TRMB - Earnings call transcript Q2 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Trimble Second Quarter Conference Call. At this time, all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] And please be advised that today’s call is being recorded. [Operator Instructions] I would now like to hand the call over to your speaker for today Mr. Officer. Executive Chief Painter, Rob Please go ahead.

Rob Painter

Good afternoon everyone.

What the get is available I you quarter, refer Harbor our started, the our to circumstances we grateful a the presentation our please ingenuity over at Safe the by occasion. in our that and colleagues of team true for reminder is, and partners to Despite demonstrated on second that today. difficult on in deeply we quick through worldwide ask last these I Before May remains months. will back. few the our my I’m rose call this commitment and website, to said network That outcomes crisis. get

stronger other on this. We of the shock. well-positioned are endure emerge the side to macroeconomic will And we

in undiminished. today. convey lists long-term Slide want messages belief key our remains two we strategy five the to Our

in enabled at million at financial our deferred $XXX outperform were our quality of First, the revenue XX.X% resilience, clear expectations our second our strategy strength EBITDA us at margins to billion, the adjusted the and quarter. model and of highlights. own $X.XX ARR,

shift more to software-centric, connected, recurring business Our model off. paying hardware revenue is and a

months and their us professionalism decisive and and demonstrated restore for strategic strengthened took the These have pay culture. we have shortly few put our executive senior financial Second, pay as March all thank in colleagues my in to position August a actions employee of thereafter. last I commitment.

injustice climate Third, our we change seriously. address take to and responsibility racial

place. lead resolve Trimble heightened awareness different my has platform of that to sense leverage Speaking have a to a personally, I strengthened to our

in and diversity representing senior appointed both working injustice. been within as public have in We well as group, racial stance organization. against the inclusion Trimble from advocates We a established equity our leadership

our climate we do. humbled lot to to respect are through we to Leah responsibility our and named with values execute know Lambertson, Foundation Connect XXXX that Operations, have strategy. our Scale our change, Trimble. to With to has a role more on of Head additional we Trimble a money to Sustainability as remain causes reiterate Head align for larger now donated to that also We & we have have of focus our where she Fourth, pleased

in balance cost downturn. during containment the will We and investment innovation

We are serve connecting our of such construction, segment, in chain. we context four reporting the the utilities, transportation in as industry three unprecedented satisfied and were lifecycles conditions, the of By agriculture, segments. in our quarter we progress a with supply

of supply While financial the well in we recovery XXXX. set performing remain opportunity our convinced our Transportation as our we in of expectations of chain I year, strategy, as potential market the strategy viability below of Earlier long-term of beginning segment. currently both the our in the demonstrable are

will the now than Given recovery take anticipated. circumstances, believe the and we environment longer

macro the discrete that to effects, Transportation. pandemic our near-term have impact there and addition suppressed topics in In which demand, difficult are three results

strategy. us which chain acquisition First, important market, to as strategically is announced remains February, the currently in our Kuebix, shipper connected our key dilutive. takes Kuebix is we of to but supply

execute mobility to subscription in enterprise and launched transition business; business business in a our offering. continue we Hardware-as-a-Service model Second, a we our

We have on these transitions. high conviction model

shipper near-term technology. and Device work customers continue are delivery Logging of in ARR by to we Electronic the volume mobility profitable size our measure the success we delivering growth, enhance our by actions incentive the and Overall, position community. (NYSEARCA:ELD) our will enterprise in older upgrade product and growing bookings, our and to commitments Third, to actions transaction through competitive will to business programs offering take

by solid perpetual expected growth, and our software segments, and offset Buildings that ARR delivered are new in bookings. hardware pleased three We in our disruptions other Infrastructure sales

we and revenue and see performance growth see quarter. in uncertainty in on measures. expenses new agriculture led business. back And the the are aftermarket positioning closely our of Geospatial coming Utilities did impact projects also managing exceptional positive by Resources Utilities we line, and an XXXX the was and job opportunities we monitoring While projects into stimulus services in business, relatively finding by available business for and

prudent and while for fifth we Nevertheless, quarter markets will turn high, balance market decline. many we believe the numbers. short-term uncertainty the conviction market do of to to Our remains call will uncertainty revenue take last the remains our in of bottom see be green guidance of us the our over not year. second the it our prevails, strong. the We I mark through point, to and David and long-term shoots would provide now believe

David Barnes

you, Rob. Thank

Let’s start review results. of a on slide second quarter three, with

primarily year-over-year both $X.XX was year-over-year, had Currency EBITDA dollars margins fell basis a in million, by introduction products of by income of expanded X%, mix. basis by XXX Net revenue also Adjusted a year-over-year impact. while XX% and also to share points XXX year-over-year, XXX discounting up per higher in Second control. X%, total improvements divestitures and decreased decrease driven $XXX basis quarter XX.X%, per gross was XX.X%. The on driven $X.XX Operating the to revenue basis. and points second by acquisitions a subtracted up revenue on translation lower XX.X%, margin margin basis, XX%. income positive X% share. margin points margin strong earnings a improved and down added for quarter new was Gross organic cost

net the cash the paid on debt $XXX down the flow operations we generation times. demonstrating X.X quarter, our fell of the million of quarter. exceeded flow to over end Moving quarter flow available approximately the facility cash. to the second revolving in adjusted million, our to was four, At from $XXX business. debt Free We $X.X in quarter and income Operating flow million. EBITDA had cash cash billion was million of credit strong $XXX and ratio $XXX cash slide net our in

on until payments debt our scheduled July XXXX. principal have no In addition, we

strong. Our therefore access remains to liquidity

acquisition the return cash implementation accelerate will allocation a will Given our strategy. opportunities consider of share open strong We repurchases. that to the we but our reduction debt of continued and modest flow, prioritization are improving capital anticipate of to structure in free

slide to turning are of highlight five key some Now, we following. the metrics the

that are are fundamental share First, that metric. and for annualized our have the licenses. ARR we from revenue of nature economic includes and from that ARR term than GAAP recurring term licenses redefined But the to the revenue is the reason, upfront characteristics in Under term report I of each value term therefore and ratably, licenses quarter. recurring excluded we note renewable now rather subscriptions. want licenses recognized line

seen year. a our our key Organic and cost on capital, invest X%. investment in in recurring business. working be twelve a picture ARR growth our of X% trailing we change, to continued second revenue, periods, indicator Investor with capital of of management So, of we R&D X% in spending. Note our that demonstrating Net more complete believe efficiency on that grew summary quarter that have initiatives. ARR period versus including months measure deferred posture in inclusive of the restated revenue growth we our One financial working of basis, provides business. the can document Relations information was of ARR proactive have this term represents approximately licenses Through ARR the billion available our prior in website. was and is in prior definition this $X.XX the

nearly our R&D on from we we recession months is Our us will to XX% innovation focus stronger entered of this enable trailing revenue, than it. believe and emerge twelve

ended the note versus Deferred progress the of the up end Finally, revenue XX% quarter year second health the point $X.X second that from I’ll going business at a against is year metrics ago, a billion, up level our of forward. two quarter backlog ago. to of and our also the

from in future. the represents recognized unrecognized and Most of as contractual it will revenue non-recurring also businesses. of maintenance revenue includes As agreements, reminder, value the represents the that a $XXX backlog over but subscription be commitments backlog million

backlog majority revenue convert give substantial expect revenue in into coming XX months. the trends our the to We in the next these metrics Both to enhanced visibility that of quarters. us of

resilience over recurring for major comments Recurring Rob a our X% increasing our six, quarter, and a reasons total on revenues Trimble even of slide to revenue of up base. earlier revenue made an elaborate in the Moving Rob’s Of the diversity difficult of XX% the I’ll environment. about by only in decline in earlier. saw economic quarter, and mentioned Transportation sources revenue, grew bit extraordinarily

access to sources revenue major of and to Software declines by businesses OEM Viewpoint, contrast, hardware, meaningful revenues, clients’ recurring non-recurring in other revenue toughest were suspensions, of facilities. growth operation our in the experienced professional businesses times. essential the even impacted continued and our e-Builder, the Our of recurring and XX% the in perpetual services, factory shutdowns, Building Construction These saw are restricted software, of including services project offerings year-on-year than quarter. collectively second quarter. These customers’ second By adversely our greater positioning including

eased in third these late the enter of overall levels quarter, While the many second below non-recurring meaningfully we business remains quarter. as year-ago restrictions our

Europe the of dynamics Europe the COVID-related terms North poor XX% weighting America very in America’s the being difference through XX%, and and impacts reopening. in with shutdowns geography, with and conditions of in at quarter in the and down was business North America the results significant largely Transportation improving Looking COVID was were correlated a segment. from in quarter. were April The with pace North higher similar, down

driven quarter, up principally of World difficult X%. business Brazil best the conditions down the the Asia-Pacific and by the was weakening was XX%, performer in Rest Brazilian currency. of in

an reporting revenue a in up Margin to adverse the offset earlier. reductions. by down revenue margins strong points down down the in segment XX% XX% to mix cost we in business, revenue. revenues services was the was of mix software each margins were revenue and an improved an points. was driven points Transportation basis, mentioned take growth on revenue the Growth and helped basis professional slide Buildings by now were The cost higher Hardware, on mid-teens revenue non-recurring were the XXX license, basis reductions. was margin revenue at Segment down XXX seven, and and Viewpoint, Utilities was in revenue on in trends Infrastructure on Rob look e-Builder XX% organic declined with expanded recurring an agriculture down growth. quarter. Resources XX% deeper and XXX revenue organic down basis including the Recurring and Turning XXX XX% from factors and Geospatial segments. than Margins expansion basis. decline SketchUp. driven due of greater basis particularly perpetual points. organic Transportation basis revenue Cityworks, experiencing basis. was Utilities some of the organic and

the on uncertainty driven markets the guidance by eight core Therefore, Turning the the lack face the in to impact business we a significant of range. of is the third broader in in pandemic restrictions the needed to the and that continue our forth risk trends to economy. and for outlook quarter, slide COVID-related we visibility the demand put

fact third project greatest a year the However, serve. comparing will factors, will we a adversely the performance. second and both I basis, business the Cityworks. and in these end experienced revenue quarter the our can the and We year. and resilience of third markets we driven segments of versus quarter segment be in than in prior and against we due the that anticipate third XXXX, by addition revenue down expect quarter, a rate that the are prior in quarter. second The that provide below the tough grow year-over-year revenues Geospatial Overall, of on some color decline the quarter we revenue albeit the same to seeing Buildings which experience segment we are relative in that Transportation on more Resources declines impacted trends in the in moderate at Infrastructure Utilities We that will will be the markets,

second of non-recurring our albeit to at rate revenue quarter, across a conversions recurring anticipate the third trends ongoing to the continue businesses. the slower contrast, By to in in our decline we our due resilience continued we these in revenues offerings revenues are by than quarter. software growth to experienced and subscriptions at Looking type, the likely

continue increased expansion year-over-year quarter. software expect as although mix, their strong We we the margins we gross second margins expect on as remain gross to experienced that will basis don’t due to in a

will in Turning than higher margins operating anticipate spending decremental expense, the that quarter We I’ll dynamics that quarter third We XXXX. expense was the going and the in to result over-year low committed estimate we that margin to healthy will quarter. across revenue remain second business. in maintaining year- second note operating our add mid-XXs. the that the operating be in extraordinarily margins in here into

be will by XXXX only recovery. characterized Our is economic slow view that and gradual

strategy our financial are peripheral to our objectives. We those or meet continue portfolio which look businesses to business to evaluate don’t and our exit

to cash flow in year, expect cash, In non-GAAP drop in terms cash slightly second be the basis exceed revenue the the expenditures EBITDA. year-over-year lower we down full continue on of to Nevertheless, expect flow to and will due we the for expect net for we operating capital half year. a income and

it turn to I’ll Now, back Rob.

Rob Painter

key progress will the talking describe XXXX in elements elements. me of which & and Let by Scale I our about in close quarter, four Connect

and and First, connecting lifecycles; manage win press In in announced Trimble integration with carrier we with solutions here. between assets France Transportation, SNCF our network. the across construction building construction, examples construction shippers two industry In released further data. we Kuebix railway a to

jobsite construction We our delivery. Near to project height couple our business, launched equipment. Everest’s delivering to me, innovation enable connects project the analytics Trimble breakout in the and to Second, leveraging fieldwork of worlds. and digital Government Nepal and offerings for completed of using data customers Mt. dear measuring content optimize a that physical GNSS

business, with machine here are business announced accelerating transformation. at actions year and enable of Third, earlier for our let’s to a special an which announced thank part you introduce wastewater shrunk today offering in our I fulfillment our Fourth, spend business. be for our IoT the digital the And we on ConExpo. quarter, estate office third would In a and our go bundles. us that, to remote Utilities With we Operator, scale offering like have please the everyone we increased we our water hardware infrastructure. we business our in to colleagues. we seismic will taking divested Platform-as-a-Service of initiative. monitoring as began the efficiently Transportation, control initiative, taking year-to-date, thank in by our small and global to to effectively and footprint and real quarter, us offices subscription XX time have We In Solutions-as-a-Service we that Q&A. focus Trimble systems model

Operator

comes the Ann from [Operator line Duignan Instructions] question your first JPMorgan. of And from

Your open. line is

Ann Duignan

afternoon good Hi, Yes. everybody.

of a couple clarifications. Just

ARR restate You And expense, adjusted I higher ran would through expectations revenue? quickly, guidance to gross myself so you pieces Could versus scrambling. the for into quarter-over-quarter in you about putting your then together, find what said the QX expect be earnings operating QX margin, given you lower all -- nonrecurring lower down QX?

David Barnes

Hi Ann, David Barnes.

continue year to are and grow lower ARR the back so revenues third quarter, expect those Non-recurring expense the that little as in come probably down, -- bit. results will of continue. in we in yes, the the So, a being total resilient as in down in because to be half businesses but and go good not the QX. won't will conversions QX than QX. up Gross down as Operating in, margins much as

we're profit. Ann, So, increasing certainly operating not dollars signaling

Ann Duignan

if ARR And why would down to grow? to continue to you in expect QX be is gross margins going

David Barnes

big, but of year-on-year margins reasons, none will many lot for up cumulative. gross a be Well,

very As period. margin you've seen, gross high QX was a

probably we prior gross higher be but think margins than year, not do QX. So, above will

Ann Duignan

year then side, tell are just as now. any what has segment the issues been profile could cyclical a that just that maybe and Okay. dig structural more that a be I on beyond a Transportation need this think little versus into XXXX? you there Transportation do And are you and on about? we weight us should is about think we ELD mean, bit How concerned issues follow-up to into

Rob Painter

this Ann, Hi Rob. is

think started is particularly the at North challenged say, that a is on macro we the the the transportation, pressure supply/demand certainly moment. end There I -- specifically through the the I know, playing was when you is, America, pricing So, And creating serve, beginning markets XXXX transportation of and actually about would imbalance, the carriers. to year. as think, of in which I most

to come set the I the think there pandemic pricing side the market back. and probably balance expected then on that back

delta half that idling to So, at trucking backdrop that assets. of I includes least companies to macro in the also backdrop some macro look at transportation put and I and the -- the

at assets trucking so that in adverse idling on And if units the those companies, you're our some impact least serving have could near-term.

or say, next let's couple the forward quarters for a some So, or maybe quarters year. of the view

of so moving as know, and for the to from are that so And do exists right our the system, couple transition, perpetual transportation Enterprise So, that business, just the a negative impacts for back or that all for we prepared thing short-term intentionally has to reiterate the engaging backdrop. offering. we points In office emphatically software a the And market, subscription is business, then management remarks. the in the model P&L. customers, to a from to

-- we're subscription two-thirds it's offering above we offering. and are new models, almost coming offering actually, bookings So, thirds are we're - of both our seeing from

that create near-term I when announced -- which was deal. a which of we're did in the So, the bit February, the a takes last the that does dilutive bookings, acquisition, more it as to about was it subscription And driving then we transportation we the market, side announce drag. near-term shipper offering, subscription Kuebix a talked us the

So that is market down. that a in hangs heavier

the now So, And yes, factors. after and the also majority ELD those the U.S. then continuing our comes customers talked are work ELD to we about And Canada migration. through itself

Ann Duignan

And it And you. year? end then leave of resolved ELD this there. issue should I'll the by Thank be

Rob Painter

working say our mean into it Yes, that I and from product through year will -- those commitments. through think it next year be beginning of would well, of bleed the probably this the working to fair end I as

Ann Duignan

the it In Thanks. Thank leave Okay. interest you. I'll there. of time,

Rob Painter

Ann. Thanks

Operator

of question Revich the Goldman line from comes next from your Sachs. And Jerry

line open. is Your

Jerry Revich

everyone. good afternoon Hi,

Rob Painter

Hey Jerry.

Jerry Revich

has for past you since performance that the Viewpoint you if the growth you especially of talk Can new the update you have kind you just -- could over the delivered? frame and folks folks wondering on over of the just What logos us and quarter? logos win Can team ownership. year about plus delivered? I'm performance just e-Builder rate for the in us past

Rob Painter

And continue two those to perform may ago of for acquisitions Buildings who that They years very Yes. space. and Viewpoint our in are e-Builder are not and well. a from know, couple Infrastructure

So, very mid-teens a businesses. of you the pleased the in been that second give respective a In overlay quarter, qualitative. bit part with what the of to since delivering To those and of they're grew Trimble. both management quantitative ARR for teams they've

the those strategy emphatic If the at model growth logos So, of about look of in been through we have driven businesses I of has would that last business the couple ARR say that's working the and working. new look e-Builder, demonstration at we When logos. years. new two-thirds

Trimble. So, then from if it's when deal, of to we a Viewpoint e-Builder it's to been to two-thirds the about also that growth and sign makes new ratios, model on subscription we existing wins, of driving a side, a sense model, from the decision. transitioning the because are model. being new majority part And you And they're a logo RFP customers, logo dots good XX%. no then the around get and of was since it's a whereas one-third around times connect look don't new And already our it's at subscription one that, type there

that you color, some hopefully, gives So, Jerry.

Jerry Revich

was were in stood the than acquisition impact this in about you And the Rob. there any then stronger deferred was bookings it, quarter? appreciate talk quarter, that I growth Can out what ARR? that was or because revenue

David Barnes

the in there, the that and Jerry, portion bigger ARR recurring businesses, growth subscriptions acquisition of health some Yes, the the both and there and maintenance of impact support. but is is

Jerry Revich

the subscription Obviously, addressable nice Can for customers then going that offerings. in in but could a two-thirds Transportation growth what's much speak? back about the in I'm offering of to the expand seeing? wondering about lot we was not of conclusions that April, to you talk it you're of signing you June, so the market on draw July terms office from folks in tail, any helping up subscription And orders hear is how the

Rob Painter

and is had going XX% me, at -- want question. the can we've custom carriers And What learned larger example, another see we our the the and we've would from other into business Yes, carriers an does we use it what to fundamentals of addressable look over it's market. and SketchUp as transition quarter implementation. expand made a, addressable predominantly from tremendous taking is construction call year-on-year the good businesses If a a of who growth. clear to we a sign I'll and unit that, to the Transportation, certainly be the medium-size market. of a have us it, are expanding sign there not where

going to more a So, box standard out offering. they're configuration of of want the

logic there's So, to a it.

we was the we've reaching of But I'd largest that do a weren't also it ourselves last, had see customers large carrier. set quarters, bookings we so think was that a reaching the in I before. And subscription say from very three

seem attractive to to it does both So be segments.

Jerry Revich

discussion. Thanks. Appreciate the

Operator

line And question Jason the KeyBanc Capital. from your next from Celino comes of

Jason Celino

To sounds for two service -- thanks questions. those it of products, think segment. then should feedback Hi, taking you for what's we build kind transition? a from Utility kind also announced the like those off But of And the how of for new of my the subscription announcements offering that been customers? particular made, your pace for you offerings, another as

Rob Painter

in across the advantage. market, which data, the the part that see down pretty continuums, the can that model there's they the believe show the & performing talked we of on being is -- there's about is Scale one, last you to were made the industry market. at I think subscription, really offering. it's quantitative can qualitatively, early really as subscription And connect the to connect back and an as we use business able say of how that data in the the customer-driven pursuit model through And optionality that to a data, transition the expansion stakeholders to believe say the going I be pursuit addressable of know data We they across move huge all I'd board the a where are an I them the example initiatives of that moving question conversion. then to connect in to give Trimble has to from the view to the the business OpEx mean, to this. days connect financial a to our really, market cloud. a we make CapEx strategy. the we're Sure. able we Connect we connect able enabler strategy being forward of get we to to the looking

so there's this. and strategic And motivated have to both that very committed reasons financial us and

And to we us so show from are examples before as parts of about about about of I talking wanting the of yes, we talked changing was the that company, or business you as hear don't this. just hardware serious often haven't such signals elements how model

we So, customer so time that to calls. in can come and tell will back certainly future on pickup

Jason Celino

Okay, see the software I end lot talking couldn't companies Was quarter And the that why A due their other one strength this customers of market accelerating been quick different can. to construction great. digital Viewpoint follow-up, investments. also? this have or and about if e-Builder in

Rob Painter

you, to I I have to say, It's hard very missed you're faint. hear so question. the

Jason Celino

Okay.

Let And market a then about end speak also? see A me the Viewpoint different try the to louder. why digital accelerating the from construction investments. that? strength lot other due companies software couldn't little and talking e-Builder customers are quarter of to in that Was

Rob Painter

we're the an in and agriculture, physics solutions acceleration level, what the physical Got at as we a digital. the you. connect secular believe it's digital essence, Well, look really and digitizing the connection markets Trimble, that at you there's sure, of worlds, we transportation. and the such construction, as And of for do

we that were customers believe And wanted. quarter some we software, of secular the in So, on-prem we're a get seen they use the bookings an the that place. We've weren't then I'll acceleration at to of had example, who -- in right some Viewpoint this ARR. -- as the on-prem had connectivity level able

and of stick the we customers. and a benefit the has actually some by shifts to help did during our course, once software want so seen them, to we've quarter cloud, that that to operates how delivery And they've seen lift side the large, in method. And

short-term, disruptions being access Now, have to able in we the customers. the actually of

the the digitization mid in separate would the terms long-term I so from And near-term very secular. of to

short-term, to think to And a So certain new we through had. bookings trends second And of we've quarter here In been from new of the better it. progressively certainly reach there. it's until has the again, the saw have long-term, harder I and bookings from into logic logos beginning quite that move quarter new in the the quarter negative the and July. quarter the the end and move that at

So, hopefully, bit we a color both on it you how of little gives see sides. it

Jason Celino

helpful. very you. That's Great. Thank

Operator

And your Wertheimer question from Research. of Melius the from line Rob next comes

Your open. is line

Rob Wertheimer

your Rob, guys. Hi operator. you, there. answer just Thank on following last

push through I think you're any customers quarter side you obviously was the Transportation similar about really construction quarter the Could logos tough through the hold? a progress new there? on digital And had taking or related. non-hardware talk new quarter. whether there's of that

Rob Painter

specifically Rob? mean you in And transportation,

Rob Wertheimer

Correct.

Rob Painter

throughout the -- of software in quarter. better saw in would the course, bookings progress Business, I look, Enterprise -- there. the spot Well In bright say we software-oriented, business. a that's our enterprise

a indexes were those macros, well, Class second, whether -- the all you look sales, of the indices truckload even some at haul the at think I know line when or unit shipment or back we kind we I historically look if pretty know negative. which of it's negative in eight quarter, elevate maybe

spot end those indices We increase. the rates by it looks bottomed. of in quarter Now, June, saw have the may like

you April -- orders June. to look Class in compare up If were July,

better than at so QX. we got incrementally first did we least market's let's the couple coming like And of see an months then backdrop of if -- feel it in the freight back, demand that

Rob Wertheimer

feeling appetite, a approach you And appears? to this I highly but your actively feel Okay. mean, you economy, just if I can that knows next How to uncertain. how really is I took year just looking? hold because, a maybe Thanks. prudent over which what's different or on Or one, the so? willingness current is that? works out an on do acquisition ask Trimble your like world who do the is is mean, if

Rob Painter

in we're at perspective, strong Well, position. financial a perspective a -- debt Sure. net financial you a strength and look EBITDA, the healthy from and to

than on the know working producing quarter, revenue X% revenue the flow, $XXX deferred less cash You million in of strong was over books. of capital the

pursue move a answer. of to So, the but it acquisition. a to From -- in have really financial for the of pursuit financial the we strategies. the that's not the sake acquisitions acquisitions, If really function pursuing executing wherewithal an I is strategic of a perspective,

we we so pulling given meant buyback. last signal have call we saw to what I open. We now big, on acquisitions that see not just you're we it's of had about that in but commentary what that hear something trough would also it, the and be wanted to about would revenue the meaningful that transparent we openness we QX And be to signal decline, or as given is to the a back -- where ourselves be the and an

particularly, say, in one, And are of, in so open the the we number overall segment. the context space, I'd in construction

Secondarily, not would probably I in I'd that be, actually agriculture the really deals, say, be too space, there's in done but say space. to many would

Rob Wertheimer

Thank you.

Operator

comes from question Oppenheimer. next your Colin And Rusch from

open. is line Your

Colin Rusch

We've projects in a as softening public sense well Can Thanks private granular you more some July. versus seen and love seeing what in give sense construction? I June of really of much guys. buildings so you're projects get as infrastructure. versus some to

you guys Just to get that on some from you move into love would color XQ. as

Rob Painter

Sure, hi Colin.

the the see we're we the come look happens punchline online, future. And future the look the the it large, hit impacting September, and the state half back renewed will non-res from hardest. -- that of with here dimension customers and what get at at we civil, current never type it have with happens data there's has, by we a let's And back resolution, went number if it the then a residential, projects continuing say, numbers and what that hopefully be resolved FAST Act, there of impacted If would infrastructure, offline been on that's get look been would are see by concern what show out, break backstop we went shortly. see the construction, with be and will of down of be by that or I a by. view on current DoT that about type factors And what at if is that's much I been about work or and one So, will all of other the would coming pushes And that offline future -- take XXXX funding non-residential, will to some perspective, online. on then pipeline. what watching in impacted civil, non-residential and I

we value look we look And at if us decline. a that of and looked at after ABI so the chain April, as serve design, at the architecture the we data across tell and we stabilized ABI that segments the would such when May market data and would the construction, June number the

positive. more look does that So,

more positive would I which, our over in than Now, we And commercial year-over-year. industrial, XX% that and note multi-residentials that SketchUp business, sense. look again, makes also units grew

to solid, space then see be efficient that down. And our we where didn't own it -- of systems play owners didn't was, backlogs the more can look help that our number and to being buildings, current our that currently see occupiers is their manage general project that of nicely are macro serve a level, if with in systems with of or have at look we can customers occupiers from So meta and we into And at business. how technologies if we see management, of are play one see efficiently. fits into how we activity see more used, that the that the they're segment, are we looking serve can occupiers space or you and contractors can can because and buildings, we at we whatever we we the

during business In retail markets. most data we've as grown are business, the historically such e-Builder markets is a centers down that seen good. verticals So, course, have And our good. government like of not that's or been

greenlighted or we've U.S. work, the watching or So, markets it the U.S. outside to then has some And well. like see and places is in what with a But in you go again, the around see as in to and with the and back within if the few that's happens civil, And of U.K., project you back starts bids. an come segments. was project differs we're answer world, seen good the the places HSX other performance

Colin Rusch

you. That's helpful. Thank incredibly

your solutions? on discussing the engagement and from effort trying just interest of pandemic briefly just a customers push migration a follow-up that is how of a response, a the of to showing that Just the in is sense much effort customer enterprise pull some through And non-software customers? seeing more are of and you I'm much more get how even of

Rob Painter

plays SaaS beginning QX, And at of software surprisingly, can then our we of dips from quite we've usage indicator, hey, and because into work. by the the intensive that's be quarter seen retention since late impacting saw in of at also when I April. businesses, able seen we the the is we and the It the have do we've of and measure the we of think intensity home not have net -- maybe Well, March to through ratio then, the businesses. especially usage. work saw remote large to we usage through the the the number way, one in And us. system And positively to the for a important continue software access

aspects incredible And it of an for never mean, attendees. we we ability demonstration, X,XXX and new In terms thousand -- from companies shifting show I ways dollars. few I of customers, and you we've be how new of are get did had all and in nature nice the far, a the In some or virtual we're important. that's like couple on that customers would will a we most And solutions, a example. a X,XXX to so the marketing. of digital certainly one the companies, did believing digitally of seeing trade out an and give we engaged. pockets ROI there we're is mean, is I learning engaging of engagement of field say, hardware and some there sales reach seen ago really attendees say success. months I'll I'd in Brazil, all in-person

-- predominant airplanes be network running. to we direct do have be and difficult, in the were was And that's environments, to worldwide on have if luckily all had it to a sales, that Now, And we there, and businesses. it's restricted been of having if dealer operate really, different say, they able because we fundamentally still than be hardware there. let's wouldn't out to partners we while up and our

having be, So, to that the is channel very moment for in the positive again, yet proving us. hardware business at

Colin Rusch

Thank you much. so

Operator

from And your Eastman next question Baird. from comes Richard

open. line is Your

Richard Eastman

perhaps in Geospatial. of so could Thanks could op from and kind just was of And up just QX I'm looking Rob, plus question. a Geospatial. Yes, profit quarter-to-quarter on op Geospatial What or And to for thank B&I in sales, about million cost sales flat -- control kind feel second $XX for you. just talk us the to million some flat is, the the is profit give was did we or B&I, us the there? at cost op profit sequentially mix $X you in takeout that QX? for the suggest versus what on

Rob Painter

care and and the board. at But drop, delta going as across travel know, fundamental did saw doctor. of pay the People on to actually, Well, the the cost at the was We was we things expenses reductions costs, we surprisingly significantly look business, to entertainment not if weren't that go drivers surprising. health we this, not you largest the saw the the look like in David add can in down, quarter. we if the and

in overall played the to So, those numbers.

the looking specifically okay. now So, if segments, within reporting we're

some there there. down And asking, So, compared QX? the QX sequential you're ND&I about to to think OpEx, Geospatial Rick, are I nuances

Richard Eastman

to flat there And Yes, it's be that. versus in B&I just more pretty flat in quite obviously, sales But increase purposes. again, component op And frankly, QX. I'm thinking $XX the looking profit would substantial to I for just modeling cost business, again, on I'm just at in profit the revenue the being million a quarter-to-quarter? dollar QX from

forward, we year-over-year, As rather of a in but have think certainly, there. move mix revenue significant recurring we profit. a op increase would software sequentially, more I it's

Rob Painter

that's higher, on between the help both those in through with And a -- delta there's And an to going in margins Yes. you revenue, element And gross the and on that? be point then -- businesses. OpEx even David, flat play do then so to that's there's gross the to view, margins an going to want of from segments. after XXX add an about being bps of

David Barnes

Yes, I'll what add Rob to said. just

phenomenon We hardware year-on-year. were and whole were the the QX of But had -- business So, in positive well. in obviously, that's stronger company, up mix. pieces and all occurred went the for and gross margins more software the we Rob a up for Geospatial And really factors that the QX to pronounced weaker Buildings where mentioned. as Infrastructure, revenue

expenditure many went travel line segments confluence seeing the the is margin in is expense positive It's I'm improved operating true and operating margins basically across your you're across no people, sure on what every really was gross category. was So, of in in and as of companies year-on-year doctor, meaningful board, low. one the two to those the reductions operating zero,

think level. low that you we as levels, the after operating forward expense can't indicated, as So, at and sustained QX, be they

up, they albeit pre-pandemic the not levels. gradually go So to will

Richard Eastman

Okay.

second question you the could then quarter? business how BIM in just performed characterize just the a in on And Okay. Europe business, BIM the

Rob Painter

particularly I better, Nordic we in the out say that the quite Rest And there's more not Nordic a have of stood World. wouldn't did surprisingly. do and Really similar bit a of concentration. anything to a Europe. U.K.

Richard Eastman

Okay.

Okay, very good. Thank you.

Operator

next your question comes Berenberg. from And from DeGasperi Andrew

is open. line Your

Andrew DeGasperi

the on in a you I'm Thank you. the ask due a wanted that in to aggressive. I We just role downtick to the again, question, know has Could -- that played any if wondering maybe particularly elaborate just Samsara that revenues. of if weakness. weak competition? particularly in was been transportation,

Rob Painter

the delta. talk I'd market let's a back of the is way nature the the -- it of macro about see of at there's element impact let we the would go least the I now. bit that But right is characterize where but little Well, half

from in capital, And there's a the industry. force companies. they've some capital some to seen was of shakeout been so lot market providers, say And I the of of attracted that or market exited with reductions whether the would we've and with in the early technology the some ELD not certainly capital smart all mandate

So, product to companies, like And you -- an the by how we've but the ourselves, moved at I'll and example with themselves the pressure. the is software. you apply competition at to wanting really have And younger if is say, going pinching some is seen long some growth. get imbalance a of of now market of that give a other increase the companies, example customers subscription shift companies, market has now moment; and hardware is pricing because bundling the the got that nature you how large, the that's I'll you look the you that the of the in competitive -- carriers tail and

is now environment, certainly And this I've negatively talking few that so hardware about has for certainly a the the into calls, wrapping been that it subscription. and impacted that margins -- the competitive it

the so was that one offering. moving press in announcements release And hardware subscription as of I had a our was

that because on So, taking aggregate, revenue upfront, the flow instead the And it in that cash we some do have available that our the to customers. business time. subscription impact we'll have net does into hardware of over of wrap

flow over a a growth. to That's than cash be flow. a it'll also fine better time measure have even ultimately cumulative cumulative on cumulative base, cash ARR, Now,

Andrew DeGasperi

your tell subscription That's Hardware-as-a-Service. helpful. just on on what -- a of on Can us you the the duration follow-up is And that average?

Rob Painter

one have but for you we Typically aiming mean, three year can typically years. three I or are three years. years,

Andrew DeGasperi

you. Thank Great.

Operator

from comes question last Rich & Company. your from Needham And Valera

open. Your is line

Richard Valera

more if Thank I you. question Transportation, could. on One

Transportation bit Rob, that So it looking the was it, and little just about the think several down gradual not quarter-over-quarter. that about upside to quarter-over-quarter QX. the likely assume we're gradual the is over what obviously I'm sounds recovery, this out in as And expecting would back I decline think to a think trough abrupt, you're and would we from hearing, a QX. the pretty what severe should like revenue in about a any of next to million way from in And that chunks of get in I the that's perhaps recovery, more perhaps quarters, $XX that

Rob Painter

about to it, think yes. That's a good way

Richard Valera

Great. And OpEx, have on could, more, talked one you if I which about. the just then

would impressive at down on was a -- So, But that much so to think very of it mean quarter-over-quarter, we give kind and any that, color OpEx how you. all appreciated. of QX any it, QX guess, almost all, not on was back in $XX I back Thank a third of we be understand half do sustainable. that's QX? at that we I million, that give color

David Barnes

evolves this and is That bit Yes, and on market David. the depends everything. a virus the how little

I second discretionary be near meaningfully quarter. to constrained spending travel was amount that think safe down. and by it's areas factors continue will OpEx the a number be it say, the down on of OpEx of will in but up, nowhere Many that the to

I'd be up it modestly to from say, -- will So, QX. up QX

Rob Painter

we And in some would addition, also FX. see

David Barnes

dollar The U.S. weakened That's right. has considerably.

So, FX just of the U.S. rates, the a lot outside cost is our

OpEx. will put on pressure So upward that

Richard Valera

gentlemen. Got okay. Thank you it. it, Appreciate

Operator

of I further Director over Investor Leyba, any have this to will at turn Relations. questions Michael Mr. time. don't it now we And

Michael Leyba

everyone, to on next quarter. to you, you We for call. Thank joining us again look speaking the forward

Trimble (TRMB) 6 Aug 202020 Q2 Earnings call transcript