ZBRA - Earnings call transcript Q1 2021 | Zebra Technologies Corporation

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Operator

Good day, and welcome to the First Quarter 2021 Zebra Technologies Earnings Conference Call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Mike Steele, Vice President, Investor Relations. Please go ahead.

Mike Steele

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

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

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

will Following Heel, Chief the join your our prepared take us Revenue remarks, we Officer as Joe questions.

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

Anders Gustafsson

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

with across business, the record results, and performance first strong team quarter profits. exceptional Our delivered resulting in sales

increase year, of XX% adjusted free non-GAAP sales net improvement; XXX XX% cash of EBITDA per point a adjusted or XX.X%, basis; earnings on of basis realized; we diluted a flow. growth from quarter, and the share margin an XX% prior For organic strong and the $X.XX, year-over-year

to all demand customers to and double-digit regions, channel, solutions of stronger-than-expected digitize recovery our each as from customers well demand automate demand strong teams executed distribution satisfy across from major realized workflows in economy. their sales broad-based as category, markets. end with an a large on-demand Our increasingly and product in We smaller well growth our strong and continued through vertical our in four

driven and growth. business invest time, mix significantly also to travel profitable sustainable we expanded while profit margins, the We expenses, by same drive continued to in at favorable initiatives lower

of confident growth Given that, the are call and improved in more in discuss will we to review financial our innovation, our now XXXX increasingly I prospects. our results pace our over With Nathan and to detail momentum outlook. QX turn

Nathan Winters

you, Thank Anders.

Let's basis, XX% QX, solutions. smaller and channel, impact start including pent-up with saw grew growth reflecting P&L and sales partially organic to we the customers through currency adjusted increased large X. even higher demand on In an broad-based demand. for of and double-digits, driven by from customers acquisition, the Reflexis on XX.X%, sales our Slide net the the Direct

services premium XX.X%, Mobility supplies printing In growth $XX solid operating mobile improved regions. We business Asset favorable We China from grew in million increased RFID solutions, segment, & higher basis and segment across with by driven charges. EMEA, XXX sales basis double-digit In America, service Australia, mobile Our all to The also exceptional margin. and also primarily Tracking of led New XX% returned XX%. sales in regions realized including America all gross Adjusted increased strength XXX Enterprise growth Intelligence regions, our double-digit with returned and & Adjusted sales XX.X%, services strong growth And percentage as APAC sales had and in by driven computing. in sub strong points. software. enterprise offset by Visibility mix, while growth the of expanded North XX.X%, beginning and of freight in incremental a sales computing, was depths the XX%, tariffs increased all each favorable points which solutions growth and up Latin growing and pandemic. increasing with margin growth is from rebound growth India. with year-on-year expenses sales to to supplies software by offering. recognized double-digits. sub to printing, Zealand China, impact XX%, in

return in We been discretionary managing high while the business, accelerating costs. prudently investments have

First XX.X%, operating quarter basis year-over-year share leverage. also offset rate. lower from from expense adjusted gross by share higher and non-GAAP benefited of period, tax drove slightly was $X.XX, count, a lower growth a diluted partially We a a EBITDA per prior-year XXX margin EPS XX.X% margin or point higher increase reflecting and the expense increase. interest earnings $X.XX

of This had We to $XX prior turning cash provide asset to X. Now $XXX investments balance primarily In million QX. $XXX two year, flow intelligence higher highlights million free Slide growth. we solutions. on the venture due million that of and increased real-time companies generated visibility was in sheet the QX, in flow profitable and cash than artificial

ratio. we debt Our adjusted perspective, net remains modest leverage balance times sheet QX From ended debt to strong. a at leverage X.X EBITDA a

order our strong we virtually and business. dimension healthy inventory to entered by demand across QX We encouraged of robust backlog We're broad-based with turn now seeing our the Let's outlook. a every levels. are channel

combination of expense, between expected $XX anticipate the in assumes premium be full-year roughly profit up diluted and Reflexis additive plans our expect This between to tariff premium guide acquisition gives sales XXXX of We to basis Non-GAAP is assumes XX% in margin momentum impact strong in the leverage. COVID we pipeline realized and net is which a step assumes to $X.XX. of point margin outlook. XX%. invest mitigation increase China the foreign XX% changes. their with to XXX and us EPS customers XXX and point basis the to outlook confidence QX, adjusted adjusted and XX%, impact gross to impacts. QX along expansion and range of QX we from from which approximately to QX currency In As freight, a gross This to sales expense operating freight also same digital the raise EBITDA be $X.XX substantially provide million transformation. our It

we for the supply in raising adjusted year between our approximately Reflexis second guide and components. the acquisition an are chain growth half our constraints XX%, of of be net growth full assumes increasing reflects from certain impact year, from and XX% percentage X solid despite the for which outlook to foreign point changes. product This XXXX, the additive For sales optimism currency

least an We from to have freight expect challenges. raised expansion XXXX be EBITDA margin million work mitigate for our in for to year, turn charges prior profitable and increased assumptions call supply assumes to discuss on adjusted due be between which to gross of year. chain Please global serve. modeling we at and Anders, expectation that, $XX free markets vision Asset revised outlook will the to meaningful the expense of shown growth. premium our the X. as to I $XX XX%, full-year $XXX cash to leverage With margin how XX% million flow additional Intelligence advancing for we back Despite we're our reference now million expectation the We Slide operating Enterprise

Anders Gustafsson

I outlook. you, our which across to Nathan. am increase our demand the encouraged strengthening XXXX by Thank business, us allows

of associates software, their Intelligence driven Businesses team frontline adopting most digitize solutions, working their of our to and innovative software performance. solutions, frontline how them the of in partners increasingly and Slide done can advance automate in our the compete such Enterprise near and complex and advanced industries operational portfolio operations transform vision. pandemic. utilizing us workflows machine by With all computer levels prescriptive Asset capabilities leveraging achieve across By vision. edge our are insights to with and customers leading through our Our job their can effectively navigating learning, customers analytics, services higher as products, to Zebra's challenges anticipate and react an customers we overcome are that economy. today's XX our illustrates has outstanding help real-time, some at more solutions on-demand now

management Reflexis and corporate software solid our that frontline making solutions the task workers, the them. as to been for well real-time with integrating reduce applications support have existing complexity progress for teams management We experience workforce optimize as market-leading

artificial easily inventory gathered the sale point and Our every action, intelligence is ensure is real-time from value next proposition data. worker assigned, or to completed; identified, best leveraging where of

We experience enable planned that we communications. are receiving tasking workforce and feedback enhancements positive year, have portfolio unified planning, this will customers very labor on software the across a from for

in suite have Consumers level of omnichannel been that We in also the market have of growing business. go-to increased increase service our investing shopping. trends XX expectations to traction our Enterprises accelerate Slide been raising solutions. their in highlights on-demand accelerated are invest an this Zebra significant of urgency, a to due continue driving to has with pandemic economy. the sense how solutions

enterprise a wide several e-commerce the shipping years. patients featuring global enterprise use not Zebra's of mentioned. announced large and to for cases. volumes a range parcel with sales benefits Automating increasingly Track customer over productivity important the experience. Forecasts And satisfaction. technology investment. healthcare return double and seeking on digital higher next and more strained an trace as also of include workflows becoming and for provides efficiency, and just software the similar These proven The launch patient and trends office from Yesterday, opportunities labels increased exclusive mobile attractive as well the are e-commerce with eco-friendly businesses. for To to design, customers, specifically application the capitalize as cloud-connected first on small seeing medium-sized easily anywhere. cartridges print trends we to small label I are business favorable and home printer customer, designed we to

an enter supplies $XXX of the market approximately recurring attractive stream. with launch printer, million we revenue Series the an With ZSB

attractive We provide and the expanding our SOHO into differentiated proof pace, offering label point where we a focus adjacent this offering. a can printing have pandemic at been markets of innovating a despite record on is

understand in Now customers challenges on-demand the We turning economy. our to increasingly Slide XX. operational face the

been address optimize timely of a markets As more in has goods pickup Zebra turn of retailers a all increase promised. have prioritizing need this range online end a to effectively. trusted in that retain end-to-end provide sharp strategic omnichannel there a available inventory labor and to of a workflows. businesses them challenge Solutions make been wide and in In shopping. when in utilize to retailers for higher their To sizes variety To deliver Zebra manner help business, partner, retail, accuracy investment or

leading evaluating example, their applications for for inventory more Zebra's They supermarket scheduling and devices, existing management chain Zebra TCXXs recently also operations. cases to For ZQXXX PSXXs a use workforce and fulfillment, Zebra management, mobile stores. their software stores their and of use printers, X,XXX over across UK we are TCXX, X,XXX enable all critical fleet other across added and omnichannel purchased thousands nearly

growth in increased perform and of associates mobile highest healthcare, top workers. for feedback efficient many customer electronic on retail supply this from customers airport capability we digitize solutions Rugged to enhanced In service. offering. opportunity. exponential recently drive the make they Additionally, operations this X,XXX demand This which wide feed end-market health easy-to-use bedside one as to growth are to safe is customer and to soon task medication positive even as management applications parcel volumes, continue hire our Zebra to analytics and well adopted company print began into allows software their enable our new visibility Other logistics, management locations scan workforce with continues large more transportation directly Patient collection our healthcare U.S. for integrate to In device attempting and fashion prescriptive customer companies the ranked selected new hospital check ID, to to record sale received entire a that and to Reflexis putting accessories variety software specimen accuracy, technology adoption of adopt positive real-time synergistic safe e-commerce system improved benefits. Tablets at and streamline retail for patient care leverage The mobility point application, into ensures to patient very ETXX Zebra's our their verification. solution with a Zebra's enables need have journey, large car-rental the has care planning and technology. workflows, pressure where option A in care. who as the patient chains, for of clinician their deploying are recently reasons mobile strong

has in QX. hardest to XXXX, been growth Although rebounded double-digit the hit manufacturing sector sales in

on emerging and prospects MCXX secured we In markets, been digitize shipping, workflows support as and This primary associates management, recognized in the with functionality, about technology selection computers a ease-of-use, an focused were number to than of markets X,XXX are with manufacturing, in their lifecycle We notable takeaway enhance we automate manufacturer, newer and criteria excited We are tablets. recently receiving closing, are by cited increasing customer for win our end to performing purchased this workflows; a equipping workflows. more thought automation Zebra see leader increasing we global customers well and in and our customer. mobile and been in a have market. who has XXXX food this

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

Mike Steele

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

Operator

first the ahead. And from will UBS. Karas Please Instructions] question [Operator with come go Damian today

Damian Karas

would you more as So quarter kind demand? thinking this your customer reflective of your will? pent-up about progress of it's pent-up smaller sales the order you demand, first But had demand through that of was from just the at quarter, mentioned run characterize some point we second you as the past that strength Are of really you're still seeing some you rate if on underlying and base. current strength that

Anders Gustafsson

most focused was customers, and on are see only by We so the and I partly in and our we And strong our growth do are from with by today very that take Yes, have large for to to as something? Nathan, that small medium-sized the like we and so on we our the larger is pleased also but did that well share but here think double-digit factor here continue pandemic, resulted businesses. - verticals, automating demand. And products market. accounts. demand by was our outlook We want - certainly I'm supported pent-up omnichannel strategic first, us. driven solutions, and secular business particularly partly expect for some demand growth and strong all performance, accelerated first based during across pent-up companies could the across digitizing broad-based results driven provide. quarter Well, from another saw strong demand, regions, it's I - all we customers, trends in add that you as all very very and us, their - that

Nathan Winters

Yes.

pent-up the So this time on demand.

I think our guidance miss recovering both XXXX the year second estimate, our is And isn't one, that the of this the half here so it quarter. is reconciliation. recovering in deal precise contributing year, is digits, of last and in it a we think an first low plan first and which most and to original double

Damian Karas

could have of some year visibility that sort larger Okay, that later you is do that you that seeing makes guidance the that of, kind should larger I you past haven't in the projects you've then, if think or in baked of we there will, still you And your point, this orders. some sense. when taken that, spoke into start there in the yet? sort the back At larger half be projects, expect hold

Anders Gustafsson

increases into be what think larger to tends is, overall into I that our we've or deals said visibility the our pipeline with it time.

- closer through we to visibility, the enter we year be So the have we'll the the further half get QX. and second better

better visibility deals. some have today the rate to of the gained so progress, on But some have likelihood run as see into visibility, don't for but perfect that we of deals how we is expect to part something also in you Joe, larger do both what that this? clearly So pipeline we our necessarily we today. have you opportunities is don't stored want our in add high to - there

Joe Heel

And half, did year. deal for Yes. the just we large the throughout half. evenly in momentum I the continued say would the large has that deals first in second we prospects have as

QX we that the One to and course said. of have QX deal, is USPS the contributing aware of large deals you're as which of is our

Operator

go from Tommy And with the Stephens. come next Please ahead. Moll question will

Tommy Moll

market geography a that's to sounds better there weaker improved market, a is we or or would ago. over driver good geography you a quarter it is quarter the raised would the as everything terms you if in know. us be mistaken, gotten everything But any if a for last or quarter one guidance, market point little of expected, to compared And and maybe talked most, nearly and I'm both that like end ago, what like to? geography end sounds it's just pinpoint if revenue the had than when Anders, to that's one

maybe and there like today Although, your comments it on tone based just sounds any? weren't

Anders Gustafsson

have our hard where a we and verticals of had today, This demand. because I question each each is had quarter we've our growing main we've don't ever four broad-based of of our a all each think categories regions, double-digits. product

just as as So also America grew it's by hard particularly stand XX%. highlight to particularly who maybe pick But I'll largest or probably strong, here, region weaker. as being our North out strong we

we've the basically up our made some mobile And highlight. we now. our to maybe think America. very from in it saw for software, good North - been continue just fastest On demonstrated the off for all supplies, fastest strong a all our And very they be to demand all go-to-market government perspective, computing, portfolio. time the we services, digits. a growing the It's had growing healthcare, printing performance also So expect in both RFID, product want paying vertical government the It in But here vertical vertical, nice portfolio, we And one. vertical and vertical investments across QX. to the entire wins across a had and I vertical broad-based growth. our double newest markets were demonstrates

for their healthcare It productivity be drive demanding for other prefer providers overall to care, solutions to areas I started they think moving the off healthcare across critical drive journey a patient to - patients to the patient experience purpose-built digital now, operations. now are that healthcare improve and more our or the and transformation remote it's healthcare greater are providers also. tracing, even able And in And care, ambulatory in like but contact expecting accelerating. is acute into care.

drive-through for like in and response used specifically, solutions vaccinations, also cold but our so and of some forth. COVID chain logistics testing healthcare And

Nathan Winters

Maybe I something add can too.

last If you Latin one America. hit the America in at the one also swung our regions it's but region. quarter smallest the was the was that's the most from and rebounded Latin look has nominally, most, hardest pandemic the was that

area. another is in In notable we're hit which good the terms one that verticals, as seeing of and pandemic is manufacturing, that in some rebound well was hard very

now I run have think customer size our medium notably are by haven't mentioned the we and driver e-commerce is the catching of larger businesses biggest and We're one in and deal and digitization. quarters in swing past size, was investing small in up big So, right? seeing and yet which now to of our accelerated business, small in rate rate. course run the and medium customers, what manifest a that purchases the that of

Tommy Moll

both. What's the If on you customers, progress ask the I with of associates some reflect extent store all could you of the making very the you, I pilots strategy us update carrying you And How Thank devices. more retail case the into least your one there? where the follow-up. potential could to or if have factor does there? lot ROI are customers? what our are Anders, this That's to helpful. one wonder of a at

Anders Gustafsson

and both able mobilize digitize now the playing can right Yes. action, The that the see more make Across device for this. the that's and which with information somebody them you that, then Reflexis progressing. who our how a be device to most at put look wants engine, then be enter We're Reflexis by in as vertical, around and of looking big inventory mobile how see to a us. task employees role the now very and well decisions, as automate all big smarter upload and if or to driving the would as technology We highest relationship be their prioritize is to hands the operations stock-outs, data. that - for time to through other react have able customers companies can of data, is in I about mobile connected carrying a are a device. worker We And every the opportunity is at theme can have synergistic. you say, ROI very right their excited to to

very it deeper network under having portfolio value - synergistic So adds both one that it's the The the roof. progressing. and strong progression both and a penetration solutions on basically adds by is to device of also effect both

for go they have seven our if had something, but or would So several and the those XX, for, X or have you of they back, X progressing. hundred have vast that are our And today eight think years may majority employees. customers. the maybe store And that's objective we large I having or they when in might years, shared devices routinely supercenter would device a associates XX say, big is retail in

the maybe and want examples We deeper of to - of range and our we've price devices kind where we've combined penetration. curve. And portfolio have provided devices software expanded you enable really of that And good where some to to examples performance full provide much Joe, some this? of across share

Joe Heel

Yes. the device you of connection all of SaaS for one software. I'll and our give our example

devices is which interact together is One largest requires have with that the is our store, to device. - enabled be ECXX to and the retailers a able with the in another. Connect the And key to each the use enable Australia Reflexis one also the associates associates which tasks their one future associates other, but all to the in of way of by communicate that's have by Workforce also using with do of cases, in

So, of I example think that's it. pretty a good

Tommy Moll

eyes those now. progress our more Thank I'll Thank back for out for keep you, both. But turn Great. We'll fronts. it on you.

Operator

will And from go Buscaglia be question with our Berenberg. Andrew ahead. Please next

Andrew Buscaglia

- what the mentioned break contributed that talk a out or gross more that little you Reflexis Can in general in and helping? I were you on obviously was just acquisitions quarter, then margins you break quarter? the bit strong. hoping which in very Can what software could out you

Nathan Winters

is Nathan. this Andrew, Yes,

what Firstly, well executing on we our been teams very can control. have

business basis leverage. two-thirds You as points. related see that XXX mix, to through volume up that the year-on-year About is well improvement gross as of margin

third medium orders, acquisition. that to high about business margins, the our large the as well and business. service coming And as service from expansion have of of small recovering due a Joe mentioned most was that especially within of that from And We expansion of earlier. our mix Reflexis

think year, margin at gross And XXXX. last I to note, also remained margin the improve to They our expected has we we we're the returned. thing stated overall and seeing that as throughout the underlying play one look trends. we mix healthy out as

Andrew Buscaglia

And EVM path of, from taking? of margins, have had those - and kind very strong But even sort particularly Are I of is do at grow gross can you the of we're that or this integration? run the is looking margins given know forward? elevated yes, you XX%, going rate of this kind freight expenses you services you coming - you're expand in. think software level, that sort some

Anders Gustafsson

expect do QX for as small level was do particularly with to over especially time, as margins forward, the strong software normalized move expansion think we I But our and EVM mentioned margins we as I'd more to say, a of I the expect of over to favorable our think, due that we you business. improve. to normalizes medium-sized and mix improve of solutions. time, growth

Andrew Buscaglia

maybe step just or in that you assume if the guidance expense? QX, unless one. big And down for ramp got SG&A? expect margins in gross we So, into last a given Okay. pretty reason you - some in stuff QX, In a just do freight

Nathan Winters

Yes.

to XXXX. that gross down of mix XX% is favorable lower to guide business up to from it you margin. due year-on-year is Sequentially, it is QX points, nearly if EBITDA X So points most X due XX%, of at our look

comes CRS As first had in we slight QX. for size, in we sequentially. all margin said, quarter - high as I also care the the back seasonality, And here from recovery level you think, deal we gross have exceptionally are lowering a

we in to As R&D do go and we as new solutions as in well accelerate our both expect continue market. investment OpEx, higher to

Operator

next Jim Please and ahead. question the from Ricchiuti Company. go will And come Needham with

Jim Ricchiuti

all what Just anticipating full wondering prices? issues? if relates as headwinds do we've take supply potentially you actions be about what component raw material the of forward those it pricing the higher year, just just might seeing given And having to chain for been going you constraints, hearing - just any along kind to anticipate or lines,

Anders Gustafsson

Yes. lately. is, the in the we're I would bit issues one supply shortages in press logistical around other first bottlenecks on that quite been industry-wide and semiconductor categories. One the chain two working the that characterize is a has

congestion on our a the and logistical increase when a bit ocean of on with of the rates a add - used this pandemic. That's shortages to bottlenecks. little and sort in a by - increased on resulted container having key airplanes, in of port a caused much factor the commercial air carry of on have top air But that. you has routes, pretty all - since in combination two, of on commercial of or start combined increase lot freight really which an by reduction Then also. fewer of First commercial cover demand traffic

freight of as - are are cost incurring customer we this. we result meeting So, customer And a expected delivery premium dates. prioritizing

this supply our impact more chain They team our and negative all Europe has freight business. a and the customers, China an being this been on modalities of to has US. and So, - this devices able have from say, of - I'd impacts to done using But semiconductor - others. shortages a impact had around chartering flights the to including products And had leveraging than we of on to our from issues outstanding revenues. our some and the the job manage Europe minimize products negligible get

all a have job optimizing - great us. allocations for managing of been teams of are Our doing angles

when We history to multiple multiple have practical. tend can a components have of us We we thoughtful qualify suppliers contingency helping planning, think I is when and even which here.

But competitive that both incorporates mentioned, outlook surcharges the the confident based We of We outlook have seen, on the both asked And to issues lastly sourcing these sales environment. of in gave. full I we - assess the you The these year about. we then again, pricing in that despite modest points. are action components. continuously related these on increases price

plan imminent supply at there look always increase addressing have a price we chain these address but no of issues. let's is say, to that, So, we or broader having, -

Jim Ricchiuti

the And you. thank And follow-up.

- of AIT - business - just legacy the in the part on business. cycles? your And Just market how wondering seeing compares economic this in I'm recoveries the what other and previous legacy you're with

Anders Gustafsson

taking for We The an across corporate Yes. demand channel, - channel our also was through customers channel the well had some to Smaller - average been recovering able were We competitive. issue been - so, ecosystem. rates share gains. think some And pent-up year the growth more print. eco average. us or exceptional and last quite portfolio go-to-market it we've an as to around And the had accelerate we growth made And saw quarter over that's our here. we nicely. I certainly steps above strengthen

RFID digits. printing even business was business doing well. time was supplies - And was particularly very Tempt up the double also printing Our strong.

strongly a - also maybe a had that So the And Joe bit board. beyond to mentioned was it highlight is was further little after and also very And performance strong earlier, XXXX further across manufacturing. in that printing it QX very in exposed that, the would up the manufacturing tougher go having out. a most

impact disproportionate manufacturing our that have printing on goes a when business. So up would

Operator

with question Morgan will Marshall from The ahead. go come Stanley. next Meta Please

Meta Marshall

question. A quick

some in be you they smaller different these come of asking environment. still asking to what - before. face are they back. you they may competitive challenges the going that Clearly, for What Some were customers from from

And maybe then healthcare asking Just on the in you wondering, for opportunities. what particular? they're

kind these are as COVID boosted of past these cases, seeing you you use the cases most of move in where traction there? Thanks. Just some

Anders Gustafsson

color will here. Yes. I ask then, also provide to and will start, Joe some I

size, we're businesses solutions can into they our those of seeing, their they say, them - of different. how So figure first automate is, all better. to and and help the on I customers look workflows do looking smaller more. physical And things, would Meta. are really two much applications One physical to to that customers all type connect out them pretty connect verticals what's irrespective world across automate say what digital world, I'd to workflow the digitize to and

basically theme broad-based a is all and that of verticals. So customers across sizes

compete investments themes. to down. be - make a looking to generally many many to them our who generally Joe, do businesses now larger better. this? - larger think as presence are in business, had customers, who they add operating deemed enables And anything automation be The in able manufacturing other I them - their They have COVID essential world some have invested pivot are to to want made more shut they were with to come that smaller of were point to would of digitization that our seemed back, essential customers while who and of to you to those be earlier

Joe Heel

businesses said mentioned on But in we're expansion, transformation, on Anders small-and-medium those as catching you new we're digital it asked - patient healthcare resident up that, the of think really as have. COVID portion is like more care, use pent-up prepared demand. the remote you ambulatory cases, say, care. an healthcare still larger And of healthcare. and their of into would demand well businesses. just - the SMBs, has pent-up the the areas seeing most next the about small-and-medium like going Clearly, I it to also they're their among pronounced I beyond on And level remarks get beyond XX

order some for remote So to And big use is of tablets, seeing enable of big use that also in use we're course, a of patient Communication, example, a particular lot case. accelerating [indiscernible]. is the driving the and of case. care one is, new right that locating asset use in the in hospitals, right are the person, demand tracking Those locating interest procedure. are cases asset for or people a and

Operator

from next Northcoast the And will Please with go ahead. Housum Research. Keith question come

Keith Housum

guys, and the a quarter, on guidance. great congratulations solid morning and Good

last sustainable margins, step something little services to quarter had this European a you? great time want XX%, like to was the roughly, a gross forward? Software a that that's to compared services first around. step gross and understand more? further this for again, in obviously improvement due the And bit margin year's going last up up fourth or I just getting this year. unpack Just new improvement, And Is growth, normal is the in quarter

Nathan Winters

Keith.

of part growth the just question, in our and So software. first your both to - service

expect service then continuing at the basis, line, the an margin Now X organic grow nearly But flow repair And that. Reflexis business. to is addition than that the as the operations higher over streamline we and P&L of again, through average both actions several leverage well And helping. company do part in seeing on And also the took to improvement. other that the double-digit being as revenue gross core work improve growth, grow we to margin of is team points to - the now our with from continue and operations. the the up to the due improve is efficiency from driver last as we year-on-year other year-on-year the is, efficiency ends, the volume of seen I've big top that right years is the

Keith Housum

Great on terms to products that's growth. some the multiple growth, there? contributed your you're to expansion perhaps perhaps, trying growth perhaps then, overall of Just of the And markets dimensionalize from drivers doing before? growth But you of aspects I been well as your it. the touch that understand hear there's and revenue new into in new not in can we're

Anders Gustafsson

Yes.

new when of were just say products new solutions, you So, types mean generally? more you or products, new

Keith Housum

I that not types And customers, mean, new of perhaps, use looking did for previously cases. generation solutions, of your addressed. products prior have new more new

Anders Gustafsson

provide Yes. Okay. start year some can and - I'll Joe, you also.

see we really I'd tough in did that's QX. year, say, having a strong had So last quarter in started RFID a very RFID going QX. but

of was year quarter. last more QX - pretty was was there So mill, reasonable

And us. a provides of And interact and the the But say, are grow. see mobile would of I having this us we of continue RFID. provides very to Analytics Prescriptive opportunities you great, more contactless a demand that compelling with look which them more also strong very deployment types when having then Zebra rebound devices combine great software proposition they each how for suite very those and our and a great well. with solutions it then is is a see as Reflexis, them. - are at these our differentiated offerings a and - in of traction. see themselves to value by - solutions performing for offering, having which combination we The being Workforce So for Connect great are of

of still other slow facilities have ramping of as our intelligent have solutions our hard in back the COVID do operating access - into concepts edge But don't we are to still Joe? way of more proof pilots as And customers' we customers. to probably here some up types we we've our ease with that. little to, to through a - like and and engagements other get normal used a expect to and get had extent that of we

Joe Heel

Yes. - add helpful. could I'll maybe of be that couple add a things

an computing we terms segment. Andrew right? seeing for of out as an device But can the about example. the everyone. mobile of you all. just transport talked hospital, described, a necessarily where of always additional said, isn't - This this. you not In to someone for rolls nurses, now expansion for are a And it use devices to previously sets We people, in That for big expansion game, just

cases. But we've big also that's been innovative expansion. So very a use some had

to vertical ability cases for but The of also a own we acceleration seen there. segment, devices That accelerated and keep providing that that And the have government tires I through call good the internationally. not two use as the well. service ET is good is combine out and tablets, with new gap track and think One healthcare change, only some measure to have I'm a Xplore I grow tread of in inventory, to segments. in healthcare to we innovation, very a would our them, time the quite is, of acquisition we the recently a to is offer that and proud a now some press customer. traction using our also be tablet of From of tire release perspective, ago type published the the our segments new going

that is You and know other the are go-to-market right, America. just deals around Australia, but an in strong with position the seeing modernizing seeing investments, their But North government in some accelerated U.S., that also mentioned institutions but we've where globally. countries always not now made substantial and had in the And U.K. area, in opportunities now world these of a is, Japan bar. we've growth. computing, we're infrastructure that around sizable, the in we've mobile reasonably also we're the printing governments Most are again,

Operator

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

Richard Eastman

good morning. Yes,

margin? China benefit, fall margins. did gross the tariff did Just on very quickly that - the gross the - It the all into EVM chair

Anders Gustafsson

EVM have and both fallen It between would printing.

it both So split had have the I but we off - them, exact don't was...

Richard Eastman

Okay.

Anders Gustafsson

weighted - AIT. equally between or So and EVM proportionately

Richard Eastman

there any continue? that? benefit QX, is going is - on I just then that mean, to And Okay. QX visibility forward,

Nathan Winters

terms do But, included We incremental benefit. the for to year continue? into quarter you benefit have the or that guidance not our expect in the of

from processed actively it's when tough it's be frankly, we get of But approved and pretty the - to recovery and But the work when yes, quite the something timing the hard to predict we've As we manage. it's predict will claims expect government. very to continually paid. how and

Richard Eastman

I see.

Okay. the does me? the relative XX%, Could And I to was in the U.S. what versus speak direct then in just just, the growth quarter you're going Service in the for the you second fall just core define channel Postal that was hopefully maybe as piece And growth believe. question around a to direct?

Anders Gustafsson

- I believe in growth a provide I'll we be with Joe But colors. Joe? in think, Yes. what customer, had Joe. accounts. probably second, quarter, Channel can our business I our direct I think, the fantastic most And than USPS will stronger had Channel

Joe Heel

Yes, I can confirm that.

has again business goes portion happy report that strategy our the grown with So revenue faster our the than and going to be revenue remains I'm has And through of our to through majority has the Channel. the overall, our therefore Channel expanded and of Channel-centric, that once vast Channel.

Richard Eastman

track. bit the it's kind software little to a PartnerConnect that, about mid just - an that, on speak press But here, talk and channels? Zebra? to just And expansion talk Track. release Alliance vendor I've expands Is And these just just, that this the question lastly, how for related brings out came to this non-selling maybe the ago the complementary made you here? But this. about what table a is VAR of just there independent that opportunity just, set But got of and to maybe And partnerships. investment in that is -April.

Joe Heel

Do to Anders? need that, I take

Anders Gustafsson

please. Yes,

Joe Heel

Yes.

program. on of as devices VARs has course, that especially wants that added the it our that has and our buy to the comprehends an ISVs, transition the We've that PartnerConnect how runs Android software the in Of the been customer because way. solution and of integrated core importance

important network which you the think the provide that aligned ourselves I'll of proud But those the those with recognized looking to we similar to And that locationing are that some solutions And give to to allow infrastructure, an And and within very ISVs us customers, real, recognize to by outfit. that example, if People Alliance customers, largest of partners. us, ISVs work So with Track providers. us. as for closely right, for it's in and, They also working recognized solutions. have to influencers example order of are program. we in and paying with our more are this like there equipment provide other a such WiFi about off the created this is, environments for customer. effectively make you nicely to influencers. capabilities, kinds ISVs. they example, Almost enable they can for we've

Richard Eastman

influencers it's what mean, So around you lead basically it? other These generation. I products?... is that to ID look

Joe Heel

It sorry, go I'm gene... is ahead. lead

Richard Eastman

No, question. my that was

Joe Heel

it perhaps in that close that a is we're have even of sees it chance opportunities, lead we but greater right? us to together, the we're When a Yes, and generation, allowing effective customer is working more winning. aligned

Operator

from ahead. Drab William with The Blair. will next Please question be Brian go

Brian Drab

second guess the much will and the fourth kind same And quarter. that can that will rate then is be assume gave the for first might I'm the run putting that, And for the something freight you I off the midpoint but wondering, - almost implies the after how of kind big XX.X% persist third maybe quarter? for - first that's that fall in on to quarter? XX.X% the year margins. that is full-year swings the in quarter, the guidance later level all, quarter that first between fair implies year? third the Just the into I'm guidance if XX.X% or premium balance of just full-year XX.X% conservatism and of and up the headwind no baked fourth the also, EBITDA us of wondering that be

Nathan Winters

So do million, accelerate half, transitory all or will tariffs. - commercial of than come higher least side at predict in of grow. continued look in to also also OpEx improve our costs, Reflexis. to And back gross that we continue expect Because of million we guide coming our $XX And particularly particularly our full-year to of we're the XX% grow XX%, margin and we cost that solutions here at premium seeing year-on-year, investment those the of when do it's and including in the million freight to if as travel. we we from to that's you expect our of in software by the hard in with the the offerings supply software most any around and XXXX some half. $XX $XX second air integration high what $XX million don't which And invest in we've first and raised including really to opportunities ROI change expectations see expect

Brian Drab

and so what from the industry can Just versus And in mobile your coding market the it? thanks. percent of computer just as now the And then, what some last Okay, Windows-based Thanks. the is? details was also within that year you share talk quarter? can environment terms with your the computing, competitive exploding. seeing share changed can what you're Android provide your equipment in much mobile Anything about on bar you of the you then has is share of perspective in market

Anders Gustafsson

and if - I'll environment. I competitive right. missed if All start anything. we'll see But so

other customers. last COVID in more say with actually as I'd XX took staying benefit I We than through continuing confident products we've provide of been momentum gone and as in think could new good close say, our as solutions that's we've year I'd very gained in here. First out and probably. are back we with and we've we here last - competitive attack new coming as positioning. XXXX of the to it We're year share the we've to ever as history, invest We coming launched done now. in us actually confident

very we markets think are, Our attractive.

in I that very kind something believe We invest mentioned something companies strong have of the have workflows secular The theme some we will that I automating - very and a strong growth around also. - broad-based digitizing advantages be that's will trends several years. broad we for and some as trends. think that's

scale, network, ecosystem our the go-to-market have we have our there. We

a a from is competitor make say perspective. will of I'd that lastly, that vision. number our So there things formidable And us

partner and from they see can Intelligence perspective, not Asset to our share are buy automation that share can looking help Enterprise they their operations now, talk are them Our When something and who data to customers look, just us, with to device drive digitization we to they of lag. here differentiates into somebody the sources they that From competitors. a for get and us our tend how future. independent from looking

think we QX that in Number certainly computing print only over, area. low was and share we So I XX% on On a over have mobile think XX% is, But I directionally data. print, I XX%, I record a think we the - X, in believe it it have XX%, is... we had

Nathan Winters

Yes.

Anders Gustafsson

second competitor low is double digits. next our And

largest the is scan, like think XX%, second also in we And more I XX%. where have about XX%. about

Windows. mix we have are across Android our So, over your last And Android. And about we strong now computing was and our mobile position of of sales business. have XX% question - the

Operator

the Please if answer needed further. Anders, question you proceed to Mr.

Anders Gustafsson

remains - Android, probably just of we're that of have in particularly element. XX% particularly approximately I We our Well, so share share Android in strong strong. Android the

Brian Drab

answer. good a That's Yes.

Operator

the Thank Research. And from will you, come Please sir. Wolfe Gendron final proceed. question with Blake

Blake Gendron

to Thanks I flow. me here. on squeezing start with want for cash

wording least at the of $XXX guidance, the million higher. to in guide appreciably prior current is relative So the

how mix XXXX can imagine growing conversion cash the that free in software I context and wondering, mentioned. pent-up think Number recapture of hardware-led growth both, about I'm channel X healthy that X, you we So Number as conversion would demand way what a different and beyond, the from some we that's perhaps capital in look But cash see is can there XXXX. about the into it's drag structurally think been in past? would free we working

Nathan Winters

just so, just question outlook to your the aligns the full-year for part really the terms increased is of of greater first profitable than growth million of the year. guide in $XXX And

changes in perspective to a capital notable no relative - last So from guide. working our

in cash over year-outs time and that strength XXX% as be we move because year-in flow just This - of year we forward. be XXXX. something target that Our as conversion. don't it'll in the at look can year changing out noticeably free and achieve slightly we we lower than and we - see But had

Blake Gendron

A does, M&A And manufacturing any the there follow-up And application handheld which is helpful seems you all here. Do machine Machine realm? Zebra competitor, one bit machine on do periphery AI from automation, tire purview, helpful. then a to small that's somewhere but Is vision device. large of a this quick is coming with customers, think the perspective. there of it's like would Interesting the is here? in vision particularly that overlap that we're in win Zebra's scanner increases, what the of a deployment Business if what that like little Okay, customer. the of - overlap. that in lot hearing the be facility terms within manufacturing Building seems there's

Anders Gustafsson

sensing solutions. for camera. and is SmartPack, our We've enable for us of number already that data MPXXXX solutions machine flatbed technology a into the like helps Yes. SmartSight, vision color a us very exciting, acquisition vision scanners intelligent our Machine automation incorporated

cases create So, team vision we mobile have from been digital and to that use our vision we depth machine about solutions. XX team on basically machine for it expertise do, our for solutions us - have that to and and can great just another be on deployment they able figuring extract images tread feel that going to clearly called an I accessory invest. that see be great an tire a helping company to expect solutions put example our strong area we're Cortexica of to - it's addition The be find how put opportunities of vision. our machine useful deep our I into to we and we continue is that computers sensor, Their months focus where is is we but a out back, to trying to video competitive. where as a accelerate information play has to unique put, how leverage we customers. the to was right was engineering We that now, think to they other continued now other acquired

Operator

would like to Ladies and conference I to Mr. gentlemen, concludes the Gustafsson over remarks. our for this question-and-answer back any turn session. closing

Anders Gustafsson

Yes.

up, to I So results focus, wrap for dedication like partners would exceptional their XXXX. for our improved and and resiliency, employees outlook and to thank QX leading an to

everyone. from the Our partners, as top and health priority well-being our to customers of continues pandemic. protecting be safe the and we employees, recover Stay

Operator

Thank you, for has conference Thank presentation. now sir. attending today’s you The concluded.

may disconnect. You now

Zebra Technologies (ZBRA) 4 May 212021 Q1 Earnings call transcript