Motorola Solutions’ Robust Q2 Driven By Recent Acquisitions, LMR Growth

Motorola Solutions (NYSE:MSI) published a stronger than expected set of second-quarter results, driven by strong demand for its land mobile radio (LMR) products, its recent acquisitions and growth in the EMEA and Americas regions. The robust performance is likely to continue, as the company raised its revenue and EPS guidance for the full year. Below we take a look at the performance of the Products business and what lies ahead.

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LMR Sales Remain Strong

Revenues from Motorola’s Products and Systems Integration stood at about $1.2 billion, marking an increase of $142 million or 14%, including $115 million from acquisitions and the impact of a new accounting standard. Demand for the company’s bread-and-butter LMR products has remained strong, with the Americas and EMEA markets driving demand over the quarter. While the growing demand is partly due to a strong global economy, the company’s ecosystem lock-in and the mission-critical nature of its applications make it unlikely that existing customers will switch to competitors. Motorola indicated that it had a total of 13k LMR systems installed worldwide. The company’s backlog for the Products and Systems Integration segment also expanded by 13% (or $367 million) compared to last year to $3.1 billion.

Avigilon Business Can Benefit From Motorola’s Market Reach 

The recently acquired Avigilon business, which sells security cameras and related analytics software, is also performing well. The company notes that Q2 growth came in at high-teens levels, with the addressable market expanding to close to $12 billion (excluding China), driven by increasing demand for video surveillance and analytics products worldwide. Motorola could see significant synergies, primarily relating to sales and marketing, as it integrates the business. The company indicated that it was focusing on building new routes to the market, leveraging its government sales team (which also sells its deeply entrenched LMR products) and its existing channel partners, many of whom have also sold video-based products in the past.

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