Q4 2021 Motorola Solutions Inc Earnings Call

Good afternoon, and thank you for holding welcome to the Motorola solutions fourth quarter 2021 earnings conference call. Today's call is being recorded if you have any objections. Please disconnect at this time.

Speaker 1: Good afternoon and thank you for holding. Welcome to the Motorola Solutions fourth quarter 2021 Earnings Conference call. Today's call is being recorded. If you have any objections, please disconnect at this time.

Speaker 1: The presentation material and additional financial tables are currently posted on the Motorola Solutions Investor Relations website.

The presentation material and additional financial tables are currently posted on the Motorola solutions Investor Relations website.

Speaker 1: In addition, a replay of this call will be available approximately three hours after the conclusion of the call over the past few days.

In addition, a replay of this call will be available approximately three hours after the conclusion of the call over the Internet.

Speaker 1: The website address is www.motorollasolutions.com slash invest.

The website address is www dot Motorola solutions Dotcom slash investor.

Speaker 1: At this time, all participants have been placed in a listen-only...

At this time, all participants have been placed in a listen only mode.

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You will have an opportunity to ask questions. After today's presentation I would now like to introduce Mr. Tim Yocum, Vice President of Investor Relations. Mr. Yocum, you may begin your conference.

Speaker 1: You will have an opportunity to ask questions after today's presentation. I would now like to introduce Mr. Tim Yocum, Vice President of Investor Relations. Mr. Yocum?

Yeah.

Speaker 2: Good afternoon. Welcome to our 2021 fourth quarter earnings call with me today are Greg Brown, Chairman and CEO , Jason Winkler, Executive Vice President and CFO , Jack Malloy, Executive Vice President and COO and Mahesh Saptarishi, Executive Vice President and CTO. Greg and Jason will review our results along with commentary and Jack and Mahesh will join for Q&A.

Good afternoon, welcome to our 2021 fourth quarter earnings call with me today are Greg Brown, Chairman and CEO , Jason Wangler Executive Vice President and CFO , Jack Molloy Executive Vice President and C O O and Mahesh SAP, the Risi Executive Vice President and C. T O, Greg and Jason will review our results along with commentary and Jack.

And the hash will join for Q&A, We've posted an earnings presentation and news release at Motorola solutions Dotcom slashed Investor. These materials include GAAP to non-GAAP reconciliations for your reference and during the call we reference non-GAAP financial results, including those in our outlook unless otherwise noted.

Speaker 2: We posted an earnings presentation and news release at motoroilsolutions.com slash investor. These materials include gap to non-gap reconciliations for your reference.

Speaker 2: And during the call, we referenced non-GAAP financial results, including those in our outlook, unless otherwise noted.

Speaker 2: A number of forward-looking statements will be made during this presentation and during the Q&A portion of the call. These statements are based on current expectations and assumptions that are subject to a variety of risks and uncertainties. Actual results could differ materially from these forward-looking statements.

A number of forward looking statements will be made during this presentation and during the Q&A portion of the call. These statements are based on current expectations and assumptions that are subject to risks uncertainties actual results could differ materially from these forward looking statements information about factors that could cause this.

Speaker 2: information about factors that could cost us. This can be found in today's earnings news release, in the comments made during this conference call, in the risk factor section of our 20th annual report on Form 10-K , and in our other reports and filings with the SEC. We do not undertake any duty to state any for the record.

Can be found in today's earnings news release, and the comments made during this conference call in the risk factors section of our <unk> annual report on Form 10-K , and in our other reports and filings with the SEC, we do not undertake any duty to update any forward.

With that I'll turn it over to Greg. Thank.

Speaker 3: With that, I'll turn it over to Greg. Thank you, Tim, and good afternoon and thanks for joining us today. I'll start off by sharing a few thoughts about the overall business before Jason takes us through our results and our outlook.

Thank you, Tim and good afternoon, and thanks for joining us today I'll start off by sharing a few thoughts about the overall business before Jason takes us through our results and our outlook.

Speaker 3: First, I'm very pleased with our performance during the quarter and in particular, our ability to navigate the current supply chain environment to deliver the critical solutions that our customers rely on every day.

First I'm very pleased with our performance during the quarter and in particular, our ability to navigate the current supply chain environment to deliver the critical solutions that our customers rely on every day.

Speaker 3: We achieved revenue at the higher end of our guidance and earnings per share above our guidance, ended the year with record backlog of $13.6 billion, up 19% versus last year, and generated $703 million of operating cash flow during the quarter and a record $1.8 billion for the full year.

We achieved revenue at the higher end of our guidance and earnings per share above our guidance ended the year with record backlog of $13 6 billion up 19% versus last year.

And generated $703 million of operating cash flow during the quarter and a record $1 8 billion for the full year.

Speaker 3: Second, our full year results exemplify the strength and durability of our business and highlight our ability to leverage our large installed base to sell more value-add software and services.

Second our full year results exemplify the strength and durability of our business and highlight our ability to leverage our large installed base to sell more value added software and services for the year. The software and services segment grew 13% expanded operating margins by 210 basis points.

Speaker 3: For the year, the software and services segment grew 13%, expanded operating margins by 210 basis points.

Speaker 3: and accounted for 38% of total sales and 54% of total operating earnings.

And accounted for 38% of total sales and 54% of total operating earnings for the company. Additionally, revenue was up double digits in all three technologies in this segment led by 39% growth in video security and access control software.

Speaker 3: for the company. Additionally, revenue was up double digits in all three technologies in the segment, led by 39% growth in video security and access control software, which resulted in approximately $400 million for that category of revenue.

Which resulted in approximately 400 million for that category of revenue for the year.

Speaker 3: And finally, looking ahead to this year, our record backlog and continued demand are informing our expectations for another year of strong revenue, earnings, and cash flow growth, with growth in both segments, despite the ongoing and fluid supply chain challenges. At this point, I'll now turn the call over to Jason to take you through our results and outlook before returning for some final thoughts.

And finally looking ahead to this year a record backlog and continued demand are informing our expectations for another year of strong revenue earnings and cash flow growth with growth in both segments. Despite the ongoing and fluid supply chain challenges at this point I'll now turn the call over to <unk>.

Jason to take you through our results and outlook before returning for some final thoughts.

Thank you Greg our Q4 results included revenue of $2 3 billion up 2%, including 10 million from acquisitions and $6 million from favorable currency gap.

Speaker 4: Thank you, Greg. Our Q4 results included revenue of 2.3 billion up 2% including 10 million from acquisitions and 6 million from favorable currency.

Speaker 4: gap operating earnings of $549 million and operating margins of 23.7% compared to 24.4% in the year-ago quarter, non-gap operating earnings of $670 million up $3 million and non-gap operating margins of 28.9% down 40 basis points due to higher operating expenses for employee incentive compensation and acquisitions.

GAAP operating earnings of 549 million and operating margins of 23, 7% compared to 24, 4% in the year ago quarter.

non-GAAP operating earnings of $670 million up 3 million and non-GAAP operating margins of 28, 9% down 40 basis points due to higher operating expenses for employee incentive compensation and acquisitions.

Speaker 4: Operating margin in products and systems integration was down 170 basis points due to lower sales and higher operating expenses partially offset by higher sales and improved operating leverage in the software and services segment.

Operating margin in products and systems integration was down 170 basis points due to lower sales and higher operating expenses, partially offset by higher sales and improved operating leverage in the software and services segment.

Speaker 4: Gap earnings per share of $2.30 compared to $2.37 in the year ago quarter. Non-gap earnings per share of $2.85 versus $2.86 last year with higher sales and improved operating leverage in software and services offset by within the products and systems integration segment, higher opX related to incentives, and acquisitions along with lower sales.

Earnings per share of $2 30, compared to $2 37 in the year ago quarter.

non-GAAP earnings per share of $2 85 versus $2.86 last year with higher sales and improved operating leverage in software and services offset by within the products and systems integration segment higher opex related to incentives and acquisitions along with lower sales.

Speaker 4: OpEx and Q4 was 518 million, up 26 million versus last year, primarily due to higher employee incentive compensation and acquisitions. The Q4 effective tax rate was 22.3% compared to 21% in the prior year.

Opex in Q4 was $518 million up 26 million versus last year, primarily due to higher employee incentive compensation and acquisitions. The Q4 effective tax rate was 22, 3% compared to 21% in the prior year.

For the full year of 2000, 2021 revenue was $8 2 billion up 10% with growth in both segments and across all three technologies revenue from acquisitions was $120 million and the FX impact was 130 million favorable during the year.

Speaker 4: For the full year of 2021, revenue was 8.2 billion up 10% with growth in both segments and across all three technologies.

Speaker 4: Revenue from acquisitions was 120 million, and the FX impact was 130 million favorable during the year.

GAAP operating earnings were $1 7 billion or 24% of sales versus 18, 7% in the prior year. The increase was primarily driven by higher sales and improved operating leverage.

Speaker 4: GAP operating earnings were 1.7 billion or 20.4% of sales versus 18.7% in the prior year. The increase was primarily driven by higher sales and improved operating leverage.

Speaker 4: Non-GAP operating earnings were 2.1 billion, up 282 million, and non-GAP operating margins were 25.9% of sales, up from 24.8% of sales in the prior year, driven by higher sales and improved operating leverage.

non-GAAP operating earnings were $2 1 billion up 282 million and non-GAAP operating margins were 25, 9% of sales up from 24, 8% of sales in the prior year driven by higher sales and improved operating leverage this increase in profitability also includes 100.

Speaker 4: This increase in profitability also includes 100 million of higher employee incentive compensations earned in 2020.

A higher employee incentive compensation.

Earned in 2021 .

GAAP earnings per share was $7.17 compared to $5.45 in the prior year driven by higher sales improved leverage higher other income and lower reorganization charges in the current year.

Speaker 4: Gap earnings per share was $7.17 compared to $5.45 in the prior year, driven by higher sales, improved leverage, higher other income, and lower reorganization charges in the current year.

Speaker 4: Non-GAP earnings per share was $9.15, up 19% from $7.69 in 2020, on higher sales, higher operating earnings, higher other income, which was partially offset by a higher tax rate. For the full year, OpEx was 1.9 billion, up 123 million versus last year, primarily driven by higher employee incentive compensation and acquisition.

non-GAAP earnings per share was $9.15 up 19% from $7.69 in 2020 on higher sales higher operating earnings higher other income, which was partially offset by a higher tax rate for.

For the full year Opex was $1 9 billion up 123 million versus last year, primarily driven by higher employee incentive compensation and acquisitions.

Speaker 4: And the effective tax rate for 2021 was 21%, compared to 20% in the prior year on higher benefits from discrete items, including the benefits of stock expense looked in the prior year.

The effective tax rate for 2021 was 21% compared to 20% in the prior year on higher benefits from discrete items, including the benefits of stock comp.

Expense booked in the prior year.

Turning to cash flow Q4, operating cash flow was $703 million flat versus the prior year and free cash flow was $635 million versus 637 million in the prior year and for the full year <unk> was a record 1.8 billion compared to $1 6 billion in the prior year.

Speaker 4: And for the full year, OCF was a record 1.8 billion compared to 1.6 billion in the prior year. And free cash flow was a record 1.6 billion versus 1.4 billion in the prior year. The increase in cash flow was driven by higher sales, higher earnings, and partially offset by higher cash tax.

And free cash flow was a record $1 6 billion versus $1 4 billion in the prior year. The increase in cash flow was driven by higher sales higher earnings and partially offset by higher cash taxes.

Speaker 4: Capital allocation for 2021 included 528 million of share repurchases at an average price of $208.41 482 million and cash dividends and 457 million for acquisition

Capital allocation for 2021 included $528 million of share repurchases at an average price of $208.41.

$482 million in cash dividends and 457 million for acquisitions. Additionally, during the year, we issued $850 million of new long term debt redeemed $324 million outstanding debt entered into a new upsized to two 5 billion revolving credit facility and ended the year with one.

Speaker 4: Additionally, during the year, we issued 850 million of new long-term debt, redeemed 324 million of outstanding debt, entered into a new upsized $2.25 billion revolving credit facility, and ended the year with 1.9 billion of cash, and a net debt to adjusted EBITDA ratio of only 1.6.

$9 billion of cash and a net debt to adjusted EBITDA ratio of only 1.6.

Speaker 4: We also increased our dividend 11%. Our 11th consecutive year of a double digit increase and we announced a $2 billion increase to our share repurchase program in the second quarter.

We also increased our dividend, 11%, our 11th consecutive year of a double digit increase and we announced a $2 billion increase to our share repurchase program in the second quarter.

Speaker 4: Moving to our segment results. Q4 products and system integration sales were 1.5 billion, down 1%, which was impacted by the supply constraints we discussed on the last call. Growth in video security and public safety LMR was offset by a decline in PCR and revenue from acquisitions in the quarter was 4 million.

Moving to our segment results Q4 products and system integration sales were $1 5 billion down, 1%, which was impacted by the supply constraints. We discussed on the last call growth in video security and public safety LMR was offset by a decline in PCR and revenue from acquisitions in the quarter was four.

Operating earnings were 378 million or 25.

Speaker 4: Operating earnings were 378 million or 25.3% of sales down from 27% in the prior year driven by higher employee incentive compensation and lower sales.

3% of sales down from 27% in the prior year, driven by higher employee incentive compensation and lower sales.

Speaker 4: So notable Q4 wins and achievements in this segment include a $98 million P25 upgrade for the Commonwealth of Massachusetts.

Some notable Q4 wins and achievements in this segment include a $98 million P 25 upgrade for the Commonwealth of Massachusetts.

Speaker 4: 94 million of Apex next device orders in North America. A $68 million P25 device upgrade for the District of Columbia. A $28 million P25 upgrade for a large US customer. A $21 million fixed video security order for a large North America utility customer. A 19 million dollar additional tetra order from the German MOD. A $17 million tetra device upgrade for a customer in Asia Pacific.

94 million of apex next device orders in North America.

Ah $68 million P 25 device upgrade for the district of Columbia, a $28 million P 25 upgrade for a large U S customer a $21 million fixed video security order for a large north America utility customer.

A $19 million additional Petro order from the German M O D and a $17 million tetra device upgrade for a customer in Asia Pacific.

Speaker 4: And for the full year, revenue was 5 billion, up 9% from the prior year, driven by higher sales of LMR and higher sales of video security.

And for the full year revenue was 5 billion up 9% from the prior year driven by higher sales of LMR and higher sales of video security.

Revenue from acquisitions was $89 million operating earnings were $976 million or 19, 4% of sales up from 19% in the prior year on higher sales, partially offset by higher Opex move.

Speaker 4: Revenue from acquisition was $89 million. Operating earnings were $976 million or 19.4% of sales, up from 19% in the prior year on higher sales, partially offset by higher op-ex.

Moving next to our software and services segment Q4 revenue was $824 million up 8% from last year driven by growth in LMR services video Security software and command Center software revenue from acquisitions in the quarter was $6 million.

Speaker 4: Moving next to our software and services segment, Q4 revenue was 824 million, up 8% from last year, driven by growth in LMR services, video security software, and command center software. Revenue from acquisitions in the quarter was $6 million. Operating earnings were 292 million, or 35.4% of sales, up 150 basis points from last year, driven by higher sales and improved leverage.

Operating earnings were 292 million or 35, 4% of sales up 150 basis points from last year, driven by higher sales and improved leverage.

Some notable Q4 wins in this segment include a $25 million he twenty-five multiyear services contract with Cook County, Illinois, a $17 million P. Twenty-five multiyear software upgrade agreement for ACI systems Authority in California, a $17 million body worn camera as a service order for the <unk>.

Speaker 4: Some notable Q4 wins in this segment include a $25 million P25 multi-year services contract with Cook County, Illinois, a $17 million P25 multi-year software upgrade agreement for ICI Systems Authority in California, a $17 million body-worn camera as a service order for the city of Houston, Texas, police department.

City of Houston, Texas Police Department.

Speaker 4: a $15 million P-25 multi-year software upgrade for Orange County, California, and a $14 million additional Body Worn Camera Order for the French M-O-I.

$15 million P 25, multiyear software upgrade.

Our Orange County, California, and a $14 million additional body worn camera order for the French M. A y.

Speaker 4: A $11 million Command Center software hybrid cloud order from North Carolina Department of Public Safety. And we saw a 27% growth in software for video security and access control.

A $11 million Command Center software hybrid cloud order for North Carolina Department of public safety, and we saw a 27% growth in software for video security and access control.

Speaker 4: For the full year, revenue was 3.1 billion up 13 percent on growth in LMR services, video security, and command center software. Revenue from acquisitions was $31 million.

For the full year revenue was $3 1 billion up 13% and growth in LMR services video Security and command Center software revenue from acquisitions was $31 million operating earnings were $1 1 billion or 36, 4% of sales.

Speaker 4: Operating earnings were 1.1 billion or 36.4% of sales, up to 210 basis points versus the prior year driven by higher sales and improved leverage.

210 basis points versus the prior year, driven by higher sales and improved leverage.

Speaker 4: Looking at regional results, North America Q4 revenue was 1.6 billion, up 4% on growth in video security and LMR products and services. For the full year North America revenue was 5.6 billion, up 11% with growth in both segments and across all three technologies.

Looking at regional results North America, Q4 revenue was $1 6 billion up 4% on growth in video security and LMR products and services for the full year North America revenue was $5 6 billion up 11% with growth in both segments and across all three technologies International.

Speaker 4: International Q4 was 705 million down 3% due to a decline in LMR partially offset with growth in videos security and Command Center software We saw growth in Latin America during the quarter while EMIA was flat and Asia pack decline

International Q4 was 705 million down 3% due to a decline in LMR, partially offset with growth in video security and command Center software, we saw growth in Latin America during the quarter, while EMEA was flat and Asia Pac declined for.

Speaker 4: For the full year, International Revenue was 2.6 billion up 9 percent with growth in both segments and across all three technologies. Revenue was up in EMIA in Latin America, offset by a slight decline in Asia-PAC.

For the full year International revenue was $2 6 billion up 9% with growth in both segments and across all three technologies revenue was up in EMEA and Latin America offset by a slight decline in Asia Pac.

Moving to our backlog ending backlog was a record $13 6 billion up $2 2 billion compared to last year driven by the home the UK home offices exercise of their contractual right to extend the Airwave network four years through 2026.

Speaker 4: Moving to our backlog, ending backlog was a record, 13.6 billion, up 2.2 billion compared to last year, driven by the UK Home Office's exercise of their contractual right to extend the Airway Network four years through 2026.

Speaker 4: along with record LMR product orders and growth in software and services contracts in North America. Sequentially backlog with up 2.2 billion driven by the air wave extension and record LMR product orders in North America during the fourth quarter.

Along with record LMR product orders and growth in software and services contracts in North America.

Sequentially backlog was up $2 2 billion driven by the Airwave extension and record LMR product orders in North America during the fourth quarter.

Software and services backlog was up $1 3 billion compared to last year and up $1 8 billion sequentially driven by the Airwave extension and growth in software and services agreements in North America products and Si backlog was up 886 million compared to last year driven by record.

Speaker 4: Software and Services backlog was up 1.3 billion compared to last year and up 1.8 billion sequentially driven by the airway of extension and growth in software and services agreements in North America.

Speaker 4: Products in FI backlog was up $886 million compared to last year driven by record LMR orders. Sequentially backlog was up $417 million driven by record LMR orders in North America during the fourth quarter.

LMR orders sequentially backlog was up $417 million driven by record LMR orders in North America during the fourth quarter.

Speaker 4: Turning next to our outlook for 2022. For the full year, we expect sales to be up approximately 7% with mid-single digit growth in products and systems integration and approximately 10% growth in software and service.

Turning next to our outlook for 2022 for the full year, we expect sales to be up approximately 7% with mid single digit growth in products and systems integration and approximately 10% growth in software and services and we expect full year non-GAAP earnings per share between $9 80.

Speaker 4: And we expect full year non-GAF earnings per share between $9.80 and $9.95. The Saltlook assumes FX at current rates, a weighted average diluted share count of approximately 174 million shares, and an effective tax rate of 21 to 22%.

And $9 95.

This outlook assumes FX at current rates, a weighted average diluted share count of approximately 174 million shares and an effective tax rate of 21% to 22%.

Speaker 4: It also assumes 120 million of higher material costs, largely driven by the current semiconductor market dynamics of limited supply and us procuring available parts at a premium from other secondary markets. Additionally, we expect pricing adjustments to our portfolio, which we've recently made to take effect as we progress in fulfilling existing backlogs.

It also assumes $120 million of higher material costs, largely driven by the current semiconductor market dynamics of limited supply and us procuring available parts at a premium from other secondary markets. Additionally, we expect pricing adjustments to our portfolio, which we've recently made.

I'd to take effect as we progress in fulfilling existing backlog.

Speaker 4: For Q1, we expect sales to be up approximately 3% with non-GAPEPS between $1.53 and $1.59 per share, inclusive of 50 million of the incremental material costs I referenced for the year. It also assumes FX at current rates, a weighted average diluted share count between 173 and 174 million shares, and an effective tax rate of approximately 17%.

For Q1.

We expect sales to be up approximately 3% with non-GAAP EPS between $1 53, and $1 59 per share inclusive of $50 million of the incremental material cost I referenced for the year. It also also assumes FX at current rates a weighted average diluted share count between 173.

174 million shares and an effective tax rate of approximately 17%.

Speaker 4: We expect full year operating cash flow of approximately 1.9 billion. This OCF outlooks include $75 million of higher employee incentive payments earned in 2021, and $150 million of higher cash tax.

We expect full year operating cash flow of approximately $1 9 billion. This OCI outlooks include $75 million of higher employee incentive payments earned in 2021 and $150 million of higher cash taxes half of which is driven by the U S federal tax requirement to cap.

Speaker 4: half of which is driven by the U.S. federal tax requirement to capitalize R&D beginning in 2022.

<unk> R&D beginning in 2022.

Speaker 4: And for the full year, we will continue to be diligent in our cost management. We expect OPEX to be up approximately 100 million from last year driven by investments in video security and command center software, inclusive of 40 million related to recent acquisitions.

And for the full year, we will continue to be diligent in our cost management, we expect opex to be up approximately $100 million from last year driven by investments in video security and command center software inclusive of $40 million related to recent acquisitions.

Speaker 3: I would now like to turn the call back over to Greg. Thanks Jason, let me just end this piece with a few additional thoughts.

I would now like to turn the call back over to Greg.

Thanks, Jason Let me just end this piece with a few additional thoughts.

Speaker 3: The first 2021 was an outstanding year for our company. We achieved record orders, sales, earnings and cash flow. We increased backlog 2.2 billion, and we returned approximately 1 billion to our shareholders in the form of share repurchases and dividends.

First 2021 was an outstanding year for our company.

We achieved record orders sales earnings and cash flow, we increased backlog $2 2 billion.

And we returned approximately $1 billion to our shareholders in the form of share repurchases and dividends. Additionally, we continue to invest in our video security and command center software offerings with the acquisitions of open path envision and 911 data master.

Speaker 3: Additionally, we continue to invest in our video security and command center software offerings with the acquisitions of Open Path, InVision, and 9-1-1 data master.

Second I'd like to provide you with a little bit more color on what we're currently seeing with supply and demand and how that impacts our current 2022 expectations.

Speaker 3: Second, I'd like to provide you with a little bit more color on what we're currently seeing with supply and demand. And that how that impacts our current 2022 expectations.

Demand across all three technologies was incredibly strong in 2021 in fact, it even accelerated in Q4 like.

Speaker 3: Demand across all three technologies was incredibly strong in 2021. In fact, it even accelerated in Q4. Like many companies procuring semiconductor supply to meet our increasing demand, has been challenging and the environment in Q4 was even further impacted with supplier delays and the impact of the Omicron variant.

Like many companies procuring semiconductor supply to meet our increasing demand has been challenging and the environment. In Q4 was even further impacted with supplier delays and the impact of the omicron variant.

Speaker 3: In particular, delays from some sending conductor suppliers required us as Jason just referenced to substitute parts from alternative sources at higher costs. And this will impact margins for Q1 and Q2.

In particular delays from some semiconductor suppliers required us as Jason just referenced to substitute parts from alternative sources at higher costs and this will impact margins for Q1 and Q2.

Speaker 3: For the full year, we still expect solid revenue growth in the product segment driven by both video security and LMR products, inclusive of PCR. We've taken a careful look at our portfolio and made further pricing investments that we anticipate will take effect in the second half of the year and lead to 2020 to full year gross margins that will be comparable and operating margins that will be slightly higher.

For the full year, we still expect solid revenue growth in the products segment, driven by both video security and LMR products inclusive of PCR.

We've taken a careful look at our portfolio and made further pricing assessments that we anticipate will take effect in the second half of the year and lead to 2022 full year gross margins that will be comparable and operating margins.

That will be slightly higher year over year.

Speaker 3: Third, I'm really pleased with our position for growth. The funding environment for our customers continues to remain exceptionally strong. Our apex next refresh cycle is gaining traction with our public safety customers with almost 100 million in Q4 orders alone.

Third I'm really pleased with our position for growth the funding environment for our customers continues to remain exceptionally strong.

Our apex next refresh cycle is gaining traction with our public safety customers with almost $100 million in Q4 orders alone. We continue to capture market share and our video security and command Center software businesses and our recurring revenues continue to grow.

Speaker 3: We continue to capture market share in our video security and commands in our software businesses and our recurring revenues continue to grow.

Speaker 3: And our balance sheet is stronger than ever, which allows us to be opportunistic in our deployment of capital in this current environment.

And our balance sheet is stronger than ever which allows us to be opportunistic in our deployment of capital in this current environment.

Speaker 3: And finally, I'd like to just recognize all of the Motorola employees around the world who, despite the pandemic, have never wavered in their commitment to our customers and also in giving back.

And finally I'd like to just recognize all of the Motorola employees around the world, who despite the pandemic have never wavered and their commitment to our customers and also in giving back.

Speaker 3: Last year, our foundation donated more than 12 million to charitable organizations, and our employees volunteered a record 65,000 hours in more than 40 countries. I'm incredibly proud of their efforts, and of the recognition we continue to receive. We were recently named again to Fortune's most admired companies, and as one of the 100 best ESG companies by investors business daily.

Last year, our foundation donated more than $12 million to charitable organizations and our employees volunteered a record 65000 hours and more than 40 countries I'm incredibly proud of their efforts and of the recognition. We continue to receive we were recently named again to Fortune's most admired.

<unk> and as one of the 100 best ESG companies by Investor's business Daily.

Speaker 3: I'm also really pleased with our recent announcement that Dr. Ayanna Howard will be joining our board for perspective and experience in AI and robotics will be invaluable as we continue advancing these technologies that deliver public safety and enterprise security. I'll now turn the call back over to Tim and welcome your questions.

I'm also really pleased with our recent announcement that Doctor Ayanna Howard will be joining our board for perspective and experience in AI and robotics will be invaluable as we continue advancing these technologies that deliver public safety and enterprise security I'll now turn the call back over to Tim and.

Welcome your questions. Thank you Greg before we begin taking questions I'd like to remind callers to limit themselves to one question and one follow up to accommodate as many.

Speaker 2: Thank you Greg. Before we begin, take your questions. I'd like to remind callers to limit themselves to one question and one follow up to accommodate as many possible. Operator, would you please remind our callers on the line how to ask a question?

<unk> operator would you please remind our callers on the line how to ask a question.

Speaker 1: The floor is now open for questions. At this time, if you have a question or comment, please press the star key, then one on your touch tone.

The floor is now open for questions. At this time, if you have a question or comment. Please press. The star Key then one on your Touchtone phone.

Speaker 1: If at any point your question is answered, you may remove yourself from the queue by pressing the

If at any point. Your question is answered you may remove yourself from the queue by pressing the star key then too.

Speaker 1: We do ask that while you pose your question, please pick up your handset to provide optimal sound quality.

We do ask that while you pose your question. Please pickup your handset to provide optimal sound quality. Thank you. Our first question will come from Tim long with Barclays. Please go ahead.

Speaker 1: Thank you. Our first question will come from Tim Wong with Barclays. Please go ahead.

I've got one question and then afterwards I'll come back with the follow up.

Speaker 3: Got one question and after result come back with the follow up. Greg, can you talk a little bit about air wave, nice to see that that's signed for the four-year extension? Can you talk a little bit, you know, at a high level about how we should think about economics of that deal, you know, pricing or anything relevant and whether or any other, you know, incremental opportunities potentially that are a part of that and any impact on...

Greg can you talk a little bit about airwave nice to see that that signed for the four year extension can you talk a little bit.

At a high level about how we should think about economics of that deal.

No pricing or anything relevant and were there any other incremental opportunities potentially that are a part of that and any impact on.

Speaker 5: The government kind of investigating your position in those networks and then I got a follow up after that.

The government.

Kind of investigating your position in those networks and then I've got a follow up after that.

Speaker 3: Thanks Tim. We were pleased about the extension of AirWave, the UK Home Office exercised their contractual right in December to extend it by four years to the end of 2026. Obviously, we welcome that. We think that's good news. We also think...

Sure. Thanks, Tim we were pleased about the extension of Airwave.

The UK home office exercised their contractual right in December two extended by four years to the end of 2026, obviously, we welcome that we think that's good news we also think.

Speaker 3: That's a continuing reflection of the criticality and the importance of what that network does for British First Responders. It was extended at contractual existing pricing.

That's a continuing reflection of the criticality and the importance of what that network does for British first responders.

Was extended at contractual existing pricing.

Speaker 3: And having said that, we also in parallel continue to work with the competition market authority as they continue to progress with their investigation. We're actively engaged with them and I think by their own timeline, the CMA expects to conclude their work by I think sometime in the summer.

And having said that we also in parallel continue to work with the competition markets Authority.

As they continue to progress with their investigation.

We're actively engaged with them and I think by their own timeline.

The CMA expects to conclude their work by I think sometime in the summer.

Speaker 3: or the mid or end of summer and we would update you accordingly but we obviously feel good about this development and we're very proud of the resilience in the investment we continue to make an near-end.

Or the mid or end of summer and we would update you accordingly, but we obviously feel good about this development and we're very proud of the resilience and the investment we continue to make in Airwave.

Speaker 5: Great, thank you. And then just follow up on the video and mark it. Numbers were good for the year, very good for the year. Could you talk a little bit about kind of outlook there? You did 30% plus growth this year. And also, if you could leave into that kind of what you're seeing from some of these other, you know, whether it's the NDAA and the potential for FCC involvement with Chinese players and how that could impact the growth profile for that business. Thank you.

Okay, great. Thank you and then just follow up on the on the video and market numbers were good for the year are very good for the year could you talk a little bit about kind of outlook. There. You know you did 30% plus growth. This year and also if you could weave into that you know kind of what youre seeing from some of these other.

Whether it's N DAA and the potential for FCC involvement with with Chinese players and how that could impact the growth profile for that business. Thank you.

Speaker 3: yeah i think i'm i'm really pleased with uh... the execution by uh... jack mulloy and uh... John kadsirski and mahesh in uh... our full uh... video security and access control business for the year the category the technology category group thirty two percent twenty one percent organic

Yeah, Tim I'm really pleased with the execution by Jack Malloy and Uh Huh.

John Kozlowski <unk> in our full video security and access control business for the year the category of the technology category grew 32%, 21% organic.

Speaker 3: which I think is great and for 2022

Which I think is great and for 2022.

Speaker 3: Our outlook is, and expectation is for video security and access control to grow approximately 20%.

Our outlook is an expectation is for video security and access control to grow approximately 20%.

Speaker 3: When we look at the category in total, we think

When we look at the category in total we think.

Speaker 3: Yeah, that market in the main is probably growing seven or eight percent.

That market in the main is probably growing seven or 8%.

Speaker 3: So the good news is we continue to take share. We've taken share in 2021. We can, I believe we'll take share again in 2022.

So the good news is we continue to take share we've taken share in 2021, we can I believe we'll take share again in 2022.

Speaker 3: We're getting really good traction in the government vertical, which a vigilante had a very nascent presence in, rough dating and refreshing the product portfolio, both on fixed video and of course we acquired Pellco and IndigoVision.

We're getting really good traction in the government vertical which are vigilant had a very nascent presence in.

We're updating and refreshing the product portfolio, both on fixed video and of course, we acquired palco in Indigo vision.

Speaker 3: We've refreshed the camera portfolio. We're doing more investment in software and analytics.

We've refreshed the camera portfolio, we're doing more investment in software and analytics, the Haitians, leading the refresh around in car and body worn camera.

Speaker 3: The Haysha is leading the refresh around in-car and body-worn camera.

Speaker 3: And I'm also very pleased with the Open Path acquisition we did earlier. I like our execution. The addressable market in 2022 is now we believe 18 billion, 3 billion larger than last year. We're taking share, we're growing, and I like our outlook.

And I'm also very pleased with the open path acquisition, we did earlier.

I like our execution the addressable market in 2022 is now we believe $18 billion 3 billion larger than last year, we're taking share we're growing.

And I like our outlook.

Great. Thank you.

Thank you Tim.

Speaker 1: Our next question will come from Meta Marshall with Morgan Stanley . Please go ahead.

Our next question will come from meta Marshall with Morgan Stanley . Please go ahead.

Speaker 6: Hi, team. This is Eric on Permita. Thanks for taking our question. Maybe to follow up on some of the comments on the video side and specific to the deal you announced with the Houston Police Department on body cameras. I guess I know they had paused their deployment a couple of years ago and cited concerns around technology as the reason I'm wondering if you could give some color on maybe some of the development or improvements you made there in light of the refreshes you mentioned and

Hi team. This is Eric on for me. Thanks for taking my question maybe to follow up on some of the comments on video.

And specific to the deal you announced with the Houston.

Police Department body cameras, I guess I know they had paused their deployment in a couple of years ago and cited concerns around technology is the reason I'm wondering if you could give some color on maybe some of the development or improvements you made there in light of the refreshes you mentioned and like.

Speaker 6: like just what the lift was from a tech perspective and if that's mostly done.

Just what the lift was from a tech perspective, and if that's mostly done.

Okay.

Or again, it's Jack so.

Speaker 3: You're correct. When we originally acquired watch guard a few years back, they had had some quality issues with Houston. We put the full team's focus on improving the quality both from a back end standpoint, as well as from a device standpoint. We've also pivoting our offer in the body worn space to an as a service offer. And we think that was compelling for the city of Houston. At the end of the day.

You are correct.

When we originally acquired Watchguard a few years back they had had some quality issues with Houston, we put the full teams focused on improving the quality both from a backend standpoint as well as from a device standpoint, we've also pivoting our offer and the body worn space to an as a service offer and we think that was compelling for the city of <unk>.

And at the end of the day, we've got long standing and broad relationships with the city of Houston, and I think they trusted us as MSI is Motorola solutions to come and fix the appropriate quality issues as we have throughout our history.

Speaker 3: We've got long standing and broad relationship with the city of Houston and I think they trusted us.

Speaker 3: as MSI, as Motorola Solutions to come and fix the appropriate quality issues as we have throughout our history. And I think we're gonna have a real happy customer there. You know, as it relates to body, worn in general, it's probably also important to highlight that for the full year, our order is more than

I think we're going to have a real happy customer there.

As it relates to body worn in general its probably also important to highlight.

But for the full year, our orders more than doubled Q4, 'twenty one was a record orders quarter for us.

Speaker 3: Q4, 21 was a record, Orders quarter for us.

Speaker 3: And I also highlight that moving forward, we're really well positioned for growth internationally. We think that in general, the market has wanted an alternative. And as Greg said, we believe we're taking share both domestically and internationally in the body-worn space.

And I'd also highlight that moving forward, we're really well positioned for growth internationally.

We think we think that in general the market has wanted an alternative and as Greg said, we believe we're taking share both domestically and internationally in the body worn space.

Speaker 6: Awesome. Thanks for thanks for that color. And then maybe just on the supply chain side, it seems like you're mostly seeing headwinds and PCR just based on growth rates. But are you also seeing them kind of across the board and video as well, just less severe if anything kind of from product wise, you could give color on would be helpful. Thank you.

Awesome. Thanks for thanks for that color and then maybe just on the supply chain side. It seems like you're mostly seeing headwinds in PCR just based on growth rates, but are you also seeing them kind of across the board in video as well just less severe if anything kind of from product wise you could give color on would be helpful. Thank you.

<unk>.

Speaker 3: Yeah, Ergon, we, um, the incremental material semiconductor costs of 120 million for all of 22.

Yeah, Oregon.

The incremental material semiconductor costs of $120 million for all of 'twenty two.

Speaker 3: is primarily LMR, which is inclusive of PCR. There's also some video in there as well, but we expect the incremental material semiconductor cost to be about 50 million in Q1, 50 million in Q1.

Is primarily LMR.

Which is inclusive of PCR. There's also some video in there as well, but we expect the incremental materials semiconductor cost to be about $50 million in Q1 $50 million in Q2.

Speaker 3: and 20 million in the back half as we make progress for filling backlog and we've taken additional pricing increases.

And $20 million.

The back half as we make progress fulfilling backlog and we've taken additional pricing increases as the year progresses, our leverage will improve.

Speaker 3: As the year progresses, our leverage will improve.

Speaker 4: from a P&L and operating earnings standpoint. And on PCR, even with the supply constraints, on the year that it had, it grew in 2021, 9%, to just over $800 million. So despite the supply chain and backlog in that PCR space that we're yet to deliver, it grew 9%. Awesome.

From a P&L and operating earnings standpoint.

And on PCR, even with the supply constraints on the year that it had it grew in 2021, 9% to just over $800 million. So despite the supply chain and back.

Backlog in that PCR space that were yet to deliver it grew 9%.

Awesome, all congrats and thank you.

Thanks Scott.

Speaker 1: Our next question will come from Adam Tindle with Raymond James. Please go ahead.

Our next question will come from Adam Tindle with Raymond James. Please go ahead.

Speaker 3: Okay, thanks. Good afternoon, Greg. I wanted to start on the record backlog. Just to be clear, is that something that you can reprice or is that locked in? Because the concern would be that margin compression might last a little bit longer if prices are locked in and costs remain elevated, so that you could touch on the dynamics there.

Okay. Thanks, Good afternoon, Greg I wanted to start on the record backlog just to be clear is that something that you can reprice or is that locked in because of the concern would be that margin compression might last a little bit longer if prices are locked in and costs remain elevated so maybe you could touch on the dynamics there.

Speaker 3: Yeah, I think pricing and backlog is largely fixed and cannot be reprised. I think that's informing the guide we're giving you both for the full year and the linearity of the impact of margins of Q1 and Q2 primarily. But.

Yes, I think pricing in backlog is largely fixed and cannot be repriced I think that's informing the guide we're giving you both for the full year.

And the linearity of the impact of margins of Q1 and Q2, primarily.

But.

Speaker 3: The backlog is as strong as I've ever seen it. And even if you take the extension of air wave out.

The backlog is as strong as I've ever seen it and even even if you take the extension of Airwave out.

Speaker 4: It also was still really strong in LMR and PCR as well. I'd also point to the services up for backlog is as the largest part of our backlog. And within it, our multi-year services contracts, many of them do have a pricing mechanism around price escalation. So services in software has a little bit of a hedge there on the parts of the business thats a recent sense. They can help you pay more. What is your campaign? Hopefully not to come soon, just before I was login?.

It also was still really strong in LMR and PCR as well.

I'd also point to the services backlog is is the largest part of our backlog and within it are multi year services contracts.

Many of them do have a pricing mechanism around price escalation. So.

Services and software has a little bit of a hedge there on the parts of the business good punches.

Speaker 3: got it and maybe just a quick clarification on that. Some investors might be concerned that we have price increases coming in the back cap of the year. And maybe some of this record backlog that we're seeing is some pull forward of demand ahead of those price increases. What would you say to those investors? I'm sure you thought about that.

Got it and maybe just a quick clarification on that some investors might be concerned that you have price increases coming in the back half of the year and maybe some of this record backlog that we're seeing is some pull forward of demand ahead of those price increases what would you say to those investors I'm sure you thought about that.

Speaker 4: So the bulk of our backlog, again, is direct customers, their public safety and nature. They order when they need things and we're prioritizing them. We do have a channels business as well. Record low inventory levels among the channel. And we're prioritizing the demand signal from them, which we believe to be very clean. So in terms of pull forward and pricing strategies, we've been adjusting price.

So the bulk of our backlog again as direct customers that are public safety in nature. They order when they need things and we're prioritizing them, we do have a channels business as well a record low inventory levels among the channel and we're prioritizing the demand signal from them, which we believe to be.

Very clean.

So in terms of pull forward and pricing strategies, we've been adjusting price.

Speaker 4: for a number of quarters. And our backlog has been largely uneffected.

For a number of quarters.

And our backlog has been largely unaffected and Jason we obviously track canceled orders and canceled orders have been de minimis throughout the 2021.

Speaker 3: And Jason, we obviously track canceled orders and canceled orders have been diminished throughout the 2021.

Yeah.

Speaker 3: Got it. If I could just get a quick clarification for Jason, it's so unusual for us to deal with a $50 million, you know, hit in Q1 and the implied margin. Is there any way for you to help us with margin by segment? Because I'm trying to understand if there's also a step down in services and software margin implied in this guide.

Got it if I could just get a quick clarification for Jason It's so unusual for us to deal with that $15 million.

In Q1, and the implied margin is there any way for you to help us with margin by segment because I'm trying to understand if there's also a step down in services and software margin implied in this guidance.

Speaker 4: Well, the bulk of the 50 million is related to our supply lines around semi-conductor, which are embedded in the products, primarily LMR. So, the bulk of that 50 or that 50 is within the product segment.

But the bulk of the $50 million related to our.

Supply lines around semiconductor, which are embedded in the product primarily LMR.

The bulk of that 50 or that 50 is within the product segment.

Okay. Thank you.

Thanks, Adam.

Speaker 1: Our next question will come from Keith Hausem with North Coast Research. Please go ahead.

Our next question will come from Keith House them with Northcoast Research. Please go ahead.

Speaker 4: Good afternoon, gentlemen. Just follow up on the supply chain questions here. Obviously, you can get a lot of attention. We're hearing from other people as well. It's just some of my conductors that we're seeing supply chain issues on. Are you guys seeing issues on any other of the components of ability materials? And is that perhaps popping up with some frequency or the past few months? And do you have any idea about how it looks next few months?

Afternoon, gentlemen, just a follow up on the supply chain questions. Here, obviously, you can get a lot of attention.

We're hearing from other people as well.

Semiconductors that were seeing supply chain issues on are you guys seeing issues on any other the components ability of materials is that craft popping up with some frequency or the past few months and do you have any idea about how that looks for the next few months.

Speaker 4: The supply chain environment is challenging on the front's Keith of freight being elevated, which we talked about and most companies are having to navigate those higher prices. The material cost drivers that we've highlighted as incremental this year are entirely around obtaining supply for semiconductors. There are other

The supply chain environment is challenging on the fronts Keith of freight being elevated which we've talked about and most companies are having to navigate those higher prices the.

The material cost drivers that we've highlighted is incremental this year are entirely around obtaining supply for semiconductors. There are other general price pressures within supply chain, but we are mitigating those are they are not the key challenge that we have we've navigated those it's really freight and its.

Speaker 4: general price pressures within supply chain, but we are mitigating those. They are not the key challenge that we have. We navigated those. It's really freight and it's semi-conductors.

Speaker 4: We have a higher inventory position to Keith. I'll point you to on the balance sheet, mirroring $800 million of inventory.

<unk>, we have a higher inventory position to Keith I'll point, you to on the balance sheet nearing $800 million of inventory.

Speaker 4: So we're creating a buffer for the other categories of parts beyond semi-conductors, so that when the available semi-conductors are delivered that we have the right matching of component trees. So I'd say our key challenges are continuing our round supply chain of semi-s.

So we're creating a buffer for the other categories of parts beyond semiconductors. So that when the available semiconductors are delivered that we have the right matching of componentry. So I'd say, our key challenges in continuing our around supply chain of semis.

Speaker 4: and just following up with that, is the issue here just the fact that you guys are in a demand it's greater than you've perhaps originally forecasted for, or just that your original suppliers are unable to meet your demand and others.

And just I don't know if that is the issue here is just the fact that you guys are either demand is greater than you, perhaps originally forecast before or just that your original suppliers are unable to meet your demand and others.

Speaker 4: It's both. Our demand has increased, but our original demand signal has not been delivered. We've had delivery delays from a handful of semiconductor suppliers. That's in part what we pointed to and what's driving the incremental cost of 120 million this year.

It's both our demand has increased but our original demand signal has not been delivered we've had delivery delays from a handful of semiconductor suppliers. That's.

That's in part what we pointed to and what's driving the incremental cost of $120 million. This year.

Great. Thank you guys appreciate it.

Thank you Keith.

Speaker 1: Our next question will come from George Naughty with Jeffries. Please go ahead.

Our next question will come from George Notter with Jefferies. Please go ahead.

Speaker 3: Hi guys, thanks very much. I guess I wanted to ask about Fimulus.

Hi, guys. Thanks, very much I guess I wanted to ask about stimulus.

Speaker 5: If I go back to 2020 if memory serves, I think you said you got $150 million in incremental benefit from the CARES Act on revenue. And...

If I go back to 2020, if memory serves I think you said you got $150 million in incremental benefit from the cares Act on revenue and I was wondering if you have a comparable number for 2021, obviously.

Speaker 5: I was wondering if you have a comparable number for 2021. Obviously, you know, ARPA might be more of the benefit there. But and then also as you look at your guidance.

ARPA might be more of the benefit there, but and then also as you look at your guidance.

Speaker 5: for 2022, you know, what kind of stimulus benefit do you think you have baked into that guidance? Thanks a lot.

For 2022, you know what kind of stimulus benefit do you think you have baked into that guidance. Thanks a lot.

Speaker 3: George, so maybe to start from a cares perspective in 2021, we had about 50 million last year in cares. And really the conversations have pivoted to the American Rescue Plan. You know, as we highlighted, $350 billion.

Sure George So maybe to start from a <unk> perspective in 2021.

We had about $50 million last year, and cares and really the conversations have pivoted to the American rescue plan as we highlighted $350 billion available to state and local and then 170 billion.

Speaker 3: available to state and local and then 170 billion Available to schools which is interestingly enough one of our biggest vertical solutions for video security

Available to schools, which is interestingly enough one of our biggest vertical solutions for video security and access control. So the funding environment not only from a stimulus perspective, but actually from a state and local budgets and receipts perspective has been as good as we've ever seen in my end really in the history of my visits but probably more.

Speaker 3: and access control. So the funding environment, not only from a stimulus perspective, but actually from a state and local.

Speaker 3: budgets and receipts perspective has been as good as we've ever seen in my and really in the history of my business but probably more importantly

Importantly, Jason highlighted it Greg highlighted it it's making sure that we've got the attractive portfolio to meet to do that and so things like APAC snacks and device refresh from an LMR perspective things like driving new camera portfolio investing in analytics and AI in the video security I think in physician and marry well with the stimulus opportunities.

Speaker 3: Jason highlighted it, Greg highlighted it. It's making sure that we've got the attractive importantly to do that. And so things like Apex Max and Device Refresh from an LMR perspective.

Speaker 3: things like driving new camera portfolio investing in analytics and AI in the video security I think of position and married well with the stimulus opportunities Which is what you're seeing in backlog and I think future demand yeah the other the other thing to note is

Which is what youre seeing in backlog and I think future demand, yes. The other the other thing to note is as you know.

Speaker 3: This ARPA money is multi-year in duration. So the $350 billion that Jack talked about, the $170 billion and there's more. Some of this multi-year funding goes all the way out to the end of 2024. When you take that visibility of funding, in addition to state and local tax receipts being robust.

This ARPA money is multi year in duration.

So the 350 billion that Jack talked about the 170 billion and Theres more.

Some of this some of this multi year funding goes all the way out to the end of 2024.

When you take that visibility of funding in addition to state and local tax receipts being robust.

Speaker 3: And then you combine some of the other regulatory things around NDAA, but also more recently the Secure Equipment Act, where the FCC has been directed to direct certain Chinese companies and prevent them from competing like Hyterra in LMR or Hick Vision in Daoah for fixed video for state and local opportunities in the US, that's an incremental benefit as well. So the environment's strong.

And then you combine some of the other regulatory things around NDA, a but also more recently the secure equipment Act, where the FCC has been directed.

Two direct certain Chinese companies and prevent them.

From competing.

Like high terror in LMR, or Hick vision and dawah for fixed video first.

State and local opportunities in the U S. That's an incremental benefit as well so the environment strong.

Speaker 5: Got it. And then any any sense for which you've got embedded in your revenue guidance for this year from from stimulus

Got it and then any sense for what you've got embedded in your revenue guidance for this year from from stimulus.

Speaker 3: Jack, maybe you can talk about the funnel development, but in terms of it, it's implied in both products growth and SNS growth for the year. Yeah, and I think, you know, we look at, we track our ARP funding as well, and you know, pipeline to start 22, just to mention that over 21 is up. But again, I think it's more important to, I think equally as important as a stimulus funding, is just the condition of state and local budgets in general. Yeah, great. Thanks.

Jack maybe you could talk about the funnel development, but in terms of its implied in the both products growth and SNS growth for the year.

I think we look at we track our AARP funding as well and the pipeline to start 'twenty two just dimensionalize it over 21.

Is up but again I think it's more important.

I think equally as important as the stimulus funding its just a condition of state and local budgets in general Yeah. Yeah. Okay. Thank you.

Thank you George.

Speaker 1: Our next question will come from Louis de Palma with William Blair. Please go ahead. Right, Jack.

Our next question will come from Louis Dipalma with William Blair. Please go ahead.

Hi, Jack and Jason Good evening.

Why are you Louie.

Speaker 7: Great. Greg, I believe you mentioned in your scripted remarks how government demand has been elevated, particularly for the a vigilante video solution.

Great.

Greg I believe you mentioned in your scripted remarks, I'm, how government demand has been elevated particularly for the vigil on video solutions.

Speaker 7: Is that primarily driven by the Secure Equipment Act from the federal government that you just mentioned? And like how big of an opportunity do you have to take share from some of the Chinese vendors, such as HIGG vision that are deployed across the federal government and for local government accounts? The Secure Equipment Act first assessment on the focus isn't a applicable money aid This is shared welcoming interest to other funds and working with the public care offices.

Is that primarily driven by the the secure equipment Act from the federal government that you just mentioned and like how big of an opportunity do you have to take share from some of the Chinese vendors such as <unk> vision.

They are deployed across the federal government and for local.

Local government accounts.

Speaker 3: Yeah, Louis, thank you. I think our growth is coming for a variety of reasons.

Yes. Louis Thank you I think I think our our growth is.

Coming for a variety of reasons.

Speaker 3: I think it's the portfolio we have, the investment Maloy's made in Go-to-Market.

Didn't gets the portfolio, we have the investment <unk> made in go to market.

Speaker 3: The refresh that Mahesh is doing on mobile video

The refreshed that nation's doing on mobile video.

Speaker 3: Yes, I do think NDA, the National Defense Authorization Act for the federal government, is a beneficial tailwind. Jack talked about, on the last call, we were targeting 330 million.

Yes, I do think NDAA, the National Defense Authorization Act for the federal government.

As a beneficial tailwind Jack.

Jack talked about on the last call, we were targeting $330 million of.

Speaker 3: of the overall fixed video and access control.

The overall fixed video and access control.

Speaker 3: category to be yielded from government customers. We actually exceeded that. It was closer to slightly above 350 million. So yes, I think we will continue to take

<unk> to be yielded from government customers, we actually exceeded that it was it was closer to slightly above $350 million. So yes, I think we will continue to take share.

Speaker 3: and grow our business in the government vertical, but I also think we'll take it.

And grow our business in the government vertical but I also think we'll take it.

Speaker 3: continue to take share in commercial enterprise as well. Another thing I'd feather in Greg, it just is, we talked about our Pellco acquisition and what that meant in terms of bringing federal government contracts and we actually have invested in the refresh of that portfolio, which I think will be critically important for our federal government business. It dovetails with all things NDAA, Secure Communications Act, in 2022 and beyond.

To take share in commercial enterprise as well one other thing I'd, rather and Greg just as we talked about our telco acquisition and what that meant in terms of bringing federal government contracts in and we actually have invested in them and a refresh of that portfolio, which I think will be critically important for our federal government business. It dovetails with all <unk>.

NDAA secure Communications Act in 2022, and beyond and Greg just to clarify the $350 million number you mentioned is both mobile and fixed video total into government. That's right all of the great portfolio Mahesh has around.

Speaker 4: and Greg just to clarify the $350 million number you mentioned is both mobile and fixed video total government that's right all of the great portfolio Mahesh has around mobile and in car complemented by fixed video a market that was nascent for a vigil on just three years ago. So exactly market for us and continue to be.

Mobile and in car complemented by fixed video market that was nascent for a vigil on just three years ago, So exactly market for us and continue to be.

Speaker 7: Great, and Greg, you also mentioned accelerating demand during the fourth quarter. Was there any particular end customer for which the demand was the most pronounced?

Great and and Greg you also mentioned.

Accelerating demand like during the fourth quarter was there any particular end customer for which the demand was the most pronounced.

Speaker 7: such as, like, are you seeing the most demand from, like, local and state, like law enforcement customers, or is it from the federal government or commercial? I was just wondering if you could parse out where you're seeing the strongest demand.

It does like are you seeing the most demand from local and state like law enforcement customers or is that from the federal government or a commercial I was just wondering if you could parse out where you're seeing the strongest demand.

Speaker 3: I think we entered Q4 with strong demand, and then it did accelerate in Q4. The end user that I would highlight is probably the public safety customers for Apex Next.

I think we entered Q4 with strong demand.

And then.

Got it did accelerate in Q4, the end user that I would highlight is probably the public safety customers for apex next week.

Speaker 3: We had high expectations. We've spent a lot of time improving, refreshing the Apex next that Jack has referenced.

We had high expectations. We've spent a lot of time improving refreshing the apex next that Jack has referenced.

Speaker 3: orders and demand increased. It was outstanding in Q4. And we also introduced the Apex XN Fire Radio. We have plans to introduce some mid-tier Apex next.

<unk> and demand increased it was out standing.

In Q4, and we also introduced the apex X and fire radio we have plans to introduce some mid tier apex next.

Speaker 3: And if I were to highlight Louis I area, although demand was fairly broad, I would highlight the apex next public safety users in North America and as Jack's already referenced, I think we're in the early innings of that apex next refresh cycle.

And if I were to highlight Louis one area, although demand was fairly broad I would highlight the apex next public safety users in North America and as Jack has already referenced I think we're in the early innings of that apex next refresh cycle.

Sounds great. Thanks, everybody.

Thank you.

Speaker 1: Our next question will come from Paul Silverstein, but Cowan, please give us.

Our next question will come from Paul Silverstein with Cowen. Please go ahead.

Speaker 8: Thanks. I don't think I heard you all say it. I apologize if you did, but Greg, Jason, can you tell us what growth, how much of growth has been taken away by the blockchain, what growth looked like in 22, but for the

Thanks.

Thank.

I'll say it I apologize.

Jason can you tell us what growth how much of growth is being taken away by supply chain.

It looked like.

22 book for supply chain.

Speaker 3: Well, I would say this. So we talked about overall demand being strong. It accelerated in Q4, Paul, you know, we ended the year with record backlog. We're providing full year revenue guidance of 7%. That is in the context.

Well I would say this so we talked about overall demand being strong it accelerated in Q4, Paul <unk>.

We ended the year with record backlog, we're providing full year revenue guidance of 7% that is in the context.

Speaker 3: semiconductor constraints that we think will be throughout most

Semiconductor constraints that we think will be throughout most of 2022. It also is guidance that incorporates a 60 million dollar headwind for FX. So we certainly don't have any demand problem in this environment.

Speaker 3: of 2022. It also is guidance that incorporates a $60 million headwind for FAT.

Speaker 3: So we certainly don't have any demand problem in this environment. It's a supply constraint environment. And when I think about, look, you know, how much better could it be? Look, I think if supply was more free-flowing.

It's a supply constraint environment and when I think about look how much better could it be.

Look I think it's if supply was more free flowing.

Speaker 3: I think we could, you know, we could have growth in 2022 that wouldn't be too much dissimilar from the year we just completed.

I think we could we could have growth in 2022 that wouldn't be too much dissimilar from the year, we just completed.

Speaker 3: So demand is strong and we're navigating it and we're pleased with the execution that the team is doing. You know, as we look at supply, yes, we're buying broker parts.

Demand is strong and we're navigating it and we're I'm pleased with the execution that the team is doing as we look at supply, yes, we're buying broker parks at higher costs, we're looking for substitutes alternatives Malloy and Scott molten and on the engineering side are doing real time prop.

Speaker 3: at higher cost. We're looking for substitute alternatives. Maloy and Scott Moteman on the engineering side are doing real time product design, redesign work that takes a little bit of time. We're carrying longer higher inventory. We are entering into longer term supply agreements where we can with certain semiconductor providers. So I think we're doing a lot in parallel, but demand is strong.

Product design redesign work that takes a little bit of time, we're carrying longer higher inventory, we are entering into longer term supply agreements, where we can with semi certain semiconductor providers. So I think we're doing a lot in parallel but demand is strong.

Speaker 8: Greg's been clear, I'm not questioning that to me, I'm not as strong as it's how many I quantification, but I hear you saying that to me, broke this year could have looked like 10% but for some plugins trends. And I want to put word to your mouth, but I think that's what I just, I would say.

Let's be clear on a question that you had a strong I was just hoping to get a quantification, but are you seeing that.

This year could look like 10% buffer supply constraints I don't want to put words in your mouth, but I think those would just I would just.

Speaker 3: I would say not too dissimilar from last year. So you could take that within the contours of that, but clearly it's stronger than 7% and the 60 million of headwind with FX. But yeah, Paul, I think you're absolutely directionally on it. I appreciate that.

I would say not too dissimilar from last year. So you could you could take that within the contours of that but clearly stronger than 7% and the $60 million of headwind with FX, but yeah, Paul I think youre absolutely directionally on it.

I appreciate that just as a follow up.

Speaker 8: I apologize if your applied to Kim previously, but on the high care questions specifically, and I know I'm asking you to speculate here, but given that it's not a criminal action, and the thought arises that I suspect that could shut them down or effectively shut them down throughout the US and perhaps in other regions outside of China as well.

Apologize.

It's been previously but on the tariff question, specifically and I know I'm asking you to speculate here, but given that it's now a criminal action and the thought arises that I.

But that could shut them down or effectively shut them down throughout the U S and perhaps in other.

Regions outside of China as well.

Speaker 8: Any thoughts on how good the, and I recognize it's gonna take time to smug it out overnight. But if that criminal action proceeds, it ends up in the same place the civil action did, what would be the impact to your business from a revenue growth?

Any thoughts on how good.

And I recognize it's going to take time to smoking happened overnight.

That criminal acts and pursuits.

It ends up in some places a civil action did.

What would be the.

Impact.

To your business from a revenue growth and profitability standpoint.

Speaker 3: Well, first of all, I was happy to see the DOJ earlier this week announce a 21 count criminal indictment of Hiterra for conspiracy. It is separate than our civil actions. It doesn't change our strategy on the pending civil litigation poll. And now as a result of a series of judgments, they owe us...

Well first of all I was.

Happy to see the Doj.

Earlier, this week announced 21 count criminal indictment of Vitaros for conspiracy.

It is separate than our civil actions it doesn't change our strategy on the pending civil litigation, Paul and now as a result of a series of judgments they owe us.

Speaker 3: in excess of 670 million.

In excess of 600 and.

$70 million.

Speaker 3: separate from the criminal actions that the DOJ just announced.

Separate from the criminal actions that the Doj just announced.

Speaker 3: They are effectively shut down in the US.

They are effectively shut down in the U S and Australia, and Germany, I think this will put incrementally more pressure on them.

Speaker 3: and Australia and Germany, I think this will put incrementally more pressure on them. Look, we're in a multi-year campaign. There's nothing more important, nothing, Paul, than our intellectual property and the innovation that we invest in. We will continue to defend it. We will fiercely continue to pursue collection. I don't mind spending the money.

Look we're in a multiyear campaign there is nothing more important nothing Paul then our intellectual property and the innovation that we invest in we will continue to defend it we will fiercely continue to pursue collection I don't mind spending the money.

Speaker 3: and we'll do what we need to do to get appropriate remuneration back from Hytera. It was a very concerted multi-year campaign where they stole and we're going to get them to pay for it. I like the fact that the DOJ announced their criminal indictment, but I look at that as kind of two different parallel streams and doesn't interfere with our focus and perseverance in determination around our civil litigation.

And we will do what we need to do to get appropriate remuneration back from <unk>. It was a very concerted.

A multiyear campaign, where they stole and we're going to get them to pay for it I like the fact that the Doj announced their criminal indictment, but I look at that as kind of two different parallel streams.

And doesn't interfere with our focus and perseverance and determination around our civil litigation.

Speaker 8: It'd be great just to be clear to your comment on you're saying independent of the criminal action Basically out from the civil litigation where if I recall I think the damages were reduced to 45 million But you've got a very happy Royalty's dream and perpetuity You're telling us that that Royalty's dream and the damages will effectively shut high-carre down Including the PCR market whether or not that criminal investigation yields a verdict against

Greg just to be clear to your comment on you.

You're saying independent of a criminal action based on the outcome of the civil litigation.

Recall I think the damages, we reduced Republic $45 million, but you've got a very hefty royalty stream in perpetuity, you're telling us that that royalty stream and the damages will effectively shut down including the PCR market, whether or not the criminal investigation yields and you brought up your insights here.

Speaker 3: I think that our actual judgments are over 670 million when you add in attorney's fees and pre-judgment interest and trial costs and so on. I think I'm just saying in the main poll, I think the pressure on this company is so great.

I think that our actual judgments are over $670 million when you add in attorney's fees in prejudgment interest and trial costs and so on I think I'm, just saying in the main Paul I think the pressure on this company is so great.

Speaker 3: In the US, I'd be surprised if they're able to continue to operate going forward. We'll see, but we're going to pursue all of our collections. And if it includes asset seizure, we'll do that too. But we're not going to let people, anybody, steal our product or trade secrets or intellectual property. As it should be good.

In the U S I'd be surprised if they are able to to continue to operate going forward, we'll see but we're going to pursue all of our collections and if it includes asset seizure, we will do that too, but we're not going to let people anybody steel or products or trade secrets or intellectual property.

As it should be good for Ya thanks for the responses.

Thank you Paul.

Speaker 1: Our next question will come from Sammy Bodry with Credit Suisse. Please go ahead.

Our next question will come from Sami Badri with credit Suisse. Please go ahead.

Speaker 1: Awesome. Thank you, by the way, for all the color on the various elements on the questions I were asked earlier. The couple of questions I have is when you think about pricing for your products, and I'm referring mainly to LMR, what is the average price increase that you guys are thinking about to put into the actual list pricing of LMR products? 10 or 15 bucks. None, an amount of that lies and C but if you get feels than an expectation about your products.

Awesome.

Thank you by the way for all the color on the various elements on the questions are asked earlier.

A couple of questions I have is when you think about pricing for your products and I'm, referring mainly to LMR. What is the average price increase that you guys are thinking about to put into the actual.

List pricing of LMR products so.

Maybe I'll start off there.

Speaker 4: Sure, so we've been looking at the portfolio and implementing surgical adjustments through Q3 and Q4. It really depends on the portfolio and how we stack up competitively. We've been adjusting not only list prices, but also discount management and programs, which can also yield higher sales and lower discounts.

Sure. So we've been looking at the portfolio.

Implementing surgical adjustments through Q3, and Q4, it really depends on the portfolio.

And how we stack up competitively.

We've been adjusting not only list prices, but also discount management in programs, which can also yield a higher sales and lower discounts.

Speaker 4: It's tough to put a number on it in aggregate. It's going to be an improvement and a real help to offset the costs that we talked about in the second half. So the series of actions in aggregate that we put together will offset a large part of the price of the cost increases that we mentioned incrementally. That's why.

It's tough to put a number on it in aggregate it's.

Going to be.

Improvement in AR, and a real help to offset the cost that we talked about in the second half. So the series of actions in aggregate that we put together, we will offset a large part of the pricing of the cost increases that we mentioned incrementally that's why.

Speaker 4: The bulk of the 120 million of the increased semiconductor costs is in the first half, 100 million of it. 20 million of it is in the second half, and that's in part because of the actions we put in place.

The bulk of the $120 million of of the increased semiconductor cost is in the first half $100 million of at $20 million of it is in the second half and that's in part because of the actions we put in place.

Speaker 1: So just save to assume that the minimum

So just safe to assume that the minimum price increases will offset the increases in costs. The surgical costs, that's like you're stepping up the standard base case right the floor and then.

Speaker 1: Price increases will offset the increases in cost, the surgical costs. That's like your standard base case, right, the floor. And then

Speaker 1: This doesn't take into account if customers are opting into ordering Apex NX, which is technically a much higher ASP radio compared to the rest of the portfolio. Is that the right way to think about what's going on?

This doesn't take into account if customers are opting into order on APAC snacks, which is technically a much higher asps radio compared to the rest of the portfolio that the right the right way to think about what's going on.

Speaker 4: Mix changes in the portfolio enhancements we make like Apex Next are contemplated as we plan any given year, right? And the mid-tier Apex Next that Greg mentioned that's coming to the portfolio

Mix changes in the portfolio enhancements, we make like apex next are contemplated as we plan any given year right in the mid tier APAC snacks that Greg mentioned, that's coming into the portfolio that may come at a price premium to its successor is factored into our base case the price increases that we're referring to are in the.

Speaker 4: that may come at a price premium to its successor is factored into our base case. The price increases that we're referring to are in the

Speaker 4: incremental to that around prices of products that perhaps are more aged and not new products, but rather products that have been in the market for a bit. We've looked at that across the portfolio with Jack's team around the elasticity of our entire portfolio.

Incremental to that around prices of products that perhaps are more aged.

<unk>, aged and not new products, but rather products that have been in the market for a bit we've looked at that across the portfolio with Jack's team around the elasticity of our entire portfolio.

Speaker 1: Got it. Got it. So one last question. When I think about 7% number you're guiding to for 2022. How much of that is pricing increases and how much of that is units and volume being shipped?

Got it.

Got it so one last question when I think about 7% number you're guiding to for 2022.

How much of that is price increases and how much of that is units and volume being shipped.

Speaker 4: The majority of that of the 7% growth is volume increases.

The majority of that of the 7% growth is volume increases.

Okay got it thank you.

Speaker 1: Our next question will come from Ben Bowlin with Cleveland Research. Please go ahead.

Our next.

Our next question will come from Ben Bolan with Cleveland Research. Please go ahead.

Good evening, everyone. Thanks for taking the question.

Speaker 7: Greg, I wanted to start with a question around the America Rescue Plan Act. And specifically, I'm curious your thoughts.

Greg I wanted to start with a question around the America rescue playing out.

And specifically I'm curious your thoughts about.

Speaker 7: How do you look at the incrementality of that funding versus maybe what was already, you know, strong steady state budget? And then a second part, maybe for Jack, also America Rescue Plan X related, just any behavior you're seeing from customers. Where do you think they are in figuring out where they're gonna spend this money, how much they've got, relative size of projects, any color around that would be helpful. Thanks.

How you look at the increments holiday of that funding versus maybe what was already strong steady state budget.

And then a second part maybe for Jack also America Rescue Planed Act related just any behavior, you're seeing from customers, where you think they are and figuring out where they're going to spend this money how much they've got relative size of projects any color around that would be helpful. Thanks.

Speaker 3: You've been, I would actually say, and I think Jack referenced this earlier, I think there is a strong steady state to begin with.

Yeah, Ben I would actually say and I think Jack referenced this earlier I think there is a strong steady state to begin with.

Speaker 3: up around these budgets before you get to recovery act money i think that the narrative you know a year ago was deep on the police i think we've seen a reversal of that hyperbole uh... politically but we're also seeing more and more investment people know that they need investment

Around these budgets before you get to recovery Act money I think that the narrative a year ago was defund. The police I think we've seen a reversal of that hyperbole politically, but we're also seeing more and more investment people know that they need investment.

Speaker 3: and more modern and secure infrastructure to protect these communities.

And more modern and secure infrastructure to protect these communities.

Speaker 3: and we're seeing that across the board. So I think steady state is stronger.

And we're seeing that across the board. So I think steady state is stronger.

Speaker 3: I think the sentiment around police investment is different than it was several quarters ago, and then you layer on ARPA.

I think the sentiment around police investment is different than it was several quarters ago, and then you layer on ARPA.

Speaker 3: And so Ben, as we talked about, ARPA is a multi-year, it's a multi-year in terms of how we'll draw down that money. I wanna point out there was important clarification that was directed by the United States Treasury Department in early January . They issued a final guidance, which was actually a few hundred pages long. That guidance, and this is really important, they made several references to how...

And so <unk> been as we talked about ARPA is a multiyear its multi year in terms of how we will draw down that money I want to point out there was important clarification that was directed by the United States Treasury Department.

In early January they issued a final guidance, which was actually a few hundred pages long.

That guidance and this is really important they made several references to how that money was to be used namely law enforcement equipment technology.

Speaker 3: that money was to be used, namely law enforcement, equipment technology, and there were various different caveats, but that was very important. Pointed to things like P25 infrastructure, P25 devices that those funding were able to be pointed towards obviously the products that we make. So I think that was very beneficial. But again, as I said, I think...

And there were various different caveats, but that was very important pointed to things like P. 25 infrastructure P 25 devices that that that those funding we're able to be pointed towards obviously the products that we make so I think that was very beneficial.

But again as I said I think it's one thing to have the funding, but it's more important to have the portfolio that resonates for them and I think as we've sat across the three technology segments. We're the market leader and we believe we're taking share.

Speaker 3: It's one thing to have the funding, but it's more important to have the portfolio that resonates to them. And I think as we've sat across the three technology segments, we're the market leader, and we believe we're taking share.

Yeah.

Thank you.

Yeah.

Thanks Ben.

Speaker 1: Our next question will come from Paul Chung with JP Morgan. Please go ahead.

Our next question will come from Paul Chung with Jpmorgan. Please go ahead.

Speaker 9: Hi, thanks for taking my question. So just a quick one from me on gross margins. So, you know, nice performance here to end the year kind of despite some...

Yeah.

Hi, Thanks for taking my questions. So just a quick one from me on on gross margin. So nice performance here to end the year. Despite some some freight costs, you mentioned kind of flattish twenty-two.

Speaker 9: Some freight costs, you mentioned kind of flatish 22 margin performance maybe on some of these lingering freight, but as we looked out to 23, hopefully these costs come down, some product mixed benefits kind of continue, and then these price increases hold. So can we see a gross margin step up in 23 based on those trends? Thanks.

Margin performance, maybe on some of these lingering frame, but now as we look out to 'twenty three hopefully these costs come down some product mix benefits kind of continue and then these price increases hold so can we see gross margin step up in 'twenty three based on those trends. Thanks.

Speaker 4: So the 120 million that is incremental that we've been talking about on this call regarding supply lines for semiconductors.

So the $120 million that.

Is incremental that we've been talking about on this call regarding our supply lines for semiconductors is not a structural it's temporary we're having to pay a premium because the available supply from the committed suppliers isn't necessarily there.

Speaker 4: is not a structural, it's temporary. We're having to pay a premium because the available supply from the committed suppliers isn't necessarily there.

Speaker 4: And so as a result, we're paying a premium, a markup, if you will, competing in the open market for other manufacturers who need the same part.

And so as a result, we're paying a premium a markup if you will competing in the open market for other manufacturers who need the same part so as we think about what happens to those costs over time and the market and semiconductor manufacturers all of whom are working to increase capacity all of whom are working to fulfill.

Speaker 4: So as we think about, you know, what happens to those costs over time and the market and semiconductor manufacturers, all of whom are working to increase capacity, all of whom are working to fulfill our needs and we have excellent relationships with the suppliers that we're navigating through this journey with as those things improve, those costs get mitigated.

Our needs and we have excellent relationships with the suppliers that we're navigating through this journey with as those things improve those costs get mitigated.

Okay.

Okay, great. Thank you.

Thank you Paul.

Speaker 10: Once again, if you do have a question, you may press star 1 on your touch tone phone at this time. Our next question will come from Jim Souver with City. Please go ahead.

Once again, if you do have a question you May press star one on your Touchtone phone at this time. Our next question will come from Jim Suva with Citi. Please go ahead.

Speaker 2: Thank you. Greg, you mentioned that kind of steady state or continual demand remains pretty strong. And then when we add in the additional government stimulus like ARP, the American Rescue Plan and such, I'm wondering, are we reaching a point now where first responders are looking at some major changes like to their command centers? It seems like from a lot of the work that we do.

Thank you.

You mentioned that kind of a steady state or continued demand remains pretty strong and then when we add in the additional government stimulus like ARP American rescue plan and such I'm wondering are we reaching a point now where first responders are looking at some major change.

Just like to their command centers. It seems like from a lot of the work that we do that the command centers are pretty antiquated how to date and could be a lot more technologically advanced informative and helpful and I'm. Just wondering if those are big decisions to make almost like new whiteboard stuff and.

Speaker 2: that the command centers are pretty antiquated, how to date and could be a lot more technologically advanced and formative and helpful. And I'm just wondering, those are big decisions to make, almost like new whiteboard stuff and put in completely new systems. I'm wondering, does this give us kind of over that hump or over that worry or concern to where now they can actually implement even more effective tools in command centers? I think Jim, the...

Put in completely new systems I'm wondering does this get us over that hump or over that worry or concern to where now they can actually implement even more effective tools and command centers.

I think Jim the high level answer is yes.

Because it fuels overall demand and funds for those changes.

Speaker 3: But you also know the command center is software and there are existing tools is one that embeds existing inertia and workflows.

But you also know the command center is our software in their existing tools is one that imbeds existing inertia and workflows.

And it's actually yes, it's it's available funding that can fund those transitions, but it's also.

Speaker 3: the reinvention on transformation of employee public habits and workflow that's more embedded. So I still think it'll take time. Sale cycles are a little bit longer and as we do that, as Mahatien Jack talked about last time.

The reinvention.

Transformation of <unk>.

Employee public see habits and workflow that's more embedded so I still think it'll take time sale.

Sales cycles are a little bit longer and as we do that.

As <unk> Jack talked about last time, we're looking to move more sales along our hybrid strategy of meeting customers where they are.

Speaker 3: We're looking to move more sales along a hybrid strategy of meeting customers where they are.

Speaker 3: So it could be a prem solution. It could be a SAS subscription solution. But as we sell more of those transitions, we expect it to be more of an annual recurring revenue.

So it could be a prem solution it could be a SaaS subscription solution.

But as we sell more of those transitions, we expect it to be more of our annual recurring revenue.

Speaker 3: unless public app x perches, which will elongate kind of the revenue recognition over time. It clearly is a positive though.

And less of a capex purchase, which will elongate kind of the revenue recognition.

<unk> overtime.

But clearly it's a positive though.

Great. Thank you so much for your additional details.

Speaker 3: Thank you, Jim. May I ask, did you want to add something? No. Okay. Jeff.

Thank you Jim.

Did you want to add something no okay.

Jack.

No okay.

Speaker 10: This concludes our question and answer session. I will turn the floor back over to Mr. Greg Brown, Chairman and Chief Executive Officer for any closing remarks.

This concludes our question and answer session I will turn the floor back over to Mr. Greg Brown, Chairman and Chief Executive Officer for any closing remarks.

Speaker 3: Again, thank you for joining us this afternoon. For all of the Motorola people listening, I wanna thank you for not just your perseverance.

Again, thank you for joining us this afternoon for all of the Motorola people listening I want to thank you.

For not just to your perseverance.

Speaker 3: during a challenging Q4 with Omicron and additional supply constraint.

During a challenging Q4 with omicron and additional supply constraints, but for the whole year you've been unwavering.

Speaker 3: but for the whole year. You've been on wavering.

Speaker 3: And you've allowed us and fueled our capability to achieve a lot of the record results that we talked about this afternoon.

And you've allowed us and fueled our capability to achieve a lot of the record results that we talked about this afternoon.

Speaker 3: Demand is strong. As I mentioned, it got stronger in Q4, and we're very proud of the fact that we ended the year with record backlog, the funding environment, which we just talked about again, it just remains exceptional. We're growing and taking share in all three technologies. By the way, our total software business in 2021 is approaching.

Demand is strong as I mentioned it got stronger in Q4, and we're very proud of the fact that we ended the year with record backlog the funding environment, which we just talked about again.

Just remains exceptional we're growing and taking share in all three technologies by the way our total software business in 2021 is approaching $1 billion.

Speaker 3: If you count all software and we expected to exceed a billion in 2022, and even with the 120 million of incremental material semiconductor costs and 60 million of FACFED wins, we still expect to grow approximately 7% and

If you count all software and we expect it to exceed $1 billion in 2022.

And even even with the $120 million.

Of incremental materials semiconductor costs and $60 million of FX headwinds.

We still expect to grow approximately 7% and.

Speaker 3: expand operating margins as well. Conditions like this while challenging also present great opportunities.

Expand operating margins as well.

Conditions like this while challenging also present great opportunities.

Speaker 3: inorganic and or end organic. And with our balance sheet, our firepower, we have every intention of deploying capital strategically, surgically, but to continue to drive significant shareholder value creation. I appreciate everybody on the call and to all the motorolans. I'm really proud of you and grateful for everything you're doing.

Inorganic and <unk> and organic and with our balance sheet.

Our firepower.

We have every intention of deploying capital strategically surgically, but to continue to drive significant shareholder value creation I appreciate everybody on the call and to all the Motorola's I'm really proud of you and grateful for everything you're doing.

Ladies and gentlemen, this does conclude today's teleconference. A replay of this call will be available over the internet in approximately three hours.

Speaker 10: A replay of this call will be available over the internet and approximately 3F.

Speaker 10: The website address is www.moderalsolutions.com.

The website address is www dot Motorola solutions Dot com slash investor we thank you for your participation and ask that you. Please disconnect your lines at this time.

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