Motorola Solutions Raises 2026 Outlook as Q3 Revenue Rises 12%

Motorola Solutions (NYSE: MSI) raised its full-year 2026 revenue and non-GAAP earnings outlook after third-quarter sales increased 12%, supported by double-digit growth across both reporting segments and all three of its technology categories. The company also reported a record $16.6 billion backlog, up 14% from a year earlier, reflecting record third-quarter orders across its Mission Critical Networks, Video Security and Access Control, and Command Center businesses.

Revenue for the quarter ended October 3 rose to $3.38 billion from $3.01 billion a year earlier. GAAP earnings per share were $3.06, compared with $3.33 in the prior-year period, while non-GAAP EPS increased 16% to $4.69. Non-GAAP operating earnings rose 19% to $1.10 billion, and the corresponding margin expanded 200 basis points to 32.5%.

The company’s GAAP operating margin was 23.0%, down from 25.6% a year earlier. Its non-GAAP results exclude items including share-based compensation, intangible-asset amortization, acquisition-related expenses, reorganization charges and a contingent earnout adjustment.

Growth Across Segments and Technologies

Products and Systems Integration revenue increased 12% to $2.12 billion, driven by double-digit growth in Mission Critical Networks and Video. The segment’s non-GAAP operating margin rose 240 basis points to 31.7%, as higher sales and improved operating leverage more than offset increased supply-chain costs.

Notable orders included a $140 million P25 systems and devices contract with the Federal Bureau of Prisons, a $98 million P25 device and SVX order from a U.S. federal customer, and a $63 million P25 systems and devices order from the Metro Government of Nashville and Davidson County. The segment also recorded a $56 million fixed-video order from a large convenience-store chain and a $39 million Silvus order from a German unmanned-systems provider.

Software and Services revenue rose 13% to $1.26 billion, with double-digit growth across all three technologies. Its non-GAAP operating margin increased 120 basis points to 33.8%, supported by higher sales and improved operating leverage.

Major awards included a $139 million, 10-year order from the State of Louisiana covering P25 services, mobile video and Command Center offerings; a $78 million, eight-year mobile-video award from a U.S. federal customer; and a $51 million computer-aided dispatch and records-management order from the Los Angeles Police Department.

By technology, Mission Critical Networks revenue grew 12% to $2.51 billion, Video increased 11% to $594 million, and Command Center rose 16% to $271 million. North American revenue advanced 10% to $2.33 billion, while international revenue increased 18% to $1.05 billion. The company attributed growth in both regions to gains across all three technologies.

Backlog Reaches $16.6 Billion

Software and Services backlog rose by $1.4 billion year over year to $12.4 billion, driven by demand across all three technologies. Products and Systems Integration backlog increased by $635 million to $4.2 billion, reflecting demand for Mission Critical Networks and Video products and systems.

Total backlog was also up $1.03 billion from the second quarter. Motorola Solutions said foreign-currency movements had a $9 million unfavorable effect on ending backlog during the quarter.

Operating cash flow declined to $662 million from $799 million a year earlier, while free cash flow fell to $589 million from $733 million. For the first nine months, operating cash flow was $1.58 billion, compared with $1.581 billion in the prior-year period, and free cash flow was $1.39 billion, down from $1.43 billion.

Motorola Solutions paid $200 million in dividends during the quarter and repurchased $94 million of shares at an average price of $457.07. It also announced a $2 billion increase to its share-repurchase authorization.

The company acquired counter-drone technology provider D-Fend Solutions for $1.3 billion, net of cash acquired. The transaction was funded primarily with $950 million of new long-term notes. At quarter-end, Motorola Solutions reported net debt of $9.34 billion and a net-debt-to-trailing-12-month adjusted EBITDA ratio of 2.2.

Full-Year Outlook Increased

Motorola Solutions now expects full-year 2026 revenue of approximately $13.05 billion, compared with its prior forecast of about $12.98 billion. It projects non-GAAP EPS of $17.94 to $17.99, up from the previous range of $17.62 to $17.72.

The company also raised its full-year operating cash flow expectation by $50 million to $3.05 billion. It forecasts capital expenditures of $275 million and free cash flow of $2.78 billion for the year.

For the fourth quarter, management expects revenue growth of approximately 13% and non-GAAP EPS of $5.47 to $5.52. The full-year outlook assumes an effective tax rate of 21.5% to 22% and about 168 million diluted shares.

Motorola Solutions cautioned that its outlook remains exposed to global economic and political conditions, supply availability and costs, competition, acquisition integration, large multiyear contracts, foreign-exchange movements and cybersecurity threats. The company also identified evolving regulation and compliance requirements involving artificial intelligence, biometrics, video analytics, data protection, telecommunications and government contracting as potential sources of risk.