ZBRA - Earnings call transcript Q1 2019 | Zebra Technologies Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the Q1 2019 Zebra Technologies Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Mike Steele, Vice President of Investor Relations. sir. ahead go Please

Mike Steele

you us Thank for morning. today. joining Good

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

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

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

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

call over the Anders. to I'll Now turn

Anders Gustafsson

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

first solid in the well profitable and drove quarter. Our team executed growth

and cash adjusted America. of the diluted XX% strong on year-over-year margin We million. reported free As non-GAAP EBITDA flow improvement; point year; achieved organic slide X% EMEA of EPS an Asia basis; X prior growth a performance increase of we you X% from a of XX.X% basis on $XX North across can XX an or and sales Pacific, net see $X.XX

growth remained channel. team vertical the we markets the through and demand Our drove across serve strong

product Our well. categories performed data mobile and capture computing especially

We drive and while growth. expenses same our to initiatives operating also time at employees sustainable in investing scaled the

first on opportunity the acquisition monitoring the which we leader Corporation, an us. growth quarter in in a Additionally, Temptime closed is of attractive for time-temperature

discuss turn portfolio Our confidence financial provides leading Olivier in our to With year outlook over review to to XXXX. and of for now outlook. solid us start the the to our our that I solutions call and results will

Olivier Leonetti

you, Anders. Thank

P&L. the with start us Let

in of of each We Mobility data net & see mobile As slide X and especially increased translated capture basis before and our the by and organic Visibility most you strong demand segments reporting can grew geographies. currencies which the Enterprise sales products. across to saw sales growth XX.X% on acquisitions. impacts on X.X% led first segment X.X% quarter an in in computing

large America Intelligence increased business segment North prior Asset year. was rate run realized strong orders partially We Tracking in the X.X%. fewer offset by than and sales printer which

capture Mexico, gross grew lower and sales in grew and all weakness. We capture, or and small Most region Sales service strong major Retail due million traction to continent. data saw sales growth accounts due by X% relative growth North was computing primarily with driven printing profit in China. decreased including X%, product geopolitical countries Asia-Pacific sales $XX X%. strong. XX% continued mid-sized our in to broad-based the RFID. strength Turning Latin America with across Adjusted computing. The remained categories. our retail. our up across X% to particularly and double-digits were categories. in to regions. strength America mobile Sales data and care In in EMEA increased saw strength across sales with double-digit health particular We increased mobile

the year driven decreased in As margin strong margin mix rate from expected, XX primarily gross operating points by period, basis in less both a prior segments. adjusted favorable business

in will drive Consistent and with achieved favorable cover year while as XXX to operating the year, investments QX outlook to year-over-year the meaningful We our make operating as from commentary. a of continuing organic my I net full in We one adjusted points principles, margins basis sales period. percentage decreased this expect growth. expenses leverage of prior

XX-basis a year diluted quarter First per We adjusted period. prior non-GAAP increase. of was EBITDA the share margin $X.XX, earnings XXXX, drove point XX% from year-over-year XX.X%, increase a

highlights of slide year, free lower prior quarter to payouts reflecting the performance. the generated usage, capital cash flow. cash XXXX, higher to working sheet and on Turning first This we X. than the compensation of incentive tied increased In balance including was million XXXX exceptional flow million now $XX $XX

mind target certain quarter Additionally, net were due We period fund fourth XXXX impact million to used just flow. the borrowings I primarily such in the had those as various timing in expected, capital conversion, to fluctuates of billion of debt the on acquisition the balance that of quarter on sheet. which committed a are the $XXX of cash $X.X free the short-term We cash of first of as ended with Temptime. covered. factors first we quarter, by an that which flow benefited to Keep working items XXXX QX had XXX% unfavorable

times of net is had times. the we to targeted X.X X.X of ratio, our times within debt adjusted EBITDA to first quarter, X.X range which As

our slide outlook on turn us Let X. to

expected range approximately range XXXX acquisitions, high to impact impact negative margin growth gross believe X% which to and the of assumes X.X XX% from both is and currency We an sales to be an expect which assumes adjusted X%, EPS diluted XXXX year. foreign changes. and We point to to a in would from from $X.XX XX%, in EBITDA point QX the be of the margin $X.XX. Non-GAAP sequentially approximately prior basis X.X QX be net recent XX between percentage positive

be point is positive XXXX acquisitions XX%, an point adjusted EBITDA negative XXXX percentage improvement foreign currency X be and basis guide. prior recent expected net raising between an and from from to approximately which now full XX our impact year between to are assumes and and margin We changes. year sales from XX% approximately Full growth X%, impact XXXX X%

We the improvement gross business. continue drive margin and to in operating leverage

year expect XXXX flow free that cash We exceed will full $XXX million.

We expect use that unlike XXXX. continue to to be EBITDA cash would higher XXXX, assuming a we're in and drive capital working of

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

Anders Gustafsson

Thank you, Olivier.

areas support and our our and made are for drive We all the industry focus, QX in the stakeholders. Slide key our in of value pleased which leadership strategic very we business. progress momentum XX with shows

partners. First, the relationships competition through we our unmatched continue to innovation, strong customers outpace and with and scale

capture offerings. mobile our Our never been accomplished portfolios and stronger. investment has data have been best-in-class This through focused computer, printing build upon to R&D

to market address geographies and underpenetrated to in continue meaningful opportunities core targeted our We segments business. see

in capitalizing to are imaging. on We trends, including the technology data key and capture cloud-based RFID XD transition printing,

been environment. have the we the the of adoption enterprise represents to which curve the migration retailers trend warehouse the transition, Android are sales Many the now system, operating mobile large early but more industry. in made in Another has computing in than half

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

provide example and traction organic to through their near in a higher with of leader Temptime expect vaccination inorganic time-temperature adjacencies to businesses strict meets We is flows both with RFID, programs. inorganic we Temptime markets solutions the been We where tracking gained investments. acquisition mobile new transform have of gain designing fixed An growth the various play, solutions. largest the target Corporation. portfolio and where that health and these in a have is accuracy our and in can manufacturing we global seeking organic monitoring smart launching that traction we high-growth an customers right for use products the From specifications that in significantly organizations' cases. supplies perspective,

into industry, can use as to technology into benefit other is business visibility. increased that healthcare cases from this Our the well drive asset scale as it deeper

are utilized. connected and be line Asset we Enterprise front enable to asset every optimally worker visible, to our Third Intelligence advancing and division a

We a are workflows will and of discuss deep in leveraging by megatrends. capitalizing minute. I this key more knowledge on our doing this

to financial maintaining our key our flexibility traction business Lastly attractive remains accelerate in a markets. the invest we priority, in as

turning enables digital Now enterprise. Zebra a our by slide to XX. Enterprise Intelligence providing entire Asset view the vision of

and real status improve sense This Our including products determine in time possible give the analyzed and business action to operations. products best location, information, and into from insight greater productivity is solutions data and operational assets processes. to

to intuitive Our include to a layer easy and products them which purpose-built makes manage. software integrate

device maximize and Additionally, improve our software ease-of-use. security enhance applications collection analysis, tools data and automated and new

enabler platform their intelligent communications of real-time Savanna marry is data-rich software newer of a Another Savanna, example solutions edge offerings. ecosystem which a Connect our integral our our application part a all Workforce customers mobile our cloud-based key of enables wide to A powers of with onto range our solutions computer. is single data. that our is

is additional accessed to see the by the leverage team encouraged is Savanna. Our we through valuable opportunities that data

of and to number and complementary utilize driving of increasing The new new workflow of rise vision. human humans with automation is wave floor. in been a automation the our automation venture framework our customers' artificial partners, to our machine is leverages a the which vision, efficiency example independent orders solutions of that our We key company and intelligence address to natural with analytics extension a business core in fulfill software or this robots improve collaborating have of is Unlike, platform warehouse our intelligent our an Act to challenges. a deploy intelligent Sense, A investment repetitive on collaboration that without to Analyze, specializes operator. recent

largest deploying, health overall goals Healthcare, this a and Zebra in mobility, clinical level of growing helped customer. initially many benefiting improves is Manufacturing. to and technology critical handheld & need recently our of while their with key XX patient number mobile. In equipping strong increases support drive We equipment new and vertical division, real-time are world. costs. their operations solution the many and and computers our specimen each computing their that identification mobile being strategic edge. transformation. of cloud We enabling highlights reduce wristband smart the primary customers and solutions healthcare the our printers the metrics, made one in are safety partner, sensors, our to Zebra companies as elevate productivity, translate our trusted and Slide Logistics of other from shoppers Zebra, manage largest satisfaction. we with signed to record Enterprise This We the progress a markets, handling, their customer industries, Healthcare, improve and information and experience. of Canada. automation, components Retail range This fastest monitor them they we associates empower for for increasing imagers this are megatrends across including we Ecommerce, execute Retail systems & use patients tracking care productivity and on vertical, performance caregivers cases. and Transportation businesses a a deal proliferation & An customer Intelligence premium fulfillment the desktop omni-channel and successfully patient which in-store devices to of of into gain and Ecommerce, to with Asset for digitize mobile In increased These are overall have their is

their will dispatch Together five-year computers, our productivity their for customers, we and trusted series computers, use for A their time, increase our project a implemented solutions visibility XD a these next deployment cost warehouse either Latin showcased the for major logistics and trade This industrial earlier notable process, solutions and this current solutions month, well track on solution products includes solutions. digitize partners their more have Solutions At a customers These hub costly manufacturing, with, the and can a food our range partner, for service. delivery increased productivity add the computers scanners be leaders operations. trusted are while and warehouses. of Examples RFID looking mobile floor of years. example across demonstrated generation and Purolator. scale and was model it manufacturing chain tablets include operations customer Canadian assessing enhance as-a-service include a flatbed modernize operational as Zebra's Due and verticals. by awarded how cases. is reducing We In this common of loading our printers trace, traditional facilities and show deployment plan to research, software worker outside to to management with this printers, with initiated capture American we view certified increase a innovative help than our their and improve our plant showcase solution can Additionally, to best purchases and ZTXXX using various all At freight daunting our to solutions who enlarge using worksite over Android optimal handheld activities. from The of A to the and comply our manufacturer. they According digital Italian mobile or that need and region. can a with customer's Union found for By help was gaming mobile as ETXX customers sizable ProMat for the leading complexity. needs. in consultative efficiencies, prioritizing recently lottery efficiently our package on-demand our customers volume, to data the challenges next which rolled directive. the their provide five anti-money operations faced supply by met economy. unique with transportation experts we It their European ProMat capture deploy large of and their company the RFID and trailer laundering driven were data are our limit increased customer solutions. our Company, engagement, are facilities scope of They a customers to warehouses ticket logistics helping recently expansions. their Purolator identification and products to drive out the wider half

priorities increased we uniquely increasingly customers are prospective on-demand driving pursuing similar need implementing with a and to Secular solutions who We are the are we this regulation In is summary, set opportunities with comply excited are and other Zebra additional the complex to trends enterprise that including with diverse customers positioned directives. economy about business of worldwide. regulation innovative address.

over call back Now to Mike. I'll hand the

Mike Steele

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

Operator

Thank you.

We And the & of from Ricchiuti Instructions] Q&A Company. begin today's ahead. Please question will [Operator comes Needham go Jim now first session.

Jim Ricchiuti

morning. good Hi, Two questions.

term I on mobile wanted near First, to focus for the computing. environment more

that that think this You're portion upgrade more these. about of in you there market for give continuing story the a opportunity, can terms it help, that market expansion more the much growth the Is to upgrade of and also tied this year not it's see using talked so? is to in But associates it's good any we've business us about how of appears an next the over we rate than strength opportunity. that just but might or

Anders Gustafsson

Yeah. Thank you.

our or customers derive value leverage can for way of cases we solutions our portfolio solutions. this use First, a They how innovative of derive at And quarter. is to all our our and customers' by and past product workflows out data were broad great have. and new grew fueled the think edge our the of products and understanding enablers also of I that vertical data, lines we deep

opportunity So for enabling our had megatrends all QX broad-based we're very momentum as we business about excited have specifically several now. we're this. in several product on-demand to our computing the And quarters such the we've in and the lines mobile with great portfolio, economy we growth had across and

one cases the Android see; is the the we that one and is industry. other in drivers key two highlight across I'd think I new use conversion

that on I specific a good I sub-points, use the the guess here. long-term cases, then for business. driver First, new see as Three

onto customers seeing devices our are a multiple computer. we a applications mobile lot consolidate First, of or

scanner, desk or have phones extensions. but printer would think scanners you if a walkie-talkies, a historically or PBX and not So printer, they

Workforce great those this. our makes now we computers. be things of do for mobile be will developed the that strong computers onto of application consolidated of can All Connect software and And a example ROI mobile very the a that purchases helps that

And and device have to great so further put every into in their they're deploy screen Second obviously -- sizes much ingested market trend looking to are our for reaching I our will a be about a as hand side getting us. The of and technology third traditional the customers driver that our talk tablets that's size, around operations mobile growing site faster are computers. digest screen the data the a managers tablet computers. to bigger tablet by the And we're mobile that's seeing business. business of than more so worker, being

growth. continues Android So be And those then transition are see new our driving us. we the of three use that cases to good a catalyst for that on kind

There going than Microsoft. approaching amount and And Now Android the and space substantial devices is have share of XX% market still of are of sold the we XX% Android more than are of so market. devices XX% new approximately less market XX% into overall. the Microsoft

legacy to to potential time $XX devices million maybe So market over it's be little that to this? a in want Joe the And add a still with approximately here huge need you bit Heel Windows will converted.

Joe Heel

do where a a the as that is us on The we're The also we're solution are you devices? in the million that things really manufacturing. Anders broadly. adopt of as has Android Where Well, application retailers XX is one see before on software that accounts well adopting. customer to adopted accounts working market And mid-tier right is frontier available Android. seeing the the have in warehouse can right, now that now their now left. be see seeing that -- core you can larger been mid-tier devices we're space adopted in have about has quite T&L terrific opportunity the for and the with transition those that continuing expansion see in we the our And Yes. we've described the

into to been indication the very significant to numbers think ISVs and that's expansion space the working pursue. next the to where warehouse XX them the I Android applications in have computers with those be program And come migration we will what who the will rest the go that of move help will manufacturing their is so and Android hard we've and our million

Anders Gustafsson

Yes.

the many So see about you portfolio. there excited computing can to us reasons be for are mobile

Jim Ricchiuti

one Anders. other have I question That's helpful, may. I if

an As over years, pace by retailers last automation might more two respect and going all you you the are ago? how with year acceleration to technology? some to appears increased to are was where thought seeing be business look the something adopt moving operators of the you change a one versus back Are at logistics market that the at to the surprised we and of of be look have to

Anders Gustafsson

I'd say the -- we're surprised. particularly not

we've overnight number think and for worked this expected pace new of and kind people changes often this working a on that we've successes to change. joke happen enable a say for initiatives and I of took this years time. to and solutions these been so long these and of I tell higher

may it at a been we've we're being outsiders become apparent we've but comes long So at it. working success. been this necessarily to not overnight maybe for It how time, as long an across

Joe Heel

the to opportunities these to just capitalize automation we're that one we'll division bring five right, that which Intelligence, technologies Almost had mean increasing is act. trend. past the evidence. ago, Enterprise and analyze of as put Asset automation the and point that we've years sense, we all in natural to of is innovations a future I of forward market seeing in And part on and together that the bring

Jim Ricchiuti

lot. a Thanks

Operator

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

Jason Rodgers

you bit perhaps mix some in you give segments little in that the talk more you that and factors improve confidence mention the business that unfavorable if the will wonder of the about both quarter a quarter? could Yes, I in saw second mix

Olivier Leonetti

is Jason. morning, the to correct, trend, are I referring believe good Jason? that So you margin

Jason Rodgers

Correct.

Olivier Leonetti

Yes.

a of margin quarter part than we our last the had that QX QX in So rate was lower being year. and gross guide,

If year some The last mix business -- be And is which focused you you Zebra which QX QX One, spread. expected in as impacting business the margin basis the add last This on was very was impact in Solution is high-margin -- happened about then things. strong XX a a very is QX revenue year also Retail was What remember this margin. year. two rate. what a quarter expected will points. the

years, have than Now be have that you of the is that you be believe margin P&L guide than implied to we higher would our be no achieve over rest margin we and look at in comfortable we seen expect XXXX to goal. up. margin to our We that QX scale higher to this been of the if last last the year. we've about year that the able we two feel exception year And expect and levers QX

Jason Rodgers

times that as the leverage far about of as an target? bottom that around believe you I Do then you the debt-to-EBITDA talked you have last And range X.X your approaching net update perhaps have midyear. the quarter on by

Olivier Leonetti

Absolutely.

our So in times. the X.X of at the -- ratio end leverage was QX,

We target. have a

have and are ability that call sense that compete. by our markets target last of during We to can our you our from Joe, very Anders excited and believe X.X. leverage and by X.X to said We remarks the we from end

allocation capital be M&As. or that of terms business in best organically return. result, either the us with a invest provide that to our in believe would the priority through adjusted As We would

consideration targeted Now basis. if a repurchase will share a we leverage on stay below become our sustainable

Jason Rodgers

you. Thank Okay.

Operator

go from question Stanley. ahead. of Please Faucette our And comes next Morgan James today

Erik Lapinski

through current taking team. ask is environment, demand for any Thanks for question like have Hi, as you're James. of wanted or Erik to This RFPs thinking our softening I you on or seen just today. pushouts? the cancellations

Anders Gustafsson

The year progressed had very has any seen way softening. the not any particular pushouts much have we or We expected.

projected. to XXXX had rate strong So very by that go given for think is back but been I you guidance here that and us we we've if has entirely and annual the growth moderate, to expected very, a

is it say way would we much pretty the to. far, expected So the progressing I year

Erik Lapinski

All through any expecting? up ticked -- are where may down ticked have areas your And models where have you're That's you're helpful. there just you. still much thinking right. or if or maybe Thank pretty that,

Olivier Leonetti

you at a and either has that in and Pretty business diversified that we you at look quarter much expected as line when product, see the a of theme by very by terms vertical. been top And by region, stage have also profitability. this

are So where are company about and we think feeling trends. we as good -- important a serving secular we we are

we good where are are a So we as feeling about business.

Erik Lapinski

That’s for me. it you. Thank

Operator

go from of W. Baird. And our comes Eastman ahead. Richard next Robert today question Please

Richard Eastman

Hi, guys. Good morning.

you question little to speak in core still QX. a Could quarter? AIT, a the maybe business. bit just in the have Just around comps growth the QX, tough printing the You some

curious I Just the you margin And out we of to presume the were interesting price expect also thinking. good how business that it's got through some year. what you've play was to gross balance quite there, relative but the

pricing So growth maybe in just and address if printing kind of the the would? rate you

Anders Gustafsson

large large Link-OS large also a differentiator business deals XX in than deals, months, over last the market the particularly very rate a to had which we orders was for supplies, run saw AIT had by strong which had a great XX year strong strong printer are the ramp. overall accepted us. performance connected less We for But a unrivaled through longer system. new being printers term, First really printer well bit strength and by That's market looking our smart good ago. number us. a with and and manageability more have within a we back QX, helping on very of fewer of did performance within to the products We've operating the quarter. launched portfolio wristband fresh relative of supplies that and RFID. we a in grew But we The offset

to growth we quite portfolio our see had the printing the about and on market. I'll are see prospects pricing, we excited in that. if Joe comments Specific any So

Joe Heel

printing give of on product end range. hand that one higher you had is perhaps which I strong a quarter. two Well, the pointers more our are mix tabletop the The a point, range

more look And carefully area well where printing is Asia-Pacific did you mix the regional improvement in of high-end We've supplies towards on the move portfolio. lot supplies business where that always mix said has piece, that we've parts another in is of you'll focused the profitable that and opportunity, the us helped concentrated. see If making is regional a in the growth a business. the recently

Richard Eastman

Was first as in channel that? there the fourth the on pull quarter? just from Any quarter pricing adjustments moving any the like was or anything into programs fourth the thought there. in And a anything channel there the inventory quarter based or -- into

Anders Gustafsson

is see going out The inventory was the range didn't we within nothing the in QX a inventory for and any over No, channel. out rate. norm of with of was the very set run performed the into days and as pull-ins particularly, well us them, though that normal we there that channel strong channel

was it good. So all

Richard Eastman

Okay. And growth maybe like that any a now around that screens forward does larger in just can just mentioned Xplore, a roadmap there? generally there Could an mobile you integrated? stimulate You there? there? just follow-up, maybe you move But about computing. factor looks talk product OS maybe Anders. to thoughts have as being have like acquisition Xplore and what you then, product their Is look as What opportunity you the roadmap upgrade

Anders Gustafsson

tablets acquisition, very and to become I'll or well with clear provide big two And we screen overall, then had Yeah. the Joe extra tablet the Technologies space. tablet start, but then, that our the we've in Xplore ETXX some before. portfolio also performing I'll color also. Xplore ask But, number includes portfolio that the is

excited about opportunities So the see quite we there.

We for Xplore. and launch soon we well have launched our products already Android products number a been to have Xplore which here looking to new are of received, for

PartnersConnect, for time. the extend Zebra, already quarter. done our computers this traditionally Android partner integrated also ETXX and So the fully Xplore we're organizationally to and IT Android portfolio be the of portfolio on Xplore is into will some into looking had of here part stuff We've now tablet the also, we've now basically program. the mobile all

our the tablet So world and every sellers has all portfolio, that our reseller are the incorporating full to also. sell around ability

portfolio our feel the tablet So Joe any about we what's on with have. think further prospects we overall, thoughts? I and good going very growth

Joe Heel

be towards We the particularly I'll that we the is, flagship it Xplore middle product growth as add Android is other the There's our on capability portfolio And the market. customers that launch refreshed and so the into the of the ETXX Android we're of LXX. been significant, now it Android there'll now Windows, market in on our the line the market ETXX, tablets line. we a now, platform, our coming, from the Xplore tablets. of industry. year that one what launched semi-rugged refreshed, our to Mobility to complete all thing excited with as that ability XX talked Android up and launched provides have that so other like in of great tablet is that's the just product same and that platform. one drivers is about, bringing has about today. nothing in a coming differentiating There's because which as we're platform the Anders also rugged That's the the big And that we like Android the ultra-rugged bring the earlier of this our DNA, nothing change and in complemented mentioned, is

very Xplore as we're So major excited expansion about for the portfolio. being a that

Richard Eastman

you. Thank Awesome.

Operator

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

Brian Drab

Thanks Hi. question. for taking Good morning. my

sure guidance I The the of want for and what that implies first just question this is just to it year. make on half correctly. I'm understanding the the second

what how, year? EVM number about the in you're outlook for the second year? the growth about of year, guidance of to And talk the for larger to tailwind second in growth if one, between two, the X% the the orders implies be be first expecting from about half and So X.X% for revenue relative just the hit a for in the developing guidance including the AIT you then Can half the acquisitions. quarter, half midpoint the and X% second you second for and appears net the will growth FX X.X% half for number

Olivier Leonetti

morning Brian. good So,

orders, based also for time trends numbers large stage based are the correct. So be I'm growth serving. we We performance. term spend we planning a of reasons various that being despite going we We much this and post confident is and you contribute too us In mobile well terms today that would various about the is to and to data the the profitability profile confidence, keep we between going the on avenues our growth have comps. capture the calculation businesses, the are software feel of are we printing large be significant orders strong supplies secular upon not visibility believe your of good indicated this, think not But growing in at part this before, and have computing to profile. as mentioned strong. offer as and services company to stronger to upon And business. for still strong And

Brian Drab

EVM that, think grow in a this continues second in rate AIT we Thanks just Olivier. at quarter? to year of half the you faster first as Can do that than I clarify the saw

Olivier Leonetti

That's indeed. the planning assumption today

Brian Drab

Perfect.

Olivier Leonetti

And we the Android covered drivers and cases. earlier new that use behind

Brian Drab

couple Perfect. of commented impact a the extensive more potentially? positive since timing impact Can of XG have then on of Thanks. the you've a could the or that business quarters -- rollout been Thanks. rollout about of and what on it's And across infrastructure. of impact potential XG you your capability talk

Anders Gustafsson

by down turned be to expected are services XXXX. XG First

because drive XG of XG XXXX network. the upgrading we longer-term, have So don't see real that much, or can great opportunity. first towards I the edge connectivity near us can XG haven't one XG the have business. But we highlighting But our between it would would towards impact on will certainly our really XG device. when It -- announced we make say, rollout be are we a a further term or launch as not devices. a at the driver

including of You of computers mobile types data a or and devices have leverage even can lot printers different and connected scanners.

implement So decide the in just store they instead. connectivity the not XG forward, or applications if all the as for small might and cloud have think going for a to the go might retail stores of warehouses Wi-Fi you that

our many So, be that can business helpful I very based to there's drivers think, on XG.

Brian Drab

Anders. Thanks Okay.

Operator

And question our Keith next Northcoast Housum today Research. from go ahead. comes Please of

Keith Housum

there will Zebra bought underperforming hoping here Were both from understand and were it's on guys the from when bit I expect actually was that from that? the slowing guys. in some provided little business here for or if that morning you to color guys But Good appears now tablets Xplore -- acquisition. existing to here you suggests numbers that over guys in down fourth been the commentary and the on has some moved Xplore has quarter, But color that it. quarter the for you in. business it look challenges here. of that accelerate the the hoping at that more provided this a I it is for I

Anders Gustafsson

Yes.

So I'll we expectations when our the acquisition. start and with then say I'd Xplore Joe first made will provide some extra color. But performing line is from in

trend remember performance It's meeting than was large of XXXX quarters some refreshes year, refreshes same and had beginning line the repeat we're average hadn't those the we that stronger One thing that them, large those there be. of Joe? And of not look supporting to -- expected very still kind So but quite still some our with those an customers we but volumes. are Xplore are for expectations. say made overall. would to pleased this

Joe Heel

Right.

way those refreshes if prior look expected plan from would not is take the at to large perhaps year. our the in Keith it you we that year So those this had repeat

Anders and So at is without why our according to that's what look to see. grow you plan our exactly performing And refreshes. large that it's target you if that's those said quarter-on-quarter

quite we're So with how that's developing. pleased

Keith Housum

some examples gross I Got where year do as margins. the what EBITDA you talking the on have I you you had opportunities you few would those provide margin gross earlier leverage Anders the throughout some margin be? gross Can it. referenced we're color a year pull a And one believe of it. well about as as more margin questions guidance then guess to that Appreciate little to progresses. expand of going

Olivier Leonetti

cover let me So Keith. that

Keith Housum

Sure.

Olivier Leonetti

operating improve actually margin and an the is have we for this and that the scale to believe we OpEx company. principle ability So

are demonstrating we the year. that we answer question, guide demonstrated have margin, years are We specifically two also using and to that our this over in series on To your levers. last of a

the the finish discussion hardware we First And we the same quarter to to add able believe packaged supply you And we price price rather nevertheless did and business year we my way in we sell years. Keith we allows we are here, we chain? two for the revenue as more just value this ROI the basis OpEx that dollars the not our more a as optimizing XXX value. just are of scale. levers, about an we're over on proportion by design only way saw on also COGS as OpEx, than us do combined in to of -- to devices. adding price. parts last the on So scaled growing OpEx various we all, And but how and software, and together points basis between optimize do And having

Keith Housum

Thank Great. you.

Operator

next Andrew of our from Buscaglia And question today go Please Berenberg. comes ahead.

Andrew Buscaglia

Hey, guys.

with competitors Just so larger your some in saw a question destocking their the quarter. of on distributors -- one

Sounds that? bit like Can if you little see saw into guys that. and that looked you never where that you related any really about a you talk impacts to

Anders Gustafsson

the ones our inventory inventory. ratios resellers hold The the days on the comment always hand competitors regularly. who our business. QX. on what on been very a We distribution did partners any hold our or But their destocking on Yes. we inventory can't channel from have see hand with perspective, Zebra days carefully. don't just really managed is said what's which ratios going not We with We manage in in

out, market, they them stock want heavy team I'd their and able if targets path it incentive them want there's don't to we drive that to to the sales demand. is how as have support more be a doesn't programs adequate clear us out. to And particular help our profitability can to So other be get incented say for we in and impacts drive but have them sold no have in a to sales much on so invest to sales

no us sales saw for well. performed we very the data We signs channel So strong and had out of destocking.

Andrew Buscaglia

in lower was quarter it to your expectations? ramp a a flow looks expecting that than cash up the like. going I your Okay. to a guidance little little of was bit I you're mean, was with and catch to line And in have your

Olivier Leonetti

right. You're

of are ensure Andrew, free believe to we and an to we conversion We principle, ratio we -- still have that we that as the of this managing not have that's plan business you cash flow need driving of to in compensation payments about your drive we to this. conversion XXX%. cash flow to We the was in this. Two some performance a We also remember paid every have, are to in might end That in a single if about again expected. are period. as QX. But another XXX% we and those. cycle cash in point, at XXXX. had that free bonuses And our high for but was And had one QX do strong catch-up exceptional the QX, impact QX, conversion cash we due we reasons incentive do,

to are we confident cash numbers flow the So, we you about Andrew. communicated

Andrew Buscaglia

mean, Okay. And I maybe this I may. is one last think, acquisition, pretty one, Temptime I if interesting.

a little it. up is think it going guys we this one-off at more what continue to to medical. as of that you'll invest? you came to want took healthcare, it where you sort of Is a the deeper You so price bit in a Or just -- and this tip right

Anders Gustafsson

should us. supplies don't not We -- adjacency where the kind And that the the penetrated. for helps us we have. we've we was acquisition have -- connecting EAI is as focus talked that of think other the we are really areas. around was digital we of aspect market supplies near as with Temptime One, It the and in great one the the so still about Well, share two physical the a digital, here. a

of the those. we'll a So, but like is of aspect the that I again, trend sure business. of more specific this see of -- that opportunities sure we'll supplies We was clearly so I'm we But address to I'm both like this supplies will we our business exciting and we say digitize EAI how could many us. to have do thought not Temptime those. very for and not that attractive how

Andrew Buscaglia

Okay. Thank you.

Operator

question comes Kessler And ahead. of Please from our go Jeffrey today next Capital. Imperial

Jeffrey Kessler

you way of, C-level a gaining your taking contract people vertical specific manufacturer it, facilities Thank you. that the there term a people to the want value the to question. you it cetera, you you the seeing you that food with dealing consultative I or call want if markets? American my in these for et just interested was and engagement. going negotiations comment Latin in types security longer of, want Are Thank at et more trust-oriented Are cetera. going identify of proposition be a the it, was to you on better call for to about can if mix relative

Anders Gustafsson

can We some where Yeah. customers' our we the is of knowledge of provide have we deep -- workflows. that areas vertical very particular insight

offer their things greater patient productive, And into or necessarily years we then the that start we back, people but productive how those they of when to a go areas. more regularly that truck you nursing also to we experience. we can doing have something the how around and ride-alongs five their how life customers, data access improve and can be customer delivery technology with enable we customers better or same duties like be their do around a who can even so So, business they and live experience our the can to performing working didn't are see operations that them, team or in the say to more today out have make a leveraging of we apply a insights the have day driver alongside hospital our more help

how they So, think for have can to access we've achieve in invested and assess we the to and our business apply goals. better I now capabilities their operations technology help customers'

want but try part customers And how Joe, any much a So, have. sets some how engage we leverage with are very and more receptive great others, skill example our of to it's this to thoughts? is the a further we than we been of

Joe Heel

work lot that often location like this we this. of load understanding in how do some is intensive market, all we Or for them do take we're example in not implementing exactly lot a a a by want we in in highlights. knowing driving that a noticed their manufacturer, to then are. of understand, and mentioned will to we how SmartPack can their trailer solution workflow the optimize pilot a we've And When efficiency solution you've parts how talked example. the transformation so solution, you consultative how and to them This about and bring we but spend been I'm solutions they how market, help America pleased Yes. Latin them we as go-to-market. advising with when to that with the been workflow that help auto increase has run a the that where our time centerpiece we customer

to And that ready XX% selling doing. type dedicating so expect this sales expand. is only close consultative a centerpiece we're force are we We're our of of what this and to to of

Jeffrey Kessler

follow-up and on beyond to then start program a trends already right a believing your that done? to have additive that your your be kind partners was is -- somewhat what has will value I it now it going of it's on partners program? seeing in It What you add years in can And obviously ago blossomed. the -- any Great. rough you -- were proposition or that tweaks it can new you any got off

Anders Gustafsson

been kind three, And and to believe together. Yes. for work it's been partner accepted I it's years. well how adding program place now I community. helping think partner They of four has by our value we in mean structure the

well partners as our expand. is is It new example more partners to product. overall put we're more it. the out have And partner. any say software we as changes growth we They are working envisioning more an on rates drive So and this. add higher one one The we have helping independent to vendors. than than not of continue seen sell cross-sell we emphasis average growth of large that program thing that We've increasingly rate the to the

one on put Android ISVs partner have a prerequisites of Joe? comments, our commented of of transition their big to being able Android. crossed we end an more software they back environments software integral of provide and vendors Windows are capabilities. the kind further more And a for verticals to us the that our earlier. Android little program as These overall enabler go-to-market the part But now that. to So also that's see on Any legacy as of the we started devices traditional from bit and

Joe Heel

acquisition been that Well, I and part channel-centric main has think would since has at Enterprise the been Zebra I is increasingly a company. highlight the

channel revenue channel the we up every to year our that centricity, the gone And well So over the XX%. is since further. of do percentage acquisition has

have that, concentrated the larger business. of and grown have than So with portion largest Zebra only not partners They noticed And them. of our registered our this. the partners rest but have the faster a partners business

to say we specializations has recently changes successful that would this attractive, in largest them. one for have been that not specialization there's health in capability be these And and broad been of has we've and flourish introduced we interest to their deal made that more the but an example the that's this But an journey can we've two the even proposition had differentiate blessing to intended recently. So to among onboarded to One, some solutions partners care were more ways. that this array is in attractive partners RFID, been and on great can attracted value about have specialty we've and based and and a may hand as partners make I And in introduced with for have is additional attractive that for among products. second us, a who as they value be allow but business. do we've we conversations those program. a market partners, partners this manage is proposition the can't new the take economically demanding complex solutions one the partners it onboarding consultative been in into the we has carefully for talking because And

portfolio. trends the have So been in those some

Jeffrey Kessler

much. Thank you, very

Operator

question-and-answer turn And to ladies and gentlemen, the Gustafsson conference the any I'd like session. for remarks. this to Mr. concludes over back closing

Anders Gustafsson

want partners and momentum team you. our a to strong thank Zebra into QX. first solid I the quarter and Thank for

site five bell celebrate and looking the all Times market forward and growth ringing company's past to are at Zebra's to decades. tomorrow honoring our in the success to Square contributed the have who closing anniversary We NASDAQ XXth over

a have day So great everyone.

Operator

Thank now thank for concluded we you. today's Today's attending conference all and has presentation. you

disconnect have now and a your lines wonderful may You day.

Zebra Technologies (ZBRA) 30 Apr 192019 Q1 Earnings call transcript