Motorola Solutions (MSI) Morgan Stanley Technology, Media & Telecom Conference summary

Business strategy and growth drivers

• Expanded from core LMR business into video and command center, leveraging strong customer relationships and R&D investments.

• Video business, started in 2018, now exceeds $2 billion and is growing 10%-12% annually, driven by both organic and inorganic investments.

• M&A remains a key growth lever, with 12-13 acquisitions since 2018, focusing on video, software, and leveraging sales synergies.

• 55% of operating cash flow is allocated annually to M&A or share buybacks, with recent buybacks nearly double the previous quarter.

• Transitioned from hardware-centric to a balanced mix, with over half of 2023 revenue from software, services, and video.

Market environment and customer segments

• State and local government business is robust, with funding primarily from tax receipts and public safety remaining a top priority.

• Federal business focuses on law enforcement agencies, especially DHS, with minimal exposure to military communications.

• Federal funding is a minor contributor to state and local deals, with less than 5% of orders funded by federal programs at peak.

• International LMR business is anchored in Europe and Australia, often using managed services models for predictable revenue.

Product innovation and technology

• APX Next devices, offering advanced features like remote programming and LTE, are expected to exceed 25% of LMR device revenue in 2024, supporting long-term growth.

• AI features in command center products focus on reducing incident response times through real-time translation and transcription.

• R&D investment is nearly $900 million annually, with about half allocated to LMR and command center innovation.

• Integration of LMR, video, and command center solutions is a priority, creating compelling end-to-end offerings.