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 $264 million or 20.4% compared to the prior year quarter, reflecting growth in both of our segments. Our overall sales growth reflects improved demand in all regions. Excluding the effects of foreign currency, acquisitions and dispositions, Consolidated Organic Net sales increased by 9.2%.

Gross margin increased to 53.0% for the current quarter compared to 47.6% for the prior year quarter, primarily due to the favorable impacts of IEEPA tariff recoveries and foreign currency. We also fully mitigated increased memory costs through price realization.

Operating expenses for the quarters ended July 4, 2026 and June 28, 2025 were $504 million and $433 million, or 32.4% and 33.5% of Net sales, respectively. Current quarter Operating expenses increased compared to the prior year quarter primarily due to the inclusion of operating expenses of Elo Touch, including intangible asset amortization, as well as higher employee-related costs.

Operating income was $321 million for the current quarter compared to $183 million in the prior year quarter.

Total Other expense, net decreased primarily due to net losses on long-term investments in the prior year quarter and lower foreign exchange losses in the current quarter, partially offset by higher interest expense associated with higher average debt balances.

The Company’s effective tax rates for the three months ended July 4, 2026 and June 28, 2025 were 18.2% and 18.8%, respectively. The decrease in the effective tax rate was primarily due to tax benefits related to foreign earnings subject to U.S. taxation, partially offset by increased U.S. state income taxes.

Total Net sales increased by $451 million or 17.3% 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, acquisitions and dispositions, Consolidated Organic Net sales increased by 6.8%.

Gross margin increased to 51.3% for the current year compared to 48.5% for the prior year, primarily due to favorable impacts of IEEPA tariff recoveries and foreign currency.

Operating expenses for the quarters ended July 4, 2026 and June 28, 2025 were $1,031 million and $883 million, or 33.8% and 33.9% 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, including intangible asset amortization, as well as higher employee-related costs.

Operating income was $536 million for the current year compared to $378 million in the prior year.

Total Other expense, net increased primarily due to lower interest income on cash equivalents and higher interest expense associated with higher average debt balances, partially offset by lower foreign exchange losses.

The Company’s effective tax rates for the six months ended July 4, 2026 and June 28, 2025 were 18.6% and 18.2%, respectively. The increase in the effective tax rate was primarily due to higher U.S. state income taxes and less favorability from tax credits, partially offset by increased tax benefits related to foreign earnings subject to U.S. taxation.