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Good afternoon, and thank you for holding. Welcome to the Motorola Solutions Third Quarter 2025 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 posted on the Motorola Solutions Investor Relations website. In addition, a webcast replay for this call will be available on our website within 3 hours after the conclusion of this call. The website address is www.motorolasolutions.com/investor. [Operator Instructions] 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 2025 third 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/investors. These materials include GAAP to non-GAAP reconciliations for your reference. During the call, we 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 and the comments made during this conference call in the Risk Factors section of our 2024 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 now I'll turn it over to Greg.

Thanks, Tim, and good afternoon, and thanks for joining us today. First, Q3 was another really strong quarter with revenue and earnings per share exceeding our guidance, highlighted by robust growth in software and services across all 3 technologies as well as a strong start for Silvus. Revenue was up 8% in the quarter with 11% growth in software and services and 6% growth in Products in SI. We also expanded operating margins by 80 basis points, led to record Q3 operating earnings in both segments and just under $800 million of record Q3 operating cash flow. Second, demand for our safety and security solutions across public safety and defense remains strong and led to record Q3 orders with double-digit orders growth in both segments. We also ended the quarter with our highest Q3 ending backlog ever of $14.6 billion, up $467 million versus last year, which included a record $11 billion of S&S backlog that is increasingly driven by our Command Center and video solutions. And finally, following our strong Q3 results, we're again raising our guidance for full year earnings per share. I'll now turn the call over to Jason to take you through results and outlook before returning for some final thoughts.

Thank you, Greg. Revenue for the quarter grew 8% and was above our guidance with growth in all 3 technologies. Foreign currency tailwinds during the quarter were $21 million, while acquisitions added $123 million. GAAP operating earnings were $770 million or 25.6% of sales, up from 25.5% in the year ago quarter. Non-GAAP operating earnings were $918 million, up 11% from the year ago quarter, and non-GAAP operating margin was 30.5% of sales, up 80 basis points, driven by higher sales and improved operating leverage, partially offset by higher tariffs. GAAP earnings per share was $3.33, up from $3.29 in the year ago quarter. Non-GAAP EPS was $4.06, up 9% from $3.74 last year. The growth in EPS was driven by higher sales and margins and a lower diluted share count, offset by higher interest expense in the current year. OpEx in Q3 was $652 million, up $35 million versus last year, primarily due to acquisitions. Turning next to cash flow. We achieved record Q3 operating cash flow of $799 million, up $40 million versus last year and free cash flow of $733 million, up $31 million. The increase in year-over-year cash flow was primarily driven by higher earnings, net of noncash charges. Capital allocation during Q3 included $182 million in cash dividends, $121 million in share repurchases and $66 million of CapEx. Additionally, the company closed the acquisition of Silvus for $4.4 billion and settled $70 million of 6.5% senior notes that were due within the quarter. Moving on to our segment results. In the Products and SI segment, sales were up 6% versus last year, driven by growth in MCN and Video. Revenue from acquisitions in the quarter was $111 million, while FX tailwinds were $11 million. Operating earnings were $555 million or 29.3% of sales, flat compared to the prior year, primarily driven by higher sales and improved operating leverage, offset by higher tariffs. Some notable Q3 wins and achievements in this segment include a $40 million P25 device order for a U.S. federal customer, a $14 million P25 device and mobile video order for Arlington, Texas and a $10 million Silvus order for NATO country. In addition, we received 3 large orders during the quarter for P25 system upgrades to our new D-Series infrastructure, a $110 million order from the State of Colorado, an $84 million order from the Tennessee Department of Safety and an $82 million order for the U.S. state and local customer. These large multiyear orders are a further testament to our customers' commitment to investing in our next-generation LMR infrastructure, and we have a large funnel of opportunities over the next several years. In Software and Services, revenue was up 11% compared to last year, driven by strong growth across all 3 technologies. Revenue from acquisitions was $12 million in the quarter, and FX tailwinds were $10 million. Operating earnings in the segment were $363 million or 32.6% of sales, up 200 basis points from last year, driven by higher sales, improved operating leverage, partially offset by acquisitions. Some notable Q3 highlights in the segment include a $57 million P25 services order for the State of Louisiana, a $25 million command center order for the State of Idaho, a $20 million P25 services order for a U.S. state and local customer, a $14 million mobile video order for the New York State Park Police, a $13 million P25 services order for the Buenos Ares Police and a $10 million mobile video order for the Bulgarian MOI, yet another win in Europe, where we've had good success in mobile video. In fact, Bulgaria represents the 18th European country where we will be deploying our mobile video solutions. Moving next to regional results. North America Q3 revenue was $2.1 billion, up 6% versus last year. International Q3 revenue was $888 million, up 13% versus last year. Growth in each region was across both segments and all 3 technologies. Moving to backlog. Ending backlog for Q3 was $14.6 billion, up $467 million or 3% versus last year, driven by strong demand in multiyear software and services agreements and favorable FX, partially offset by strong MCM shipments and revenue recognition from the U.K. home office. Sequentially, backlog was up $452 million or 3%. The sequential increase was driven by strong demand in multiyear software and services agreements, partially offset by revenue recognition for the U.K. Home Office. In Products and SI, the segment ended backlog with an increase of $148 million sequentially driven by MCN. Year-over-year ending backlog was down $604 million due to strong MCN shipments. In Software and Services, backlog increased $1.1 billion from the prior year to $11 billion, an all-time record for the segment and $304 million sequentially up, driven by strong demand for multiyear contracts across all 3 technologies and favorable FX, partially offset by revenue recognition for the U.K. Home Office. Turning to our outlook. For Q4, we expect revenue growth of approximately 11% and non-GAAP EPS between $4.30 and $4.36 per share. This assumes an effective tax rate of 24% and a weighted average share count of 169 million shares. And for the full year, we continue to expect revenue of approximately $11.65 billion or 7.7% growth and based on our year-to-date performance informed by a strong Q3, we are increasing our non-GAAP EPS guidance to between $15.09 and $15.15 per share, up from our prior guidance of $14.88 to $14.98 per share. This outlook assumes a weighted average diluted share count of approximately 169 million shares and now assumes an effective tax rate of approximately 22.5%. Before I turn the call back to Greg, I'd like to provide some perspective on 2 areas. First, as it relates to the ongoing government shutdown, while the vast majority of our public safety business serves state and local customers who are unaffected by the federal shutdown, we do serve certain federal government agencies, including both DoD and DHS. As the extended shutdown continues, we will monitor the potential revenue timing impact to this part of the business closely as it relates to Q4. Secondly, a couple of highlights on the strength of our balance sheet. We ended the quarter with approximately $900 million in cash and are on track to generate $2.75 billion in operating cash flow this year, which will mark the third consecutive year of double-digit growth. We maintain significant balance sheet flexibility, inclusive of the debt issued for Silvus. We have no senior debt maturities until 2028, and the payment schedule of our $1.5 billion term loans gives us continued flexibility to enable our M&A priorities. I would now like to turn the call back to Greg.

Thanks, Jason. Let me end with a few thoughts. First, I'm very pleased with our Q3 results. highlight the strength of our portfolio. Revenue was up 8%, highlighted by 11% growth in software and services. Additionally, we achieved Q3 operating earnings -- record Q3 operating earnings in both segments, record Q3 operating cash flow of just under $800 million, record Q3 orders that included double-digit growth in both segments and record Q3 backlog of $14.6 billion that puts us in a strong position as we move into next year. Second, earlier this month, our teams met with hundreds of customers at 2 of the largest trade shows in our industry, the Army's USA AUSA Conference in D.C. and the International Association of Chief of Police in Denver. And what was clear from these discussions, we have the right solutions at the right time to address the evolving challenges that our customers are facing. In defense, countries around the world are significantly increasing investments in drones and unmanned systems, seeking advanced autonomous capabilities to enhance mission effectiveness and operational resilience in complex environments. Our acquisition of Silvus positions us well to support our customers across these areas, and I'm really pleased with the momentum we're seeing since closing the acquisition in August. And in public safety agencies, harnessing the power of new technologies and artificial intelligence to improve first responder safety, dramatically reduce incident response times and automate routine tasks, thereby freeing up critical time for public safety personnel to focus on high-impact priorities. We've made significant investments to integrate these new technologies and AI into our solutions, and I anticipate this being a growth driver for the company for years to come. And finally, as we look to close out another exceptional year, we're extremely well positioned for continued growth. We got the right set of solutions that are highly critical for our safety and security customers, both in the U.S. and abroad. Customer funding environment globally for safety and security remains strong. Our deep customer relationships and continued innovation is driving increased scope across customer workflows and our solid balance sheet and cash flow continues to provide us with the flexibility in allocating capital, both organically and inorganically. All of this is informing our expectations for another year of strong revenue growth and earnings growth in 2026. And with that, I'll turn it 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, would you please remind our callers on the line how to ask a question.

[Operator Instructions] The first question is from Tim Long from Barclays.

Yes. Two, if I could. Greg, you talked about kind of sustainability of growth into 2026. Curious if you can dig into that a little bit more. Maintaining this last few years has been kind of high single-digit growth rate. Obviously, you're adding Silvus to it, so it's a little inorganic. But can you just give us a sense of what you're seeing as the real puts and takes and what could keep this growth rate above where it had been historically and kind of in line with the last few years, that would be helpful. And then the second one, SPX has been out for a little while. If you could just maybe give us a little sense on how that's doing? And related to it, if you can kind of update us on what you're seeing from software and applications on the APX NEXT side, so kind of a little bit on the newer products and technologies that are out and how they're doing.

Sure, Tim, thanks. I feel good with where we are. I like the setup. We're not going to guide '26, but this is usually a time I give some color about it. As we think about next year, we think about spot revenue, we think about revenue in the area of $12.6 billion from an expectation standpoint. I say that because we've had strong orders growth in Q2, strong orders growth in Q3, expected strong double-digit orders growth in Q4 and double-digit product orders in Q4 and exiting Q3 with a record backlog. So Jason talked about the timing of the shutdown. It looks like it's going to be the longest shutdown we've ever had. But whatever impact, even if there was an impact is timing, the underlying demand is strong. I think we also think about in '26, Tim, continuing to grow operating margin, and that's inclusive of tariffs that would hit as headwinds in the first half that were not there this year, and we expect to continue to grow operating cash flow growth. But I think the overall demand drivers are strong. That's our view for '26.

Sure, Tim. I think the second half of that was really a dual question, SPX and APX NEXT app. So first of all, as you know, we started shipping the SPX in July. We've always contended that the market wants an alternative. We're really pleased, really pleased with the early traction. Our orders are outpacing expectations. In fact, we've doubled the number of agencies that have actually purchased. We've now got 70 different police departments. We view every one of those, and that number will continue to grow is an opportunity to flip those customers to DEMS as well. just last night. And I think what we talked about in the August call was there's really a dual benefit, meaning upgrading and refreshing the APX NEXT family in tandem with the SPX device. Last night, we secured an award that we went head-to-head with our primary competitor. We were awarded the business. That's great that we secured the SPX, the AI-driven assistant, but also they refreshed and upgraded the APX NEXT family of radios. And we think that's the strength of our story. As it relates to APX NEXT applications, we had said we would have 200,000 devices by the end of this year online. We'd now like to update you that we'll have 300,000 APX NEXT devices by the end of '26. So I think good momentum, good traction on both ends there.

Yes, Jack already mentioned this, but we do look at the SVX as a body-worn assistant. And what we are also seeing is incredibly good traction on real-time translation capabilities. We announced SVX integrated with our assist chat capabilities recently as well. And also at IACP, we announced the ability to be able to summon a BRINC drone for DFR based upon the SVX and the APX NEXT integration as well. So across the board, we see traction in applications for APX NEXT and SVX as well.

The next question is from Tomer

If I do some back of the envelope calculations using your commentary from last quarter that Silvus would be about $185 million this year and the reported acquisition-related revenues from this quarter, I get that the core business grew about 5% this quarter, and I think guiding to 8% next quarter. I guess the question is a 2-parter. One, how is Silvus faring versus the 20% growth outline you gave us? And is there anything embedded in the core growth maybe in terms that gives you pause as it relates to the government shutdown as we look into next quarter and 2026?

I'll answer the Silvus part first. So Silvus is off to a strong start. We talked about on the last call, our expectations for it on a calendar basis to achieve $475 million in revenue. That's now looking more like $500 million, in part based on a $25 million order that was pulled in from Q4 to Q3 that's going to benefit Ukraine. So our expectations of $500 million have increased. And as we think about next year, given that strong start, continue to expect 20% revenue growth on that bit higher base for '25. And together with the strong start in sales, we would expect earnings contribution from Silvus next year more like $0.30 to $0.40. We had formally given an output of about $0.20. But given its performance, given our debt paydown plans, Silvus itself next year, we view as accretive to $0.30 to $0.40. So we're really pleased with early engagement with that team, working with Jack Molloy, our COO, and how they're executing.

And maybe just following up on is there anything that might give you pause in any of your segments as it relates to the government shutdown?

Well, I mentioned it on the script that we do serve the federal government and select agencies there. The bulk of our business serves state and local. And we're watching carefully the timing impact. If there were to be an impact, it would likely increase our expectations for next year in the 12, 6. But we've lost 5 weeks. The government needs to reopen. Budgets need to be approved and the queue and the backlog needs to be worked in an efficient way. Those are our expectations in the guide that we've given for 11650.

Yes. And I think that Tomer that point that Jason made is really important. I talked about in answer to Tim's question expected revenue of $12.6 billion. If there is any impact, we expect that to be additive to our $12.6 billion. So the demand is there. and we look to capture if not in Q4 in early next year, but the demand is strong.

The next question is from Joseph Cardoso from JPMorgan.

Maybe just for the first one, pretty big product order or backlog number this quarter. Is there any way you can contextualize or give us a little bit of color on the contribution from Silvus and whether you're actually starting to see any of the [indiscernible] funding tailwinds there just yet? And then maybe just as a second part to that, given we're already at the mid-3s that you provided last quarter, any updated thoughts on how you're thinking about product backlog exiting the year? And then I have a follow-up.

Yes. So Greg mentioned earlier that our orders within the product segment in Q2 grew double digits. They grew in Q3 double digits, and we expect them to grow solid double digits in Q4. That growth is largely ex Silvus. We did have the addition of backlog to Silvus of about $200 million. That's a onetime, but the growth vector of the products in SI is driven by the core. We talked about some large deals on D-Series. Devices continue to be a strong driver. The core is what's driving that product orders. And Greg, on backlog?

Yes. And therefore, while I talked about ending the year in product backlog in the

Joe, specifically to Silvus and [indiscernible] for Q3 performance, no. In fact, the overperformance Silvus in Q3 was related to a Ukrainian order that was pulled forward. If you think about the growth drivers for Q4 and beyond, it's really the unmanned, the autonomous unmanned system market. I was at AUSA last week and the store was unmanned. That's a growth driver as well as defense and borders, both in the U.S. and internationally as we kind of move into 2026.

Got it. Super helpful color there. And then maybe as a follow-up, as we think about the various growth drivers that you're highlighting, particularly on the product side of the portfolio. It seems like there's a lot of irons in the fire here. Many parts of the portfolio are doing well and are expected to do well going into next year. As we think about that evolving product mix, how should we think about the implications to product margins from a high level? Not asking you to guide next year, but just trying to think about as we think of try to contemplate all these different moving parts across the portfolio, how should we be thinking about the gross margin trajectory here, particularly as it relates to the product portion of the portfolio?

Well, within LMR, we talked Jack did about APX NEXT and how that's trending and trending well. Those are more feature-rich devices and our customers increasingly are choosing those. That helps. At the same time, we have faced some margin challenges related to tariffs. Those are largely in the second half of this year. somewhere between $70 million and $80 million in the second half of this year. But despite those tariffs, the product mix favorability has led to increased margins. And as we look forward in the developments that we have, we have a strong product portfolio.

The other thing to think about, we talk about product, and we typically talk infrastructure devices. But with the success of APX NEXT, we talked earlier, I think a quarter ago, where we thought there would be about 200,000 users subscribed to APX NEXT applications by year-end. And that shows up in the S&S bucket, not necessarily in Product. We now expect that to be about 300,000 or slightly over exiting next year. That's a good trend. And even though Joe, you talked about product, we're also -- we love the fact that Software and Services this year, we now expect to be growing low double digits, up from our earlier guide of 10%, and that's a friendly fact.

The next question is from Andrew Spinola from UBS.

I wanted to follow up on the comments you just made about the tariffs in the second half and the ability to still raise margins. I think this is going to be about your third year in a row with incremental margins at the operating line of over 40%. And you made the comment that mix is helping. And I don't know, is that -- are you making the comment that it's a temporary shift in mix? Because I'm getting a sense that there's a longer-term shift, obviously, to more software and APX NEXT apps, a number of things you've highlighted. So I'm trying to understand, it seems like there's something fundamentally changing in the business. You're outperforming the tariffs and still raising margins. So I'm just wondering if we can think about the 40% incremental margin as where the business can deliver going forward from here.

Well, we see opportunity. And you're right, we've continued to expand margins. Some of that's driven by the strong growth within software and the applications as well as services. It's also in part driven by the product portfolio. And keep in mind, we continue to sell, while APX NEXT is a very compelling device, it has its predecessor, Jack's team still sells today. So as we mix, there are customers that will into the future, continue to buy APX NEXT. The penetration is still low. And so as customers choose devices every 6 to 8 years, they'll increasingly still choose an APX NEXT device. And Jack and his team, do you want to talk about some of the road map items and what you're thinking about for APEX into the future, too?

Yes, there's a lot. I mean I think that first of all, one of the things we focused on is tiering, right? We continue to verticalize and there's more places that we can take the APX family. I think about places like critical infrastructure. There's also more that we can do from an application services. Mahesh and his team are developing Assist applications that ride over the top of the standard APX application services. So there's a lot we're going to -- I think a lot of work to do. I think if I could capture the APX family in a word, it's 2 words, continued momentum, and I expect that into '26 and beyond.

Andrew, the only other thing I'd add, and maybe it's just we do have a strong commitment. We've got a good P&L that yields well to operating leverage, which is the margin expansion we've talked about multiple years in a row, which is why we also believe we can continue with operating margin expansion for the firm next year. And we're pretty judicious and thoughtful around budgets and managing expenses and thoughtfully and surgically deploying AI for some commensurate benefit. I think we've rolled it out in certain cases around customer service or whether it's Copilot or Cursor and engineering teams. And I think we'll increase the penetration of AI as well, which will yield some operating expense benefits. But yes, it's the portfolio. Yes, it's the tiering. It's all the things that Jason and Jack talked about, but it's also the continued expectation by management that you got to not just grow top line, you got to expand operating margins and you got to grow cash flow, and that's our expectation into next year.

Got it. And just one follow-up. You've talked about the new introduction on the infrastructure side of the -- into the ASTRO platform. I was just wondering, if I'm not wrong, the upgrade cycle there is very long, possibly 10, 20 years. And I'm just wondering if with your client base knowing that, that upgrade was coming, did that create somewhat of a pause on the infrastructure side prior to the release? And are we going to see a little bit of pent-up demand on infrastructure with that new product in the market?

Yes. I think the thing -- so as you said, we typically think about infrastructure. I mean, one of the things is we have a very large footprint of statewide networks. So I think we have a great baseline to draw within. We're in regular contact with those customers. In fact, I think one of the really great stories as you think about infrastructure, the days of infrastructure as a stand-alone investment no longer exists. It's infrastructure and managed services because the care and feeding that need to be done on -- when networks became digitized, you have to think about your cyber threat surface. And we've seen our cybersecurity services up 22%. We manage a lot of these networks, and we've seen a pretty substantial growth in terms of the amount of scope that our customers expect to us to take on. So I think the infrastructure footprint that was out there fueled a lot of our services growth. And now we look at it and we're looking, our customers are asking for things like, hey, we want to improve coverage. We want more capacity. We want better energy efficiency and more resiliency within the network. And that's really what the D Series ushered in. But if you think about it, it's a really good question. Our 2 biggest statewide networks being Colorado and Michigan, Michigan upgraded, we got our first upgrade order from Michigan in Q2. Colorado gave us an upgrade order in Q3 and then the state of Tennessee, which has been the highest growth network, also gave us a D series. So I think it makes us feel good that, number one, they trust us to support their networks and manage them. But number two, that they continue to see reasons to upgrade, and we continue the R&D dollars we spend, I think they realize from an investment standpoint. And they look at it and say, "Hey, this is the network we're going to look at and care and feed for the next 10 to 15 years.

And Andrew, as Jack mentioned a quarter ago, this new infrastructure upgrade is really the first time we've done that in like 12 years. And these orders of Colorado and Tennessee and Michigan that Molloy is referencing are large multiyear deployment orders as well. So yes, we are excited, and we think that this next-generation infrastructure upgrade is a multiyear journey with multiyear orders with multiyear deployments. That's a good thing. It speaks to the durability of LMR. That's what we think about.

yes, It speaks to the durability of LMR. That's what we think about.

The next question is from George Notter from Wolfe Research.

I want to just dig into the SVX a bit more. Any anecdotes or data that you can give us in terms of just traction with customers turning on the body camera functionality or AI assist or the reporting pieces. I know you have, I think you said 70 or 80 customers. But I'm just curious how many of those are kind of moving beyond just SVX as a [indiscernible].

So a couple of things that I think are worth noting. We've had over -- since we launched Assist for digital evidence management last year, we have over 1,000 customers who have actively adopted and are using Assist for DEMS. And by the way, that includes reduction, reduction allowing us to effectively reduce the amount of time it takes for someone to share critical information by over 80%. We've added assisted narrative quite recently to it and assisted narrative allows you to reduce not just the report writing time, but the cycle time that it takes to revise narrative by over 50% as well. And I think that's quite powerful for us. You asked about an anecdote. We launched translation along with SVX. And we have a handful of customers who are now actively using it. And quite recently, there was a domestic disturbance that an officer responded to. And it was critical that they were able to actually leverage real-time translation to mitigate that situation. So we're hearing a lot of good powerful anecdotes of how translation as a key capability of this body worn assistant in SVX is starting to have an impact along with the APX NEXT application portfolio.

The next question comes from Adam Tindle from Raymond James.

Okay. I'm going to start off with a little bit more of a challenging question for you, Greg. I know you're up for the challenge and then a more big picture question. But just near term, if I look at Q3 here from an operational standpoint, obviously, I see EPS upside, but it's mainly below the line items on interest and expense. If I look at the operating income line, it was kind of more in line, let's call it. So I wonder if you just kind of assess the quarter and the moving parts on the operating line for this quarter. And I ask that in light of your comments on expecting to improve margins from here next year. I guess what gives you the confidence based on what you're seeing here in Q3?

I think the operating performance and the leverage we had was part operating leverage of the core business, part Silvus, part tax benefits, that's good. But I think that given what we see with customer engagement, the continued movement toward software and services, I'll give you an anecdote on video. Video grew 7% this year in Q3, yet we're sticking to the 10% to 12% annual guide. Why? Because Avigilon Alta, the cloud video solution, is growing over 4x faster in Q3 than the 7%. When you look at the orders growth of cloud video, it's even higher than that. So I think, Adam, when we look at where we exited Q3, the backlog, the composition of it, the increased software and services component, the strong demand across the portfolio, up leveling Silvus to now $500 million of this year and 20% next year. Maybe it's a little stronger than 20%. We also will have leverage perhaps on when to pay down some of the short-term debt associated with Silvus, which will give us EPS flexibility from that standpoint. And I think we've done a good job mitigating tariffs. And the incremental tariffs for next year is Q1 and Q2 because we'll be lapping the back half. And I think we know how to manage expenses. So the high-level answer is top level growth and the confidence of that, the existing mix and the composition we see and the expected operating leverage that we think we can continue.

And Adam, you mentioned Q3. If I expand to the year, included in our guide for the year is over 100 bps of operating earnings expansion. And that's despite $70 million to $80 million of tariffs that we have absorbed in the P&L in the second half. As we look forward to next year, of course, we'll face some headwinds in Q1 and Q2 because tariffs weren't in place last year at that time, but they'll be more moderated than that $70 million to $80 million. So I think there's opportunity for us to continue to, as Greg mentioned, expand operating margins.

Got it. Super helpful. And helpful color on Q1, Q2 as we shape our models. I think we'll try to keep that in mind. Just as a follow-up, Greg, I would love it if you could maybe just take a little bit of time to reflect on early learnings from Silvus now that you have the deal closed and kind of gotten to look further under the covers. A lot of us compare this to the potential for Avigilon and a lot of similarities there. But I wonder if you could maybe just talk about early learnings and similarities and differences maybe to prior acquisitions like Avigilon and biggest areas that could surprise us when we look back at this.

Yes. High level thematically, Adam, more bullish and more enthusiastic than at the time of the close. That's not a victory lap or a raw speech. That's a fact. Why? in part, raising the full year expectation from $475 million to $500 million in addition to the commentary Jack provided with the real high-level engagement just in the last few months since we've owned the asset around defense, borders, high bandwidth and all things unmanned. I think Silvus, the other nice thing is the growth is primarily international that we see with Silvus, not necessarily Fed. We think it's super highly complementary. Look, the reason we renamed LMR to mission-critical networks is we're the market leader in mission-critical voice. We're the leader in mission-critical voice through TETRA and P25. Now we're the leader in mission-critical data as defined by high-speed, low latency mobile ad hoc networking. That's a great complement as we envision and these are new markets we're going after because Silvus gives us new market, new market in defense, new market in autonomous, new market in drone infrastructure, new market in manned. And they're the market leader. And I think, Adam, the other thing I'd say is since owning the asset, we have seen validation of the lead we thought they had technically validated in the engagement with the customers. I think the learning also is Molloy has a first-class sales engine. We will be -- and Jason mentioned $0.30 to $0.40 of EPS accretive with Silvus anticipated or expected for next year with additional investment in Silvus. We can expand their outreach on international go-to-market. Jack and Bhavik are looking to fund headcount, and we're adding it as we speak. We will put more holes on the fire around their R&D, which is top-class engineering and research. So the learnings are great asset. We took a long time, and we're patient and measured with the due diligence. It's a new market. I think it's complementary. It's defense oriented. I think it's the right market, right technology, right place, not going to take anything for granted. We'll invest go-to-market, invest sales, invest North America strategic projects and invest in engineering. And I think there's a lot of room to run.

Yes. Greg, the only thing I'd add is the thing that I've been just so uniquely impressed with is Bhavik and his team, no question. Cultural fit within Motorola, everything they do, everything when they wake up early and go to work and they leave late at night as they think about the customer and how do we co-create and do something and distance ourselves from the competition with our customers. They do that first class. He's built a great team. All they want to do is continue to grow and take care of their customers. I'd tell you, it's just a completely refreshing group of people to work with.

And by the way, one other Adam, what learning validated to Jack's last point, Culture matters. You can look at all these assets on paper. You can justify anything. You can do an ROI, an IRR, you can have the model sing to whatever answer you want. But one of the most important things that's a difference, and it was true with Avigilon, and I think it's true with Silvus, is there has to be a cultural chemistry and a mission orientation around innovation. And the cultural compatibility with the engineering and sales team is very complementary with the core LMR mission-critical people we have here. We felt that way. We sense that. That's been proven to be true so far.

The next question comes from Keith Housum from Northcoast Research.

Sticking along the lines of the Silvus acquisition, Jack, can you remind us like what's the breakout between like your international versus domestic business? And what's military versus like state and local? And is the opportunity -- I'm sure the opportunity is in both, but how much is Silvus products used in the state and local market today?

Yes. So I think right. The majority of their business today, as we stand today, and remember, it is international. Do not, and this is 1 of the things we want to make sure we get across. When you think about Silvus, the opportunities are international defense U.S. DoD orders, federal police. Those are the opportunities. State and local, there's -- listen in a perfect world, would the FCC authorized [indiscernible] spectrum but they haven't. We're focused on what we have. We've got the team focused on. There's a lot of markets to go after an unmanned international DoD, U.S. DoD and border security that's enough for us to say grace over, and that's really where we're focused right.

And by the way, that doesn't mean domestically here in North America, Super Bowl, Presidential inauguration, FIFA World Cup, where there's FCC exemptions on bandwidth, yes, Silvus technology can be used in a multiagency interoperable environment for high speed.

Exactly Olympic -- and by the way, really proud. I mean, one of the things -- a number of us were out -- we sponsored the Ryder Cup. It was so cool to see Streamcaster Radios, which is the brand -- that's the Silvus brand named Radios to be piping video back from live video feeds, security feeds back to the joint operation center in NASA County, so cool, made us all really proud.

Great. I appreciate that. Switching gears a little bit over the command center side, great growth of 16%. Perhaps could you unpack a little bit there about where was the success greatest which is a command center where are you guys getting the best traction right now?

You're right, Keith, it was 16% growth. Drivers for that, as we talked about earlier, continue to be APX NEXT applications. They are exceeding our expectations. That's why we now outlooked already a next year ending number of 300,000 devices connected and subscribed to that package. And additionally, we saw some strength -- additional strength in the control room or 911 international parts of our business. And of course, the continued cloud adoption and subscription is also helping in that business as well.

And obviously, we're not going to guide any specifics until the February call. But I think the Q3 command center performance reinforces our confidence in the overall 12% expectation for the year and sets us up well for another strong demand center performance next year. Stay tuned.

The next question comes from James Fish from Piper Sandler.

Nice to be covering you guys. Just going back on SVX, understand the penetration that you're seeing already. But can you just talk to the competitive nature now that you've got that in the market for a full quarter? Are you seeing any change in aggressiveness from competitors on the pricing side given some of the technology that you guys have embedded with SVX?

Yes. Maybe I'll start, James. First of all, I want to -- SVX is a North America, ultimately, Australia. It's a P25 device. I want to make sure, internationally, you heard Jason talk about we're the market leader internationally in body worn. And I would just break the 2 apart. If you look at the success we've had, the largest deals in Europe, and we continue to pick up countries in Europe. And so North America, the market leader, everybody is aware who the market leader is. We've always felt that the market wants an alternative. Now ultimately, even with the 70 customers we've already secured post announcement over the course of the last few months, even the ones that aren't video using video today, they have a decision to make. It comes down to a total cost of ownership, how many devices does a police officer want to wear. It's our contention that they like to wear 1 device as opposed to 2. It's ours that they would like a swappable battery that elongates the useful life. We also think they don't want to pay for 2 different coverage plans. They can take advantage of the coverage plan that they get inherently with the APX NEXT radio. And we think that's the discussion that a lot of our customers are going to be navigating. They're going to navigate them today, and we'll continue to be navigating those over the future. And we love the device. More importantly, what Mahesh and his team have continued to drive in this device, it's not a body-worn camera, I think, as he very eloquently said, it's an AI assistant, and we'll continue to make sure that we do more and more for our customers in that capacity. So we'll see more to follow.

One more thing that I'd add to that is we have a long history of building mission-critical audio quality capabilities. when you think about a body-one assistant, this is not like using your iPhone or your Android device and talking to a voice assistant where there are sirens blazing, there's lots of ambient noise. This is an area that we have historically excelled in, the ability to isolate voice, enhance voice and now have it feed to an AI capability. That is something that we are uniquely capable of. We have expertise in, and that is paying off in the context of SVX and competitively as well.

The next question comes from Amit Daryanani from Evercore ISI.

This is Irvin Liu on for Amit. I have 1 and a follow-up. I realize that it's been less than a quarter since you have closed on Silvus, but can you talk about your long-term potential as it relates to developing Silvus specific software and solutions. And does your 20% Silvus growth outlook for next year embed any S&S revenue?

As it begins with us today, Silvus is largely recorded in products and SI. That's the nature of what they have today, although we see significant opportunity and much like we did with LMR a decade ago, offering more and more software and services around a strong platform of very, very differentiated hardware and software-enabled devices. So we see opportunity to grow the SMS contribution, but from the beginning or where we're starting from, it's largely products in SI.

Maybe 1 important thing to note is within the Silvus Streamcaster Radios, we do introduce things like low probability of detection capabilities, anti-jam capabilities, almost as features or software upgrades. It's important to remember that Silvus is a software-defined radio built on COTS hardware. And I think this allows us very rapidly to include new capabilities into the existing installed base.

Got it. And then for my follow-up, you mentioned that your expectations for APX NEXT installed base is reaching 300,000 by next year. But can you confirm whether or not this uptick is an acceleration relative to what you have seen historically in prior LMR product cycles? And just given that a lot of your expanded capabilities related to SVX, AI and VFR are relying on the connectivity provided by APX NEXT. Do you see potential for the percentage of your installed base using flagship devices expanding over time?

Well, the installed base that we've talked about is about 2 million first responders in the U.S. So even at next year's year-end we'll have 300,000, there's a long opportunity ahead of us in terms of eventually penetrating that entire base.

The next question comes from the line of Meta Marshall from Morgan Stanley.

Great. Appreciate the question. I guess just 2 quick questions for me. On the OBAAA or OBBA impact. Just any impact that you guys are foreseeing to your tax rate just as you guys have looked at it. And then second, just as you look to mitigate some of the tariffs, is that largely being done through pricing? Or just kind of how are you rejiggering manufacturing to accommodate tariffs?

Thanks, Meta. We've done the analysis around what the tax rate is. There's some small puts and takes at the effective tax rate and the cash tax rate, but nothing meaningful. It does afford us with some -- a little bit more flexibility. As I think about what the OBBA means for us, it's really more what it means for our customers and the sources of funds that they have, whether it's governments and the focus on borders and security or even whether it's enterprises and some of the availability around accelerated depreciation and the like, we view it as favorable to our overall selling environment.

And in terms of mitigating actions, we've done for tariff mitigation inventory acceleration, dual sourcing with 2 EMSs, there is some load balancing we can do with some lead time. A lot of the manufacturing is USMCA compliant, which is a friendly fact in a way to mitigate tariffs. But the team has done and our supply chain team has done a great job kind of proactively in anticipating what could be in different scenarios and feeding that to the operational improvements of the firm and what actions we need to take.

[Operator Instructions] Our next question comes from Ben Bollin from Cleveland Research Company.

Jack, could you talk a little bit about the sales motion with Silvus. How does that look versus other technologies in the portfolio? Specifically, I'm trying to understand the duration, just how similar or different the process is and your overall visibility? And then I had a follow-up as it ties into backlog and how that develops over time.

Sure. So there's really -- think of it in terms of where we're going, where we're making it. Greg alluded to the fact that we're making investments into the selling motion. There's really a couple -- there's -- number one, what I would call longer-cycle sales efforts, which is getting on the program of records. We're going to be increasing our sales coverage on all levels as it relates to that. The second piece of it, I think it's been well documented, if you're reading up on what's happening, particularly within the U.S. DoD right now, the DoD is going through, under the current administration going to what I would kind of call some nontraditional procurement. So there's a lot of trialing of new technologies, particularly around products, particularly in around the space, as I talked about earlier on unmanned systems. Silvus has mandate technology for all levels, including down to Class 1 drones right now with the StreamCaster 5200, which is the newest, smallest form factor. so we can play in all of those areas. Internationally, they have grown -- I mean, this is an incredible company that's grown from a technical pedigree. They had kind of limited international coverage. A lot of that was brought to them through partners. We're investing more people, particularly at some of the leading NATO countries to go help shepherd our long-term benefits there. And then there's just the unmanned systems. So I think we mentioned last quarter, there's around 120 domestic drone manufacturers right now, and we're on almost all of those platforms. So there's just the work to do to continue to go and trial and make sure that our technology is validated and being used on all those platforms as well. So there's really -- those are really 3 different facets that we're focused on right now. Some Silvus was resourced. Some will be incremental investments. And then the last piece of it is all the relationships that we have in the 120 countries that we do business in, the relationships we have in defense and border security, federal policing in those places and to make sure that we're providing some synergies across the Motorola and Silvus sales teams as well.

That's great. And can you -- I think I heard it earlier, but how much is still this contributing to backlog? Or how does that develop as a backlog contributor over time?

So this came with about $200 million of backlog.

Our final question today is from the line of Louie DiPalma from William Blair.

Great. We picked up that AeroVironment is using the Silvus StreamCaster radio for their new Switchblade 400 loitering missile. You guys discussed Silvus in terms of how it's well positioned for 20% growth next year. I was wondering how do you view Silvus as positioned for more like longer-term like major Army programs such as the next-generation command and control and the Soldier Borne Command Center that Anderol is prototyping right now.

Yes. So Louie, yes, it's good to see. We're very pleased with the relationship we have with AeroVironment. But specific to the next-generation command and control, we will be a key part of the architecture in both the Anderol and the [Lockheed solutions]. So we're really pleased there. We think -- by the way, we think we think there's more that we can do within NGC 2 as well. So stay tuned there, but really good relationships on both fronts there. And then the soldier borne mission Command as you know, that's really been the transition from IVAS to soldier borne mission Command. We're working with both Anderol and Rivet in the Soldier Borne Mission Command architecture. But I would say with, particularly with SPMC, it's early days. So I think there's still a lot to do on those fronts. But yes, rest assured, we're involved there. There's also -- there's also a big project going on with the Bundeswehr in Germany, the DLBL project. And we're piloting with integrators there. And if you remember, we're a long-standing partner with the GMOD, that we're doing their work both with the Army and Navy, big long-tenured projects, and so we're leveraging our relationships there within Germany there. In fact, some of our team is over in Germany as we speak. So a lot of really interesting projects going on around the globe right now.

Fantastic. It seems as though you're involved in all of these big projects.

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

Yes. I simply want to say thank you to all the Motorola people, Motorola Solutions people. All of our partners that work closely with us. Again, welcome Silvus. We couldn't be more proud to have you on our team. We feel good about where we are, like the fact that we had a record Q3 orders and all the other records that we referenced in the underlying demand and momentum of the business. Silvus is exceeding our expectations. I think the portfolio investments that we've made are resonating with our customers, and we're planning for another year of strong revenue and earnings and cash flow growth next year, and we'll talk to you on the next call. Appreciate the questions. Appreciate your engagement.