Motorola Solutions Inc.

11/04/2026 | Press release | Distributed by Public on 11/04/2026 16:00

Quarterly Report for Quarter Ending October 3, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
This commentary should be read in conjunction with the condensed consolidated financial statements and related notes thereto of Motorola Solutions, Inc. ("Motorola Solutions," the "Company," "we," "our," or "us") for the three and nine months ended October 3, 2026 and September 27, 2025, as well as our consolidated financial statements and related notes thereto and management's discussion and analysis of financial condition and results of operations in our Annual Report on Form 10-K for the year ended December 31, 2025 (the "Form 10-K").
Forward-Looking Statements
Statements in this Quarterly Report on Form 10-Q for the quarter ended October 3, 2026 (this "Form 10-Q") which are not historical in nature are forward-looking statements within the meaning of applicable federal securities law. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as "believes," "expects," "intends," "aims," "estimates" and similar expressions. We can give no assurance that any future results or events discussed in these statements will be achieved. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. Readers are cautioned that such forward-looking statements are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from the statements contained in this Form 10-Q. Some of these risks and uncertainties include, but are not limited to, those discussed in Part I, Item 1A "Risk Factors" of the Form 10-K, and those described elsewhere in our other SEC filings. Forward-looking statements include, but are not limited to, statements under the following headings: (1) "Management's Discussion and Analysis of Financial Condition and Results of Operations," about: (a) the impact of changes in the global trade environment, the dynamic supply chain environment and the memory market on our business, and our actions in response thereto (including with respect to inventory levels); (b) the impact of acquisitions on our business; (c) our plans to assess the impact of changes to tax law on our business; (d) the return of capital to shareholders through dividends and/or repurchasing shares; (e) future payments, charges, and use of accruals associated with our reorganization of business programs and employee separation costs; (f) our ability to repatriate funds; (g) the liquidity of our investments; (h) our ability to access the capital markets; (i) our use of proceeds from the issuance of notes under our unsecured commercial paper program; (j) adequacy of internal resources to generate adequate amounts of cash to meet expected working capital, capital expenditure and cash requirements; and (k) future cash flows generated from operations, and future uses of cash, investments and debt facilities; and (2) "Quantitative and Qualitative Disclosures about Market Risk," about: (a) the impact of foreign currency risk; and (b) future hedging activity and expectations of the Company.
Executive Overview
Business Overview
The Company manages the business through two segments: "Products and Systems Integration" and "Software and Services." Within these segments, the Company reports net sales across three principal product lines:
•MCN: Infrastructure, mobile ad-hoc network ("MANET") technology, devices (two-way radio and broadband, including both for public safety and professional and commercial radio ("PCR")), counter-unmanned aircraft systems ("C-UAS"), software and artificial intelligence ("AI")-powered capabilities. MCN includes installation and integration, backed by managed and support services, to help assure mission-critical communications availability, security and resiliency;
•Video: Cameras (fixed, body-worn, in-vehicle), access control, sensors, infrastructure, video management, video monitoring, software and AI-powered analytics that enable visibility of events and focus attention on what's important, to inform faster and more accurate decisions and actions; and
•Command Center: Command center solutions, software applications and AI-powered capabilities, that unify voice and data from public safety agencies, enterprises and the community, enabling a broad informational view of operations and incidents while helping to accelerate workflows and improve the accuracy, speed and trust of decisions.
We have invested across these three technologies organically and through acquisitions to evolve our land mobile radio ("LMR") focus and expand our ecosystem of safety and security products and services. Across all three technologies, we offer AI-powered capabilities and software solutions, services such as cybersecurity subscription services and managed and support services.
Third Quarter Financial Results
•Net sales were $3.4 billion in the third quarter of 2026 compared to $3.0 billion in the third quarter of 2025.
•Operating earnings were $777 million in the third quarter of 2026 compared to $770 million in the third quarter of 2025.
•Net earnings attributable to Motorola Solutions, Inc. was $512 million, or $3.06 per diluted common share, in the third quarter of 2026, compared to $562 million, or $3.33 per diluted common share, in the third quarter of 2025.
•Operating cash flow increased $1 million in the first nine months of 2026 compared to the first nine months of 2025, totaling $1.6 billion in both periods.
•We repurchased $538 million of common stock and paid $602 million in dividends in the first nine months of 2026.
Recent Events
Macroeconomic Environment Update
The global trade landscape continues to shift rapidly, including evolving tariffs and import/export regulations, such as restrictions around rare earth minerals, trade barriers and trade disputes.
On February 20, 2026, a U.S. Supreme Court ruling invalidated tariffs imposed under the International Emergency Economic Powers Act ("IEEPA"). On April 20, 2026, the U.S. Customs and Border Protection launched a system to process IEEPA tariff refund claims. Following the implementation of this system, we have determined that the recovery of a portion of these refunds is now probable. Accordingly, during the nine months ended October 3, 2026, we recognized a favorable adjustment of approximately $70 million recorded within Cost of sales in our Condensed Consolidated Statements of Operations.
In addition, we are experiencing higher costs for memory in our products which is a result of substantial demand in the market driven by AI. As a result, we continue to observe elevated volatility and uncertainty around the global supply chain. We engage with global suppliers across a diverse network of locations around the world. We are actively managing our inventory and continue to work with our global supply base to mitigate our exposure to elevated volatility and uncertainty from these rising memory costs, as well as global tariffs and import/export regulations that have developed, and which may continue to develop, to ensure supply continues at levels necessary to meet our current customer demand. We expect inventory levels to remain elevated as we mitigate this dynamic supply chain environment. The current environment has led to increased costs on materials and components, for which we continue to develop mitigation actions going forward.
Recent Acquisitions
Segment(s) Technology Acquisition Description Purchase Price Date of Acquisition
Software and Services Video Security and Access Control DeepNeuronic Provider of AI software that turns live camera feeds into real-time operational insights. $29 million and share-based compensation of $9 million August 28, 2026
Products and Systems Integration
&
Software and Services 		Mission Critical Networks D-Fend Provider of advanced counter-drone technology. $1.3 billion and share-based compensation of $76 million August 20, 2026
Software and Services Command Center Hyper Provider of conversational, agentic AI designed to reduce the burden on understaffed public safety answering points (PSAPs) by handling non-emergency calls. $23 million and share-based compensation of $2 million March 24, 2026
Software and Services Command Center Exacom Provider of cloud-native voice and multimedia recording and logging solutions for mission-critical communications. $67 million and share-based compensation of $1 million March 11, 2026
Software and Services Video Security and Access Control Blue Eye Provider of AI-powered enterprise remote video monitoring ("RVM") services. $79 million and share-based compensation of $1 million November 18, 2025
Products and Systems Integration
&
Software and Services 		Mission Critical Networks Silvus Technologies Designer and developer of software-defined high-speed MANET technology. $4.4 billion and share-based compensation of $20 million August 6, 2025
Software and Services Command Center Theatro
Creator of AI and voice-powered communication and digital workflow software for frontline workers.
$174 million and share-based compensation of $5 million
March 6, 2025
Software and Services Command Center RapidDeploy Provider of cloud-native 911 solutions.
$240 million and share-based compensation of $6 million
February 21, 2025
Results of Operations
Three Months Ended Nine Months Ended
(Dollars in millions, except per share amounts) October 3, 2026 % of
Sales* 		September 27, 2025 % of
Sales* 		October 3, 2026 % of
Sales* 		September 27, 2025 % of
Sales*
Net sales from products $ 1,999 $ 1,751 $ 5,298 $ 4,731
Net sales from services 1,377 1,258 3,925 3,571
Net sales 3,376 3,009 9,223 8,302
Costs of products sales 800 40.0 % 728 41.6 % 2,130 40.2 % 1,948 41.2 %
Costs of services sales 808 58.7 % 727 57.8 % 2,285 58.2 % 2,087 58.4 %
Costs of sales 1,608 1,455 4,415 4,035
Gross margin 1,768 52.4 % 1,554 51.6 % 4,808 52.1 % 4,267 51.4 %
Selling, general and administrative expenses 504 14.9 % 485 16.1 % 1,439 15.6 % 1,371 16.5 %
Research and development expenditures 276 8.2 % 237 7.9 % 788 8.5 % 700 8.4 %
Other charges 211 6.3 % 62 2.1 % 470 5.1 % 152 1.8 %
Operating earnings 777 23.0 % 770 25.6 % 2,111 22.9 % 2,044 24.6 %
Other income (expense):
Interest expense, net (107) (3.2) % (86) (2.9) % (315) (3.4) % (192) (2.3) %
Other, net 8 0.2 % 41 1.4 % 64 0.7 % 100 1.2 %
Total other expense (99) (2.9) % (45) (1.5) % (251) (2.7) % (92) (1.1) %
Net earnings before income taxes 678 20.1 % 725 24.1 % 1,860 20.2 % 1,952 23.5 %
Income tax expense 164 4.9 % 161 5.4 % 420 4.6 % 442 5.3 %
Net earnings 514 15.2 % 564 18.7 % 1,440 15.6 % 1,510 18.2 %
Less: Earnings attributable to non-controlling interests 2 0.1 % 2 0.1 % 5 0.1 % 5 0.1 %
Net earnings attributable to Motorola Solutions, Inc. $ 512 15.2 % $ 562 18.7 % $ 1,435 15.6 % $ 1,505 18.1 %
Earnings per diluted common share $ 3.06 $ 3.33 $ 8.57 $ 8.89
* Percentages may not add due to rounding
Results of Operations-Three months ended October 3, 2026 compared to three months ended September 27, 2025
The results of operations for the third quarter of 2026 are not necessarily indicative of the operating results to be expected for the full year. Historically, we have experienced higher revenues in the fourth quarter as compared to the rest of the quarters of our fiscal year as a result of the purchasing patterns of our customers.
We use the following U.S. GAAP key financial performance measures to manage our business on a consolidated basis and by reporting segment, and to monitor and assess our results of operations:
•Net sales: a measure of our revenue for the current period.
•Operating earnings: a measure of our earnings from operations, before non-operating expenses and income taxes.
•Operating margins: a measure of our operating earnings as a percentage of total net sales.
Considered together, we believe these measures are strong indicators of our overall performance and our ability to create shareholder value. A discussion of our results of operations and financial condition follows.
Three Months Ended
October 3, 2026 September 27, 2025
(In millions) Products and Systems Integration Software and Services Total Products and Systems Integration Software and Services Total
Net sales by region:
North America $ 1,469 $ 860 $ 2,329 $ 1,360 $ 761 $ 2,121
International 649 398 1,047 537 351 888
$ 2,118 $ 1,258 $ 3,376 $ 1,897 $ 1,112 $ 3,009
Net sales by major products and services:
Mission Critical Networks (MCN) $ 1,784 $ 727 $ 2,511 $ 1,598 $ 643 $ 2,241
Video 334 260 594 299 235 534
Command Center - 271 271 - 234 234
$ 2,118 $ 1,258 $ 3,376 $ 1,897 $ 1,112 $ 3,009
Operating earnings $ 446 $ 331 $ 777 $ 458 $ 312 $ 770
Operating margins 21.1 % 26.3 % 23.0 % 24.1 % 28.1 % 25.6 %
Net Sales
The Products and Systems Integration segment's net sales represented 63% of our net sales in the third quarter of each of 2026 and 2025. The Software and Services segment's net sales represented 37% of our net sales in the third quarter of each of 2026 and 2025.
Net sales increased $367 million, or 12%, in the third quarter of 2026 compared to the third quarter of 2025. The $221 million, or 12%, increase in net sales within the Products and Systems Integration segment was driven by an increase of 21% in the International region and an increase of 8% in the North America region. The $146 million, or 13%, increase in net sales within the Software and Services segment was driven by an increase of 13% in both the North America and International regions. Net sales includes:
•an increase in the Products and Systems Integration segment, inclusive of $169 million of revenue from acquisitions, driven by an increase in MCN and Video;
•an increase in the Software and Services segment, inclusive of $42 million of revenue from acquisitions, driven by an increase in MCN, Command Center and Video; and
•inclusive of $11 million from favorable currency rates.
Regional results include:
•a 10% increase in the North America region, inclusive of revenue from acquisitions, driven by an increase in MCN, Video and Command Center; and
•a 18% increase in the International region, inclusive of revenue from acquisitions, driven by an increase in MCN, Video and Command Center.
Products and Systems Integration
The 12% increase in the Products and Systems Integration segment was driven by the following:
•$186 million, or 12%, growth in MCN, inclusive of revenue from acquisitions, driven by the North America and International regions;
•$35 million, or 12%, growth in Video, driven by the International and North America regions; and
•inclusive of $7 million from favorable currency rates.
Software and Services
The 13% increase in the Software and Services segment was driven by the following:
•$84 million, or 13%, growth in MCN, inclusive of revenue from acquisitions, driven by the North America and International regions;
•$37 million, or 16%, growth in Command Center, inclusive of revenue from acquisitions, driven by the North America and International regions;
•$25 million, or 11%, growth in Video, inclusive of revenue from acquisitions, driven by the North America region and partially offset by the International region; and
•inclusive of $4 million from favorable currency rates.
Gross Margin
Three Months Ended
(In millions) October 3, 2026 September 27, 2025 % Change
Gross margin from Products and Systems Integration $ 1,159 $ 1,019 14 %
Gross margin from Software and Services 609 535 14 %
Gross margin $ 1,768 $ 1,554 14 %
Gross margin was 52.4% of net sales in the third quarter of 2026 compared to 51.6% in the third quarter of 2025. The primary drivers of this increase in gross margin as a percentage of net sales were:
•a 1.0% increase in gross margin as a percentage of net sales in the Products and Systems Integration segment, inclusive of acquisitions, primarily driven by higher sales, including favorable mix, partially offset by higher supply chain costs.
•a 0.3% increase in gross margin as a percentage of net sales in the Software and Services segment, inclusive of acquisitions, primarily driven by higher sales, including favorable mix.
Selling, General and Administrative ("SG&A") Expenses
Three Months Ended
(In millions) October 3, 2026 September 27, 2025 % Change
SG&A expenses from Products and Systems Integration $ 396 $ 384 3 %
SG&A expenses from Software and Services 108 101 7 %
SG&A expenses $ 504 $ 485 4 %
SG&A expenses increased 4% in the third quarter of 2026 compared to the third quarter of 2025 primarily driven by:
•a $12 million, or 3%, increase in Products and Systems Integration SG&A expenses primarily due to higher expenses associated with acquired businesses, partially offset by lower expenses related to legal matters, including Hytera-related expenses; and
•a $7 million, or 7%, increase in Software and Services SG&A expenses primarily due to higher expenses associated with acquired businesses.
SG&A expenses were 14.9% of net sales in the third quarter of 2026 compared to 16.1% of net sales in the third quarter of 2025.
Research and Development ("R&D") Expenditures
Three Months Ended
(In millions) October 3, 2026 September 27, 2025 % Change
R&D expenditures from Products and Systems Integration $ 165 $ 146 13 %
R&D expenditures from Software and Services 111 91 22 %
R&D expenditures $ 276 $ 237 16 %
R&D expenditures increased 16% in the third quarter of 2026 compared to the third quarter of 2025 primarily driven by:
•a $20 million, or 22%, increase in Software and Services R&D expenditures primarily due to investments in Video, higher expenses associated with acquired businesses, and higher employee incentive costs, including share-based compensation; and
•a $19 million, or 13%, increase in Products and Systems Integration R&D expenditures primarily due to higher expenses associated with acquired businesses and higher employee incentive costs, including share-based compensation.
R&D expenditures were 8.2% of net sales in the third quarter of 2026 compared to 7.9% of net sales in the third quarter of 2025.
Other Charges
Three Months Ended
(In millions) October 3, 2026 September 27, 2025
Other charges from Products and Systems Integration $ 152 $ 31
Other charges from Software and Services 59 31
Other charges $ 211 $ 62
Other charges increased $149 million in the third quarter of 2026 compared to the third quarter of 2025. The increase was primarily driven by:
•an $87 million contingent earnout charge related to the Silvus acquisition in the third quarter of 2026 that did not occur in the third quarter of 2025;
•a $13 million gain on Hytera litigation for amounts recovered through legal proceedings due to the theft of our trade secrets recognized in the third quarter of 2026 compared to $74 million of gains on Hytera litigation in the third quarter of 2025; and
•$97 million of intangible amortization expense in the third quarter of 2026 compared to $66 million of intangible amortization expense in the third quarter of 2025; partially offset by
•$29 million of acquisition related transaction fees in the third quarter of 2026 compared to $55 million of acquisition related transaction fees in the third quarter of 2025, primarily related to the acquisition of Silvus.
Operating Earnings
Three Months Ended
(In millions) October 3, 2026 September 27, 2025
Operating earnings from Products and Systems Integration $ 446 $ 458
Operating earnings from Software and Services 331 312
Operating earnings $ 777 $ 770
Operating earnings increased $7 million, or 1%, in the third quarter of 2026 compared to the third quarter of 2025. The increase in Operating earnings was due to:
•a $19 million increase in the Software and Services segment, primarily driven by higher sales, including favorable mix, partially offset by higher expenses associated with acquired businesses and an increase in intangible amortization expense; partially offset by
•a $12 million decrease in the Products and Systems Integration segment, primarily driven by a contingent earnout charge related to the Silvus acquisition, lower gains recognized from ongoing Hytera litigation recoveries, and higher supply chain costs, partially offset by higher sales, including favorable mix.
Interest Expense, net
Three Months Ended
(In millions) October 3, 2026 September 27, 2025
Interest expense, net $ (107) $ (86)
The $21 million increase in Interest expense, net in the third quarter of 2026 compared to the third quarter of 2025 was primarily driven by higher outstanding debt and lower interest income.
Other, net
Three Months Ended
(In millions) October 3, 2026 September 27, 2025
Other, net $ 8 $ 41
The $33 million decrease in Other, net in the third quarter of 2026 compared to the third quarter of 2025 was primarily driven by:
•a $9 million loss on fair value adjustments to equity investments in the third quarter of 2026 compared to a $8 million gain on fair value adjustments to equity investments in the third quarter of 2025;
•a $4 million loss on foreign currency in the third quarter of 2026 compared to a $4 million gain on foreign currency in the third quarter of 2025; and
•$25 million of net periodic pension and postretirement benefit in the third quarter of 2026 compared to $31 million of net periodic pension and postretirement benefit in the third quarter of 2025.
Effective Tax Rate
Three Months Ended
(In millions) October 3, 2026 September 27, 2025
Income tax expense $ 164 $ 161
The effective tax rate for the three months ended October 3, 2026 of 24% was higher than the effective tax rate for the three months ended September 27, 2025 of 22%, primarily due to lower excess tax benefits of share-based compensation, partially offset by an increased deduction for foreign-derived deduction-eligible income.
On July 4, 2025, the "One Big Beautiful Bill Act" was enacted into law, introducing a broad range of changes to the U.S. corporate income tax framework. The legislation includes business provisions that impact our tax position, including tax cut extensions and modifications to the international tax framework and corporate income tax deductions. Certain provisions of this legislation were effective for the 2025 fiscal year, whereas other provisions became effective starting in 2026. For the three months ended October 3, 2026, the impact of the enacted legislation on our tax position was not material. We plan to continue to assess the ongoing impact of this legislation as further guidance is made available.
Results of Operations-Nine months ended October 3, 2026 compared to Nine months ended September 27, 2025
Nine Months Ended
October 3, 2026 September 27, 2025
(In millions) Products and Systems Integration Software and Services Total Products and Systems Integration Software and Services Total
Net sales by region:
North America $ 3,895 $ 2,501 $ 6,396 $ 3,789 $ 2,211 $ 6,000
International 1,691 1,136 2,827 1,306 996 2,302
$ 5,586 $ 3,637 $ 9,223 $ 5,095 $ 3,207 $ 8,302
Net sales by major products and services:
Mission Critical Networks (MCN) $ 4,639 $ 2,120 $ 6,759 $ 4,269 $ 1,878 $ 6,147
Video 947 740 1,687 826 672 1,498
Command Center - 777 777 - 657 657
$ 5,586 $ 3,637 $ 9,223 $ 5,095 $ 3,207 $ 8,302
Operating earnings $ 1,112 $ 999 $ 2,111 $ 1,173 $ 871 $ 2,044
Operating margins 19.9 % 27.5 % 22.9 % 23.0 % 27.2 % 24.6 %
Net Sales
The Products and Systems Integration segment's net sales represented 61% of our net sales in the first nine months of each of 2026 and 2025. Net sales from the Software and Services segment represented 39% of our net sales in the first nine months of each of 2026 and 2025.
Net sales increased $921 million, or 11%, in the first nine months of 2026 compared to the first nine months of 2025. The $491 million, or 10%, increase in net sales within the Products and Systems Integration segment was driven by an increase of 29% in the International region and an increase of 3% in the North America region. The $430 million, or 13%, increase in net sales within the Software and Services segment was driven by an increase of 13% in the North America region and an increase of 14% in the International region. Net sales includes:
•an increase in the Products and Systems Integration segment, inclusive of $562 million of revenue from acquisitions, driven by an increase in MCN and Video;
•an increase in the Software and Services segment, inclusive of $112 million of revenue from acquisitions, driven by an increase in MCN, Command Center and Video; and
•inclusive of $105 million from favorable currency rates.
Regional results include:
•a 23% increase in the International region, inclusive of revenue from acquisitions, driven by an increase in MCN, Video and Command Center; and
•a 7% increase in the North America region, inclusive of revenue from acquisitions, driven by an increase in MCN, Video and Command Center.
Products and Systems Integration
The 10% increase in the Products and Systems Integration segment was driven by the following:
•$370 million, or 9% growth in MCN, inclusive of revenue from acquisitions, driven by the International and North America regions;
•$121 million, or 15% growth in Video, driven by the North America and International regions; and
•inclusive of $56 million from favorable currency rates.
Software and Services
The 13% increase in the Software and Services segment was driven by the following:
•$242 million, or 13% growth in MCN, inclusive of revenue from acquisitions, driven by the North America and International regions;
•$120 million, or 18% growth in Command Center, inclusive of revenue from acquisitions, driven by the North America and International regions;
•$68 million, or 10% growth in Video, inclusive of revenue from acquisitions, driven by the North America and International regions; and
•inclusive of $49 million from favorable currency rates.
Gross Margin
Nine Months Ended
(In millions) October 3, 2026 September 27, 2025 % Change
Gross margin from Products and Systems Integration
$ 3,032 $ 2,746 10 %
Gross margin from Software and Services
1,776 1,521 17 %
Gross margin $ 4,808 $ 4,267 13 %
Gross margin was 52.1% of net sales in the first nine months of 2026 compared to 51.4% in the first nine months of 2025. The primary drivers of this increase in gross margin as a percentage of net sales were:
•a 0.4% increase in gross margin as a percentage of net sales in the Products and Systems Integration segment, inclusive of acquisitions, primarily driven by higher sales, including favorable mix, and IEEPA tariff refunds, partially offset by higher supply chain costs; and
•a 1.4% increase in gross margin as a percentage of net sales in the Software and Services segment, inclusive of acquisitions, primarily driven by higher sales, including favorable mix.
Selling, General and Administrative ("SG&A") Expenses
Nine Months Ended
(In millions) October 3, 2026 September 27, 2025 % Change
SG&A expenses from Products and Systems Integration
$ 1,126 $ 1,079 4 %
SG&A expenses from Software and Services
313 292 7 %
SG&A expenses
$ 1,439 $ 1,371 5 %
SG&A expenses increased 5% in the first nine months of 2026 compared to the first nine months of 2025 primarily driven by:
•a $47 million, or 4%, increase in Products and Systems Integration SG&A expenses primarily due to higher expenses associated with acquired businesses and higher employee incentive costs, including share-based compensation, partially offset by lower expenses related to legal matters, including Hytera-related expenses; and
•a $21 million, or 7%, increase in Software and Services SG&A expenses primarily due to higher expenses associated with acquired businesses and higher employee incentive costs, including share-based compensation, partially offset by lower expenses related to legal matters.
SG&A expenses were 15.6% of net sales in the first nine months of 2026 compared to 16.5% of net sales in the first nine months of 2025.
Research and Development ("R&D") Expenditures
Nine Months Ended
(In millions) October 3, 2026 September 27, 2025 % Change
R&D expenditures from Products and Systems Integration
$ 470 $ 430 9 %
R&D expenditures from Software and Services
318 270 18 %
R&D expenditures
$ 788 $ 700 13 %
R&D expenditures increased 13% in the first nine months of 2026 compared to the first nine months of 2025 primarily driven by:
•a $48 million, or 18%, increase in Software and Services R&D expenditures primarily due to investments in Video, higher expenses associated with acquired businesses, and higher employee incentive costs, including share-based compensation; and
•a $40 million, or 9%, increase in Products and Systems Integration R&D expenditures primarily due to higher expenses associated with acquired businesses and higher employee incentive costs, including share-based compensation.
R&D expenditures were 8.5% of net sales in the first nine months of 2026 compared to 8.4% of net sales in the first nine months of 2025.
Other Charges
Nine Months Ended
(In millions) October 3, 2026 September 27, 2025
Other charges from Products and Systems Integration
$ 324 $ 64
Other charges from Software and Services
146 88
Other charges $ 470 $ 152
Other charges increased by $318 million in the first nine months of 2026 compared to the first nine months of 2025. The increase was driven primarily by:
•$178 million of contingent earnout charges related to the Silvus acquisition in the first nine months of 2026 that did not occur in the first nine months of 2025;
•$282 million of intangible amortization expense in the first nine months of 2026 compared to $142 million of intangible amortization expense in the first nine months of 2025, an increase primarily due to amortization of intangible assets from the acquisition of Silvus; and
•$73 million of gains on the Hytera litigation for the amounts recovered through legal proceedings due to the theft of our trade secrets in the first nine months of 2026 compared to $94 million of gains on Hytera litigation in the first nine months of 2025; partially offset by
•$42 million of acquisition related transaction fees in the first nine months of 2026 compared to $63 million of acquisition related transaction fees in the first nine months of 2025.
Operating Earnings
Nine Months Ended
(In millions) October 3, 2026 September 27, 2025
Operating earnings from Products and Systems Integration $ 1,112 $ 1,173
Operating earnings from Software and Services 999 871
Operating earnings $ 2,111 $ 2,044
Operating earnings increased $67 million, or 3%, in the first nine months of 2026 compared to the first nine months of 2025. The increase in Operating earnings was due to:
•a $128 million increase in the Software and Services segment, primarily driven by higher sales, including favorable mix and improved operating leverage, partially offset by higher employee incentive costs, including share-based compensation, higher expenses associated with acquired businesses, and an increase in intangible amortization expense; partially offset by
•a $61 million decrease in the Products and Systems Integration segment, primarily driven by contingent earnout charges related to the Silvus acquisition, an increase in intangible amortization expense, higher supply chain costs, and higher expenses associated with acquired businesses, partially offset by higher sales including favorable mix, IEEPA tariff refunds, and lower expenses related to legal matters, including Hytera-related expenses.
Interest Expense, net
Nine Months Ended
(In millions) October 3, 2026 September 27, 2025
Interest expense, net $ (315) $ (192)
The $123 million increase in Interest expense, net in the first nine months of 2026 compared to the first nine months of 2025 was primarily driven by higher outstanding debt.
Other, net
Nine Months Ended
(In millions) October 3, 2026 September 27, 2025
Other, net $ 64 $ 100
The $36 million decrease in Other, net in the first nine months of 2026 compared to the first nine months of 2025 was primarily driven by:
•a $47 million loss on derivative instruments in the first nine months of 2026 compared to a $41 million gain on derivative instruments in the first nine months of 2025;
•a $1 million loss on fair value adjustments to equity investments in the first nine months of 2026 compared to a $21 million gain on fair value adjustments to equity investments in the first nine months of 2025; and
•$76 million of net periodic pension and postretirement benefit in the first nine months of 2026 compared to $92 million of net periodic pension and postretirement benefit in the first nine months of 2025; partially offset by
•a $31 million gain on foreign currency in the first nine months of 2026 compared to a $57 million loss on foreign currency in the first nine months of 2025.
Effective Tax Rate
Nine Months Ended
(In millions) October 3, 2026 September 27, 2025
Income tax expense $ 420 $ 442
The effective tax rate for the nine months ended October 3, 2026 of 23% was equal to the effective tax rate for the nine months ended September 27, 2025, primarily due to an increased deduction for foreign-derived deduction-eligible income, offset by lower excess tax benefits of share-based compensation.
On July 4, 2025, the "One Big Beautiful Bill Act" was enacted into law, introducing a broad range of changes to the U.S. corporate income tax framework. The legislation includes business provisions that impact our tax position, including tax cut extensions and modifications to the international tax framework and corporate income tax deductions. Certain provisions of this legislation were effective for the 2025 fiscal year, whereas other provisions became effective starting in 2026. For the nine months ended October 3, 2026, the impact of the enacted legislation on our tax position was not material. We plan to continue to assess the ongoing impact of this legislation as further guidance is made available.
Reorganization of Business
During the third quarter of 2026, we recorded net reorganization of business charges of $12 million, including $10 million of charges recorded within Other charges and $2 million of charges in Cost of sales in our Condensed Consolidated Statements of Operations related to employee separation costs. Included in the $12 million were charges of $13 million related to employee separation costs, partially offset by $1 million of reversals for employee separation accruals no longer needed.
During the first nine months of 2026, we recorded net reorganization of business charges of $42 million, including $30 million of charges recorded within Other charges and $12 million of charges in Cost of sales in our Condensed Consolidated Statements of Operations. Included in the $42 million were charges of $46 million related to employee separation costs, partially offset by $4 million of reversals for employee separation accruals no longer needed.
During the third quarter of 2025, we recorded net reorganization of business charges of $14 million, including $12 million of charges recorded within Other charges and $2 million of charges in Cost of sales in our Condensed Consolidated Statements of Operations. Included in the $14 million were charges of $13 million related to employee separation costs and $1 million related to exit costs.
During the first nine months of 2025, we recorded net reorganization of business charges of $45 million, including $33 million of charges recorded within Other charges and $12 million of charges in Cost of sales in our Condensed Consolidated Statements of Operations. Included in the $45 million were charges of $46 million related to employee separation costs and $2 million related to exit costs, partially offset by $3 million of reversals for employee separation accruals no longer needed.
The following table displays the net charges incurred by segment:
Three Months Ended Nine Months Ended
October 3, 2026 September 27, 2025 October 3, 2026 September 27, 2025
Products and Systems Integration $ 9 $ 9 $ 30 $ 31
Software and Services 3 5 12 14
$ 12 $ 14 $ 42 $ 45
Cash payments for employee severance in connection with the reorganization of business plans were $41 million in the first nine months of 2026 and $48 million in the first nine months of 2025. The reorganization of business accrual at October 3, 2026 was $25 million related to employee separation costs that are expected to be paid primarily within one year.
Liquidity and Capital Resources
Nine Months Ended
October 3, 2026 September 27, 2025
Cash flows provided by (used for):
Operating activities $ 1,582 $ 1,581
Investing activities (1,768) (4,972)
Financing activities (163) 2,111
Effect of exchange rates on cash and cash equivalents (42) 72
Decrease in cash and cash equivalents
$ (391) $ (1,208)
Cash and Cash Equivalents
At October 3, 2026, $490 million of the $774 million cash and cash equivalents balance was held in the U.S. and $284 million was held in other countries.
Operating Activities
Cash flows provided by operating activities increased by $1 million in the first nine months of 2026 compared to the first nine months of 2025, totaling $1.6 billion in both periods, driven primarily by:
•Expanded operating earnings of $67 million driven by an increase in net sales and gross profit, inclusive of higher non-cash charges of $445 million which included contingent earnout charges related to the Silvus acquisition, depreciation and intangible asset amortization expense and share-based compensation expense; partially offset by
•An increase in cash paid for income and withholding taxes, net of refunds, of $61 million, primarily driven by higher cash tax payments on our U.S. federal income tax return;
•An increase of $164 million in cash paid for interest driven by elevated levels of outstanding debt issued in connection with the funding of the Silvus acquisition in 2025;
•An increase of $50 million in cash paid for employee contributions into the employee stock purchase plan due to timing of the settlement window; and
•An increase in cash used for working capital, primarily due to higher investments in inventory of $396 million to provide operational flexibility to respond to customer demand and mitigate production risks associated with supply chain volatility, partially offset by improved collections of trade receivables and favorable billing terms across our contract assets and contract liabilities, which contributed $320 million year over year.
Investing Activities
The decrease in cash flows used for investing activities in the first nine months of 2026 compared to the first nine months of 2025 was due to a $3.2 billion decrease in cash used for acquisitions and investments, primarily reflecting the acquisition of D-Fend for $1.3 billion in 2026 compared to the acquisition of Silvus for $4.4 billion in 2025.
Financing Activities
The increase in cash flows used for financing activities in the first nine months of 2026 compared to the cash flows provided by financing activities in the first nine months of 2025 was primarily driven by (see also further discussion in the "Debt," "Share Repurchase Program" and "Dividends" sections below in this Part I, Item 2 of this Form 10-Q):
•$1.8 billion decrease in net proceeds from the issuance of debt in the first nine months of 2026 driven by the issuance of our 4.85% senior notes due 2029 and 5.65% senior notes due 2036 compared to the issuance of debt in the first nine months of 2025 driven by the issuance of our 4.85% senior notes due 2030, 5.2% senior notes due 2032, 5.55% senior notes due 2035, and term loan due 2028 (defined below);
•$423 million decrease in net proceeds from short-term borrowings, including commercial paper, in the first nine months of 2026 compared to the first nine months of 2025;
•$178 million increase in the repayment of short-term debt driven by the partial repayment of our 2025 364-day facility in the first nine months of 2026 compared to the repayment of our 7.5% debentures and 6.5% debentures in the first nine months of 2025; and
•$56 million increase in the payment of dividends in the first nine months of 2026 compared to the first nine months of 2025; partially offset by
•$121 million decrease in cash used for the purchase of common stock in the first nine months of 2026 compared to the first nine months of 2025; and
•$48 million increase in cash provided by the issuance of common stock in the first nine months of 2026 compared to the first nine months of 2025.
Sales of Receivables
The following table summarizes the proceeds received from sales of long-term customer financing receivables for the three and nine months ended October 3, 2026 and September 27, 2025:
Three Months Ended Nine Months Ended
October 3, 2026 September 27, 2025 October 3, 2026 September 27, 2025
Accounts receivable sales proceeds $ - $ 19 $ 35 $ 19
Long-term receivables sales proceeds 76 58 181 171
Total proceeds from receivable sales $ 76 $ 77 $ 216 $ 190
Debt
We had outstanding debt of $10.1 billion at October 3, 2026, of which $750 million was current. We had outstanding debt of $9.2 billion at December 31, 2025, of which $749 million was current.
On August 17, 2026, we issued $350 million of 4.85% senior notes due 2029 and $600 million of 5.65% senior notes due 2036. We received net proceeds of approximately $942 million after debt issuance costs and discounts. The proceeds from the issuance of these notes were used to fund a portion of the acquisition of D-Fend.
On August 6, 2025, we borrowed $1.5 billion of senior delayed draw term loan facilities comprised of a $750 million 364-day facility (the "2025 364-day facility") and a $750 million three-year facility ("term loan due 2028") to fund a portion of the acquisition of Silvus. On January 30, 2026, we repaid $200 million of the $750 million 2025 364-day facility, reducing the outstanding principal balance to $550 million. On June 26, 2026, we exercised our option under the 364-Day Term Loan Credit Agreement to extend the maturity of $250 million of the outstanding principal amount by one year. On August 5, 2026, upon maturity of the 2025 364-day facility, we repaid $300 million of the outstanding principal amount, with the remaining $250 million of the outstanding principal amount scheduled to mature in August 2027. Separately, on August 17, 2026, we borrowed $300 million under a new 364-day term loan facility. We have the option to extend the maturity of up to $150 million of the outstanding principal amount of this new facility by one year. We must comply with certain customary covenants with respect to each of the term loan facilities, including a maximum leverage ratio (as defined in each of the related credit agreements). We were in compliance with our financial covenants under these facilities as of October 3, 2026. During the three months ended October 3, 2026, the combined weighted average interest rate of both of the 364-day facilities was 4.74%, and the weighted average interest rate of the term loan due 2028 was 4.92%.
We have an unsecured commercial paper program, backed by the 2025 Motorola Solutions Credit Agreement (as defined below), under which we may issue unsecured commercial paper notes up to a maximum aggregate principal amount of $2.2 billion outstanding at any one time. Proceeds from the issuances of the notes are expected to be used for general corporate purposes. The notes are issued at a zero-coupon rate and are issued at a discount which reflects the interest component. At maturity, the notes are paid back in full including the interest component. The notes are not redeemable prior to maturity. As of October 3, 2026, we had $200 million outstanding debt under the commercial paper program, which had a weighted-average interest rate of 4.04% during the three months ended October 3, 2026.
We have a $2.25 billion syndicated, unsecured revolving credit facility scheduled to mature in April 2030 which can be used for general corporate purposes and letters of credit (the "2025 Motorola Solutions Credit Agreement"). Borrowings under the facility bear interest at the prime rate plus the applicable margin, or at a spread above the Secured Overnight Financing Rate (SOFR), at our option. An annual facility fee is payable on the undrawn amount of the credit line. The interest rate and facility fee are subject to adjustment if our credit rating changes. We must comply with certain customary covenants including a maximum leverage ratio, as defined in the 2025 Motorola Solutions Credit Agreement. We were in compliance with our financial covenants as of October 3, 2026.
We have investment grade ratings on our senior unsecured long-term debt. We continue to believe that we will be able to maintain sufficient access to the capital markets in the next twelve months and the foreseeable future.
Share Repurchase Program
Through a series of actions, including approval in September 2026 to increase the authorized amount by $2.0 billion, the Board of Directors has authorized an aggregate share repurchase amount of up to $20.0 billion of our outstanding shares of common stock (the "share repurchase program"). The share repurchase program does not have an expiration date. During the three and nine months ended October 3, 2026, we repurchased approximately 0.2 million and 1.3 million shares at an average price of $457.07 and $426.48 per share for an aggregate amount of $94 million and $538 million, respectively, excluding transaction costs and excise tax. As of October 3, 2026, we had used approximately $17.5 billion of the share repurchase authority to repurchase shares, leaving $2.5 billion of authority available for future repurchases.
Dividends
During the three and nine months ended October 3, 2026, we paid $200 million and $602 million, respectively, in cash dividends to holders of our common stock. Subsequent to the end of the quarter, we paid an additional $201 million in cash dividends to holders of our common stock.
Adequate Internal Funding Resources
We believe that we have adequate internal resources available to generate adequate amounts of cash to meet our expected working capital, capital expenditure and cash requirements for the next twelve months and the foreseeable future, as supported by the level of cash and cash equivalents in the U.S., the ability to repatriate funds from foreign jurisdictions, cash provided by operations, as well as liquidity provided by our commercial paper program backed by the 2025 Motorola Solutions Credit Agreement.
We do not anticipate a material decrease to net future cash flows generated from operations. We expect to use our available cash, investments, and debt facilities to support and invest in our business. This includes investing in our existing products and technologies, seeking new acquisition opportunities related to our strategic growth initiatives and returning cash to shareholders through common stock cash dividend payments (subject to the discretion of our Board of Directors) and share repurchases.
Long-Term Customer Financing Commitments
We had outstanding commitments to provide long-term financing to third parties totaling $350 million at October 3, 2026, compared to $179 million at December 31, 2025.
Recent Accounting Pronouncements
See "Recent Accounting Pronouncements" and "Recently Adopted Accounting Pronouncements" in Note 1, "Basis of Presentation" to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.
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