Good afternoon, and thank you for joining us. Welcome to the Motorola Solutions Fourth Quarter 2023 Earnings Conference Call. This call is being recorded. If you do not wish to participate, please disconnect now. The presentation materials and additional financial tables are available on the Motorola Solutions Investor Relations website. A replay of the webcast will be accessible on our website within three hours after the call concludes. The website is www.motorolasolutions.com/investor. All participants are in listen-only mode, and there will be a chance for questions following the presentation. I would now like to introduce Mr. Tim Yocum, Vice President of Investor Relations. Mr. Yocum, please proceed with the conference.

Good afternoon. Welcome to our 2023 fourth quarter earnings call. With me today are Greg Brown, Chairman and CEO; Jason Winkler, Executive Vice President and CFO; Jack Molloy, Executive Vice President and COO; and Mahesh Saptharishi, Executive Vice President and CTO. Greg and Jason will review our results along with commentary, and Jack and Mahesh will join for 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 reference non-GAAP financial results including those in our outlook unless otherwise noted. 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 2022 Annual Report on Form 10-K or any quarterly report on Form 10-Q and in our other reports and filings with the SEC. We do not undertake any duty to update any forward-looking statements. And with that, I will turn it over to Greg.

Thanks, Tim. And good afternoon and thanks for joining us today. First, Q4 was an exceptional quarter. We achieved record revenue in both segments in all three technologies, including double-digit growth in Video Security and Command Center, highlighting the strength and robust demand for our safety and security solutions that help protect people, property, and places. Additionally, we expanded operating margins for the sixth consecutive quarter, generated over $1.2 billion of operating cash, and strengthened our video security portfolio with the recent acquisition of IPVideo, creator of the HALO Smart Sensor. Second, our full-year results were outstanding. In our Products and SI segment, we grew revenue 9%, driven by strong growth in both LMR and Video Security, and we ended the year with record product backlog. We also expanded operating margins in this segment by 380 basis points, driven in part by higher ASPs and lower product costs. In Software and Services, revenue was up 10%, inclusive of the Airwave revenue reduction, highlighted by strong growth in Video Security, Command Center, and our Services business outside of the UK. We also generated record operating cash flow of $2 billion, up 12% versus the prior year. And finally, as we enter 2024, our robust backlog position coupled with the continued strong demand for our safety and security solutions positions us well for another year of strong revenue and earnings growth. And with that, I'm going to turn the call over to Jason.

Thank you, Greg. Revenue for the quarter grew 5% and was above our guidance with growth in both segments, both regions, and all three technologies. FX tailwinds during the quarter were $16 million, while acquisitions added $17 million. GAAP operating earnings were $738 million or 25.9% of sales, up from 25.6% in the year-ago quarter. Non-GAAP operating earnings were $870 million, up 6% from the year-ago quarter. And non-GAAP operating margin was 30.5%, up 10 basis points. The increase in both GAAP and non-GAAP operating earnings was driven by higher sales and lower direct material costs. GAAP earnings per share was $3.47, up from $3.43 in the year-ago quarter. Non-GAAP EPS was $3.90, up 8% from $3.60 last year. The growth in EPS was driven by higher sales and higher margins. OpEx in Q4 was $597 million, up $60 million versus last year, primarily due to higher incentives and acquisitions in the current quarter. For the full year 2023, revenue was $10 billion, up 10% with strong growth in both segments and across all three technologies. Revenue from acquisitions was $98 million and the impact of unfavorable foreign currency rates was $38 million. GAAP operating earnings were $2.3 billion or 23% of sales versus 18.2% in the prior year. The increase was primarily driven by lower direct material costs, higher sales, the $147 million ESN fixed asset impairment charge in the prior year, and lower intangible amortization expense in the current year. Non-GAAP operating earnings were $2.8 billion, up $416 million and non-GAAP operating margins were 27.9% of sales, up from 26% of sales in the prior year, driven by lower direct material costs, higher sales, inclusive of higher ASPs and improved operating leverage. GAAP earnings per share was $9.93, up 25% compared to $7.93 in the prior year, primarily driven by higher earnings and the asset impairment charge related to the exit of ESN in the prior year, partially offset by a higher effective tax rate in the current year. Non-GAAP earnings per share was $11.95, up 15% from $10.36 in 2022. On higher earnings, partially offset by a higher effective tax rate. For the full year OpEx was $2.2 billion, up $178 million versus 2022, primarily driven by higher employee incentives and higher expenses associated with investments in Video and Rave. And the effective tax rate for 2023 was 21.9% compared to 20.1% in the prior year due to lower benefits from employee stock-based compensation in the current year. Turning to our cash flow. Q4 operating cash flow was $1.2 billion, driven by higher earnings, partially offset by higher cash taxes. For the full year, we generated record operating cash flow of $2 billion, and record free cash flow of $1.8 billion. The increase was driven by higher earnings, partially offset by higher cash taxes. Capital allocation for 2023 included $804 million in share repurchases, $589 million in cash dividends, and $253 million of CapEx. Additionally, during the quarter, our Board of Directors approved a $2 billion increase to the share repurchase program and an 11% increase in our dividend, which is the 13th consecutive year of double-digit increases. Moving next to segment results. In the Products and SI segment, Q4 sales were up 4% versus last year, driven by growth in LMR and Video. Operating earnings were $567 million or 30.0% of sales, up from 28.4% in the prior year, driven by higher sales and lower direct material costs. Some notable Q4 wins and achievements in this segment include a $90 million P25 system and device order from a US customer. A $67 million P25 device order for emergency services telecommunications authority in Australia. A $57 million P25 APX NEXT devices order for a US customer. A $38 million P25 system order for the State of Arizona Department of Public Safety. A $31 million TETRA system order for a European customer. And a $13 million fixed video order for an international customer. For the full year, Products and SI revenue was $6.2 billion, up 9% from the prior year, driven by higher sales of LMR and Video. Revenue from acquisitions was $15 million, and currency headwinds were $19 million. Full year operating earnings were $1.5 billion or 24.3% of sales, up from 20.5% in the prior year on higher sales, inclusive of higher ASPs and lower direct material costs. In Software and Services, Q4 revenue was up 7%, driven by growth in Video, Command Center, and LMR. Revenue from acquisitions was $15 million in the quarter, and FX tailwinds were $11 million. Q4 operating earnings in the segment were $303 million, and operating margins were 31.6%, down from 34.4% last year, primarily driven by the Airwave revenue reduction related to the price control. Some notable Q4 highlights in the segment include a $330 million LMR managed services renewal through 2034 for Denmark's nationwide public safety communications network. A $48 million Command Center order for the city of Chicago's Office of Public Safety Administration. A $20 million LMR service agreement for Spokane Washington Regional Emergency Communications and a $19 million mobile video order from a US customer. Finally, a $10 million command center order for the city and County of San Francisco. For the full year, revenue was $3.7 billion, up 10% on growth in LMR services, Command Center, and Video. Revenue from acquisitions was $83 million, and currency headwinds were $19 million. For the full year, operating earnings were $1.3 billion, or 33.9% of sales, down 140 basis points versus the prior year, driven by the Airwave revenue reduction and higher acquisition-related expenses. Looking next at our regional results. North America revenue was $2 billion in Q4, up 6% and $6.9 billion for the full year, up 9%, driven by growth in both segments and across all three technologies. In international, Q4 revenue was $832 million, up 3% versus last year, driven by growth in Video and LMR. For the full year, international revenue was $3 billion, up 11% versus last year, driven by growth in LMR and Video. Moving to backlog. Ending backlog for Q4 was $14.3 billion, down $88 million versus last year, inclusive of approximately $1 billion of backlog reduction related to the Airwave price control and revenue recognition for Airwave and ESN. Sequentially, backlog was down $15 million, inclusive of the Airwave and ESN reduction and $160 million of favorable FX. In the Products and SI segment, ending backlog was up $93 million or 2% driven primarily by strong demand in North America. Sequentially, backlog was up $99 million, also driven by demand in North America. In Software and Services, backlog decreased $181 million from last year and $114 million sequentially. Excluding Airwave and ESN, Software and Services backlog was up almost $800 million versus last year, driven by strong multi-year agreements in both regions. Turning now to our outlook. We expect Q1 sales to be up approximately 8%, with non-GAAP earnings per share between $2.50 and $2.55 per share. This assumes a weighted average diluted share count of approximately 172 million shares and an effective tax rate of approximately 23%. For the full year, we expect revenue growth of approximately 6% and non-GAAP earnings per share between $12.62 and $12.72 per share. This full-year outlook assumes a weighted average diluted share count of approximately 171 million shares and an effective tax rate between 23% and 24%. Additionally, we expect another strong year of operating cash flow with 2024 expectations of $2.2 billion in operating cash flow. Before I turn it back to Greg, I wanted to share some additional highlights. First, I want to give you some color on the technology growth expectations that are included in the sales guidance for the year. In Video Security and Access Control, we're planning for 10% growth, which is informed by the acceleration and strong adoption of our cloud offerings. For Command Center, we also expect 10% growth, consistent with last year's organic growth rate. In LMR, we expect to grow mid-single digits or high single digits when normalized for the impact of the UK Home Office. Second, I would like to share with you some exciting updates about our Video business, in light of two recent partnerships that support our growth expectations, one with Jabil and another with Google. With Jabil, we've entered into a strategic manufacturing agreement where Jabil will assume responsibility for our manufacturing operations at our sites in Canada and Texas. This agreement further optimizes our video supply chain, provides redundancy, future cost savings, and scalability. Additionally, it allows us to focus on engineering, designing, and bringing to market video solutions that serve our customers' security needs while continuing to enable regulatory compliance with NDAA rules for the procurement of secure equipment. With Google, yesterday, we announced a new strategic agreement with Google Cloud that harnesses the power of their latest cloud advancements to enable assistive intelligence, such as accurate and reliable video content, mapping, and other AI capabilities. Google Cloud also enables Avigilon Alta, our fast-growing cloud-native fixed video and access control platform, which we introduced a little more than a year ago. Alta combines the power of our AI analytics with the ease and simplicity of a cloud-delivered VMS that is increasingly preferred by some verticals like education. The rapid adoption in Alta contributed almost a quarter of our growth last year to total video and includes a higher subscription attachment compared to a traditional Avigilon Unity sale. Finally, we ended the year with a very strong balance sheet, including $1.7 billion in cash, a fixed-rate balance debt maturity profile and our net debt to EBITDA ratio of 1.4 is our lowest since 2015, providing us with ample flexibility to continue to deploy capital and drive shareholder value. I'll now turn the call back over to Greg.

Thanks, Jason. First, 2023 was a phenomenal year for the company. We achieved significant expanded operating margins, grew earnings per share by 15%, and generated record operating cash flow of $2 billion. We also returned $1.4 billion to our shareholders through dividends and share repurchases and we strengthened our Video Security portfolio with the recent acquisition of IPVideo. Second, this past November, we announced our new brand narrative, solving for safer. This reflects our purposeful transformation centered on public safety and enterprise security and our sharpened focus on solving for safer communities, safer schools, and safer businesses. Our solutions across LMR, Video Security and Command Center that are powered by artificial intelligence enable collaboration between public safety agencies and enterprises, connecting those in need with those who can help. While we recognize technology is not the only way to a safer future, it does play a vital role. Finally, as we enter 2024, the momentum of our business remains strong. Funding for public safety continues to be a priority. Investments we've made in the portfolio, including our APX NEXT device, and the software applications that run on this device are driving higher ASPs for our products and strong growth in Software and Services. We're also seeing a noticeable acceleration of cloud adoption in Video Security that is driving margin accretive revenues in Software and Services. With our exceptionally strong balance sheet, we have the opportunity to continue to deploy capital to drive long-term shareholder value. I'm extremely pleased with how we're positioned and I expect 2024 to be another year of strong revenue and earnings growth for our company. I'll now turn the call back over to Tim.

Thanks, 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, please remind our callers on the line how to ask a question.

The first question is from George Notter with Jefferies. Your line is now open.

Hi, guys. Thanks a lot. I have a question on the margin expansion in the business. I guess I wanted to ask about what kind of headwind you guys still had running through the business in 2023, I'm thinking about things like expedite fees and even freight costs. I know that a lot of those fees didn't come out of the model until you guys had burned down some backlog. So I guess I'm wondering how much of the headwind was in the 2023 numbers and then I assume that'll be all out fully for the 2024 year. I'm just kind of wondering what kind of benefit you might get on margins there. And then just as a follow-up, second question was just on Silver Lake. I'm just curious about, is there any update there and what those guys might do? How might you kind of fund the unwind of that position? Thanks a lot.

Yes, George. To confirm, we anticipate an increase in operating margins for 2024, partly due to ongoing improvements in PPV. I want to commend Jason and Jack for their excellent work in surpassing the targets we set last year. We expect an additional $60 million in PPV improvements in 2024. In terms of gross margin for the company, we expect it to remain steady or increase slightly. We believe we handle operating leverage well, both in gross and operating margins. Additionally, the operational expenses will likely rise by about $80 million from 2023 to 2024, with $40 million of that being organic and the other $40 million inorganic. Regarding Silver Lake, there are no updates at this time. They are in the final year of the second five-year agreement, which ends in September. The diluted share count is already factored into our earnings per share projections. So, there is nothing new to report. The partnership is strong, and we will see how it develops over the remainder of the year. Furthermore, we expect that with the conclusion of the agreement, interest expenses will increase this year by about $40 million, which includes an assumption of $1.3 billion in refinancing — $1 billion for the Silver Lake notes and $300 million in debt that expires in September.

Great. That's helpful. Thanks very much.

The next question comes from the line of Tim Long with Barclays. Your line is now open.

Thank you. I would like to inquire about the top line. Greg, the Q1 guidance appears to be quite strong, but the full-year growth forecast seems to be slightly lower. Could you discuss your visibility or expectations for the latter half of the year? Is this simply due to conservative comparisons, or is there anything else we should consider regarding the differences in growth rates? Additionally, I want to follow up on the 10% growth in video. As the numbers continue to increase, could you provide context regarding your share gains and deeper penetration into government verticals? Are there specific benefits from ARPA funding this year, such as for Safe Schools and other areas? It would be helpful to have that context regarding the driving factors. Thank you.

Let's take the full year first. I think it's important to say that I'm super proud of last year. But to your point, as we're sitting here in February, backlog is strong, but so is the pipeline. We're in a good aged backlog position, but the pipeline remains strong as well, which makes me feel good about where we sit here for the balance of the year. I'd also tell you that when we think about the full year guide, it's coming off of a Q4 that exceeded our guidance. It's coming off of a full year that exceeded our guidance. If you anchor it to the color I gave last time at about $10.5 billion, it's about $75 million higher than that reference a quarter ago. Now having said all that, we guide for the full year 6%, I remind you that $200 million is a headwind related to the UK Home Office. So year-over-year, we expect Airwave revenue to be about $375 million. If you take year-over-year, you add in the $200 million full year UK Home Office headwind that can normalize the year-over-year comparison. Additionally, one other thing worth mentioning is, and Jack talked about this a quarter ago, we had exceptionally strong revenue contribution from Ukraine of $150 million last year. Based on what's expected to be shipped in backlog, we expect that to be $50 million. So you take the year-over-year 6%, you take $200 million detriment for UK Home Office headwind, you normalize for Ukraine, and I think our growth is quite solid and a prudent guide at this point in time.

One other insight into the video growth of approximately 10% this year. Within that, we're really pleased with the cloud growth that we're seeing. Alta, which we talked about on the call, the platform is, which is cloud-native is growing exceptionally well. We've also made a decision to rationalize some of our on-prem VMS. The combination of that growth rate in '24 and rationalizing the VMS is about $40 million of impact in 2024. We're continuing to grow.

Yes, Tim, I would like to elaborate on what Jason mentioned. The cloud business is expanding, and we also expect our on-premises business to remain strong and continue to grow. Regarding market share, we believe we are gaining ground. You also inquired about the government sector. Total video sales in government, including both mobile and fixed solutions, have reached $500 million in 2023. I want to emphasize that our government video segment is growing at a faster rate than our overall business, driven by increased prioritization and efforts to enhance efficiency and mobility within police forces, especially as they face rising crime rates.

Tim, one other thing, just because we're still to George's question weaning off PPV, and we'll have some commensurate benefits this year. If you take last year and this year, as we're working through the supply chain and elevated inventory and improved freight in PPV, if you look at first half and second half, Tim, to your point about guide and linearity, it's very similar to last year. So I'm not concerned about anything as we sit here with our expectation for the full year performance.

Okay. Thank you very much.

Thanks, Tim.

The next question comes from the line of Matthew Niknam with Deutsche Bank. Your line is now open.

Hey, guys. Thank you for taking the questions. One question, one follow-up. So just on the supply chain, I think this was alluded to a little bit, but just if you can give any more color on the latest you're seeing there and any noticeable impact from some of the disruption we've seen on the Red Sea front, if that's impacted you guys at all in terms of costs. And then secondarily, can you just talk a little bit more about the Jabil agreement, strategic rationale there and any cost implications we should keep in mind? Thank you.

I'll answer the second one first. The Jabil agreement is for them in 2024 to operate the two factories that will be transitioning to them. So not a significant change in cost profile in '24, but as we look to '25, with our growth expectations, there'll be opportunities for cost as well as an efficient way to scale the growth that we're expecting. This agreement is a way for us to look into the future and we're very pleased with it as it provides us additional redundancy. It will help us scale, grow and manage our cost envelope as we grow. Regarding the Red Sea, we primarily use air transport, which means we have minimal impact from higher container rates. The supply chain is improving, and we believe that using air and the associated rates is a wise investment to ensure we receive everything on time. We have observed ongoing improvements in our supply chain and from our vendors, especially in semiconductors. There are still enhancements needed, but we anticipate better delivery of nanometer chips, particularly those at 40 nanometers and above. Progress is being made, and we are addressing it.

As we worked through the year, it would be our expectation at the end of the year to have overall inventory reduced. Again, this year, as things normalize and improve.

That's relative to the $827 million you ended last year at?

That's right. The $827 million was down $200 million from its 12-month predecessor and we expect to drive that down even further by year's end as we navigate an improving environment.

Appreciate it. Thank you.

The next question comes from the line of Adam Tindle with Raymond James. Your line is now open.

Thank you. Good afternoon. Jason, I wanted to ask about the trends in backlog for clarification. While the reported total backlog seems to be down, I believe Airwave significantly affects that. Could you provide insight on what the backlog looks like without Airwave included? As a follow-up, I'd like to hear from either Jack or Greg, or both, since this is a key metric that investors are closely monitoring. We've seen backlog builds and records in tech hardware from companies like Cisco in networking, which led to a quicker digestion period than expected once the backlog started to decrease. Could you elaborate on the current supply and demand situation and how you view the similarities or differences in your business regarding the timing and process of normalization, if it occurs? Thank you.

I would start out and tell you that this is one of the things I'm most proud of when I look at the trend for the full year. Overall backlog of $14.3 billion, ending the year down from a year ago with absorbing just under $800 million decrement for the calculation of Airwave and the three-plus-year backlog that that sits. Being able to keep that at the same level or comparable levels with that reduction is pretty significant. The other thing that gives me optimism is the exceptionally strong product backlog that we exited Q4 with and the age backlog that we sit in the position of as we enter, but I also remind you, so I love the backlog position, but I also love the pipeline and the ongoing demand and what I see in Molloy and his team's conversion rates. I'm optimistic about what's in backlog, I'm also optimistic about what's in the pipeline.

A couple of attributes I think that are important to understanding our backlog. First, over 95% of our backlog comes to us from our government customers and our public safety customers. And the majority of that is a direct relationship and a contractual one between us and an end customer. That is very important. Secondly, as you think about our backlog, we entered the year much like last year in a position where about half of our revenues for the year, a little bit more than that, will come to us from backlog. With that strength combined with the pipeline strength, that's what informs our guide for our 6% growth.

Exactly.

Very helpful. Just quickly, Jason, I'm sorry if I missed it, did you talk about free cash flow expectations in 2024 and any benefit from working capital with the Jabil agreement? I know sometimes that can have some transitional working capital that may be favorable. So free cash flow and the potential benefit.

Yeah, given that '24 is a steady agreement, the working capital benefits are minimal in terms of that agreement. That said, we do expect working capital improvement. We talked about inventory. Our outlook for operating cash flow was $2.2 billion, that's up off of last year's record $2 billion. Within that operating cash flow, the contribution for our CapEx continues to be 15% or less. We are expecting another strong year of cash flow.

Very helpful. Thank you.

The next question comes from the line of Joseph Cardoso with J.P. Morgan. Your line is now open.

Hey. Thanks for the question, guys. I just wanted to follow-up on the last free cash flow question. I guess when I'm taking a look at it, it kind of implies that you're going to have a nice step-up in free cash flow generation, which in combination, exiting 2023 with I think, $1.7 billion of cash on the balance sheet. Looks like you'll have a fair bit of dry powder. Can you just help us think about the appetite in '24 to deploy cash, buybacks, M&A? Should we be thinking about a more aggressive than typical nature? Any color would be appreciated. Thank you.

In terms of capital allocation, we always consider it. I appreciate our strong balance sheet. Jason mentioned a net-debt to adjusted EBITDA of 1.4, which provides us with significant flexibility. I take pride in our responsible management of capital, returning value to shareholders through share buybacks and dividends, while also being strategic about making accretive acquisitions. When we look at cash flow, I think of it in terms of 55-30-15. Fifty-five percent of our cash flow is available for share buybacks or acquisitions, depending on available opportunities. Thirty percent is allocated for dividends, and fifteen percent, as Jason noted, is for capital expenditures. Although we made only one acquisition at the end of the year with IPVideo, it doesn’t fully represent all the engagements we’ve had. There are numerous opportunities ahead. I’m excited about the organic potential we have, including device refreshes, public safety initiatives, ARPA funding, enterprise options, and video opportunities in government. These organic opportunities are significant. Additionally, I am enthusiastic about acquisition prospects that can strengthen our portfolio, especially in video, software, or services. That’s our perspective on the situation.

The other thing that was noteworthy in '23 given the strength of our balance sheet is that we did earn an upgrade from Moody's to Aa2. As Greg mentioned, we will be in the debt markets this year refinancing $1.3 billion. Having taken note of that strength of the cash flow in '23 as well as our expectations in '24, that will help us as we refinance.

Yeah. Guys, we appreciate the color there. For my follow-up, can we just get an update on Airwave? I noticed in the press release, it sounded like you guys have the option to file an application with the UK Court of Appeal. Are you actually taking that step? Can you provide any color around that? What are the next steps beyond the filing? What other options do you have at your disposal? Thanks for the question.

We will move forward with the next step of appealing to the UK Court of Appeals, with plans to file that appeal next week. Throughout this process, we have maintained that the circumstances are truly unique and unprecedented, and we believe there are legal flaws in the matter. Rather than dwell on it, we stay consistent in our stance and will pursue all available options to defend our position, including the appeal next week. The timeline for this process is uncertain but could take several months. Additionally, it's clear from public discussions with the CMA and other parliamentary hearings that there is a consensus that Airwave will be essential well beyond 2026, with references to its necessity extending to 2029 or 2030. We will continue to advance as effectively as possible, engaging when we can while ensuring we maintain necessary investments in the network and uphold customer service at its highest levels.

As a reminder, our current backlog with the adjustment we mentioned in Q4 has our contract with the UK Home Office through 2026. There is an opportunity for us to serve that account beyond that.

I appreciate the color, guys. Thanks for all the questions.

Thank you. The next question is from the line of Tomer Zilberman with Bank of America. Your line is now open.

Hey, guys. Thank you for the question. I just wanted to start off first with ARPA. I just wanted to get an update on its contribution to orders this year and your expectations going into next year. I know you previously noted it was 5% contribution in '22 and I think you said in the first half of this year was also 5%.

Yes, Tomer. That's in line with what we've previously stated. The main point I want to emphasize regarding budgets is that public safety remains the top priority for spending. I have thoroughly reviewed the state and local budget drafts for 2025, and overall, the situation looks promising. Interestingly, even states that have seen an influx of immigrants are allocating more funds for public safety. Generally, the budget conditions at the state and local levels are very strong.

Got it. As a quick follow-up, I know you touched on backlog already, but curious how the duration of the backlog has improved in the last three months and maybe the start of this year?

To begin this year, its duration has been similar to slightly improved from where we were entering last year. The duration and the quality attributes of the backlog are as good or better than they were last year.

Got it. Thank you.

The next question is from the line of Benjamin Bollin with Cleveland Research. Your line is now open.

Good afternoon, everyone. Thanks for taking my question. Greg, bigger picture question. Going into an election year, curious how that has any impact if at all on how you guys thought about 2024 in your top line targets? And then a secondary question would be, could you share your thoughts around the typical refresh that you see in the fixed video deployment and how you think about replacement versus net new placements in the wild and how that comes together in that 10% figure that you're talking about for video growth this year? Thank you.

In terms of the election year, it's interesting; we always talk about this too. If you look back over the history of this business, we do pretty well, irrespective of the Republican or Democratic administration. We had great success in 2023, we expect to have another strong year this year. When there is a presidential change, there is always some period of transition; they will typically operate under a continuing resolution. But in the main, generally speaking, we have a pretty solid foundational level of performance with kind of low beta risk, given the backlog and the continual high priority demand in public safety. For fixed video, if you spoke about Jason articulating the 10% target for this year, I actually like the fact that we have the width and breadth of the portfolio that we do. We have the broadest portfolio in Video, fixed or mobile, prem or cloud, and we can meet the customer wherever they want to be met to buy. Most of our customers have both cloud and prem. If in fact that there is a notable acceleration of cloud adoption, which we've seen, and we are seeing that move more toward cloud, that's great. If that moderates the top line growth from 15% to 10%, that's okay too because the revenues, the stickiness with the customer relationship and as Molloy said, he and we still believe we're taking share. We feel good about our position. In terms of the refresh on cameras, Jack, maybe you want to talk about that.

Yeah. Ben, it varies if there are city-wide deployments, meaning outside cameras; you start to see a replacement cycle of anywhere between three to five years in the networks that we manage. Internally, those upgrades are more driven by the R&D investments that Mahesh and team have made around analytics. I would note one thing, the acquisition we made in telco; we're very pleased in 2023 with the growth that Telco had. As we think about competitive VMSs that are out there, the work that we have ahead of us this year is to go and leverage our telco portfolio to drive new opportunities in the camera replacement cycle.

Just one more thing to add to that is just to support our Alta growth with Video. One of our initial acquisition theses was just the ability to expand the camera portfolio that Alta supports. Something that we did towards the end of last year was to expand the entire H6SL, which is one of the more popular within the Avigilon camera family. Now that is entirely supported within Alta video. I think that's also going to help with the refresh cycles and help with some of the transition to cloud. Unity8, which we introduced last year, is not just done on-prem solution; it can actually bridge into the cloud side as well. As we think about those transitions, the boundary between on-prem and cloud is a bit fuzzy, and I think in a good way for us.

Thanks, guys.

Thank you. Thanks, Ben.

The next question comes from the line of Keith Housum with Northcoast Research. Your line is now open.

Good afternoon guys. And great job on the quarter and for the year. Guys, question for you on the IPVideo acquisition. Perhaps just walk us through some rationale for that acquisition and perhaps where you see some cross-selling opportunities and growth opportunities going forward?

Sure. So the HALO Video sensor, our HALO sensor is actually not a new thing for us. Avigilon had partnered with IPVideo for several years. The key reason there is that there are plenty of situations like in schools where video cannot be used in certain locations, but these sensors can. Think of it as the detection of smoking, vape sensors, et cetera, in bathrooms, in areas where we typically do not install cameras. These become quite important from a security and safety standpoint. HALO is sort of the leading sensor when it comes to air quality, vape sensing, audio analytics including gunshot detection. As we think about really expanding our capability within education and beyond, this is just a natural fit for us to bring in and integrate more closely with our Unity and Alta platforms.

The only thing I’d add on that just in terms of cross-sell would be that they've done very well in education. It's our role to get in and expand that business into healthcare, into workplaces, into transit areas where you have issues with people smoking and those kinds of things. We think we've got the relationships to extend in those markets as well.

Okay. Makes sense. Helpful. I appreciate it. Small question, changing gears slightly here. No conversation on PCR, and I know there's been some moving pieces throughout the year in terms of getting out of some areas like Asia. But perhaps just give an update on where PCR stands and I know there were also some issues with supply chain earlier in the year. Any update would be helpful.

PCR actually did great in '23, Keith. About $1.1 billion of revenue last year. It was a record in full year '23. The performance by that team was exceptional, and I would expect PCR to be comparable levels this year. That's informed into the LMR mid-single-digit technology growth or actually high single digits when you normalize for Airwave. So PCR is quite resilient and doing well.

Great. Much appreciated. Thank you.

You bet.

The next question comes from the line of Louie DiPalma with William Blair. Your line is now open.

Greg, Jason, Jack, Mahesh and Tim, good afternoon.

Louie, how you doing?

Doing great. I was wondering if there are any special benefits for partnering with Google for Alta compared to the other major cloud providers. I know you have a partnership with Azure for your Command Center business.

Yeah, Louie. To begin with, Avigilon Alta Video is already on Google Cloud today. This is really a scale story, especially around some key vectors, for example, AI. As we think about expanding Alta geographically and expanding Alta more broadly across our capability set, AI was important, mapping capabilities, low latency data delivery, video delivery were important. We thought that Google would be a good partner as we expand our installations and capabilities deploying within Google Cloud. In terms of a broader comment on this; there's lots of stuff happening in the cloud world today, whether that's on the AI side, core cloud services, etc. We want to be able to provide our customers with the best performance at the best price point. This Google partnership is really part of our multi-cloud strategy at the end of it all, so that's what drove it.

We're positioned to offer our customers a choice. As Jack mentioned, we have growth expectations for both Unity, the on-prem solution as well as Alta. Customers like those in education, we mentioned on the call are increasingly choosing Alta. The difference between the two is really how the VMS or software layer is delivered. In the case of Alta, the VMS is delivered and deployed to the cloud under a term license. In the case of Unity, it's an on-prem and more of a perpetual with a maintenance arrangement. So those are the two models we have. Jack, customers are…

Two things there, Louie, is the purchase decision remains very dynamic up until the last two to three weeks of a decision. It's interesting as we look at win-loss data; one of the interesting things is that we've had our competitors who are more point solution providers who have been eliminated from decisions and we've had both Alta and Unity as finalist decisions. Again, I think this speaks to the breadth and the advantage that gives us in the marketplace.

While the customer decides, it's not just about what we promote; it's about their preferences. Many customers choose to implement both solutions. Although cloud fixed video contributes less to our overall revenue compared to prem fixed video, it's important to note that the growth of cloud fixed video significantly outpaces that of the prem solution.

Yeah. Is there increasing momentum for Alta? I think you mentioned how 25% of the growth for 2023 with Video is from Alta, do you think that 25% is going to increase to 35% or something like that in 2024?

I don't know; it depends on what '24's growth composition ultimately ends up being. What I will say is the cloud solution, in our case Alta, is growing significantly faster than prem. So it's hard to predict the composition at the end of year '24 until we see how things settle.

That's all I have. Thanks, everyone.

Thank you, Louie.

Our next question comes from the line of Meta Marshall with Morgan Stanley. Your line is now open.

Hey, everyone. You've got Jamie on for Meta. I appreciate you taking the time. Similar to one of the earlier questions and understanding that you're still seeing strong growth and some impressive wins in the quarter, the Q4 growth and accompanying 2024 outlook in Command Center just looked a little bit lower than what we had been modeling. I guess is there any additional detail you can provide as to what you're seeing there and what's driving that outlook on '24? As a follow-up, how should we think about the contribution from pricing broadly in the growth outlook for '24?

Command Center, that's another one I was particularly proud of, because we grew 21% for the year. Obviously, Rave is the key driver in that and Rave has turned out to be a great acquisition for us, actually exceeding its business case. You take that out, Jamie, and you normalize for organic growth, the organic growth is another solid year of 10% growth. By the way, that's inclusive of the growth of a $25 million headwind that actually represents the transitioning out of ESN. The overall 10% growth of Command Center includes the normalization of the exit of ESN that's worth $25 million, but growth remains pretty strong in that segment as well.

In terms of growth drivers for '24, we would expect growth from both volume and price inclusive of ASPs continuing to grow as they did in '23, as our customers adopt more of the feature-rich part of the portfolio, including APX NEXT in other parts of the portfolio. We would expect that to continue and that's included in our growth expectations.

Great, thank you so much for the time.

Thanks, Jamie.

This concludes our question-and-answer session. I’ll now turn the floor over to Mr. Greg Brown, Chairman and Chief Executive Officer, for any additional comments or closing remarks.

Thank you for dialing in and listening. I would just close by saying that as we're entering 2024 or in it now in February, it's pretty clear that public safety and enterprise security have never been more important. I love the fact that we've got the broadest and most comprehensive product portfolio. I like the fact that as customers index to a more notable adoption on cloud acceleration, we're able to capitalize on that with our Alta solution. I love the fact that we have the APX NEXT refresh cycle in particular continues to march forward and that remains robust. As mentioned on the call, I am particularly excited about our partnership with Google. For all of the Motorola team listening in on the call, I'm really proud of you. I’m proud of our team's execution in '23 and I'm anticipating another strong year in 2024 and I appreciate everything you're doing. I look forward to catching up and talking with you and debriefing in a quarter. Thanks again for all the great work.

Ladies and gentlemen, this does conclude today's teleconference. A replay of the call will be available over the Internet within 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.