01—Abstract
Summary
Summary of the 10-Q filed May 7, 2026. Cited figures are marked; the original filing is the authoritative source.
Motorola Solutions, Inc. (MSI) reported net sales of $2.714 billiona for the first quarter of 2026, an increase from $2.528 billion in the prior year's comparable period.
This growth was primarily driven by a significant 18% increase in the Software and Services segment, boosted by contributions from recent acquisitions and organic growth across MCN, Command Center, and Video offerings. The Products and Systems Integration segment saw a modest 1% increase, with strong performance in Video and international markets offset by softness in North America. However, operating earnings declined to $525 millionb from $582 million year-over-year, impacted by a substantial increase in "Other Charges," notably a $75 million contingent earnout charge related to the Silvus acquisition and higher intangible amortization expenses.
Despite the decrease in operating earnings and a rise in interest expense due to increased debt, the company maintained a solid operating cash flow of $451 millionc. MSI also continued its capital return program, repurchasing $118 million of stock and paying $201 million in dividends.
02—Key points
Key Highlights
- Net sales increased by 7% to $2.714 billion, driven by the Software and Services segment's 18% growth.
- Operating earnings decreased by 10% to $525 million, impacted by a significant increase in 'Other Charges' including a $75 million contingent earnout adjustment.
- Net earnings attributable to Motorola Solutions, Inc. decreased to $366 million ($2.18 per diluted share) from $430 million ($2.53 per diluted share) in the prior year.
- The company reported strong growth in its Software and Services segment, up 18%, with acquisitions contributing $38 million to revenue.
- The Products and Systems Integration segment's revenue grew 1%, with international sales increasing 35% while North America sales declined 10%.
- Operating cash flow was $451 million, a decrease from $510 million in the prior year, attributed to increased inventory investments and higher interest/tax payments.
- Motorola Solutions returned $319 million to shareholders through share repurchases ($118 million) and dividends ($201 million) during the quarter.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Motorola Solutions, Inc. kept $0.13.
- Revenue$2.71B100.0%
- Cost of revenue−$1.35B49.8%
- Gross profit$1.36B50.2%
- Operating costs−$837.0M30.8%
- Operating income$525.0M19.3%
- Interest, other & tax−$159.0M5.9%
- Net income$366.0M13.5%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed May 7, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $2.71B$2.77B | −1.8% |
| Cost of Revenue | $1.35B$1.35B | 0.0% |
| Gross Profit | $1.36B$1.41B | −3.6% |
| R&D Expenses | $252.00M$231.00M | +9.1% |
| SG&A Expenses | $439.00M$450.00M | −2.4% |
| Operating Income | $525.00M$692.00M | −24.1% |
| Interest Expense | $111.00M$71.00M | +56.3% |
| Net Income | $366.00M$513.00M | −28.7% |
| EPS (Basic) | $2.21$3.08 | −28.2% |
| EPS (Diluted) | $2.18$3.04 | −28.3% |
| Shares Outstanding (Basic) | 165.80M166.80M | −0.6% |
| Shares Outstanding (Diluted) | 168.00M168.80M | −0.5% |
05—Questions
Frequently Asked Questions
What is the main driver of the revenue increase in the current quarter?
The primary driver of the revenue increase was the strong performance of the Software and Services segment, which grew by 18%. This growth was fueled by contributions from recent acquisitions and organic growth across Mission Critical Networks (MCN), Command Center, and Video offerings. The international region also saw significant growth, contributing to the overall increase.
Why did operating earnings decrease despite the revenue growth?
Operating earnings decreased primarily due to a significant increase in 'Other Charges,' which rose from $49 million in the prior year to $146 million. This increase was largely driven by a $75 million contingent earnout charge related to the Silvus acquisition and a substantial increase in intangible amortization expense. Higher interest expenses related to increased debt also contributed to the decline.
What is the company's strategy regarding acquisitions?
Motorola Solutions continues to actively pursue strategic acquisitions to expand its technology portfolio and ecosystem of safety and security products and services. Recent acquisitions in the Software and Services segment, such as Hyper, Exacom, Blue Eye, Theatro, and RapidDeploy, focus on areas like AI, cloud-native solutions, and video monitoring. The acquisition of Silvus further strengthens its Mission Critical Networks capabilities.
How is the company managing its debt and capital structure?
The company has a significant amount of long-term debt, totaling $8.4 billion. During the quarter, they repaid $200 million of short-term debt. They also have a revolving credit facility and an unsecured commercial paper program, indicating access to liquidity. Motorola Solutions is also actively returning capital to shareholders through share repurchases and dividends, signaling a focus on shareholder value.
06—Continue