Q2 2026 Zebra Technologies Corp Earnings Call Transcript
Key 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.
- 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.
Good day, and welcome to the second quarter 2026 Zebra Technologies earnings conference call. (Operator Instructions) Please note this event is being recorded.
I would now like to turn the conference over to Mike Steele, Vice President of Investor Relations. Please go ahead.
Good morning, and welcome to Zebra second quarter earnings conference call. This presentation is being simulcast on our website at investors.zebra.com and will be archived there for at least 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
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