ZBRA - Earnings call transcript Q2 2021 | Zebra Technologies Corporation

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Operator

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

Michael Steele

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

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

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

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

I to hand Anders. as over Slide turn X, Now let's it to

Anders Gustafsson

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

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

year adjusted basis earnings a strong industry year-over-year share free chain on flow. or ongoing wide growth sales XX.X%, improvement. Non-GAAP prior supply increase a net cash $X.XX, and an XXX adjusted XX% points realized we challenges. of quarter organic of XX% the an basis; margin the from Despite XX% EBITDA nearly per diluted For of

we to distribution all realized with double-digit through and category, demand four as teams sales customers Our solutions robust and all Similar product growth of end successfully both demand from channel. well major markets. direct across QX as our satisfied stronger-than-expected vertical each broad-based our regions, in

digitize economy. Our sense the a customers in global increasingly and workflows continue with on-demand of automate their to urgency

expanded across costs. also than offsetting supply We margin business global our profit escalating more significantly chain

We results to also balanced our call our operating will now in With improved review approach I sustainable while to in continued profitable and expenses, detail drive over investing scaling more discuss to QX XXXX to that, financial the our turn Nathan initiatives growth. outlook.

Nathan Winters

you, Thank Anders.

Slide currency sales our In Let's the demand increased and impact solutions reflecting while sizes. net broad-based sales see our customers of an direct high XX.X% including rate to organic driven business the large X. to start QX, on basis, adjusted for by P&L through XX.X%, partially continuing of with and growth run channel from acquisition, We in the pent-up realized particularly demand, growth strong customers. all from on

mobile mix, Adjusted sub computing Australia, double-digit also regions gross Japan. In strong with business grew North the margin sales all by enterprise China, deployment continue strong capture. in recover led strength as XXX increasing for its double-digits. driven major million freight operating import recognized our XX% charges, growth customers growth growth Our increased which in Intelligence strong Latin that all increased recent in discuss pandemic. contribution in higher sales services Visibility this exceptional further exceptionally primarily realized in which favorable tariffs, all & with America activity across and growth sales expenses and offerings. moment. benefits we'll printing points segment recovery percentage regions XX%. to EMEA, of America, high and sales from Enterprise premium and including margins, regions. growth data In margin driven XX% a with & categories offset XX%, very and service Mobility by solutions, support were as growth Tracking with solutions APAC major recovery categories, we across by XX.X%, snapped supplies basis in expanded with growth all our increased Chinese software solid Adjusted of realized higher points. up also India sales and improved Asset partially growing while a a has RFID from by with $XX XXX basis along again acquisitions. sales These XX.X% segment, including double-digit sub back We XX% Note

to investments continue business. while return scale prioritizing high the in We OpEx,

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

cash increased million flow of Slide Machine primarily on X. Vision and the million made was and We solutions profitable cash in sheet acquired advance $XXX generated balance XXXX. flow QX, Adaptive $X million to prior we half first of growth. Vision venture our due to $XXX In free the to higher million the of highlights than year, investments. for now $XX This Turning a

million repurchased In Zebra addition, $XX we shares. of also

a to From adjusted debt to primarily imports. to bottlenecks the we strong. debt impact ended QX of Our as X, on On by attractive times transitory which ratio, an pandemic, leverage at chain invest supply to acquisitions. we the caused Slide EBITDA freight, well related show business due X.X global net as costs affords China expedited multi-year balance tariffs modest sheet a perspective, remains flexibility

these negative we year-on-year to be translates expect For items to million, second $XX point impact. now which the year, approximately unfavorable the X of margin impact a percentage half the from gross

Impacts ocean actions component parts Global of exceptionally X a chain escalate. an virtually environment. expedite to Tier increased costs to global supply our satisfy supply meet customer in cost well to order global per to higher to from as shipping freight, taking our manufacturers include chain cost has continue shifting Our delivery commitments. as modality kilo, air to for demand all customer team extraordinary challenging been freight in modalities across

We expect supply components premium improves. freight and costs to capacity abate once freight

assumes XX%, margin outlook point acquisitions to foreign pandemic and expect been This broad-based across million assumes to operating leverage which percentage Non-GAAP Let's with momentum expect we between from price currency across $XX the $XX and experience. component healthcare million also recently than We gross outlook. provide our entered of us a increase X expense, is premium with our to It including be every now $X.XX the net $X.XX. costs, offset which track sales and expense be the driving is shopping XX% order were between QX increases. outlook. that strong additive We in year. announced higher to raise assumes the our robust anticipate desire the changes. XX% expected business continue demand And to diluted the for more to QX The to last trends substantially supply with we approximately margin year-over-year. strong adoption, backlog. EPS impact chain expansion EBITDA and have also QX digital This XX% has the we and omni-channel trace sales to for dimension largely experiencing turn from accelerated along adjusted need and pipeline year. We full-year freight and which our of guide range our In of higher see prior business. confidence gives product virtually a adjusted QX, a

highlighted, growth an Fetch foreign to that, I'll well With sales transportation projected our advancing we're we any impact margin For year the our despite industry currency vision transitory Anders pending to additional assumptions for will expansion charges that the We be point percentage from from XXXX, XXXX outlook our growth Despite profitability. that from least include results three moments. for X, existing freight adjusted the approximately in in of does expense to to XX%, flow we're for margin reflects of at outlook changes. and significantly new which which the back now significant the full-year shown and of assumes XX%, due increased Anders net we're discuss Robotics, call as for be half maintaining the acquisition Please not prior-year. expect reference note turn assumes few and constraints additive premium expectation markets. to strategic guide raising strong modeling the Enterprise expectation EBITDA Intelligence between $XXX a This be supply optimism our adjusted million free in our Slide XX% our components, on the as to chain operating leverage cash increased how and second product bottlenecks. our discuss gross just Asset for XX% and acquisitions full-year between certain year, increasing acquisition

Anders Gustafsson

increase our by achieve by our businesses of and encouraged XXXX outlook. our real automate anticipate customers solutions, our and the them leading Asset can operational products, to to our near react artificial I'm portfolio now complex business, some can advanced and operations, capabilities, innovative by customers higher workflows demand to as and implement Vision. more our which Nathan. advance with in vision, XX of their customers strengthening effectively. Zebra's across allows Enterprise further analytics to tailored of across utilizing solutions, performance. help Machine our software you, working illustrates learning, We we're driven intelligence, With insights partners levels digitize solutions industry Thank frontline challenges leveraging Intelligence their how prescriptive compete transform that their time, and Slide us overcome software enabling associates industries services, such machine and most

Slide turning Now to XX.

to recent Zebra Zebra volumes will to upgrading to globe, another safe the ensure adding strategic We're and operations, broad printers more to opportunity to Postal notification and use and for across the manufacturer their have end-markets them for to deliver demonstrate increased manner providing supermarket would workforce also utilizing collaboration latest requires a investment associates productivity, enable As in service make service to manual and a industry, U.K. helping efficient inspection investments this more manufacturing. use Industrial North solutions This up customer higher public build resources long vision eliminate efficiently announced Machine around a utilize expedite acquisition carriers. States to how XX,XXX online across retail, by and management post Scanning the help goods improve of Solutions decided TCXXs of deep prioritizing experience our which of This actively fragmented are American them in powered can in this of standing patient Adaptive them of XX learning the rooms. Solutions Intelligence and The labor to we're our to or large their product the is parcel Continuing improving address than deploying of relationship, Reflexis provide solution We're growth highlight by range Machine ETXX operations. specimen excited a our recruiting their to quality in I It's to will Large workflows. intent and Postal advanced mobile autonomous and by retailers Enterprise computing we More handle operations. care. allow processes and in our a sector patient computers high significant easily variety effectively invoicing more time our enable entire to cases. our warehouse This tool has for versus the are the system with more accuracy digitize we July, wide visibility our a been in of integrated steel to we solution, and patient robots our employee our United customer systems. using and emergency the range hospital proof the successful and and whose also European Asset recently with operator platform optimize inventory broadly The enables U.S. optimize care. point launch the acquire our to paper current including businesses Service mobile will management Vision the services market real also transfusions mobile Fetch automate process. advance deployed is of Large broadest and Zebra effectively. In self-service their manage software than Slide our blood employees labor to parcel administrative also with in software promised. The the Service. XXX in they're that electronic partner, business. customer to increase launch mobile customers more available Vision X,XXX will portfolio a for channel business proof tablets physical which to partners monitoring and highlights of applications. computers, We to penetrate when implementing end-to-end implement their approximately access. Vision delivery the To that focus May, its and recent warehouse is trusted timely announced which customers solutions In complemented sharp and a customer of into challenge, pickup tracking, with several retailers tasks. like making turn to Robotics Fixed locations. journey shopping be scale security omnichannel in efficiency customer operating in on increase about end-markets, wristbands, which wins delivery. and solution frees to more standalone in this be our to scheduling, Cloud and regional

Our in vision to workflows. the is robots cloud order to through technology and material and orchestrate equipped transport fulfillment optimize software frontline both workers

energized prospects business automate as the we and has venture in been innovation. to the given by the closing, and to In heightened prospects partner our combined for of about We're investment, Fetch markets digitize the in we're momentum emerging and newer vibrant a excited businesses. trusted confident prospects markets, we're workflows. in core experiencing As we're a growth our see well pace Zebra, our our as

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

Michael Steele

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

Operator

the question [Operator first ahead. begin question-and-answer Damian session. Your with from We'll go comes Instructions] UBS. Karas now Please

Damian Karas

morning, everyone. Hi, good

Anders Gustafsson

Good morning.

Damian Karas

component as strong wanted just pretty this in are to third to the year? shortages, the still of the a drag on ask to the quarter much growth we're bit you if I would any But in and able expecting drive you sales be quarter about second your that able So obviously little see shortages some to how quantify of well. component a

Anders Gustafsson

start I'll to here. Yes, help and Nathan out also I'll then have

They've the start been documented first - last well the wide obviously kind months, on impacted. So industry very I'll we're by of over press, the shortages. the few semiconductor and

we impacted But working across is our that been uniform not to components, team allocations. there's our angles larger all say components all can doing have much others. that number that normal more quarter. a I'd lead great to much job collaboration between time. can components new would is alternative though a than less impact sustaining some components are we groups do have in the So it's optimize But in of we qualify great And engineering our ensure working

some did costs. to we get as ensure, to much provide recently available impact to here customers to product increased mitigate can. So we We as our component of the prices raise of the

confident that we price and the And outlook full-year have so in announced increases that increased, increased we these today. shortages, the despite we're quite

Nathan Winters

to on full-year really in the the been it'd and question to guide, constructive speculate answer be it be will quantify, what be incorporated with the have associated number unconstrained. think risk the Damian, I just tough shortages really outlook, our QX to And could on that but

Damian Karas

on having despite wanted were second that's little margin headwinds. Okay, frayed the to you then And a able to those bit quarter the about I you think really mean, ask helpful. front. I outperform

we to quarter. curious, kind but - Why So expect be XXX drop would expecting you be guess you - will these pretty kind the reverse we basis additionally to to thinking why be here of points completely second in manage in that should second expenses? of just able we're year, - I in premium you're abrupt a shouldn't able next we those half. And freight shouldn't as the

Anders Gustafsson

seen One, back to different around which of year seeing previous costs. So, really maybe if our incremental the three calls we've talked in earlier the bottlenecks, in lower where the you about where in our because travel, us those of up, down we're air oceans and have commercial - pandemic. X just the there's take and international the we've areas on air congestions seeing the to port have come the stabilized. anything's the around ocean start really that's And air container over since side Xx it, several months. gone last of we're supply shortages, If rates rates terms not

higher X ocean. In global global addition, the a from manufacturing with expediting shipping increased demand, printing percentage Tier component particular because of of via supply air and along Along versus constraints Tier we're perspective with X - in now parts our partners.

cost the the terms transitory really into And QX the driving so also those second step from change are of in half.

manufacturing have particularly and In Asia, further for due to us, of addition, the constraint supply. you have and in parts Malaysia that Southeast shutdowns Vietnam COVID

as will is end with It's through the today, extraordinary impacts say year. So we hard see to the great abate actions of the managing a team customers impacts But at next through doing lead and least of our persist the expecting to really year. the again, job the you're those communicating when into times.

as offset think we the half to in cost. incremental repeat two don't second there's million second that we of. in is One things recovery terms quarter. of also China change half look expect our So the guide, tariff in QX, you think had I the $XX the increase that second And in to was of an step at

Damian Karas

insight. Understood. the you luck. Thank for Good very much

Anders Gustafsson

you. Thank

Operator

Tommy Our Please next Moll with go question ahead. from Stephens. comes

Tommy Moll

Good for thanks morning, questions. and taking my

Anders Gustafsson

Yes.

Tommy Moll

comments a be as momentum have Thanks. give levels understand be inventory of the us could you through about you to next year-end would even augment the Anders you best sense pipeline. on helpful. any them robust and and you whether in could there sustainable you've as well? year? backlog any is would channel appreciated comments talked Any And Do give the

Anders Gustafsson

a Joe, I'll and start the range provide question, in you're excited extraordinary exceeded pleased some sales also And and here. environment. pretty they're have had say quarter. customers ask they collaboration a he'll don't strong trends those guidance digitizing the across here. with that COVID. end first see our for in then all are long their how we we through any And time, markets Yes. We I our obviously between been very satisfy demand high teams The supporting accelerated secular chain performance prioritizing may constrained the business I'd automating very build. second be the and workflows. strong in our to the color. a we much previous have And abatement continuing supply of To our supply the trends about to will vertical

in see I think and across well. way. retailers of solutions most regions, retail that well and omnichannel - capabilities out double-digit the see across main our markets. well growth retail example. categories omnichannel We is did all investing building our or digitizing the probably as meaningfully as their in four did main particularly product sized best do vertical customers operations all medium In as their our small vertical We as and

even here well behind strategic market. at based And continue stage. this too customers. we being I see growth. definitely in by the with that And do the us was performed this will we to that expect accounts to medium saw our up on performance, largely strong sized take share very large growth our But small, demand. think - we So But driven large was of a result be part partly I pent that

end at Our today, lower of our ranges. Joe. healthy expected the but in may be inventories are it the channel

Joachim Heel

very, is we we which But all hard inventory I at the keep and to strong range. levels serve backlog the the we're you end and on to inventory as working distribution the definitely we're to pandemic this, that leading our pandemic. seeing, our very underscore same is triggered the strong. think trying and wave of inventory lower - we fair. sustain the what has our you're partners that the to demand. Anders and possible healthy pipeline. can a digitization of that's time is to tell in need did our the at the I at And comes as was demand not to we what very side, demand can, mean when our in it moment the projects can I It before customers serve that consider see When automation taking to of demand, every with saying

also of shortages. visibility enjoying that that advance. driver We're customers a good working So sustained enjoying us year. customers for see. give visibility, the were is aware into because our momentum of next the in we us to that that pipeline we confidence with are And growth continued And supply us gives far are

Tommy Moll

do can size the at shot play share, advantages you you to competing? Anders, on part Anything Machine have question to of us asset. markets helpful these bring Thank wanted Fixed you I entry any how had A Industrial you give the follow-up Vision substantial the markets? do Adaptive Vision And you or to think frame relationship both. you you are adjacent those bring could with what advantages here around Adaptive you they're and markets. where the the currently does couple to in Scanning good Those a and where answers. new in Vision your any got markets you came Thanks. but a you've opportunity prior then and into market with it context know what question

Anders Gustafsson

fragmented. act more summarize - the intelligence side ways a it try data new market our here. to new to I'll to the but framework, and then capturing a our customers solutions our It's This entry market These on Industrial is Yes, helps act then enable very that Scanning address. market. it's Fixed really us sense can analyze and dollar can we quite our Machine into vision. attractive portfolio about but that accelerate Vision we are on. multi-billion of of This see, provide some that sense we're the analyze as the is this But excited an firstly, enterprise

the capabilities invest ready bigger the and to of for addressing go functionality, so mostly folks not we're be on and on Although entire bigger we to after part we're the in in market scanning market add but initially add can it market. text to one, industrial continuing day

solutions strong we of well Our value on and these and types very focus ease is proposition of in the as ability the cameras their is to upgrade believe field. as of use devices

differentiators cameras had believe have. So the Vision the we to we we augment strong two developed. us Adaptive that we It's those that and a way are is software great had The for a and our easily way to applications Machine how for implement customers to or be Industrial Vision to able engage develop build Vision Scanning Fixed incorporating Machine and more or basically for in Vision into familiar Fixed our internal we've time workflows. their Vision sure looking a for been really Industrial we and to Scanning strong ways offering solution had And we've Zebra. with strong area a make felt Adaptive been and fit software with that some and own nice attractive in Adaptive solution, with there we very at to a augment development can come very was that up and

Tommy Moll

Anders. turn Thanks, I'll it back.

Operator

Our question ahead. Please Jim Company. comes with Ricchiuti from go and Needham next

Jim Ricchiuti

of with a might for be I'm freight components. additional the sales Thanks issue on color you're wonder up some moments incurring wondering the G&A the could both some a on if of in I acquisitions? and terms thinking Anders, healthy the and half how about have follow-up spend second a marketing. costs higher of talking OpEx few sales, about OpEx, the morning. that good amount sequentially, you I year. And of in significantly we for Hi, by just you but admittedly those

Nathan Winters

drivers increase every perspective, the think impact overall couple of year-on-year, terms from look really that in there's you OpEx quarter. an a So if I major

actions The for below salary in the last we're as as and of obviously mid-year first plans to the as pandemic incentive we the was the year, comp, reductions impact peak offset some our well help targets took around year. lower

a drive invest some with of those of in increases. full-year discretionary to the along and costs the alone and a again, So starting two R&D P&L with go-to-market Reflexis in increase year-on-year significant particularly

we quarter. for So the in half from increase change first of the increases year-on-year will say the in to the I'd the year, step spending I where second half are expect look continue. pretty the quarter. But all see a But if for real consistent wouldn't you saw second again, each ramp

Jim Ricchiuti

Anders, And is of Fetch, about the I'm technologies to addition see market. you Nathan. internal expand your wondering Thanks, and at think what talk look acquisitions, both I we footprint? to a to development about potential Adaptive talked might you in additional extent M&A fragmented you these being

Anders Gustafsson

to our Scanning, we excited both of Yes, Industrial and augmented Fetch we acquisitions comment of the by it's me first say do and obviously But about hard Robot about on more the have vector outlook these business I'd our Autonomous And first, Fixed have development the standing Mobile now about and growth. M&A a long opportunities here. had excited we're activities generally Adaptive. But M&A very and for specific for markets, markets. business for that we see we're organic as

good returns a do those. think Adaptive deliver good can and opportunities a I think on advance digitizing of interest the talked growth. We're at acquisitions that of also Vision Robotics we all Look have workflows high that for their earlier EI our way Vision. But chains. targeting selective us number automating or the all about we them, look customers M&A growth accelerate Fetch across an and as are, acquisitions about at we're the we supply I need and in bolt-on to excited what around,

So to that good provides continue for opportunities capabilities. our add to to us

that And a we sheet growth. for do as M&A so strong accelerate activities also. can support us at we that And M&A have to a look balance way

Jim Ricchiuti

for pipeline your M&A? And

Anders Gustafsson

where have particular market Yes, around is our a we a the There over we areas the we at broadly interest. target - looks a team opportunities. of that have good kind scans have obviously healthy pipeline

where terms pipeline of or healthy not, out, but come what we'll opportunities. will to have know we never a You work do

Jim Ricchiuti

you. Thank

Operator

comes Please question next Your from JPMorgan. go ahead. Chung Paul with

Paul Chung

Hi, thanks questions. for taking my

on fixed Vision Machine follow-up another just scanner. industrial So,

accretive your this kind be solution of cushion continued competitive is nice quality industry, with share kind cash very then strong we in similar how over in players to very and So, kind larger expect general, of maybe you M&A to a margins, kind today of higher peers what another large longer-term? in provides and and solutions eventually for strategy of the flow, margins will pricing broader business for kind the take led is the software resulting software of free earnings of time resulting preference opportunities. Should high on kind from

Anders Gustafsson

to Yes, adding Fixed players, through entering or the to Scanning initially where core with cases primarily that on to our portfolio, market to able a the both, competencies our strong here first it's I'll closest think be say Fixed Scanning a it's Machine this to believe I I market, very also Industrial attractive around here. was start that Vision tail market. one then what there's and the a But to and the right on side address We which And you is on hardware share side, it's very players part at capabilities question smaller Joe market, comment but Industrial fragmented have the market. are camera But both your side, then ask or we on have near market the will our play. there, the primarily of on we long quite it's adjacency we of a two software the but larger a looked resource we're do. a table if share, use the

if add we the right, our a value a look be engineers, in scan, to And the also. that our at the print in and here you computing, part the big devices, the from majority differentiation of case is mobile Software huge differentiator expect of software. comes certainly all

partners to was inorganic minimize the underestimate some organically. we or accelerate more investments that building capability, that Machine to not Reseller also way I track bit? in in Industrial can Joe, Scanning also We earlier, to PartnerConnect Maybe think mentioned specifically should software the accelerate help of investing Vision that on recruiting we're in to expand and of the growth. I that that that we're making Fixed we're putting program a that, do of So specialized address go-to-market. in our you importance but division in

Joachim Heel

Yes, exactly. strategy about share. going your on to comment I was question specifically take what's our to

the piece Fixed part, natural of parts essential. the capability. Fixed is Machine the acquisition now translating that - leading part know where scanning And market. So we Industrial in of technically, industry the And Scanning Industrial leadership of you and us that we software the the Scanning that's of we're extension Adaptive have gives course of succeed software to a Machine Vision is have that the in the Vision

how way software more that expect that use and is these win also share it translate there's that's market. strategy to of than that, to in part as to proposition customers, the a the critical gains. for fully the to use this we to that's to want it use using compete partners to ease we and which second easy into to But is of deploy value to specifically enhance So important

through solutions these of partners. are All deployed

end-users, us, software is very compete the to and we're company, making value a what just And not our Machine use going is know. win easy as centric For that you to the to Vision space partners those we're but partner also proposition to in and use to a specifically.

that's hopefully So helpful.

Paul Chung

could outlook, that kind base, stuff, selling centers? time, margin some very kind be fulfillment can Fetch key Yes, competitive you small cross if on cases on and Thank good but and of the all could business over of days, hope material you a how how see revenues expand much customers, some you you. I about talk And early lastly use if ramping, Robotics, opportunities. beyond from get, warehouses you to this it's environment, know

Anders Gustafsson

answer a broad while of that's take it question, Yes, a it. can to all

level yet. closed about on haven't you So response I we we But acquisition tried But a high here. the it. first, excited certainly to are give

as a some We venture have investment worked for time. with quite Fetch

great we team in been in platform and based how those two we software these for that, and to [indiscernible] capable been the then enabled They they on leverage a focused very the and of believe workers. warehouses you'll can the in markets. strong, Cloud number portfolio workers broadest the more ROI robots both very, industry. superior Fetch Mobile the deploy of to focused the combining Autonomous think we manufacturing, to mostly in very robots, And technology of optimize warehouses portfolio understand initially say, use and be Robots flow to able and has, the AMRs. control a have and We to the of these we a manage So cases. offer customers on broad we opportunities the understand have Fetch's market, see see we've by

also going retail that position introductions our to our after. these those providing to we goods. comment are think whatever with I in very have Joe with we of know virtually on broader transportation But pursue in ask a And solutions other help they that cases number we we're I there's movement in use all where more those well that also. growing logistics, this So And can another think automation suited are large vertical those augment also, our solutions of in workflow have see area customers we fast or I'll industry customers. will here's well, that manufacturing, where strength organization, and of as go-to-market

Joachim Heel

of focusing is Yes, work the those attribute targeting robots that on areas we're humans and that where we're a market together. particular

of And is collaboration a so two Cobot, the strategy. heart the the notion the between right, that of at

we're workers already use cases base and to now take they're person augmented or us like robots. have, use picking, conveyance. allow to a warehouses goods means broad targeting So and being in that And we of installed computers, by have cases those mobile advantage

that speed that means achieve the deliver to no use with in robots that that we and really the to advantage strategy. anyone that strong no can overall combining unequaled this go that that range with else else, improvements it across the capability else productivity safety a that the this can one of taking orchestration Fetch extent that's orchestration platform two. with and we're cases broader and the of as than can, products has we can of there's one And a So humans can. and are do market can really that between And result, the take

Paul Chung

much. so Thanks

Operator

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

Meta Marshall

thanks. Great,

you us degree can or increases On much you the the sense price transitory. increases, just of noted, how those a they be to expecting you give guys and were prices like, are broad how

the question, interaction just sense a maybe channel so USPS of just may the you second how year. deal, QX, it's in the primarily and see be to the this expected getting Thanks. hold less near-term, of that So year, just a inventory QX Postal Service this concentration

Anders Gustafsson

right here. part our the price to and obviously and And price everybody important on how is The make now and some users us our that we comment are partner who start to have continue go-to-market that the we we the increases, competitors I'll they here end Nathan to solutions have our key We announced assess also we profitability, the something something here. a community that or first pricing but competitive price increases activities ask are then competitively but have sure competitive obviously address. actions priced hasn't. very to of also, positioning to assess increases do pricing believe as the of checks is is part appropriate, regular that I'll to respond overall as announced of well

to making and for corporation So assessed any a maximize this value based we and sure as the of very cede that we don't share believe these. based on that make longer-term, sure ourselves want market put geographies granular the see a this long-term don't the the we either. with of play that risk competitive we on have products to of kind to being cost We kind we short-term of though transitory, here, game in we want

Nathan Winters

and completing to earlier is the the And we of with at for carriers of end is largely then third as EMC the USPS rollout XXX,XXX solution the current the and goal the from the of this progressing the full communicated expected, of quarter. as rollout year, here perspective, completing in units

Meta Marshall

this what mean range kind assess the to we difficult which point? just or just just top project, think is of kind like portfolio is of that coming Great. on to should the impact is of on line just there a the across is that back I - too of at

Nathan Winters

price would margins from it's just perspective, from full-year a within out revenue. say last the we week. increases the full-year rolled that, take I'll the I

Meta Marshall

great. Okay,

Anders Gustafsson

a the time and between rollout announcing market. in there's being On the lag effective price us increases,

see this than business our QX QX. rather you So can will impacting be

Meta Marshall

Okay, great. Thank you much. so

Operator

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

Keith Housum

and guys quarter. great Good morning, congratulations on a

the at be impact for and adjusted else in and cost there there being will of on sold the rest looking transport of thought or increased some the margin Just premium the process year? the the costs perhaps go this here as that suggested in cost. beyond anything longer-term, again EBITDA guidance perhaps of labor freight anything at example, goods costs will Is

Anders Gustafsson

Keith way buckets. two Yes, the into

raw costs, taken offset increases at price you labor to increases, costs If we've or material is that's meant look the the the that. largely what

really, a accordingly to changes and still we I the of I is think the best think logistical the profitability the of the no we be as to I into Again, we're quarter one quarter taken. as the we one expect next actions if taking and think, optimize kind are we've year. timing, prices, end mitigated bottlenecks can. but be maximize out. price the go reacting So fourth between a at would those And from inflationary of now time mitigation think played and we with that's into the year, But and largely about from that

Keith Housum

enough. Okay, fair

Nathan Winters

a bit. little that Maybe just on build

transitory. So the logistics and the we be semiconductor to component those cost, consider

there's our the into very labor small. goods think But labor that if goes of in sold, upward always you some of of amount cost movement side, On the rates. labor it's

labor. of from single is part is that think it's not, I single high our digits, value-add So digits,

not something So changes P&L. the it's that meaningfully

Keith Housum

it, strong at the providing up Anders, And and suggests quarter, from you got flat you're historically quarter. the always your big guidance looking quarter full-year it. is fourth had perhaps very tick even sequentially have Got a third roughly guidance, here guys fourth a second

any upside to So business about are is how pulled thought the thinking process you ahead during quarter, fourth the kind or potential there has year that that? the of the

Anders Gustafsson

we a number was or guided we strong had the fourth guide fourth this growth, last as for Well, implied I think QX very half that the for quarter strong here indicate - in the growth full-year QX. first quarter would had in quarter, which as certainly our the But we've not year.

strong, So anything But momentum great want quarter. tougher strong see the continued This to fourth is of Nathan see our demand in compare recovery there from add or to - that? you go the don't we a is than abating. anything, more that customers, we we was very do saw

Nathan Winters

as a in sales of the that when It's earlier, the funnel, from quarter. update customer we're QX and seeing base. QX, as are as reflects visibility of in much And terms our the is our it in confidence Keith getting standpoint, where backlog really of particularly think a the typical I quarter third and sequential wouldn't acceleration not weakness factor. us the fourth fourth strength, we're pull-ins the major guidance. I a from giving say from investment in here Joe from full-year, to look if we've mentioned anything, you the at inventory terms don't just the on in anything the strength And think just noted I as quarter days Yes, hand

Keith Housum

it. Okay, appreciate thanks. I

Operator

go question next Buscaglia from is Andrew with ahead. Berenberg. Please The

Andrew Buscaglia

guys. morning, Good

Anders Gustafsson

Good morning.

Andrew Buscaglia

your $XXX cost I'm So you year I and going last this how related wanted spending to or And is And to call to this ask months push. track, AMR really kind XX what wondering spent could to this so. year $XXX on you R&D, Vision much Do start of forward? or million need then that on a of be secondly, at R&D line spending point leverage flat million about

Nathan Winters

for really key us. And say several activity drives say us, look back the a R&D we've investments our great development, I R&D what would made for return investments growth. longer-term in years had last over that is you in-product I'd has First, if and is a

with the across. here, there own core real number way to so of would for longer of customers adjacencies, of leverage of And solutions mentioned very So years. at we you solutions in But robots then the investments and compete before, our look we longer-term years a horizons, little have business. short-term portfolio In attractive of to investments developed the we the which that SmartSight type many our grow more both bit intelligence innovative those to us ground near can to a learn have areas, fresh up a been enterprise which investments we would specifically, say have want a our also value have payback couple for solutions, more as new ways little more we kind three a returns across our a us that industry. they're can return offer make of to we sure certainly that Fetch that there's We our asset R&D innovations.

high So us new a we when a and we augment adjacencies way we can make see make to us do where our drive own growth great into programs for difference. as that acquisitions, internal

So that answers your question.

Andrew Buscaglia

correctly, And like that's is if and helpful. healthcare retail that a it's the you area excitement kind backseat I nice heard of that taking Yes, award on got this all quarter going to healthcare on investments of are people But kind logistics. you out terms in us accelerating that narrative in - and where post-COVID e-commerce seeing update of, you can automation play are there. still

Anders Gustafsson

has we end-markets primary And ones. the are of verticals about secular grew workflows and that continue workers be Yes, I utilized. quarter. in mean to our into that these our each invest their second automate the double-digits to driving optimally to vertical talked all think empower around I frontline trends and markets all our COVID accelerated of our of Each we've first. across kind digitize solutions in help connected and expanding

patient in COVID acute they I'd into healthcare for vaccine remote say, healthcare it's more but started care, our saw other healthcare we outpatient, areas like Specifically distribution. been moving testing, markets, care, -

efforts our It's healthcare areas. new in geographically. expand expanding to So into continues also

similar they're journey, and Also, are of more providers. a sure experiences online the So kind drive experience, think make offer providers taking was of productivity only to patients in activities. healthcare greater pressure book improve our the also putting is digital healthcare win extra I or to purpose critical we've devices patients. talked let's about on out solutions some for Europe. built say are of not today type they a the And And can healthcare but the for paid patient here, for the which their e-commerce shopping healthcare to providers seeking

Joachim Heel

In come know you they healthcare different enjoyed. on back income that profit some and we that, healthcare, that. also continued then from on where of a there's Anders on the will pandemic, in of solutions returning returns as as ability income Yes, we they have that mentioned the we've we to to procedures of dimension. the but big parts hospitals, more in because their that is to is I pulled for significant Asia we usually growth. before. that And systems piece, might that spending, drive their depending world stage. And extent in One the well. seen out this seen see didn't growth add Have spend another and interest different that that of elective we phenomena are, these is other international two European the see hadn't

growth more two the factors that were expect. we they So

Anders Gustafsson

going is need through the be. we tariffs are suppliers opportunities the automation But Just healthcare hit to to through be tougher to putting one at it's growing I vertical sourcing diversity comment this the that workflows sub for great more work up hardest will over see fastest this which in our and COVID-XX. newer macro important continue longer-term. four ones and was on heads But distribution into components trace by in expect us. displays to vertical. And assembly have the and to the some But - in a Manufacturing way was great our was with opportunity our bit through providing across the track up. other one fastest wearables was the and QX verticals, manufacturing, main and growing all that other here, the business that, increase things. coming the

the strongest was for markets QX. but actually vertical So well, one all our in manufacturing performed us very

Andrew Buscaglia

Anders. Thanks Okay.

Operator

question with go Mason Baird. ahead. Last Rob from is Please

Rob Mason

wanted channels, your channel products. And being to maybe to And thoughts I'm Scanning the on those you partners will pull existing same for products how Yes, products? channel. get through Fixed could or to go percent is able separate your good Vision the curious together Anders morning. those also of The channel. question. sell if be the what your Thanks sell two Machine Industrial the relatedly, also to envision you I guess you thought quickly suitable both Joe - then or

Anders Gustafsson

extra here also. can Yes, provide I'll start and some color Joe

So, and we to working on the engagements. our - we started is and on strategy solutions. This go-to-market channel have worked the since product our

been has not doing something is a we've something in parallel to large done we serially, degree. this can this So

there, to who EC with. their to add So how you interest that diagram for think relationship space. new partners partners them. already we response Machine with that obviously capabilities recruiting have, good but having of are see not a to great partners Vision Scanning their a today, expansion we've add Venn space seen a solutions. necessarily Industrial been out portfolio, Industrial And can strong we and they're in there's partners who our say are we Vision value they - if And Fixed we're - with rates also not Machine impressed in and they can currently our Fixed have the see them. that also And them, but our And have from I Scanning

the been response the planning obviously year channel do positive. so big But So I'd a part ensure far, for revenue deliver now need we or from of has intending is what growth next we say that the the to and we very to this that for. that are

Joachim Heel

appreciate I Yes, that.

You're question, as to approach, asking central this lot our a centric And, because go-to-market this very is go-to-market designing of spent were channel channel company. right? we on this. We're strategy, time we this

percentage serve which partners. of need I needs Vision, are dedicated the small important Machine partners in estimate we track in we to progress distributors sellers. great a create, PartnerConnect - partners, need week recruiting I'm First very created these current also program, Machine is our and no our have to these of Vision to already. recruit we made percentage. a would A particular And partners majority The sorry. that of do that's

deploy up this strong about product a essential talking already very And it group signed we We designed the designed we've those make we've critical that's have were how particular wanted to what sell think that of partners. sell success. easy the a that's We and product. towards with to to for of geared We have proposition partners earlier, to that's the value because solutions. that And force. partners in

the pipeline very is And interested of able selling been recruit. the And that in we partners, with that our already of partners products. that additional pleased we've to number so have both we're

Rob Mason

good. Very

recovery, contribution quarter Just it one assumed the in third that half China a that What's the potential tariff in follow-up. to nice or or recur? for second quarter. the the for Nathan, was second

Nathan Winters

no have half the amount Yes, guide. so in incremental we assumed second

claim was we've over and total just recovered million, $XX Our $XX million to-date.

that's left reconciliation. the that So say majority large is I'd in

reconcile the last fairly expect would a few that's we of as I go And we bit those that's small. just is - the timing little amount So transactions. to left batches of unknown,

Rob Mason

And see. as clarify well to in I your guide. just

it now, think because about you're fetch, heavily but hasn't are closed. second profit to being fairly for the we material half in planning small just nothing and quarter. assumed You've impact invest we assume how it the that But business or or would should fourth aggressively that

Nathan Winters

think So it overall run I'm at scales. is But it business. material within in guide. guide, not haven't the rate revenue and the we profitable assumed within a million the margins time this as $XX closed of I that's since about that our And

Rob Mason

you. Thank good. very Okay,

Operator

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

Anders Gustafsson

and heightened would to and above wrap increasingly in economy. just for to up, our serve customers stretch to the they employees I like our So going expectations on-demand thank as beyond meet to partners to

of great Robotics team everyone. focusing maximizing we to the the the pandemic. from we Fetch business, also priority growth protecting are and in the customers transaction. close top well-being Thank partners, welcoming on once profit We're be our recover or you a day and forward our health the employees, to we as While looking have and continues

Operator

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

You may now disconnect.

Zebra Technologies (ZBRA) 3 Aug 212021 Q2 Earnings call transcript