Motorola's Q1 Earnings Beat Estimates on Solid Revenue Growth

Motorola Solutions, Inc. MSI reported strong first-quarter 2025 results, with both the bottom line and revenues surpassing the respective Zacks Consensus Estimate. The company witnessed healthy revenue and operating earnings growth year over year, driven by the diligent execution of operational plans and strong growth dynamics backed by solid order trends. Management expects this growth momentum to continue in the near term on robust demand patterns.

Net Earnings

On a GAAP basis, net earnings in the first quarter were $430 million or $2.53 per share against a net loss of $39 million or a loss of 23 cents per share in the year-earlier quarter. The year-over-year improvement was primarily attributable to top-line growth.

Excluding non-recurring items, non-GAAP earnings in the quarter were $540 million or $3.18 per share compared with $482 million or $2.81 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 17 cents. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Revenues

Quarterly net sales were $2.52 billion, up 6% year over year, backed by growth in North America. Solid sales in both segments were driven by the strength of the company’s business model and the value of its mission-critical integrated ecosystem, which further boosted the top line. The company witnessed strong demand for video security, command center software, and LMR (land mobile radio) services. The top line beat the Zacks Consensus Estimate of $2.51 billion.

Region-wise, quarterly revenues increased 9% year over year in North America to $1.9 billion from $1.7 billion due to growth in LMR, command center software, and video security products. International revenues decreased 3% year over year to $676 million from $696 million, owing to a decline in LMR, partially offset by growth in Video and Command Center.

Segmental Performance

Net sales from Products and Systems Integration increased to $1.54 billion from $1.49 billion in the year-ago quarter, driven by higher demand for LMR and video security solutions. It missed our estimates of $1.56 billion. The segment’s backlog decreased $1 billion year over year to $3.6 billion, primarily due to strong LMR shipments. 

Net sales from Software and Services were up 9% year over year to $982 million from $899 million, with solid performance across command center software, LMR and video security services. The segment revenues beat our estimates of $946 million. The segment’s backlog was up $732 million to $10.5 billion due to strong demand for all three technologies.

Other Quarterly Details

GAAP operating earnings increased to $582 million from $519 million in the prior-year quarter. Non-GAAP operating earnings improved to $716 million from $638 million, backed by increased sales, favorable product mix and lower material expenses. The company ended the quarter with a backlog of $14.1 billion, down $306 million year over year. Overall, GAAP operating margin was 23%, up from 21.7%, while non-GAAP operating margin was 28.3% compared with 26.7% in the year-ago quarter. 

Non-GAAP operating earnings for Products and Systems Integration increased 24.8% year over year to $434 million with a margin of 28.1%. The uptick was driven by higher sales, a favorable mix and lower direct material costs. Non-GAAP operating earnings for Software and Services were $282 million, up from $268 million a year ago, for a non-GAAP operating margin of 28.7%.

Cash Flow and Liquidity

Motorola generated $510 million in cash from operating activities in the reported quarter compared with an operating cash flow of $382 million a year ago. Free cash flow in the quarter was $473 million.

During the quarter, the company repurchased $325 million worth of stock. As of March 31, 2025, MSI had $1.56 billion of cash and cash equivalents and $5.67 billion of long-term debt.

Guidance

For the second quarter of 2025, the company expects revenue growth of approximately 4% year over year, with non-GAAP EPS between $3.32 and $3.37 per share. Non-GAAP effective tax rate is forecasted to be approximately 23.5%.

For 2025, management expects non-GAAP earnings in the $14.64 to $14.74 per share range on revenue growth of approximately 5.5%, with a rise in both segments on higher demand. Non-GAAP effective tax rate is estimated to be approximately 23.0%.

MSI’s Zacks Rank & Stocks to Consider

Motorola currently carries a Zacks Rank #3 (Hold).

InterDigital IDCC sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the trailing four quarters, InterDigital delivered an earnings surprise of 160.15%. It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. InterDigital boasts a comprehensive portfolio of more than 33,000 granted patents and applications. The company witnessed an exceptional year in innovation in 2024, with more than 5,000 new patent filings worldwide.

Ubiquiti Inc. UI carries a Zacks Rank #2 (Buy) at present. The company offers a comprehensive portfolio of networking products and solutions for service providers and enterprises. In the trailing four quarters, Ubiquiti delivered an earnings surprise of 7.48%.

Ubiquiti’s excellent global business model, which is flexible and adaptable to evolving market changes, helps it overcome challenges and maximize growth. The company’s effective management of its strong global network of more than 100 distributors and master resellers improved its visibility for future demand and inventory management techniques.

Ericsson ERIC carries a Zacks Rank #2 at present. Ericsson is well-positioned to cash in on the market momentum with its competitive 5G product portfolio. The company continues to execute its strategy to become a leading mobile infrastructure provider and establish a focused enterprise business. In the last reported quarter, Ericsson delivered an earnings surprise of 33.33%.

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