Zebra Technologies raised its full-year 2026 sales outlook following broad-based demand growth, but acquisitions, dispositions, and favorable currency movements are expected to contribute a substantial portion of the projected increase.
The company now expects adjusted net sales to grow between 14% and 16% for the full year.
Approximately eight percentage points of that growth are expected to come from acquisitions, dispositions, and foreign-exchange movements.
That implies underlying organic sales growth of roughly 6% to 8%, assuming the expected external contributions occur as projected.
At the 15% midpoint of Zebra’s outlook, acquisitions, dispositions, and currency would supply approximately 53% of the expected full-year growth.
The outlook’s composition is consistent with Zebra’s second-quarter performance.
Quarterly net sales increased 20.4% to $1.56 billion from $1.29 billion.
Organic net sales increased by a lower 9.2%, indicating that approximately 11.2 percentage points of the reported quarterly growth came from acquisitions, dispositions, and currency.
Those factors therefore represented about 55% of Zebra’s headline second-quarter growth.
The difference between reported and organic growth is important because organic sales provide a clearer view of demand across businesses already owned during both comparison periods.
Zebra nevertheless delivered organic growth across both of its major segments.
Connected Frontline Computing generated $903 million in net sales, compared with $717 million during the prior-year quarter.
The segment’s organic sales increased 7.5%.
Asset Visibility & Automation produced $654 million in sales, compared with $576 million a year earlier.
Organic sales in that segment increased 11.4%, making Asset Visibility & Automation Zebra’s fastest-growing operation on an underlying basis.
Zebra’s products support workflows involving barcode scanning, mobile computing, radio-frequency identification, machine vision, robotics, asset tracking, and workforce automation.
Management said demand was broad-based as customers continued digitizing operations and investing in frontline automation.
Zebra also benefited from strong growth across all major geographic regions.
Organic sales increased 15% in Latin America and 13% in Asia Pacific.
North American organic sales rose 9%, while Europe, the Middle East, and Africa generated growth of 7%.
The combination of organic demand, acquired revenue, and currency benefits produced significant operating leverage.
Gross profit increased approximately 34% to $825 million from $616 million.
Reported gross margin expanded to 53% from 47.6%, an improvement of 540 basis points.
Adjusted gross profit increased to $830 million from $619 million.
Adjusted gross margin also expanded by 540 basis points to 53.3% from 47.9%.
The margin improvement included $73 million of recoveries involving tariffs imposed under the International Emergency Economic Powers Act.
Only $14 million of those recoveries had been received during the second quarter, meaning most of the recognized benefit had not yet been collected in cash by quarter-end.
The tariff recoveries represented approximately 4.7% of quarterly net sales and contributed materially to Zebra’s unusually high second-quarter margins.
Excluding the recoveries in a simplified calculation, adjusted gross margin would have been approximately 48.6%.
That would still represent modest improvement from the prior-year period but would be substantially below the reported 53.3%.
Adjusted EBITDA surged 61% to $431 million from $267 million.
Adjusted EBITDA margin expanded to 27.7% from 20.6%.
The $73 million tariff-recovery benefit represented approximately 45% of the year-over-year increase in adjusted EBITDA.
Underlying profitability still improved after excluding the recovery, supported by higher organic sales, acquired operations, operating productivity, and better business mix.
Net income more than doubled to $233 million from $112 million.
Reported diluted earnings per share increased 121.5% to $4.85 from $2.19.
Non-GAAP net income rose 64% to $306 million from $186 million.
Adjusted diluted EPS increased 75.9% to $6.35 from $3.61.
The increase in adjusted EPS substantially exceeded sales growth because of margin expansion, operating leverage, tariff recoveries, and a lower diluted share count.
Zebra repurchased $268 million of shares during the quarter.
Management said the company returned more than $850 million to shareholders through share repurchases during the first half of 2026.
Those repurchases reduced the number of shares among which Zebra’s earnings were divided, providing an additional benefit to per-share results.
The company’s stronger financial performance led management to raise several elements of its full-year outlook, including sales, adjusted earnings, adjusted EBITDA margin, and free cash flow.
However, the full-year sales guidance indicates that investors should distinguish between total growth and growth generated by Zebra’s existing operations.
The implied organic rate of approximately 6% to 8% remains healthy but is considerably lower than the headline range of 14% to 16%.
Zebra’s second-quarter results demonstrate the same distinction.
Reported sales increased more than 20%, while organic growth reached slightly above 9%.
The company’s ability to sustain momentum will depend on continued customer demand, successful integration of acquired businesses, currency movements, component costs, pricing actions, and the timing of tariff recoveries.
KEY QUOTES:
“Our record results reflect broad-based demand for our innovative solutions and excellent execution on our growth and profitability priorities. We delivered for our customers by leveraging our long-standing supplier relationships to support our growth.”
“The momentum we see across our business underscores Zebra’s position as the foundation for intelligent operations and frontline AI as customers digitize and automate environments.”
Bill Burns, Chief Executive Officer Of Zebra Technologies
“Our strong balance sheet and cash flow continue to provide significant financial flexibility, enabling us to invest for growth while returning more than $850 million to shareholders in the first half of this year through disciplined share repurchases.”
“We believe this balanced approach positions Zebra to create long-term shareholder value.”
Nathan Winters, Chief Financial Officer Of Zebra Technologies
