Q4 2024 Earnings Summary
- Zebra Technologies delivered strong Q4 results, exceeding their earnings outlook due to larger projects and double-digit growth across all major categories, regions, and end markets, including significant year-end spending from retail customers.
- The company is experiencing positive momentum in RFID adoption, with strong Q4 sales growth and a robust pipeline of opportunities across supply chain, retail, manufacturing, and government sectors. Zebra has the broadest portfolio of RFID solutions and is expanding into new applications like fresh food and government supply chain visibility.
- Zebra anticipates significant growth opportunities in the manufacturing sector, which is currently lagging but presents long-term potential. The company is less penetrated in manufacturing compared to other verticals, and they see opportunities in automation, machine vision, and the adoption of tablets for production workers.
- Zebra Technologies is facing increased uncertainty and lack of visibility beyond Q1 due to macroeconomic factors, including trade policies and tariffs. Customers are delaying budget finalizations and projects, causing Zebra to be more conservative in its outlook.
- Foreign exchange headwinds from a strengthening U.S. dollar are becoming a significant challenge, impacting sales growth and causing concern among international customers, potentially affecting Zebra's sales and profitability.
- Customers are staging deployments over longer periods, leading to reduced visibility, especially on large orders and deployments, which could impact Zebra's sales growth in upcoming quarters.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Sales Growth | Q4 2024 | 28% to 31% | no guidance | no current guidance |
Adjusted EBITDA Margin | Q4 2024 | approximately 22% | no guidance | no current guidance |
Non-GAAP Diluted EPS | Q4 2024 | $3.80 to $4.00 | no guidance | no current guidance |
Non-GAAP Diluted EPS | Q1 2025 | no prior guidance | $3.50 to $3.70 | no prior guidance |
First Quarter Sales Growth | Q1 2025 | no prior guidance | 8% to 11% (with 1 point FX unfavorable impact) | no prior guidance |
First Quarter Adjusted EBITDA Margin | Q1 2025 | no prior guidance | approximately 21% | no prior guidance |
Sales Growth | FY 2024 | approximately 8% | no guidance | no current guidance |
Adjusted EBITDA Margin | FY 2024 | approximately 21% | no guidance | no current guidance |
Non-GAAP Diluted EPS | FY 2024 | $13.30 to $13.50 | no guidance | no current guidance |
Free Cash Flow | FY 2024 | at least $850 million | no guidance | no current guidance |
Sales Growth | FY 2025 | no prior guidance | 3% to 7% (including 130 basis points FX adverse) | no prior guidance |
Adjusted EBITDA Margin | FY 2025 | no prior guidance | 21% to 22% | no prior guidance |
Non-GAAP Diluted EPS | FY 2025 | no prior guidance | $1.75 | no prior guidance |
Free Cash Flow | FY 2025 | no prior guidance | at least $750 million | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Macroeconomic uncertainty driving cautious customer spending and delayed deployments | Mentioned in Q1 and Q2 as causing cautious spending and phased large deployments. | Customers taking longer to finalize budgets and staging deployments; visibility tempered beyond Q1 2025. | Continued caution; deployments remain extended. |
Mid-tier and run-rate business transitioning from softness to strength | Q1: Not fully recovered, lagging large orders. Q2: Showed strength, key driver of margin improvement. | Reported strength alongside large deals, indicating broad-based growth. | Shifted from softness to a strength. |
Manufacturing expansion opportunities including automation, machine vision, and production tablets | Q1: Focused on automation, machine vision, and robotics. Q2: Emphasized machine vision diversification into automotive and logistics. | Highlighted manufacturing as a key growth driver, investing in 3D machine vision with pending acquisition of Photoneo, plus production tablets for workers. | Consistent expansion; ongoing investments in advanced manufacturing tech. |
Mobile computing recovery and double-digit growth | Q1: Recovery noted in retail, no mention of double-digit. Q2: Achieved double-digit growth, first category to rebound. | Delivered double-digit sales growth across regions; mobile computing a key growth driver. | Sustained improvement; broad-based recovery. |
RFID adoption momentum with a broadening pipeline of applications | Q1: Strong momentum, expanding beyond retail apparel. Q2: Broadening beyond apparel into T&L, manufacturing, parcel tracking. | Strong RFID sales growth, pipeline expanding in supply chain, retail (fresh foods), government. | Accelerating adoption across multiple sectors. |
Inventory management to align supply with demand | Q1: Focus on channel inventory normalization, improved working capital. Q2: Overall normalized, some regional rebalancing. | Balanced inventory levels, daily monitoring to stay aligned with demand. | Stable approach; focus on proactive oversight. |
Foreign exchange headwinds | Q1: No specific mention [–]. Q2: FX was favorable, helped margin slightly. | Cited as a significant headwind impacting sales growth guidance. | Shift from a tailwind to a headwind in Q4. |
Higher interest rates affecting acquisition strategy and budget finalizations | Q1: Created a higher bar for M&A, customers delaying large deals. Q2: Still cautious on acquisitions, wary of macro factors. | Higher interest rates affecting M&A; budget finalizations delayed due to uncertainty. | Consistent caution on M&A and spending decisions. |
China’s prolonged recovery impacting Asia-Pacific growth | Q1: Longer recovery timeline, underwhelming results. Q2: 3% decline in Asia-Pacific, weakness in China. | China remains modest (3% of business); stronger growth in Australia, New Zealand, India. | Lingering softness; shift in regional manufacturing activity. |
Large installed base requiring device refresh cycles | Q1: Largest ever installed base, expecting refresh opportunities. Q2: Customers eventually upgrading after absorbing capacity. | Refreshes remain an opportunity; not seeing an acceleration yet. | Ongoing potential, timing remains variable. |
Restructuring actions targeting 20%+ adjusted EBITDA margin | Q1: Part of $120M net savings, aiming for 20% margin. Q2: Realized cost benefits, reached 20.5% adjusted EBITDA. | No mention of restructuring in Q4 [–]. | Likely completed; no further details in Q4. |
Potential for expanding margins and market share as customers upgrade devices | Q1: Margin expansion tied to higher volumes, cautious large orders. Q2: Confidence in share gains, large refresh cycles pending. | Refreshes can drive premium hardware revenue and software growth; strong installed base supports future upgrades. | Ongoing optimism; device upgrades seen as growth driver. |
Research analysts covering ZEBRA TECHNOLOGIES.