Zebra Technologies (ZBRA) 29 Oct 242024 Q3 Earnings call transcript

Company Profile

Participants

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

Call transcript

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Operator

Good day, and welcome to the Third 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

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

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

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

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

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

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

William Burns

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

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

quarter, strong non-GAAP increase; $X.XX, year and EBITDA of prior [ margin per flow. we $X.X free billion, a the adjusted an basis was cash a earnings of point which the realized For almost the share to XX.X%, sales year, XX% delivered increase Xx prior compared diluted XXX of ]

broaden early markets destocking cycle and growth. we the mobile quarter, our the as on computing end return across of recovery our began year. also to last growth to our double-digit data quarter, last half second across and end during We discussed with with in second As realized recovery markets we we third customers the all encouraged the see began to of activity growth. of call, returning primary see sizes significant growth signs were to In to we printing broad-based capture all to earnings

in and That We customer for America still most are seeing second EMEA end generally North higher of goods half the expectations across lagging spending year-end manufacturing in sector economy markets. the spend to including the said, as continues is recover. indications improving

as regarding the of large Additionally, visibility limited to deployments. ahead we look remains XXXX, timing

leverage highlight improved Another was primarily and mix. margin due our improved volume driven to profitability gross by business

actions have of recent into completed our distribution our restructuring $XXX With million of annualized single net successfully American the to centers facility, a area North savings. deliver we consolidation Chicago operating

our third we quarter the profitability and raising profitable Nathan call and our to our Given growth, results demand free on discuss will are in performance, now XXXX momentum outlook. year outlook for focus full review over our QX and flow. I to our financial turn sales, recovery cash improved revised

Nathan Winters

Thank Bill. you,

the Let's in company with In P&L XX.X%, across on categories. demand QX, start our product Slide continued recovery sales total major reflecting grew X.

increased by XX% primarily and solutions. strong in data capture Enterprise Mobility sales with and RFID. and segment Intelligence Asset Our Visibility and XX.X% driven growth segment computing Tracking mobile grew printing

mobile Our sales strength grew across with in growth XX%, services businesses sales grew and software X% grew regions. In Europe. quarter. North led in America, recurring We realized our XX%, the revenue by Northern EMEA double-digit and sales printing. computing

point adjusted margin led basis operating prior points. to greater with year-over-year increased Latin third stabilization sequential XX% year India, in and XX.X%, China. mix Brazil. Adjusted by in improvement a XXX gross Mexico volume increase of This strength XX QX. by particular expenses momentum point XXX sales America XXX% sales of quarter And adjusted percent along XXX Asia the diluted a a basis increase. $X.XX, earnings basis Pacific grew margin was per improved points share basis in business Southeast from and in EBITDA than versus due in resulted favorable sales to leverage XX.X% and Non-GAAP as Asia XX% grew and a with and

repurchase sheet of cash to at ended quarter activity in EBITDA now have billion free of drive flexibility the EBITDA facility. capital. In improved cash balance revolving within leverage our flow, cash Slide and flow ratio, is improvements continue now generated capacity we resumed on We of a the range. we net which the than X debt first XXXX, flow million target and increased given in and net to on adjusted X. improved, and our Turning X.Xx our significant $XXX credit working $X.X QX as lower debt more months We to share

our We outlook. and American a retail our large customers, our to XX%. turn categories spending major projects. now expect solid the between entered with year-end by XX% assumes fourth growth North and pipeline several improved level and outlook sales quarter of of an Let's including product opportunities continued across This recovery with backlog

We the last half continue the across business part significant of in distributors activity easier to destocking cycle during our due to comparisons year. second by

margin to earnings be expected are $X. XX%. the QX to to expected approximately share is in be adjusted of range per EBITDA diluted And $X.XX non-GAAP

Our full of translates fourth year outlook quarter sales approximately to growth X%.

and stronger $XX.XX expected of QX per guidance. our is $XX.XX outlook, flow EBITDA in be approximately focus recovery growth cost at continued by XX% earnings adjusted is cash margin least our momentum represents $XXX structure. Free demand to be expected Our to and on to year profitable supported the diluted based on share full is prior non-GAAP to be expected in million. This range for now our the in increased year approximately

levels, With while rightsizing to on reference that, modeling our including shown X. will inventory. growth Bill. call Please additional Slide capital drive assumptions the profitable working to improving our continue We turn I back

William Burns

Nathan. you, Thank

positioned prescriptive and artificial demonstrate with more tasks including navigating and Turning to digitize of to and comprehensive empower and capabilities, from benefit workflows to software services. to continues by We constant Slide effectively analytics, purpose-built well portfolio trends change including time learning execute innovative secular real market leadership XX. remain to automate We workers machine in our intelligence. Zebra through innovation. frontline to automation, solutions, hardware, advance

our reinvested approximately XX% We new recent and into At new [indiscernible] solutions software market. revenues and commitment to innovation. development unveiled of AI research and customer to in advance that our the the and we environments. events innovative demanding cloud tablets North EMEA, have include our advanced These underscore utilizing America solutions bring consistently and for hosted of work to latest machine version learning our rugged

a We expand with Zebra's Kiosk near tasks. adjacent value market focus including us solution tap-to-pay self-checkout, the enables on associates launch software enables that which addressable technology our to core frontline higher enhance offering to also capabilities, and customer experience leverages highlighted Zebra platform. This

sales, are merchandising operating computing AI feature a developing we procedures, workers the frontline mobile Additionally, at assist we National to will January. Federation designed and generative Retail trade in solution which show with

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

on Zebra e-commerce and year, Our and and wins. differentiation second relentless logistics. innovation large we half North EMEA of competitive in momentum drive continues our in American across this seeing to deployments retail, focus secure are the In

our include large built e-commerce a during Our at solutions customers increased are they've they pandemic modernization mobile a out as the look supply chain key technology project increase and in-season in drive customer latest productivity. capacity to several investment wins enable optimize absorb will the to beginning large grocers computers cloud the computing to mobile desktop drive work software a devices retailer upgrade to to with retailer at applications, use cases replace a the deploy pricing. and software their initiative to front-of-store Recent luxury

wearable our mobile and I competitor's and increase Additionally, our the care. a voice highlighted Last customer quarter, new logistics the improve expects computers with satisfaction success Zebra's to employee customer to and selected solution. solution. health in traction customer enterprise-grade benefits devices This picking of and selling [indiscernible] replace accuracy

systems record integration secured we ease large into differentiator printing North computing a hospitals. competitive and Our mobile recently of at has been electronic wins and America medical

of improve solutions visibility and tracking specimen. enhanced equipment Our and workflows assets, will and enable

all to We growth recovers. realized sales Slide Now markets XX. as turning demand double-digit across vertical

mandates, In several we consumer for confidence to and that themes underpinned growth including drive expect sustainable trace investment Our the labor resource need long-term our in closing, of this real-time recovery and sales fourth with increased normalized and quarter the year a seasonality XXXX. in by half enter solutions, track more and demand broadening constraints, into of second expectations is seeing in visibility. in are chain supply a the volumes we as we

customers as of term, through longer our we maintain look portfolio our strong we our with elevate As role in innovative for opportunity strategic the solutions. conviction we Zebra

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

Michael Steele

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

Operator

Andrew [Operator Instructions] with question BNP Paribas. first The Buscaglia from comes

Andrew Buscaglia

up picking demand a be obviously, So quite bit. seems to

larger America retail you I You're facing but comps, project North easy some had wins, believe. some commentary also some around

If comment that that, you And that next you seeing out on are what in see market playing you do how year? specifically? could into

William Burns

the would recovery retail in of outperformed QX. expect would the I to that and where just retail kind we a QX, that Yes, Andrew, QX, a vertical all say seeing really happy across say we which encouraging. in product and markets, into saw e-commerce that was perspective, we categories quarter retail certainly I not executed and all across results, certainly, teams pretty ended that we're From the broadening extend with I were say ultimately, well. would

able orders see easier certainly and you year-end we've have some e-commerce, spending, compares larger EMEA. mentioned, which and past which from seen North from normalized retail a America we [indiscernible] in ago, but year-end and specifically also with years, transportation to As at logistics, seasonality, year been some

what that of year-end. we course, year, at now hadn't We and last we're more to seen is this seeing So see levels. that return normalized normally

focus we retail feel be differentiated that retail got omnichannel software e-commerce, drive spend we've the good opportunities about going against I'm QX. hardware to win serving [indiscernible] to We've market that again, and to a customers pipeline of investments market. competition enter portfolio a we continue solid to continues continue to market. as in as beginning in So got

QX about American across where good QX what feel coming see we seeing in and year-end across we seasonality So EMEA. some North the back we're and spending retail

to recover, continue pretty feel beginning the good If we think the to moment. retail the first and year. and So recover, the the throughout was the first seeing right? at first to to across It you back was that of we're retail about year, decline retail the

Andrew Buscaglia

Yes.

And Okay. their are of customers? you with to kind decisions about seeing can on they comment trends And what restock? to you're those And you start what how then seeing with going just distributors? are

William Burns

in to inventory and think to from hand working but closely we're each they've the right QX, as our them level got that level to them I to they've would partner product in uptick sure that closely with distributors Nathan. stocking that we're of the I that across categories the work to meet that got Maybe the business that demand of we make right we increase say seeing of sure I'll with all enter our to regions we start continue the the around are globe. seeing overall community make sure that that across make

Nathan Winters

Yes.

when where be we'd like think it an perspective, I days look quarter. amount good inventory in fourth a of from them at Again, to that the checks. of on at entering hand we they're terms

overall spend So, again, as the said, good the with year-end as for through. we we the inventory quarter expectation come enter I the Bill position think here feel, to about

Operator

question Jamie Truist. from comes next Cook with The

Jamie Cook

volume the XX% wondering, quarters, mean, the the gross over level so some the past on of X margins help XXXX? least us of level margins this and XXXX. that just in in expectation quarter or and from you nice to help orders, what's large second understand And fourth I quarter. orders the rate at margins guess the question, fourth quarter based I'm implied I my restructuring, the for the of a back the can at exit into did and sales that implied benefits continues were third be guess quarter. given sort on that's XX% that the Congrats I much that the then confidence can in how the plus, your just XXXX large

William Burns

Yes.

I Nate out say I'd we at, quarter right? we assets, margin. clearly significant 'XX scrutinizing frame. they order fourth we destocking And were to deal saw that So they -- -- hand overall time and pandemic, fourth sweating and of distributor customers Jamie, of that quarter on activity in drove that were large in kind would no large absorbing 'XX. and 'XX maybe in right, over I'll we're around that build to budgets, the say year, of of start kind were the capacity then end And last recap look in if back, where really

year entered the on would and that remain in So saw half. I that about focused really in we really half really we say what's signs as really first early first first this recovery talked ultimately, retail, half, run businesses orders and in that's below the of the mid-tier 'XX we mobile is but computing rate different and levels that, large historic in

got North we seeing I regions, what call half, mid-tier America most for by some second seeing recovery of seeing manufacturing, we're still is in instance, retail As into also across We're seeing EMEA. We're logistics and markets. all and we're larger health lag, year-end spending it, orders, and would broader customers in orders care. end the return but from probably

a which also has us been guide. care strength, raise has allowed health to So our

an in seasonality seeing typically, the next of quarter fourth year. orders probably as kind normalized more the saw CapEx as demand fourth year. other the they in is uptick I say more we that spend quarter throughout that thing saw we're move increased we fact a was So large I would on that into comment the where customers our think is

Certainly, what really more business injecting we're back based guiding 'XX that got to that throughout quarter them quarter customers in strong injecting the again, macro around continues XXXX. back we're in again, increased The capital second to across recovery expect like and our their seasonality 'XX. as seasonality spending, especially a expect, injected seasonality business. in more the normalized 'XX. into while to fourth seeing the I'd business confidence retail into be and 'XX, we'd expect clearly fourth from happen continue on we're into say in the think I in perspective, So year the and not then half, just optimistic we the environment in we'd

product a that what the each and the say new still one lagging I little say really different uncertainty of would applications. investment or customer investment that we're segments. whether in P&L some other seeing is of and means would is absorbing caution bit So or seeing phase I'd the base customers be, business capacity. we're customer their across would new a say new I it's manufacturing refresh across

a limited large we've going got happen on to projects to when So bit of they're visibility 'XX. in

comment across the is a some to recovery thing end continue, Maybe we'd bit can I'd So only perspective. on but again, a expect the from uneven caution margins. markets of the say Nate

Nathan Winters

year is the the we look that -- thing And at I'd margin kind as of I'd EBITDA So sequential just think implied guide into just at what benefited the mix volumes XXXX historically, QX we flow distribution go say actions than coming on again, seen third fixed America. the you as what's throughout margin Jamie, the through like as in piece of last that North deal in our a on do bit incremental if a completed benefit of decline wildcard than look so of as The but a through large there we kind margin deal you our consolidation deal midway the and margin our percent good a highest some the our, enter expect gross say we restructuring still quarter, Obviously, what we've the That the was scaling gross year but based look in volume. We large history, centers large the of our gross higher from was through. recent infrastructure. look gross seeing of is the but as had the in quarter, is still only on as over XX%. dynamics. return, that's lower about you really lower in That's volume. as we've

Operator

with next The question Damian comes UBS. from Karas

Damian Karas

the Nice work quarter. Yes. in

deployments about year-end limited late what do So kind Could get of guys still like sense still you you you visibility decisions, of year just CapEx you us there there could guidance? only the large when after kind election, is? have these going into potential mentioned budget of spend? where that larger kind that type that and think later through a of give factoring deployments. into -- have And around is Are some you have for why be in and the visibility there you your maybe we baked some you is

William Burns

would I Yes. say, a we good the Damian, about guide guide. pipeline orders feel in support the fourth and with visibility quarter to size really all

the say, to saw e-commerce we off spending of fourth momentum view from 'XX kind and that I start a happen good visibility a IT increase, likely feel GDP, into I year. capital for we of a guide that's limited spending We'd CapEx ramp would throughout was overall, device spending is of on what is 'XX, think from as I growth, perspective, expect that through macro lots we look, to kind same customers in quarter. up think 'XX. environment, projected So I about be I spending with as whether 'XX. XXXX in overall, conservative look there's positive thing positive said, in that's think the whether the

that's of impacting kind their But the news the as macro inflation things So right? kind CapEx. overall, the and caution Interest of elections, consumers more on all second-guess around weighing spending right? high, All good sales cycles, which customers, kind for of things you think the it, rates still their other those are our approvals, creates they that on mentioned bit part then a U.S. including of longer globe, are of I 'XX.

deployments of 'XX. and the throughout that projects given overall, especially 'XX seen we the a when release the CapEx to just kind in early they'll it's slow see we've large say while bit I'd 'XX, happen at just actually moment, So into for visibility have

about happening 'XX. we for there feel a fourth guide about of think good our things a We is out uncertainty really from So macro there with environment. feel quarter, still good but lot I

Damian Karas

sense. could wondering starting us maybe I still just give to vision a the signs drag makes That or machine improvement point if you on on at update see was maybe your this financials then of business. there? Is And an that some

William Burns

environment. and an about customers within look and closely chain And -- that from for we portfolio declined a visibility in think quarter. as scanning manufacturing as vision to visibility our logistics across the vision that perspective automate still transportation being feel say their opportunity I to overall us supply and to our overall from inspection continue I'd adjacent look, machine good perspective machine creating

affected I has along think example saw in be were all electrical clearly. vehicle semiconductor the good our semiconductor, slowed. our kind diversify of overall semiconductor. one manufacturing that the to, and quarter. acquisition to weakness that beyond Matrox in of which of in business, stabilization of heavily seen weighted market We of been objectives A that's the manufacturing would We've kind is

positive a that's sign. So

about are semiconductor that working software that good good machine feel pleased think new opportunity vision into around we our for benefit I with go-to-market markets benefit that broader into And ultimately, diversification we returns. learning the efforts as investments recover. of continued software We investment deep that the feel to manufacturing, on And and and quarter. as diversify in to us not us some T&L the just will market the AI but across outside growth the will we're

we machine prospects at vision. good of tough long-term the feel the moment, but So about market

Operator

Moll from Tommy Stephens. with Next question comes

Thomas Moll

look clear the you in what coming? to a large orders, at that and for planning visibility And you you when the next what's point. like? on that would to my get visibility then remains order loud start typical do have you conversations limited define want of I about is, wanted year hear pick much I year, question where And cycle advance topic. this notice on and up to really normal kind start however that large did a how the

William Burns

the would X they as What I'd along to Tommy, are when add use customers always devices, And the from the they cycle months. that planning next bigger use they're months are then cases say for? [indiscernible] they right, than in months always refresh, typically generation and devices typically that also ultimately our they've of Are projects larger typically visibility are advance cases say look I what's larger the our X using additional refresh, to in have device. We the they upgrades think the way. begins X deploy use more projects customers. cases about used -- last as more of

they're what forward. and months all move ordered plus deployed, and of So advance, go then it to schedule, solution, Like got they've sometimes vendor factors. side, their and new X product, they with on discussed whether they've do rolling in got go working business. the that developments meet on and their they through in other a gets ultimate out vendors when process relies the then happening selecting based or outside their of to project their software gets instance, on of seasonality that timing And what rollout what want for internal or then

rollout So depends a all perspective. that from

get through they say faster. And their 'XX. I they half delayed, expect to would ramp then kind sometimes in We along I of we projects through move 'XX. saw months more get think move typically they that visibility typically But the CapEx moment, we the quarter, first in Sometimes visibility. of at process. In the X 'XX. -- first typically And

Operator

Hewitt comes Brad Wolfe with from The next question Research.

Bradley Hewitt

be way growth we And do meaningful XXXX to of line a see rates need or returning So better your year-end a quarter large the more long-term anything how than with pipeline much more to in growth or makes you in in as spending, optimistic the the that from retail you aside about next we think large rates seeing are think for XXXX? in were orders order about then framework? in conversion recovery last than you in year, you

William Burns

we're optimistic little color, bit say a right? not is give for to Look, recovery. again, probably guide I'll the we're that, Certainly, of 'XX. trying I'd you

T&L bit our parcel year positive [indiscernible] of We of headwinds last customers. and continued into of but uneven a see Manufacturing, marketplace, overall, based the strong we've still include the the a recovery. the the about will expect pandemic but quarters. we've that, already, 'XX some recover, seen has to shoots I'd the on to continue all seen still been also in softness seeing we're that we that now capacity the care of challenges the half T&L lagging by recovery, over in 'XX the we the limited during the CapEx are increased. results meaning while uneven, working green volumes ramp We've in macro some that budget broader we've into first second quarter that, X using out sectors. kind then the as get through bit built which into other But Retail, talked and visibility projects And second say customers clearly health a continue right? happen China, manufacturing across as business. to when seen they've

strength come XXXX, believe see seasonality We on 'XX right of we'd do early lot overall. now, into into recovery continued second a to So in half. of that the it's the business though. does into And back 'XX visibility too have the just

So back as of we business XXXX. effects that expect to be injected seasonal would we're seeing quarter, in at fourth into the seasonality really large orders

Operator

Keith The next North Coast Housum question with Research. comes from

Keith Housum

we geographies? you quarter. easier Or for those those about a that color can we and Latin forward? Was areas geographical this a of the America in as go from perhaps a bit EMEA standouts, capping is think of there can provide little some compares were Bill, obviously, perspective. it matter perhaps

William Burns

again, growth weak you But end say with and encouraging. know, Keith, as was year. regions double-digit Yes, markets, product right, categories, across a major certainly easier last all QX I'd compares

EMEA, at an compares destocking So clearly the distributor point aggressive in time. easier regions. I'd than that say other

But compare a that even good projects an remains computing. strength overall. we is think than but P&L had is So regions. news the in as in all using across said, product regions America, the the as across our good moving recover. would say, a is categories, easier challenging all a example. back, still would are [indiscernible], say, coming mobile other forward I particularly we're manufacturing bit challenging, care, I story other of lacking the the Northern would in fastest-growing I say North is EMEA, overall say, quarters I an capacity, bit really people EMEA and But Germany care, retail, some in seeing with improvement comparison X T&L of wins Health but some health parcel I uneven would strength about market. in Europe Manufacturing regions. the than clearly other EMEA continue and easier feel that to areas. row, kind volumes larger

that's in to the Asia. past Southeast we've what America. momentum North returned in care, Asia health especially So say I'd in seen around

quarter. kind heard of So overall China, and from probably us before. spots kind Stabilization of Mexico were recovery we're near-term you've bright Southeast from say I'd India And of or expecting Asia moment. a at in in Latin as the kind America I'd and say, not driver the growth China in strength Brazil, and

about I than is good And all around the think themselves. pretty the regions recovery feel is it difference the markets we think more regions. I across vertical So actual

Operator

The from next with comes Meta Stanley. question Morgan Marshall

Meta Marshall

of couple A Great. questions.

we this market hangover COVID that just kind health second, kind within you penetration you post the strength spend overall care -- initiatives moves that and some question fully Is the are about on care all so health of of just enacted Just or or health of a XXXX? of more should think guys kind I are the in some there the after that guys adding are margins. new that just But OpEx around carried just about are initiatives how initiatives think we improved earlier that just of XXXX, into about OpEx this you as year made gross some have Or seeing. know then guys asked And expansion accounts earlier in-depth that had just was out? of health of care? into on are

William Burns

customers care over continued with health Nate. across all categories. across saw I health new of start then would but a say care I growth from and margin health refreshes I'll say to portfolio, and we would a perspective, product Yes, across gross that the hand combination opportunities care.

say, of I'd to on put mobile for lines is health safety information and North specific health have the important but across and providers we into and market. record care world. focused America in scanning, be enhance care, medical towards care electronical overall, computing really sizes We not take specifically which and the able around systems, all printing, improved productivity health it just

automating this happening an patients, say environment all within collecting us assets, what's care. of medical overall, digital across for opportunity workflows, I'd in health information creates on segments So of the -- idea

So us. been whether home for health it's care, have those care, all or mobility clinical virtual opportunities

vertical in well. market health say care at moment fastest expansion it's would I opportunities, care the opportunities growing our both not smallest America, global but new health and is across So North as just but -- and the and

Nathan Winters

Meta, -- when perspective, at incremental you of the primarily from in Yes. P&L. gross in is -- for really really an incremental North the of the related the of benefits of the go OpEx say look I'd of closure second full Really to the in things. restructuring a DC margin gross the the the embedded and to the couple flow-through in are America. OpEx half just benefit restructuring One, it

things that And to efficiency what focused drive for allowing on the of drive team technology terms chain in how today. the all of and code software around to do drive exciting management now we generation, forecasting, how is OpEx the we or AI are have and use of we -- that So the generative scale teams leverage some across order productivity again, supply productivity support us there's on really scale really working have. we infrastructure AI

with scaling So the the the tools really are we that today on structure is that's focus that available. and technology think I have

Operator

Blair. next question from William comes Brian Drab The with

Brian Drab

saw of think one in second third you that different I demand different quarter. is recruit the cadence in -- third a the a base timing even lot the of is the because demand lot First that today it's you quarter with tone recovery that the just saw just during from quarter, touching you the around

I'm of October? see demand even pickup recently So you wondering, as markets incremental the did end in just some in as an

Nathan Winters

start. me let Brian,

I that real before third we from commitments the starting wanted part of to quarter for our prior assumed POs in into second one, the guide, what of if look through spending. was the saw half the customers similar demand we modest half the and a fourth what QX of And from the really quarter. in think, And really here continuing our level that's see embedding the come you I increase the to year-end we back second with think early guide. only at a through

conversion So through, raise which of really see the is that confidence we pipeline to as have to the are today. coming the we guide wanted what to

here the pipeline part that's the that where fourth customers the through the those that of our in of It's picked come based the full later raise to start think I and year-end really quarter conversion in part and the to the the quarter on confidence of So fourth commitments just third really in the see here early we the for really up had from guide year quarter. difference.

Brian Drab

at go into tariffs Trump administration, certainly what you've just start that could That of happening it -- second I now sense. know past question, force. a that the And be that's position on there right environment? significant if to I'm then the here, election task Okay. And could Zebra tariff established makes describe to potentially that wondering for a place. be the activity that outcome And could you depending the in there's concern

Nathan Winters

have all Well, the But for too we we so scenarios some the on next that that come week's of focused alternatives new of on can we to out speculate have been planned tariffs impact various accordingly. the could build early and how been XXXX election. respond on

some working to improve is We've future overall base diversify resiliency to continue chain plans actively the as on into supply to tariffs coming since our the well mitigation that for partners. for are with of actively tariff supply as team we And prepare been any this doing work So the XXXX place. new changes.

outcome place in and structure of obviously, we that coming accordingly. on election supply we accordingly, So or say now, really and but been And right resiliency whether pivot how teams. disasters, improved our it's planning we that of overall I'd be, and respond from primary geopolitical policies different will could depending has natural focus of the that's of focus scenario so the to been that it's options chain make what sure various the respond respond, the the can have our tariffs, then

Operator

Mason with comes Baird. from next The question Rob

Robert Mason

less in promotional from that performing to Zebra's anything well. is you recovery? aspect? promotional structurally practices discount the around sure leadership commentary and out carry position, gross curious, Do recovery. been as could we've in a The change gone maybe portfolio? competitive. margin somewhat need early forward about I'm But the either there really again, you've just I'm your from -- business the is way has Or built touched the on been the already just has still any we're

William Burns

around and say really we our any really confident I I haven't continue in strengthen the health example vertical the continue I'll the market. scale investments continue strategic innovation. early us our in win portfolio we we're clearly, landscape. about customer competitors. that we would depth call. our of through strength. that to in care, gave to our on the to Rob, in meaningful Yes, competitive talked the say breadth relationships, each the leadership I market competitive partner community technology, vertical And differentiates look, with that's change truly and say that. have and we the of the world overall, deep I our each gives our advantages seen around that And around being our across an that to solutions relationships would industry And take leader market We from would you before us tailored customers. we'll extend investment across expertise strong markets serve, all that the market

much we the a haven't same. at pretty seen really around different moment, of competitive perspective So the from much world the landscape

Robert Mason

how those printing about on computing starting But you now, are just capture momentum see data follow-up. against talked that, a And perspective and starting accelerating and products you in growth as We've year-over-year whether good see any see. recovery. to then to leaving -- well? quick mobile as follow comps. may easier you're give Can just I had this we

William Burns

and categories was within then broad-based think QX recover of in to major demand you computing and first said category by QX really these DCS all really Rob, regions. across it, and saw for I'd broad-based in across see QX continuing in driven mobile computing But growth including mobile the deal all was product of again, then to what activity that kind larger mobile as Yes, I we in say QX, some we're DCS, computing. and

a in So And in good I and not expect in variations in the into and in we'd then 'XX DCS sign. I in Again, DCS, being been the on first around think that's available that chain seeing strength there's we're continue all of more half 'XX around But the recovery variation same think print supply year XXXX. to it. growth print.

particularly the -- most one mobile of growth So across has been print strengths print. categories

I creating There's So print. again, the linerless back computing, say [indiscernible]. within that. printing, new so opportunities less like things across to idea right, no strength mobile ties eco-friendly opportunities waste that would in is

So we growth about me across and DCS it because be up feel good the may the I last area print. would come RFID. is broad-based mentioning worth say hasn't yet

the So in see to RFID in across RFID broad-based as QX strong continue of quarter. we growth adoption

Operator

James Ricchiuti question with comes Needham. from The next

Chris Grenga

on Grenga Chris Jim. is for This

for involving There Just been departments. first use new one to grocery, RFID case follow being on about apparently point. bakery that have applications in up RFID reports

new to anticipate be of with RFID growth the general is merchandise whether second, what go case as meaningful more broadly, year question next whether apparel, result opportunities and seeing how printing business use And view along you First developments? a opportunities we're a for the over in and RFID these do your logistics? you might could grocery

William Burns

in say for of opportunities would across retail, RFID strong pipeline I perspective T&L, growth manufacturing. QX and that an Yes, strong

within general and As opportunity seen the store Chris, like and the originally what you see things store where been said, broadening of an some fresh across leveraging into time retail apparel and around the we've RFID perimeter there. and now as you goods it's and on industry the that beyond retail for outside merchandise worked fresh, right,

supply I along software Zebra's the we've of think that. tracking, to and clearly an across readers, trace all represents got labels RFID care, and handheld our with opportunity from that So set and health for opportunity and create industrial us, fixed an track mobile including those parcel, solutions, chains, printing, perspective, broadest go also

the of tags of out the collection you So of looking would exciting are as that applications broadening within apparel more more P&L. store, we feel say the allows inside the or the good and there automated for those are a about is opportunities beyond, opportunity is piece tagged, the right, more [indiscernible] information. tag there's retail and adoption, of The are instance, the retail. that items growth and readers RFID and tagged or more in RFID items and the source-tagged parcel a that said, more at everybody I

pipeline So grow grow, to we're continues applications about I the excited to think the and ultimately, continues of as and and RFID opportunities market well.

Operator

from Giordano next The Cowen. comes with question Joe TD

Joseph Giordano

much update we know And production us is your and to are is [indiscernible] moved, Can You how touched there? of can much there? around. how Or if guys us partners on necessary? how China on where lot Can be of how you still be much like like manufacturing like remind structurally has you with what tariffs and I doing. moved much just you're -- you stuff out a moved

Nathan Winters

Yes.

close the chain still dollars, supply chain in of that component if is given finished is -- production move or we majority the trickier look outside it goods a vast how that's of and really you at within aggregate supply to China, terms So stickier part it's within almost of embedded China, an to just remains of market. more the of XX%

portion China. really American last North we I important out we to moved all think it's But of places several So again, Vietnam years. move like into note, a of volume the the that's North ramp Malaysia, America to didn't manufacturing in up to continued XXXX, significant support back over

or Some given for to return produce relative the North the tariffs. in still made products, sense China even volume higher just on the American the investment with market,

back higher we then. and pricing, with inflation, actions the the offset that again, took that's, So we pricing

we're which more now, equation and when moved if tariffs should additional is are can working the be that's what through So enacted. move any be

and are again, to make where do we components subassemblies So we're that's make also source is because we rely as gives making where resiliency I that sure is but well long-term supply coming planning too and those what on, decision team not out, scenario dislocated that the the us as components right the sure chain from going follows business from. far want

that that that that So working challenge. it's that in we and team to equation have we're solve with region around chain the we pretty But complex the supply is lucky and a work partners through. work

Joseph Giordano

it that. the want year. And understand And then discussion your where like normally, year? just you give first mentioned next I That's versus I step quarter get have to Or that big But you fourth in end fourth the hitting moderate continued through I situation kind you as And is down year? we're a quarterly want make XXXX without of so a of step think you even seasonality increase of is to do this know project like go appreciate you in quarter. helpful. unreasonable kind around the just to a don't orders guidance. in the next activity sure aren't now like quarter, still a I the down

Nathan Winters

we pretty QX QX is there's QX from to QX with recovery, large and big the step-up in pretty year-end expectation There on QX saw the within not fourth be based to still -- a think what -- earlier, been is spend. deployments think several I maybe to to we said I full but quarter. it's is a what back

like of the larger maybe the So and we're you more be a next said I we'd seeing year here would to -- some of because fourth in that's why deployments the go year-end into seasonality we as expect demand historical it quarter.

Operator

comes next The Guy from Capital Freedom question Markets. Hardwick with

Unknown Analyst

return first time share return would against you share acquisitions? the performance. those repurchases? you year capital how repurchases the balance a to leverage with as to Obviously, that has making deleveraging, percentage now more great made fallen point progress in and materially sales. I results, at Congrats for at noticed you up on But has I excellent in Zebra ratio down a trade of year-to-date X.Xx, what And working the you believe do QX. than

Nathan Winters

touched I start haven't Guy, it. Yes, we maybe think to because just on

the obviously, So from last to free than date, higher the flow $XXX million $XXX year. million, for over year cash

the by We've inventory year-to-date team work on $XXX improvements. over tremendous reduced really capital just by working So million.

cash we capital that the reduction So see actions place working in flow. starting that the in to great come through seeing and put it's through in free to flow

next as really great the the quarter. a to back share in and in to here a returned in And the as repurchases the repurchases year quarter take share mentioned, going in -- approach we third puts exiting So into into continuing we systemic here it go next third we're and with return year. at And arise. slightly you giving on or the the puts mentioned, to a target end of year. you with as nice the But either position, capital returning us comfortable position to shareholders opportunities the debt low range, in really capacity position leverage debt ratio M&A overall which for us to X.Xx, is net us they as in but cash to

William Burns

doing of changed. as from say returning of uses really balance hasn't for we flow M&A. bit today are a bar would or cash opportunities on to there's our higher higher at today. it. would advance even with strong and say M&A capital from investors bit the said, do capital think a M&A pointed to Overall, I our capital out, vision our Clearly, what We share leverage we synergistic us the there return how you or that interest look target adjacent of the and It's is entail I to out overall, And that strategy a larger about moving gives closely through free it's as market is opportunities good to just and really rates. sheet within specific buybacks -- forward philosophy optionality in some certainly uncertainty is say perspective. comments that would really I something that, us. Maybe still increase to the would M&A. idea Nate

of to the So acquire want going we'd were kind if to something, coming we be assured in. stream revenue

bar bit higher a the So moment. at

we for as it shareholders capital I how through can to use a that in that to disciplined I M&A think share buyback. today. think as think And we're our vector is we growth business it excited returning about addition exists long-term about

So both are an option.

from our strategic I M&A the marketplace inquisitive think got we it's perspective, meet continue to to look in and but be an vision.

Unknown Analyst

quick as follow-up. Bill, And just a

you NRF few the referenced to when the early mean will thought Does enterprise your would closer remarks, be just on we think at perhaps are ago have I show -- be you'll you -- in mobile those you AI-enabled this that a the showing you showing call? that the QX months commercialization, that year. prepared computers next discussed

William Burns

Yes. We -- I yes. would say,

Google closely NRF This early opportunity. last mobile our continue a really of advance this year. advancement working devices So some of on that of to lines our continued an at to companion partners will customers along year, we and NRF with demonstrated version Qualcomm, those AI be at

see this drive of and think large assisting connectivities customer digital I a worker the productivity the requiring on device, being idea device we that as to model frontline the running the the this elevate experiences. will that a on And cloud. language mobile assistant really without

not. of You think warehouses a can stores, of environments, their or our of have of retail And connectivity cloud others. out you want if of a lot have customers think don't and lot connectivity

well see I it advantage. something we're how what commercial means building an their do us they is make We're from that closely that, that's bodes offering the to think mobile do with through on and moving really within closely of current I they're for and working think working how that, it Zebra. making that it's how them with that data, they how large forward they our protect upgrade and we'll language and customers, focused from sure And from in us, 'XX, but some happen. using do understanding we're we're models devices, keep what working So type likely

So ahead demo going area. development to kind I show investment move of the we're takes getting that we're refresh level in our there continue next that And closer, this with the yes, to think, and continue cycle NRF add year. a

Operator

comes with Hewitt from Brad Wolfe Research. last Our question

Bradley Hewitt

It XXX bit. margins bumped the took little by looks sequential sequential implied the up basis But you growth you like points. revenue a implied down QX EBITDA about incremental

QX about EBITDA on curious a margin you and takes to of QX? So the there in if benefits expect should we line were basis? that sequential how think not QX any And in puts mix the do occur

Nathan Winters

XX%, higher just large drag flat the you as a Yes, volume timing. deal and that on bit. EBITDA that change driven And OpEx up I point -- it's is the think large driving you the on the mentioned, of again, at Brad, our guide the with margin, from so over of the down by real And leverage. deployments sequentially somewhat look from if X.X just some QX. mix based some sequentially America of And in overall of North just a relatively deals mix project gross primarily of

embedded gross within gross So on basis and the margin of sequential majority margin. any is a incremental

So within I to kind is mix no just real of on that's other all change And through the the obviously I volume. portfolio. think different stronger higher from through actions came the flow seeing think -- then QX really the QX QX the just -- the

Operator

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

William Burns

end for competitive customers our continued say and would their for actually, and QX markets we closing, delivering financial I this to [ us And I continued support about like we're as commitment ago ] positioned recover. week, well continues years our say innovation in differentiation you And just advance thank and In partners and I'd strong our Yes. on our the drive acquisition. that to focus employees to XX results. was to years would our -- the relentless secure XX our say to ago marketplace closed industry leadership It Enterprise wins.

day, you. great everyone. thank a So Have

Operator

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

disconnect. You now

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