Why is GAAP EPS growth (+38%) so much higher than non-GAAP EPS growth (+11%)?

The 2024 GAAP base was depressed by a $585M loss on extinguishing Silver Lake convertible debt, which was excluded from non-GAAP results. The 2025 GAAP figure benefited from a $157M Hytera litigation gain, which is also excluded from non-GAAP. Both effects inflate GAAP growth relative to the underlying business, so non-GAAP EPS (+11%) is the better gauge of operating performance.

What drove the strong Q4 growth, and is it sustainable?

Q4 sales rose 12%, with about $188M from acquisitions and about $30M from favorable FX, so organic growth was roughly 6%. Software and Services grew 15%, led by large renewals such as the $201M Maryland P25 services deal. Acquisitions and a strong backlog support near-term momentum, but the organic rate is considerably below the headline figure.

Is the backlog growth broad-based?

No. The $1B increase to a record $15.7B came from Software and Services, which grew 13% (about $1.4B, including $381M of FX). Products and Systems Integration backlog fell 8% (about $323M), reflecting strong MCN shipments in the first half of 2025. Investors should watch whether hardware orders re-accelerate.

What are the main risks flagged for 2026?

The release highlights tariffs under IEEPA and related trade actions, volatility in memory and other components driven by AI data center demand, and supply chain cost pressure. Management says it substantially mitigated material cost increases in 2025 but expects continued mitigation work. Hytera collections are also uncertain: a court has not yet ruled on whether the $101M of H-Series royalties must be paid into escrow or directly to the company.

How much debt did the company take on, and how does it affect the outlook?

Long-term debt rose to $8.4B from $5.7B after $2B of senior notes and $1.5B of Silvus term loans (now $1.3B outstanding), and short-term borrowings were $749M at year-end. Interest expense, net, rose to $302M from $227M. The company renewed a $2.25B revolver through 2030, and its cash flow comfortably covers dividends and buybacks, but higher interest costs will weigh on GAAP earnings in 2026.

MSI 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed February 11, 2026. Cited figures are marked; the original filing is the authoritative source.

Motorola Solutions (NYSE: MSI) reported record full-year 2025 results in its February 11, 2026 earnings release.

Full-year sales rose 8% to $11.7 billion^a (organic growth about 4%, with acquisitions contributing $382 million), and Q4 sales rose 12% to $3.4 billion. GAAP EPS was $12.75 for the year, up 38%, aided by a $157 million Hytera litigation gain and the absence of the 2024 Silver Lake debt extinguishment loss. Non-GAAP EPS was $15.38, up 11%.

Free cash flow reached a record $2.6 billion^b, up 21%, and the company ended the year with a record $15.7 billion backlog. Growth was driven by Software and Services, which rose 13% for the year and 15% in Q4, while Products and Systems Integration grew 5% for the year and 11% in Q4. Backlog growth was concentrated in Software and Services, while Products and Systems Integration backlog fell 8% after strong first-half MCN shipments.

The company also closed four acquisitions for $4.9 billion^c, including Silvus, and its balance sheet carries more leverage as a result: long-term debt rose to $8.4 billion and goodwill to $6.8 billion, with total assets up about 33%. Looking ahead, management guided 2026 revenue to about $12.7 billion (roughly 9% growth) and non-GAAP EPS to $16.70 to $16.85.

Q1 2026 guidance calls for 6% to 7% revenue growth and non-GAAP EPS of $3.20 to $3.25^d. Investors should weigh tariff and memory-supply volatility, the pending Hytera collections, and the higher debt load against the strong demand and cash generation.

02—Key points

Key Highlights

FY2025 sales of $11.7B (+8%); Q4 sales of $3.4B (+12%), with organic revenue up about 4% for the year and 6% in Q4.
GAAP diluted EPS of $12.75 (+38%) versus non-GAAP EPS of $15.38 (+11%). The GAAP gap reflects the absence of 2024's Silver Lake debt extinguishment loss and a $157M Hytera gain in 2025.
Record operating cash flow of $2.8B (+19%) and record free cash flow of $2.6B (+21%).
Record ending backlog of $15.7B, up $1B; Software and Services backlog rose 13%, while Products and Systems Integration backlog fell 8%.
2026 guidance: revenue of about $12.7B and non-GAAP EPS of $16.70 to $16.85; Q1 2026 revenue growth of 6% to 7% and non-GAAP EPS of $3.20 to $3.25.
Capital deployment in 2025: $4.9B on four acquisitions (including Silvus), $1.2B of buybacks, and $728M of dividends; $2B of senior notes were issued and $1.5B of Silvus term loans were drawn, with $200M repaid after year-end.
Balance sheet leverage increased: long-term debt rose to $8.4B from $5.7B and goodwill rose to $6.8B from $3.5B.

03—Questions

Frequently Asked Questions

Why is GAAP EPS growth (+38%) so much higher than non-GAAP EPS growth (+11%)?
The 2024 GAAP base was depressed by a $585M loss on extinguishing Silver Lake convertible debt, which was excluded from non-GAAP results. The 2025 GAAP figure benefited from a $157M Hytera litigation gain, which is also excluded from non-GAAP. Both effects inflate GAAP growth relative to the underlying business, so non-GAAP EPS (+11%) is the better gauge of operating performance.
What drove the strong Q4 growth, and is it sustainable?
Q4 sales rose 12%, with about $188M from acquisitions and about $30M from favorable FX, so organic growth was roughly 6%. Software and Services grew 15%, led by large renewals such as the $201M Maryland P25 services deal. Acquisitions and a strong backlog support near-term momentum, but the organic rate is considerably below the headline figure.
Is the backlog growth broad-based?
No. The $1B increase to a record $15.7B came from Software and Services, which grew 13% (about $1.4B, including $381M of FX). Products and Systems Integration backlog fell 8% (about $323M), reflecting strong MCN shipments in the first half of 2025. Investors should watch whether hardware orders re-accelerate.
What are the main risks flagged for 2026?
The release highlights tariffs under IEEPA and related trade actions, volatility in memory and other components driven by AI data center demand, and supply chain cost pressure. Management says it substantially mitigated material cost increases in 2025 but expects continued mitigation work. Hytera collections are also uncertain: a court has not yet ruled on whether the $101M of H-Series royalties must be paid into escrow or directly to the company.
How much debt did the company take on, and how does it affect the outlook?
Long-term debt rose to $8.4B from $5.7B after $2B of senior notes and $1.5B of Silvus term loans (now $1.3B outstanding), and short-term borrowings were $749M at year-end. Interest expense, net, rose to $302M from $227M. The company renewed a $2.25B revolver through 2030, and its cash flow comfortably covers dividends and buybacks, but higher interest costs will weigh on GAAP earnings in 2026.

04—Continue

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