Zebra Technologies (ZBRA) 30 Jul 242024 Q2 Earnings call transcript

Company Profile

Participants

Michael Steele	executive
William Burns	executive
Nathan Winters	executive
Damian Karas	analyst
Jamie Cook	analyst
Thomas Moll	analyst
Joseph Giordano	analyst
Andrew Buscaglia	analyst
Meta Marshall	analyst
Bradley Hewitt	analyst
Keith Housum	analyst
Brian Drab	analyst
Robert Mason	analyst
Guy Hardwick	analyst
Robert Jamieson	analyst

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the Second Quarter 2024 Zebra Technologies Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Mike Steele, Vice President, Investor Relations. Please go ahead.

Michael Steele

to quarter welcome conference and morning, Zebra's earnings second call. Good our is for investors.zebra.com year. being presentation website at simulcast X there This archived on at be and least will

and on results Actual differ discussed materially, you expectations based in and refer could are we the statements to risks forward-looking and Our assumptions to are and our subject uncertainties. filings. current factors SEC

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

earnings and slide a You release. Throughout can to provide our the will third on at unless from and and our Executive indicated, outlook. this results. presentation press strategic will find constant Nathan Bill detail today's discussion otherwise additional end of quarter presentation, Chief quarter year remarks Bill Nathan basis. This and Officer; with presentation sales our in the include begin conclude performance on of reconciliations and our currency Financial prepared Winters, second Burns, discuss then will Chief references the Officer. are on priorities. progress a year-on-year financials Bill full our our revised with advancing will

the Bill and Nathan will Following prepared your questions. take remarks,

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

William Burns

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

teams results Our sales in end quarter, of outlook. and second above delivering well executed the earnings our high the

and adjusted quarter, decrease earnings realized diluted X% and XX.X%, prior to margin year. EBITDA sales $X.XX, point non-GAAP year, we of the prior of decrease, For XX of the flat $X.X approximately per the billion, from a a share basis

are second care, growth. Mobile of we the see led more and each by including to categories call, across in was end-markets, in signs we other growth first comparisons discussed we challenging, the across to e-commerce. by where year-on-year quarter, modest are mobile computing across saw where began health retail. The declines of and a recovery. saw of and quarter. product in we growth health end-markets, last Services momentum recovery double-digit offset growth in and vertical software earnings retail other care we in realized earlier returned our stages during As our computing our major modest In the quarter,

While we have cautious large to historical yet are returned continue behavior demand, see on spending in customers levels. early deployments, we from our by not encouraged momentum which to

Another due our of highlight benefits improved margin our the was in restructuring actions. sequential improvement profitability to and gross

complete. to of annualized plan operating is deliver Our $XXX substantially savings million on track net and

call and our revised our in our actions Given for outlook our of sales progress financial results on full-year signs early second quarter profitability. I and our Nathan are we now cost will turn discuss performance, raising momentum and to demand, the review outlook. QX to XXXX over

Nathan Winters

Thank you, Bill.

QX, start in retail of In the beyond P&L company early sales Let's on demand with total reflecting momentum flat, signs X. approximately e-commerce. and were Slide

This software. Performance was declined and Tracking We sales computing, Our solutions. X% in & driven driven health as by Latin with diluted Visibility manufacturing, increased by incentive total services in a point expenses XX.X%, printing comparisons. Enterprise million mixed mobile continued growth primarily logistics, Australia growth a Southeast share growth offset compensation net than year decline in on in Adjusted approximately growth increased with demand large realized was as Asset Japan, in XX year-over-year and X.X%, was actions. expense, basis & restructuring X% categories improvement prior normalized percent improvement $X.XX, North and and and care. XX.X% from Mobility and in our care data sales modest $XX In double-digit in Intelligence and XX QX. declined points. as benefited XXX challenging America, modest the to XX.X%, Asia. growth by all by chain Brazil. From were partially prior basis transportation sequential by the with a versus prior saw product premium America, orders capture we from gross margin RFID of with segment quarter FX. cycling sales in and computing. a partially X% decrease. strong This EMEA, we of driven point by nearly EBITDA regions. partially higher operating and a fewer led favorable supply sales across in challenging QX, The throughout in segment adjusted decreased costs in and savings sales a points incremental offset earnings by basis XX Pacific, in increased offset sales by sales QX compares increased perspective, offset per Asia in health resulted quarter transportation from increased second In retail year In sequential Non-GAAP XX%, weakness our slightly X.X% logistics. Adjusted of basis partially margin China decrease the in mobile year

capital our the our drove and quarter-end. We working the target million $XXX while balance in senior by X. to adjusted quarter we billion debt within range. during which net ended to flow revolving X.Xx half had notes, Turning is at diversified of We May. second credit generated sheet of matured a in first we as quarter flow receivable retiring our the capital. approximately cash of ratio, XXXX, of free And facility we improvements cash facility structure of Slide now In on on EBITDA unsecured million leverage $XXX the the $X.X issuing financing capacity as that

We also terminated cash for rate $XX remaining swap agreements our interest proceeds. of million

our cash have increased paydown debt prioritizing flow. balance lower debt been improved and have now given flexibility We and

to outlook. now turn Let's our

sales broad-based and order of opportunities. year. as in customers remain XX% easier the continued prior share and demand is continue in $X XX%, conversion what uncertain recovery. QX the per product like lower EBITDA business, from benefits between third momentum sales volume, environment. are to expected range outlook orders a our additional margin expect rates driven That historical significant with an to by expected We than across destocking XX% across adjusted be of categories, cautious actions, to QX, an before large by higher This would solid during the XX% assumes last pipeline compares from offset stability between major diluted $X.XX. growth growth not stronger to activity activity expense. a by remains Non-GAAP we cycle we compared pipeline incentive we For expense the considering of partially half in said, and leveraging on second large our our distributors anticipating factoring compensation to to see earnings now levels with entered of restructuring be the are year. We in in as trends increase quarter including the with backlog be normalized

for in $XXX the now have between range expect EBITDA per our second for $XX.XX least expected Non-GAAP X% the full X% the range reflecting to and We at sales for in early of to earnings year the margin are $XX.XX. year, be be XX% signs XX%. of We demand. and our is performance diluted quarter share be raised to in adjusted million. Free expected to now cash flow growth year, to of now guidance the and momentum

have shown Please cash modeling X. been additional sheet and making conversion. inventory reference our improving assumptions Slide We on progress on balance rightsizing

Bill. With call that, I will to turn back the

William Burns

for through labor that workflows environments increased digitize our support Nathan. solutions, workers empower need resource from secular Innovation and change including and Day long-term well intelligence. At automate benefit We tasks we their effectively visibility. include constraints, of capabilities, portfolio drive trends positioned how learning workflows trace supply demonstrated event expectations, We in across help and enterprises their for time our Thank positive services. navigating Zebra by is hardware, and software and our the automation, These more to the our in through purpose-built May, our you, and to chain real-time across consumer growth. end-markets. transform frontline innovative machine execute to supply track mandates, analytics, chain real customers including comprehensive advanced artificial prescriptive we constant outcomes

consumers solutions XX, point see you a can and throughout chain. On from visibility enable solutions will mission-critical the are last-mile Zebra supply Slide product products enterprises the to now origination Our to delivery. entire expect its that of XXx and touch

look through and In comprehensive solutions a trace mobile provide a and robots warehouse, track inspection [ transform process. the computers, the wearable our and our throughout RFID briefly picking and manufacturing, visibility machine receiving, journey quality with vision Let's few autonomous high-level walk portfolio ]. In mobile shipping.

fulfill the you verifying receive mobile stock are to on a As associates equipped handheld And is assist inventory arrives orders. Zebra's from at when customers notification online store, with product an on-time running and a home, delivery. and computers picture device your quality software delivered Zebra to our item

We end-markets. better customers, leverage customers patients. workflows on productivity range As optimize our empower drive of broad and solutions you'll our serve across to enterprises see a and Slide shoppers their to XX,

vertical are value Customers in we that of Zebra's solutions mobile end-markets. the transform differentiation layer devices our computing to workflows the capabilities they seeing and our embed software We competitive leverage outcome. improve in wins drive across

AI. mobile utilizing retailer example, For new airline leverage their North package their stores. secured to enabled commercial computers, will computing in dimensioning win associates, our software with connecting a mobile their collaboration better mobile a on Also, solution we Zebra's a wearable through American drive outcomes Workcloud

convenience environment multifactor to mobile phones shared It retailer able authentication that in cell Guardian contributed notable care. we growth provides Zebra's health our and that are European Additionally, to front the security, a Identity line. It computers productivity also mobile sales a brings double-digit with to consumer device and computing displace at solution. is for

lower teams of systems. solutions mobility Over ownership been the the delivering benefits of past for while clinical in cost year, our successfully total selling hospital our that caregivers empower have

We consumer continues for expect through we half our with We runway be role comparisons second for closing, momentum with devices, and long in the equipping portfolio see computers. In to of beyond growth innovative as opportunity broad-based solutions. cell easier we mobile and from clinicians our strategic conviction more have to retail. long-term our opportunity phones there been our to a customers maintain Zebra in benefit of much displacing our strong elevate with

now us as to Our recover. I Mike. initiatives for well have end-markets sales it profitable growth back cost our to continue and positioned will hand

Michael Steele

Bill. call to ask We Thanks, the limit one follow-up open give that yourself a Q&A. you question to one and now to chance to participate. everyone We'll

Operator

from Damian Our Karas Instructions] comes UBS. first [Operator with question

Damian Karas

some guidance back quarter. it you're much take Congrats much expecting Good to maybe than fact, you the us your start not see bring I return of give you you there upside to how And in to this going could would a Bill, what it's fold. the suspect a project on to sense year, on later? just -- to do, into like do if larger you think sounds sooner your rather be morning, activity wanted the thoughts on everyone. get

William Burns

in quarter retail And that of to e-commerce. sales encouraged really, recovery, look think better-than-expected if we I as retail QX, We're by about was we mid-tier we certainly back and signs the in -- Damian, beyond momentum, said, early it results saw driven which as we last really. rate by business. run really and we saw talked around QX,

still pretty So levels. large was QX deal of consistent coming well activity below historic off QX, in but

orders, continue in deals for that this. to being large base deployments see uncertainty those a placing markets, to that their or purchasing we longer their these which behavior. smaller time in installed -- add reflecting to or to think think smaller market to over I overall they're opportunities customers placing and ultimately, is are So new more expansion their being I because the overall when date. applications or to And really period say out spread their deals spread us midsized cite end-markets, of I'd of they're

I of pipeline opportunities strong. think the that So remains

optimism think our the on part customers. and I of partners there's

we we'd saw like the in so orders large kind to momentum in in the more see of I second large quarter. flat first think quarter, the first orders,

activity about okay more that. think rate. see feel base call we'd just growth recovery. saw mid-tier order a like in broader to we So I to run We large

of our think medium more large seeing across really it's strength I we're I macro want happening of see So what's mobile large now from And just customers. driven and caution just kind computing, their today. in orders to strength think by small, orders, in we but

Damian Karas

know want Great. the And experiencing been been headwind a to just the makes that a ask on you that some to was pick talk To you what a in I of have front. That of up just your extent seems I like year? in bit back years. of cost It And little of you shipping sense. there's the in guidance And kind inflation? what's maybe guys for maybe for rest cost rates. past

Nathan Winters

Damian. Yes,

the now the seen issues, or ocean the with that's particularly rates. have to we a in So stronger rates demand, modest increase due around some whether Red Sea of

as So again, I'd team and the say it's leverage well of that terms the modes, mitigate again of our But in to terms improve time of the several different half working dock the demand air costs, incremental with working get to is as, full-year possible. year that the included for of impacts in a actions modest transit guide. we we've ahead that as second cost as how around our remainder of much partners -- forecast the in

-- modest but at say is some our guide. increase, pretty absolutely seeing there and second So this I'd point half it's within

Operator

The Cook next question with comes from Jamie Securities. Truist

Jamie Cook

first than better a struck Congratulations your thought. than I expectations. your me were question, even quarter, quarter. I nice EVM what my I in on guess guess much I just think better And margins the

I think sequentially. were margins guiding to you down

then behind then start drivers you second my -- And guess So can my give question. that? I I'll to I guess. you the first question and I'll that's there, just speak after,

Nathan Winters

if at margins margin at in the gross look benefiting overall our of is so gross level this deals. our Jamie, you X yes, from years, highest quarter XX.X%, large

We're costs. So seeing the the run which margins, in services towards continued margin, is all our rate strength more chain in EVM within well as and segment. positive rolling also supply now weighted again, for heavily is as in software fully gross EVM, premium a mid-tier particular over the in strength

driving So I particularly. within strength bottom sequential volume think part was of in margin the through really fall quarter in both the and improvement -- seeing was just gross again, the EVM to line, incremental the it that the

Jamie Cook

wouldn't was I And I I XX%, margin in XX% margin is it Okay. mean and the strength guess or second just see we I the don't guide declines what, think why, this the your half about then given EBITDA you'd that in quarter, quarter? line in flat wondering to better now, the back think top pull-through XX%. particular, to just year, in of before I'm with see the growth relative revenues the

Nathan Winters

leverage, our at for the look from quarter such primarily as well third volume that's you if to X QX, And mix to year-on-year, of points. get we nearly XX%, similar as a that up, profile No, Yes. to XX% QX EBITDA business think expect QX. to similar guide QX you again, I deal due margin

of So then don't mix gives same similar some at that in as benefit expect the quarter the to on volume. fourth for to business level if in we of QX the mix on effectively the of deals you sequentially of as guide the QX the incremental implied able say from modest underlying as actions. based flat well were the QX guide, that look profile. I'd realize assumption benefits see really the unit do that kind other, And of incremental the uptick restructuring you the incremental us

Operator

comes from question Moll with next Stephens. The Tommy

Thomas Moll

to really customer this one fully become order deal large we're the year? are for lot your point, the the At July, baked through on And budgets question XXXX when start large of refreshed? what customer conversation a budgets does around point First activity. this how nearly at are centered

William Burns

Tommy, of spending economy customers. on that and even what is happen well year, customers And seen the the into to around year-end I that, still of think do budgets the I in in from of some to kind weighing those half right? the them the as continue some say of will that kind past, of in here. our have the think that with, we're year deployments large their But think uncertainty I second we've scrutinize I'd

do into think or move just there'll inch that shipping or growth presidential volume, by have a more about the whether from parcels, perspective, to those, interest it's So that talking of yet a think they that customers. those question with visibility our all 'XX production, is rates or macro 'XX? I late started volumes. be opportunities see. into election and for we quite spending turn pipeline up in manufacturing shipments positive ahead in to And certainly have year-end then they typically whether I not We're parcels,

even those, move those to on reluctance of I all got think of I there's macro of with business. the factors ahead And budgets, weighing the kind So though think overall. their because kind really they've there's,

we'd expect their to kind we in kind of of more with XXXX. But stabilize, those think forward to get really business, of get to half customers and it's projects, of I still. into those continue say confidence into kind just move regarding as and and then I'd that can the abate longer they second overall discussions many year our safety about

we order we large again, pickup flat a overall. mid-tier in run rate. QX activity saw Now QX about saw this to And

quarter outside Mobile really to segment. So these first we the in a retail, the saw to positive first decline first which return are and all to into broader was growth. signs. Growth computing of

that. expected We

in -- just 'XX our I 'XX. customers is in direction, So kind year-end think I I would the of that think I optimistic, the that into everything know moving for right direction. moving everything don't think is right we're but and say, But

Thomas Moll

changed just is from that aggressive whatever price standpoint, you've anything there more or large become seen you've particularly perhaps having the where competitive participants market Bill, other context on factor? deal other seen in a And

William Burns

customers. of Yes. differentiation maintain bring our leadership, go-to-market, community, marketplace. a that certainly No, about our the that changed our in competitive our, environment depth our advantages, lot I with we marketplace technology We're to with would our We hasn't relationships say feel continuing competitive the the solutions, our the to partner good share really, and our overall. breadth scale,

out the competitors really case. to change levels, to about And competitive And So don't continues then about not a perspective. deal not small. historic market. going large We're is that really and coming to large we mark always be there not have from truly phenomenon -- the returned any the see It's Zebra.

and market. continue feel there, in good So and position win market to the nothing about we our

Operator

Giordano from question TD Cowen. with Joe comes The next

Joseph Giordano

guess understood were what's had started that requesting? quarter, you the update hesitant get where future You inventory sure it mentioned, was was to they're on Have that distributors were because you trying then for going give were needs you you what but -- to of want you products Like, willing than buildup prevent to to them to I liquidated again. it of -- that? asking and kind last make wanted because sell more you

Nathan Winters

a still this is days Joe, say look the overall, inventory Nathan. can take a that. it Yes, I'd we is normalized global hand, channel as level. on from I at at

think of rebalancing, still where as around down driving channel you bit both there's in where a pockets as have the incremental little well world I inventory the needs. there's

And have we where were it's we with similar see regions partners that those quarter, expecting working and they demand. the of the inventory that to one the pipeline. to across appropriate level last They're the each in for of ensure

it more. channel position about. collaborative, we've right some the have where getting say, again, just where of that that uncertainty say, ahead talked a not in remains, we bit I'd And So were some of in always we similar amount but ourselves to end-users, to sure our make I'd support trying QX, there's again, given want the little very the

Joseph Giordano

and see And then like if update I within Fetch, just smaller on of with some exiting terms you us your businesses. Matrox enough. in and an businesses Fair size RFID maybe like could how on and year? in growth you give those of this ask Can trends

William Burns

to would challenging expect return year second compares a I say cycling of half in year. large that I'd from kind growth overall on RFID take can that, opportunities ago. I quarter second Joe. say would

We move second manufacturing. half continue retail but with into really transportation, backlog logistics, just of across we opportunities pipeline and strong to the --

tracking tracking airline. general apparel continued seeing side, track chain, we're moving within T&L, use baggage across trace retail, and an across supply the with including RFID, beyond clearly, So parcel cases to merchandising

semiconductor excited of the we well. it RFID. I still be is vision. knew opportunity market machine opportunities Matrox about acquisition, lots which when say, asset, moment. that as was So a continue would vision, within equipment And manufacturing, machine segment the challenged heavily our acquired we A we weighted challenging across towards to at

in Vision machine in so saw machine it bright spot. acquisition, quarter about software quarter, the that vision, -- our Adaptive good a we the overall. in in decline but was a strength feel So software vision We

of logistics all automotive new I'd along, into which say areas. diversification areas business, the our the that diversify and focus into business, like that was Matrox of

customers, logistics We ultimately. also area, that opportunities, on we're the we're in vision, organic seeing in machine more more and had to machine diversification go-to seeing across well which applies market to globe more really continuing our We're going is invest opportunities investment across calling more vision. just

good wearable pretty overall. I'd about of the space for seeing that great our software now especially feel our we're excited mobile the software, of some say So assets, combination devices, with opportunity software our we're in about. a we and assets in that Zebra

we to solution WorkCloud on our and of combine there. is continue that in the leveraging solutions together bring and really retail then some mobile and wins associates. like things the computing. So device those focused with early advance We've hands mobile retail wearable seen And

So we of of meaning market, overall the not feel market, segment good about sorry, the piece Or smaller portfolio. They're of business. right? our our or a smaller segment business

growth, to mobile the of as really, that being see segments computing we challenged. These Zebra. are areas more growth returning driving So future other

Operator

from next question with The Andrew BNP. Buscaglia comes

Andrew Buscaglia

Yes.

base? on to in in of Because of So age and installed think. especially to these your a share XXXX. presumably, get around your the need devices, these of have I you COVID sold we natural during lot devices potential start upgrade a should data next any you want to would I Do upgrades see the can thoughts were year,

William Burns

computing during our that say pandemic more anything I'd mobile they've really Let's the the a we're capacity else. say, perspective, -- have been overall, from out customers absorbing that than built

the during that more clearly So capacity. Then of capacity across upgrade continued created today. customers. slowed, economy using that all idea pandemic, that think our the as from that so But much cycles built there's the they out they're I capacity even

of kind seeing. I'd that new again. solid of that cases, computing use of portfolio. say of I customers to refresh, idea the capacity the seeing some mobile for But number move the early base. off, to what think So customer devices they've to of across into And absorbed in buy overall, and competitive beginning wins capacity pipeline we're that's if that we're add continuing signs our we're to continue using see kind a we both inside there's of the opportunities are

environment ultimately more. what out Others refreshes And out leveraging there, So have that I'd will will gets the second are to the within our see in medium and assets some that, large quarter. there, are marry say macro rate they better, which an what are customers are we're our business customers upgrades sweating I today. upgrade devices bit the with business, our run in we're continue orders a we'll uptick seeing confident as as and kind think of growing

Andrew Buscaglia

Yes.

kind Okay. on are Is year-end? share some then again. things Or -- focus -- And are, expectations Or we to repurchase? you more improve, things? given you we your where see And thinking allocation free there where here, that is cash the a capital going how you're looking fruition do come have -- and M&A of probably confidence is raising year-end? flow start before some to into see you will M&A in to come just about

Nathan Winters

Yes.

working our on part, pleased the free us the cash half so prioritize settlement structure priority the as swap flow in working capital year. raise our capital as -- -- really, quarter, stated, well conversion. And above XXX% for long million, to in I the -- get you as the including over of overall guide think the the flow debt on the first in first paydown to on the final sale So free to improvement $XXX as and cash second again,

So leverage, under ending quarter, -- below move and sequentially through the X.Xx range the the year. just of our improve that second debt target as will we

terms unchanged. priority, in been overall they think I of

growth capital be year. the the and through levels. overall cash wanted right growth, as now needed to we structure, the to be, organic And lever. additional share think flexibility the business to The a flow move for first improved is as continues the I as we have repurchases we back to profitability with getting well with along trajectory, M&A be our

want M&A to do Bill, you the on maybe know, share? don't I touch growth

William Burns

say I I'd really our guess that philosophy remains M&A unchanged.

term, where would higher continue that In to to advance probably short vision we strategy. I the think today. assets uncertainty ultimately to is synergistic we based higher and M&A kind say business sense leverage adjacent rates. overall But to on our makes that and continue our I'd and our interest bar are then I say, it target of select closely macro the

flexibility As strong continue And we've sheet to is and moment. Nate at got the the continue to to higher we inquisitive, look balance said, a at be but companies. bar

Operator

And Meta comes from the Stanley. next question with Morgan Marshall

Meta Marshall

questions. a Maybe of couple

Just a challenged they had on been strength had I -- been relatively saw, the health that environment. know you that a in more care spend

for So just new there? And wondering strength detail source how then based, a any guys. you that broad-based EMEA that like just is. project of or Is kind question, of second looked

across I some think we've seen that some other across -- other companies.

out EMEA worth that's strength of coming of you are from environment, depressed coming and base, that any where and the the And calling or EMEA are you so -- they're is, think lower a is that in a trends there so just very of out? matter are some

William Burns

Yes.

overall. that drove with really overall, the total in, focus devices health care. realize we of It record I'd growth cost electronic of overall care care. ownership. on safety is a data and space. health by the in I them a health on clinical And devices of in computing well care, and we're and workers, start medical So is of that then ownership improving thinner margins used within I'll lot EMEA. patient Zebra systems, mobile say, And of think an team's Health then significant in consumer mobility productivity care, environment tighter number that of getting add seeing budgets enhancing We've in into health seen really our the and systems ultimately of total positioned jump ultimately value for cost health care past

workflows, digitizing staff and of is seeing. of think care information health that value I the the patients our and assets the are So automating around customers

I care. think That now seeing for remains like a medium- to us. is opportunity home longer-term opportunity an things we're health

tablets home in in that So care. things health like area

we're about So excited that.

piece smaller of our So health of growing in been faster areas, been always the business, happened certainly that QX. one a care has and but

EMEA, we positive QX say of EMEA compare Overall, easy projects I'd the ahead retail. in larger saw regions. would the if I in say say, move other strength relatively to the to some compared overall, I'd move outside is EMEA that we was in

So seen places some retail in some where wins and the this P&L of of competitive is we've EMEA. one outside in growth

good remains today. feel challenging EMEA in we So about that. Manufacturing

challenging. mixed some T&L So good think of overall. large manufacturing easier compare, kind orders, I but that Feel orders, remains about T&L

and think come North first, overall, America, I EMEA, we too. saw out Latin but we to So expect we'd I strength of think America to want this some see in

I across So results mixed the regions. think

Operator

question next Brad the Wells comes And with Fargo. Hewitt from

Bradley Hewitt

Wolfe there. sure happened Research, what not

Nathan Winters

Sorry, missed there -- the during question. you Brad, up broke we the

Bradley Hewitt

sorry. Yes,

if a curious just a more seeing you're line from top elaborate on in second perspective. half what little So the could you

in second rate. So QX the run guidance, revenue at your full-year midpoint it the with essentially of implies the half flat

momentum So help mobile reconcile me of given in versus can that early computing you seasonality of the signs kind QX? in typical positive also and the

Nathan Winters

Yes.

demand, half offset for really then lot challenging of in about to look a year, about of with the where you comps X But full-year you points the of had year, first the where, look parts if destocking double-digit accounts what again, I that by midpoint in them. guide the second we the year the X% from is think at last moving from half if X growth. a full at driven X.X%, for perspective, X% the growth So of our points year-on-year see we

in the strength is business the driven by underlying in the growth second So full-year half. again, really,

see increases we modest each inclusive As markets. we QX That's of of beat. our the vertical demand across said,

look QX the third into we we -- the as in at really think strength saw quarter. I So continuing it

fourth the structured to sequential we similar how but anticipating quarters last we what weeks in as saw of have see a seen guide it that the second the here I of recent July not over several quarter, we or than in improvement, in the level higher expecting into and increase think continuing the we, in at months. We here bit most terms modest go as a business, entered with the stability quarter. we albeit we

in has customers year-end we commitments with our full-year see highlighted orders about past. So lot we on and forward guidance before towards embed being it as spend moving guide. a how in leaned thoughtful large that projects customers for we those those the have certainty the Bill typically, our more And the before, our so including from again, from of

we it's that the see large and think appropriate. deployments, today in grounded into I visibility given what So

Bradley Hewitt

you Okay. in the quarters spend the in That's recent guys And half helpful. then your second year. seasonally expectation of have OpEx for talked lower about

talk about of curious we of some on puts takes margin, basis? if And there if shine at and the kind sequential the XX%, you EBITDA can Just light a on QX some that. implied about it's more you look could then

Nathan Winters

Yes.

et lower if go sometimes when to the towards benefits, some of you year. go as look, on year. we lot weighted the So sequentially the historically, it you trade a half of back but first of year the around timing meetings, just of benefit the based hard as as get world, as holiday kickoff well the of as you our year, be into half the see, to Then cetera, costs throughout into seasons through the get you tend shows, is typically, sales more

say we've -- the I'd the fleshed majority of of restructuring now benefits restructuring the lot through through a vast the the of sequential benefits that of So all P&L. related, timing is improvement kind

then based line. OpEx in flowing look as And as improvement on sequential QX the to QX leverage in slight that I really as higher volume from improvement profitability the well the at bottom to

Operator

Housum the And from comes Northcoast question next with Research. Keith

Keith Housum

up Can computing With mobile you and little as in I services. that on connection sign up buying modest the nature. for shed have that the guess and through two little software more that between software contracts a digits, flowing Question perhaps of of a the light warranty you people services expected and and would item on double bit the growth I you that this the being their for quarter? things in had line

William Burns

I seen Bill. several say last is and this Keith, software quarters. would in overall that growth we've Yes, over consistent the services

continue we strong with mobile feel to rates we say So attach that. about see devices. good I'd

So uptick course, computers. strong continue So in that, right? the with lags ultimately, rates revenue attach of mobile the

are change exact no to on mobile in directly devices the quarter there. not It's just So when tied sold. real depending revenue the

say that so anything think less in looking and a I by attach agreements, devices customers rates So of mobile upgrade continue a that the things customers whether seen to from their little in some to ultimately and the to customers we've service and future. past seeing forth our good from us. I'd extend again, is, strong the really see bit support our that, buying be we're I now, which we'll and sign for security around aspect wouldn't patches away of driven important OS upgrades like take continue an

less like. of if important Overall, is others So else. revenue software that, we maybe bit that and a piece recurring I'd of and little business, an say our services anything

So I to there, nothing it, into think all read Keith. really good

Keith Housum

mobile to people just of towards Okay. of where we should a the about devices follow-up, I most X how as it refresh you bought about years do ago? like, lot terms buying similar? a And But starting today are ago, X ago? then look versus or is down cycle, years versus people that. it in you trading to pricing think how the was, are X people lower Or think appreciate computer? as today what years Are a most pricing say, lower, X customers, about and think relatively

William Burns

Yes.

type of they -- we're choices on there's device making environment. think in customers obviously, their -- are need I the

to see I think So we that that. continue

think And see a if beat happens to time. and device? device, the experience all needs go more higher-tier good up, could that mid-tier you'll had move device, they a devices a rugged a they somebody rugged So reverse those device. type more their they experience a a was more and I if with device had they the lower-tier to they'll

of high allowed margins tier pricing And to as continue we we're make as that to we think keep can. our I same customers devices the we gross sure getting value if can't, the then ASPs out bring that to each to of margin portfolio And keep higher. our us we've kind better, all best, the way that's In think good, and I portfolio. down of tier. or to of valued to the the the kind tiered past,

the don't kind It and conviction the want device, so case. you're in portfolio. We players. have good at allowed meet In around X the prices ago, of working us Android, price select for of days, higher-spec that a our them if higher ago as early didn't right have customers ago, it, to closely to So call for us value-tiered discounting our a do really device we or you the X right has devices, higher-end X end. years pay years today. flavors it. with X, devices years higher tiering to you We're use And many the we about, feel

Operator

And Drab the next question with comes Brian from William Blair.

Brian Drab

if further you're You some the have manufacturing. been weeks. sequential And just manufacturing seeing of feel end-markets, if pretty up seeing in are recent buying the industry and your -- like all you're really now? improvement or stable signs mentioned any that softness if There customers' patterns show in in improvement wondering across of you a environment including sequential that does it T&L I'm

William Burns

in EMEA, But where wouldn't grow demand, computing vertical back from mobile of to call levels that see I'd in manufacturing. clearly got you we just in some is past. But retail, would we've But I -- -- we're been mobile sequential QX your we first, an the so I that, specifically, back computer and manufacturing as saw levels I still we're kind for large especially seeing health a important e-commerce I I retail lesser -- seeing We us. lesser in we've segment that to improvement, we're of we in penetrated say think think historical which before, saw seen end-markets, across of was isn't the way. think think Yes, overall, any say kind good. Manufacturing for and talked challenges QX, normalized about QX. the in in manufacturing and sequential it's in care. say, the saw instance, manufacturing. manufacturing T&L, And a improvement overall, deals, still each I now manufacturing, challenge I'd through

Our relationship the that chain. warehouse in the moving finished or with manufacturing many production supply times through are the more and

machine And having new our play all CPG tablets, into broader some manufacturers, our demand around solutions a of vision, manufacturing. portfolio planning solutions for for rugged

seeing think say We would see in the we're ultimately growth same us. that segment for still So for the we I about seeing. sort term. as probably of But you're challenge

Brian Drab

Okay. potentially opportunities and we seeing in on of environment? a obviously service. when to And balance EVM positioned have up a sheet, mean I in out potentially you customer then ultimately? both better terms technology you're this letting you you Can you tougher great not be follow-up, of share investment for how AIT are gain might comment come in and

William Burns

feel say we're good we that relationships. Yes, where overall, at our I'd customer in about

them. we a second we cases as we're our begin that And continue to And that close environment. saw better, that the We our increased continue in I I growth would we're across medium very as from that to customer think orders think quarter. The to gets use in large to see installed as improve seeing partner continues grow. think to will customers run -- and again, they environment especially say stay I buy in we'll trusted base that to perspective, rate I think macro

will So that That sweating do They forever. their shift. some can't assets. are still

broaden order then the your vertical momentum by then size continuing first overall, in and So demand across activity large see type and by both medium to market, of small, and think order we and I orders. to continue of question,

Operator

Mason from Baird. And the with question next comes Rob

Robert Mason

up has Or XXXX your kind Bill, returned structurally to different mentioned, -- as portfolio strength you or you suggest does you think, that about Have be of gross margin, margin the it the as maybe how already been say, margin would large The about in in we orders of tiering versus, anything think that levels holds or orders when come -- kind agreements just back? done I profile supply should you are back, today better? the maybe when commented around thinking has your gross do sensitivity on. XXXX? XXXX, But XXXX, come thinking the gross either how large

Nathan Winters

a Yes, would structural difference say Rob, versus no we'd the you I'd in business. maybe say terms between -- look the expect deal of kind run rate of large I the margin just on differential if

whether right since chain lower right, you go back So go base. that's -- The so then what's it's the changed. if XXXX, growth, go back, to one the if one XXXX, supply just And particularly, XXXX tariff, baseline. if think find from you rapid it's the the structurally challenges, that challenging the hasn't pretty aspect to I on thing, of you

we from decremental build to but recover, So I it gross strength a we once look at the scale and as grown margin, higher inherently the incremental about in be -- somewhat think in large I the think will the have our of the company. But leverage gross think you you rate. portfolio think portfolio EBITDA profile is network to underlying an strength as able distribution still leverage it margin today, -- terms as margin across deals across if we've again, I business being and the gross

So the margin I think there's the line, slightly in to margin. balance dilutive of to gross it's but -- still incremental the total bottom

Robert Mason

any If could math, I America on is but see. you the color stepped and not that totally My just sequentially. And North maybe to back right, down is little regional the bit saw what discussion. provide this on case look that it go just did there? like a you

William Burns

would Yes. overall, it's Nate's was sequentially saw down to well, sequentially down like me. Rob, returned just as growth that computing was North America, to say -- across again, the mobile regions, pointing America other we year-on-year. I so I'm in positive. sure not clearly North

print perspective. first in a saw The other supply ago, a chain from product quarter, categories and we abate challenges and year were a down second as scanning

pretty QXs had the those and businesses. good really compares challenging for both So of They QX were year. last

an So on typically North as America, that has impacted well. I think large America. In deals North overweight

because So really of North the kind America. overweight and deals in to growth run in North see deals rate America, mid-tier large large typically like are we

then to back activity second kind saw come really we'd And said growth activity North 'XX. see hopefully QX America, into sequentially, we then spend, So like of more half, to of here deal large we and some deal in before, large as kind QX. flat year-end and

story America. the North really of that's So

Operator

with question next from the And Jim comes Ricchiuti Needham.

Unknown Analyst

is This the for touch The ] chart is questions Gringo addressed, with for of very Most Jim. my helpful. [ just Chris points me. but maybe on have one been

Or in that? a one about whether a Just wondering, are those many thinking generally you're for do how projects large one be larger nodes? Or factory, ahead it's to large look of broad, warehouse cetera? preparing of to seeing activity coverage of et or broad you or nodes, project return, any store entail you as projects just particular last-mile, these

William Burns

Yes, see across we of scale large portfolio, about size typically deals and the so kind customers. of it's I that think all

for logistics, refresh in multiple new or and device, that larger across that So upgrade a for it cycles refreshing example, last-mile retail, an store as of would drivers, portfolio would be a of the or upgrades do instance. In retailers like across or postal refresh transportation opportunities. large have -- be larger orders we larger upgrade would logistics, you examples transportation fleet workers see things the around delivery the globe the

So location deal in they we to of we'd I opposed where retail by by location fleet plant multiple each as think In more where or do it's an see T&L see different. entire manufacturing, drivers postal. they do plant, them large activities across once, or bit or stores they're a at one

it's different node. a So bit by

more more say, of So deployments. site, those not time, multiple larger at at systems, multiple down more retail time more care would I kind like T&L hospitals a broken as hospital manufacturing large refreshes. as stores by manufacturing, once, hospital at large not health or more a but

and more T&L. retail I'd So upgrades to large say tied refreshes and

Operator

And the question Guy Freedom from Markets. Capital next comes Hardwick with

Guy Hardwick

of on super for computers, cloud. Qualcomm with kind to very the regular Zebra without requirements regarding but mobile interesting issued working some press releases run uploads of the LLMs

products wondering, was how these Bill, Zebra in digital kind of system kind broad-based So computing? mobile close of just introduction just is AI of I

William Burns

Yes.

of different ways. portfolio in across several the So we AI think

really about as AI that's data, feed that overall. just collecting and intelligence core used models kind is to business real-time First our is of

printed being back tag into whether reading a So information whether barcode it's the it's on cloud, with a RFID label the it read.

and a the the we models. AI, digitizing AI we do, that ultimately, of data real-time So our to our the these models customer's fundamental idea insights thing -- collect, and to of data feeds environment, is getting value and, generate

of that's the think of AI. I about think kind So when you baseline

product is portfolio about our dimensioning, traditional around package more that's demand traditional Second mobile optical recognition solutions for used and across different recognition, software planning forecasting. inside the robots, AI whether is -- or autonomous today, probably character in XX workforce navigation

traditional we kind the that think across of So of is second AI portfolio. piece the

The Retail our our again with information, AI Show to this as that is to model connectivity and National third empowering -- the you're at that idea the January, is through you Federation we Trade cloud, in more Day. language that frontline demonstrated right, on We've it's worker do demonstrated of large referring without working closely Qualcomm go a the Google, is that. Innovation what leveraging mentioned, at to, assisted, kind device

this well. at We also year Google's trade earlier as demonstrated show

required yet. our we're to So best It's do the excited that We're date. work we customers keep how commercialized think how today. to that what's closely that, we which to in do continuing all around understand use with I about model cases, model the leverage opportunity not really case, up

of excited our a with So to lot and will offering But like. it. customers work different Qualcomm on discussions about Google what that we're with look

customers within assistant or about Our digital retail excited manufacturing. are having a

to tie your of able of most customer. think good associate all back the your procedures or standard to experienced the being of to the worker, worker, that being use at of operating the what's having You all restricted as of cases the the making frontline your worker the hands source data, individual as newest

But today, long and us. differentiator early pilots and devices we commercialization. our mobile working customers driver a it's demonstrating still a for term more than with think So for days, and

Guy Hardwick

a don't beyond you mean little of or a just if frame bit terms that. pushing mind time commercialization, in is that? on So I XXXX it me

William Burns

we're likely to customers some along probably we're commercialization our would then -- of as have I to with in it demonstrations around in going we more 'XX. as today in the it see next Retail National with show Yes. planning today. step year No, And that go the 'XX next it at

Operator

And the Research. Jamieson final question comes Vertical with from Rob

Robert Jamieson

on Congrats quarter. the

adding M&A lot of to go and -- verticals. great various base market of I high-level of question share a ask your wanted back around kind a and adjacencies. have Just all more mean and revisit installed you across a

do with recently done adjacencies think something kind adding comfort can in you've more like to that that and things what customers Fetch a you and solution, Matrox and of return be normal other your customers Fetch like about you, like maybe given their you new as deploying will that we leverage have and markets, your adding will environment we like you the that of advanced comfortable more As or operations? Matrox more a -- kind think

William Burns

think customer a to us set strategic clearly, of with our I our partnership an to deploy allows relationships broader that, opportunity that. solutions do for customers. those creates trusted within us That

that great. the think hasn't environment been of backdrop I all the

us is vision that kind good and a around a them space to a that were diversification already. centered customers But takes is giving semiconductor really solutions that. machine because more relationship opportunity are our It's market. of our And -- just outside where of in an of been then challenging we time moving So we that. have example with sell

mentioned. you robotics, seeing we're across as think thing I the software same and retail

and them. breadth a persona. to portfolio, relationship always matters, same depth not current our it trusted our have of clearly, with them, that partner we're So the It's the the we fact

our buyer the So say of we've a solutions got current easy, person meaning get today deploys it's else not -- who to from our solutions it's and I our within won't to organization. someone

now stick example. So to relationship with vision if distribution we line manufacturing of line, manufacturing, form on for to need a the machine the with manufacturing solutions, we're at end that somebody working of like the on somebody with more inside of things products the

Robert Jamieson

then looking to is to things adjacencies That's especially looking the willing and getting here? helpful. just an it. appreciate add just as level specific you're as anything leverage about I share, to is portfolio, And point moment, the high or that to your that you're the you're extent there attractive either at at, to you talked

William Burns

closely portfolio we markets synergistic I really today. talked that, the of and vertical the like just think No, assets in do again, to that we things about. for we are reasons do the We'd think it's what adjacent -- to to overall similar

bit as ultimately, certainty we bit. then at a said down weigh And higher uncertainty and that the sure little little revenue, to if macro given interest rates all I to moment or into going So acquire make before, higher of that, something, that on play. the a ultimately, were then hurdles the comes

Zebra. overall, the So fit we I right to be inquisitive. be right got It's asset think for continue to the and

Operator

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

William Burns

Yes, up now growth just for continued second Zebra employees I'd half in the the of wrap of the year. in thank We're execution like our to and and you to second by quarter. positioned partners saying support for

you. have a So everyone. Thank great day,

Operator

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

disconnect. may You now

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.