MSI Q1 2026: Revenue and EPS Beat, Guidance Raised, Shares Fall 12%

Transcript intelligence

What changed

Revenue growth decelerated from 12% in Q4 2025 to 7% in Q1 2026, though Software and Services accelerated to 18% growth. The backlog remained at the record $15.7B level set in Q4, contrary to management's prior expectation of a sequential decline. Acquisition focus shifted from the Q4 Silvus and BlueEye deals to Exacom, Hyper, and the pending Bell Canada LMR transaction. A new competitive threat emerged with Axon entering the 911 market, whereas the prior quarter's competitive focus was on Anduril in defense. Memory component costs emerged as a more acute concern, with spend expected to more than double in 2026, prompting new mitigation strategies. Partnerships expanded to include T-Mobile and Starlink for APX NEXT satellite connectivity. Hyper AI for 911 call handling was introduced as a new product capability.

Guidance delta

Full-year FY2026 revenue and non-GAAP EPS guidance were raised from the levels established at Q4 2025 (revenue $12.7B, non-GAAP EPS $16.70 to $16.85), driven by Silvus performance and public-safety growth. Management continues to target approximately 100 basis points of operating margin expansion despite tariff and memory cost headwinds. Capex outlook remains stable.

Key takeaways

• Revenue of $2.71B beat consensus by 0.6%; non-GAAP EPS of $3.37 beat by 4.0%.
• Software and Services grew 18% year-over-year, leading all segments.
• Backlog held at a record $15.7B, contrary to the expected sequential decline.
• Full-year revenue and non-GAAP EPS guidance were raised.
• Exacom and Hyper acquisitions closed; Bell Canada LMR purchase pending, adding approximately $100M in recurring revenue.
• Operating margin expected to expand roughly 100bps despite tariff and memory cost headwinds.

Management priorities

• Roll out Assist Suites and AI-assist capabilities across the product portfolio.
• Integrate APX NEXT with T-Mobile and Starlink for satellite connectivity.
• Launch the StreamCaster 5200 MANET radio via Silvus.
• Close the Bell Canada LMR network services acquisition.
• Continue R&D investment in Silvus and LMR technologies.
• Pursue further M&A to expand digital evidence and LMR services capabilities.