Information-management specialist Zebra Technologies (NASDAQ:ZBRA) delivered a strong report for the second quarter of 2020. Sales and earnings fell due to COVID-19 fallout, but the drops were smaller than expected and Zebra remained firmly profitable. Here's a closer look at the quarter.

Zebra Technologies' second-quarter results by the numbers

Metric

Q2 2020

Q2 2019

Change

Analyst Consensus

Revenue

$956 million

$1,097 million

(13%)

$940 million

GAAP net income

$100 million

$124 million

(19%)

N/A

Adjusted earnings per diluted share

$2.41

$3.02

(20%)

$2.28

Data source: Zebra Technologies. GAAP = generally accepted accounting principles.

Zebra enjoyed solid order volumes for mobile computing devices and support services. Large clients were increasing their barcode and data management systems investments, while many smaller customers had to scale down their orders.

On an exclusive phone call with yours truly, Zebra CEO Anders Gustafsson said:

Our large businesses were very strong in the second quarter, driven by the businesses that were deemed essential in the lockdown. That includes things like e-commerce, groceries, and mass merchants, and that's about two-thirds of our retail business. They tended to invest quite a bit to scale up their operations as the shutdown changed the business environment.

A photo of a zebra with a barcode inserted in its stripes.

Image source: Getty Images.

Traditional brick-and-mortar businesses had to adapt to the coronavirus lockdown orders by scaling up their online-ordering processes. Zebra's products and services play a significant role in many inventory management and shipping systems, where barcodes and radio-frequency identification (RFID) tags can help retailers digitize their product flows. And many companies were forced to try some point-of-sale strategies that they hadn't really considered before.

"Buy online, pickup in-store used to be, prior to the pandemic, a niche-y kind of use case and it became mainstream very quickly," Gustafsson said. "A lot of our customers were investing to scale up their buy online, pickup in-store processes."

Some of Zebra's fastest-growing operations in a normal quarter are lagging in this unusual market environment, though. According to Gustafsson:

RFID has grown very nicely over the last two years. In Q2, RFID was quite weak. Our RFID business tends to be focused on retail and within retail, on apparel and high fashion. These are retailers that are generally not seen to be essential so a high proportion of those retailers shut down. Therefore, the business took a breather in Q2.

Is Zebra a buy today?

The second quarter was rough, but Zebra should recover nicely in the second half of 2020. The stock is trading near its all-time highs, so investors are vulnerable to a correction if a second wave of COVID-19 infections comes along.

Either way, Zebra's business looks solid, even in the darkest days of the COVID-19 crisis. Whether you're buying Zebra shares now or waiting for a dip, it always makes sense to invest in a solid business with bright long-term prospects.