81 annotations
rimble Construction 1 or TC1, can be thought of as a commercial framework around prepackaged bundled offerings. In the fourth quarter, we doubled the number of these prepackaged offerings by serving more users across more vertical segments. Nearly half of our AECO bookings in the fourth quarter were TC1 bookings. We come into 2024 with a strong portfolio, and we will learn, adapt and expand these offerings.
As we connect more of our data and workflows, we will continue to expand these offerings powered by the investments we have been making in our underlying systems and enhanced by our process transformation.
After a couple of years of hard work, we can now see [indiscernible] of our customer set, which unlocks marketing and selling insights to enhance our go-to-market motion with more advanced marketing and selling strategies that are more efficient and cost-effective.
We will continue to roll out functionality in 2024, and we will expand the capabilities across more geographies and more of the product portfolio and it goes further because product, systems and process work have to link to an aligned go-to-market organization in order to turn possibility into a reality.
TC1 colour
Transcript
2023 Q4
15 Feb 24
nd 1 of the things we said in the prepared remarks was that our TC1 agreements have now accelerated to make up 50% of the bookings that we had in the fourth quarter. And those agreements are the basis that powers that cross-sell penetration and that made up 25% and of the fourth quarter bookings that we had.
Coming into 2024, we'll continue to expand TC1 by rolling it out to more regions, for example, Asia Pacific, and we'll roll it out into more of the portfolio.
TC! was 50% of bookings in Q4
Transcript
2023 Q4
15 Feb 24
Within the vertical markets in construction, it won't surprise you that we overall see strength in subsegments such as infrastructure, renewables, data centers, reshoring, onshoring drive positive momentum for the bookings. Residential remains more challenged on a global level and more so in Europe.
The freight markets, which would impact our transportation business does remain quite challenged. I'd say -- I really say globally on that. I commented already on agriculture, and we see those macros challenged a little bit more globally as well. The thing I would overlay on top of that Jonathan, as we think about coming into 2024 is just how structurally different our businesses as compared to the Trimble of old.
mix of end markets -- freight and ag weak
Transcript
2023 Q4
15 Feb 24
uring the first quarter, we expect to see softness in Ag. Weakness in the global Ag market is certainly a factor, but the bigger driver is the expected impact of the transition in our distribution strategy
ag market weak plus distribution trandsition
Transcript
2023 Q4
15 Feb 24
Software businesses in Buildings and Infrastructure are expected to grow in the mid- to high teens with product-related businesses up slightly, leading to organic revenue growth for the full year of between 11% and 13%.
b & i guidance
Transcript
2023 Q4
15 Feb 24
From a cash flow perspective, we expect full year cash flow of approximately 0.85x non-GAAP net income.
Excluding the costs relating to our AGCO JV transaction and the impact of the 53rd week, Free cash flow is estimated to be approximately equal to non-GAAP net income.
underlying fcf v good, 100% underlying conv
Transcript
2023 Q4
15 Feb 24
Resources and Utilities
resources & utilkitues
Transcript
2023 Q4
15 Feb 24
Buildings & Infrastructure,
buildngs & infrastructure
Transcript
2023 Q4
15 Feb 24
Geospatial,
geospatial
Transcript
2023 Q4
15 Feb 24
Product revenues, which are nonrecurring and predominantly our bundled hardware and perpetual software were down 3% year-on-year.
Excluding agriculture, product revenues were down less than 1%, reflecting the stabilization of these businesses, now the dealer inventories have come well down from their peak in early 2022.
Dealer inventories are now broadly in line with dealers' business outlook and our sales trends going forward are expected to track underlying demand trends.
prod rev down but working thriugh dealer inventory situation
Transcript
2023 Q4
15 Feb 24
n September, when we announced the JV, we communicated our plan to pay down debt and return capital to shareholders via a buyback. In the fourth quarter, we executed $100 million of buyback.
On January 30, our Board approved a new buyback authorization of $800 million, replacing the remaining authority under the prior plan. We reiterated our intention to pay down $1.1 billion of debt and communicated that our near-term intentions on M&A are to focus on tuck-in opportunities.
buyibacks and debt repayment
Transcript
2023 Q4
15 Feb 24
We have reduced thousands of SKUs in the last couple of years and turned a number of stand-alone products into features within larger bundled solutions.
In September, we announced our joint venture with AGCO, which naturally led us to rethink how we organize ourselves, which, in turn, unlocked an ability for us to further simplify and focus our teams. In the second half of 2023, we undertook $50 million of run rate cost reductions, $10 million ahead of our commitment in November, recognizing that we needed to say no to more things so that we could further focus the organization.
reduced skus and AGCO deal
Transcript
2023 Q4
15 Feb 24
As measured by cross-sell activity, more than 20% of 2023 annualized contract value, or ACV bookings and AECO were cross-sell bookings. In the fourth quarter, this number accelerated to over 25%. This didn't happen by accident. The acceleration comes from a packaging of solutions across business lines and is enabled by our digital transformation.
25% of annual booking were cross sell
Transcript
2023 Q4
15 Feb 24
nnualized recurring revenue finished 2023 at a record $1.98 billion, up 13% organically and represents the single biggest lever we have to increase shareholder value. This compares with ARR of $1.1 billion 5 years ago. Recurring revenue was 49% of our total revenue in 2023 and 53% in the fourth quarter versus 31% in 2018. Remaining performance obligations closed the year at $1.8 billion. Gross margin closed at a record 64.7% in 2023, up 470 basis points over 2022, this compares to 58% 5 years ago. This is definitive structural improvement.
EBITDA margin closed at a record 26.6% for the year. In dollars, we crossed the threshold of $1 billion of EBITDA. This compares to EBITDA of 22.6% 5 years ago. Operating leverage has been 44% over a 5-year time frame.
We are running with negative working capital and we closed with free cash flow of $555 million, up 60% over prior year.
ARR improving, so is margin, and so is fcf generation
Transcript
2023 Q4
15 Feb 24
Rob, it's David Barnes. I'll take that. I mentioned in my prepared remarks that bookings are coming in soft in our North American mobility business in transportation and we received notification of churn that will occur going forward.
So our -- while our ARR has been looking better recently, we do think that will -- the churn we have in our North American mobility business will adversely affect transportation ARR growth in Q4 and going into next year by somewhere around 200 basis points.
Now I'll emphasize that the rest of the transportation ARR base is doing really well.
Our Maps business is growing ARR at double-digit rate, even Transporeon were growing ARR
trasportation is arr weak spot
Transcript
2023 Q3
3 Nov 23
after the last 3 or 4 quarters, well, since we bought the business. We're not declaring a turnaround yet.
transpireon weakened since itr was bought
Transcript
2023 Q3
3 Nov 23
we expect to hold or improve EBITDA margins even with the impact of the close of our AGCO deal.
2024 ebitda margin expansion
Transcript
2023 Q3
3 Nov 23
we believe ARR will continue to grow at a double-digit rate
2024-- arr up DD
Transcript
2023 Q3
3 Nov 23
First, we expect that organic revenue growth trends will be better than those we posted this year as our hardware business has stabilized following the declines of 2023 and as recurring revenue sources make up a growing proportion of our total revenue base.
2024- rev growtg trends better
Transcript
2023 Q3
3 Nov 23
Even in the current macro environment, we see strong demand for our software offerings, while our hardware businesses are expected to be down at a mid-single-digit rate.
software up , hardware down msd
Transcript
2023 Q3
3 Nov 23