Good afternoon and thank you for holding. Welcome to the Motorola Solutions Second Quarter 2020 Earnings Conference Call. Today’s call is being recorded. If you have any objections, please disconnect at this time. The presentation material and additional financial tables are currently posted on the Motorola Solutions Investor Relations website. In addition, a replay of this call will be available approximately three hours after the conclusion of this call over the internet. The website address is www.motorolasolutions.com/investors. At this time, all participants have been placed in a listen-only mode. I would now like to introduce Mr. Tim Yocum, Vice President of Investor Relations. Mr. Yocum, you may begin your conference.

Good afternoon. Welcome to our 2020 second quarter earnings call. With me today are Greg Brown, Chairman and CEO; Jason Winkler, Executive Vice President and CFO; Jack Molloy, Executive Vice President of Products & Sales; and Kelly Mark, Executive Vice President of Software & Services. Greg and Jason will review our results along with commentary, and Jack and Kelly will join the Q&A. We've posted an earnings presentation and news release at motorolasolutions.com/investor. These materials include GAAP to non-GAAP reconciliations for your reference. And during the call we’ll reference 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. 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 2019 Annual Report on Form 10-K, and in our other reports and filings with the SEC. We do not undertake any duty to update any forward-looking statement. And with that, I’ll turn it over to Greg.

Thanks, Tim. Good afternoon, and thanks for joining us today. I’ll start off by sharing a few thoughts about the overall business before our CFO, Jason Winkler, takes us through our Q2 results and outlook. First, I'm proud of our focus and execution in the second quarter as we dealt with the challenges from COVID-19. We achieved revenue and earnings per share above our expectations, generated $209 million of operating cash flow, and continued to grow in our Video Security, Command Center Software and Services businesses. Additionally, we closed the acquisition of IndigoVision earlier this week and announced the acquisition of Pelco, investments which further strengthen our position as a global leader in Video Security. Second, our Software and Services segment continues to perform well. During the quarter, the segment grew 5% and expanded operating margins by 260 basis points. We also won several new multiyear software and services contracts, highlighted by a $26 million Next-Gen 911 contract with the state of Utah. And finally, I'm inspired by how our employees across the business continue to find ways to engage with customers, to sell, deploy, and support their solutions. And while the COVID-19 environment remains fluid, I am encouraged by the customer activity we've seen, particularly over the past several weeks. Now, before turning it over to Jason, I'd also like to take this opportunity to thank Gino Bonanotte for his 33 years of outstanding service at Motorola. One of Gino's many accomplishments was developing a world-class finance organization. And Jason is a great example of our strong bench, as well as our succession planning. Jason's operational finance experience across Motorola for almost 20 years, and most recently leadership of our largest segment, including Video Security, uniquely qualifies him as Gino's successor. I personally have worked closely with Jason for just under 10 years, and several of you may recall him from when he was in Investor Relations a few years back. And with that, I'll now turn the call over to Jason to take you through our results and outlook before returning for some final thoughts.

Thank you, Greg. Q2 results included revenue of $1.6 billion, down 13% from a year ago, including $40 million of revenue from acquisitions and $30 million from currency headwinds. GAAP operating earnings of $218 million and operating margins of 13.5% compared to 18.8% in the year-ago quarter. Non-GAAP operating earnings of $359 million, down $85 million, and non-GAAP operating margins of 22.2%, down from 23.9% in the year-ago quarter, due to lower sales in the Products and Systems Integration segment, partially offset by higher sales and gross margins in Software and Services. GAAP earnings per share of $0.78 per share compared to $1.18 in the year-ago quarter. Non-GAAP EPS of $1.39 versus $1.69 last year, primarily due to lower sales in products, partially offset by higher sales and gross margins in Software and Services. OpEx in Q2 was $426 million, down $68 million versus last year, primarily due to lower discretionary spend and incentives, partially offset by costs from acquisitions. Q2 effective tax rate was 23% compared to 24% in the prior year, a change driven primarily by higher R&D tax credits this year. Turning to cash flow, Q2 operating cash flow was $209 million compared with $251 million in the prior year, and free cash flow was $155 million compared with $188 million in the prior year. The year-over-year decrease in cash flow was primarily due to lower sales and net income, partially offset by improvements in working capital. For the first half, both operating cash flow and free cash flow were up year-over-year, primarily driven by improved working capital. Capital allocation for Q2 included $109 million in cash dividends, $83 million of share repurchases, $65 million for acquisitions, and $54 million of CapEx. Additionally, we repaid $500 million of the $800 million we borrowed in Q1 under the revolving credit facility, which was in response to COVID-19. $300 million of this was paid during Q2 and $200 million has been paid subsequent to the quarter-end, bringing the current outstanding amount to $300 million. Moving to our segment results. Q2 Products and Systems Integration sales were $968 million, down 22% driven by a decline in professional and commercial radio and public safety LMR. The decline in the segment was primarily due to delayed sales engagements and deployments, primarily caused by COVID-19. Revenue from acquisitions in the quarter was $20 million, and the currency headwinds were $10 million. Operating earnings were $131 million or 13.5% of sales, down 600 basis points from last year, primarily driven by lower sales. Some notable Q2 wins and achievements in the segment included a $24 million P25 order for the state of Alaska, a $20 million P25 order for Newton County, Georgia, and a $17 million P25 order for the state of South Dakota. We also launched the WatchGuard V300 continuous operation body-worn camera, the first in the industry to address law enforcement's need for cameras that remain operational beyond a 12-hour shift. We closed on the acquisition of IndigoVision and announced the Pelco transaction, both important assets as we expand our video security solutions. Moving to the Software and Services segment, revenue was $650 million, up 5% from last year, driven by growth in North America Services and Software. Revenue from acquisitions in the quarter was $20 million, and currency headwinds were $20 million. Operating earnings were $228 million or 35.1% of sales, up 260 basis points from last year, driven by higher gross margins and improved operating leverage. Some notable Q2 wins in this segment include a $37 million P25 multiyear services contract with the state of Louisiana, a $10 million statewide multiyear services contract in North America, an $8 million multiyear computer-aided dispatch contract with Baltimore County, and a $26 million Next-Gen 911 services contract with the state of Utah. Looking at regional results, North America Q2 revenue was $1.1 billion, down 13% due to declines in professional and commercial radio and public safety LMR, partially offset by growth in Video Security, Command Center Software, and Services. International Q2 revenue was $525 million, down 14% primarily due to a decline in professional and commercial radio and unfavorable FX. Moving to backlog, ending backlog was $10.5 billion, down $376 million compared to last year, inclusive of $126 million of unfavorable currency rates, driven further by revenue recognition on the Airwave and ESN contracts and a few other international deployments, partially offset by growth in North America. Sequentially, backlog was up $68 million, inclusive of $253 million of favorable currency rates. Software and Services backlog was down $148 million or 2% compared to last year, inclusive of $116 million of unfavorable currency rates, revenue recognition on the Airwave and ESN contracts, and partially offset by growth in North America multiyear agreements. Sequentially, backlog was up $161 million or 2%, inclusive of $225 million of favorable currency rates. Products and SI segment backlog was down $228 million or 7% compared to last year, inclusive of $10 million of unfavorable currency, due to large international deployments and COVID-19 delaying sales engagements. Sequentially, backlog was down $93 million or 3%, inclusive of $27 million of favorable currency rates, driven primarily by COVID-19 delaying sales engagements. Turning to our outlook, we expect Q3 sales to be down between 9% and 8%, with non-GAAP EPS between $1.72 and $1.78 per share. This assumes a weighted average diluted share count of approximately 174 million shares and an effective tax rate of approximately 23%. For the full year, we expect sales to be down approximately 7%, with non-GAAP EPS between $7.40 and $7.52. This assumes approximately $30 million of FX headwinds at the current rates, a weighted average diluted share count of approximately 175 million shares, and an effective tax rate of approximately 21% to 22%. Additionally, we still expect to realize the $210 million of year-over-year OpEx reductions that we communicated on our last call. The acquisition of Pelco has an incremental $30 million of OpEx for the balance of the year, resulting in a net reduction of $180 million inclusive of Pelco. And for our operating cash flow, it is expected to be $1.5 billion for the year. I would now like to turn the call back over to Greg.

Thanks, Jason. And let me just close with a few thoughts. First, our momentum is strong in Software and Services. In Command Center Software, we won numerous multiyear awards during the quarter, highlighted by our Next-Generation 911 order from the state of Utah. Additionally, we're seeing an increase in engagements for our cloud-based solutions as more public safety agencies recognize the benefits that these solutions can provide. We launched our CAD and records products in the cloud during the second quarter and have sold them to a number of customers already. In our services business, the support we've provided to our LMR customers during the pandemic has further validated the criticality of private secure mission-critical networks. We continue to see customers investing in these networks for the long term. Second, in our Product segment where we clearly felt the impact from COVID-19 during Q2, as many of our customers experienced disruptions, I've been encouraged by the increase in activity we've seen particularly over the past several weeks with our customers. We are expecting improvement in the second half of the year as economies open up and public safety customers reengage. In our Video Security business, demand remains strong, and we continue to expect growth for the year. We're investing in the portfolio to provide AI-powered solutions with analytics that keep people and communities safe. And we've expanded our global footprint with the recent acquisitions of IndigoVision and Pelco. Finally, as I look to the second half of 2020, we expect business conditions to gradually improve from the low point in Q2. Our portfolio of solutions across LMR, video, and command center software, together with the services we provide, are as critical as ever. Engagements with our customers and the corresponding pipeline have increased sequentially. Our balance sheet and free cash flow generation remain strong, providing us with the flexibility to be opportunistic in the deployment of capital. I'll turn the call back over to Tim.

Thank you, 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 callers on the line how to ask a question?

Thank you. Our first question is from Tim Long of Barclays. Please go ahead.

Thank you. Greg, you mentioned some encouraging conversations recently, and I would like to hear more about that, especially regarding state and local government budgets. How are you seeing that situation, and what kind of impact do you anticipate for the rest of the year? Any additional details would be appreciated. Thank you.

Yeah. I think that things have gradually improved. It's incremental, but from the low point, Tim, in April and May was tough as well. June is better and July has performed within the context of our expectations. I think that as customers reengage, among other things, there's obviously heightened interest around video, particularly body-worn video. There's interest in cloud and cloud engagement, given more and more people having to work from home and a few of our customers that are having public safety systems and major deployments. Some may not be fully encrypted. Given the congregation of large numbers of people in the cities, some of these customers have reached out in an effort to have us work with them to accelerate their public safety systems to encrypt them and be more secure. Those are three themes. I think the other thing I would say is we've done a pretty good job. I think the team's done a great job learning how to engage customers remotely and move some procurements along. I also think that the pipeline is beginning to see some gradual improvement, which is positive as well. And I don't know if you want to add anything to that, Jack.

Yeah. I think, you said Greg. State local, we're full on reengaged with customers face-to-face in North America, but maybe just a few stats to put meat on the bones. Our marketing call center inquiries in Q2 were up 15%, quotes for body-worn were up close to 50%, and in-car and body-worn requests for quotes were up over 100%. So, just to quantify some of the things that Greg spoke about.

Okay. That's great. Jason welcome since your first one, I'll throw one to you. Obviously, great performance in the margins on Software and Services. Could you talk a little bit about kind of sustainability and as that business scales, and there's more bundle sales and software and things like that. Is there still room for upside to that line? And what would drive that? Thank you.

Yeah. Sure. Thanks, Tim. First, we were pleased with the growth of 5% in the segment for the quarter, and it did drive higher gross margins complemented by lower operating expenses and leverage. So, I'm pleased with the performance there. I think the team led by Kelly continues to execute well. We'll continue to expect growth from that business as well as continue to expect operating margins this year around 34%.

Our next question today will come from Adam Tindle of Raymond James. Please go ahead.

Thank you. Good afternoon. Greg, I wanted to start by appreciating the full year guidance you provided. It seems that for 2020, the EBITDA might end up being similar to or slightly better than in 2008 and 2009. I would like to question whether the guidance includes an expected increase in Q4. I have two questions regarding that. First, concerning the revenue, it suggests a year-over-year improvement. What gives you the confidence to project that so far in advance? Do you have information from orders or an aging backlog that supports your outlook for Q4? Secondly, regarding the operating profit dollars, it appears that these will decline less than revenue on a year-over-year basis, suggesting a significant change in Q4. What might be the reason for that? Are there any additional cost cuts or factors that would lead to such a shift in operating profit? Thank you.

Let me provide some context for the Q3 guidance. We're expecting revenue to decrease by about 8 to 9 percent, leading to an overall decline of approximately 7 percent for fiscal year 2020. When I talk about improvement in the second half, I'm referring to a recovery from the low point we experienced in Q2, where conditions were quite challenging in April and May. Although we're seeing sequential improvement, we do not expect Q4's growth to return to the overall decline of 7 percent noted earlier. We anticipate Q4 will show improvement over Q3 but not enough to indicate a return to positive growth. In comparing this year's situation with the fiscal crisis of 2009, I see key differences. This time, the challenges are exacerbated by COVID-19, which is a global public health crisis and has led to one of the toughest economic conditions since 2009, affecting 188 countries. However, the positive aspect is that we are now a fundamentally different company than we were back then. In 2009, we were struggling in the cellphone market and holding a minor share in cellular infrastructure, which were both facing significant challenges. Today, we are focused on mission-critical public safety networks and 911 command center software, along with various video technologies. Our product portfolio now includes essential services rather than optional ones. While we have certainly felt the impact of COVID-19, it has primarily disrupted operations rather than diminished overall demand. We still anticipate growth in our command center software, video security, and land mobile radio services, despite the challenges posed by this year. We expect the Software and Services segment, which we initially projected to grow in the mid single digits, to actually achieve high single-digit growth for the full year of 2020. The expected operating margin for this segment has also improved from 33 percent to around 34 percent, reflecting the progress we're observing in June and July. Lastly, our aged backlog has increased slightly, both leading into Q3 and for the second half of the year, which supports our outlook for the full year.

Okay. Thanks, Greg.

Our next question will come from George Notter of Jefferies. Please go ahead.

Hi. Thanks very much. I guess, I wanted to get back to the questions around public safety, LMR. There's a stimulus package obviously kind of potentially coming out of the U.S. House and Senate. I guess, I'm just trying to think about how state and local governments are kind of parsing that. I mean, it may or may not include some backfill for budgets on state and local. If you think about your outlook over the second half of the year, are governments counting on any stimulus? Or when you talk about the picture you have over the back half of the year, is it fair to say you're not expecting any stimulus as part of that picture? So, any help there would be great. Thanks.

Yeah. I think first, the guidance we're giving you today contemplates kind of the state of play as it is today. We talked about public safety engagement being pushed to the right a bit in our inability to get with customers face-to-face. It also impacted some deployments. But I would characterize that again as more of a disruption than a decline in demand. Now, all-in, when we think about North America public safety, land mobile radio, all-in products and services, I think we contemplate approximately a decline of about 7% for North America public safety products and services all-in. So, that's kind of the way we think about it.

Sure. Building on that, George, as you know, we assess our deals from the ground up, which is reflected in our guidance. We feel we've been cautious in our forecasting. Recent phase two CARES funding has started to reach state and local governments. For instance, we received a $20 million order for a P25 upgrade from a state in the Southeast just a few weeks ago. While we expect to see some of that funding, it's already accounted for in our outlook for the second half of the year. Overall, any additional funding could be beneficial, but we believe what we have planned for the second half is already secured.

Great. Okay. Thank you very much.

Thank you.

Our next question is from Sami Badri of Credit Suisse. Please go ahead.

Hi. Thank you for the question. Now that you've introduced your body-worn camera, and also we've talked about the video opportunity a bit more broadly on past calls, and as you integrated IndigoVision and WatchGuard, are you still expecting to grow at three times the video market rate, even with the introduction of a body-worn camera, given the series of current events that have actually taken place in North America? Do you still expect to go three times the market?

Yes, Sami, it's Jack. There are really two questions. We've discussed our goal to grow three times the market regarding our fixed video business, and I can confirm that we do believe this to be true. The external market share data supports our claim that we are growing at that rate. With our recent acquisitions of IndigoVision and Pelco, we have gained additional scale and geographic reach. We've expanded our portfolio with innovative and explosion-proof technology, and we've also established open distribution channels that will strengthen our North American business. I believe we are in a better position now than we were three months ago to maintain this growth. Three times the market is a solid target. In terms of body-worn cameras, we inherited a body-worn solution from our acquisition of WatchGuard. Currently, there is a growing demand for transparency in policing in the U.S. and internationally; we recently secured two deals in Europe exceeding a million dollars for body-worn cameras. Our pipeline continues to grow, and we've received numerous requests for quotes for both body-worn cameras and in-car combination deals. Customers are asking for faster deployments, which aligns perfectly with our announcement in May of the new V300 body-worn camera. We believe we have enhanced the quality significantly. Additionally, we've introduced a body-worn camera as a service offering just in the last two weeks, responding to market demand. We are confident about our position in fixed video with the added brands and coverage. We are excited about our prospects in body-worn cameras as we see a clear demand for alternatives in this market.

Got it. Thank you for those details. And then, maybe a quick one on Pelco. I know you guys disclosed the revenue run rate and the fact that it's going to be EPS dilutive. But do you guys have a timeframe in mind when it's going to be EPS neutral or accretive? And what growth rate of revenue should we expect for that acquisition or that revenue run rate?

Yeah. So, as you pick up and we've talked about it being $55 million, maybe $60 million of contribution to the top line this year, slightly dilutive on EPS, approximately $0.03. As we get into next year, it will be dilutive again to a small amount. The improvements to the business around growth, which we expect to execute into 2021 and beyond.

Thank you. Good evening, everyone. I appreciate the opportunity to ask a question. I wanted to start by discussing public sector budgets and whether you anticipate any long-term effects on public safety revenue sources in the upcoming years due to the recent developments related to COVID. Specifically, I would like your thoughts on income taxes, property taxes, and sales taxes. I have a follow-up question as well.

Sure, Ben, it’s Jack. I’ll try to address your question. Our experience with COVID has primarily involved challenges in physically meeting with customers. We’ve been effective in maintaining virtual connections and ensuring that our services continue, thanks to Kelly's team. However, it's crucial to note that technology comprises a small fraction of overall policing budgets in the U.S. It does provide public safety with greater efficiency. When we evaluate our customer interactions and proposal flow, we have observed a positive trend. Regardless of funding sources, when an emergency arises, such as dialing 911, communication capability remains essential, and we play a significant role in that. Additionally, although there’s a lot of focus on sales tax funding impacted by COVID, there are numerous other funding sources for public technology, including property taxes, which may improve in light of rising home prices. Federal grants, including those from the CARES Act, will likely boost public safety funding. Importantly, 911 funding is also a key aspect of our acquisitions. Despite prevailing narratives in the media, we recently saw a successful vote in Kalamazoo, Michigan, to fund a P25 upgrade for 911 services, passing at a two-thirds majority. The public remains committed to providing police, fire, and EMS with top-notch technology. Overall, we have not experienced any negative impact on our customer engagement or business pipeline.

That's really helpful. Thanks. The other aspect relates to this a little bit. I wanted to discuss how you evaluate your performance in the command center initiative, particularly concerning call center and dispatch records, and your views on progress and market share. I understand there's a competitor experiencing some difficulties with the PE roll-off. I'm interested to know if you believe there is still a significant amount of market share available to capture and how you perceive that market evolving. Thanks.

Sure. I'll take that. This is Kelly, Ben. We're very pleased with the progress we're making in the command center. In fact, this quarter we announced our Records and our CAD products are now available in the cloud. We've already had a number of sales and deployments that we're working on around that. We've announced a lot of new features associated with our 911 call taking, related to call transcriptions, and some new features there. Just to remind you, we also got awarded a deal with the state of Utah for NGCS, which is part of our growing software business that provides enhanced data infrastructure for 911 systems. They can handle text, voice, multimedia, and other video applications that might be sent as 911 calls. Our 911 call centers have typically used our VESTA call-taking software, which has been what I would call a single lane road for voice calls. We're now building a multi-lane highway that allows them to handle multimedia. We're very pleased. We're well placed with many customers. We're continuing to see expansion in regards to sales and customers buying into the suite. I see it as a great opportunity to take that install base we have and continue to grow with these new offerings.

I would like to add that Kelly and his entire team consistently meet or exceed the financial expectations we set internally. Andrew Sinclair and his team have done an excellent job integrating the suite and achieving operational efficiencies from the point solutions and acquisitions we've made. This quarter, we saw a 260 basis point increase in operating margin, and we anticipate continued growth in this area. We will also be making investments along the way. I believe that the improvement in operating margin for this segment will be more gradual, rather than linear, but I'm excited about the investment and integration.

Thanks everyone. I appreciate it.

Our next question will come from Paul Coster of JPMorgan. Please go ahead.

Yeah. Thanks for taking my question. I'm wondering if there's any significant shift in the mix of sales between infrastructure and devices. And within devices, any significance to the sort of the LTE-based products. Is there a shift in favor of those at this time?

There have been some mixed shifts with devices experiencing a noticeable decline in Q2, which aligns with our expectations. As I mentioned in May, our PCR device business in professional and commercial radio, mainly serving non-public safety sectors like oil and gas, airline travel, and hospitality, has been significantly impacted. This has resulted in a sharp decline, and we anticipate the PCR business will be down about 35% for the entire year of 2020. The decline in devices has been particularly acute, and there has also been a decrease in public safety devices due to COVID-19 disruptions, but this remains within our expectations. Regarding LTE, there haven't been any significant updates. LTE serves as a complementary broadband network that supports mission-critical public safety and the P25 networks in the U.S., with no material changes occurring on that front.

Paul, it's Jack. In public safety, we've got 43 state and provincial networks. I think out of the 47 that had been built, many of those are rural areas, so we've got good public safety coverage in rural America. We have continued to see, by the way, there are also a couple of states that we deem rural that are looking at CARES funding to accelerate the acquisition of statewide upgrades. I think it's probably more generally CARES funding that they get directed to some of those rural states.

Thanks, Paul.

Our next question will come from Paul Silverstein of Cowen. Please go ahead.

Thanks. Greg, last quarter, I think you said public sector video hit the $50 million revenue mark roughly one year after you first launched video into the public sector. I recognize there's going to be quarterly volatility, but I'm hoping you can give us an update on that number. And I guess the longer-term question would be, if I remember correctly, you did $700 million video all-in in calendar 2019, almost all of which by definition was from the commercial non-public sector market. The thought arises, you just added Pelco over $100 million annualized run rate. I think Indigo did $50 million last year, and that was growing at 12% and my understanding was impaired at the time. You've just added $150 million of revenue on top of your video base. When you look out into calendar 2021, what do you see for the video progression? I assume the public sector, given that it's so early in that adoption, we should expect public sector and Feds video very aggressively with or without the police funding moment. And that $50 million by the end of this year could be in the high tens, not a $100 million. I think about it too aggressively.

If we look at the video security business as a whole, considering the assets like Avigilon, IndigoVision, Pelco, VaaS, and WatchGuard, along with ongoing development and acquisitions, we're nearing $1 billion in annual revenue. For this year, I estimate we will reach between $900 million and $940 million in annualized revenue from video security. This is significant given that we are addressing one of the largest markets available. Molloy mentioned that on the fixed video side, we expect to grow at three times the market rate, which historically has been about 5%. The overall market growth may be lower, possibly in the low single digits, but we aim to capture more market share in fixed video. In body-worn video, there is enthusiasm about having a strong second competitor, which brings great opportunities. You mentioned video performance for IndigoVision and Pelco in the past, but we need to remember that those figures were impacted by COVID-19. It's not accurate to project previous video numbers into 2021. It's reasonable to expect that Pelco’s revenues will be lower in 2020, prior to our acquisition, with estimates ranging between $140 million and $150 million. Our objective is to stabilize that revenue, leveraging the global channel, the second brand, and the international presence while tapping into the unique opportunities Pelco provides in the federal market. There are many intriguing possibilities for the company and brand, which may not have achieved these alone. We are making strides in both video and government sectors.

As we think about the government piece of it, that's education as well as public safety. We're exceptionally proud of the team's agility and how quickly they moved to market. When they were working from home to develop the COVID-19 dashboard, think about kids going back to school and the universities in the K-through-12 environment. We've developed software that can do occupancy counting within classrooms or the workplace, social distancing metrics, mass detection. Through the use of our access control manager, we can do correlation reports to the workplace or to schools. That software will continue to help us not only in government, we believe, but in the enterprise space as well.

Hey, Greg and Jack, to my question about relative to the $50 million you did in the first quarter for public sector. Can you give us an update on that?

In Q3, we faced significant challenges in April and May, but we experienced a recovery in June, achieving a 7% growth. Our government sector business improved, highlighted by securing another deal worth over a million dollars with a federal agency. The education sector also saw improvements in June, likely nearing but not quite reaching $50 million, yet the overall trend remains robust.

Just to clarify your comment about PCR, I remember PCR being a $1 billion annual business for you. So when you mentioned it being down 35%, that puts it around $350 million.

That's right. Approximately, yes.

Our last question will come from Keith Housum of Northcoast Research. Please go ahead.

Hi, this is Trevor filling in for Keith. Could you talk about how canceled deals compared to delayed deals in the second quarter? And when would you expect the delayed deals to become realized?

Sure. Trevor, to be candid, and I think I'd be aware of him because I'm forced by someone to be very detailed. We didn't have any deals that were canceled. What we've seen and I think you've probably heard this is, we did have delayed engagements on meetings. When we started analyzing pipeline in April and really the first two weeks of May, we saw some new deal creation that slowed. The other piece of it is the physical ability to access sites, and those access command centers as we were deploying command center software was delayed. But I would tell you that we've virtually deployed eight countywide networks in Q2. The renewals for our management support service contracts in North America have not only been signed on-time but also upsold as well. Nothing canceled. Some delays and pushed to the right, but we've seen renewals for our service management support agreements accelerate not only in size but in some cases, increased value.

If we take the regional lens, we talked about engagements improving incrementally in North America in June and July. If we look at the rest of the world, the international business, I would say that since May, Latin America has stepped down; we expect that to be down now about $90 million for the full year, which is an incremental $60 million decline from May, but that's largely offset positively by the acquisition of Pelco.

Our next question will come from Jim Suva of Citi. Please go ahead.

Thank you and good evening. Earlier in the conference call, you pretty much alleviated the concerns about the funding of projects. You talked about the prioritization to first responders, which is believable and just fine. My question is as things are being bid on, are you being asked to provide a proposal on? And I don't want the answer to be both. Is it more command center, body-worn camera, or security? I know you kind of talked about all of them, but can you dimensionalize the three?

It's a great question. If we look at it from a revenue perspective and think about the revenue potential related to securing currently unencrypted infrastructures such as cloud and body-worn technologies, I would consider the opportunities in securing land mobile radio networks as the top priority in terms of overall revenue potential. Jack, what would you say about the comparison between body-worn and cloud?

Body-worn right now, followed closely by cloud as well.

Also because the cloud opportunities that we would capture are largely as a service going forward. So, in terms of their revenue significance annualized, it's less than the other two. But over the longer term, obviously, a cloud customer with an annuity-based as a service is a very valuable financial customer.

Ladies and gentlemen, this will conclude our question-and-answer session. At this time, I will turn the floor back over to Mr. Tim Yocum, Vice President of Investor Relations, for any additional or closing remarks. I appreciate you listening in today and we look forward to talking to many of you soon. Thanks.

Ladies and gentlemen, this does conclude today's teleconference. A replay of this call will be available over the internet in approximately three hours. The website address is www.motorolasolutions.com/investor. We thank you for your participation and ask that you please disconnect your lines at this time.