Zebra Technologies Q1 Earnings Call Highlights

Key Points

• Zebra Technologies beat Q1 expectations and raised its full-year outlook after reporting sales of nearly $1.5 billion, adjusted EBITDA margin of 23.2%, and non-GAAP EPS of $4.75. Management cited strong demand across regions, especially in manufacturing and Machine Vision.
• The company lifted its 2026 sales growth forecast to 10% to 14% and now expects full-year non-GAAP EPS of $18.30 to $18.70, with at least $900 million in free cash flow. Zebra also guided Q2 sales growth of 14% to 17% despite higher memory costs.
• Management spent significant time on memory supply constraints, saying Zebra has visibility to enough supply to support guidance and plans to offset a roughly two-point margin headwind through price increases, supply actions, and cost savings. The company also highlighted momentum in Elo Touch, RFID, and AI-driven automation opportunities.

Zebra Technologies NASDAQ: ZBRA reported stronger-than-expected first-quarter results and raised its full-year outlook, citing broad demand across regions and end markets, momentum in manufacturing and Machine Vision, and confidence in its ability to manage memory supply constraints.

Chief Executive Officer Bill Burns said the company “delivered results near the high end” of its outlook, with quarterly sales of nearly $1.5 billion. Chief Financial Officer Nathan Winters said total company sales rose 14.3% from the prior year, or 4.3% on an organic basis. Zebra reported adjusted EBITDA margin of 23.2% and non-GAAP diluted earnings per share of $4.75, up 18% year over year and above the high end of its prior outlook.

Burns said the results reflected “positive demand trends across our portfolio” and strong execution by Zebra’s team. He also pointed to growth across both operating segments and all regions, with particular strength in manufacturing end markets.

Segment and Regional Results

Winters said Zebra’s Connected Frontline segment grew 20.6%, including the recent Elo Touch acquisition, or 3.8% organically. Growth in the segment was led by mobile computing. The Asset Visibility and Automation segment grew 4.8%, led by printing and Machine Vision.

Regionally, Zebra reported sales growth across all geographies. North America sales increased 4%, led by manufacturing strength. EMEA sales grew 2%, with broad-based growth across Europe partially offset by softness in the Middle East. Asia Pacific sales rose 11%, led by India and Southeast Asia, while Latin America sales increased 10%.

Adjusted gross margin improved 80 basis points to 50.4%, which Winters said was driven by productivity initiatives, favorable foreign exchange, business mix and only a modest impact from memory inflation in the quarter. Adjusted operating expense leverage improved by 20 basis points.

Zebra generated free cash flow of $163 million in the quarter. As of quarter-end, the company had a debt leverage ratio of 2.1 and $1.1 billion of credit capacity.

Full-Year Outlook Raised

Zebra raised its full-year sales growth outlook to a range of 10% to 14%, which Winters said represented a one-point increase at the midpoint from the prior outlook. The forecast includes a seven-point favorable impact from acquisitions and foreign exchange.

The company now expects full-year non-GAAP diluted earnings per share of $18.30 to $18.70 and adjusted EBITDA margin of approximately 22%. Zebra also expects free cash flow of at least $900 million, which Winters said reflects an approximately 100% conversion rate.

For the second quarter, Zebra expects sales growth of 14% to 17%, including approximately 10.5 points from acquisitions and favorable foreign exchange. Second-quarter adjusted EBITDA margin is expected to be slightly above 21%, with non-GAAP diluted earnings per share projected between $4.20 and $4.50.

Winters said the full-year guide factors in year-to-date performance, a strong pipeline of opportunities, manufacturing and Machine Vision momentum, previously announced price increases, constrained memory availability and acquisition and currency benefits.

Memory Supply Remains a Key Focus

Management spent a significant portion of the call addressing investor concerns about memory supply and pricing. Winters said Zebra has “line of sight to the supply we need to support our outlook” and that component pricing trends are tracking in line with prior guidance.

Burns said the memory environment remains dynamic, but Zebra has been working on the issue since the second half of 2025 through supplier relationships and customer demand planning. Winters said the company has strong visibility into first-half supply and that its second-half guidance assumes a similar level of memory supply as received in the first half.

Winters said Zebra has received no indication that its second-half allocation will be below first-half levels. He added that teams are working on options to increase supply to meet unconstrained demand, which he said is near the high end of the company’s guidance range.

The company expects to fully mitigate a two-point margin headwind from memory costs for the year through targeted price increases, direct memory initiatives, restructuring savings, volume leverage and foreign exchange favorability. Winters said the sequential decline in expected second-quarter EBITDA margin is largely due to higher memory costs and more normalized deal mix after a favorable first quarter.

Elo Touch, Machine Vision and RFID Discussed

Burns said Zebra remains encouraged by the Elo Touch acquisition, which he said expands the company’s Connected Frontline portfolio. Elo grew in line with expectations in the quarter, and Zebra expects the business to grow in the mid-single digits in 2026. Burns said Zebra is seeing progress on both revenue and cost synergies, including early wins in new geographies such as India.

Machine Vision was another area of focus. Burns said the business grew at a strong double-digit rate in the first quarter and that Zebra expects double-digit growth for the full year. He cited logistics wins in the U.S. and Europe, as well as growing opportunities in manufacturing and e-commerce. Burns said Zebra’s value proposition in Machine Vision is centered on ease of use, rapid deployment and a unified software platform across the product portfolio.

On RFID, Burns said Zebra saw a decline in the first quarter due to strong prior-year comparisons but expects growth in the second quarter and for the full year. He said RFID demand is expanding beyond retail apparel into fresh foods, broader retail merchandising, parcel tracking, quick-service restaurants, healthcare and other tracking and tracing applications.

Capital Returns and AI Strategy

Zebra repurchased $300 million of stock during the first quarter and an additional $200 million early in the second quarter, bringing year-to-date repurchases to $500 million through early May. Burns said Zebra has already exceeded the prior expectation of allocating roughly half of full-year free cash flow to repurchases. He said the updated EPS guidance assumes an additional $100 million of share repurchases, while the company retains flexibility to allocate all free cash flow to buybacks if conditions remain attractive.

Burns also emphasized Zebra’s positioning in automation and artificial intelligence, saying the company’s solutions help customers collect data from frontline operations and act on it. He said AI and automation trends are “net positive” for Zebra, particularly because its products support visibility, worker productivity and physical-world data capture.

Asked about internal AI use, Burns said Zebra is deploying AI tools across software development, sales and marketing, supply chain forecasting and customer service. He said AI is expected to support productivity and margin improvement over time, while the larger opportunity remains providing AI-enabled solutions to customers.

Burns closed the call by thanking employees and partners for delivering what he called “solid Q1 results” and progress against Zebra’s 2026 priorities.

About Zebra Technologies NASDAQ: ZBRA

Zebra Technologies Corporation is a global technology company specializing in marking, tracking and computer printing solutions. The company produces a wide range of hardware and software products designed to enable real-time visibility of assets, inventory and personnel across diverse industries. Its offerings help businesses automate data capture and streamline operations in environments such as retail, healthcare, manufacturing, transportation and logistics.

The company's product portfolio includes barcode and RFID printers, mobile computing devices, barcode scanners, RFID readers and related supplies such as labels and tags.

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