ZBRA - Earnings call transcript Q2 2019 | Zebra Technologies Corporation

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Operator

Good day, and welcome to the Second Quarter 2019 Zebra Technologies Earnings Conference Call. [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. Please go ahead.

Michael Steele

you us thank and morning, for 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

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

join Senior your prepared Heel, the Joe Sales we President questions. as our remarks, Global of will Following us, take Vice

presentation, archived being presentation year-over-year and there investors.zebra.com, recently otherwise acquired This Technologies, our Also on throughout Xplore be and businesses. this to results on least are references is the from for unless and website one-year. a indicated, will basis sales growth our exclude constant currency simulcast Temptime at at Profitect

to the turn I'll Now over Anders. call

Anders Gustafsson

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

and second well drove profitable strong Our the growth quarter. team in executed

basis an than X% year. Slide sales point reported $X.XX, on year-over-year net non-GAAP adjusted EPS XXX increase and of growth of we the a on of And X% more diluted from As basis. margin a XX% prior EBITDA you improvement XX.X%, can see or organic X,

customers with deep saw has accomplished build workers efficiencies a mobile global data channel. to innovation, and growth mobile and profit Android been the broad-based lead through the our in have solid computers QX, and bright of through of capture unmatched as cost us through and our both computing, scale with for portfolios investment to computing accelerate broadest We employees through cases. performance and Enterprise This selection relationships outpace mobile our R&D competition the stronger. without extend to investments continue was we double utilizing offerings. compromising printing growing a to use partners, best-in-class focused We discipline direct and our initiatives. industry, the enabled been in our growth upon spot, are never our Enterprise a growth continue variety in digits, solutions. the powered our new Operational

the investments Android transition are from the benefiting to in We paying from multi-year to operating also Organic diversify initiatives growth are system. Windows off.

solutions the Connect Workforce our spots were For software application, example, RFID and second bright quarter. additional in

the vector attractive also to opportunities. as adjacent We see a of market to for growth continue penetrate and the company profitable way acquisitions

Profitect is acquisition. leading analytics, growth quarter, attractive is and the which position Profitect and our outlook leadership Intelligence us well us an closed provider second position for our on of the Asset first as In solutions Enterprise provider performance announced the half the for vision. year. advances our in the Overall, as we our confidence solid prescriptive a as provides and market in opportunity

repurchase $X turn billion will and to share our review the now authorization. our new that, Olivier financial With I to discuss results, over our outlook call

in sheet Our continuing strong afford generation and while flow balance to invest our us the ability to cash shareholders, capital return business. to

Olivier Leonetti

Anders. you, Thank

P&L. the with start us Let

diversified by of in & X.X%, sales strong net growth currencies sales in before services. led X% to on We of translated basis, segment see Slide the As on second impacts an reporting Visibility saw increased Enterprise segments support organic which in regions. particularly X, most and you each in grew the demand computing Mobility can X.X% and our quarter, acquisitions. mobile

increased and with X.X% retail growth printing, segment Asset Intelligence services supplies, in solutions. & Tracking sales

strength Turning in in sales mobile and growth grew saw services. and increased strength growth computing geopolitical gross points margin -- Retail logistics, as from X% efficiencies, and productivity the regions; strength year X%, relative with particular transportation sales America, and We in in America realized our with wins. North primarily were to go-to-market period, continued expanded by competitive mobile EMEA lower primarily sales in We prior in some to and in in with due driven had Mexico We relative weakness. categories. Adjusted basis Southeast Asia-Pacific particularly our printing region continued RFID. primarily Asia to and mobile most services flat, and China. were Latin in sales XXX driven X% increased cost countries. due traction retail and support healthcare services. well strong strength and our RFID. XXX% Australia, in discipline, across Sales were saw as by strong up computing computing, major particularly

of Consistent percentage operating as principle, key operating adjusted of expenses net from basis prior sales period. XXX a year our with the points improved one

prudent driving initiatives. of while We growth leverage, operating a in continuing make have investments balance approach to

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

year usage in the second the million on now Turning free flow strong prior we a quarter We to Free capital highlights lower flow the the XXXX. $XXX period, million and X. cash year performance. discussed. in half in increased expect entirely generation was balance This the of cash higher cash the was generated $XX previously we half flow which the than to of Slide second and due first first sheet quarter, prior period, than working

net our debt X.X targeted is ratio below range midpoint X.X Our EBITDA to the X.X adjusted times. times of to of

our that authorized we program. has a Board $X repurchase today share mentioned, announced Anders billion As

the profile annually. outstanding investing Our strong one, debt cash and leverage enable us maintain repurchasing approximately X% our of to range, to including target our business, up balance shares sheet our acquisitions and in flexibility flow

Slide to X. turn year is X% assumes We're exceptional $X.XX. be X be acquisitions expected exchanges. in net from us expense and EPS performance. negative XX%, X then adjusted currency diluted margin which the EBITDA the be assumes from on percentage leverage quarter That prior our to cycling gross range of recent margin XXXX year. approximately impact our and point foreign expected said, believe operating XXXX X%, QX to third -- impact to approximately approximately an Let in percentage and prior between We higher is which sales from QX Non-GAAP growth currently positive expect is outlook would $X.XX point

and our We impact negative impact from foreign X%, growth assumes full changes. percentage net point be positive between which to sales are recent rate maintaining X% approximately percentage from currency acquisitions and X year approximately point XXXX X

assuming and about to basis growth from we basis adverse impact are have XXXX in prior that improvement an points. increased our be approximately Given Full prior our is XX guide XXXX additional year XX organic FX our guide. approximately from we by adjusted points expected now XX%, margin effectively guide, EBITDA

our margin improvement expectations. high-end and operating team the has gross leverage been Our of driving at

cash XXXX, exceed We $XXX Unlike continue will in XXXX full capital to working cash expect that would assume XXXX. flow that we use million. year be free of a

Slide XXXX can year other modeling X. on see assumptions You full

With Anders our discuss are vision. making progress that, Enterprise will Intelligence back I to to Asset call the the we turn on

Anders Gustafsson

Thank you, Olivier.

pleased QX very and are our momentum in the with We see business. our results we

by and Intelligence asset to worker to enterprise. Now Slide connected Enterprise enable a every providing visible, of turning our frontline this utilized. view Asset to vision advancing the Vision XX; and digital optimally we enables are be entire Zebra

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

cloud event is enablement the analytics our of a and of community portal partners partner application with our launched our enable a workflow Savanna services that and scalable, is at APIs empowers and the solutions the to clear enhance In step customers as providing secure, through edge provider, integral build workflows self-service interfaces of by It layer analyze which platform enabling or Savanna our devices which ecosystem sensor API-based visibility digital and services, intelligent business. ease An June, through Savanna Services, customers speed. powers delivers data supports of to optimization. solutions our data sense end a our triggers framework. reputation forward frontline developers act to information, connects we part elevating monetizable benefits programming our Data solutions. customers Savanna, and web with in analytics

time of leveraging an APIs a print has ship London early point, store e-commerce cloud from based As Dawdle, from have Services. the user proof provider reduce deployment to They service been been of Savanna Data proposition. its a

distribute get items ledger to expect the into and our Profitect to they Intelligence through other services use to reduce chain suite term, data supply across blockchain Longer Savanna visibility We've software Zebra costs applications acquisitions, MotionWorks return the complements quickly. handling of the QX. also more and most Enterprise been Workforce being inventory offering. advancing including of in recent our vision Asset our growing Profitect Connect, back

address technology sellable and and areas to discrepancies. identifies and we team, pricing intelligence Profitect's we expect improving all relevancy the merchandise our markets global for idle assortment artificial stocks wider expands retail its learning and deeper of and talented to serve. capabilities and solution Additional operations. accuracy, Profitect's The offerings, machine inventory Overtime, in vertical leverage

acquisitions further past as analyze platform, attractive and partners. Zebra growth We the The layers enable also functionality core, underpenetrated high into intend outside made are Savanna year over where that enter we and us markets of we out the to new advance and the benefiting to categories solutions build have a scale both act us incorporate existing Profitect's provider. the our to

enterprise with offering ultra-rugged enabled factors. Profitect, our Xplore has temperature portfolio In to smart form supplies us Temptime monitoring augmented time has tablet into expand our to and addition best-in-class

solid vision, help Asset their digitize performance made have edge. we as and progress industries businesses a Enterprise many operations gain on Intelligence across our We

of our We sensors, by devices technology opportunities workflows of are of including knowledge capitalizing for which Zebra. key all mobility, create and leveraging megatrends and and automation, the computing proliferation on doing this smart deep cloud

XX e-commerce, our care. improve that increased well and consumer to staff health manufacturing, clinical our patient opportunities. broaden at implemented we by We hospitals, Children's smartphone In Slide monitoring. TCXX optimal efficient and patient We and safety. customer markets a as serve, solution attractive recently nurses operations view This diversify range more its a its health for mobile translate electronic care, empowers growing markets real of durability mobility used of helped healthcare with highlights and to including other provide computers its medical as fastest replaced that devices and Health health vertical, System healthcare, for devices collaboration. the bridge Nemours vertical time records and with growth our transportation purposed the retail into solutions our between two connectivity, degree to and and operations patient a improve remote seamless including XXX logistics status

capabilities provider improved up as providers the like Our healthcare with are are moving solutions us a stack Nemours.

the we with space. e-commerce, partner a are leaders strategic and in retail this In trusted

We fulfillment have their retailers see heightened for with meet to as stretch consumers' improvement found capabilities opportunity that expectations. significant they omnichannel most

that Our solutions include such Workforce complex customers deploying are software as applications and professional a Connect. wide RFID, services of increasingly range can

real-time strategy. ROI to also the with a to level model investment in and to compete prominent and need our chain The with execute experience. customers computers necessary are associates fulfillment Android successfully effectively. elevate to recently powered computers tech the chose of them increase their TCXX its high they seeing that overall This an store customer mobile with and their empower of latest in-store We mobile our enable upgrade our to equipping number increasing omnichannel the department is their shoppers omnichannel delivers new information stores

ensure As are solution, providing transition. to and out professional retailer support rolls our this smooth services we a

seen this many prominent enterprise players, one, takeaways grade like best-in-class a solution. competitive retail who with and have We e-commerce require

is The level workforce three way can results their the most help In coming drive warehouse. top they and in helping years. of customers recent our to best and of quarters and productivity automation the study, with say challenges resources. capacity to utilization, that requirements the technology more delivery bring transportation By efficiencies, their that, introduce and respondents site higher over operations vision expedited show with to increased as face logistics, augmenting Zebra current labor than shortages warehouse workers

this As need. advisor, we number proven a demonstrating meet ways a are trusted thought and to leader of

For example, logistics a the solution Zebra the will transportation be rolling year. with over next and customer out global

the and We support containers. mobile parts customers load will the be monitoring density Europe professional air of of solution in services, enhancing with the effectiveness of delivery of cargo various and featuring computers, that TCXX the

a and to can rolling solutions looking increase their contract plant costs. efficiency. be visibility reduce accuracy on In A manufacturing, example manufacturer, increase our customers Asian can its found who out RFID who with operational notable is partners, are trusted our for and major floor,

verticals, we our opportunity adjacent traditional our are Beyond about in markets. excited

into For example, make new we the market. are well federal public inroads positioned to safety

class for network. TCXX rugged our FirstNet use Our enterprise and TCXX certified XSLATE as mobile well computers and RXX now tablets are the LXX on as

ideal Our a variety and mission-critical walls. offering wide for of inside the applications four is outside

our address In summary, the we in we priorities. demonstrates a increasingly set of complex with vision. the we we worldwide with the implementing marketplace excited business their are Asset Enterprise The solutions making to innovative about are are diverse Intelligence success customers are realizing progress

in our extend value. We our continue the drive to industry focus that and solutions shareholder in investments lead

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

Michael Steele

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

Operator

Thank you.

session. begin comes Your question We from will now the Instructions] [Operator first Buscaglia question-and-answer ahead. go Berenberg. today Please with Andrew

Andrew Buscaglia

get the but guide, your your back are you Thanks I guide? looks -- your talk in little come a I Can what's a implies how the so fairly that talk about large there? bit and -- the So more did you question. your it just digging for the bit into sense which top in little strong, reflected my on -- QX, muted? guidance, QX, with you line so ramp get and Can up about the sense holding a margins taking

Olivier Leonetti

morning, Good Andrew.

of last guiding in would XX%. we remember organic an QX, translate we for you are X% X% to very about to And about into at growth So growth this X%. a had nominal stage That year if X% a on basis. strong

and today tough regional your to have to or across from market. bit feel a about this compare few about based either ability seen guide a our you to good our of in standpoint, at includes now you that product to for profitability this cover term take we be trends portfolio point question. a answer context in guide the about key to would on the P&L profitability. operational today, you At quarters leverage EBITDA basis have line XXX are the are the have have From margin OpEx planning in or our we more of we reflected where guide, we stage, also gross standpoint we that believe, standpoints. in we growth the leverage due a in So our And company presenting and is in improvement the have XX%, upon as discipline the to guide. a specifically And to

Andrew Buscaglia

you about seeing talk -- bit in at your little more inventories what I Do when you confusion think can little Got are you bit think and if weaker there's you I yes, it. guess, -- What could -- I bigger share think the you're of a regards gaining generally. channel distributors? having competitors a And to results. What with seeing? comment substantially you're on,

Anders Gustafsson

Yes.

won't other results to like where that, feel First anything on competitors able -- we about be are. good comment we or but I

that compelling over We years, the for have in QX. a executing and specifically diligently we have the last on strong vision several been company

have of strong strength customers. we the first on propositions very all on position, channel. I company. think value inventory also Asia America a inventory every have were very both performers. portfolio, We and We the portfolio channel specifically of transportation our e-commerce are across our product as and carefully competitive all very and manage But think in And had a as for and product through I the and EMEA yes, our we we our strength base And let's Basically in up perspective, computing from Pac, today, were vertical the the performance our -- say, position. time. the resonating well retail, direct strong solid strong particular logistics executed quarter we half. well profitable services verticals drove perspective, North that from and well the mobile with growth saw

the We what would consider normal. inventory channel of within continue be to within to we have be band comfortably -- the be

we there's sales unusual our sales, in for So the so And on that area. compensate people out. nothing us sales maybe

drive, is overstocking to say the there channel. no So of incentive

Andrew Buscaglia

Okay, got it. guys. Thanks

Operator

Jim Company. Needham with The from comes go next & question ahead. Ricchiuti Please

James Ricchiuti

the good had sounds it I'm some guidance, I thus look competitive you, at wins half is you assume Thank clearly we larger morning. some out like I that deals. you your larger deal second wondering pipeline, as what wonder, this year. can far -- for characterize

Olivier Leonetti

are are we and can we large complement. So then Jim, of maybe forward, totally guide, normal and the not are amount They putting planning in contemplated deals. Joe not

Joe Heel

Yes. Large part second large portfolio. and an large particular unusual And large expect of we become part for of year, QX, the that unusable in as our we but deals, is Olivier in of of year important to years. not half, this number relative deals have quarter a expect said, in don't number deals previous the a an usually deal

James Ricchiuti

signs And just to good just you're the if your my it pretty manufacturing, the at the markets. potential macro fragmented, you from markets in seeing business? of but you. base? follow-up seeing strength it core But where like question, your caution it a customer are part reasonably which still in Thank is seeing relates sizable as seems environment, all like smaller very you, Are of

Anders Gustafsson

and hence and workflow help tight we provide line this to efficiencies guidance experience We our particularly more technology to start of labor They much dependent strategies. real-time partner I'd do become more all -- much able be ecosystems. that them our through front customers on their to customers' Things are the increase type saying our have our customer markets. employees, of in we top important priorities. foundational by on like patient our their to are solutions the execute

unusual little most -- be year we've it that on on business our us. but quarter, across across diversified -- performance through and much and but it Every can no Mexico based we'll across worked And as think that the broad I in and is that quarter geographies, as saw was business sub-regions different. this a is that still generally, or holds our geopolitical we last maybe countries environment, a little was would some making downs, hard we strong ups have helping -- very So our some mentioned world. based, a products we verticals some sure Last have verticals. see of soft we

James Ricchiuti

you. Thank

Operator

The Paul JP next go question comes from today Please with Coster Morgan. ahead.

Paul Coster

Yes, for question. taking my thanks

know I that Androids Anders, thoughts So peaking. stand year? be the this cycle Can on us persist where might in why your you many Mobile? are Windows upgrade CE believe the so-called we investors the replacement of concerned Windows And latest beyond and growth you might give

Anders Gustafsson

Yes.

solutions I'd broader a First, broadly the more say growth and that portfolio seeing of and broad products across the business. I'd -- innovative are across from perspective, say a driving solid entire portfolio we

So and market and leverage is this Android things differentiates us of mobile something edge data line. that one the some in to product the more than ability for and think help deep the Again, But optimize things customers to back our us flows that's to decisions I I like of computing much take good real-time of some businesses. work to their understanding is to our one go drive broader aspect. the at giving

on-demand there's economy. product very of So our megatrends growth like in the opportunities several lines. all we're support that about And the excited

have the the for we've we are There computing, excited mobile certainly for great several drivers about and that growth several outlook to business. now. And seen. the years we're have we seen made we over growth specifically progress Now very

by our use we Now that deployed they being of new strong software computing there's that's have cases of underpinned things portfolio for the mobile are developed like portfolio. capabilities a number

historically think, lot will drivers. people. have use customers One cases, So best or computers. be many this many or and looking customers the of being growth or used devices a onto our applications couple PBX of example are consolidate using are A verticals our wireless new dedicated multiple long-term phones I for mobile PBX multiple examples, to

can our application, Connect mobile and with computers. we device case onto our Workforce that that consolidate Now use

Another more of customers are all in trend our looking seeing that and we're put is more the hands technology their to people.

device our vehicle-mounted use of traction. is of So are further computers pushing also. tablets mobile the a gaining also of I'd having new say organization, everybody big screen into seeing the so and a lot And trend cases for portfolio a computers, lot and interest of technology so

there have And Now specifically Android. still share more Android of is has it all converted lots legacy for And or not the than Android market potential anticipate now -- supporting think is XX% systems. market mobile we to forecast up We made market. been of the to catalyst about for the stops mobile approximately growth are by XX over overall that still devices. transition, million still clearly to their devices market We Microsoft when market. going in in Android XXXX, XX% the older these We computing this us. there's that Windows devices in be operating

So conversion drivers. take this see longer. We will good cycle

driver and to some released warehouse products. devices capitalize new we ramping our on software great MCXX specifically the that's a transition, up and Our MCXX so now, be new devices to continues --

but So our driver, there's computing clearly for business. drivers Android long-term a is only one several of mobile great

Paul Coster

follow-up. Quick

lot You're in obviously software. investing a

services, applications, because I is looking software cloud expressed this know in your How software vain for in data acquiring the there. some not into and and it's some. APIs business You're line model, folks way your

into translate just margin on the improvement So hardware side?

Anders Gustafsson

business a it. of first and software from of thoughts I'll smart having strategy say the and devices couple infrastructure. you smarter devices now Well, historically, to gone around made more our kind We've downward give for

us. for performance So driving focused has on and a software a very and portfolio great for become edge our its much customers differentiator entire

easier their layer integrate, makes manage products. customers our to suites it and Zebra of Our Software for DNA lot

pull as great moves Services, new will to and leadership we and and our our customers So our the solutions Data stack provider broader specifically -- capability that also monetize that's for as us Zebra It the us enables us up and through well as as to for help well. enable helps it data then that demonstrate easily launched Savanna solutions a thought partners more Zebra the a access data.

a Software continue is but overall to be bigger expect do differentiator still into also, but devices business, bigger our something and embedded as a is that's a modest it software all to part our business. part of of our we

Olivier Leonetti

strong Paul impact. business And strong have that performance is model due software of gross company, Anders the several perceived we necessarily margin allows to quarters margin it's way and in and now the we in the Clearly, feeds. on a based strength complement hardware, software reflected reflected in you offering as the thought in P&L, see is to we than leader the the result, investment the have the upon said. basis are and And sell on a but industry don't which as also as software posted that just to us price. speed And of offering gross the for these line we return in the rather also

Paul Coster

you. Thank

Operator

Drab from Please question William The Blair. today Brian ahead. next comes with go

Brian Drab

which or geographies terms too, could retail below terms if of great X%? below of AIT. above just we may drill further if Hi, segment, into Slide the growth curious you and on specifically good wondering talk morning. in X%? end I P&L, first, within mention was AIT, X% for which manufacturing, it little could would then or just a in were Thanks. And in about markets, be be just were Can that above maybe you X

Anders Gustafsson

here. Yes. start I will

deals year. QX. versus So in grew last first, XXXX see QX We fewer did in large AIT

regional other all out last to of has have able is we through portfolio. and good and which fresh were grow in growth here. it I'd particularly portfolio, Europe they well, Link-OS the Asia deals AIT call not a strong portfolio printer our printers portfolio saw smart -- year, market In in from So differentiator. within Pac, prospects and we do we some as in overall, saw printing the of replicate really segment an that We printing mostly ones. our of a our overall a manageability we a But also connected growing that's were large From strong the very and particularly. our unrivaled great RFID but see retail portfolio, portfolio, like saw and in we positioned printers, we the

I out as growth think had good areas good market. printing Even two the us. call a I would us, strongest for China for which those is

So we as high were well. in China up single digits

of by answer penetrating if and manufacturing. electronics are offsetting that So other manufacturing sectors like other your China in automotive we some Does question? discrete manufacturing heavier the

Brian Drab

Yes. above? I that's and mean, the saying for to this T&L obviously. of with markets. mean, answer CapEx to regions still was the above I was hoping more manufacturing at in I below the I mean all X% the what guessing trends you're like trying some I'm and yes, end maybe maybe hoping question. retail -- specific and we're X% guess between guess other these -- my reconcile like was trying But to from -- were read specifically just I and seeing below I I lines I helpful, feel I'm I'm some are and below. were

Olivier Leonetti

mentioned outliers business of Anders earlier, not portfolio. characterize printing an vertical being is you as in a outliers quarter. But outlier assumption particular printing of particular have seeing the that's particular in also strong we Joe the really, The across year. way we model No we our and today of That being in as QX the key would a can any rest majority our Brian. the the country case actually are and was

Brian Drab

opportunity out doing to you business the kind key are obviously, and in to cost is And lever well. your different topic; a the And thanks. of new the these manufacturing manufacture that I'm optimizing products Android that pull take products? there's whenever of time. be as a over a to then on these over And is portfolio some time Android product, wondering able cost might follow-up so relatively new Okay, very just there's a

Anders Gustafsson

look always suppliers. -- we with as routinely engineering and out based pricing we And part I time. the our bringing we margin have would on we that at roadmaps of devices. the renegotiate volume, for say do product So position line Android value -- on on legacy our our look products been costs at cost here now very Windows position in much with margin the actively this some are doing and

this that we actively time. is haven't not for is we we -- So been have something doing something done. This some that

Brian Drab

right. All

you. That's thanks. Thank Okay, helpful.

Operator

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

Keith Housum

this guys. retail warehousing driver And it's Olivier, healthcare for T&L that to a contribute a the years that. And growth be year. segments? through there talking time it still manufacturing color Or geographical growth, of see little morning, expecting perhaps and Good Quite and onto Question bit and when the the before is that a provide in significant those on you you train? like say we're growth jumping it growth. to several you're year sounds perhaps happening? little you're they honestly, seeing more seeing been more next continues into you, here are to Android Can and perhaps we're

Anders Gustafsson

strong So QX. transportation you us. up manufacturing growth to It's I'll other of very take It for goes about up that for double-digit and asked vertical first, very basically solid But tends in in But a kind profile. logistics here. QX. you T&L and and any have

that. strong months, supports XX has is There If secular you T&L the that last some done at well. very look trends

economics You facing every of new household that times, labor to number expedited of A number T&L providers delivering boxes with box corporations. see a are shortages. comes delivery versus one

help are good introduce we kind of how and help automation to issues. us can So address technology talk about all being of those for backdrop to those things

ramp play from those are to warehouse our Microsoft we many see to starting having is or the transition. those issues. And now Solution. warehouse the is in a ways really now drive help In customers Edge we positioned think Intelligent logistics, uniquely Android to transportation moving Android. and capitalize our The on in particular I

so particularly So P&L warehouse to forth and SmartPack, the RFID for position space giving location leadership solutions, the thought also. be also and well-suited us and

is We we so. was has manufacturing out. not robust If move as over well enabling it folder very industry our or But the in then months -- to XX performed last portfolio quite increasing, manufacturing; as QX.

within accelerating And us. vertical solutions manufacturing. So its manufacturing increased market. location the for Also, sizable has Manufacturers supply opportunity are is Android transition visibility looking as see we also our their market primary a into chain. manufacturing as for

Joe Heel

Joe into about legacy devices, if I'd add XX we more installed market. that million, be space. think spoke base, in the manufacturing believe and the This remaining detail that, majority of to you we look remain more our is replaced one about And is like to that Heel. fact into before the warehousing the We the thing. Windows in of

of that manufacturing which just as For fact reflected the see those adoption we heavily the -- serve do customers I But slower up. that, that variety warehousing pick on focusing quarter MCXX in you technologies. in now those reasons, expect that we've the in are and this apologize, released the to of adopt warehousing now space flagship past the have before the been MCXX, that And going will good And adoption market. MCXX, forward. the that evidence manufacturing seeing Android we're devices that transition a

Keith Housum

million science a we've data in to But about And year. windows. based moved very helpful. then past guys on that been Is still range? maybe we really that incomplete year at the I very Or guess can mobile or at know remains are number have that that, there? you that X imprecise the XX that's over computers on say this to a that our best anymore adjust, getting precision probably are is out you roughly question get still still it. That XX talking there months same -- number think hasn't number installed million it's Great, this or I get often, we

Anders Gustafsson

hasn't is that one come data, has But over has the go say -- down Android XX% every and I'd come the our reason on that But million there we incomplete XX down. come months last can't each devices. the -- over used and down only is more faster calls in of that it be may and numbers we've It I identify Microsoft. those to switch -- the from XX market last was be year guess,

market. the legacy So devices sold of substantial amount there's still a Windows into being

on eating are, one to into is legacy to end base we or the we're from the devices. with new adding it while the adding installed So say, it other end, industry

Keith Housum

one. good Yes,

Joe Heel

rates. have XX% are I high those computing the markets still Windows computers, think than surprised customers of very bit well of computers world that relatively mobile our to mobile mobile have Windows where that us the high a still some the continued the one segments more in is in penetration There dynamic at revenues buy perhaps has that are as around category.

The will and also that's the So prolong existence -- Windows going forward. prolonged. transition Android to cycle

Anders Gustafsson

certainly So having maybe see being I'd talks about add close don't Android to a peaked questions couple peaking. or of that. of kind We being that

some deeper corporations, cases that new believe time, for Android mobile proliferation going to the to use good devices be computing continue growth We when then expect of transition and of penetration couple we for a with you time. is some and the into business

Keith Housum

Did squeeze the then you to additional share Got could hear you. guys be that to here in if willing of terms with guys more you at outstanding the the repurchases? Good are X% on just repurchase. share annually? of in guys I take cap say And you on debt share the I share And one a are repurchases point. opportunistic

Olivier Leonetti

what summarized it term of well in to you Keith, we're So planning do.

So me why of buyback. of let a background give the bit

our So leverage about X.X. achieve of now range one, the our bottom we of --

XX in to we would period, We will strength we We quarter. allow achieve within a the should the That's of the of that will we your in on of Would share be the company invest third that fourth table. believe higher buyback plan invest go start believe And quarter outstanding. to a point, that flow X% buyback. business, months the see. why buy the still M&A do the of to And the about opportunistically? back and us we cash in

Keith Housum

Great.

are additional debt take -- fund you in those willing on to debt order so repurchases? And to

Olivier Leonetti

that. to allow The to cash don't company. with of We we cash buyback strength flow the do of finance the the will need us think

Keith Housum

I guys. thanks Great, appreciate it.

Operator

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

Richard Eastman

could any a quite in Yes, the bid to good and and bid in I inched But price frankly, the and as just the taken quarter? larger or on channel pricing up know And were opportunities has morning. capture well? pricing what you speak pricing on both Could if the is process. large Olivier actions Anders, projects, it

Anders Gustafsson

been that competitive been have a much always We've are attention see our market. our making had in in -- sure to competitive we strong to So certainly customers, premium compelling looking on able the it's market. work and a are and attracted very we very that competitors, We've we portfolio a solutions focus of to environment. us getting

today I been we for and able but that with cost that pressure is well six or characterize pressure even we've the gross Maybe, to now competitiveness you compete to think further been additional three price so comments? have months that to occasion different was any Joe, for offsetting we long of have the margins. our market time. increase price or ago than have on to wouldn't But I a far it do particularly deals, achieve or able reductions ago. maintain months the Obviously, any

Joe Heel

to to continue with that ability And gain competitive exactly where to It has primarily is picture I that work with large understand pricing two closely margin pricing very think, grow. other in can talked our price good continuing the been the price way distribution. smaller to a which what deals, the the our is described expertise Anders to that good about quantities share. Our realize in We transactions. always already we've market to the so is and while partners in a rate, pleased our distributors level the in And goes run we well. that of to we've developed, parts. and part very happens And of segment,

Richard Eastman

the a points and add Could with products, up The consolidated XXX a you Or consolidated I we're points basis on basis gross look the XX channel, think, on improvement? year-over-year the there a just that through some price could clarity adjusted margin a price? and just that so it's When through that. there to that number, capturing Is on say, points. out capture of I of is at piece gross of look, -- I XXX margin basis that bps, it put XXX year-over-year, channel, Olivier, as both basis, slice price that? direct did basis that to many with

Olivier Leonetti

price chain strength efficiencies way pieces, one answer margin to with it's of the we what precision. difficult all We mentioned to and very offer in particular, pass to wouldn't point I I supply of drivers. the The and the is It's Richard. value -- multiple to earlier. that difficult the due we the also

Richard Eastman

-- Is sorry. Okay.

Anders Gustafsson

contributor. has margins bigger that expect And we should becoming strong to helpful. able continue improve No, I software of our been nicely say, part going was to in QX. portfolio. we be a That's services to earlier mentioned mention quite I margin to a also

Richard Eastman

And ask Okay. again. I then could

wins quarter. How X% just to to think direct I consolidated not Did on it for the that growth quarter. relative some against in as core? you above the at the grow or Just channel growth retail rate business? large alluded of channel? core did maybe the great But a X% wins direct the the averse that this look

Anders Gustafsson

There the the sales In channel. stronger other channel But in deals. the it than way. growth saw large does our the we of it direct QX, in is quarter-to-quarter. So were sales than one, QX, the direct the change stronger

Richard Eastman

revenue thought at I come Okay. looking a maybe where I'm in. was just below question; might And it little explore last bit my

repositioning to you just bit curious the maybe Now quarter. per revenue adjacent or be there little in speak investment the benefit their hope arguably, and forward? you're what's -- investing what's acquired may product or markets line portfolio whether But a maybe we what's the acquisition Xplore? their how the to at you're just could straight if strategy expanding And for going I'm Xplore

Anders Gustafsson

Yes.

a portfolio in has And vehicle-mounted attractive computers. that think We reminder, market. two we us portfolio screen clear our very nicely That very portfolio, number in right. big since includes growth strengthen and a the been continue QX. we had -- Xplore, cement we us includes As growing help the good space. as a helped is tablets to portfolio ETX computing very really acquired our that tablet this to first, our think whole as bought We has And Xplore broader rugged Xplore, QX. across in it the of really mobile

on working Xplore now to the available in new and can optimizing tablets all going is Zebra. available also near have we adjacencies really capitalize in we the historical to how now very of some received, integration our help now Android-powered drive is we well. And resell. Our have this well our We've and for strength the scale Xplore where all The of we're market. And been products hasn't strengths efficiencies. -- go-to-market -- Xplore got looking Joe, help. partners is And some to Xplore that has see in do been first

Joe Heel

Yes.

you and as So two I you perhaps identify things. are investing said we about, would repositioning. asked how specifically And

and the tablet that government, has we've verticals The would the just which areas. about public the in outside And of of penetrating vertical those Things one. utility we be, for number market repositioning just number investing safety now. And such additional Android Zebra quarters talking like been LXX many examples identified, is to made and launch version. first, are core that Anders, depth would that segments, segments be announcement two the we

strength I Because that talked earlier. is that? it we think to it's a important very investment. additional Why that us leverage enables about

DNA into mobility now space, that we we our Android, differentiate capabilities can will Our tablet software leverage capabilities, in us. think that and

So areas we've of two made. investment those are

Richard Eastman

you. very good. Thank Okay,

Operator

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

Erik Lapinski

James. for taking the is question. for Erik on this Thanks Hi,

You in transportations customer low-density including logistics monitoring. roll-out mentioned and a global

if Just solution? there? ask, been ROI about to progressing, you on timing your just SmartPack this is more have maybe to on color that, if you how And wanted including prove have talk can trials

Anders Gustafsson

Yes.

And Edge location specific nicely. call what of RFID, Solution, SmartPack, reference we our was that forth, So is Intelligent broader to solutions SmartLens, so portfolio SmartPack. and progressing

pipeline to into feel, over have of leader some truly products proper it have it's we lot hard also other we're Joe, a growing commercial we're pilots. through roll-outs can And of Zebra making our We But all working helping and progress or sure convert certainly we and a time. of those a make more And thought position as comments. pulls us as well. good pilots

Joe Heel

color flavors of Two Yes. of sort here. more

from first that the the ROI we prove solution or customer way the where continue are of we monitor hundreds out now trying to loading. where expansion And customers where expand. to prove the now in and the have really doors we to can the rolled trials thousands that see include to in that also about mentioned think roll-outs multiple And Anders You going sense. of we we're smaller back that technology the

there within The use solution. other direction cases expansion the is multiple are of

So containers how the examples monitor only not be of trailers, loading can can and And you this of also monitor cargo expanded. you for can there other this but air loading of example. technology are the solution

in so directions. We are both of these doing

Erik Lapinski

your That's just really sense if Thank of potentially that And capital any strategy announced program? helpful. you. about allocation great, that's us how then share plans for a And maybe get there? the could impacts you're you thinking M&A strategy if repurchase your given newly and

Olivier Leonetti

invest us the cash is the still business we for based would be and and Zebra believe invest either of a company. business, in believe buy in to that We priority the return So inorganically. our that that strong vector back. can a organically growth we cash M&A upon excess to And flow the strong of for

change inorganic big believe organic, I've do reached this we now the of the we we three buyback. bottom at range, as Erik. mentioned, our can targeted and And have no investments stage, leverage So

Erik Lapinski

Thank great. That's you.

Operator

our Jeffrey Kessler Imperial. question with comes And Please today last go ahead. from

Jeffrey Kessler

a security and seems and college, [indiscernible] We're the also of on so wanted education AIDC. you gestating the in me market what and but be to alluded you update I other call for seeing to which us that getting bit of on you safe if thank you cities, government could projects, little penetration lot know just to growth -- long. little want bit civil and the market, a tracking a areas you, call. specific in not Thank for market institutional I K-XX before. into

Anders Gustafsson

range room enables grow as provide first devices on attractive the a either lot public you market. providing that there. start will of of then in safety becomes well cases a I in think choice for devices augmenting Joe as us extra that think new has for that up But familiar to its Joe market good rugged there think also And for we a growth I'll the Yes, that Historically, computers our of market and been opportunity way we kind space. But an that valid today. other maybe been some computers millions the made that pushed materially use consumer here. there's public several safety on the dollars. has of talked as is market are and And responder with. hundred some call And from and That of thoughts first, mobile color. is traditional of dedicated We about market Zebra.

Joe Heel

Yes.

we public the look of education, second. I If see at the first, would government, safety think, in sector and we majority the you in opportunity opportunities, the including say public

order moment. priority would think that at of be the sort our opportunity I of

Jeffrey Kessler

could the taken you expected to -- Okay. with or And worse particularly like things the the be don't -- places your organized UK with regard account secondly, in I'm wondering have guidance and get if you if the Forex Forex better possibility already? guidance, that -- that in there? into Is

Olivier Leonetti

is. And by we've company. we believe P&L It And moment the as headwind. multiple a as manage the said the before, that the levers to way, we FX have FX at well. is we can of And manage

Jeffrey Kessler

excellent. right, All

Olivier Leonetti

you. Thank

Jeffrey Kessler

sorry. I'm ahead, Go

Olivier Leonetti

That's it, what Jefferey.

Jeffrey Kessler

Thank much. Okay. you very

Olivier Leonetti

You take care.

Operator

to our call I would Gustafsson concludes question-and-answer the to back turn any Mr. This for closing over remarks. like session.

Anders Gustafsson

you. Thank

day, financial Zebra delivering results. want great to as to So the quarter welcome and for thank I another partners to team I the team execution up, a excellent want Profitect strong wrap Have everyone. of for we also our Zebra. and

Operator

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

disconnect. now may You

Zebra Technologies (ZBRA) 31 Jul 192019 Q2 Earnings call transcript