Zebra Technologies reported its Q4 2015 earnings on February 25th 2016 beating analysts’ EPS estimates by $0.04 while missing on revenue by $7.52 million. The company’s revenues grew 20.5% from Q4 2014. Revenues of $952.74 million for the quarter included $635.8 million from the Enterprise business unit, which was significantly higher than the revenue contribution in Q4 2014 (24% increase) as the acquisition closed on October 27 of that year. Zebra’s legacy business (including barcode printers, card printers, consumables, location services) accounted for $320.5 million, up from $314.6 million in Q4 2014. The company’s gross margin now stands at 45.1% for the quarter, down from 46.6% in the fourth quarter of 2014; this is reflective of a couple of factors including the change in revenue mix associated with Enterprise products, which have lower gross margin percentages than legacy Zebra products, and the impact of foreign currency movements. Although Zebra Technologies has managed to exceed analyst expectations in EPS estimates, company shares have fallen almost 15% since the Q4 earnings release.
The following are key insights from the company’s 2015 fourth quarter performance
Looking forward, Zebra Technologies is expecting a tough Q1 2016 to be flat to down 3% YoY and EPS of $1.19-$1.34. Investors have not taken too kindly to this relatively weak near-term outlook; this is the primary reason for the steep fall in the stock price. Coupled with its 1%-4% full-year sales growth guidance as compared to a consensus of 3.5%, the company has its task cut out. Zebra shared that it has a number of new product releases lined up for the year ahead with two newly launched solutions for 2016 including its new mobile computer, the TC8000, as well as a new cartridge-based tabletop printer, the ZD420. We will continue to follow the company’s progress and keep our readers updated.
(with Richa Gupta, Senior Analyst)
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