All right. I'll get this started on our disclosure that I have to read before we hit the 12:20 officially, but for important disclosures, please see the Morgan Stanley Research Disclosure website, at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley representative. For those who don't know me, I'm Meta Marshall. I cover the hardware and the networking space here at Morgan Stanley. We're delighted to have Zebra and William Burns, CEO. Thanks so much for being here today. Yeah. Thank you. All right. So maybe post-COVID surge and digestion period, demand characteristics for Zebra have started to kind of normalize somewhat, or we have a sense of what the new normal is. While demand characteristics are starting to normalize, kind of what are customers looking for Zebra, and how has that changed over the last four to five years? Yeah. I'd say from a Zebra perspective, we think of our business as really digitizing and automating our customers' environments, right? And our vision of having every asset and worker within the enterprise visible, connected, and ultimately optimally utilized, right? So if you can digitize the environment, if you can give an asset a digital voice, a tool a digital voice, a forklift a digital voice, and then you can ultimately have workers connected. So you take information that ultimately about where is my inventory, where are my workers, where are my tools, where's my IV pump in a hospital, and then translate it into a workflow that ultimately is impacted by a mobile device, rugged mobile device made by Zebra ultimately, and then change the outcomes within their business. What our customers are looking for is a strategic partner to go do that with. And that means not just Zebra, but our partners as well. So our technology partners in the case of Qualcomm or Google, our independent software vendors, large and small, from the Manhattans of the world to the Epics inside healthcare. So all of our software partners we work along with that allow us to generate and impact workflows to make them more effective and efficient each and every day in their business. Being the market leader in rugged mobile devices, in handheld scanning, in industrial printing, and then our investments across RFID and tablets, and then new investments in robotics and retail software as well as machine vision allows us to be that strategic partner to them across a multitude of different use cases where they ultimately want to become, whether it's retail or transportation districts, manufacturing, healthcare, more efficient, more effective in their business to get more visibility and to get more benefits ultimately from their workers and their assets they have across their businesses. So maybe kind of the same vision as pre-COVID, but with kind of more advanced capabilities. That's right. The same desire, but more advanced capabilities. Yeah. So I think what hasn't changed is that our products and solutions are required for our customers ultimately to pick an order in e-commerce, to run a retail store, to deliver a parcel inside transportation logistics, to manufacturing goods across the assembly line all the way to distribution of that, to deliver healthcare in a better way with better outcomes ultimately or more efficiently. That hasn't fundamentally changed in the use cases. What I think we're seeing is more sophistication of the use cases, right, and stronger ROIs over time to leverage technology. And we're seeing even more of this in AI. The idea of using a rugged mobile device with AI functionality as a digital assistant that empowers the frontline worker. The idea that having more connectivity to each of the frontline workers across all those verticals allows customers to ultimately the enterprise to be more efficient in what they do. Because if I can't direct the workflow, it's not good enough to know that the shelf is empty in retail. I need to do something about it. I have to go get top stock and move it to the shelf. I have to be able to move stock from back of store into the store. I need to reorder back to my distribution center. And unless there's a mobile device or something in the hands of a worker, a tablet inside manufacturing, then I can't communicate, collaborate, or do something about it. Fixed screens in manufacturing aren't sufficient enough anymore. We want to be able to have a tool inside a tablet in manufacturing that gives the worker an assistant and communication collaboration to do something on the floor if the machine goes out of specification, if production goes out of specification, what do I do about it? So this idea of having connectivity, the idea of having more information, whether it's through generative AI or it's just through information on those device or communication collaboration across the environment allows them to be able to see the outcomes they're really looking for. Okay. We've gone through a lot of different hype cycles in kind of particularly in retail, whether it's machine vision or RFID or more robotics. Just where are you seeing these technologies having the most traction, and are there ways that Zebra can kind of help speed the adoption of them? Yeah. I would say that the two different places, right? I would say RFID and machine vision, clearly proven technologies that are out there and deployed across different use cases. RFID starting in apparel inside retail and then moving to other areas within retail and across the supply chain, all the way from manufacturing through distribution into the store, into the distribution centers of the store, into the front of store, and then even used for things like loss prevention today. And I think that visibility across the supply chains leveraging RFID technology has continued to accelerate and new use cases even inside retail, things like Fresh within the store ultimately to say, how do I have less food waste? How do I ultimately optimize pricing around my fresh goods to be able to drive better profitability, which are higher margin items to begin with inside things like grocery? So we're seeing the use of RFID throughout the entire supply chain. Machine vision, there's two different primary applications in machine vision. One is transportation logistics around the idea of automating inside a transportation logistics network. The second is things like inspection inside manufacturing. And both of those are proven use cases across that. And vision will continue to be an important segment of product recognition, defect recognition. All that will become and continue to be an important part of automating the environment within manufacturing, both proven technologies. I would say in the robotics side, it's more in its infancy, right? The idea that through COVID, customers look to be more effective and more efficient anywhere they could in their business. So take the picking environment inside a warehouse. If I can automate that and use robotics and people working together, we think that's the advantage Zebra has, is that the idea of using our autonomous mobile robots along with workers that have mobile devices, directing both to make the pick as efficient as it can be inside that environment has a clear advantage to our customers, but what our customers are saying is, I can't just optimize the pick, I've got to optimize my receiving, the picking, and my outbound shipping, so customers are saying, what do I have to do across the entire e-commerce warehouse to be more efficient, and I need partners the size and scale of Zebra and others to work with me to optimize the entire warehouse. So I think that where you've got RFID that's come a long way in looking across the entire supply chain today. I think you've got machine vision that is well- entrenched into manufacturing, but new use cases. AI makes it smarter, machine learning, and then embedded inside transportation logistics with things like conveyance and others. I think you're seeing robotics still at its infancy. And I think people are still looking to say, how do I get the most efficiency out of workers and robots working together? And then ultimately, how do I optimize the entire process end to end and working with us and other partners to go do that? Okay. Perfect. You noted last year that about 1/3 of your R&D kind of goes to these new investment areas. How do you determine that split? And And how do you decide whether to build versus buy kind of? Yeah. So I think that it's important that we continue to invest our R&D dollars in our core markets where we're the market leader to continue to be the market leader. So across our rugged mobile devices, across scanning and printing, we're the global leader across those segments. And as the leader, we continue to refresh those products in that portfolio, especially with additional technologies like AI. So how do you put AI on mobile devices I talked about before, where you can have a digital assistant on the actual device itself? So I don't have to go back to the cloud every time. I can run a large language model on a mobile device and have access to standard operating procedures. How do I take my newest produce manager and make him as experienced as my most experienced produce manager inside a store? How do I continue to innovate across my core portfolio to continue to remain being the leader? That is things like tiering the portfolio as well. I want to address customers at the high end of the market, but I also want to be able to address the Asian market with lower cost devices ultimately for more cost-effective solution customers that are looking for that. I tier the portfolio. I advance technology like AI is just one example of that. I invest a lot in the core to continue to be the leader. I've got new areas that are faster growing than my core. Things like tablets and RFID we just talked about. Our supplies business, how do I continue to enhance and make digital supplies? RFID-enabled supplies or temperature sensing supplies for my printers is another example. So those grow faster than my core markets. And then I'm investing in new areas, vision systems, machine vision we talked about, long-term growth across vision, retail software where I'm enabling software applications on those mobile devices in retail that do things like task management, workforce management. How do I allow that worker to leverage the mobile device and recurring revenue to Zebra across those mobile devices through my software assets? And we talked about robotics. So actually, we think about a whole portfolio of horizons for revenue and then revenue opportunities. Some grow much faster than others, but they may be a smaller market to start, but they're accelerating like RFID into a bigger market. We get the best returns from our organic investments. So I'd rather invest organically and develop new products and solutions. But there's times when somebody else is further to market. They're further along than I am. They have taken steps in a market where they've learned a lot about that market, and I may not know as much about it. So I want to buy into that market in a quicker way, time to market, think of it that way. And we think of it as kind of closely adjacent to the markets we play in today. So many times we'll make an organic investment and then do an acquisition. So in machine vision, we did exactly that. We invested in the low end of the market around fixed industrial scanning. We bought Matrox at the higher end of the market. We bought Adaptive Vision, which was more software and machine vision, small acquisition, but valuable asset. And we recently bought Photoneo in the 3D segment of machine vision, fastest growing high-end technology, but very small company. So we marry all that together, organic with M&A, and then ultimately we have a broader offering to the market because us trying to cover the entire market organically is very difficult. Okay. Got it. That's helpful. We've now talked about new technologies. Let's talk about kind of new markets. You've been very successful in retail, transportation, logistics, manufacturing. Healthcare has been a relatively new market for you. Just what initiatives can you take to kind of be more successful in healthcare or new markets? Yeah. I mean, healthcare has reemerged in 2024. It's really across the second, third, and fourth quarters. So the second half of the year certainly is our fastest growing market. It was before COVID. Then you saw all the variations across what happened through the pandemic and shortly afterwards. But healthcare is an interesting market, right? It's that you still around the world, you're still deploying electronic medical records. The U.S., you have electronic records across the entire U.S. and all the hospital systems and all the medical systems. In places like Europe, there's countries that have two or three or four hospitals that only have electronic medical records. So there's an opportunity, a tremendous opportunity for us to be able to populate information into electronic medical record systems around the world. This idea of clinical mobility, the more just like we see in retail or manufacturing inside healthcare, how do I have more workers connected and be able to communicate across the environment, whether that's not just nurses, but also whether it's cafeteria workers or janitorial staff that clean rooms and move things to be more efficient across a hospital system? We're seeing opportunities in things like home healthcare or virtual care. All those create opportunities for us at Zebra. We think of healthcare and how do we accelerate in those markets is continue to invest. So it's about dedicated sales teams that ultimately focus on those markets that really know the healthcare market. We've done the same recently in government. So we've done less business in government proportionally across the business, but we've made an investment into a government team. We're seeing the opportunity there is simply supply chain. Supply chain across governments are woefully behind what they are in the public sector today, and we're finding tremendous opportunities there to automate their supply chains across government. We also think of things like geographies. Japan's a good example of the investment we're making. How do we do more in Japan differently than we've done in the past? We also look at things like our partner community in Japan and say large Japanese customers want to do business more with things like the telcos. NTT DOCOMO is a good example. We're a good example. We're a partner with them inside Japan to be able to win more large businesses and opportunities. System integrators, Japanese system integrators working closely with them inside Japan to win newer and larger opportunities. So we're going to market in Japan in a different way, not just investing in our sales team, but investing in partnerships across that geography to win more business. So we think about vertical growth, but we also think about geography growth because our market share is different depending on where you are in the world. And while we're the global leaders, that creates an opportunity for us to grow our business and grow our share in a place where I may have very little share because I haven't been focused on that market or I need to go to market a different way. Okay. Okay. That's super interesting. As we think about bridging kind of what you guys talk about as 4%-5% industry growth versus kind of how you guys think about your growth rate over a longer term, kind of 5%-7%, just what are the biggest drivers of that delta and how should we think about share gains as a part of that? Yeah. So I think we kind of see ourselves again as differing share around the world gives us an opportunity even in our core markets where we are the global leader today to continue to take share, right? Japan is a good example of that. Government's a good example of that. So we see an opportunity to continue to grow across our core markets. We talk about these adjacencies I mentioned before, tablets, RFID, our supplies business grows faster than our core. And these new expansion businesses that give us both our software business and our services business creates really about $1 billion in recurring revenue to Zebra that while we've got to resell a lot of hardware and software and solutions each and every day, we also have a large recurring revenue stream ultimately. So we see these expansion businesses across software and robotics and others creating a longer-term opportunity, even faster growth, but often much smaller base than our adjacencies or core. So when we marry all those together and say our core markets continue to grow, we still have opportunities even though we're the market leader to take share. Our adjacencies grow even faster than that, and they're so closely adjacent to what we do. We can ultimately accelerate growth in those areas. And then the new investments we're making around our expansion businesses are a step a little further away from the core, but areas in which we believe have long-term growth potential around automation and robotics, around machine vision, and around software leveraging our devices. That kind of gets us to the 5%-7% through cycle. Okay. Got it. Stepping back to the here and now, after a strong second half where you started to kind of see a return of retail and transportation logistics demand, on the Q4 earnings, you were maybe less bullish about carrying some of that into 2025. Just can you discuss what you're seeing in the current environment and maybe what made you just a little bit cautious to start the year? Yeah. I would say that as we progressed through 2024, we saw more broad-based growth go into the second half of the year. We saw more traditional fourth quarter where retailers and e-commerce specifically in this case spent more money at year-end ultimately using budgets they had throughout the year, which carried a bit into first quarter because some of those retail year-ends are really at the end of January. So we came into the year with a solid backlog and feeling good about first quarter. I think what weighed on us was kind of two things. One is that if you look at our organic growth taking FX out, we're at a 6%+ growth rate for the year, and we feel pretty good about that. Our guide was 3%-7% overall. I think that when we look at it, we say all the uncertainty that was playing out from a geopolitical perspective, and it's still very early in the year, and first quarter is our toughest quarter around visibility. Our customers are really setting their budgets for the year. It's more of, hey, what projects do we have lined up? Do we ultimately see those projects moving forward during the year? Ultimately, what's the confidence level you have that's all going to happen? What we were seeing was continued momentum, broad-based growth. I would say the one laggard was probably manufacturing, still growing, but less so than the other verticals. A concern that ultimately FX was weighing down our top-line growth and just this uncertainty around geopolitical and trade, which really is kind of playing out now over the last couple of days, as we all know. We felt a guide to 3%-7% was the right guide for us for the year. We'll have more clarity, hopefully, as we go through first quarter into second quarter. And then if we've got to revise our guide throughout the year, we'll go do that. But I think we feel good about our guide today. We feel good about our growth rate organically being at 6%+ percent. It's right in the sweet spot of what we kind of set our market growth rate was long-term. We feel good about our business. There's just a lot of uncertainty out there at the moment, and that's really what weighed on our guide more than anything else. Might prove to be smarter than a lot of people who wanted to take back their guidance at this point. So investors have been focused around kind of your mobile computing install base, given the surge in COVID you saw and the idea that this base has kind of grown meaningfully since pre-COVID. So just how should investors think about kind of the refresh cycle of this now larger install base as we go forward? Yeah. As we think about, when we talk about refresh cycles, we're typically talking about mobile computing, but the same happens across scanning and printing in our customers' environments, just kind of in a different way. But the largest opportunities there are really around our mobile devices. And as you said, from pre-COVID to today, the number of mobile devices being used by enterprise customers across retail, e-commerce, transportation logistics, manufacturing, healthcare, government has significantly increased. And what we see in a refresh cycle typically is if you wind back five years ago, a customer in retail, let's say, is going to deploy mobile devices across thousands of stores. They're going to buy 40,000 devices. Ultimately, you fast forward to five years, now that refresh looks like 60,000 devices because they've bought more devices along the way. They've added more stores. They've added more devices in the hands of more associates, and then they want to do even more, meaning they want to put more devices in the hands of more associates in more applications within the store overall, so the refresh has become bigger over time, naturally on their own, independently. Every customer is at a different refresh cycle, but typically in mobile computing, it's about five years. Sometimes it's six, sometimes it's shorter depending on maybe you're tough on the devices or you want to deploy new applications that need more memory or faster processing power, those kind of things, but you have a different cycle for everybody, but the increased number of devices deployed, they are in use today, and they will be upgraded sometime in the future. Whether that comes in 2026, 2027, 2028 remains to be seen, but it is an opportunity for us to go refresh those. We believe also that the continued leadership we have in the industry and the things we're doing around, we'll talk about AI probably in a minute, but the things we're doing there allows us to win more of those refreshes as well. We continue to work hard to stay close to our customers, understand that refresh cycle, where they're at in it, and what timeframe they want to go do that and make sure that we're the vendor of choice when they go do it. We feel good about that. We feel good that the refreshes continue to get bigger. The devices that were bought between pre-COVID and now ups the install base significantly and creates a future opportunity for us. Got it. I mean, maybe back to manufacturing for a second. Is there any reason other than just macro that manufacturing has kind of lingered, or are there any technology changes that they're seeing, or is it just purely we haven't really seen that industrial cycle yet? Yeah. I think we saw clearly during COVID, we saw a goods-based economy, right? People spent a lot of money on goods. They upgraded their homes. They bought flat-screen TVs. They bought new furniture. They'd spent a lot of money on goods, and I think we saw the shift from that to really a services-based economy. We're calling it an experience-based economy, right, so ultimately, I think that the buying shifted to that area. I think that we're seeing them move back. It's just more slowly than you would have seen in the past. I think that new home sales drives sales of do-it-yourself retailers, right? Ultimately, that people spend more money on homes, goods, right, and we haven't seen that happen yet with higher interest rates, so I think that we'll see people's buying behavior shift away from experiences and back to goods. I think it just hasn't quite happened yet. In our guide, we looked and said manufacturing, while growing, isn't growing as fast as the other verticals. It'll still remain challenged, we see, in 2025. We'll see what the impacts of tariff have on that, right? Because it would have the biggest impact on, obviously, manufacturers. So we'll see. But I think Germany continues to lag. Manufacturing in China will continue to lag. But I think we'll see the flip back to goods. Okay. All right. Got it. You alluded to AI earlier. You've announced a lot of new AI functionalities recently at NRF and ways in which you're building it into your products. Just where can you help customers with additional AI tools, and just how do they work their way through the kind of P&L that you guys are thinking about? Yeah. I mean, at the National Retail Federation show, we talked about the AI-powered Modern Store, right? The idea that in retail, we talk to our customers about the idea that ultimately they have more engaged associates by having mobile devices and technical tools to be able to engage with their associates. We talk about inventory management and everything we do about knowing where the assets are in retail. And then we talk about how do you better serve customers. And I think that AI plays a role across all those. What we announced at NRF was really a digital assistant. The idea that on a mobile device, the example is a retail associate using generative AI, so local language or text ultimately, could say to a mobile device, what do I do if somebody wants to return an item that's older than 90 days old? What do I do if I want to return an item and get cash back that they bought on a credit card? What do I do if somebody returns an item that's damaged? And the flip side, I was saying before about the produce manager. How do they take not only standard operating procedures in those cases, but can they take knowledge from someone else in the business to train somebody else or know what to go do, so the most experienced produce worker or produce manager says, here's what you do when you're out of an item, so that the most inexperienced one says, hey, it's a holiday weekend. I'm out of strawberries. What do you do? Well, you take the five places you have strawberries and produce and you put them all together so it doesn't look like you're out. You move the blueberries and raspberries closer together, and you place a rush order back to your distribution center that you need more strawberries. But ultimately, that's knowledge that may be in the most experienced produce manager, but not the newest one. So can you gain local knowledge across the chain as well to make your newest employees' experiences your most experienced employee or manager in the chain, not just standard operating procedures, doing that through GenAI on the device and leveraging our partnership with Qualcomm and Google to be able to run the large language model on the device? Many of our enterprise customers don't have a lot of connectivity from a retail store or from a warehouse back to the cloud. Plus, it's expensive if I have to go to the cloud for every question I want to go ask. So can I run a scaled-down large language model on that device? Then can Zebra play a role in keeping those updated, be able to easily put that large language on a device? How do I get all the information there? How do I parse the information to different associates? Because I'm not sure I want every one of my retail associates to have every one of my standard operating procedures. I want to be able to parse that information depending on what job they're doing within the environment. So Zebra plays a role there. I think the way we monetize it is like the higher ASPs, meaning you've got higher processing speed, more memory, higher price devices. We win more opportunities because we're the market leader and we're investing in this crop. Third is we have APIs that our largest customers want to develop those applications themselves. But Zebra also announced four applications we could provide our customers. Ultimately, this digital assistant, the idea of working in inventory, the idea of managing Zebra devices better within the environment. So we'll develop our own applications, which will create recurring revenue streams to us as well. So this will play out. We'll release those products starting the mid-part of this year and then into 2026. But I think it'll be good for us and good for our software partners as well to be able to leverage AI on the device, either resident on the device or leveraging the device to get to the cloud and to be able to truly be a digital assistant. And it's not just retail. Think of manufacturing I talked about before. In a tablet environment, you're going from fixed screens in manufacturing to manufacturing workers having tablets. What do I do when the red light's on the machine? What do I do when production's out of specification? What do I do when there's maintenance to be done? How do I get that on a tablet or mobile device inside of manufacturing as opposed to something I watched production before on a fixed screen? Yeah. Okay. Okay. That's super helpful. That strawberry-blueberry example is living in my head now. All right. So maybe we almost made it 30 minutes before talking about tariffs. So now is the time. Just how should investors think about kind of the impact of tariffs for you to 2025? And just what did your learnings kind of from the first administration kind of go around with tariffs a number of years back kind of help you in terms of thinking about either how to move around supply chains or how to think about pricing to kind of offset headwinds? I think that the first round in the tariff side of things, and I think certainly all the supply chain challenges of COVID has caused us and others to really rethink their supply chains. Ultimately, how do you have diversity of locations where you're actually building products and resiliency across the entire supply chain? How do you not build in a single country but multiple countries? How do you go to China Plus One or exit China from a manufacturing perspective? All those things have been taking place both at Zebra and other places. I think we've done as good if not better a job than anyone else starting back in the fall with the election to say, these are the things that are being discussed: tariffs on China, additional tariffs, Mexico, Canada. As those come up, and how do we plan around that? Not only from where do I produce products, but ultimately, what does it look like from a pricing perspective? Where do my competitors produce products today? How much can I raise price if I ultimately have to? And I think the team has done a great job. We characterize this in our announcement, which the impact, the full year impact would have been about $60 million overall. We're saying it's ultimately net going to be about $20 million with both production moves as well as ultimately price increases. And that includes both Mexico and 10% tariffs on China. Now, over the last couple of days, there's another 10% on China. We got some more work to do to figure out exactly what the impact is on our business associated with that. But I think ultimately we feel good about where we're at. We said over Mexico and the 10% of China, we'd also mitigate it by year-end, meaning it'd be fully mitigated by year-end ultimately. And I think that's about the same timeframe we had last time, maybe a little bit shorter. It was about 12 to 18 months to mitigate tariffs last time through. We'll see that it's in a moving environment, right? We got more announcements coming here on April 2nd. So moving supply chains today compared to the first time through with this administration when it was kind of a known, you just needed to move outside of China. Today, coming up April 2nd, we don't know what country. I don't think anybody would have expected Canada to be included in the mix. We have very little exposure in Canada from a manufacturing perspective, actually none. But I think that it's been moving around a lot. We tried to characterize because we did the work, we wanted to characterize in our guide what we did know, which is $10 million Mexico impact, $10 million China impact with the 10% increase. And now we have some more work to do. But we will raise price, we'll move production where we can, and then ultimately try to mitigate the effects as much as we can across our business. Okay. Perfect. In terms of margins, your long-term framework is for kind of 30% organic incrementals or better. Just how should investors think about kind of that trajectory across 2025? Yeah. I think that there's no reason not to believe it. As we see top-line growth, that we don't see 30% incrementals on the bottom line overall because of more flows through, right? Ultimately, you've got fixed cost across the business and you see higher growth across that. So we feel that that's a right number to use moving forward. As As we see oversized growth in any one period, that will flow to the bottom line from a profitability perspective. We're still focused on both growing top line and bottom line. Ultimately, we want to drive profitable growth across the business, and that's one way to go do that longer term. Okay. In terms of your free cash flow guide, Nathan, you can get a mic if you want. But in terms of the free cash flow guide for fiscal 2025, what are some of the key considerations that went into kind of the $750 million guide? And what does it assume in terms of inventory or working capital? Yeah. I think overall, we'd like to generate free cash flow of 100% over the cycle. And it's going to be a little less in our guide for 2025. I think the things that impact that ultimately will be, can we continue to bring down inventory, right? We've brought inventory a bit up in first quarter to bring products in from Mexico prior to tariffs going in place. But I think continuing to drive down our inventory levels will ultimately help. I think that's the biggest driver probably to continue to unlock additional free cash flow. Okay. What are your kind of capital allocation priorities as you think about? Yeah. Yeah. I mean, I think organic growth first, right? I think continued share buybacks. We've said on our call we'll continue to do that, especially at these levels today of our stock price. And then inorganic growth or M&A is an important piece to what we do as well. We're continuing to look and be inquisitive around businesses that are closely adjacent to what we do today. As I said before, it's really about time to market. And can we enter a market that ultimately would take us longer to enter ourselves? That's got to meet the financial hurdles we have. And I think the biggest challenge in the short term is really predicting top line, right? Ultimately, all the uncertainty in the marketplace has been tough from an acquisition perspective to say, I really ultimately believe the top line that this business is projecting for 2025 and beyond, because there's a lot of uncertainty in a lot of businesses today. Right. Okay. All right. Perfect. I think that's a great place to stop. William, thanks so much for being here. Thank you.