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 $294 million or 22.3% compared to the prior year quarter, reflecting continued growth in both of our segments. Our overall sales growth reflects broad-based growth across all verticals and regions. Excluding the effects of foreign currency, acquisitions and dispositions, Consolidated Organic Net sales increased by 11.3%.

Gross margin decreased to 45.7% for the current quarter compared to 48.0% for the prior year quarter, primarily due to increased memory costs and unfavorable business mix, partially offset by foreign currency favorability.

Operating expenses for the quarters ended October 3, 2026 and September 27, 2025 were $501 million and $451 million, or 31.0% and 34.2% 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, inclusive of intangible asset amortization.

Operating income was $237 million for the current quarter compared to $183 million in the prior year quarter.

Total Other expense, net increased primarily due to lower interest income on cash equivalents and higher interest expense associated with higher average debt balances.

The Company’s effective tax rates for the three months ended October 3, 2026 and September 27, 2025 were 17.2% and 36.5%, respectively. The decrease in effective tax rate was primarily due to prior year foreign earnings subject to U.S. taxation resulting from federal tax legislation, as well as lower current year U.S. state income taxes.

Total Net sales increased by $745 million or 19.0% compared to the prior year, reflecting continued growth in both of our segments and all regions. Excluding the effects of foreign currency, acquisitions and dispositions, Consolidated Organic Net sales increased by 8.3%.

Gross margin increased to 49.4% for the current year compared to 48.3% for the prior year, primarily due to favorable impacts of IEEPA tariff recoveries recognized in the second quarter and foreign currency, partially offset by higher memory costs.

Operating expenses for the quarters ended October 3, 2026 and September 27, 2025 were $1,532 million and $1,334 million, or 32.8% and 34.0% 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, inclusive of intangible asset amortization, as well as higher employee-related costs.

Operating income was $773 million for the current year compared to $561 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 nine months ended October 3, 2026 and September 27, 2025 were 18.2% and 24.5%, respectively. The decrease in effective tax rate was primarily due to prior year foreign earnings subject to U.S. taxation resulting from federal tax legislation, as well as lower current year U.S. state income taxes.