Zebra Technologies Corporation (NASDAQ:ZBRA) Q1 2018 Earnings Conference Call - Final Transcript
May 08, 2018 • 08:30 am ET
Ladies and gentlemen, at this time, we will begin the question-and-answer session. (Operator Instructions) And our first question today comes from Jim Ricchiuti from Needham & Company. Please go ahead with your question.
Thank you. Good morning. So you've shown several consecutive quarters of very strong results in mobile computing and this appears to be more than just an upgrade cycle, but I wonder if could just give us a little bit of color in terms of where we might be in the upgrade cycle? But clearly, there's some other demand drivers that appears better fueling this business. Thanks.
Yes. First, I'd just like to put it in context all the product categories that we have. We drove a nice growth across all the lines of business that we had, and I think we did that largely through the innovation that we've introduced into the portfolio and making sure we have a very deep understanding of our customers workflows and be able to kind of take the data from that and re-apply it into those workflows to reduce friction in those workflows. So I think we have a very strong value proposition as strong portfolio across the Board, specifically to mobile computing. I mean, that was obviously the standout performance in the quarter.
We had a great revenue quarter, particularly driven by Latin-America, EMEA and North America. We're starting to see now strong strength in the channel. If you remember few years back, that was mostly, kind of our large direct deals. Now we've expanded this into the rest of the channel portfolio, so we're seeing more say mid-sized and smaller run rate deals. The depth and breadth of our portfolio, I think is a great differentiator. We have by far the largest or broadest portfolio of anybody in the industry, particularly around Android devices, and we are also a lot of emphasis on innovating, say on top of the devices, so a lot of softer innovations like security with our lifeguard service, manageability with OBS or a number of different types of applications in services through our mobility DNA suite.
But Android is the key to the growth at the moment. We have well over 50% market share for Android, so we've executed very well there. I think we feel good about the continued momentum in the Android migration. Our estimate is that there's at least another 10 million legacy Windows devices out there that needs to be upgraded. And if you look a little bit further out, I think we have some new growth drivers in that the -- in North America specifically, the 3G cellular service is going to be turned down in 2021, and so all devices, Zebra or other suppliers, all our 3G devices will need to be upgraded to LTE or maybe 5G at that point also, which will be a new growth driver for us.
Anders, is there any color you could give on the verticals? Did any one area stand out either geographically