Zebra Technologies (NASDAQ:ZBRA) Posts Mixed Q3 2025 Results with EPS Beat and Revenue Miss

ZEBRA TECHNOLOGIES CORP-CL A (NASDAQ:ZBRA) has reported financial results for the third quarter of 2025, delivering a performance that presented a mixed picture for investors. The company's earnings per share surpassed analyst forecasts, while its top-line revenue narrowly missed expectations, leading to a negative reaction in pre-market trading.

Earnings and Revenue Versus Estimates

The company's third-quarter results revealed a clear divergence between its profitability and its sales performance relative to Wall Street's expectations.

• Non-GAAP Earnings Per Share (EPS): $3.88, exceeding the analyst consensus estimate of $3.83.
• Revenue: $1.32 billion, slightly below the estimated $1.34 billion.

This earnings beat, coupled with a revenue miss, appears to be the primary driver behind the stock's pre-market decline of approximately 4.4%. The market's reaction suggests that investor concerns over the sales shortfall outweighed the positive news of stronger-than-expected profitability.

Quarterly Performance and Financial Health

Beyond the headline figures, Zebra Technologies demonstrated solid operational performance in the third quarter. Net sales grew 5.2% year-over-year, reaching $1.32 billion, up from $1.26 billion in the same period last year. A deeper look into the segments shows organic net sales growth of 4.8%, with the Asset Intelligence & Tracking (AIT) segment being a particular standout, posting a 10.6% increase.

The company's profitability metrics showed some pressure, with gross margin declining to 48.0% from 48.8% in the prior year, which management attributed primarily to U.S. import tariff expenses. However, this was partially offset by disciplined cost management, as evidenced by the following key non-GAAP metrics:

• Adjusted EBITDA increased to $285 million, up from $268 million a year ago.
• Adjusted EBITDA margin expanded slightly to 21.6% from 21.4%.
• Non-GAAP net income rose to $198 million, a 9.4% increase year-over-year.

Balance Sheet and Capital Allocation

Zebra Technologies maintains a robust financial position, which supports its ongoing capital return program. The company ended the quarter with $1.05 billion in cash and cash equivalents. For the first nine months of the year, it generated free cash flow of $504 million.

Demonstrating confidence in its financial health and commitment to shareholder returns, the board has authorized a new share repurchase program. The company has committed to buying back $500 million of its common stock over the next twelve months, a significant capital return initiative.

Forward-Looking Guidance

The company provided an optimistic outlook for the fourth quarter, which may help counterbalance the mixed third-quarter results. Zebra's sales growth forecast for Q4 stands between 8% and 11% compared to the prior year. This guidance includes an anticipated 850 basis point favorable impact from recent acquisitions and foreign currency translation.

More importantly, the company's revenue projection for the next quarter is approximately $1.46 billion, which sits above the analyst consensus estimate of $1.43 billion. This above-consensus guidance likely provided a floor for the stock's decline, preventing a more severe sell-off.

Other key guidance metrics for the fourth quarter include:

• An Adjusted EBITDA margin of approximately 22%.
• Non-GAAP diluted EPS in the range of $4.20 to $4.40.
• Full-year 2025 Free Cash Flow is expected to exceed $800 million.

Market Reaction and Conclusion

The initial market reaction, characterized by a pre-market drop, reflects the nuanced nature of the earnings report. While investors applaud the earnings beat and strong forward guidance, the slight revenue miss in Q3 has introduced a note of caution. The company's ability to exceed profit expectations and project robust growth for the upcoming quarter suggests underlying business strength, but the market is clearly weighing all factors.

For a detailed breakdown of historical earnings performance and future analyst estimates for Zebra Technologies, you can review the data here.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any security. The information presented is based on publicly available data and should not be relied upon as the sole basis for an investment decision. Readers should conduct their own research and consult with a qualified financial advisor before making any investment decisions.