Zebra Technologies (NASDAQ:ZBRA) reported fourth-quarter and full-year 2025 results that topped management’s outlook, citing stronger execution and an improving demand trend. Executives also outlined a 2026 forecast that assumes continued momentum in RFID, a return to growth in machine vision, and contributions from recent acquisitions, while acknowledging a looming cost headwind from memory component price increases beginning in the second quarter.
Fourth-quarter results exceed outlook
CEO Bill Burns said fourth-quarter sales were “nearly $1.5 billion,” up 10.6% year over year, or 2.5% on an organic basis. Zebra posted an adjusted EBITDA margin of 22.1% and non-GAAP diluted earnings per share of $4.33, up 8% from the prior year and above the high end of the company’s guidance.
Regionally, the company highlighted strength in Asia-Pacific and Latin America, with EMEA returning to growth. Winters said Asia-Pacific sales increased 13% (led by Japan and India), Latin America rose 8% (with double-digit growth in Mexico), and EMEA increased 4% (with growth in Northern Europe and Germany). North America declined 1% as the company cycled large order activity from the prior year, which management said was partly offset by “solid run rate demand.”
Margins, tariffs, and restructuring charges
Winters said adjusted gross margin declined 50 basis points to 48.2%, primarily due to lower services and software margins. On the call, he attributed the services pressure mainly to higher repair costs tied to an aging installed base, noting that the overall rate improved in the fourth quarter versus the second and third quarters and is expected to level out, with services and software margin “flat” year over year in 2026.
Management also emphasized that it “fully mitigated current tariffs earlier than expected,” citing supply chain moves, product portfolio rationalization, and pricing execution. Adjusted operating expense leverage improved by 60 basis points, supporting the 22.1% adjusted EBITDA margin.
The company recorded $76 million of restructuring charges in the fourth quarter related to exiting its robotics business and productivity initiatives. Burns said Zebra exited robotics to sharpen its focus on higher-growth opportunities such as RFID, machine vision, and AI-powered solutions.
Full-year 2025 performance and capital returns
For full-year 2025, Burns said Zebra delivered more than 6% sales growth and 17% growth in non-GAAP diluted EPS, while generating more than $800 million of free cash flow. Winters provided more detail, reporting free cash flow of $831 million for the year, a conversion rate of 102%.
On capital allocation, management highlighted significant shareholder returns. Zebra repurchased $300 million of shares in the fourth quarter and $587 million for the full year. The company ended the year with $125 million of cash, a debt leverage ratio of 2, and $1.2 billion of credit capacity, according to Winters.
Zebra’s board expanded its repurchase authorization by $1 billion, leaving $1.1 billion available after $100 million repurchased through early February. Winters said the company is targeting share repurchases of about 50% of expected 2026 free cash flow, “primarily here in the first half of the year,” while maintaining flexibility for the second half.
2026 outlook: acquisition-driven growth and a memory cost headwind
Winters said Zebra entered 2026 with a “solid backlog and pipeline,” guiding to first-quarter sales growth of 11% to 15%. That range includes roughly 10 points of contribution from acquisitions and favorable foreign exchange. First-quarter adjusted EBITDA margin is expected to be 21% to 22%, with non-GAAP EPS of $4.05 to $4.35.
For the full year, Zebra guided to sales growth of 9% to 13%, with adjusted EBITDA margin of about 22% and non-GAAP EPS of $17.70 to $18.30. The outlook includes a “7-point favorable impact from acquisitions and FX,” as well as expectations for machine vision to return to growth and continued momentum in RFID and manufacturing. Free cash flow is expected to be at least $900 million, implying about 100% conversion.
A key 2026 topic in the Q&A was memory component inflation. Winters said the company expects “industry-wide price increases for memory components beginning in Q2,” representing an approximately 2-point gross margin headwind on a gross basis, but Zebra expects to fully mitigate that within the year. Mitigation actions discussed included:
- Global price increases announced the prior week, expected to take effect in March
- Working with suppliers on spot buys and demand co-planning
- Evaluating alternative memory sources and transitioning to higher density memory
- Offsets from the robotics exit, lower tariff rates and tariff mitigation actions, and foreign exchange favorability
Management also addressed supply risk, saying it believes it can secure enough memory and is focusing on “shaping demand” by getting earlier SKU-level visibility on large projects. Executives said the issue is concentrated primarily in mobile devices, with some impact in Elo’s POS/kiosk portfolio.
Strategic priorities: RFID, machine vision, and frontline AI
Burns highlighted a served market of $35 billion and reiterated Zebra’s focus on “intelligent operations” through connected frontline devices and asset visibility solutions. He said the company is accelerating investments in RFID, machine vision, and AI.
On RFID, Burns described momentum in adoption and noted that Zebra is embedding RFID reading capabilities into next-generation mobile computers. He cited an example of a North American telecommunications company selecting Zebra’s RFID-enabled mobile computers for retail locations to improve inventory accuracy and reduce shrink. Later in the call, Burns said the company expects “high double-digit” growth in RFID in 2026, with opportunities expanding beyond apparel into broader retail merchandise, grocery fresh food, parcel logistics, government, quick-service restaurants, and healthcare.
On machine vision, Burns said Zebra saw sequential growth in the fourth quarter and expects the business to “return to growth in 2026,” supported by transportation and logistics wins as well as manufacturing recoveries, including in automotive manufacturing. He also pointed to investments in go-to-market initiatives and the Photoneo acquisition as supporting the pipeline.
On AI, Burns detailed Zebra’s recently launched Frontline AI Suite, describing three components—AI enablers, AI blueprints, and Zebra Companion—and said paid pilots are underway with scaled deployments expected in 2026. He also suggested AI capabilities could support higher average selling prices in mobile computing as customers adopt devices with higher memory and processing power.
In closing remarks, Burns thanked employees and partners for 2025 performance and said the company remains focused on advancing its portfolio and delivering profitable growth.
About Zebra Technologies (NASDAQ:ZBRA)
Zebra Technologies Corporation is a global technology company specializing in marking, tracking and computer printing solutions. The company produces a wide range of hardware and software products designed to enable real-time visibility of assets, inventory and personnel across diverse industries. Its offerings help businesses automate data capture and streamline operations in environments such as retail, healthcare, manufacturing, transportation and logistics.
The company’s product portfolio includes barcode and RFID printers, mobile computing devices, barcode scanners, RFID readers and related supplies such as labels and tags.
