ZBRA - Earnings call transcript Q1 2018 | Zebra Technologies Corporation

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Operator

Good morning, everyone, and welcome to the Q1 2018 Zebra Technologies Earnings Release Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Mr. of Please President ahead. Vice Steele, Investor go Relations Mike

Michael A. Steele

us. you Good thank joining morning and for

Before need of could statements materially. begin, the These on and to we statements number I safe is Private this the statements of that uncertainties Exchange discussion the that a company's Act call A made Securities uncertainties certain reflect Litigation are include of differ provisions factors Commission. to the forward-looking to cause factors harbor subject which events results contained Reform subject future company's to are of inform concerning XXXX. the you expectations actual and filings these detailed Securities and in with current and

non-GAAP performance. describe financial measures During call, this as to business we will reference we make

find remarks Financial and Executive the this end earnings GAAP results to You of presentation first priorities. progress Anders will of prepared quarter Chief will our from our discuss XXXX Gustafsson, with at by Anders non-GAAP second on Officer; will Zebra's press and can detail on quarter XXXX discussing financials our Olivier in the outlook. reconciliations Leonetti, include our Officer. provide more Olivier Chief and release This slide presentation. then conclude highlights. today's our full-year begin made strategic Anders will and

and our year. is there us one investors.zebra.com website indicated, Following basis. This the otherwise currency take we as on your and being will join to of least for prepared be presentation, at on simulcast our questions. are will unless year-over-year remarks, Joe throughout constant Sales, Heel, President our sales Senior presentation archived at Global a Also, this growth Vice references

to Now, Anders. over call we'll turn the

Anders Gustafsson

morning, you everyone, you, and us. thank Thank Mike. joining for Good

driven were results across strong business. by quarter performance the first Our

currency from the margin XXX for net XX.X%, of can year. to on constant EPS the a $XXX diluted growth a or flow XX% QX we start of of X, prior cash operations. non-GAAP reported you see $X.XX, on an increase sales basis, adjusted from the and million an great of slide XX% improvement, quarter, year-over-year XX% point As basis year EBITDA a was

executed global in environment. a well Our team macroeconomic solid

leadership industry all particularly in strong America. achieved with solutions. market We EMEA driving our for demand across Our regions, and is performance growth broad-based North robust

saw also computing, We to led our which we our in continued portfolio, solid exceptional devices performance by growth enhance and and software mobile with printing Android-powered features. smarter have security across

on share. profit achieve a us Our structure lean expand and significantly operational to margins focus per earnings record discipline and enabled cost a

backlog the results financial to Olivier flow. outlook. QX and I'll over outlook gives order and confidence the that, XXXX now Our of provide and to full-year our us call raise margin revised strong details the solid review to to cash results our sales, turn for With free our

Olivier Leonetti

Anders. you, Thank

us Let walk begin the P&L. through the with

on can sales each you in sales across X.X% Enterprise X, robust of Visibility all first our four see growth mobile increased by by As in Mobility computing. segment segments in & regions. results grew the solid slide quarter, XX.X%, and demand reporting led driven

continued driven higher, our X.X%, printing. growth increased by were & Sales sales Intelligence Asset strong of Solutions. strength applications segment Services services with Retail Zebra Tracking in and Visibility in

manufacturing strength in computing solid strength sector exceptionally in in XX%, and strong region. products. Sales the devices, as in of the demand the driven growth EMEA America the driven to solid mobile conversion was sales. were regions, our sales retail Android, for with the increased North in growth our channel. to sector, grew X%, Sales X%, and up printer particularly Asia-Pacific computing ongoing well sales Turning sales by to to due broad-based printing throughout by mobile most as

go-to-market compensation by of basis attributable the the to execution, offering. XX% million increased million gross period primarily business business favorable business and increased from and are XXX profit end primarily from segments and higher our product performance. demand sales to increased the market $XX Consolidated mobile improved strong seeing the expenses appreciation in both Latin due year. tailored we nicely and or exceptionally for gross improved mix increased operating margin X%, in in the increased growth prior $XX business prior in products. euro has shift past operating point, Adjusted driven China higher over Our the data on volume. America reflecting been Adjusted computing period, recovering capture incentive sales sales expense

from XXXX sales driven leverage First due growth. margin period. margin was our profitable the approach gross was and higher quarter adjusted This EBITDA operating disciplined XXX to increase by prior point expense higher basis a XX.X%, to on

lower cost interest non-GAAP $X.XX, addition rate expansion, per to diluted the increase EBITDA year-over-year. margin XX% earnings decreased drove or tax and In to share

more interest Turning with now balance $X.X sheet, cash had for than XXXX. on is million end, we variable flow billion debt highlight At the quarter slide which rate to the balance sheet hedged and $XXX on X. rate swaps of of

a paid we cash we would in a strong of swaps $XXX In principal debt notional results. in our effective As fixed swap $X.X $XX Due timing excluded million. billion. realized December QX, shows in free path deleveraging. to we of Slide locked of that become floating rate late non-cash from $XX for we have in million XXXX, reminder, which incremental of $XX to value this down to of transaction, an the XXXX, gain overall financial favorable million X by an million our flow supported QX, non-GAAP

EBITDA of targeting X.X quarter. and We're Continued strong growth of quarter. of net by achieve end as a third the debt first achieve the expect range between to and which we to X a down pay enabled times, EBITDA the debt-to-adjusted us times X.X ratio

foreign entering from currency sales impact to turn approximately and expect point an another XXXX between second us to had Let be We X. outlook translation. on X% XX%, second our which and percentage quarter quarter we net slide growth strong the X assumes favorable backlog

in increase period, primarily to prior quarter range XX.X% XX%, to EBITDA due Second adjusted is an higher of slightly the expense $X.XX leverage. the to operating EPS is margin margin $X.XX. and to be expected XXXX and gross from diluted expected be Non-GAAP between

we For X% compared the This to as currency favorable expect X%. between operating an year. gross foreign Full-year approximately higher and growth adjusted expense are X-percentage the EBITDA be full sales impact net includes from now XXXX our raising is XX% expected translation. point prior and outlook anticipated to margin to and assumes year, and now leverage margin be

EBITDA. expect $XXX full-year flow. the now of we free primarily expected increase For is to million This higher XXXX, due to cash exceed

improve grow the we're as be of we business. cash cycle, Additionally, use although cash assuming capital will conversion aim our to we that a working

expense. full-year priorities. made You that, turn slide other modest modeling on to for and that back XXXX our Note can assumptions call the X. to stock-based will our see to compensation we interest adjustments Anders strategic discuss on I With have progress assumptions

Anders Gustafsson

Olivier. you, Thank

the of improved made first quarter the and We progress for are in outlook year. the pleased XXXX with our

see leadership on you drive As priorities on and shareholder slide key build XX, our focused remain industry our value. to upon we

we leadership and are our our partners. the strong innovation, with extending and First, in unmatched relationships core through scale customers business

software recently solid market in our that driving with us our direct resonating are utilities are Our Ultra-Rugged product to the and in customers, and and the scanners include and now RFID printers, offerings our the our growth have which industry's latest expand with Enterprise TCXX computers, both our across families data mobile mobile advanced applications core been relationships and most enabled equipped Several TCXX our of security our have and and channel. tools. well devices Android

are strength leverage growth on focused emerging such attractive driving are in Zebra's Services. including underpenetrated as opportunities evaluate areas continually that where supplies, Visibility in we we well in as adjacencies markets our specialty core. We Second, our as near

marketplace. knowledge leveraging workflows technology vision and to Third, trends. capitalizing or makes on is our we our deep solutions vision in are Enterprise Intelligence of unique Zebra's advancing our EAI Asset and integral EAI by the key

worker Our connected aspiration be and visible, to asset enable is frontline utilized. optimally every and to

Additionally, Zebra's cash structure. optimizing we capital flexibility to flow increasing strength our continue financial and enhance and by

soon scale our of to investment ability customers deliver solutions of frontline we few unique we global to us I slide competitive those spend scope expect in our Zebra's our size to As including Zebra. are highlight progress to a serve to are to key We choosing and strategic the industry-leading relationships in the on on breadth and net and edge dedicate a are made customer and enterprise value our debt offer performance of proposition reach allows demanding. and moments customers this development, operations, tremendous more Olivia we the area target. business. the portfolio, our the advantages. The resources to customers create have like would globally why needed market our product mentioned, leverage to XX achieve a

frontline our create in a it that track of users and particular design culture. and tailor-made are workflows. record embedded purpose-driven solutions in have is innovation for their products We with We

reliable, rugged have security leading Our and through to They their scalable portfolio and platform. and easily integrated also intuitive a lifecycle. products are with fully other products are create Zebra by enterprise-grade Zebra to of and supported solutions use

best on markets in solutions these work. our more provide experts their elaborate this understand landscape are the customers vertical markets in I'll do the business We We a serve. we and minute. in to necessary the enable to

This implementing growth own consists integrators, role stronger software a all Lastly, distributors, sales the drive who enabling capabilities, us ever service XX,XXX more providers augments and our users our is partner of than in more partners, ecosystem serve vendors and global play through various specialized independent channel. critical end and than solutions. ecosystem to our

seen increases our sharp We portfolio. product selling have entire in partners

vertical year, enhance introduce XX% one new majority a with our signed volume. X,XXX the marketplace lives. edge. selling are partner summer, brand new program. will service, of verticals. This we we by highlight past the has for workflows the highlights resellers perform XX which primary productivity, our and customers improve on better, of differentiation to sales understanding serve, we most our the of and core customer in customers positioning, number each enable why than we more has which Ultimately, Zebra comply help partners and currently gain our further to these markets technology save in performance Slide regulations that to vast an Enterprise will account operational Over increased the our even of Zebra often have Zebra's chosen intimate

over is XXXX, accelerating help Through us need curve of their to to more customers pace successfully that in XXXX, more solutions of XX% by an and the efficiently budgets points. next intend supply of retailers ahead nurses devices bedside analytics businesses chain Zebra of to will we The of through Logistics type points. their enables IT Transportation our provides. physicians change for automation, by field operate mobile And an increase XX% planning than years. the challenges operations are increase factories XXXX. the navigate and at fully the of the our reinvent & XX that their XX% research, three expect are than in more invest and of sensors that connected use XX of stay estimate business. XX% expertise through Our of and to increasing manufacturers Mobility

the expand at showcased and Atlanta, for Let April, & Transportation mobility. MODEX In on tradeshow field me in warehouse further Logistics. the we solutions

chain more have an progress supply towards their successfully visibility understand of supply solutions are to are well customers and with workflows Our chain customers changes have assets, order people, operational execute these consumer connected superior dramatic flawlessly. partners. that our throughout smarter, criteria, We and and maximize and must customers and to to actions. of the inventory a this, decisions achieve driving In their resonated informed on-demand industry. complex our Because deliver economy in our very looking make efficiency, on needs

to team been the They Android-powered among benefits. investment TCXX and us purchased optimizing specialist strong significant leading the the a translating a for information thank I'll full erase their recently the In navigation, quarter success back want made the device improve to it Mike. call stories strong last-mile European drivers our to closing, year. results. express a the mobile tools serve example, markets experience. process. their hand on into delivery A enabling applications system, other to There the and suite vertical is that of Zebra in and has we of to computers similar improve sales are end outlook in company's And arm with for user to each delivery our to connectivity customized many centralized driving I For parcel delivery that, has with loaded

Michael A. Steele

Q&A. as to and limit We We'll Thanks, Anders. follow-up question call now the that you open yourself one as that many can you possible. so we get ask of to to

Operator

Ricchiuti our And your we question-and-answer from session. Ladies Needham and from today will Jim gentlemen, comes with at begin this go ahead first & the quarter Please time, question. Company.

James Ricchiuti

good Thank you, morning.

computing. be be very quarters you And more So, in just this just bit you've in upgrade little an drivers could this upgrade of to mobile Thanks. business. But clearly, of than where terms that of strong a fueling color I in if cycle. appears some consecutive give wonder But results us other appears that several there's we the cycle. shown demand might are

Anders Gustafsson

into portfolio to sure our deep take to data the very a workflows making categories the customers' in nice reapply we've across that have and First, lines that be I'd just introduced those innovation able it drove the growth put in largely understanding that business did like we friction product the and We of reduce have. and all think we from workflows. it I that that context, into those workflows And to of had. we all we the through

have strong board. we strong very I a and across value So, think, proposition the a portfolio

computing, was the quarter, in driven and channel. revenue America, Specifically quarter. in obviously strong America. strength see standout had performance We North started a that the mobile to now by to EMEA great Latin particularly the We

our you it large direct deals. If was few a years remember back, mostly

into this the channel the portfolio. expanded we've of Now, rest

seeing a depth The smaller and breadth portfolio our I differentiator. of more deals. run-rate mid-sized think is So, we're and great

We innovating, of largest far of around broadest say, emphasis a And Android by also particularly on on devices. in device. anybody or the have portfolio industry, we're the lot putting the of top

services growth or through manageability like different DNA So a moment. our the suite. the a to and of is the innovations key with with Mobility types lot applications at software Android LifeGuard of our of number security OBS But service,

share well We for market XX% over have Android.

So very there. we've well executed

think about migration. I continued we the good in Android feel momentum the

drivers out, at if another out XG upgraded. some there's the in needs legacy further look be that we have Windows down is North new I little – going is And million cellular bit a XXXX. you think that devices turned America service least in that growth to estimate XX Our the to in there specifically, be

And suppliers, to be driver which for to point our so will that will us. new all be LTE all a at need other devices, XG or Zebra devices XG or maybe also, growth upgraded

James Ricchiuti

give out the logistics, verticals? terms Anders, stand you any there any globally on color or is retail, geographically could industrial? e-commerce, of in Did either one just area

Anders Gustafsson

verticals. Yeah again, we had four a our strong performance main across

to have much on foundational more executing business our their become strategic solutions customers Our strategies. and

perceived a bit be of tactical to productivity maybe tended a we tool. So historically as more

strategies a frontline QX actions translate largest market improvements service was and you the our is drive provide data sales what really many employees. our as know. workflows think Retail efficiencies, today, visibility e-commerce that us that's part customers performance there get also. vertical customer real able into greater much of Retail and might can omni-channel to an or drive integral we help into think to drive being I of be. of edge execute a if in us as that them really We very on or performance, for their strong their – here

particularly talked on a growth part They're to and the we that. shift of on growing, see. part they is the critical kind think to and a capitalizing to as of done I we study couple retail continues that opportunity capabilities build of validate see I think retailers. those brick-and-mortar transforming quarters us had retail I types we having the doing that that think a of the ago, and about of But

solutions very – ensure some with starting to them that traction in solutions our the take seeing But been customers. we've – executing are working get think also retail show I retail. for we are So, have well right we to on new

think strategy and SmartLens, our scanners, (XX:XX) our to the one, parts essential be scenic scanners flatbed an are all I Personal out bioptic building also. will RFID omni-channel those Shopper, So

James Ricchiuti

Thank you.

Operator

Coster your question next with from question. comes Our Please from Paul JPMorgan. go ahead

Paul J. Chung

Thanks Great. for This is my Paul Hi. Thanks. Chung Coster. for on question. talking

is question gross first So on margins.

You scale of benefits had pre-MSI margins quarter, in and like kind this range. some looked FX the they're moving

a on here? think should these them at sustainable term they are is, question long change So and how levels about structural we

Olivier Leonetti

multiple them. is QX. margin So a gross variables, strong of good, company margin of right. We had one based rate is The upon you're the very G&A in

We have on the particularly been quarters. gross over margin, two last focusing

we this Our our would mix and initiatives improvement in to also doubling improvement with would I quarter standpoint. that very also area channel, of product well sevices XX mention explained intensity We last, factors saw paid quarter-on-quarter. a of margin. We our had in has playing few Zebra complete, behind Retail about benefits highlight, And played initiative point basis Also, FX. in be out. the been maybe and rate so operational from level also the margin some the A we vertical had COGS from discipline. Solution was business out. our strong I

series see levers, answer So not my from you one particular. of a in

we to question the that believe improve year-over-year. to margin ability to we sustainability, on Now your answer have

implying is guide Our this.

However, provided. we we and leverage guide the we balanced want prudent margin P&L. improvement see have, the in I repeat to remain it, again, and But we that hence

Paul J. Chung

on then, question guidance. the Great. my Thanks. is year XXXX fiscal And second

kind a similar So, is and Thank a to to XQ it possibly of, safe in then weaker given the you. years bump tough assume, XQ previous sequential comp?

Olivier Leonetti

So, a year indeed X% the basis. grow to for X% to on are we nominal at planning

This guide the for translate the X at a the as into This as run in the business. going this our the view, visibility second We're not, We point, this although we a orders prudent not by investing generation. point. is based half have large year upon at rate is profile, growth many we're and relying to view a mention percentage low-single-digit – on point of We're have I year. about growth. balanced increased for last

higher this was if to nimble yeah. adapt and if needed demand higher to be demand happen, will we Now, to able

Paul J. Chung

quarter. Great Thanks. Great.

Olivier Leonetti

you. Thank

Anders Gustafsson

Thanks.

Operator

with comes go from question. Our Brian Blair. William ahead from Drab question Please your next

Brian P. Drab

a like the to that visibility Congratulations a second the to year. maybe looks to third take Olivier, if for the – be you'd taking you have on expect quarter the would start of that unusual. can for guidance quarter, for guidance Is where step-down? you from I half sequential would wanted step guess a on – second down really great elaborate Thanks even – the the to the Hi. I we have implied much the questions. sequential the that do It year. just

Olivier Leonetti

point. That's a fair

going the view the today to have if stage. And And for we're is decreasing be We this go what is we'd way prepared this visibility guide to most at to those. now. push is into to to we compete it's balanced indicated, we Run and of materialize, stage good with rate we a QX. But the deals guide at this visibility into large And the half as to have. second as visibility appropriate be the think year. going were fulfill

Anders Gustafsson

to If from numbers or you has at tends at bit Europe QX. look QX. vacation historically, Europe. it's changing our But be to slightly step usually times compared back as there's flat in a down of more a modestly QX time

Olivier Leonetti

There – in the as me another fundamentally reflected in macroeconomic well end nothing in color. was events either or put the Let market different the guide.

Brian P. Drab

second my can question period, I in Okay. quarter. XXXX. couple time years, third is understand guidance understand you we're X% up that a bit I the but XXXX, XXX dynamics about Thanks. longer I second bit and over X% time balance quarter result longer – guidance I in outstanding in quarter to the to why of last there over could better just guess, And quarter talk of quarter different want expect sequentially. year? Can little the XXX I'm we I about on EBITDA second the be more looking ask the should XX.X% first I the know periods if I'm down third don't up for the a margin just though? the talking little at the in points in for weakness – the guess just a margin – basis

Olivier Leonetti

course. Of

to point the for good at to EBITDA guide year-on-year gross directionally be an OpEx look year-on-year. will up and it's margin you to margin, and up a expect by be about if improvement So be we year-on-year

guide look at at point XX% a you about If of translate would about into the EBITDA margin full the year, a gain.

to said a have way at at not the believe we're calls, to we it's P&L. We're this Now, and in we to that other company balanced looking stage, that, going the that but but as to stop performance, want manage short-term performance. the is also QX you good We performance. invest paying see a return generate out long-term the on in and this and in business

of that's the we want So P&L. way the to the management approach

Brian P. Drab

the didn't down Do sequentially, a you a lower work though but for I'm down quarter really in sequentially. backlog that's – you which margin I'm sorry, it's addressed big sure have and step I not step the second big that,

Olivier Leonetti

down It sequentially. is step a

Zebra at have generated elements One, Solution, two, will obviously QX. this. You margin – basis one. point XX is business, of is that a I not point two which about look in Retail on seasonal And point will QX the number year-on-year, sequentially in and number present be

So that would of be the bridge. part

Brian P. Drab

appreciate you. Okay. more follow-up later. it. I'll Thank I

Olivier Leonetti

Thank you.

Operator

question. Our go with Jason next your Lakes question ahead from comes from Review. Great Rodgers Please

Jason A. Rodgers

XX there customers? The of how devices it estimate devices to – and is those Yes. possible belong mentioned, large that still small smaller medium versus million you much out to

Anders Gustafsson

I'll start have see some here also. insights and might Joe if I'll

those it's of are. I real for a – where to the us mix detailed of to think view have hard

expect said, have they devices be ones could adopt see very some the T&L are largest that have of Android. large, You But that companies couple would years. the that earliest still that and next to certainly are in being that upgraded I companies generally frankly the would on (XX:XX) the been Windows we working

a accounts So, between more but you as mix into smaller dig it's you'd I certainly that pile. the them, into get think

Joachim Heel

Yeah. echo I would that.

who of tend the partners seeing start and be adoption channel customers Android user our we're their that have in is customers one the the the be smaller part channel of for adoption, we think in conversion I indicator the that slower channel smaller. the days to likely but strong this of are was devices in to to Android and now, with end majority driving early remaining conversion

it. indicator one that's So of

highest where again, should have conversion Android, of look have by The if to say, many manufacturers, vertical XX smaller remaining the has the penetration of and we devices is of to that – a portion from. in that's big other come expect vertical, not the XX million yet million, still we those I and Windows made we additional that the or manufacturing, legacy indicator is

Jason A. Rodgers

margin on profile higher is deals smaller the larger, than And Zebra for correct? the

Anders Gustafsson

It largest Yeah. deals. deal when very buyers with tends there's to of and negotiations that talk in our they a be direct the power when customers, they we obviously lot sophisticated have large about such

Our around more run list be business to rate-oriented tends our much pricing. executed more

Jason A. Rodgers

just in. And then finally, I one could if more squeeze

Just on the seeing wondering raw material way if you're material anything costs? of higher

Anders Gustafsson

So, memory probably that's with batteries. now. last or started something nine It we have mid year something seen months and for

new So, is, part we potential we've margin qualify because sure people with see best of that extended. price. make the we need lead closely a working forward also would partners hard why the so forecast negotiating think, the supply very have in sure offset fairly price possible can have have make secured experience make supplies next industries. by increase and to pricing we closely we we we that in But sure adequate quarters the have any that are our feel sure now times and to vendors we get to, good going this to plans we're our place get make with make Olivier – supply talked technology right more put the when and gross that's a emphasis in working sure we quarter the And suppliers we to certainly from about obviously right been we we have on I to and for or chain. for But improvement much broad-based

Jason A. Rodgers

you. Thank

Operator

Our comes your question. ahead with question Eastman from Richard from Baird. go Please next

Richard Eastman

the And go Yes. provide Good mean, that your of morning. from Could Anders, other? to of retail slanting that SmartLens composition in-store is of you're the around the what directionally, best-performing business? comments your little was just a – with just also, that kind fulfillment Is basically computing more or into retail. color where has with you back and if talk you I things it I the mobile your business there bit or towards market, Maybe piece warehouse leading vertical of take still retail? are then earlier like grown products faster? where

Anders Gustafsson

start Yeah. we can started back more then kind more think inventory-type applications color of, we've off the the be also, And with doing – of further I store. that. here the I'll in in, yeah, historically, but migrated to store some and Joe much provide now

to has sure retailers of one if lot it So sales looking up have to merchandise all associates use they're carrying tools if neighboring can't devices be for, work our helpful the in questions as now and that the and their a for, can the they're the of piece many out engage and it store. answer other they ring them that store goes of associates even with large to and are looking time make find what ship sales the can from somebody then they engage customers, with sale see understand them, them,

the So things great how so and in around other store. example do in price inventory of also checking now our that using But devices customers our store are and will they forth. checking the a be

So across say I retail would the products of retail the the our of the prevalent are store and warehouse, back store. front the

MCXXXX there. the to the see TCXX, products on more mobile come wearables probably out Android now. other products, mobile lot Series the you side, the you'll TCXX mainstay if computing devices, Our warehouse get and side the are and But

in the printing retail, lot in We the for back both of markdowns. store have of a and in the front price of stores

bag ways up store, you some online, all consumer. and buy got If to those bags pick in to in you the do you with e-commerce actual associate label the

we in the great new scanners our scanners see which for of our some new And a of we largest also. that's think for applications flatbed – And also as course, doing well are accounts. driver So very have that printers. for growth us

technologies retail that utilize last guess I for look we've if vast forward, looked does forward, comment, our majority are some retail. products. And really of newer the there So the you developed also are

one of all to So the like we frictionless way up example SmartLens, would that take you that checkout kind technologies. can be

Joachim Heel

– two Maybe Okay. one additional thought.

new As part is, Anders experience that you products mortar innovative front of the of excited as a and being used is back ways. of hotbed where of store, we're about are e-commerce mentioned and the and blurring and about think omni-channel the our retail store in is other transforming brick and earlier, and

the For trunk a find deliver our into as store and them type of a at introduce being products collect car well then or of the gather both special schemes, to retailers the example, click products in you'll used counter. as as

are Our and then shopping list prepare that journey and their shopping experience check customers the shopping while then, to retrieve store, a on shopping PSS out. with a interact products in being start list, used they're online,

So, the technologies are and the innovative the of to where really excited lines in products between store and used of those we're blur the front ways are examples the about those. and back

Richard Eastman

for And Understood. quick also, question then Olivier. a

of did it gross line? that just look basis the basis gross just points just, break just So, at margin, you you? out margin XXX how FX, points, FX improvement, how benefited curious, – adjusted If improvement the consolidated I'm many FX was just benefit basis segmenting points FX, what in in gross could you margin,

Olivier Leonetti

out So, year-on-year was single But of was wouldn't due margin series wouldn't to driver in single the I improvement a factors. a in was particular. was one. Operational particular. I Service one FX a margin improvement and discipline one driver.

improvement. broad-based its think I

Richard Eastman

just just of mean, was follow-up out I But standpoint reoccur, does question. as more much was others Thank thought the I the you. the does from the segment want FX. can what seem I or to trying not that behind well. – to sustainable. I Just

Operator

ahead Stanley. with comes Please your Morgan Faucette from from James go question. question next Our

James E. Faucette

Great. you those is, first have my a what's color happening while stocking Thank you dollar a or in mean, much. other forward there's a It growth like asked. correct. more see that little that that you And happening Europe? make you been of follow-up math looks a the was or XX% – was just guess what Had little I that questions was couple organic thereabouts, number things very I think to is bit on can that – is yeah, my Europe? if talk in any do can or like of anomalous bit on about weak going

Anders Gustafsson

was so great were strong. sub-regions. across led computing broad-based and lot a but so today? a faster I the execution. Europe the would to why we all saw strong, Europe growing is very From retail down strength that Yeah. right. much Mobile – of But T&L virtually put charge,

gotten kind programs of well any would maybe also. years if partners in our couple some to it, the region program. recruiting a difficult channel going into our anomaly had underinvested more new to very of have deals say of very we good shape our there's a We I on they economic we're in think issues. Europe technologies be through And were the in when lot executed and larger I

be but some there seen so, we that catch-up that. could And case, of in any evidence haven't really

kind Europe want think So, feel they of investments the it good in and have budgets been feels and compete. I coming and just they're they back confidence in Europe – that and to community business like there's feels they approved

James E. Faucette

you enhance of product kind Just should sense And to those does think a could we get et how how you still then sheet, more uses should think for targeted it just should cetera, debt more acquisitions, and – pay uses that make sense or on about down, your at down balance levels debt particularly look as to continue as levels. of come debt the start to we primarily for hit of portfolio? the we Great. capital about cashes to anticipate trying cash

Olivier Leonetti

Right.

now So, year. leverage mid-year options going deliver this on our those. nevertheless, to to by and has that at the in have on We're shareholders. to executed be to invest of opportunities look by After deploy compete to have ratio time our capital. within that, believe been our cash ability for free end business and focusing period we're very markets excited our We range going of very well. pay-down team believe a this we're debt return generation We many we flow for attractive the we and to

will So focus an where would element investing in the on. business we be

James E. Faucette

very Great. Thank much. you

Operator

question ahead our Imperial question. Please from with today Jeff comes from And Kessler final your Capital. go

Jeffrey Ted Kessler

up to new ago began and year you ability better to what year, Thank how set integrate – you. a Savanna a they what such affect – improvements that platform a margin? describe you'd Can as half improvements your began the gain

Anders Gustafsson

broader I about about picture EAI, talk of you the kind think... if first, So,

Jeffrey Ted Kessler

Yeah.

Anders Gustafsson

a time to friction is able our operations. to us, devices, it from them some to of these to part and is other is of that platform employees enabling enable that's insights work insights in more generating stream and very and and so to northbound be critical with is, devices fixed where provide information further data something insights hand do it overall what to enable also is mobile ...for about in insights intelligent are greater we that now business workflows some this insights frontline is, and but really it easily helps EAI then It that productivity data can we improve and and about analysis excited data, of that. actionable drawn, the is additional infrastructure that and the that data can how infrastructures actionable Savanna and some processes, help all devices to draw sense this. or assets, from reduce that to analyzed real a be integrate analyzed analytics applications to form is do to off applications information products other

data. We block SmartLens the expose our other also we in way you to of way portfolio. a data, to manage is But to kind a and across foundational Savanna this as internally us So to this building for so us the – OVS in the partners. glue to the Savanna, for is say help the can analyze things provide or use

part done to way is conference partners on big compete help strategy other much we to a our this our some more we show went long ways of I (XX:XX) and in they services partner think, real. great it. much weeks and to had I them our be It and us So and partners can of – further how more our this. engage and is strategy of EAI stage, made partners offer had growth think our EAI couple a a data our the a in abstract, less they that Savanna what up with had show advanced to And understand opportunities for Savanna Europe, back, in what

Jeffrey Ted Kessler

partners, your their is So what of use in for confidence you're already saying of a there larger is level the platform.

Anders Gustafsson

started Yeah. fall, call incubation... We – might remember we the you something Savanna the we in

Olivier Leonetti

adopter... Early

Anders Gustafsson

from and adopter where they would devices and which kind highlighting our more that or of take on give cases then a back analyze it where ...early value-add. in with our to in we program six kind certain five work to us partners way be use data of customers brought could

up very write to gone We're that's and can it X, we partners second XX a expand partners with have think open looking hardened can enough say Savanna have any we now of I now phase it. another before to that of well. that all our applications and we

Joachim Heel

I'll question Maybe for about one right. draw you to connection your margins

Jeffrey Ted Kessler

Okay.

Joachim Heel

Solutions, SmartLens that feature as as like SmartPack customer you than to our are solutions a directly such, the been But problem a is deliver Solutions, the typically solutions are at a relative And Location of the customers great which they that, some such deliver ROI also they process rolled and solve. business a these they of piloting customer. to price that look have a out in our types they we the developing If doing products of in and higher already average that to way for margins, are trying the company. we and that linked us great added with to have commercially

So, our so base do these we accelerate all platform of because which access broaden accessible a solutions. faster these different coming on The when solutions same now these Savanna, to and platform, common have a by to we more on our accelerate that, our is a can solutions then us these way give market we to margins selling partners they reach solutions platform. and they

it for has On and it an double it to as the one development, into the it of both a and get hand, accelerant faster us. sort a cost So for then lowers to benefit, our the market as develop; partners right? platform-based acts

Anders Gustafsson

one last that's is have be will point we access Maybe to. very data the get to hard something

reduced to other center, our things workflows fixed then, workflows, the frontline to we're company IoT it data sitting infrastructure. efficiency, and to the in take able business. the say are an data of those – have I our you knowing our be some in data workflows. you the a customers' with friction combination if that vertical for of customers well, then and mobile we of us, what's And computers of also don't happening positioned really our think well very uniquely other can (XX:XX) capture and printers That's So scanners improve at we call about data

really something with that's very So well our customers. that is resonating

Jeffrey Ted Kessler

Okay. One quick follow-up question.

that may describe where see markets quarter? into describe by – from generalities You've talked have that of of you first can right the obviously, course not have. about product, is is going fourth quarter about the as not pipeline mean, your, the product what talked bit and over you a the pipeline on obviously XXXX, moving but pipeline been vertical nature in Can it the different you you bit leading you now? a I the the little in

Joachim Heel

we're about what a is bit of this maybe Heel seeing. Joe can speaking. talk the little nature So, I

across Just different to of units, in pipeline forward is reiterate, all the the mirrored and in and our also computing, lines scanning, well. we had of success pipeline that that past going business the the our in see across it all broad-based services mobile strong business we've printing including our as business is

see Android the related the have And half we deals not the the have the you see question the presence What last and have to conversion So, large strength do would is we as in their right, we that what compare are is adoption last of many about year, in strong there following. technology if to we a do many year, were done are of as – the had broad-based we second now mid-sized customers to and visibility adoption, large this more channel to customers a there. of but pipeline deals. see we very the and mid-sized many where say we how earlier occurring,

pipeline. in little bit color a on you of the give may that So movement the

Jeffrey Ted Kessler

Okay. you very much. Great. Thank

Anders Gustafsson

Thank you.

Operator

the that call closing Gustafsson gentlemen, and for conference question-and-answer like this over time, session. our to I'd Anders any Ladies will At turn remarks. conclude to

Anders Gustafsson

Yeah. Thank you.

grateful have these our am team community very that have results I Just to We the up, wanted as not a just help in and we to supportive Have serve delivered everyone. valued day, help. great a to industry wrap highly partner mention could best I customers. their without the

Operator

We thank you Ladies today's and do conference gentlemen, concluded. has presentation. for now the attending

You may lines. your now disconnect

Zebra Technologies (ZBRA) 8 May 182018 Q1 Earnings call transcript