ZBRA - Earnings call transcript Q3 2018 | Zebra Technologies Corporation

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Operator

Good day, and welcome to the Third Quarter 2018 Zebra Technologies Earnings Release Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Mike Steele, Vice President of Investor Relations. Please go ahead.

Michael A. Steele

Good morning, and thank you for joining us today.

the need call you subject are Safe provisions I made certain to begin, Reform Harbor this Litigation on forward-looking of we to XXXX. that inform statements the Act Before of Securities Private and are on These assumptions and and expectations are statements current and to subject are risks based uncertainties. and materially differ due in could Commission. factors results discussed filings Exchange our Actual to with the Securities

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

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

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

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

Anders Gustafsson

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

and share exceeded performance sales profits. resulting record exceptional delivered and per across with third all margin the EBITDA team quarter business, outlook. strong Our results our Sales, in earnings

reported across broad-based or Asia-Pacific operations. markets. growth of on non-GAAP all of in diluted see basis; cash from growth North our adjusted from an customer computing, categories XX% nearly growth XX% major flow the margin EPS year; basis EMEA, on continues of increase sales key achieved support $XXX the sales vertical can grew relationships mobile business, improvement; supplies the net We you EBITDA strong We a and of year-over-year channel. services $X.XX, America, our of portfolio, strong, slide prior million as our XXX organic an X, well from a be point XX.X%, we including As Demand our to direct services. capture, and data as each including specialty and printing through double-digit and of product XX%

provider category acquisition leading in Additionally, This the acquisition of quarter, an tablet enterprise and relatively underpenetrated of fast-growing a leading solutions, enterprise-grade closed the third Technologies, positions manufacturer. we on tablet the as Xplore Zebra. us for

been significantly have to expanding investing the We initiatives drive at while growth. and in time sustainable profit our employees same margins

and now leading solid to will review XXXX. our and portfolio of financial into of results opportunities the support order call pipeline to momentum solutions, Our to provide finish to the XXXX turn year outlook. strong discuss strong our I that, With over a backlog and Olivier

Olivier Leonetti

Thank you, Anders.

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

strong in we XX.X%, Enterprise serve. each primary of segments and before the the to quarter, basis of and saw on you sales impacts regions & Mobility across segment by our As on sales solid the vertical markets slide Visibility results XX.X% net led see third an X, We which reporting grew currencies all acquisitions. especially translated XX.X% computing. that in in organic increased mobile demand can

& growth in Intelligence sales solutions. by driven increased solid X.X%, segment printing Asset Tracking

increased particular and categories. most XX% across Sales We in driven capture saw America strength our growth EMEA in strength and printing mobile and with major outperformance was our and regions. e-commerce, as Turning logistics. product retail as geographies in computing, to well all data XX%, transportation North by sales categories.

period, up were improvement year. recovered expenses impacts. in healthcare. by demand see strong Sales Adjusted mix and Brazil the as India All transportation increased primarily lower as strength. execution, to in continued points, XX% higher this and performance We expense prior-year $XX growth expense our relatively last and the Australia, business well exchange strength due operating were and shift to broad-based favorable offset We e-commerce, volume million Adjusted foreign weaknesses primarily of by China partially has grew logistics $XX and adjusted and leverage countries XX margin, grew by compared improved in from gross AIT Asia-Pacific orders. business, saw our in exception particular to sales and retail continue from business especially in points Adjusted a sub-regions uncertainty. strength These due basis in with in exceptional saw reflecting double-digits. go-to-market initiatives. region We gross incentive Latin increased earlier Most with profit election-related or driven basis QX continued America to year. investment increased of operating We increased segment business margin compensation favorable as million XXX factors in printing XX%. higher the growth solutions. X%. the improved currency productivity our large

XXXX margin prior-year margin. was period. increase higher a by This and adjusted XX.X%, EBITDA the driven quarter was operating expense gross from Third point XXX leverage basis

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

the shows as driven quarter this in $XXX and profitability as XXXX increased sheet At on months was operating the of of supported our year, integration X. costs. free primarily highlights to sheet. by Slide $X.X debt flow flow compared $XXX first nine acquisition well strong of and now balance as the of less cash debt down slide In million cash paid X balance financial by we to $XXX million. months had end, deleveraging. of principal, flow free the million on we Turning increase to first nine path The cash billion

X our of and pay-down times. X.X QX, which debt ratio end to is achieve the growth net-debt-to-adjusted-EBITDA between a times of strong within and Continued now EBITDA us of range well times enabled X.X as targeted

Let demand portfolio leading us a X. to strong of outlook on our solutions. order slide the our solid end and fourth for We backlog quarter entered turn with market

XXXX X% and accessories currency diluted leverage. have QX tariffs been the point of Fourth XX%, from that approximately foreign compared assumes to assumes gross source acquisition as operating approximately components the We X margin which XX%, net higher of we that in expect Xplore this slightly from neutral assumes prior enacted an to Non-GAAP and year be Note Technologies positive impact XXXX adjusted to sales be products, be from outlook to-date impact China. quarter percentage on translation. expected is growth a between is to the expected higher to that impact and EBITDA which margin $X.XX $X. range from QX expense modest a EPS and certain

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

that, updated year the to X. on assumptions strategic priorities. will on With I other full back see modeling call to Anders slide XXXX can You turn discuss progress our

Anders Gustafsson

Thank you, Olivier.

made very we on We the finish are we track year. and quarter, the for with are third in pleased progress strong to a the

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

strong strong mobile solid computers growth and to the been applications, voice of our RFID competition products unmatched solutions. our areas relationships our software, Android continue broad-based and Several data saw printers through solutions. outpace include family demand partners. and We driving and we with scale for innovation, that customers and mobile and communications First, our have tabletop

a in We We business differentiate had have computer portfolio quarter, core our market including launches our our of invest further offering. mobile popular meaningful continue third gained across the to and we categories share the across product of record generation several solutions to year, next this the and solutions. Android in number

implement omni-channel help as shopping and demand from We to see continue their fulfillment them to robust retailers, we strategies.

experienced computer customers, transportation the well demand We logistics and increasing also as as adoption have mobile rate as Android from manufacturing accelerates.

we into advance focused provider. competitive on driving entry leverage our operationalize markets markets in as new that existing are scale attractive us we are a Second, growth underpenetrated where to and plan We categories where advantages. we solutions can

serve In tablet We into acquired markets, gas. enterprise government, third markets gain lineup for our inorganic expect Xplore traction these enhances which we quarter, new Technologies, markets investments. the complete Xplore's product a first and provides portfolio. and oil organic four vertical and Representing through nearly offerings safety, utilities significantly our and inroads both acquisition in to provide years, public including Zebra in existing and

are advancing visible, every be Asset to we enable connected and vision Third, Enterprise worker our and Intelligence frontline to utilized. optimally asset

technology We our this doing megatrends, such workflows capitalizing knowledge leveraging smart proliferation and computing, key of on cloud the as mobility of are devices. and deep by

application Connect of software one I this solution is life. elaborate on Our to will bringing EAI example in a minute. more Workforce

increasing by optimizing Zebra's strength and enhanced structure. financial flexibility have our we Lastly, cash capital flow and

to free our targeted within our well mentioned, record levels. and Olivier have for leverage we flow increased expectation we As are debt range, cash

turning Now, Zebra digital provides a slide enterprise. XX. to entire of view the

infrastructures products friction reduced and information location into result in insight business improved products sends The operational smart status, assets, to information best action. The is workflows, determine and real-time analyzed and is then Our the in productivity condition including greater operations. and about possible processes.

behind data-driven on actions by basis, of performance Our focuses what's platform, powers overall an data our that a component on our approach edge our the and a This optimized adding real-time offering. intelligence intelligence to knowing Savanna, outcomes frontline. is platform and analyzing the be cloud-based solutions. happening essential can

of partners. this in with collaborating area capabilities number our in investing are expanded and an We

capturing serve; than to help of XX operations which data-powered We marketplace. and of manufacturing, maximize are grew our double-digits vertical value we customers reality as digitize data relevant many customers' systems that record. to of that their and their today's reflect the markets operations, in in stay healthcare, as critical primary them QX. increasing and the of information. well better retail e-commerce, for at businesses transportation this highlights Slide environments workflows all across amounts create compete smart intend logistics our edge and We effectively to industries the transform help and we We traditional

each cases know our need solutions. In Our the equipment, people of are evolving supply enterprise knowledge to in customers across operational key are Across end-to-end chain. demands. use to these with real-time verticals, and help intimate their reason our where materials address workflows verticals is seek of the manufacturing, customers in increasing

providers while In in other have safety plant conditions care patient streamlined reducing being As implementing as that the workflows, Immediate been to our productivity. locationing area their floor increasing is solutions and patient for and a Zebra New optimum proof center medical RFID vital we care. solutions members patient tasks manual point, drive partner team among their A to allow automotive industry, chose have healthcare, communication the initiative. in England monitor mobile.

by comply Our workflow errors solution with XX%. enabled medication them reduce regulations dosage and to scanning

more by cost trace organizations their effective ways the most and track and is are use Labor optimizing We cases operating business, patient are increased are In use explore also well cases. healthcare us driving working we improving significant with known care. while workflows. hospitals, proof-of-delivery collaboration manage the and resources to for and expanding logistics transportation to limited clinical in and

Our are A maximize find immediate actions meet logistics key the to been Transportation e-commerce to demands the evolving factor at solutions includes provide visibility offerings supply providers and information the that business double-digits have real-time translate business. to workers their into of enough in real-time small the challenged orders. grow of implementing on parcel chain and increasing point to every assets delivery and that that trillion drive continues effectiveness. $X

retail, a due solutions recently, that experience. historically transformative execution In solutions we our effectiveness omni-channel including that at enhance inaccurate missed such this overall been challenges routing productivity fulfillment due number More as and management. related have other the to Billions of of challenge been launching cargo to loading floor sales the and address in-store complex driving sale have dollars inventory been and and through factors. software used elevating lost innovative are have increasingly solutions to pilots inventory optimize to product activities. address We of point models,

solutions real-time shrinkage. to significantly accuracy can providing and Our sales nearly meaningful increase reduced inventory uplift XXX%,

We pleased mobile various fulfills voice, a business are communications. their large objective and by particularly their which applications, of a consolidating global employee retailer, with recent win

out rolling months. across our base providing next are several enterprise their mobile a computers over the streamlined TCXX solution includes We which store

Mike. our replacing of their associates hand to voice enterprise seamlessly. are will computers software mobile includes the the and data to I'll communications increasingly this our Store also are trend encouraging device. to empowered Connect marry devices, onto tasks few enable back have business challenges. to with Workforce This seen multiple We over most In with summary, ROI. retailer Our all that, the to now we workflow effective one call the that to and perform consumer-grade phones customers solve helping highest their be partner customers an With strategy, enable their utilizing application past solutions complex we years. solution

Michael A. Steele

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

Operator

comes Company. question Ricchiuti Please with ahead. Needham first go Jim Our from &

James Ricchiuti

with Thank a increasingly seeing I'm conversations you might you. more long as little tie automation in into talk Good meaningful and stores, about could as see newer potentially their might customers wondering more increased some be you logistics. your articles how we contributions bit about think you morning. products if plans? cashier-less and And term questions. these nature, One, having of we're Two as in from the well some retail of they logistics about retailers and when the just

Anders Gustafsson

Yeah.

of But their automation, to of that's part it define automation it. we action minds the data as when go capture, intelligent kind kind robotics. that the we analysis data, automation, to hear the of people automation the the First, of when automates or and decision tend about think –

So, it's a broader, little intelligent more bit focus on more it.

kind a kind analyze, But of it net all is way we problems, the for up natural automate making making us, big to insights infrastructures each is for act, of and of, tasks productive, or stages those. with of the and it's same of deliver – of different do So, a of our our there. business EAI, robots or It EAI workers extension us solve leverages robots them. those that but continuum smart sense, segments; help we execute for productive, to strategy, can critical a customers more infrastructures opportunity. have moving that opportunities using on intelligent automation see more different a the as of and the we having good capabilities the kind smart the, we in But using number humans or

totally like generates with it workflow more at with automatically you And infrastructure, continuum that know it's you It with it, SmartLens. somebody started what's reaches and with execute robot. kind a mobile a inventory they you I'll RFID, They automatically a the So, Or for on and solutions at times SmartLens, is merchandise and used do out in the system Then, or have a the shelves. retailers of order work up be replenish it a some to on threshold, replenish reading barcodes items, workflow. go and of a how automatically that smart but can the human just it. look can to by call start you and by you what that all going us. count right. shelves, real-time computers somewhat automated. purchase But manually now the historically done can certain order our adding or telling manually automate a shelf, on generate newer – have when else on we then taken And out that then

an cameras a activity, I those checkout also think of do there's that lot but frictionless – and that much Cameras telling solve very can can a the another is forth. what cases. sizes so one store. be all a pair this pair can part going be a use of technology So, don't automated of of jeans jeans, way best aren't and different from things, to of

And there. of about are lot big it's that different and we we and we EAI, to of what as that it type So, help have opportunity a for we net-net, the solutions to quite drive spot for see do excited a sweet automation. we kind Zebra of see

James Ricchiuti

see is something to it to contribute out – fiscal XXXX? And opportunity late either you calendar an or revenues beginning incremental looking XXXX late is really this that

Anders Gustafsson

it's this smaller are smaller a a some revenue base, base. good but so but we getting So, from today growth off off

as will not growth expect along. we to predict going that go to try when see kind knee as But continue the do we So, more something and to occur. curve that in our the I'm that nicely. grow more to we to contribute of will

James Ricchiuti

Thanks very much.

Operator

Great ahead. question comes go from next Rodgers our And Please Lakes Jason with Review.

Jason A. Rodgers

talk the EVM play you quarter in the you going to growth, if Obviously, impact fourth computing. very Are expecting could out in Wondering segment. large and of those mobile into next year? strong Yes. some especially about the

Anders Gustafsson

Yeah. broad-based have segments, across product our We markets. had across our we regions, very across products, – all vertical strength across

the very seeing. the value clearly both Mobile is driving we're with that margin chain, the pleased expansions also this I as we're revenue so, And of well think in growth we the performance across strong QX. had was entire well particularly which as some quarter. computing And we're executing

having in quite mobile sales that growth our for in both in are new our quarter Android specifically activities. to our devices in frankly, XXXX. of our onto exceptional to deployments, a strong the of also applications number starting Android was are our but starting some devices that new computing, we're had seeing implementations not and trend – consolidate performance back regions, think, I customers trends many just We're – computers. and computing, replace an We're some mobile double-digit of devices of now a seeing in all original mobile channel So, and there direct first

a, single the computer person, effectiveness take (XX:XX:XX) give in can devices of efficiencies. you would to say, are Wi-Fi device put and have but trying have like somebody they that, to would a greater phone cordless and those less other and mobile – get also onto So, one weight retail, most that on

growth good for So, that driving ways of we us there's of new here. a – see lot

competitive a have for top and us, we the think innovating on breadth of the depth and also and I of materially is portfolio invested advantage our definite device.

patch of easier our And where unprecedented makes visibility can of cybersecurity the tools lot big the is that then, manage key through – devices for computing service devices. and device. the DNA clearly, manageability our it is devices mobile differentiator. growth and deploy and lastly, Mobility gives transition a the here. Android also. to utilities It's life But OVS So, a we of the LifeGuard, that

have we Android for XX to see computing that continued devices we the upgraded. We XX% over well mobile strong about are in for and our Android, market There legacy overall be Windows million still growth are approaching But XX% for market business. are waiting business, too. our potential share in

also. manufacturing Android We beyond retail, transportation, a logistics, lot are starting to good Healthcare devices is accelerating. see doing traction are of

see is going and customers benefit Another lifecycle in Android more – they new that devices. Android on offers old around that value innovation the with There's is Windows the shorter sufficiently somewhat see as that than for refreshing sufficiently little look devices. XXXX, their and And bit look further, North out valuable at down of the for them in to America will turn kind service. a XG if upgrading you

leveraging of there's XG So, overall, XG, see as business. be point they to field mobility have be a Android at about the XG it to reasons upgrade might that so if any lot – excited or (XX:XX:XX) to applications but will we

Jason A. Rodgers

at you in you comps expect the for detail out, sales a to EVM? you would And despite laid as those difficult growth long-term there. just you'll targets the year have next Thank follow-up, that achieve the looking

Anders Gustafsson

to have and many levers position, order and XXXX, we and So, we earlier. organic competitive very are automation business about a always investments of not for talked to in investments profitable providing growth drive very and – We've today. be our driving have maximize that's lot not growth. pull including won't we been just feel we opportunities challenging strong a We XXXX – conviction strong but any ourselves for profitable for outlook a have we We changing. for XXXX a beyond. growth to in growth But our that EI diversified in making

Jason A. Rodgers

you. Thank

Operator

go question Drab next Please from our with William comes ahead. Brian And Blair.

Brian P. Drab

great Good morning. results. the Congrats Hi. on

from Where you million million think transition answer question, where in and quantify did I'm XX – a following you (XX:XX:XX) about sure you maybe – Android about devices that Windows that Just we XX are of there – not can you mentioned in are on comment recent where talk to in terms you if Android? the made. are left

Anders Gustafsson

think mentioned and it let we XX million we also. in Joe first estimated started there – about market. when about We comment talking I Yeah. devices this, was Windows we I'll start, the I'll here on

being upgraded. think old estimated we I as left I we million Windows Windows still said today be to earlier to XX devices new devices, deployed. are upgrade there And be about

So, of pretty the still pool is Windows devices substantial. legacy

of are Android. shorter we think for I to I runway So, of consolidation have new lifecycle new devices that of driving cases pursue. some believe use still also, somewhat And talked we onto applications a about as of and lot a the

Joachim Heel

Yeah. with we we're clearly of add This I now is waves of adopted now have warehousing seeing the multiple up, into the adoption and transition the which But some edge retail the particular are was that Android in Android. most we are product launches manufacturing retailers as we're also Heel. putting T&L is just in thinking Joe where large might that the market. the about of ramping leading spaces which the coincides

need The have second thing verticals a the for will T&L adoption that bigger as occur than to to is tail longer in order transitions adopt. and those there in manufacturing in likely we're that are retail, seeing

example, to rewritten. refreshes then, already we what's to need adding I the that For applications excitement is think And adoption. of original seeing our retail are third, that be

more and you – potential overlay you'll differentiated get three picture you ahead. if we can of still are a in where adoption those So, of the of all curves, particular

Brian P. Drab

you're in just lists? of that on one about why a seeing how And components question, are the manufacturing Okay. base Thanks. where is, otherwise go That's (XX:XX:XX) second just tariffs, incoming – Jabil can a give much tariff really what impact through tariffs. of you then, list percentage that made actually helpful. and your us more just maybe not on and little fall these China on from And granularity

Anders Gustafsson

situation a China. import number a situation other are clearly products of our only Yeah. like But The today. many like dynamic today. we of and fluid – impacted from products Zebra substantial very fraction is tariff companies,

and data some So, other that limits accessories. to products it capture certain

So, for quite XXXX, is the modest. impact

working can on a basically actions up supply when mitigate is year, parts, all a that to working January we or take of lot For with to our working partners XX% taskforce Zebra within that some have tariffs. of assess chain next of group the tariffs impact that's the to cross-functional X group we go possible

So, China, able up of changing supply, of like considering supply changing new China, price doing that in somewhere specs to setting product avoid would mitigate include outside be to certain things. of chains of to outside Also, things them that bringing some to adjustments sources we're impact. some

will actions of or longer for bit this will and chain Some those to a of them good some have immediate plan benefit take attack be and – immediate over so but little we're have like all how moving a supply feel a we it.

Brian P. Drab

Thank very you Okay. much.

Operator

ahead. And next Capital. Please Imperial from our Jeff Kessler question comes with go

Jeffrey Ted Kessler

that into now Thank have not right not see verticals go XXXX floor for in quarters, you driving certain perhaps, product you. than you interested I'm number with certain in the XXXX see that the markets But what to the that in certain you know in that categories, momentum I be one, what the little numbers. XXXX? but – last is, in I'm you're horizontal markets going come see have in might you – that of just and to couple wondering a that different be you'll bit as the vertical driving

Anders Gustafsson

Jeff, versus XXXX? in will what XXXX different be

Jeffrey Ted Kessler

horizontal in capabilities some Both vertical Yes. markets you in of of out there, of also terms too. the that have but terms

Anders Gustafsson

Yeah.

Xplore have on our that of So, thinking lineup. horizontals, now more Technologies the part of the as obviously we product starting as side,

fills up across so portfolio more our I opportunities our and and Generally, we portfolio. very tablet a the, think new addition limited like that main serve great had public It and safety, oil portfolio say, a didn't have very out verticals new strong categories. product it well we forth. we and really gas that's opens before, to government and before

So, a a portfolio and products. to our time, that as has long been it of probably lot we is we feel as new release continue strong for

more So, those are a our, intelligent we that. our say, we of type and we to ramp solutions good And are to EAI also market. feel have edge new from new bringing starting solutions, position

we horizontal customers So, think us how things maybe we're toolbox out perspective, have. can gives there's will growing laggard ways to good for vertical. a been than transition, so. it's see maybe the well-placed. XXXX. and old the had particularly change growing It the faster couple to I manufacturing of The businesses. There's from think a – the we the the them but quarters always devices for of perspective, our larger From has think – I to a it prior in up It's we help a I – manufacturing more it one a year prior been Android talk stepping be go last But could Android. in this vertical faster XXXX or and becoming a from now Windows had improve converting the their opportunities about to

well of We printers and tabletop have launched several they've our some new very like been products received. that are manufacturing particularly aimed new at

there, already. is think, a have perform the it the over continue So, of players But I has will last couple of leading large the way T&L, very industry, and It's well. doing see some very we Android manufacturing to our traditional is years. handheld out also adopted accelerating in devices our Printing new onboard XXXX edge coming expansion Android, see T&L. we to growth from a wearables. more to intelligent and of lot we others type and solutions in roll have

and electronic relatively attractive records us. So, term. But in it's over this. Technology as automated more a well The health us investing some healthcare newer longer market is going – to The be been to us maybe, those And which for bigger the as connectivity about vertical there. vertical generally us. expect for leader talked there mobility the adopted, for fastest in for underpenetrated I other has to growing speaking. a very of be still not workflows. the I it catalyst are technology nicely becoming help for a But catalysts and is thought it positions last,

started all verticals And quality a for across very off is our healthcare, improve big to of focus on healthcare is ability driving geographic care the to proposition in a value efficiencies. from help – Our perspective, tends our deal – in us. But and Middle for TCXX much of see healthcare. we're in we've Australia, world, so our healthcare UK, in parts of also devices seeing grow the U.S. like – purpose-built China, the it forth. a for number we the And East But other invested

have We scanner. healthcare a DSXXXX

printers have for We healthcare.

a have portfolio we also. strong So, there

Jeffrey Ted Kessler

fact has from a essentially, have lead that have My much bring Which for it's how that Thank business vertical market have most that, you something vertical in it's is for them assuming the opportunity from the gotten product how Android cuts mismanagement – product. product your on benefited second vertical a different more you. in a a more you you in XG for more markets, on or the that lead that in that Okay. there. matter you rest little have have brings from subtle the but focused opportunity markets you I'm a of question just you down vertical? an – them or either inventory in

Anders Gustafsson

Yeah. better with We business. put lot after a the together the story around emphasis of we combined Enterprise

substantially focus to very sure growing type do resellers also focusing And hard not resellers that better anybody are we've mobile work So, We're how make to And product. we that, but we to make they scanners with our with and more that the portfolio. better them make single them solutions. our full together? worked work our than else's, of on printers, trying computers kind work are of the can with sure worse want that they a on resellers selling faster that

So, I'll out area lot bit a this. the examples of maximize on that fill how is we an we a Joe specific this But verticals. put to figure within emphasis around maybe do let little more in

Jeffrey Ted Kessler

That would be great.

Joachim Heel

Yeah.

Solutions other product, when differed. it some may has mentioned very from let Let right? a a acquisition it talk computer the lead us, were the cases, focus about mobile is business, have some been cases, in good some we examples. a you completed specific we in cross-selling you already. we a Enterprise for printing. in me of some was printing. it been beginning, you Anders after and big the me give And In – sometimes it strong Healthcare more give brought that But one. So,

had We and mobile in for really computing. printers the healthcare substantially in in wristbands printing position Our was we've particular strongest right? into leveraged that space, originally

same better them that that to electronic records on and in could the with but we use use to deliver patient then combine improve wristband, the also we care. other emerged, was order those medical As hospitals they productivity showed how and cases went information

many very discovering products the having for one application cases. our applications, for they to they earlier, in actually upgrade communicate budgets can Anders with use our And operating cases. a those Another productivity many on same spend in management. an on currently products used computers They're software have current, money be they've alluded devices we as their that inventory could them to store, those by mobile reduce more other is used within which it that's take as lead and retailers products such positioned of

an with opportunity gives been third you that is, at software. our looking to think us the we've if So, presence I excited augment that look about one that solutions we're And at. a particularly areas

that retailers in are RFID example RFID. for deploying take So,

RFID that handheld pilots could a like they the at computer visibility our with inventory retailers in today have looking real-time their combined them and presence reader now to infrastructures strong are the those of mobile sled us where go a a readers, are beyond what and handheld have which many then We continuous do same SmartLens, with (XX:XX:XX) the SmartLens allows provides. with typically to

So, there's maybe three examples.

Jeffrey Ted Kessler

I you very appreciate much. color. Thank for Great. that additional right. All

Operator

from comes question Housum Please Northcoast Research. with Keith ahead. next go Your

Keith Housum

strong Good another morning, congratulations guys, and on quarter.

Anders Gustafsson

you. Thank

Keith Housum

quarter in any you – quick then, Just following impact quarter? how this being by is of and what in how from demand to tariffs up of any their end can what's fourth underlying your and can, and much do pull-forward of business on of how And customers anticipate they're their there really they terms are impacted as that the (XX:XX:XX) to was that in I revenue it impact tariffs business in with second the terms guys? what you kind saying translates

Anders Gustafsson

Yeah.

certainly on pull-forward answer. an question us one, for First, to the that's easier

manage and relatively We the carefully. of forecasting our our or inventory. with hand So, within not inventory sitting position relatively want narrow there – band to inventory. they're them of was inventory. narrow that And inventory. too too all of have We them days to want in much don't – certainly QX. We no in them be We on have pull-forward we're into to a band any tend distributors very into QX, pull-forward little

expect this and be to and depending anything (XX:XX:XX) that it's we we and of possible think really customers QX not this. advantage any And fair that. this, don't saying very impact particularly our we to don't we've after speculate So, I in too to to want take feel are much respect – about say end happens With to list they us, pre-buying that, like have it on case there's that of either. what so might far, the no that what much or asked how think is I

think would modest are can that business, place we the the and mitigate current we effect. see largely I having impact in as on tariffs that

So, talking are we to doing it. help customers mitigate what are we about to our

we're so minimize good a they their for on doing comfortable the that we And far, been I have think plan to business. impact have what

Keith Housum

a Okay. of you And year expect you'd gears is perhaps say you and guys do your ago? believe on exceptional head which start terms software out? hardware the progress services two where year I above the a year. to in the you're and obviously, hardware over you some place I software Appreciate it. growing there that growth past had where one services, markets, would for of that a changing But Is and on follow-up growth? up? And and just it to that out, ramp will stand has in be seeing software a guess, you services your do years your is think underpenetrated this

Anders Gustafsson

Yeah.

a And printer customers' our more engineers. engineers you a than our the lot our of we do deliver you probably we software that this software majority people of look vast, are kind recognize. look value engineers, more if – And at if the vast So, at in Look software. network mobile networks. in connected, computer less it at a citizen largely go much scanner, a in from it being printer it's printing makes (XX:XX:XX) or to Link-OS or good sophisticated very by even driven the

of We software. much have also other leveraging are solutions number a more that

of in types ways. as we has specialized into stream they we solution. at opportunities more a different you of pure SmartLens, SmartPack, have way. component still revenue hardware for a So, solution, to mechanisms variety is a customers if software at things, – piece think, a hardware those a of often our keen solution a specialized pure it And But monetize I more that with lot a software them of to those particularly software often of we because deliver OVS have But as-a-service do of and always also. it are been, our move of for us that delivery type us to looking look

Joachim Heel

very think Yeah. notice, we much part of our Maybe of thing, other software solution. a to the a as Keith,

that And sell for our are so, in talking to that have with the about we have time of pilot many them customers, solutions we some software all of solution. substantial those will a in we intend as been elements

look solutions, So, the the I be will hold. to take if indicator that for growth of you of software the those think starts best when

Keith Housum

start or software they've out, it up? year now, doesn't is like still line really to really at the a Yeah. yet. question seeing a starts and the or taken is look that's out I this where or numbers ramp it services two if the look I two hold we'll to Is guess, quarter perhaps –

Olivier Leonetti

Yeah. bundled together. Keith, are Services software you mentioned it. and

our when from we from truly lower to – at are it But able is would So, the this base. and I a a hardware, from but cannot of multiple business, conclude. a you going say what hardware software is lower base, growth, split

Keith Housum

Thank you. Okay.

Operator

our Coster JPMorgan. And Paul Please come will go question ahead. today with from last

Paul J. Chung

my Hi. Thanks. Thanks Coster. for Paul on This taking is Chung for questions.

expectations margin the quarter most for year. and So, first exceeded off, you EBITDA this likely

takes costs Your see what So, more And mostly with here? kind you. pace integration are But your comfortable view costs? XXXX? of you expansion behind you are finally the kind Are of initial kind OpEx what's in of do and on opportunistic of your levels there? some puts

Olivier Leonetti

have So, also to We rate, the we have rate. improve ability indicated as we our manage before, dollars. want believe to but we EBITDA

the of in keep But dollar either line, as the in EBITDA P&L investing increase while stage will on on some the have at at margin a we the period we line believe have So, our rate. leverage done OpEx for ability or business year, of the the to now we we gross time. expense

Paul J. Chung

Okay. is update any target? there your And long-term regarding

Olivier Leonetti

Not this stage. at

and in numbers indicated, As improve. more we'd feel business, to the strong a our quarter when XXXX detailed have have conviction opportunities for Anders about and clearly But come we scale you back QX. with we close we we to

Paul J. Chung

to that may Zebra expect cash we you other where hit now looks my buybacks. calcs. targets, of you've of It of your you. your share XXXX kind free in free most went Thank $XXX old, like north by in the question, cash my of should then, hit And Right. leverage million

Olivier Leonetti

calculation – at The Your cash company correct. is for the has great the job has Zebra growth. a done team and team managing done profitable

bottom the reach will end by target of this the our We of leverage year.

believe the exciting in position business. As as deliver of excited have by you our organic of competitive opportunities end feel serve been our our to inorganic and now to for We in either company and posting in we result opportunities by those a markets as or number we quarters, you results a and we invest investing we from see many business. sense have by from we the call markets sense very the the

sense deliver opportunities contemplated, they not many be an return. Share to dividend is. have our and We would the buyback are focus off table where you attractive and but

Paul J. Chung

it. Appreciate you. Thank

Operator

And over the question-and-answer to Gustafsson back this I for closing will conclude like session. turn to remarks. any our Mr. would conference

Anders Gustafsson

Yeah.

wrap up, as the partners So, and Zebra to I exceptional team thank we quarter. for want our an

and close year to well into expect XXXX. are We the strong positioned

great day, everyone. So, a have

Operator

presentation. concluded. today's you The now attending for has conference Thank

may now disconnect. You

Zebra Technologies (ZBRA) 6 Nov 182018 Q3 Earnings call transcript