ZBRA · 10-Q · 2026Q3 · Full report

Gross Margin Drivers

ZEBRA TECHNOLOGIES CORP · 2026-08-04 · Importance 50 · Surprise 58 · From source text

Consolidated gross margin increased 540 basis points to 53.0% in the second quarter from 47.6% and increased 280 basis points to 51.3% year to date from 48.5%. The company recognized a $73 million pretax benefit from expected refunds of previously paid IEEPA import tariffs, with $46 million assigned to Connected Frontline and $27 million to Asset Visibility & Automation. Foreign-currency benefits and price realization that fully mitigated higher memory costs also supported the quarterly margin improvement. CF margin rose to 51.2% from 47.3%, while AVA margin rose to 56.3% from 48.6%, with business mix an offset for CF and a benefit for AVA.

Key facts

• Gross profit for the quarter was $1,567 million compared to $1,261 million in the prior year quarter (24.3% $ change shown in table). source
• The Company recognized Total Cost of sales for the three months ended July 4, 2026 of $1,485 million and for the three months ended June 28, 2025 of $1,340 million. source
• AVA gross margin increased to 56.3% in the current year compared to 48.6% for the prior year quarter. source
• We also fully mitigated increased memory costs through price realization. source
• Gross margin increased to 51.3% for the year to date compared to 48.5% for the prior year, primarily due to favorable impacts of IEEPA tariff recoveries and foreign currency. source
• CF gross margin increased to 51.2% in the current year compared to 47.3% for the prior year quarter. source
• Gross margin increased to 53.0% for the current quarter compared to 47.6% for the prior year quarter. source

Impact estimates