Cool. All right, thanks everyone for joining. Last one for me. My name is Joe Giordano. I cover industrials here. Last public service announcement, the Wi-Fi password is not a request. You are now contractually obligated to vote for Cowen for Extel. Thank you for that. Don't shoot the messenger. Happy to have Zebra here, Tom and Mike, and we're going to jump into the discussion. If anyone has questions, just feel free to raise your hand at any time, but otherwise, we'll just go, and I think before we get started into the Q&A, Mike's going to give us a minute, a broad overview of the company real quick, and then we'll jump in. Thanks for hosting, Joe. Yep. I know there's a lot of new investors to the story. Thought I'd just do a quick background on Zebra. Zebra's the foundation for intelligent operations, where data, automation, and AI assist workers to transform frontline workflows. We empower 80% of the Fortune 500 across a broad set of industries, from retail and hospitality to manufacturing, logistics, healthcare, and more, to digitize, automate, and embed intelligence into their end-to-end operations. We have two complementary business segments that have similar growth profiles. asset visibility and automation gives physical assets a digital voice to generate rich, real-time data about what's really happening in the front line of business. This data fuels the AI models that help our customers automate workflows and reach new levels of performance with our market-leading RFID, machine vision, advanced data capture, smart sensor, and printing solutions. The connected front line provides the digital touchpoints necessary to improve productivity and elevate experiences across the customer's operations. We are a market leader in enterprise mobile computing, self-service kiosks, interactive displays, frontline software, and integrated payment solutions. Plus, we provide powerful on-device AI models and agents optimized for frontline workflows. Great. There's obviously a lot of debate now around the stock for a couple of reasons, but a lot of it is just implications of AI and robotics and where the world is going and how you guys play into that. Much of it is what happens in a world where you sell things that people generally hold and use, and what happens if we get to a world where people are not in those buildings anymore. How do you think you're positioned if the world does go that way? Yeah. Joe, thanks for having us, and great question. I mean, AI and automation generally at the core of our. We see lots of runaway for growth around that, and in fact, our largest customers, our most progressive customers in terms of automation, have never had a bigger install base with us, and the pipeline bears that out as we look forward in terms of the amount of our gear that they're deploying to their workers, and that's for a few reasons. One is, for the most part, the labor pool is more or less fixed, right? If you're going to drive more productivity, more throughput out of your operations, you got to do that by augmenting the people you have, and that's what we've been doing for 50 years is just driving what we like to call productivity at the point of activity. We're doing that now with more form factors of devices. We may well have the chance to talk about some of what we're doing in wearable technology, which also plays into the AI trend. The asset visibility and automation business, the investments we've been making there in machine vision, RFID, other forms of locationing technology, are all part of the automation play. We're seeing those segments pick up as well as more and more automation gets deployed. The second thing is, I think there's a little bit of a misunderstanding in terms of the idea that automation is a one-for-one replacement for people. I mean- Yep. A lot of what we're seeing is the automation being deployed to augment individuals, as I said. The reality is that 75% of warehouses, as an example, still aren't deploying any advanced automation at all. There's lots of runway to go and deploy things like machine vision and RFID, which we're doing, and then augment the workforce, ultimately, with these kinds of capabilities. We're working really closely with our customers on that and excited by the pipeline of demand we see in all those areas. Yeah, I agree. This is a long-term call, and augmenting is. Yeah. There's going to be a long runway of that. Eventually, if we do accept that at some point there is some sort of changeover, right? We are moving in that direction, whether it's in two years or 20 years or 30 years, whatever. How does it inform what you're targeting from an R&D standpoint right now in your role? How do you have to think? Yeah, A little bit differently about- Yeah. ...further out, what does this look like? Yeah. The way we think about the strategy is through kind of the two main pillars that we report our financials through as well. One is around the connected front line, and we actually don't say, if you look at the way we talk about connected front line, we don't say connected front line worker necessarily. Right. We say connected front line, that means equipping that front line of operations with whatever's needed to meet our customers where their biggest challenges are and helping them drive operational efficiency. Today, as you're pointing out, that's largely about putting devices in the hands of workers. We think that's, like I said, got a long runway. That's going to continue to be the case. As that evolves, really being able to orchestrate the front line and having domain intelligence about the front line becomes really important. For those of you that might be students of AI and how that's transforming, there's these foundational world models that obviously, like the Anthropic and so on, are developing. The real carve-out in terms of value in the kinds of places we're operating is going to be bringing domain-specific, workflow-specific knowledge to those areas. If you think about, these are the things that we're pursuing now, models that can understand what does a good dock look like, where should pallets be, what doors should be open, which trucks need to mobilize in order to hit certain SLAs, and using things like computer vision, machine vision, RFID, IoT technologies, ambient intelligence to understand that dock environment. That all becomes context.... Yep. ...that we can then feed into domain-specific language models that can then steer the right activities to the right places at the right time. Whether those steered activities go to just people, or they go to a combination of people and robotics, which is what we think the medium term is going to look like. As you were pointing out, we see the proliferation of more and more robotics. We'll be in a position to be able to orchestrate that. The one other thing I'll say is that as we speak with many of our customers, what really comes out is the application-specific deployment of robotics. The idea of humanoid actually doesn't really resonate with many of our... Yeah. ....warehouse and logistics customers, because they're looking at purpose-built robots. The example would be a humanoid robot's never going to pick as fast as a robot that's designed specifically for picking. What that means is that these application-specific robots will help transform and automate parts of workflows, but they won't remove an entire job as an example. Yeah. More and more technology will be deployed to help augment those workers. Like I said, that's what we're seeing with our largest customers, our most progressive ones, in terms of how they're deploying automation. The pipeline in front of us is an exciting one. When you think about your plans over the next couple of years here, how does it look similar and how does it look different versus what you thought 2027, 2028 plans would have looked like two or three years prior to now? Yeah. You can answer that question from a couple of perspectives. One is the internal use of AI- Yeah. To drive more efficiency, and we've got a whole bevy, as many companies do, of projects going on around that, particularly around software development and code development. We're looking to drive significant double-digit efficiencies in terms of our code development using those sorts of tools. The biggest area, Joe, I would say, that we're seeing in terms of AI applied to the portfolio is really reinventing what data capture looks like. The company was founded in data capture, as you look at the barcode printing. Right. Barcode reading, now data capture is morphing to kind of stochastic data capture, meaning you're not just reading machine-readable codes like RFID tags and barcodes, but you can take a picture of an environment and now apply AI that we've optimized that runs on the device that extracts information out of that environment that you otherwise would've had to gather manually. If I had to give a real quick example of that, if you're in an application on SAP on a mobile device, you might be entering into each field information on a manifest for something you just received at the dock door. We just demonstrated this at the Hannover Messe conference in Germany with SAP, where we've put computer vision-based machine learning models down on the mobile computer. This is shippable today. You can snap a picture of that manifest, that 8.5 by 11 piece of paper. It will understand what's the ship-to address, what's the receiving address, what's the quantity, what are the items on it. It'll extract all that information and automatically enter it into the SAP field. You're talking about 20%, 30% increase in productivity in terms of what you can do with regard to receiving. That's just one example. We haven't seen, since the advent of the barcode into a mobile device, we haven't seen that level of productivity increase. By the way, to your point, two or three years ago, we couldn't have predicted. Yeah. We would have that kind of capability down on our devices. Now we do. We've launched that capability. We're deploying it with partners and with customers, and we have our ZONE end user conference next week in Tennessee in Nashville, and we're going to be showcasing much more around what we're about to announce around that. You mentioned using it internally as well. When you think about your R&D spend. Yeah The efficiency on that. Yeah. How do you think that can track over the next couple of years, as a percentage of sales? Do we have a lot of room to work that? I'm not trying to get to a specific- Yeah. Yeah. Right. ...number, but- Yeah. Can that keep tracking lower? Yeah. I think there's a few different ways we're looking at it. One is we're starting with what's called SDLC, the Software Development Life cycle. As you look at software development in the products, we've identified there's many sub workflows within software development. We've identified the top four or five workflows that we think specifically within software development, and these kind of numbers are industry benchmark sort of numbers. We can get to a 20% increase in efficiency on those key areas of workflow within software development life cycle. Then the next step, and who knows what this will yield. Nobody knows. Everyone's trying out to kind of see where it lands and I've got the privilege to work with some of our largest customers, and they of course, have very big IT teams and developer teams and so I get to trade notes with them and see what they're thinking and they're figuring it out as well. What's going to happen here is the entire product development process, the entire software development process is going to be done differently. Yeah. We're going to reimagine what the entire workflow looks like. The only thing I could say is that directionally I would imagine that's going to be bigger than the efficiencies we get from this first phase. It's something we're very much engaged in from the top of the company on down. Maybe take me through the strategy of when you decide whether to build AI tools internally for? Yeah. Customer deployment versus- Yeah. ...having partners innovate and go that route. Yeah. It's a great question. I think sometimes we don't talk about it enough because we're talking about many times the AI capabilities we have on devices, which you could just very quickly to talk about that for a moment, is those beyond the barcode computer vision capabilities or audio capabilities or building in 3D depth sensors, which we have in our latest devices that can image items that are within its field of view, so we could dimension parcels or understand spatially what's happening in an environment. We've built that kind of hardware into the device, and the AI Enablers are sort of ingredient AI that runs on the device that can be used by applications to go and execute that. Then we've built out on top of that what we call blueprints, which bring those ingredients together to be able to deliver on solutions and then ultimately up to what we call companion, which you could think about as delivering an end-to-end kind of capability. So we very often talk about those capabilities that we have available on the device or offering into the market, but we don't talk so much about what's underneath the hood- Yeah. ..on those. We have very strategic relationship with both Google and with Qualcomm. We work obviously with many other partners and third parties. We have a huge ISV ecosystem. Yep. Independent Software Vendor ecosystem. As an example, those enablers are being used by ISVs that deliver solutions on SAP's platform. They are already proliferating that. That would be one example from a partner perspective. With Google, we are working really closely with Gemini and the generative AI capabilities they have around that. We are also working with a number of open source models that we are tuning. We are not doing the foundational LLM model- Right. ...tuning those models to deliver on these workflows. Qualcomm has been an amazing partner on the semiconductor side that we drive in lockstep with the Android operating system from Google. There's more we're doing with what I would call the higher-end version of chipsets from Qualcomm that we're building into our latest generation of devices that give us more neural processing unit capabilities. You could think about as GPU, NPU on the mobile device. We're expanding now into what we're calling edge box software capability. This is a box that can run on-prem using the likes of what NVIDIA and Qualcomm have. It can assist mobile computers to run workloads without having to go all the way up to the cloud. This has become a really relevant conversation with our customers because we started to talk now about tokenless AI processing, where you don't have to process tokens in the cloud, which then drives cost to our customers from a consumption point of view. We can run those workloads right down, either on the mobile computer, as we call the far edge being a mobile computer, or the edge being this edge box that's on-prem. It significantly impact the economics of being able to deploy these solutions. What's the strategy around monetizing this stuff specifically? Yeah. Correct me if I'm wrong, but mostly it's using the AI capabilities to drive the device sale, and there's not a ton on whether it's a subscription or a pay for use or however. Yeah. How do you see that and how do you see it changing? Yeah. That's definitely the direction it's going is to attach more recurring revenue to the device- Yeah. ...as we deploy these solutions. First is creating a set of AI-optimized devices. The newest devices, you'll see mobile computers from us that look like a device like this, where we've built in several layers of AI enablement. One is, if you think about the camera system and the scanner that's in a device like this, if you knew you were only reading barcodes, you'd design that one way. Yeah. If you're going to try to understand the physical world, like for instance, take a picture of a shelf inside retail, recognize all the products on that shelf, read all the shelf edge labels, verify the pricing, and ensure all the product is located in the right spot, and identify all the out-of-stocks, and do that in a few hundred milliseconds, which is really that's what we're doing now with these models running on the device, then you're going to design that camera differently. You're going to give it higher resolution, a wider field of view. We're building that kind of capability into the device, and then the only way to get access to that functionality is to buy that higher tier device. The first part of the monetization strategy is to say, "We have AI you can't afford to operate without, and therefore you want to accelerate your refresh cycle to these new devices, and you want to make sure you're maximizing your competitive advantage as a customer of ours by using that latest hardware technology." That largely manifests itself in higher ASPs and accelerated refreshes as a CapEx on the device. These ingredient capabilities, like the enablers, the blueprints that run on the device's software, get attached to that device as annual recurring revenue, essentially on a per user basis. We announced on our last earnings call that we delivered an AI-based p icture proof of delivery- Yep ...solution that runs on the device using that latest hardware on the device, and that's attached to the device as ARR on top of the CapEx of the device itself. The last part of your question, which is where do we see it going? Right now, it's a set of point use cases, like proof of delivery, receiving, the shelf intelligence that I mentioned earlier. Where we see it going is, it's back to this domain-specific capability where by vertical then by sub-vertical, we will have bundles of AI-enabled use cases, and then we'll be attaching those AI bundles as a fixed price, say per month or per annum, as ARR on the device. The only way you'll get access to that will be to buy the premium device, which has the hardware capabilities to do it. We're super excited by that. Yeah. I have to say, our customers, given what I mentioned earlier around the tens of percent of increase we're seeing in productivity using some of these tools, are leaning in. They're thinking about how do they change their fleet over to the newer devices. Their conversations with transportation logistics customers are going from, "I need a refresh of the device I had. I'll take the good enough version, if you know what I mean, to get the job done," to, "Wow, I want that proof of delivery capability. Right. I want this efficiency. I'm going to buy up to the next level of device and ARR. The other concern with investors right now is memory. Yep. Can you maybe size it for us again? I know you've talked about it before, but size how much you're buying from a dollar standpoint, and how are you reacting to tightness in pricing in the market right now? Sure. Yeah. Mike? Yeah, I can start with that. First off, the team's doing a great job in terms of mitigating the memory challenges. Just like we have a track record on mitigating supply chain challenges we've encountered over the past few years. The size that we're overcoming is about two point headwind gross margin. That's what we've indicated earlier in the year, and we've been generally on track with that projected impact. To give it a sense of size, we're paying about 2x-3x, in that range, for full year 2026 versus prior year full year 2025. A meaningful increase there. On the supply side, we have a number of mitigation factors. We have good relationships, good, strong relationships with the largest memory providers, and we're doing proactive supply chain management and co-planning with them. We're also qualifying alternative sources of supply as a backstop. Also from the cost side, we're going to higher density in general, memory, which is where the supply is. Yep. That's a supply matter, but it's also a cost dimension. We've raised prices. Earlier this year, we had a price increase. We noted a substantial one in mobile computing that is expected to ramp in terms of being realized in our P&L into the back half, and that's going to be a major point of mitigation as we get in the back half. Meanwhile, we are mitigating the entire two-point headwind by the combination of direct mitigation, like pricing- Yep. Also factors like productivity initiatives, including restructuring in the business, FX tailwinds, and other initiatives. We've got it covered this year. We've got a plan, and we feel confident in our approach. Can I just clarify one thing on the guide? I know you mentioned on the call that demand is higher than what you're able to guide to now, right? The supply constraints on memory are there. I just want to confirm, the current guide range, does the current supply of memory allow you to hit anywhere within that range? Does the constraint prevent you from being a higher range than what we have now? Yeah. Our guide does contemplate the scarcity of demand for memory. We are taking the approach where we wanted to give a range that we are confident in hitting, particularly at the midpoint, with the supply we are confident in getting. The demand signals, to your point, have been signaling more at the top end of our range, and we're going for that, and going for that memory to get that supply, and that's what provides the upside opportunity towards the top of the range, as long as we can secure the supply. The top end of the guide range as current contemplates more memory than you have currently? The other way to put it is we are handicapping the outlook a bit to acknowledge the supply constraints, meaning the top end of the guide is where our demand signals are. The top end is where. As long as we can- Okay ..secure it, which we are going for. Again, those are all the factors we're contemplating when coming up with the range. Understood. Tom, from your side. Yeah What is the dynamics with memory now? How does that flow into new product design, and how long-term are these decisions that you're making now in a very kind of crazy time? Yeah. You're making multi-year decisions here. Yeah. Exactly. Yeah. No, from a design perspective, there's a lot of agility going into the design. In many cases when we're doing product design, we're putting in the capability to be able to mount different memories, different formats of memories, working with the memory vendors on their roadmap in terms of memory densities as they look and move forward, which are higher memory densities that are more likely to become available as we get into the future. In that same assembly, we can drop in either part. A lot's happening there from a design agility, flexibility perspective. To your point, just in terms of looking out, at this point, it's a year plus, we're looking into things like roadmaps and products and what do we do to mitigate as much of that as possible. Working really closely with the supply chain team on resilient strategies with regard to multi-vendor- Yeah. ...provider opportunity as well as how we're mitigating from our overall supply chain resiliency perspective in terms of where we produce the product as well. Yeah. I was going to say, you've had multiple bottlenecks pop up, whether it's tariffs or whether it's prices. Yeah. Is there a change you have to make in terms of design? Can we use the same products across more? Yeah. Yeah. same supply- Yeah ...production products and things like that? Yeah. It's a great point. That's something that, and maybe even in my first response, I took it for granted. For many, many years, and we do think this has been a competitive moat for us, is we've taken a platform approach to our mobile computing portfolio, and we've done that in some of the other parts of the portfolio as well, where if you look at everything from a tablet all the way down to a handheld and even on some of our wearable devices, very high, 90%, let's call it like 97%, 98% of those designs are the same, even down to the software level. It's the last 2% or 3% that's used to kind of customize those if you subtract out the mechanics. Yep. Yep. The Android platform is common. That gives us lots of R&D leverage capability. Also, our customers love it because they know if they write an application for one of our devices, that application's going to run across the gamut. They can run that application on a tablet, on a mobile, they can run it on a kiosk, and they can be sure they're going to have a stable, consistent environment. If you're an IT decision-maker, you're really looking for that. If you think about security, manageability, deployment of the device, and something we call Mobility DNA, that allows you to do lifecycle management of the deployed fleet. Some of our customers, as people here know, have hundreds of thousands of our devices, 200,000, 300,000 devices. You've got that many devices out in the field that are mission-critical, allowing you to run your operations every day. You want visibility into those devices. You want assured, from an IT point of view, that you can securely update and manage. That platforming has been huge, both in terms of R&D leverage and some of the things you were just talking about with regard to flexibility as it relates to memory and other components. It's also been a huge advantage for our customers and the decision-makers, and it's absolutely a competitive advantage relative to anybody else out there. Just how do your negotiations with memory suppliers work? I know you're not paying spot, and I know you have visibility into what you're getting here and the price that you're going to pay for it and how to mitigate it. As we think into 2027, 2028, is there a negotiation about what that looks like? Is there a cap on how far it can reset from year to year? Just how do we think about out into the future, given where some of these spot prices are? Yeah. I'll start. Yeah. We do have strong top-to-top relationships with this. To be clear, and there has been some misperceptions out there, we're not paying spot prices. We're putting in orders about 12 months in advance. The pricing and allocation is set more quarterly, but we do have these continual discussions with them. So far, we've had very good relationship with them. Things have been coming through as anticipated from the beginning of the year, and it gives us confidence as we progress through the year that we're going to be in a good position. Yeah. I guess I'm thinking of it almost like an interest-only mortgage reset or something like that. Is there some sort of thing that happens where it's like, "Okay, well, that was 2026, and now it's 2027, and now the price is X times five," or something like that? That's generally not how those discussions would go, how you're framing it, right? I can't add anything to that. Yeah. Well, the only thing I would just say is that they're not event-based discussions. Yeah. Sure. Yeah. Sure. which is kind of like what I sort of got out of what you just said, which is, "Hey, this happened, now it's going to be that." It's a continuous discussion. Sure. If our Chief Supply Chain Officer were here, she'd tell you it's weekly. Yeah that she's on, not just her, but her team is working with these suppliers on this. I think the interesting thing about our portfolio and our volume is we're strategically important to these memory providers. Yep. We're also at a place where if we need hundreds of thousands or half a million pieces, it's not a consumer phone where it's a binary, we got to get 10 million or we're not going to take any. Right. That actually gives us more flexibility in terms of, for instance, a memory supplier's capacity and being able to get more flexibility from that perspective. Yeah. Just want to shift, in the time we have left- Yeah. ...over to M&A a little bit. Yeah. What's your role in those discussions? Yeah. Typically, I'll be working with our corporate strategy team, as you might expect, our strategy cascades down from, "Here's where we're looking to go over the next three to five years. Here are the strategic themes." Based on those strategic themes, we're looking at buy, build, partner, and venture as well. Yep which I think sometimes we don't talk about enough, is that we have a venture capital investment arm where we can place a bet in an area that we want to maybe have a board seat- Yep. ...understands what's happening, what's developed, maybe influence a little bit. We build out that funnel across those different areas. From both a strategy and a technology perspective, I and my team, and working with the strategy team, are evaluating that. We're really looking at, like most companies would be, what's our ability to execute organically? We would prefer that route if we can do it, but if we don't have the skill set or the competency, then we'll look at what acquisition categories make sense in that regard. Ability to execute, how quickly can we execute if we were to go and do it on our own and realize value? As anybody would be looking at, is the overall return on investment for the options that are before us, right? Looking at, hey, what's the best allocation of capital overall given that dynamic? It's kind of weighing those things out together with the strategy team and then bringing that to our executive leadership team and our business unit owners to evaluate further. From an outsider, pre-Elo. Yeah. It felt like some of the more recent deals were smart strategically, but maybe the wrong asset. Almost more of a venture acquisition than a true acquisition. Like, why wouldn't Fetch work, for example, right? That seems like something that you should own. Like from a what do they do. What are some of the lessons on some of these smaller deals and maybe why didn't they play out the way you thought? We can get into how Elo maybe is on the other side of that. Sure. Yeah. Well, in the case of Fetch, the AMR market at the time that we acquired Fetch was predicted to be much higher than it ended up being. I think as time marched on, even from an industry analyst perspective, that continued to contract. We were gaining traction in the space, but the overall size of the addressable market contracted to be significantly less than maybe we originally thought. Big difference between how, just to draw a comparison real quick, between machine vision, which is an established market that we're entering and looking to climb our way up from a market share perspective to the leading level market share positions we have in other categories, to a nascent category where Fetch was a market-making category, and then the market just didn't turn out to be as big. At some point, Joe, it's like, "Hey, we have capital we can allocate." You look at areas like machine vision, you look at areas like RFID, you look at these AI enablement on the mobile computers that I was just describing earlier, and we said, hey, there's just a much higher return based on what we learned in investing in those categories than continuing on from a Fetch perspective, where we're better off serving shareholders by reallocating that capital there. The lesson learned is keeping your ear to the ground and pivoting and pivoting quickly as you need to based on how the market conditions are bearing out. I know we're out of time here, but maybe I could just, last one on Elo. I did want to touch on that. Yeah. What did you see there? I know it was something you were working on kind of internally as your own products there. What did you see in that business specifically, and how do you see the combination of these two being greater than what you had before? Yeah. Just very quick, I know we're on time, but two ways to look at it. One is around the dynamics of the business, like a little bit what we were just talking about earlier. You think about accretive to our margin profile. You think about it's a scaled business- Yep. ...in the sense it's doing $400 million a year, it's at a different level of scale and maturity than maybe some of the other acquisitions we bought, where we got a lot of go-to-market synergy in the sense that we're talking to the same. Yep. kinds of customers where we can go and deploy these things. We get supply chain synergies because this platform conversation we were having earlier with Qualcomm and so on, we're already buying large volumes, and we can bring those pricing benefits over to an Elo portfolio. The other part of it all goes back to the beginning of this conversation, which is around automation in the sense that kiosks are really a form of automation. They're enabling self-service, which is then returning time to store workers to do more higher-value tasks or more consultative engagement with customers, rather than kind of just the rote motions. We're hearing more and more from our customers, whether it's in the quick-serve restaurant space or it's in retail, hospitality, that they need to meet their customers where they're at, right? We're seeing this across the board with things like self-checkout. Yep. with kiosks, whether you're at the airport or you're at a quick-serve restaurant. Some customers want the full-service experience. Others don't want to speak to anyone, and they want to kind of do it on their own. Our customers need to offer that flexibility, and we're there to provide that to them, and that's where we saw Elo as a great opportunity to do that. I think we have to leave it there, but thanks, everyone, for joining, and thank you guys for being here. Appreciate it. Thank you. Thanks, Joe. Thanks, Joe