Key Highlights

  • ZBRA shares fell 10.70% pre-market to $322.48 after third-quarter results.
  • Net sales rose 22.3% to $1,614 million, with non-GAAP EPS of $4.95.
  • Fourth-quarter sales growth is guided to between 10% and 14%.

Zebra Technologies (NASDAQ:ZBRA) shares fell 10.70% to $322.48 in pre-market today, down $38.66 from the prior close of $361.13. The company reported third-quarter results for the period ended October 3, 2026, with net sales of $1,614 million, up from $1,320 million, against a market estimate of $1.57 billion. Non-GAAP Earnings of $4.95 per diluted share compared with an estimate of $4.89. The shares had gained roughly 49% year to date before the report, and the Nasdaq-100 is in a correction on AI-spending concerns.

Zebra, based in Lincolnshire, Illinois and founded in 1969, makes rugged mobile computers, barcode scanners, thermal and RFID printers, RFID readers and machine vision, along with software and services. It has about 11,000 employees and sells through a direct sales force and a channel partner network.

Sales Growth Across Both Segments as Gross Margin Narrows

Connected Frontline net sales were $949 million, compared with $705 million, and Asset Visibility and Automation net sales were $665 million, compared with $615 million. Organic net sales rose 11.3%, with a 15.0% increase in Connected Frontline and 7.0% in Asset Visibility and Automation. Chief Executive Officer Bill Burns said Elo Touch contributed to double-digit growth.

Gross profit was $738 million, compared with $634 million, and gross margin was 45.7%, compared with 48.0%. The company attributed the change primarily to increased memory component costs and Business mix, partly offset by favorable foreign currency. Net Income was $164 million, or $3.43 per diluted share, compared with $101 million, or $1.97. Non-GAAP net income was $237 million, compared with $198 million. Adjusted EBITDA was $349 million, compared with $285 million, with the margin unchanged at 21.6%.

Fourth-Quarter Guidance, Cash Flow and Share Repurchases

Management said efforts to strengthen memory supply, implement pricing actions and capture Operating Leverage supported growth while keeping the adjusted EBITDA margin level year over year. For the fourth quarter, Zebra expects sales growth of 10% to 14%, including about 150 basis points of favorable foreign currency, an adjusted EBITDA margin near 22% and non-GAAP EPS of $5.00 to $5.40, compared with an estimate of $5.18. Full-year free cash flow is expected to be at least $1 billion.

For the first nine months, Operating Cash Flow was $711 million, capital expenditures were $50 million and free cash flow was $661 million. Share repurchases were $75 million in the third quarter and $643 million for the nine months. Cash was $182 million and total Debt was $2,578 million at October 3. The stock has trailing earnings of $19.31 per share and a 52-week range of $199.05 to $392.78.

Memory Costs and Fourth-Quarter Delivery Are the Next Checkpoints

Zebra reported higher sales, earnings and Adjusted EBITDA, a lower gross margin tied to memory costs and a raised full-year outlook. The next items to follow are the conference call today, the fourth-quarter targets for 10% to 14% sales growth and a 22% adjusted EBITDA margin, and the path to at least $1 billion of full-year free cash flow.