ZBRA - Earnings call transcript Q4 2019 | Zebra Technologies Corporation

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Operator

Good day and welcome to the Q4 and Full Year 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, Investor Relations. ahead. go Please

Michael Steele

thank and joining today. us Good you morning for

risks the to that are of certain Before provisions due and we 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 begin, 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

will include find reconciliations Gustafsson, our remarks Executive Officer. Anders vision. can the results and from made highlights. Officer to provide non-GAAP Chief our Intelligence at our Olivier Leonetti, and will begin our in will full today's end of discuss Enterprise You on presentation. Chief prepared and our XXXX discussing on and press year Anders slide recent Financial fourth Asset release of progress Then conclude Anders financials earnings with this Olivier our detail by additional GAAP advancing quarter presentation the will outlook. This

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

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

Anders Gustafsson

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

team profitable fourth growth in drove quarter. Our the

of XX.X%, $X.XX, XX% earnings on and the Slide increase share net of prior year. level impacted XX expanded EBITDA of high range X.X%, of EPS, prioritizing which although to due adjusted it a year-end end end see sales of a expenses margin. record margin mobile a the expectations higher per can large points, was tariff non-GAAP reported the we each orders, our diluted growth We gross budget and of our which guidance posted lower X, of mix by you of computing at As at basis from

double-digit transportation Our diversified by economy. enterprise an portfolio offset grew uneven another our to verticals The We despite China logistics. We solid soft drove in is in regions. and retail business North EMEA all growth our mobile major environment enabling us global our in growth macro and exceptional and continued by was computing America more year. post led than healthcare, capped which growth

for computing the our benefit Our operating from sun-setting solutions in use Windows as cases the customers utilize leadership new our platform from we Android system. the on mobile transition

We product which to well will we Lower attach RFID EBITDA mid-year, weighed quarter, operational footprint, gross higher greater will a bodes growing the diversified which also transitory mitigate have enable spot expand that and to expenses expenses tariffs. bright enabled margin. continued despite margin, operating drive for double tariff on us digits. the sales, service more By strong rates sourcing in was on quarters. our another future flexibility

Systems on the Vision we QX, capabilities, later In which call. vision Cortexica our I discuss acquired will to accelerate computer

of non-GAAP results free XX% cash margin with X.X% full adjusted basis expansion, EPS growth, million the For year, solid points flow. growth of and $XXX EBITDA sales XX Zebra delivered

technologies investing by upon in our We in the continue offerings our to innovative industry-leading enabling role elevate intelligent enterprise. that build

record we order year can performance. We drive are we entering are XXXX of that with a and backlog another solid optimistic

to over call discuss and our results the turn review now will our XXXX outlook. financial I that, to With Olivier QX

Olivier Leonetti

Anders. you, Thank

with Let P&L. start us the

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

and X.X% Retail with and Tracking relative increased Zebra Intelligence sales strength Asset Services segment in Solutions.

basis expenses of operating and driven $XX not million sales. normal. mix increased sales of new Turning declined XXX the improved to in and margin XXX impact profit markets. in by a primary X% flat. primarily China by driven of regions; strength exceptional a were lower primarily due full rate Sales reduced America, net orders. point mobile the gross and in recently tariffs Eastern period. to sales year-end primarily from expenses Adjusted nearly quarter. large and due XX.X%, spend X% points acquired improvement mobile primarily Adjusted in as project the contracted grew with our declined macro X%, percentage points services. sales percentage RFID. computing year to a incentive broad-based from across America prior X basis in QX in computing, spots our We year Southern List due increased We strength trade our view by from to from services, and this expense, compensation and inclusion region prior the softness as sales continued X%, and bright relative businesses. an gross unfavorable to was nearly offset North period vertical Latin This budget strength were saw Asia-Pacific Europe partially tensions. EMEA Adjusted

balanced while drive to initiatives. leverage driving in investments a of continue growth will We operating prudent making approach

diluted one year-over-year increase, negative impact including the Fourth drove adjusted $X.XX, quarter increase a XX non-GAAP the earnings $X.XX X prior-year a XX% List EBITDA XXXX share which includes tariffs. tariffs. XX.X%, period, impact was per of margin We the from from from temporary point negative point basis

due now primarily after to expected, and $XXX which than We level lowest flow in of year venture and more generated the funding This shares ago. the free since Turning of adjusted five XXXX. of for million Slide net the million ended flow investments. timing to capital repurchased cash the the acquisition paid the with sheet the X. We period, million was the cash highlights business down XXXX $XXX balance working year of on year full prior times lower as acquisitions of X.X XXXX. in is than of EBITDA the years We debt Enterprise debt to We $XX ratio, items.

balance flow flexibility profile provide Our and and strong shareholders. strategically sheet invest cash us return capital to to excess ample

Section on on an X, Slide the tariffs to from XXX update imported On Zebra to products the the provide U.S. impacts anticipated we

our tariffs impacting printers. September, on are diversify X global We sourcing became to our effective which that in computers mitigate and List track will footprint, mobile

contract partners capital to lines additional U.S. the actions million through expected in with one-time to These our pre-tax up We of $XX move most an $XX order replicate are volumes to expenditures. result work to manufacturing continue charges in mid-XXXX to Asia. million $XX of of plus million broader to to

tariffs chain to substantially mitigate mid-XXXX. we actions, these With expect supply by

In to million the these we QX expect of launch first alternate million sources quarter, as outside negatively we decline supply margin to of gross impact $X tariffs $XX by in and approximately China.

to We solid backlog turn our and on order opportunities. XXXX a of with higher-than-expected entered us Let pipeline Slide X. outlook

returned all in from China to outbreak. the Our chain areas workers experienced supply our as the due delays have contract usual later of coronavirus than the manufacturers new year and

view outlook our impact. incorporates best the coronavirus Our of

then X% X%. impact positive point expect approximately X and an and This one impact outlook We percentage recent assumes sales percentage foreign currency net be to acquisitions point growth from changes. from between approximately in QX negative

than from cost negative be to of million QX million XX%, attributable impact situation outbreak gross cost is meaningfully estimated expected lower the a The adjusted impact $X.XX. to margin range $X.XX. freight could supply negligible and approximately $X different repurchase. Also, expectations. will impact $X.XX coronavirus. operating with we opportunistic believe impact $XX is diluted margin improved the to related that EBITDA buyback in becomes be continue share due program. from coronavirus leverage said, $X tariffs a We to freight share would $XX sales to chain approximately We million to our tariffs and List from approximately estimate to have an Non-GAAP if additional expense the assume be we assumes That delays which and we additional million of to EPS the a from additional X

and potential risk impact believe in leverage. operating today, drive understand be we growth We XX from not to X% an point to order acquisitions coronavirus that in an outbreak, adjusted our negative fulfillment from its impact impact expect currency XXXX be timing from basis believe full-year mainly do we year net expected EBITDA X We outlook. work and between of an as approximately on point recent X%, material to impact We margin will foreign which gross than XXXX as Full near-term. slightly have expansion the XX%, assumes be to the positive full-year improvement changes. and percentage sales an higher is margin approximately

will increase million, $XXX We expect that a full year XXXX cash flow exceed from substantial XXXX. free

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

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

Anders Gustafsson

Olivier. you, Thank

we continue global about an to we can as optimistic uneven successfully business are we We our and XXXX enter navigate macroeconomic believe environment.

workflows, systems bring addressing are medical to their a growth verticals collaborate Now vertical, QX broad In across they customers throughout their and proposition to facing year. challenges of growing each can turning strategic from sales so in supply primary we chain. We operations. to translated to full that hospital supplies our equipment set of range the transform healthcare, the of has and bedside XX. our that management the The are These their closely achieve care their Slide goals. with value challenges fastest to we for market

the been example, National the U.K., System at to level supply chain. treat improves solutions the actionable the which Health an digitization to patients, computing of real-time to bedside and As data optimize out safety we the rolling entire in enabling generates have and mobile

These productivity Zebra floor their business. optimizing include field across the their For planned manufacturers, and operations. addresses warehouse smart needs enabling

solutions we customers with in even ROI a our challenging resonating are solutions can positive environment. a for demonstrate because Our

dollar BXB printing their recently solutions computing that We delivery. prominent Android manufacturers and workflows direct in including maximize excited multi-million to help North in store mobile are America multiple deployed productivity

and and to which in vertical customer the information in logistics increasingly are staff are an The overextended transportation we bringing chain, success seeing service real-time them customers' to attributable we end this enables their customers our is the productivity. on-demand increase are instantly and visibility to space, In expect supply our economy.

our around US like will which to for nearly the team's the of the Postal all to in largest postal choice globe, a becoming of success begin out would call partner I including to computers the Service, tracing by data our technology deploy postal carriers with in security. the level mobile productivity high increase scanning, across We mobile empower their of network with tracking packages second systems and quarter.

capabilities omnichannel are close because it a become fulfillment an e-commerce, where is RFID important investments. to area retail critical has omnichannel accuracy. and In inventory retailers improve deliver increasingly XXX% can making to option significant

more of more the source are gains at items As momentum. and tagged point manufacturer, RFID

a and the several deploying RFID thousand purchased hour, than for conducts which of is We customer This customer This retailer. hundred of scans our one to with in store stores are entire barcode handheld currently point readers increased driving for shrinkage. and their RFID also uplift scanners lower major less solution sales sale an devices daily RFID apparel has of transactions. inventory combination several

improve with results. pleased collaborate that and use have the bottom-line with we can this we are to customer their address strategic proofs-of-concept additional on We forged in-store as relationship cases top

Slide to Now turning XX.

for solutions. the learning, showcased models. National we that a Retail machine As intelligent and few we analytics, through suite innovative for the enablers the end-to-end full associates vision featured reinvent to our a we that a partner, primary all verticals retail serve. show. business challenges the we key and in computer workflows operational customers customers trusted are in their month Last accomplish they as These address Federation of solutions this computers at Expo, retail e-commerce Prescriptive many strategic at mobile we face how orchestrate

our sources. inventory, Advancements retailers automation now RFID unprecedented mobile information through other amount flow of solution. to stores computer software generate on allow in systems, is heavy actionable This and with technology point-of-sale, frontline real-time mobile scans, their in of shelf data an cameras, edge

formerly to as learning utilizing data massive sent devices machine known directly Zebra identify take recommendations real time. variations instantly to streams action most are impactful optimal the prescriptive to prioritized outcomes. in The Profitect mobile workers' analytics, data for analyze in and

component Delhaize including Depot, an Ahold proven Computer vision the leading offering Family have important in ASTA, capabilities vertical of we many Walgreens, other retailers and offering more. are REI, our markets deployed We Dollar, Home and our many becoming serve. increasingly with retail

a intelligent critical issues our that direct SmartSight leverage in intelligence can has In been enhanced generation whose in recognition solutions QX, accelerate to and that acquired features the team a our through price new in which innovative and identify mobile a through such computer introduced capabilities capabilities system as We stock-outs this use markets Cortexica we developing and solutions robotic fruits analysis our computer flatbed vision At NRF computer further London analytics capabilities, rolls address a our include as or machine worker can well dollar correct store to next area, artificial learning, plan that discrepancies a multi-billion engineering we identify vision-based Vision represent talented opportunity. aisles. based Systems, through video object Expo, scanner cases with image solution automation that visual search. system vision and believe The offerings to we to vegetables, situation. as including the emerging and visually vision

our Zebra's mobile this year. enable to Their devices efficient for transform that strong associates demonstrated to and all across co-workers stores is mobile with improve solutions Connect computing experience many distribution and efficiency and collaboration the operational how deployed to at with customer We centers. their equip software among solution feature empower booth have Office includes They were proud they customers. associates. their and our at associates retailers a purpose-built Depot trend collaboration Workforce their application growing There to

our year. the computers their later roll We entire at to enterprise of to are purpose-built featured additional of empower for workforce. have appropriate mobile we we and out expect some NRF ensuring that this portfolio offerings these We customers

resonate In closing, well market. the offering product continues to our in core

including a and provider, partnering all. computer are And and capabilities solutions in that as to we digitize our role for operations. new strategic for enterprise attractive market vision and with our Zebra invest broadening new automate applications, intelligent C-suite. mobile large, devices are customers We opened continuing automation point-of-sale We've opportunities solutions

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

Michael Steele

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

Operator

The first of Jim Instructions] from question Ricchiuti will & come [Operator Company. Needham

James Ricchiuti

Thank business talk I'd just providing I color good Hi, with know, areas and the bit relates to in particularly, to a wanted questions, the Two you're entering some of book to of coronavirus you. order I then risk. as strength a geographies. XXXX, have the it respect like you're the which little morning. seeing to follow-up first, question about the And

in that seeing the little first the of -- sounds like on wonder but just I areas So on about Thank RFID, the you and strength. It business sustainability talk where if strength good you. of it you're strength. could a bit more the

Anders Gustafsson

Yes, thank you.

XQ we think QX, up almost and were very growth our I of in on we a First, was top that X% team executed 'XX. X% -- well in

computing that see spend was very had in mobile and we and saw We tough our softer North also We portfolio, but So solid performance a RFID, That EMEA. very and verticals transportation in as services fastest healthcare up America vertical our offset mentioned. by environment, compare. particularly and serve, verticals full in strength did retail in for all China. particular -- you all XXXX, market followed year strong logistics double-digit the growth we're with grew by also. manufacturing we as We the by led

XXXX. diversified So I we're which a uneven grew macroeconomic us that now have we a post quite we environment. share is solid in global growth to lastly, And being very business confident in enabling guess despite more

James Ricchiuti

are see QX your playing outlook. those respect you same to so out And guidance-- trends your with those as trends in

Anders Gustafsson

and than we geographies to our well. China go-to-market QX, strongest first we healthy show here expect a channel don't we expect around to entered growth year-over-year last now discipline an inventory of continue I backlog, we year good for in levels resonate we the and for X% kick Yes, and in offerings year. pricing good X% America And growth of I North outlook the proposition faster starting continue faster EMEA think we We us to have the and continues know, to solid have value our and see to and X% growth. as that's with I side, think to have currently so a the the quarter also softness. over

the will though, For QX. USPS expecting first in start out that we roll the aren't participate, to quarter,

James Ricchiuti

respect expense sales, developments. shifting and the -- I to Anders the of coronavirus, a or these -- Okay. I'm related to out related that. QX I business for about highlighted is wondering, bit as guidance could the with talk trying you. you're identify appreciate potentially into with some $X chain you think you, fast demand wonder to But million the we see you Thank that you've freight the additional Thank $XX any potentially challenges QX? forecast that And little on whether business are revenue all just moving does impact your if mean, million supply anticipate that you now, is then that you more I anticipating. for

Olivier Leonetti

Let me answer to this question, Jim.

situation indicate the you obviously as that fluid. So very is

every We have new news day.

case for coronavirus base or XX% impact know the as Our it. QX of we assumes the the growth

shifting our cost So to on we and in chain, pills back times pretty multiple ramping going for bit work demand Xs, to their with lower is all supply reflected a are demand, have much Tier what partners our a key and on additional our colors our productions. more are taking day, teams you example, give China, freight

ramping with some production partners Our is Tier manageable every back work chain are X our largely bottleneck. supply day. to and And operating

impact that in will think on as fluid to guide be in it. full we is guide. that what we year virus have we and the the put So case, believe be impact would intact. impact the If can be we situation the our we the manage of don't QX, an it know We would top were believe and of timing the we

additional our me not on that's XX additional risk the comment $X top-line. million million expectation. on the let Again, to potential Now,

would Our but mitigate be per expectation is know able we as that our impact the production tariff not our was of if we the be the to we to wanted of it, unlikely to ramp as the potential about million million, and materialize. timing to some you be to if again that to $XX the we scenario impact $X give bookends impact size was would expectation,

Anders Gustafsson

chain one of to to our the about on just earlier then calls to We've strategy add supply impact mitigate that. tariffs. Okay, thing talked diversification

quarter in Vietnam also. computing an now our is and and mobile Malaysia on manufacturing for So have printing up ramping would the and impact

James Ricchiuti

Thank you.

Operator

Meta Marshall next from will The come Morgan question of Stanley.

Meta Marshall

thanks. coming second quarter. USPS -- into you maybe your just deal, this built net just size the target And Maybe explicit as deal then point. in, on just year you're maybe question mentioned the below kind of as -- second question given magnitude. And in the debt Great, the that first what you've just far at and

and how just free next amount you meaningful of -- flow cash the year. a to So generate are in going

So use just are of how you thinking cash? free Thanks. about

Anders Gustafsson

you. with Thank yes. part. the So, I'll start USPS

USPS for and we The USPS network. our proposition our visibility -- of includes big professional already in specific the services. TCXX relationship managed be the proud and is it will our the product package XXXX. the contract. very some and Mobility I the largest us is company other customer well as, -- history our strength assumes USPS. the deployed will the a outlook our of That's the start had in the helps award think The multi-year it solutions ramp-up across of DNA, in majority are of also value custom QX the before. carrier win. highlights and and computers, of solution delivery augments we orders first, with and a mobile here. as their software, The of This optimize it It's So were win They execution

that our a we and taken outlook. view visibility only included prudent here orders XXXX We've into have the

the postal with that that expect the entire USPS service service by, will that up back XG roll-out, come the they Joe on. cellular providers on, definitely for ending devices will but of maybe XXXX, they have of good consideration done and that that lot said a XG XG work U.S. the on we basically won -- cadence roll-out XXXX other wins to later, be As the can service before is network. end of at sure end we the to I pick be a the can And make

Joachim Heel

the devices the regions world XXXX, And making many the Yes, tenders of additional largest won Latin our just all there. largest which and deal, to right, we making of Android-based we fortunate Asia, the we've with have Windows-based European are four Post, to postal that Android and in we've America, context, in in Australia around also services participate In to which largest the our of from the we transition been in postal about each the participate transitioned customers win in. are as won know deal you largest system, the recently won earlier computer. deal in

is for areas at us service one moment. postal the strength So of those of

Olivier Leonetti

allocation me Let cover cash your question.

related debt as you leverage year acquisition. lowest the to, the was you of as our EBITDA, the to end net at So X.X Enterprise ratio indicated, times the since

investments the business Our and our fund. a deploy in would investing organically, cash has we be flow also venture cash but our M&A through generation, strong business in also

buyback also a deploy to cash We will program.

we be a market over buyback. buyback $X of believe be stock we in upon based would But in the cap buy our opportunistic and guide and of had of quarter, does we to an billion the assume company We market for the reminder, have a year, above not about more price. $XX QX back bought the authorization. We the for the X% would impact this authorization we'd EPS particular behavior that, from we in any year. date As million --

Meta Marshall

it. Got Thanks, guys.

Operator

come The Brian of from will William next Blair. Drab question

Brian Drab

that delivered incorporated in mean, the Hi, was of a three the much as doesn't -- rate like points in XXXX. much you've those year look majority growth But good contract, the XXXX wanted It contract, is -- I is at said ask of would this This that to for Thanks the XXXX, just I comments, public those seem like XXXX. is, million my expecting, delivered knowledge orders impacting USPS. second it's $XXX in say it by given the a the in year you was maybe starting would million max we and like questions. add majority like I it's least following doesn't as quarter. the thinking end be a I should the morning. $XXX Anders when should about you of in XXXX. this be well, in The taking XXXX devices

I that think with people being be you $XXX I'm plus the some could including million I'm XXXX impression this me contract. $XXX -- this that just in in maybe way left if revenue from or can just like help reconcile off? million And I -- us

Anders Gustafsson

first included looked -- the the from baseline Well, have the schedule delivered for next a which the orders assumes XXXX we delivery we we've be will have is -- basically that that have at we USPS and year. majority that in the what of received

that can some the Now whatever put that's as projected our as opportunity have case of is case, to our they be and no, their is in, we is -- better. can -- is base that told But is our will there certainly we of there that want be today that opportunities our an guide but pulled schedule us in not what -- part be delivery there outlook. base

Brian Drab

But...

Olivier Leonetti

consider holdup guide assumptions consider factored the we will prudent. to we -- be have Yes, in we would the

Brian Drab

that. -- Well, than more I just I'm specifics need looking for

like million $XXX XXXX that said this think revenue what I from mean? if in call, model what it you guess say in so the know far contract. I I would you I from reasonably You

Olivier Leonetti

we best That's Yes. information the can...

Brian Drab

of to much, contract any you said it's it's and think beyond you is shipment end with this there -- XXXX really 'XX? the pretty done deliveries by that Is or

Anders Gustafsson

In services could they to the other other said. buy it, of beyond continue and or have and replace -- to devices opportunity there deliveries true, with be they also, come it includes, parts is can that there damaged have repairs there afterwards, initially what

contract have volume contract. that end the by longer the a but they number is the in out at USPS contract envisions So of put out --the total this the XXXX a put end two-year not the and doesn't dollar

Brian Drab

deliveries in more this you in that total to that contract possible have than it Is million Okay. XXXX? $XXX could revenue

Anders Gustafsson

for specific leave we don't at -- comment this what we I that. what share think to of for and think I know we it a on we we've can have We is the kind want to amounts XXXX think tried and to dollar today prudent outlook contract.

Olivier Leonetti

And, Brian part of a as portfolio also we have large the well. few as accounts

So not USPS but one. the only is obviously one of them,

Brian Drab

saw asking the the $XXX that's the I'm a it in why and about million All associated, company's figure right. I as It's largest history, Anders that only it's mentioned. one has

then with and XX figure latest the your where the where upgrades? just terms So, is that? comment on the or -- you the view in Thanks. are million $XX What's with of industry

Anders Gustafsson

Android, the said, good say a so drivers business, Android for Yes, on strong -- I'd I've broadly, as we have number clear the of three drivers.

will First, be new around cases. we use

most expand. years of look XX, applications and cases continue different and are to and probably If customers larger of that back Today, the was use go going mid-single-digits. used you think is XX at or number more for, use probably five our say back, customers like it applications cases, our to we mobile computers

versions from January older this systems support that the of a end of went continues. been that's legacy great transition So driver. OS of the The Windows of There the at were out several Windows Android year. operating

is approximately XX Our still estimate Windows market be that that the is million best needs legacy devices there upgraded. in to

Our market for say, still I'd percent at is continues be great a gaining very migration momentum, share the warehouse and XX-plus strong to in us. Android there and opportunity

last that's half also, did I guess, and driver see At new certainly in to refreshes. of the QX, Android a start second we year,

the Android started a putting we processing don't five are applications now now most since for support android -- customers different recent getting all different the run requirements and had as all the required ready well we or are capabilities memory versions. by devices those the our years to use -- newer the the refresh. cases, it on as it's to of some So devices shipping have The earlier processing

hand say, retail. looking is, lastly, a as they every of trend new our more densely computers organizations, and into the mobile to are device seeing have And looking I'd their deeply we're basically also, are healthcare a into particularly in or customers to much employee, deploy for

the We are positive for in solutions device where those have our then our we to for customers them portfolio right ROI areas. enable the expanding to generate a worker, of right can

order to and employees drives from or predicated basically those a was applications be Connect an large in intended Workforce which of new because of had have most We between device, And ECXX also a greater lot store all employees use employees. of collaboration inter-store QX that which cases included are U.S. deployed retailer, driving on applications to their our customers.

Brian Drab

I thank Okay, you for it. that all appreciate detail.

Anders Gustafsson

Yes.

Operator

of Keith question from Housum Research. will next Northcoast be The

Keith Housum

service morning, guide hoping little more the bit the the growth will XXXX, for fact can Good it more on be add, first a appreciate quarter quarter. think, a guys. should actually is like still easier comps was If postal of more few going loaded I bit and you I fourth approximately points have the but a than looks third for of back-end the that against. little sort -- you it are I year full the and conservative Especially, color guide.

that -- on little the seeing guidance year first So year expect than and lower bit quarter what the guidance are might a first horizon, I you gives full your on based guess, guidance? what perhaps we

Olivier Leonetti

market, go-to remaining respectable based prudent is indicated, Keith, able product will should to believe the we offering, of you be be outlook year of strength upon based growth a going the what solution We guide, that so we market, based that believe our the strength Keith. order USPS -- be next most we that believe more to rest upon see the deployed our So, as for year. It's the this this of the and in prudent. year of than the deliver of we upon

Keith Housum

Okay.

the forecasting to maybe that Is overall your they a demand be little you economic part growth? are decreased -- worse? or processes So for bit kind expectations get actually of of market

Olivier Leonetti

the not case. That's

if stronger the QX far, guide of of to QX So you look at QX. was going is stronger than than performance QX. XXXX Zebra, be

the and believe way an guide various prudent did. events the in we phenomenon acceleration business. to So, we in But approach of based we upon the other see most macro the the market, it's happening

Keith Housum

to perhaps up R&D there intent R&D and follow-up than quarter-over-quarter, Are a on sales increase in there? or bit more I for was investment you is we a guess, more up, to that due expenses. perhaps change thought. And Okay. was a those acquisitions question was in increases, marketing operating

Olivier Leonetti

ratio look more as you have scaling OpEx QX. been actually that in significantly a quarter, if even So of we proportion at every revenue,

playing QX, If as R&D the actually. of manage a we add you the we have acquisitions company as OpEx. do in looking But rather of is OpEx at proportion have at line, quarter, impact to P&L to revenue mainly mind quarter. And the the able indeed than been every look the that key of in we out principle only the in scale we

Keith Housum

you. right, All thank

Operator

The next Robert question will come from Richard Baird. Eastman W of

Richard Eastman

color Yes, And give number could good little quarter degradation just gross of bit in unusual a mobile little back little the just not If through to the and you here an saw a and bit, morning. sense the sift of provide computing it's -- large of Olivier, maybe we model you a that through margin maybe in Was to to in EVM side? double for forward. around going year-over-year AIT mentioned that that that could kind second this both just maybe a a decline sift mentioned order. us you bit and basis just just that you the points? tariffs,

Olivier Leonetti

Absolutely.

I margin going the through of So QX as The exceptional profile you in to indicated, XXXX back second. year and normal. was wise and QX guide the full details go the and for implies would us a

the relative into QX, So was about the lower for Richard, had guide -- we point. by implied to our details, going back X rate margin we

prepared in large is impacted year-end budget customer computers. AIT EVM point demands. and this I remarks, our shift due to orders to that to As mobile but we mainly degradation margin That my meet have indicated X

points. the was XX various to point if And basis impact large as point. to I orders, through to orders to due basis had The point we lower and impact XX large freight bridge tariffs XX was about of than guide, the of relative point, the basis had lower of higher elements mix were go of margin about the margin we about impacts expectations higher our trying the expedite the to impact a was the those

the full see you point. one impact, break the full So the of

XXXX Richard, believe you in the have time want, on to a exceptional all margin. set was to initiatives nascent if We Now gross we will definitely gross are an we improve launch margin. and working of we we go that activities, details, could into the feel point. improve QX We

Richard Eastman

the cost to the you Could for look and expect margin would out year the of to when 'XX basis we So of -- look to 'XX, XXXX? you XX supply look out you points the out that year-over-year, adjusted tariff some number? we comes XX out perhaps taking full year you're should for in of improvement expect of when gross at and see the chain to gross the the margin, you full

Olivier Leonetti

you of that we're maybe so examples XXXX believe Let we over and the freight net will gross elements me exceptional So margin why a am mentioned, I we you increase And give saying cost. the that? levers tariffs of using. few XXXX,

part example. more being them, pricing a we have reach been standpoint, the from for example, of one addressing healthcare So verticals for of and more market,

maximize, not this only have one. up. mix been be would will to deploying is resources segment drive margin the That We actually one, improvement the

been as platforming to We're standpoint, very have We And believe more is profile that lines are that COGS and from product products has platform using new material our pricing impact designing our our that that, on constant improve which margin now of launched, the one machine also so piloting a products using as The for North a are been the with margin learning a tool, will also, America. same business material outside a And for has profile service network now significantly will service XXXX our launching the we speak. that the will new have various we quickly, reset year. transactional have of also whole. we various across well. on a about orders our impact as and margin for a margin Zebra a this been we tool tool value improve

activities keep have done improving years. nice to again profile for we now margin the number a of set a So of of the business as

Richard Eastman

you you that there? here, number printers of -- one Malaysia, that -- being similar maybe do of -- just mobile movement or margin that mentioned basis along into computers on Malaysia, production then Vietnam out done just And as of China last mostly are scanners pick movement think does is just just we out there moved is gross or to does one, up I definition, And China and structurally? points lines by some and lower but that COGS Vietnam, have question

Anders Gustafsson

take one. So, this I'll

of move objective we can mitigate U.S.-bound So out to ensure here first, to China the volume is tariffs.

We are of our computing some volume and countries. volume most also printing to moving but to out to other Vietnam, Malaysia, our mobile going

these primarily. tariff China. was Mexico that to side, of in outside the Taiwan, and scanners scanning the -- would we with That by we of looking middle up expect to wrap in already On our manufacture But was mitigate in this largely all impacts. programs year,

From we gross think will But into our and of parts we work sure components improvement to be them while, on over might more an cost to we other as piece get freight little say, Vietnam. little Early margins. time, making gross cost that an Vietnam. moving margin a be neutral will that labor on, ongoing today, lower have perspective, we a bit in

Richard Eastman

Thank you. excellent. Okay,

Operator

will The J.P. from come next of Coster Paul Morgan. question

Paul Chung

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

have a follow-up. what you well. as the the your computers. So and this a that computers is confirm you're of relative happening, to main legacy mobile then shorter kind opportunity this units? mentioned five that driving maybe factors than is assuming suggesting kind And lifecycle still of moment kind at your contribution refreshes just kind deployments? of XX new of Are million a seeing are Windows-based refresh, a kind selling at quite low years. follow-up mobile products Android Is of and lifecycle the of could if you more that on And keeping you I

Anders Gustafsson

volume -- All to are Microsoft they devices. say, of have are we deployments It are of that for they Windows. I'll migrate and installed customers I XXXX We a don't who customer business, our we I existing I existing is markets right, remember. to of into have time, Android it's the is base fair over say answer large But accounts -- if make all the can't at basically I to that we to and us the it selected think I that looking start I'll the those service -- over I devices hope support still? with still think to our -- highest Microsoft new switched of yes. -- was see can sell if but selling the do where And would Android.

volume the say, Now highest we our I'd of Android. have proportion the, in

some have strong at them markets more like that a those even. players might out industry, of than Asia, seeing. but we're seem Windows gone devices It platform and packages still Windows still look is look other as a Android software little are there. quite And the they counterintuitive So of is what are support, of some Windows you you if in at some selling more if selling

shipping by also. Windows others So adding legacy end one new the on devices we and devices, the devices are that volume, new of the are million XX we into other eating hand, Android on but

Olivier Leonetti

a trend. complement, And just we to as positive see that

earlier, despite device said and a of to sales able still we a performance strong being also to, been buying market. have new part Windows the for due a post market computing We trend in cases, a the of lot in as mobile new hold this use

Anders Gustafsson

touch refresh, on color. take, refresh And able Those forth here no based on memory the in then bode TCXX customers and so shipping more Android I'll so our market, years the about, capacity to ask support and in Heel Joe on MCXXs five more to add Android we also give wear started are the I'll or some tear, the and say, devices longevity objectives. but our speed longer maybe processing back. on the, But and

if looking to all more you're memory and require current applications they are to speed Android newer memory Our and more looking speed. use upgrade processing many which to also more all deploy customers and processing versions,

fresh and rate than a when think will that Windows than I operating Android fair say, around industry. higher going default a the innovation the be overall on system more -- comment even historically There this was So is around platform is the for the a there was, platform for Android lot Windows devices. refresh

did on devices Android So we to refreshes do than our of we for higher Windows. or see Android level shorter expect lifecycle did a for we than

Joachim Heel

additional some there's that. Perhaps Yes. color on

but lifecycles now. horizons this calculations making five-year at customers point, ROI you are we with three-year do I see think seeing time their often

would to expectancy expect And that applications. used they if for have the is significant where they communications. three things inventory There we now the our increase management, that we are trend life So application, them it -- are in customers One on these voice customers will adjust that a customer are they cite driving putting There saying applications you'll it use for originally customer would a direction. that use have think we from refreshes. that will to -- our devices perspective, for say may do significant customers is those in increase a you of applications. is

by time driven addition those upgrade two, the come demands need Number to applications Android with was as short more they're put intervals. that being envisioned. are XX cycles, the Right? memory, The new devices piece then And even all months ongoing Those for not reuse that inherent used years ago technologies purposes where in the were Anders being on on cases being on technology saying, is the technology. are five requirements, last so very the or

the driving refresh volume. are cycle three refresh -- those increased So and of all increased refresh shorter

Paul Chung

the the Do in or on switching have could robots of early? term. customers the newer and gears highlighting to see groceries, these solutions if Thanks Just also want biggest seeing you we near products, for you momentum in bit were of in then are kind showcasing new ones automated solution on of actual you impact Thank solutions you update demand any at NRF, which will for And SmartPack of new of kind you of solutions there? for deploy the sense kind trailers. that. you. do solution to have you get pipeline, And any an then that kind are kind particularly any a provide think and kind

Anders Gustafsson

years. solutions new Edge-type have been is our last several going nicely Intelligent very that solutions, the say be I'd growing to First, for

some solutions. we we a a camera, but of off obviously our our attractive with XXXX. had met our with color robot. with expectations quite internal scanner MPXXXX base, the had smaller So growth At NRF had EMA We flatbed and solution number showcased We SmartSight On so with have our has quite displays, been rate saw new from that for with we you in that years, has are solutions SmartSight, Edge we've before. first pilots been heads-up number it large of the new our different -- that Smart type that of several offered a solutions industry for developing the customers.

for So demand that expect there'll we certainly it. be

number our figure of introduced working environments. are their into how customers with We a best to be out can we

other with can Edge display the improvements a of ways our the attractive And great value we've a display, that's, productivity to And very variety but with is and really be in drive customers I can on benefits, and we think, Smart also. whole been doing solution. modernize think, how just some It on these. done heads-up systems can helps with heads-up they I add management additional that way the interface one render Joe, warehouse those

Joachim Heel

Sure.

we advanced another to an customer have thousands of doors. deploying significant we to in that that several U.S. great is this And doors for. and So first we a this that broad are a introduced with continent, large have is is thousands of customer customers also their have about solutions other dock now deployment the expectations with of take have you European broadly piloting we which of -- mode of tens one of we dock milestone network very this SmartPack. with across SmartPack all asked Europe, a in the lead one now where deployed and

confident solution successful being one SmartPack the So we're of ones. the about

prepared our across customers. other in point We mobile for reached a this this The for strong had also are the leverages Connect solution for us RFID, and worth remarks, extremely mention are a two of one would IEF us computers solution has a very as solution we mentioning that been other time. we've portfolio solutions for Workforce has strong collaboration is in the tipping multiple that RFID. believe been quite some our in has large

Paul Chung

much. very you Thank

Operator

Andrew Buscaglia Berenberg. The will from next be of question

Andrew Buscaglia

on which double-edged sword side quick that comment -- to share known, the saw what it's A your get pricing from guys. use lever, -- fortifies you is sense year. as Do guess so some a Hi, power gains that's I on I your made I'm maybe competition this a that of but trying you that pricing you question and in XXXX, and a -- think stepping well more will in fairly you that? sort concerns your have it's pricing

Anders Gustafsson

is understood as I pricing our us? lever if correctly, against asking compete a you So, if you're using to competition

Andrew Buscaglia

concern Yes. that a yours, selling... And you're is if of given

Anders Gustafsson

competitive -- competitive it's Yes, well, it's a market. a first

very working markets competitive definitely attractive are factor. in We price but some is and a

say a solutions, win than wouldn't been any by foremost, competitive We is premium sure today it I Now, has tend making pricing best that's try first ourselves over to that not competitors. historically. more differentiate and that the we our new. have and we to with

meaningful that I So our our us variety around the It's the others premium. we not match, -- a Joe, innovation get is solutions, our premium. for breadth the uniqueness extra we that And think reasons, can't a have then, to enables intimate, of maybe but solutions some you... of that it -- of and

Joachim Heel

add I'll things. two

we pricing. significant majority we discipline have done our of company we the where points. the so examples what -- deals the to had call, gains, given So in those within share of of specific concessions. special would And we do concession, about we some are I'll a attention on, we have One give of have price computing two is customers. price managing of the area data or to prices subject mobile pay a significant you The talked majority earlier. great those the

a sales attention from of to management perspective. we pay so that a And lot

heard software pricing very allow this prepared are and a the The thing us. a that remarks because capabilities introducing granular that important we some you deploying we're pricing us and capabilities some for at the lever precisely area very in second manage in to level, is

Andrew Buscaglia

it. Got

out like do portfolio? kind And as get in we I of are go guys care software the like of more what's It's you pushing and going with percentage more but software Okay, that's mentioned internal to business a the more vision about target term, you long to services. products focus things an talk that side roll-out Do or that's of see on helpful. really do And, route you you that obvious Olivier, you into then, have will or you your the SmartSight want products? kind guess, continue strategy? before of the of or with see to tandem you all-in still where

Olivier Leonetti

-- portfolio, the look higher the start and So, upon margin at profile profile the ability growing part large capabilities overall for our market, excited orchestrator overall that but because as and our are for of software particularly as sense, than at markets. the customer's Those a being it workflows increase and could also this the play a for that the in a true the if Where average. and company have for a win in impact. all an we has markets of The go? those to an drives launching and reason are you increase part company are this about we of you in this, the new is service rate year, of been, revenue to based company, this

Andrew Buscaglia

thanks right, guys. All

Operator

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

Anders Gustafsson

Thank you.

our We the are and committed employees, customers coronavirus situation. supporting work to as through we partners

our opportunity grateful continued trusted and about I for much optimistic team XXXX and are see us We and success. we ahead. Zebra positioned that am excited partners have

like welcome team organization. I day, to they and talents to would also the bring the everyone. great Cortexica Have a our

Operator

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

You lines. Have your day. great may disconnect a now

Zebra Technologies (ZBRA) 13 Feb 202019 Q4 Earnings call transcript