A maker of rugged mobile computers, barcode scanners and printers, RFID tags, and workflow software used by retailers, warehouse crews, manufacturers, and hospital staff to track goods and people. It started in 1969 as Data Specialties making tape-punching machines, then rebranded as Zebra in 1986 after launching a barcode printer — because the black-and-white stripes of a barcode reminded founders of a zebra. In 2014 it absorbed Motorola Solutions' enterprise business, and in 2025 bought Elo kiosks and Photoneo 3D vision.
Zebra's Q2 gross margin hit 53.0% as a $73M tariff refund lifted profitability, while organic sales grew 9.2%.
A one-time tariff refund reshaped the quarter. rose 20.4% to $1.56 billion and expanded 5.3 points to 53.0%, driven by a $73 million tariff refund benefit and favorable foreign exchange. The underlying business grew organic sales 9.2%, but the headline margin is not repeatable.
Key takeaways
reached 53.0%, up 5.3 points , primarily because of a $73 million benefit from expected tariff refunds and favorable foreign currency impacts.
Consolidated rose 20.4% to $1.56 billion, but growth was 9.2% after adjusting for the Elo Touch Solutions acquisition and foreign exchange.
rose 75.4% to $321 million, with the increase partly offset by a 16.4% rise in operating expenses to $504 million tied to the inclusion of Elo Touch and higher employee-related costs.
Section summaries
Management's Discussion and Analysis
Q2 FY2026 net sales rose 20.4% to $1,557M, driven by both segments and a $73M IEEPA tariff refund benefit.
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Consolidated organic grew 9.2% in Q2, with the CF up 7.5% organically and the AVA segment up 11.4% organically.
expanded 540 to 53.0%, primarily due to a $73M benefit from expected IEEPA tariff refunds and favorable foreign currency impacts.
The Connected Frontline grew 7.5% organically and the Asset Visibility & Automation segment grew 11.4% organically, showing broad-based demand improvement.
The company repurchased $568 million of shares year to date and increased borrowings to fund the buybacks, while rose 52.3% to $198 million for the quarter.
fell 76.8% to $493 million, a sharp decline from $2.13 billion a year ago, reflecting a reclassification of the to current liabilities ahead of its May 2027 maturity.
What changed
The Q1 FY2026 watch item on is partially answered: accelerated to 9.2% in Q2 from 4.3% in Q1, suggesting the low-single-digit pace was not a permanent ceiling.
The Q1 FY2026 watch item on sustainability is clarified: the 53.0% Q2 figure was driven by a $73 million one-time tariff refund, not by an underlying structural improvement, so the 49.6% Q1 level remains the more representative baseline.
The FY2025 watch item on the is partly resolved: the rate returned to 19.5% in Q2 FY2026 from 36.5% in Q3 FY2025, removing the large drag on that had been flagged.
The FY2025 watch item on debt service and cash reserves is evolving: cash remains low at $157 million, but dropped to $493 million as the was reclassified to current, and the company plans to refinance it in the second half of 2026.
What to watch
Whether organic growth sustains near the 9.2% Q2 rate or decelerates back toward the 4.3% seen in Q1 as the Elo acquisition is lapped.
Where settles once the $73 million tariff refund drops out — whether it returns to the 47-49% range or whether underlying mix and productivity gains support a higher floor.
The outcome of the planned refinancing in the second half of 2026 and its impact on and , given the facility's reclassification to current liabilities.
The pace of share repurchases versus debt management, given that the company borrowed to fund $568 million in buybacks year to date while cash reserves stand at $157 million.
Operating expenses rose 16.4% to $504M, driven by the inclusion of Elo Touch and higher employee-related costs, though they declined as a percentage of sales.
The company substantially completed its 2025 Productivity Plan, recording $8M in Q2 costs and expecting $35M in annualized pre-tax savings.
Year-to-date increased to $361M, while the company repurchased $568M of shares and increased borrowings to fund the buybacks.
The company plans to refinance its , maturing in May 2027, in the second half of 2026, subject to market conditions.
Quantitative and Qualitative Disclosures About Market Risk
There were no material changes in the Company’s market risk during the six months ended July 4, 2026. For additional information on market risk, refer to Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in the Annual Report on Form 10-K for the year ended De…
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There were no material changes in the Company’s market risk during the six months ended July 4, 2026. For additional information on market risk, refer to Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in the Annual Report on Form 10-K for the year ended December 31, 2025.
In addition to the other information included in this report, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2025, and the factors identified under “Safe Harbor” in Part I,…
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In addition to the other information included in this report, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2025, and the factors identified under “Safe Harbor” in Part I, Item 2 of this Quarterly Report on Form 10-Q, which could materially affect our business, financial condition, cash flows, or results of operations. The risks described in the Annual Report are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently considers immaterial also may materially adversely affect its business, financial condition, and/or operating results. There have been no material changes to the risk factors included in our Annual Report for the year ended December 31, 2025.