Release Date: August 04, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Record Q2 results with sales exceeding $1.5 billion, growing over 20% year-over-year, and non-GAAP EPS of $6.35, a 76% increase.
- Strong performance across all segments and regions, with double-digit growth in retail, manufacturing, and healthcare end markets.
- Adjusted EBITDA margin expanded by 7.1 points to 27.7%, driven by better-than-expected gross margins and operating expense leverage.
- Successfully mitigated a $20 million increase in memory costs through strong price realization, and raised full-year outlook due to confidence in navigating memory supply.
- Robust capital allocation with $568 million in share repurchases in the first half, and free cash flow expected to be at least $1 billion for the year.
- Early traction in new AI-optimized mobile computers, wearables with RFID, and machine vision solutions, enhancing competitive positioning.
- Elo Touch acquisition contributing strong profitable growth with robust customer interest and identified $10 million in synergies.
Negative Points
- Memory supply remains a challenging and dynamic environment, with demand signals exceeding supply, potentially capping growth.
- Q3 adjusted EBITDA margin expected to decline to approximately 22%, partly due to higher memory costs and removal of tariff recovery benefits.
- Transportation & Logistics sales were flat due to strong prior-year comparisons, with softness in the Middle East impacting EMEA growth.
- Full-year guidance factors in potential supply constraints, with the midpoint reflecting possible memory limitations despite strong demand.
- Memory cost headwind of approximately $120 million for the year requires continued price increases, which may impact customer relationships.
- Q4 growth is somewhat capped by expected memory supply, and the company is still working to secure additional supply for the second half.
- RFID growth was flat in Q2 due to project timing, though full-year growth is still expected.
Q & A Highlights
Q: Can you provide more color on the successful deployments expected in 2027 in the T&L segment, and does your confidence in 2027 bookings continue to grow?
A: Bill Burns (CEO): We feel good about transportation and logistics despite difficult comparisons from last year, with growth across third-party logistics and warehousing. We have a robust multiyear pipeline of large deployments focused on last-mile delivery. Our differentiation comes from new mobile devices that add RFID and AI capabilities, giving us a competitive advantage. Starting in 2027, we see a strong pipeline of opportunities for refreshes within transportation and logistics, and we are increasingly confident in those conversations with customers.
Q: To what extent is your guidance for Q3 and the second half still constrained by memory supply, and what visibility do you have into 2027 on that improving?
A: Bill Burns (CEO) and Nathan Winters (CFO): Memory remains a dynamic and challenging environment, but our teams executed well to secure supply and exceed the top end of our Q2 guidance. Demand signals from customers are above what we are guiding to, and there are still constraints. We are working on direct supplier co-planning for the next 18 months, qualifying 10 new suppliers with a goal of having 5-7 qualified suppliers for each primary memory type. These actions give us confidence to secure volume needed to support customers into 2027.
Q: Can you provide clarity on how we should think about the two segments (Connected Frontline and Asset Visibility & Automation) for the rest of the year, and which should lead growth?
A: Nathan Winters (CFO): We see strong growth across both segments. Asset Visibility and Automation (AVA) saw strong growth in print, data capture, machine vision, and RFID deployments. Connected Frontline (CF) is seeing customers deploy more devices to frontline workers, with next-generation devices adding AI capabilities and RFID. Elo Touch had a strong Q2 and we expect that to continue with joint selling efforts. We expect growth in both segments in the second half, with truly broad-based growth across the portfolio, regions, and vertical markets.
Q: On the memory cost headwind, it looks like pricing is being realized more quickly than expected. Can you tell us what's happening with pricing realization?
A: Nathan Winters (CFO): Out of the $120 million gross memory headwind, we previously communicated $60 million expected benefit from pricing, but we've increased that to $90 million primarily due to strength in Q2. We proactively quoted deals at higher prices going back to the beginning of the year, even before the official price increase in late March. This proactive approach on pipeline projects was a big driver. The team's focus gives us confidence to deliver on the back half and fully mitigate exposure into 2027.
Q: Is the high end of your revenue guidance achievable in the current memory availability framework, and are long-term agreements (LTAs) available to you?
A: Bill Burns (CEO) and Nathan Winters (CFO): Demand signals lead us to the high end of our outlook for Q3 and the full year, but the midpoint factors in potential supply constraints from memory. We were able to secure additional supply in Q2, pushing us above the top end. We've had discussions regarding supply agreements with memory suppliers, but our priority has been qualifying new suppliers and memory types. While discussions are ongoing, LTAs haven't been necessary to achieve our goals, but we would pursue them if needed to obtain increased supply.
Q: On the Elo Touch acquisition, where are you in terms of exploiting revenue synergies, and where is the strong healthcare traction coming from?
A: Nathan Winters (CFO): Elo Touch performance reaffirms our conviction in the acquisition, with growth above expectations in Q2 and a strong pipeline driven by joint selling efforts. We've identified about $10 million in synergies so far, with real synergies coming from expanding into new geographies and named accounts. In healthcare, our highest growth vertical, we're seeing strong mobile computing performance as more caregivers are equipped with enterprise-grade solutions. We're also taking Elo products into healthcare for self-service applications like patient check-in, expanding opportunities in this vertical.
Q: Can you elaborate on the underlying demand environment across different business verticals in the EMEA region specifically?
A: Nathan Winters (CFO): EMEA is slightly behind other regions, partly due to tougher compares from the prior year and softness in the Middle East from geopolitical challenges. However, we're seeing resilient demand across Europe with double-digit growth in machine vision, supplies, RFID, print, and mobile computing. We saw 7% growth for the quarter, with relative strength in retail, manufacturing, and healthcare. We have no concerns about EMEA and feel good about what they're seeing given the resilience despite conditions in the European market.
Q: On RFID growth, are you still expecting double-digit growth for the full year, and can you share more color on gross margins and OpEx in the second half?
A: Bill Burns (CEO) and Nathan Winters (CFO): We expect RFID growth for the full year despite Q2 being flat, which is primarily project timing. We're seeing opportunities beyond retail apparel into broader merchandise, parcel, fresh food, and healthcare. For margins, Q3 guidance reflects a slight step down from Q2 excluding IPA refunds, with about 1 point degradation from higher memory costs. We'll get about 1 point of OpEx scaling for the year driven by higher volume and restructuring actions completed in Q2, while continuing to invest in new AI solutions and go-to-market coverage.
Q: On the full-year guide, if we take out pricing, volume growth seems to be around mid-single digits. Is that sustainable and can it improve into next year?
A: Nathan Winters (CFO): Our full-year sales guide of 14%-16% includes organic growth of 7 points, which includes 2 points of price, with acquisitions and FX making up the remaining 8 points. While not guiding for 2027, we're excited about long-term opportunities. We feel confident we can continue to meet growing customer demand, and there's no reason we wouldn't be within our long-term growth range of 5%-7% as we move into 2027, though that depends on pipeline timing and memory capacity entering the year.
Q: Was memory still a constraint in Q2, and would sales growth have been even higher if memory were unconstrained?
A: Nathan Winters (CFO):
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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