Key financial results

  • Revenue for the quarter grew 12% and exceeded guidance.Revenue and earnings per share exceeded our guidance as we continue to see strong menu across our entire safety and security ecosystem
  • GAAP operating earnings were $777 million, representing 23% of sales.GAAP operating earnings were $777 million or 23% of sales
  • Non-GAAP operating earnings were almost $1.1 billion, an increase of 19% compared to the year-ago quarter.Non-GAAP operating earnings were almost $1.1 billion, up 19% from the year ago quarter
  • Non-GAAP operating margin was 32.5%, an increase of 200 basis points driven by operating leverage.non-GAAP operating margin was 32.5%, up 200 basis points, driven by higher sales and improved operating leverage
  • GAAP earnings per share was $3.06, impacted by a noncash charge related to the Silvus earn-out provision.GAAP earnings per share was $3.06, down from $3.33 in the year ago quarter
  • Non-GAAP earnings per share was $4.69, up 16% from $4.06 in the prior year.Non-GAAP EPS was $4.69, up 16% from $4.06 last year.
  • Operating cash flow for the quarter was $662 million, and free cash flow was $589 million.

Business segment results

  • Products and SI: Products and SI segment sales grew 12%, with operating earnings of $671 million or 31.7% of sales.Operating earnings were $671 million or 31.7% of sales up from 29.3% in the prior year
  • Software and Services: Software and Services segment revenue grew 13%, with operating earnings of $425 million or 33.8% of sales.Operating earnings in the segment were $425 million or 33.8% of sales, up from 32.6% of sales last year
  • North America: North America revenue was $2.3 billion, up 10% with growth across all three technologies.
  • International: International revenue was $1 billion, up 18% with double-digit growth in all three technologies.
  • The ending backlog reached a record $16.6 billion, an increase of $2.1 billion compared to the prior year.Q3 ending backlog was an all-time record of $16.6 billion, up $2.1 billion or 14% versus last year

Capital allocation

  • Capital allocation during the quarter included $200 million in cash dividends, $94 million in share repurchases, and $73 million in CapEx.Capital allocation for Q3 included $200 million of cash dividends, $94 million in share repurchases and $73 million of CapEx.
  • The Board of Directors approved a $2 billion increase to the share repurchase program.Additionally, during the quarter, our Board of Directors approved a $2 billion increase to the share repurchase program.
  • The company raised $950 million in new long-term senior debt and refinanced $300 million of Silvus term loans.In August, we raised $950 million of new long-term senior debt at attractive rates to fund the Defend acquisition
  • Demand for safety and security solutions remains strong, particularly for unmanned systems and high-bandwidth communications.The overall demand profile for safety and security remains robust.
  • Public safety funding remains consistent regardless of political cycles, with state and local funding remaining strong.public safety bubbles to the top consistently. In blue administrations, in red administrations, funding remains really strong at state and local.
  • There is an urgent priority for drone detection and mitigation tools within public safety and critical infrastructure.As drone detection and mitigation becomes an urgent priority for public safety and critical infrastructure

Competitive landscape

  • Silvus is considered a market leader in high-throughput, jam-resistant tactical communications for contested environments.in the most contested congested environments, it's the market leader.
  • The company continues to win competitive contracts by integrating mobile video and command center solutions with LMR devices.continued competitive wins like this one, demonstrate how customers are recognizing the compelling value of complementing our next-generation LMR devices
  • The Defend acquisition provides differentiated cyber takeover capabilities for counter-UAS applications.we love the fact that they have leading-edge mitigation cyber takeover technology, which is much more than just jamming mitigation

Macroeconomic environment

  • Foreign exchange tailwinds contributed $11 million to revenue during the quarter.FX tailwinds were $11 million.
  • Management identified memory costs as a significant headwind, noting they could potentially double in 2027 compared to 2026.It wouldn't surprise us if memory costs that could very well double, 2027 over 2026.

Growth opportunities and strategies

  • The company is integrating AI Assist across its portfolio to streamline emergency workflows.our purpose-built Assist AI amplifies the integration across these technologies, streamlining the end-to-end emergency workflow
  • The company is expanding the Silvus sales force and R&D investment to capture international demand in NATO and the Indo-Pacific.We've expanded internationally, and we're starting to get some significant traction in NATO
  • The D-Series infrastructure refresh cycle is in its early stages and represents a multiyear opportunity.we've got over 1,300 P25 networks. We are very much in the early stages of a multiyear refresh.

Financial guidance and outlook

  • Q4 sales growth is expected to be approximately 13%.We expect Q4 sales growth of approximately 13%
  • Q4 non-GAAP EPS is expected to be between $5.47 and $5.52 per share.non-GAAP EPS between $5.47 and $5.52 per share.
  • Full year revenue guidance was raised to approximately $13.050 billion.For the full year, we now expect revenue of approximately $13.050 billion, up from our prior guidance of $12.975 billion
  • Full year non-GAAP EPS guidance was raised to between $17.94 and $17.99 per share.non-GAAP EPS between $17.94 and $17.99 per share, up from our prior guide of between $17.62 and $17.72 per share.
  • Full year operating cash flow expectations were raised by $50 million to $3.05 billion.we're now raising our operating cash flow expectations $50 million from $3 billion to $3.05 billion for the year.
  • Preliminary 2027 revenue expectations are approximately $14.25 billion.we're expecting, again, high level, Tim, revenue approximately in the ZIP Code of [ $14.25 billion ].

M&A and Integration

  • The acquisition of Defend closed for $1.3 billion net of cash acquired.we are excited about the acquisition of Defend, which we closed for $1.3 billion net of cash acquired.
  • The acquisition of Bell Canada's LMR network services business is now expected to close in Q1 or Q2 of next year.Bell Canada's LMR network services business, an acquisition we previously expected to close in Q4 is now expected to close in Q1 or Q2
  • Silvus is on track to generate over $900 million in revenue for the full year 2026.it's on pace to do probably a little more than $900 million this year.

Supply Chain and Capacity

  • Silvus lead times have been reduced from approximately 20-22 weeks to 12-14 weeks.we've been able to remediate from what was at 1 point in time around 20, 21, 22 weeks were down around 12 weeks right now, 12 to 14 weeks
  • The company has expanded manufacturing capacity in Los Angeles and is bringing a new facility in Salt Lake City online to support 2027 demand.Salt Lake City, which we announced, I think 60 days ago, will start to come online and get some benefits of that as we roll into 2027.

Q3 2026 results

MetricResultChange
Revenue growth12%Year-over-year
Non-GAAP operating margin32.5%Up 200 basis points
Non-GAAP EPS$4.69Up 16% year-over-year
Ending backlog$16.6 billionUp $2.1 billion year-over-year
Operating cash flow$662 millionNot stated

How management sounded

Positive (+45 on our -100 to +100 scale). Management raised full-year guidance for the third time, highlighted record backlog, and expressed high confidence in demand and margin expansion for 2027 despite supply chain headwinds. Management sounded more upbeat than on 62% of the 302 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.

Read the analyst Q&A summary and guidance and outlook for this call.

What to watch before the next call

  • Integration of the newly acquired Defend business and its counter-UAS technology.
  • Supply chain management, specifically the expected doubling of memory costs in 2027.
  • The timing of the Bell Canada LMR network services acquisition, now expected in Q1 or Q2 2027.

Earlier calls

  • Q2 2026 (Aug 5, 2026), tone Positive: Motorola Solutions reported record second-quarter results with 13% revenue growth and raised its full-year guidance. Strong demand across all segments and technologies, particularly in land mobile radio and Silvus, drove the performance.