Zebra Technologies (ZBRA) Q1 2025 earnings summary

Executive summary

• Q1 2025 results exceeded outlook, with net sales of $1,308 million, 11.9% organic growth, and broad-based gains across all major product categories, verticals, and regions.

• Adjusted EBITDA margin rose to 22.3%, up 240bps year-over-year, driven by improved business mix and volume leverage.

• Non-GAAP diluted EPS increased 41.5% to $4.02, reflecting strong demand recovery and operating leverage.

• Maintained market leadership and advanced portfolio through innovation and strategic acquisitions, notably the $62 million Photoneo 3D machine vision acquisition.

• Demand environment remained positive into Q2, with no significant changes in customer purchasing behavior observed.

Financial highlights

• Net sales grew 11.3% year-over-year to $1,308 million; organic net sales growth was 11.9%.

• Adjusted gross margin improved to 49.6%, up 150bps year-over-year.

• Adjusted EBITDA reached $292 million, margin at 22.3%, up 240bps year-over-year.

• Non-GAAP diluted EPS was $4.02, up 41.5% year-over-year and above guidance.

• Free cash flow was $158 million in Q1; cash and cash equivalents at $879 million.

Outlook and guidance

• Q2 2025 sales growth expected between 4% and 7%, with adjusted EBITDA margin around 19% and non-GAAP EPS of $3.00–$3.50.

• Full-year 2025 sales growth guidance maintained at 3%–7%, adjusted EBITDA margin expected between 20% and 21%, and non-GAAP EPS of $13.75–$14.75.

• Full-year free cash flow projected to exceed $700 million, with capital expenditures of $65–$75 million.

• Guidance includes approximately $70 million in U.S. import tariff expenses, net of mitigating actions.