Motorola Solutions, Inc. (NYSE:MSI) Q4 2023 Earnings Call Transcript

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Louie DiPalma: Great. And are the economics significantly different for Alta versus Unity? Are you actively pushing for one instead of the other?

Greg Brown: We’re positioned to offer our customers a choice. As Jack mentioned, we have growth expectations for both Unity, the on-prem as well as Alta, customers like those in education, we mentioned on the call are increasingly choosing Alta. The difference between the two is really how the VMS or software layers delivered. In the case of Alta, the VMS is delivered and deployed to the cloud under a term license. And in the case of Unity, it’s an on-prem and more of a perpetual with a maintenance arrangement. So, those are the two models we have. Jack, customers are…

Jack Molloy: Yeah. Two things there, Louie is the purchase decision remains very dynamic up until the last call it two to three weeks of a decision. But it’s interesting as we look at win-loss data, one of the interesting things is that we’ve had our competitors who are more point solution providers who have been eliminated from decisions and we’ve had both Alta and Unity as finalist decisions. Which again, I think speaks to the breadth and the advantage that gives us in the marketplace.

Greg Brown: And Louie, while the customer decides, it’s not so much what we push, it’s what they want. And as Jack said, many customers deploy — they deploy both. Cloud fixed video is smaller from our overall revenue contribution than prem fixed video, but it’s noteworthy to say that the growth of cloud fixed video is a strong multiple of the prem solution.

Louie DiPalma: Yeah. Is there increasing momentum for Alta? I think you mentioned how 25% of the growth for 2023 with Video is from Alta, do you think that 25% is going to increase to 35% or something like that in 2024?

Greg Brown: I don’t know, it depends on what ’24’s growth composition ultimately ends up being. But what I will say is the cloud solution, in our case Alta is growing significantly faster than prem. So it’s hard to predict the competition — the composition at end of year ’24 till we see how things settle.

Louie DiPalma: That’s all I have. Thanks, everyone.

Greg Brown: Thank you, Louie.

Operator: [Operator Instructions] Our next question comes from the line of Meta Marshall with Morgan Stanley. Your line is now open.

Unidentified Analyst: Hey, everyone. You’ve got [Jamie] (ph) on for Meta. I appreciate you taking the time. Similar to one of the earlier questions and understanding that you’re still seeing strong growth and some impressive wins in the quarter, the Q4 growth and accompanying 2024 outlook in Command Center just looked a little bit lower than what we had been modeling. So, I guess is there any additional detail you can provide as to — as to what you’re seeing there and what’s driving that outlook on ’24? And then as a follow-up, how should we think about the contribution from pricing broadly in the growth outlook for ’24?

Greg Brown: And maybe we can tag team this. But Command Center, that’s another one I was particularly proud of, because we grew 21% for the year. Now obviously Rave, what’s the key driver in that and Rave has turned out to be a great acquisition for us, actually exceeding its business case. Can you take that out, Jamie, and you normalize for organic growth, the organic growth is another solid year of 10% growth. And by the way, that’s inclusive of the growth of a $25 million headwind, that actually represents the transitioning out of ESN. So when you think about the overall 10% growth of Command Center, you do have to include the normalization of the exit of ESN that’s worth $25 million but growth remains pretty strong in that segment as well.

Jason Winkler: And in terms of growth drivers for ’24, we would expect growth from both volume and price Inclusive of ASPs continuing to grow as they did in ’23 as our customers adopt more of the feature-rich part of the portfolio, including APX NEXT in other parts of the portfolio, we would expect that to continue and that’s included in our growth expectations.

Unidentified Analyst: Great, thank you so much for the time.

Greg Brown: Thanks, Jamie.

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

Greg Brown: Yeah, thanks. Listen, thank you for dialing-in and listening. I would just close by saying that, I think as we’re entering 2024 or in it now in February, it’s pretty clear that public safety and enterprise security have never been more important. I love the fact that we’ve got the broadest and most comprehensive product portfolio. I like the fact that as customers index to a more notable adoption on cloud acceleration, we’re able to capitalize on that with our Alta solution. I love the fact that we have the APX NEXT refresh cycle in particular continue to march forward and that remains robust. And as was mentioned on the call, I am particularly excited about our partnership with Google. For all of the [Motorolas] (ph) listening-in on the call.

I’m really proud of you. I’m proud of our team’s execution in ’23 and I’m anticipating another strong year in 2024 and I appreciate everything you’re doing. I look-forward to catching-up and talking with you and debriefing in a quarter. Thanks again for all the great work.

Operator: Ladies and gentlemen, this does conclude today’s teleconference. A replay of the call will be available over the Internet within three hours. The website address is www.motorolasolutions.com/investor. We thank you for your participation and ask that you please disconnect your lines at this time.

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