Motorola Solutions (MSI) Q1 2026 earnings summary

Executive summary

• Q1 2026 sales reached $2.7 billion, up 7% year-over-year, driven by strong growth in Software and Services, international markets, 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 a non-GAAP operating margin of 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, interest, and tax payments.

• Completed acquisitions of Exacom and Hyper for $90 million and agreed to acquire Bell Canada's LMR networks services business, expanding AI, digital evidence, and managed services capabilities.

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, 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 approximately 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.

• Silvus full-year revenue now expected at $750 million, up $75 million from prior guidance.

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

• Management expects continued volatility in the global supply chain and memory markets, with ongoing mitigation efforts for tariffs and rising component costs.