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

Jason Winkler : And just to remind everybody, the size and scale of our federal business last year was 7% of our total revenues. This year, it’s trending slightly higher than that. It’s an important market for us. And it remains an area of focus, but it’s smaller than state and local.

John Molloy : One final thing that we’ve talked about is around the NDA and Secure Communications Act that has essentially been an unfunded mandate. And now there’s $450 million for the cybersecurity state and local grant, it’s going to fund rip and replace, which should be beneficial from a camera business standpoint.

Meta Marshall : Great. Thank you.

Operator: The next question comes from the line of Ben Bollin with Cleveland Research. Your line is now open.

Unidentified Analyst: Good afternoon. Thanks for taking the question. This is Brian [indiscernible] on for Ben. I was wondering if you could update us on the APX NEXT refresh cycle, kind of where we are in that and how you see that playing out into ’24 and ’25?

John Molloy : Sure. So in 2 words, I’d say, momentum acceleration. We’re now received of $600 million of orders since our introduction in late 2020. We actually did $100 million of orders in Q3 ’23. I think the thing we’re most pleased with is we’re having good success within major cities, but we’re now starting to see smaller state and local customers place orders against us. I would attribute a few things. It’s a lot of the basics, I would call world-class ergonomics, audio quality. But the game changer for us has really been the application adoption customers, the demand to have location that works hand in glove with our command center software and Rave solution, the ease of use by way of smart programming and then the ability to extend the network through SmartConnect have really been a game changer.

I think we look at it and say they’re — when we look at our portfolio, APX NEXT family and radios, there’s really nothing like it in the public safety domain. I think you asked a follow-on question around 20. We’ve typically said our LMR business and the device plays into that as it’s a mid-single-digit kind of business.

Unidentified Analyst: Okay. And one follow-up, if I could, on the Surveillance business. I think you called out incremental verticals getting involved there, but we would love to hear your perspective on the mix between commercial and public sector and surveillance and kind of how that’s shifted and where it’s going?

John Molloy : Sure. So public safety is now one of our two largest vertical markets in terms of video security. And I’d remind everybody that when we acquired Avigilon, that was essentially a nascent business. So that’s been the function of our sales team’s ability to take a new portfolio in the government. So that’s the first thing. In the enterprise, our business in enterprise, particularly in video security and access control is a little different than most. It’s really centered around safety and security. The primary verticals that we touch there, as we’ve said, is education. It’s health care. And then business around energy production and utilities and transportation, which have all grown as well. Those are really the core verticals for that business in the enterprise space.

Unidentified Analyst: Thank you.

Operator: The next question comes from the line of Joe Cardoso with JPMorgan. Your line is now open.

Joe Cardoso : Hey, good afternoon. And thanks for the questions. I actually just want to follow up on the APX NEXT comment and the momentum you’re seeing there in combo with the LMR growing mid-single digits. We’re just coming up against some quarters with tough compares. So I just wanted to — just curious or maybe it’s more of a clarification. If you think that mid-single-digit growth is sustainable even on top of the difficult compares over the next couple of quarters? And then I have a follow-up. Thank you.