Strong Q1 Revenue Growth
Q1 sales of nearly $1.5 billion, up 14.3% year-over-year (reported) and +4.3% on an organic (constant currency) basis, with broad-based growth across segments and regions.
Zebra Tech
· ZBRA
May 12th, 2026
Summary
- Earnings Call Date:
- 2026-05-12
- Change Since:
- +2.48%
- Next Earnings Date:
- 2026-08-04
Earnings Call Sentiment
PositiveThe call emphasized strong top-line and bottom-line results (nearly $1.5B revenue, +14% YoY; EPS +18%), margin expansion, robust cash generation and aggressive buybacks, and management raised the full-year outlook. These positives are tempered by a key operational risk: memory supply and cost volatility that is expected to pressure margins sequentially (notably into Q2) and could constrain back-half volumes. Additional modest risks include reliance on acquisitions/FX for part of near-term growth and trade/tariff uncertainty. Overall, the company's execution, pipeline strength, and margin actions appear to outweigh the near-term headwinds but the memory issue remains an execution risk to monitor.
Company Guidance
Zebra guided Q2 sales growth of 14%–17% year‑over‑year (including ~10.5 points from acquisitions and favorable FX), Q2 adjusted EBITDA margin slightly above 21% and Q2 non‑GAAP diluted EPS of $4.20–$4.50; for FY2026 it now expects sales growth of 10%–14% (midpoint +1 point vs. prior outlook) with a ~7‑point benefit from acquisitions/FX, adjusted EBITDA margin of ~22%, non‑GAAP diluted EPS of $18.30–$18.70, and free cash flow of at least $900 million (≈100% conversion). The guide assumes full mitigation of a 2‑point memory cost headwind (including ~1 point of pricing), and builds on Q1 results of nearly $1.5B sales (+14% y/y, +4% organic), 50.4% adjusted gross margin (+80 bps), 23.2% adjusted EBITDA margin, $4.75 non‑GAAP EPS (+18% y/y), $163M Q1 free cash flow, $500M of share repurchases YTD, net leverage ~2.1x and $1.1B of credit capacity.
Margin Expansion and Earnings Beat
Adjusted gross margin improved 80 basis points to 50.4%; adjusted EBITDA margin of 23.2% (expanded ~90 bps year-over-year per management); non-GAAP diluted EPS of $4.75, an 18% increase YoY and above the high end of prior outlook.
Segment and Regional Strength
Connected Frontline grew 20.6% including Elo (3.8% organic); Asset Visibility & Automation grew 4.8%. Regional growth: Asia Pacific +11%, Latin America +10%, North America +4%, EMEA +2%.
Machine Vision and Manufacturing Momentum
Machine vision delivered strong double-digit growth in Q1 and manufacturing was a notable outperformer, contributing meaningfully to sales and gross margin strength.
Elo Acquisition Progress
Elo Touch is contributing solid growth (management expects mid-single-digit growth for Elo in 2026), early synergies realized in revenue and cost, and geographic expansion including initial wins in India.
Cash Generation and Share Repurchase Activity
Generated $163 million of free cash flow in Q1; repurchased $500 million of stock year-to-date through early May ($300M in Q1 + $200M subsequent), and FCF for the year expected to be at least $900 million (~100% conversion).
Raised and Improved Full-Year Outlook
Company raised full-year sales growth guidance to 10%–14% (midpoint up 1 point from prior guide), full-year adjusted EBITDA margin ~22%, and non-GAAP EPS now $18.30–$18.70.
Memory Supply Mitigation and Operational Productivity
Management reports line of sight to needed memory supply, multiple mitigation strategies (supplier co-planning, alternative sourcing, transitions to higher-density parts), and productivity initiatives (restructuring, software development efficiency) that supported margin expansion.
Operator
Good day, and welcome to the Zebra Technologies First Quarter Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to hand the call over to Michael Steele, Vice President of Investor Relations. Please go ahead.
Michael Steele
Good morning, and welcome to Zebra's first quarter earnings conference call. This presentation is being simulcast on our website at investors.zebra.com and will be archived there for at least 1 year. Our forward-looking statements are based on current expectations and assumptions and are subject to risks and uncertainties. Actual results could differ materially, and we refer you to the risk factors discussed in our SEC filings. During this call, we will reference non-GAAP financial measures as we describe business performance with reconciliations shown at the end of the slide presentation and in our earnings press release. Throughout this presentation, unless otherwise indicated, our references to sales performance are year-on-year on a constant currency basis and exclude results from both business acquisitions and dispositions for 12 months. This presentation will include prepared remarks from Bill Burns, our Chief Executive Officer; and Nathan Winters, our Chief Financial Officer. Bill will begin with his perspective on our first quarter results, our value proposition and strategic priorities.
Nathan will then provide additional detail on our financial results and discuss our outlook. Followed by Bill's closing remarks. Then Bill and Nathan will take your questions. Now let's turn to Slide 3 as I hand it over...
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