Zebra’s third quarter results met Wall Street’s revenue expectations but were followed by a significant negative market reaction. Management pointed to uneven demand across key regions and verticals as a central challenge, with strength in North America, Asia Pacific, and Latin America offset by continued softness in EMEA and manufacturing. CEO William Burns highlighted, “Our retail and e-commerce end market was a bright spot,” while noting that macro uncertainty and trade policies contributed to uneven demand. The company also faced declining operating margins, attributed in part to higher U.S. import tariffs, despite operational efficiencies and selective pricing actions.
Is now the time to buy ZBRA? Find out in our full research report (it’s free for active Edge members).
Zebra (ZBRA) Q3 CY2025 Highlights:
- Revenue: $1.32 billion vs analyst estimates of $1.32 billion (5.2% year-on-year growth, in line)
- Adjusted EPS: $3.88 vs analyst estimates of $3.75 (3.4% beat)
- Adjusted EBITDA: $285 million vs analyst estimates of $275 million (21.6% margin, 3.7% beat)
- Revenue Guidance for Q4 CY2025 is $1.46 billion at the midpoint, above analyst estimates of $1.43 billion
- Adjusted EPS guidance for Q4 CY2025 is $4.30 at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: 13.9%, down from 15.2% in the same quarter last year
- Organic Revenue rose 4.8% year on year vs analyst estimates of 4.5% growth (28.3 basis point beat)
- Market Capitalization: $13.71 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 From Zebra’s Q3 Earnings Call
- Andrew Buscaglia (BNP Paribas) questioned the deceleration in organic growth guidance for Q4. CEO William Burns attributed this to timing of customer orders and noted that some peak season demand was fulfilled earlier in Q3 than typical.
- Piyush Avasthy (Citi) asked about the timeline for AI-driven products contributing to revenue. Burns stated the company expects first revenues from AI solutions in 2026 with broader scaling in 2027 and beyond.
- Damian Karas (UBS) pressed for details on the large project funnel and order timing. Burns emphasized that project pace is steady, but macro uncertainty and trade policy have caused customers to spread purchases over multiple quarters.
- Jamie Cook (Truist Securities) requested clarification on margin divergence between business segments. CFO Nathan Winters explained that mix shifts, especially growth in higher-margin RFID and printing, drove short-term differences, and tariff mitigation will primarily benefit the Asset Intelligence & Tracking segment.
- Joe Giordano (TD Cowen) inquired about guidance conservatism and the impact of Elo acquisition. Burns and Winters clarified that year-end spending assumptions are consistent with last year and that Elo’s full-year EPS accretion is about $0.10.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will be monitoring (1) the pace of AI solution adoption and pilot-to-revenue conversion in frontline applications, (2) successful integration and cross-selling of Elo Touch Solutions’ products into Zebra’s existing customer base, and (3) progress on tariff mitigation and supply chain resilience. The trajectory of RFID growth and recovery in EMEA and manufacturing verticals will also be key indicators of sustained momentum.
Zebra currently trades at $273.98, down from $310.18 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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