Zebra Technologies Corporation Q4 FY2025 earnings call

• Acquisitions: Expanded connected frontline via Elo Touch acquisition and 3D machine vision via Fotoneo acquisition; exited robotics business to focus on RFID, machine vision, and AI-powered solutions.
• Financial Results: Fourth quarter sales nearly $1.5 billion, up 10.6% y-o-y (2.5% organic); adjusted EBITDA margin 22.1%; non-GAAP diluted EPS $4.33 (8% higher y-o-y). Full year sales growth >6%, non-GAAP diluted EPS growth 17%; free cash flow $831 million; repurchased $587 million of stock; Board authorized additional $1 billion for share repurchase.
• Operational Focus: Invested in market-leading solutions; mitigated tariffs; drove operating expense leverage; restructured for robotics exit and productivity initiatives.

The Connected Frontline segment grew 3.6% led by mobile computing, and the Asset Visibility and Automation segment grew 1.3% led by printing and supplies. Regionally, Asia Pacific sales increased 13% (led by Japan and India), Latin America sales rose 8% (double-digit growth in Mexico), EMEA sales climbed 4% (solid growth in Northern Europe and Germany), while North America sales declined 1% due to cycling large order activity in the prior year but had solid run-rate demand.

• Q1 2026: Sales growth guidance range 11%-15% (including ~10 points from acquisitions and FX); adjusted EBITDA margin 21%-22%; non-GAAP diluted EPS $4.05-$4.35.
• Full Year 2026: Sales growth 9%-13%; adjusted EBITDA margin ~22%; non-GAAP diluted EPS $17.70-$18.30; free cash flow at least $900 million; fully mitigate ~2-point memory component headwind through price increases, supply chain moves, and transitioning to higher density memory.

• Memory Component Headwind: Industry-wide price increases for memory components starting Q2 pose a gross margin headwind, but mitigated through various initiatives.
• Tariffs: Previously a risk, now fully mitigated, though future trade challenges could still exist.

Q: On memory headwind, how is it offset and progression?

A: Mitigated through price increases, supply chain moves, product portfolio rationalization; two-point headwind fully offset in 2026.

Q: On share repurchase, plans?

A: Targeting ~50% of full year free cash flow for repurchases, aggressive in first half of 2026.

Q: Q1 revenue guidance, reasons?

A: Strong finish to 2025, Elo's linear growth, no year-end spend surge, and underlying demand momentum.

Q: Memory visibility and customer pull-forward?

A: No significant pull-forward in Q1; price increase announced recently, monitored impact on demand.

Q: Software margin, reversal?

A: Service and software margins pressured by repair costs, but unifying platform efforts expected to improve margins in back half of 2026.

Q: RFID growth, areas?

A: High double-digit growth continuing, broad-based across retail, transportation/logistics, manufacturing, government, etc.