Zebra Technologies Corporation Q4 2025 Earnings Call Summary

Performance in Q4 was driven by strong execution in Asia Pacific and Latin America, alongside a return to growth in EMEA and key end markets like healthcare and retail.

Management is sharpening strategic focus by exiting the robotics business to prioritize higher-growth opportunities in RFID, machine vision, and AI-powered solutions.

The acquisition of Elo Touch is being leveraged to enhance the ‘modern store’ offering, integrating self-service kiosks and digital media with frontline mobility.

Operational leverage was achieved by fully mitigating existing tariffs through supply chain moves, product portfolio rationalization, and price execution; however, adjusted gross margin still declined 50 basis points due to lower services and software margins.

The company is positioning itself as a critical enabler of AI by providing the ‘digital voice’ for physical assets through its visibility and automation segments.

Strategic capital allocation remains balanced between internal investments, accretive M&A like Fotoneo, and returning value via a new $1 billion share repurchase authorization.

Full-year 2026 sales growth guidance of 9%–13% assumes a strong pipeline in machine vision and continued momentum in RFID adoption across the supply chain.

Management expects to fully mitigate a two-point gross margin headwind from industry-wide memory price increases starting in Q2 through targeted price hikes and vendor collaboration.

The guidance framework incorporates approximately seven points of favorable impact from acquisitions and foreign exchange, balanced against macro uncertainty.

Machine vision is projected to return to growth in 2026, supported by a diversified pipeline in transportation, logistics, and automotive manufacturing.

Free cash flow conversion is targeted at approximately 100%, with plans to optimize working capital while maintaining supply chain resilience.

Recognized $76 million in restructuring charges during Q4 related to the robotics business exit and ongoing productivity initiatives.

Industry-wide memory component shortages and price escalations represent a significant dynamic risk beginning in the second quarter of 2026.

Service and software margins were pressured by higher repair costs due to the aging of the installed base, though management expects this to level out in 2026.

The company successfully mitigated previous tariff impacts earlier than expected through product portfolio rationalization and manufacturing moves.