Zebra Technologies sees upbeat profit on better demand, cost controls

(Reuters) -Barcode scanner maker Zebra Technologies forecast fourth-quarter profit above Wall Street estimates on Tuesday, betting on improving demand and better cost controls driven by its restructuring measures.

After a challenging 2023, demand for Zebra’s products has been recovering, led by portable mobile-computing devices that workers use across retail, healthcare and other industries.

Each of the company’s product divisions – mobile computing, printing and scanning – has shown double-digit growth in the third quarter.

“Mobile computing is leading, from a product perspective, but we’re seeing growth in printing and DCS scanners as well. The other area we’re seeing growth is in RFID,” CEO Bill Burns told Reuters. DCS scanners are handheld devices used to scan barcodes, while RFID refers to an electromagnetic scanning technology.

While Zebra’s customers were preferring small- and medium-sized deals over large deals in the first half of the year, there has been some recovery in large deals in the third quarter, and going into the fourth quarter, Burns said.

“(Large deals) were led by retail, e-commerce, and logistics. The seasonality we typically see in our business, where the fourth quarter is an uptick over third quarter, we’re actually seeing it this year.”

According to Burns, large deals are still yet to reach historical levels. “Everything hasn’t recovered equally yet. Some of our customers are placing large orders, and some are still using the capacity they built out during the pandemic.”

On an adjusted basis, Zebra expects a fourth-quarter profit between $3.80 and $4.00 per share, compared with analysts’ average estimate of $3.54, according to data compiled by LSEG.

Results for the third quarter also benefited from a cost-saving initiative that included a voluntary retirement plan meant to reduce labor costs.

(Reporting by Rishi Kant in Bengaluru; Editing by Tasim Zahid and Devika Syamnath)