Zebra Technologies Corporation (ZBRA) Earnings Call Transcript & Summary

Okay. Good morning. I'm Brian, Market Sector Specialist Sales at Credit Suisse, and I'm pleased to have with me Bill Burns from Zebra Technologies. And with that, Bill, why don't you give us a little overview of the company and with a specific emphasis on the Enterprise Asset Intelligence vision for you.

Sure. Thanks, Brian. Thanks for having us. Zebra has been in business for over 50 years. Our focus is really on digitizing and automating our customer environments. We talk about our vision of Enterprise Asset Intelligence, which is really to give every worker and asset within the front line of business to allow them to be visible, connected and optimally utilized. And we think about that in the framework of what we talk about a sense Analyze act, sensing what's happening at this point of productivity within our customer environments, analyzing that data through either our software assets or that of our partners, allowing our customers to take the next next best action within their business and then ultimately driving outcomes. And people would see Zebra in everyday life at the front of store checkout where they use scanners to check out and rebar codes, you would see us in hospital environments with risk bands on patients, improving health care, you would see our products being in delivery of parcels in T&L or e-commerce to the end customer using mobile devices. Our newest investments have been in areas such as robotics and warehouse automation, in software, retail software to marry with those mobile devices and within machine vision and fixed industrial scanning, which is cost adjacent to our scanning business that we're in today.

Okay. Can you give us some of your largest end markets, retail e-commerce and how that kind of, how the EIA is going to fit into all of that?

Yes. I think from a Zebra perspective, we continue to -- our primary markets are retail, transportation, logistics, manufacturing, health care or primary vertical markets today. Use cases within them, we've seen the COVID accelerate those use cases. But they also have longevity, meaning that our customers are looking to as I said earlier, digitize and automate their environments, they're looking to be more effective and more efficient in what they do every day. Our solutions are mission critical. When a customer wants to pick an order and e-commerce warehouse, they use a Zebra device to do that. In the future, they'll use both the Zebra device and an automated robot along with that worker to pick that order. Inside retail associate, we carry a mobile device from Zebra, and they would leverage Zebra software today around workforce management and task management and communication and collaboration on that device. Our core business was in fixed industrial -- [indiscernible] handheld scanning, and we've now entered the market of fixed industrial scanning. So I think the difference of a handheld scanner to read a barcode and in a fixed industrial scanner sitting over a belt in a conveyance environment, still reading barcodes in that environment, but a new market for us to enter. And then closely adjacent to that would be our machine vision market. So those apply across the different verticals, whether it's retail, transportation list, manufacturing others, everyone is looking to be able to augment the frontline worker to get visibility into their business. And if they have that visibility, then they can take and analyze that information and be able to take actions within their business to be more efficient. How do I take that order online in a retail store in the past that customer came in and picked the order themselves. They selected the items from the grocery store. Now they're ordering online. The retail associate needs to have a device in their hand to go pick that order, they actually need software on that device to distribute that task from the manager of the store to say, go pick that order. They need a printer from Zebra to print a label to have that package ready to be delivered to the customer when they come. They use that mobile device again to be sent a task to say the customer showed up and they're in the parking lot and deliver that to the end customer. And then they scan a barcode on that package again at the end to say, "Hey, it's been delivered to the end customer. So in everyday life, you see Zebra being used, but it's really automating and digitizing workflows in our customer environments each and every day. In an e-commerce warehouse, you would have goods being received into the warehouse, you'd have orders being picked, you'd have orders being then packaged and shipped and Zebra products would be used throughout that, whether that's scanners or mobile computers or printers inside those environments and then last-mile delivery. So the person delivering that parcel ultimately, whether they're a transportation logistics employee or an employee of the e-commerce provider would be using a Zebra device to go deliver that. And when you look across that across all these different verticals, the use cases are very similar in the idea that everyone is looking to get more efficient within their business. Labor is difficult to come by these days. And how do I do more with less.

Yes. So with the inflationary labor environment and the proliferation of e-commerce and just a lot of new technologies trying to get like robots that can take better to get more labor out of the equation to take your costs down. There's a lot of new technology that's coming from a lot of different areas. So what is Zebra's strategy over the next 5 years? Like where do you see this all playing out? Like what -- let's put it this way. Like what are the customers increasingly asking you for? Do they want you to be a one-stop shop? Or is it still a la carte a lot of [indiscernible]

Yes. I mean I think our customers -- we have strong strategic relationships with our customers around the world. 86% Fortune 500 customers are our customers. If you're a retailer, a transportation logistics company, manufacturing or health care, you're likely our customer, note where you are in the world today, and you're using our core products where we're the market leaders. So rugged mobile devices, scanning and printing, we're the global leader across each one of those. We think of our businesses, our customers are asking us to say, "Hey, I want you to do more for me, so we entered adjacencies. So rugged tablet market. We're now #2 in the rugged tablet space around the world. RFID reading, so automated reading of radio frequency tags. We're the global leader in readers of RFID adjacent to our business and why we expanded that areas. Our supplies business to go along with our printers, we acquired a company in smart supplies that does temperature sensing on those labels when they're delivered to the customer. So our customers are always looking for ways and giving us ideas of things that we can go innovate either organically or go acquire. Most recently, we've stepped a bit further than those adjacencies and said, look, there's a interesting market in fixed industrial standing and machine vision. It's closely adjacent to what we do in data capture, and we believe there's an opportunity to invest organically, which we did, and then we acquired Matrox Imaging and to be able to marry with that asset along with another small acquisition we did in Europe with Adaptive Vision. We entered the robotics market by making organic investment first and then a venture investment into fetch, which is a robotic solution focused on goods transport or in fulfillment for someone in picking an e-commerce warehouses. And the third is we did a series of acquisition and organic investment in the area of retail software. So our customers are looking for us to expand our portfolio into areas adjacent to what they're buying for us today. And now we're taking a step a little bit beyond that in the retail software, fixed industrial scanning machine vision and into warehouse automation where, again, same customer base, same customer relationships, leveraging our channel partners around the globe to really enter new faster-growing markets than even our core markets are today.

Okay. And then some of these areas that are kind of step outs for you like, let's choose Matrox for the machine vision industry you're running up against some larger incumbents. So like what's the strategy? Is it the portfolio that you have now from that acquisition? Do you have what you -- what it takes to compete with other guys like what's your share now? Where do you envision it like 5 years?

That's right. Yes. So I think that the -- we like the fixed industrial scanning machine vision space and made an organic investment initially because as I said, it's so closely adjacent to our data capture solutions business, right? It's a handheld scanner in a box, basically, and they're used in some different applications. So we needed to change our software a bit to faster pace barcode reading and things like that inside the T&O environment but closely adjacent to fixed industrial scanning machine vision. So think of fixed industrial scanning being an imaging device, a camera. And think of a smart camera just adding more processing power on that. So the first thing you do is you read a barcode. That's the simplest thing, fixed industrial scanning. The second is you want to look at -- read the barcode and then you want to tell some characteristics about something. Are the parts in the right place on a PCB board and [indiscernible] manufacturing of electronics are the brake pads manufactured to the specification you want. Is a liquid filled in a bottle to the right levels you want within the manufacturing process. That's used smart camera technology. We developed those both internally ourselves, and then we acquired adaptive vision to layer some software, machine vision software on site, on top of those smart cameras. And then we looked and said, "What else can we use in the portfolio to fill it out. So we like Matrox Imaging and did that acquisition because it really brings us the high end of the market. At the high end of the market, you don't use smart cameras, you use just regular cameras, vision systems, imagers and you collect all the images from multiple cameras into a vision system, a very high-end vision system. And that allows and Matrox also had machine vision software that we can leverage at the higher end of that smart camera market as well, but also had the high end of vision systems. So now we have the whole portfolio of products that open up about a $3 billion market to us. So fixed industrial scanning, smart cameras and then these vision systems for Matrox. We married our organic investment with acquisitions acquisition and a larger one inside Matrox and we feel good about the portfolio today. What we like about the market is that it's closely adjacent to what we do today. The customers many times are the same customers we're selling into, transportation logistics and manufacturing customers. The market is fragmented. So there's a lot of players in the market, but it's a fragmented market. And we think there's an opportunity to work closely with the partners in this market, system integrators to be able to get design wins early across the portfolio and to expand the Matrox customer base beyond where they were focused. They are private companies. So they're not investing to the scale we would and things like go to market. So the opportunity is to win in the low end of the market with our organic portfolio continue to expand the customer base in the Matrox portfolio and bring it together to address this $3 billion market that for Zebra today is just at its infancy.

That Matrox. [Audio Gap]

That's right. Yes. And the [Audio Gap] so what they brought to Zebra was we're certainly well respected inside barcode scanning, not known as a name in machine vision, so it was a new name for us. Matrox gives that the credibility within the machine vision and vision systems market.

Okay. That's great. Maybe moving on to the Fetch Robotics acquisition, a little bit more about that.

Yes. We like Fetch a lot and again, this goes back to -- we'd like to organically invest first to really understand the market, and we invested in some robotic solutions internally initially and then we made several robotic investments around robotics in plus one robotics inside locus, inside Fetch. We've made another recent one in automated forklifts. So when we make venture investments to really understand the markets further than what we could even do organically, and Fetch was one of our venture investments. What we like about their portfolio is that they were investing in the fulfillment robot. So think of a worker inside of e-commerce warehouse being directed by a mobile device and a robot being directed to the same area to actually do the PIK. So the robot actually goes into an aisle, a worker is actually in the aisle, saving steps where a normal e-commerce warehouse worker would walk about 10 miles a day. Now you put the worker stationed in an aisle too and the robots come to the worker. So they have bins of actually orders. They have a screen on the robot. It says pick Item #5, put it in the bin #2, the worker actually picks that item, we're typically wearing a mobile device from Zebra. And they actually picked that order and then the walking is done by the robot, not the employee, right, not the warehouse picker. So fulfillment. The other application is Goods Transport. So smaller robots to move goods across to take parts to an assembly line to move trash from one location to another in the facility, just to move small area of goods. So goods transport in small scale, then they also had pallet-moving goods transport robots and a cloud-based software to control all of those. And what we liked was the portfolio robots. We think ultimately, customers, while many of these markets are in their infancy today, customers don't ultimately want to buy just point solutions, they want to buy a portfolio of robots from the same vendor controlled by the same control system with applications above them, material movement, fulfillment, order picking and others. And in the same facility, have the same vendor supporting them with the same software. So we liked was their portfolio robots. It's early days. The biggest market today is really in goods movement, goods transport in these smaller robots but growing very fast inside fulfillment and then a smaller segment, but an interesting one that is more pallet movement. So goods transport, but in a bigger scale. All of those are places we're investing R&D dollars today. We've got our first pilots going on in fulfillment. We've got multiple customers in Fetch did prior to the acquisition inside material movement, we continue to scale them in a go-to-market perspective.

Okay. And then you've made some software acquisitions as well that Reflexis and some other names. How does that tie into the retail strategy?

Yes. So again, you see this idea of adjacency or expansion areas closely connected to what we do today. So we saw that our mobile devices being used within the retail marketplace today or used a lot of applications developed by our customers or our third parties. Looking at inventory, of being able to look at does a retailer have a product at another store, is it in the backroom, is it a warehouse, those kind of applications on those devices payment. But we saw an opportunity for specific retail software around enabling the worker. So we organically invested in software that's communication and collaboration software. Think of you're in a big box retailer and you're the manager of the shift in that, how do you communicate to the 70 employees that are on the floor working at any one time? Well, when they come in for their shift, there's not even a room big enough in the retailer to actually get them all together in a huddle and talk about what their job is for the day. So being able to communicate and collaborate, how do I go find bill in the aisle somewhere to tell them what I'd like to go do next, I got to go search them down in the store. So this idea of shared devices has now become a device for everyone in the store and they want to be able to use that to collaborate and communicate from management and between associates. Some of our retailers say, engagement with the associates is so important to them to keep those associates. If an associate is 2 hours away in a retail store in grocery, they may as well be a forest away from each other. But if they can collaborate through text and communication and chat with each other, then it's a more engaging environment while they're doing their work. Next, acquisitions, we did that organically. Then we invested in Reflexis because it has workforce management and task management software. So again, leveraging that mobile device in the hands of the worker. Workforce management allows the manager to plan the workforce that they need in their location at any one time. So think of a Home Depot, where you have somebody at a customer service desk, somebody to check out, somebody in plumbing, somebody in lumber and allows you to plan that workforce. Do you use that same software across banking and other industries as well where you have segmented workforces. So workforce management, the mobile device in the hands of a sales associate inside retail, they can pick their own schedules, they can change their schedules, they can interact. They get a way to engage employees. They also have task management of again, this idea of the manager communicating with the employee in the store, how do I send them task. And then we acquired a company that works on -- that delivers prescriptive analytics. That looks at data within the retailers and says, what task has the highest value. If I go refill the shelf of Doritos is that is important is going to replace the snow shovels in the front of the store where I have more higher margins. So it looks across the store and says, "Hey, what needs to be done from a task perspective? And what has the highest value. So I can look at the data, analyze it and then send a test to the workers. So task management married with prescriptive analytics. Another acquisition we did was in inside planning, retail planning software that looks at demand planning. So it looks like each mine store and says, "Hey, what is selling out, what's selling in? Should I mark something down? What should happen, and we believe that ultimately, what we'd like to do is connect the actual task management and execution back to planning. So if you're a planner in retail and you ultimately say, "Hey, I'm going to buy snow shovels for all these stores and the snow shovels don't get sold out, don't get actually put out on display. I don't know the task wasn't completed. All I know is the snow shovels I bought for that store didn't sell. So next year, do I buy less snow shovels for that store? Well, maybe the execution didn't take place. So if I can go and say, "Hey, before the first snowstorm, they never put the snow shovels out. You should buy the same amount of snow shovels for next year and make sure the task is executed upon. So if we can tie planning and execution and communication, enabling the associate through our mobile devices in retail, it's a very powerful solution to our retailers. So you see this connectivity across the portfolio where we take our core products and leverage them into adjacencies and expansion areas that are all interconnected. And we do it both organic investment, early venture investments and then ultimately, acquisitions where it makes sense.

Okay. Great. So we've got a industrial-focused group here, and I know you speak to tech folks as well. I think you were at other conferences as well. Just for the audience here, what does Zebra look like in 5 years? Are we -- like software has higher margins? There's a lot of competition and there's a lot of innovation that goes on. But how does -- how is the margin trajectory move forward? What are your areas of focus for your acquisitions going forward from here? I know we've got the 3 buckets there, but...

Yes. So I think we think of it as being our core business continues to grow. So across mobile computing, scanning and printing, we see that as continue to be growth markets for Zebra and continue to generate high levels of profitability and cash flow within the business. I see these adjacencies that I talked about, RFID, bioptic scanning, smart supplies, all being areas of faster growth for us. So it will grow faster than our core markets, but they're smaller markets. So -- but they'll add to the growth rate, rugged tablets. And then we see these adjacencies being actually higher gross margin than software machine vision and robotics being a higher-margin business for us. And then ultimately, many times being sold is as a service. So Software-as-a-Service, robots as a service within fulfillment. So we see more recurring revenue streams at higher margin from these expansion businesses over time. But we see our core business continue to be robust and continue to grow. We see the adjacencies growing faster, and we see these new expansion markets adding to Zebra's growth at a higher gross margin level looking forward.

Higher gross margin. Does that translate into higher free cash flow margins for the company as well?

Yes. I mean ultimately, we look to scale our revenues faster than we do certainly are expenses within the business. We make a fair amount. [Audio Gap] for R&D and our sales teams around the world to service our customers. We're thoughtful about those investments all the time but even more so now in the environment we're in.

Okay. I turn on the news the other day, and I heard something that coming.

Maybe.

Your current state of affairs and the 3Q, you had a bit of a revenue miss.

Yes.

Can you just talk about a little bit of the levers that happened there?

Sure. Yes. So in Q3, we -- 2 things happened prominent in the business was that our North America distribution center from 1 3PL provided to another in a different location. So Chicago area from the Texas area that didn't go well. Ultimately, we believe we could go execute on that with the partner and when it became time to scale that wasn't able to be done through the partner. So we've moved back to our 3PL provider in Texas and are now shipping the predominance of goods out of that location. That's what we did in Q3. We just ran out of time with that transition to be able to get everything out in Q3. The second impact on Q3 was really around supply chain just parts availability. The quarters were becoming less and less linear more and more shipping towards the end of the quarter, and we just didn't get the parts we needed that were in allocation from our suppliers to be able to ship another segment of the revenue in the quarter. Since then, we've now seen significantly more linearity within the supply chain in the fourth quarter as we focus really on that to drive the new year back. We've put more resiliency in the supply chain from the idea of redesigning parts [Audio Gap] there's still some challenges out there, but we believe that the things we've been doing over the last 18 months or so redesigning parts out, giving us option value for other parts, signing a supplier commitment deliver those parts that we're well on our way to kind of being challenges. So those are the 2 biggest pieces. The third goes back to your recessionary comment. We saw some demand [Audio Gap] remains strong. And I think our run rate business remains strong, but we've seen and wanted to make sure we are fully transparent that we've seen some customers push some orders out. I think the challenge is ultimately that everyone is trying to predict what's going to happen in 2023. And I think we feel good about our business. Our value proposition to our customers is good and solid in good times and in tough times. We rather be in good times because they buy even more from us. But in difficult times, they also buy from us because we're mission-critical to what they do. They have to be able to deliver those orders to customers. They have to pick those e-commerce orders. They have to be able to have a delivery driver delivered that parcel. That has to happen in their environment, and they look to be more effective.. So this idea that we give them visibility [Audio Gap] in the environment. What we've seen in the past is customers will pull back for [Audio Gap] So we saw that through COVID. [Audio Gap] And I think that's because we're needed in their environment, and we add significant value and investment in technologies when they invest, they see the return in ours. So I think no matter whether we is strong, but --

Maybe just talk about chip other bottlenecks are the Tier 1 [Audio Gap].

Yes, people say it [indiscernible] character memory as an -- it's a variety of sort -- there's times when you can times you can start to place build in resi for years like you're going to switch to be more resilient. How do I, at the point of design, design in an alternate part so I can go use that the initial part that I designed in. How do I have long-term supply agreements, so I guarantee to get the parts over somebody else, longer term, my supply chain. So we're working hard on areas of kind of resiliency and how do you make sure that that you have it. I think that it is large and small suppliers, it's not one or the other. The story I tell people is, in my career, if somebody came to me and said I couldn't build a product because I can't get parts. I'd say, Okay, come back to me, let me know how that goes. And it was always solved. Within a couple of weeks, it was solved. That wasn't the case over the last 18 months. It was a very tough environment. where manufacturers discontinuing parts, parts weren't available. We were redesigning parts. It was tough. But I think now we'll see a focus on supply chain around resiliency moving forward both in location and geographies, but also in individual parts down to the component level within devices and then finding that balance between resiliency and low cost.

We've heard over the last couple of quarters of companies saying supply chain like talking about lead times 9 months almost up to a year and no pulling closer to normal, but maybe not abnormal. Can you just tell us where your lead times are for a lot of your things?

Yes. I mean there's still components out there that have 12-month lead times. So in those parts, we're still buying and putting orders in and making sure that we've got supply on hand. Many of those parts, we've also diversified suppliers now. So we have more alternatives than we've had in the past. So I think that that still exists out there. It's gotten a lot better. I would say that by first quarter, we'll probably be well beyond the supply constraint that our customers have been experiencing from us. And many of our products, almost the entire portfolio will be readily available within normal lead times 4, 6, 8 weeks that customers had to wait for those even in the past.

And what about inflation? I mean you're a higher gross margin companies but our industrial people -- there's been a lot of inflation. So talk about price cost over the last couple of years and where you are right now? And when do you think that maybe price offset costs. There are some input costs on metals and things come down. So like can you keep -- like when do you turn price cost positive and then what does it look like? I don't want you the guidance for '23 but just like kind of like just what -- from here, where does it look like on the price side? And can you keep it? And what does it look like on the cost side as you're heading to '23?

Yes. So we've raised prices 3x predominantly around increased parts cost to our our customers and other factors like most recently FX. But we've raised Parts 3x. We've done that very thoughtfully, meaning that we just don't raise prices across the portfolio we look at actually on a global scale across each geography that we sell into and what the price points are for each segment of our product line. And then we also look at not only end user sales price compared to our competition, but we also how much margin our partners make when selling our products because some of our partners around the globe sell our competitors' products as well. So we want them to sell ours as opposed to somebody else. So it's a fairly complicated equation, but we worked through all that, and we raised prices 3 different times over the last 2 years or so to keep up with the inflation and costs around parts. The place we've seen also significant inflation is the cost of freight and the fact that we've taken our printing products and we've put them air freighted those as opposed to in the past, we put them on ocean-freight. And the reason we've done that is we haven't had the parts to be able to build and supply in time to be able to put them on ocean to wait for that time frame to be delivered to customers because of customer demand. So in fourth quarter, we're going to move back to putting more of our products from the printing side on ocean. So from a cost perspective, that's probably the best -- the highest value item that will come down from a cost perspective in 2023 for us. So we'll see that flow through. We also see in 2023 paying less premiums for parts. So as parts become more available, you're buying less on the gray market. That's another cost that we'll see come back into the P&L from a positive perspective in 2023. And we've said that that in first quarter of this year, piece part variance high paying more for parts and freight was about $60 million additional cost to Zebra. It's about $30 million in the fourth quarter, and we see that -- our hope is that by fourth quarter next year, we're not talking about this anymore, but it's not an added cost and it comes in our favor. Offsetting that is FX, right? FX certainly is a headwind to us and many other customers. So company so I think we'll continue to see that in 2023. But I think from a price side, we'll be able to hold the pricing increases we have. And I think we'll see our costs come down in freight and piece part bearing as.

Okay. Some of the customer pushouts maybe like somebody starts with an A, slowing down a little bit on warehouse expansions. Just how do you think that plays out? There was a lot of growth through COVID. It's slower right now. But like how do you -- how are you guys positioning and like internally for how long the duration could be and like just your thoughts because you've been in the industry for a while, so like where does it -- what does this flush out? And then that's just the long-term TAM growth rate of the industry?

Yes. We've got a lot of questions about it in 2021, we had great growth rates. And do people buy ahead, do we ship ahead, those kind of things. We view 2021 as being more pent-up demand from 2020. But honestly, we didn't have enough supply to oversupply any point in 2021. And we talk to our customers, the one that you repreferenced clearly has been public about overbuilding and a view that the e-commerce market would grow faster than it does. That said, the e-commerce market is still projected to grow at 14% moving forward. So we feel overall that -- our customer base is solid. They'll continue to buy from us that there hasn't been early purchases. There's been some, as we said, pushouts in Q3 by select customers. But we're also not sticking our head in the sand and saying, "Hey, the macroeconomic environment is not going to impact us because it will, right? And I think that we've said, look, we're going to be thoughtful about cost and what we spend next year. We're going to be thoughtful about hiring and those kind of things to make sure that if the top line slows based in a recessionary period that ultimately, we have the right cost structure in place around it. But I think the 1 customer you mentioned is it was headwinds in Q3 specifically. Another example, that was a large postal supplier in North America. It was tough headwinds for our mobile computing business in Q3. You got Russia and Ukraine pulling back from those markets. So all those were headwinds in Q3 of this year for our mobile computing business, now they're behind us. So I think that if we take our retail business ex-large customer you mentioned, even with that decline from that customer in Q3, our retail business grew. So our retail business overall has been strong, it then that example, which is a large customer are, large customers are many, many people.

And this is an investor meeting. So does anyone have a question in the audience? At the back.

Thanks. You talked a lot about the large customers and what you're seeing there. Maybe if you could just help us on the -- what you're seeing on the small customer side? And then would you expect small customers to see the same kind of dynamics around deferrals into next year and maybe they're just lagging the large customers. Can you talk about that?

Yes. I think that we're seeing that small, medium customer growth is still strong. We've seen that in Q3, and we expect that to continue into our guidance for Q4. So again, the pullback has been primarily a few select large customers pushing things out. So our customers would tell us and our partners and distributors who just had their conferences most recently that demand remains strong. And I think that, that we typically have more visibility into the larger customers. And when they make decisions typically it's pushed out. It's not cancellation of orders, it's moving things out a quarter or so. It's delays in decision-making saying, "Hey, look, I had a tough quarter. Ultimately, let's figure out what we're going to go spend money on and then they take a pause for a month or 2 or 3, and then they come back and they buy again. And we've seen that some of the large retailers this year that have said, "Hey, I've had a tough quarter, and then they've come back a month later and put the orders in that they were going to go put in. So I think that we've seen customers come back pretty quickly. The visibility is easier in large customers. About 80% of what we sell around the world is through distribution. So the smaller customers when they're buying 5 or 10 mobile computers or printers or scanners at a time, it's hard to predict their behavior except in a larger scale of a trend. The trend today is that the small and medium businesses, there's still solid growth rates from them. And again, like I said before, we can't stick our head in the sand and say, "Hey, run rate is great from the small and medium businesses. We've seen some customers pull back. Everything is going to be great for Zebra because we know the macroeconomic environment will impact us. I think ultimately, our value proposition is strong in good times and bad. We've said, look, no matter how -- what happens from a market perspective, we're going to grow faster than the market. And traditionally, if you look back at our business coming out of a recessionary period, we've taken share because we've continued to invest in our go-to-market and our customers. We continue to invest in our R&D through cycle and even through the downturn, while managing it thoughtfully, we've continued to invest, and we've come out of it with solid a stronger market share than we came in.

Great. We're bumping up on time, but I just wanted to add one more if I could. The IRA does that do anything for you guys like to the potential that there's reshoring here and then a lot more warehouses, et cetera, coming from like the changing of the -- how goods are shipped in the United States? Or is that nothing just like that's nothing for you guys. You've more retail.

Yes. I mean I think we -- I think there's probably an opportunity there but nothing that we're seeing is.

Okay. All right. With that, thanks, Bill.

Yes. Thank you. Great.

Thanks for coming, and thanks for everybody being in the room.