Enterprise data capture company Zebra Technologies (NASDAQ: ZBRA) beat Wall Street’s revenue expectations in Q2 CY2026, with sales up 20.4% year on year to $1.56 billion. On top of that, next quarter’s revenue guidance ($1.56 billion at the midpoint) was surprisingly good and 4.1% above what analysts were expecting. Its non-GAAP profit of $6.35 per share was 45.1% above analysts’ consensus estimates.

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“Our record results reflect broad-based demand for our innovative solutions and excellent execution on our growth and profitability priorities. We delivered for our customers by leveraging our long-standing supplier relationships to support our growth," said Bill Burns, Chief Executive Officer of Zebra Technologies.

Company Overview

Taking its name from the black and white stripes of barcodes, Zebra Technologies (NASDAQ: ZBRA) provides barcode scanners, mobile computers, RFID systems, and other data capture technologies that help businesses track assets and optimize operations.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years.

With $5.85 billion in revenue over the past 12 months, Zebra is one of the larger companies in the business services industry and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because it’s challenging to maintain high growth rates when you’ve already captured a large portion of the addressable market. To expand meaningfully, Zebra likely needs to tweak its prices, innovate with new offerings, or enter new markets.

As you can see below, Zebra’s sales grew at a sluggish 2.5% compounded annual growth rate over the last five years. This shows it failed to generate demand in any major way and is a rough (but perhaps misleading) starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Zebra’s annualized revenue growth of 15.8% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

Zebra also reports organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Zebra’s organic revenue averaged 13.8% year-on-year growth. Because this number is lower than its two-year revenue growth, we can see that some mixture of acquisitions and foreign exchange rates boosted its headline results.

This quarter, Zebra reported robust year-on-year revenue growth of 20.4%, and its $1.56 billion of revenue topped Wall Street estimates by 3.9%. Company management is currently guiding for a 18.5% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 6.3% over the next 12 months, a deceleration versus the last two years. Still, this projection is above the sector average and indicates the market sees some success for its newer products and services.

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Adjusted Operating Margin

Adjusted operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D. It also removes various one-time costs to paint a better picture of normalized profits.

Zebra has been a well-oiled machine over the last five years. It demonstrated elite profitability for a business services business, boasting an average adjusted operating margin of 19.8%.

Looking at the trend in its profitability, Zebra’s adjusted operating margin rose by 1.4 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q2, Zebra generated an adjusted operating margin profit margin of 22.7%, up 3.4 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.

Zebra’s weak 2.5% annual EPS growth over the last five years aligns with its revenue performance. On the bright side, this tells us its incremental sales were profitable.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

Zebra’s two-year annual EPS growth of 49.8% was fantastic and topped its 15.8% two-year revenue growth.

Diving into Zebra’s quality of earnings can give us a better understanding of its performance. Zebra’s adjusted operating margin has expanded over the last two yearswhile its share count has shrunk 7.1%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

In Q2, Zebra reported adjusted EPS of $6.35, up from $3.61 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Zebra’s full-year EPS to stay about the same, moving from $19.31 to $19.46.

Key Takeaways from Zebra’s Q2 Results

We were impressed by how significantly Zebra blew past analysts’ organic revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock traded up 11.9% to $319.96 immediately after reporting.

Zebra may have had a good quarter, but does that mean you should invest right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).