Item 1. Consolidated Financial Statements

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

			March 29, 2025						December 31, 2024
			(Unaudited)
Assets
Current assets:
Cash and cash equivalents			$	879					$	901
Accounts receivable, net of allowances for doubtful accounts of $1 each as of March 29, 2025 and December 31, 2024			617						692
Inventories, net			681						693
Income tax receivable			20						20
Prepaid expenses and other current assets			94						134
Total Current assets			2,291						2,440
Property, plant and equipment, net			309						305
Right-of-use lease assets			165						167
Goodwill			3,927						3,891
Other intangibles, net			423						422
Deferred income taxes			545						512
Other long-term assets			239						231
Total Assets			$	7,899					$	7,968
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt			$	69					$	79
Accounts payable			559						633
Accrued liabilities			411						503
Deferred revenue			464						453
Income taxes payable			78						36
Total Current liabilities			1,581						1,704
Long-term debt			2,103						2,092
Long-term lease liabilities			153						155
Deferred income taxes			57						57
Long-term deferred revenue			309						304
Other long-term liabilities			70						70
Total Liabilities			4,273						4,382
Stockholders’ Equity:
Preferred stock, $.01 par value; authorized 10,000,000 shares; none issued			—						—
Class A common stock, $.01 par value; authorized 150,000,000 shares; issued 72,151,857 shares			1						1
Additional paid-in capital			719						669
Treasury stock at cost, 21,013,606 and 20,645,798 shares as of March 29, 2025 and December 31, 2024, respectively			(2,025)						(1,900)
Retained earnings			4,996						4,860
Accumulated other comprehensive loss			(65)						(44)
Total Stockholders’ Equity			3,626						3,586
Total Liabilities and Stockholders’ Equity			$	7,899					$	7,968

See accompanying Notes to Consolidated Financial Statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share data)

(Unaudited)

			Three Months Ended
			March 29, 2025						March 30, 2024
Net sales:
Tangible products			$	1,062					$	929
Services and software			246						246
Total Net sales			1,308						1,175
Cost of sales:
Tangible products			542						498
Services and software			121						114
Total Cost of sales			663						612
Gross profit			645						563
Operating expenses:
Selling and marketing			161						148
Research and development			151						138
General and administrative			111						81
Amortization of intangible assets			24						26
Acquisition and integration costs			3						1
Exit and restructuring costs			—						10
Total Operating expenses			450						404
Operating income			195						159
Other (loss) income, net:
Foreign exchange (loss) gain			(5)						3
Interest expense, net			(23)						(17)
Other expense, net			(2)						(3)
Total Other expense, net			(30)						(17)
Income before income tax			165						142
Income tax expense			29						27
Net income			$	136					$	115
Basic earnings per share			$	2.64					$	2.24
Diluted earnings per share			$	2.62					$	2.23

See accompanying Notes to Consolidated Financial Statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

			Three Months Ended
			March 29, 2025						March 30, 2024
Net income			$	136					$	115
Other comprehensive income, net of tax:
Changes in unrealized gains (losses) on sales hedging			(28)						9
Foreign currency translation adjustment			7						(5)
Comprehensive income			$	115					$	119

See accompanying Notes to Consolidated Financial Statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except share data)

(Unaudited)

						Class A Common Stock Shares						Class A Common Stock Value						Additional Paid-in Capital						Treasury Stock						Retained Earnings						Accumulated Other Comprehensive Loss						Total
Balance at December 31, 2024						51,506,059						$	1					$	669					$	(1,900)					$	4,860					$	(44)					$	3,586
Net share issuances and tax withholding payments related to share-based compensation plans						6,550						—						(1)						—						—						—						(1)
Share-based compensation						—						—						51						—						—						—						51
Repurchase of common stock						(374,358)						—						—						(125)						—						—						(125)
Net income						—						—						—						—						136						—						136
Changes in unrealized gains and losses on sales hedging (net of income taxes)						—						—						—						—						—						(28)						(28)
Foreign currency translation adjustment						—						—						—						—						—						7						7
Balance at March 29, 2025						51,138,251						$	1					$	719					$	(2,025)					$	4,996					$	(65)					$	3,626

						Class A Common Stock Shares						Class A Common Stock Value						Additional Paid-in Capital						Treasury Stock						Retained Earnings						Accumulated Other Comprehensive Loss						Total
Balance at December 31, 2023						51,378,862						$	1					$	615					$	(1,858)					$	4,332					$	(54)					$	3,036
Net share issuances and tax withholding payments related to share-based compensation plans						21,106						—						(3)						—						—						—						(3)
Share-based compensation						—						—						17						—						—						—						17
Net income						—						—						—						—						115						—						115
Changes in unrealized gains and losses on sales hedging (net of income taxes)						—						—						—						—						—						9						9
Foreign currency translation adjustment						—						—						—						—						—						(5)						(5)
Balance at March 30, 2024						51,399,968						$	1					$	629					$	(1,858)					$	4,447					$	(50)					$	3,169

Certain prior period amounts have been reclassified to conform with the current period presentation.

See accompanying Notes to Consolidated Financial Statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

			Three Months Ended
			March 29, 2025						March 30, 2024
Cash flows from operating activities:
Net income			$	136					$	115
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			41						43
Share-based compensation			51						17
Deferred income taxes			(23)						(21)
Unrealized gain on forward interest rate swaps			—						(20)
Other, net			1						1
Changes in operating assets and liabilities:
Accounts receivable, net			84						(80)
Inventories, net			15						98
Other assets			3						(9)
Accounts payable			(76)						13
Accrued liabilities			(110)						(28)
Deferred revenue			16						(9)
Income taxes			42						43
Settlement liability			—						(45)
Cash receipts on forward interest rate swaps			—						7
Other operating activities			(2)						—
Net cash provided by operating activities			178						125
Cash flows from investing activities:
Acquisition of businesses			(62)						—
Purchases of property, plant and equipment			(20)						(14)
Proceeds from sale of short-term investments			—						3
Net cash used in investing activities			(82)						(11)
Cash flows from financing activities:
Payments of debt			—						(284)
Proceeds from issuance of debt			—						151
Payments for repurchases of common stock			(125)						—
Net payments related to share-based compensation plans			(1)						(3)
Change in unremitted cash collections from servicing factored receivables			2						9
Other financing activities			5						3
Net cash used in financing activities			(119)						(124)
Effect of exchange rate changes on cash and cash equivalents, including restricted cash			1						(1)
Net decrease in cash and cash equivalents, including restricted cash			(22)						(11)
Cash and cash equivalents, including restricted cash, at beginning of period			901						138
Cash and cash equivalents, including restricted cash, at end of period			$	879					$	127
Less restricted cash, included in Prepaid expenses and other current assets			—						—
Cash and cash equivalents at end of period			$	879					$	127
Supplemental disclosures of cash flow information:
Income taxes paid			$	9					$	3
Interest paid inclusive of forward interest rate swaps			$	16					$	30

Certain prior period amounts included in Net cash provided by operating activities have been reclassified to conform with the current period presentation.

See accompanying Notes to Consolidated Financial Statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 Description of Business and Basis of Presentation

Zebra Technologies Corporation and its subsidiaries (“Zebra” or the “Company”) is a global leader providing innovative Enterprise Asset Intelligence (“EAI”) products, services, and software solutions (“offerings”) in the automatic identification and data capture industry. We design, manufacture, and sell a broad range of offerings, including cloud-based software subscriptions, that capture and move data. We also provide a full range of services, including maintenance, technical support, repair, managed and professional services. End-users of our offerings include those in retail and e-commerce, manufacturing, transportation and logistics, healthcare, public sector, and other industries. We provide our offerings globally through a direct sales force and an extensive network of channel partners.

Management prepared these unaudited interim consolidated financial statements according to the rules and regulations of the Securities and Exchange Commission for interim financial information and notes. As permitted under Article 10 of Regulation S-X and the instructions of Form 10-Q, these consolidated financial statements do not include all the information and notes required by United States Generally Accepted Accounting Principles (“GAAP”) for complete financial statements, although management believes that the disclosures made are adequate to make the information not misleading. These interim financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

In the opinion of the Company, these interim financial statements include all adjustments (of a normal, recurring nature) necessary to fairly present its Consolidated Balance Sheet as of March 29, 2025, the Consolidated Statements of Operations, Comprehensive Income, Stockholders’ Equity, and Cash Flows for the three months ended March 29, 2025 and March 30, 2024. These results, however, are not necessarily indicative of the results expected for the full fiscal year ending December 31, 2025.

Note 2 Significant Accounting Policies

For a discussion of our significant accounting policies, see Note 2, Significant Accounting Policies within Part II, Item 8 “Financial Statements and Supplementary Data” in the Annual Report on Form 10-K for the year ended December 31, 2024. There have been no changes to our significant accounting policies since our Annual Report on Form 10-K for the year ended December 31, 2024.

Note 3 Revenues

The Company recognizes revenue to depict the transfer of goods, solutions or services to a customer at an amount that reflects the consideration which it expects to receive for providing those goods, solutions or services.

Revenues for tangible products are generally recognized upon shipment, whereas revenues for services and solution offerings are generally recognized over time by using an output or time-based method, assuming all other criteria for revenue recognition have been met. Revenues for software are recognized either upon delivery or over time using a time-based method, depending on how control is transferred to the customer. In cases where a bundle of products, services, solutions and/or software are delivered to the customer, judgment is required to select the method of progress which best reflects the transfer of control.

Disaggregation of Revenue

The following table presents our Net sales disaggregated by product category for each of our segments (in millions):

			Three Months Ended
			March 29, 2025																		March 30, 2024
Segment			Tangible Products						Services and Software						Total						Tangible Products						Services and Software						Total
AIT			$	432					$	30					$	462					$	365					$	27					$	392
EVM			630						216						846						564						219						783
Total			$	1,062					$	246					$	1,308					$	929					$	246					$	1,175

In addition, refer to Note 17, Segment Information & Geographic Data for Net sales to customers by geographic region.

Performance Obligations

The Company’s remaining performance obligations relate to services and software solutions. The aggregated transaction price allocated to remaining performance obligations for arrangements with an original term exceeding one year was $1.18 billion and $1.19 billion, inclusive of deferred revenue, as of March 29, 2025 and December 31, 2024, respectively. On average, remaining performance obligations as of March 29, 2025 and December 31, 2024 are expected to be recognized over a period of approximately two years.

Contract Balances

Progress on satisfying performance obligations under contracts with customers related to billed revenues is reflected on the Consolidated Balance Sheets in Accounts receivable, net. Progress on satisfying performance obligations under contracts with customers related to unbilled revenues (“contract assets”) is reflected on the Consolidated Balance Sheets as Prepaid expenses and other current assets for revenues expected to be billed within the next twelve months, and Other long-term assets for revenues expected to be billed thereafter. The total contract asset balances were $9 million and $11 million as of March 29, 2025 and December 31, 2024, respectively. These contract assets result from timing differences between billing and satisfying performance obligations, as well as the impact from the allocation of the transaction price among performance obligations for contracts that include multiple performance obligations. Contract assets are evaluated for impairment, and no impairment losses have been recognized during the three months ended March 29, 2025 and March 30, 2024, respectively.

Deferred revenue on the Consolidated Balance Sheets consists of payments and billings in advance of our performance. The combined short-term and long-term deferred revenue balances were $773 million and $757 million as of March 29, 2025 and December 31, 2024, respectively. During the three months ended March 29, 2025, the Company recognized $141 million in revenue, which was previously included in the beginning balance of deferred revenue as of December 31, 2024. During the three months ended March 30, 2024, the Company recognized $146 million in revenue, which was previously included in the beginning balance of deferred revenue as of December 31, 2023.

Note 4 Inventories

The categories of Inventories, net are as follows (in millions):

			March 29, 2025						December 31, 2024
Raw materials (1)			$	250					$	248
Work in process			3						4
Finished goods			428						441
Total Inventories, net			$	681					$	693

(1) Raw material inventories primarily consist of product components as well as supplies used in repair operations.

Note 5 Business Acquisitions

Photoneo

On February 28, 2025, the Company acquired Photoneo, a leading developer and manufacturer of 3D machine vision offerings. The Company’s cash purchase consideration of $62 million was primarily allocated to technology-related intangible assets of $17 million, customer relationship assets of $6 million, and goodwill of $34 million. The technology-related intangible assets and customer relationship assets both have estimated useful lives of 7 years. The Company utilized estimated fair values as of the acquisition date to allocate the purchase consideration to the identifiable net assets acquired based on estimates and assumptions, as well as customary valuation techniques. While we believe these estimates provide a reasonable basis to record the net assets acquired, the purchase price allocation is considered preliminary and subject to adjustment during the measurement period, which is up to one year from the acquisition date.

The goodwill, which will be deductible for tax purposes, has been allocated to the EVM segment and principally relates to the expansion of our machine vision offerings across several industries.

Note 6 Investments

The carrying value of the Company’s long-term investments, which are included in Other long-term assets on the Consolidated Balance Sheets, was $110 million as of both March 29, 2025 and December 31, 2024.

The Company did not make any payments for the purchase of long-term investments during the three months ended March 29, 2025 or March 30, 2024. Net gains and losses related to the Company’s long-term investments are included within Other expense, net on the Consolidated Statements of Operations. No net gains or losses were recorded during the three months ended March 29, 2025 or March 30, 2024.

Note 7 Fair Value Measurements

Financial assets and liabilities are measured using inputs from three levels of the fair value hierarchy in accordance with Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into the following three broad levels:

• Level 1: Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs (e.g. U.S. Treasuries and money market funds).

• Level 2: Observable prices that are based on inputs not quoted in active markets but corroborated by market data.

• Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs. In addition, the Company considers counterparty credit risk in the assessment of fair value.

The Company’s financial assets and liabilities carried at fair value as of March 29, 2025, are classified below (in millions):

			Level 1						Level 2						Level 3						Total
Assets:
Investments related to the deferred compensation plan			$	42					$	—					$	—					$	42
Total Assets at fair value			$	42					$	—					$	—					$	42
Liabilities:
Foreign exchange contracts (1)			$	7					$	8					$	—					$	15
Liabilities related to the deferred compensation plan			42						—						—						42
Total Liabilities at fair value			$	49					$	8					$	—					$	57

The Company’s financial assets and liabilities carried at fair value as of December 31, 2024, are classified below (in millions):

			Level 1						Level 2						Level 3						Total
Assets:
Foreign exchange contracts (1)			$	1					$	30					$	—					$	31
Investments related to the deferred compensation plan			41						—						—						41
Total Assets at fair value			$	42					$	30					$	—					$	72
Liabilities:
Liabilities related to the deferred compensation plan			$	41					$	—					$	—					$	41
Total Liabilities at fair value			$	41					$	—					$	—					$	41

(1)The fair value of the foreign exchange contracts is calculated as follows:

• Fair value of forward contracts associated with forecasted sales hedges is calculated using the period-end exchange rate adjusted for current forward points.

• Fair value of hedges against net assets denominated in foreign currencies is calculated at the period-end exchange rate adjusted for current forward points unless the hedge has been traded but not settled at period-end (Level 2). If this is the case, the fair value is calculated at the rate at which the hedge is being settled (Level 1).

Note 8 Derivative Instruments

In the normal course of business, the Company is exposed to global market risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company uses derivative instruments to manage its exposure to such risks and may elect to designate certain derivatives as hedging instruments under ASC Topic 815, Derivatives and Hedging (“ASC 815”). The Company formally documents all relationships between designated hedging instruments and hedged items as well as its risk management objectives and strategies for undertaking hedge transactions. The Company does not hold or issue derivatives for trading or speculative purposes.

In accordance with ASC 815, the Company recognizes derivative instruments as either assets or liabilities on the Consolidated Balance Sheets and measures them at fair value. The following table presents the fair value of its derivative instruments (in millions):

			Asset (Liability)
									Fair Values as of
			Balance Sheets Classification						March 29, 2025						December 31, 2024
Derivative instruments designated as hedges:
Foreign exchange contracts			Prepaid expenses and other current assets						$	—					$	30
Foreign exchange contracts			Accrued liabilities						(8)						—
Total derivative instruments designated as hedges									$	(8)					$	30
Derivative instruments not designated as hedges:
Foreign exchange contracts			Prepaid expenses and other current assets						$	—					$	1
Foreign exchange contracts			Accrued liabilities						(7)						—
Total derivative instruments not designated as hedges									$	(7)					$	1
Total net derivative (liability) asset									$	(15)					$	31

The following table presents the net gains (losses) from changes in fair values of derivatives that are not designated as hedges (in millions):

			Gains (Losses) Recognized in Income
									Three Months Ended
			Statements of Operations Classification						March 29, 2025						March 30, 2024
Derivative instruments not designated as hedges:
Foreign exchange contracts			Foreign exchange (loss) gain						$	(8)					$	1
Forward interest rate swaps			Interest expense, net						—						20
Total net (loss) gain recognized in income									$	(8)					$	21

Activities related to derivative instruments are reflected within Net cash provided by operating activities on the Consolidated Statements of Cash Flows.

Interest Rate Risk Management

The Company is exposed to market risk associated with interest rate payments on its borrowings under a term loan (“Term Loan A”), Revolving Credit Facility, and Receivables Financing Facilities, which bear interest at variable rates plus applicable margins. The Company manages its exposure to changes in interest rates by issuing both fixed and variable rate borrowings as well as periodically utilizing interest rate swaps to economically hedge interest rate exposure based on current and projected market conditions.

Credit and Market Risk Management

Financial instruments, including derivatives, expose the Company to counterparty credit risk of nonperformance and to market risk related to currency exchange rate and interest rate fluctuations. The Company manages its exposure to counterparty credit risk by establishing minimum credit standards, diversifying its counterparties, and monitoring its concentrations of credit. The Company’s counterparties are commercial banks with expertise in derivative financial instruments. The Company evaluates the impact of market risk on the fair value and cash flows of its derivative and other financial instruments by considering reasonably possible changes in interest rates and currency exchange rates. The Company continually monitors the creditworthiness of the customers to which it grants credit terms in the normal course of business. The terms and conditions of the Company’s credit policies are designed to mitigate concentrations of credit risk.

The Company’s master netting and other similar arrangements with the respective counterparties allow for net settlement under certain conditions, which are designed to reduce credit risk by permitting net settlement with the same counterparty. We present the assets and liabilities of our derivative financial instruments, for which we have net settlement agreements in place, on a net basis on the Consolidated Balance Sheets. If the derivative financial instruments had been presented gross on the Consolidated Balance Sheets, the asset and liability positions would not have been significant as of March 29, 2025 or December 31, 2024.

Foreign Currency Exchange Risk Management

The Company conducts business on a multinational basis in a variety of foreign currencies. Exposure to market risk for changes in foreign currency exchange rates arises primarily from Euro-denominated external revenues, cross-border financing activities between subsidiaries, and foreign currency denominated monetary assets and liabilities. The Company manages its objective of preserving the economic value of non-functional currency denominated cash flows by initially hedging transaction exposures with natural offsets and, once these opportunities have been exhausted, through foreign exchange forward and option contracts, as deemed appropriate.

The Company manages the exchange rate risk of anticipated Euro-denominated sales using forward contracts, which typically mature within twelve months of execution. The Company designates these derivative contracts as cash flow hedges. Unrealized gains and losses on these contracts are deferred in Accumulated other comprehensive income (loss) (“AOCI”) on the Consolidated Balance Sheets until the contract is settled and the hedged sale is realized. The realized gain or loss is then recorded as an adjustment to Net sales on the Consolidated Statements of Operations. Realized amounts reclassified to Net sales were $9 million and $1 million of gains for the three months ended March 29, 2025 and March 30, 2024, respectively. As of March 29, 2025 and December 31, 2024, the notional amounts of the Company’s foreign exchange cash flow hedges were €742 million and €592 million, respectively. The Company has reviewed its cash flow hedges for effectiveness and determined that they are highly effective.

The Company uses forward contracts, which are not designated as hedging instruments, to manage its exposures related to net assets denominated in foreign currencies. These forward contracts typically mature within one month after execution. Monetary gains and losses on these forward contracts are recorded in income and are generally offset by the transaction gains and losses related to their net asset positions. The notional values and the net fair values of these outstanding contracts were as follows (in millions):

			March 29, 2025						December 31, 2024
Notional balance of outstanding contracts:
British Pound/U.S. Dollar			£	16					£	5
Euro/U.S. Dollar			€	178					€	146
Euro/Czech Koruna			€	14					€	16
Japanese Yen/U.S. Dollar			¥	173					¥	360
Singapore Dollar/U.S. Dollar			S$	22					S$	23
Mexican Peso/U.S. Dollar			Mex$	204					Mex$	142
Polish Zloty/U.S. Dollar			zł	74					zł	53
Net fair value of assets of outstanding contracts			$	7					$	1

Note 9 Long-Term Debt

The following table shows the carrying value of the Company’s debt (in millions):

			March 29, 2025						December 31, 2024
Term Loan A			$	1,575					$	1,575
Senior Notes			500						500
Receivables Financing Facilities			108						108
Total debt			$	2,183					$	2,183
Less: Debt issuance costs			(9)						(9)
Less: Unamortized discounts			(2)						(3)
Less: Current portion of debt			(69)						(79)
Total long-term debt			$	2,103					$	2,092

As of March 29, 2025, the future maturities of debt are as follows (in millions):

2025 (9 months remaining)						$	69
2026						71
2027						1,543
2028						—
2029						—
Thereafter						500
Total future maturities of debt						$	2,183

All borrowings as of March 29, 2025 were denominated in U.S. Dollars.

The estimated fair value of the Company’s debt approximated $2.2 billion as of both March 29, 2025 and December 31, 2024, respectively. These fair value amounts, developed based on inputs classified as Level 2 within the fair value hierarchy, represent the estimated value at which the Company’s lenders could trade its debt within the financial markets and do not represent the settlement value of these liabilities to the Company. The fair value of debt will continue to vary each period based on a number of factors, including fluctuations in market interest rates as well as changes to the Company’s credit ratings.

Term Loan A

The principal on Term Loan A is due in quarterly installments, with the next quarterly installment due in the first quarter of 2026 and the majority due upon maturity in 2027. The Company has and may make prepayments in whole or in part, without premium or penalty, and would be required to prepay certain outstanding amounts in the event of certain circumstances or transactions. As of March 29, 2025, the Term Loan A interest rate was 5.42%. Interest payments are made monthly and are subject to variable rates plus an applicable margin.

Senior Notes

In the second quarter of 2024, the Company completed a private offering of $500 million senior unsecured notes (the “Senior Notes”) with a 6.5% fixed interest rate. The Senior Notes mature on June 1, 2032, and interest is payable semi-annually in arrears in June and December of each year. The Company may make prepayments in whole or in part, without premium or penalty, and would be required to prepay certain outstanding amounts in the event of certain circumstances or transactions.

The Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by certain of Zebra’s existing and future subsidiaries. The Senior Notes contain covenants that, among other things, limit the ability of Zebra to: (i) grant or incur liens; (ii) have its subsidiaries guarantee debt without becoming guarantors; and (iii) merge or consolidate with another company or sell all or substantially all of its assets.

Revolving Credit Facility

The Company has a Revolving Credit Facility that is available for working capital and other general business purposes, including letters of credit. As of March 29, 2025, the Company had letters of credit totaling $10 million, which reduced funds available for borrowings under the Revolving Credit Facility from $1,500 million to $1,490 million. As of March 29, 2025, the Revolving Credit Facility had an average interest rate of 5.42%. Upon borrowing, interest payments are made monthly and are subject to variable rates plus an applicable margin. The Revolving Credit Facility matures on May 25, 2027.

Receivables Financing Facility

As of March 29, 2025, the Company has a Receivables Financing Facility with a borrowing limit of up to $180 million. As collateral, the Company pledges perfected first-priority security interests in its U.S. domestically originated accounts receivable. The Company has accounted for transactions under this facility as secured borrowings. The receivables financing facility matures on March 19, 2027.

As of March 29, 2025, the Company’s Consolidated Balance Sheets included $549 million of gross receivables that were pledged under the facility. As of March 29, 2025, $108 million had been borrowed, of which $47 million was classified as current. Borrowings under the facility bear interest at a variable rate plus an applicable margin. As of March 29, 2025, the facility had an average interest rate of 5.37%. Interest is paid monthly on these borrowings.

The Company’s borrowings described above include terms and conditions that limit the incurrence of additional borrowings and require that certain financial ratios be maintained at designated levels.

As of March 29, 2025, the Company was in compliance with all debt covenants.

Note 10 Leases

During the three months ended March 29, 2025, the Company recorded $4 million of right-of-use (“ROU”) assets obtained in exchange for lease obligations primarily related to the extension of existing leases.

Future minimum lease payments under non-cancellable leases as of March 29, 2025 were as follows (in millions):

2025 (9 months remaining)						$	36
2026						42
2027						34
2028						31
2029						26
Thereafter						60
Total future minimum lease payments						$	229
Less: Interest						(40)
Present value of lease liabilities						$	189
Reported as of March 29, 2025:
Current portion of lease liabilities						$	36
Long-term lease liabilities						153
Present value of lease liabilities						$	189

The current portion of lease liabilities is included within Accrued liabilities on the Consolidated Balance Sheets.

Note 11 Accrued Liabilities, Commitments and Contingencies

Accrued Liabilities

The components of Accrued liabilities are as follows (in millions):

			March 29, 2025						December 31, 2024
Incentive compensation			$	72					$	174
Payroll and benefits			72						76
Unremitted cash collections due to banks on factored accounts receivable			53						51
Customer rebates			48						56
Current portion of lease liabilities			36						36
Warranty			27						26
Interest payable			18						3
Freight and duty			16						12
Other			69						69
Accrued liabilities			$	411					$	503

Warranties

The following table is a summary of the Company’s warranty obligations (in millions):

			Three Months Ended
			March 29, 2025						March 30, 2024
Balance at the beginning of the period			$	26					$	27
Warranty expense			8						7
Warranties fulfilled			(7)						(7)
Balance at the end of the period			$	27					$	27

Contingencies

The Company is subject to a variety of investigations, claims, suits, and other legal proceedings that arise from time to time in the ordinary course of business, including but not limited to, intellectual property, employment, tort, and breach of contract matters. The Company currently believes that the outcomes of such proceedings, individually and in the aggregate, will not have a material adverse impact on its business, cash flows, financial position, or results of operations. Any legal proceedings are subject to inherent uncertainties, and the Company’s view of these matters and their potential effects may change in the future. The Company records a liability for contingencies when a loss is deemed to be probable and the loss can be reasonably estimated.

Note 12 Share-Based Compensation

The Company issues share-based compensation awards under the Zebra Technologies 2018 Long-Term Incentive Plan (“2018 Plan”), approved by shareholders in 2018, which superseded and replaced all prior share-based incentive plans. Outstanding awards issued prior to the 2018 Plan are governed by the provisions of those plans until such awards have been exercised, forfeited, cancelled, expired, or otherwise terminated in accordance with their terms. Awards available under the 2018 Plan include stock-settled awards, including stock-settled restricted stock units, stock-settled performance stock units, restricted stock awards, performance share awards, stock appreciation rights, incentive stock options, and non-qualified stock options. Awards available under the 2018 Plan also include cash-settled awards, including cash-settled stock appreciation rights, cash-settled restricted stock units, and cash-settled performance stock units.

The Company uses treasury shares as its source for issuing shares under the share-based compensation programs. As of March 29, 2025, the Company had 1,424,590 shares of Class A Common stock remaining available to be issued under the 2018 Plan.

The compensation expense from the Company’s share-based compensation plans and associated income tax benefit, excluding the effects of excess tax benefits or shortfalls, are included in the Consolidated Statements of Operations as follows (in millions):

			Three Months Ended
Compensation costs and related income tax benefit			March 29, 2025						March 30, 2024
Cost of sales			$	4					$	2
Selling and marketing			10						5
Research and development			17						6
General and administration			22						8
Total compensation expense			$	53					$	21
Income tax benefit			$	9					$	3

As of March 29, 2025, the total unearned compensation cost related to the Company’s share-based compensation plans was $190 million, which will be recognized over the weighted average remaining service period of approximately 1.7 years.

The majority of the Company’s share-based compensation awards are issued as part of its employee and non-employee director incentive program each fiscal year. Beginning in 2025, the annual employee equity incentive awards were granted in the first quarter. The non-employee director equity awards will continue to be granted in the second quarter. The Company also issues awards associated with business acquisitions and other off-cycle events. The majority of the Company’s share-based compensation is comprised of stock-settled awards.

The compensation cost of awards is expensed over each award’s service period, which is generally subject to certain employment conditions. The Company’s 2025 award agreement provisions resulted in increased recognition of compensation cost as compared to previous awards.

Stock-settled awards

The Company’s awards are typically time-vested with stock-settled RSUs vesting ratably in three annual installments and stock-settled PSUs vesting at the end of the three-year period. Upon vesting, stock-settled RSUs and PSUs convert to shares of Class A Common Stock that are released to participants.

Compensation cost is calculated as the fair market value of the Company’s Class A Common Stock on the grant date multiplied by the number of units granted, net of estimated forfeitures. The expected attainment of the performance goals for the stock-settled PSUs is reviewed at the end of each reporting period, with adjustments recorded to compensation expense in the Consolidated Statements of Operations, as necessary.

A summary of the Company’s restricted and performance stock-settled awards for the three months ended March 29, 2025 is as follows:

			RSUs												PSUs
			Units						Weighted-Average Grant Date Fair Value						Units						Weighted-Average Grant Date Fair Value
Outstanding at beginning of period			482,067						$	295.39					241,946						$	304.44
Granted			255,307						307.02						97,861						306.84
Released			(5,646)						300.29						—						—
Forfeited			(7,405)						287.04						(1,420)						304.51
Outstanding at end of period			724,323						$	299.53					338,387						$	305.18

Stock Appreciation Rights (“SARs”)

SARs were previously granted primarily as part of the Company’s annual share-based compensation incentive program. Beginning in 2021, the Company no longer included SARs in its annual share-based compensation award issuances. As of March 29, 2025, there were 214,243 outstanding SARs, all of which were exercisable with a weighted-average remaining contractual life of 1 year.

Cash-settled awards

The Company also issues cash-settled share-based compensation awards, including cash-settled restricted stock units and cash-settled performance stock units that are classified as liability awards and typically have a vesting period of three years. Compensation cost is calculated as the fair market value of the Company’s Class A Common Stock on the grant date multiplied by the number of share-equivalents granted, net of forfeitures. The fair value for all cash-settled awards and the expected attainment of the performance goals for the cash-settled performance stock units is reviewed at the end of each reporting period, with adjustments recorded to compensation expense in the Consolidated Statements of Operations, as necessary. Cash settlement is based on the fair value of share equivalents at the time of vesting, which was not significant for the three months ended March 29, 2025 or March 30, 2024. Share-equivalents issued under these programs totaled 52,395 and 273 during the three months ended March 29, 2025 and March 30, 2024, respectively.

Employee Stock Purchase Plan

Eligible Zebra employees may purchase common stock at 95% of the fair market value at the date of purchase pursuant to the Zebra Technologies Corporation 2020 Employee Stock Purchase Plan (“2020 ESPP”). Employees may make purchases by cash or payroll deductions up to certain limits. The aggregate number of shares that may be purchased under the 2020 ESPP is 1,500,000 shares. As of March 29, 2025, 1,304,693 shares remained available for future purchase.

Note 13 Income Taxes

The Company’s effective tax rate for the three months ended March 29, 2025 and March 30, 2024 was 17.6% and 19.0%, respectively. In the current period and prior period, the variance from the 21% federal statutory rate was primarily attributable to the tax benefit related to foreign earnings subject to U.S. taxation and the generation of U.S. tax credits.

Note 14 Earnings Per Share

Basic net earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average number of diluted common shares outstanding. Diluted common shares outstanding is computed using the Treasury Stock method and, in periods of income, reflects the additional shares that would be outstanding if dilutive share-based compensation awards were converted into common shares during the period.

Earnings per share (in millions, except share data):

			Three Months Ended
			March 29, 2025						March 30, 2024
Basic:
Net income			$	136					$	115
Weighted-average shares outstanding			51,365,011						51,387,570
Basic earnings per share			$	2.64					$	2.24
Diluted:
Net income			$	136					$	115
Weighted-average shares outstanding			51,365,011						51,387,570
Dilutive shares			441,539						402,931
Diluted weighted-average shares outstanding			51,806,550						51,790,501
Diluted earnings per share			$	2.62					$	2.23

Anti-dilutive share-based compensation awards are excluded from diluted earnings per share calculations. There were 52,843 and 18,095 shares that were anti-dilutive for the three months ended March 29, 2025 and March 30, 2024, respectively.

Note 15 Accumulated Other Comprehensive (Loss) Income

Stockholders’ equity includes certain items classified as AOCI, including:

• Unrealized gain (loss) on sales hedging which relates to derivative instruments used to hedge the exposure related to currency exchange rates for forecasted Euro sales. These hedges are designated as cash flow hedges, and the Company

defers income statement recognition of gains and losses until the hedged transaction occurs. See Note 8, Derivative Instruments for more details.

• Foreign currency translation adjustments which relates to the Company’s non-U.S. subsidiary companies that have designated a functional currency other than the U.S. Dollar. The Company translates the subsidiary functional currency financial statements to U.S. Dollars using a combination of historical, period-end, and average foreign exchange rates. This combination of rates creates the foreign currency translation adjustment component of AOCI.

The changes in each component of AOCI during the three months ended March 29, 2025 and March 30, 2024 were as follows (in millions):

						Unrealized gain (loss) on sales hedging												Foreign currency translation adjustments						Total
Balance at December 31, 2023						$	(5)											$	(49)					$	(54)
Other comprehensive income (loss) before reclassifications						13												(5)						8
Amounts reclassified from AOCI(1)						(1)												—						(1)
Tax effect						(3)												—						(3)
Other comprehensive income (loss), net of tax						9												(5)						4
Balance at March 30, 2024						$	4											$	(54)					$	(50)
Balance at December 31, 2024						$	22											$	(66)					$	(44)
Other comprehensive income (loss) before reclassifications						(28)												7						(21)
Amounts reclassified from AOCI(1)						(9)												—						(9)
Tax effect						9												—						9
Other comprehensive income (loss), net of tax						(28)												7						(21)
Balance at March 29, 2025						$	(6)											$	(59)					$	(65)

(1) See Note 8, Derivative Instruments regarding the timing of reclassifications to operating results.

Note 16 Accounts Receivable Factoring

The Company has a Receivables Factoring arrangement, pursuant to which certain receivables originated from the EMEA and Asia-Pacific regions up to a maximum of €75 million are sold to a bank without recourse in exchange for cash. Such transfers are accounted for as sales and the related receivables are removed from the Company’s balance sheet. The Company does not maintain any beneficial interest in the receivables sold. The Company services the receivables on behalf of the bank, but otherwise maintains no significant continuing involvement with respect to the receivables. Sale proceeds that are representative of the fair value of factored receivables, less a factoring fee, are reflected in Cash flows from operating activities on the Consolidated Statements of Cash Flows, while sale proceeds in excess of the fair value of factored receivables are reflected in Cash flows from financing activities on the Consolidated Statements of Cash Flows.

During the three months ended March 29, 2025 and March 30, 2024, the Company received cash proceeds of $119 million and $346 million, respectively, from the sales of accounts receivables under its factoring arrangement. As of both March 29, 2025 and December 31, 2024, there were a total of $28 million of uncollected receivables that had been sold and removed from the Company’s Consolidated Balance Sheets.

As servicer of sold receivables, the Company had $53 million and $51 million of obligations that were not yet remitted to the bank as of March 29, 2025 and December 31, 2024, respectively. These obligations are included within Accrued liabilities on the Consolidated Balance Sheets, with changes in such obligations reflected within Cash flows from financing activities on the Consolidated Statements of Cash Flows.

Note 17 Segment Information & Geographic Data

The Company’s operations consist of two reportable segments that provide complementary offerings to our customers: Asset Intelligence & Tracking (“AIT”), which includes barcode and card printing, RFID and RTLS offerings, supplies, and services; and Enterprise Visibility & Mobility (“EVM”), which includes mobile computing, data capture, fixed industrial scanning and machine vision, services, and workflow optimization solutions. The reportable segments have been identified based on the financial data utilized by the Company’s Chief Executive Officer (the chief operating decision maker or “CODM”) to assess segment performance and allocate resources among the Company’s segments. The CODM reviews adjusted operating income to assess segment profitability primarily during the Company’s annual budget and forecasting process. The CODM assesses the profitability of each segment relative to its long-term growth objectives in evaluating resource allocation priorities. Segment assets are not reviewed by the Company’s CODM and therefore are not disclosed below.

Financial information by segment is presented as follows (in millions):

			Three Months Ended
			March 29, 2025						March 30, 2024
Net sales:
AIT			$	462					$	392
EVM			846						783
Total Net sales			$	1,308					$	1,175
Cost of sales:
AIT			$	226					$	208
EVM			437						404
Operating expenses:
AIT (1)			$	136					$	108
EVM (1)			287						259
Operating income:
AIT (2)			$	100					$	76
EVM (2)			122						120
Total segment operating income			222						196
Corporate (3)			(27)						(37)
Total Operating income			$	195					$	159

(1)AIT and EVM segment operating expenses include Selling and marketing, Research and development, and General and administrative expenses, excluding the amounts classified within Corporate.

(2)AIT and EVM segment operating income includes depreciation and share-based compensation expense. The depreciation and share-based compensation expense amounts are proportionate to each segment’s Net sales.

(3)To the extent applicable, amounts included in Corporate consist of Amortization of intangible assets, Acquisition and integration costs, Exit and restructuring costs, as well as certain other non-recurring costs (impairment of goodwill and other intangibles, and business acquisition purchase accounting adjustments).

Information regarding the Company’s operations by geographic area is contained in the following tables. Net sales amounts are attributed to geographic area based on customer location.

Net sales by region were as follows (in millions):

			Three Months Ended
			March 29, 2025						March 30, 2024
North America			$	656					$	612
EMEA			443						380
Asia-Pacific			125						112
Latin America			84						71
Total Net sales			$	1,308					$	1,175