ZEBRA TECHNOLOGIES CORP

Consolidated Results of Operations

Net sales to customers by geographic region were as follows (amounts in millions, except percentages):

Operating expenses are summarized below (amounts in millions, except percentages):

Consolidated Organic Net sales growth:

(1)Operating results reported in U.S. Dollars are affected by foreign currency exchange rate fluctuations. Foreign currency translation impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. Dollar. This impact is calculated by translating the current period results at the currency exchange rates used in the comparable prior year period as well as removing realized cash flow hedge gains and losses from both the current and prior year periods.

(2)For purposes of computing Organic Net sales growth, amounts directly attributable to business acquisitions are excluded for twelve months following their respective acquisitions.

(3)Consolidated Organic Net sales growth is a non-GAAP financial measure. See the Non-GAAP Measures section at the end of this item.

Total Net sales increased by $133 million or 11.3% compared to the prior year, reflecting growth in both of our segments associated with the continuation of improving demand trends that began in the middle of 2024. Excluding the effects of currency changes and acquisitions, Consolidated Organic Net sales increased by 11.9%.

Gross margin increased to 49.3% for the current year compared to 47.9% for the prior year. As compared to the prior year, Gross margin was higher in our AIT segment and slightly lower in our EVM segment.

Operating expenses for the quarters ended March 29, 2025 and March 30, 2024 were $450 million and $404 million, or 34.4% of Net sales in both periods. Current year Operating expenses were higher than the prior year primarily due to higher incentive compensation resulting from changes in share-based compensation eligibility provisions and the annual grant date, as well as increased investments in the business. These increases were partially offset by lower Exit and restructuring costs.

Operating income was $195 million for the current year compared to $159 million in the prior year. The increase was due to higher Gross profit, partially offset by higher Operating expenses.

Net income increased compared to the prior year primarily due to higher Operating income, as described above, partially offset by higher Other expense, net. The increase in Other expense, net was primarily due to non-recurring interest rate swap gains in the prior year and unfavorable changes in Foreign exchange (loss) gain in the current year.

The Company’s effective tax rates for the three months ended March 29, 2025 and March 30, 2024 were 17.6% and 19.0%, respectively. The change in the effective tax rates year over year was primarily due to higher U.S. tax credits and tax benefits related to foreign earnings subject to U.S. taxation in the current year.

Diluted earnings per share increased to $2.62 as compared to $2.23 in the prior year due to higher Net income.