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Motorola (MSI) Q2 Earnings Top Estimates on Record Revenues
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Motorola Solutions, Inc. (MSI - Free Report) reported strong second-quarter 2024 results with record revenues and operating earnings, driven by the diligent execution of operational plans and healthy growth dynamics backed by solid order trends.
Both adjusted earnings and revenues surpassed the respective Zacks Consensus Estimate. In addition, Motorola ended the quarter with a solid backlog, which further exemplified the strength of its portfolio. The company expects this growth momentum to continue in the near term on robust demand patterns, and raised its guidance for 2024.
Net Earnings
On a GAAP basis, Motorola reported GAAP earnings of $443 million or $2.60 per share compared with $371 million or $2.15 per share in the year-earlier quarter. The year-over-year improvement was primarily attributable to top-line growth.
Excluding non-recurring items, non-GAAP earnings in the quarter were $552 million or $3.24 per share compared with $458 million or $2.65 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 23 cents.
Motorola Solutions, Inc. Price, Consensus and EPS Surprise
Quarterly net sales were record high at $2.63 billion, up 9% year over year, with solid sales in both segments across all regions driven by the strength of its business model and the value of its mission-critical integrated ecosystem. The company witnessed strong demand for video security, command center software and LMR (land mobile radio) services. The top line beat the consensus estimate of $2.59 billion.
Region-wise, quarterly revenues were up 17% in North America to $1.92 billion due to growth in LMR, command center software and video security products. International revenues were down 7% to $711 million as growth in video security products and command center software was more than offset by lower revenues in the United Kingdom, owing to prospective price control on Airwave and the exit from the Emergency Services Network contract. Acquisitions contributed $13 million to revenues, while foreign exchange headwinds were $5 million.
Segmental Performance
Net sales from Products and Systems Integration increased to $1.66 billion from $1.44 billion in the year-ago quarter, driven by higher demand for LMR and video security solutions. The segment’s backlog was down $482 million to $4.3 billion, primarily due to solid LMR shipments.
Net sales from Software and Services were relatively flat at $970 million as solid performance across command center software, LMR and video security services was offset by the impact of the Airwave Charge Control and the exit from ESN. The segment’s backlog increased $164 million to $9.7 billion led by strong demand across all three technologies.
Other Quarterly Details
GAAP operating earnings increased to $644 million from $518 million in the prior-year quarter, while non-GAAP operating earnings were up to $758 million from $641 million. The company ended the quarter with a backlog of $14 billion, down $318 million year over year.
Overall GAAP operating margin was 24.5%, up from 21.6%, while non-GAAP operating margin was 28.8% compared with 26.7% in the year-ago quarter. Non-GAAP operating earnings for Products and Systems Integration were up 56% to $445 million for a margin of 26.8%, driven by higher sales, a favorable mix and improved operating leverage. Non-GAAP operating earnings for Software and Services were $313 million, down 12% year over year, for a non-GAAP operating margin of 32.3% due to the impact of the Airwave charge control.
Cash Flow and Liquidity
Motorola generated $180 million in cash from operating activities in the reported quarter compared with $93 million a year ago, bringing the respective tallies for the first six months of 2024 and 2023 to $562 million and $85 million. Free cash flow in the second quarter was $112 million. The company repurchased $71 million worth of stock during the quarter. As of Jun 30, 2024, MSI had $1.38 billion of cash and cash equivalents with $5.74 billion of long-term debt.
Guidance Up
With solid quarterly results and robust demand patterns, the company raised its guidance for 2024. Non-GAAP earnings for 2024 are currently expected in the $13.22-$13.30 per share range, up from $12.98-$13.08 on revenue growth of 8% (up from 7% expected earlier), with a rise in both segments on higher demand.
For third-quarter 2024, non-GAAP earnings are expected in the $3.32-$3.37 per share range on year-over-year revenue improvement of 7-8%, backed by healthy demand trends.
Moving Forward
Motorola is poised to gain from disciplined capital deployment and a strong balance sheet position. The company expects strong demand across LMR products, the video security portfolio, services and software while benefiting from a solid foundation.
Cogent Communications Holdings, Inc. (CCOI - Free Report) is scheduled to release second-quarter 2024 earnings on Aug 8. The Zacks Consensus Estimate for earnings is pegged at a loss of $1.02 per share, suggesting a decline of 684.6% from the year-ago reported figure.
Akamai Technologies, Inc. (AKAM - Free Report) is slated to release second-quarter 2024 earnings on Aug 8. The Zacks Consensus Estimate for earnings is pegged at $1.54 per share, indicating growth of 3.4% from the year-ago reported figure.
Akamai has a long-term earnings growth expectation of 4.8%. AKAM delivered an average earnings surprise of 5.4% in the last four reported quarters.
Keysight Technologies, Inc. (KEYS - Free Report) is due to release third-quarter fiscal 2024 earnings on Aug 20. The Zacks Consensus Estimate for earnings is pegged at $1.35 per share, implying a decline of 38.4% from the year-ago reported figure.
Keysight has a long-term earnings growth expectation of 5.5%. KEYS delivered an average earnings surprise of 4.4% in the last four reported quarters.
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Motorola (MSI) Q2 Earnings Top Estimates on Record Revenues
Motorola Solutions, Inc. (MSI - Free Report) reported strong second-quarter 2024 results with record revenues and operating earnings, driven by the diligent execution of operational plans and healthy growth dynamics backed by solid order trends.
Both adjusted earnings and revenues surpassed the respective Zacks Consensus Estimate. In addition, Motorola ended the quarter with a solid backlog, which further exemplified the strength of its portfolio. The company expects this growth momentum to continue in the near term on robust demand patterns, and raised its guidance for 2024.
Net Earnings
On a GAAP basis, Motorola reported GAAP earnings of $443 million or $2.60 per share compared with $371 million or $2.15 per share in the year-earlier quarter. The year-over-year improvement was primarily attributable to top-line growth.
Excluding non-recurring items, non-GAAP earnings in the quarter were $552 million or $3.24 per share compared with $458 million or $2.65 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 23 cents.
Motorola Solutions, Inc. Price, Consensus and EPS Surprise
Motorola Solutions, Inc. price-consensus-eps-surprise-chart | Motorola Solutions, Inc. Quote
Revenues
Quarterly net sales were record high at $2.63 billion, up 9% year over year, with solid sales in both segments across all regions driven by the strength of its business model and the value of its mission-critical integrated ecosystem. The company witnessed strong demand for video security, command center software and LMR (land mobile radio) services. The top line beat the consensus estimate of $2.59 billion.
Region-wise, quarterly revenues were up 17% in North America to $1.92 billion due to growth in LMR, command center software and video security products. International revenues were down 7% to $711 million as growth in video security products and command center software was more than offset by lower revenues in the United Kingdom, owing to prospective price control on Airwave and the exit from the Emergency Services Network contract. Acquisitions contributed $13 million to revenues, while foreign exchange headwinds were $5 million.
Segmental Performance
Net sales from Products and Systems Integration increased to $1.66 billion from $1.44 billion in the year-ago quarter, driven by higher demand for LMR and video security solutions. The segment’s backlog was down $482 million to $4.3 billion, primarily due to solid LMR shipments.
Net sales from Software and Services were relatively flat at $970 million as solid performance across command center software, LMR and video security services was offset by the impact of the Airwave Charge Control and the exit from ESN. The segment’s backlog increased $164 million to $9.7 billion led by strong demand across all three technologies.
Other Quarterly Details
GAAP operating earnings increased to $644 million from $518 million in the prior-year quarter, while non-GAAP operating earnings were up to $758 million from $641 million. The company ended the quarter with a backlog of $14 billion, down $318 million year over year.
Overall GAAP operating margin was 24.5%, up from 21.6%, while non-GAAP operating margin was 28.8% compared with 26.7% in the year-ago quarter. Non-GAAP operating earnings for Products and Systems Integration were up 56% to $445 million for a margin of 26.8%, driven by higher sales, a favorable mix and improved operating leverage. Non-GAAP operating earnings for Software and Services were $313 million, down 12% year over year, for a non-GAAP operating margin of 32.3% due to the impact of the Airwave charge control.
Cash Flow and Liquidity
Motorola generated $180 million in cash from operating activities in the reported quarter compared with $93 million a year ago, bringing the respective tallies for the first six months of 2024 and 2023 to $562 million and $85 million. Free cash flow in the second quarter was $112 million. The company repurchased $71 million worth of stock during the quarter. As of Jun 30, 2024, MSI had $1.38 billion of cash and cash equivalents with $5.74 billion of long-term debt.
Guidance Up
With solid quarterly results and robust demand patterns, the company raised its guidance for 2024. Non-GAAP earnings for 2024 are currently expected in the $13.22-$13.30 per share range, up from $12.98-$13.08 on revenue growth of 8% (up from 7% expected earlier), with a rise in both segments on higher demand.
For third-quarter 2024, non-GAAP earnings are expected in the $3.32-$3.37 per share range on year-over-year revenue improvement of 7-8%, backed by healthy demand trends.
Moving Forward
Motorola is poised to gain from disciplined capital deployment and a strong balance sheet position. The company expects strong demand across LMR products, the video security portfolio, services and software while benefiting from a solid foundation.
Motorola currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Cogent Communications Holdings, Inc. (CCOI - Free Report) is scheduled to release second-quarter 2024 earnings on Aug 8. The Zacks Consensus Estimate for earnings is pegged at a loss of $1.02 per share, suggesting a decline of 684.6% from the year-ago reported figure.
Akamai Technologies, Inc. (AKAM - Free Report) is slated to release second-quarter 2024 earnings on Aug 8. The Zacks Consensus Estimate for earnings is pegged at $1.54 per share, indicating growth of 3.4% from the year-ago reported figure.
Akamai has a long-term earnings growth expectation of 4.8%. AKAM delivered an average earnings surprise of 5.4% in the last four reported quarters.
Keysight Technologies, Inc. (KEYS - Free Report) is due to release third-quarter fiscal 2024 earnings on Aug 20. The Zacks Consensus Estimate for earnings is pegged at $1.35 per share, implying a decline of 38.4% from the year-ago reported figure.
Keysight has a long-term earnings growth expectation of 5.5%. KEYS delivered an average earnings surprise of 4.4% in the last four reported quarters.