ZBRA 10-K & 10-Q changes, risk factors and insider trading

•Managing logistical problemschallenges common to complex, expansive international operations;

Inability to consummate future acquisitions at appropriate prices could negatively impact our growth rate and stock price. Our ability to expand revenues, earnings, and cash flow dependsmay be affected in part uponby our ability to identify and successfully acquire and integrate businesses at appropriate prices and to realize anticipated synergies. Acquisitions can be difficult to identify and consummate due to competition among prospective buyers and the need to satisfy applicable closing conditions and obtain antitrust and other regulatory approval on acceptable terms. Macroeconomic factors, such as rising inflation and interest rates, capital market volatility, etc., could negatively influence our future acquisition opportunities.

•Disruptions in our business due to difficulties integrating and reorganizing operations, offerings, systems, networks, supply chains, technologies and personnel;

Cybersecurity incidents can take a variety of forms including unintentional events as well as deliberate attacks by individuals, groups and sophisticated organizations, such as state sponsored organizations or nation-state actors. Further,We certainrely of ouron third-party vendors havefor limitedcertain services, which may require them to access to our employee and/or customer datadata. While our Third-Party Risk Management (TPRM) program is designed to assess and maymitigate usethese thisrisks, a failure of such a vendor's security controls could lead to unauthorized data inaccess unauthorizedor ways.misuse. Any such cybersecurity incident or misuse of our employees’ or customers’ data may lead to a material disruption of our core business systems, the loss or corruption of confidential business information, and/or the disclosure of personal data that in each case could result in an adverse business impact as well as possible damage to our brand. This could also lead to a public disclosure or theft of private intellectual property and a possible loss of customer confidence. In addition, any failure on the part of one of our contract manufacturers, distributors or resellers to maintain the security of its systems or data, including via the penetration of their network security or ransomware, could result in business disruption to us and damage to our reputation.

DefectsDefects, errors, or errorsbugs in the Company’s softwareour offerings, or in third-party components or software included in or upon which our offerings rely,offerings, could harm our reputation, result in significantliability, costreputational to us,harm, and impairsignificant costs. Our products may contain actual or apparent design or manufacturing defects, not only in our abilityown todesigned marketproducts suchbut offerings.also in components of our products provided by third-party suppliers. Our software, third-party software included in our offerings, or servers and infrastructure upon which our offerings rely may contain undetected defects, errors, defects, or bugs. We have been and may continue to be subject to product liability claims, including for property or economic damages or personal injury, where damages arose from our products as a result of actual or apparent design or manufacturing defects. Although we have not suffered significant harm from any defects, errors, defects, or bugs,bugs in our offerings, we may discover significant defects, errors, defects, or bugs in the future that we may not be able to correct or to correct in a timely manner. AnyWe futureseek errors,to defects,limit orthese bugsrisks foundthrough insurance protection, product design, manufacturing quality control processes, product testing, and contractual indemnification from suppliers. However, given the growing size of our installed base and the number of applications in which our offerings are used, any future actual or serversalleged anddesign infrastructureor manufacturing defects, errors, or bugs may result in: product recalls; delays in, or loss of market acceptance of, our offerings; inability to deliver our offerings; diversion of resources; injury to our reputation; increased serviceservice, warranty, and warrantylegal expensescosts; and payment of damages;damages. whichAny couldof these events may have a material adverse effect on our financial results.

Our business success depends on our ability to attract, retain, develop and motivate key personnel. Our business and results of operations could be adversely affected by increased competition for highly skilled employees, higher employee turnover, or increased compensation and benefit costs. The future success of the Company is substantially dependent on the continued services and contributions of key personnel, including senior management and other highly skilled employees. The experience, industry knowledge, and skill sets of our employees materially benefit our operations and performance, and the ability to attract, retain, develop, and motivate highly skilled employees is important to our long-term success. Skilled employees in our industry are in high demand and competition for their experience and skill sets is intense. The incentives and benefits we have available to attract, retain, and motivate employees may become less effective as employees seek new or different opportunities based on factors such as compensation, benefits, mobility, and flexibility that are different from what we offer. Although we strive to be an employer of choice, we may not be able to continue to successfully attract, retain, develop, or motivate key personnel in the future. Any disruption in the services of key personnelpersonnel, including those resulting from succession planning challenges, may have a material adverse effect on our business and results of operations.

WeLarge, aremulti-year, exposedand fixed-price contracts may expose the Company to risks under large, multi-year contracts that maycould negativelylead impactto losses and adversely affect our business. We enter into large, multi-year contracts with our customerscustomers, some of which are on a fixed-price basis, that exposecould subject us to risks,financial risks if we fail to properly estimate our costs. Because many of these contracts involve new technologies and applications, require us to engage subcontractors, and span multiple years, our initial cost estimates are subject to unforeseen events. These events, which include technological difficulties, fluctuations in the price of raw materials, challenges with our subcontractors or suppliers, and significant increases in inflation, may cause cost overruns and result in such contracts becoming less favorable or even unprofitable. In addition to risks related to cost estimation, these contracts may expose the Company to other challenges including among others: (i) technological risks, especially when contracts involve new technology; (ii) financial risks, including the accuracy of estimates inherent in projecting costs associated with large, long-term contractstechnology, and the related impact on operating results; and (iii) cybersecurity risks, especially in offerings or managed services contracts with customers that process personal data. RecoveryFurthermore, the recovery of front-loaded costs incurred on long-term managed services and software-based offerings contracts with customers is dependent on the continued viability of suchour customers. The insolvency of customersa customer could result in collectability risk of outstanding trade receivables, and/or a loss of anticipated future revenue attributable to that program or offering,offering. whichSuch contracts’ financial, technological, and cybersecurity risks could have an adverse impact on ourthe profitability.Company’s profitability and financial results.

We have outsourced portions of certain business operationsoperations, such as repair, distribution, engineering services, and information technology services and may outsource additional business operations, which limits our control over these business operations and exposes us to additional risk as a result of the actions of our outsource partners. We are not able to directly control certain business operations that we outsource. Our outsource partners may not prioritize our business over that of their other customers and they may not meet our desired level of service, cost reductions, or other metrics. In some cases, our outsource partners’ actions may result in our being found to be in violation of laws or regulations, such as import or export regulations. As many of our outsource partners operate outside of the U.S., our outsourcing activity exposes us to information security vulnerabilities and increases our global risks. In addition, we are exposed to the financial viability of our outsource partners. Once a business activity is outsourced, we may be contractually prohibited from, or may not practically be able to, bring such activity back within the Company or move it to another outsource partner. TheFurther, actionsfrom of our outsource partners could result in reputational damage to us and could negatively impact our financial results. Further,time-to-time we have from time-to-time,have, and in certain instances will continue to, transition our outsourced operations to new serviceoutsource providerspartners and/or to different geographies. Such transition activities between new or existing outsource partners or across different geographies, as well as insourcing activities, could result in additional cost, time and management attention in order to effectively manage the transition, which could negatively impact our financial results.

We rely on third-partyour dealers,channel distributors,partner and resellersnetwork to sell many of our offerings, and theirfailure failureof channel partners to effectively bring our offerings to market may negatively affect our results of operations and financial results. In addition to our own sales force, we provide our offerings through aour varietyglobal channel partner network of third-partydistributors, dealers,VARs, distributors,ISVs, direct marketers, and resellersOEMs who may also market other offerings that compete with ours. Failure of one or more of ourthese third-partychannel dealers, distributors, or resellerspartners to effectively promote our offerings could affect our ability to bring offerings to market and have a negative impact on our results of operations. Any changesChanges to our channel program may cause some of our third-partychannel dealers, distributors, or resellerspartners to exit the program due to modifications to the program structure, which may reduce our ability to bring offerings to market and could have a negative impact on our results of operations.

Third-partyOur dealers,channel distributors or resellerspartners could also face additional costs or credit concerns resulting from an uncertain economic environment that would cause such parties to reduce purchases of our offerings, thereby causing a negative impact on our financial results. Some of theseour third-partieschannel partners are smaller and more likely to be impacted by a significant decrease in available credit that could result from a weakness in the financial markets. If credit pressures or other financial difficulties result in insolvency for third-partychannel dealers, distributors, or resellerspartners and we are unable to successfully transition end-customers to purchase our offerings from other third-partieschannel partners or from us directly, it may cause, and in some cases,cases has caused, a negative impact on our financial results.

Final assembly of certain of our hardware products is performed by third-partythird party electronics manufacturers.manufacturers, including EMSs and JDMs. We may be dependent on these third-partysuch electronics manufacturers as a sole-source of supply for the manufacture of such products. A failure by such electronics manufacturers to provide manufacturing services to us as we require, or any disruption in such manufacturing services up to and including a catastrophic shut-down, may adversely affect our business results. Because we rely on these third-party electronics manufacturers to manufacture certain of our hardware products, we may incur increased business continuity risks. We are not able to exercise direct control over the assembly or related operations of certain of our products. If these third-partyelectronics manufacturers experience business difficulties or fail to meet our manufacturing needs, then we may be unable to satisfy customer demand, lose sales, and be unable to maintain customer relationships. Longer production lead times may result in shortages of certain products and inadequate inventories during periods of unanticipated higher demand. Without such thirdelectronics partiesmanufacturers continuing to manufacture our products, we may have no other means of final assembly of certain of our products until we are able to secure the manufacturing capability at another facility or develop an alternative manufacturing facility. This transition could be costly and time consuming. We have taken actions to diversify, and may take additional actions to diversify in the future, our product sourcing footprint. Such actions have,have resulted and may again,again result in additional costs.

Our future operating results depend on our ability to purchase a sufficient amount of materials, parts, and components, as well as services and software to meet the demands of customers. We source some of our components from sole-source suppliers. Any disruption to our suppliers or significant increase in the price of supplies, inclusive of transportation costs, or change in customer demand could have a negative impact on our results of operations. Our ability to meet customers’ demands depends, in part, on our ability to obtain in a timely manner an adequate delivery of quality materials, parts, and components, as well as services and software from our suppliers, and our ability to deliver offerings to our customers. In addition, certain supplies are available only from a single source or limited sources and we may not be able to diversify sources in a timely manner. If demand for our offerings increases from our current expectations or if suppliers are unable or unwilling to meet our demand for other reasons, including as a result of natural disasters, public health issues, severe weather conditions, or financial issues, we could experience an interruption in supplies or a significant increase in the price of supplies that could have a negative impact on our business. We have experienced shortages in the past that have negatively impacted our results of operations and may experience such shortages in the future. At times we have and may continue to execute multi-year purchase commitments with suppliers that contain minimum spend thresholds, which we are obligated to fulfill even if customer demand declines, and may require that we purchase inventory that exceeds our forecasted demand. In addition, volatility in customer demand, offering availability, and transport costs, may result in increased operating input costs, elevated inventory levels, as well as inventory-related losses. Also, credit constraints at our suppliers could cause us to accelerate payment of accounts payable by us, impacting our cash flow.

In addition, our current contracts with certain suppliers may be canceled or not extended by such suppliers and, therefore, not afford us with sufficient protection against a reduction or interruption in supplies. Moreover, in the event any of these suppliers breach their contracts with us, our legal remedies associated with such a breach may be insufficient to compensate us for any damages itwe may suffer.

Increased public awareness and worldwide focus on environmental and climate change issues has led to legislative and regulatory efforts to limit greenhouse gas emissions, and may result in more international, federal or regional requirements or industry standards to reduce or mitigate global warming. Environmental, Social, and Governance (“ESG”) requirements and other increased regulation of climate change concerns could subject us to additional costs and restrictions and require us to make certain changes to our manufacturing practices and/or product designs, which could negatively impact our business, results of operations, financial condition and competitive position.

From time to time, we create and publish voluntary disclosures regarding ESG matters. Identification, assessment, and disclosure of such matters is complex. Many of the statements in such voluntary disclosures are based on our expectations and assumptions, which may require substantial discretion and forecasts about costs and future circumstances. However, if our ESG practices or business portfolio do not meet evolving investor or other stakeholder expectations and standards, then our reputation, our ability to attract or retain employees and our attractiveness as an investment, supplier, business partner, or acquiror could be negatively impacted. In addition, we note that certain ESG matters are becoming less “voluntary” as regulators,regulators including the SEC, begin proposingpropose and adoptingadopt regulations regarding ESG matters, including, but not limited to climate change-related matters. As we are subject to increased regulatory requirements, we could experience increased compliance-related costs and risks, including potential enforcement and litigation. Such ESG matters may also impact our suppliers and customers, which may compound or cause new impacts on our business, financial condition or results of operations.

This section generally discusses fiscal 2025 and 2024 items and year-over-year comparisons between 2025 and 2024. Discussions of 2023 items and year-over-year comparisons between 2024 and 2023. Discussions of 2022 items and year-over-year comparisons between 2023 and 2022 are not included herein.herein, other than within the Results of Operations by Segment which reflects the changes made to our segment reporting made in 2025. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20232024 for that discussion.

The Company is a global leader in providing Enterprise Asset Intelligence (“EAI”) offerings in the Automatic Identification and Data Capture (“AIDC”) industry.industry, ensuring frontline operations everywhere are digitized, automated and intelligent. The AIDC market consists of mobile computing, data capture, radio frequency identification devices (“RFID”), thermal barcode printing, and other workflow automation offerings. TheEffective Company’sin operationsthe consistfourth quarter of two2025, we realigned our reportable segments thatfrom providethe complementaryformer offeringsEnterprise toVisibility our& customers:Mobility (EVM) and Asset Intelligence & Tracking (AIT) segments to two new segments: Connected Frontline (“AITCF”) and EnterpriseAsset Visibility &and MobilityAutomation (“EVMAVA”). Our CF and AVA segment results will also exclude share-based compensation expense from the measurement of segment operating income. Refer to Part I, Item 1 of this document for additional information.

Consolidated Organic Net sales growth (decline):

(2)For purposes of computing Organic Net sales growth (decline),growth, amounts directly attributable to business acquisitions are excluded for twelve months following their respective acquisitions.

(3)Consolidated Organic Net sales growth (decline) is a non-GAAP financial measure. See the Non-GAAP Measures section at the end of this item.

Gross margin increased to 48.4%49.2% forin the current year2024 compared to 46.3%45.2% in the prior year. The increase was2023 primarily due to volume leverage, favorable business mix, higher service and software margins, lower freight rates, and lower inventory-related charges. Gross margin was higher in both segments, particularly EVM.

Operating income wasincreased $74270.4% millionin for the current year2024 compared to $481 million for the prior year. The increase was2023 due to higher Gross profitprofit, partiallypartly offset by higher Operating expenses.

Asset IntelligenceVisibility & Tracking SegmentAutomation (“AITAVA”) (amounts in millions, except percentages)

AITAVA Organic Net sales growth (decline):

(23) AITAVA Organic Net sales growth (decline) is a non-GAAP financial measure. See the Non-GAAP Measures section at the end of this item.

Total Net sales for AITAVA decreased $4$37 millionmillion, or 0.2%1.6%, compared to the prior year2023 primarily due to lower sales of printingdata productscapture and supplies,printing partiallyproducts, partly offset by favorable foreign currency changes and higher sales of services and software and RFID products. Excluding the impact of foreign currency changes, AITAVA Organic Net sales decreased by 0.9%.2.2%.

Gross margin increased to 48.1%48.0% in the current year2024 compared to 47.7% forin the priorprevious year primarily due to favorable foreignbusiness currencymix, changes, partiallypartly offset by higher inventory-relatedinventory related charges.

FirstSecond Quarter 2026 Financial Summary and Other Recent Developments

•Net sales were $1,495$1,557 million in the current quarter compared to $1,308$1,293 million in the prior year firstsecond quarter.

•Operating income was $215$321 million in the current quarter compared to $195$183 million in the prior year firstsecond quarter.

•Net income was $135$233 million, or $2.72$4.85 per diluted share in the current quarter, compared to net income of $136$112 million, or $2.62$2.19 per diluted share in the prior year firstsecond quarter.

•We repurchased $300$568 million of common shares inyear theto firstdate, quarter,including followed by an additional $200$268 million thus far in the second quarter.

As a result of these actions, we expect to achieve net annualized pre-tax cost savings of approximately $35 million. See Note 7, Exit and Restructuring Activities in the Notes to Consolidated Financial Statements for further information related to the Company’s exit and restructuring actions.

FirstSecond quarter 2026 compared to firstSecond quarter 2025

Total Net sales increased by $187$264 million or 14.3%20.4% compared to the prior year,year quarter, reflecting growth in both of our segments. Our overall sales growth reflects improved demand in all regions. Excluding the effects of foreign currencycurrency, acquisitions and acquisitions,dispositions, Consolidated Organic Net sales increased by 4.3%.9.2%.

Gross margin increased to 49.6%53.0% for the current yearquarter compared to 49.3%47.6% for the prior year,year quarter, primarily due to the favorable impacts of foreignIEEPA currency,tariff business mix,recoveries and productivityforeign initiatives.currency. We also fully mitigated increased memory costs through price realization.

Operating expenses for the quarters ended AprilJuly 4, 2026 and MarchJune 29,28, 2025 were $527$504 million and $450$433 million, or 35.3%32.4% and 34.4%33.5% of Net sales, respectively. Current yearquarter Operating expenses increased compared to the prior year quarter primarily due to the inclusion of operating expenses of Elo TouchTouch, andincluding Photoneointangible andasset amortization, as well as higher employee and employee-related costs.

Operating income was $215$321 million for the current yearquarter compared to $195$183 million in the prior year.year The increase was due to higher Gross profit, partially offset by higher Operating expenses.quarter.

Total Other expense, net increaseddecreased primarily due to realizednet losses associated with the sales of certainon long-term investments in the firstprior year quarter and lower foreign exchange losses in the current quarter, aspartially welloffset asby lowerhigher interest incomeexpense onassociated cashwith equivalents.higher average debt balances.

The Company’s effective tax rates for the three months ended AprilJuly 4, 2026 and MarchJune 29,28, 2025 were 19.2%18.2% and 17.6%,18.8%, respectively. The increasedecrease in the effective tax rate iswas primarily due to less favorability from tax credits and tax benefits related to foreign earnings subject to U.S. taxation.taxation, partially offset by increased U.S. state income taxes.

FirstSecond quarter 2026 compared to firstSecond quarter 2025

Gross margin increased to 49.1%51.2% in the current year compared to 48.7%47.3% for the prior year,year quarter, primarily due to favorable impacts of IEEPA tariff recoveries and foreign currency.currency, partially offset by unfavorable business mix.

Operating income increased 20.7%54.2% in the current year compared to the prior year due to higher Gross profit, partially offset by higher Operating expenses.year.

(2)For purposes of computing AVA Organic Net sales growth, amounts directly attributable to the acquisition of Photoneo and the disposition of the robotics automation business are excluded for twelve months following or preceding the February 28, 2025respective acquisition date.or disposition, respectively.

FirstSecond quarter 2026 compared to firstSecond quarter 2025

Total Net sales for AVA increased $46$78 million or 7.4%13.5% compared to the prior year, primarily due to higher sales of printing and machine vision products and favorable impact of foreign currency. Excluding the impacts of foreign currency and theacquisitions acquisitionand of Photoneo,dispositions, AVA Organic Net sales increased by 4.8%.11.4%.

Gross margin increased to 51.9%56.3% in the current year compared to 50.6%48.6% for the prior year, primarily due to favorable impacts of foreignIEEPA currency,tariff recoveries, business mix, and productivityforeign initiatives.currency.

Operating income for the current year increased by 17.8%79.4% compared to the prior year due to higher Gross profit, partially offset by higher Operating expenses.year.

The change in our cash and cash equivalents balance during the threesix months ended AprilJuly 4, 2026 compared to the prior year was primarily due to the following:

•$2$62 million decreaseincrease in net operating cash inflows primarily due to growth in the business and higher operating profitability, favorable timing of vendor paymentspayments, and customer collections, largely offset by lower incentive compensation payments in the current year.year, partially offset by unfavorable timing of customer collections.

In the first quarterhalf of 2026, we increased our borrowings under the Revolving Credit and Receivables Financing Facilities to help fund share repurchases. See Note 10, Long-Term Debt in the Notes to Consolidated Financial Statements for further details related to the Company’s debt instruments.

During the firstsecond quarter of 2026, the Company repurchased 1,294,0281,173,993 shares of common stock for approximately $300$268 million. AnDuring additionalthe 888,963six months ended July 4, 2026, the Company has repurchased a total of 2,468,021 shares of common stock for approximately$568 $200 million were repurchased as of the date of this filing.million.