MSI
#Yes, on services, we love the Airwave acquisition.
We're especially appreciative and pleased with the unconditional clearance from CMA.
We're always on the look, or lookout, for other, what we refer to as quote, unquote, mini Airwaves, if they're there.
I think there might be some, but they're not nearly as material, or of the revenue density as Airwave.
Having said that, I think <UNK> and <UNK> are teaming well to get a lot of the managed and support services growth organically.
Better sales execution, software user agreements, multi-year maintenance, and I think <UNK>'s team has done a really good job tending to that.
On the second part of your question ---+ <UNK>, this is <UNK> <UNK>.
With respect to body-worn video, we really have two portions of our solution here.
One is the evidence management solution, or the back end that stores the digital evidence.
And we've taken an approach where we've integrated that in with our other command center software assets ---+ call-taking, CAD, records, counsel, et cetera.
And then on the device itself, with the demands on the officer for on-body real estate, we've taken an integrated approach and integrated voice.
So, remote speaker mic, with video recording, as well as radio control on a single platform.
And we think that gives us a unique advantage in the marketplace.
Having said that, this is really a try-before-you-buy market.
And while we're engaged with a number of customers around the US, and some internationally as well, and we made initial shipments in Q2, we don't expect the revenue for 2016 to be material with body-worn video.
Sure.
So, just recapping services backlog, services backlog sequentially was down ---+ was down $210 million.
It was down ---+ $170 million of that is an adjustment to our backlog position, based on the pound.
And as we recognized $146 million of revenue in Q2 against the fixed Airwave contract, the result of those two was a decrease in sequential backlog.
Obviously, absent those two, we did have sequential backlog growth in services.
We did grow managed and support services, specifically 4% organically.
So from a backlog perspective, heading into the second half, with respect to services, were comparable to slightly ahead of where we were the prior year.
<UNK>, this is <UNK>.
I think a couple ---+ maybe two comments on Europe, particularly in Europe.
But our comps from an overall perspective, as we start to look at the second half of 2016, our comps ease due to the Norway roll-off.
To your point around security in Europe, in fact I just talked to our Head of Sales in EMEA the other day on this, there's certainly border security issues that we think can stimulate both product and service revenue opportunities, but they're moving ---+ they're not moving super rapidly.
There's funding around them, and there's governance and things like that, but we definitely see business in the second half picking up, largely due to comps.
I do also think, though, from an overall tone standpoint, in addition to what's going on in Europe and the climate for policing here in the US, we've always said mission critical public safety is high on the priority list.
It's as high as it's ever been.
It's reinforced by some of the unfortunate circumstances that are going on.
What I would say also anecdotally, while you did ask about Europe, I think we've seen some increased interest, particularly around the older systems here in the US, with a sensitivity around encryption, and protected police communications.
So systems here in the US that might be older, longer in the tooth, if you will, where the bad guys may unfortunately have the opportunity, with not too much effort, to listen in.
I think some of those communities are engaging in those conversations with us, making encryption and secure communications a higher priority, vis-a-vis an upgrade and a modernization that I think over time will be a positive demand driver.
Okay.
<UNK>, it's <UNK>.
So I think as we look at the second half, we're not ---+ obviously it's not appropriate to comment on 2017 right now.
But in general, to give you some regional color, North America in the second half, which is obviously our biggest region ---+ as we said all along, North America will grow in 2016.
Product pipeline, as well as services pipeline, looks strong.
We talked about Latin America, and again, Latin America is less than 5% of our overall revenue.
Again, less pressure in the second half, due to comps.
We also believe we have de-risked a lot of the large projects there.
And I think on the bright side, we see southern Latin America improving.
We see the business in Mexico stabilizing.
And I think the big point there is, in spite of some of the headwinds we faced in the last 12 months, we've maintained our investment in the region.
And we think we've created a good level of demand that we'll fulfill here in the future.
When we think about EMEA, which I just commented on ---+ Europe, Middle East and Africa ---+ again, our comps ease in Europe.
There is a fair level ---+ even in spite of oil in the Middle East, the business remains strong.
I think one point of emphasis here would be in Africa.
Africa's an area really what I would say is an area that we've invested in.
We're investing in more significantly in go-to-market.
We've shored up some lower end or our lower end of our portfolio product that we think is very attractive in the African market.
And then as we start to pivot to Asia-Pac, Asia-Pac is actually ---+ it's been a good news story.
In constant currency last year, it grew 8%.
It will be up this year in constant currency, particularly, and again, as <UNK> highlighted in the opening, in Australia.
I will tell you ---+ China ---+ China's less than 3% of our Company's revenue.
2016 will be a challenging year, but we've got really suppressed expectations candidly about China, just due to some of the preference that I think the Chinese government has towards some of the indigenous providers.
I think that's probably a summary of the fly over as we see it regionally around the world.
I'll let <UNK> answer Richmond first.
<UNK>, on Richmond, it's a multi-year revenue expectation.
We'll have a small amount in the back half of this year, but again, it's a multi-year, as a lot of these big milestone-based projects are.
And, <UNK>, on the share repurchase, we guided annual repurchase of $750 million to $1 billion.
We were out of the market largely in Q1 because of the Airwave M&A activity.
We were opportunistic, given what we thought were pretty attractive levels in Q2.
I think our annual guidance remains unchanged of $750 million to $1 billion.
So I would just leave it at that, and that would be our expectation at this point in time for the full year.
Sure.
I'll take the ---+ actually, I'll take both of those ---+ the FX question first.
Certainly, the FX is included in the guidance we gave for the full year.
We said on the Q4 call, and in Q1, we said we saw at the time, based on spot rates, headwind of about $60 million.
At this point we see headwinds in the $40 million range for the full year, but again, it's contemplated within the guidance.
Specifically, the volatility has been around the pound.
And again, we haven't changed our view of full-year revenue for Airwave at $450 million, despite the movement in the pound.
Secondly, on product gross margins.
You can expect to see the same type of seasonality, certainly as the volume increases in products, in the second half of the year.
I think that the PS-LTE opportunity, as I mentioned, is slow to develop.
It's certainly a lot slower and less material than we thought three years ago, just to reference a point, or even when the legislation was passed in the Middle Class Jobs Relief Act in 2012 that was US-centric.
I think it's for a combination of reasons.
Countries have to develop and allocate the spectrum.
You've got to line up the appropriate funding.
I do think, though, we're very uniquely positioned, positively, better than anybody, quite frankly.
And I say that as a reflection of our knowledge and expertise in P25 and TETRA LMR, and the complexities and customization that go with that, and the interoperability and interconnection required of LMR platforms, whether they be P25 or TETRA, to the additive broadband network that gets deployed.
I think it would span services, some applications, devices.
I don't see consumers' smartphones replacing mission-critical radios, for a whole host of reasons around power management, spectrum, efficiency, group talk, as well as things that are embedded in the 3GPP standard and so many other things that would be required for that to happen.
I think public safety LTE is a good opportunity for this Company.
I think it's additive to our LMR business.
I don't think it's substitutional or cannibalizing in the future.
I just don't see that.
And I don't think it's a reflection of our head in the sand.
I really don't, because we push ourselves constantly here, and challenge each other.
It's a direct reflection of what we're hearing from our customers.
And it's worth reminding, in LA, we are building an LMR system at the same time, and updating an LMR system right now, at the same time PS-LTE is being deployed.
That's also true in the UK, which you know about the commitment to multi-year, fixed-price contract with Airwave, and the eventual migration to ESN.
And we'll see how quickly that happens, and in what complementary nature ultimately that gets rolled out in.
And the two Middle East customers, right as we speak, are investing in LMR and public safety LTE.
And we're getting service contracts that are multi-year, 10, 15 years plus.
So the customers are speaking, and the market's speaking, and we're going to seize on both those opportunities.
So public safety LTE is more muted.
Again, $130 million last year, comparable this year.
I would guess it's comparable, maybe slightly up next year as we round out those implementations.
But between infrastructure, devices, applications, and the interconnection to make the end-to-end system work, I think we're well positioned.
Let me do Airwave, and then I'll turn it over to <UNK> for contracts.
The reason our guidance on Airwave revenue of $450 million is unchanged despite the contraction in the pound is a tip of the hat to <UNK> and the finance team.
Because as we modeled ---+ he and the team model different scenarios, right at the close of the acquisition, we knew that there was uncertainty out there with Brexit.
We wanted to get the contract in hand.
We wanted to get the organization integrated.
So, <UNK> and team were prudent.
So, even with the pound contraction of about 15%, maybe 16% since that Airwave acquisition was done, we're not changing our revenue guidance of approximately $450 million.
At this point, given the spot rate in the pound, we would expect Airwave revenue to grow next year, because we have 12 months of revenue recognition versus 10.
Okay, <UNK>.
So I think, <UNK>, to the second question around projects, dimensionalize it two ways.
There's two things.
Most of these projects, one ---+ by the way, projects we're proud to have won, the Richmond area that we talked about, we spoke about King County last year, and the State of Iowa.
These are essentially multi ---+ we talked about, they could be hundreds of sites.
So, each and every one of those sites has a life story themselves, meaning civil, permitting, environmental, OSHA, those kind of requirements, that tend to have longer duration.
So we typically think of those things taking anywhere from 12 to really two years to revenue, to get through all the [revetable] things.
That's the first piece of it.
And then typically within those ---+ also within those contracts, there's a device component.
And those things are more actionable, and we can work with customers to pull those in for revenue.
But ultimately, each project has its own dimension.
A lot of them are civil and site related, longer duration.
The second piece of it is devices.
We can typically action those with customers in a quicker fashion.
Then the last element of them is obviously the multi-year support.
I think it's noteworthy because it's been brought up a few times today.
But basically every customer in North America, and typically in a lot of different countries overseas now, doesn't enter into an agreement until they think about at least five years.
We've had customers that have gone up to 20 years of life cycle and managed and support service agreements.
Those obviously have even a longer duration, and those revenue every year.
So I think that probably answers your question.
