Research HubSoftware & Cloud ServicesMotorola Solutions, Inc. (MSI)

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SEC 10-K / 10-Q Equity ResearchSoftware & Cloud ServicesTicker: MSI

Motorola Solutions, Inc. (MSI) DCF Valuation & Fundamental Primer

Motorola Solutions, Inc. (MSI) currently trades at $383.72 with an enterprise value of $39.68B. Our proprietary institutional model rates Motorola Solutions, Inc. at 63/100 (Grade: B · Mixed Fundamental Profile). The current market price prices in an implied 5-year revenue CAGR of 23.9% vs. historical growth of 9.9% (Aggressive Growth Expectations Priced In).

GDA Quality Score

B63/100

Mixed Fundamental Profile

Share Price / DCF Base

$383.72 / $211.51

Enterprise Value

$68.36B

TTM Revenue

$10.82B (+9.9%)

Gross Margin

51.0%

Rule of 40 Score

29.6%

EV / TTM Revenue

6.3×

Structural Moat: Enterprise Software & Cloud Services Switching Costs & Recurring Workflow Integration

Key Growth Catalyst: AI workflow automation, multi-module expansion across enterprise cohorts, and operating margin leverage at Motorola Solutions, Inc..

Institutional fundamental teardown of Motorola Solutions, Inc. (MSI) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.

Seed MSI in Interactive 3-Statement Model

Section 1 · Intrinsic Valuation Engine

Motorola Solutions, Inc. (MSI) 3-Scenario DCF Valuation Range

WACC: 10.0% · Terminal Growth: 2.5% · Diluted Shares: 166.6M

bear Case DCFSensitivity

$98.55

Implied Equity Value:$16.41B

vs Current ($383.72):-74.3%

base Case DCFPrimary Benchmark

$211.51

Implied Equity Value:$35.23B

vs Current ($383.72):-44.9%

bull Case DCFSensitivity

$347.17

Implied Equity Value:$57.82B

vs Current ($383.72):-9.5%

Interactive What-If DCF SandboxSim Rule of 40: 29.6%

Stress-test MSI's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.

Seed Custom Drivers in /model

1-Click Regimes:

5Y Revenue CAGR9.9%

2%Hist: 9.9%50%

Target FCF Margin19.7%

5%Base: 19.7%45%

WACC Discount Rate10.0%

6.5%Base: 10%14.5%

Terminal Growth (g)2.5%

1.0%Implies 13.7× Y5 FCF4.0%

Accounting Lens:

Simulated Implied Price$211.15

Spread vs Market-45.0%

Simulated EV$39.62B

Effective FCF Margin19.7%

Simulated 5-Year Cash Flow Trajectory (Unlevered FCF vs. Discounted PV)Cumulative 5Y PV: $10.63B

Year 1$11.89B

FCF:$2.34B

PV:$2.13B

Year 2$13.06B

FCF:$2.57B

PV:$2.13B

Year 3$14.36B

FCF:$2.83B

PV:$2.13B

Year 4$15.78B

FCF:$3.11B

PV:$2.12B

Year 5$17.34B

FCF:$3.42B

PV:$2.12B

Enterprise Value Composition Bridge$39.62B

Split between 5-Year Explicit Cash Flows and Discounted Terminal Value

5Y Explicit PV: $10.63B (26.8%)Terminal PV: $28.99B (73.2%)

(+) Balance Sheet Cash & Equivalents+$2.10B

(−) Total Debt Obligations−$6.55B

(=) Implied Equity Value (166.6M shs)$35.17B

2D Institutional Valuation Sensitivity Heatmap

Implied share price & upside/downside spread across 25 valuation states (Current Price: $383.72).

WACC \ Terminal	1.5%	2.0%	2.5%	3.0%	3.5%
8.5%	$237.58 -38%	$253.84 -34%	$272.82 -29%	$295.24 -23%	$322.15 -16%
9.3%	$211.02 -45%	$223.83 -42%	$238.54 -38%	$255.61 -33%	$275.64 -28%
10.0%	$189.17 -51%	$199.47 -48%	$211.15 -45%	$224.49 -41%	$239.88 -37%
10.8%	$170.89 -55%	$179.31 -53%	$188.75 -51%	$199.42 -48%	$211.55 -45%
11.5%	$155.37 -60%	$162.35 -58%	$170.11 -56%	$178.79 -53%	$188.54 -51%

Section 2 · Fundamental Underwriting

Institutional Software Quality Scorecard (63/100 · Grade B)

Mixed Fundamental Profile

Viable recurring software business but carries notable dilution, lower margins, or higher leverage.

Cash Conversion18 / 25

Actual: 79% of EBITTarget: Target: ≥100%

Solid cash generation with minor working capital absorption

Dilution Friction25 / 25

Actual: 2.2% of RevTarget: Target: ≤8%

Minimal dilution friction; management compensation aligned with shareholders

Unit Economics8 / 25

Actual: 51% GM / R40: 30%Target: Target: ≥75% GM / ≥40% R40

Sub-par gross margins; higher cost of delivery or hardware/services mix

Balance Sheet12 / 25

Actual: -$4.45B Net DebtTarget: Target: Net Cash > 0

Moderate leverage or cash burn; monitor liquidity runway

Core Investment Strengths & Moats

Low dilution friction: SBC is only 2.2% of revenue

Key Operational & Dilution Risks

Lower software gross margins (51.0%), indicating higher hosting or service delivery drag

Section 3 · Expectations Investing

Reverse-DCF Solver: What Growth is Priced Into MSI?

Aggressive Growth Expectations Priced In

The current share price demands 23.9% 5-year CAGR (25.8% net of SBC & dilution)—a +14.0% acceleration over historical run-rate (9.9%). Any growth slowdown risks valuation multiple contraction.

Implied 5-Year Revenue CAGR

23.9%

Required to justify $68.36B EV

Historical Run-Rate CAGR

9.9%

Audited multi-year top-line trajectory

Growth Hurdle Spread

+14.0%

Implied hurdle minus historical growth

Implied FCF Margin @ Hist. Growth

34.0%

Steady-state FCF margin needed at current CAGR

Institutional Dilution-Adjusted Hurdle Lens

Headline Reverse-DCF ignores Stock-Based Compensation (2.2% of revenue) and annual share dilution (0.3%/yr). Accounting for both requires 25.8% 5-year revenue CAGR to justify $383.72/sh on a true per-share economic cash flow basis.

True Economic Hurdle25.8%

SBC & Dilution Hurdle Tax+1.9% / yr

Section 4 · 5-Year Forecast Schedule

Motorola Solutions, Inc. (MSI) 5-Year Fundamental Forecast

Customize in Live Engine

Statement Line Item	TTM Audited Base	TTM	Y1	Y2	Y3	Y4	Y5
Revenue	$10.82B	$10.82B	$11.89B	$13.06B	$14.36B	$15.78B	$17.34B
Gross Profit	$5.51B	$5.51B	$6.06B	$6.66B	$7.32B	$8.04B	$8.84B
Operating Income (EBIT)	$2.69B	$2.69B	$2.95B	$3.25B	$3.57B	$3.92B	$4.31B
Stock-Based Compensation (SBC)	$243.0M	$243.4M	$267.5M	$294.0M	$323.1M	$355.0M	$390.2M
Unlevered Free Cash Flow (FCF)	$2.13B	$2.13B	$2.35B	$2.58B	$2.83B	$3.11B	$3.42B
SBC-Adjusted True Cash Flow	$1.89B	$1.89B	$2.08B	$2.28B	$2.51B	$2.76B	$3.03B

Section 5 · Relative Valuation Multiples & Regression

Software & Cloud Services Peer Comparables & Rule of 40 Regression

Click any peer node or ticker to open its dedicated equity research report

Rule of 40 vs. EV / Revenue Multiple Regression

OLS Fit: EV/Rev = -10.7 + 0.45 × (Rule of 40) · R² = 60%

Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.

MSI Actual vs. Reg. Multiple6.3× vs 2.6× fair

Reg.-Implied Share Price$144.45 (+139.8% Premium)

MSIMotorola Solutions, Inc.·Rule of 40: 29.6%·Actual EV/Rev: 6.3×·Regression Fair Multiple: 2.6×

+139.8% Above Trendline (Premium)Open MSI Report

Company	Ticker	Market Cap	TTM Revenue	Gross Margin	FCF Margin	Rule of 40	SBC % Rev	EV / Rev
Motorola Solutions, Inc.	MSI	$63.91B	$10.82B	51.0%	19.7%	29.6%	2.3%	6.3×
ServiceNow	NOW	$152.61B	$10.98B	79.2%	31.1%	54.2%	15.9%	13.9×
Workday, Inc.	WDAY	$50.35B	$8.00B	75.0%	27.4%	43.9%	19.0%	6.4×
Salesforce	CRM	$217.10B	$37.90B	77.2%	32.8%	42.8%	8.4%	5.8×
Datadog	DDOG	$46.05B	$2.68B	80.8%	31.1%	57.7%	21.3%	17.4×
Snowflake Inc.	SNOW	$71.79B	$3.63B	66.5%	25.2%	57.7%	40.8%	20.0×
Hubspot	HUBS	$19.89B	$2.63B	85.0%	21.3%	52.7%	19.2%	7.7×
Peer Cohort Median Benchmark (N=6)				78.2%	29.2%	53.5%	19.1%	10.8×

Section 6 · Downside Protection & Multiple Sensitivity

EV / Revenue Multiple Compression Stress Test

Multiple Scenario	EV / Revenue	Implied Enterprise Value	Implied Equity Value	Implied Share Price	Delta vs Current
Current Multiple	6.3×	$68.36B	$63.91B	$383.72	0.0%
-20% Multiple Compression	5.1×	$54.69B	$50.24B	$301.63	-20.0%
-35% Multiple Compression	4.1×	$44.43B	$39.98B	$240.07	-35.0%
Software Baseline Floor (5.0× EV/Rev)	5.0×	$54.09B	$49.64B	$298.02	-20.9%

Section 7 · Investor Diligence FAQ

Frequently Asked Questions: Motorola Solutions, Inc. (MSI) Valuation

What is Motorola Solutions, Inc. (MSI)'s intrinsic DCF valuation and implied share price?

Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, Motorola Solutions, Inc. (MSI) has a Base Case implied value of $211.51 per share (with a Bear Case of $98.55 and a Bull Case of $347.17), compared to its current price of $383.72. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.

What is Motorola Solutions, Inc. (MSI)'s Rule of 40 score and Free Cash Flow margin?

Motorola Solutions, Inc. achieves a Rule of 40 score of 29.6%, combining a 9.9% revenue growth run-rate with a 19.7% TTM free cash flow margin on $10.82B in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.

What revenue growth rate is priced into MSI stock according to Reverse-DCF analysis?

At $383.72 per share (Enterprise Value of $68.36B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 23.9%, compared to Motorola Solutions, Inc.'s historical CAGR of 9.9%. Overall market expectations are rated as "Aggressive Growth Expectations Priced In".

How does Motorola Solutions, Inc. compare to Software & Cloud Services software peers?

Motorola Solutions, Inc. (MSI) earns an institutional Software Quality Score of 63/100 (Grade B — Mixed Fundamental Profile). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.

How does Stock-Based Compensation (SBC) impact Motorola Solutions, Inc. (MSI)'s valuation?

Motorola Solutions, Inc. recorded $243.0M in TTM stock-based compensation (2.2% of revenue). When treating SBC as a cash-equivalent compensation expense, Motorola Solutions, Inc.'s SBC-adjusted free cash flow yield is 3.0%, scoring 25/25 on our Shareholder Dilution Friction pillar.

Motorola Solutions, Inc. (MSI) DCF Valuation & Fundamental Primer

WACC \ Terminal

1.5%

2.0%

2.5%

3.0%

3.5%

8.5%

$237.58

-38%

$253.84

-34%

$272.82

-29%

$295.24

-23%

$322.15

-16%

9.3%

$211.02

-45%

$223.83

-42%

$238.54

-38%

$255.61

-33%

$275.64

-28%

10.0%

$189.17

-51%

$199.47

-48%

$211.15

-45%

$224.49

-41%

$239.88

-37%

10.8%

$170.89

-55%

$179.31

-53%

$188.75

-51%

$199.42

-48%

$211.55

-45%

11.5%

$155.37

-60%

$162.35

-58%

$170.11

-56%

$178.79

-53%

$188.54

-51%

Statement Line Item

TTM Audited Base

TTM

Revenue

$10.82B

$11.89B

$13.06B

$14.36B

$15.78B

$17.34B

Gross Profit

$5.51B

$6.06B

$6.66B

$7.32B

$8.04B

$8.84B

Operating Income (EBIT)

$2.69B

$2.95B

$3.25B

$3.57B

$3.92B

$4.31B

Stock-Based Compensation (SBC)

$243.0M

$243.4M

$267.5M

$294.0M

$323.1M

$355.0M

$390.2M

Unlevered Free Cash Flow (FCF)

$2.13B

$2.35B

$2.58B

$2.83B

$3.11B

$3.42B

SBC-Adjusted True Cash Flow

$1.89B

$2.08B

$2.28B

$2.51B

$2.76B

$3.03B

Company

Ticker

Market Cap

TTM Revenue

Gross Margin

FCF Margin

Rule of 40

SBC % Rev

EV / Rev

Motorola Solutions, Inc.

MSI

$63.91B

$10.82B

51.0%

19.7%

29.6%

2.3%

6.3×

ServiceNow

NOW

$152.61B

$10.98B

79.2%

31.1%

54.2%

15.9%

13.9×

Workday, Inc.

WDAY

$50.35B

$8.00B

75.0%

27.4%

43.9%

19.0%

6.4×

Salesforce

CRM

$217.10B

$37.90B

77.2%

32.8%

42.8%

8.4%

5.8×

Datadog

DDOG

$46.05B

$2.68B

80.8%

31.1%

57.7%

21.3%

17.4×

Snowflake Inc.

SNOW

$71.79B

$3.63B

66.5%

25.2%

57.7%

40.8%

20.0×

Hubspot

HUBS

$19.89B

$2.63B

85.0%

21.3%

52.7%

19.2%

7.7×

Peer Cohort Median Benchmark (N=6)

78.2%

29.2%

53.5%

19.1%

10.8×

Multiple Scenario

EV / Revenue

Implied Enterprise Value

Implied Equity Value

Implied Share Price

Delta vs Current

Current Multiple

6.3×

$68.36B

$63.91B

$383.72

0.0%

-20% Multiple Compression

5.1×

$54.69B

$50.24B

$301.63

-20.0%

-35% Multiple Compression

4.1×

$44.43B

$39.98B

$240.07

-35.0%

Software Baseline Floor (5.0× EV/Rev)

5.0×

$54.09B

$49.64B

$298.02

-20.9%

Motorola Solutions, Inc. (MSI) 3-Scenario DCF Valuation Range

2D Institutional Valuation Sensitivity Heatmap

Institutional Software Quality Scorecard (63/100 · Grade B)

Core Investment Strengths & Moats

Key Operational & Dilution Risks

Reverse-DCF Solver: What Growth is Priced Into MSI?

Motorola Solutions, Inc. (MSI) 5-Year Fundamental Forecast

Software & Cloud Services Peer Comparables & Rule of 40 Regression

Rule of 40 vs. EV / Revenue Multiple Regression

EV / Revenue Multiple Compression Stress Test

Frequently Asked Questions: Motorola Solutions, Inc. (MSI) Valuation

What is Motorola Solutions, Inc. (MSI)'s intrinsic DCF valuation and implied share price?

What is Motorola Solutions, Inc. (MSI)'s Rule of 40 score and Free Cash Flow margin?

What revenue growth rate is priced into MSI stock according to Reverse-DCF analysis?

How does Motorola Solutions, Inc. compare to Software & Cloud Services software peers?

How does Stock-Based Compensation (SBC) impact Motorola Solutions, Inc. (MSI)'s valuation?

Related Software & Cloud Services Equity Research Reports

Motorola Solutions, Inc. (MSI) 3-Scenario DCF Valuation Range

2D Institutional Valuation Sensitivity Heatmap

Institutional Software Quality Scorecard (63/100 · Grade B)

Core Investment Strengths & Moats

Key Operational & Dilution Risks

Reverse-DCF Solver: What Growth is Priced Into MSI?

Motorola Solutions, Inc. (MSI) 5-Year Fundamental Forecast

Software & Cloud Services Peer Comparables & Rule of 40 Regression

Rule of 40 vs. EV / Revenue Multiple Regression

EV / Revenue Multiple Compression Stress Test

Frequently Asked Questions: Motorola Solutions, Inc. (MSI) Valuation

What is Motorola Solutions, Inc. (MSI)'s intrinsic DCF valuation and implied share price?

What is Motorola Solutions, Inc. (MSI)'s Rule of 40 score and Free Cash Flow margin?

What revenue growth rate is priced into MSI stock according to Reverse-DCF analysis?

How does Motorola Solutions, Inc. compare to Software & Cloud Services software peers?

How does Stock-Based Compensation (SBC) impact Motorola Solutions, Inc. (MSI)'s valuation?

Related Software & Cloud Services Equity Research Reports