Zebra Technologies (ZBRA) 3 Nov 202020 Q3 Earnings call transcript

Company Profile

Participants

Michael Steele	Vice President of Investor Relations
Anders Gustafsson	Chief Executive Officer
Nathan Winters	Acting Chief Financial Officer
Joachim Heel	Senior Vice President, Global Sales
Tommy Moll	Stephens Inc
Jim Ricchiuti	Needham & Company
Meta Marshall	Morgan Stanley
Richard Eastman	Robert W. Baird
Brian Drab	William Blair & Company
Keith Housum	Northcoast Research Partners
Blake Gendron	Wolfe Research
Andrew Buscaglia	Joh. Berenberg, Gossler
Jeffrey Kessler	Imperial Capital

Call transcript

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Operator

Good day, and welcome to the Third Quarter 2020 Zebra Technologies Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mike Steele, Vice President, Investor Relations. Please go ahead.

Michael Steele

Good morning and welcome to Zebra's third quarter conference call. simulcast there website year. for being will investors.zebra.com is archived be at presentation on at our and This least one X and forward-looking based the to conveys make uncertainties. Slide are today risks statements and on and assumptions we expectations are subject current that could filings. materially our differ results to factors Actual in discussed due SEC

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

our and today's presentation Officer. advancing the progress exclude Chief Officer, fourth You third discuss and trends of businesses the our currency indicated, Anders in reconciliations unless will quarter additional following in and with months this Throughout will our at constant and end Anders the acquisition. Chief to for are earnings Nathan find Anders with asset results results. growth release. begin on will include Gustafsson, end This can presentation Financial on press Then Nathan a acquired intelligence markets. sales detail our year-over-year presentation our vision our outlook. quarter references otherwise remarks slide enterprise provide Executive prepared Acting each XX will from financials on Winters, recently and basis the our conclude from

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

Now as slide over I X let's to to flip turn the Anders. call

Anders Gustafsson

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

COVID-XX. battle during focus honored empowering am that on the needs customers workers against of I our times. these critical are our We our are resiliency serving solutions proud in challenging employees' and frontline

partners. customers well-being to of Our health employees, the continues and top priority and be protecting our

In pressured to macro the As environment. businesses by plans. QX, results our continued to be continue without progress global reopening

points EBITDA from net a XX non-GAAP sales decrease and $X.XX, X% by quarter, margin diluted the basis growth XXX the adjusted prior of For per XX.X%, of earnings which of share contracted points; we basis realized year.

demand; success each faster and levels at our exceeded record of large Not result mix. and outlook. in driven customers expected to by challenging pressure, In these our we diligently our have been prioritizing have to Demand retailer which business than excellent and accelerated discretionary in labor workflows. their fulfillment shift chain QX recovery light enterprises execution been As customers to has costs, like with and teams, and from profitability manage would measures by with of our gross some preserve this spend the supply a of significant order a customers solutions strategic this costs I with in environment, markets, weighed leading shipping has force. continued a premium automate that technology margin. improved cash highlight and flow. We on stories. has notable to a disproportionately our Despite Zebra digitize our increased enable Together e-commerce the execution to resulted volumes. order surprisingly, certain smaller has relationship require impacted end pandemic trends expanded experiencing They significantly trusted empower

cited and Accessories, deploying system a their they growing Innovation, to chosen seamlessly electronic delivering by team and TCX that critical has competitor record our high our point this which solutions quality solution. are series their are in computing, health our quarter QX, attributes interface replace footprint. purposed And medical hospital global deployment care of mobile with healthcare will system. with mobile Denmark a A proud clinical In of began and multi value scanning computers partner their our We standards. are customer. we printing to across is

QX to holiday mid goal in QX. mobile We through resume deploy TCX by have continued to late with passing to Postal peak season, are Carriers USPS computers as and of now series the planned, expecting completion their

demand on mission their able that we an proud economy. to critical help our meet are customers needs are increasingly We in

closed minutes, continue as a elevate In Reflexis Zebra role September, view the solutions We and we results our review that, discuss In With growth this vector the I'll provider. QX to will the our now acquisitions as over Nathan turn elaborate to early for a to is acquisition offering. QX call of and I our on few profitable synergistic way on acquisition. to to outlook. a how financial our

Nathan Winters

Thank you, Anders.

before the net modest acquisitions. Net XX slide and with X. start increased Let's on of the currencies P&L sales impact basis points

offset was in the channel, large and decline mentioned, mid-sized Anders small business capture. stronger disproportionately prior than year. volume which impacted order was the As by and much data This through a printing

driven solid and mobile and increased visibility segment sales by Our computing growth services. in mobility X% enterprise

the flat; from computing pandemic. segment, We to significant improvement data and each continued we of solid intelligence QX QX with by continue and asset due from was bright America, regions from of during environment, to recover to the activity This spots. realized EMEA solutions North sequential last In the impacted sales most decline. improvement capture XX year. returns a the Location increased declined global project prior well. sales X% services solid supplies lower services computing managed sequential professional tracking Our decreasing notable and year pandemic. be including mobile the from our to the peak our Solutions. printing and as from in realized perform a Retail sales in were point growth recessionary Zebra in We mobile growth and continue were and services X%;

by in to points dynamics categories $XX the premium XX% across XX%; operating in service mix healthy. business prior see declined margin. services Europe. our compensation Latin to our sales excluding Pacific XX.X% by improved the mix, primarily year preserving in while one planned and freight to margin period, bright percentage a also as costs, to Asia with million continue due offset three Adjusted driven basis and XXX sales. margin all discipline management major primarily spot nearly was from points gross expenses of Underlying We which investments point partially from points business was This region the and than more and Northern expense remain growth. trends lower was improvement unfavorable Sales improved contracted a declined returning modest China declined cost Central basis declining. strength Adjusted America XXX business. from product and

a decrease Third drove was per earnings X% quarter decrease. a prior period XX.X%, lower from the non-GAAP We basis adjusted share driven $X.XX, EBITDA points of year-over-year year margin. XXX margin $X.XX or entirely by gross diluted

we lower to of as sheet use the as than receivable expanded period, year million generated nine the to and highlights months slide higher cash Turning million our was of program. now capital in $XXX on the $XXX well X; flow This prior working flow free of XXXX. cash balance a accounts primarily due first factoring

comfortable a Our strong. of Reflexis. X.Xx sheet ended balance From ratio, last net is leverage debt EBITDA higher QX adjusted to quarter due the than at perspective, a X.Xx we to acquisition debt financing

to results demonstrated deliver while can solid that invest future. a to X; continuing slide turning have economic we challenging we in environment Now in our

flow by consistently generation cost execution is flexible markets, driven Our model; capitalized structure management. strong end cash business strong and diversified our cost free disciplined

Let's now outlook. turn to our

basis paused Based to mid encouraged the realize with demand by many are assumes will order pent-up and which between expense. healthy small from impacts Non-GAAP and to operating of modest premium benefit on expect an higher a between from beginning EBITDA well a sized as be from adjusted outlook inventory the X%. XX% slightly be diluted the approximately levels, as XXX and the of acquisition tariff net to additive in and leverage soft who We neutral year. last our and large businesses foreign the Reflexis environment, trends points from XX%, year. their mix assumes to faster these is of margin have and macro than $X.XXs. expected customers currency expected we EPS but is This QX in impact to offsetting changes. than year, be freight adjusted We channel in range an impact recovery the year-on-year earlier lower $X.XX X% spending of prior are improving believe and Margin QX expense sales reflecting increase Gross expected

which slide the to Note markets. we to synergistic discuss at vision, asset with Reflexis to our on that, X. enterprise is I our cash expect free back assumptions trends With year, end will modeling that Anders in $XXX higher XXXX. intelligent other least see the how is now turn can be as as for call million You flow than well

Anders Gustafsson

Thank Slide proposition our value how building Nathan. on with customers are provider. you, highlights solutions elevate XX to we foundational our a as capabilities

uniquely our products access install from edge. of to challenges solve at customers' operational a positions the base to Our us unmatched frontline data vast complex,

help to investing by gain orchestrate time that are customers in insights. actionable in our technologies their data real workflows We leveraging better emerging

workforce around which employee self-scan existing also the an retailers you for Reflexis Zebra helps price as a Their Reflexis Reflexis see in on can to globe customer demonstrated retailers with productivity of to and hundreds retention, board XX; enterprise service is our solution. and slide are include by We and execution. of markets. drive engagement life vision suite further to a have asset improving task management and as on synergistic other leader excited utilized intelligent bring is is effects. management intelligence our solutions end platform is these which while SmartCount, physical innovative inventory

intelligence Our automated real robotic in identify shelf time. to issues uses store SmartSight the solution, help on which

inevitable prioritized the real in critical application which Zebra communication addressing provides driven shrinkage. for maximize portfolio Connect the our and throughout Our product and collaboration a unison actions provide capability workday. and Workforce unplanned solutions data tasking. Analytics, list of time suite Zebra's to of prescriptive data and that reduce insights events occur for with is and successfully This help that efficiency work voice mobile Prescriptive workers contextual

platform few software Reflexis' to optimize with the complimentary the for frontline workers. quarters, we continue market leading in seamless experience integration the next invest of to our will offerings Over

suite go-to-market that associates ROI accelerated serve. unmatched currently also will regarding we solutions. are our an customers we to investing realize compelling mixed XX, our update provide We a are empowering vertical impact seeing all that with traction slide their enterprise these the of primary we the We of our in by efforts with On in drive solutions. believe markets

was omni update, We opportunities during on intelligently a a sector. critical in changing assuming. entire pandemic, demand markets continue end care providers also longer-term efficient and mixed the In invest to are increasingly the the innovative last need serve term, complex related growth initiated are picture warehouse still real is There pause on transactions that Longer patient peak large non exciting for their is fulfillment at economy. for healthcare, depending quarterly as prioritizing in pandemic. online safe time patients. retailers to are investment dramatically buy make the e-commerce care our the customers through market technology visibility which are in of it in although help in technology levels an elective the into highlight since demand journey, of high and channel health Demand the strategies solutions provide budgets improving our straining have from and our hospitals solutions record the healthcare, now increased our opportunity. automation Retailers the for as needs. Trends procedures increased and and service to our capacity flex a the

we specialty mile in Chinese are vision. trade enabling from invest through car crisis successfully continues also through our in airlines, relatively and is intelligence that global those asset to the advancing tensions. delivery, providers operate Zebra discrete while to to in in recovery logistics solid navigating be challenging In held process related companies The volumes enterprise pharmaceutical pandemic. specialty have manufacturing, remained stores in continues segments partial challenged. is have strong manufacturing. resume manufacturing, as and Passenger e-commerce aviation most environment within to the this doors. businesses position. continuing seen We transportation emerge to goods we other bright up and Zebra. spot In their challenged. food been trends This particularly favorable a rental with begun mixed sector and Key last impacted growth space, have business reopening COVID-XX many department with We've which A this stronger discretionary with is manufacturing closing, to our to and retailers such continue drive well and competitive

are strengthening workflows We to also and digitize accelerated. automate our longer-term prospects trends believe secular a have that

I've back Mike. over Now to to had call

Michael Steele

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

Operator

from will Instructions] Tommy [Operator Our first question Moll Stephens. with come

TommyMoll

relationship? revenue integrating allow Good terms mix how wanted strategic will of important morning, and are other Could taking Anders, software rationales? thanks what the stickiness for us for words, do customer up and Reflexis you as forward? on to head to you and related one frame In questions. traditionally you. you does then you And brings more dynamics sales, that articulate market I Zebra that how as part are my the to of we be the you've think there? as the your it of with to competed? do increasing other software Or that's what deal. a start the some competitive want going Thank where in advantages should What about competitive more into driven do as point,

AndersGustafsson

I'll ask out Heel also. Joe Yes, help that's good. start to I'll and

Your company. great Reflexis first just a is

And demonstrated been drive of and to to intelligent and family our We workforce are many, to of of very to Prescriptive leader Analytic execution now, many deployed Zebra by it's the task years. our customers globe part have of portfolio, help part many the as and excited are those it's productivity employee to management Zebra common And been also solution. here retailers hundreds retention. around Zebra for

So solutions when we with solution. we we our Reflexis have; very look other by see them being at overall Prescriptive as synergistic see software Analytics and and

help that's our analyze summing If historically solutions around you think think great into I our framework being have around to maybe had show both are But probably capabilities of the a but acquisition and that few examples we Connect would of analyze Reflexis to us Reflexis, over Prescriptive different we analyze actions let Analytics then might now our customers, has the the customers quite and Analytics actually our And easiest assets complete to we of combine help to and Reflexis, able way integration we when But all other and that. think actions feed had get they between value something more to a continue into felt bit. expanded we And asked way. Prescriptive more how sense like of to in Zebra prioritized do for a side investments. those Prescriptive there we of part. more engine act, to mobile do strength tight creating prior the about back sense, in would a and our world sample be the then tied years, retail computers. can Workforce what's software have can Zebra action happening act been Zebra Reflexis sense around that leverage to out last the physical foundation. the of that into number the Analytics our the able be kind like And

either our by as system enabling our think associates of then enter that but and be them more or increase into customers, ZPA do other more the partners, by business. So can for Zebra, or that thought about or actions fed address store even can from workflows. be complete we deliver they that also Reflexis, to to strategic into And so updates more with develop can their we data able that scan effective can in solutions a can store ROI a suite the the whole, greater items we become being solutions, And to we as that our that. value service overall a our of how strategic be can they start receiving

excited want very a can we and to about is Joe, us for very feel path this So definitely do compelling that with this. you something? we what add

Joachim Heel

strong strong how but sales different underline can you retail Andrew Reflexis level, two we certainly the that we capabilities share we some where side together can Reflexis us already. bringing has market Reflexis we're fact the into operation opportunity cross on that right, also this way. that that those that bring in as retail has Anders leads is is strategic on. think into that is a on And retailers. problems way it I'll that discovering synergistic, have described, And we perhaps that presence bring now to product not other sell have, the the addresses just also the that generally and And Yes, a of actually in the very touched sell which customers around, solve we go-to-market opportunity competitive there customers crosses opportunity space. we're question their the gives around as software the immediate works your One competitors in do this part more see things an we And level, workflow of strategically. are and the different us area. have, to also product pure described Certainly second perhaps this the they

have to have act holistically. we them the that and and EI of as the capability of the analyze, none part However, sense, to problem together bring the solve vision

at can So with competitors where we from Reflexis now look competitors differentiate the traditional we this both bring them. as a we and that the actually, space had, ourselves that

Anders Gustafsson

of their combination I'd over Reflexis about have to I've also that for value are continue say They And add combination. to excited the two. on they Reflexis that our to vision solution, say the and they Just round the I'd their out, are many extra of can but month the how been we about customers and resources phone very the Zebra we value how the passionate operations. with see uniformly or with can last largest

think market it's feedback a so and from been great from far, I our So the customers.

TommyMoll

helpful. very all That's all. you Thank

a wanted you commentary the up to follow Anders. As shift I some offered, to market of end

and of platforms. into plans for leaning sounds customers retail omni larger e-commerce e-comm, the their or some integration accelerated like within the Specifically their it channel have

in are visibility smaller into customers, customers moving that being that the trends, of up lot omni level maybe ahead then seeing interest to So that of And look you gives frame has least new expanded here ago. a now terms maintaining potential a sales? not the just it current they think you around suggests even you talking the were smaller at not pace you or channel far a playing how two related robust or landscape, questions; order how than engaged more quantitatively if in retail year could durable you see they're anything, do qualitatively field or maybe if you backlog just about trend your

just this a well, Thank aspect it's maybe dynamic in favor. your TAM as you. wonder shifted I to if So where there's

Anders Gustafsson

environment And then in little I for of become have I'll bit it add solutions customers. a ask in start. Joe our Yes, firstly, to our to color also, more even this critical I'll think

say all our and frontline has We positioned e-commerce, buy vertical empower And a at And workers uniquely markets. secular up around channel pick online most number omni of end accelerating and to probably around across are retail automation. it's COVID-XX around apparent in been I'd store. digitization trends

the Here investing They've we've in this been most they and the aggressive the at a and around around they that particularly the channel, to to in store quickest, buy guess of retailers are the seen take. and largest retailers around and believe earliest growth start omni up seen grocers two there's up mass business. continue and have I'd our their can pick still been great I they businesses, e-commerce. adopting that or and market say have grow mostly the solutions - to of lots pick But on online and that been omni share, most, merchants, channel about that thirds

where was, scaling six in their months say capabilities, capabilities back. they to out are invest their compared just it So and to building continuing heavily

example, buy need stores, how online in to build think it change they the omni not customer an they to one and For times. say I a capabilities. up quite these as that I step big retailers to to invest a COVID-XX changes at and capabilities. and abundantly made smaller maybe quick investment comfortable are in omni were generalizing But consumers has types channel smaller in and want as complicated bit buying with in they now, the for retailers, a pick clear at if up channel think the a It's behaviors they compete, of I'd

automation, quite trend Joe, the this think around going some see in XXXX for pipeline just expected digitization, in that time. think And as business particularly of be would pipelines we and a being that we So see as quite say, them as robust. have we I saying around will as time. opportunities robust then is to look larger these as now this and that types of the retail, And for on prior trends years I'd we as be these into Joe? at of we

Joachim Heel

associate most add in perhaps And up. see means that two us particular, thoughts. One differently omni is Yes, little do I'll that's perhaps far it where suggesting. were store, big you favor TAM to instant a all I you I it TAM going of of being And is has a device case items with at area are expansion than and form. that a you theirs that enable in in I give but we're think because being more just front channel you your in some things channel And digitize the number to broadly in fact company than a this capabilities, you from need the created. to these where need that today. order do need the to think in every enable need deep picked do the capability to of omni your that one, the on, worker capabilities that's

to the And acceleration seeing e-commerce. supply extend lot a modernization digitizing that TAM piece this of in And chain. chain. the of second And expansion. So that's terms need that's into clearly is to automating activity related and you of supply we're your

Operator

Our Ricchiuti & next Company. with Jim comes question from Needham

Jim Ricchiuti

on Two follow that. up

were environment the you anticipating like making your with Some customers. robust larger of last sounds just fairly commentaries a you're still that

and fashion is growth? the actually quarters in areas you I two both next over consistent as a could large are I accounts seeing it's - So meeting one as the there's there have what And more been a the to to segment toward some the from mean SMB recovery relates that you there. of sure potential wasn't of moving the not investments stronger small that potentially, to but it the then making. digestion they've extent business

Anders Gustafsson

our markets. XXXX. - Yes, will faster economy think in expected than cautiously economy optimistic seeing about the we're firstly, I we're improvement And how the a end recover into

our I bottom-line point, why at our saw growth this us is we to And but feel in strengthening. for that's deals to they're When large think we into definitely both was you our our looked industry QX our in anything not run want levels, it and to And something competitors. enable qX we to and in was investments larger and how improving. think to globally. invest rebound performance stronger improving than that but to Joe, I guide will confident QX. business pipeline QX, and that we It's our a And were back good looking to leadership obviously also very our our rate strong have here, top pre-COVID-XX add also? and do customers still beyond. in here

Joachim Heel

just perhaps things. Yes, two

look at was year a indicator, it you on If our ago. relative pipeline, it's a an strong as basis as as

confidence. strong expect good rate seeing. clearly And we run gives been a clearly driver the that that we And continue growth that us didn't Maybe have our been as we recovering. it's of we've pipeline has well. but a to say that So enough,

Jim Ricchiuti

and know robots deploying Got that at reports in-store does have we looked you appear question, back is, of question more major pulled and looked relates looking the this that see, robots and it it. guys the simply including to I there, opportunities large looks inventory has by of store that? devices to one my been the a at as up with personnel of guess like like it follow to considering may that analysis, at some in apparently opposed market. store you now the on retailers hands that as if retailer automation in maybe I that opt just for had more some some putting a for things initiative, began And But

Anders Gustafsson

their fully believe and there the ROI mentioned to be being those I'd addition associates I for devices as also be more putting is our utilized - enabling in something drive types and good high that all them. problems of using or respect. being them more that handheld think to Deploying to that and devices of that in computers. that don't in is applications our the you robot one able customers connected a first, sees clearly a to and systems able of say customer for a to solution With Yes, they as solve more hands all to trend we respect able to market solutions, opportunity be solutions see

We our in year, progressed increase And an customers, very think we I announced few in have this for from and solution and pilots I demand months say last now SmartSight we've in this. many from NRF that's nicely seen at the it since particularly would grocers. here

strong. accuracy able have so prove where And far, the very is been leveraged reads technology. here over I the we've, been area of And think acquisition. Cortexica we've around on has the proven an And our pilots to our our ROI just we based labor alone. savings

to other employed to into lot some So of technologies we've ability that accelerate a vision computer SmartSight solutions images. from and extract from information to digital our useful of the our

in of good a are pilots have us who with America see this piloting North interested we in the and customers and pipeline we at solution So stage. healthy Europe

interest harder fair was is say little comments to as also a which it's on made but that COVID-XX we, Although is it up, pilots I ramp to for has further high slower would any to making you? COVID, it Joe, as from pre customer these us engage say. sites, it

Joachim Heel

thing one add here. maybe I'd to like

using other as you merchandise assortment. improvement, a certain store and from different suited types with solutions place trying with of simply or And that there store. what Analytics are the like to is like the assortment. well inventory, trying for Prescriptive the do problem that of formats, what solutions automation solve solve solution, there different this store And and to the robotics capabilities in the differently Let's data is retailers are accuracy inventory believe devices capable merchandise for solutions solve accuracy formats to they're the were we do store. while robotic remember, accuracy inventory many associates in as RFID, can And Zebra the they're

So the a capability that's these to the of bring be to key having a be them position robotic do, all we're at going our solutions what in look different to minds customer. And and will in including the automation. to

Anders Gustafsson

that's Yes, good I point. think a

to going breadth to emphasize to where Just our solve? of and solve bring then trying you're coming solutions, we to to what's problem in this hammer look is question on problem is about is bear saying, first solve it. have best can to technology to us your back versus the whatever to again and our at in trying And my what our the to is go customers going portfolio the - okay, enables from our a they're the we how I talk solve had problem

this is breadth solution great a to advantage. plays our think the of our of example I So how

Operator

Stanley. Our Meta Morgan next will come Marshall question from with

Meta Marshall

Great, couple thanks. on from Maybe win, movement in? that there you context, from? partner the Was kind the of maybe Thanks. seeing you're focus of geographies to deal? into particular traditional as that Denmark any in you're your seeing or And a type are healthcare more then ecosystem on brought just - that of that just more any that questions customer Healthcare one that improvement you was SMB, that me; partner brought particular

Anders Gustafsson

to Yes. provide Again, ask color. Joe and start then extra I I'll some

retail say on I healthcare. our so when uniquely first are healthcare are are very Healthcare very is Denmark solutions in the manufacturing also And very are in excited focused different on partners very win for and It's would uniformly, are it end partners those The that healthcare; say, had that us, almost Denmark, and we markets. the and problems very different; or different. rare have we strong

value vertically a chain we across improvements tends oriented our foot more a So run basis. rate all much geographies to entire Then in for lead around to SMB, did us. see it sequential on

I as is that to QX, business seen into run the that and Joe, continue QX, think more we further into we look this any rate expect of something also but from here, XXXX. good see see we you? into the economy to recovers as the comments certainly we've - progression SMB we'll as a get

Joachim Heel

for important partner one partners; us healthcare in of records the comments that particular very the on type space, Two healthcare are companies. is medical electronic the

perspective. relationships both for out healthcare from a China. the would resale segment, one market. excellent one ISV source of us in has particular have been them, other In an call SMB growth the that good is in and with I And We

seen resurgence particular of business, in are and customers I the we've think contributed certainly for that effect. so in manufacturing return the, to essential So China, our printing they've

Operator

will Richard from Eastman come question next with Baird. Our

Richard Eastman

good Yes, thank and you. morning,

points. Maybe adjusted think explore little a segments surprised AIT, were just margin that margin both I around bit the down. gross to minute segments XXX here here being segment to a wanted for XXX down I basis the by gross

expense maybe is question premium freight manufacturing structurally around twofold. is the mean and subcontract we base? Or here? freight my impact? I the some those given e-commerce So to using freight, that around is were first up orders specifically term the What realignment all of large our is the of expenses, getting around urgency the that these

Anders Gustafsson

been And cost. have teams again, control And the of look as than points, and pretty I free segments, start mix. margin. of QX. segments, more mix drivers, between deal look QX, an at three I'll as deals the, unfavorable we our just saw large get can by; you to take from mix, both test Hey, actually you large our want business from to than both across in an what example, think both in this. as both as mix, was well consistent if greater at unfavorable what it's business well executing spread And premium the we well if gross the around I Rich.

to margin. the to our our freight you point vertical, exposure another to cost and along generally we're And answer manufacturing example, trends, the with which if of just QX. rate AIT so question, to again, rate, as Xx proportion from begin see come in dynamics, what per do you'll capacity in costs. mix gross what's at recovers, look larger margin business, on travel at And capacities pre some your it within point, reduction higher has to here Xx internationally. gross so if the the printer manufacturing the And not underlying up then saw run will to premium you And a gross offline, our healthy. our change speaks in it's seeing pandemic, much the margin, think from economy kilo I the And business constraints really, and footprint. from run the we which as look excluding they improves, important, air with Another remain

Richard Eastman

large the scanning. the and on has order does again, side printer of same, the AIT And impact AIT on on business it the MC as

Anders Gustafsson

a say rate of higher has When run the less higher reliant within it's I a it deals, run proportion business. rate, large proportion but on

Richard Eastman

and upside, margin orders, freight normalize, the Okay. when dissipate. between for And out things that level that's kind at, when let's gross let's around of mix premium this call a kind this gross this business to XX% still we channel modest the Zebra, it look here? then large freight, and starts normalized is you this margin still move of normalized of with Are you're at

Anders Gustafsson

Yes.

margin we get levels So past the as do of pre-pandemic expect majority and OpEx environment for I return said to rate like like healthy, the back get rate. as remain margins both pandemic, normalizes. vast our to we also gross EBITDA we the the to would for And expect like

get We have expect that both savings pre OpEx will the again, I'd and will levels, to But to side. of pandemic some we that we reinvest the be - permanent EBITDA around rate. gross to get look do do say in back bit margin

Nathan Winters

our one just to we develop continue thing to I that, Maybe add portfolio. also

they higher EBITDA as margin talked software of too. tend solutions come scale, we very would certainly. to gross a as think earlier; our, a we the here them with So expect to you attractive margin, about they have And

Richard Eastman

and second channel. just follow my second the questions around sales my up sales just And Understood.

three, there Europe Just the revenue the plus guidance plus quarter? North is the quarter question, as a we guide that in for America in the quick seven guide, channel, assumption your fourth at year-over-year. of well is when fourth as that revenue assumption both Does look up

Nathan Winters

to if your channel expected was So year-over-year? question be up the is

Richard Eastman

as run Channel in rate.

Anders Gustafsson

rate, a okay. yes, As run

that provide Reflexis. - But first extra bottom-line your QX able to X% again. guide be start have and color from Joe again, in and here year-over-year expectation And for points XXX includes impact So top X% both some but positive I'll of to in basis I'll here, to growth. the we are growth pleased quite

pent-up the recovering we some is underlying are activity and also remain very business deal And first strong, demand the benefiting large expected. from Our QX. in faster but than

As seen to large also in same we a degree we've strong QX. this backlog but had that to we The entered higher compared mix not QX, prior order continue, as year that the helped in will area. us that

to the business and grow. expect rate Joe, any do channel we more you? So continue sequentially to the for And run color

Joachim Heel

I to don't think add. I anything have

You said it.

Operator

Our next Drab question William will Brian come Blair. with from

Brian Drab

Hi, you point, this recent to questions at were I follow the that just questions quick have addressing. two up

I could can I Or that if margin back on a Is XXXX? finer the term? expect you that a near in is expectation? levels. wonder the pre get that. on that to point large XXXX appreciate that a does weigh it postal maybe So should somewhat in gross pandemic the Or put order something that service longer-term we Is expectation?

Nathan Winters

and continue economy this rate detailed that improve give improvement our for early at our with the to XXXX think a along us too stage, sequentially we margins XXXX, the do I to in business. with will along expect run guidance little it's gross but

Brian Drab

becoming business, on for can that. of some And than be margin of less of meaningful that said Okay, we more gross sense course, a past, - give percentage I impact as Can even more now it's know, you a revenue it also to how and Is are of something don't the it's model terms just X%? not Anders, highlighted bigger for obviously us the in business in with you to any know it's we without then, tailwind And gross that or business. take you really Reflexis but should how it software piece. sense software? at the really margin grows. for what you - a piece

Anders Gustafsson

Obviously, the quite and forward. been And a for excited be our think, expect The we're growing nicely. of we business growing much in software single services we bigger it's the go very a us. it whole, part business software still nicely. as would as business But to our is I quite been digits about software and has business

Operator

Research. from Keith come question will Housum with Northcoast next Our

Keith Housum

up to Good pause morning, XQ you in next Anders, guys. do that to late a I little the call. the question. quarter. first Postal And it year. deals heard then US guys we'll until in thanks for congratulations, Hey, and further think want into And finish the a Nathan, And bit I say a dig Service. welcome on look

trying summer? just a to was I is So still guess, a to plan get idea little of late quarter. more third I end

talking Service? we expect are much end so the quarter of pause, first don't the first the Postal the from of terms In in XXXX quarter, US the of

Nathan Winters

it devices first, Yes, activity is in Canada peak start their always season. now deploy have ramping USPS. And will quarter. intent the we a that to half the from again first we up of was planned This second pause new not know during the

obviously with USPS. and certainly we And we'll other will be then And we continue that up. QX than expect wrapping with was this lower late projects will it QX. project expansions be basically summer, QX of So and

Keith Housum

Can the horizon? be advantage might that my that is thanks. just it Temptime there there perhaps follow business of terms up How's out an on the that is COVID-XX business this of business. is cover; Great, going any you in take vaccine with how opportunity in doing? And play perhaps And to here?

Anders Gustafsson

Temptime? So you said

Keith Housum

Correct.

Anders Gustafsson

been in has QX all vials very we based and QX the cover Temptime traditional vaccine on well covered, that doing there. the that they So vaccines

are a COVID becomes pharmaceutical logistics that available. well to that vaccine We companies, when the positioned we working to and with provide companies number to solutions WHO ensure with are of respect

this, the that are from people, addition but small, received can nice and who but capabilities to kind inventory XXXX. in a expect we orders quite build be they've have the for proactively up of initial been to business looking We

Operator

Research. Gendron with question will from Blake Wolfe come next Our

Blake Gendron

in like the quantify Good size I here. I thanks. pandemic if But the versus, or Yes. dominated deal bps coming morning. Where about you the given trough the the would friction on mix back? whatever, and be it And XX, of some a capital, back because size then you of of do maybe XX morning. been terms deal imagine. on AR, helpful. mix? we've this offshoot deals of Hey, third where receivables year-over-year quarter and want bit expect mix large to the evolution do do some scale to Are to you're that in then, the size be to impact that. were normalized just receivables X impacted that things sort know deal by you being a to super on of being little circle X talking And should pre with is of second quarter, we expect as of just the would deal fourth I that an the you smaller payables friction anticipate where offset well, as working

Nathan Winters

your answer and both large the first question to in respect growth we're to non seeing So around large deals. the

going continue order factoring; expect would head into slightly And to as the around say, we hard that's as back I year, impact modest not XX QX. to to say AR greater pre-pandemic friction and a additional we your large So a QX levels XX%. size, mix relative recovery again, higher, large quarter, expect maybe grew to that we'd is those as deals go same that just we relatively And to any on we gradual impact our year-to-date our see to question a than the And $X in through see definitely I XXXX put the than wouldn't seen down get as the are And to classification, to year degree guide. we'd economy. on modest over a cash clarify, it had deal X the large to we've full deals flow, our last million, in over be large XX%. non third but into deals a say when were prior

Nathan Winters

prior more question. the this Maybe and one adds to just

it USPS per came what drove But our investors a on expectations. we've on QX a have impacts not had as on So much USPS US focus is USPS had and from large the business deal. was lot of very our overachievement. and of in our obviously

Blake Gendron

better other Understood, I you least growth, a color. slide have actually America Latin little Europe, North if maybe out more in than disclosed trending on could guest. a of like with was follow directionally. appreciate it so than the deck. Looks had companies And bit the APAC would regional indicators that heavily America, kind then at up, broke I the additional down pretty maybe some other and

of something there it I get And channel non-China? all, discrepancy? it Pacific first specific on versus due APAC? the Does us going help just just better So the for customers? levels a a it to trying Is then is with there guess China Asia on is - or issue end is feel to the markets inventory weakness there, in

Anders Gustafsson

Pac and part our more first, supporting some accelerated see what have as COVID. we of Asia secular in said globally Well, trends business of also globally, the I that are

So run more deals. automation, than global rather trends. Asia by, driven around been are are our rate those has And say, business omni channel, digitization - business the that and have, large all those in a Pac we

our shut parts QX, good Pac less bigger the drove So in business large in business and I been COVID-XX parts in and declines of rate more India of manufacturing Southeast where Asia areas, the has down. think those run or countries other specifically and were Asia than

QX. in us. returned leadership China relative So also actually to that have said, doing I job new General and China, Asia strength was for sequentially great in Pac. But And for was as more from up there Australia We new did some who's impactful we growth. from QX, Manager, Pac in Asia a see

Operator

Berenberg. Our next question comes from Andrew Buscaglia with

Andrew Buscaglia

to I USPS just guys, Hey, clarify something award. on wanted the

that wrap of by or to you're So QX. award you most of of end up said deal most the going

because upwards I of, what was wrapped $XXX that guess of will follow million. know fully I $XXX be up is deal or million on stuff in within was that portion comprised the think that total there's up the I - award

Anders Gustafsson

and to USPS when be count, don't give, as the think think the was contract I say $XXX volume stage large award the of we the million. of part this maximum this how up breakout contract. can will a at I a for specifically

Andrew Buscaglia

your think sale much about see as your starting which and America it again. QX of nice as And lockdowns guide, quite North was to Also, is EMEA a rebound Okay. I didn't third in a we're guide. it now

Is of guess take kind I account into it that what that Europe? does going conservative in in guide? have on what's So contemplated you and

Anders Gustafsson

for So have very the lower guy our it backlog; positive the in levels we levels in QX; we confident of had inventory momentum strong reflects feel with entered or the sales we healthy We quarter in channel. the business.

more So the actually end quarter than loaded normal. is front

and are this in now companies us the we which environment. some of think of some this. business March think still say when continued So and obviously to pressures and I April, - the do you giving Europe guide. or that I'd specifically there of if around end there Covid see rather of to But great though, that as are compare from our lockdowns confidence most most have how ourselves, I sort when life. to lockdown started, we the much I enterprises than lockdown the be And of I more operate think think to learned, this life of aspect the first on social companies, better intended like the in uncertainty

would I so store would of around lockdown that and some be a think have of less would us. expect for again, online now. So about I will some drive which pickup forth, we the that severe in thee impact lockdown positive the buy talked channel, impact offsetting omni And trends

Operator

Kessler Jeff from come will today with question last Imperial Our Capital.

Jeffrey Kessler

full about been call get if has how think to, which markets point? you SaaS you're forward. you. solution that vertical of you interested - going What most want been do - developing Thank for it vertical full, to recurring them type markets about it Zebra talking providing this to when a revenue, least call talk at in a solution, let's Which a; at have you

Anders Gustafsson

that this look not been address at the known about vertical it though, as some Profitect, excited - like has and that acquisitions more Analytics any our you if or vertical I'm they was been I more Reflexis Maybe say Zebra can sure retail. software I have Prescriptive can markets if others. previously say recent our that of than primary

a I has a in further as probably But retail and certainly acquiring lot in in healthcare along is a we interest say service. markets. So solutions industry other than I vertical of highlight broader them are we or would an that

Jeffrey Kessler

of the up which first terms types to you in be Okay. or would the the USPS once available once done be for first technologies that might the market? be what you've add-on of done to of services - you've first, And total areas your expand part and/ part contract, might in the able instructive follow finish other of

Anders Gustafsson

I'm from products I USPS of business possible and Yes, in might many sure of our already. USPS talk we to want of what the customer if ourselves about not future. get a win is ahead

So printing, scanning and solutions. mobile computing services; some software

highlight to I So see a you. want opportunities I specific across know I for that any for don't suite us solutions. to broad engage But ones of

Jeffrey Kessler

types just NFC, of what regard taking be technologies in employing, such that and types at technology with the line other a your have BLE of are technologies now. identifiers that right in to thinking increase other other you you're And to types that Okay. using look or of mobile been new complimentary on scanners, with quickly, of the may you as

Anders Gustafsson

looking at yes, be data will of answer broad technologies. we the sorts certainly guess capture I all of So type

many mobile Our computers, them of NFC have already.

the looking customers we're see the ROI of best to provide enable type So functionality our for can we get how always right solutions. to those to

Joachim Heel

might, Joe. is You this

and energy, solution for that on in we introduced Bluetooth solutions we are the is based NFC used which that's remember built proximity You our low might railway for technologies, monitoring into devices have ticketing. example,

think we already in the So future. and potential more those using we're have are all technologies

Operator

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

Anders Gustafsson

are like and frontlines wrap our just up, to at customers would to thank time. the employees, Yes, working challenging who I partners during this

technology executing helping world well the pandemic we the are navigating is safe everyone. COVID-XX that and as of challenges of are team solutions our Our recovers. through through the Stay enterprises proud

Operator

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

disconnect. now may You

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