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    ZBRA
    Earnings call· Mar 2026(Q1 FY26)

    ZEBRA TECHNOLOGIES Q1 FY26 earnings call ZBRA

    May 12, 2026 Source

    Executive summary

    Zebra Technologies Q1 FY26 — Strong Start and Raised Full-Year Outlook

    Zebra Technologies delivered a strong Q1 FY26, driven by broad-based demand, effective productivity initiatives, and favorable deal mix, leading to record gross margins and exceeding EPS expectations. The company raised its full-year outlook, expressing confidence in mitigating memory supply challenges and leveraging its integrated portfolio to drive profitable growth and long-term shareholder value through automation, digitization, and AI.

    Highlights

    5

    • Sales of nearly $1.5 billion, a 14% increase (4% organic) from the prior year.

    • Adjusted EBITDA margin expanded by 90 basis points to 23.2%.

    • Non-GAAP diluted earnings per share of $4.75, an 18% increase over the prior year, exceeding the high end of outlook.

    • $500 million of share repurchases executed year-to-date through early May.

    • Full-year sales growth outlook raised by 1 point at the midpoint.

    Concerns

    4

    • Memory cost and supply landscape remains dynamic, requiring proactive management.

    • EMEA sales growth of 2% was partially offset by softness in the Middle East.

    • RFID experienced a decline in Q1 due to strong prior-year compares.

    • Freight rates increased 20% to 30% across various lanes.

    Guidance & targets

    10
    CategoryTargetConfidence
    Q2 Sales Growth
    14% to 17%
    high materiality
    High
    Q2 Adjusted EBITDA Margin
    slightly higher than 21%
    high materiality
    High
    Q2 Non-GAAP Diluted EPS
    $4.20 and $4.50
    high materiality
    High
    Full-Year Sales Growth
    10% and 14%
    high materiality
    High
    Full-Year Adjusted EBITDA Margin
    approximately 22%
    high materiality
    High
    Full-Year Non-GAAP Diluted EPS
    $18.30 and $18.70
    high materiality
    High
    Full-Year Free Cash Flow
    at least $900 million
    high materiality
    High
    Elo Touch Growth
    mid-single digits
    medium materiality
    Medium
    Machine Vision Growth
    double-digit growth
    medium materiality
    High
    RFID Growth
    growth
    medium materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Connected Frontline
    Led by mobile computing, including the recent Elo Touch acquisition.
    Organic growth: 3.8%
    		—20.6%——
    Asset Visibility and Automation
    Led by printing and machine vision.
    		—4.8%——
    North America
    Led by strength in manufacturing.
    		—4%——
    EMEA
    Broad-based growth across Europe, partially offset by softness in the Middle East.
    		—2%——
    Asia Pacific
    Led by India and Southeast Asia.
    		—11%——
    Latin America
    		—10%——

    Operational metrics

    17
    Non-GAAP diluted EPS
    $4.7518% year-over-year increase
    Q1 FY26

    Exceeded the high end of outlook.

    Adjusted EBITDA margin
    23.2%90 basis points expansion
    Q1 FY26

    Driven by multiyear high gross margin and operating expense leverage.

    Adjusted gross margin
    50.4%80 basis points improvement
    Q1 FY26

    Primarily due to productivity initiatives, favorable FX, and business mix with modest memory inflation impact.

    Debt leverage ratio
    2.1x
    Q1 FY26

    Modest debt leverage ratio.

    Credit capacity
    $1.1 billion
    Q1 FY26
    Share repurchases
    $500 million
    YTD through early May

    Includes $300 million in Q1 and $200 million in Q2 to date.

    Elo Touch growth
    mid-single digits
    FY26

    Expected for 2026, playing out as expected.

    Machine Vision growth
    double-digityear-on-year
    Q1 FY26

    Strong double-digit growth in Q1, expected to continue for the full year.

    RFID growth
    growthdecline in Q1
    Q2 FY26 and FY26

    Expected for Q2 and full year, following a decline in Q1 due to strong prior-year compares.

    Freight rates increase
    20% to 30%
    recent

    Stabilized recently, incorporated into guidance, less than 2% of revenue.

    Memory cost headwind
    2-point
    FY26

    Expected to be fully mitigated for the full year.

    Full-year pricing benefit
    1 point
    FY26

    Offset by lower volume assumptions due to memory constraints, resulting in net neutral impact.

    Unconstrained demand
    near the high end of our guidance range
    current

    Teams are working options for increased supply to meet this demand.

    Warehouses in early automation stages
    3/4
    current

    Based on third-party research, highlighting significant opportunity.

    Served market
    $35 billion
    current

    Significant runway for growth.

    Organic sales growth profile
    5% to 7%
    over a cycle

    Expected for Connected Frontline segment.

    Organic sales growth profile
    5% to 7%
    over a cycle

    Expected for Asset Visibility and Automation segment.

    Industry KPIs

    8
    MetricValueDetails
    M a contribution10.5 points%
    Orders book to billStrong backlog and pipeline
    Segment revenue growthConnected Frontline grew 20.6% (3.8% organic); Asset Visibility and Automation grew 4.8%%
    Design wins product cycle rampsnew frontline AI picture proof of delivery capability
    Order visibility backlog policystrong backlog and pipeline
    Supply demand imbalance lead timesconstrained memory availability
    End market revenue mix organic growth4%%
    Operating margin incremental leverage23.2%%

    Orderbook & backlog

    1
    Backlog and pipelineStrongQ1 FY26

    Supports Q2 sales growth guidance range of 14% to 17%.

    Product announcements

    2
    ProductTypeDetails
    Enterprise mobile computers and wearableslaunch
    Frontline AI picture proof of delivery capabilitylaunch

    Deals & partnerships

    1
    Elo TouchAcquisition of interactive display solutions provider

    Elevates strategic position across Connected Frontline segment, adds breadth and depth to portfolio, expanding into new geographies like India.

    Risks & headwinds

    4
    Memory cost and supply landscapeFY26

    2-point margin headwind for the full year

    Mitigation: Proactive actions including direct supplier co-planning, alternative sourcing, transitions to higher density memory components, and targeted price increases. Expected to be fully mitigated.

    Softness in the Middle EastQ1 FY26

    Partially offset EMEA sales growth of 2%

    Increased freight ratesrecently

    20% to 30% price increases

    Mitigation: Incorporated into guidance; transportation costs are less than 2% of revenue; teams are actively working on different lanes and options.

    Tariff regime changesFY26

    No material impact for full year guidance expected

    Mitigation: Monitoring and tracking with trade compliance team; expect new forms of tariffs (e.g., Section 301 or 232) to replace IEEPA rates in H2. Will take necessary actions to mitigate impact.

    What to watch in Q2 FY26

    5

    Memory Supply and Cost Mitigation

    next quarter and full year
    Current2-point margin headwind for FY26, expected to be fully mitigated
    TargetContinued full mitigation of memory cost headwind and secured supply

    Why it matters

    Successful mitigation of memory challenges is crucial for achieving full-year margin and EPS guidance.

    Our full year guide continues to reflect full mitigation of the memory 2-point headwind, which we are increasingly confident in achieving.

    Q&A highlights

    6

    Are you implying you've secured capacity to mitigate memory costs, and what are your memory price assumptions for the rest of the year?

    Management is confident in mitigating memory impacts, having line of sight to supply for the first half and expecting similar for the second half. Costing is in line with prior guidance, benefiting from direct supplier relationships compared to spot market rates. They are working on options for increased supply to meet unconstrained demand.

    “We've received no indication that our second half allocation would be any less than the first half. And if anything, the teams are working options for increased supply to meet the unconstrained demand we have, which is near the high end of our guidance range.”

    asked by Andrew Buscaglia · answered by Nathan Winters

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Priorities and Market Position

    Zebra emphasized its industry leadership and unique value proposition, combining hardware, software, and services to address complex customer challenges. The company is deeply embedded in customer operations, driving productivity through workflow automation and integrating AI, positioning itself as a supplier of choice for AI on the frontline. Management highlighted a clear strategy to create long-term shareholder value by driving profitable growth, building on innovation, and enhancing financial strength.

    02

    Growth Drivers and Market Opportunity

    The company highlighted significant growth runway within a $35 billion served market, supported by mega-trends in automation, digitization, and AI. Both Connected Frontline and Asset Visibility & Automation segments are expected to achieve 5% to 7% organic sales growth over a cycle, with penetration still relatively low. For example, three-quarters of warehouses globally are in the early stages of their automation journey, indicating substantial future opportunity.

    03

    Memory Supply Mitigation and Cost Management

    Management expressed increasing confidence in mitigating memory cost and supply impacts through proactive measures including direct supplier co-planning, alternative sourcing, and transitions to higher-density components. The company has line of sight to required supply and expects to fully mitigate the 2-point margin headwind for the year. This mitigation strategy involves targeted price increases and operational benefits from restructuring actions.

    04

    Capital Allocation and Shareholder Returns

    Zebra continues to execute a balanced capital allocation strategy, prioritizing investments in its portfolio while consistently returning capital to shareholders. Year-to-date through early May, $500 million in share repurchases have been executed, following over $300 million in Q4. The full-year EPS guide assumes an additional $100 million in repurchases, with flexibility to allocate all free cash flow to further repurchases if attractive.

    05

    Innovation and Product Development

    Recent innovations include a new line of enterprise mobile computers and wearables with embedded RFID and optimized AI processing capabilities. Additionally, a new frontline AI picture proof of delivery capability has been selected by a global logistics customer, driving faster delivery times and improving consumer experience. These innovations demonstrate alignment with customer needs and are designed to drive both growth and differentiation.

    06

    Elo Touch Acquisition Progress

    The Elo Touch acquisition is performing in line with expectations, contributing solid profitable growth and expanding Zebra's strategic position in the connected frontline segment. Synergies in both revenue and cost are being realized, and the portfolio is expanding into new geographies, with first wins reported in India.

    AI-generated summary of the company’s earnings call. Not investment advice.