ZBRA · Read the filing

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

Overview

The Company is a global leader in the Automatic Identification and Data Capture (“AIDC”) industry, ensuring frontline operations everywhere are digitized, automated and intelligent. The AIDC market consists of mobile computing, data capture, radio frequency identification devices (“RFID”), thermal barcode printing, and other workflow automation offerings.Effective in the fourth quarter of 2025, we realigned our reportable segments from the former Enterprise Visibility & Mobility (EVM) and Asset Intelligence & Tracking (AIT) segments to two new segments: Connected Frontline (“CF”) and Asset Visibility and Automation (“AVA”). Our CF and AVA segment results will also exclude share-based compensation expense from the measurement of segment operating income. Refer to Part I, Item 1 of this document for additional information.

•The CF segment is focused on unifying teams, customers, and AI agents to deliver enhanced frontline experiences. This segment brings together solutions that empower frontline workers with the information and tools they need to make smarter decisions and improve customer service. Principal product categories include mobile computing, point of sale solutions, self-service kiosks and interactive touchscreen displays, workflow optimization software solutions, and related services.

•The AVA segment provides solutions that track critical assets and automate workflows to provide the real-time, data-driven insights necessary to optimize supply chains, manufacturing, and logistics. The principal product categories include thermal barcode printing and related supplies and sensors, data capture, fixed industrial scanning, machine vision, RFID, real-time location systems (RTLS), and related services.

2025 Financial Summary and Other Recent Developments

•Net sales were $5,396 million in the current year compared to $4,981 million in the prior year.

•Operating income was $700 million in the current year compared to $742 million in the prior year.

•Net income was $419 million, or $8.18 per diluted share in the current year, compared to Net income of $528 million, or $10.18 per diluted share in the prior year.

•We repurchased $587 million of common shares, including $303 million in the fourth quarter.

Exit & Restructuring Actions:

In the fourth quarter of 2025, we announced our intention to dispose of or exit our robotics automation solutions business in an effort to better align resources with our strategic priorities. In relation to this decision, we incurred approximately $55 million in one-time costs in the fourth quarter, principally consisting of long-lived asset impairments of $45 million, including an intangible asset impairment of $34 million, a right-of-use lease asset impairment of $8 million, and property, plant and equipment impairment of $3 million. The other one-time costs consisted of employee severance and working capital-related charges. These one-time costs are classified as Exit and restructuring on the Consolidated Statement of Operations. Additional costs may be incurred in 2026, as we complete the divestiture of this business.

In the fourth quarter of 2025, the Company committed to certain organizational changes designed to generate cost efficiencies while better aligning our organizational structure with the Company’s long-term growth strategy (collectively referred to as the “2025 Productivity Plan”). The total cost under the 2025 Productivity Plan, which is expected to be substantially completed in 2026 and will primarily consist of employee severance costs, is estimated to be approximately $35- 40 million, including $21 million recognized in the fourth quarter of 2025. The costs of these actions are classified within Exit and restructuring on the Consolidated Statements of Operations.

We expect annualized pre-tax operating costs savings of at least $20 million from these actions, net of re-investment into advancing the Company’s AI product portfolio, reorganizing our sales force, and absorbing increased employee-related costs.

Acquisitions:

On September 30, 2025, the Company acquired Elo Holdings, Inc. (“Elo”) for $1,303 million in cash, net of cash on hand. Elo is an innovator of solutions that engage customers, enhance self-service, and accelerate automation across a wide range of end

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markets. The Elo acquisition expands our portfolio of self-service and consumer-facing workflow offerings. The operating results of Elo are included in the CF segment.

On February 28, 2025, the Company acquired Photoneo for approximately $62 million in cash. Photoneo is a leading developer and manufacturer of 3D machine vision offerings. The Photoneo acquisition complements and expands our machine vision offerings across several industries. The operating results of Photoneo are included in the AVA segment.

See Note 5, Business Acquisitions in the Notes to Consolidated Financial Statements for additional details.

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Results of Operations: Year Ended 2025 versus 2024 and Year Ended 2024 versus 2023

Consolidated Results of Operations

(amounts in millions, except percentages)

Net sales:

Net sales to customers by geographic region were as follows (amounts in millions, except percentages):

Operating expenses are summarized below (amounts in millions, except percentages):

Year Ended December 31, As a Percentage of Net sales

Amortization of intangible assets 114 104 104 NM NM NM

Acquisition and integration costs 24 6 6 NM NM NM

Exit and restructuring costs 76 17 98 NM NM NM

Consolidated Organic Net sales growth:

Year Ended December 31,

Reported GAAP Consolidated Net sales growth 8.3 % 8.7 %

Adjustments:

Impact of foreign currency translations (1) — % (0.6) %

Impact of acquisitions (2) (2.1) % — %

Consolidated Organic Net sales growth (3) 6.2 % 8.1 %

(1)Operating results reported in U.S. Dollars are affected by foreign currency exchange rate fluctuations. Foreign currency translation impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. Dollar. This impact is calculated by translating the current period results at the currency exchange rates used in the comparable prior year period as well as removing realized cash flow hedge gains and losses from both the current and prior year periods.

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

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

2025 compared to 2024

Total Net sales increased $415 million or 8.3% compared to the prior year reflecting growth in both our AVA and CF segments associated with improved demand trends that began in the middle of 2024, along with contributions from our recent Elo and Photoneo acquisitions. Excluding the effects of foreign currency changes and acquisitions, Consolidated Organic Net sales increased by 6.2%.

Gross margin decreased to 48.1% for the current year compared to 48.4% in the prior year. The decrease was primarily due to unfavorable impacts of tariffs, net of mitigating actions, along with lower services and software margins, largely offset by volume leverage favorability. Gross margin was higher in AVA and declined in CF. As we exited 2025, the unfavorable impacts of existing import tariffs have been fully mitigated.

Operating expenses for the years ended December 31, 2025 and 2024 were $1,893 million and $1,671 million, or 35.1% and 33.5% of Net sales, respectively. Current year Operating expenses were higher than the prior year primarily due to higher employee and employee-related costs, the inclusion of operating expenses and higher acquisition and integration costs associated with recently acquired companies, and higher exit and restructuring costs primarily driven by the planned divestiture of our robotics automation solutions business. The higher employee and employee-related costs in the current year include higher share-based compensation costs, primarily driven by changes made in the current year to the timing of the annual grant and eligibility provisions as well as improved expected attainment associated with performance-based awards.

Operating income was $700 million for the current year compared to $742 million for the prior year. The decrease was due to higher Operating expenses, partly offset by higher Gross profit.

Total other expense, net, increased primarily due to non-recurring interest rate swap gains in the prior year and foreign exchange transaction losses in the current year, partly offset by lower net interest costs associated with the Company’s borrowings driven by rate favorability and higher interest income on cash equivalents in the current year.

The Company’s effective tax rates for the years ended December 31, 2025 and December 31, 2024 were 25.2% and 16.9%, respectively. The increase in the effective tax rate compared to the prior year was primarily due to increased taxes related to foreign earnings subject to U.S. taxation as a result of 2025 U.S tax legislation,lower share-based compensation deductions, increased reserves for uncertain tax positions, and U.S. state income taxes, partly offset by the generation of U.S. and Canadian tax credits and the release of certain Canadian valuation allowance reserves.

Net income decreased 20.6% compared to the prior year due to lower Operating income, higher non-operating expenses, and higher income taxes, as described above.

Results of Operations by Segment

The following commentary should be read in conjunction with the financial results of each reportable business segment as detailed in Note 20, Segment Information & Geographic Data in the Notes to Consolidated Financial Statements. To the extent applicable, Share-based Compensation, 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 intangible assets, and business acquisition purchase accounting adjustments) are excluded from segment results.

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Connected Frontline (“CF”)

(amounts in millions, except percentages)

Net sales:

CF Organic Net sales growth:

Year Ended December 31,

CF Reported GAAP Net sales growth 9.1 % 19.0 %

Adjustments:

Impact of foreign currency translations (1) — % (0.5) %

Impact of acquisition (2) (3.5) % — %

CF Organic Net sales growth (3) 5.6 % 18.5 %

(2)For purposes of computing Organic Net sales growth, amounts directly attributable to the acquisition of Elo are excluded for twelve months following the September 30, 2025 acquisition date.

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

2025 compared to 2024

Total Net sales for CF increased $246 million, or 9.1%, compared to the prior year primarily due to higher sales of mobile computing products and the net sales of Elo. CF Organic Net sales increased by 5.6%.

Gross margin decreased to 47.2% in the current year compared to 49.2% in the prior year primarily due to unfavorable impacts of tariffs, net of mitigating actions, and lower services and software margins, partly offset by volume leverage favorability.

Operating income increased 4.7% in the current year compared to the prior year due to higher Gross profit, partly offset by higher Operating expenses. The inclusion of Elo’s results of operations also contributed to the higher Gross profit and Operating expenses.

2024 compared to 2023

Total Net sales for CF increased $434 million, or 19.0%, compared to 2023 primarily due to higher sales of mobile computing products, favorable foreign currency changes, as well as higher services and software sales. CF Organic Net sales increased by 18.5%.

Gross margin increased to 49.2% in 2024 compared to 45.2% in 2023 primarily due to volume leverage, favorable business mix, higher service and software margins, lower freight rates, and lower inventory-related charges.

Operating income increased 70.4% in 2024 compared to 2023 due to higher Gross profit, partly offset by higher Operating expenses.

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Asset Visibility & Automation (“AVA”)

(amounts in millions, except percentages)

Net sales:

AVA Organic Net sales growth (decline):

Year Ended December 31,

AVA Reported GAAP Net sales growth (decline) 7.5 % (1.6) %

Adjustments:

Impact of foreign currency translations (1) — % (0.6) %

Impact of acquisition (2) (0.5) % — %

AVA Organic Net sales growth (decline) (3) 7.0 % (2.2) %

(2)For purposes of computing AVA Organic Net sales growth (decline), amounts directly attributable to the acquisition of Photoneo are excluded for twelve months following the February 28, 2025 acquisition date.

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

2025 compared to 2024

Total Net sales for AVA increased $169 million, or 7.5%, compared to the prior year primarily due to higher sales of printing products, as well as higher sales of RFID, supplies and sensors, and data capture products. AVA Organic Net sales increased by 7.0%.

Gross margin increased to 50.0% in the current year compared to 48.0% for the prior year primarily due to primarily due to favorable business mix, lower inventory related charges, and volume leverage favorability.

Operating income for the current year increased 22.4% compared to the prior year due to higher Gross profit partially offset by higher Operating expenses.

2024 compared to 2023

Total Net sales for AVA decreased $37 million, or 1.6%, compared to 2023 primarily due to lower sales of data capture and printing products, partly offset by favorable foreign currency changes and higher sales of services and software and RFID products. AVA Organic Net sales decreased by 2.2%.

Gross margin increased to 48.0% in 2024 compared to 47.7% in the previous year primarily due to favorable business mix, partly offset by higher inventory related charges.

Operating income decreased by 1.6% in 2024 compared to 2023 due to lower Gross profit, partly offset by lower Operating expenses.

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Liquidity and Capital Resources

The primary factors that influence our liquidity include the amount and timing of cash collections from our customers, cash payments to our suppliers, capital expenditures, acquisitions, and share repurchases. Management believes that our existing capital resources, inclusive of available borrowing capacity on debt and other financing facilities and funds generated from operations, are sufficient to meet anticipated capital requirements and service our indebtedness. The following table summarizes our cash flow activities for the years indicated (in millions):

Cash flow provided by (used in):

Effect of exchange rates on cash balances 1 (3) — 4 (3)

Cash flow provided by (used in):

Less: Purchases of property, plant and equipment (86) (59) (87) (27) 28

(1)Free cash flow, a non-GAAP measure, is defined as Net cash provided by (used in) operating activities in a period minus purchases of property, plant and equipment (capital expenditures) made in that period.

2025 vs. 2024

The change in our cash and cash equivalents balance during the current year was primarily due to the following:

•$96 million decrease in net operating cash inflows primarily due to larger reductions in inventory in the prior year, higher employee incentive compensation payments in the current year, and cash receipts from the settlements of terminated interest rate swap agreements in the prior year. These items were partly offset by favorable timing of customer collections.

•$1,398 million increase in net investing cash outflows primarily due to the acquisitions of Elo and Photoneo and higher capital expenditures in the current year.

•$49 million increase in net financing cash outflows primarily due to higher share repurchases in the year, partly offset by borrowings to help fund the acquisition of Elo in the fourth quarter as well as the timing of transactions associated with servicing factored receivables.

•Free cash flow remains strong, with the decline compared to the prior year due to lower operating cash inflows and higher capital expenditures, as described above.

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Company Debt

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

December 31,

Revolving Credit Facility 275 —

Receivables Financing Facility 161 108

Less: Unamortized debt issuance costs (8) (9)

Less: Unamortized discounts (2) (3)

Less: Current portion of debt (141) (79)

In the fourth quarter of 2025, we increased our borrowings under the Revolving Credit Facility to help fund the acquisition of Elo. See Note 12, Long-Term Debt in the Notes to Consolidated Financial Statements for further details related to the Company’s debt instruments.

Share Repurchases

During the year ended December 31, 2025, the Company repurchased 2,138,127 shares of common stock for approximately $587 million. Subsequent to the year ended December 31, 2025, the Company repurchased 401,649 shares of common stock for approximately $100 million through February 5, 2026. Additionally, on February 4, 2026, the Company’s Board of Directors authorized additional share repurchases of up to $1 billion. The level of the Company’s repurchases depends on a number of factors, including its financial condition, capital requirements, cash flows, results of operations, future business prospects and other factors its management may deem relevant. The timing, volume, and nature of repurchases are also subject to market conditions, applicable securities laws and other factors and may be amended, suspended or discontinued at any time.

Future Cash Requirements

We believe that our Cash and cash equivalents, which totaled $125 million as of December 31, 2025, along with anticipated cash generation from operations and available borrowing capacity on debt and other financing facilities, will be sufficient to fund the Company’s cash requirements during the next 12 months and thereafter based on our current business plans.

Included in the Company’s Cash and cash equivalents are amounts held by foreign subsidiaries, which was $39 million and $52 million as of December 31, 2025 and 2024, respectively. We do not expect that Cash and cash equivalents held by foreign subsidiaries will need to be repatriated to fund the Company’s U.S. operations based on current cash requirements.

Our cash requirements during the next 12 months and thereafter include payments to satisfy the following obligations:

•Purchase obligations — The Company has a limited number of multi-year purchase commitments, primarily related to semiconductors and cloud services, which contain minimum purchase requirements and are non-cancellable. As of December 31, 2025, these multi-year commitments were approximately $101 million. This amount excludes routine purchase orders for goods and services, as well as amounts already reflected within Current liabilities on the Consolidated Balance Sheet. See Note 14, Accrued Liabilities, Commitments and Contingencies in the Notes to Consolidated Financial Statements for additional details.

•Debt obligations — We expect to make total payments of approximately $275 million associated with the Company’s debt facilities in 2026. This expected use of cash is based on the Company’s current borrowings and applicable interest rates and margins as of December 31, 2025, and includes principal and interest payments. In the ordinary course of business, the Company may decide to borrow additional amounts or repay principal earlier than contractually owed, which would affect future cash payments. See Note 12, Long-Term Debt in the Notes to Consolidated Financial Statements for further details related to the Company’s debt facilities.

•Leases obligations — We lease various manufacturing and repair facilities, distribution centers, research facilities, sales and administrative offices, equipment, and vehicles. As of December 31, 2025, the Company’s fixed lease commitments totaled $234 million, of which $49 million is payable in 2026. See Note 13, Leases in the Notes to Consolidated Financial Statements for further details related to the Company’s lease arrangements.

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In addition to the expected cash requirements described above, we may use cash to fund strategic acquisitions, investments, or repurchase common stock under our share repurchase program. In October 2025, we announced our commitment to repurchase $500 million of shares over the following twelve months, of which $403 million had already been repurchased as of February 5, 2026.

We also expect to spend approximately $85 million to $95 million on capital expenditures in 2026.

Critical Accounting Estimates

Management prepared the consolidated financial statements of the Company under accounting principles generally accepted in the U.S. The application of these principles requires the use of estimates which affect the amounts reported in our consolidated financial statements. While we believe that our estimates are reasonable based upon available information, actual results could differ substantially from those estimates. Note 2, Significant Accounting Policies in the Notes to Consolidated Financial Statements provides additional discussion of these items along with other significant accounting policies of the Company. The accounting estimates described below have been identified by Management as those that are most significant to our financial statements.

Income Taxes

We estimate a provision or benefit for income taxes and amounts to be settled or recovered in several tax jurisdictions globally. Our estimates are complex and involve significant judgments and interpretations of regulations. Resolution of income tax treatments in individual jurisdictions may not be known for several years after completion of a given year. We are also required to evaluate the realizability of our deferred tax assets on an ongoing basis, which requires estimation of our ability to generate future taxable income. In particular, our income tax provision or benefit is dependent on our ability to forecast future taxable income in the U.S., U.K., Singapore, and other jurisdictions. Significant judgments included in our forecasts include projecting future sales volumes and pricing, costs to manufacture and procure products and to deliver offerings, among other factors. Our estimate of the current year income tax provision includes the impact of the 2025 U.S. tax legislation.

Acquisitions

We account for acquired businesses using the acquisition method of accounting. This method requires that the purchase price be allocated to the identifiable assets acquired and liabilities assumed at their estimated fair values. The excess of the purchase price over the identifiable assets acquired and liabilities assumed is recorded as goodwill. The estimates used to determine the fair values of long-lived intangible assets can be complex and require judgment. We generally value intangible assets using income-based valuation methodologies, such as the excess earnings method, which require critical estimates that include, but are not limited to, future expected cash flows from revenues and the determination of discount rates.

Goodwill Impairment

Our goodwill impairment testing includes a comparison of the estimated fair value of each of our reporting units to its carrying value. Fair value determinations require judgment and can be sensitive to changes in underlying assumptions, estimates, as well as market factors. We estimate the fair value of reporting units using both income and market-based valuation approaches. Estimating the fair value of reporting units requires that we make assumptions and estimates including projections of revenue and income growth rates as well as cash flows; capital investments; competitive and customer trends; appropriate peer group selection; market-based discount rates and other market factors. Our annual impairment testing, most recently completed in the fourth quarter of 2025 both immediately before and after the Company’s segment and reporting unit change, continues to indicate that the fair values of each of our reporting units exceed their respective carrying values.

Revenue Recognition

We recognize revenues when we transfer control of promised offerings to our customers in an amount that reflects the consideration we expect to receive. The consideration that we expect to receive is estimated by reflecting reductions to our transaction price for product returns, rebates, and other incentives. These estimates are developed using the expected value that the Company anticipates receiving and are based on recent trends observed in similar transactions. Additionally, some of our contracts with customers contain multiple performance obligations, including various hardware, software, and/or services. For such contracts that contain multiple performance obligations, we allocate the estimated total transaction price to each performance obligation based on relative standalone selling prices (“SSP”). The determination of SSP is established at a regional level. SSP is based on observable prices in recent standalone transactions for the same or similar offerings, to the extent available, which is often applicable to tangible products and software licenses. Alternatively, in the absence of recent observable prices, the Company generally applies the expected cost-plus margin approach to professional services, repair and maintenance services, and solution offerings. There were no changes to our estimation processes for consideration received or SSP that materially affected revenues during the year.

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New Accounting Pronouncements

See Note 2, Significant Accounting Policies in the Notes to Consolidated Financial Statements regarding recent accounting pronouncements.

Non-GAAP Measures

The Company has provided reconciliations of the supplemental non-GAAP financial measures, as defined under the rules of the Securities and Exchange Commission, presented herein to the most directly comparable financial measures calculated and presented in accordance with GAAP.

These supplemental non-GAAP financial measures – Consolidated Organic Net sales growth, CF Organic Net sales growth, AVA Organic Net sales growth (decline), and Free cash flow – are presented because our management evaluates our financial results both including and excluding the effects of business acquisitions and foreign currency translation, as applicable. Management believes that the supplemental non-GAAP financial measures presented provide additional perspective and insights when analyzing the core operating performance of our business from period to period and trends in our historical operating results. These supplemental non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with the GAAP financial measures presented.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Zebra is primarily exposed to the following types of market risk: interest rate and foreign currency.

Interest Rate Risk

We are exposed to interest rate volatility with regard to existing debt issuances. Our exposure is primarily tied to the Secured Overnight Financing Rate (“SOFR”). We periodically use interest rate derivative contracts, including interest rate swaps, to mitigate the Company’s exposure from interest rate changes on existing debt and future debt issuances, thereby reducing the volatility of our financing costs and, based on current and projected market conditions, fix a portion of variable rate debt. Generally, under these interest rate swaps, we agree with a counterparty to exchange variable rate for fixed rate interest amounts with an agreed upon notional amount.

As of December 31, 2025, approximately $2.0 billion of our $2.5 billion of total debt outstanding had interest determined by reference to a variable rate index. A one percentage point increase or decrease in interest rates would increase or decrease annual interest expense by approximately $20 million. Refer to Note 11, Derivative Instruments in the Notes to Consolidated Financial Statements for further discussion of these risk mitigation activities. Exposure to variable interest may increase or decrease, to the extent that the Company’s borrowings under its debt facilities increase or decrease, respectively.

Foreign Currency Risk

We provide offerings in approximately 179 countries throughout the world and, therefore, at times are exposed to risk based on movements in foreign exchange rates. In some instances, we invoice customers in their local currency and have a resulting foreign currency denominated revenue transaction and accounts receivable. We also purchase certain raw materials and other items in foreign currencies. We manage these risks using derivative financial instruments, including foreign currency exchange contracts. See Note 11, Derivative Instruments in the Notes to Consolidated Financial Statements for further discussions of derivative and hedging activities.

The currencies that we are primarily exposed to fluctuations in foreign currency exchange rates are the Euro, British Pound Sterling, and Czech Koruna. A one percentage point increase or decrease in exchange rates relative to the U.S. Dollar would increase or decrease our pre-tax income by approximately $2 million. This amount is inclusive of the impact of associated derivative contracts.

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Item 8.Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page

Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) 42

Consolidated Balance Sheets as of December 31, 2025 and 2024 45

Notes to Consolidated Financial Statements 50

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Zebra Technologies Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Zebra Technologies Corporation and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 12, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Acquisition of Elo Holdings, Inc. - Valuation of Developed Technology and Customer Relationships

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Accounting for Uncertain Tax Positions

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/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2005.

Chicago, Illinois

February 12, 2026

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

December 31,

Assets

Current assets:

Cash and cash equivalents $ 125 $ 901

Income tax receivable 31 20

Prepaid expenses and other current assets 110 134

Property, plant and equipment, net 353 305

Right-of-use lease assets 166 167

Liabilities and Stockholders' Equity

Current liabilities:

Current portion of long-term debt $ 141 $ 79

Income taxes payable 12 36

Long-term lease liabilities 157 155

Deferred income taxes 32 57

Long-term deferred revenue 396 304

Other long-term liabilities 116 70

Stockholders’ Equity:

Preferred stock, $.01 par value; authorized 10,000,000 shares; none issued — —

Additional paid-in capital 814 669

Accumulated other comprehensive loss (18) (44)

Total Liabilities and Stockholders’ Equity $ 8,502 $ 7,968

See accompanying Notes to Consolidated Financial Statements.

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

Year Ended December 31,

Net sales:

Cost of sales:

Operating expenses:

Acquisition and integration costs 24 6 6

Exit and restructuring costs 76 17 98

Other (loss) income, net:

Foreign exchange (loss) gain (18) 5 (2)

Other expense, net (14) (14) (12)

See accompanying Notes to Consolidated Financial Statements.

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

Year Ended December 31,

Other comprehensive income, net of tax:

Changes in unrealized (losses) gains on sales hedging (26) 27 6

Foreign currency translation adjustment 52 (17) 6

See accompanying Notes to Consolidated Financial Statements.

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except share data)

Share-based compensation — — 55 — — — 55

Repurchase of common stock (194,319) — — (52) — — (52)

Foreign currency translation adjustment — — — — — 6 6

Share-based compensation — — 89 — — — 89

Repurchase of common stock (130,560) — — (47) — — (47)

Foreign currency translation adjustment — — — — — (17) (17)

Share-based compensation — — 163 — — — 163

Excise tax on share repurchases — — — (5) — — (5)

Foreign currency translation adjustment — — — — — 52 52

See accompanying Notes to Consolidated Financial Statements.

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

Year Ended December 31,

Cash flows from operating activities:

Impairment of goodwill, intangibles and other assets 45 — —

Equity-settled share-based compensation 163 89 55

Deferred income taxes 21 (94) (36)

Unrealized gain on forward interest rate swaps — (31) (9)

Changes in operating assets and liabilities:

Other assets 6 9 (25)

Settlement liability — (45) (180)

Cash receipts on forward interest rate swaps — 86 26

Other operating activities 3 (1) 9

Net cash provided by (used in) operating activities 917 1,013 (4)

Cash flows from investing activities:

Acquisition of businesses, net of cash acquired (1,365) — —

Purchases of property, plant and equipment (86) (59) (87)

Proceeds from sale (purchases) of short-term investments — 5 (4)

Proceeds from the sale of long-term investments 1 — —

Purchases of long-term investments (5) (3) (1)

Net cash used in investing activities (1,455) (57) (92)

Cash flows from financing activities:

Payment of debt issuance costs, extinguishment costs and discounts — (9) —

Payments for repurchases of common stock (587) (47) (52)

Net payments related to share-based compensation plans (14) (30) (8)

Net cash (used in) provided by financing activities (239) (190) 117

Cash and cash equivalents at end of period $ 125 $ 901 $ 137

Supplemental disclosures of cash flow information:

Interest paid, net of forward interest rate swaps $ 129 $ 55 $ 111

See accompanying Notes to Consolidated Financial Statements.

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 Description of Business and Basis of Presentation

Zebra Technologies Corporation and its subsidiaries (“Zebra” or the “Company”) is a global leader focused on digitizing and automating operations and improving enterprise workflows on the frontline in the automatic identification and data capture offerings 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, hospitality, public sector, and other industries. We provide our offerings globally through a direct sales force and an extensive network of channel partners.

Effective in the fourth quarter, the Company’s reportable segments changed to Connected Frontline (“CF”) and Asset Visibility & Automation (“AVA”). This change aligns with how we are operating our business to advance our strategy and the level of detailed financial information reviewed by our chief operating decision-maker going forward. Also effective in the fourth quarter, our segment results exclude share-based compensation expense from the measurement of segment operating income. Historical segment results have been recasted to conform with the current period presentation. These changes did not have an impact on our results of operations, cash flows, or financial condition. Refer to Part I, Item 1 of this document for additional information about our operating segments.

Note 2 Significant Accounting Policies

Principles of Consolidation

These accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the U.S. and include the accounts of Zebra and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Fiscal Calendar

The Company’s fiscal year is a 52-week period ending on December 31. Interim fiscal quarters end on a Saturday and generally include 13 weeks of operating activity. During the 2025 fiscal year, the Company’s quarter end dates were March 29, June 28, September 27, and December 31.

Use of Estimates

These consolidated financial statements were prepared using estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period as further discussed in the following footnotes to the Consolidated Financial Statements. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash consists primarily of deposits with banks. Cash equivalents include deposits with banks and other highly liquid investments with original maturities of less than or equal to three months. Cash equivalents are readily convertible to known amounts of cash and are so near their maturity that they present insignificant risk of a change in value because of changes in interest rates.

Accounts Receivable

Accounts receivable consist primarily of amounts due to us from our customers, net of variable consideration and an allowance for doubtful accounts. Collateral on trade accounts receivable is generally not required. The Company maintains an allowance for doubtful accounts for estimated uncollectible accounts receivable that is based on expected credit losses. Expected credit losses are estimated based on historical loss experience, the durations of outstanding trade receivables, and expectations of the future economic environment. Accounts are written off against the allowance account when they are determined to be no longer collectible.

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Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is generally determined based on moving-average cost (which approximates cost on a first-in, first-out basis). Manufactured inventory costs include materials, labor, and manufacturing overhead. Purchased inventory cost also includes internal purchasing overhead costs. Raw material inventories primarily consist of product components as well as supplies used in repair operations. Provisions are made to reduce excess and obsolete inventories to their estimated net realizable values as well as to record liabilities on non-cancellable purchase commitments. These provisions are based on forecasted demand, experience with specific customers or suppliers, the age and nature of the inventory or committed purchase, and the ability to redistribute inventory to other programs or rework it into other consumable inventory as well as renegotiate contractual terms with suppliers.

Property, Plant and Equipment

Property, plant and equipment is stated at cost net of accumulated depreciation. Depreciation is computed primarily using the straight-line method over the estimated useful lives of the various classes of property, plant and equipment, which are thirty years for buildings and range from three to ten years for all other asset categories. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or ten years.

Leases

The Company recognizes right-of-use (“ROU”) assets and lease liabilities for its lease commitments with terms greater than one year. Contractual options to extend or terminate lease agreements are reflected in the lease term when they are reasonably certain to be exercised. The initial measurement of ROU assets and lease liabilities is based on the present value of future lease payments over the lease term as of the commencement date. In determining future lease payments, the Company has elected to not separate lease and non-lease components. As the Company’s lease arrangements do not provide an implicit interest rate, we apply the Company’s incremental borrowing rate based on the information available at the commencement date in determining the present value of future lease payments. Relevant information used in determining the Company’s incremental borrowing rate includes the duration of the lease, the transaction currency of the lease, and the Company’s credit risk relative to risk-free market rates. The Company’s ROU assets are measured including any initial direct costs incurred, net of lease incentives. The Company’s lease agreements do not contain any significant residual value guarantees or restrictive covenants. All leases of the Company are classified as operating leases, with lease expense being recognized on a straight-line basis.

Income Taxes

The Company accounts for income taxes under the liability method in accordance with Accounting Standards Codification (“ASC”) 740 Topic, Income Taxes. Accordingly, deferred income taxes are provided for the future tax consequences attributable to differences between the carrying amount of assets and liabilities for financial reporting and income tax purposes. Deferred tax assets and liabilities are measured using tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is established when necessary to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company recognizes the benefit of tax positions when it is more likely than not to be sustained on its technical merits. The Company recognizes interest and penalties related to income tax matters as part of income tax expense. The Company has elected consolidated tax filings in certain of its jurisdictions which may allow the group to offset one member’s income with losses of other members in the current period and on a carryover basis. The income tax effects of non-inventory intra-entity asset transfers are recognized in the period in which the transfer occurs. The Company classifies its balance sheet accounts by applying jurisdictional netting principles for locations where consolidated tax filing elections are in place.

U.S. tax law contains the Global Intangible Low-Taxed Income (“GILTI”), Base Erosion Anti-Avoidance Tax (“BEAT”), and Deduction for Foreign-Derived Intangible Income (“FDII”) provisions, which relate to the taxation of certain foreign income. The Company recognizes its GILTI, BEAT, and FDII inclusions, when applicable, within income tax expense in the year included in its U.S. tax return.

Goodwill

Goodwill is tested annually for impairment, or more frequently if indicators of impairment exist. When evaluating goodwill for impairment as part of our annual assessment, we include consideration of current events and circumstances. Our annual impairment testing also includes a comparison of the estimated fair value of each reporting unit to its carrying value. If the carrying value of a reporting unit exceeds its estimated fair value, goodwill would be considered to be impaired and reduced to its implied fair value. We estimate the fair value of reporting units using a weighted combination of the income and market approaches. The income approach requires management to estimate projected future operating and cash flow results, economic projections, and discount rates. The market approach estimates fair value using comparable marketplace fair value data from a comparable industry group.

As discussed in Note 1, Description of Business and Basis of Presentation, the Company changed its operating segments effective beginning in the fourth quarter of 2025. The Company completed its annual goodwill impairment testing in the fourth quarter of 2025 and, also completed testing both immediately before and after its segment change, none of which resulted in an

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impairment of goodwill. See Note 6, Goodwill and Other Intangibles for additional information related to the allocation of goodwill to the new operating segments.

Other Intangible Assets

Other intangible assets consist primarily of technology and patent rights, customer relationships, and trade names. These assets, which are generally acquired through business combinations, are recorded at fair value upon acquisition and amortized on a straight-line basis over the asset’s useful life which typically ranges from two to eleven years.

Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of

The Company accounts for long-lived assets in accordance with the provisions of ASC Topic 360, Property, Plant and Equipment, whichrequires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the sum of the undiscounted cash flows expected to result from the use and the eventual disposition of the asset. If such assets are impaired, the impairment to be recognized is the excess of the carrying amount over the fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Investments in Securities

The Company’s investments primarily include equity securities that are accounted for at cost, adjusted for impairment losses or changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. These investments are primarily in venture capital backed technology companies where the Company's ownership interest is less than 20% and the Company does not have the ability to exercise significant influence. See Note 8, Investments for additional information.

Revenue Recognition

Revenues are primarily comprised of sales of hardware, supplies, services, and software offerings. We recognize revenues when we transfer control of promised goods or services to our customers in an amount that reflects the consideration that we expect to receive, which includes estimates of variable consideration, in exchange for those goods or services. We are typically the principal in all elements of our transactions and record Net sales and Cost of sales on a gross basis. Substantially all revenues for tangible products, supplies, and perpetual or term software licenses are recognized at a point in time, which is generally upon shipment, when control and the risks and rewards of ownership have transferred to the customer, and the Company has a contractual right to payment. Revenues for our service offerings and Company-hosted software and solution offerings are typically recognized over time. Our service offerings include repair and maintenance service contracts, as well as professional services such as installation, integration and provisioning that typically occur in the early stages of a project. The average life of an initial repair and maintenance service contract is approximately three years. One year renewals are available thereafter. Professional service arrangements range in duration from a day to several weeks or months.

The Company elects to exclude sales and other governmental taxes that are collected by the Company from a customer, from the transaction price. The Company also considers shipping and handling activities as part of its fulfillment costs and not as a separate performance obligation. See Note 3, Revenues for additional information.

Research and Development Costs

Research and development (“R&D”) costs include:

•Salaries, benefits, and other R&D personnel related costs;

•Consulting and other outside services used in the R&D process;

•Engineering supplies;

•Engineering related information systems costs; and

•Allocation of building and related costs.

R&D costs are expensed as incurred, including those associated with developing and maintaining software within our customer offerings. The Company typically applies a dynamic and iterative approach to developing customer product and software offerings as well as ongoing software maintenance, and feature and functionality enhancement releases, and accordingly, such costs do not meet capitalization criteria.

Advertising

Advertising costs are expensed as incurred. These costs totaled $27 million, $28 million and $31 million for the years ended 2025, 2024 and 2023, respectively.

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Warranties

In general, the Company provides warranty coverage of one year on mobile computers and batteries. Printers are warrantied from one to three years, depending on the product. Advanced data capture products are warrantied from one to five years, depending on the product. Thermal printheads are warrantied from six months to one year, depending on the product, and battery-based products, such as location tags, are covered by a 90-day warranty. Point-of-sale solutions, self-serve kiosks, and interactive touchscreen displays are warrantied from 18 months to five years, depending on the product. A provision for warranty expense is adjusted quarterly based on historical and expected warranty experience.

Contingencies

The Company establishes a liability for loss contingencies when the loss is both probable and estimable. See Note 14, Accrued Liabilities, Commitments and Contingencies for additional information.

Fair Value of Financial Instruments

Fair value is 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. Our financial assets and liabilities that are accounted for at fair value have generally included our employee deferred compensation plan investments, foreign currency forwards, and interest rate swaps. In accordance with ASC Topic 815, Derivatives and Hedging (“ASC 815”), we recognize derivative instruments and hedging activities as either assets or liabilities on the Consolidated Balance Sheets and measure them at fair value. Accounting for the gains and losses on our derivatives resulting from changes in fair value is dependent on the use of the derivative and whether it is designated and qualifies for hedge accounting.

The Company utilizes foreign currency forwards to hedge certain foreign currency exposures. We use broker quotations or market transactions, in either the listed or over-the-counter markets, to value our foreign currency exchange contracts. The Company also periodically utilizes interest rate swaps to hedge a portion of the variability in future cash flows on debt. We use relevant observable market inputs at quoted intervals, such as forward yield curves and the Company’s own credit risk, to value our interest rate swaps. See Note 11, Derivative Instruments for additional information on the Company’s derivatives and hedging activities.

The Company’s securities held for its deferred compensation plans are measured at fair value using quoted prices in active markets for identical assets. If active markets for identical assets are not available to determine fair value, then we use quoted prices for similar assets or inputs that are observable either directly or indirectly.

The carrying amounts of cash and cash equivalents, receivables, and accounts payable approximate fair value due to the short-term nature of those financial instruments. See Note 10, Fair Value Measurements for information related to financial assets and liabilities carried at fair value.

Share-Based Compensation

The Company has share-based compensation plans and an employee stock purchase plan under which shares of Class A Common Stock are available for future grant and purchase. The Company recognizes compensation costs over the required service period of awards, which is typically three years; subject to certain employment conditions. These costs are recognized net of estimated forfeitures. Compensation costs associated with awards with graded vesting terms are recognized on a straight-line basis. See Note 15, Share-Based Compensation for additional information.

Foreign Currency Translation

The balance sheet accounts of the Company’s subsidiaries that have not designated the U.S. Dollar as its functional currency are translated into U.S. Dollars using the period-end exchange rate, and statement of earnings items are translated using the average exchange rate for the period. The resulting translation gains or losses are recorded in Stockholders’ equity as a cumulative translation adjustment, which is a component of accumulated comprehensive loss (“AOCI”) within the Consolidated Balance Sheets.

Acquisitions

We account for acquired businesses using the acquisition method of accounting which requires that the purchase price be allocated to the identifiable assets acquired and liabilities assumed, generally measured at their estimated fair values. The excess of the purchase price over the identifiable assets acquired and liabilities assumed is recorded as goodwill. The estimates used to determine the fair values of long-lived assets, such as intangible assets, can be complex and require judgment. Critical estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from revenues and the determination of discount rates. Management’s estimates of fair value are based on estimates and assumptions utilized as part of the purchase price allocation process and are believed to be reasonable; however, elements of these estimates and assumptions are inherently uncertain and subject to refinement during the measurement period, which is up to one year after the acquisition date.

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Recently Adopted Accounting Pronouncements

In the current year, the Company adopted Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires an annual tabular effective tax rate reconciliation disclosure including information for specified categories and jurisdiction levels, as well as disclosure of income taxes paid, net of refunds received, disaggregated by federal, state/local, and significant foreign jurisdiction. This ASU was applied retrospectively and did not have an impact on our results of operations, cash flows, or financial condition.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of certain categories of expenses that are included within expense captions presented on the Consolidated Statements of Operations on an annual and interim basis. This ASU will be effective for the Company’s fiscal December 31, 2027 year-end and interim periods thereafter, with early adoption permitted. We are assessing the impact of this guidance on our disclosures; it will not have an impact on our results of operations, cash flows, or financial condition.

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient to assume that current conditions as of the balance sheet date will remain unchanged while estimating the expected credit losses on accounts receivables and contract assets. This ASU will be effective for the Company beginning in 2026. We have assessed the impact of this ASU and do not expect it to have a significant impact to the Company’s consolidated financial statements.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which amends the criteria for capitalizing internal-use software development costs. This ASU will be effective for the Company beginning in 2028, with early adoption permitted. While we are currently assessing the impact of this ASU, we do not expect it to have a significant impact to the Company’s consolidated financial statements.

Note 3 Revenues

The Company recognizes revenue to depict the transfer of goods, services or software solutions to a customer at an amount that reflects the consideration which it expects to receive. To determine total expected consideration, the Company estimates elements of variable consideration, which primarily include product rights of return, rebates, and other incentives. These estimates are developed using the expected value method and are reviewed and updated, as necessary, at each reporting period. Revenues, inclusive of variable consideration, are recognized to the extent it is probable that a significant reversal in cumulative revenues recognized will not occur in future periods.

We enter into contracts that may include combinations of tangible products, services, and software solutions, which are generally capable of being distinct and accounted for as separate performance obligations. We evaluate whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract has more than one performance obligation. This evaluation requires judgment, and the decision to combine a group of contracts or separate the combined or single contract into multiple distinct performance obligations may impact the amount of revenue recorded in a reporting period. We deem performance obligations to be distinct if the customer can benefit from the product or service on its own or together with readily available resources (“capable of being distinct”) and if the transfer of products, services, or software solutions is separately identifiable from other promises in the contract (“distinct within the context of the contract”).

For contract arrangements that include multiple performance obligations, we allocate the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices for each performance obligation. In general, standalone selling prices are observable for tangible products and software licenses, while standalone selling prices for professional services, repair and maintenance services, and solutions are developed primarily with an expected cost-plus margin approach. Regional pricing, marketing strategies, and business practices are evaluated to derive estimated standalone selling prices.

The Company recognizes revenue for each performance obligation upon transfer of control of the promised goods or services. Control is deemed to have been transferred when the customer has the ability to direct the use of and has obtained substantially all of the remaining benefits from the goods and services. The determination of whether control transfers at a point in time or over time requires judgment and includes our consideration of the following: 1) whether the customer simultaneously receives and consumes the benefits provided as the Company performs its promises; 2) whether the Company’s performance creates or enhances an asset that is under control of the customer; and 3) whether the Company’s performance does not create an asset with an alternative use to the Company, while the Company has an enforceable right to payment for its performance completed to date.

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Revenues for tangible products are generally recognized upon shipment, whereas revenues for services 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, 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, CF and AVA, for the years ended December 31, 2025, 2024 and 2023 (in millions):

Segment Tangible Products Services and Software Total

In addition, refer to Note 20, 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 $1.17 billion and $1.19 billion, inclusive of deferred revenue, as of December 31, 2025 and 2024, respectively. On average, remaining performance obligations as of December 31, 2025 and 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 $12 million and $11 million as of December 31, 2025 and 2024, respectively. These contract assets result from timing differences between billing and satisfying performance obligations, inclusive of any impacts 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 years ended December 31, 2025, 2024 and 2023, 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 $842 million and $757 million as of December 31, 2025 and 2024, respectively. The Company recognized $441 million, $455 million and $432 million in revenue that was previously included in the beginning balance of deferred revenue during the years ended December 31, 2025, 2024 and 2023, respectively.

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Our payment terms vary by the type and location of our customer and the products, services, or software solutions offered. The time between invoicing and when payment is due is not significant. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined that our contracts do not include a significant financing component.

Costs to Obtain a Contract

Our incremental direct costs of obtaining a contract, which consist of sales commissions and incremental fringe benefits, are deferred and amortized over the weighted-average contract term. The incremental costs to obtain a contract are derived at a portfolio level and amortized on a straight-line basis. The total ending balance of deferred costs to obtain a contract, which are recorded in Prepaid expenses and other current assets or Other long-term assets on the Consolidated Balance Sheets, depending on the timing of expected amortization, was $32 million and $38 million as of December 31, 2025 and 2024, respectively. Amortization expense, which is recorded in Selling and marketing expense on the Consolidated Statements of Operations, was $30 million, $29 million and $26 million during the years ended December 31, 2025, 2024 and 2023, respectively. Incremental costs of obtaining a contract are expensed as incurred if the amortization period would be less than one year.

Note 4 Inventories

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

Work in process 7 4

Total Inventories, net $ 729 $ 693

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

Note 5 Business Acquisitions

Elo

On September 30, 2025, the Company acquired all of the equity interests in Elo Holdings, Inc. (“Elo”), an innovator of solutions that engage customers, enhance self-service, and accelerate automation across a wide range of end markets. Through its acquisition, the Company expanded its portfolio of self-service and consumer-facing workflow offerings.

The acquisition was accounted for under the acquisition method of accounting for business combinations. The Company’s purchase consideration was $1,303 million comprised of cash paid, net of Elo’s cash on-hand.

The Company utilized estimated fair values as of the acquisition date to allocate the purchase consideration to the identifiable assets acquired and liabilities assumed. The fair value of the net assets acquired was based on several estimates and assumptions, as well as customary valuation techniques, primarily the excess earnings method for technology, the distributor method for customer relationships and the relief from royalty method for trade names. 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 primary fair value estimates still considered preliminary as of December 31, 2025 include intangible assets and income tax-related items.

The preliminary purchase price allocation to assets acquired and liabilities assumed was as follows (in millions):

Identifiable intangible assets $ 501

Inventory 96

Accounts receivable 59

Other assets acquired 41

Deferred tax liabilities (62)

Accounts payable (48)

Other liabilities assumed (60)

Net assets acquired $ 527

Goodwill on acquisition 776

Total purchase price $ 1,303

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The $776 million of goodwill, which is non-deductible for tax purposes, has been allocated to the CF segment and principally relates to the planned global expansion and integration of Elo into the Company’s self-service and consumer-facing workflow offerings.

The purchase price allocation to identifiable intangible assets acquired was as follows:

Fair Value (in millions) Useful Life (in years)

Customer relationships 206 10

Total identifiable intangible assets $ 501

The operating results have been included in the Company’s Consolidated Balance Sheets and Statements of Operations beginning on the acquisition date. Since the September 30, 2025 acquisition, Elo contributed approximately $96 million of Zebra’s consolidated net sales.

The unaudited pro forma net sales of Zebra, assuming that the Elo acquisition was completed on January 1, 2024, were $5,711 million and $5,350 million during the fiscal years ended December 31, 2025 and 2024, respectively. Such unaudited pro forma financial information may not be indicative of the results that would have been obtained had the Elo acquisition actually occurred at the beginning of 2024, nor is it intended to be a projection of future results.

Photoneo

On February 28, 2025, the Company acquired all of the equity interests in Photoneo, a leading developer and manufacturer of 3D machine vision offerings.

The acquisition was accounted for under the acquisition method of accounting for business combinations. 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 each have estimated useful lives of 7 years.

The Company utilized estimated fair values as of the acquisition date to allocate the total purchase consideration to the identifiable assets acquired and liabilities assumed. The fair value of the net assets acquired was based on several estimates and assumptions, as well as customary valuation techniques, primarily the excess earnings method for technology and the distributor method for customer relationships.

The $34 million of goodwill, which is deductible for tax purposes, has been allocated to the AVA segment and principally relates to the expansion of our machine vision offerings across several industries.

Acquisition and integration costs

The Company incurred $24 million, $6 million and $6 million of acquisition-related costs during the years ended December 31, 2025, 2024 and 2023, respectively. These costs are included within Acquisition and integration costs on the Consolidated Statements of Operations and are primarily related to third-party transaction and advisory fees, and integration activities associated with our business acquisitions.

Note 6 Goodwill and Other Intangibles

Goodwill

Changes in the net carrying value of goodwill by segment were as follows (in millions):

CF AVA Total

Photoneo acquisition — 34 34

Foreign exchange impact 3 23 26

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As discussed in Note 1, Description of Business and Basis of Presentation, the Company changed its operating segments effective in the fourth quarter of 2025. Existing goodwill was reallocated to the new reporting units on a relative fair value basis. No events occurred during the fiscal years ended 2025, 2024 or 2023 that indicated it was more likely than not that our goodwill was impaired. See Note 5, Business Acquisitions for further details related to the Company’s acquisitions and purchase price allocations.

Other Intangibles, net

The balances in Other Intangibles, net consisted of the following (in millions):

Amortized intangible assets

Amortization expense was $114 million, $104 million and $104 million for years ended December 31, 2025, 2024 and 2023, respectively.

In relation to the Company’s decision to dispose of or exit its robotics automation solutions business, we recognized an impairment loss of $34 million on our technology and patent-related intangible assets during the year ended December 31, 2025. See Note 9, Exit and Restructuring Costs for additional information.

Estimated future intangible asset amortization expense is as follows (in millions):

Year Ended December 31,

Note 7 Property, Plant and Equipment

Property, plant and equipment, net is comprised of the following (in millions):

December 31,

Machinery and equipment 422 377

Furniture and office equipment 35 33

Software and computer equipment 79 107

Projects in progress 60 43

Property, plant and equipment, gross $ 859 $ 781

Less accumulated depreciation (506) (476)

Property, plant and equipment, net $ 353 $ 305

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Depreciation expense was $71 million, $68 million and $72 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Note 8Investments

A rollforward of the Company’s long-term investments is as follows (in millions):

Year Ended December 31,

Balance at the beginning of the period $ 110 $ 113 $ 113

Loss on long-term investments (11) (6) (1)

Purchases of long-term investments 5 3 1

Proceeds from sale of long-term investments (1) — —

Balance at the end of the period $ 103 $ 110 $ 113

The carrying value of the Company’s long-term investments are included in Other long-term assets on the Consolidated Balance Sheets. Net gains and losses are included within Other expense, net on the Consolidated Statements of Operations.

Note 9 Exit and Restructuring Costs

In the fourth quarter of 2025, the Company decided to dispose of or exit its robotics automation solutions business in an effort to better align resources with its strategic priorities. In relation to this decision, the Company incurred approximately $55 million in total one-time costs during the year ended December 31, 2025, principally consisting of long-lived asset impairments of $45 million, including an intangible asset impairment of $34 million, an ROU lease asset impairment of $8 million, and property, plant and equipment impairment of $3 million. The other one-time costs consisted of employee severance and working capital charges.

In the fourth quarter of 2025, the Company committed to organizational design changes intended to better meet its strategic objectives and improve cost efficiency (referred to as the “2025 Productivity Plan”), principally within the Europe, Middle East, and Africa (“EMEA”) and North America regions. Exit and restructuring charges associated with the 2025 Productivity Plan, which primarily consisted of employee severance and benefits, were $21 million during the year ended December 31, 2025.

The one-time costs associated with the planned disposal or exit of our robotics automation solutions business and the 2025 Productivity Plan are classified within Exit and restructuring on the Consolidated Statements of Operations.

The Company’s outstanding payment obligations of $23 million associated with the above actions are reflected within Accrued liabilities on the Consolidated Balance Sheets.

A rollforward of the liability associated with the Company’s Exit and restructuring activities is as follows (in millions):

Year Ended December 31,

Balance as of the beginning of the year $ 4 $ 22 $ 9

Non-cash utilization — (3) (13)

Cash payments (8) (32) (72)

Balance as of the end of the year $ 23 $ 4 $ 22

Exit and restructuring costs incurred during the years ended December 31, 2024 and 2023 related to the Company’s 2022 Productivity Plan and 2023 voluntary retirement plan.

Note 10 Fair Value Measurements

Financial assets and liabilities are measured using inputs from three levels of the fair value hierarchy in accordance with 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

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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 December 31, 2025 are classified below (in millions):

Level 1 Level 2 Level 3 Total

Assets:

Investments related to the deferred compensation plan $ 48 $ — $ — $ 48

Total Assets at fair value $ 48 $ — $ — $ 48

Liabilities:

Foreign exchange contracts (1) $ 2 $ 5 $ — $ 7

Liabilities related to the deferred compensation plan 48 — — 48

Total Liabilities at fair value $ 50 $ 5 $ — $ 55

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 (Level 2).

•Fair value of hedges against net assets denominated in foreign currencies is calculated at the period-end exchange rate adjusted for current forward points (Level 2). Except, if the hedge has matured but not yet settled as of period end, then the fair value is calculated at the amount at which the hedge is being settled (Level 1).

Note 11 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 commonly uses derivative instruments to manage its exposure to such risks and may elect to designate certain derivatives as hedging instruments under 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):

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Asset (Liability)

Fair Values as of December 31,

Derivative instruments designated as hedges:

Foreign exchange contracts Prepaid expenses and other current assets $ — $ 30

Foreign exchange contracts Accrued liabilities (5) —

Total derivative instruments designated as hedges $ (5) $ 30

Derivative instruments not designated as hedges:

Foreign exchange contracts Prepaid expenses and other current assets $ — $ 1

Foreign exchange contracts Accrued liabilities (2) —

Total derivative instruments not designated as hedges $ (2) $ 1

Total net derivative (liability) asset $ (7) $ 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

Statements of Operations Classification Year Ended December 31,

Derivative instruments not designated as hedges:

Foreign exchange contracts Foreign exchange (loss) gain $ (24) $ 4 $ (4)

Forward interest rate swaps Interest expense, net — 31 9

Total net (loss) gain recognized in income $ (24) $ 35 $ 5

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

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 significantly different as of December 31, 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.

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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 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 $39 million of losses for the year ended December 31, 2025, $11 million of gains for the year ended December 31, 2024 and $15 million of losses for the year ended December 31, 2023. As of December 31, 2025 and 2024, the notional amounts of the Company’s foreign exchange cash flow hedges were €582 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):

December 31,

Notional balance of outstanding contracts:

British Pound/U.S. Dollar £ 14 £ 5

Euro/U.S. Dollar € 92 € 146

Euro/Czech Koruna € 13 € 16

Japanese Yen/U.S. Dollar ¥ 395 ¥ 360

Singapore Dollar/U.S. Dollar S$ 16 S$ 23

Mexican Peso/U.S. Dollar Mex$ 250 Mex$ 142

Polish Zloty/U.S. Dollar zł 71 zł 53

Net fair value of (liabilities) assets of outstanding contracts $ (2) $ 1

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 Facility, which bear interest at variable rates plus applicable margins. The Company manages its exposure to changes in interest rates on variable rate borrowings by periodically utilizing interest rate swaps to economically hedge interest rate exposure based on current and projected market conditions.

The Company had no active interest rate swap agreements during the year ended December 31, 2025.

In 2024, the Company terminated all of its interest rate swap agreements, none of which were designated as hedges, resulting in a $77 million cash receipt that is classified within Cash flows from operating activities on the Consolidated Statements of Cash Flows. Total cash receipts for the fiscal year ended 2024 were $86 million.

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Note 12 Long-Term Debt

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

December 31,

Revolving Credit Facility 275 —

Receivables Financing Facility 161 108

Less: Unamortized debt issuance costs (8) (9)

Less: Unamortized discounts (2) (3)

Less: Current portion of debt (141) (79)

As of December 31, 2025, the future maturities of debt are as follows (in millions):

Total future maturities of debt $ 2,511

All borrowings as of December 31, 2025 were denominated in U.S. Dollars.

The estimated fair value of the Company’s debt approximated $2.5 billion and $2.2 billion as of December 31, 2025 and 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 on May 25, 2027. The Company has made 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 December 31, 2025, the Term Loan A interest rate was 4.97%. Interest payments are made monthly and are subject to variable rates plus an applicable margin.

Senior Notes

The Company’s senior unsecured notes (the “Senior Notes”) have 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 has the option to or could 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 December 31, 2025, the Company had letters of credit totaling $10 million, which reduced remaining funds available for borrowings under the Revolving Credit Facility to $1,215 million. As of December 31, 2025, the Revolving Credit Facility had an average interest rate of 4.79%. 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.

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Receivables Financing Facility

As of December 31, 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 December 31, 2025, the Company’s Consolidated Balance Sheets included $738 million of gross trade receivables that were pledged under the facility. As of December 31, 2025, $161 million had been borrowed, of which $53 million was classified as current. Borrowings under the facility bear interest at a variable rate plus an applicable margin. As of December 31, 2025, the facility had an average interest rate of 4.74%. 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 December 31, 2025, the Company was in compliance with all debt covenants.

Note 13 Leases

The Company leases various manufacturing and repair facilities, distribution centers, research facilities, sales and administrative offices, equipment, and vehicles. All leases are classified as operating leases with remaining terms of up to 10 years, with certain leases containing renewal options and termination options. The Company records ROU assets and lease liabilities on the Consolidated Balance Sheets associated with the fixed lease and non-lease payments of leases with terms greater than one year.

The following table presents activities associated with our leases (in millions):

December 31,

Fixed lease expenses $ 48 $ 50 $ 52

Variable lease expenses 17 20 35

ZBRA US Equity

ZBRA · 10-K · period ended 2025-12-31

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8.Financial Statements and Supplementary Data

ZBRA US Equity☆

ZBRA · 10-K · period ended 2025-12-31

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8.Financial Statements and Supplementary Data

ZBRA US Equity