Motorola Solutions execs cite continued strength of LMR business during earnings call

Motorola Solutions officials yesterday expressed encouragement by the company’s third-quarter (Q3) results, repeatedly citing strength within the company’s land-mobile-radio (LMR), which is expected to be bolstered by the signing of key contracts in the United Kingdom (UK) and the state of Florida.

“I’m very pleased with our Q3 results that were led by North America,” Motorola Solutions CEO Greg Brown said during the third-quarter earnings call. “We see strong demand across land-mobile-radio products, services and software, and the Avigilon [video-surveillance company] acquisition continues to perform ahead of our expectations.

“I like our momentum in the services-and-software segment. Q3 was another strong quarter for our services business, and we’re seeing continued traction with recent command-center wins that highlight the power of our end-to-end software suite. And, while there’s more work to do, I remain excited about the recurring revenue, margin expansion, and earnings potential of this segment going forward.”

Although Motorola Solutions is an original partner in the AT&T team selected to build and maintain the FirstNet public-safety broadband network, the company’s current 2019 forecast “contemplates no meaningful FirstNet revenue contribution next year,” according to Brown. Last week, AT&T announced that more than 3,600 public-safety agencies use FIrstNet, representing more than 250,000 subscriptions.

Brown said that he is “very pleased” with the company’s LMR business and reiterated a prior announcement that Motorola Solutions would receive $1.45 billion from the UK Home Office for a three-year extension to the Airwave TETRA system. Although the Airwave contract has not been signed yet, the extension deal is “pretty cut and dry,” Brown said.

No terms were announced for the announced extension of the broadband Emergency Services Network (ESN) arrangement with the Home Office, but Brown said that contract would be “signed at the same time” as the Airwave agreement. Company officials’ expectations for ESN revenue “is reasonably modest for 2019,” Brown said.

Motorola Solutions officials are “targeting” that the contracts for both UK extensions will be signed by the end of this year, Brown said.

Brown noted that neither UK extension nor the anticipated contract for the state of Florida P25 network—Motorola Solutions’ selection as the lead vendor was upheld, despite a formal protest by incumbent vendor Harris—are included in the company’s record $9.5 billion backlog to end the third quarter. The UK extension and the Florida deal are expected to generate more than $2 billion in revenue, he said.

Jack Molloy, Motorola Solutions’ executive vice president of products and sales, echoed Brown’s optimism about the LMR business, which he described as “very robust.” Molloy said that the Florida system as “the biggest statewide project” but said the company has “multiple other statewide upgrades that we’re in pursuit of.”

Molloy also hinted that Motorola Solutions would be introducing new products in the command-center software space and offerings “related to our devices.”

Many U.S. companies are surrounded by worries associated with trade threats associated with China, but Brown said that the Chinese market is “not really significant” to the company, which realizes about 2% of its overall revenue in the massive market.

“As a part of a very concerted multiyear effort, we do not do manufacturing in China; we don’t do product development [there],” Brown said. “It is more about sales and sales support and go-to-market distribution.”

Brown said that this approach could benefit Motorola Solutions, as federal lawmakers have expressed concerns about Chinese-manufactured equipment being leveraged by China’s government to enable state-sponsored espionage and cyberattacks.