Zebra Technologies Stock Plunges After Q2 Performance: Earnings Miss, Guidance Cut and More

Zebra Technologies Corp ZBRA reported a second-quarter FY23 net sales decline of 17.3% year-on-year to $1.21 billion, missing the consensus of $1.31 billion. Non-GAAP EPS of $3.29 missed the consensus of $3.31.

Consolidated organic net sales for the quarter decreased by 16%. 

Net sales in the Enterprise Visibility & Mobility (EVM) segment fell 24.6% Y/Y to $755 million. The net sales of the asset Intelligence & Tracking (AIT) segment decreased by 1.7% Y/Y to $459 million.

The non-GAAP gross margin expanded by 200 bps to 48.0%. The non-GAAP EBITDA margin declined by 70 bps to 21.2%.

Zebra held $68 million in cash and equivalents.

The company expanded the scope of the 2022 Productivity Plan and initiated a Voluntary Retirement Plan, entailing charges of $105 million, increased from $25 million.

“Our second quarter results were impacted by softening demand and more cautious customer spending, particularly in our retail and logistics end markets, and by distributor destocking. Profit margin was higher than expected, enabling us to achieve our EPS outlook for the quarter,” said Bill Burns, Chief Executive Officer of Zebra Technologies. 

“While we are revising our outlook downward, we remain confident in our ability to benefit from the long-term secular megatrends to digitize and automate workflows.” 

Outlook: Zebra expects Q3 net sales to decrease between 30% - 35% Y/Y compared to the consensus of $1.32 billion. It sees the non-GAAP EPS of $0.60 - $1.00, well below the street consensus of $3.77.

Zebra sees FY23 net sales decline by 20% - 23% Y/Y (prior 2% - 6%) compared to the consensus of $5.50 billion. 

Price Action: ZBRA shares traded lower by 18.60% at $250.73 on the last check Tuesday.