Zebra shares fall 9.9% after Q3 sales rise 22%, outlook raised
Non-GAAP EPS of $4.95 per share was below the $5.00 consensus estimate compiled by Finnhub, while revenue of $1.61 billion was above the $1.59 billion estimate.
Key takeaways
- Zebra Technologies (ZBRA) said third-quarter net sales rose 22.3% to $1.61 billion from a year earlier, and it raised its full-year outlook. Non-GAAP diluted EPS was $4.95, below the $5.00 consensus estimate. Net sales were above the $1.59 billion estimate.
Zebra Technologies (ZBRA) said on Nov. 3 that third-quarter net sales rose 22.3% to $1.61 billion, and it raised its full-year outlook.
Shares fell 9.9% in regular trading as of 10:26 a.m. ET, from a previous close of $361.13.
Non-GAAP diluted earnings per share were $4.95, below the $5.00 consensus estimate. Net sales were above the $1.59 billion estimate.
Zebra sells connected frontline, asset visibility and automation solutions to customers in retail, manufacturing, transportation, logistics and healthcare, the company said in its press release.
The results cover the quarter ended Oct. 3. Organic net sales growth, which excludes currency, acquisitions and dispositions, was 11.3%.
Here's how the company did:
- Net sales: $1.61 billion vs. $1.32 billion a year earlier
- Adjusted EPS: $4.95 vs. $3.88 a year earlier, against a $5.00 consensus estimate
- Net income: $164 million vs. $101 million a year earlier
- GAAP diluted EPS: $3.43 vs. $1.97 a year earlier
- Adjusted EBITDA: $349 million vs. $285 million a year earlier
Gross margin fell to 45.7% from 48.0% a year earlier, the company said, mainly because of higher memory component costs and business mix, partly offset by favorable foreign currency.
Operating expenses rose to $501 million from $451 million, mainly because of expenses tied to acquired businesses, including amortization of intangible assets.
Segment results
The Connected Frontline segment reported net sales of $949 million, up from $705 million a year earlier, with organic growth of 15.0%.
Asset Visibility & Automation net sales were $665 million, compared with $615 million a year earlier, and organic growth was 7.0%.
“We delivered another record quarter underpinned by strong execution and broad-based demand trends with Elo Touch contributing to our double-digit growth as customers prioritize automating their frontline operations,” said Chief Executive Officer Bill Burns.
2026 guidance
The company expects fourth-quarter sales growth of 10% to 14% compared with the prior year, including about 150 basis points of favorable foreign currency impact.
It expects fourth-quarter adjusted EBITDA margin of about 22% and non-GAAP diluted EPS of $5.00 to $5.40, assuming an adjusted effective tax rate of about 19%.
Full-year free cash flow is expected to be at least $1 billion.
Revenue has risen in each of the last three quarters, from $1.32 billion in the third quarter of 2025 to $1.56 billion in the second quarter of fiscal 2026, according to its SEC filings.
Cash and capital returns
For the first nine months, net cash from operating activities was $711 million and capital expenditures were $50 million, leaving free cash flow of $661 million.
The company repurchased $643 million of its shares in the first nine months. At quarter end it had cash of $182 million and total debt of $2,578 million.
“We are putting our strong cash generation and balance sheet to work, investing in growth while returning capital to shareholders,” said Chief Financial Officer Nathan Winters.