Zebra earnings more than doubled in the second quarter of 2026, prompting the workflow technology company to raise its full-year outlook. Results announced on August 4 for the quarter ended July 4 showed sales of $1.557 billion, up 20.4%, and net income of $233 million, compared with $112 million a year earlier.
Key Takeaways
- Organic sales grew 9.2%, with both operating segments contributing to the increase.
- Tariff recoveries and favorable foreign exchange helped expand reported gross margin.
- Management raised its 2026 outlook to sales growth of 14%–16% and non-GAAP diluted EPS of $20.75–$21.25.
Table of Contents
- Zebra earnings strengthen across both operating segments
- Tariff recoveries help explain the margin improvement
- Raised annual targets remain management expectations
- Conclusion
Zebra earnings strengthen across both operating segments
Zebra’s second-quarter 2026 results announcement showed diluted earnings per share of $4.85, up from $2.19 a year earlier. On a non-GAAP basis, diluted EPS increased 75.9% to $6.35, while adjusted EBITDA rose 61.4% to $431 million.
Connected Frontline sales increased to $903 million from $717 million. Asset Visibility & Automation sales reached $654 million, compared with $576 million. Organic growth was 7.5% and 11.4%, respectively.
The distinction between reported sales growth of 20.4% and organic growth of 9.2% matters: the headline increase was not entirely underlying business expansion. Chief Executive Bill Burns cited broad-based demand and supplier relationships that helped Zebra support its growth.
| Item | Details |
|---|---|
| Cash and cash equivalents | $157 million as of July 4, 2026. |
| Total debt | $2.776 billion as of July 4, 2026. |
| First-half operating cash flow | $387 million. |
| First-half capital expenditure | $26 million. |
| First-half share repurchases | $568 million. |
Tariff recoveries help explain the margin improvement
Reported gross margin rose to 53.0% from 47.6%. Zebra attributed that improvement primarily to IEEPA tariff recoveries and favorable foreign currency exchange, rather than solely to stronger operating demand.
The company recorded $73 million in tariff recoveries, of which $14 million was received during the quarter. That difference separates the amount recognized in the results from the cash collected during the period.
Operating expenses increased to $504 million from $433 million, primarily because of expenses associated with acquired businesses, including amortization of intangible assets. Even with those higher costs, adjusted EBITDA margin expanded to 27.7% from 20.6%.
Raised annual targets remain management expectations
In its August outlook, Zebra projected full-year sales growth of 14%–16%, including approximately eight percentage points of favorable effects from acquisitions, dispositions and foreign currency. It expected adjusted EBITDA margin of 23.5%–24.0%, non-GAAP diluted EPS of $20.75–$21.25 and free cash flow above $1 billion.
For the third quarter, management forecast sales growth of 17%–20%, including approximately 10.5 percentage points from acquisitions, dispositions and foreign currency. It projected an adjusted EBITDA margin of about 22% and non-GAAP diluted EPS of $4.70–$4.90.
Burns said strong demand and progress on productivity and memory supply supported the increased annual outlook. These figures were guidance issued on August 4, not completed third-quarter or full-year results.
Conclusion
The next performance checkpoint is delivery against Zebra’s third-quarter guidance. That comparison will help distinguish continued operating growth from the acquisition, currency and tariff effects that influenced the second-quarter results and annual outlook.
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