Earnings

Zebra Lifts Mobile Computer Prices About 15% To Chase $145 Million Memory Bill

CEO Bill Burns says customers dislike the October increase but demand holds, as the full-year memory headwind grows to about $145 million.

Matteo Parrino Jonathan Ponciano

Matteo Parrino, Jonathan Ponciano

— 2 min read
Share
Zebra Lifts Mobile Computer Prices About 15% To Chase $145 Million Memory Bill

Zebra Technologies raised prices on its mobile computers by about 15% in October to close the gap on soaring memory costs, CFO Nathan Winters said on the company's third-quarter earnings call Tuesday. The stock fell 12.69% to $315.29 in Tuesday trading, from a prior close of $361.13.

A 15% increase, a $145 million bill

Zebra, which makes mobile computers, barcode scanners, printers and other devices businesses use to digitize and automate workflows, expects only a modest effect from the October increase in the fourth quarter. Winters said it should add roughly a point and a half to 2027 sales.

The full-year memory cost headwind is now about $145 million, up $25 million from the prior estimate, Winters said, entirely because mobile computer volume ran higher. In the third quarter, memory costs ran about $50 million against roughly $25 million of price realization.

He confirmed that a point and a half of pricing covers about $90 million of the year's bill, leaving $55 million to restructuring savings, tariff relief and operating-expense productivity, a split a Barclays analyst laid out. Management still expects to offset the full amount this year, and Winters said the October increase sets Zebra up to cover it dollar for dollar in 2027.

"Difficult conversations" with customers

Burns said Zebra is having "difficult conversations" with customers to balance higher component costs against protecting margins and winning the largest deals. "I think our customers don't like the price increases, you know, but they continue to know they have to invest in technology," he said, adding that they hear the same from other vendors using memory.

Asked by a Morgan Stanley analyst whether buyers rushed orders to beat the increase, Burns said Zebra has seen no revenue impact from pull-forward. He cited broad demand across regions, verticals and both segments, and said the largest customers get Zebra's best pricing.

Memory supply and the 2027 outlook

Winters said memory prices are still rising, though less than in the middle of the year, and he expects increases into the first half of 2027 before moderating in the back half. Inventory rose about $90 million in the quarter, entirely from memory supply and a bit of pricing, and Zebra has qualified five new suppliers, with two more expected in 2027.

Winters said it is too early to give a 2027 memory-cost figure. Burns said growth should reach the high end of the long-term range and that the fourth quarter should be the profitability baseline for next year. He pointed to transportation and logistics refreshes, with multi-year rollouts beginning in 2027.

Third-quarter sales topped $1.6 billion, up more than 22% or 11% organically, with adjusted earnings of $4.95 a share. Zebra now guides to full-year sales growth of about 17% and fourth-quarter earnings of $5 to $5.40 a share.

Whether the 15% increase holds without costing Zebra the large transportation and logistics refresh deals is the test heading into 2027.

Sources

Read more