Motorola Solutions' Q2 2026 sales rose 13% to $3.13B and GAAP EPS 10% to $3.33, but acquisitions supplied $243M of revenue and a $60M tariff refund added 190 bps of margin; organic growth was 5% and backlog hit a record $15.6B.
Revenue
$3.1B
+13.3% YoY
Net income
$557M
+8.6% YoY
Diluted EPS
$3.33
+9.5% YoY
Operating margin
25.8%
Overview
Motorola Solutions makes two-way radios and the networks behind them for police, fire and other emergency services, plus 911 dispatch software ("Command Center") and video security cameras. In the second quarter of 2026 (three months ended July 4, 2026), sales rose 13% to $3,133 million, a Q2 record. Most of that growth was bought rather than grown: $243 million came from acquisitions, mainly Silvus Technologies, the $4.4 billion maker of radios that build their own mesh network without towers, which Motorola bought on August 6, 2025. Stripping acquisitions out, organic revenue (sales from businesses owned for at least four full quarters) grew 5% to $2,890 million. That 5% includes $35 million of help from a weaker dollar, so underlying volume growth was closer to 3%.
Profit grew faster than sales, but a one-time refund inflated the headline. GAAP operating earnings rose 17% to $809 million, and diluted EPS rose 10% to $3.33. Both include a $60 million pre-tax refund of tariffs, worth $0.25 a share. Motorola booked this refund after the U.S. Supreme Court struck down tariffs imposed under the International Emergency Economic Powers Act (IEEPA) in February 2026.
Key metrics
Metric
Q2 2026
Q2 2025
YoY Change
Net sales
$3,133M
$2,765M
+13%
Organic revenue (excl. acquisitions)
$2,890M
$2,765M
+5%
Gross margin
53.6%
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Operating margin is the share of sales left after running the business, before interest and tax. "Non-GAAP" is the company's own adjusted measure. It leaves out share-based pay, amortization of acquired intangibles and one-off items. Backlog is signed orders not yet turned into revenue.
The tariff refund flatters the margin story
According to the press release, the $60 million refund added 190 basis points (1.9 percentage points) to operating margin. It was recorded as a reduction in cost of sales. Taking it out shows a different picture:
GAAP operating margin would have been about 23.9%, below the 25.0% of a year ago, not above it. That comes from $749 million of operating earnings on $3,133 million of sales, which is our calculation from the filing's figures.
Non-GAAP operating margin would have been about 31.0%, still up about 1.4 points from 29.6%. So the underlying business did get more profitable, just by much less than the reported 330-basis-point gain.
Non-GAAP EPS would have been about $4.16 instead of $4.41. That is still up about 17% from $3.57, not 24%.
The gap between GAAP and adjusted results comes mostly from the Silvus deal. Intangibles amortization, the non-cash write-down of acquired customer relationships and technology, jumped to $95 million from $39 million. Motorola also took a $16 million charge because Silvus now looks more likely to hit the targets in its earnout, an extra payment of up to $600 million in stock if Silvus meets financial targets through mid-2028. The fair value of that liability has risen from $38 million at closing to $127 million. Over the first half the earnout charge totaled $91 million, which is why half-year GAAP EPS fell to $5.51 from $5.57 even though half-year sales rose 10%. A larger earnout liability is expensive, but it also means management expects Silvus to grow faster than it assumed when it bought the company.
Below the operating line, net interest expense nearly doubled to $103 million from $55 million. The 10-Q attributes this to "higher outstanding debt", the roughly $2.0 billion of notes issued in June 2025 to help pay for Silvus. That is why net earnings grew only 8.6% even though operating earnings grew 17%.
Segment performance
Products & Systems Integration (radios, radio network infrastructure, cameras) grew 15% to $1,908 million. However, $210 million of the segment's $255 million increase came from acquisitions. Within it, Mission Critical Networks (MCN), the land-mobile-radio business, grew $211 million (16%), including the Silvus revenue. Video grew $44 million (15%), with no acquisition help flagged for that line. International sales in this segment rose 36%, well ahead of North America's 9%. The segment's gross margin rose 3.0 points. The 10-Q credits "higher sales, including favorable mix, and IEEPA tariff refunds partially offset by higher direct material costs". Operating margin rose to 23.7% from 22.0%.
Software & Services (dispatch software, managed and maintenance services for radio networks, video software) grew 10% to $1,225 million, and only $33 million of that came from acquisitions. This segment is the cleaner read on organic demand: MCN services up 10%, Command Center up 14% and video up 8%. GAAP operating margin slipped to 29.1% from 29.6%. The 10-Q cites higher incentive pay, including share-based compensation, and costs at acquired businesses. It also shows R&D in this segment up 22%, "primarily due to investments in Command Center." On the company's adjusted basis, margin rose to 35.3% from 33.8%.
Takeaway: Q2 looks like a blowout on the headline numbers, but it rests on two things that won't recur in the same form: $243 million of acquired revenue and a $60 million tariff refund. Underlying organic growth was about 5%, or about 3% excluding currency. The real positive is the Software & Services segment and the backlog: record Q2 orders pushed backlog up 11% to $15.6 billion, and the service side of that backlog grew $1.2 billion.
Cash, backlog and balance sheet
Backlog of $15.6 billion is up $1.5 billion year on year. Products & Systems Integration backlog rose $329 million (10%), mainly MCN and Video. Software & Services backlog rose $1.2 billion (11%) "driven by strong demand across all three technologies". Service backlog is largely multi-year contracts, so it gives more visibility into future revenue than product orders do.
Free cash flow (operating cash flow minus capital spending) rose to $414 million from $224 million. The company cites higher earnings and lower tax payments, partly offset by inventory build.
Inventory is rising on purpose. It climbed to $1,333 million from $983 million at year-end 2025. Management says it expects inventory to "remain elevated" while it hedges against rising memory-chip prices driven by AI demand and tariff swings. The same filing lists "higher direct material costs" as a margin headwind, so memory costs are already showing up in the numbers.
Capital return: $326 million of buybacks at an average $413.53 a share and $201 million of dividends in the quarter. After the quarter, on September 9 the board added $2 billion to the buyback authorization, which had only about $0.6 billion left at quarter-end.
More deals and more debt: Motorola agreed on May 31 to buy D-Fend Solutions, a counter-drone technology company, for $1.5 billion, with closing expected in the second half of 2026. On August 17 it issued $950 million of new senior notes ($350 million due 2029, $600 million due 2036). Total debt was already about $9.0 billion against $710 million of cash at quarter-end.
Outlook
Management raised full-year guidance for the second time this year:
Guidance
Prior
Now
FY2026 revenue
~$12.8B
~$12.975B
FY2026 non-GAAP EPS
$16.87–$16.99
$17.62–$17.72
Q3 2026 revenue growth
—
~8%
Q3 2026 non-GAAP EPS
—
$4.39–$4.44
The EPS midpoint rose by about $0.74. The $0.25 Q2 tariff refund accounts for about a third of that, and the rest reflects the operating outlook. Full-year guidance implies about $7.1 billion of second-half revenue against $5.8 billion in the first half, which means a heavy fourth quarter, as is typical for the government-budget-driven radio business.
Our read: The ~8% Q3 growth guide is the more honest number to watch. Silvus was already in last year's Q3 for about eight weeks, so the acquisition boost starts to fade from here, and growth will depend more on organic demand. Record orders and the 11% backlog increase support that. The risks are cost-side: memory-chip inflation hitting radio margins, deal-related amortization and interest that keep GAAP earnings well below adjusted earnings, and a possibly larger Silvus earnout payable in stock, which would dilute existing shareholders. After D-Fend and the August notes, leverage matters more, and GAAP EPS, not just the adjusted figure, is worth tracking to see whether the acquisitions are paying off for shareholders.
Source: Motorola Solutions Form 10-Q for the quarter ended July 4, 2026, and the Q2 2026 earnings release (Form 8-K Exhibit 99.1, August 5, 2026). Year-ago backlog (~$14.1B) is derived from the stated $1.5B increase. Figures labelled "about" or "would have been" that exclude the tariff refund are our calculations from reported numbers.