Motorola Solutions achieved record sales in 2022 in both its product segments and all three technology groups. The firm’s total revenue in 2022 reached $9.1 billion, a 12% increase on 2021 figures. While growth came primarily from its radio communications product lines, its video security business has also grown by around $300 million year-over-year and now accounts for over $1.5 billion. In this research note, we examine Motorola Solutions’ video security business in the past year, based on their full-year financial results and recently published 10-K document.

Since 2011, Motorola Solutions has become a leader in mission-critical communications and analytics. Its offering is split into three technology groups; Mission Critical Communications, Command Center Software, and Video Security & Analytics Solutions. Their business operations are split into two segments; Software and Services, and Products and Systems Integration, which each draw from the three technology groups.

The company has intentionally created overlap in its segments to encourage integration of its technology groups. For video security, this means fixed and mobile video equipment as well as on-premise and cloud-based access control solutions fall into the Products and Systems Integration segment; while video management software, decision and evidence management software, and certain video equipment falls into the Software and Services segment.

Motorola Solutions total 2022 sales were $9.1 billion, up 12% on the previous year. The Products and Systems Integration segment grew 14% primarily due to higher sales of LMR and Video. The Software and Services segment grew 8% driven by growth in video security, LMR, and command center. Video technology within the Products and Systems Integration segment represented 18% of the net sales of the total segment in 2022, while video within the Software and Services segment represented 15% of the net sales for the year.

For the full year, the firm’s GAAP operating margin was 18.2% of sales, compared to 20.4% for the prior year, while non-GAAP operating margin was 26.0% of sales, up from 25.9% in the prior year.

Video security grew by around $300 million year-over-year and now accounts for over USD 1.5 billion, with much of the growth coming from the North American market. The rapid development of Motorola’s video security business has relied largely on strategic acquisitions that have vastly increased the firm’s capacity in the space.

Motorola Solutions Strategic Acquisitions

Building on the purchase of surveillance and access control solution provider Avigilon Corporation in 2018, as well as the acquisitions of IndigoVision and Pelco Inc in 2020, Motorola Solutions has continued to show great intent in the video security space in 2022. Over the course of the year, the company has invested over $850 million in video security-related acquisitions alone.

On July 13th 2021, Motorola Solutions announced an agreement to acquire Openpath Security a cloud-based mobile access control provider. While the purchase price was not initially disclosed, the company’s latest 10K report declared it as $298 million and a share-based compensation of $29 million. And, the November 2021 acquisition of Envysion, an enterprise video security solutions provider focused on hospitality and retail, was completed for a reported $124 million and share-based compensation of $1 million.

On March 3rd 2022, the firm announced it had acquired Ava Security Limited, a UK-based provider of video security and analytics, for a considerable $388 million plus share-based compensation of $7 million. Ava Security offers a flexible cloud solution with real-time visibility and an advanced analytics platform with self-learning algorithms. And, a month later Motorola Solutions announced the acquisition of Calipsa, another cloud-native advanced video analytics based in the UK, for $39 million and share-based compensation of $4 million.

Then, in May, the company completed the acquisition of Videotec for $23 million and share-based compensation of $4 million. The Italy-based company provides ruggedized video security solutions that are designed to withstand extreme conditions and hazardous environments, both indoors and outdoors. And, Motorola rounded out the year with a $553 million acquisition of Rave Mobile Safety, a provider of mass notification and incident management services from the building scale to the public alert scale, playing into multiple business segments.

Challenges

The company reports that its supply chain continues to be impacted by global issues related to the effects of the COVID-19 pandemic, the Russia-Ukraine conflict, and an inflationary cost environment. These factors have been especially impactful on materials in the semiconductor market, where the firm has experienced part shortages, increased freight costs, diminished transportation capacity, and labor constraints.

For the year ended December 31st, 2021, the company's net sales in Russia and Belarus were less than $25 million. However, during the first quarter of 2022, in response to Russia's invasion of Ukraine, the company suspended all sales, provision of services and shipments of its products to Russia and Belarus, which did not constitute a material portion of the company's business.

The company does anticipate the broader impacts of inflationary pressures, as well as increased material and supply chain costs and disruptions to continue into 2023 but expects global transportation costs to improve during the same period. They now expect revenue growth of between 12% and 13% compared to the first quarter of 2022. For the full-year 2023, the company expects revenue in the range of $9.65 billion to $9.7 billion.

Motorolas video security business is already considered a market leader but continued investment in a wide range of trending technologies, notably cloud computing and analytics, bodes well against industry forecasts. The company’s obvious commitment to the segment has already paid off with strong revenue growth, and continued acquisitions suggest an upwards trend for their video security business.