Key Highlights

  • Non-GAAP diluted EPS of USD 4.95 beat the consensus estimate of USD 4.89, while GAAP diluted EPS was USD 3.43.
  • Net sales of USD 1.614 billion rose 22.3%, topping the consensus estimate of USD 1.57 billion; organic growth was 11.3%.
  • Gross Margin fell to 45.7% from 48.0% on higher memory component costs, while adjusted EBITDA margin held at 21.6%.
  • Fourth quarter non-GAAP EPS guidance: USD 5.00 to 5.40; full year free Cash Flow guidance: at least USD 1 billion.

Zebra Technologies Corporation (NASDAQ:ZBRA) reported third quarter 2026 net sales of USD 1.614 billion, up 22.3% from USD 1.320 billion a year earlier and above the consensus estimate of USD 1.57 billion. Non-GAAP diluted EPS of USD 4.95 rose 27.6% from USD 3.88 and topped a consensus estimate of USD 4.89. GAAP Net Income per diluted share was USD 3.43 against USD 1.97 a year earlier, and GAAP net income rose 62.4% to USD 164 million.

Organic net sales increased 11.3%, while acquisitions added 8.9 percentage points and currency translation 2.1 points to the reported 22.3% growth. Chief Executive Officer Bill Burns called it another record quarter built on broad based Demand as customers automate frontline operations, with Elo Touch contributing to double digit growth, and said memory Supply efforts, pricing actions and Operating Leverage allowed the company to hold adjusted EBITDA margin year over year.

Segment Growth and Margin Pressure From Memory Costs

Connected Frontline net sales were USD 949 million against USD 705 million, with organic growth of 15.0%. Asset Visibility and Automation net sales were USD 665 million against USD 615 million, with organic growth of 7.0%. Gross Profit rose 16.4% to USD 738 million, but gross margin fell 230 basis points to 45.7% on higher memory component costs and Business mix, partly offset by favorable currency. Adjusted gross margin was 46.0% against 48.2%.

Operating expenses rose to USD 501 million from USD 451 million, mainly on costs tied to acquired businesses including intangible amortization, and adjusted operating expenses were USD 413 million against USD 368 million. Adjusted EBITDA rose 22.5% to USD 349 million, equal to 21.6% of adjusted net sales in both periods. Non-GAAP net income was USD 237 million against USD 198 million.

Fourth Quarter Guidance and Capital Allocation

The company guided fourth quarter sales growth of 10% to 14% over the prior year, including roughly 150 basis points of favorable currency, with adjusted EBITDA margin of about 22% and non-GAAP diluted EPS of USD 5.00 to 5.40 on an adjusted tax rate of about 19%. Full year free cash flow is guided to at least USD 1 billion. Burns said the company remains confident in its growth drivers and in demand tied to automation and Physical AI.

The company repurchased USD 75 million of shares in the quarter and USD 643 million over the first nine months. The chief financial officer said the repurchases reflect confidence in the long term opportunity and a disciplined approach to capital allocation.

Guidance Against Third Quarter Actuals and Balance Sheet Changes

Fourth quarter non-GAAP EPS guidance of USD 5.00 to 5.40 compares with USD 4.95 in the third quarter, and the guided adjusted EBITDA margin of about 22% compares with 21.6%. Nine month free cash flow of USD 661 million sits against the full year guide of at least USD 1 billion and USD 504 million a year earlier. The current portion of Long Term Debt stood at USD 2.077 billion against USD 141 million at the start of the year, while total debt was USD 2.578 billion and cash was USD 182 million against USD 125 million.