Key Takeaways:
Zebra Technologies reported Q2 revenue of $1.56 billion, up 20.4% year over year and 3.9% above consensus, sending shares up 11.9%.
"Customers are investing to digitize and automate frontline operations and our integrated portfolio is central to their progress," Bill Burns, chief executive officer of Zebra Technologies, said.
Adjusted EPS came in at $6.35, up from $3.61 a year earlier and 45.1% above the $4.38 analysts expected. Adjusted EBITDA reached $431 million, a 27.7% margin that included $73 million in tariff recovery. Management raised its full-year 2026 EPS forecast to $20.75-$21.25 from $18.30-$18.70 and lifted expected sales growth to 14%-16% from 10%-14%.
The guidance raise shows management expects demand for its barcode scanners and inventory-tracking gear to keep accelerating. Investors will watch the Q3 earnings call for updated segment margins and memory supply updates.
Connected Frontline, the segment housing mobile computers and the recently acquired Elo Touch business, grew nearly 26% in the quarter, or 7.5% on an organic basis. Asset Visibility and Automation, which includes printing and machine vision, rose 11.4%. Healthcare was the fastest-growing end market, with double-digit growth across retail, manufacturing, and healthcare overall.
Regionally, North America sales rose 9%, EMEA grew 7%, Asia Pacific climbed 13%, and Latin America advanced 15%. The company said it fully offset a $20 million increase in memory costs through price realization, part of a roughly $120 million full-year memory headwind it expects to mitigate.
Zebra repurchased $568 million of stock in the first half of 2026 and plans an additional $150 million in the second half, with free cash flow expected to reach at least $1 billion. The company ended the quarter with a debt leverage ratio of 1.9 times and $925 million of credit capacity.
The earnings beat and raised outlook contrast with rival Rockwell Automation, which also reported strong results but drew a more muted reaction. Zebra's $20.75-$21.25 EPS guide sits well above the $18.57 consensus, a gap that typically pulls upward analyst revisions in the weeks after a report. The next catalyst is the Q3 earnings call, where investors will gauge whether memory supply constraints ease into 2027.
This article is for informational purposes only and does not constitute investment advice.
