ZEBRA TECHNOLOGIES CORP

Results of Operations

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 attributable to business acquisitions or dispositions are excluded for twelve months following or preceding the respective acquisition or disposition, respectively.

(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 $187 million or 14.3% compared to the prior year, reflecting growth in both of our segments. Our overall sales growth reflects improved demand in all regions. Excluding the effects of foreign currency and acquisitions, Consolidated Organic Net sales increased by 4.3%.

Gross margin increased to 49.6% for the current year compared to 49.3% for the prior year, primarily due to favorable impacts of foreign currency, business mix, and productivity initiatives.

Operating expenses for the quarters ended April 4, 2026 and March 29, 2025 were $527 million and $450 million, or 35.3% and 34.4% of Net sales, respectively. Current year Operating expenses increased compared to the prior year primarily due to the inclusion of operating expenses of Elo Touch and Photoneo and higher employee and employee-related costs.

Operating income was $215 million for the current year compared to $195 million in the prior year. The increase was due to higher Gross profit, partially offset by higher Operating expenses.

Total Other expense, net increased primarily due to realized losses associated with the sales of certain long-term investments in the first quarter, as well as lower interest income on cash equivalents.

The Company’s effective tax rates for the three months ended April 4, 2026 and March 29, 2025 were 19.2% and 17.6%, respectively. The increase in the effective tax rate is primarily due to less favorability from tax credits and tax benefits related to foreign earnings subject to U.S. taxation.