Public safety technology company Motorola Solutions (NYSE: MSI) announced better-than-expected revenue in Q4 CY2025, with sales up 12.3% year on year to $3.38 billion. Its non-GAAP profit of $4.59 per share was 5.4% above analysts’ consensus estimates.

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Company Overview

Born from the company that invented the first portable handheld police radio in 1940, Motorola Solutions (NYSE: MSI) provides mission-critical communications, video security, and command center software solutions for public safety agencies and enterprise customers.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years.

With $11.68 billion in revenue over the past 12 months, Motorola Solutions is larger than most business services companies and benefits from economies of scale, enabling it to gain more leverage on its fixed costs than smaller competitors. This also gives it the flexibility to offer lower prices.

As you can see below, Motorola Solutions’s sales grew at an impressive 9.5% compounded annual growth rate over the last five years. This is a great starting point for our analysis because it shows Motorola Solutions’s demand was higher than many business services companies.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Motorola Solutions’s annualized revenue growth of 8.2% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

We can better understand the company’s revenue dynamics by analyzing its most important segment, Software and services. Over the last two years, Motorola Solutions’s Software and services revenue averaged 8.9% year-on-year growth.

This quarter, Motorola Solutions reported year-on-year revenue growth of 12.3%, and its $3.38 billion of revenue exceeded Wall Street’s estimates by 1.1%.

Looking ahead, sell-side analysts expect revenue to grow 7.8% over the next 12 months, similar to its two-year rate. This projection is particularly noteworthy for a company of its scale and implies the market is forecasting success for its products and services.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Motorola Solutions has been a well-oiled machine over the last five years. It demonstrated elite profitability for a business services business, boasting an average operating margin of 22.7%.

Looking at the trend in its profitability, Motorola Solutions’s operating margin rose by 5.2 percentage points over the last five years, as its sales growth gave it immense operating leverage.

In Q4, Motorola Solutions generated an operating margin profit margin of 27.9%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Motorola Solutions’s EPS grew at a spectacular 14.9% compounded annual growth rate over the last five years, higher than its 9.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Motorola Solutions’s earnings to better understand the drivers of its performance. As we mentioned earlier, Motorola Solutions’s operating margin was flat this quarter but expanded by 5.2 percentage points over the last five years. On top of that, its share count shrank by 3.1%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Motorola Solutions, its two-year annual EPS growth of 13.5% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q4, Motorola Solutions reported adjusted EPS of $4.59, up from $4.04 in the same quarter last year. This print beat analysts’ estimates by 5.4%. Over the next 12 months, Wall Street expects Motorola Solutions’s full-year EPS of $15.40 to grow 6.1%.

Key Takeaways from Motorola Solutions’s Q4 Results

It was good to see Motorola Solutions beat analysts’ EPS expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 3.8% to $436.96 immediately after reporting.

Motorola Solutions had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).