Zebra Technologies reported its Q3 2015 earnings on November 10th beating analysts’ EPS estimates by $0.16 while missing on revenue by $2.22 million. The company’s revenues grew 3% from Q2 2015. Net sales of $916.27 million for the quarter included $605.1 million contributed by the Enterprise business unit acquired from Motorola Solutions, a 5.6% increase from Q3 2014. Zebra’s legacy business (including barcode printers, card printers, consumables, location services) accounted for $314 million, up from $303.3 million in Q3 2014. The company’s gross margin now stands at 45.2% for the first 3 quarters in 2015, down from 50% for 2014; this is reflective of rebranding of legacy Motorola product, the change in product mix and the contribution of Enterprise solutions to the overall revenues, which tend to have a lower margin than legacy Zebra products. Although Zebra managed to exceed analyst expectations in EPS estimates, company shares have fallen almost 12% since the Q3 earnings release.
Here are some key insights from the company’s 2015 third quarter performance.
With additional cost savings and cost controls being implemented, Zebra expects its positive growth to continue and plan to end on a high note in the fourth quarter. The company expects total revenues in the range of $945 million to $975 million. Zebra Technologies’ executive leadership is confident in its market standing and optimistic about market opportunities for the remainder of 2015.
Like we’ve mentioned in our previous posts, Zebra has its work cut out for it from a distribution and execution standpoint and needs to manage expectations via well-crafted messaging to both partners and customers. We will continue to follow the company’s progress and keep our readers updated.
(with Richa Gupta, Senior Analyst)
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