Q1 2025 Motorola Solutions Inc Earnings Call
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Operator: Good afternoon, and thank you for holding.
Good afternoon, and thank you for holding welcome.
Operator: Welcome to the Motorola Solutions first quarter 2025 earnings conference call. Today's call is being recorded. If you have any objections, please disconnect at this time.
Welcome to the Motorola solutions first quarter 2025 earnings conference call.
Today's call is being recorded if you have.
Any objections. Please disconnect at this time.
Operator: The presentation material and additional financial tables are posted on the Motorola Solutions Investor Relations website. In addition, a webcast replay of this call will be available on our website within three hours after the conclusion of this call. Website address is www.MotorolaSolutions.com slash investor. All participants have been placed in a listen-only mode.
The presentation material and additional financial tables are posted on the Motorola solutions Investor Relations website in.
In addition, a webcast replay of this call will be available on our web site for three hours. After the conclusion of this call.
The website address is www dot Motorola solutions Dot com slash investor.
All participants have been placed in a listen only mode Youll have an opportunity to ask questions. After today's presentation.
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Tim Yocum: I would now like to introduce Mr. Tim Yocum, Vice President of Investor Relations. Mr. Yocum, you may begin your conference. Good afternoon.
Speaker Change: I would now like to introduce Mr. Tim Yocum, Vice President of Investor Relations. Mr. Yocum, you may begin your conference.
Greg Brown: Good afternoon, welcome to our 2025 first 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 <unk>, <unk> Executive Vice President and CTO, Greg and Jason will review, our results along with commentary and Jack.
Tim Yocum: Welcome to our 2025 first quarter earnings call. With me today are Greg Brown, Chairman and CEO, Jason Winkler, Executive Vice President and CFO, Jack Molloy, Executive Vice President and COO, and Mahesh Saptharishi, Executive Vice President and CTO. Greg and Jason will review our results along with commentary and Jack and Mahesh will join for Q&A. We've posted a news posted an earnings presentation and news release at MotorolaSolutions.com slash investor. These materials include GAAP to non-GAAP reconciliations to be referenced, and during the call we referenced non-GAAP financial results, including those in our outlook, unless otherwise noted. A number of forward-looking statements will be made during this presentation and during the Q&A portion of the call.
Greg Brown: And Mahesh will join for Q&A, we've posted a news posted an earnings presentation and news release at Motorola solutions Dot Com slash investor materials.
Greg Brown: Materials include GAAP to non-GAAP reconciliations please reference during the call we reference non-GAAP financial results, including those in our outlook unless otherwise noted.
Greg Brown: 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 information about factors that could cause such differences can be found in today's earnings news release.
Tim Yocum: 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. Information about factors that could cause such differences can be found in today's earnings news release, in the comments made during this conference call, in the risk factors section of our 2024 annual report on Form 10-K, or any quarterly report on Form 10-Q, and in our other reports and filings with the SEC. We do not undertake any duty to update any forward-looking statements.
Greg Brown: And the comments made during this conference call in the risk factors section of our 2024 annual report on Form 10-K, or any quarterly report on Form 10-Q, and in our other reports and filings with the SEC, we do not undertake any duty to update any forward looking statements and with that I will turn it over to Greg.
Gregory Brown: And with that, I will turn it over to Greg. Thanks, Tim, and good afternoon. Thanks, everybody, for joining us today.
Greg Brown: Thanks, Tim and good afternoon, and thanks, everybody for joining us today I'll begin with a few thoughts of the business before turning it over to Jason.
Gregory Brown: I'll begin with a few thoughts of the business before turning it over to Jason. First Q1 was an excellent start to the year, with record first quarter revenue, record operating earnings, and record cash flow. In software and services, sales were up 9%, driven by continued strong adoption of software applications, across our safety and security ecosystem, and by our LMR services. In products in SI, sales were up 4% with significant operating margin expansion driven by growth for our higher tiered public safety devices, as well as lower material costs. Second, our investments in video and software continue to drive meaningful revenue growth for the company.
Speaker Change: <unk> Q1 was an excellent start to the year with record first quarter revenue record operating earnings and record cash flow and software and services sales were up 9% driven by continued strong adoption of software applications across our safety and security ecosystem and by our LMR services and <unk>.
Speaker Change: Products and Si sales were up 4% with significant operating margin expansion driven by growth for our higher tiered public safety devices as well as lower material costs.
Speaker Change: Second our investments in video and software continue to drive meaningful revenue growth for the company.
Gregory Brown: During the quarter, our command center and video technologies both grew double digits and achieved record Q1 orders and ending backlog. We also closed on the acquisitions of Rapid Deploy and Theatro, adding to our software offerings for both public safety and enterprise customers. And just last week, we launched SVX and Assist, two groundbreaking technologies that will transform how public safety officers protect and serve. And finally, as we navigate the current environment, I like how we are positioned. Our customers are continuing to prioritize investments in safety and security. Our public safety ecosystem continues to expand with new products and solutions.
Speaker Change: During the quarter, our command center and video technologies, both grew double digits and achieved record Q1 orders and ending backlog.
We also closed on the acquisitions of rapid deploy and theatrical adding to our software offerings for both public safety and enterprise customers and just last week, we launched SPX and assist to groundbreaking technologies that will transform how public safety officers protect and serve.
Speaker Change: And finally, as we navigate the current environment I like how we are positioned our customers are continuing to prioritize investments in safety and security are public safety ecosystem continues to expand with new products and solutions and we're taking actions to offset cost increases related to tariffs all of them.
Gregory Brown: And we're taking actions to offset cost increases related to tariffs. All of this is driving our continued expectation for strong revenue earnings and cash flow growth for the year.
Speaker Change: This is driving our continued expectation for strong revenue earnings and cash flow growth for the year and with that I'll now turn the call back over to Jason.
Jason Winkler: And with that, I'll now turn the call back over to Jason. Thank you, Greg. Revenue for the quarter grew 6% and was above our guidance with growth in all three technologies. FX headwinds during the quarter were $25 million, while acquisitions added $32 million. Gap operating earnings were $582 million or 23% of sales, up from 21.7% in the year-ago quarter. Non-gap operating earnings were $716 million, up 12% from the year-ago quarter, and non-gap operating margin was 28.3%, up 160 basis points, driven by higher sales, favorable mix, and lower direct material costs, partially offset by acquisitions. Gap earnings per share was $2.53, up from a $0.23 loss in the year-ago quarter, which then included a non-operating loss due to the accounting treatment for the settlement of our Silver Lake convertible debt.
Jason: Thank you Greg revenue for the quarter grew 6% and was above our guidance with growth in all three technologies FX headwinds during the quarter were 25 million, while acquisitions added $32 million GAAP operating earnings were $582 million or 23% of sales up from 21, 7% in the year ago quarter.
Jason: <unk> non-GAAP operating earnings were $716 million up 12% from the year ago quarter, and non-GAAP operating margin was 28, 3% up 160 basis points, driven by higher sales favorable mix and lower direct material costs, partially offset by acquisitions gap.
Jason: GAAP earnings per share was $2 53.
Jason: From a <unk> 23 loss in the year ago quarter, which then included a non operating loss due to the accounting treatment for the settlement of our silverlake convertible debt.
Jason Winkler: Non-GAAP EPS was $3.18, up 13% from $2.81 last year. The growth in EPS was driven by higher sales and margins in the current year. OPEX in Q1 was $603 million, up $35 million, versus last year, driven by investments in video and acquisition. Turning to cash flow, Q1 operating cash flow was $510 million, up $128 million versus last year, and free cash flow was $473 million, up $137 million. The increase in cash flow was primarily driven by higher earnings and improvements in working capital. For the full year, our expectations for double-digit operating cash flow growth, or approximately $2.7 billion, are unchanged.
Jason: non-GAAP EPS was $3 18 up 13% from $2 81 since last year the growth in EPS was driven by higher sales and margins in the current year.
Jason: Opex in Q1 was $603 million up $35 million versus last year, driven by investments in video and acquisitions.
Turning to cash flow Q1, operating cash flow was $510 million up $128 million versus last year and free cash flow was $473 million up $137 million. The increasing cash flow was primarily driven by higher earnings and improvements in working capital.
Jason: For the full year, our expectations for double digit operating cash flow growth or approximately $2 7 billion are unchanged.
Jason Winkler: Capital allocation for Q1 included $325 million in share repurchases, $182 million in cash dividends, and $37 million of CapEx.
Jason: Capital allocation for Q1 included $325 million in share repurchases $182 million in cash dividends and $37 million of Capex. During the quarter. We closed two acquisitions for a combined total of $414 million rapid deploy a cloud native next generation 911 provider and <unk> a maker of <unk>.
Jason Winkler: During the quarter, we closed two acquisitions for a combined total of $414 million, Rapid Deploy, a cloud-native next-generation 911 provider, and Teatro, a maker of AI and voice-powered communication and digital workflow software for frontline workers. Both acquisitions are included in Command Center within our software and services segment. Moving to segment results and products in SI, sales were up 4% versus last year, driven by growth in LMR. Currency headwinds were $14 million in the quarter. Operating earnings were $434 million or 28.1% of sales, up from 24.8% in the prior year, driven by higher sales, favorable mix, and lower direct material costs.
Jason: And voice powered communication and digital workflow software for frontline workers. Both acquisitions are included in command center within our software and services segment.
Jason: Moving to segment results in products and Si sales were up 4% versus last year driven by growth in LMR.
Jason: Currency headwinds were $14 million in the quarter operating earnings were $434 million or 28, 1% of sales up from 24, 8% in the prior year, driven by higher sales favorable mix and lower direct material costs.
Jason Winkler: Some notable Q1s and achievements in this segment include a $19 million Tetra Award for a customer in Germany, a $10 million fixed video order for Duke Energy, a $10 million P25 system order for a customer in North Africa, a $10 million P25 device order for a U.S. state and local customer, and a $7 million P25 device order for Aurora, Colorado. And in software and services, revenue was up 9% compared to last year, driven by strong growth across all three technologies. Revenue from acquisitions was $32 million, and FX headwinds were $11 million. Operating earnings in the segment were $282 million or 28.7% of sales, down from 29.8% of sales last year, primarily due to acquisition.
Jason: Some notable Q1s and achievements in this segment include a $19 million Tetra award for a customer in Germany.
Jason: $10 million fixed video order for Duke energy a.
Jason: $10 million 25 system order for a customer in North Africa.
Jason: $10 million 25 device order for a U S state and local customer and a $7 million P 25 device order for Aurora, Colorado.
Jason: And in software and services revenue was up 9% compared to last year driven by strong growth across all three technologies revenue from acquisitions was $32 million and FX headwinds were $11 million.
Jason: Operating earnings in the segment were $282 million or 28, 7% of sales down from 29, 8% of sales last year, primarily due to acquisitions.
Jason Winkler: Some notable Q1 highlights in software and services include a $19 million LMR managed services extension for an international customer. an $18 million LMR services renewal for a U.S. utility, a $9 million fixed video services contract renewal for the city of Chicago, a $7 million command center order for a U.S. federal customer, and a $5 million command center order for Denver's public transport. Moving next to our regional results, North America Q1 revenue was $1.9 billion, up 9% on growth in all three technologies. International Q1 revenue was $676 million, down 3% versus last year, with growth in video and command center, offset by foreign currency headwinds, and lower LMR revenue from Ukraine in the current year.
Some notable Q1 highlights in software and services include a $19 million LMR managed services extension for an international customer.
Jason: And $18 million LMR services renewal for U S utility a $9 million fixed video services contract renewal for the city of Chicago, The $7 million Command Center order for U S federal customer and a $5 million Command Center order for Denver's public transport.
Jason: Moving next to our regional results North America Q1 revenue was $1 9 billion up 9% on growth in all three technologies International Q1 revenue was $676 million down 3% versus last year with growth in video and command center offset by foreign currency headwinds and lower <unk> revenue.
Jason: From Ukraine in the current year.
Jason Winkler: Moving to backlog ending backlog for q1 was 14.1 billion down 306 million or 2% versus last year driven by strong LMR shipments and revenue recognition from the UK Home Office partially offset by strong growth across all three technologies within software and services. Sequentially, backlog was down $605 million, or 4%. The sequential decline was driven by strong LMR shipments, revenue recognition for the UK Home Office, as well as order seasonality that's typical of the first quarter of the year. In the products and SI segment, ending backlog decreased approximately $1 billion versus last year due to strong LMR shipments and $533 million sequentially driven by the order seasonality pattern that I just mentioned.
Jason: Moving to backlog ending backlog for Q1 was $14 1 billion down $306 million or 2% versus last year, driven by strong LMR shipments and revenue recognition from the UK home office, partially offset by strong growth across all three technologies within software and services.
Jason: Sequentially backlog was down $605 million or 4%. The sequential decline was driven by strong LMR shipments revenue recognition for the UK home office as well as order seasonality. That's typical of the first quarter of the year.
Jason: In the products and Si segment, ending backlog decreased approximately $1 billion versus last year due to strong LMR shipments and $533 million sequentially driven by the order seasonality pattern that I just mentioned.
Jason Winkler: In software and services, backlog increased $732 million compared to last year, driven by strong demand for multi-year contracts across all three technologies, partially offset by the revenue recognition for the UK Home Office. Sequentially, software and services backlog was down $72 million, primarily driven by revenue recognition for the UK Home Office. And turning now to our outlook, we expect Q2 sales growth of approximately 4%, with non-GAAP earnings per share between $3.32 and $3.37 per share. This assumes a weighted average share count of approximately 170 million shares and an effective tax rate of approximately 23.5%. For the full year, we continue to expect revenue growth of 5.5% and non-GAAP EPS between $14.64 and $14.74 per share.
Jason: In software and services backlog increased $732 million compared to last year, driven by strong demand for multiyear contracts across all three technologies, partially offset by the revenue recognition for the UK home office sequentially software and services backlog was down $72 million, primarily driven by revenue recognition for the UK home office.
Jason: And turning now to our outlook, we expect Q2 sales growth of approximately 4% with non-GAAP earnings per share between $3 32, and $3 37 per share. This assumes a weighted average share count of approximately 170 million shares and an effective tax rate of approximately 23.
Jason: 5% for the full year, we continue to expect revenue growth of five 5% and non-GAAP EPS between $14 64, and $14 74 per share.
Jason Winkler: This full year outlook assumes 40 million of foreign currency headwinds. a weighted average share count of approximately 170 million shares and an effective tax rate for the year of approximately 23%.
Jason: This full year outlook assumes $40 million of foreign currency headwinds.
Jason: Weighted average share count of approximately 170 million shares and an effective tax rate for the year of approximately 23%.
Jason Winkler: And before I turn the call back to Greg, I wanted to spend a moment on a few additional topics. First, with respect to tariffs. As I mentioned earlier, we are reaffirming our full-year guidance despite higher costs from the current tariff environment, which we estimate to be up to $100 million this year. We are navigating this dynamic environment with a number of supply chain actions, and we're implementing cost-saving measures along with finding price opportunities as well. Second, our continued investments in software across the entire portfolio are driving strong adoption of our cloud and SaaS offerings, resulting in more recurring revenue contributions and driving our expectations of strong software and services growth this year.
Speaker Change: And before I turn the call back to Greg I wanted to spend a moment on a few additional topics first with respect to tariffs as I mentioned earlier, we are reaffirming our full year guidance. Despite higher costs from the current tariff environment, which we estimate to be up to $100 million. This year. We are navigating this dynamic environment with a number of supply chain.
Speaker Change: <unk> and we're implementing cost saving measures along with finding price opportunities as well.
Speaker Change: Second our continued investments in software across the entire portfolio are driving strong adoption of our cloud and SaaS offerings, resulting in more revenue recurring revenue contributions and driving our expectations of strong software and services growth this year.
Jason Winkler: One example to mention on this increase in software adoption has been the success of Apex Next and the suite of software applications that are available on these devices. Our customers recognize the operational efficiencies these deliver, and by year-end, we expect to have over 200,000 Apex Next devices with an app subscription in North America, generating an average $300 per year per device in revenue. This recurring revenue stream and its associated multi-year backlog are recorded within our SNS segment. Furthermore, the latest extension of APEX Next Platform with the introduction of Assistant SVX provides us with even greater opportunities to deliver value-added software applications on the platform.
Speaker Change: One example dimension on this increase in software adoption has been the success of apex next and the suite of software applications that are available on these devices our customers recognize the operational efficiencies. These deliver and by year end, we expect to have over 200000 apex next devices with in App subscription in North America.
Speaker Change: Generating an average $300 per year per device and revenue.
Speaker Change: This recurring revenue stream and its associated multiyear backlog are recorded within our <unk> segment.
Speaker Change: Furthermore, the latest extension of apex next platform with the introduction of assistant SPX provides us with even greater opportunities to deliver value added software applications on the platform and.
Jason Winkler: And finally, a couple notes on our balance sheet. Last week, we successfully renewed and extended our $2.25 billion revolving credit facility with improved pricing and flexibility. The new five-year facility extends into 2030 and further complements our maturity profile. This, combined with our $1.6 billion of cash on hand and the $2.7 billion of operating cash flow we expect to generate this year, gives us continued flexibility in capital allocation.
Speaker Change: And finally, a couple of notes on our balance sheet last week, we successfully renewed and extended our $2 5 billion.
Revolving credit facility with improved pricing and flexibility the new five year facility extends into 2030 and further complements our maturity profile. This combined with our $1 6 billion of cash on hand, and the $2 7 billion of operation operating cash flow, we expect to generate this year gives us continued flexibility.
Speaker Change: <unk> and capital allocation, Greg back to you. Thanks, Jason I'm, just going to briefly with a few thoughts.
Gregory Brown: Greg, back to you. Thanks, Jason. I'm just going to end briefly with a few thoughts. First, I'm very pleased with how we're executing in the current environment. Our quarterly results were outstanding with Q1 record sales, earnings, and cash flow. Our pipeline of new opportunities remains strong. And we've implemented mitigation actions to offset higher costs related to tariffs.
Speaker Change: First I'm very pleased with how we're executing in the current environment.
Speaker Change: Our quarterly results were outstanding with Q1 record sales earnings and cash flow our pipeline of new opportunities remains strong and we have implemented mitigation actions to offset higher costs related to tariffs.
Gregory Brown: Second, I'd like to take a minute to talk about our latest product launches of SVX and ASSIST. Born from the trusted foundation of our Apex Next Radio and inspired by who we serve, SVX and ASSIST represent significant leaps forward in public safety technology. SVX is a first-of-its-kind video remote P25 speaker mic that converges secure voice, video, and AI and eliminates the need for a separate body-worn camera. ASIST is our interactive AI platform that bridges AI-enabled features across the portfolio to provide the public safety community with contextual and actionable information when and where a decision needs to be made.
Speaker Change: Second I'd like to take a minute to talk about our latest product launches of SPX and assist.
Speaker Change: And from the trusted foundation of our apex next radio and inspired by who we serve SPX and assist represents significant leap forward in public safety technology.
Speaker Change: SPX has a first of its kind video remote P 25, speaker mic that converges secure voice video and AI and eliminates the need for a separate body worn camera.
Speaker Change: First is our interactive AI platform that bridges AI enabled features across the portfolio to provide the public safety community with contextual and actionable information when and where the decision needs to be made.
Gregory Brown: The convergence in the SVX device brings video and even more AI to first responders' most trusted lifeline, their radio, and it creates a whole new category of technology to reduce response time and save lives. In addition, it significantly improves the performance of applications, like AI-assisted report writing, by utilizing our extensive experience in public safety audio technology enhanced by advanced noise cancellation. The SVX will be exclusively available with our Apex Next family of radios, which we believe will drive increased adoption of these higher-tiered radios and significantly increase our opportunity to provide software apps across the Apex Next platform.
Speaker Change: The convergence in the FCS device brings video and even more AI.
Speaker Change: The first responders most trusted trusted lifeline their radio and it creates a whole new category of technology to reduce response time and save lives. In addition, it significantly improves the performance of applications like AI assisted report writing by utilizing our extensive experience in public safety.
Speaker Change: Audio technology enhanced by advanced noise cancellation.
Speaker Change: The SPX will be exclusively available with our apex next family of radios, which we believe will drive increased adoption of these higher tiered radios and significantly increase our opportunity to provide software apps across the apex next platform.
Gregory Brown: The early engagement with the public safety community has exceeded our expectations, and I'm excited for them to start experiencing the benefits of these game-changing solutions.
Speaker Change: The early engagement with the public safety community has exceeded our expectations and I'm excited for them to start experiencing the benefits of these game changing solutions.
Gregory Brown: And finally, as I think about the remainder of the year, I'm encouraged on a number of fronts. Our need to have solutions in safety and security are continuing to be prioritized by our customers. The increased adoption for software and services apps helps drive continued growth in recurring revenue within our software and services segment, which we expect will make up almost 40% of our revenue this year. And we had a strong start to the year with regards to capital allocation, with over $800 million already deployed between acquisitions and share repurchases year-to-date. Additionally, we have a very strong balance sheet and robust cash flow that allows us to continue to play offense when the opportunity presents itself.
Speaker Change: And finally as I think about the remainder of the year I am encouraged on a number of fronts, our need to have solutions and safety and security are continuing to be prioritized by our customers. The increased adoption for software and services apps helps drive continued growth in recurring revenue within our software and services.
Speaker Change: Segment, which we expect will make up almost 40% of our revenue this year and we had a strong start to the year with regards to capital allocation.
Speaker Change: Over $800 million already deployed between acquisitions and share repurchases year to date.
Speaker Change: Additionally, we have a very strong balance sheet and robust cash flow that allows us to continue to play offense when the opportunity presents itself and with that I'll now turn the call over to Tim and open it up for questions.
Tim Yocum: And with that, I'll now turn the call over to Tim and open it up for questions. Thanks, Greg.
Operator: 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 participants as possible.
Tim Yocum: Thanks, 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 participants as possible. Operator would you. Please remind our callers on the line how to ask a question.
Operator: Operator, would you please remind our callers on the line how to ask a question? The floor is now open for questions. If you have a question or comment, please press star 5 on your telephone keypad. If for any reason you would like to remove yourself from the queue, please press star 5 once again. We do ask that while you pose your question, please pick up your handset to provide optimal sound quality. Thank you.
Speaker Change: The floor is now open for questions. If you have any question or comments. Please press star five on your telephone keypad. If for any reason you would like to remove yourself from the queue. Please press star five once again, we do ask that you pose your question. Please pickup your handset to provide optimal sound quality. Thank you.
Alyssa Shreves: The first question is from Tim Long from Barclays. Your line is now open.
Speaker Change: The first question is from Tim long from Barclays. Your line is now open.
Alyssa Shreves: Hi, this is Alyssa Shreves on for Tim Long. Just two quick questions. You mentioned the strength and the software services as a service. Can you kind of walk us through the video product revenue performance in the quarter? Was the product weakness kind of driven by the shift to the cloud?
Speaker Change: Hi, This is <unk> on for Tim Lang.
Speaker Change: Just two quick questions.
Speaker Change: You mentioned the strengthened.
Speaker Change: Software services as a service can you kind of walk us through.
Speaker Change: The video product revenue performance in the quarter was that product weakness kind of driven by the shift to the cloud and then I have one follow up.
Alyssa Shreves: And then I have one follow-up.
Alyssa Shreves: Sure, Alyssa. Thanks for the question. So I think you're picking up on the fact that video grew nicely for the quarter and is on path for our video growth that we expect for the year of 10 to 12 percent. Software is leading that growth and has been for a number of quarters. That's consistent with how we've invested in the portfolio, and it's been performing nicely in that regard. And we expect continued growth. And part of that, yes, is the performance of Alta, our cloud video offer, which is growing quite nicely. And, Alyssa, even with cloud growing exponentially stronger than product, we also still expect products to grow for the full year as well.
Speaker Change: Sure Lisa Thanks for the question. So I think you are picking up on the fact that video grew nicely for the quarter and is on path for our video growth that we expect for the year of 10% to 12% software is leading that growth and has been for a number of quarters thats consistent with how.
Speaker Change: We've invested in the portfolio.
Speaker Change: And it's been performing nicely in that regard.
Speaker Change: And we expect continued growth and part of that yes is the performance of alter our cloud video offer which is growing quite quite nicely and elicit even with <unk>.
Speaker Change: Cloud growing exponentially stronger than product, we also still expect products to grow for the full year as well.
Alyssa Shreves: helpful. Thank you.
Speaker Change: That's helpful. Thank you and then just a quick one on tariffs.
Gregory Brown: And then just a quick one on tariff. Are you seeing any change in customer behavior with this kind of uncertainty? Are you seeing any pullback, any kind of elongation of deals? Any color there would be great. Thank you. Yeah, listen, we're not. I mean, we're not either internationally or in North America. It's the what's happening in the field right now is pretty consistent with what we've seen over the last number of years.
Speaker Change: How have you seen any change in customer behavior.
Speaker Change: This kind of uncertainty are you seeing any pullback any kind of elongation of deal.
Speaker Change: And any color there would be great. Thank you.
Speaker Change: Yes, when I say, we're not we're not either internationally or in North America.
Speaker Change: What's happening in the field right now is pretty consistent with what we've seen over the last number of years.
Jason Winkler: And I would add in terms of how we're navigating the environment and and getting past about $100 million impact this year, proactively dual sourcing, you know, moving around our flexible footprint. We are implementing some discretionary cost controls across the company, as well as some pricing opportunities, as I mentioned.
Speaker Change: And I would add in terms of how we're navigating the environment and in getting past about $100 million impact this year proactively dual sourcing moving around our flexible footprint. We are implementing some discretionary cost controls across the company.
Speaker Change: As well as some pricing opportunities as I mentioned.
Jason Winkler: And the tariff, Alyssa, the tariff, increased tariff of about $100 million or up to, is driven by, you know, higher input costs from different theaters, it's production associated with Malaysia, and even though we are out of China, as you know, from any and all manufacturing and development, we still have a few, very few, actually, commodity components that are sourced from China, and with the rate sitting at 145%, that's included and informing that about $100 million estimate, which, by the way, in an EPS basis is about 40 cents of full year EPS.
Speaker Change: And the tariff.
Speaker Change: Alyssa the tariff increase tariff of about $100 million are up to is driven by higher input costs from different theaters.
Speaker Change: Production associated with Malaysia.
Speaker Change: And even though we are out of China as you know from any and all manufacturing and development.
Speaker Change: We still have a few very few actually.
Speaker Change: Commodity components that are sourced from China and with the right sitting at a 145%. That's included in informing that about $100 million estimate, which by the way on an EPS basis is about 40 <unk> full year EPS.
Joseph Cardoso: The next question is from the line of Joseph Cardoso with J.P. Morgan. Hey, good afternoon. Thanks for the question. So maybe the first one here, just wanted to touch on the demand trend that you're seeing. I appreciate it sounded like you're not seeing any change in the environment.
Speaker Change: The next question is from the line of Joseph Cardoso with J P. Morgan.
Speaker Change: Your line is now open.
Speaker Change: Hey, good afternoon, and thanks for the question.
Speaker Change: So maybe first one here just wanted to touch on the demand trends that youre seeing I appreciate it sounded like youre not seeing any change in the environment, but if I take a step back and look at the full year revenue guide and kind of strip out the FX impact that was embedded.
Joseph Cardoso: But if I take a step back and look at the full year revenue guide and kind of strip out the FX impact that was embedded 90 days ago versus what you're embedding today, it does look like there's a bit softness embedded there relative to what you were originally expecting. And maybe I'm pulling at hairs here. But maybe you could just touch on that with some of the moving pieces, what you're seeing across demand in the pipeline. And particularly, just curious, just given kind of what we're hearing in terms of concerns on the macro, can you maybe differentiate between what you're seeing in maybe your core public safety vertical versus maybe on the enterprise side of the business?
Speaker Change: 90 days ago versus what Youre embedding today, it does look like theres a bit soft.
Speaker Change: Embedded there relative to what you were originally expecting and maybe I'm pulling at hairs here, but maybe you could just touch on that with some of the moving pieces, what youre seeing across demand in the pipeline and particularly just curious just given kind of what we're seeing in terms of concerns on the macro can you maybe.
Speaker Change: Differentiate between what Youre seeing and maybe your core public safety vertical versus maybe on the enterprise side of the business.
Gregory Brown: And then I have a follow-up. Thank you. Yeah, on the first part, Joseph, yeah, you're right on the FX. But I think in this environment, given the volatility and uncertainty, and while FX is a good guy now to the difference of the $80 million you talked about, obviously it wildly fluctuates.
Speaker Change: And then I have a follow up on the first part Joseph.
Speaker Change: Youre right on the FX, but I think in this environment, given the volatility and uncertainty and while FX is a good guy now to the difference of the $80 million you talked about obviously, it wildly fluctuate and I think for us to bake it in and just take it to the bank in this volatile and uncertain environment.
Gregory Brown: And I think for us to bake it in and just take it to the bank in this volatile and uncertain environment and the 90-day tariff pause supposedly being lifted on June 8th and all the things, you know, flurrying around, we thought it was prudent. to just hang tight on top and bottom line for now, but that should not be interpreted as any softening demand, because we don't see that. And we have improvements ahead of us, really, in the second half. So, to quote you, I wouldn't, you know, pulling on heirs, I'm not concerned about what you described.
Speaker Change: And the 90 day tariff pause supposedly being lifted on June eight and all the things.
Speaker Change: Flirting around we thought it was prudent.
Speaker Change: So just hang tight on top and bottom line for now but that should not be interpreted as any softening demand because we don't see that.
Speaker Change: Improvements ahead of us really in the second half exactly.
Speaker Change: To quote you I wouldn't youll pulling on errors I'm not concerned about what you described.
Gregory Brown: and in terms of seeing any difference in behavior between North America and international? I think the first thing I think I'd note is Q1 North America, we had record orders. So I think that's a statement to kind of the state of play for public safety in North America. Internationally, I remind everybody, we have a very resilient revenue source in that our two biggest markets are EMEA and Australia, which are both largely driven by managed service agreements. And as it relates to our commercial and enterprise market segment, we had, I think, as Jason just pointed out, a very strong Q1 in video security.
Speaker Change: And in terms of seeing any difference in behavior between North America and International I think the first thing I think I would note is Q1 North America, we had record orders. So I think thats a statement to kind of the state of play for public safety in North America internationally I'd remind everybody.
Speaker Change: We have a very resilient revenue source in that our two biggest markets, our EMEA and Australia, which are both largely driven by managed service agreements and as it relates to our commercial and enterprise market segment. We had I think as Jason has just pointed out a very strong Q1 in video security and for our PCR business.
Gregory Brown: And for a PCR business, if you outboard FX in Ukraine, we expect another year, a very good year in 2025.
If you outboard FX in Ukraine, we expect another year of very good year in 2025, and I'd also the last thing I'd circle back as remind everybody that our verticals that drive our our enterprise security business or healthcare or critical infrastructure and education those take those those markets tend to be more resilient.
Gregory Brown: And I'd also, the last thing I'd circle back is remind everybody that are verticals that drive our enterprise security business, their health care, their critical infrastructure and education, those markets tend to be more resilient.
Joseph Cardoso: Yeah, fair guys, and I appreciate the detail.
Speaker Change: Hey, guys and I appreciate the detail.
Gregory Brown: Maybe just as a quick follow up on the on the tariff commentary, like you obviously mentioned Malaysia, but curious if you could just touch on your Mexico manufacturing footprint there. And any details around whether you're USMCA compliant there and so little bit less of a concern nowadays. And then the second part of that question on tariffs is just more around the mitigation that you're embedding in the guide, like is the expectation or the assumption that you're making is that 100 million eventually goes to zero? Or how should we think about the impact of that as we kind of progress through the year and the mitigation efforts that you're putting in?
Speaker Change: Maybe just as a quick follow up on the tariff commentary.
Speaker Change: You, obviously mentioned, Malaysia, but curious if you could just touch on your Mexico manufacturing footprint, there and any details.
Speaker Change: Sales around whether Youre U S MCA compliance there and so little bit less of a concern nowadays and then the second.
Speaker Change: Part of that question on tariffs is just more around the mitigation that you're embedding in the guide like is the expectation or the assumption that you're making is that $100 million eventually goes to zero or how should we think about the impact of that as we kind of progress through the year and the mitigation efforts that you're putting in thanks for the questions.
Gregory Brown: Thanks for the question. Yeah, Joseph, good question on Mexico. The good news is overwhelmingly, as Jason mentioned last quarter, we are USMCA compliant. So that's a big factor, which is why I highlighted Malaysia. Because with USMCA compliance and looking at the totality of our production outside of the United States, Malaysia would be the single country as it relates to production. That's the biggest driver toward the up to 100 million. And with respect to the second part of the question, the tariff impacts, which we've sized at up to $100 million, our mitigation plans fully cover that.
Speaker Change: Yes, Joseph Good question on Mexico, the good news is overwhelmingly.
Speaker Change: As Jason mentioned last quarter, we are U S MCA compliant.
Speaker Change: So that's a big factor, which is why I highlighted Malaysia, because with U S. MCA compliance and looking at the totality of our production outside of the United States, Malaysia would be the single country as it relates to production.
Speaker Change: The biggest driver towards the up to $100 million.
Speaker Change: And with respect to the second part of the question the tariff impacts, which we've sized it up to $100 million. Our mitigation plans fully cover that so that's why we are reaffirming our prior guidance of EPS and expect to cover the impact of tariffs through the three things that I mentioned.
Gregory Brown: So that's why we are reaffirming our prior guidance at BPS and expect to cover the impact of tariffs through the three things that I mentioned. Discretionary costs, some flexibility in moving around the supply chain that we do have to avoid some tariffs, and thirdly, some pricing across our portfolio, which we continue to look for. And the nice thing about that is even with all with all of those ingredients into the blender and maintaining and reaffirming full year, we still expect operating margin expansion for the full year. And I would say for the full year on gross margins to be comparable.
Speaker Change: Discretionary costs some flexibility in moving around the supply chain that we do have to avoid some tariffs and thirdly <unk>.
Speaker Change: Some pricing across our portfolio, which which we continue to look for.
Speaker Change: And the nice thing about that is even with all with all of those ingredients into the blender and maintaining and reaffirming full year, we still expect operating margin expansion for the full year.
Speaker Change: And I would say for the full year on gross margins to be comparable.
Joseph Cardoso: No, that's great to hear. Appreciate the color, Greg and Jason. You bet. Thank you.
Speaker Change: No that's great to hear I appreciate the color, Greg and Jason.
Speaker Change: You bet. Thank you.
Meta Marshall: The next question is from the line of Meta Marshall with Morgan Stanley. Your line is now open. Hey, good afternoon, everyone. This is Jamie on from Meta.
Meta Marshall: The next question is from the line of meta Marshall with Morgan Stanley.
Speaker Change: Your line is now open.
Jamie: Hey, good afternoon, everyone. This is Jamie on for me I guess, just the first question with the new SPX product in the future.
Jamie Reynolds: I guess just the first question, with the new SVX product and assist feature, you know, are you able to give us a sense of any sort of like early demand signals that you're seeing or launch or feedback from, you know, early launch customers? And then how should we think about kind of the monitored Yeah, I think the first thing I'd point out is we're really excited, but interest is high from both our customers, our body-worn customers, as well as our competitors' body-worn customers. I'll give you an example. I had a phone call with one of our sales executives last night who had just left a meeting with the police department in the Midwest, and there's really dual benefits as we see it.
Speaker Change: Give us a sense of any sort of like early demand signals that you're seeing are launch or feedback from early launch customers and then how should we think about kind of the monetization.
Speaker Change: Yes, I think the first thing I'd point out is we're really excited but interest is high from both our customers our body worn customers as well as our competitors body worn customers I'll give you. An example, I had a phone call with one of our sales executives last night, who had just left the meeting.
Speaker Change: With the police department in the Midwest and Theres really dual benefits as we see it. This was a customer that has a competitive body worn camera customer today, they were going to and had planned to buy mid tier apex radios. After the announcement of demonstration yesterday with the SPX their new plan is to unify on our body worn camera solution and actually upgrade to the APAC.
Gregory Brown: This was a customer that's a competitive body-worn camera customer today. They were going to and had planned to buy mid-tier Apex radios. After the announcement and the demonstration yesterday with the SVX, their new plan is to unify on our body-worn camera solution and actually upgrade to the Apex Next family of radios. And so those conversations are happening throughout the country. I think, as Greg pointed out, the big piece of this where the benefit stands is there's no more need for two devices, no more need for two data plans, and I think our customers come to expect world-class audio with this device.
Next next family of radios and so those conversations are happening throughout the country I think as Greg pointed out the big piece of this where the benefit stanzas.
Speaker Change: There is no more need for two devices no more need for two data plans and I think our customers come to expect World class audio with this device I think many of us even in the initial demonstrations we sell with the product team.
Mahesh Saptharishi: I think many of us, even in the initial demonstrations we saw with the product team, were blown away with really the ambient noise reduction capabilities, as well as swappable batteries, as well to elongate the product life. So really excited, but I think it's more important to look at the excitement through the lens of our customers' eyes.
Speaker Change: Loan away with the really the ambient noise reduction capabilities as well as swappable batteries as well to elongate the product life. So really excited but I think it's more important to look at the excitement through the lens of our customers' eyes.
Mahesh Saptharishi: Got it. That's determined. Go ahead. You asked about monetization, so we expect it to drive further adoption of Apex Next. Of course, it comes with more software-attached opportunities with it. It extends our mobile video portfolio. Those are areas where we're excited about the monetization of what this means for the future. and the whole, the whole strategy.
Speaker Change: Got it that's in terms of.
Speaker Change: Okay go ahead.
Speaker Change: You asked about monetization. So we expect it to drive further adoption of apex next of course, it comes with more software attached opportunities with it at.
Speaker Change: It extends our mobile video portfolio those are areas, where we're excited about the monetization of what this means for the future.
Speaker Change: Got it.
Speaker Change: Strategy.
Speaker Change: Yes.
Speaker Change: Yes.
Gregory Brown: Great, Jamie. I would just reaffirm the whole strategy there is look, nothing is more important to a first responder than P25 secure voice. So why have two devices when you can have one? And when you can have one, we lower the total cost of ownership. And when you take front-end body worn and the radio, the speaker mic, and combine it with back-end evidence, we lower the total cost of ownership for the whole experience, too.
Speaker Change: Great Jamie I would just reaffirm the whole strategy there is look.
Speaker Change: Nothing is more important to first responder then P 25 secure voice.
Speaker Change: So why have two devices when you can have one.
Speaker Change: And when you can have one we lowered the total cost of ownership and when you take front end body worn.
Speaker Change: The radio the speaker Mic and combine it with backend evidence we lowered the total cost of ownership for the whole experience two plus with this converged device. We're ingesting more critical information and assist in maybe Mahesh you wanted to Dimensionalize that.
Mahesh Saptharishi: Plus, with this converged device, we're ingesting more critical information in assist, and maybe Mahesh, you want to dimensionalize that. Absolutely. So, and Jimmy, you mentioned assist as part of this SVX, which is a critical part of the story. As Jack mentioned, that superior audio quality allows us to do more with AI as it applies to SVX. But quite importantly, if you think about helping an officer author a report, a narrative after an incident, a body-worn camera doesn't always hear everything that the officer sees and hears. The SVX very uniquely is capable of listening to everything that the officer may see or hear, inclusive of what is happening on an LMR radio, perhaps that officer has a earpiece on, and listening to everything that is happening across the talk group.
Mahesh: Absolutely so.
Mahesh: Jimmy you mentioned assist as part of this SPX, which is a critical part of the story.
Speaker Change: As Jack mentioned that superior audio quality allows us to do more.
Speaker Change: With AI as it applies to SPX, but quite importantly, if you think about <unk>.
Speaker Change: Helping an officer also.
Speaker Change: Port of narrative.
Speaker Change: After an incident.
Speaker Change: A body worn camera doesn't always hear everything that the officer season, Here's the SPX very uniquely is capable of listening to everything that the office certainly see or hear inclusive of what is happening on an LMR radio perhaps that officer has a euro piece on and listening to everything that is happening across the top.
Mahesh Saptharishi: We have access to all of that, including CAD data, including what the dispatcher adds as commentary about the incident, inclusive of radio metadata, such as what talk group was the officer part of, what is the battery level, volume, is there any reason why an officer may not have heard something. That in totality helps us really create a more authentic and true report for that officer, and really make that whole experience way better than what it could be otherwise with a traditional body-worn camera.
Speaker Change: We have access to all of that including CAD data, including what the dispatcher adds us commentary about the incident inclusive of radio metadata.
Of such as what top group was the officer part of what is the battery level volume is there any reason by an officer may not have heard something that in totality helps us really create a more authentic and true report for that officer, and really make that whole experience way better than what it could be otherwise with the traditional.
Speaker Change: <unk> body worn camera.
Jamie Reynolds: Great.
Jamie Reynolds: Thank you for all the detail. I'll jump back in queue. Thanks, Jamie.
Speaker Change: Great. Thank you for all the detail I will jump back in queue.
Speaker Change: Yeah.
Jamie: Thanks, Jamie.
Keith Housman: The next question is from the line of Keith Housman with North Coast Research. Your line is now open. Thank you. Good afternoon, gentlemen. I appreciate it.
Speaker Change: The next question is from the line of case Hosterman with Northcoast research.
Speaker Change: Your line is now open.
Case Hosterman: Thank you good afternoon, gentlemen, I appreciate it in terms of the federal business currency Federal's, a fairly important part to your business, especially on the video side.
Jack Molloy: In terms of like the federal business policy, federal is a fairly important part of your business, especially on the video side. Can you give us any commentary about what you're hearing from your federal customers in terms of bookings in the first quarter and their expectations for the second quarter and the rest of the year, based on efforts from Doge and everything else going on right now? Yeah, I think so. For our federal government, you know, they're operating on a CR through 930. By the way, I'd note that over the course of the last handful of years, we've had great years when we've operated under CR.
Speaker Change: Can you give us any commentary about what you're hearing from your federal customers in terms of bookings in the first quarter and their expectations for the second quarter than the rest of the year based on efforts from dos and everything else going on right now.
Speaker Change: Yes, I think so for our federal government.
Speaker Change: They're operating on a CR through 930 by the way I would note that over the course of the last handful of years we've had.
Speaker Change: Great years, when we operated under a CR. So this is nothing new for our team demand remains very strong within the federal market. We're also keeping an eye on the on the both the house and Senate budget bills that are being passed through because if you look at it there's going to be.
Jack Molloy: So this is nothing new for our team. Demand remains very strong within the federal market. We're also keeping an eye on both the House and Senate budget bills that are being passed through. Because if you look at it, there's going to be a substantial increase with both borders, immigration control, with a particular lens around video technology, around next generation LMR communications and body worn, I think there's gonna be things like that. So we're keeping an eye on that. We've got the teams in place. We expect another very strong year with our US federal government team, both here and abroad.
Speaker Change: Substantial increase with both borders immigration control with a particular lens around video technology around next generation LMR communications and body worn I think theres going be things like that so we're keeping an eye on that we've got the teams in place. We expect another very strong year with our U S. Federal government team both.
Jack Molloy: The only thing I'd add to that, Jack, is the focus that your team has around law enforcement and law enforcement within federal being a majority of the business and the alignment of priorities around law enforcement and the federal law enforcement agencies. We seem to be well aligned there. Okay, great.
Here and abroad, the only thing I'd add to that Jack is the focus that your team has around law enforcement law enforcement within federal being a majority of the business and the alignment of priorities around law enforcement in the federal law enforcement agencies, we seem to be well aligned there.
Keith Housman: And then just a secondary question for you guys, you know, I understand that, you know, seasonality in terms of the backlog, but I look at your backlog over the past several years, you still have growth year over year in the first quarter, and look at your notable wins also appear, you know, somewhat lower than we usually see. Was there any weakness in, you know, closing those deals during the quarter? Or you're not concerned at all with the prior seasonality here? I'm concerned, Keith, and the seasonality, as you mentioned, is a part of our business. The last two years have been a bit different as we navigated through supply chain, and eventually unlock that opportunity through available parts.
Speaker Change: Okay, Great and then just a secondary question for you I understand the seasonality in terms of the backlog, but I look at your backlog over the past several years, you still have growth year over year in their first quarter.
Speaker Change: I looked at your notable wins also somewhat lower than what we usually see was there any weakness in closing deals during the quarter or youre not concerned at all with prior seasonality here.
Speaker Change: Our concern Keith and the seasonality as you mentioned is a part of our business. The last two years have been a bit different as we navigated through supply chain and eventually unlock that opportunity through available parts, but just to further dimensionalize. It Q1.
Jack Molloy: But just to further dimensionalize it, you know, Q1 orders being a record, as Greg mentioned, ex home office 1.9 billion up 5%. They were similarly in the prior quarter, Q4, which is always our largest quarter, we're also up 5%, and that was a $3.7 billion ex-home office print. So that gives you the relationship of Q4 to Q1, and additionally, we're growing at a similar rate Q4 into Q1. Demand patterns, as we expect, are continuing. And the thing I would add is, having said all that, we still expect product orders to grow for the full year, even though we've, you know, we're indexing more, as we've said, to quick turn.
Greg Brown: <unk> being a record as Greg mentioned.
Speaker Change: <unk> home office, $1 9 billion up 5% they.
Speaker Change: They were similarly in the prior quarter Q4, which is always our largest quarter were also up 5%.
Speaker Change: And that was a $3 7 billion X home office print. So that gives you the relationship of Q4 to Q1 and Additionally, we are growing at a similar rate Q4 into Q1 demand patterns as we expect are continuing.
Speaker Change: And the thing I would add is having said all that we still expect product orders to grow.
Speaker Change: For the full year.
Speaker Change: Even though we were indexing more as we've said to quick turn and while product backlog it'll move around a little bit our expectation is for it to be I don't know and the ZIP code of the mid threes by the year end. So I think generally performing as expected and demand remains solid.
Jack Molloy: And while product backlog, you know, it'll move around a little bit, you know, our expectation is for it to be, I don't know, in the zip code of the mid threes by the year end. So I think generally performing as expected and demand remains solid.
Operator: For more information visit www.FEMA.gov Great, thank you. Thank you.
Speaker Change: Great. Thank you.
Speaker Change: Thank you.
Louis Dipalma: The next question is from the line of Louis DiPalma with William Blair. Your line is now open. Greg, Jason, Jack, Mahesh, and Tim, good afternoon. Louie, how you doing? Great.
Speaker Change: The next question is from the line of Louis Dipalma with William Blair. Your line is now open.
Speaker Change: Greg, Jason Jack Mahesh and Kim and good afternoon.
Speaker Change: Louie how are you doing.
Mahesh Saptharishi: Congrats on the launch of SVX and ASIST. One of my questions, can you provide more detail in terms of how you are able to attain the superior audio quality for your microphones relative to competitors? And does it come from your decades of heritage as a radio provider? And are there like codecs and AI and software involved or how are you able to achieve that? you mostly answered the question for me. Yes, it's our decades of experience with audio in particular, our expertise in microphone design, microphone diaphragm design, understanding the characteristics of the microphone, and then coupling it with the appropriate AI on the back end to effectively do ambient noise cancellation.
Speaker Change: Great. Congrats on the launch of SPX and assist one of my questions can.
Speaker Change: Can you provide more detail in terms of how you were able to attain the superior audio quality for your microphones relative to competitors and does it come from your your decades of heritage.
Speaker Change: As a radio provider and are there like <unk> and AI and <unk>.
Speaker Change: In software involved or how are you able to achieve that.
Speaker Change: Thanks.
Speaker Change: Thank you mostly answered the question for me.
Speaker Change: Yes, it's our decades of experience with audio in particular.
Speaker Change: Our expertise in microphone designed microphone Dyer from design understanding the Kerr.
Speaker Change: Characteristics of the microphone and then coupling it with the appropriate AI on the backend to effectively do ambient noise cancellation all of that plays into this whole picture and I think over the past I would say two years or so.
Mahesh Saptharishi: All of that plays into this whole picture. And I think over the past, I would say two years or so, the level to which AI can now parse out what is noise, what is human speech, and in this particular case, understanding human speech is quite important. And that's, we have focused on that, and I think we have delivered on that with SVX. Great.
Speaker Change: The level to which I can now.
Speaker Change: Out what is noise what is human speech and in this particular case understanding human speech is quite important and thats.
Speaker Change: We are focused on that and I think we've delivered on that with SPX.
Speaker Change: Great.
Mahesh Saptharishi: And secondly, for anybody, are you able to share what AI provider you are partnering with for AI assist? I know that you have a significant cloud partnership with Google, but are you using like an open source, like a language learning model generative AI provider or is there? like a particular vendor you're using. Sure. And I think we've actually talked about this publicly as well. So we leverage Anthropx Claude for much of what we do when it comes to and all that we do with ASIST, and we are constantly looking at models that help us move the ball forward.
Speaker Change: And secondly.
Speaker Change: For anybody are you able to share what AI provider you are partnering with for AI assist.
Speaker Change: I know that you have a significant cloud partnership with Google, but are you using like an open source like language learning model generate of AI provider or is there.
Speaker Change: Like a particular vendor you're using.
Speaker Change: Sure and I think.
Speaker Change: <unk> talked about this.
Speaker Change: Publicly as well so.
Speaker Change: So we leverage anthro.
Speaker Change: <unk> Claude for much of what we do when it comes to.
Speaker Change: Assist.
Speaker Change: All that we do with assist.
Speaker Change: And we're constantly looking at models that help us move the ball forward some of our biggest.
Mahesh Saptharishi: Some of our biggest concerns in how we design is safety and safeguards that we can put in place, and not all large-language models, especially open-source large-language models, allow us to do that. Us being able to apply our domain knowledge to the mix here to understand exactly how we need to apply safeguards to LLMs to allow for ASIST to operate the way it needs to, especially in the context of authoring, helping an officer author reports, being able to understand the cognitive psychology elements of what needs to be done along with the machine learning elements of what needs to be done.
Speaker Change: <unk> and how we design is safety and safeguards that we can put in place and not all large language models, especially open source large language models allow us to do that us being able to apply our domain knowledge to the mixed year to understand exactly how we need to apply safeguards to LMS to allow for assist to operate the way it.
Speaker Change: Needs, especially in the context of offering helping the officer also reports being able to understand the cognitive psychology element of what needs to be done along with the machine learning elements of what needs to be done.
Mahesh Saptharishi: We get that through CLAWD, and we get that through the safeguards we have implemented on top of that as well. So that's really how we leverage what we do with ASIST.
Speaker Change: That through Claude and we get that through the safeguards you have implemented on top of that as well. So that's really how we.
Speaker Change: <unk>, what we do with assist.
Gregory Brown: Great.
Gregory Brown: And one final one. You announced the partnership with Brink for drones as a first responder. And I was wondering, how do you view the TAM and the market rollout for that new product? Two of your competitors have been very vocal about the market opportunity, and you guys have also invested with your CAPE software. But I was wondering, how does Brink expand your existing CAPE software and platform? We, the team, Mahesh and others have been involved and engaged with Brink for a while. We're particularly excited by the holistic strategy we've got around drones, the counter drone strategy with SkySafe.
Speaker Change: Great.
Speaker Change: And one final one.
Speaker Change: You announced a partnership with brink for drones as a first responder and I was wondering how do you view the Tam.
Speaker Change: And the market rollout for that.
Speaker Change: And that new product two of your competitors have been very vocal about the market opportunity and you guys.
Speaker Change: <unk> also invested with your Cape software.
Speaker Change: I was wondering.
Speaker Change: How does it rank expand your your existing Cape software and platform.
Speaker Change: The team at <unk>, and others have been involved and engaged with brink for a while.
Speaker Change: We're particularly excited by the holistic strategy, we've got around drones counter drone strategy with Sky safe.
Gregory Brown: and Drone is a first responder with Brink. The thing I love about Brink is it's progressive, it's a nimble company, it is a leading provider specifically for public safety DFR, and all of its products are made already in the United States. A great technical architecture, strong partnership, and it does more than just the DFR, and it can do delivery of like EpiPens or Narcan. So it does more than competitive drones do today, and we view that as expansive and additional areas for us to ingest and capture in command center aware. And Louis, I think the other thing to note that in the second half of 2024, we saw a fairly sharp increase in FAA waivers for DFR.
Speaker Change: And drone is a first responder with brink the thing I love about brink is.
Speaker Change: It's progressive it's a nimble company it is a leading provider specifically for public safety DSR and all of its products are made already in the United States.
Speaker Change: Great Technical architecture strong partnership and it does more than just the DLR and it can do delivery of like epipen or narcan. So it does more than competitive drones do today, and we view that as expansive and additional areas for us to ingest and capture in command Center.
Speaker Change: We're aware.
Louie: And Louie I think the other thing to know.
Speaker Change: Put that in the second half of 2024, we saw a fairly sharp increase in FAA waivers for <unk>, we see that continuing into 2025 brink offers us a differentiated solution as Greg mentioned in addition to that we are actively working on integrating assist with our VFR program is.
Mahesh Saptharishi: We see that continuing into 2025. BRINC offers us a differentiated solution, as Greg mentioned. In addition to that, we are actively working on integrating ASSIST with our DFR program as well, including with the SVX platform with Apex Next. So all of that combined, I think we have a fairly unique opportunity here.
Speaker Change: Well, including with the SPX platform with the apex Max So all of that combined I think we have a fairly unique opportunity here.
Gregory Brown: Excellent.
Ben Bollin: Thanks, everyone. The next question is from the line of Ben Bollin with Cleveland Research. Your line is now open. Good afternoon, everyone. Thanks for taking the question. I guess a two-parter.
Speaker Change: Excellent thanks, everyone.
Speaker Change: Absolutely.
Speaker Change: The next question is from the line of Ben Bolan with Cleveland Research. Your line is now open.
Ben Bolan: Good afternoon, everyone. Thanks for taking the question.
Speaker Change: I guess, a two parter.
Ben Bollin: I'm interested in your thoughts on What you're seeing into the current kind of state budget cycle with respect to federal grant awards, if it looks similar or different. versus prior years. And then the second part. Any thoughts as the majority of states go into the new fiscal year in the back half? Any thoughts on what state budgets are looking like into their fiscal 26? Yeah, Ben.
Ben Bolan: Interested in your thoughts on.
Speaker Change: What youre seeing into.
Ben Bolan: Into the current state.
Ben Bolan: State budget cycle with respect to Federal Grant awards, if it looks similar or different.
Ben Bolan: Versus prior years.
Ben Bolan: And then the second part.
Ben Bolan: Any thoughts since the majority of states go into the new fiscal year in the back half.
Ben Bolan: Any thoughts on what state budgets are looking like into fiscal 'twenty six.
Jack: Yeah, So hi, it's Jack I think first of all public safety.
Jack Molloy: So, hi, it's Jack. I think first of all, public safety, public safety technology continues to be prioritized. And actually, the budget situation across the board from a state and local standpoint, on the surface is very good. I'd remind you, federal transfer dollars are at best complementary in the funding environment. State and local budgets are funded largely by income, sales and property tax, which including, including sales tax through Q1, if you look at the receipts, are up. So the environment's very good. As we think about the second half of the year, because we are in public safety, we're doing a lot of long cycle selling, upgrading LMR systems, where there's a lot of customer excitement around the D series, you know, which essentially gives us another opportunity to refresh infrastructure, leveraging smaller, smaller geographic footprint, more power, less energy, improved channel spacing and more capacity that actually pulls in LEO satellite capability and things that our customers have asked for.
Jack: Public safety technology continues to be prioritized and actually the budget situation across the board from a state local standpoint on the surface is very good I would remind you.
Jack: Federal transfer dollars are are at best complementary in the funding environment state local budgets are funded largely by income sales and property tax, which including including sales tax through Q1. If you look at the receipts are up so the environment is very good as we think about the second half of the year because we are.
Jack: In public safety, we're doing a lot of long shake long cycle, selling upgrading LMR systems were where theres a lot of customer excitement around the D series.
Jack: Which essentially gives us another opportunity to refresh infrastructure.
Jack: Leveraging smaller smaller geographic footprint more power less energy improved channel spacing and more capacity.
Jack: That actually pulls in Leo satellite capability and things that our customers have asked for so there's a lot of excitement there, but as we start to think about the second half of this year and beyond.
Jack Molloy: So there's a lot of excitement there. But as we start to think about the second half of this year and beyond, pipeline look continues to look robust. And so I think that's, that's, that's really the nature of public safety, getting a lot of attention, a lot of priority, and around some of the advances in technology and the R&D investments we continue to make that I think meet the market right now. So We're very, we're very encouraged.
Jack: Pipeline continues to look robust and so I think thats.
Jack: That's really the nature of public safety is getting a lot of attention a lot of priority and around some of the advances in technology and the R&D investments. We continue to make that I think meet the market right now so we're.
Jack: We're very we're very encouraged.
Gregory Brown: If I could add one follow up, Greg, you know, back in 2013, you guys saw this narrowbanding effort that, you know, kind of supported a bunch of incremental funding and urgency. And I guess I'm curious if you draw any compares to what you've seen with respect to like ARPA, for instance, or any of the the stimulus over the last few years. if you see any similarities between the current environment and kind of where we are in that cycle versus what we saw then. And that's it for me. Thank you. Yeah, I mean, a little bit.
Jack: If I could add.
Jack: One follow up Greg you know back in two.
Jack: 202013.
Speaker Change: Guys saw this narrow banding effort that kind of is.
Speaker Change: Supported a bunch of incremental funding and urgency.
Speaker Change: I guess I am curious if Johnny compares to what you've seen with respect to like <unk> for instance, or any of the stimulus over the last few years.
Speaker Change: If you see any similarities between the current environment and kind of where we are in that cycle versus what we saw then and that's it for me. Thank you.
Speaker Change: Yes, I mean, a little bit, but you know and we talked and I talked about the funding environment that came out with the.
Gregory Brown: But you know, and we talked and I talked about the funding environment that came out with the, you know, quote, unquote, the Inflation Reduction Act and the 1.9 trillion. Obviously, that the size of that legislation and stimulus coming out of the federal government. in an answer to COVID. Nothing was ever larger than that. Having said that, I think we're kind of largely through that. And since we index and orient ourselves more around the continuity of state and local budgets and sales tax and property tax, and coupled with the fact that, as you know, Ben, what we do is higher in the food chain of criticality as opposed to discretionary, I think we've reached a level a little bit more that feels steady state.
Speaker Change: Quote unquote, the inflation reduction act and the one nine trillion.
Speaker Change: Obviously that the size of that legislation and stimulus coming out of the federal government.
Speaker Change: And in answer to Covid, nothing was ever larger than that.
Speaker Change: <unk> said that I think we're kind of largely through that and since we index and Orient ourselves more around the continuity of state and local budgets and sales tax and property tax.
Speaker Change: And coupled with the fact that as you know than what we do is higher in the food chain of criticality as opposed to discretionary.
Speaker Change: I think we've reached a level a little bit more of that feels steady state.
Jack Molloy: And I like the consistency of the demand we see. I do think, as we've talked about, with video being a higher proportion of our business, we're seeing more quick turn than more long cycle. And as we've normalized through the supply chain semiconductor backlog, kind of kink in the hose, we're more regular as well. But a little bit, narrow banding was unique, I think we're a little bit more steady state.
Speaker Change: And I like the consistency of the demand we see I do think as we've talked about with video being a higher proportion of our business.
Speaker Change: We're seeing more quick term than more long cycle and as we've normalized through the supply chain semiconductor backlog kind of kink in the hose, where more regular as well, but a little bit narrow banding was unique but I think we're a little bit.
Jack Molloy: Ben, this is Jack. I just don't think I'd add on to that. If you think about 2013 on the narrow banding, that was a mandated move, meaning customer, state of Minnesota, state of Michigan, whoever it might be, you have to move, you have to figure a way to fund an upgrade cycle, both on infrastructure and a lot of times devices. That's far different than ARPA, which last year, if you looked at our orders, was less than 1% of our North American orders. So that would be the only thing that I would just add on to Greg's commentary was in my 30 year career in this business, 2013-2012 was an externality, unlike we've never seen because it was a mandate that's required.
Speaker Change: A more steady state so ventas Jack I, just the only thing I would add onto that if you think about 2013 on the narrow banding that was a mandated move meaning meeting customer state of Minnesota State of Michigan whoever it might be you have to move you have to figure a way to fund an upgrade cycle, both on infrastructure and a lot of a lot of times devices that is far different.
Speaker Change: Then ARPA, which last year, if you looked at our 2024 orders was less than 1% of our North American orders. So that would be the only thing that I would just add on to Greg's commentary was in my 30 year career. In this business 2013, 2012 was an externality. Unlike we've never seen because it was a it was a mandate was required.
Ben Bollin: That's great. Thanks, guys. Have a great night. Thank you, Ben.
Speaker Change: That's great. Thanks, guys have a great night.
Speaker Change: You bet.
Speaker Change: Yes.
Tomer Zilberman: The next question is from the line of Tomer Zilberman with Bank of America Securities.
Speaker Change: The next question is from the line of tumor Silberman with Banc of America Securities. Your line is now open.
Tomer Zilberman: Your line is now open. Hey guys, I want to continue the line of questioning from earlier. If I look at the 2Q guidance, the revenue growth of 4% was I think give or take 30 million below the street. Can you just take us through the puts and takes of the growth next quarter? Is there anything in the demand environment that's driving any You know, our growth expectations for both Q1, which we achieved, and the Q2, which we've just guided to, are consistent with the first half that we had put forward for our expectations within the firm.
Speaker Change: Hey, guys I want to continue the line of questioning from earlier.
Speaker Change: If I look at the <unk> guidance the revenue growth of 4% was I think give or take $30 million below the street.
Speaker Change: Can you just take us through the puts and takes of the growth next quarter is there anything in the demand environment, that's driving any conservatism.
Speaker Change: Our growth expectations for both Q1, which we achieved in the Q2, which we've just guided to are consistent with the first half that we had.
Speaker Change: Put forward for our expectations within the firm if I think about Q1 and Q2, they are coming off some pretty significant comps.
Gregory Brown: If I think about Q1 and Q2, they're coming off some pretty significant comps. um from from the past two years um which is in part uh behind the guide and that was due to the supply chain normalization so uh looking at the year our growth expectations are affirmed at five and a half percent q2 being uh the four percent that we guided to And Tomer, again, like as we always prepare, we always think about where we guide and what we want to do. And just given this environment in particular, we just thought it was prudent.
Speaker Change: From from the past two years.
Speaker Change: Which is in part.
Speaker Change: Find the guide and that was due to the supply chain normalization. So.
Speaker Change: Looking at the year, our growth expectations are affirmed at five 5% in Q2 being four.
Speaker Change: <unk>, 4% that we guided to.
Speaker Change: And tell me again as we always prepare we always think about where we guide and what we want to do and just given this environment in particular.
Speaker Change: We just thought it was prudent.
Gregory Brown: to keep the full year where it is at this point in time. Even though we have, I know your question's Q2, even though we have what was pointed out earlier, a tailwind on FX, let's everybody not get over our skis, be prudent, and continue to have this business perform consistently, that's kind of the psychology that's informing the full year.
Speaker Change: To keep the full year, where it is.
Speaker Change: At this point in time, even though we have I know your question is Q2, even though we have the what was pointed out earlier a tailwind on FX, let's everybody not get over our skis and be prudent and continue to have this business performed consistently that's kind of the psychology, that's informing the full year.
Gregory Brown: Got it. And as a follow up, you know, if we look at the rest of the year, the second half, now that you're maintaining the guidance, can you maybe just share with us some indicators that you're seeing that are giving you the confidence to maintain that full year, especially as we think about as we enter 3Q, you know, that 90 day tariff pause comes Yeah, I think what we're pleased about is record Q1 orders. What we're enthusiastic about is a very continued, strong pipeline. I think that, you know, things continue to move quite favorably. By the way, even though, you know, we're early into Q2, April is quite good as well.
Speaker Change: Got it and as a follow up if you look at the rest of the year. The second half now that you are maintaining the guidance can you maybe just share with us.
Speaker Change: Indicators that youre seeing that are giving you the confidence to maintain that full year, especially as we think about as we enter three Q.
Speaker Change: Of that 90 day.
Speaker Change: Aaron Pas comes to an end.
Speaker Change: Yes, I think what we're pleased about is record Q1 orders.
Speaker Change: What were key.
Speaker Change: Enthusiastic about is it very continued strong pipeline.
Speaker Change: I think that things continue to move quite favorably by the way even though we're early into Q2 April was quite good as well so we like that and we.
Gregory Brown: So, you know, we like that and we just want to keep everything. off hitting the guardrails and continue to execute, but the indications, the engagement. The pipeline, the quick turn conversion that Molloy's team is successfully doing, I think are all pretty good indicators overall. And by the way, and there's strong adoption on the cloud as well, which came up earlier. So, irrespective of the top line revenue growth number, the more and more this firm indexes to software and services, the more we index to cloud with a vigilant alta, the more we index to reoccurring, that's a good trend.
Speaker Change: We just want to.
Speaker Change: Keep everything.
Speaker Change: Offsetting the guardrails and continue to execute but the indications the engagements.
Speaker Change: The pipeline of the quick turn conversion that will always team has successfully doing.
Speaker Change: I think we're all pretty good indicators overall.
Speaker Change: And by the way strong adoption on the cloud is strong adoption on the cloud as well, which came up earlier, so irrespective of the topline revenue growth number the more and more of this firm indexes to software and services. The more we indexed the cloud with a vigil on alter the more we index to reoccurring.
Gregory Brown: And we like the markers on that field as well. And with the growth, we're expecting earnings growth as well.
Speaker Change: That's a good trend and we like the markers on that field as well.
Speaker Change: And with the growth we are expecting earnings growth as well.
Tomer Zilberman: Got it, thank you.
Speaker Change: Got it thank you.
Operator: Thanks, Tomer. Once again, if you have a question, you may press star 5 on your telephone.
Speaker Change: Thanks Tomer.
Speaker Change: Yeah.
Speaker Change: Once again, if you have a question you May press star five on your telephone keypad.
Matthew Niknam: The next question is from the line of Matt Niknam with Deutsche Bank. Your line is now open. Hey, guys, thank you so much for getting me on.
Speaker Change: The next question is from the line of Matt nickname.
Speaker Change: Deutsche Bank. Your line is now open.
Matt: Hey, guys. Thank you so much for getting me on.
Gregory Brown: Two, if I could, I guess, first, if you can comment on the latest you're seeing on the M&A front, just in terms of opportunities and private market valuations. And then secondly, with Europe, I know there's been some talk of increasing defense spend. I know you primarily focus on more state and local, but I'm wondering if the opportunity or prospect of increased defense spend in Europe presents any incremental opportunities for the company. Thanks. I think the M&A discussions remain active. Even though the environment for actual deal completion in general has been lower, I'm not saying for MSI, but lower than expected outside.
Speaker Change: Two if I could I guess first.
If you can comment on the latest you're seeing on the M&A front just in terms of opportunities in private market valuations.
Speaker Change: And then secondly.
Speaker Change: With Europe, I know theres been some talk of increasing defense spend.
Speaker Change: I know, you're primarily focused on more state and local but I'm wondering if the opportunity a prospect of increased.
Speaker Change: <unk> spend in Europe presents any incremental opportunities for the company.
Speaker Change: I think the M&A discussions remain active.
Speaker Change: Even though the environment.
Speaker Change: For actual deal completion in general.
Speaker Change: Its been lower I'm, not saying for MSI, but lower than expected outside we did close a rapid Sos we closed theatrical.
Gregory Brown: We did close RapidSOS. We closed Theatro. Love both of those. They're a little over $400 million, coupled with, as I mentioned, the $400 million plus to date in share repo. In Q1, we bought back. about $325 million at a price of $4.37 and change. So the opportunity to invest in share repurchase and inorganic remains strong. And I think our discussion. in the private market opportunities and with more current and realistic valuations than maybe a year ago. I think they're active, and I'm pleased with the opportunities that present themselves to us, and will continue to be opportunistic as we evaluate and or action on any of them between now and the end of the year.
Speaker Change: Both of those there are a little over $400 million, coupled with as I mentioned, the 400 million plus to date and share repo in Q1, we bought back.
Speaker Change: About $325 million at a price of $4 37 and change so the investors the opportunity to invest in share repurchase and inorganic remains strong and I think our discussions.
Speaker Change: In the private market.
Speaker Change: Opportunities and with more current and realistic valuations than maybe a year ago.
Speaker Change: They are active in.
Speaker Change: I am pleased with the opportunities that present themselves to us and we will continue to be opportunistic as we evaluate <unk> action on any of them.
Speaker Change: Between now and the end of the year on the second part I agree with you.
Jack Molloy: On the second part, I agree with you. I think additional defense spending in Europe overall is good. In Germany and specifically, it's good as European countries move toward a higher NATO 3% target of defense spending as a percentage of GDP. We think those are favorable trends, and Molloy's team, you may want to talk about Germany. You've done a great job there. Yeah, Greg, sure. Real proud of the work we've done with the German MOD, both from a military and a naval operations standpoint. We've gone in and, by the way, worked with local partners to deploy systems. We think there's opportunities for some scale to add additional scale to those programs. The other thing that hasn't been talked a lot is around border security leveraging video, particularly our thermal assets by way of our silent sentinel acquisition.
Speaker Change: I think additional defense spending in Europe overall is good in Germany, and specifically its good as European countries move toward a.
Speaker Change: A higher NATO, 3%.
Speaker Change: <unk> of <unk>.
Speaker Change: <unk> spending as a percentage of GDP. We think those are favorable trends in Malawi team you may want to talk about Germany, you've done a great job there.
Speaker Change: Yes sure.
Speaker Change: The real proud of the work we've done with the German MLD, both both from a military and enable operation standpoint, we've gone in and worked by the way work with local partners to deploy systems, we think theres opportunities for.
Speaker Change: For some scale to add additional scale to those programs. The other thing that hasn't been talked a lot is around border security leveraging video, particularly our thermal assets by way of our silent Sentinel acquisition, a lot of interest as it relates to that.
Jack Molloy: A lot of interest as it relates to that, and so we're excited about that as well, but we're keeping an eye on the budget. It's really important to point out we have teams local that work with our customers, and I think they'll continue to work to execute and help our customers to the greatest extent they can. Thank you.
Speaker Change: And so we're excited about that as well, but we're keeping an eye on the budget. It's really important to point out we have teams local that work with our customers and I think that will continue.
Speaker Change: To work to execute and help our customers the greatest extent they can.
Speaker Change: Thank you.
Irvin Liu: Thanks, Matt. Our final question today is from the line of Amit Daryanani with Evercore ISI. Your line is now open. Hi, thank you. This is Irvin Liu on for Amit. I had one in a follow-up.
Matt: Thanks, Matt.
Speaker Change: Our final question today is from the line of Amit <unk> with Evercore ISI. Your line is now open.
Speaker Change: Hi. Thank you this is irvin Liu on for Amit I.
Speaker Change: I had one and a follow up first I hate to beat a dead horse, but on the topic of tariffs you mentioned pricing as a component of your mitigation strategy.
Gregory Brown: First, you know, I hate to beat a dead horse, but on the topic of tariffs, you mentioned pricing as a component of your mitigation strategy. Contractually, are you able to pass through some of your higher costs on current backlog, or would this more apply to new orders? And then can you share with us any sort of customer feedback as it relates to potential price increases? Our pricing opportunities are within the pipeline that's ahead of us, generally on new orders.
Speaker Change: Contractually are you able to pass through some of your higher costs on current backlog or would this more applied to new orders and then can you share with us any sort of customer feedback as it relates to potential price increases.
Speaker Change: Our pricing opportunities are within the pipeline Thats ahead of us generally on new orders Jack If you want to talk about services renewals and maybe how they work every year. There is an opportunity there too yeah. So we do have we have an opportunity on services. We typically have two big contractual gating.
Jack Molloy: Jack, if you want to talk about services renewals and maybe how they work every year, there's an opportunity there too. Yeah, so we do have, we have an opportunity on services. We typically have two big contractual gating, and that's in, largely in June, and again in January. We have done, by the way, we've done, we've added cyber security capabilities to our, to what I kind of call an enhanced service offering with the price increase. We did that last year. We're evaluating new opportunities this year. You also asked the question as it relates to what our customers are saying, and largely our customers have already gotten a lot of price increases, so I think there's an expectation in the marketplace.
Speaker Change: And that's largely in June and again in January we have done by the way we've done we've added cyber security.
Speaker Change: Capabilities to our to.
Speaker Change: What I would kind of call an enhanced service offering with the price increase we did that last year, we're evaluating new opportunities. This year. You also asked a question as it relates to what our customers are saying.
Speaker Change: Largely our customers have already gotten a lot of price increases. So I think there is an expectation in the marketplace. That's what we're hearing not only from our customers, but also from our partners that there will be some pricing.
Gregory Brown: That's what we're hearing, not only from our customers, but also from our partners, that there will be some pricing actions taken in the near term. And Irvin, just to add one last level of a dimensionalization, we're mitigating about a hundred million, but the majority of that mitigation is cost reductions, not pricing opportunities, just to dimensionalize it. Got it. Thank you for the color there.
Speaker Change: Pricing actions taken in the near term and Irvin just to add one last level of Dimensionalize Asian, we're mitigating about $100 million, but the majority of that mitigation is cost reductions not pricing opportunities just to dimensionalize. It.
Speaker Change: Got it thank you for the color there.
Mahesh Saptharishi: And then for my second question, it's great to see your AI innovation address real world use cases out in the field. So you know, I appreciate the color on your monetization efforts as well. I think it's great for your TAM, it's great for your pipeline. But maybe from a customer perspective, as it relates to budgets, do you anticipate, you know, budget dollars shifting higher for some of the technology investments that your public safety customers are looking at? I'm just kind of curious, because, yeah, any color on budgets as it relates to AI spend would be helpful.
Speaker Change: And then for my second question, it's great to see.
Speaker Change: Innovation address real world use cases out in the field. So I appreciate the color on your monetization efforts as well that it's great for your Tam it's great for your pipeline, but maybe from a customer perspective as it relates to budgets do you anticipate budget dollars shifting higher for some of our.
Speaker Change: Technology investments.
Speaker Change: Public safety customers are looking at.
Speaker Change: Kind of curious because.
Speaker Change: Any color on budgets as it relates to AI spin would be helpful. Thanks.
Mahesh Saptharishi: Thanks. Yeah, maybe Mahesh will tag on this. But as it relates, and I've mentioned it earlier, but I think what we're seeing, and particularly with, I'm thinking about a couple RFPs that are imminent. But yeah, I think, particularly within our major, what I would kind of call tier zero, tier one cities, they're starting to think about leveraging technology, pulling together the command center, providing more mobile capability, their officers by way of Apex Next, our SVX device. We talked about DFR earlier. Those are the kind of things that will continue to draw attention and probably appropriate more money within our big city police forces in the United States.
Speaker Change: Yes, maybe a national tag onto this but as it relates to and I mentioned it earlier, but I think what we're seeing in particular with our thinking.
Speaker Change: Thinking about a couple of Rfps that are eminent but yeah, I think particularly within our major what I would kind of call tier zero tier one cities. They are starting to think about leveraging technology pulling together the command center, providing more mobile capability their officers by way of apex next our SPX device.
Speaker Change: We talked about <unk> earlier, those are the kinds of things that will continue to draw attention and probably appropriate more money within our within our Big City Police forces in the United States Mahesh I don't know if you have anything you would add on that so just maybe from a slightly different perspective on this.
Mahesh Saptharishi: Mahesh, I don't know if you have anything you want to add on that. There's starter, there's standard, and there's plus. For each of those, we're revealing assist as a key capability. At the starting of the levels of the first tier, it's everything that's related to search, everything that's related to summarization of information, really making information easy to find. And we do this across the entire incident timeline. And what that really does is it actually encourages cross-sell of our solutions across the products. The next tier is really proactively surfacing information. And as we think about what we have done for assist for 911, as an example, there was a daughter who called 911 Those three levels are embedded into our products.
Speaker Change: How.
Speaker Change: How users interact with software is just fundamentally changing.
Speaker Change: AI is redefining what a user interface looks like what that means is that across all of our command center software products.
Speaker Change: We are embedding assist and assist as part of the solution.
Speaker Change: We typically have three tiers of solutions across our commencement of products there.
Speaker Change: The starter their standard and Theres plus for each of those were revealing assessed as a key capability.
Speaker Change: At the starting of the levels of the first year, it's everything thats related to search everything thats related to summarization of information really making information easy to find and we do this across the entire incident.
Speaker Change: <unk> and what that really does is it actually encourages cross sell of our solutions across the products. The next year is really proactively surfacing information and as we think about what we have done for US just for 901 as an example, there was there was a daughter who called 911.
Speaker Change: Really because her mother needed help medical assistance.
Speaker Change: The location was associated with the daughter's phone.
Speaker Change: Just prompted the call take her to to confirm whether the mother wasn't the same location of the daughter and it did turn out that they were in two different locations that makes 901 response that much more effective in the third level is really where we can start automating multiple task now getting closer to agenda AI.
Speaker Change: For example, if there is an amber alert and that start that process was triggered during the call. We can do multiple things including understanding.
Speaker Change: The LPR information being able to trigger searches through automatically through our LPR network.
Speaker Change: Searching video networks being able to dispatch drones multiple things that can really effectively solve that problem. Those three levels are embedded into our products and what we're fundamentally doing is making our core applications that much more powerful and tight together, making them that much more powerful as well. So it's a different perspective as opposed to thinking of.
Irvin Liu: And what we're fundamentally doing is making our core applications that much more powerful and tied together, making them that much more powerful as well. So it's a different perspective as opposed to thinking of assist purely as a discrete entity that we monetize. Got it, thanks for the call.
Speaker Change: Purely as a discrete entity that we monetize.
Speaker Change: Got it thanks for the color.
Gregory Brown: This concludes our question and answer session.
Speaker Change: This concludes our question and answer session.
Gregory Brown: I'll now turn the floor over to Mr. Greg Brown, Chairman and Chief Executive Officer, for any additional comments or closing Thanks, and thanks everybody for dialing in and listening. I want to start with thanking all of the Motorola Solutions people and all of our partners. A specific shout out and grateful acknowledgement to the SVX team, Mahesh and Scott Moten, and all the people, engineering, development, product, sales, everything. It culminates in an 18-month plus effort on just to kind of piggyback on what Mahesh just said. Look, we're interested. Innovation is the oxygen of our company. We have a robust patent portfolio.
Speaker Change: I will now turn the floor over to Mr. Greg Brown, Chairman and Chief Executive Officer for any additional comments or closing remarks.
Speaker Change: Thanks, and thanks, everybody for dialing in and listening I want to start with thanking all of the Motorola solutions people and all of our partners a specific shout out and grateful acknowledgement to the SPX team.
Speaker Change: Patient, Scott <unk> and all the people engineering development product.
Speaker Change: Sales everything.
Speaker Change: It culminates in an 18 month plus effort on just to kind of piggyback on what the H just said look we're interested.
Speaker Change: Innovation is the oxygen of our company.
Speaker Change: We have a robust patent portfolio. Obviously, you know we defend that voraciously, but we're all about innovation, particularly organic or inorganic but were developing around the needs through the lens of our customer and while we're proud of our individual products, we're doing things in mind with a total safe.
Gregory Brown: Obviously, you know we defend that voraciously. But we're all about innovation, particularly organic or inorganic. But we're developing around the needs through the lens of our customer. And while we're proud of our individual products, we're doing things in mind with a total safety and security ecosystem that resonates with the public safety community that makes them more productive. We have the best products, but we also talk about user interface, productivity benefits, total emergency workflow, expanding situational awareness. And just again, in particular, the SVX team and all and everybody involved was outstanding.
Speaker Change: And security ecosystem that resonates with the public safety community that makes them more productive we have the best products, but we also talk about user interface productivity benefits total emergency workflow expanding situational awareness and just again in particular, the SPX team and all <unk>.
Speaker Change: And everybody involved was was outstanding I'm excited by the investments, we're making in innovation welcome to the rapid Sos and theatrical employees that joined the Motorola solutions team, we talked about our excitement around drones, both counter and shown as a first responder and some of the superior characteristics and.
Gregory Brown: I'm excited by the investments we're making in innovation. Welcome to the RapidSOS and Theatro employees that joined the Motorola Solutions team. We talked about our excitement around drones, both counter and drone as a first responder, and some of the superior characteristics and attributes that brings us in that partnership. SVX and assist, we talked about. I like the fact that we had record product introductions at ISC West. So, I like where we are. I'm heartened that the composition of our revenue continues to more index toward recurring and software and services, and I appreciate all of you joining us.
Speaker Change: <unk> that bring brings us in that partnership.
Speaker Change: SPX and assist we talked about I like the fact that we had record product introductions at ISC West So I like where we are.
Speaker Change: I'm heartened that the composition of our of our revenue continues to more indexed towards recurring and software and services and I. Appreciate all of you joining us I appreciate the whole team.
Gregory Brown: I appreciate the whole team in Motorola Solutions for your execution, and we'll see you in a quarter again, but thanks for everybody's efforts.
Speaker Change: In Motorola solutions for your execution, and we'll see you in a quarter again, but thanks for everybody's efforts I appreciate you.
Gregory Brown: Appreciate you.
Operator: This does conclude today's teleconference. A replay of this call will be available over the internet within three hours. The website address is www.MotorolaSolutions.com. We thank you for your participation and ask that you please disconnect your line.
Speaker Change: This does conclude today's teleconference. A replay of this call will be available over the internet within three hours the.
Speaker Change: The website address is www dot Motorola solutions Dot com slash investor.
Speaker Change: Thank you for your participation and ask you. Please disconnect your lines at this time.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.