Zebra Technologies Surpasses Q2 Expectations, Boosts Outlook and Valuation

Zebra Technologies reported Q2 revenue of $1.29 billion, matching analyst projections, driven by strong demand and effective management. CEO Bill Burns expressed confidence in the future, enhancing sales and profitability expectations for the year. The company primarily serves the retail, transportation logistics, manufacturing, and healthcare markets, providing solutions to improve efficiency at its customers. Zebra Technologies maintains a solid liquidity position, robust margins, and a manageable level of debt. Its strong financial health is supported by a stable Altman Z-Score of 4.4 and minimal recent insider transactions.

Zebra Technologies Corporation (ZBRA) reported its second-quarter 2025 financial results, showcasing robust revenue growth and elevated earnings per share (EPS). The company's Q2 revenue of $1.29 billion matched analyst projections, driven by strong demand and effective management strategies. CEO Bill Burns expressed confidence in the company's future prospects, enhancing sales and profitability expectations for the year.

The company's adjusted earnings per share (EPS) of $3.61 surpassed the Zacks Consensus Estimate of $3.31, marking a 13.5% increase from the year-ago quarter. Total revenues of $1.29 billion reflected a 6.2% year-over-year (YoY) increase, driven by strong performance in the Enterprise Visibility & Mobility and Asset Intelligence & Tracking segments. Consolidated organic net sales also increased by 6.3% YoY.

Zebra Technologies' Q2 results highlight its strategic focus on acquisitions and operational efficiency. The company announced the acquisition of Elo Touch Solutions, a leading provider of Point-of-Sale, Interactive Display, and Self-Service Kiosks solutions, which is expected to expand Zebra's addressable market by approximately $8 billion. The acquisition is anticipated to contribute meaningfully to Zebra's growth while maintaining a similar EBITDA margin profile.

The company's operational discipline has helped offset margin pressures, contributing to overall profitability improvement. Zebra's adjusted EBITDA margin reached 20.6%, a 10 basis point improvement from the previous year, while non-GAAP diluted EPS grew by 13.5% to $3.61. The company's strong financial health is supported by a stable Altman Z-Score of 4.4 and minimal recent insider transactions.

Zebra Technologies primarily serves the retail, transportation logistics, manufacturing, and healthcare markets, providing solutions to improve efficiency at its customers. The company maintains a solid liquidity position with $872 million in cash and cash equivalents and a net debt to adjusted EBITDA ratio of 1.2x as of Q2 2025. Free cash flow for the first half of 2025 was $288 million, though this represented a $101 million decrease year-over-year due to higher incentive compensation payments, timing of inventory purchases, and prior year interest rate swap settlements.

Looking ahead, Zebra has raised its full-year guidance, expecting FY25 sales growth between 5% and 7%, adjusted EBITDA margin between 21% and 22%, and non-GAAP diluted EPS of $15.25 to $15.75. For Q3 2025, the company projects sales growth between 2% and 6%, an adjusted EBITDA margin of approximately 21%, and non-GAAP diluted EPS between $3.60 and $3.80.

Despite the strong quarterly performance and raised guidance, Zebra's stock experienced significant volatility, closing down 10.63% on the day of the earnings announcement. The market reaction suggests investors may be concerned about broader economic factors, competitive pressures, or the sustainability of growth rates. However, the company's strategic initiatives, particularly the Elo acquisition and tariff mitigation efforts, appear well-positioned to address some of these concerns.

References:
[1] https://finance.yahoo.com/news/zebra-technologies-q2-earnings-revenues-131800574.html
[2] https://www.investing.com/news/company-news/zebra-technologies-q2-2025-slides-reveal-63-growth-elo-acquisition-strategy-93CH-4170980