Zebra Technologies Corporation

What they do

Zebra designs, manufactures, and sells a broad range of AIDC offerings, including mobile computers, barcode scanners, RFID readers, specialty printers, real-time location systems, and machine vision. They also provide related services, cloud-based software subscriptions, and self-service touchscreen solutions. The company operates in two segments: Connected Frontline (CF) and Asset Visibility and Automation (AVA).

Revenue drivers

• Connected Frontline (CF) — Largest segment, $903M in Q2 2026, includes mobile computing, point-of-sale, self-service kiosks, and workflow software. Grew 7.5% organically year-over-year.
• Asset Visibility and Automation (AVA) — Second segment, $654M in Q2 2026, includes barcode printing, data capture, machine vision, and RFID. Grew 11.4% organically year-over-year.
• Services and software — Includes maintenance, technical support, repair, managed services, and cloud-based subscriptions, providing recurring revenue across both segments.

Recent performance

Q2 2026 net sales were $1,557M, up 20.4% year-over-year, with net income of $233M and diluted EPS of $4.85. Gross margin rose to 53.0% from 47.6%, partly due to a $73M tariff refund benefit. For the first six months, operating cash flow was $387M and free cash flow was $361M. Full year 2025 net sales were $5.40B with net income of $419M.

Strategy

Zebra is executing a strategy to digitize and automate frontline workflows, expanding beyond traditional AIDC into AI, computer vision, and self-service. Acquisition of Elo for $1,303M in 2025 expanded self-service kiosk offerings, while Photoneo (acquired for $62M) strengthened machine vision. Management is focusing on productivity improvements, including the 2025 Productivity Plan targeting cost savings, and plans to exit the robotics automation business to align resources with strategic priorities.

Risks

• Acquisition integration complexity — The company has grown through acquisitions like Elo and Photoneo, increasing business complexity and integration risk.
• Supply chain and manufacturing dependencies — Reliance on contract manufacturers and global supply chains could disrupt operations.
• Tariff and trade policy exposure — Changes in import tariffs, including IEEPA-related tariffs, could affect costs and margins; future tariff actions remain unpredictable.
• Restructuring and divestiture costs — Exit of robotics business and productivity plan involve one-time charges that may continue into 2026.

Outlook

Management raised full-year outlook citing strong demand momentum and productivity improvements. The company expects annualized pre-tax savings of at least $20M from 2025 restructuring actions, and additional savings from the productivity plan. It continues to execute share repurchases, having bought back $568M in the first half of 2026.