SVX strategy, we think, is a game changer for the opportunities and disrupting and winning flips into the future. In the meantime, we're going to continue to serve customers with their voice needs, the voice-assisted properties up. And when they're ready to take on video at the next contract cycle opportunity, frustration, et cetera, we're well positioned to do that, right?

Maybe before we go back into the individual kind of segment lines, I want to ask you a more conceptual question, right? Because we spoke about some of the same competitors here who are also trying to grow into other areas of your market right now. I think Axon made 2 acquisitions for the 911, the Command Center, right? So you historically have touched more key parts of the public safety workflow, right, across LMR, video and Command Center, and you've had it for longer.

So you've had more market mind share awareness, whatnot and the resulting market share. How do you think that the competitive landscape evolves over the next few years, not just on the point products, but as the platform as a whole?

You're right. We've been in the market a long time. There are 6,000 911 centers in the U.S. We have one or more parts of our solution in 60% of them. And so there's -- whether it's call taking or what we call VESTA NXT, whether it's CAD or records, the recordization of what happens during these incidents or whether it's the dispatch, which ultimately makes its way into LMR communications and using voice to dispatch the nearest responder to help somebody. That entire workflow is integrated. It's not only integrated on-prem, it's integrated in the cloud.

And traditionally, the barriers for 911 operators, which are critical operations have been upgrades are painful and disruptive. And with our integrated fabric, we're making upgrades less painful. And if you choose our solution, it's naturally integrated. You don't have to do interfaces. So we really like where we're at. We're familiar with what those other possibilities were looked at them. We like what we have, and we're differentiated where we have core, not over-the-top solutions, but end-to-end workflows that are becoming more and more integrated, and that's what customers really want.

They want -- in this critical solution, they want a vendor, a provider, a partner to solve their problems and do it in a way that has accountability and to be in all of the parts of the Command Center, including CAD, which is tough, which we have a strong presence in. And that's like the epicenter of a 911 center. And to be in CAD and records is really important. It demonstrates to our customers that we can solve their complicated solutions.

Right. We have a few minutes left here. So maybe I want to open up to the room if anyone has questions. No. I'll keep going then. Maybe in the last few minutes, we'll talk about margins. Memory first. You called out last quarter that memory costs are doubling, right, from $50 million to $100 million.

A little more than double.

A little more than double, but it roughly equates to, I think, about 2% of your COGS. So not a huge impact, but I kind of want to back up and ask you where are the memory impacts most prevalent? And what steps are you taking off?

Yes. I mean the categories are DRAM and flash in general. And it's a small portion of our bill of materials in total, as you mentioned. It's also small when it comes down to the amount of DRAM or flash in a camera relative to its overall bill of material that the same for a device or a radio.

Nonetheless, it's a headwind, right? So what are we doing about it? We're finding offsets elsewhere in our $6 billion COGS line, working with vendors as we did in prior scenarios like when semiconductor costs were inflating, we were still growing op margins because we were finding offsets. We've got a little bit of pricing around particularly high memory content solutions like video recorders. So we've adjusted price a little bit there.

But it's really about finding alternatives. We are getting the memory that we need. We're paying more for the memory. That's the reality of the market. But to be able to grow op margins as we expect 100 bps this year and grow it in both segments, despite this headwind, that's sort of table stakes DNA, figure it out that we expect our supply chain and teams as well as a little bit of price opportunity to do.

Gross margins for the company, despite this headwind and even a little bit from tariffs, which still remain with us, different types of tariffs, we expect to remain comparable over last year. So the OE expansion and the opportunity that's there in front of us is positive.

You lead me to the next question about operating margin. But maybe I'll ask one last question here is the funding environment, right? I think historically, you talked about the OBBV kind of as a potential tailwind. I don't think we heard too much about it lately. Is there anything that you're seeing? Finally, funds started flowing through the end of last year? Are you seeing any kind of...

Yes. The overall funding environment for our state and local business, which is the heart of our North America is good. It's relatively similar to last year. Customers figure out funding and prioritization for what we've been talking about, which is mission-critical.

In the case of OBBV, some of our federal customers are seeing and using that opportunity, and we've seen a couple of federal opportunities come our way with those as funding sources. So just starting to flow, it's over $150 billion for both DoD and DHS. So again, one more opportunity for customers who need these solutions to find funding opportunities, which they generally do.

Got it. Okay, Jason, we are out of time. Thank you so much for being here.

Thanks, Tomer for the time.

Thank you. Thank you all.

Good morning, everyone, and thank you for joining us. For our first session today in the morning, we have the CEO of Motorola, Greg Brown. Greg, thanks for joining us. Always great to have you here.

Thanks for having me.

So Greg, maybe I wanted to start with a little bit of an open-ended question. You're approaching your 20th year as CEO, a tenure that spanned across transformations, across different technologies, even different macros. So maybe just starting from there, how would you characterize where we are today, both on the technology side, macro side? And how does that compare to previous points across your tenure, particularly as it relates to Motorola's positioning and prospects looking forward?

I think without going through a history lesson, taking a step back, I think this is one of the stronger periods from an overall demand standpoint and from a positioning in Motorola Solutions standpoint. We've worked hard over the years to get the assets -- the people, the end user markets curated in a way that we're a mission-oriented company around public safety and now I'll call it new defense or national security. And I really like the assets we've been able to acquire. I love the organic development on the product side. The people in Motorola Solutions are a really good mix, Joe, of organically developed executives as well as either newly hired or newly acquired.

So I think about a total addressable market as approximately $85 billion. We're in the backdrop now as we sit here in May of 2026 against strong demand. We've had 4 consecutive quarters of double-digit order growth. I like our position in AI as Mahesh has built out organic product development in the AI designed around personas. So you think about -- we're embedding AI in emergency workflow from incoming call to case closure and all of the points in between, whether it's a call taker, a dispatcher, first responder, an RTCC operator or an investigator. So you ask how do I feel about our setup on our journey. I love our AI position, love the width and breadth of the asset portfolio in video, fixed and mobile, cloud and prem, hybrid, we meet customers where they are.

And the 2 other things that I'm excited about is Silvus, which was our biggest acquisition for about $4.5 billion, adds an addressable new market of $3 billion. Silvus is the market leader in the high-end unmanned systems. It's used pretty pervasively in Ukraine. So it's tested technology, and we're getting good traction and conversations with Silvus in other theaters. That acquisition is certainly appears at this point to be one of our best, and we'll see how it plays out. And by the way, LMR, I love where we are in LMR. You know the device refresh strategy we're on. For the first time, we're refreshing the infrastructure side, D-series, which we haven't done in a dozen years. And we're adding resilient layers of network protection to these 13,000-plus networks in LMR where your radio can do LMR, LTE, 5G, WiFi and now Starlink.

So an officer, we help connect regardless of their location. And even though we had negative organic revenue growth in Q1 on the LMR side, we expect that to continue in Q2, this one, too, Joe. But Q2 this quarter will mark the last of the difficult comps coming out of supply chain normalization. So I feel pretty good. I think gross margins for this full year will be comparable and that's in the face of higher memory. That's in the face of some headwinds on tariffs. I think our growth rate organically as a firm will be about -- we expect it to be 9% to 10% in the second half of the year, driven largely by mission-critical networks. Silvus is performing, as I like to say, all lights are green on the cockpit. So I really like the set up.

No, that's great to hear and lots of stuff to unpack there. But if I could, maybe you talked about how you were feeling about the setup for the year -- or for Motorola going forward. Maybe I can flip that on the head and bring it a little bit near term. What are you hearing from customers, right? You just had your annual Summit in Orlando. Where are you seeing customers prioritizing today? Which area of the portfolio is most resonating with them?

I guess that's -- I'm glad you asked a follow-up, and I don't mean to be -- this is not CEO speak. I actually feel good about the whole portfolio. I like the underlying strength we're seeing in LMR. And I like the setup for the back half of the year after we finish this difficult Q2 comp, which I think is the last in the line of difficult comps, as I mentioned. I like the Silvus demand. I like -- look, in Q1, we grew Command Center 27%. Now that was exceptionally strong due to 3 or 4 deployments on Tier 1 metro deployments, but the overall funnel is great.

I really like the performance in video. We guided 10% to 11% this year. We came out of the gate at 16% in Q1. I was at in Orlando, the Software Summit, we had over 1,600 customers. And I talked to a lot of -- there was 2 sets of customers. We had call takers and dispatchers. Remember, there's a little over 6,000 public safety answering points in the country. We are in over 60% of those with a software product and talking to those users, their enthusiasm for what we're doing was exceptionally high. We tripled the number of breakout sessions for AI. We have the Responder AI Assist Suite, and we're the only one that have the Dispatcher AI Assist Suite. And they like what we're doing.

They like the ease of the use and deployment of how we're putting AI throughout emergency workflow. And then I had an executive session with about 40 to 50 chiefs where in a separate room, unplugged, they can ask me anything they want, and we have a good back and forth. By the way, just to be anecdotal. One of the people -- one of the chiefs in the room a few weeks ago, I texted last night because it looks like they will be selecting us for a competitive SVX deployment. They looked at Axon, they looked at 2 other competitors. They looked at Motorola Solutions and given the SVX, which is the combined body camera, remote speaker mic AI assistant along with -- so total cost of ownership is 50% less, one device, Mahesh and team can migrate the back-end digital evidence management in a matter of weeks.

It was a very good competitive win, and I'm talking to him at 3:00 today to give him my personal reassurances around the deployment, which will be later this year. So long-winded answer. At the executive chief level, I think the conversations are strong. At the user level, call handler dispatcher, I think they're robust. And I think people appreciate, and I know first responders and police officers appreciate the resiliency that we're building in to further fortify and strengthen the criticality of LMR. It's good. It's very good.

No, got it. I mean great to hear all that detail. Maybe just double-clicking on Silvus now. You've raised guidance multiple times. You're expanding manufacturing, which we'll touch on later. But maybe just on the demand side, can you walk us through how the pipeline has evolved since you closed the deal, how it's diversifying across customers, geos, end markets? And are we really seeing demand getting pulled forward, right? I think the drone opportunity, if I was talking to anyone 2 years ago, they would have expected it to be more of a 2030 story. It seems like that's got pulled forward. So maybe just talk about that dynamic.

We have -- I think Jack Molloy and team and Babak, the Founder and CEO, have done a really good job. And by the way, it's important before I just mention a few metrics around Silvus. When we target that kind of acquisition, yes, it's about the addressable market. Yes, it's about the technology. Yes, it's about new defense extension, opening up a market and what that presents as a firm in terms of mission-critical, in this case, M&A networking. But it's also about talent and people, not just the founder but the executive team, engineering, supply chain, product design, really strong team, many of them educated out of UCLA, hence the location in L.A. And I think they have fit in quite well with Motorola with an RF, radio frequency, centricity and a cultural compatibility.

So you take the internal talent of Motorola along with the acquired talent of Silvus. And what I told them and what I tell other people that I'm talking to now that are potential M&A targets. We're a big company, but we're a small company. So yes, we have a lot of people, 23,000, but there's a handful of people that jump on a call and make a quick decision. And Babak in this case, for Silvus, I want you to be part of that team. So we've doubled the sales force. We've added capital into R&D capacity. We've doubled the capacity of building Silvus product in L.A. by adding a second floor. Demand is really strong. We announced the facility in Salt Lake City, 165,000 square feet, 200-plus new jobs in Salt Lake City. I think that facility should come online early 2027.

So we can reduce lead times and meet demand. I think demand continues to be obviously strong in Ukraine. We've gotten some initial orders as a result of the Israeli-Iranian conflict. The growth for Silvus is largely internationally driven. We have higher engagement with NATO countries. We referenced a big order in Q1, which was just under $80 million out of Germany. We've also had some orders as it relates to Silvus out of the U.K. So this new warfare and these conflicts are unfortunate, obviously, in Ukraine and Iran. But you've read about it, you've seen enough about it that warfare, electronic warfare is entirely different than what it was 3 or 4 years ago. And all things drone, all things are navigating unmanned systems, either in the air or in the water. And Silvus is the market leader and in the sweet spot that governs these high-capacity anti-jamming threat detection, low probability of intercept, low probability of detect in a highly scalable, low-latency environment. So I think it's strong across the board.

And so you mentioned expanding manufacturing sales, et cetera, and you've doubled capacity thus far. Can you just talk about how you're thinking about keeping pace with the demand that you're seeing on the supply side of things? And then maybe just a quick follow-up on the Salt Lake expansion. How are you thinking about that in terms of capacity unlock for you guys?

So what people -- and I'm sure you're thinking about this, right, they're saying, well, let me get this straight. He's doubled capacity. He's at $750 million a year, add the square footage, what's the exponential growth in capacity? How does that inform the revenue line? Tell me what that does to my model. I want to easy in the saddle a little bit. But I think it will reduce lead times for sure. The lead times are too long and customers want that product quickly. It will be -- I don't want to give you a number. I actually don't know the exact number, but obviously, it will be an exponential capacity expansion that will allow us to continue to meet the strong demand we're seeing. It's a pretty robust funnel of opportunity, but the most important thing for us is we got to reduce the lead times and get this product in the hands of customers sooner.

No, fair enough. One of the big questions I get from investors is they're just not as familiar with the Silvus business. So maybe you can just walk us through the programs that you've recently won, put some context around them, what's a typical deal structure look like? How much is hardware versus software, the duration of the contract? Are you sole source, those type of avenues in terms of how these deals kind of form and what they look like? And how should we think about year 2 and year 3 of one of these deals?

It is largely hardware. I think it's about 90% -- 85% or 90% hardware, 10% or 15% software. The deals are -- some come in from the U.S. Fed team here. Domestically, the majority of our growth is being derived more than 50%. I think it's closer to 60% plus internationally. The size of the deals dramatically differ just like an LMR deal. It could be a couple of million. It could be tens and tens of millions. The Germany order for $78 million is multiple quarters. So it's largely hardware upfront, minimal recurring afterward as you think about the dimensionalization of the rev rec. But that's kind of the composition of what we're seeing.

A Lot of conversation with NATO countries, a lot of conversation around border protection. And remember, Silvus is for us, is a defense play. It is not a public safety play. There's not spectrum here in the states to use Silvus for public safety. That's okay. That wasn't contemplated when we made that acquisition. The total addressable market we talked about being $3 billion. We expect that addressable market to double in 4 to 5 years. So a lot of good growth opportunity for us. Again, I think we've raised it 3x in terms of the annual revenue outlook, and it remains real strong, Joe, at this point. And as I guided a couple of weeks ago at $750 million, but it's strong.

Got it. And can you just talk about the potential around cross-sell opportunities? Obviously, you talked about kind of entering aggressively the defense vertical. How is that looking from a cross-sell, upsell type of opportunity for you guys?

By the way, I didn't answer the other question fully, the first one. We sell Silvus largely direct, but we are also in over 100 OEM platforms where we are subbed into whether it's aero environment and/or all or others. So I like being in the reference architecture for high-end M&A against the competitive landscape. What was your...

Cross-sell?

Cross-sell. Yes. Germany is a good opportunity. We -- so even before Silvus, Michael Kaae runs our international organization. Joe Balchune runs U.S. Fed. We sell into MODs with Ministers of Defense with the existing Motorola Solutions product category. So we could sell into Italy MOD, Germany MOD, U.K. MOD. MOI is police, MOD is defense. We know a lot of the customers for NATO countries in MOD, and we have helped broker introductions of Silvus into those defense departments Germany being a very good example, where I think cross-sell is high and there'll be other theaters as well.

Got it. Maybe moving off Silvus going to the broader video portfolio and just taking kind of a step back a lot of investors come to us and there's this perceived notion that there's a lot of increased competition, whether it's from some of your public peers or even some of the private folks in the field. Maybe just -- can you touch on that and discuss the competitive landscape as you see it today? And then I have a follow-up there.

Sure. I think it's fragmented competition. It depends on what theater. Obviously, let's take the Chinese competitors first. Hikvision and Dahua. They're not a competitive threat per se for new deals in the U.S. and in North America, given the North America Defense Authorization Act, which basically prohibits Hikvision and Dahua from being procured for new procurements into the states for federal government, either end-user contracts or Fed funds. The concern around those 2 companies is similar to Huawei and others, where the U.S. government is reticent to allow Chinese content.

They think perhaps related to CCP to be in comms, video surveillance, critical infrastructure. So that's a favorability for us from a competitive landscape in North America. We compete against in fixed video, primarily Axis, which is a division of Canon. Verkada is a cloud competitor, a pure-play cloud competitor. Internationally, Axis, we see the Chinese competition most acutely, as you would imagine, in Asia. But Axis and Verkada are the -- and Hanwha out of South Korea are the primary competitors for the remainder of theaters around the world. I think of prem and I think of cloud. We compete well in both. We believe we are taking share in cloud with Avigilon Alta, growing faster than Verkada historically. And we like the fact, Joe, that we can meet customers where they are. If you want a prem solution, we have that. If you want a cloud solution, we have that.

If you have a hybrid environment, you may have a Unity server, which is prem oriented and 60 cameras and decide the next 30 you want cloud. We can put cloud connectors at the edge device on the camera and the customer can run a hybrid environment. I think the team -- again, this is a good team where we've hired a couple of executives from the outside and from competitors underneath Alex Castaneda, who runs North America, came out of Zebra, knows channel because video is largely a channel sale. So you have to have the right channel mix. You have to have the right channel relationships. You have to tweak and understand compensation. So I like our setup. No one has in video the width and breadth of our portfolio, not only in fixed but in mobile and mobile being in car body cam, nobody has that portfolio. And I think the 16% growth and really strong start in Q1 is a testament to that. So I don't see the competitive landscape it hasn't materially changed from now versus several quarters ago. If anything, we have gotten a little stronger on the product side.

Got it. And you mentioned something there in terms of the breadth of the portfolio. It does seem like anecdotally, the competitive or the broader landscape is moving to this more portfolio approach that you guys have been doing for a while now. I guess, what are you seeing from the customer side as they look at your portfolio, particularly now with AI kind of layering and being more pervasive across the portfolio, particularly on the video side or specifically on the video side. Is that starting to resonate more?

Definitely. It's resonating. The customers like the choices that they have with us. They very much like AI being embedded throughout all product categories. And if you go and think about video or command center deployment inside the context of public safety, they love it being embedded from an end-to-end emergency workflow standpoint. And I think that Mahesh, the deployment team, Todd Piett, [ Johan ] running AI and others, the improvements that we've made in terms of product performance, speed of deployment, better quality, I do think it's resonating.

Got it. And maybe just on that point, SVX seems to be one of the products that does this convergence across multiple avenues, right? So maybe -- and you mentioned already a win or win in the pipeline. But can you just talk to what you're seeing on the demand side? And one of the questions that we get a lot on the SVX product is how much of this is just speaker mic? How many of these are competitive takeouts versus greenfield opportunities just because of some of the subsidies that are coming through. So maybe walk us through what you guys are seeing on the...

Yes. It's one of my favorite products that Mahesh has developed because if you think about it, and let me just back up, I always we just had a Board meeting Monday. And I said, when I think about what makes MSI special? What's the competitive advantage I think we bring? I think we bring 3 things. I think we bring balance sheet. Now there's a lot of bigger companies that more cash and well capitalized, especially in the world of AI hyperscalers. That's not what I'm talking about. When I look at the landscape of public safety competitors in that spectrum, our balance sheet is an advantage, not just because we're only 2:1 net debt to EBITDA, but because we expect to generate as an investment-grade company, $3 billion of operating cash flow.

That gives us powder and opportunity to continue to invest organically to extend the product leads that we believe we have. It allows us to give good shareholder return, increasing the dividend double digits, which we've historically done every year since the creation of MSI buy back shares. The stock dropped stair step down after Q1. We've been aggressively buying back shares. We -- right as we sit here today, have bought back just under $400 million year-to-date. So the capital allocation flexibility that the #1 advantage of balance sheet in a public safety context affords us is consequential.

The second thing that I think makes us special is I would call it brand equity. And more specifically, I mean, the relationships, the stickiness of LMR and the relationships that we provision in addition to that incumbent technology. We're not selling devices. I've been in that movie. It's not a very pleasant movie. We're selling systems, LMR mission-critical systems that are bespoke infrastructure curated around that specific customer, devices, software, encryption, monetized services built around the workflow for LAPD, NYPD, Chicago PD, Dallas Fire Department. And so disintermediation or substitution is very hard. So let's build on an ecosystem, whether it's command center or video and integrate it and orchestrate it with these mission-critical networks that we are the best in providing.

So advantage #1, balance sheet; advantage #2, brand equity relationships. By that, I mean the bifurcation of the incumbent systems and the relationships. And then the third advantage is the critical networks themselves. And that brings me to SVX. So we're not interested in selling a device, a camera. We designed an integrated device, a multipurpose device. You don't need to, you have one. What's it grounded in? It's actually grounded in mission-critical voice, not cellular voice, which is subject to the vagaries of a cellular network that can be either congested or go out of service, but fully encrypted always-on redundant five nines encrypted secure voice.

So that device powered by AI, by the way, is doing secure voice, body video, back-end digital evidence management. And the thing, Joe, that makes it special is it is multisource ingestion of situational awareness. It can take body video, take VIX video. It can take CAD information where we are a market leader. And because it's grounded in LMR voice, it can do the radio LMR traffic recording logs and aggregate all of those multisources to give the best, widest view of situational awareness information to a dispatcher or an investigator at a total cost of ownership that is about half of what the other choice is. So hence, by the way, my anecdotal comment a few minutes ago to the chief I'm talking to this afternoon, he looked at those alternatives.

He understood the value proposition and the difference. They have a mission-critical LMR network, a P25 network from Motorola. And I said, you can buy another body camera. You can buy an iPad if you want. I don't know why you would think about it across the spectrum of what we add and provide from a full ecosystem standpoint and total cost of ownership. So we've had over 100 different customers procure the SVX. But as we said in Q1, about 30 of those are also activating and provisioning the video. Now what I like about that is once you see the SVX, the customer can turn the video on whenever they want. So they may have a contract that's running with the other guys for 2 more years. That's okay. See the SVX, when that other contracts expired, you don't need to renew it. You can go right over, activate the video on the already purchased remote speaker mic, activating that second feature on video, and we move in the back-end digital evidence management and migrate those customers over.

Got it. Let me just pause there and see if there's any questions in the room. Please raise your hand. There's one upfront. Wait for the mic, please.

As the complexity of the business starts to grow, and it's always been fairly complex, but how do you start to think about protecting margins in the midst of that complexity?

Good question. I think that we do have a good DNA in the firm around -- look, I always tell the team, revenue growth is fine. It can be A, B or C. But you got to grow operating cash flow, you got to grow operating margins and you got to hold or take share. That's what compounder companies do. We do expect operating margin expansion of 50 bps this year. By the way, that's in the face of memory cost more than doubling, a little more than doubling as we updated on the earnings call. That's also with tariff headwinds of, I think it's $60 million in the first half of this year. But our team figures it out, and I'm proud of that.

By the way, even with the challenges and the vagaries around memory cost, increased freight with the Strait of Hormuz moves marginally, we can largely absorb that. We also expect gross margins to still be comparable year-over-year, '26 over '25. So while we have your word, the complexity of the business, I also see that as a lot of levers as well available to us. And -- we've -- by the way, we've increased inventory. That was an intentional decision. It's running higher than it was from a working capital standpoint a year ago. Part of that is the addition of Silvus, but part of that was intentional to try to get in front of DRAM and flash memory escalation costs and prebuy inventory.

I think we dual source, we can reengineer parts when we need to. And also, by the way, given our market leadership, we have pricing power in certain cases. And if I specifically think about video and memory cost, we've increased the prices of cameras and servers to keep pace with what's happening in the market, so we don't erode margin. So I think the financial team, the operating team, the executive team understands the criticality of margins. And for this year, we expect gross margins to be comparable but continued -- actually, we expect operating margins to be up 100 bps this year. I stand corrected, you were trying to give me the evil eye here. It's 100 bps, I should know that. What else?

After you win a contract with L.A. or New York, the big cities across the country, what's the max life of the radios where the entire department has to turn them over?

What's the max what?

Life of the radios where the entire department has to turn them over.

So on average, a radio in North America gets replaced about every 8 years. When you have a large customer like New York or L.A., it takes several years to upgrade the entire force. They pace it. Sometimes it's paced to the reflection of the budget dollars that's available to them. But that's about the dimensions of the longevity of a radio, and it takes several years to upgrade.

That's not just one big [indiscernible]

Years and years and years. And that's the other thing I like about this business. 13,000-plus land mobile radio networks. To your point, sir, thousands of contracts. So there's not an over density or concentration from a vulnerability standpoint. They're all distributed and disseminated. And they're accruing and expanding and upgrading infrastructure or a certain number of devices at a variety of different bases. So that lends itself well from a lower beta standpoint. And when we look at backlog and we have a sense of the agings and the durability, it provides a solid robust platform for us to continue to grow.

So you talked about hardware and software. Is there also a component to this to the deployment to the actual user? And then the last part also is the aftermarket part of it where you have units that are need of service or what have you. So what is the entire bundle of where you can harvest revenue and profit from?

Well, we -- remember, as we report the firm, we have total revenue, we report it in the segments, product and SI, product and installation, software and services and then we disaggregate through the 3 technologies: mission-critical networks, which is LMR plus Silvus; Command Center, which is all primarily the PSAP or public safety answering point solutions from call taker to evidentiary management and then all things video. We can monetize the hardware price -- we monetize software and services. Many of our service contracts have cost of living increases where depending upon what inflation is, we can recover cost. We've increased surgically price where we are largely providing either a new product or larger scope.

By the way, another thing that comes to mind is we talk about these land mobile radio networks, and we talk about all the devices out there, and we record the revenue and product and S&S software and services. But there's 200,000-plus devices that are using now an applications ecosystem on the radio, that's not too dissimilar than what you do with your Apple App Store. It's not as sexy. It doesn't have all these applications. But for mapping, location, over-the-air programming, it's $300 a year per device. And we've said we expect about 300,000 of those users for public safety radios to be using the apps. That's another area to monetize. Implementing cybersecurity protection, another area to monetize. So if I -- you asked in the first question about the history of the firm and have not, number one, not a consumer company, B2B.

Our North Star is mission-critical. Mission-critical what? Mission-critical networks for public safety and defense. Mission-critical AI embedded through emergency workflows and getting away from individual devices where there's no competitive moat, and having a system end-to-end orientation, where you can monetize, customize and provide unique services to each customer. And under a financial envelope, revenue growth, operating cash flow growth, operating margin expansion. And I think we have done reasonably well, but what excites me more is the opportunity in front of us from where we sit today because I think the market is there and the capability and capacity from people and product on our end is there to seize it as well.

Thank you, Greg. I think we're out of time. So thank you, everyone. Thank you, Greg. Thank you.

Good afternoon, and thank you for holding. Welcome to the Motorola Solutions First Quarter 2026 Earnings Conference Call. Today's call is being recorded. If you have any objections, please disconnect at this time. The presentation material and additional financial tables are posted on the Motorola Solutions' Investor Relations website. In addition, a webcast replay of this call will be available on our website within 3 hours after the conclusion of this call. This website address is www.motorolasolutions.com/investors.

[Operator Instructions] I would now like to introduce Mr. Brian Piotrowski, Vice President of Investor Relations. Mr. Piotrowski, you may begin your conference.

Good afternoon. Welcome to our 2026 first quarter earnings call. With me today are Greg Brown, Chairman and CEO; Jason Winkler, Executive Vice President and CFO; Jack Molloy, Executive Vice President and COO; and Mahesh Saptharishi, Executive Vice President and CTO.

Greg and Jason will review our results along with commentary, and Jack and Mahesh will join for Q&A. We have posted an earnings presentation and news release at motorolasolutions.com/investors. These materials include GAAP to non-GAAP reconciliations for your reference. During the call, we reference non-GAAP financial results, including those in our outlook, unless otherwise noted. A number of forward-looking statements will be made during this presentation and during the Q&A portion of the call.

These statements are based on current expectations and assumptions that are subject to a variety of risks and uncertainties. Actual results could differ materially from these forward-looking statements. Information about factors that could cause such differences can be found in today's earnings news release, in the comments made during this conference call, in the Risk Factors section of our 2025 Annual Report on Form 10-K or any quarterly report on Form 10-Q, and in our other reports and filings with the SEC. We do not undertake any duty to update any forward-looking statements.

I'll now turn the call over to Greg.

Thanks, Brian. Good afternoon, and thanks for joining us today.

First, Q1 was an outstanding start to the year with earnings per share that exceeded our guidance as well as record revenue. Revenue was up 7% in the quarter, highlighted by 18% growth in software and services. Additionally, we saw growth across all 3 technologies with particularly strong starts to the year in Command Center and video, where we continue to see customers adopt our cloud and hybrid solutions to future-proof their operations and leverage our latest purpose-built AI workflows.

In terms of Silvus, Silvus continues to exceed expectations, and I'm very pleased with our continued execution on that front. And at a company level, we also expanded year-over-year operating margins for the fifth consecutive quarter.

Second, demand for safety and security solutions remains robust. Our record Q1 orders grew 38%, contributing to a record Q1 ending backlog position of $15.7 billion, up 11% versus a year ago. This is a testament to the continued prioritization of safety and security by our customers globally and the investments we're making across our ecosystem.

During the quarter, we acquired Exacom and Hyper. Exacom integrates critical radio and 911 audio into our digital evidence management, while Hyper injects agentic AI into our 911 call handling. These capabilities convert voice, video and data into actionable intelligence, helping our customers to act with greater speed and certainty.

Additionally, we announced our intent to acquire Bell Canada's LMR network services business, which we expect to close sometime in Q4. This acquisition expands our mission-critical managed services footprint into the Canadian public safety customer base.

And finally, based on our Q1 results and continued momentum in the business, we're raising our full year guidance for both sales and EPS.

And with that, I'll now turn the call over to Jason.

Thank you, Greg. Revenue for the quarter grew 7% and was above our guidance with growth in both segments and in all 3 technologies. This included $60 million of FX tailwinds and $219 million from acquisitions, which was consistent with our Q1 expectations.

GAAP operating earnings were $525 million or 19.3% of sales, down from 23% in the year ago quarter, driven by a $75 million noncash charge for the increase in the Silvus earnout, which is aligned to stronger performance of the business and increased intangible amortization in the current quarter.

Non-GAAP operating earnings were $781 million, up 9% from the year ago quarter, and non-GAAP operating margin was 28.8%, up 50 basis points, driven by higher sales and improved operating leverage, partially offset by higher supply chain costs.

GAAP earnings per share was $2.18, down from $2.53 in the year ago quarter, primarily due to the $0.45 noncash charge for the Silvus earnout that I mentioned earlier.

Non-GAAP EPS was $3.37, up 6% from $3.18 last year. Our growth in EPS was driven by higher operating margins, partially offset by higher interest expense. OpEx in Q1 was $607 million, up $4 million versus last year due to acquisitions.

Turning to cash flow. Q1 operating cash flow was $451 million, down $59 million versus last year, and free cash flow was $389 million, down $84 million. The decrease in year-over-year cash flows was primarily driven by increased investments in inventory and higher interest, partially offset by higher earnings.

Capital allocation during Q1 included $201 million in cash dividends, $118 million in share repurchases and $62 million of CapEx. We closed 2 acquisitions during the quarter, Exacom and Hyper for a total of $90 million, net of cash acquired. We also entered into a definitive agreement to acquire the LMR network services business from Bell Canada, which is expected to close in the fourth quarter of 2026.

Additionally, the company repaid $200 million of the $1.5 billion term loans issued to fund the Silvus acquisition, leaving a balance of $1.3 billion outstanding.

Moving next to our segment results. In Products and SI, sales were up 1% versus last year, driven by growth in video. Revenue from acquisitions was $181 million and foreign currency tailwinds were $30 million in the quarter. Operating earnings were $386 million or 24.8% of sales, down from 28.1% in the year prior, primarily driven by unfavorable mix and higher supply chain costs, partially offset by improved operating leverage.

Some notable Q1 wins and achievements in the Products and SI segment include $148 million P25 device and SVX body-worn assistant orders for the U.S. federal government, a $16 million P25 device order for a U.S. state and local customer, a $14 million fixed video order for a large U.S. fitness company and a $10 million fixed video order for Duke Energy.

During the quarter, the company also secured $78 million of Silvus orders from an unmanned systems provider in Germany with an expected delivery schedule over the next few quarters.

In Software and Services, revenue was up 18% compared to last year, driven by strong growth across all 3 technologies.

Revenue from acquisitions was $38 million and currency tailwinds were $30 million in the quarter.

Operating earnings in the segment were $395 million or 34.2% of sales, up from 28.7% last year, driven by higher sales, inclusive of favorable mix and improved operating leverage.

Some notable Q1 highlights in this segment include a $41 million 5-year P25 services renewal for the Minnesota Department of Transportation, a $24 million Command Center order for Denver, Colorado, a $16 million Command Center order for Anne Arundel County in Maryland, a $10 million P25 services order for Paraíba, Brazil Department of Social Services and a $9 million mobile video order for a U.S. state and local customer.

Looking now at our regional results. North America Q1 revenue was $1.9 billion, flat compared to the prior year with growth in Video and Command Center. International Q1 revenue was $857 million, up 27% versus last year, driven by Mission Critical Networks, Video and Command Center.

Moving to backlog. Ending backlog for Q1 was $15.7 billion, up $1.6 billion or 11% versus last year, primarily driven by record Q1 orders, which was our fourth consecutive quarter of double-digit orders growth in both segments.

Sequentially, backlog declined $60 million, driven primarily by revenue recognition for the U.K. Home Office, partially offset by strong demand in Video and Command Center.

In Products and SI, ending backlog increased $255 million versus last year due to strong demand in video and Mission Critical Networks. Sequentially, ending backlog increased $45 million, driven by strong demand in video.

In Software and Services, backlog increased $1.3 billion compared to last year, driven by strong demand for multiyear contracts across all 3 technologies and favorable foreign currency impacts. Sequentially, the ending backlog declined $105 million, primarily driven by the revenue recognition for the U.K. Home Office, partially offset by strong demand in Command Center and Video.

Turning to our outlook. We expect Q2 sales growth of approximately 8.5% with non-GAAP earnings per share between $3.82 and $3.88 per share. This assumes a weighted average diluted share count of approximately 168 million shares and an effective tax rate of approximately 23%. For the full year, we now expect revenue of approximately $12.8 billion, up from our prior guidance of $12.7 billion and non-GAAP earnings per share between $16.87 and $16.99 per share, up from our prior guide of between $16.70 and $16.85 per share.

This full year outlook assumes a weighted average diluted share count of approximately 168 million shares, an effective tax rate of approximately 22.5% and favorable FX of about $100 million, which is unchanged from our prior outlook. Additionally, we continue to expect another strong year of cash flow generation with approximately $3 billion of operating cash flow for the full year.

Before turning the call back to Greg, I want to highlight a couple of items. First, we are raising our top line revenue expectations $100 million, driven by strength from both Silvus, which we now expect to generate $750 million in full year revenue, up $75 million from our prior expectations, and as well our core public safety business increasing. With these increased top line expectations, we now expect Products and SI to grow between 8% and 9%, up from 7% to 8% and Mission Critical Networks, the technology to grow between 8% and 9%, up from 7% to 8% previously.

Second, we continue to navigate a dynamic supply chain environment that includes tariffs and rising memory costs. Regarding tariffs, the Supreme Court ruled against the IEEPA duties in February. However, these were promptly replaced by new Section 122 tariffs, which we're subject to, and a broader tariff framework of uncertainty remains on the horizon. The net impact of these changes is that we continue to project $60 million in tariff headwinds this year, primarily in the first half of the year. And we continue to monitor the IEEPA refund process.

Turning to memory. On our last call, we dimensionalized our direct memory spend at approximately $50 million last year. We now expect this to a little more than double in '26, and we are actively pursuing mitigation strategies, including accelerating inventory, deeper strategic partnerships and surgical price adjustments to offset these memory cost increases. As a result, we still expect to expand our operating margins by 100 basis points for the full year, with operating margin expansion in both segments.

With that, I'd like to turn the call back to Greg.

Thanks, Jason, and I'll end with a few thoughts. First, I'm very pleased with our Q1 results and demand continues to be quite strong across the portfolio. Revenue was up 7%, highlighted by 18% growth in our Software and Services segment. Additionally, we achieved a record Q1 ending backlog, which was up 11% versus last year, providing us with an excellent foundation for the rest of 2026.

Second, I couldn't be more pleased with the energy, enthusiasm coming out of our annual Public Safety User Summit, which was held in Orlando last month. Innovation has always been at our core. And after spending time with the record 1,600-plus customers in attendance, it's more clear than ever that they're looking to our solutions to help simplify an increasingly complex public safety workflow.

To that end, I'm excited about the recent launches within our Command Center that leverage our latest AI assist capabilities, missions and record management. With missions, we're redefining crime center operations by centering workflows around measurable outcomes.

With Records Management, we're unifying an agency's records and case management into a single cloud-native solution that can significantly accelerate agency reporting and case closure. These solutions build on our comprehensive approach to AI with Assist, focused on injecting intelligence directly into every workflow across the portfolio, serving the call taker, dispatcher, responder, RTCC operator and the investigator with a compelling value proposition for our customers.

In Mission Critical Networks, we continue to redefine what resilient communications means. Our new APX NEXT integration with T-Mobile and Starlink seamlessly enables direct-to-device satellite connectivity, adding yet another mode of network resiliency to LMR, where we now incorporate LTE, 5G, Wi-Fi and satellite to help ensure that a first responder is never out of reach.

In Video Security, we also continue to expand the breadth of our portfolio across key verticals, including health care, retail and critical infrastructure.

And finally, the opportunities in front of our Silvus business continue to grow in today's geopolitical environment, where unmanned systems, particularly drones, are transforming security and defense operations around the world. The resilient, highly scalable secure broadband connectivity that Silvus provides puts us at the very center of new defense and electronic warfare communications, and we continue to see strong demand from U.S. and allied defense agencies worldwide, which is in part driving our increased guidance for this year.

As I look forward to the rest of the year, I'm absolutely encouraged by our momentum. We're seeing sustained global prioritization of public safety, enterprise security and defense spending and are very well positioned for the remainder of the year. And our strong balance sheet and excellent cash flow provide us with the flexibility to remain opportunistic in capital allocation, both organically and inorganically.

And with that, I'll turn the call back over to Brian, and we'll open it up for your questions.

Thank you, Greg. [Operator Instructions] Operator, would you please remind callers on the line how to ask a question.

[Operator Instructions] And our first question comes from Tim Long with Barclays.

Yes, I was hoping I could start with the strong performance in Video and Command Center. Both those product lines seem to be above growth rate. So could you talk a little bit about kind of what drove that? Was there one-timers in there, particularly in Video with the big order that was discussed? And any updates on outlook there? And then I had a follow-up on mission-critical networks after that.

Thanks, Tim. And yes, it was a strong start to the year for Video, as you mentioned, 16% growth. Growth drivers in there include body-worn cameras, ALPR, our Unity platform and of course, Alta, which is our cloud-based platform, continuing to lead the way with growth. Much of that's aligned to the continued investments that Jack's made in the team. I wouldn't point to any one particular deal, but a couple of the deals we talked about that are new wins for us, including Duke and the large one that we mentioned for fitness. Jack, you and your team did a tremendous job on those, and it's pretty broad-based, Tim.

Tim, the only thing I'd add, I think Jason hit it, the only thing is, Alta has been a game changer in terms of vertical markets served. We weren't really in retail before. And as we alluded to with the big national fitness chain, that's an example, I think, of what you'll come to expect from us moving forward. And we've been very intensive on education, public safety, critical infrastructure, but I think there's a broader market that we can serve with Alta and with the investments we've made in go-to-market.

And the second half of your question, Tim, also a strong start to our command center technology with 27% growth. That was driven in part by some Tier 1 cities coming online for our next-generation 911, which Mahesh and team have delivered. Those customers have made some pretty significant commitments to us given the road map that Mahesh has.

I think on top of that, I'd say that we also moved to a hybrid subscription model for our CAD solutions and our record solutions last year. Those customers went live, and we are seeing the dividends of that play out as well at this point. Last thing I would say is that we introduced Assist Suites last quarter, and we are seeing excellent product market fit there. 100% of our 911 VESTA NXT call handling solutions had Assist dispatcher suite associated with it. So that was a great win for us as well.

Okay. And then I just wanted to follow up on the mission-critical networks. It sounds like Silvus is exceeding and you raised numbers there as well. Revenues were down year-over-year in the quarter. So maybe talk about what's going on in the LMR product area to start the year?

Sure. So there, Tim, it's as we expected, where Q1, in particular, has a series of comps behind it. Our Q1 is pretty strong in the LMR business. And so we were expecting that, prepared for that. Silvus is continuing to exceed our expectations. I would also point you to demand, which is a function of orders. Our double-digit product orders growth, inclusive of LMR, is our fourth quarter in a row of capturing that level of demand and is anchored around our expectations for growth in the second half within MCN and LMR inclusive growth to accelerate, which is much like last year.

And Tim, I would just add and further unpack that. When you decompose products and specifically LMR, remember, we're also going against a couple of years prior comps that are double digit, which is a reflection of the normalization of semiconductor supply that in Q1 and one more quarter this quarter, this year, we will be through. So that's another anomaly that we're playing through, but love the fact that we've had 4 consecutive orders of double-digit product growth. And quite frankly, we expect full year double-digit orders growth in products as well. So it is as expected. That's a reflection of the linearity you see.

And the raise that we mentioned on the call, the $100 million, while $75 million is related to Silvus, the other $25 million is from really the public safety business broadly. So our expectations have increased.

The next question will come from the line of Matt Niknam with Truist Securities.

I guess to the point of accelerating growth, particularly in the back half of the year, I'm just curious if you can talk to visibility and confidence level you have towards achieving the guide more in terms of supply and getting enough at hand to be able to ship.

And then on a related note, just on gross margins, I know you guys reaffirmed the expectation to grow op income margins by about 100 basis points. I'm wondering if there's maybe a little bit more leverage against OpEx? Or how you're thinking about gross margins relative to scaling past OpEx to get there?

Sure. So on the demand side, you can see it in our product backlog, which actually increased sequentially. Strong public safety orders as well as strong video orders included in that. In terms of our ability to continue to attain the supply to match those strong demand profiles, those double-digit quarters that we've talked about, we are getting the supply we need.

In some cases, we're having to pay a little bit more for it, in particular, memory. But our supply lines are lined up to the demand profile that we have today and what we expect to be there in the second half. And despite the higher costs, we mentioned on the call that we still expect to grow operating earnings for the company 100 basis points and to do it in both segments. Each segment will contribute to that 100 basis point expansion.

Pipeline, Matt, the only thing I'd tell you is, given you have a full understanding of public safety being a significant part of our business, it is a long sales cycle in public safety, which is a good thing for us because it gives us visibility in terms of deals -- not only deals we propose, but deals approval, they go to county board, city commission, state budget office. And so we have a high degree of confidence in our outlook for the year.

Our next question will come from the line of Joseph Cardoso with JPMorgan.

Maybe just wanted to circle back on Silvus. It's great to see the upside to the outlook here. I mean I'm just wondering if we could take a step back and really just touch on how you guys are seeing the opportunity pipeline build for this business relative to when we last spoke? And then the second aspect of that question is, as we consider your ability to capture this demand, can you talk about your manufacturing footprint here and how we should think about that as a potential gating factor, if at all, to potential further upside around this business? And then I have a follow-up.

Yes. I think it's -- since we closed on Silvus in August of last year, as we sit here today, it's definitely exceeding our expectations. I think that what you're seeing in the print in Q1 and the overall guide to $750 million is a reflection of the increased investment that we're making in go-to-market. The sales force for Silvus has already doubled with Jack and his team making investments. We're seeing demand increase as well internationally.

I think when you dimensionalize the $750 million annually, the majority of that is coming from international demand in multiple theaters. And when we acquired it, we always thought it was best-in-class technology. The other thing we're doing is putting more coals on the fire on R&D for differentiation and technology refresh, so we keep that lead and further extend our differentiation.

Yes. And just to build on that, Greg, if you think about it, there's really 3 facets in R&D. Number one, it's the spectrum dominant software, which is ultimately Silvus' secret sauce. It's what differentiates us to the other MANET providers in the world of electronic warfare, very critical.

The second thing from an R&D standpoint is we've had a big focus on reduction of size, weight and power. In January, we introduced the StreamCaster 5200, which has gotten rave reviews not only in the DoD, but also within the NATO space. And that is now our smallest full-featured MANET radio.

And then the last thing is the spectrum sensing capability. When you think about counter UAS, this is a handheld tactical radio at the edge that can sense RF and has spectrum awareness. So for the modern war fighter and what's happening in various theaters around the world, it's also being used there. So we're really pleased. I think the last thing, and we talk about investment, Greg nailed the go-to-market is we have already increased our supply capacity in California. And I will -- we're going to let you know we're going to be adding a GO redundant site that will bring on incremental capacity in 2027.

And the other place you'll see our expectations having increased for Silvus is in the earnout that we structured, which is a win-win. We mentioned on the call that it's gone up to be now an expected payout of just over $100 million. That reflects the increase in what we expect the business to perform under the earn-out structure. So aligned there as well.

That's awesome color, guys. I appreciate all of that. And then maybe, Greg, last quarter, I think you talked about your expectations to expand product backlog exiting 2026. I mean, as we sit here today, product backlog is already at an excellent point for you to execute on that. So maybe just given kind of -- I mean, you've somewhat already talked about a lot of these -- or talked about the kind of the demand you're seeing and the momentum in the business. But as you sit here today relative to 90 days ago and that expectation around kind of building backlog through the year, how are you feeling better or worse in terms of achieving that? And any sense of direction there would be great and kind of the drivers behind it.

From 90 days ago, stronger. Stronger because, as you recall, Joe, I guided last call, I gave color that I actually thought product backlog would decline. It didn't decline. It increased sequentially. And it increased because, yes, in part to Silvus, but also public safety LMR and a little bit of Video. So that was a pleasant surprise that obviously increases the floor, gives us more confidence.

In addition to that, Q1 is not only record backlog, but record orders. So between those 2 records and product backlog coming in stronger than expected, yes, I and we feel better. And I think the rhythm of the business is good across the portfolio. You saw the start to video, 16%; Command Center, 27%. We incrementally increased as part of the $100 million, $12.7 billion to $12.8 billion, the guidance around Mission Critical Networks.

When I think across all 3 technologies in both segments, Joe, I feel good. I feel very good about where we are, the pipeline in front of us and the visibility we have. We have to execute. We'll stay focused on that. But yes, it was a pleasant surprise. And I think it's a reflection of the durability and longevity of LMR, which is foundational, the ecosystem with AI being connected throughout all product emergency workflows, and we're seeing that resonate with our customers. The Summit feedback was outstanding just a few weeks ago in Orlando. So product backlog end of the year, I expect it to be at comparably strong levels from where we are now.

Our question now comes from the line of Keith Housum with Northcoast Research.

Jason, can you remind me your software and services number, how much of that is recurring revenue? What's the percentage of recurring?

We view and have asserted that software and services is our proxy for recurring -- sorry, Keith. So really, in our view, the definition of it is it is recurring.

Okay. So what we see here in this quarter is really a significant step-up year-over-year, and that we will be able to carry that through for the rest of the year, the growth that we're seeing, correct?

Well, we've guided to S&S performance being a little less than the 18% it started off at. As we mentioned on the Command Center side, there are some activations that come with a recurring true-up. We mentioned those 3 to 4 with Tier 1 cities. that are large that were in the Command Centers, Keith. So those are now live, and that was in part what was in the 27% as well as in the 18%. But we are very excited about the growth prospects of S&S as we look forward.

Okay. Appreciate that. And then you guys still expect double-digit growth -- order growth for the year? I think that was the commentary you guys provided last quarter.

Yes, yes.

Our next question comes from Ben Bollin with Cleveland.

Greg, I was hoping you could comment or Jack, a little bit about what you see happening with the timing of Congress passing funding for DHS. Any influence on the backlog rev rec during the quarter or how that flows through to the model for the remainder of the year?

Yes. Ben, no, we're monitoring, obviously, what's happening in D.C. Listen, as it relates to federal, we had a great 2025. We expect growth -- comparable growth in 2026. If you think about it, everybody -- all agencies are funded except for ICE and CBP, who basically have a pretty significant budget tailwind through the One Big Beautiful Bill Act. And I think that's important to point out.

I would also remind you that we had a $148 million DHS order in Q1 that was funded through the OB3 Act, not only an APX NEXT, but also an SVX order tethered to that. So as we play it forward, we think we're in a great budget situation with the federal government. We're always monitoring what happens in D.C., but we think it's immaterial, and we think this -- it's all implied within our guide for 2026.

And a follow-up, when we think about near-term opportunity associated with World Cup, how should we think about that capture opportunity or incrementality of that for 2Q and beyond?

Sure. So we've had -- so -- I'd just remind everybody with the World Cup, and we're working with all those cities, and we've generated business in all those cities. A lot of that -- more than half of that money was earmarked for counter UAS systems that were not in place in the stadiums.

But with the other monies that were available, we have seen APX NEXT refreshes. We've seen a significant -- and this is important, a significant amount of business for us was in the SmartConnect. So think about it connecting public safety to private stadium systems. We've had business there. All of that -- it's been generally conducive, but it hasn't been a big driver of the business. In fact, it's been about $40 million all in with the World Cup City sites.

Our next question will be from Andrew Spinola with UBS.

I think you had another fairly large SVX win this quarter in the press release in your federal business. Wondering if you can just comment on the momentum in that SVX product line and specifically highlight why you're so bullish on the federal business, what you're seeing there and what that opportunity looks like?

Sure. We've said the market wants an alternative. We're really excited, but I think we're more excited because of the demand signals we're seeing from our customers. To your point, we secured a significant DHS order, as I just alluded to, with SVX tethered [ APX NEXT ]. But to date now, we've seen 100 customers with SVX. And I think the most important metric that we're following is 30% of those customers are utilizing video. We've completed some deployments, namely Arlington, Texas.

By the way, that's a World Cup site. Buckeye, Arizona; and Marion County, Florida as well. Playing it forward, we're monitoring weekly the pipeline. We've got hundreds of quotes out to customers that want an alternative and they're looking to continue -- our sales team continues to look to work to seed the device into the marketplace.

And just the 30 customers utilizing video are doing so with AI assist. And oftentimes, as you know, we're doing it with 1 device, not 2 because it's converged with the body cam and the remote speaker mic. We're doing it with compelling total cost of ownership, which is much more affordable and attractive.

And by the way, we're doing it now and can move back-end data pretty easily in a matter of depending upon the size of the repository, but we can easily switch a customer with the incumbent provider over to Motorola Solutions with SVX and Assist and migrate that back-end data and that all of evidence management since it's owned by the customer in a matter of many times weeks and sometimes a couple of months, but we are doing it now on a regular basis.

And maybe related to that as well, with narrative Assist that's attached to our Command Center Records Management platform today, just compared to December, we have seen an 800% increase in the number of completed reports that are generated with Assist. So the adoption of these technologies has also increased quite dramatically.

Interesting. Just one other question, one follow-up, a separate question. Thinking through Q1 to Q2 trends in mission-critical on the product side, how should we think about Silvus in general? Obviously, it's in a pretty strong growth ramp. Is there any reason to think that there's either seasonality from quarter-to-quarter? Or was Q1 stronger? How should we think about modeling that in Q2?

Well, I would first say, again, demand is strong and orders are strong. We talked about the additional investments in go-to-market and R&D and the capacity expansion that Molloy's team is taking. I think when you take a look and step out and look annually, it isn't exactly a linear business. Projects are an important part of this business, which don't necessarily allow you to take a quarter and just extrapolate times 4. But we do feel good about the shape of the year. We continue to invest. And at the end of the day, as we sit here in May, it's -- I consider and we consider the guide prudent, and we'll update you again in August, but demand is really strong.

Our next question will come from George Notter with Wolfe Research.

I was just curious about the backlog metrics look really good. I'm wondering if there's any change in the duration of orders. Anything that might help kind of skew that backlog metric up? I'm just trying to understand how much I can rely on that backlog metric as a gauge for future growth.

No change to where we were positioned on the backlog from this point last year, both in terms of when we expect it to ship, George, but also the duration on things like S&S, which you know is a multiyear. So we look at backlog as a function of informing our guide as well as looking forward to what we will earn in orders, quick turn, which is also an important part. And again, much like last year, our setup here as we sit here today is for a strong backlog position, complemented by continued strong orders is what's informing our guide and our raise.

Okay. Super. That's great. And then one other one. I was just curious about the Bell Canada LMR acquisition. Any sense for what that would look like financially? Is it accretive? How much revenue would that drive? Anything else you can tell us there would be great.

Well, it's about -- it will bring to us approximately $100 million of the recurring services, managed services operations, which you know that we do elsewhere across the globe. It's a number of underlying customers. There's potential to serve those customers better and deeper in other areas. But the starting point is the $100 million of recurring managed services business, which again -- and again, we expect to close that in Q4. We'll have some more details on that as we close.

Our question now comes from Meta Marshall with Morgan Stanley.

Just maybe a question just in terms of kind of what was driving some of the strength that you saw in Video in the quarter, that would be helpful and maybe as a starting point.

As I mentioned earlier, Meta, we're pleased with our video performance, both in orders and sales. We had strong camera sales, which you can see in the products number. We had strong Unity sales and SVX, which we mentioned and Jack highlighted some of those deals is a driver as well. So overall, strong performance in video to start the year.

Got it. And then just -- and apologies if this has already been asked, just in terms of kind of thinking about LMR product for the remainder of the year, just in terms of kind of now that we're past some of the tougher comps, just how to think about that?

Yes. We talked about some of the double-digit comps from previous Q1s of a couple of years. I think to this quarter and probably, Meta, next quarter as well. Next quarter, we'll complete what we believe is the normalization post semiconductor supply. So we expect more robust growth in the back half of the year.

And when you think about organic growth, primarily grounded in mission-critical networks and LMR, we expect it to be stronger annually for the full year. '26 over '25, and we like the double-digit orders for product and the pipeline that Jack's team continues to provide. So I feel very good about the position of mission-critical networks and specifically LMR underneath it.

Our next question comes from the line of Tomer Zilberman with Bank of America Securities.

Maybe another question on the competitive landscape. Axon announced that they're entering the 911 call-center market through 2 acquisitions. I think that was just about a month ago. So I guess the question really is, how do you see that landscape of Command Center evolving? And is there any concern that they're going to be a lot more competitive given you kind of already interact with them in the mobile body-worn camera market?

Well, I mean, we could tag team it. But my view is, to date, we haven't seen a material change in the competitive landscape. I'm well aware of what they announced and suffice to say that we have visibility and opportunities as well. But we like what we have. We like what we're building. We like the fact that we're in over 60% of the 6,000 public safety answering points today. And we like the fact that we have the widest and broadest portfolio. Remember, you want to do prem, you could do prem. You want to do cloud, you can do cloud. But we also not just do both. We give you a hybrid solution to allow you to migrate from one to the other. That's unique in the market and no one else provides that.

And then when you overlay AI assist and a lot of people talk about AI, but we've been more quiet, but pretty pervasively intentional of putting it throughout our portfolio into the role-based suites. We announced responder, we announced dispatcher. Just think about the way Mahesh's team is embedding AI through all of public safety emergency workflow. And then when you look at it from a voice standpoint and the success we've had with SVX and Video being activated with Assist and a little over 30% of those, I very much like the position we're in.

The other thing to emphasize here, Tomer, is that we're not just an over-the-top solution here. Remember, a PSAP has 3 significant applications. There's 911, there is CAD and there are consoles. And one of the things we're doing with Assist, which is encompassed in the dispatcher suite is to address the connectivity via AI among those 3. And as I mentioned before, every one of our VESTA NXT sales last quarter went with the Assist dispatcher suite. So that's a very important element of it.

The other thing I'll say is that at Summit this year, we had a record number of attendees. We had double the number of AI breakout sessions that we had previously, and it was centered around really pushing the notion of the connectivity that Assist brings to bear across our applications, almost exactly like Greg explained. We also introduced Hyper at Summit, and Hyper was received incredibly well, bringing non-emergency call automation into the mix. And Hyper is also now tightly integrated with our 911 solutions as well. So when you think about it, Assist and AI is not just an over-the-top thing for us. It is really the fabric with which our applications and our ecosystem function together. So I think we're competitively set up quite well.

Our next question will come from Ryan Abbott with Piper Sandler.

I'm on for Jim Fish. The first question is on the SVX wins, what are customers liking? Like what's driving those wins? And what does the pipeline look like going forward? And I have a follow-up to that.

Yes, I'll start. I think, Ryan, what we've seen, customers like, first of all, I think there's -- it's a multisource body-worn AI-driven assistant. It's not a body-worn camera. It looks at -- I think as Mahesh just laid out, we look at things end-to-end. It extracts video from the Command Center. There's better knowledge base that's provisioned to a police officer when they get on the site. And so it's that. But I think we can't -- you can never walk away from the fact that just -- the audio, which blew me away, has blown the customers away when they look at it in terms of voice and just what that means to the device, too.

The last piece of it that I would say is when we're talking to people making financial decisions, is no longer it's not -- you don't need 2 cell phone bills. I think you're getting more and more value from the hub at the edge, which is the APX radio. And I think that's the economic value that it provides as well.

Maybe a few things just on the technical side to add there. Quite a few of radio users use ear pieces. And when you use the ear piece, the body-worn camera, if it's separate and distinct from the radio system itself, does not capture that audio. It is a significant contributor to what an officer sees and hears, which feeds into our assisted narrative and other AI functionality.

The SVX actually combines all of that together. In addition, from a connectivity standpoint, we leverage not just -- we don't need a separate connectivity piece in the body-worn camera, the body-worn assistant. It is tied to our APX NEXT units. So the TCO advantage there is quite significant as well. So we see this as an incredibly powerful solution.

And last but not least, on the digital evidence management side, our redaction solution assisted with AI has been powerful. Our customers love it. The speed with which you can redact is incredible. We often hear what used to take 35 hours before, now takes 1 hour, and that's a significant advantage for our customers. The time saving is powerful. I think the user experience all in all, is very compelling for SVX.

Great. And then on Silvus margins, are they still about in the 40%-ish range? And what should we see flowing through to next year?

We talked about EBITDA margins of about 45% for this year. Yes, Silvus is performing at that level, actually at the moment, perhaps a little bit stronger, and that's after the investments we've made in R&D and go-to-market. So particularly pleased about it's not only top line growth and robust orders, but the maintenance and continuity of the profitability profile that it's supporting itself as well.

Our final question will come from Amit Daryanani with Evercore ISI.

I guess you announced the Exacom and Hyper as well as the Bell Canada. I guess, how are you guys thinking about using M&A the rest of the year to address any more competitive gaps? And then how are you trying to balance that versus continuing organic R&D investment?

Well, the good news is the balance sheet position we're in is really strong. And we reaffirmed, obviously, today our expectation to generate approximately $3 billion in operating cash flow. You know that when you think about CapEx, the dividend and M&A. It's about 60-30-10, 60%, we can do share repo, 30% dividend, 10% CapEx. So I think we are sitting in a position. We purchased -- we bought back $118 million of shares in Q1. As we sit here today, just under $250 million of share buyback to date, but a lot of flexibility ahead, both inorganically and organically.

I think the investments we're making in the product portfolio, command center, video, fixed, prem, mobile, hybrid, cloud as well as Silvus as well as LMR on D-Series infrastructure refresh, first time we've done that in over a dozen years. The continued device refresh, the network layered resiliency. We have a lot of opportunity in front of us and good optionality with net debt-to-EBITDA sitting a little over 2. So I think we have a lot of powder, and I think we have a lot of opportunity. I don't think we have any "gaps" per se.

Bell Canada being a great example. That's an extension of a core business that expands the Canadian public safety footprint that's core of what we do. We know how to monetize services. We know how to upgrade the infrastructure. We know how to device -- do device refresh, and we know how to load applications on that P25 infrastructure and device footprint over time. So we'll see how it unfolds, but there's a lot of flexibility and optionality that's in front of us from here looking to the rest of the year.

This concludes our question-and-answer session. I will now turn the floor over to Mr. Greg Brown, Chairman and Chief Executive Officer, for any additional comments or closing remarks.

Yes. I simply want to say thank you to all the Motorolans and our partners for a great start to the year. I think we're really well positioned to execute on the increased expectations we outlined on the call. We just see continued strong, robust demand, not just in a strong pipeline.

But again, coming out of Q1, record backlog, fantastic order performance, and we like the portfolio investments we're making that are clearly resonating with customers, as Mahesh referenced just a few weeks ago with one of the best testimonials there with almost 2,000 people in Orlando. We've got a strong balance sheet, strong and robust cash generation and a lot of flexibility and opportunity in front. So excited about what's next and look forward to catching up with all of you on the next call in August. Thanks for dialing in.

This does conclude today's teleconference. A replay of this call will be available over the Internet within 3 hours. The website address is www.motorolasolutions.com/investors. We thank you for your participation and ask that you please disconnect your lines at this time.

Great. In this last minute before we get started, I will read the disclosures, the super boring part. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. For those who don't know me, I'm Meta Marshall, I cover networking and cybersecurity here at Morgan Stanley. We're delighted to have Motorola Solutions, have Jason Winkler, CFO, with us here today.

Thanks, Meta, and it's a pleasure to be here looks like it's a well-attended conference. So congrats on that.

Yes. Even the 4:50 slot.

Yes. I'm right in front of drinks.

Yes. Exactly .

Over the last year, there have been a lot of consternation just around backlog and tough comps that had weighed on the stock. As we emerge from that period and the stock has rebounded as well, what do you think that, that discussion missed about the underlying fundamentals of the Motorola story?

I think -- well, as you said, we completed a strong Q4 wrapped up a very good year achieved record operating margins of 30% despite some tariff headwinds. So what people missed, and not everybody missed it, by the way. I think you upgraded at mid-quarter. But I think there was some -- there's a lot of focus on backlog. We're in a record backlog position of $15.7 billion. And even products backlog is very strong at $3.8 billion. And what what we focus on in terms of demand and how the business comes together is about orders, what do orders look like? And beginning in Q2, we saw an acceleration in orders growth to be double digits. Same in Q3, same Q4, not only for the company but for products. And with that strong growth in orders and now that we're in a supply chain environment, where we're far beyond not having the available supply, we're able to turn and get things out the door in revenue. So the pipeline that informs the orders that Molloy and team yet, our supply chain is then able to deliver. So maybe people missed that. But we didn't -- we were, I think, pretty clear that the year when we put out a year ago was going to be accelerating growth in orders and more revenue growth in the second half, and that expectation continues. When we guided this year, and we guided it to another $1 billion of growth with 100 bps in operating margin expansion again for '26.

That too will be informed by strong orders and orders when we're able to receive an order and get it out the door timely, that revenue growth. And that's how the company worked for years, Meta, you followed us for a while. But for the supply chain crisis when, frankly, backlog was stuck -- we've always been a quick turn focused business, and it's supported by a pipeline that our sales team knows when deals are going to close, when they can be delivered -- and that informs our forecasting, and that's where we ended up on -- for the year and for the year we're now in.

Yes. Perfect. As we look at the LMR business, still kind of the majority of the revenue, where are we in terms of kind of Apex next upgrades? And overall, just how do you look at that growth profile? Or what kind of drives the growth of the LMR business going forward? .

Yes. So it's we think of it as a mid-single-digit growing business, inclusive of both product software and services. And that's before Silvus will probably talk about that. But the fundamentals of how that business grows are consistent, right? It's -- you said Apex Next, which is a device that customers really like that is increasingly selected by customers. It has more features has applications that are differentiating it. And that's a better sale for us and a better solution for customers. In LMR, the infrastructure, these are mission-critical networks. There's nearly a couple thousand of them in the U.S. and North Canada. They need upgrades in time. So we're now launching our D-Series infrastructure the prior infrastructure for these LMR networks, which we designed and implemented is over a decade old. So we're seeing customers like State of Tennessee, Colorado, a region in the Midwest, starting to refresh the infrastructure or hardware that goes with the networks. And together with that, they're signing up for more software content, more services contact. And and long-duration services agreements because they believe in the future of LMR. We -- LMR, as living and breathing and innovative as it's ever been. We continue to differentiate around it. So for example, the D-series, not only is it consume less power, more channels and coverage out of it. It also has yet another form of backhaul redundancy. It incorporates LEO. So instead of using microwave or whatever else a customer may use for backhaul. Now you have one more opportunity to connect these sites and resiliency is really important. So having the right product at the right time when the refresh cycle ahead of us for infrastructure, it's about a $2 billion a year business for us. We see that as an opportunity for sustaining the LMR growth that we expect.

Yes. an area that you guys have been talking more about, I think you focused on it at IACP this year is kind of noting that you have this kind of $300 per year subscription tied to the radio. What do these most often include? And just what are some of the newest areas you're introducing here? .

So the Apex NEXT Radio is not just an LMR mission-critical radio. It also has an LTE network embedded in it chipset. You can -- the customers choose whichever carrier they want to use. But what that allows -- remember, mission-critical voice is a narrowband application. It does voice exceptionally well. It doesn't do data. So with put those 2 together in a device that's mission-critical voice first and has an additional network in it. You can then through that pipeline, deliver over-the-air programming, the kinds of things we're used to like getting an iOS update. We don't even think of it -- before this technology that we innovated around on this platform, you have to bring an LMR radio back into the shop when you want to reprogram it or are you going to add a user or -- it's really laborious. So that's a pretty big app.

LMR networks are defined by coverage areas. So for example, the city of Chicago has a defined coverage area and the network covers exceptionally well. But if an officer leaves and goes to a lake in the Minneapolis, this is an extension of that range where they could go to an LTE and still communicate back with the [ home ] LMR range, does better other improvements like better location. And of course, it can ingest video. It's got a screen. So that applications platform, which we've offered first a few years ago has grown to 200,000 subscribers, a little over that are now on the platform. It's very sticky, and we see that platform count of users going to 300,000 by year's end. So Apex NEXT is a better device, solving a customer pain points that we benefit from both a better sale as well as an application stream that comes along with it. So -- and just to size it, dimensionally, there's -- we think about 2 million users in public safety, and we're at 300,000. So a long opportunity ahead of us to continue to have apps in that base.

Okay. That vectors kind of pretty interesting there. All right. Silvus, which I think we'll talk about more just given kind of the news over the weekend -- but the Silvus acquisition has certainly outperformed expectations, at least that you gave to -- the Street in the first few quarters, allowing you to raise expectations for 2026 to $675 million from $600 million previously. Can you just give a little bit of background about Silvus and just where you're seeing some of that upside?

Yes. So Silvus is a leader in mobile ad hoc networks that very strong use cases in empowering drones. So if you want to have a technology that empowers drones and allows them to communicate that the enemy cannot intercept, destroy, redirect, take down an impenetrable network, which is what these use cases require, that's what Silvus does. And so the expanding use cases and demand for drones, unmanned systems is part of the growth drivers for why we think that the business will grow to this year, we said $675 million over last year's annual calendar basis of $570 million. And the position that Silvus has both in a technology leadership, augmented by the things that we can help them with going deeper into some federal or international accounts where we serve them today with voice and we can now serve them with data is an area of opportunity. They have a great portfolio, and we think that together, we can continue to grow and perform. And they have a very strong EBITDA margin to start. So it's been a very good acquisition and one that we're excited about. And I think people are starting to understand it better. And it's not LMR substitute. It does something totally different than LMR. LMR does narrowband voice and it uses a different form of spectrum. [ Mana ] uses infrastructure list, high-band networking to do data and video, very different use cases. Now the commonality is they use RF. And they have very good RF engineers that are patented around [ man. ] We have exceptional R&D engineers that are patented around [ TETRA, P25 ] and DMR. So -- they're happy with their founder and their team likes being a part of Motor and we like in part Motorola [ too. ]

Yes. I mean just -- you mentioned kind of there's these opportunities for cross-sell. Just -- where do you think you are in terms of MSI either being able to sell to existing Silvus customers or sell of us being able to sell to kind of existing MSI customers. .

Yes. So Silvus for us is deeper into defense. So the demand that's in front of them, we think it's a $3 billion TAM and growing nicely, maybe doubling in the next 4 or 5 years. And that's really focused around areas where they're strong in defense. So we have a defense business. We sell to the German military. We sell to the U.S. military. We sell them voice communications. Now we can sell them data. So extending them and going deeper into certain accounts is part of the acquisition thesis. And we also think a very good sales team was 50 people. And with the right investments that we can make and adding to that sales coverage, we can help with their growth, help diversify their growth and go deeper into federal defense accounts. There are some use cases in public safety for a [ man ] network. It's not an area of focus for us.

Yes. Okay. Maybe just in terms of -- I know maybe to stop on solves for 1 more second. Just Ukraine had maybe you had been expecting when you initially made that acquisition that you were kind of winding down that revenue or at least taking it out of the expectations. That obviously seems not to be the case now. Just what -- can you give us a sense for kind of Ukraine as a piece of the opportunity -- or just expectations, not financial, but just how you see the Ukraine piece of the business.

Ukraine was a reason why they outperformed our expectations last year and continues to be an area where there's a lot of innovation development and demand. But at the same time, we're going into a broader base of accounts, including the U.S. Federal, including other international. So we see the growth opportunity for them being broader. But make no doubt about it, the innovation that's happening in Ukraine and how Silvus is getting better because of the adaptability and the features that are being developed for that. They're making the product better, and they're coming with demand, of course. But -- and the NATO ally and the support that's been given to them is only making the Allied countries more interested in their own drone and communications needs. So I think a proving ground area of opportunity for everybody else to learn from is how we see that at theater.

Another area that you guys have talked about with Silvus is just kind of the border defense area in this kind of being one of those areas where we might see those OBVA funds. Just where are we in terms of kind of how that opportunity could develop? .

So OBVA funds, new and incremental met the DHS and DoD are both getting roughly $150 billion, which is to be spent over 4 years. There are 2 areas where we are, I think, maybe 3 where we're really well aligned with that new and incremental funding for our customers. One you mentioned is the Border. And it's not just that Silvus networking could be an interesting use case for the border, but also we have a long-range thermal camera platform on silent Sentinel in fixed video. That's also a very important solution there. In terms of other areas of increased resources around the border, mission-critical voice communications is an area that they continue to look for more. And we just recently got our entire platform of Apex and the related video and audio accompaniment. [ FedRAMP ] high certified. What that means is we can now sell the full portfolio into the federal government and serve their needs. And yes, the funding is -- we're seeing some activity start with those ones.

Okay. turning to the video business. This largely kind of started with the Avigilon acquisition has expanded from there. It's continuing to grow double digits. Just where are you seeing kind of the biggest incremental opportunities on the video side? .

It did start in 2018 with Avigilon. They were $450 million in revenue about that. And at that point, it was probably the that was the beginning of the third leg of our technologies, right? Before that, it was LMR and Command Center 911. We've grown it. We've grown it organically. We've added a dozen or more acquisitions to where last year was over $2 billion in revenue. And it's really -- we decipher the business in 2 ways. One, fixed video. That's Avigilon. It's cameras dome and long-range cameras, it's the software and AI that powers them and it's some storage. That's about 70% of that $2.1 billion. The other 30% is body-worn cameras, the cameras in cars and license plate recognition and information around those. Those tend to be -- that 30% tends to be more public safety direction -- but to have guided another year of 10% to 11% for the overall video technology, and there are parts that are growing faster. Cloud is growing faster. Body warn is growing faster. So there are a number of significant improvements happening in the overall portfolio. But together, when we step back, it's a 10% to 11% [ grower ] over double digits last year. And the total TAM to dimensionalize at $2.1 billion in revenue for us last year. $37 billion TAM. So a lot of opportunity. It's pretty fragmented. We like our portfolio. We like being in a fixed video, cloud as well as on-prem. Customers want a choice. Some customers want the on-prem and some want cloud. We offer an indifference to either model. In fact, we offer a path where if you want to do prem today and you want to migrate to cloud tomorrow, the sure path. So we like the overall market dynamics. We've been taking share for a number of years.

Yes. Okay. You mentioned kind of the body cameras. Just what has been the response to the SVX and kind of the coupling of the radio and the body camera?

The response has been very good. In terms of the unit count last year, we deployed 15,000 units of the SVX, which just to remind everybody is not only a voice and body want assistant, but it's also fully featured video capabilities, along with the digital evidence back end that we have as well. So when fully enabled. It can do everything a body-worn camera can do along with mission-critical voice. So happy with the deployments thus far. Day 1, most have come out of the box in an audio capability. And by the way, it can do translation, which is a pretty important feature for law enforcement media translation in the field at the edge.

And then every one of them represents an opportunity to not have to need another body-worn camera. That's an additional sales opportunity for us and one that we're actively working on.

Got it. You mentioned kind of being agnostic to whether a customer wants subscription or premise, but you've noted kind of this headwind, at least from kind of the subscription transition on the video piece. But maybe showing up kind of in a higher software backlog number. And so just how should investors think about this kind of subscription impact on the video.

So we report the business in 2 financial segments, Products and SI and software and services. And software and services has been growing generally over a multiyear view faster than that of products. That's where the more and more of the value and the innovation is. So to the point where last year, 38% of revenues are from software and services. Within there, that's a proxy for our recurring revenue is cloud. Is cloud applications for video, fixed, mobile, the apps that we talked about around Apex NEXT. The future of SVX monetization is all there. And so as that business continues to grow, and by the way, the backlog shapes around that same dimension, too. The $15.7 billion of backlog, almost $12 billion of it is in software and services. That's a multiyear strength indicator complemented by the strong product orders growth that I mentioned earlier. That's how we put together our year's outlook. So continued business model transformation towards more and more software and services but it really does start with a differentiated device portfolio, too.

Yes. Okay. Perfect. Maybe moving on to the Command Center business. This is an area where we're starting to see a little bit more AI come into. You recently introduced some product extensions here. How does that change kind of the TAM of the market that you see? Or just how does it change how you see the market opportunity?

So Command Center for us is about a -- had been a $20 billion TAM. And with the introduction of these role-based suites that we've introduced for the first responder to help them write a report and as well as for the dispatcher to do their job faster and better. That's added about another $2 billion of TAM. So TAM got better. The opportunity increased -- and Command Center for us is a full -- we're deeply embedded in the command center. It's call taking and call routing. [ There's 6000 911 ] centers in the U.S. We're in over 60% of them with one or more parts of our portfolio, increasingly more -- there's applications that I mentioned earlier. And then there's also computer-aided dispatch or dispatch getting the right resources there quickly and the records of what happened during a given call that goes and flows through to judicial system. Being in all 3 of those is really a differentiator. And in the nervous system of the 911 center, it's CAD and to be there and to have these platforms and trusted customers trusting us and doing more puts us in a position where this year, we think we'll grow another 15%, which is the growth that we printed last year. So in a market that isn't growing 15%, it's more like mid-single. So good customer engagement, strong integrated portfolio, and I like where we're at with the addition of now [ SVX, ] Increasingly, the edge devices, the body-worn cameras, the audio device -- mission-critical audio devices. All that is being is converging towards the central nervous system of CAD records in the 911 software center, which is really integral to 911.

Got it. More on that AI discussion, you've noted kind of a version of your report writing software, where edits an already drafted report versus kind of some alternatives, which take a first draft of the report. Just why do you feel like this is the direction to go in?

Well, for us, we think human in the loop is the way to go around enabling this technology. It's been that way since we started with AI differentiation in video. And -- so having AI assist or [ ad ] perspective, we think, is the right way to go. And keep in mind, the report writing assist for us isn't just helping [ decipher ] what happened in the video clip. That's 1 mode. What happened in the audio channel? What happened -- what did the dispatcher here, say? What happened in the video that was being streamed from the command center to the device? We view those multiple modes, which this device and our solution ingests and helps write a report. We think that's a better way of approaching and making the officer more efficient, and that's our differentiator on how we're enabling ultimately, what officers want, which is a little bit of help in automating the mundane and doing it accurately.

Got it. Okay. Memory pricing, obviously, has been a topic of discussion here today. A big concern with any hardware company. I think one of the biggest pushbacks that I got when we upgraded you guys was, well, what about memory. I think what do investors need to understand just kind of about what your [ guys' ] memory exposure is?

Well, first of all, I think we dimensionalized last year's direct material input. We use -- I mean most of our printed circuit boards have DRAM and flash, right? And then that enables mission-critical audio video cameras and the like. So last year, we spent about $50 million of [ DM ] enabling our portfolio last year. We are planning for an increase, just like last year when we set together set our financial plan we knew there would be tariff impacts. So there are certain things you can control and there's things you can. And so we're planning for in-year cost reductions elsewhere in our $6 billion of COGS to mitigate the risk around paying more for memory, to mitigate the risk that we still have around tariffs in the first half of this year. But there's opportunity elsewhere. And together, with the envelope we put together in our guide, we expect to grow operating margins this year 100 basis points. We'll face headwinds from tariffs. We know that. We'll face headwinds from memory. But there are a number of areas in the portfolio that with engineerings help and vendor consolidation and doing designs differently that we can create cost offsets to mitigate the impact of those things. And we also too, with the growth profile we mentioned. Software and service is growing faster than products in SI has a margin accretiveness to it. That's been with us, and we expect that to continue.

Devices. Customers trending towards a more feature-rich device gives a little bit of an ASP tailwind as well. And we'll continue to mitigate memory like we did semiconductor crisis, right? It's -- how much are we using? Are we using it in the right way. There may even be some opportunities in certain parts of the portfolio to pass it on through price, which we've done before, too.

Yes. Okay. Public safety and defense is maybe seeing this whole host of kind of new companies come to market. How do you view the competitive landscape and just the opportunities to kind of leverage your balance sheet or be more active kind of within the market?

We like our position. We like the competitive differentiation. It's a tough market to enter and sustain the leadership position in. Part of that's enabled through our over $900 million of R&D per year. Part of it is us continuing to be M&A mindful of things that can make us better and companies that strengthen our portfolio. So having the balance sheet to do the M&A part, having the discipline to do the R&D part, and do R&D with the highest yield, for example, half of our R&D now goes to our fastest-growing businesses, which is -- we talked about video, and we talked about 911 center. Those are areas where we're making more R&D investments. LMR, we still invest sizable amount in LMR and with our leadership position, when we bring to market a D-Series, that can lead to growth. When we bring to market an Apex NEXT and customers like it. that can help with growth. So I think it's about the staying power of the R&D, the balance sheet and having discipline around staying in areas where we can differentiate ourselves and be strong. If you think about our Chairman and CEO. He's built a great company with a lot of our being on the team of getting out of some really bad businesses, differentiating around where we could win public safety later acquiring around video and now Silvus sustainable competitive advantage and good margins, cash and growth are how we try and make decisions.

And then just maybe a question on kind of capital structure and just kind of optimizing capital structure and how you're thinking around that, just given that you're continuing to kind of crank out more margin out of the business?

Yes. So our -- the model that's been with us for how we use our cash flow, our growing cash flow is for about 60% of it to be available for either M&A and buyback -- M&A or buyback, we've done both. 30% goes to support the dividend, and the remaining 10-ish percent is for capital, which is. And even within that, we can step up from there. For example, last year, with Silvus, it went bigger in one direction. The balance sheet can sustain it. We're still at a net debt to EBITDA of just over [ 2. ] Again, the strong cash flow of the company gives us a great position to be in with our credit rating and the ability to flex up when we find something like Silvus. But the opportunities where we are now have in front of us for M&A are in areas like video and software. And we'll continue to look for things that make the overall portfolio rounded out better and also integrated better. The convergence that I mentioned earlier is 1 where we want to lead. You want a video solution that's well integrated with all the other things that we do, we want to lead in that.

Got it. Maybe just a last question for me. Just given news over the weekend, just any -- like should we think of kind of opportunities for Silvus nearer term in some of these kind of new markets in which we're seeing kind of activity?

Yes. So I think we're all seeing the footage on CNN and and the likes around just how important drones can be the whatever is happening. And I think the demand for drones, some of our strongest largest customers for Silvus include the largest drone manufacturers as demand is very strong. I think those are just reminders and the geopolitical environment is one that it's challenging and safety, security, border, defense, these are areas where our portfolio helps.

Okay. Perfect. Any last questions from the audience? Your work -- in between now and the end of the day. So Jason, thanks so much for being here.

Thank you for having us. It's a good conference. Thank you.

Okay. As we're getting settled in, I'll just start with the introductions here. Thanks, everybody, for joining. My name is Adam Tindle, and this is part of my connected devices coverage here at Raymond James. Thrilled to have the team from Motorola Solutions. They've been a long-time participant in the conference. And this year, we have the special privilege of having Greg Brown, Chairman and CEO.

In terms of our format, just going to do a casual fireside chat. I would love to keep it interactive. If you do have questions, please feel free to raise your hand. I structured this fireside chat to give you a little bit better view of Greg's philosophy around capital allocation and the company's philosophy around capital allocation in particular. So we'll go through some historical examples because I think it's really important just to understand sort of the overall psyche that goes into making Motorola what it is today.

For those of you not as familiar with the metrics on the company, Vicki and Brian have done a great job of just giving you a summary slide of how the business breaks out that you can see up here. And of course, if you need models or anything like that, I'm happy to provide those.

So with that, Greg, thanks again for joining.

Sure. Thanks for having me.

Would love to start at a high level with your philosophy to value creation. And I asked you this question a couple of years ago. I just love it. I talk about an old quote that's attributed to you that says something like, ''I wake up in the morning, and I think about 2 things, my people and the allocation of capital." So I'd love to start with your high-level thesis or guiding principles on value creation.

Yes. I mean it sounds like CEO hyperbole, but it's not. Because capital allocation is my job as CEO, and that's a nice way of saying strategy and where we're going to spend money. What are the budgets, how much are we putting in R&D, what goes in sales and marketing, what should the dividend yield be? When should we or shouldn't we be buying back shares? When should we be acquiring a company? And I think we've gotten quite good over capital allocation, in particular, acquisitions over the last decade plus.

And I focus on people because I can be the best speaker in the world. I can have power points that bring a tear to your eye. It doesn't matter, but it's all about the executive team in the firm. And do we have role clarity, can we execute? Do we have incentives that drive shareholder return? And I think that you talk about psyche and philosophical emphasis. It is very clear to me and the team that we're here for total shareholder return.

There's a lot of other benefits in commensurate that a CEO and an executive team does running a public company, but it's about total shareholder return, and you got to grow the top line, but that's not enough. You got to expand operating margins, you got to grow cash flow. You have to have a competitive moat that allows some earnings and cash flow predictability and you continually have to innovate.

So we have 80 vice presidents. We have about 23,000 people, 80 VPs. I probably stay in touch with, I don't know, the top 150 people. They all have my cell phone. We text, we call, I ask a lot of questions. I do many skip levels. I want to know because the biggest risk for a person in my job is not having the best information, the most current information and a lot of people want to tell me good things, right? Greg, I'm doing well. I'm going to make my forecast, I want to know what we're not doing well. And I have to create an environment that's disarming and transparent that I know the real deal about what's going on in the pulse of the company. So that's how we run the firm.

Love it. And when I'm talking to investors about Motorola, there's some misconceptions. A lot of people think about Motorola handheld phones that they may have known from many years ago. But Motorola Solutions or MSI was formed as a unique decision to actually shrink the company. We often come across the ''Empire Builder Syndrome'' or a leadership philosophy that would be resistant to shrink a company often to the detriment of shareholders. So maybe just take us through that initial decision and rationale? And how does that influence your decisions looking forward?

Yes. And my entire focus is about value creation, not size. When I first came into the firm in January of '23, I was running the ''public safety division.'' They've had an acronym called CGISS, not a marketing phrase: Commercial Government Industrial Solutions Sector. And I remember telling Chris Galvin, who hired me in a nice way, I said -- and remember, Motorola used to be a conglomerate. In addition to the cell phone, we had automotive electronics, we had semiconductor, which ultimately became a spin-off with Freescale. We had set-top boxes. And remember telling the board 9 months and they said, what do you think? You're the new person. And I was the only senior executive ''hired from the outside.''

And I said, I think there's one really good business in Motorola, one, and it's the public safety business, a business most people don't know about other than our end-user customers. It doesn't get capital oxygen or retention because it was a sliver of the conglomerate and the identity of Motorola was the cellphone because Motorola invented the cellphone in 1973, commercialized it in 1983. And over time, in addition to the brand identity, it became the largest revenue division of the firm. So there was the cell phone and then nothing else.

I remember saying also that my view was we should get out of the cell phone business. This is pre-Android, pre-iPhone. I said, if you look at what Motorola has done well historically, it's a great company that innovates, but it fails to sustainably compete and going through the commercialization stage. We invented the car radio. We invented the portable TV. And in many instances, they were consumer innovations that got eviscerated by the Japanese, Taiwanese and Koreans on scale and margin.

And I said the same thing is happening to us in cell phone at the time, LG, Samsung, we will lose. We're going to lose on scale. And the dirty little secret of the cellphone business was it had multiple chipsets, multiple software stacks. Again, pre-iPhone pre-Android, and I said this is a crisis waiting to happen. So then the iPhone gets introduced a year before I get the baton to run the company. Android came later, one of the best decisions I think we've ever made is to get out of that business. As you all know, 90% of the margin profit pool accrues to Apple. And the thing I knew Motorola wasn't, it's not a software company. It was a consumer electronics company, and I said the only difference is public safety.

So I said we're going to get smaller to get more valuable, and it's about doing less to do more, focus, focus, focus, and the public safety business which we doubled down and tripled down on has served as the core engine to provide handsome total shareholder returns for the last -- since we split the company. Total shareholder return as of Friday, when we broke up the company and Motorola Solutions was RemainCo. We spun off the cell phone business. It got acquired by Google. They were going to be the vertically integrated. I'll do hardware and Android and compete with Apple's hardware and iOS. They didn't want to do that. They then sold the company to Lenovo. But PSR since January 1 of '11 is over 1,560%. I track it every week. It's ultimately our scorecard. And having said all that, no one cares about what was done. It's all about future value creation, which is my focus.

I'm going to ask one more historical, and then we'll get into current company. Just because it's -- I find it so interesting, your experience over the years. And along the way, you've worked with some high-profile investors, whether it's Carl Icahn, Silver Lake, et cetera. We often find CEOs that become threatened by key investors like this that can be a little bit more agitating. You embrace them. So maybe just speak to some of your key learnings from those investor interactions over the years and how that's helped to shape your thesis around value creation.

So I was saying to Vicki and Brian this morning, this is my 19th year as CEO. In every single year, we and I have had either an activist not just invested on the Board or a private equity firm not only invested but on the Board, 19 out of 19 years. Icahn actually was a choice. He kind of forced my predecessor out. I asked the Board to settle. I wanted him inside and not agitating because at the time, even though Carl would admit he's not an operator, he may not admit it, but a lot of his arguments were right.

We were wasting capital on the cellphone business. We had excess cash. And I said, I don't want to fight Carl Icahn. I want him inside the tent, if you heard me say [ fishing out instead of outside fishing in ]. We signed a standstill agreement. He came in.

I will tell you, Adam, I am a better CEO because of ICON, because of ValueAct. Silver Lake was on the Board 11 years, and they have 2 co-CEOs, Egon Durban and Mondre. They both were on the Board. And people said, you did a $1 billion pipe with Silver Lake. And you get them 2 Board seats. Why did you do that? And I said, because I couldn't give them 3. They helped in Board governance. They helped this pristine focus on TSR, alignment and clarity.

And I like -- look, my view is we should have as many smart people challenging me, not just inside the company on management, but in the Board. And if I or we can't answer the questions, defend a point of view, not be threatened check your ego out the door and it's a meritocracy of ideas to drive value, then I don't think we should be and I should be in the job. So initially, was I concerned about it? Sure. And ICON was very intimidating. But over time, and I have friends with him to this day, I called them last Monday on his 90th birthday. He didn't pick up, that's okay. But it's definitely been -- it's gone from situational to where it's intentional on my part. I like an active set of smart people challenging me to drive value.

So fast forwarding to today, one of the key decisions, I guess it's been 5 years now kind of crazy to think about that, but investing heavily in capabilities around video, and you see on the screen how big that's become in terms of a part of the overall mix. And more recently, you made a significant investment to enter mission-critical mobile ad hoc networks. That's a mouthful. We'll get into specifics around that.

So I want to kind of ask questions on both of these, but we'll start with video and kind of go in time order. I remember, it's obviously been a home run in hindsight. But at the time, there was a lot of doubts around the Avigilon acquisition was kind of the starting point to get into that. Just take us through the process at the time to make that move. How did you weigh the various strategic options? And why was video the right adjacency to pursue?

So higher level, right, think of us as a public safety and national security company, more recently with Silvus. But before Silvus, think of us as all things public safety. And when you're doing that, you want to combine incident management with situational awareness to maximize a first responder or dispatcher's view of a situation. We lead in mission-critical networks called land mobile radio, and we provide significant numbers of public safety networks in North America and international.

Let me also stop and give you a very important distinguishing factor. So these "public safety networks. So they're private. When you subscribe to AT&T, T-Mobile, Verizon, they're public cellular networks. They're run by the operator. Your connectivity, your coverage, your connection, your throughput is dependent upon where you are and what their capital investment is. These networks, thousands of them, we sell are owned by the customer. They're private. They're not public. They're specialized. They're reliable. They're always on. They're designed for different coverage and capacity. They're fully encrypted. So these plethora of individual literally thousands of networks, you then build the infrastructure, monetize the services, provide applications and you do "device refresh.

You change out your smartphone on average every 2 or 3 years, maybe it's 3 years. In the public safety market in the United States, a first responder changes out his or her radio every 7 or 8 years. So the other thing, and this goes back to ideology. We are not interested in being a commodity business. That's why we're out of the phone business. We're out of the end device business. We view things around a system orientation.

And in land mobile radio for public safety networks, you sell the infrastructure, and you upgrade it, monetize services, provide later -- more current software releases and charge for them. You upgrade the devices and refresh those with spectrum efficiency and more capacity and you sell software. But it's an end-to-end system. In video, we bought Avigilon, not because it was cameras, but because it was an end-to-end system orientation. Edge devices infrastructure, software analytics. So we would go in and sell an end-to-end video security system to end-user customers.

The other thing I liked about Avigilon was it was sound technology. They had a culture that was compatible with ours. I thought it could be easy to acquire. Integration risk was low because we left them alone. We don't do video. So I said we're not going to buy this asset and smother it under mother Motorola. We'll do economies of scale for procurement. We'll do supply chain efficiencies. We'll do some back office IT but get out of their way on innovation because they know something we don't know. We know RF, we know radio, they know video. So that clear role clarity and bifurcation of responsibility served us well. And I like it because it brings in video from a situational awareness standpoint into the purview of incident management around our installed base of land mobile radio network.

The other thing I liked about Avigilon is when we bought it, I think it was 95% plus enterprise revenue. So I said, why can't we take this asset and put it over our existing sales motion and sales force in state and local government and public safety. And the last figure, this is a dated figure. When we bought Avigilon, they were $400-and-some million of total revenue. They're now over $1 billion, and we're over $400 million a year just in government, which was effectively 0 when we bought them.

So I always think about what do we bring to the table that's differentiating in the competitive landscape. We bring our balance sheet. We can talk about that. We bring an incredibly impressive installed base with relationships that are created and customized by each municipality county, state jurisdiction, and we bring networks. We bring mission-critical networks. And we are the leader in mission-critical networks. So when we capitalize that on incumbent position, build products and services that are adjacent, but relying on those core mission-critical networks, and we have the balance sheet to grow organically or inorganically, we can create a lot of value.

So that's going to dovetail into my follow-up. And I'm going to ask this one and then pause for questions. So if you do have a question, start getting that ready now. So we talked about video and kind of your philosophy on going into video, how there was questions around that at first. Feels very similar to, I'd say, the past year, if you're looking at your chart of MSI and you look at kind of middle of last year, they announced an intent to acquire a company called Silvus which got them into a new market, and there was a lot of investor questions and still our investor questions around that.

Significant acquisition, largest in company history, $5 billion.

$4.4 billion in cash. The earnout brings it to $5 billion. I hope to pay the earn-out. Love to pay the earnout.

So maybe you can compare and contrast the video entry to Silvus, the decision to enter a newer, less penetrated technological market and unmanned systems with a different customer base of defense seems kind of similar to what we're just talking about with Avigilon, but love for you to talk about that.

Yes. So we spent well over a year looking at Silvus, thorough due diligence. We went pens down I think, 3 different times. You're right. It's the biggest decision I've made on $4.4 billion in cash. By the way, even after buying that asset and closing on it last August, and taking out some short-term debt and commercial paper. We exited last year at net debt-to-EBITDA levered about -- a little over about $2.1 billion. Extrapolating going forward, it is very possible we could be underneath $2 billion from a leverage standpoint -- sorry, 2x levered -- less than 2x.

Last year, we generated cash flow of $2.8 billion. And if you -- we're a CapEx-light model, I like this. So I know now it's like the magnificent 7, the hyperscalers, the Magnificent 7s going to spend $600 billion in CapEx, and this is fantastic. Maybe it is. But that's not the business we're in. We are -- our capital allocation framework, I'll get to Silvus, 60-30-10. 60% of operating cash flow is either share repo or acquisition. 30% is the dividend, 10% is CapEx.

On Silvus -- so what makes Motorola special? Market leadership in mission-critical networks, market leadership in command center and a very competitive position in video security and access control, which is very fragmented. So we lead in 2 of the 3 technologies. In mission-critical networks, we have an RF or radio frequency culture, engineering orientation. We know how to curate customized build thousands of reliable networks. But they're mission-critical voice networks. They're mission-critical narrowband networks for voice for these public safety organizations.

What I loved about Silvus is it's a market leader in mission-critical broadband, mobile ad hoc network technologies. What does that mean? It means that great applications like battlefield communications. So this is used extensively in Ukraine at the tip of the spear and then battle-tested, no pun intended for the efficacy, latency, throughput, 550-plus node coverage.

So it is -- it's basically an infrastructure for unmanned, but it's infrastructure less. There's no towers or anything or fixed infrastructure. You buy these radios and you drop them into coverage and you instantly get a high-speed mobile ad hoc network. You can deploy it for wildfires. You can deploy it for a Super Bowl when multiple agencies and hundreds of thousands of people congest in an area. So it's best-in-class at the time, about 350 people out of L.A., spent a lot of time with their engineering group, wildly impressed. And when we bought them, Adam, I said whenever in August, we think they'll do about $475 million of annualized revenue. This is last year, with EBITDA of about 45% EBITDA.

We -- every time we reported, we raised that forecast to now in 2026, we expect them to do about $675 million, growing very healthy, 20% plus historically and 45% EBITDA with the investment in R&D, with the investment in go-to-market sales force, Silvus was doing great with, I would argue, a fairly relatively skeletal sales force. So why does it make sense? Because it widens the aperture of our mission-critical network leadership, narrowband voice, mission-critical public safety, mission-critical broadband throughput in mobile ad hoc networking. We're entering new defense.

I call it new defense because I distinguish it between the defense primes like Lockheed, General Dynamic, Northrop. This is different. Anduril is a partner. We sell to Anduril. We sell to AeroVironment. So this is the market leader platform that's driving sophisticated high-scale, high throughput, large coverage unmanned systems. You see -- unfortunately, you see in the last few days, another example of how important that is, but I think we're well positioned. So we bought a market leader. I think it can use the sales force of Motorola in NATO countries. It can use the sales force in D.C. for U.S. federal. It can use our balance sheet and capital to do other things. So I couldn't -- I'm as excited forget as excited. I'm more convicted today on whatever day is March 2, 3, than I was on the day we closed in August and the performance of that asset has been superb.

And I know you're headed to D.C. later this week.

I am. Thursday and Friday.

Good luck. Any questions so far for Greg?

Yes. Maybe -- so there has been [ deal ] from Ukraine and the [indiscernible]. Can you give us a sense of what will be the impact of [indiscernible].

So Ukraine has been a significant contributor to the growth of Silvus. In Q4, I mentioned Silvus overperformed as well, largely led by Ukraine, U.K. and Germany. And it provides pretty significant density of revenue in 2026 as well. Whether or not there's a ceasefire or a pause, our view and my view is you're going to need still this technology maybe there's a demilitarized zone, who's going to protect that demilitarized zone? You're still going to need the efficacy of border control. Who's going to survey that and defend against penetration on border?

So I believe even in a different war environment, there'll be significant demand from Silvus ongoing. And even if Ukraine's contribution decrements slightly, even though there's other use cases to be used, we're seeing engagement in the U.K., Germany and NATO countries that's ascending. So I think as we broaden the revenue contribution over a wider mix of theaters, I still think we'll be able to sustainably grow. Thanks for the question.

So I actually work my first job out of college was for one of your competitors. One of your only competitors.....

Shame on you.

[indiscernible].

I am kidding. I am joking.

[indiscernible] , at that time, I were hearing a voice chip segment. If you ask a most value isn't there [indiscernible].

100%.

My question is that looks over 10 years ago, how has that changed with new technology....

It hasn't. It hasn't. And it's -- I'm glad you brought that up. I see a lot of customers and the radio is as critical to them today as it was. Most police officers will go a whole tenure. They'll never fire their gun. They use the radio dozens and dozens and dozens of time a ship. It is their lifeline. So it's critical. We know how critical it is. And in addition to always continuing to refresh the technology, expanding and building out a highly differentiated patent portfolio, we complement the technology with resources because, look, when you put these systems in or CAD, they're complex, something is going to go wrong. Motorola Solutions fixes it. and we take accountability. And we don't nickel and dime customers and change order them to death. You gave us a commitment, we gave you our commitment and we'll fulfill it. So I'm just proud of the superiority of the technology and criticality of it as I am the people and the resources that surround it.

By the way, so we're also now selling public safety AI bundles, public safety assist suite around the first responder and a public safety assist suite around the dispatcher, which, by the way, the dispatcher is new in the industry. And I am amused by when I hear other people bundling products in an AI suite, they argue that it's the criticality and the nucleus of that is the TASER. Well, ask first responders, how often they use their TASER. It's highly infrequent. And so why would you build a bundle around a product that has low utilization instead of building it around a mission-critical product has high utilization.

Also as it relates to AI, I'll be quick. We have multi-source ingestion of AI. So the difference between us and our competitor in body-worn camera. Their body-worn camera relies on an LTE network. That's fine. 5G. For those of you that have Verizon 1.5 months ago, how is that working out for you? The difference is our SVX device is not only ingesting multiple sources, 911 information. We're in almost 2/3 of the public safety answering points in the country. It's taking CAD information.

It's taking radio audio which is not captured by the other guys, radio audio, all of the back-and-forth conversations on this fundamentally different. So what we're doing is taking that criticality of that radio and that network, which is as important today as when you were in the industry 10 years ago and building products and services that rely on that mission-critical always-on encrypted secure P25 public safety audio to differentiate ourselves from other offerings. So I'm glad you asked.

We're going to do a breakout in Cordova 3. We have time for you to bring us home, Greg. So if you do have more questions for Greg, please come down to Cordova 3, and we'll discuss further. But what's the final message you'd like to leave with investors as they think about Motorola today and in the future?

I think it's -- while we're proud of our record track record on TSR and capital allocation, you should know that we are focused about value to be created, not belts on the wallet in the case even last week or last month. Our team is focused on driving TSR. And by the way, if your stock goes up from X to Y, so what are you outperforming the peer group, are you outperforming the S&P? Are you expanding operating margins? Revenue growth is 15% or 5%. Well, tell me what the yield is on that. Tell me the operating margin expansion, the cash flow generation and then what you're doing with the capital. So I would just tell you that we remain maniacally focused on the value to be created, and we are not complacent or satisfied or taking a victory lap of what was. We're focused on what needs to be. And I appreciate that.

Let's leave it there. Thanks, Greg.

Thanks, Adam.

Good afternoon, and thank you for holding. Welcome to the Motorola Solutions' Fourth Quarter 2025 Earnings Conference Call. Today's call is being recorded. If you have any objections, please disconnect at this time. The presentation material and additional financial tables are posted on the Motorola Solutions' Investor Relations website. In addition, a webcast replay of this call will be available on our website within 3 hours after the conclusion of this call. The website address is www.motorolasolutions.com/investor.

[Operator Instructions]. I would now like to introduce Mr. Tim Yocum, Vice President of Investor Relations. Mr. Yocum, you may begin your conference.

Good afternoon. Welcome to our 2025, fourth quarter earnings call. With me today are Greg Brown, Chairman and CEO; Jason Winkler, Executive Vice President and CFO; Jack Molloy, Executive Vice President and COO; and Mahesh Saptharishi, Executive Vice President and CTO.

Greg and Jason will review our results along with commentary, and Jack and Mahesh will join for Q&A. We posted an earnings presentation and news release at motorolasolutions.com/investor. These materials include GAAP to non-GAAP reconciliations for your reference. And during the call, we reference non-GAAP financial results, including those in our outlook, unless otherwise noted. A number of forward-looking statements will be made during this presentation and during the Q&A portion of the call.

These statements are based on current expectations and assumptions that are subject to a variety of risks and uncertainty. Actual results could differ materially from these forward-looking statements. Information about factors that could cause such difference can be found in today's earnings news release, the comments made during this conference call, in the Risk Factors section of our 2024 Annual report on Form 10-K or any quarterly report on Form 10-Q, and in our other reports and filings with the SEC. We do not undertake any duty to update any forward-looking statements. And with that, I will turn it over to Greg.

Thanks, Tim. Good afternoon, and thanks for joining us today. I'm going to start off by sharing a few thoughts about the overall business before Jason takes us through our results and outlook.

First, Q4 was an exceptional quarter across the board with record revenue in both segments, record operating earnings and record operating margins. We also grew orders by 26% and ended the year with our highest ever backlog of $15.7 billion, up $1 billion year-over-year.

Second, our full year results were outstanding. Revenue increased by 8%, EPS by 11%, which marked our fifth consecutive year of double-digit EPS growth. We also achieved record operating cash flow of $2.8 billion, which was up 19%. We expanded operating margins 130 basis points that resulted in our first-ever 30-plus annual operating margin.

Finally, as I look to 2026, our record backlog position, strong demand environment, and expanding product and services portfolio are all informing our expectations for another strong year of revenue earnings and cash flow growth.

And now I'm going to turn the call over to Jason.

Thank you, Greg. Revenue for the quarter grew 12% and was above our guidance with double-digit growth in both segments and all 3 technologies. Revenue from acquisitions was $188 million, and the impact of favorable FX was $30 million. GAAP operating earnings were $944 million or 27.9% of sales, up from 27% in the year ago quarter.

Non-GAAP operating earnings were $1.1 billion, up 19% from the year ago quarter and non-GAAP operating margin was a record 32.1%, up 170 basis points. The increase in both GAAP and non-GAAP operating margins was driven by higher sales, favorable mix, improved operating leverage and was partially offset by higher tariffs.

GAAP earnings per share was $3.86, up from $3.56 in the year ago quarter. Non-GAAP EPS was $4.59, up 14% from $4.04. The growth in EPS was driven by higher sales, higher margins and a lower diluted share count, partially offset by higher interest and a higher tax rate.

OpEx in Q4 was $700 million, up $48 million versus last year, primarily due to expenses from our acquisitions. And the effective tax rate for the quarter was 23.6% compared to 22% in the year ago quarter, driven by lower benefits from share-based compensation recognized in the current quarter.

Moving to the full year 2025. Revenue was $11.7 billion, up 8% with strong growth in both segments. Revenue from acquisitions was $382 million, and the impact of favorable FX was $35 million. GAAP operating earnings were $3 billion or 25.6% of sales versus 24.8% in the year prior. Non-GAAP operating earnings were $3.5 billion, up $395 million, and non-GAAP operating margins were a record 30.3% of sales, up from 29% of sales in the prior year driven by higher sales, higher gross margins and improved operating leverage.

GAAP earnings per share was $12.75, up 38% compared to $9.23 in the prior year, primarily driven by a loss in the prior year related to the accounting treatment for the settlement of the Silver Lake notes, partially offset by higher earnings in the current year.

Non-GAAP EPS was $15.38, up 11% from $13.84 in 2024, driven primarily by higher earnings and a lower diluted share count, partially offset by higher interest expense. For the full year, OpEx was $2.6 billion, up $140 million, primarily driven by higher expenses associated with acquisitions and increased organic investments in our higher-growth businesses. and the effective tax rate for 2025 was 22.3% compared to 22% in the prior year.

Turning to cash flow. Q4 operating cash flow was $1.3 billion compared to $1.1 billion in the prior year, driven by higher earnings. For the full year, we generated record operating cash flow of $2.8 billion, up 19% year-over-year and record free cash flow of $2.6 billion, up 21%. These increases were primarily driven by higher earnings, and 2025 marked our third consecutive year of double-digit cash flow growth.

Capital allocation for 2025 included $4.9 billion for acquisitions, including our acquisition of Silvus, $1.2 billion of share repurchases, including $490 million in the fourth quarter, $728 million in cash dividends and $265 million of CapEx.

Additionally, during the year, our Board of Directors approved an 11% increase in our dividend, which is our 14th consecutive year of double-digit increases. We also issued $2 billion of long-term senior notes and $1.5 billion of term loans to fund the Silvus acquisition and repaid $322 million of senior debt during 2025. Subsequent to year-end, we've repaid $200 million of the $1.5 billion term loan, leaving an outstanding balance of $1.3 billion as of today.

Moving next to our segment results in the Products and SI segment, Q4 sales were up 11% versus last year, with 11% growth in MCN and 12% growth in Video.

Revenue from acquisitions was $151 million, while FX was $20 million favorable. Operating earnings were $667 million or 30.9% of sales, up from 30.5% in the year prior, driven by higher sales and improved operating leverage partially offset by higher tariffs. Some notable Q4 wins and achievements in this segment include a $180 million P25 system order for the state of Tennessee and expansion of the network upgrade that was announced last quarter. $162 million P25 device and SVX body-worn assistant order from a U.S. Federal customer.

An $81 million TETRA system for our customer in North Africa, a $20 million Silvus order for an unmanned systems provider and a $20 million fixed video order for a customer in Argentina. For the full year, Products and SI revenue was $7.3 billion, up 5% from the prior year, driven by higher sales in MCN and Video.

Revenue from acquisitions was $262 million and the FX impact was $20 million favorable. Full year operating earnings were $2.1 billion or 28.9% of sales, up from 28.1% in the prior year on higher sales and improving gross margins.

In Software and Services, Q4 revenue was up 15%, driven by growth in all 3 technologies. Revenue from acquisitions was $37 million, while FX was $10 million favorable. Q4 operating earnings in the segment were $419 million and operating margins were 34.3%, up from 30.3% last year, primarily driven by higher sales, expanding margins, inclusive of favorable mix, and improved operating leverage.

Some notable Q4 highlights in the S&S segment include a $201 million 10-year P25 services renewal from the state of Maryland. An $86 million command center order for an international customer, a $79 million P25 services and command center order for Prince George's County in Maryland. A $61 million TETRA services order for the London Underground in the U.K. and a $29 million TETRA services order from a European customer.

For the full year, revenue was $4.4 billion, up 13% compared to last year, driven by strong growth in all 3 technologies. Revenue from acquisitions was $120 million during the year and FX impact was $15 million favorable. Full year operating earnings were $1.4 billion or 32.5% of sales, up 170 basis points versus the prior year, driven by higher sales, expanding margins inclusive of favorable mix and improved operating leverage.

Looking at regional results. North America revenue was $2.4 billion in Q4, up 7% and $8.4 billion for the full year, also up 7%, driven by growth in both segments and in all 3 technologies. International Q4 revenue was $1 billion, up 26% versus last year with strong double-digit growth in both segments and all 3 technologies. For the full year, international revenue was $3.3 billion, up 11% with growth in both segments and double-digit growth in all 3 technologies.

Moving next to backlog. Ending backlog for Q4 was an all-time record of $15.7 billion, up $1 billion versus last year and up $1.2 billion sequentially, driven by the record orders we received during both Q4 and during the full year.

In the Products and SI segment, ending backlog was up $235 million sequentially, driven by record Q4 orders in both MCN and Video. For the year, backlog was down $323 million or 8% and driven primarily by strong LMR shipments in the first half. In Software and Services backlog increased $1.4 billion from last year and $945 million sequentially, with strong growth across all 3 technologies.

Now turning to our outlook. We expect Q1 sales to be up between 6% and 7% with non-GAAP EPS between $3.20 and $3.25 per share. This assumes a weighted average diluted share count of 168 million shares and an effective tax rate of 20.5%.

For the full year, we expect revenue of approximately $12.7 billion and non-GAAP EPS between $16.70 and $16.85 per share. This full year outlook assumes an average weighted share count of approximately 168 million shares and an effective tax rate of approximately 22.5%.

It also includes favorable FX of about $100 million, which is unchanged from what we assumed in November when we gave color on 2026. Additionally, we anticipate our strong cash conversion to continue in '26 with expectations of approximately $3 billion in operating cash flow.

And finally, before I turn it back to Greg, I wanted to share 2 highlights. First, some color on the segment growth expectations that are included in our guidance for this year. In our Software and Services segment, we're anticipating revenue growth of between 10% and 11%, and in the Products and SI segment, our expectations are for revenue growth of 7% to 8%. And for our technologies, we're planning for Video growth of 10% to 11% with continued strong adoption of our cloud offerings. And in Command Center, we're anticipating another year of 15% growth. And in MCN, we expect to grow between 7% and 8% with growth accelerating in the second half of the year.

Finally, I'd like to highlight the launch of our first-ever Assist Suites a couple of weeks ago. These suites integrate our most critical AI-powered applications around 2 key roles in public safety, the dispatcher and the officer. We've tailored these offers to assist these key personnel under a role-based pricing model of $99 per user per month.

This package offers our state-of-the-art public safety AI to our customers at a superior value, and much like our APX NEXT applications platform, we expect Assist to be another driver of recurring revenue growth while expanding our software TAM. I'll now turn the call back over to Greg.

Thanks, Jason. Let me close with a few thoughts. First, our financial performance last year was outstanding, and I'm encouraged by how we executed on several key product initiatives. We continue to invest in the technologies that our customers depend on. Evidenced by the successful release of SVX, our body-worn assistant, that converges secure voice, video and AI and eliminates the need for a separate body-worn camera.

We've shipped over 15,000 SVX devices since we launched, and we have a robust funnel of opportunities for the coming year. We're also seeing strong interest in our latest generation D-Series Mission Critical infrastructure from our P25 LMR customers, and we secured several large upgrades during the year.

Furthermore, achieving FedRAMP approval for our APX NEXT radios, the associated applications and our back-end digital evidence management platform are significant milestones that strengthen our position within the federal space, ensuring our cloud-based solutions meet the highest security standards.

Second, we continue to make significant investments in AI and just last month, Jason referenced it, we launched our first 2 public safety AI assist suites for 911 dispatchers and first responders, designed specifically to address the unique challenges of each role.

The introduction of these 2 suites is fundamentally about reclaiming the most valuable resource in public safety, time. We've built a broad-based ecosystem of public safety solutions and continue to use AI to intelligently ingest multisource data, 911, ED, the radio transcripts and body-worn information and synthesize it into a unified actionable picture.

When we take a police report that used to take an hour to write and drop it to 15 minutes with Narrative Assist or reduce the redaction time of mobile video footage from 35 hours down to 1. We're helping putting officers back on the street. Our introduction of these 2 assist suites, and by the way, there are more to come, underline our comprehensive approach to AI.

We don't see these solutions as point products. They're the integrated nerve center of the emergency workflow delivering real, verifiable value of AI to the people who protect our communities every day. Third, 2025 was a landmark year for capital allocation. We deployed nearly $5 billion towards strategic acquisitions headlined by Silvus, got us into the rapidly growing new defense and unmanned systems market. In addition, we strengthened our portfolio in cloud-native 911 solutions, AI-driven workflows, and remote video monitoring.

We did that while also returning almost $2 billion to our shareholders in the form of dividends and share repurchases. I expect our robust liquidity profile, continued solid cash flow generation and strong balance sheet to provide significant flexibility for capital allocation, including M&A and share repurchases.

And finally, I believe we're very well positioned entering this year. We're seeing continued prioritization of safety and security from our public safety and defense customers worldwide, driving increased demand for our integrated ecosystem of mission-critical technologies and our record ending backlog and strong orders pipeline continually highlight the trust our customers place in us.

And I'll now turn the call over to Tim and open it up for questions.

Thanks, Greg. [Operator Instructions] Operator, would you please remind callers on the line how to ask a question.

[Operator Instructions] The first question is from Tim Long with Barclays.

Yes, 2, if I could here. First, maybe for Greg or Jack, if you could just give us kind of an update on Silvus. Good to see a nice sized order in the quarter. I think you had been looking at about 20% growth for the year. Just curious, given all the developments around unmanned vehicles, if you think there would be upward bias to that?

And then the second question is somewhat related. You got Silvus obviously, with some Federal. A lot of FedRAMP certifications coming through with SVX, APX and APX NEXT. And obviously, that order that included some SVX. So maybe, Greg, if you could just level set for us how you're thinking about growth and traction now that you're set up in much better ways, it seems for the federal piece of the business here, whereas obviously, a lot of this was state and local. So just curious with all these moves that you made, how you're thinking about federal as a TAM going forward?

Yes. Thanks, Tim. Look, I and we couldn't be more pleased with Silvus' performance since we closed that asset and that acquisition in August. I think Molloy and his team have done a really good job on -- and Jason's, quite frankly, on integration.

We're putting more money into R&D. We're putting more money into go-to-market. We're adding engineers. We're adding salespeople. We're improving coverage. Simultaneously, while Silvus is pretty much stand-alone, we are integrating what you would think we would, procurement, supply chain, reducing lead times, cost of goods, economies to scale.

I'm very pleased with what both Jack and Jason have done. Look, Silvus had a very good Q4, there was Q4 upside that was driven by Ukraine and unmanned systems demand. By the way, Tim, when we look at 2025, revenue all in for Silvus, it was more international versus North America, primarily driven by strong demand in Ukraine, the U.K. and Germany.

We're raising our expectations again for revenue this year in 2026. We expect Silvus' revenue of $675 million in 2026. That's $75 million higher from expectations a quarter ago, and it continues to be a critical litmus test in Ukraine for critical defense -- new defense technology in unmanned.

Yes. Tim, and I think just a couple of things to build on. I think is really related to APX NEXT traction and SVX traction. So APX NEXT, as you -- as we've discussed before, we have 2 million, first responders in the U.S. that encompasses police fire and EMS. We now -- we've stated that we're going to have 300,000 users by the end of 2026. That's up from 200,000 at the end of 2025 that pay $300 a year annually in terms of app services.

So good traction on the apps. As it relates to SVX, just a couple of things. We did get FedRAMP approval for SVX as well as our digital evidence management I will tell you, we've got every field seller equipped with an SVX device. Interest is strong, demand is strong. The units that have been fielded, the feedback has been outstanding. And remember, it's a new category in and of itself. It's a body-worn assistant, it's multi-sourced.

I think that's where it's different. We've shipped over 15,000 units, but we expect significant more traction this year with quotes out to hundreds of customers, Tim. So we're really like we're really excited about SVX. And I think, as we've said, the market wants an alternative.

And as a customer told me, that I met with last week, it starts to become a total cost of ownership, and it becomes about platform unification, we know we need to talk, and this does a lot more for us. So I think it's a game on.

The next question is from the line of Andrew Spinola with UBS.

I have a quick question for Jason. I think the margin continues to outperform our expectations. I think, looks like you're guiding to some further improvement next year. Could you talk about your outlook for margin for '26? And maybe specifically about some of the puts and takes from tariffs and memory costs, et cetera, that you have in your outlook? .

Sure. Thanks, Andrew. So much like in '25, we're planning for another good year. '25 and the margin expansion we saw of 120, 130 basis points in OE at included a tariff headwind, which for '25 was in the second half. Now as we enter 2026, we plan for an incremental tariff, which will present itself in the first half, and that's about $60 million.

In terms of drivers for overall margin expansion and overcoming tariffs and other parts of the portfolio like memory that we'll see an increase. It's about continued customer adoption of our feature-rich devices and some of the devices that Jack just talked about as well as the continued uptake of APX NEXT, it's about mixing to higher growth parts of the portfolio, including services and software. And those growth drivers that drove '25 exists for '26, and we'll continue to expand margins and, of course, prudently manage costs and OpEx. That's what's included in our outlook for '26 is 100 basis points of operating margin expansion.

With operating margin expansion in both segments as well. .

Got it. And just 1 follow-up. Could you maybe drill down on the acceleration in the Command business that you saw in Q3 and then further in Q4? And then maybe just on that question, sort of maybe expand a little bit on your view on the 911 market, given some of the acquisitions that have been done, how do you see yourself positioned against the competition? And what's your outlook for that business? .

So I'll make 1 comment around the acceleration of growth, particularly in Q4 where we saw a 19% growth. Keep in mind that within Command Center is included our APX NEXT applications. And the uptake that we've seen in there has benefited that part of the business. And we gave an outlook on the last call that the 200,000-plus subscribers that we ended '25 at for APX NEXT subscribers would grow to 300,000 by end of this year. So part of what you're seeing there is that benefit, and Mahesh, there's other things happening. .

Absolutely. So if you think about a typical PSAP, there are 3 core workflows. There's 911, there's CAD and there's consoles. And when we think about our solution, we think about all 3 and we think about workflows across all 3. So as opposed to having any sort of AI capability that's an over-the-top instance, we actually embedded within our core workflow applications.

And this is critical to our Dispatcher Assist Suite, catering to that persona. And think about it this way, we've had transcription and translation now out for a few years. Just last year alone, there were about 33 million assisted calls out there. And now with the Dispatcher Suite, we're now able to not only facilitate that 911 call-takers's workflow, but also do things like create incidents in CAD automatically.

So the Assist Suite is now helping us connect the different pieces of the applications that are critical to that workflow. And all of that, I think, is leading to great traction within our VESTA NXT portfolio, which has been key for us, and we went live with a couple of large customers as well with that solution. So I think those are all the things that are leading to growth in the Command Center portfolio. .

Yes. The thing I'd add is just to remind you, VESTA NXT is Cloud 911 call handling, we've got the product. We've rolled the product. We're implementing the product. Some others are looking to, I think, catch up with us in that regard, that's fine. But we like the portfolio. The other thing to understand about Command Center, 15% growth last year, we're guiding for 15% growth this full year as well.

By the way, Q1 is likely to be stronger than that given the timing of certain implementations. But nonetheless, we think the full year will be equally strong, 15%, over 15%. It's also important to understand the connective tissue between the technologies and what we're doing with the Assist Suites.

So yes, Command Center is growing at 5% -- 15% expected to be for this year. Embedded in that is the expectation around assist suites. We're not just rolling out Assist Suites at $99 a month per user, which is much more competitive than some alternatives out there. It does more, it does things like CAD and Records.

By the way, we're the market leader in CAD. We are in almost 2/3 of PSAPs already. We're using our mission-critical network position, the superiority in a converged device with the body worn assistant, to do multisource ingestion and spread it to an end-to-end emergency workflow. So there's high connective tissue between the way we go to market, not just in the radio and SVX, but in the Command Center software as well through 1 salesforce. It will provide users with technology refresh, and I think we're very well positioned to continue to grow that, both businesses in an integrated way.

Market leader in CAD and 911. .

Exactly .

Two of the 3 largest cities in the United States under contract and being deployed. .

The next question is from the line of Adam Tindle with Raymond James. .

Okay. Greg, I thought backlog was obviously a highlight here very strong, and you certainly did what you said you were going to do. I know there was a lot of doubts on product backlog in particular. And you mentioned that -- I think it was record orders, there was a view that with ARPA fund -- funding expiration kind of impending and potential pressure from those that we might see subdued orders or moderation in that.

I guess as you kind of look at the lens in hindsight, why was that the wrong assumption to make for bears? And then going forward, any thoughts on backlog in the 2026 product backlog in particular? I know it's not a guide point, but just kind of general direction on where you're thinking that goes. .

Yes. No problem. I think, look, taking a step back, a lot of the narrative and inquiry around product backlog, you have to remember the context by which we and I talked about it, and that we were and are transitioning from historically record high product backlog that was elevated because of the supply chain semiconductor congestion in previous periods. So what you see us doing, and I've guided it around where I think it would be, we achieved that for '25. I'll talk a little bit more about '26.

But underpinning your question is we are getting back to the quick-turn rhythm of the way this business operates, normalized for the COVID backlog issue. By that, I mean, more than half of our revenues last year were quick turn. Remember, I define that as sold and installed in the same year. We're expecting the same thing in 2026.

Love the fact that we finished the year with record backlog all in at 15.7%. To your point, we were pretty confident. I'd say highly confident that product backlog would end in the high 3s. We did at $3.8 billion. But also, aside from just backlog, you have to look at orders. We've had 3 consecutive orders. Q2, Q3, Q4 of double-digit product orders. By the way, we expect double-digit product orders in Q1, and we expect double-digit product orders for the full year in '26.

When I look out a year from now, I think product backlog will likely be up versus the 3.8% exiting '25. It's going to bounce around as it normally did as it did last year. I think product backlog will decline in Q1 as it typically does from a normal seasonality standpoint. But I'm just thrilled with not just the backlog position, I'm more thrilled with the order performance and the pipeline and the consistency of execution by Molloy's team. That's what gives us confidence.

Adam, let me dimensionalize a little bit just Q4 and what that meant. Jack's team drove $2.4 billion of product orders, which was up $500 million from the year prior in Q4. That's a record, by the way, and it's a very strong indicator of demand.

Yes. One other thing I would just say, you talked about backlog. I want to dimensionalize just total revenue for the guide of 2026. We guided $12.7 billion. I think that the revenue will be very similar in 2026. It will come in very similarly as it did in 2025. And when you really look at first half, second half, we expect second half of this year to be significantly stronger than first half, but overall, feel very good about our position and the momentum we have coming into this year.

Great. All very helpful color. Just -- as a follow-up on a different topic, I thought 1 of the other highlights on the call was the 30-plus percent first ever full year S&S margin. I wonder if you could maybe just talk a little bit more about what's driving that, the trends and trajectory from here? Is there sort of an upper limit? I mean, we're already at very optimal margins for any sort of software business at that level. But just trends and trajectory how you're thinking about it from here and reflect on that milestone? .

Yes. By the way, just a quick one. It's not S&S margin. It's 30-plus annual operating margin for MSI for the whole company, which obviously is even stronger than just the segment. .

Yes. And if I drill down on S&S, it expanded from 30.8% to 32.5%, based on drivers like mix, like efficiencies in delivering Services and Software, et cetera. And it's on a path to continue to expand. So we had some years of the impact of Airwave. And since that, and it's now incorporated into our base, we're now growing revenue, and we're growing margins accordingly. So it's on path to grow operating earnings again this year, and the fundamentals are strong for it to continue. .

Next question will come from the line of Joseph Cardoso with JPMorgan.

Maybe if I could start for the first one. I just wanted to flesh out the 1Q guide a little bit. If I take out FX or make assumptions around FX and acquisitions, contribution. I'm calculating an above-seasonal decline sequentially relative to the past couple of years. you're obviously underscoring strong momentum in the business with 4Q results backlog, et cetera.

But so just curious what the puts and takes relative to maybe a slower start to the year, when I'm looking at it from a seasonal perspective on an organic basis, just because I think last quarter, we talked about the federal shutdown. Now there's some DHS in the news in recent events. So just curious if there's any some of these outsized impacts that are still kind of impacting coming into 1Q? And then I have a follow-up.

Yes. So as we mentioned, demand remains strong. We raised the full year from our color last call from 12.6% to 12.7%. Greg mentioned that the revenue growth in the second half, much like this year will be stronger. In terms of your observation on seasonality, it really depends on what period you're looking at.

As we look at the business pre-COVID, the seasonal decline from Q4 to Q1 is within what we would expect. And what's more important is that the product orders that we expect in the quarter to be up again double digits, which will be the fourth quarter in a row, are informing what's included in our guide for Q1. So our outlook for the year is strong, it's stronger than it was 90 days ago. And our outlook for Q1 reflects where we are with the product backlog that we have and the orders that the pipeline supports for Q1 and the rest of the year.

It's also worth noting that on an annual basis, 2026 over 2025, we're expecting full year revenue organic growth to be better this year over the last.

No. Got it, guys. That's fair. And then maybe just wanted to touch back on to the assist suites that you guys just announced, like I know it's early days, and you guys just put out these products. But I think, Greg, you mentioned more to come. So just curious like how should we be thinking about kind of the cadence here in terms of new product introductions.

Should we think about a pipeline that's more on an annual basis? Or is this kind of more pedal to the floor in terms of how you're thinking about introducing new products. And as we think about the new products coming in, should we think about it as additions to the existing dispatch and responder product suite? Or are you guys thinking about additional suites that you guys can monetize further?

So just as a -- looking at 2025 as an example, in pretty rapid fashion, we launched capabilities that are associated with Assist like translation, we launched before that assist for 911 supporting transcription, translation, summarization and other capabilities for 911. And since then, we have launched assist chats also last year, and all of these happened almost on a quarterly basis through the course of the year.

What you can expect as we fill out dispatcher and responder is a similar sort of cadence going forward. And as Greg had already indicated, there are more personas we are going to attack as well. If you think about the responder suite, in particular, think of it in 3 real significant buckets.

One, what does the responder need to do when they're responding to an incident? This is everything that includes things like translation, it includes capabilities like updating their CAD status. It includes -- by the way, with voice, the ability to now query Records platforms, the ability to query the transcript that was generated during the 911 call.

And -- It's actually very worthwhile to note that there's a statistic out there that says that 40% of the time when officers actually respond to an incident, they claim that they do not have the right situational information prior to that response. Everything that is involved in making sure that, that response is effective is what we're putting into that response capability for that initial part of the responder suite.

The next part is all the administrative tests. We launched assisted narrative, Narrative Assist last year as well. This is everything to help our officers be able to author reports very quickly, and the key point there is we're assisting them to author the reports as opposed to having a magical AI just have a button pushed in for it to author this capability entirely on its own.

And importantly, we're able to tap into multiple sources in CAD, in Records and other platforms to make sure that report is actually authored accurately. And finally, on redaction and investigation, we are able to now accelerate that very significantly as well. All of this, by the way, part of the responder suite.

As you can imagine, within response, within administrative efficiencies, within investigations and search, there are multiple other things that we can now do given our full holistic portfolio in public safety to accelerate that even further, and you can expect that cadence to continue. And so that hopefully gives you some idea on what's coming next.

The other thing that's new and different about Assist suites is much like we embarked on the APX NEXT platform business, is that it's a package. And you mentioned pipeline. Mahesh and team have a tremendous pipeline of new features. This package gives customers the certainty in the future of what we're delivering, not just now but into the future. And that's how we started with APX NEXT and built that business as well in terms of its applications. .

Next question is from Amit Daryanani with Evercore ISI.. .

This is Victor Santiago on for Amit. I just wanted to ask about Silvus. Historically, there's been more focus on military and defense applications. But can you talk about the public safety and commercial opportunities as it relates to Silvus and whether these markets would be incremental to the TAM you originally had in mind when you first made the acquisition? .

Yes. I think -- so the first thing as it relates to Silvus is it still -- we think of it largely our focus today is really around 3 areas. It's defense, as you alluded to. It's actually borders as well. So there's border police that's adjacent to defense that there's a market for. It relates to state and local, please, there's some issues just around spectrum with what you do it. You could have a special temporary authorization or stay to do it.

So Las Vegas PD, Metro PD has a stay to use it and they use Silvus' technology. but it would be incremental to the TAMs that we've kind of talked about if it happens, but it needs spectrum. There is so much room to run from us to do DoD business within the United States internationally, the expansion we're seeing and the traction, the groundwork we're laying throughout NATO, not just Ukraine, but it's all about NATO, Australian Navy.

We're in discussions with them. We've got a lot of opportunities just to run there. And then as Greg referred to and Jason referred to, the unmanned systems, the platform modernization in terms of drone technology, Class 1 to Class 5, all different types of drones. We've broadened the portfolio already at Silvus.

We're constantly thinking about size, weight power, how do we fit those in different classes of unmanned systems. I think we're uniquely -- with our spectrum-dominant software suite, we're uniquely positioned to do really well in the unmanned space. So law enforcement is great. We have a team focused on federal enforcement, but that's all incremental to the focus on defense, U.S. and abroad and unmanned systems.

The next question is from the line of Meta Marshall with Morgan Stanley.

Congrats on the quarter. Maybe a couple of questions for me. First, you mentioned some of the pricing actions you were taking probably largely around tariffs. But I just wanted to get latest views on memory just as an overhang and kind of availability and just actions that you guys are taking there? And then maybe as a second question, maybe building on Joe's question, the -- of the kind of $100 million raise, it looks like you guys are doing for fiscal '26.

The vast majority of that is Silvus. But yes, there's still kind of some across the other businesses. Just wondering where -- what businesses you feel kind of the strongest about heading into fiscal '26? Thanks.

With respect to memory, Meta, we are planning for increases. The costs have gone up on parts of our portfolio. But across our $6 billion of COGS, memory is not a significant input for us, probably less than $50 million. In terms of how we'll mitigate the increases that we are expecting. The same way we did semiconductors. We're working with our vendors. We're adding vendors. We're leaning in on public safety and our customer base being critical, inventory and, and to some extent, planning for surgical price increases across the portfolio as well. So with that, we do plan for gross margins to be comparable despite the headwinds of tariffs that I mentioned earlier as well as what's to come from memory.

And on the incremental $100 million, it's 12.6 to 12.7. You're right, given what we said earlier, it's about $75 million for an increase of revenue associated with Silvus, $25 million for the core. Quite frankly, Meta, an answer to your question of how do we feel about -- forget, Silvus for a minute, the rest of the components of the business and the 3 technologies, really good.

LMR is being driven by APX NEXT applications refresh, the body want assistant, SVX, the D-Series mission-critical P25 LMR infrastructure, Command Center 15% last year, expected to be 15% this year. Video, security 10% last year, guiding to 10% to 11%, with increased cloud adoption. And I think Mahesh in terms of architecture and intentions to unify cloud and prem, we feel good about that as well.

And we continue to add salespeople on the front-line Video sales force. So candidly, when I look compositely across the portfolio, I think we feel good about all of it, quite frankly.

The next question is from the line of Keith Housum with North Coast Research. .

Your AI solution has been out there for several months. I remember we're seeing a preview of that back in May. I guess can you talk about some of the early adoption you have and the success you've had so far, before rolling out this AI assist.

And then I guess, second part of that question, obviously, your competitor has their own AI package as well, which you guys are probably about half the price of that. Do you think your customers will have 2 different AI plans that they're going to want to use? Or do you believe it's 1 or the other as you guys start competing in the space more rapidly.

So as I think about the early adopters and such in the space, I think it's important to remember that assist for 911, we've been out there. We've been out there for over 18 months at this point. And as I mentioned before, there are about 33 million calls that were taken last year alone that benefited with assist for 911. So that is that is significant for us. We have -- as part of our SVX launch, extensively tested translation capabilities across the board. .

And by the way, that translation capability is also something we had originally within our 911 portfolio supporting not just transcription, but translation as well. When you have language as a base there, what is very natural to do, and I believe that this is what we have seen across the industry is things like summarization, things like being able to focus the call takers attention on the right pieces of data, all of those pieces become much easier and more straightforward.

But what -- where the magic is, is in being able to connect applications across workflows. And so -- very specifically, what we have done is leverage AI in this context to not just be something that is resident within a single application for supporting a particular user, but also linking applications across the board. So in this case, leveraging 911 to support a CAD incident data creation, leveraging 911 data straight to the first responder to improve their situational awareness.

These are all capabilities that are a consequence of us having the full Command Center and public safety ecosystem that is out there. In terms of do you buy the whole thing, do you buy 1 thing, we really want to give our customers as much flexibility as possible.

Obviously, as they own more of our portfolio, there are more things that are -- that come into play in terms of that tight integration between those capabilities, and there's more time saved as a consequence of those integrations. But we -- customers, we fully expect, given the applications, the core applications they have, they will expand from that point on and they can take it in the direction that they see fit based upon the performance of our solutions, which we are very confident about.

Yes. And the only other thing I'd add is, to your point, we're rolling out the Responder Assist suite, we believe it's more comprehensive. You mentioned the attractive price point at about half of the alternative. It's also important to know that the Dispatcher Assist suite is new. So it is additive to versus anything else that's out there. And of course, remember the interplay between the assist suite and the body worn Assistant SVX, we've been competing with the incumbent on body-worn camera, but this is a new day, a new day that we literally don't need a separate device.

You can go to one, you can converge it. You can use a more comprehensive set of AI. You'll get a better total cost of ownership. We talked about just getting FedRAMP approval. So if I'm a public safety customer and I'm looking at alternatives, I'd be wary of signing or being asked to sign this locked in long-term multiyear contract and make sure I stare and compare about what's really viable as an alternative because we think our value prop is pretty compelling.

Great. So the package here for the AI for first responders. Is that sold separately? Or is that sold as a bundle with your radios? .

I'm sorry, yes, the bundle is an incremental, the $99 is incremental to the radio.

In terms of the contract vehicle customers will have the choice. .

We're not saying you must sign 10 years or anything. It's -- you want to sign up for a year or 3, whatever it might be, but that's -- we're not planning the games. It's $99 and you're going to get more than anything else that's out in the market for $99. .

The next question comes from the line of George Notter with Wolfe Research.

Quite impressed with the growth in the software and services side in the LMR business. Obviously, you've been driving low teens growth and has been for some time now. I guess I'm just curious about what's driving that growth? I assume it's the cyber protection and 24/7 monitoring services. How do you keep driving those kinds of growth rates over time? What's the outlook there, anymore perspective would be great. .

Thanks for the question, George. So you've zoned in on the services part of Services and Software. And absolutely, part of our growth driver has been doing more for our customers. And every customer is on a different journey and we can help them solve problems and the portfolio is getting more integrated, and they're looking to us as the vendor of choice to look after it, in many cases, looking to us to monitor network performance and, in some cases, run the network. So that's absolutely a growth driver and have opportunity ahead of us. .

In terms of the software side of Services and Software there, we've talked about the applications, the Command Center, Video software, all of which are strong drivers. And together, the Services and Software segment, which you know is a recurring business, as it grew 13% last year, we're guiding 10% to 11% this year. And with that, we have scale and operating leverage. It's a terrific business is 1 where we can do more for our customers. .

Just 1 more thing to add there. So we've seen a 77% year-over-year customer growth in our managed detection and response platform for cybersecurity. And 1 of the key drivers there, by the way, is also the fact that we have AI-driven automation within our cybersecurity platform, where we process 1 billion security transactions on a daily basis and 99% of that is actually handled automatically with AI. And that's largely starting with our critical communications infrastructure, and we're just penetrating into the PSAPs and other areas as well. . So there's growth profitabilities there. .

And another area where we're seeking to assist customers is in remote video monitoring with the recent acquisition of Blue Eye. There's opportunities for our enterprise customers to help them identify false positives and get through signals a lot faster than they're doing now as well. .

Got it. If I -- again, kind of honing on the LMR piece of the software services business, like how penetrated do you think you are with these services, cyber or 24/7 monitoring.

Yes. So cyber is -- I would say we are -- for P25, P25 networks we're reasonably penetrated, but we have a lot of room to go there. It's -- when you start getting to the international market, and I think some of the enterprise security markets which are massive in terms of the number of actual networks that are out there, particularly in the PCR side, they also -- when you think about refineries, hospitals and the like, there are also targets for potential network intrusion. They need cybersecurity as well. There's -- it's pure opportunity as it relates to that part of the business. .

George, 1 other thing I'd point to, too, is the D-Series and the infrastructure upgrade around P25 and that we're in the very early stages of that's new hardware. And with new hardware, customers are opting for more software and longer-duration software agreements around that hardware refresh. So some of the deals that we talked about like Tennessee and others aren't just a hardware refresh, it come with services uplift and extensions.

[Operator Instructions] The next question will come from Tomer Zilberman with BofA. .

I wanted to continue on the line of questioning of the LMR growth. If I remove the Silvus contribution this quarter, it looks like the organic growth for your total business was about 7%. LMR was about 5%, which is an improvement from the 3% to 4% that we saw in the last few quarters and actually, in fact, at the high end of your previous guidance range of low to mid-single digits.

So I appreciate you mentioned some comments around APX NEXT and SVX and some of the other opportunities. But really, what changed in the last maybe quarter or 2, 3 quarters or whatnot that's driving this accelerated growth for LMR? Is it heightened deployments right now that we're seeing with DHS. Is it that refresh cycle that you started -- that you were discussing that's starting to really take real legs? Like what is the opportunity there? .

Look, the way I think about it, it's more of a -- I don't necessarily think of acceleration, I think consistency and durability, 3 consecutive quarters of double-digit order growth, with the expectation of Q1 being double digits and the full year being double digits.

While we go through 2025 and execute, build backlog and then migrate and transition to more of the quick turn model. I just think -- it's just a consistency of demand. Do I think that's informed by some new product? Yes. Like the D-Series that Jason just mentioned in part, obviously, very early with the thousands of units of SVX that are seated and shipped.

But as we monetize software and services, as we continue to get significant cloud adoption, it's -- back to Meta's question, I just see consistency of demand through all 3 technologies in both segments, and that's given us more confidence to guide the year up $12.7 billion versus $12.6 billion and we feel good about the position we're in. And overall, the momentum we have. FedRAMP approval is another one. I think it's not sequential. On APX NEXT radio, on SVX, on FedRAMP back-end approval of digital evidence management. So that widens the aperture of the addressable market that we could sell LMR into?

Got it. Maybe as a follow-up. I know last quarter, you mentioned that first half of '26 would have about a $450 million headwind related to LMR backlog deployments of last year. I appreciate that's probably a majority 1Q, which is somewhat impacting your guide, at least from a mathematic standpoint. But how much of that is residual left in 2Q, in other words, how much could 2Q theoretically be pressured before we start seeing that double-digit 10% plus order growth kick in, in maybe the back half of the year?

In terms of normalization of our backlog, as Greg mentioned earlier, from 4.1 to 3.8, which we expected, and we've been clear on that. Majority of that, it obviously happens in Q1 as we return to more normal seasonal patterns, which we also covered. So the bulk of the change is reflected in the period of Q1. .

Got it. So limited impact to Q2 -- of Q2.

More significant in Q1 than Q2. That's what we anticipate.

Next question will come from the line of Ben Bollin with Cleveland Research. .

I wanted to, I guess, piggyback on a lot of these backlog questions. If I recall during the pandemic, you guys had made some adjustments to pre-existing contracts that allowed you to reprice backlog to account for pricing changes I'm curious, is that contributing at all to what you're seeing in backlog behavior today as you're making price changes? Are we seeing that flow through? Is that a potential future mechanism that you could pull at some point in the future? Just -- any way to think about what that means for the numbers we're looking at today? And then I have a follow-up. .

So Ben, we did not reprice existing contracts during the pandemic. We have contracts with customers at an opportunity for renewal as well as for products, which tends to be a quick-turn business. We do have pricing opportunity, and that's more of the levers that we implemented during COVID. So no, there's no sort of residual effect to your question of what's coming through backlog related to actions we took in the past. We'll always look at pricing opportunities. We have them with the advent of new products, including the D-Series but that's just in our DNA. .

Okay. That's great. The other 1 I wanted to ask is a bigger picture, looking at what's going on with the World Cup. Could you talk about how that's contributing to visibility and what you're seeing? And in particular, interested in your perspective on who is funding those investments, fed, metro, state, just any thoughts on what you're seeing and how that's going. .

Yes, sure. So we are -- let's start with it's not being -- there's money available at the Federal level. But remember that World Cup is not just a U.S. phenomenon. It's also in Canada and Mexico. The biggest deal that we've actually gotten to date has been in the Vancouver area, network refresh, refresh of fixed video opportunities. That's what we're seeing.

The other opportunity as it relates to the World Cup and some of the locations and discussions we're having are the strategic investments we've made with both BRINC and SkySafe in terms of drone and counter drone activity.

Because what we realized when we were partnered with the Ryder Cup is our ability to feed live video and how we incorporate Silvus into those offerings as well. As I alluded to earlier, on special temporary authorization of usage, there's a use case there to do that.

And so those are the conversations that I think we're uniquely position to have with the cities. But most of that, what we're seeing to date is being driven some Federal grant money available, but largely being required to be planned at the local level and then executed at the local level.

Our final question today is from the line of Louie DiPalma with William Blair. .

One of Silvus's high-profile customers from Anduril recently received a $1 billion order for Taiwan loitering missiles. And we've heard of several other contracts for Silvus' customers and customers specifically mentioning that they're using Silvus for their radios. And I was wondering, for the Silvus' guidance raise, is most of that associated with non-Ukraine deployments as this Taiwan potential order is non-Ukraine, and there's been a lot of other non-Ukraines. But I was wondering where is the guidance raise coming from?

As we kind of alluded to, Louie, it's a mix of international and unmanned systems. To your point, the Taiwanese loitering munitions, by the way, just -- I'm always going to be -- loitering munition are typically or FPV drones, typically less likely to carry a higher tier radio on them.

But that said, I was out with -- met with had a really good meeting with some of the leadership at Anduril 2 weeks ago. I'd tell you, I was really -- first of all, I'm really impressed with what Anduril does and how they get product to market. But I was so proud of Babak and his team because when I looked -- went around their products alone and I looked and I was doing some quick math, and I think 2/3 of their products are -- have a -- or incorporate Silvus radio into their design.

So we're really encouraged. We want to deepen that relationship. And I think with the funding we're bringing both from an R&D standpoint, and I think they realized our willingness to scale around the globe, the relationships we have, I think we have an opportunity to really deepen that relationship.

And Video had a really strong fourth quarter, and you've been able to maintain double-digit growth for Video at a very large scale. I was wondering for hospitals, schools and public venues, has there been an uptick in demand in response to just recent high-profile tragic incidents in which there were calls that some of these public venues didn't have like enough camera density? And so I was wondering, what have you been hearing from customers in terms of the demand for your video systems. .

Yes. So it's a great question. So I think, number one, camera density is important, but I think when people look to us, they're looking to us because they believe we're the leader in the AI-driven analytics that actually fuel what you do with the data, how you can go through the video footage that you have and make better decisions in a more mobile and efficient environment.

But now listen, the Video team, we've been adamant about -- Mahesh, first of all, has done a great job in terms of what he's built on the -- our cloud Alta platform. But we're also -- we also forgot people, we had a really good Unity quarter in Q4, which is our on-prem business. Camera deployments for '25.

In terms of camera counts were up slightly. We expect a better 2026 in terms of number of cameras fielded. And I think some of that's a phenomenon of what you said about we land a deal and then which we typically see is they expand those networks. And that's something that we work with our customers on. So like I just think all things being equal, safety and security rules a day in the public domain as well in private enterprise. And I think we're in a good position to benefit from that. .

And Louie, the 10% to 11% that we outlooked for '26 in Video includes the continued acceleration of the cloud, as Jack mentioned, our cloud-based platform Alta is leading the way. But the portfolio is also through Mahesh's leadership, becoming more hybrid in nature. We're giving customers a choice, which we think is going to position us even better.

And the only thing I would add to that is that we launched generative AI capabilities last year in support of both Unity and our Alta solutions. And 1 of the key things that, that's enabling is historically, when we think about Video, it's largely security-oriented use cases. We're now transitioning also into safety and compliance-oriented use cases.

So when you think about health care, when you think about some of these other key verticals safety and compliance also become a significant element of why video cameras are needed, and the VMS is needed as a consequence and all of that sort of ties in nicely to our growth story.

This concludes our question-and-answer session. I will now turn the floor over to Mr. Greg Brown, Chairman and Chief Executive Officer for any additional comments or closing remarks.

Yes. Thank you. Look, I just want to say thanks to everybody for joining us, and thanks for the wide-ranging and robust questions. To reiterate, I like where we are as we sit here today heading into the year. The strong demand profile, strong pipeline, especially also like the strong liquidity profile and the robust cash generation and the strategic flexibility that a great balance sheet affords us.

Want to thank all the Motorola people, all the Motorola partners. But I also want to take a minute and thank Tim Yocum. Tim is transitioning to a critically important role in finance supporting our -- will be, our Command Center business. He's been leading IR for 7 years, and he's built a great team.

He and I have been through a lot. I really value his candor, his leadership, he's willing to roll up his sleeves. He's a great give-and-take guy. You'll be meeting Brian Piotrowski who will be coming into this role and will formally announce next week, but we have plenty of time to transition.

But Tim and team, you've done an awesome job. I appreciate you a lot, and I know you're not going far away, but I wanted to make sure that you understood how much I value and we value Tim Yocum and his leadership and look forward to strapping it in with Brian Piotrowski, who, I think, along with Vicki and of course, [indiscernible] you will enjoy. So thanks for dialing in. Thanks for listening. Talk to you in a quarter.

This does conclude today's teleconference. A replay of this call will be available over the Internet within 3 hours. The website address is www.motorolasolutions.com/investor. We thank you for your participation and ask that you please disconnect your lines at this time.

Thank you, everybody, for joining. Tim Long here, IT hardware, comm equipment analyst at Barclays. Very happy to have Motorola Solutions with us today, Jason Winkler, CFO. Thanks for coming. Really appreciate it. I know it's a little bit of a crazy time.

So got a bunch of stuff to go through here. Maybe we'll just start with a few of the kind of hotter topics that we get from investors on the name. So let's start with LMR product. This is obviously was an area that had a few good years of growth, probably higher than trend rate and then pull back a little bit on a growth perspective. Walk us through how you're looking at that business, maybe we'll talk about Silvus separately, kind of the core LMR product business specifically over the next few years?

Sure. So LMR for us, before the addition of Silvus because now we call it mission-critical networks, which is whole new MANET technology to it. But as I think about the LMR business for us, where we're a leader in P25, which is largely North America. We're a leader in TETRA, which is a European standard, and then we're a leader in DMR, which is a commercial standard, mean the LMR business for us is a mid-single-digit growth business in totality. I know we're going to talk about products, but I think it's important to -- we think about the business on the whole because there's a lot of high-quality attributes around the product side, and it's supplemented by a very good transition that's taken place to a more services attached software type business. And then Silvus, of course, when we add that in, improves its growth profile over the long term as well. So in terms of products, there's a couple of things we're pretty excited about. One has been with us for a few years.

One is just getting started and it's infrastructure, the one that's just getting started. Our P25 customers are mission-critical state, local county, city of X customers in North America are on their second -- our second generation of infrastructure, our base stations, our proprietary P25 standards compliant equipment that now we've introduced our third generation, which is the D-Series. And infrastructure for the company is a little less than $2 billion. And we think that the opportunities in the coming years for that infrastructure change out from our customers. We've talked about some big ones, by the way, on the last call, State of Colorado, State of Tennessee, St. Louis area. They're investing in upgrading their land mobile radio networks for both the infrastructure and the services and software that come with it. Those customers and most customers attach a software agreement or services agreement. And so that will benefit us as well. So D-Series, we're just seeing the beginnings of. We just released it, and we're seeing good uptake and traction and infrastructure takes some time to replace.

You got to go touch sites, you've got to change things out. So that will be with us for a number of periods. And then on devices, which is another $2.5 billion of our total LMR business. So together, devices and infrastructure about half of LMR and we've talked about the devices uptake there, continuing towards APX NEXT, which is our most recent radio that is accompanied with an LTE pipe to deliver applications and value to customers. It's priced at a little bit of a premium upfront. And then, of course, it comes with the subscription or apps that accompany it. And our customers overwhelmingly adopt the app. So 200,000 subscribers on the Apps platform end of this year. We talked about next year, we see 300,000 units being subscribed to the platform. So continued driver as well around devices refresh, now with the beginnings of a D-series refresh and then all the services and applications that get attached to it. So LMR before we talk about Silvus continues to be in a strong place.

Okay. Great. Yes, that APX NEXT transition is good. And for those that don't know these are long cycles. These devices tend to last 8 years or whatever.

Right, in infrastructure, by the way, is usually about double that. So we'll see 2 cycles on devices for every 1 cycle on infrastructure. And by the way, also, we talk about cycles, our business, our customers, every customer is on a different journey, different dates of when they adopted it. So we don't see cyclicality in our total business because every customer is different. And the aggregate effect is that it leads to more of a steady state for us. But if you look at a customer and even our top customers in any given year, they're always different because everybody is on their different unique locally owned, locally controlled, locally funded type network and devices journey because they're maniacally focused around state and local governments want control of what's happening.

Their citizens expect safety. They do expect interoperability as well. So that when something does happen in a city, in a state and the county and Feds and they all come together, they interoperate. And that's where our technology excels because we're selling to all of those customers. And when you know what hits the fan and they show up, those communication systems are well coordinated and responses are strong.

Right. Right. Okay. Great. Yes, we'll get a little more into APX NEXT and that part of the business. But just one other on the infrastructure. You mentioned the software and services. When we look at LMR services, it's a pretty good growth business for Motorola typically back out what happened with Airwave, but pretty consistent grower. Do you think those infrastructure upgrades on the hardware side allow that growth to continue or even accelerate at times because of you're touching it again and you have more ability...

The content and the hardware is more powerful. It's solving customer challenges like better redundancy, better cybersecurity, better backup and yes, with that comes an opportunity to attach more software content as well as services in what we do. You're right, Tim, if I zoom out and think about the long term of our business and what we've seen transpire and what we would expect, services and software around LMR generally grow faster than that of products. And so that's a content, that's a value, and that's our opportunity to serve our customers more and more. Some customers have turned to us to do things that they once did themselves, right, protecting a network, reading a network, cyber securing a network. We're monitoring a network. We have a NOC SOC in Illinois, we have another one in the U.K. We can scale those operations and do things for our customers that they either weren't doing or that they were doing themselves that we can offer them at a better value and better expertise.

Okay. Great. Second topic is the funding environment. I think there's been a lot of discussion around DOGE and shutdown and a lot of federal stuff and you guys are mostly state and local. So maybe if you could just talk a little bit high level about what Motorola sees in the current funding environment for the core parts of the business.

Yes. So state and local for us, in aggregate, is about a $5 billion business largely focused in -- it is in North America, U.S. plus Canada. And it's thousands of customers and to dimensionalize that, in every year, we see about 20,000 purchase orders, contracts, buying decisions from them. So it's a very diverse space. They all buy for their unique needs. They don't count on the federal government for their funding. They count on property tax, use tax, special tax, general funding sources. They figure out a funding plan to do something that's critical, which is public safety. And so they continue to do that. We look at the budgets. Many state and local budgets roll over in July, some in January.

As we looked at the July rollover, the budget situation among our -- most of our customers was for yet another good year in terms of their own funding priorities within their budgets, which, by the way, state and local budgets have to be balanced. That's not the case from the federal government. So we entered and are entering and we're seeing it a period of another good year for funding backdrop. The things that we provide to our customers are generally top of the list. And we've seen orders growth within our portfolio, largely driven by LMR. In Q2, Q3 and expected in our Q4 guidance is for double-digit products growth complemented by double-digit services growth. So it's in both places.

Okay. And it seems the reliance on federal grants is probably a little overstated in the investment community. But maybe to some of the bigger programs like where are we with ARPA and OBBB as far as more impacting the next year or 2 in certain parts of the business?

ARPA is behind us, but for our customers, our state and local customers, we didn't see a significant. It was a super small contribution to what some customers used to buy, single digits, real small. It's behind us. And customers continue to find new and other ways to fund. So we never saw it as a significant tailwind. And so as we look forward, you mentioned OBBBA, different bucket of money that's targeted again towards our federal customers. And we do serve federal customers -- law enforcement continues with DHS as well as some DoD as well. The OBBBA funds that have been made available for both of those -- some of agencies, DoD, DHS, each one is getting over $150 billion of incremental and new funding that's yet to flow, but we see alignment between what are their priorities with that funding and what some of the things we do are communication systems, video security, national defense, Silvus, all of those types of things that we enable and they have prioritized in this new source of funds those represent opportunities for our federal business, which for us is about 9% of revenue.

Okay. Yes. I had a later follow-up on federal but let's hit it now. You talk obviously with the shutdown, not a big part of your business, but remind us how you're looking at that federal business in the near term into Q4, I think you couched it as this business might be subseasonal, but if things pull in, it's better. And then are we back to business as usual in 2026 in that business?

We framed it as we reaffirmed our guidance for Q4, which is for 11% growth, 7% to 8% of which will be organic and that we gave a marker. Greg generally gives a marker color around the following year of 12.6% which is 8% growth, a little north of 5% organic, which again is better than the year we're completing. So we feel good about next year. And that to the extent that when the government was closed, there was any timing issue with orders or engagement with customers. It would add to the 12.6% of next year. Now thankfully, the shutdown is behind us. So we're actively engaged with customers, again, prioritizing the types of things that we do tend to be top of the list. And we're back at it and engage with our customers.

Okay. Great. Maybe let's hit on Silvus. It's still from the investment community still learning this business. But -- you've only had a short amount of time, it already upside the first quarter that they reported and still seeing pretty healthy 20% growth for next year. So walk us through kind of how you view that business given that it's very good margin, very good growth right now, a lot of incremental TAM, really strong technology. So how important do you think this could be for Motorola?

Yes. I think you framed it well. And we've been working through diligence with them for about a year, right? And what do we like about them and now us together, they lead in a different form of RF, which is MANET, mobile ad-hoc networks that have use cases like in the battlefield, where you need a mission-critical data always on resilient, can't be blocked, can't be jammed kind of application, that's what they do. And we're excited about the business that they've built. We're excited about the opportunities that we have together. They've scaled this year on an annual basis to be $500 million. They have 45% EBITDA margins. And yet they have a pretty small sales team, right? It's 30-plus people. We're going to enhance their market coverage with the relationships that we do have. We do have a federal business, but not a defense-oriented business.

So we think we can help them there. Their R&D, we spend $900 million a year in R&D, half of which goes to our LMR now MCN technology. They spend a fraction of that. We've already got our best teams working together with them around how to advance their software and solutions even further. And to date, they are generally a very good software-enabled product with little services or software attached around it. That's a lot like we were a decade ago. And you've seen us, Tim, you followed us, transition from where 80% of our business came from more hardware-centric things to we're now more like 60% trending to 40% software and services. So a lot of opportunities, good growth, good platform, good synergies, and it is taking us deeper in defense.

And we like that. We like the demand backdrop for drones, unmanned systems. We like the customer base. We like the work that they've demonstrated as best-in-class in Ukraine. And together, I think we can continue to help them grow and diversify their account base.

I imagine Europe is another big opportunity given the focus on defense and there are probably limited exposure to that.

Yes. I just got back from an NDR in Europe and a lot of investors acknowledging that those area NATO countries are getting serious about increased defense spend in the environment we're in. And where is a lot of that going. It's going in new defense which includes things like unmanned systems. And also, another thing Silvus got counter drone, right. So they have a very powerful network to empower communication systems, which have a good use case in drones. But the inverse is true, too, where you don't want drones to be somewhere and you want to field a place or protect a place or monitor a place using similar technologies to keep drones out from somewhere. And we like that application, too.

Okay. Great. And there's been stories about the U.S. government with pretty ambitious drone plans over the next multiple years. I would assume this is a pretty good guide post an indicator for what some incremental Silvus opportunities would be?

Yes, absolutely. I mean you can't read a headline without the current readiness for the defense industrial base and what modern warfare and what drones or unmanned systems, what part they have in the future, and that's a great backdrop for us. In terms of TAM, we've sized it at roughly about $3 billion. It's going to, we expect, double in the next 4 to 5 years. And Silvus has a lead. There's 2 or 3 other competitors in there, but they have the most robust platform, scalable and can't be intercepted better than anybody else's. And we're going to continue to grow that technology lead, and we're going to grow it from an account coverage or a sales base lead as well.

So we're excited about Silvus. At the same time, we're excited about the majority of everything else that we do, which is -- next year, $12 billion in everything else in our core, $600 million in Silvus, the relationship, we're very excited about it, but not to miss the fact that we have fundamental drivers in our business in LMR, in Command Center and in video that will continue to be strong for us.

Yes. Before we get into the video and command center, just to go back to APX NEXT, you mentioned the 200,000 going to 300,000. Where are we in what inning are we in the transition to APX NEXT? And then second, if you can talk about -- I think that $300 number encompasses like 6 or 7 applications mostly. Do you see growth in the ability to monetize the base on top of what's currently being monetized for the applications?

We do. So there's 4, 5, 6 core apps that have been delivering value for customers and driving the adoption curve, extending the network, programming the radios, better GPS and video ingestion are 4 that are top of the list. We're developing more. It's a platform to size it, again, next year's end-of-year view, 300,000 units, there's 2 million public safety users. Now we have significant share. We don't have all of them, but that gives you an opportunity for us to see how this thing plays out. We're a few years into it. And just this year, we've fully tiered the portfolio. I mean when we released the APX NEXT platform, which was industry-leading and remains so, it was targeted at the quad-band radio, four bands. Most complicated users with the most needs for interoperability. That's where we started.

We fully tiered it out now where if you're a simpler user and you're on 1 band or RF and there's an APX NEXT for them, too, which comes with the applications platform. Now another thing that can help us bend the curve around adoption is the release of this SVX device, which starts first as a mission-critical audio device paired with only APX NEXT. So as that has gotten some very good customer reception, we're already in 70 accounts as an audio-first device. Many of them are trialing the video capabilities to examine what that could bring as well. But we think that, that strategy not only will help us sell value upfront, help customers with an AI assistant but position us as well for further video growth, including body-worn camera video, which the device does and, of course, all the value on the back end and storage redaction, evidence management and the platform that we have there as well.

Okay. Yes, it's a good segue to the video business. So maybe at a higher level, still guiding that business, I think, 10% to 12% annual growth. So I know there are some headwinds around the move to SaaS. So maybe talk -- and the software piece of that software analytics is obviously growing pretty rapidly. So maybe walk us through the calculus of how we can continue to see that business as double-digit growth.

Sure. So we guided this year, 10% to 12% in the total video business, which last year was 1.9. So plot that out, we're over $2 billion expected this year. If you then look at how the growth has shown up, it's stronger growth in software and services for a number of periods, a couple of years, where software content in that double digits is growing more than the related products in SI. And that's a favorable trend. That will -- we expect continue. And it's complemented by what you just mentioned, Tim, which is a transition to cloud. So think in fixed video, which is about 70% of that total video business. Most customers today are on-prem, but we're seeing an increase in the number of customers that are wanting to run the software, which is the very powerful ingestion of lots of cameras in the cloud. Still includes a camera, a very good camera, edge-enabled analytics.

We lead in what's powered at the camera's edge, complemented by what happens on the software layer. So within that growth profile, and you'll see it in software and services in video is a transition to customers, more and more embracing wanting to run the software layer for them in the cloud. The market -- the most of the market remains on-prem today, and we have a portfolio in both places. We are a leader in the ability to serve a customer how they want to be served. If they were a big scaled operation and they want the control in the on-prem, we have a portfolio called Unity. And that's exceptional portfolio from -- started with Avigilon. If you want to explore moving to the cloud and running the very good cameras that we engineer in the cloud, you can do that, too. And to be positioned in both places, I think, is a really special opportunity for us, and we're going to continue to drive the growth while transitioning to that software stickier content.

Okay. Great. And on the SPX, you mentioned some good initial activity with some trials going on. When do you expect that to kind of more fully ramp as body camera and because you need APX NEXT with it, do you think it will drive increased upgrades to APX NEXT? Or how do you think that dynamic?

It will do all 3. So we're selling it today. it is already -- and it's more feature rich in terms of what it can do. It's not just a speaker microphone. It's an audio assistant. It can help through AI assist right reports, it can ingest data from the command center. Another important differentiator, audio logs. What -- if you're going to write a report and a police officer between what happens, it's multimodal, right? What happened between you and the assailant, what were you being told from the command center in your audio, were you being told to do something? Did you follow directions? Where you following policy? All those types of multimodal things come together in this device, whereas the first draft that's available in using that tool is high quality and of course, then subject to review and edits and the like. So we like the position of where it puts us around mission-critical audio. It will lead to a little bit more content upfront.

And then over some time, it will, we believe, lead to higher video growth, including more customers in North America on our body-worn camera platform. We have a body-worn camera platform. We're in North America. We're doing more with SVX than we ever had. And then I think about the international portfolio, which is a little different device, but we're -- the strength of our body-worn camera portfolio there, we talked about in the earnings call, we're in 18 countries of countrywide deployments where they tend to prefer at the moment on-prem deployments, and we have that value proposition for them, too. So I like our long-term positioning and what SVX does for us in North America, extends what we can do for our customers and extends the possibilities for video into the future.

Okay. And I'm guessing in North America, one of the hurdles is maybe an agency is with a competitor that has some type of subscription. And I think this is something you've come across in your command center software business, which we talk as well, maybe win the 911, but they don't have CADs not up yet or something like that. So is that a little bit of an inhibitor in the near term on the body camera?

There is an incumbent in the market in North America who's been there a while and has contracts. But to be on the body or the person that we talk about of already having that device deployed and the opportunities that presents at every contract renewal for us to have a conversation about why do you need another device. It's already there. We have a great back end. It converges. It's taking information and it's delivering video from our camera platform. So I think it's a great position to be in. Stay tuned. I think we'll end up doing more on the platform, too.

I think our opportunities around using voice, data, video and around an application stream and a value proposition to customers will be more put into a suite format where customers will be offered a more comprehensive enablement that doesn't matter whether it's writing on a camera or writing on an audio device or a converged device. It's just that -- it's important applications that can help them do their jobs and respond better.

Okay. Great. And I did want to touch on the command center software. You guys -- it's been a pretty good growth business and very fragmented. Your share looking at compared to the total TAM is not crazy big. So a little bit more of a land-and-expand model. So kind of walk us through where you are with the PSAP community and selling multiple modules into it.

There are 6,000 911 centers or PSAPs in the country. We're in over 60% of them with one or more products. An important one is VESTA NXT, and we're transitioning that call routing platform to be cloud. We've integrated it with our CAD and records. We've integrated with our call taking. We have a full integrated platform. And to be in those -- that many accounts and offer every customer additional content or additional migration paths is an excellent place to be for growth, and we're committed -- fully committed to being in CAD, which is the central nervous system of these 911 centers. It's the ERP of what they do. And it's challenging, and it's customized and it's integrated and it's -- but that's what we do. We help customers solve problems, Motorola solutions.

And with that systems orientation and a platform that's fully integrated, we really like our position in the command center. It's growing at 12% this year. We talked about apps around the platform for LMR. Those apps are monetized in command centers, so that's a growth enabler, too. So like being in the command center and like the apps that opportunity that presents to us, and we also have incident response like a portfolio called Rave that we acquired about 1.5 years ago. So definitely continued growth opportunities for us, and we've been taking share in that market.

Great. I did want to touch on a financial question. So maybe talk to us a little bit about capital return. You guys very acquisitive over the years. That's always a part of it, buybacks, dividends, there's been some disruption in the stock this year. So how do those priorities shape up? And as you look out through this year and into next year?

We have a strong balance sheet that will enable us to continue to do both. M&A funnel remains active. It's pointed in video and software like solutions that you've seen us do. In video, we started with Avigilon. We found 11-plus companies that make us stronger in total video. And in terms of the opportunity that the current stock price presents us, I mentioned that we're on path to buy over $400 million already this quarter, and that will be over $1 billion for the year, which is more than the last year or the year before that. So we can be opportunistic.

We have a strong balance sheet. Our backlog position as I communicated for as we expect to end this year. On path towards $15-plus billion of backlog in total with high 3s in the product segment, which has gotten a lot of attention. Those -- that's a very strong position to be in and to expect the growth that we do next year. And so the stock price at the moment represents an opportunity as well as the M&A funnel.

Okay. Great. Yes, I think we're basically out of time here. So Jason, really appreciate the time.

Thank you.

Thank you so much.

Thank you, everybody.

Okay. Good afternoon, everyone. Welcome to the Motorola Solutions presentation at the first day of the UBS Technology Conference. I'm joined on stage today by Motorola's Executive Vice President and Chief Financial Officer, Jason Winkler. Welcome.

Thank you, Andrew. It's good to be back here. Thank you for launching coverage. It gave me an opportunity to come back. Last year, my IR team was here. Took a lot of meetings, but we didn't have an opportunity to have this dialogue. Yes. We're glad to be back at this conference.

Thanks for coming. Maybe a great place to start would be just on your LMR business. You guys have put together a string of pretty strong years, let's say, the last pretty much post 2020 or high single-digit, double-digit growth on the product business. You gave guidance that was ahead of my numbers by about $100 million for 2026. So maybe just start out, what does the environment look like in public safety? How are the customers looking? What's the outlook for that business? And maybe we can drill in after that.

Sure. Well, it looks pretty good, as you mentioned, Greg did provide some commentary as we often do in November about the year ahead and LMR being in a good fundamental place to grow off of some comps over the last 3 years that with the product growth that we've seen of CAGR double digits and our growth this year, as we expected, being fueled by what we described as a return to quick turn, meaning that as we set out in the year in February and through to November, things have actually improved. Our orders growth, which in Q2 was double digits in both segments, it was the same in double digits in Q3 and included in our Q4 guide for the company for 11% growth, which is about 7% to 8% organic growth is for, again, double-digit orders growth.

So what that means is demand is strong. And demand, we're able now than the supply chain environment we're in to deliver in a timely manner to our customers, which is outstanding. So as we sit here and finish the year, our organic growth outlook for next year included in that [ 12.6% ] is actually better for the company than it was or is for the year that we're wrapping up. And the fundamentals, which we'll likely talk about are strong and continue to be so for LMR as well as for our higher-growth businesses like video and command center.

Right. And before I move on to the next question, I should have mentioned that we do have an app where you can ask questions, and I'll try to get to them at the end if you want.

So let's break that down. The LMR business is really made up of the device side, the infrastructure side and then the software and services. For a number of years now, well, you launched the APX NEXT, which is the your -- the kind of higher-end device that's been driving an upgrade cycle. Maybe help us understand like in terms of the outlook for the business. How far are you into that upgrade cycle? How much of demand is coming from the high end? And how much further penetration do you think you can get from APX NEXT?

Sure. So APX NEXT is a device that's industry leading. It includes not only LMR but also LTE is a secondary network. Customers really like it. It comes with a number of features that solve customer pain points like programming the radio, GPS and ingesting video into the radio, which now has a screen, so very compelling. And we are, at a point, we mentioned on the last call, where this year, we'll have over 200,000 subscribers on the APX NEXT platform. That's not only a better sale for us at the time of sale, so a little bit higher priced device, but it also comes with this application stream. Customers pay about $300 a year for a number of features that are really important. And so we have product opportunities and growth in that transition, but we also have been building an applications business, a company -- wholly done within the company, bootstrapped. I mean it's a value proposition to customers.

And so the outlook for us included in next year's growth drivers is that we think that the devices, subscriber count on APX NEXT is going to grow from about 200,000 to 300,000. And you mentioned high tier. That's generally where we start, Andrew, when we innovate on a device like APX NEXT, but soon thereafter, we price it down to value -- different tiers, including down to a more value tier, and we drive out the costs out of the platform at the same time. So about mid this year, we're fully featured in that APX NEXT platform being available at all customer price points. And so we think that's another opportunity for it to continue to grow.

Have you ever said how much of that market? I think you've said [ 2 million ] first responder to the U.S. Maybe how much the high end can be applicable to? Or it sounds like now you've got a...

We think the whole market is ripe for it. I mean, 2 million public safety users. We have significant share, but we're not the only market participant. But if you think about that over the long term, we think that there's ample opportunity to continue to turn every customer.

And the other thing I'd point out is we still sell a very good APX device. And some customers who are on contract for that device continue to choose that. We're offering them a choice, which is what customers in public safety want. They don't want forced migrations. They have long-term contracts. We're a respected vendor. We're in it with them together. And I think this continued migration and acceleration for APX NEXT is a driver that we'll continue to see fundamentally help products as well as the applications attached, which by the way, we report in services and software. That's the nature of their contracts.

We also -- the applications business around that APX NEXT platform is part of our command center revenues. Why? Because the information that's being shared into those devices is connective tissue to the command center. It's getting the officers or responders better information, 2-way communication. It's adding video. It's ingesting location. It's doing an important role in shortening the cycle for responding. And then it's also improving the mundane around report writing and evidence management and the like.

So that's where you'll see those numbers show up. In our command center growth this year, we expect 12%, and we think that's a continued opportunity for us in APX NEXT.

Final point on APX NEXT, we also have a device you're probably going to ask me about called SVX. And we've chosen to deploy that, first, in an audio world-class mission-critical audio format, and customers are really embracing it. We've got about 70 to date that have deployed it in an audio-first capabilities. And when they did that, they chose APX NEXT to radio because the platforms are together. So yet one more reason why a customer would choose APX NEXT is to enable that very powerful SVX, which can do audio, video, 911 and the likes, which we'll probably talk about more.

And then you mentioned infrastructure. We've now introduced our third generation in P25 infrastructure. We call it the D Series. Its predecessor, the G Series is a decade-plus old. Every one of our customers are thousands of customer-owned networks. And you've seen us talk about networks like Tennessee, Colorado, St. Louis area. They're at a point in their network journey where the infrastructure is aged to a point where they're going to replace it. And they're embracing LMR for another decade plus. And they're buying infrastructure, and they're buying the services and software that get wrapped around that in the form of 5- and 10-year contracts.

So early days on the infrastructure upgrades in North America in P25, and it will be with us again as a driver for the business. It's about, by the way, infrastructure is almost a $2 billion business for us, including all forms of network infrastructure, P25, TETRA and the likes, but the bulk of it is P25.

Right. So that's like, what, like a 70-30 split or 80-20?

20, 25.

20, 25.

Of LMR as a total percent.

Right. Got it. So I think help me think about how you guys kind of talk about the long-term growth opportunity for the LMR business, sort of what the growth rate is. If I think about -- I think my view is to kind of the product side, maybe 3% to 4%, the services, maybe 5, 6 something roughly. As we talk about these, it sounds like infrastructure is on the verge of a big upgrade cycle. I think that you guys described it as having a large funnel. The APX NEXT is kind of really hitting its stride in terms of upgrade. I would think you'd be at the higher end of that range. I'd throw out that there's also a lot of money coming in the federal government from the OBB bill. So it seems like a good environment.

Yes, it is a good environment, but every year has puts and takes, right? So in the case of the last couple of years, we've had this opportunity to unlock backlog and deliver to our customers' demand from prior periods, right? We're thankfully now in a condition where we can get the requisite supply. So part of our growth over the last couple of years, that robust growth in products, was enabled through getting supply.

We're now in a position where backlog, which, by the way, is in a record, $14.6 billion total for the company, and we talked about on the call, Greg mentioned that by year's end, product backlog, which is a subset of that $14.6 billion which is mid-3s right now would, by the year's end, be $3.5 billion to high 3s. We're comfortably trending to high 3s of product backlog at this point, given what we're capturing and on path to see an opportunity for a $15 billion backlog by year's end.

So those are, again, favorable trends around what we see in front of us and what backlog could be into the future. And the opportunities that we're seeing are across the board, services and software as well as products.

In terms of the growth profile, we generally think of products is low single digits, and we think of the services and software opportunity that accompanies it with as -- is mid and we mix those in and you get the LMR opportunity. And we'll talk maybe about Silvus. Silvus complements that growth profile as well. And when you step back, LMR, whether it's products or whether it's services and software, mid-single-digit grower kind of business. Now we have Silvus which is new, different entire fundamentals come to us for that market, which is defense, and that can complement that mid-single-digit growth rate within that range a little bit. So it's a good opportunity.

Got it. And let's talk about that in a second, but just you mentioned the backlog and the headwind that it created. I think coming into your outlook for 2026, I was a little concerned you were going to come up short of it. You actually beat me by $100 million in line with the Street. But it has been difficult trying to understand there was -- the backlog was built and then it was worked down over a couple of years. Is the right way to look at it -- I think we don't know what exactly the drawdown was until you report the fourth quarter, but maybe it's $500 million, particularly a headwind in Q1, when I think a lot of it was recognized. So the right way to think about your 2026 growth, which is a little bit lower, I think, organically ex Silvus in the LMR business that has been historically is just the normalization of that backlog trend. Is that the right way to think about it. But to our initial discussion, the actual organic trends are actually right where you want it to be.

Yes. I think the organic trends of double-digit product orders growth complemented by services and software orders growth of double digits as well, that's what's driving the second half growth, Q2, 3 and 4. I guess that's 3 quarters. And that's what we would expect to be a growth driver into next year as well. Backlog complements the demand as a function of orders, and I think to be in a strong backlog position, be projecting future backlog by the end of this year being higher. I just told you that. And we'll see what next year's opportunity brings.

But with strong orders and the opportunity to convert those. And by the way, infrastructure, we talked about that. Some of those projects are multi-quarter deployments, right? It's not as simple as shipping a device. You got to go out, touch the customer networks, deploy, and we're going to do that. So I think that the backlog position complemented by the demand and pipeline that Molloy and his team are driving are expected to be continued drivers for us as we look into '26. And the color we gave was about $12.6 billion. That's a roughly 8% growth, 5-ish percent organic, which is a starting point and better than where we're expecting to finish this year at the [ 11,650 ] with 7.7% growth.

Right. You mentioned $15 billion of backlog. I don't have the backlog number in front of me. Is that by the end of this year?

It's $14.6 billion right now, in Q3 and with the trends that we're seeing in totality as well as in products, we would envision $15 billion -- seeing a path to $15 billion by year's end and that the products backlog, which has gotten a lot of attention, would be in the high 3s.

Great. And just before I move on to Silvus, obviously, the federal government shutdown was an issue you guys called out on the last call. You said that if it got -- that's resolved relatively shortly after that you would be able to meet the demand for the rest of this quarter. I mean, any thoughts on how things have worked out around the federal government in general?

Just that the government has reopened. We described it as a timing issue, and we're actively reengaged with our customers around the demand that we clearly see. And many of them, the customers, the agencies, the procurement arms, they're just as excited as we are that the government is back open, so that we can together -- come together, make the order and the delivery and the likes.

But the demand within our federal business, even before, I think about OBBA dollars, which have yet to flow is good. And I think with the opportunities in OBBA being pointed at DHS and DoD, each of them is getting $150 billion or more of incremental funding, which we think or know is about a 4-year window. Clarity on that funding. We know it's targeted in areas like defense, border, and our portfolio is used in those applications, video for the border, communications. And those are a good match for incremental new and funding opportunities, and we'll continue to pursue those.

Right. So you mentioned the Silvus acquisition. This is a pretty meaningful deal for you guys. You've renamed the LMR business sort of just generically the mission-critical networks because of this acquisition. So maybe talk about where this fits into your portfolio, why you like this acquisition so much and what you think it does long term for Motorola.

We are excited about this acquisition. I think many of our investors are, too. So Andrew, you and I were on the road last week in Europe. In fact, and so you heard it firsthand from some of our investors about what's exciting about it. What's exciting about it is that it's new for us in terms of a new market. It's defense. It's battlefield communications. It's unmanned systems, and we all know what's happening to drone demand, particularly as countries like ours and overseas look to deploy drones.

What Silvus does, it's a robust communications network that can empower drones that is imperceptible, can't be jammed, can't be taken down. It's robust. It's the best in the space. We like that they're in a leadership position, tremendous engineering, great portfolio, signed over 100 different drone platforms, great customers like [ Arrow ] and Aero Environment. And where we see opportunity in helping them grow is through -- they've got 30-plus salespeople today. We're going to add to that. We have a route to market within defense. We'll expand that. And in the R&D portfolio.

So we're going to go deeper into the space that they're in, which is defense. We see a few opportunities on the public safety side as well. But for the most part, the business case is about going deeper and wider into the accounts that they have. And you'll see us do that and diversify their customer set. We expect 20% plus growth next year, which we mentioned on the call. The starting point this year on a calendar year basis, we've owned them since August 7, is about $500 million on a calendar year basis, and we indicated that next year will be 20%, a bit more than that.

So we're off to a good start. Everything that we've learned, we've diligenced them for over a year, is that we're aligned from an R&D culture, from a sales execution culture and their founder, [ Bobeck ], is outstanding and built a great team, and we're working well together.

Interesting. And you mentioned that you -- one of the things you'd like to help them do is diversify their customer base. Can you give us a sense of the profile of their customers and where a lot of their revenue is coming from? I think you said Ukraine directly is 20%.

About that. Ukraine has been a proving ground, clearly an innovation ground and a demand area for certain. So have the NATO countries that are supporting them in their own regard, so -- and it's been an opportunity for us to prove battlefield technologies, innovate, make the product better and then sell that product, which is a custom off-the-shelf type solution to a lot of different places. And we think there's opportunity to do more of that. And that's in part why we're excited about the partnership.

And when I think about -- you mentioned where we're reporting it. It's mobile ad hoc networking. They're the leader in it. It's about a $3 billion TAM. We think it's going to double in 4 to 5 years. So you've got high-speed data, redundant mission-critical communications networks, MANET. And then you have land mobile radio, narrowband, very effective voice communications tools. They share one element, among others, which is RF. And so that's why we're reporting it together.

They can serve different markets, federal versus state and local and the likes. But it's a nice complement in terms of its technology and the engineering efforts that we have complement each other too.

Right. And you just mentioned that you expect the TAM to double in the next 3 to 4 years.

4 to 5.

4 to 5, sorry. What would drive that doubling? Is it...

Well, the demand profile for drones within defense applications specifically. The number of use cases are expanding unmanned and aerial systems, and the portfolio of Silvus is expanding as well from the high tier, like we starting into other parts of the portfolio, so that it is a great network of choice for customers that want to run drone systems and run them without interference.

Got it. And what is -- I think one of the questions I've gotten plenty is sort of what this means for your, I guess, generically capital allocation priorities going forward, specifically M&A in the defense area. Is this the beginning of something you sought this company out? It seems like acquired them. So a lot of people are curious if this is a new strategy or if this is something that just fits well with your current strategy.

It's more of the latter. We like it because the tailwinds are there, as I described for defense. There's a lot of opportunity for them to grow within that $3 billion TAM. And we think we can improve on the business, improve a number of areas, supply chain and things that a large-scale company like ours can provide to a start-up-type culture. And I think it's much like Avigilon. Avigilon was a starting point that we've added about 12 portfolio companies, too, in video. That was totally new for us.

In the case of MANET networks, they have a leadership in MANET networks, but it's a form of mission-critical networks. So it's close to our core of LMR. And they coexist, and we think that they can work well together and are unique mission-critical networks type technology, and that's where we're recording it.

Got it. And I think you've pointed out it has a 45% EBITDA margin. And that -- it leads me to ask you about kind of the margin, right? So if I look at the last 5 years, you've taken op margins from 25% to 30% roughly. I was just looking. Half of it came from gross margin. Half of it came from OpEx. You just printed a quarter that despite tariff pressure was up, I think, pretty significantly. It was a record, if I recall from your presentation. So I think we're all trying to figure out if you can keep the 40% incremental margins going. And maybe the better way to look at it, if you step back, just what is driving these strong margins in the last few years? Is it just revenue upside? Or is there more to it? Is there more mix, right? You talked about -- obviously, Silvus is going to help, but you talked about a lot of the software. We haven't talked about it yet on the software -- on the video and command side.

There's also the applications on the mobile side as well. So what's driving that margin?

It's a combination of operating leverage for us is driven by, on the products and software and services side, both. We are able to navigate the tariffs and still produce operating earnings this year. You mentioned the headwind. It's about $75 million in the second half of this year. We mitigated a lot of that through costs within our own portfolio, platforming, taking out vendors that were more costly than others and doing the kind of block and tackling that supply chain should be doing. And then ASP appreciation or mix variable does benefit us. When we -- a customer chooses a more feature-rich device, that's benefit to the sales line and also to margins. And you also mentioned it, we'll probably talk about it. We should talk about it, command center.

But the software characteristics of command center of video, software and the like does help as well from the ability to improve op margins.

Right. Has any one of those segments been bigger contributors? Or I know you guys don't report margins by segments, but you do have a lot of transition in video and command to software.

We don't report margins by technologies but LMR being the largest dollar contributor and the high-quality characteristics happening in that portfolio help. But video and command center are higher growers in terms of the absolute dollars they're bringing, both our double-digit growth portfolios for us expected this year. And so one is growing faster and one is bigger. But together, they both bring incremental dollars to the operating margin line when they're growing, right?

Can we talk about the growth? We might as well move to those segments. We could talk about them together. What are your -- what's the growth drivers and outlook in the video business? Why don't we start there? It's the bigger of the 2, has the bigger TAM as well, which is interesting.

Yes, $37 billion TAM in total. This year, it's tracking to over a $2 billion business, 10% to 12% growth expected this year. And about 70% of that is what we call fixed video. So it's cameras securing places like this or municipal government buildings, et cetera, fixed camera systems, camera systems and software. And then in the case of mobile, it's -- about 30% of that is body-worn cameras, in-car cameras and license plate recognition. So that's the 2 portfolios. Both are excellent growers. Both are benefiting from increasing cloud transition. Customers can choose to run the software themselves in an on-prem model where they can choose to have us host and deployed in a subscription-like model. And we're growing those rates 10% to 12% in video and 12% in command center, the 911 business, while going through a high-quality transition to stickier revenues, which you can see in our S&S software results.

Right, right. In the video business, are you growing with the TAM? Are you taking share? What -- and I'm talking -- let's start with fixed because I know they're very different.

Yes, fixed -- so of that TAM, $37 billion, 90% of it is fixed. The other 10% is mobile. And the TAM in fixed is growing last report was mid-singles, and we're growing that at 10% to 12%. So we have been outgrowing the market. That trend started with our acquisition of Avigilon and the organic growth complemented by some portfolio enhancements along with that journey through M&A has gotten us to a point where we're the leader in a number of technologies, including we have -- we are the only portfolio play where we have both in fixed video on-premises as well as cloud. We're offering customers a choice. Some customers want to continue on an on-prem environment. That's a growth opportunity for us. We want to transition to a cloud-based software deployment. Cameras are still the cameras, but it's the software deployment that will be procured differently. We have that as well.

And so I think we've seen good growth. It's faster growth in software of the cloud-based variety in fixed video. And then in mobile video, we see a significant opportunity ahead of us and continuing to go deeper into our accounts around our latest strategy with SVX.

Let's talk about SVX. It's very interesting that your -- you've brought the LMR piece where you're dominant into the body camera to sort of compete against another stronger player in that space. How should we think about you using LMR as a lever to win share in that space? Is that really where you're seeing the advantage? And how successfully in this could be?

Well, there's clearly a convergence taking place between -- in -- around public safety around the 911 center. There's 6,000 of them in the U.S. We have a presence in over 3,600 911 centers. There's a convergence of video, voice, data, all where a platform like ours, which is end-to-end voice video and 911 unrivaled, is an important place to be because those 911 centers are complex operations, taking a call routing a call, dispatching the call, recording everything that happens all the way down the evidence line. And to have an integrated portfolio and the investments that we've made over a number of years, to have a common UI, to have a common experience positions us well at every customer to do something more for them.

The latest is SVX. And that device is a world-class audio assistant. It can do video. We have an excellent back end to a company that does all the things the customer needs. So they can choose now to have a single device, whereas in the world they live in today, they have 2 devices. So it's an opportunity for us as we look forward.

And in order to win in that business, you have to be in CAD or dispatch or computer of interest. And we're in it. It's a tough business. We serve our customers. We serve them well, and it's a differentiator. It's the nervous system of a 911 center. And you have to be in that in order to aspire to serve your customers in all the ways you want to.

Okay. And you mentioned that you've got the applications for the APX NEXT and that you're tying again in another area, LMR business into CAD. Is that another part of what you're talking about?

It's another reason why we chose the revenue reporting relationship to be around what information are we monetizing and we have more opportunity there around the devices platform that we have today, world-class LMR and what can we do to enable more information at the hands of officers, first responders, paramedics to save lives and then to do their jobs better. And we see continued opportunity in this SVX device, which, by the way, is paired uniquely with APX NEXT. That's the pipe. And the applications that we can provide and do provide today are growing and the ARPU opportunity is growing as well. So more number of devices as well as more features, that's part of why we think the growth command center is ripe for growth.

You think in Command Center is doing 10% to 12% this year?

Video is 10% to 12%. Command center is 12%.

Sorry, 12%, is that kind of a -- is that, again, a TAM growth or you...

It's more than TAM. TAM's mid-singles again there, and we're -- how we're able to grow is off that strong platform, being in the customer, solving problems, making that natural migration versus introducing another app that you have to integrate. It all flows through the 911 center.

Sure. Makes sense. Well, this has been great. Thank you so much, Jason.

Yes. One last thing, Andrew. You and I were together in Europe, and you had asked a number of investors around -- there's clearly -- and you made the point to me a rotation taking place in chasing some pretty high-growth names, right? Fundamentally, the growth for our company and the organic growth is improving next year. I made that point. And with multiples and having contracted a little bit presents opportunities for some of the investors we met with where we are on the road. It presents opportunity for us.

We bought back already $400 million this quarter in Q4, which puts us over $1 billion. So remain convicted on the fundamentals of this business and the opportunities ahead of us, and it was a great opportunity to be here and explain more about what's happening at Motorola Solutions.

Right. Fantastic. Thank you so much.

Thank you. It's been great.