Zebra Technologies (ZBRA -2.31%) can typically count on having a strong fourth quarter, and last year was no different. In this segment of "The Earnings Show" on Motley Fool Live, recorded on Feb. 11, Fool contributors Zane Fracek and Brian Withers take a closer look at how the logistics company beat estimates and its future growth opportunities.
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Zane Fracek: They're a logistics tech company. Like I said, they started with barcodes, scanners, and printers, and they've since adapted to the newer logistics market and the new technology that's required to really increase efficiencies in retail environments, warehouses, pretty much anywhere that you would see this technology.
If you look on the bottom, there's perfect examples. Now that guy on the left, that Zebra scanner, I actually used when I worked with Target (TGT -0.67%) back in the day. [LAUGHTER] It was very in demand because it handled everything in the store. It seemed it knows where all the items are, it knows what's in stock, it knows if there's a guest outside ready to pick up. They're all over the place and they're innovating to really help on all fronts in logistics.
On earnings, the stock was down about 8% during the day, so not the best reaction by investors. But to me, it looks like a great quarter. The revenue was almost $1.5 billion up 12% and beating estimates. Their non-GAAP earnings per share was $4.54, up 2% year-over-year and also an analyst beat. They did provide an outlook for next quarter, guiding for a slight decrease sequentially of revenue and earnings per share, but an increase year-over-year.
It's a very cyclical business as you can imagine, in Q4, think about Amazon (AMZN -1.35%) for example. All the warehouses they would have to manage with logistics tech like this. During the Christmas and the holiday season, it's going to get really busy and there's going to be a lot more demand, so Q4 is pretty huge for them usually.
I touched on some of their highlights. Their mobile computing segment in Latin America and Asia-Pacific was really strong, management commented on that. They're seeing 29% sales growth in the Asia-Pacific region and 42% in the Latin America region, so really great international expansion.
Their enterprise visibility and mobility sales up 13%, and the last segment asset intelligence/tracking up 3% year-over-year. It's worth mentioning that out of that 12% revenue growth year-over-year, 10% would've been organic growth. They're really still growing in their core business.
It's also worth mentioning they added a new board member named Nelda Connors, just 25 plus years of experience in the industry. But interestingly, she worked at Tyco. She was the CEO of Tyco's international electrics and metals business. Take what you will from that working at Tyco and that experience and add to the board.
They're also launching this new product, a new line of products. On the bottom right you can see what's called an RFID portal. You might be more familiar with them, basically ringing at you when you leave department stores or grocery stores to make sure what's going through. But the same thing can work at docks like this to keep track of what's going through and automate processes so people don't have to go in and spend time tracking packages and things.
Brian Withers: Yeah, that's tremendously valuable. That's even one-upped the technology. If you have to scan the barcode for every box, we're humans, we miss stuff occasionally. Sometimes we'll scan something twice. You just walk through the RFID sensor there and it just captures all of that stuff all at once. It makes their job significantly easier.
Hey, wanted to finish off here, Zane, with a question or comment from the queue, says looking forward to hearing the Zebra explanation excuse. The stock was down a bit after their earnings report. I think there's really a couple of things that maybe investors might have been a little bit disappointed with. I know that they saw some supply chain and premium freight headwinds more than expected in the quarter. They were expecting about $55 million and I think it turned out to be $60 plus million. A little bit of increase in costs as well as the outlook there of plus 2% in the upcoming quarter.
They're looking at more of an organic growth of 3-5% over the long term. This is a little bit slower going into next quarter. I think there's some temporary headwinds here. But to me, this business has all the components of a really great long-term play.
