Motorola Solutions (NYSE:MSI) raised its full-year revenue, earnings and cash flow outlook after third-quarter sales rose 12% and orders pushed its backlog to a record $16.6 billion. Management also outlined an initial revenue expectation of approximately $14.25 billion for 2027, while cautioning that higher memory costs could pressure margins.
Chairman and CEO Greg Brown said revenue and adjusted earnings per share exceeded the company’s guidance, with double-digit growth in both operating segments and all three technology categories. Third-quarter orders rose more than 20% from a year earlier, he said.
Non-GAAP earnings per share rose 16% to $4.69 from $4.06, while non-GAAP operating margin expanded 200 basis points to 32.5%. CFO Jason Winkler attributed the margin improvement to higher sales and operating leverage, partly offset by increased supply chain costs.
On a GAAP basis, earnings per share fell to $3.06 from $3.33. Winkler said the decline was primarily due to a $0.52-per-share noncash charge related to an increased earnout provision for Silvus, whose performance he described as strong.
Higher outlook and record backlog
Motorola Solutions now expects 2026 revenue of approximately $13.05 billion, up from its previous forecast of $12.975 billion. It raised its non-GAAP earnings outlook to $17.94 to $17.99 per share from $17.62 to $17.72, and increased its operating cash flow expectation by $50 million to $3.05 billion.
For the fourth quarter, the company projected revenue growth of approximately 13% and non-GAAP earnings of $5.47 to $5.52 per share. It also raised its full-year operating margin expansion expectation to 190 basis points from 170 basis points.
The $16.6 billion quarter-end backlog was up $2.1 billion from a year earlier and $1 billion sequentially. Winkler said record orders across all three technologies drove the increase, with mission-critical networks contributing the largest share.
Products and systems integration revenue rose 12%, with segment operating margin improving to 31.7% from 29.3%. Software and services revenue increased 13%, and its operating margin rose to 33.8% from 32.6%.
Among the quarter’s awards, Winkler cited a $140 million P25 systems and device order from the Federal Bureau of Prisons and a $139 million, 10-year Louisiana order that included P25 services, mobile video and command center solutions.
Silvus growth and drone capabilities
Winkler said Silvus, which supplies communications technology for unmanned systems, is on pace to generate slightly more than $900 million in revenue this year. Its third-quarter revenue was near $300 million, he said, while noting that the business has been non-linear.
Chief Operating Officer Jack Molloy said demand has been strong in unmanned systems in the U.S. and internationally. Motorola Solutions has doubled Silvus’ Los Angeles capacity, and a Salt Lake City facility is expected to begin contributing as the company moves into 2027. Lead times have fallen to roughly 12 to 14 weeks from as much as 20 to 22 weeks, Molloy said.
Brown said the company expects Silvus revenue to grow about 30% in 2027 and does not see a slowdown in demand. That forecast was part of management’s preliminary commentary rather than formal annual guidance, which Brown said would be updated in February.
The company also closed its acquisition of D-Fend for $1.3 billion, net of cash acquired. D-Fend adds drone detection and cyber takeover-based mitigation capabilities. Motorola Solutions expects approximately $45 million of D-Fend revenue in its 2026 results for the period after closing.
Brown said D-Fend is expected to generate about $185 million in revenue for the full 2026 calendar year and grow 40% to 50% in 2027. Winkler said he expects the acquisition to be accretive to the company’s overall margin profile next year.
Memory costs remain a headwind
Brown said the company expects to expand operating margins in 2027 even though direct memory component costs could double from their 2026 level. He put those costs at about $50 million in 2025 and referenced a 2026 estimate of roughly $150 million.
Winkler said more of this year’s roughly $100 million increase is affecting the second half as Motorola Solutions works through inventory. He added that an approximately $75 million benefit from IEEPA tariff refunds helped offset costs this year but would not recur next year.
To manage the pressure, Brown and Winkler cited measures including securing supply, qualifying additional components and suppliers, and making selective price adjustments. Brown said Motorola Solutions was mindful of remaining competitive on pricing.
About Motorola Solutions (NYSE:MSI)
Motorola Solutions, Inc provides communications, software, video security and related services for public safety agencies and commercial and industrial organizations. Its products include two-way radios and land mobile radio systems, dispatch consoles, command center software, video surveillance systems and access control technology.
The company’s offerings are designed to help customers coordinate communications, manage incidents and support security operations. Motorola Solutions also provides services such as system integration, maintenance and technical support.
Motorola Solutions serves customers around the world.
