All right. Okay, I'm gonna go ahead with the research disclosure first. For research disclosures, please see the Morgan Stanley Research Disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please feel free to reach out to your Morgan Stanley sales representative. Very pleased to have Zebra here today. We have Bill Burns, CEO, and Mike Steele, head of Investor Relations. I'm Meta Marshall, I cover the networking space here at Morgan Stanley, along with a lot of other stuff. Maybe, you know, just to remind everybody, if you wanted to give just a brief overview of kind of the key markets that Zebra serves, to kick off. Yeah, sure. Zebra empowers the front line of business. We think of it as making every worker and asset fully visible and optimally utilized within our customer's business through rugged mobile devices, scanners, printers, RFID solutions, automation solutions such as robotics, retail software, and machine vision and fixed industrial scanning solutions for our customers. Got it. You know, you've recently kind of stepped into the CEO role. You know, what was it that attracted you most to the Zebra opportunity? Just what do you think that investors kind of miss in that story today? Yeah, I mean, I joined Zebra seven years ago, so that was really the attraction was the enterprise acquisition. You know, specialty printing, industrial printing business buys Motorola Enterprise Business back in November of 2014. I joined in June of 2015. I'm just as excited about the businesses today as I was, you know, back then. I would say that, you know, the excitement really is around the idea that we continue to have growth opportunities in our core markets. We've got strong adjacent markets, and, you know, other markets that we're entering, as I said earlier, around that are attractive to us around machine vision and robotics and others. I would say, you know, what's, you know, misunderstood about us, probably that we're just not a e-commerce or COVID story, that ultimately we believe we can deliver 5%-7%, you know, long-term growth through cycle. As we've said for some time, you know, prior to 2022, we've talked about 4%-5% growth. We exceeded that, you know, for the 8 years after the acquisition to more like 7% growth. Certainly challenging macroeconomic environment at the moment. We see an opportunity to continue to deliver profitable growth. Got it. I mean, as you were kind of talking about all the different markets where you can bring digital transformation, you know, whether that's retail, manufacturing, transportation, healthcare, just where do you think is that greatest opportunity to increase the penetration of devices? You know, is it still retail? What markets do you feel like are most under-penetrated? I mean, I think we think of it in terms of served hands. About, you know, a third of frontline workers today are using mobile devices. Use that as an example. I think we've seen the trend initially within retail, where you've seen more retail workers within the store having devices. You know, equipping every worker in some larger retailers, that's a good example of that. I think the reason for that is things like our retail software offerings, where retail associates wanna be able to communicate and collaborate to each other. The manager wants to collaborate with the employees. Otherwise, they've got to work through the store, walk through the store and find the associate the number one question asked across a walkie-talkie is, "Where are you?" A manager can have a conversation, a private conversation with a worker within retail. Think of it as task management. How do you send tasks down to a worker inside a retail store? How do you have it interrupt driven? Meaning a customer's here to pick up an order they ordered online and need to pick up on store, unless they have a mobile device in their hand. How can they check inventory or price or allow them to order something for somebody that has another store or tell them it's at the store within a mile away if you wanna go there and pick it up or have it delivered to your home. I think retail is the example of that, but I think we're seeing it in other places, even, you know, healthcare, where you move beyond nurses and doctors into janitorial staff that's cleaning rooms or cafeteria staff. Healthcare, you're seeing one step even beyond the healthcare worker into the patient's hands. We're seeing home healthcare, where they're sending devices to patients' home that are, you know, already set up for them, already interconnected to medical diagnosis devices and then diagnostic devices, and then ultimately give the connectivity back to telehealth. It's one step beyond the worker in that case, you know, frontline worker. We think there's lots of opportunity across each of the verticals. We're seeing it in retail first, seeing in healthcare, but others will follow. Got it. You know, obviously just talked about penetration of devices, but where are the next phases of technology adoption you're watching across some of these key verticals? I think it is, you know, the underserved hands. I think it is the technology in the hands of more workers. I think you're seeing more opportunities to digitize and automate customers' environments beyond what we're doing today. RFID is a good example of that. Okay. Where we're seeing, you know, retail. You know, RFID has been around in retail for a long time. The primary use case over the last couple of years has been in, you know, fast fashion, where people control their entire supply chain. They control their manufacturing all the way through point of sale, and they were using RFID tags in that environment. I think now you're seeing, you know, big box retailers basically demand that certain categories are actually tagged with RFID, and a big step forward from an RFID perspective. We're also seeing RFID used throughout the entire supply chain. We're seeing segments of the supply chain tag every parcel through their supply chain to make sure that they get efficiencies through the supply chain, make sure at the end, when they're basically doing last mile delivery, they get the right box on the right truck to deliver to the right customer because customer service is so you know, so important today, and the expectation of the customer has never been higher to get it when somebody says they're gonna get it. I think we're seeing, you know, opportunities to digitize and automate, just not with our core portfolio, but also the expansion portfolio as well. Inside manufacturing, I think we're seeing things like, you know, machine vision utilized more and more within the manufacturing environment. Fixed industrial scanning used more inside our T&L customers. Technology adoption across the entire portfolio, it's more than just more served hands. It's really into you know, automating and digitizing the environments our customers are in. Got it. I mean, I think people or investors get the competitive landscape within the devices landscape, but maybe in some of these more expansion areas, I mean, I'm assuming you've had an RFID portfolio. Yeah For a very long time. Yeah. You know, in some of these areas that are taking root, whether they be machine vision or RFID, just, you know, how different is the competitive landscape, and how strong is that kind of Zebra portfolio sale in those markets? Yeah. I think there's, you know, there's competitors in every market. In large and small. I would say in our new vertical markets, robotics and warehouse automation, machine vision, retail software, we're competing against different, you know, competitors than we had in our traditional portfolio. I think the positive for us is the customers many times remain the same. 80+% of the Fortune 500 customers are our customers today in some way. It's leveraging those relationships and bringing them new solutions into their environments. Ultimately, they're looking for outcomes. They're not looking for, you know, which vendor provides a solution as much as, "Are you delivering the outcome I'm looking for within my environment? It's not always the same persona, only the same person buying within the organization. We can find our way to that buyer. Okay. We've got strong enough relationships and partnership with our end customers. Our partner community as well, so many times we're leveraging the same partners. About 80% of our business goes through our partner channel ecosystem. We've been building new channel partners into these new areas but also leveraging our existing ones. It's those relationships with end customers that help us, and it's also relationships with our channel partners around the globe. Got it. What is the sales cycle for some of these newer technologies, like those in the SmartLens portfolio? You know, do you see potential for it to accelerate as more have adopted, or, you know, like, do you just have to prove the ROI with each customer? Yeah, I think that, you know, early on in any, you know, technology life cycle, think of robotics today. Our robotic solutions inside the warehouse do, you know, two primary applications today. One is goods transport, so think of lineside fulfillment within manufacturing, or picking for e-commerce, so leveraging a worker and a robot together to pick e-commerce orders. I think those applications are still fairly early days, and there's a lot of, you know, proving of the solution, showing the ROI to the customer, a fair amount of customization on the front end until you get where the solutions are more repeatable. Yeah. Once you integrate into one warehouse management system, then you know, have that same leverage to go into the next customer. I think the early days, you always see elongated sales cycle, elongated proof of, you know, ROI to the end customer. I think over time, those sales cycles shorten. People see the ROI from other customers. You can prove those to and explain those to new customers, and there's less integration to be done. Okay. I think on the newer technologies, longer sales cycles today, longer proof points, but that comes down over time. The flywheel. That's right. There will be a flywheel effect. Right. We're just kind of in earlier days on that. Okay. Focusing on retail, you know, aside from some of the largest retailers with robust deployments, you know, what are you seeing from your more run rate business in retail? You know, is there still this urgency and investment of needing to kind of catch up with some of their e-commerce partners? Yeah. I think the news is primarily about the, you know, largest North American e-commerce provider slowing down, and I think that's the case. You know, despite that, e-commerce continues to grow. I think that, off of, certainly pandemic levels of growth, the growth has moderated back to more normal levels of e-commerce, but e-commerce continues to grow. It's an important investment for many of our retail customers. So is things like omni-channel. You know, buy online, pick up in store, buy in store. Where, you know, do I have the goods that ultimately somebody wants to buy online and pick up a store in the store, so when they show up, I actually have them there to deliver to them? Inventory visibility within the store, inventory back, you know, and visibility back into the supply chain is ever more important. I think that, you know, those are the places that we continue to see investment by small and large customers today, and we continue to see it across e-commerce as well as in brick and mortar. We're also seeing the, you know, the continued demand across, you know, T&L. One of the You know, we've just won our largest RFID, you know, wins ever in a T&L provider who's really doing parcel delivery. And in that case, still driven by, you know, e-commerce demand and wanting to have more visibility across their supply chain. I think we see continued opportunity in brick and mortar and in e-commerce, just at a slower rate than it was during COVID. Got it. You've just kind of spoken to the traction or pickup you were seeing in T&L. You know, obviously, everybody in this room has ordered far more delivery products than they ever thought they could over the past couple of years. You know, is that market. Should we think of that as the driver being number of drivers? Is it number of packages? Just what kind of helps determine how we should think about the transportation market growing? Yeah, I think the, you know, the investment in technology clearly is driven by things like number of drivers that, you know. Yeah need a mobile device in the last mile. It's also driven by number of parcels through, you know, any facility or a network of facilities. I think it's also, you know, driven by increased expectation to get it right. In this large RFID order, it was really about getting the right parcel on the right truck, was the primary first use case in the last mile delivery. Because trucks were meeting every day to switch parcels, which is totally inefficient. You know, lets down customers on when it was supposed to be there. Now they're saying, "What are the rest of the use cases we can use 'cause we justify the technology solution just on customer satisfaction? I think that there are drivers, like number of parcels and numbers of drivers, but there's also, you know, other applications that ultimately, things like, you know, better customer service are driving technology adoption, you know, in T&L and across our customers. Got it. Manufacturing obviously seems like the most obvious application for machine vision. Now that you have just more assets within that space, kind of what opportunity do you see? Is it primarily expanding within your existing customers who just spoke to the footprint? Or, you know, can that bring broader customer footprint and opportunity for you guys? The synergies we see with the Matrox acquisition inside machine vision is really diversifying the customer base. Being a, you know, a private business, they didn't make the same type of investments we can certainly in the go-to-market. It's leveraging our channel partners today and growing their channel ecosystem, as well as calling on those, you know, Fortune 500 customers that are our customers today to introduce the Matrox solutions to them. We see it as really about, you know, an expansion of their existing, you know, customer base. We've also made an organic investment prior to the Matrox acquisition. Many times we do this, we make an organic investment first, and then look to see what's in the marketplace from an M&A perspective or even venture. Our investment was really more at the lower end of the market around fixed industrial scanning, which plays not just in manufacturing, but also T&L. Okay. We see an opportunity across our customer base with a broader portfolio of fixed industrial scanning and machine vision opportunities with both the Matrox acquisition and our organic investment to expand with our current customers and our current channel partners. Expand beyond that into new personas within our customer, and to attract new channel partners to our program. I mean, Clearly, you guys have a deeper customer base and a deeper go-to-market than Matrox had. Were they more maybe, since it is a different buyer? Yo u know, were they more familiar with maybe who you needed to find within those organizations? Just maybe the synergy of kind of. Yeah those two organizations coming together. Yeah. There's no doubt that the Matrox knowledge of the industry and how respected they were gives Zebra credibility within the market, right? I think that at the lower end of the market around fixed industrial scanning, we already had credibility because of our handheld scanning, you know, portfolio. Yeah. We really didn't have that at the high-end vision system area, and they know that market well. They know the partners, they know the integrators, they know what's required in that marketplace. They're doing very high-end, you know, work inside the semiconductor industry, which is very, you know, sophisticated vision systems. That gives Zebra credibility in the marketplace today. Yes. Okay Beyond customers and channel. It really was, you know, giving Zebra credibility in the market. Okay. Got it. You know, healthcare has obviously been an area where you guys have talked a lot about as a key vertical over the past couple of years. You know, I think we can all think of the ways in which our hospital experiences could be more productive with a little bit more technology. What is the willingness to kind of spend or trial some of these new technologies just because it is a slower moving market maybe? Yeah To adopt technology? You know, I think that the, you know, the challenge of healthcare probably for us is just reaching the full opportunity across it 'cause it is fairly fragmented. Yeah. We haven't seen a lack of technology adoption, whether it's our mobile devices, printers, scanning, tablets, RFID solutions, inside healthcare. Now, as I said earlier, we're really seeing move that move to telehealth all the way to the actual patient in technology. We haven't seen any challenge around technology adoption. I think it's more, how do you reach the broadest set of customers with a limited sales team and leverage our partners in that space to win more customers and more opportunities. I don't think technology adoption has been a challenge. I think, in fact, it's been more embraced and as I said, ever more embraced with the idea of telehealth. Okay. Got it. You know, you guided to -3% to 1% growth for 2023. You know, this was honestly better than a lot of bears, given concerns just kind of about large customer, large e-tailers and kind of commentary around them. Yeah. Can you give a sense of just how you thought about the guidance bounds and just comfort level that large customer orders are de-risked? Yeah. I mean, we saw in, you know, in Q4, some customers, you know, slow down their buying ultimately, a bit longer, elongated sales cycles, some orders pushing out to future quarters. We're seeing that continue in the Q1, no surprise to us. You know, budgets are being approved later in the Q1, like they typically are in a tougher macro environment. You know, budgets, customers are coming back saying they're a bit smaller than they anticipated, so they need to re- kind of rethink where they're gonna spend their money in 2023. All this is what we anticipated in the guide. You know, we feel good about the guide overall. Our run rate business continues to remain strong. We continue to work closely with our channel partners, our distributors and partners around the world to really understand end user demand. You know, we're seeing that there's plenty of opportunities. There's new opportunities we've won, large and small. We're just seeing clearly, as you see from the guide, a slowing of the business driven really by the macroeconomic conditions. We feel good about our 5% to 7%, you know, long-term growth rate through cycle. We still feel good about that guide. I think in 2023, it's really all about macro. Got it. The kind of lower end of that range to the higher end of that range, is that when budgets get approved in the quarter? Is that, it sales cycle, you know, extending out your sales cycle? Just how do we think about what kind of informs the bounds of that? Yeah, I think, you know, tougher comparison first half year, I would say, you know, is how we think about it. The guide is a bit lower in the Q1. Cycling through, you know, some larger customers in the second half. FX, you know, gets a bit better for us in second half compares from a year ago. I think we'll see, you know, our guide, you know, reflects, you know, a lower guide for Q1, and then, you know, getting a bit better, based on conditions around what happened last year, in the second half of the year. Got it. You've seen $200 million in elevated freight and component costs over the last year. You've mitigated a lot of these costs on adjusted pricing. You know, just how should we think about kind of some of the growth margin headwinds that you've faced over the last year? Yep. Tailwinds? I think that, you know, the biggest opportunity for us from a supply chain perspective in bringing those costs down is really getting our printer products back onto ocean. Really, ocean freight rates have come down considerably. Air rates are still fairly high from Asia, as we haven't seen, you know, the travel come back to China. I think that's the biggest opportunity we have. You will see that, and we put that into our guide, you know, for the year, is that we move shipments of our printer products back to ocean. I think that, you know, we also see, you know, elevated component prices coming down a bit. There's still some components out there that are still constrained and we're still paying higher prices for, but I think we see that, you know, coming down through the year. We see, you know, positive momentum in gross margin. That's offset by, you know, FX, especially in the first half of the year. You're not seeing it quite come through as much as you would like in the first half. We'll see through the year those costs, modulate from where their high was. Ultimately, FX, impacts diminish as well and we'll get a lot of those printing products back on ocean, which will help us. Got it. You know, you've invested a lot in your software offerings over the past few years. You know, where do you see the opportunities to sell more software? You know, how can that drive incremental margin beyond what you've delivered historically? Yeah. I mean, across all of our solutions, really, software is the key, whether it's printing, scanning, mobile computing, our machine vision solutions or robotics and other, software is really the key to everything we do. Our customers have come to expect world-class hardware and world-class software from Zebra. The majority of engineers are software engineers today. Specifically on our retail software, I think we see, you know, what we talked about at the National Retail Federation in January was really about enabling the customer associate be able to manage their inventory and engage customers in a different way across retail. Our software offerings really go across those inside the retail associate. It's really around collaboration between the associates, as I've talked about before. It's really around task management and sending tasks to the associate. It's around workforce management, planning the workforce within a retail store. It's around leveraging AI around planning and closing the loop with execution. So we think about empowering the retail worker, the front line of business, using that mobile device. In inventory management, we think of things like RFID and our other solutions around, you know, tracking inventory. Bar code reading, printing, scanning, to be able to make sure we know what's in the store, what's in the supply chain, visibility around that. Then really, it's engaging customers around things like payment and leveraging our mobile devices around payment, freeing up our associates to be able to engage more with the customer, and that's the framework we've talked about. Yeah. At the National Retail Federation. Our software assets today, while we're looking to expand upon that, are really focused around enabling the retail associate. Okay. 'Cause I guess one of the questions that comes out of that is just where does it make sense for Zebra to act as the software provider? Where does it make sense to partner? Where does it make sense for your kind of extensive partner network... Yeah. Reseller network to provide that software? Yeah. We leverage third-party software vendors as a key part of our partner program each and every day. Our solutions really aren't deployed without some type of software solution around those, so we're used to that, large and small. Anyone who's a software vendor within retail or T&L or manufacturing or healthcare, you know, Inside government applications, you know, that, we're leveraging software partners along with our own. You know, our first, you know, primary focus around, you know, SaaS really is around the retail associate. We've got lots of other software offerings around RFID, around a robotic solution in others, but we talk about it being more retail-focused today. Leveraging partners inside software is something we've always done. Got it. You know, turning to OpEx, Zebra has always had a fairly flexible operating model. Can you just kind of give a better sense of kind of fixed versus variable costs on the OpEx side? Yeah. I think that, you know, especially with the macroeconomic environment we're in today, we're gonna be cautious around spending. you know, we have a variable cost model within the business, and you've seen in the past, we've been able to manage, you know, our cost structure in a tougher economic times. We've typically exited that environment by gaining share and being able to continue to invest thoughtfully within the business across our go-to-market resources and across R&D despite the variable cost structure, to make sure that when, you know, things turn around from a macroeconomic perspective, we're in a position to continue to take share. We've been able to prove that we've been able to do that. I think the variable cost structure will serve us well in a tougher environment. I think that. We'll be continuing to make thoughtful investments across the business. Got it. You know, we've talked about opportunities to grow the software portfolio and organic investments have been a key part of the Zebra growth story for a number of years. Just what would you say is your appetite today for larger acquisitions or just kind of how flexible are you willing to be on the capital structure of the company? Yeah. As I said, you gave the example before around machine vision, our first choice is really organic investment. We get very high returns. We work closely with our customers. Our organic investment is really our first choice to bring, you know, product and solutions to market. We've leveraged M&A in areas where we wanted to advance our Enterprise Asset Intelligence portfolio. Really entering new markets or leveraging time to market that made sense for us. You know, the Fetch acquisition in robotics we really liked because they had a platform of robotic solutions and in a software suite above that to be able to do multiple applications within the warehouse, and that's what we thought customers wanted over time. We felt it would take longer for us to get there than we wanted. We could build one point application, but we liked what they had as a portfolio solution, so we chose to do an acquisition really around time to market. We think of M&A really in time to market space. We also think of venture. Fetch was a venture investment for us prior to the acquisition. We like to use venture to really understand more about, an end market before stepping into it. We also leverage venture. I would say right now we don't have any holes in the portfolio where we have to acquire something. We're certainly continuing to be inquisitive out there about, you know, what's out there from an M&A perspective. Our, our target debt levels we've kind of set is between, you know, 1.5 and 2.5 times. We'd like to keep it around, you know, that place. Got it. Any questions from the audience? For RFID and barcode, as RFID delivery starts to cannibalize barcode, how do you kind of think about that as you, try and. Yeah. No, it doesn't. We basically have seen our customers that deployed RFID, they deploy both. Ultimately, you know, RFID tag, you don't have RFID readers everywhere. You also have tags that get damaged and others. You still need the barcode. Think of, you know, kind of point of sale in retail. You still use a barcode to check someone out, right? You know, there's instances in which you can use RFID, but it's not 100%, you know, today. I think that ultimately we see them being complementary. We don't see anyone saying, "I'm gonna deploy an RFID tag and I'm not gonna deploy a label." The RFID tag is basically has a printed barcode on it, so there's no added expense to that label or that tag to put an RFID, you know, or a barcode on it. We don't see it replacing the barcode. Does it put pressure on pricing for barcode that you have to have more functionality? I think that, you know, the lowest cost way to be able to track something like inventory is just to read the barcode, but it's more, you know, more labor involved than, you know, an automated solution inside, you know, using RFID. I think it's really about efficiency within the operation. There's times in which I ultimately wanna be able to read a lot of RFID tags at one time, and other times I wanna read an individual, you know, barcode per item. Got it. Just for those listening online, that question was just about RFID and whether it's cannibalizing to barcodes or just would it impact the price. I think people probably got that from the answer, but, just to repeat for those at home. Then just maybe in our last minute here, you know, just what are your kind of capital allocation priorities throughout the year? Yeah. Again, I think we see it as being organic investment first, as I said earlier, right? We continue to be inquisitive about, you know, M&A if there's opportunities out there to acquire businesses that are closely adjacent to what we do today. We'll continue to make venture investments into markets in which we wanna learn, you know, more about. We think that's a, you know, interesting opportunity. I think from a, you know, a share buyback, you know, debt perspective, as I said, we're targeting kinda 1.5x-2.5x debt ratio. We'll continue to look to acquire shares where that makes sense and, you know, we'll continue to be inquisitive on the M&A side. Got it. All right. Well, perfect. With that, we're at time. Bill, Mike, thanks so much for being here today. Thank you. All right. Thank you.