Motorola Solutions posts strong results, plans to defer $80 million in Airwave revenue this year

Motorola Solutions officials announced strong earnings during the second quarter—featuring high growth in command-center and video-security offerings—and an improved outlook, despite a ruling that will cause an $80 million deferral in projected revenue from the Airwave network in the United Kingdom (UK).

Motorola Solutions Chairman and CEO Greg Brown expressed optimism about prospects in several product areas, noting the company’s record backlog and an encouraging funding environment for government entities that are core customers.

“This business is performing as well as I’ve ever seen it,” Brown said during the company’s quarterly conference call with financial analysts earlier this month. “Demand is strong. It’s strong for what we do—public safety, enterprise security.

“I like what we’re doing to meet that demand and exceed that demand with the execution of what we do and what we’re doing on the portfolio reinvention and device refresh … There’s also great work being done on video security and access control … around 911 command center.”

Motorola Solutions’ gains during the second quarter were led by 20% growth in command-center offerings and a 17% growth in video-security sales, according to Brown.

In addition, the company continues to realize growth in its traditional stalwart product line: land-mobile-radio (LMR) technology.

“In terms of growth of LMR and the technology, we’ve guided for the full year mid-single-digits, we still expect that to be appropriate full-year guidance,” Brown said. “We’re coming off some monster comps in the first half of this year.”

This LMR projection takes into account the fact that Motorola Solutions will defer $80 million in projected revenue from the Airwave TETRA system that provides mission-critical communications to UK public-safety agencies. This accounting change was done in response to the Competition and Markets Authority (CMA) decision to impose price controls on Airwave services that were slated to begin on Aug. 1.

Motorola Solutions appealed the CMA decision to the Competition Appeal Tribunal, which conducted a two-day hearing on the matter that concluded on Aug. 3.

“Now we will wait to see what they [members of the Competition Appeal Tribunal] rule on the appeal,” Brown said, indicating that he believes the tribunal will announce its decision by the end of September.

Brown emphasized that the fact Motorola Solutions is deferring the $80 million should not be interpreted by outsiders as company officials wavering in their opposition to the CMA ruling.

“It doesn’t change at all our belief and our confidence in this case, by the way,” Brown said. “We’ve been very consistent. We think this action is unprecedented overreaching. It effectively is opening up an already-agreed-on, binding legal contract.”

Brown reiterated his longstanding position that Motorola Solutions “will exercise all legal avenues available to us,” noting that an appeal beyond the Competition Appeal Tribunal would be to the UK Court of Appeals. Brown did not provide a timeline for that process, if it becomes necessary.

Meanwhile, if Motorola Solutions does not succeed in its appeals, the company would defer $80 million in projected Airwave revenue during the rest of this year—a decrease from $560 million last year to $480 million this year—and would project a further decrease of about $100 million in 2024, according to Brown.