Motorola Solutions (MSI) Q1 2026 earnings summary

Executive summary

• Q1 2026 sales reached $2.7 billion, up 7% year-over-year, driven by strong international growth, Software and Services, and recent acquisitions.

• Record Q1 backlog of $15.7 billion, up 11% year-over-year, reflecting robust demand across segments.

• GAAP EPS was $2.18, down from $2.53, while non-GAAP EPS rose 6% to $3.37, with non-GAAP operating margin at 28.8%, up 50 bps year-over-year.

• Operating cash flow was $451 million, down from $510 million, and free cash flow was $389 million, down from $473 million, mainly due to higher inventory and interest.

• Completed acquisitions of Exacom and Hyper for $90 million, announced intent to acquire Bell Canada's LMR Network Services business, and recognized $36–40 million in Hytera litigation recoveries.

Financial highlights

• Q1 revenue grew 7% year-over-year to $2,714 million, including $60 million FX tailwinds and $219 million from acquisitions.

• Non-GAAP operating earnings rose 9% to $781 million; GAAP operating earnings were $525 million (19.3% margin), down from 23% last year due to a $75 million Silvus earn-out charge.

• Gross margin was 50.2%, down from 51.4% year-over-year, mainly due to unfavorable mix and supply chain costs.

• SG&A expenses increased 1% to $439 million; R&D expenditures rose 8% to $252 million, both reflecting higher costs from acquisitions.

• Interest expense, net, increased by $53 million to $104 million due to higher debt levels.

Outlook and guidance

• Q2 2026 revenue growth expected at ~8.5%, with non-GAAP EPS between $3.82 and $3.88.

• Full-year 2026 revenue guidance raised to ~$12.8 billion, and non-GAAP EPS to $16.87–$16.99.

• Operating margin expansion of 100 bps expected for the year, with both segments contributing.

• Silvus revenue guidance increased to $750 million for the year, up $75 million.

• Effective tax rate for Q2 at 23% and for the full year at 22.5%.