Motorola Solutions, Inc. (NYSE:MSI) Q2 2023 Earnings Call Transcript

Greg Brown: So just a couple points. The first of which is think about the government’s procurement cycle, which is one to say it’s long cycle, it’s long years. We did not announce the mid-tier APX NEXT until Q3, late Q3 of 2022. So Louie, what that’s really a function of a byproduct of when it was announced, what was actually able to be quoted at that point in time. But without question, we’re seeing acceleration to the numbers, $80 million in a quarter on the new orders, the type and the striation of customers that are buying those devices. So the other piece of it, just historically speaking, having worked here long enough to see probably three pretty large scale device refreshes, it typically takes three years – three to five years post-launch to start to alleviate and move those legacy versions down and through the cycle.

Louie DiPalma: Great. And it seems that The House committee has approved a $15 billion next-generation 911 funding bill. And on this topic, what is the status of the integration of Rave Wireless with your VESTA solution? And has the adoption of Rave accelerated as a result of the combination with Motorola? Have you juiced up Rave’s ability to generate orders from the education vertical and enterprise vertical?

Mahesh Saptharishi: Absolutely. So we – as of last quarter, we are now bundling the Rave 911 suite along with our VESTA, new VESTA sales. So it comes part of that as a whole. In addition to that we have been actively working on just – Rave, remember, is an important bridge for us from enterprise security to public safety. And we’re adding more and more lanes to that bridge with every integration that we do here. The VESTA integration is definitely one of those. I mentioned the panic button integration with aware being another one. We’re integrating Rave into Orchestrate, which now ties that in with the video and access control pieces as well. So together Rave now plugs into public safety more effectively. And then Rave and aware together actually allows us to connect different instances of CAD as well.

So dispatchers instances can communicate with each other as well. So as you look at the install base that we have in VESTA, as you look at the install base that we have in schools, K-12 schools with video and access control, we’re leveraging all of that by bringing that together as this bridge between public safety and enterprise security gets wider.

Louie DiPalma: Great. Thanks, Mahesh. And lastly for me, do you have any thoughts on the reported TETRA cybersecurity vulnerabilities?

Mahesh Saptharishi: Sure. So I think the first thing is Etsy is the primary spokesman in custodian for the TETRA standard in conjunction with the critical communications authority in Europe. What was reported, I think the first thing I’d like to point out is what was reported is there was no weaknesses found in the public safety algorithms. There’s three algorithms. Tier 1, TEA1 is actually for general use. It’s a little bit more open due to export control issues. But there’s been no exploitation of operational networks that we know of. And essentially subsequent to those findings, which we knew about even into late last year there’s been software patches and then upgrades to the algorithms that have been done subsequent to that.

So this was actually paid, this was a research tank done out of the Netherlands who actually did the testing. So yes, something we knew about we had a – the primary weakness was in general use, and I think it’s been remediated since then.

Louie DiPalma: Great. So it’s been resolved already. Thanks.

Mahesh Saptharishi: Yes. In our view, yes. Thanks, Louie.

Louie DiPalma: Thanks.

Operator: This concludes our question-and-answer session. I will now turn the floor over to Mr. Greg Brown, Chairman and Chief Executive Officer for any additional comments or closing remarks.

Greg Brown: Thanks, everybody. Thanks for joining us, but just in closing, I want to make sure I thank all the employees and the people in Motorola Solutions worldwide and all of our channel partners worldwide. I’m proud of you and we’re proud of you, most especially what you do, how you do it, and the execution. I said in the call, you heard from Jason and Mahesh and Jack, this business is performing as well as I’ve ever seen it. Demand is strong. It’s strong for what we do, public safety, enterprise security. And I like what we’re doing to meet that demand and exceed that demand with the execution of what we do and what we’re doing on the portfolio reinvention and device refresh. We talk a lot about APX NEXT and all the great work done there, but there’s also great work being done on video security and access control that Mahesh is doing around 911 command center.