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October 29, 2025 • 3 min read
Zebra Technologies (ticker: ZBRA), a key player in enterprise data capture and automation—powering everything from warehouse barcode scanners to retail mobile computers—recently reported its financial results for the third quarter of 2025. A deep dive into the company's latest 10-Q filing reveals a story of growing sales overshadowed by escalating costs that are squeezing profitability.
Zebra posted a solid top-line performance, with total net sales for the quarter ending September 27, 2025, climbing 5.2% to $1.32 billion from $1.26 billion in the same period last year. This growth was fueled by a 6.1% increase in sales of its tangible products.
The company's two primary business segments showed different growth trajectories:
Geographically, growth in the third quarter was strongest in the Asia-Pacific region, which saw an impressive 23.5% increase in sales. North America, the company's largest market, grew by a healthy 6.1%.
The following flow diagram visualizes how Zebra's third-quarter revenue was converted into profit, breaking down the major costs and expenses along the way.
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While revenue increased, profitability faced significant headwinds. Gross profit rose to $634 million, but the company's gross margin—the percentage of revenue left after accounting for the cost of goods sold—slipped from 48.8% to 48.0%.
The more significant challenge came from operating expenses, which climbed 6.9% to $451 million, outpacing sales growth. This increase was driven primarily by a 15.6% jump in general and administrative costs and a tenfold surge in acquisition and integration costs, which hit $10 million this quarter compared to just $1 million in the prior year. This pressure caused operating income to decline by 4.2% to $183 million, despite the higher sales.
The combination of lower operating income and a substantially higher income tax expense—$58 million this quarter versus only $12 million in Q3 2024—significantly impacted the bottom line.
Net income for the quarter landed at $101 million, a marked decrease from the $137 million reported in the same quarter last year. This resulted in diluted earnings per share (EPS) of $1.97, down from $2.64.
Despite the drop in profit, Zebra continued to return capital to shareholders, repurchasing $34 million of its common stock during the quarter. The company has bought back $284 million in shares so far this year.
Zebra Technologies' latest results highlight healthy market demand for its products, particularly in its AIT segment. However, this top-line success is being undermined by rising operating costs that are compressing margins and reducing net income. For investors, the key question is whether management can implement effective cost controls to ensure that future sales growth translates more efficiently to the bottom line, all while continuing to invest in innovation to maintain its competitive edge in the dynamic automation market.
Last updated: October 29, 2025