Motorola Solutions, Inc. (NYSE:MSI) Q3 2023 Earnings Call Transcript

So we’ll see where we’re at. But as we sit here in November, do I like how we’re entering into 2024? Absolutely. And if there’s any changes to that, obviously, we’ll update you in February.

Adam Tindle : Got it. Okay. And then as we think about that backlog converting to revenue, obviously, supply chain is still challenged, but starting to get better, and I’m wondering what that could ultimately mean for 2024 growth in various scenarios. Obviously, I’m not guiding to that. I hear you on the 10/5 [ph], but if supply were to kind of free up in a blue-sky scenario, are you looking at high single-digit growth or better? What are the kind of the different scenarios based on potential backlog converting to revenue?

Greg Brown : Yes. I think I would just stick to the 10/5 as a general high-level anticipated marker and reserve any additional color on either technologies or segments for the February conversation. But again, Adam, and I appreciate the question. But all I would tell you is I feel very good about going into 2024, and we’ll update you in about 90 days.

Adam Tindle : Okay. Yeah. Understood. I know you like to stay conservative, which I think we all appreciate. Maybe just 1 final point on this for Jason. As this backlog comes through, can you maybe speak to the margin profile of that? I can’t remember if you’re a FIFO or LIFO, but there may be some benefit from higher priced backlog coming through and would think that would potentially help margins moving forward. But any finer point you can put on the mechanics of that would be helpful. Thanks.

Jason Winkler : Sure. So beginning in Q3 of last year is when our P&L began to see the benefits of the work that Jack and his team did around strategic pricing. We’ve seen that continue in the back half of last year as well as the entirety of this year. So continue to focus on price and optimization and some of our new products, which customers really like also come at a price increase for us. So in terms of backlog, we prioritize around, first of all, customers — priority goes to public safety. But for the most part, the backlog that we do have in products is representative of the prices that we’ve implemented CIRCA July of last year. So you’ve seen it show up in the P&L, and we would expect that to continue with our growth being driven by both volume and price.

Greg Brown : And I think we do expect operating margin next year.

Jason Winkler : Absolutely. Yes, exactly.

Adam Tindle : Okay. Appreciate the clarification. Thanks, guys.

Jason Winkler : Thanks.

Operator: The next question comes from the line of Tomer Zilberman with Bank of America. Your line is now open.

Tomer Zilberman : Hey, guys. Thank you for the question. Just the first one for me. So your revenue outperformance this quarter versus street expectations really shown through LMR and Command Center. But it looks like you fell a little bit short on a Video product and SI. Can you talk about the weakness there? What drove the 5% growth this quarter?

John Molloy : Sure. Thanks, Tomer. So first of all, I want to highlight the fact that we’re actually really pleased with Q3 because the 8% is against the backdrop of a comp last Q3 of 33%. So our full year expectations remain unchanged. It’s really a linearity story. And I think leaving that, I think we take a look at it and say, from an alignment standpoint from the portfolio investments, we just announced the H6A camera. We’re now shipping the ACC8, which is a unified video management solution. And then more importantly, if you think about the verticals that we serve, it’s government, which has shown resilience in funding, it’s education is health care and industrial, which has actually grew 17% for us this quarter. We’re really pleased, and we think there’s good synergies on the investments we’re making in the markets that we serve.