Timing clarification: Zebra Technologies is scheduled to report Tuesday morning, August 4, 2026, with its conference call at 8:30 a.m. ET. That is today, not tomorrow. As of the latest documents available for this preview, the Q2 release had not yet been posted.
Zebra enters Q2 with considerably more optimism—and a higher bar—than it faced three months ago.
The company beat its Q1 outlook, raised its 2026 guidance, reported broad-based organic growth, and expressed greater confidence in its ability to absorb sharply higher memory costs. Investors rewarded that performance: ZBRA closed at $291.68 on August 3, up roughly 34% since the day before its Q1 report and approximately 17% year to date. The S&P 500 gained only about 2.5% over the period since the last report.
That appreciation changes the earnings setup. A quarter merely within guidance may no longer be enough. The most important questions are whether Zebra can:
The cleanest benchmarks are management’s May guidance:
| Metric | Q2 company outlook | Implied midpoint / comparison |
|---|---|---|
| Reported sales growth | 14%–17% | 15.5% |
| Implied revenue | $1.474B–$1.513B | Approximately $1.493B |
| Acquisition and FX contribution | Approximately 10.5 points | Implies roughly 3.5%–6.5% underlying growth |
| Adjusted EBITDA margin | Slightly above 21% | Approximately $314M of EBITDA at the revenue midpoint |
| Non-GAAP diluted EPS | $4.20–$4.50 | $4.35 |
| Prior-year non-GAAP EPS | $3.61 | Midpoint implies approximately 20% growth |
Management’s full-year outlook currently calls for:
The sales and EPS ranges were raised after Q1. At the midpoint, full-year revenue would be about $6.04 billion and non-GAAP EPS would be $18.50.
Memory is likely to dominate the call.
Zebra’s mobile computers and other hardware products are exposed to higher memory-component costs and constrained availability. In May, management said:
The Q2 margin guide already anticipates a meaningful sequential step-down from Q1’s 23.2% adjusted EBITDA margin to slightly above 21%. Management attributed about 150 basis points of that expected decline to higher memory costs, with normalized deal mix accounting for much of the balance.
Therefore, investors should not interpret a sequential Q2 margin decline as a surprise by itself. What matters is whether management still expects:
A positive report would include improved supply allocations, evidence that price increases are sticking without hurting volume, and continued confidence in the approximately 22% full-year EBITDA margin.
Any reduction in second-half volume assumptions, acknowledgment that spot-market purchases are becoming necessary, or suggestion that price recovery is lagging costs would undermine one of the major pillars of the current outlook.
Reported Q2 growth will be flattered by the Elo Touch acquisition and favorable currency translation. The headline 14%–17% growth range translates to only approximately 3.5%–6.5% growth excluding acquisition and FX effects.
That is still healthy, but investors should separate the underlying business from acquired revenue.
In Q1:
A high-quality Q2 would show organic growth at least matching Q1, ideally toward the upper half of the implied Q2 range. Growth concentrated primarily in acquisition revenue or pricing would be less impressive.
Manufacturing was Zebra’s strongest Q1 vertical, with strength across areas including automotive and semiconductors. Machine vision grew at a strong double-digit rate, and management forecast double-digit machine-vision growth for all of 2026.
This is important because machine vision has experienced a difficult industry cycle. Continued double-digit growth would support management’s claim that the business has reached an inflection point rather than merely benefiting from an easy comparison.
Watch for:
Mobile computing supported Q1 organic growth, but this is also the area most exposed to memory constraints. The Q2 report should clarify whether demand remains intact and whether component availability is limiting shipments.
Longer term, Zebra sees transportation-and-logistics device refreshes as a meaningful opportunity, but management has indicated that the larger refresh cycle is more likely to begin in 2027. Investors should avoid assuming that this will materially accelerate 2026 results.
RFID declined in Q1 because Zebra was cycling large prior-year projects. Management expected RFID to return to growth in Q2 and for the full year.
A rebound would be constructive, particularly if demand is broadening beyond retail apparel into logistics, manufacturing, grocery, healthcare and restaurant applications.
Zebra acquired Elo Touch for approximately $1.3 billion in September 2025. Management expects Elo to grow at a mid-single-digit rate in 2026 and has highlighted early geographic expansion and cross-selling opportunities.
Investors should look for:
Q1’s adjusted gross margin reached 50.4%, a multi-year high, helped by productivity, FX and favorable product and customer mix. That level is unlikely to repeat in Q2 given the anticipated memory-cost step-up.
The key distinction is between a planned normalization and a more fundamental deterioration.
Investors should examine:
Zebra expects approximately $35 million of annualized pre-tax savings from its productivity program and planned to substantially complete the actions during the second half of 2026.
An in-line Q2 accompanied by unchanged guidance could produce a muted reaction following the stock’s strong run. Conversely, investors may tolerate modest quarterly noise if management raises the full-year outlook or meaningfully de-risks memory supply.
The current full-year guidance implies:
At the August 3 closing price, ZBRA trades at approximately 15.8 times the midpoint of 2026 non-GAAP EPS guidance. That valuation is not extreme, but the recent share-price appreciation means the market is increasingly discounting successful execution.
A token increase reflecting only Q2 upside or additional repurchases would carry less weight than a raise based on:
Zebra generated $163 million of free cash flow in Q1 and targets at least $900 million for the year. Cash generation is weighted toward later quarters, making working-capital commentary important.
The company had repurchased $500 million of shares through early May—$300 million during Q1 and another $200 million early in Q2. Its May EPS outlook assumed another $100 million of repurchases, although management said it could allocate all 2026 free cash flow to buybacks if valuation remained attractive.
Investors should balance the accretion against leverage:
Additional buybacks would support EPS, but organic earnings growth and debt reduction would be higher-quality sources of shareholder value.
Zebra disclosed that it previously paid approximately $75 million of tariffs subsequently invalidated by a February 2026 U.S. Supreme Court decision. It intends to seek refunds but had not recognized a receivable because timing and recoverability remained uncertain.
Management expected a small Q2 tariff benefit but no material full-year guidance benefit, assuming other tariff mechanisms eventually replaced the invalidated rates.
Any refund could create cash or GAAP earnings upside, but investors should treat it as uncertain and nonrecurring. More important will be Zebra’s current assessment of semiconductor and Mexico-related trade exposure.
This would be a fundamentally respectable outcome, although the share-price reaction could be subdued given the recent rally.
The Q2 numerical hurdle appears achievable based on Zebra’s strong Q1 backlog, manufacturing momentum and acquisition contribution. The larger debate is not whether reported revenue grows in the mid-teens; acquisitions and FX should make that likely. It is whether the core business is sustaining mid-single-digit growth while Zebra protects margins from memory inflation.
The best outcome would pair organic growth near the upper end of the implied range with stronger component availability and a full-year guidance raise. A simple in-line quarter with unchanged guidance would still support the fundamental recovery, but after the stock’s roughly 34% rise since the prior report, it may not be enough to drive substantial additional upside.