Motorola Solutions has added another company to its growing portfolio of Security brands, this time with the acquisition of Ava Security, a vendor of cloud video surveillance and analytics. Terms of the deal were not released at this stage, but in keeping with previous Motorola acquisitions, they will probably be released in a future financial statement.
Only last month, UK-based Ava declared that "Overall video revenue grew globally by over 300%, ARR grew by 500%, and the number of cameras connected to the Ava Aware Cloud continues to double every three months." Many in the industry saw them as a natural competitor to Verkada, and it will remain to be seen if they can keep up that level of growth and innovation under the Motorola Solutions umbrella.
From the Motorola Solutions perspective, this move is entirely in keeping with their acquisition strategy and has the added bonus of removing a fast-growing competitor to one of their previous acquisitions, Avigilon. The deal marks Motorola's sixth acquisition in less than four years targeting enterprise security solutions for the built environment.
Their 2018 acquisition of Canadian Avigilon for around $1 billion added access control solutions in addition to cameras, sensors, and infrastructure embedded with advanced video analytics. They then expanded their fixed video security technology through the acquisition of UK-based IndigoVision for $37 million and Pelco for $110 million in 2020. In July 2021, they announced the acquisition of US cloud-based access control startup, Openpath Security for $297 million. Then they purchased Envysion, a US physical security provider for the retail sector, for $124 million net of cash at the end of last year.
Motorola’s video security and analytics technology, from their Products and Systems Integration segment, includes network video management infrastructure, fixed security and mobile video cameras and access control solutions. These solutions are found in thousands of government and commercial buildings.
Motorola’s full-year 2021 sales were $8.2 billion, up 10% from 2020. The full year’s video security and access control sales specifically, rose 32% and 21% from organic growth, compared to the previous year, supported by a notable $21 million fixed video security order for a large North America utility customer.
“Although the COVID-19 pandemic continued to introduce challenges throughout 2021, the company is encouraged by customer demand for its products and services. Within the Products and Systems Integration segment, while the company is encouraged by strong LMR (Land Mobile Radio) backlog and the resiliency of the Video Security and Access Control technology that experienced growth in 2021, supply constraints continue to impact the company's LMR business and the company expects demand for its products will continue to out-pace its ability to obtain supply throughout 2022.”
Motorola’s end of year report shows their Products and Systems Integration segment grew 9%, credited to the higher sales of video security, public safety LMR products and PCR. However, the Q4 earnings call reveals a 1% drop in revenues in the last quarter, driven by supply constraints.
“As the company progressed through 2021, its supply chain has been increasingly impacted by global issues related to the effects of the COVID-19 pandemic, particularly with respect to materials in the semiconductor market, including part shortages, increased freight costs, diminished transportation capacity and labor constraints,” reads the end of year report. “This has resulted in disruptions in the company's supply chain, as well as difficulties and delays in procuring certain components and the need to purchase components from alternative sources.”
The Q4 earnings call went on to say that the growth in video security and public safety LMR was offset by a decline in PCR. While the non-GAAP operating margin was down 170 bps driven by higher operating expenses, inclusive of incentive compensation and acquisitions, as well as lower overall sales in the Products and Systems Integration segment.
The Software and Services segment, meanwhile, grew 13% driven by growth in LMR services, video security software, and command center software. This includes a 27% growth in video security and access control software specifically.
Motorola Solutions ended the year with a record annual backlog of $13.6 billion, up $2.2 billion from the prior year, and a record full year operating cash flow of $1.8 billion.
“Our 2021 results, highlighted by strong growth in both segments, reflect the criticality of our solutions and our team's unwavering execution in a challenging and fluid supply chain environment,” said Greg Brown, chairman and CEO, Motorola Solutions. “Our record backlog and continued robust demand positions us very well for sustained strong growth this year and beyond.”
Looking forward, the company predicts 3% revenue growth this quarter, compared with the first quarter of 2021, and 7% revenue growth for the full-year 2022, compared to 2021 figures. Video security products, systems integration, and software, for buildings and other applications, will continue to offer resilient and dependable growth for Motorola Solutions.