Zebra Technologies (ZBRA) 13 Feb 252024 Q4 Earnings call transcript

Company Profile

Participants

Michael Steele	executive
William Burns	executive
Nathan Winters	executive
Thomas Moll	analyst
Joseph Giordano	analyst
Edward Magi	analyst
Piyush Avasthy	analyst
Brian Drab	analyst
Meta Marshall	analyst
Keith Housum	analyst
Guy Hardwick	analyst
Bradley Hewitt	analyst
Chris Grenga	analyst

Call transcript

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Operator

Good day, and welcome to the Fourth Quarter and Full Year 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 fourth 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 slide You release. can the at and press find today's end of presentation in this reconciliations

quarter Throughout currency our Winters, are financials will on Nathan with Chief this remarks Financial priorities. additional detail discuss references results. and to year-on-year and our progress provide unless otherwise strategic Officer. and presentation, indicated, presentation our Bill will our prepared Nathan on with Bill then will sales Chief on the basis. include begin XXXX Burns, a our outlook. Officer; discussion performance a will Bill our constant conclude advancing from Executive This fourth of

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

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

William Burns

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

Our above our well delivering quarter, results teams in executed outlook. the fourth

compared flow. greater free adjusted nearly For more strong double realized fourth we of which XX% prior share Non-GAAP and $X, diluted $X.X increase. the year cash EBITDA is X-point than the sales quarter, a billion, increase margin the of a prior to year, than XX.X%, earnings per

to As call, printing QX. data capture growth and computing following in to we we the with growth discussed broaden our recovery saw on last earnings return demand quarter, in returning third mobile

year-end with markets bright along with manufacturing with America lagging. trends factors, retail we significant was These customer continue anticipated. sector end spot throughout fourth the quarter to spending had the Demand in a improve North a stronger growth than drove in from strong expansion, profitability significant a sales sales second operating our cash earnings in perspective, and leverage the of in last resulted flow. supporting double-digit our destocking year QX. strong distributor half the growth From most margin

our remain a order environment, XXXX, and navigate our As global we an backlog we outlook QX, however, dynamic solid backdrop. a in geopolitical supports trade, including enter macroeconomic as our uncertain customers cautious

turn over XXXX will review actual discuss I call Nathan and to the results to outlook. now our

Nathan Winters

Bill. you, Thank

Let's our XX%, X. QX, outlook. major start in P&L the with demand In in company above growth on across retail computing total categories were continued Slide product sales recovery reflecting approximately drove strength our

Tracking & Visibility grew and increased Mobility Intelligence and XX%. Enterprise Asset Our segment XX% segment sales

Our America, the sales services and regions. growth XX% orders double-digit in In solid significant with mobile our improvement software computing recurring [ large quarter. in revenue businesses retail ]. We growth across realized North had sales grew a

Europe. EMEA sales XX% in with grew strength Northern

increase point in of $X This XX.X% XXX% improvement basis a to outlook. year-over-year basis and sequential points. year XX fourth resulted Non-GAAP point margin quarter QX. EBITDA and, sales the in operating sales increased margin basis increased along XX% volume with to Latin led and XX.X% adjusted XX%, as strength America particular expenses due New of and in Asia China increase earnings versus basis the of XXX percent modest XXX adjusted XXX high Zealand was points India, leverage, share by Pacific improvement a Brazil. with diluted Australia, and prior in end sales grew at per improved by Adjusted and from our gross to

Slide cash X. now the sheet balance flow Turning on to and

debt achieved levels. ratio. to leverage million flow at as free and full generated EBITDA of capital and a conversion cash and improvements XXX% adjusted the EBITDA year, X.Xx inventory drove $XXX We significant the in ended cash free we working year increased, we For flow net

recovered moderated, deploy allocation capital to consistent with have and flows levels we priorities. As our flexibility have our cash debt increased

in activity for the shares of the QX. million repurchased We of year, most $XX full with

Europe first part efforts quarter. to purchase the company EUR markets, to close a in our recently machine is As we in Eastern million, expected in scale vision approximately continued leading based adjacent XD to our Photoneo, for expansion agreed XX of which

now by strong supported carried quarter. spending turn entered a our outlook. that XXXX We solid our to with Let's predict retail backlog year-end into first

to XX% Our over growth range stronger unfavorable of X% guidance from first quarter sales assumes FX dollar favorable point months. impact several past a the to comparisons and reflects X significantly due a

earnings expected adjusted of $X.XX is be EBITDA expected in margin to the and $X.XX. per Our be diluted to first are XX%, to approximately quarter non-GAAP range share

reflective This sales seasonality. and of profitability expectation sequential decline QX, normal from is a

lagging. than inclusive sales usual. as growth our said, we with year, FX. from been markets a of to X% end have our in we trends basis For environment. cautious points between and our most XXX positive manufacturing X% expect as navigate of lower outlook the Demand unfavorable beyond impact customers an And visibility spending our uncertain That remain QX customer result, is across

non-GAAP to margin XX% And expected share deliver solid say earnings EBITDA to adjusted to we agile XX%. be ensure growth. be $X.XX between to expected Our are is profitable will continue and remain diluted reaching per to full we year

the for million, is least expected year be to which at reflects greater conversion [indiscernible]. free flow $XXX flow cash than of cash Free

We working over initiatives. We beyond chain supply our supply further with substantial levels, years. work resiliency China diversifying will balanced several capital continue our past to made on sourcing progress the chain optimizing our

an work our tariffs. of import with to navigate to optimize which impacts announced our in us We the footprint manufacturing and trade recently continue improved to puts position closely partners

begin We impact incremental is $XX that profit split roughly to of in became $XX and million the gross approximately net tariffs a QX. Mexico. The China March. China tariffs between to on impact XX% million early the peaking and in effective anticipate February that Mexico Based XX% early

we X. Slide been annualized expect $XX substantially We Left have to additional these increases. would targeted on mitigation, Please supply than reference and shown price the chain through as tariffs mitigate impact exit assumptions more million. XXXX modeling initiatives on

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

William Burns

Thank Nathan. you,

XX. Slide Turning to

remains from to software secular benefit We tasks including frontline to execute change have As we central digitize well empower sales development trends we business, constant helping look Innovation and positioned solutions, for services. to to and of portfolio our advance workflows at reinvested workers real and portfolio and of of with our the long-term automate in purpose-built we opportunities innovative by into our more research remains our approximately time. our to them consistently industry XX% navigate leadership solutions. effectively hardware,

Photoneo, portfolio look expansion the forward strategic We AI-based manufacturing, markets. kiosks, progress pending efforts the team other printing vision within acquisitions offerings acquisition RFID our We embedded supply. to will self-service which Recent includes and computing augment closes. eco-friendly vision. mobile our our key includes vision XD once our acquisition our with machine welcoming expand into machine organic automotive of advance capabilities This that and logistics solutions into

As on fresh leverage customer increasingly beginning their their North of our Zebra food I account. is markets service readers biggest technology to closely and availability optimize for address part which transform large drives journey customers workflows. Slide and shelf retailer like American end rise see some productivity The with to challenges. XX, to to you solutions optimize and workflows to customers, our of Zebra will apparel. would deploy works bridge customer across A RFID to fixed the to better wins highlight broad performance and patients. on-demand our shoppers to a continues

such recently lays us, initial groundwork leading additional RFID for provide their project manufacturer A a relationship competitors' to streamline expansion prevention. auto as an with outbound and U.S. mobile replaced optimize inspections. solutions warehouse America selecting Zebra expansion into printers launched visibility online and computing kiosk, and spanning sites loss readers scanners, inbound the An the final expanded investment operations. multiple to devices and quality retailer This their refresh South real-time mobile computers, in RFID

performance are customer. particularly ability efficiency operational to Our improve produce and reliable device

capabilities, with customer tablets is Additionally, offsite. tablets, and placed with technology to workflow on to a projects These and care enabling through provide navigate solution innovation comprehensive us scheduling, in-store commitment patient services. Zebra's their journey pharmacy due how to our product their deploying rely the staff life along and expertise, a support competitor's of or our cycle support. whether leading improved to retail customers demonstrate Zebra breadth our maintenance This

value We innovative show drive engaged improved an help improved modern proposition trade elevated our XX solutions that showcased we deliver Federation the outcomes January. how these execution, Retail through Zebra Zebra's demonstrating store, experience. to helped associates power National Slide partners inventory, retailers AI in and prevention, highlighted optimized highlights through our performance worker customer loss more. Zebra omnichannel and and at collaboration

retail independent vendors frontline software have Qualcomm, our power help the begin to across Google their of We to customers AI operations. leverage and with strategic partnered

device operations. queries unique as assistance a to Zebra guidance and AI with agents the customer sales as associates operating act extensive product agents and environment, merchandising tasks our AI At assist store that leveraging customers' the edge for prominent tailored with show, respond our to information, generative to such training. perform demonstrated operating need procedures, without companion intelligence, digital These retail

of their mobile development cost-effective solutions AI customers of Zebra's take as new partners our Additionally, and advancement of within continued suite business-critical our quick mobile AI use of the enables and applications, that computing accelerate advantage platform.

we needs solutions. believe material our expect strong customers' results, strategy. in impact don't with In frontline have our driving as seeing to an we integral we our of closing, AI ahead near-term conviction the they While connected of portfolio we'll solutions on part our evolving be a new worker innovative play opportunities address

visibility. Our long-term track is increased reflected for and and growth sustainable Slide mandates, trace the and XX. labor resource supply need on chain in confidence include constraints, expectations themes several These by underpinned real-time consumer

I will back to now Mike. hand it

Michael Steele

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

Operator

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

Unknown Analyst

for on Damian. [indiscernible] is This

factoring of you couple XQ return of project and you're any So quick XQ, activity had saw in on terms the larger how in into if I questions that's what larger guidance? a seeing projects

William Burns

I in stronger-than-expected the the high customers. outlook. by end team QX, say at our year-end of Yes, delivered from well would spending retail our driven Really that

QX but across markets backdrop, I the of I all and projects of was yes, certainly take mean which outlook. kind we our sales We run a drove types. the see activity, order year, quarter. all broader sizes compares distributor And see just high growth of really major easier growth all the above some large from broader-based the a by stronger last So And earnings was all would say, did categories, helped mid-tier deals in that included growth end was place flow-through then and end that regions, in larger in retail rate double-digit that, that not QX. of destocking.

Unknown Analyst

broadly, more makes a some executed a already to a pricing would move quickly pricing be? as what those follow-up, touch to That what get timing Okay. tariffs for if manufacturing what on sense. actions, And just actions to sense other around would you've and And there, you're Yes. decision I be just trigger want regions? planning the

Nathan Winters

Yes.

I So our about it's think environment. the response. is dynamic broader tariff sort just question a Obviously,

to We potential establish have -- to We the increases a respond to to mitigation is to and that's tariffs, been mitigation. date. provide to design team announced do -- just our around strategy impact to expect announced And of the look the what are we embedded monitor announced transparency guide. in which at the price part shortly if changes, now you current want obviously, dedicated the

Operator

question comes Stephens. Moll from with next The Tommy

Thomas Moll

that at is, sales rolled for this of mentioned outlook, My lower first usual of the quarter year the You what question up full your year. kind than visibility are is know I beyond assumptions you it as the time year? in we make you the what past, assumptions there? making funnel kind are look of and conversion, and you some the this making on about deals pipeline large

William Burns

that, say, deals. stronger of view I'd that spending. maybe broader then certainly I'd as Tommy, backlog large and cover Yes, of with by the I'll solid we kind entered say driven XXXX, retail a

And tempers orders, carried pull spending broad-based in date, about, we our clearly into are still that solid in right? But visibility seeing being XXXX. back some quarter. quarter our Budget out couple while you first And large from haven't impacts as seen organic from we a talked growth to So expectations expecting customers fourth really finalized, kind that customers beyond we're of playing QX. examples. with impacts our the market of uncertainty

We're orders, large time. seeing some a over specific stage customers deployments longer to period of

about actually a impact. concern that's of the us, dollar, thinking are large Clearly, the do. their still visibility it to that policy we business their bit a some seeing little U.S. of just projects large FX uncertainty much international really deal And U.S. customers focused overall to a impact. something visibility, customers do potential and and dollar and of our is oriented, on moving their what's impact forward think I not customers some it headwind that's small on, we're some our but and and with strong a and plans how And are of from trade the global it. right, around So adds mitigate hey, causing as seeing the strong they our

So feel both our solid despite reflects deployments. in is about confident uncertainties, that and we're guide tough, pretty especially but we and on all while really good our business, business visibility orders these organic large our growth

Thomas Moll

down look helpful. balanced As bias Any key channel are the at feels like context levels some the there? you can that the is inventory this at with or and think you And of your would up it partners, provide roughly you or what the be sell-through insight if sell-in point?

Nathan Winters

year. is say fairly Tommy, balanced. Nathan. the throughout stayed I'd very it's this It balanced

good as But hand days channel partners we saw a the level. think the the the terms again, position around we daily exited SKU sales in year at teams, what sales globe. at a here we exclude we're making if again, XXXX. balanced from And feel of distribution a place activity and I our our the they right with And pretty in out the perspective, look sure have in year. you obviously, inventory the good was we're So throughout with the that's overall it beginning inventory at of from the year the dynamics you about on

Operator

question comes Cowen. Giordano The Joe next TD with from

Joseph Giordano

conservative, you and just to but a I XQ, if why I'm on year, in me, taking to if It now? like ago. ], a the in touched framing -- way visible categorize we So you're were the year little feels you're of given framework like loss it last full where only putting uncertainty. bit, we've you like it understand what's you it all full a are, year, like why was highly compare seemed How compared on the you like right I the it the given would upside. Is guess were but like what to you this curious that? [ were there like was idea like a kind a and similar year to

William Burns

I say that year was is the And little throughout year, our really I XXXX then out that bit they're last visibility customers on for driven say a last impact our the of geopolitically what idea right? like very out with the in the and and happened off XXXX. of we is their ultimately policy year year today I much back absorbing It's kind and that would that going think recovery the saw absorbing visibility. they it we capacity to by what's playing budgets the guide. would then in a reasons, pandemic. lack came really trade and different commitment still projects broader-based different the built to business is global the reflects

see differently in see at, clearly it we where while organic bit visibility that's put it's So our we the a year. of The out and today the kind in confidence solid where more reflected guide. is year, play growth and throughout

that think be we're we at the uncertainty out That's providing the we us conservative I the causing ultimately there all moment visibility impacts So guide like have the is today. to and feel today.

Joseph Giordano

Yes. Fair enough.

the there's infinite on definitionally. a build I million I strength the kind above -- in is it the consider? cash for from if why I at that excellent. 'XX should had and are see the versus guide guess flow that $XXX puts follow-up. what Just How quarter of wouldn't And The 'XX here? mean, -- takes we free least you was that

Nathan Winters

from cash just year conversion, that you're repeat off challenge. that, of to cash you 'XX a perspective on last committing is XXX% free flow as repeating on basis great and annual coming No, an a year mentioned, a

XXXX. real also January So if look U.S. this imply saw year just difference is volume demand impact. and does It to at everything inventory purchasing you perspective teams up a the we get to a in working little inventory we improvements, X $XXX the we they you the full million, can expect our degree tariff of bit are do look to also guide not at continued in position, the between into that a I of potential mean ahead as saw capital as as early but ticked bit in support inventory from the our possible of pull as QX that doing but

year balance tariffs. tariffs, So short-term as mitigate help I mitigate think use flexibility the and us manage some try giving from go through as as the our impact can we we help sheet much to to that to

over conversion but So think XX% -- say, flow free And this implies a big work improvements that's good we working again, to still just baseline capital the 'XX. from. difference, for cash

Operator

Buscaglia question BNP next Paribas. from comes The with Andrew

Edward Magi

This on is Ed Andrew. for

I deep weeks to ago, Following AI. the ask about with developments ] few seek [ wanted

guys You long power the the in discussed have AI of platform.

more possibility Following find the AI fish opportunity competition? the from development of due net enhanced product you [ an recent ] risk or events, to do in a or standpoint probability a presents

William Burns

an AI Yes. see empowering We would as the clearly, workers. for frontline Zebra opportunity really

if Zebra's So role look at in think today what AI. is we I

assets First gives at we in real and digital and and and models, and which business, first a gives that time really AI visibility right, really foremost, voice, collect feed line foremost. front the workers of assets data

data So the heart it's kind at of around the we line collection of what business. of front do

many traditional solutions The our second is opportunity the for of across AI portfolio. AI today used is across that

portfolio. use optical whether traditional recognition, we inspection recognition, throughout character package AI So it's the or machine product dimensioning, vision

capabilities. was January, generative And as AI a what demonstrated we really national retail in show

our to developers an mobile So that software launched ourselves Zebra community allows on for our developers, of We've also really build other suite AI portfolio software -- devices. companion. AI applications independent and

to being the it, device assistant it their say. agents of AI that management. within merchandising has own customer information, base standard specific around let's as information knowledge generative X a operating procedures, think from multiple Sales and digital So

we So software or develop our -- partners partners, and continue agents do. as these there'll be multiple to agents

your your to really So think gather with to enterprise the way information operate share way And customers leveraging from for worker see area operating hardware the making an as of this premium the as in from agents as newest sales, market gain standard on way Gen drive we employee. to and because we innovator capabilities, be see mobile as to ourselves information good devices. opportunity empowered us employees additional best this these a frontline as really the from as AI procedures

Additional as from our AI Software revenues and software our offerings. cloud revenue associated a capabilities and Service recurring software with work

So that this workers. line real-world an each frontline opportunity as and their at leveraging we Zebra true help AI improve applications day see for in of customers our front their the in efficiency every

Edward Magi

if was that Over all to the entering into. XXXX, I XXXX It great you X.Xx guess, to are in be amount M&A, action. fair offer other allocation, any to of can would you maybe guys that we it in about expand leverage, think capacity helpful. into could with plans see a recent acquisition, on tap capital

William Burns

the excited we're that ultimately, perspective. about closed feel we that getting and from Yes, a Photoneo good about acquisition XD vision

already investments fastest-growing to adjacent partnership. So And And certainly, example is another again we is partnered really OEM that. beyond with the XD of in organic enter -- with this opportunities Visioning or synergistic the to M&A within [ were market an Photoneo We ]. the just business. our segment leveraged

well and team. business the know leadership we the So

strong sheet closely about enable done to we'll that balance good M&A strategy. vision have feel in we I have to That's said, adjacent and think our and We've certainly, us markets. flexibility you that. a we've use what So advance as

to the but the we higher say with term, continue a of inquisitive and bit kind the And be use continue M&A today it market, of to there's in bar higher experience given our that rates, near vision. a certainly interest to in uncertainty we and macro able visibility the be we're to about I'd the and advance

Operator

with Next Piyush Citi. question comes from Avasthy

Piyush Avasthy

your end. seeing like some your elaborate What's your and Europe 'XX we China customers? we mixed outlook regional appreciate on trends of in have in -- as From are signals for companies, a these the negotiation think at guidance other overall based heard you so your XQ you on would outlook seeing regions general, from can I what in you're perspective, with

William Burns

and The China, said? Europe that he X is geographies,

Piyush Avasthy

Yes.

William Burns

rates XXXX. to across Overall, Yes, markets the Europe. start I'd the retail, America, all about year-end guess, in strong Europe. care, retail from say in great. business EMEA, really that larger within in growth see strong continuing I saw in sales business North strength overall wins -- Northern continue modest in manufacturing, spend end represents and I'd product Germany as competitive in the to we've seen our North America, of particularly lagging, growth We're in I'd momentum remains throughout in we Europe, China say growth in maybe and our categories projects build stabilized. to manufacturing and health say mobile came still in growth and China okay, I North challenging, return has computing business and America. highest X%

markets think New exists in to more the India, But opportunity Zealand, But of outside like has from I in modest see growth some continue the Asia, China. strength clearly, come real China. Australia,

story just also and of think move to in outside move in manufacturing that's a as China, us right, a geographies. to capture China for the I we're around opportunity China China a is chains not but people the well other clearly supply as from of seeing opportunities perspective as manufacturing outside manufacturing the

Piyush Avasthy

administration what to be verticals, helpful. U.S. up said, manufacturing your the following just you Yes, appears like Quickly current US. more like on other lagging pro versus

and maybe in on automation, and still vision? machine based reshaping your begun up So are with robotics you see step least customers your where I adopting chain talking our to at know their your have customers more conversations customers, it's conversations supply about but with a early,

William Burns

it's RFID in see other we're short-term see clearly world, represents that It's term, markets, the monitoring manufacturing automation the opportunities workers a mean throughout fixed lagging with But an we screens are all production the we vertical around around less move right? us. other penetrated our for we're machine I manufacturing the from vision, longer opportunities to supply seeing Yes. opportunity opportunity than production, an for we chain, the as and see And us. investment entire tablets in markets.

Operator

Brian with from comes William Drab question next Blair. The

Brian Drab

a couple questions. quick Just of

So rounding difference -- second quarter, essentially a bit, and in in if AIT million kind that seasonal the building. $XXX quarter. the improving in on to little AIT then you third EVM quarter, kind sequentially expect I dynamic of was of strength mean in but outlook first quarter and around course, the fourth a XXXX, similar Is the between XXXX EVM what of I'm flat XXXX?

Nathan Winters

Yes, I'd say look look for year, in similar obviously balance little wise Obviously, timing of we rates on distorted growth XX%. rates, were the down there's based terms if growth year. a out this the we of could just

the huge growth or the a here balance market look see previous from on again, the whether easier not fairly we at of enter into seeing segments. of talk to I'm X large of, about we're obviously, think bifurcation first we the the you seeing expect quarter X even back deals, each higher rate consistent -- playing portfolio. the we or the year. again, as So it's And the question, that But comp, if in growth visibility, across we'd across across really rate an geography that's across kind growth year, vertical I as those the consistent dimensions run

fairly growth. balanced some see some deals. basis, I or timing you'll quarterly a see variation think of comps on But based might on on the just you again, year, Now

Brian Drab

moving just thinking And X potentially. on you other Could question. about how then production you're Okay. elaborate

are States, bit tariffs and is war, of was the you time more to the production trade China with the I of point, But production United just the potentially think intentions moving I some a which simple you, move China. last at the out of where this X playbook considering guess, administration. back even little

Nathan Winters

Look, we multiple as really geopolitical full a production assess overall dynamic important stability, the as I cost taking think capability a well -- manufacturing regions, is footprint cost from which the and within continuously capability. factors from

end did respond significant years We gives XX% X/X ago. the executing, from today China. a have made mean, actions base, about we back if exposure of will in historically, our flexibility than supply look and imports lot we China. into our with several to North are diversify of I that America our us with now you have right were more to And which year place we progress the from

again, So a the primarily of exposure years several you today to Mexico. to and of kind diversify. Southeast if single-digit it's mid over China, Asia past -- lot through look outside then great high work And of

So like I we'll competitive a based to perspective continue evolve diverse can. things land most gives think a to where position that have the trade chain we on supply us from

So have on to think, world, own, I taking to a of their flexibility X activity, that as wouldn't I put where lot our manufacturing again, footprint us partners have with in lot around a of that scale their and that we're our of a and us partnership capability leverage and really place, expanding great us global they're think we advantage is we footprints that. full gives they react have with advantage other customers gives the

Operator

Meta question Morgan Marshall Stanley. next with comes from The

Meta Marshall

Great.

way or of you've I saw. indicative X that of Just of some in of kind talked activity. consider the activity is of given that trends? large know and demand was and you that that since And of think kind on growth the overall seeing pipeline about anything I caught RFID and kind of during what of past, that just the we're kind build? X where refresh terms don't you're kind of kind then same COVID deal quarter the I versus performance But to it maybe about just more surges kind refresh that of hitting years think in still

William Burns

creates add look continuing to I would refresh opportunities a retailers. quarter and like those. those then any activity. a have they of comes believe XXXX since in both the or the fourth And anything multiple with add devices, computers would refresh spend We're I that of say the a they typically from remember, refreshes refresh of additional for not broad opportunity take that of Yes. Great. expansion applications. of when that. refresh us. we I refresh plus additional for I'll that applications. Because was at, continually that instance, years perspective, like retail think acceleration an seeing base given say, pre-COVID, And installed into mobile comes, time even more certainly you

you into and COVID and they from the clearly applications But refresh there's it's devices meaning 'XX, a but opportunity perspective, out in there. damaging that depending a of a RFID we came Or strong their just frame across on different into the over seen got say had as chain, a recently. the is the of how need in happy devices, time an opportunities coming I'd RFID. do absolutely say devices, us just they power? long we We still every the pipeline customer are retail devices use is ahead environment. some how are more frame, opportunities with how hard 'XX pretty we're sold time opportunity many use, and of they QX We've is, to processing RFID. think most not on even hard years they P&L, supply We've because I'd sales an here growth manufacturing, government. they

fresh with America, saw and like always apparel case have beyond really fresh another the been merchandise, at retail seen large North well We've rollout grocer first primary food, use adoptions in foods. We retail ahead the into North bakery associated has as look really retailer as right? America move which Our things foods. right, general with fresh a

So the of military visibility the with we've ahead with across chain. supply U.S. seen branches their X move

to broadest to labels. to of of broader RFID. specialty continuing probably services handle So the RFID adoption We've from we're of to see anybody readers, printers portfolio fixed, to got

supply grocery, the into pretty across think chain, into and we broadening the applications, of I So opportunity about feel that we feel good. and government good

Operator

Research. Next Keith Housum question with Northcoast comes from

Keith Housum

In on terms with past visibility And based end year drum keep of about it you the the visibility like the quarters. just -- full changed increasing perhaps I lack in touch on a the perhaps increased visibility weeks market here. terms second, was because can seems of to has a several past a bit better over to need about how of the understand but that over guy, several little and that being the here trying just

to dynamics trying Just the there. understand

Nathan Winters

but I Keith, of last think uncertainty has over couple that somewhat experienced I that is of the part here we've of an of outcome months. everyone I the its think think -- visibility,

at basis. dollar the become that our organic and it's significant weeks. in on last business of year terms sales coming since our even last FX over headwind and X% if to guide look to has fairly volatile you X% of So an growth full Obviously, U.S. over the a X% the been strength of update

half of year. the particularly the FX that as hedges So the through place, we've had roll increases headwind the first year we in in over

wider Bill as has that there's stabilized, range we have -- And while again, reflects the uncertainty. mentioned, the demand higher

mid-single-digit as So of mentioned, again, it's steady and QX, outside is visibility falloff -- uncertainty not the the the economy predicting from year war around think refresh today. from a a acceleration, given we're of the the an Bill organic the for But nor growth appropriate, trade not cycle. we again, macro balance

Keith Housum

evolved overall and the consumer about in understand more has we you where trying going your your just in to average end Got price trends of devices, it. how And several And past sales we future? it. market. the more where toward like of we're the guess, the over industry. it's should the seeing reach about years? Can And the more I Appreciate think then talk

William Burns

lot ASPs end. at across that, the -- time ASP say Yes. tiered over in been of computing, would to change mobile the really I I scanning, the that we've printing would protect hasn't the say that high frame. a I'd say Keith, There's there folio

if end market, bring to to low Because I'd at the mid-tier have market. value at your go past, that have the for you of that buy lower you. -- my compete So didn't want end I device, pricing would I in the the device if I to a to have the of

So us gearing in protect portfolio premium, kind ASPs. of the really mid-end helped of value tier has kind of

and about tablet. of opportunities to we idea are tablets the opportunity, for to in is seeing X I of we've before, the years seeing talked it think the I but clearly mobile seeing that we're fixed from computing The we a having and kind right? real is it of let's associates. example. for screens ultimately, assistant, more. last control that production look a That the idea -- a The move continue We're an digital mobile and in to assistant, use management. drive computing the enterprises it collaboration, worker, and but communicate mentioned that it's More more them. device frontline realizing, hands and difficult the of manufacturing it to to having theme idea task to in idea at are of not the communication more connectivity and very

box only have big a meet conversation. in get is The break room to of the them for manager Think all a way a with even retailer. everybody to and

throughout no have you If the collaboration store. communication vehicle

there's the do are think that see more I new in the here the computing hands helps. think device mobile So ASPs in associates. out devices But that. I are to of got go portfolio they We've opportunity an hearing we'll put to what

them. So opportunity have they some technology That's -based for camera base, devices of [indiscernible] our are new RFID another us. but on

mobile points think hands but the I feel with computing, devices we're generating of in we more So excited more about price about good selling more the workers. demand we're

Operator

The next Markets. Freedom question, Guy Capital Hardwick with

Guy Hardwick

just to throughout and on of you itself follow some in the what last the were mentioned, to model of could the terms say, like maybe I versus percentage hardware think the of be Zebra revenues business either I in the earlier as out? companion companion know talk for Mix Zebra that revenues. sales as or, could January, software you that that look you you X X products. show premium hardware years other what you saw mentioned Bill, smoother opportunity you maybe sales in But Those point. up companion SaaS demonstration could NRF want recurring

William Burns

predict got volume all lot Yes. still areas of I I the either kind mean where a We've to more come launch the others. about win or in or think additional revenues early it's generate to of from. multiple us to business

you got we've that Market ultimately sure not the devices the hardware, to on and further. and with of itself, gains. there that premium cloud but then customers, couple only working Google maybe will the make clearly, and margin. support examples, closely device Qualcomm we could our think share can But AI and give a device premium right, hardware I'll monetizing go in drive I So which revenue for

companions, suite innovation in own with partners. We the as as front, we'll believe our well and we do here with but well lead as AI with continue our working to also our AI that

opportunity from own So vendors software with or anytime third-party I Higher recurring can me drive customer, the it to cloud make things customers agents, this additional right? our adding value write end work suite top my AI our allows Zebra leverage our customers software Zebra to that's like share. AI store. AI going gain create our to or that about modern and The including is capabilities to -- software either at of we come third-party talked or software, portfolio NRF on our for that of to our idea agents suite easy for an around really revenues to either to the

there's revenue for recurring opportunities well. So there as

So think software agents. well these I our both as as in business

the about lots certainly the and and good not revenue, of they We opportunities are increased drive look like. we overall, our I model really to of still forefront critical working but think we're we're this. at. we're They're revenue near-term different on what represent projections those where to And business future, So believe profit. increased feel through

Guy Hardwick

quick I'm activity a QX ahead customers? follow-up. you early of wondering QX tariffs whether by any just saw prebuy as getting in or Just and

William Burns

with customers, I not we've seen we've year-end really. mean spending, really not driven some by retail No, seen but larger tariffs. orders

say really no. So would I

Operator

Brad The with from Research. Hewitt next Wolfe comes question

Bradley Hewitt

that So of stronger stages or would margins the early volume organic the the incrementals could in is XX% XX% it you're XXXX. I thought about have have incrementals a been long-term incremental embedding I appears framework better. But know in bit recovery.

for puts things? the margin walk through and just side So takes of can on XXXX the you

Nathan Winters

Yes, X is $XX headwind profit half to I I from guide, first with probably And the the predominantly first think of of again, the would tariffs. the that's incremental including point the Brad, million in year.

to So from fully mitigated then we'd QX, see QX QX. into substantial peaking then a sequential QX pretty improvement and in

that's to different that, I So have, sequential improvement. probably around you conclusion if remove you different a think, a you'd come obviously, -- -- the

So I to consider. X think that's

to announced what's mitigate into And end so we can exit on as least we again, back that the where we focused, head at year, been ensuring as exit recouped year as of fully again kind XXXX. get we've and date, year and soon been those the those the possible

be get full higher the end from would I basis. see would XX important tariffs guide pre the tariff that's on a of of you as So where FX to standpoint. on kind expect at along EBITDA pre-tariff most range back really And or think the XX where least basis you a headwind point that's of dynamic we the and the to profitability probably leverage, removing the from year full of incremental reflect stand-alone with if about we volume -- first or mentioned X.X And margin obviously, and look those to earlier.

are puts those takes. and think some the I So of

Bradley Hewitt

sequentially, helpful. your and stepped XXXX. a business like and the of then side looks margin downtrend the since That's the on bit of it start down gross And services there's of software been a

how gross on software into So going think there and what's XXXX? you can services about going you margin about and just the talk

Nathan Winters

Yes.

the Part being supply a demand volume. margin We that -- to some high So was chain that complete expect of repair over those from the incredible X of get QX internally recoup as the to software, X same last QX. years on last where both And we've just some the both bit degree just to on the job done into to able degree expanding years. of not a not margins driven X service to accretive portfolio was over the just was I today. the are we of mean but expansion, get some we've software still down as to before, And just I of pretty a had timing. the the margin to we repairs seen and last and expansion. line and component expect service seen over years. drive same parts X I'd still and us that an we've team be has said And

Operator

with Alyssa from comes question next The Barclays. Shreves

Unknown Analyst

a Just question. quick

QX. care noticed in strength there health was you -- the in that guys On

about I XXXX. see health of strength? vertical strong this moving should that kind of vertical care a into was it year. kind continued outsized all we the should know Is but pretty moving last about we thinking smallest XXXX? is into where Just think How

William Burns

X that I got care saw commented, we was a care. X the QX, workers from care. XXXX, the in Prior a that at would and and broad-based to the feel say say mobility, health exist markets. improved health about would it's care. get say see the health XXXX. providers time, care, in to good QX, across virtual But productivity we specific get of We've opportunities devices. and in as use some product in pandemic, would I clinical patient reemerged where home to care I that health health and vertical in our it's for into the fastest-growing would continuing we we're all Yes. vertical that we of in portfolio demand engagement,

well So of I that think our for all portfolio of bodes solutions.

that which we'll we're is trade talked about. health care largest done the we're show up, show and a in about our a health We team has I have care. portfolio customers that great got think solutions our the sales health show, next show I that with weeks, care the We great think HIMSS time of coming team, we've retail in the products coming at there. in But excited more and and job, spend the but

see I there, continued yes. So strength

Operator

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

Chris Grenga

Grenga Jim. This for is on Chris

for Do retail showcased And of transportation expanded like logistics verticals. perhaps couple companion for for you the types time. the potentially customer beyond period manufacturing set into NRF a the of and being a talk quick about any and to you the was these anticipate Just ones. to be features feature exclusive of setting could opportunity that

William Burns

Yes.

it's to our be our our leverage able and that and exclusive applications. in independent AI So not software X solution, suite computing is vendors to allows partners own One no, to for a AI It's think X any it's their mobile for devices ways. I customer. on our

they that as then on presented that in it's devices, the perspective. building top and of at specifically NRF our going the from customer vendors way the us independent software we're whether it's So own agents our well case on customers can broaden with it, or and that build of to

part was question? the second What So the both, nothing there. of

Nathan Winters

-- sorry. jump can on I in

again, we're which being is support as the able workers using our do to speed in verticals, to quickly to, same within On the languages distribution workforce how again, distribution thing center to our language think do quickly a and other as you it AI to campaign and of, X procedures different transfer documents own using we're into translate example up is management, train that possible, being in trying operating get good retail, knowledge they're used own standard that new functionality frontline to center. from in

of different say I'd are markets. to absolutely the parts yes, vertical So other functionality applicable

William Burns

all the Nate are It all Yes, the train your model those inside on, so picking to for operating standard a software right? be -- about the and opportunities warehouse idea procedures within model training is what the manufacturing procedures ultimately, it's said, leverage environment. or be you as applications. operating base So specific could it would standard

Operator

last from Jamieson Cowen and question with Our Company. comes Rob

Unknown Analyst

sure first have and one, it -- the But right. make color I know the around appreciate I full just I lot you've to just want guidance. a Just this year given of

this you more to rest that of happen would like does an quarter? might little of out? a year play see this bit be the quarter the later policy and Trump would get the And of understanding of come that expect administration, a from I bit then more year, more it of tariffs understand little So the guess, maybe everything. expect seen just your get pushouts you delays would a or to really basically, visibility have kind from indication a customers? longer And to normal ramifications a any just how we the some second through and hesitance of bit you some when taking and when of in might if clarity the

William Burns

to it's year's with. now and to we'd Yes. from would to more ship I all perspective. up still projects here would visibility. our have wrapping time, in ahead that say think conviction by going there visibility and year, are that out have move finalize this that there's no we're customers customers I uncertainty I year-end. environment. budgets are different. just as their across are by budgets say T&L always specific Customers continuing typically, date. There's the And this The budgets last their are QX right, retail Other customers customers

so differs So it it's by customer. sorry, or mid-year -- --

I the really lack uncertainty, visibility right? is think that driven by of this

said, trade But as other of there tariffs going there to today, becomes and around And you reciprocal discussions countries. if and perspective. policy even in from happen what's more yesterday a clarity, were

as do our specifically like, what on others this uncertainty are us. opposed as customers go how is and finalizing I and things because mitigate hey, So with not tariffs if are happens focused helping projects to we

So you're right.

time. customers be on have visibility haven't just is We a growth real tariffs at FX are yet. that's the today. we'd The don't things moved seen anything out headwind China real or can today. normally in certainly this have We point the delaying

try XX% about But we away. characterize for the China, to Nate Mexico does go is tariffs go XX% if away, that's it, about why of it what Mexico talked

give in certainly confidence more year clarity help then us more their So and give clarity. would and customers more our

less So the on and tariffs. there's problem is, even clarity yesterday as today, than of more

Unknown Analyst

And last one. then just X

as us completed? you acquisition. can the in said included acquisition year Photoneo there give in full revenue you that profitability Is gets on full I expectations it's your Just year potential the anything of not from for guidance. way know

Nathan Winters

would assuming portfolio, small around later the the closing And it's but relatively it be this year. on revenue XX of based the obviously, for purchase to Yes. price, quarter, total relative bps incremental

guide into our quarter we deal in as the that include move is second once closed. we again, So

Operator

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

William Burns

I'd to biggest to like for continue thank our customers' our partners their and challenges. employees work together to we Yes, support as solve

innovation transform on a continue everyone. Have relentless our day, great customer about workflows. good will to business. We Our focus our feel

Operator

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

disconnect. now may You

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