Zebra Technologies Beat On Q2 Earnings Led By Double-Digit Segment Growth, Margin Expansion; Positive Q3 Guidance

Zebra Technologies Corp ZBRA reported second-quarter FY21 non-GAAP net sales growth of 44.4% year-on-year to $1.38 billion, beating the analyst consensus of $1.35 billion. Consolidated organic net sales for the second quarter increased 39.8% Y/Y.
Tangible products' net sales grew 47% Y/Y to $1.2 billion. Services and software revenue rose 27.6% Y/Y to $185 million.
Net sales in the Enterprise Visibility & Mobility (EVM) rose 40.4% Y/Y to $959 million. Asset Intelligence & Tracking (AIT) segment net sales grew 54.2% Y/Y to $421 million.
The non-GAAP gross margin expanded 390 bps to 48%, and the non-GAAP EBITDA margin expanded 530 bps to 23.6%.
Non-GAAP EPS of $4.57 beat the analyst consensus of $4.11.
Zebra generated $539 million of operating cash flow for the six months ended Jul. 3, and held $318 million in cash and equivalents.
It continues to see extended lead times for specific product components and escalating international shipping costs as it enters the second half of the year with a strong order backlog and a robust business pipeline.
Outlook: Zebra sees Q3 net sales of $1.37 billion - $1.42 billion, above the analyst consensus of $1.31 billion.
It sees Q3 EPS guidance between $3.90-$4.10 versus the analyst consensus of $3.93.
Price action: ZBRA shares traded lower by 1.33% at $543.66 on the last check Tuesday.

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