The Company acquired Photoneo, a 3D machine vision developer, for $62 million in February 2025, expanding its EVM segment. Additionally, a definitive agreement to acquire Elo Holdings, Inc. for approximately $1.3 billion was announced post-quarter, aiming to enhance self-service and automation solutions.

Consolidated Organic Net sales growth was 6.3% for Q2 2025 and 9.0% for the six months ended June 28, 2025. Both AIT and EVM segments contributed positively, with AIT Organic Net sales up 5.8% (Q2) and 12.0% (YTD), and EVM Organic Net sales up 6.5% (Q2) and 7.5% (YTD).

Zebra continues to advance its EAI vision by expanding beyond traditional AIDC markets into areas like factory production, supply chain, retail, and healthcare. This strategy aims to transform activities through data analysis and actionable insights, leveraging cloud-based software solutions.

Management is actively diversifying product sourcing, implementing targeted list price increases, and optimizing its product portfolio to mitigate the negative impacts of evolving trade policies and tariffs, which are expected to affect H2 2025 operating results.

Management assessed its disclosure controls as effective as of June 28, 2025, ensuring timely and accurate financial reporting. No material changes to internal control over financial reporting occurred during the quarter, indicating a stable control environment.

Total operating expenses increased by 2.6% to $433 million in Q2 2025, primarily due to higher employee and employee-related costs, including incentive compensation, and unfavorable foreign currency exchange rates. This reflects ongoing investment in the workforce and exposure to global market dynamics.

Developments in U.S. and other countries' trade policies, particularly with China, are expected to negatively impact the Company's operating results in the second half of 2025 due to proposed tariffs. Management is implementing mitigation strategies but acknowledges the complexity and rapid evolution of these impacts.

The Company reported a foreign exchange loss of $11 million in Q2 2025, compared to zero in Q2 2024, and a $16 million loss for the six months ended June 28, 2025, compared to a $3 million gain in the prior year period. This contributed to a higher 'Other expense, net' and highlights currency volatility risk.

The Term Loan A, Revolving Credit Facility, and Receivables Financing Facility bear interest at variable rates, with Term Loan A at 5.43% as of June 28, 2025. While the company uses derivatives to manage exposure, the absence of active interest rate swap agreements during H1 2025 means it is directly exposed to interest rate changes.

Zebra continues to be a market leader in its core businesses, including mobile computing, data capture, printing and supplies, and support and repair services. This strong position is a foundation for its growth opportunities in adjacent and expansion markets.

The company's broad range of Enterprise Asset Intelligence products, services, and software solutions cater to diverse end-users in retail, e-commerce, manufacturing, transportation, logistics, healthcare, and public sectors, strengthening its market presence.

Three distributor customers collectively accounted for 60% of total Net sales for the six months ended June 28, 2025, an increase from 55% in the prior year period. This concentration, with these customers also representing 58% of accounts receivable, indicates a reliance on a limited number of key partners.

Consolidated gross margin declined by 80 basis points to 47.6% in Q2 2025, primarily due to unfavorable impacts of tariffs. However, for the six months ended June 28, 2025, gross margin increased by 30 basis points to 48.5%, driven by favorable business mix and volume leverage, partly offset by tariffs.

Operating expenses rose by 2.6% to $433 million in Q2 2025, and by 6.9% to $883 million for the six months ended June 28, 2025. This increase is primarily attributed to higher employee and employee-related costs, including incentive compensation, and unfavorable foreign currency exchange rates.

Inventories, net, showed a slight decrease to $686 million as of June 28, 2025, from $693 million as of December 31, 2024. This indicates stable inventory management, avoiding significant build-ups or drawdowns that could impact efficiency.

The acquisition of Photoneo, a leading developer of 3D machine vision offerings, for $62 million, significantly strengthens Zebra's technological capabilities in this area. This move is expected to expand machine vision offerings across several industries within the EVM segment.

Research and development expenses were $144 million in Q2 2025, consistent with $146 million in Q2 2024. For the six months ended June 28, 2025, R&D increased to $295 million from $284 million, demonstrating continued commitment to innovation and product development.

The Company continues to develop and offer cloud-based software subscriptions and workflow optimization solutions, particularly within its EVM segment. This focus supports the Enterprise Asset Intelligence vision by enabling customers to 'sense, analyze, and act' more effectively.

The Company repurchased 849,025 shares of common stock for approximately $250 million year-to-date, including $125 million in Q2 2025. This activity reduces the number of outstanding shares and indicates management's belief in the company's intrinsic value, with $596 million remaining under the current authorization.

Net investing cash outflows increased by $74 million for the six months ended June 28, 2025, primarily due to the $62 million cash payment for the Photoneo acquisition and higher capital expenditures of $37 million (up from $24 million in the prior year period). This reflects strategic investments for growth.

Total long-term debt remained relatively stable at $2,128 million as of June 28, 2025. However, a significant portion, including Term Loan A, carries variable interest rates (5.43% for Term Loan A), exposing the company to potential increases in interest expense if rates rise.

The provided 10-Q filing does not contain specific material disclosures, dedicated sections, or quantitative data pertaining to environmental commitments, social responsibility initiatives, or explicit governance practices beyond standard regulatory compliance statements.

The Company experienced improved demand trends across North America (8.0% Q2 YoY growth), Asia-Pacific (19.5% Q2 YoY growth), and Latin America (11.1% Q2 YoY growth), which began in mid-2024 and continued into Q2 2025. This indicates a favorable market environment in these regions.

President Trump signed the 'One Big Beautiful Bill' (OBBB) on July 4, 2025, making permanent key elements of the U.S. Tax Cuts and Jobs Act. The Company is currently evaluating the effects, with any impacts expected to be recognized starting in Q3 2025, introducing potential changes to its tax position.

Developments in trade policies, particularly with China, are expected to negatively impact the Company's operating results in the second half of 2025 due to proposed tariffs. Management is taking mitigating actions, but these external factors remain a significant concern.