Zebra Technologies delivered first quarter results that were well received by the market, driven by robust demand across its core product categories and geographies. Management pointed to a sustained recovery in key verticals such as retail, transportation, and healthcare, with CEO Bill Burns noting that "broad-based recovery continued across most of our vertical markets" and that retail and e-commerce were standout performers. The company also reported its highest gross margin in over a decade, attributing profitability gains to a favorable business mix, strong volume leverage, and disciplined cost management. While manufacturing lagged slightly compared to other verticals, it still posted high single-digit growth, and management highlighted ongoing investment in supply chain resiliency and product innovation as critical contributors to the quarter's performance.
Is now the time to buy ZBRA? Find out in our full research report (it’s free).
Zebra (ZBRA) Q1 CY2025 Highlights:
- Revenue: $1.31 billion vs analyst estimates of $1.29 billion (11.3% year-on-year growth, 1.4% beat)
- Adjusted EPS: $4.02 vs analyst estimates of $3.63 (10.8% beat)
- Adjusted EBITDA: $292 million vs analyst estimates of $270.6 million (22.3% margin, 7.9% beat)
- Revenue Guidance for Q2 CY2025 is $1.28 billion at the midpoint, roughly in line with what analysts were expecting
- Management lowered its full-year Adjusted EPS guidance to $14.25 at the midpoint, a 5% decrease
- Operating Margin: 14.9%, up from 13.5% in the same quarter last year
- Organic Revenue rose 11.9% year on year (-16.8% in the same quarter last year)
- Market Capitalization: $14.95 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Zebra’s Q1 Earnings Call
- Jamie Cook (Truist): Asked about changes in demand trends and customer reactions to tariffs. CEO Bill Burns responded that customer demand has remained steady and that most customers are still evaluating the impact of tariffs, with no significant changes in purchasing behavior so far.
- Piyush Avasthy (Citi): Inquired about visibility into a sustained recovery in manufacturing and the timeline for production shifts out of China. Burns noted that manufacturing is improving but lags other sectors, and that production moves typically take 12-18 months, depending on location.
- Brad Hewitt (Wolfe Research): Sought clarification on the gross tariff headwind and the assumptions underlying tariff rates and exemptions. CFO Nathan Winters explained the company’s assumptions, noting that about two-thirds of mobile computing imports from China remain exempt and that mitigation efforts are ongoing.
- Tommy Moll (Stephens): Questioned the company’s ability to realize price increases and the level of demand visibility. Burns stated that price increases are in line with competitors and that demand visibility has improved, though uncertainty around tariffs dominates customer discussions.
- Joe Giordano (TD Cohen): Probed the risk of pre-buying ahead of tariff hikes and whether inventory changes could mask weaker demand. Winters and Burns both indicated that there has been little evidence of such behavior, with demand trends tracking as expected.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) progress on tariff mitigation efforts and additional supply chain shifts, (2) adoption and monetization of new AI and machine vision offerings, and (3) trends in key end markets such as retail, manufacturing, and logistics, especially if global trade policy triggers further changes in customer demand. Execution on pricing strategies and new product rollouts will also be key areas of focus.
Zebra currently trades at $295.88, up from $243.55 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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