Zebra(US:ZBRA)2025-10-28 13:30Financial Data and Key Metrics Changes - Zebra Technologies reported Q3 2025 sales of $1.3 billion, a 5% increase year-on-year, with an adjusted EBITDA margin of 21.6%, reflecting a 20 basis point improvement, and non-GAAP diluted earnings per share of $3.88, which is 11% higher than the previous year [5][6][11] - Adjusted gross margin declined by 90 basis points to 48.2%, primarily due to higher U.S. import tariffs [9] Business Line Data and Key Metrics Changes - The Enterprise Visibility and Mobility segment grew by 2%, driven by mobile computing, while the Asset Intelligence and Tracking segment saw an 11% increase, led by RFID and printing [7] - RFID has been a consistent growth area, achieving double-digit growth over the past several years [12][15] Market Data and Key Metrics Changes - North America sales grew by 6%, with double-digit growth in mobile computing and RFID, although there was weakness in Canada [8] - Asia Pacific sales increased by 23%, led by Australia, New Zealand, and India, while Latin America saw an 8% increase [9] - EMEA sales declined by 3%, with mixed performance across the region [9] Company Strategy and Development Direction - Zebra Technologies is focused on digitizing and automating workflows, with a strong emphasis on AI and mobile computing solutions [12][19] - The recent acquisition of Elo Touch Solutions is expected to enhance capabilities in self-service and point of sale, increasing the addressable market [18] - The company plans to commit $500 million to share repurchases over the next 12 months to drive long-term shareholder value [6] Management's Comments on Operating Environment and Future Outlook - Management noted that customers are navigating an uncertain macro environment, leading to uneven demand across geographies and vertical markets [6][36] - The company anticipates sales growth of 8% to 11% in Q4, with adjusted EBITDA margin expected to be around 22% [11] - Management expressed confidence in sustainable long-term growth driven by trends such as labor constraints and advancements in AI [19] Other Important Information - Zebra Technologies has successfully mitigated the impact of tariffs, expecting a $24 million gross profit impact for the full year 2025, with improvements in Q4 [10] - The company is transitioning to report under two new segments: Connected Frontline and Asset Visibility and Automation [7] Q&A Session Summary Question: Demand trends and Q4 guidance - Management indicated that Q3 demand was strong, but Q4 guidance implies a deceleration in organic growth due to tough comparisons and timing of orders [24][25] Question: EVM segment growth - The EVM segment saw strong growth in mobile computing but faced challenges in data capture due to difficult comparisons [26] Question: 2026 outlook and demand characterization - Management noted cautious customer sentiment and uneven demand across verticals, but expressed confidence in long-term growth opportunities [35] Question: AI features and growth catalysts - AI features are expected to drive hardware upgrades and software opportunities, with first revenues anticipated in 2026 [41] Question: Large project funnel and customer conversations - Demand trajectory remains consistent, with customers maintaining capital spending but cautious about accelerating future projects [43] Question: Elo Touch Solutions contribution - Elo is expected to contribute approximately $100 million in Q4, aligning with previous guidance [52][68] Question: Pricing actions related to tariffs - Pricing actions have not significantly impacted demand, with an expected annual benefit of around $60 million from these actions [71] Question: OBBBA tax impact - The new tax bill is expected to reduce cash taxes by $50 million to $60 million this year, with a modest impact on the overall tax rate [72][74]