Zebra Technologies Corporation (NASDAQ:ZBRA) reported its fourth-quarter and full-year 2025 financial results, delivering a mixed performance relative to Wall Street expectations. The company, a leader in workflow digitization and automation, posted solid top-line growth but fell short on profitability metrics, leading to a muted initial market reaction.
Earnings and Revenue Versus Estimates
The company's Q4 results presented a nuanced picture when held against analyst forecasts. Revenue came in slightly below expectations, while adjusted earnings per share (EPS) also missed the consensus target.
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Q4 2025 Revenue: $1.475 billion.
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Analyst Revenue Estimate: $1.488 billion.
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Variance: Missed by approximately $13 million, or about 0.9%.
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Q4 2025 Non-GAAP EPS: $4.33.
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Analyst EPS Estimate: $4.42.
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Variance: Missed by $0.09 per share, or about 2.0%.
For the full year 2025, Zebra reported revenue of $5.396 billion, an 8.3% increase over the prior year. Non-GAAP diluted earnings per share for FY25 were $15.84, representing a 17.2% year-over-year increase.
Market Reaction and Price Action
The market's immediate response to the earnings release appears cautiously optimistic despite the slight misses. In pre-market trading following the announcement, ZBRA shares were up approximately 8.1%. This positive move suggests investors may be focusing on the company's forward guidance, strategic initiatives, and capital return program rather than the minor quarterly shortfalls. Over the past month, the stock had declined about 3.4%, indicating some investor apprehension heading into the report. The strong pre-market gain could be interpreted as a relief rally coupled with approval of management's future plans.
Key Highlights from the Earnings Release
Beyond the headline numbers, Zebra's earnings report contained several significant strategic and financial developments:
- Segment Performance: The Connected Frontline (CF) segment showed strong growth with sales of $854 million, up from $726 million in Q4 2024. The Asset Visibility & Automation (AVA) segment saw more modest growth, with sales of $621 million compared to $608 million.
- Profitability Pressures: While sales grew, gross margin contracted. Reported gross margin was 47.3%, down 130 basis points year-over-year, which the company attributed primarily to lower services and software margin. Adjusted gross margin was 48.2%, down 50 basis points.
- Significant Capital Allocation: A major headline from the report was the Board of Directors' authorization of an additional $1 billion for share repurchases, augmenting a previous $1 billion program. This underscores a strong commitment to returning capital to shareholders. The company also reported robust free cash flow of $831 million for the full year.
- Strategic Acquisitions and Restructuring: The results included impacts from the acquisitions of Elo Touch and Photoneo, which contributed to sales growth but also increased operating expenses. The company also incurred exit and restructuring charges related to its previously announced plans to exit the robotics business.
Forward Outlook and Comparison to Estimates
Management provided guidance for both the first quarter and full year 2026, which appears generally in line with or slightly above current analyst expectations.
- Q1 2026 Outlook: Zebra expects sales growth of 11% to 15%, which includes a 10-point favorable impact from acquisitions and foreign currency. At the midpoint (13%), this implies sales of about $1.51 billion, compared to the analyst estimate of $1.471 billion. The company expects non-GAAP EPS between $4.05 and $4.35, with a midpoint of $4.20, which is slightly below the analyst estimate of $4.21.
- Full Year 2026 Outlook: The company anticipates sales growth of 9% to 13%, including a 7-point acquisition and currency benefit. At the midpoint (11%), this implies sales of approximately $5.99 billion, aligning closely with the analyst estimate of $6.028 billion. Zebra guided for non-GAAP EPS in the range of $17.70 to $18.30, with a midpoint of $18.00. This is slightly above the analyst consensus estimate of $17.86.
Conclusion
Zebra Technologies concluded 2025 with respectable growth, though profitability faced some headwinds. The market's positive pre-market reaction seems driven less by the slight earnings miss and more by the company's confident outlook for 2026, its aggressive capital return program highlighted by the new $1 billion buyback authorization, and the strategic positioning from recent acquisitions. The guidance for the coming year suggests management expects to convert solid revenue growth into continued earnings expansion.
For a detailed breakdown of historical earnings, future estimates, and analyst projections, you can view the full earnings and estimates page for ZBRA here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, an endorsement, or a recommendation to buy, sell, or hold any security. Investing involves risk, including the potential loss of principal.
