What’s The Outlook Like For Motorola Solutions?

May 8th, 2018 by Trefis Team
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MSI: Motorola Solutions logo
MSI
Motorola Solutions

Motorola Solutions (NYSE:MSI) published its Q1 2018 results last week, reporting a stronger than expected set of revenues and earnings, driven by strong demand for the company’s land mobile radio products and growth in the EMEA market. The company’s outlook also remains upbeat, as it posted a record backlog position, while also raising its financial outlook for the full year. The company has upped its adjusted EPS guidance to $6.70 to $6.85, up from the prior outlook of $6.50 to $6.65. Below, we take a look at what lies ahead for Motorola Solutions.

We have created an interactive dashboard analysis outlining Motorola Solution’s expected performance over 2018.

LMR Demand And Recent Acquisitions Drive Products Business

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Motorola Solutions’ products segment has seen significant traction, with sales expanding by roughly 14% year-over-year to $801 million, compared to growth rates of under 4% during 2017. Motorola has guided for overall revenue growth of roughly 14% this year, up from the prior outlook of 10% to 11%. The growth is likely to be driven by demand for LMR products and services from both public safety and commercial customers as well as the company’s recent acquisitions, such as its purchase of security camera market Avigilon. That said, we believe that margins could trend lower, as these sales are likely to be less lucrative compared to U.S. LMR sales. The company’s product backlog is also trending higher, standing at $1.7 billion at the end of Q1, up $166 million or 11% compared to last year, driven by both the North America and EMEA markets.

Motorola’s services business has also been expanding as a percentage of overall sales. We expect the business to grow in the long run, driven by the company’s acquisitions in the managed and support services space as well as growth in software sales. The services backlog has been expanding, standing at $7.9 billion, up $973 million or 14% versus last year, driven primarily by recurring managed & support services.

 

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