TRMB - Earnings call transcript Q3 2020

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Operator

Good day and thank you for standing by. At this time, I would like to welcome everyone to the Trimble Third Quarter 2020 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. pleasure the my Mr. over now is to conference turn to It Painter, Executive Rob Officer. Chief ahead. go please Sir,

Rob Painter

Hello, everyone for today. and thanks with to us be taking the time

I We'll you messages convey please our to the four reminder our Before key at we and slide refer a today. the X Harbor available the back. website, that to is on on that ask we Safe started, get start want presentation quick with

the quality of First, expectations our million. strength revenue costs the $XXX ARR Expanding to and to of to our resilience quarterly EBITDA to in own billion, X% year-over-year $X.XX on quarter. of led adjusted the model our of gross XX.X%. us team, third enabled grew margins financial XX% year-over-year execution margins grew while strategy our outperform the and

strongly shift working. confidence to Our model Trimble continues business software a in my connected, customers support as gratitude and express Trimble. perform for hardware these to recurring who your the and investors centric revenue and continued well as more under I team, challenging our to conditions, want is to

Second, executing & Scale XXXX Connect on remains our strategy the focus.

working to improve transform transitions and workflows. industry connect lifecycle and not model of data are The to business this output stakeholders customer an strategy, are input. We an

our in and strong. a Fourth, of hire Digital & Diversity, continue newest to Talent Board our Officer, a as to Inclusion, long-term Third, we recently put enable conviction from a and Head named People elements within Officer, we Dalton, James we of a place member; organizational to the Equity remains have Sustainability. VP strategy. Most Chief promoted Chief and

in we've cost investment and downturn. during the will quarter. On base one the cost reduced hand, We in innovation balance in our transportation containment

competitive of in more digital On the & stronger few to to mode we recession we advance the are guidance. it; that exit machine autonomy continue looking our this we Connect In our level, proactive We a on and which increase comments a than in better-than-expected and saw other on footing we a note, Buildings our in construction maintain Infrastructure, transformation. opportunities, civil goal strategic make. entered investments hand, At will strategy. segment Scale and control to for results acquisition reporting &

addition, delivered strong growth. In innovation of In recurring level our sparking businesses software a demand. revenue Geospatial, is

third on farmers end Our In up Resources as an substantial which which costs. quarter. in made inventory steps, restructuring took operating meaningful getting all payments support combined have averages. during precision fixed decisions performed been Brazil ahead. which market direct lower charge work the Utilities, for prices ongoing our implemented contributed to commodity Transportation, while the plan been catching business investing on Australia, quarter. business overall project These such in America, remain we in believe the compelling well resulted & above customers will well to resilient. growth business to In in position the with Japan agriculture a have and and better the we for XXXX. in several the conditions In and performance risen, have We Markets back years in the we will our has Further, North historical ROI agriculture example, third activity. in quarter, quarters the favorable

we increasing market will transportation in improved optimistic market to support investment. sustained prices spot At conditions market to conditions that for of through we performance XXXX. Overall, improved cautiously the these path level, macro have the utilization, With are XXXX. growth for begun now capital the half behind XXXX difficult us, second decisions see compared improve asset higher the with Trimble in can as and

decisions election mode local policy government relating measures, stimulus and on infrastructure especially, will from move we funding to tax. governing decisions and we As and mode to follow trade

for David to over call the turn of a the review numbers. now me Let

David Barnes

Thank you, Rob.

Let's with on X of begin review results. a quarter third slide

divestitures XXX foreign up organic to mix million, and structural to acquisitions, up was by Net factors basis. quarter basis margin XXX XXX Cost COVID-XX. margin by share. Net primarily income of margin dollars and a improved XX.X%. $XXX XX.X%, year-over-year up fluctuations also products Third per also of was basis while third increased driven $X.XX by on expansion lower basis to revenue exchange temporary Operating per by $X.XX XX% X% both higher was reduction. points and share in on assisted increased declined points margins. income Adjusted year-over-year, revenue gross earnings XX.X% with the related year-over-year by and was year-over-year quarter and driven a result actions cost margins reduction new revenue X%. expanded Gross a basis, discounting EBITDA points

Turning slide X. to

had Our X.X in $XXX operations million. the down approximately represented paid third and flow net was $XXX $XXX to times. was We reflecting adjusted cash cash to approximately on income strong business. ratio of non-GAAP quarter we debt over million, end times Operating cash net of the from our quarter available Free of in the generation billion the million in cash. revolving million quarter. flow cash our $XXX and the $X.XX facility flow the flow quarter, EBITDA X.X fell debt At credit net

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

remains sheet Our liquidity and strong. balance

metrics basis. as that slide which X, in the revenue, key billion the includes Annualized reminder we value on of X%. up a recurring third growth follow. ARR of quarter, XX% on licenses highlight term of Next year-over-year $X.XX a Organic was the we was some annualized

XX-month Net of our X% in working revenue Excluding the of ARR inclusive on our of a a nature asset-light revenue basis organic model. business deferred the approximately double-digit trailing demonstrating represents Trimble Transportation segment, capital rate grew quarter. at

XX% costs, are trailing We and metrics while proactively that revenue. investment we manage and Research Two on development maintaining our revenue follow continue of in XX-month key nearly to initiatives. basis deferred was backlog. a additional

prior growth metrics give and deferred our backlog in year. acquisition-related ahead. a versus and XX% a visibility on Our into more revenue up two up additional billion, trends revenue organic basis combination was These through was the quarters us future $X.X than XX% the year-over-year of

Trimble of in revenue to these compared ago. in across businesses. revenues total are offerings of slide Even environment, XX% operation up essential of customers' a to growth, recurring quarter made range year revenue Turning experienced economic tough a a We the wide businesses. X. XX% the Recurring our to

Geospatial access areas about non-recurring and hardware in year-over-year services, agriculture service facilities and the are of professional Our lack including but COVID perpetual helped Transportation. our employees. strength revenues, professional quarter. weak decline offset Performance beginning performance of trends from still in to in the software by customers' by improved in crisis, in was impacted Overall, experienced expected by of quarter our our the businesses, the a and X% somewhat these negatively

a the sequential our when terms business. geography, was America second impacted declines compared down down Transportation X% was In adversely quarter, the North Revenues in XX%. in were improvement which by representing to North of America

in in revenue was grew project year-over-year North the Transportation, activity quarter. third across Excluding America in Europe reflecting broad-based continent. the X% over improvement up X%,

again a direct Japanese once performer spot support in Agriculture best up of the from was quarter and in government in Australia drought XX%. quarter the Asia recovered implemented the was as the multiyear increased Pacific Asia Pacific farmers. a bright

small the easing from grew still country in shutdowns. in COVID-related the quarter of year-on-year recovered business China, Our the while third as

flat Revenue principally and customers. increased slide to sales combination basis. from software role products, levels the double-digit organic played agriculture, quarter from Geospatial basis, strong of to were on organic sales prior over was versus percentage system due our Resources Revenue of meaningful were to revenue revenue in points, strong an second X as and OEM margin detail an discounting now segment four was Infrastructure and was positioning integration profitability nearly points year-on-year. driven strong on were control. improved revenue cost from by mix of local a in and governments. higher-margin was our to growth up M&A down growth XX% services percentage the to due also essentially capability revenue points, We up additional businesses. in percentage improvement up organic compelling by when mix, of segments. up and X% XX% Margins margins on precision M&A and mix growth the revenues year, control. agriculture in basis. Turning and Cityworks new to driven over lower was surveying growth on benefited offerings utilities nearly Buildings XX sector cost each for an cost and X% Utilities reporting of control. up offerings. each Margins of from software mapping significant revenue our higher Segment the expanded the the has X added a quarter for revenue a

in last the down to was consistent took as business margins call. XX quarter we broadly results Transportation business. with charge were the and XX% earnings the the below basis impacted did line as The with lower as revenue well organic revenue long-term our second into an The in rate as an revenue subscription margin points. decline the compared and improve Segment coming top Profitability declined our drivers objectives. we are the in revenue of quarter highlighted decline customer in transition did was While mobility expectations third performed retention. that in our well quarter of inventory on over percentage those and quarter, by M&A consistent

outlook now quarter. our Turning to for fourth the

sectors we across serve. significant uncertainty face continue the to We demand in industry market

our countries, from face pace rate of With risks virus. customers the stemming restrictions the rules And of COVID-XX the in uncertain. the renewed curb many economy recovery in governmental broader increasing of remains work to the spread the infection of

enable a end-user guidance. As sufficient the in demand us still to have result, we to don't clarity give

In year we did important our which with XXXX at you we fiscal on drive the enjoy of from growth revenue. benefit our trends we Starting the quarter overall that will of the color had The remind I'll Trimble onset lack As quarter, pandemic provide this impact spring. an less last $XX XXth most will revenue will performance. about the X%. week. projects deferred by this quarter, million last extra adversely week or some approximately will

XXXX for of growth the recurring revenue which remain performance. Construction that quarter our divestiture Trimble Logistics our momentum. versus all growth we quarter. will more at businesses fourth prior robust strong the quarter part modest anticipate The to line is the fourth these was rate Resources revenues Nevertheless comparable Cityworks favorable year. albeit and Infrastructure fourth to the modestly expect from quarter rate the the acquisition at Note that with grow quarter. Cityworks, resulted that quarter Finally, be recurring we and lapping revenue in the Utilities are see license Trimble XXXX revenue in in of we fourth revenue of at business, in fourth much Buildings principally revenue again last Considering third and perspective, factors, a segment XXXX. inorganic lap a Geospatial and combination to ARR term year decline down less likely we quarter third of From total trends Transportation with recent likely organic the are a what in the average. experienced of of will as segments about in of continue company a to will

margins. gross to Turning

We expect The reduced and expect fourth driven that from gross this and extra discounting. though, their year products by have last to the week margins in performance impact quarter. positive strong flat boost new year software continue we quarter. the Separate roughly factor, do in margins this versus of prior in mix, we won't margins quarter did fourth

due the up the restrictions. areas from approximately seeing operating where and discretionary the spending performance across quarter. Our year, incentive in $XX increase With third anticipate spending million compensation our higher grow to will quarter, was we a sequentially expenses low are we for gradual improved COVID in unsustainably outlook modestly

revenue to the margin we to manage the decremental mid-XXs. and to in I've Assuming low dynamics expect described, margins

our will have Finally, we generation. we With a repurchase program. share reinstituted healthy at leverage long-term now modest cash continued I project that flow our target note

Rob We structure will our a as over disciplined continue employ With manage I will to turn to to conclude. to and future. we capital it that, allocation invest capital approach the for

Rob Painter

in Connect & me how by close our XXXX and strategy progressed slide the to Scale turning quarter. we reinforcing X Let against

how add real-time examples can and Construction, field engineering the unique construction is this worlds. reality together by in how In autonomous data more blade and WorksOS, another and a models, to helps bring towards we with Today, easily step and productivity reality share. from is Trimble create and and dynamically X us digital the cab First, progress we further to Slide additional, we entire integrate In take in points. the next all This here available industry physical excavator, and of an reference and across integrates future. understand into a financial this shows machine this data hardware XD software, we Back and of of view other and positions of will and way. office data, design The plan. cost into XX surface back the intelligence model. views. connecting we lifecycles. system the is the the model a guidance our equipment. on WorksOS, machine augmented information, coupled slide released model the from Two is office management essence, construction, earthworks put launched bring with XD a jobsite. the ERP progress asset visual deliver operators construction in constructible which enriched machine dimensions model for From constructible connecting algorithms data our with artificial to With schedule the workflow to a with digital learning solution. to transforming workflows Augmented to Trimble example aggregation and updates control slope of solutions control cut/fill our Trimble construction which we data XD

receiver to productively been What enables a the Two robust RXXi, that and receiver, GNSS share. environments. means market success. The inertial our is of technology innovation. effectively breakout delivering in new examples Geospatial, GNSS Second; this that challenging innovation work integration compensation. tilt has the is in surveyor can In the the

easier. We are work making customers’ our

The on second example is slide highlighted XX.

visualization. types the used more deliver of month, This and this assembling winners is the well detailed and in look for and reveals best design are as component, our designs the of slide field. you BIM is software winners each projects. past needed XXXX those announced we than instructions This these are BIM projects A fabrication structural projects for team delivering for On these many engineering to just the specifications teams call two the see will incredibly projects. awards. automate What best Our are individual for as infrastructure Design” exemplary. materials what that complex “Constructible closer these commercial precise

Third; transformation. Construction, first accelerating business civil in we Platform-as-a-Service model construction sold our our offering In business. our

technology completed delivering world-class enable our week construction optimized. our scale operations and in while cloud the we and one expands logistics business. support integrating network closed further of third positioning a and customers’ services the business construction to over the effectively miles of divestiture are for actions acquisition North on are us that services our current that our to assurance and business; Last cover in quarter Fourth; customers We efficiently taking we our we now million square keep to America.

decisions Q&A. you and with like go I’d With let’s to thank and data We that, us. time connected us are in meet ahead enable us are to for our taking intelligence please Trimble thank of investments to special of Operator, a the colleagues. the to opportunity everyone in be the and enablement, global today, will management, scale that to which area artificial making cloud to approach,

Operator

the comes from Munda [Operator line Berenberg Gal Instructions] Capital. of from first Your question

open. now is line Your

Gal Munda

Hello. Thanks first I've the one. my taking got for question.

of on of expansions on licenses. Just wanted quarter. ARR And as model of in this the is, seeing first you. is what how you it of my that's wondering a customers I much can the continued you're growth, little which Yeah and Thank bit around one talk was versus transition much to ARR follow-up more how the lower having kind the organic business strong new growth the is question. side drivers if in kind

Rob Painter

Hi, Gal, welcome back.

Gal Munda

Thank you.

Rob Painter

the XX% growth the If organic we'd in in around so growth segment. the exclude we total ARR in level Buildings ARR Transportation the business, the Infrastructure level. a quarter, construction business, double-digit to relates at on and including be so X% at the it in an company As reporting

short In terms customers answer growth. between seen customers the of we've new it's existing the and breakdown where both is

we to new So customers into a out environment. are digital sell way figuring this logo in

the actually business addressable the And an grew XX% a level compared think expansion of XX% the like clearly market new So ARR from and towards that for the we probably SketchUp it's as reasons. coming that said is let's thing such of a to seeing a weight level almost more in than winning and customers Viewpoint -- take same help? that's logos business Having the Does obvious I existing the is it business. penetration at greater say portfolio prepandemic there year-over-year. total

Gal Munda

helpful. and very you of little and industry breed finding life follow-up, That's the Thank to buying does of those you which that strategic you do levers connecting of kind sold specific tool a sales best suite yourself about now more is a of the be And you'd talked you cycles? versus seeing someone average relate -- -- start previously companies is, the more bit you. have contract you just I'm becoming one there? best are a as that connecting you're else strategic to of were new the within mentioned And wondering construction. when suite your you potentially, those What that maybe products, cycles of dots size the how one previously a center

Rob Painter

in give if the construction new Scale months. say system business that the cycle, really Trimble see to connect the the industry I connect is take management system We're I we've a is I'll of XX data $X.X in if the the use is record over Viewpoint say you early the in customer I & right. utilities of last the company -- construction, strategy. had pull. this of for I construction the construction discretely ACV life And which example just can the would whether construction part agriculture push really million mean for across And solutions -- So stakeholders transportation as an absolutely it's you're strategy of Connect example forestry. example. To we

or connect create system record. of essentially suites to customer of So solutions bundles into pool to that

which electrical for business, of look cost in If of are that construction our at So on that office If -- we we can see the asset MEP augment job material system mechanical we plumbing ties that the software. utilization example estimates pricing, and fabrication cost procurement and at into there business, management which back or information integration job look in change, estimating, ERP. management the telematics, the into is the record. have we the structural

the more integrate they to unified us a to customer. we're a customers that in being as real Trimble wins logo that new our And few are result seeing So of a see where we're examples technologies to asking starting various as come have. face able to

In who an a to commitment significant terms that ENR XXX of recent in sell CIO. to I was model example made customer we Trimble. new the who with a with

So it the correlates to contract when that Trimble up-leveling overall sale. look Clearly C-level sizes. we're like more to an starts to the sale

low So like X could we're deals let's each as four be it of type hundreds say $X as million contract opposed they with to more to start heading contracts separate the become thousands it. in or over on a which basis where right tens starts total to look three, value

Gal Munda

on you congrats helpful. much great quarter. very Thank great, a so That’s and

Operator

Your next question comes Eastman from the line Baird. of from Richard

Your now line open. is

Richard Eastman

Rob, maybe out a the bit of took the you're side some ask I a and get business revenue of both once margin and you this year in the this of quarter. a and to But And this starting some how just maybe off, from like basis those from we do mean little op structural throw to the growth costs you bottom more color here Thank through maybe metrics. perspective? questions. for the sounds business I around of would first you the basis, suggest see thanks in It revenue XXXX business viewing just quarter. in form the wanted a Transportation clearly

Rob Painter

see the had that point we put from last similar that expectations into we But year of the I'll second of more forward see think it's say at moves that that narrative fruit holds in now the of the credibility is we narrative the we're margin I'd as does half. first the hit to last cumulative to to it the half meet the quarter. recurring point. have that a clearly that engine half establish we game below quarter the did second we is so there year. business it for so I'll revenue get Rick expansion it's starting it take that when number next topline. say similar nature from we What's saying making that the we'll in next can I We'll than a The ambition. that going expect a what that start gets by long-term pretty going. our just becomes of to while And topline

similar and characterized it So, really upfront. view but -- think a I you well

Richard Eastman

just question. as a then And other follow-up my Okay.

I'm third any when kind Is look quarter a hardware other the it of quarter. as in the on there really sales? in the Just sequentially. message noise lots But message any improve of of XX% double-digits bad? second revenue the the than I did business there there the just curious basis the at was for is kind around in software quarter, side of hardware follow-on obviously, sequential But rebound double-digit second

David Barnes

David Hey up QX. projects couple that catching observations. we I'll Part of stalled Richard, Barnes. it's benefit from what a in got or on did delayed up of is offer

it. that's So, not But all that helped. of

improving trends in Geospatial we've the way. of is a innovation the Rob revenue had and area which As lot mentioned by margins

draw and it. number in And hard in seeing you're with these noisy some right we're a to that a our some it's bring of software -- trend times, but improvement so -- areas hardware

three. of bit all a So

Richard Eastman

Okay, very good. Thank you.

Operator

comes question JPMorgan. Ann the Duignan next Your of line from from

open. line is Your now

Ann Duignan

Maybe Hi, color different Rob fundamentals on good provide the some afternoon. markets. you end around the could

we most seen increase of -- improved. have some orders. macro the bill. similarly us then activity huge particularly large Transportation a on a truck now a won't color usually in You least likely at get And construction good you're terms how more in infrastructure from thinking We've standpoint fundamentals that about give what

Thanks. you're those how wondering just I'm about both So, the industries. in feeling fundamentals specifically

Rob Painter

Ann. Hi Sure.

of I'll and the a stakeholders. Buildings with do start bit around the little walk Infrastructure So, a and

use expected. the start the resilient place in Department to say been state with I'll have DOTs we DOTs start the would as And or of I'll would than logical about U.S. the thinking And be owners. Transportations owners. -- I think I more

been so And a that's good thing.

would ABI be look we comment is below owner to If XX. I on and still a at that indicators next the when So architecture segment. a large go the

in than Now, encouraging numbers did the we saw September August. looks more

construction go ABI I because macro for it's what the North look we when design XX% up civil for where helpful saw architecture business saw ARR business with with think and our health. But is stay we So, backlog America actual an we I'll in year-over-year. that's the in civil contractors, to meaningless engineers. If at a we and civil is but little contractors increase bit. Civil in decrease backlog a almost

if an mixed XXXX. recovery that U.S., construction a with When general take where slowing outside business so suggest the numbers. the an Viewpoint the when next to look of see Europe, markets some we with contractors. expansion contractors we forward the again lower confirm bookings has and to we expecting through could the look that on say compared that of I'd system of PMI could initial construction at And we would some If view emphasis hiring as been velocity of for PMI year that record shows flow I quote our are number

down not construction have EPC some we surprising, and see infrastructure is the we that companies of also well. backlog that look of largest in Commercial's been what and Europe. this a residential – little We see a And America basket is down. there doing and bit. North at at is

to are So that than is, see I say, unambiguously are conflicting what is demand, saw unequivocal time the information. better think what summarize would and if I for by we work numbers demand sustained that, market digitization close What's see is and end we access March, saying, some try May we one today see, would around. of frame. feel what the moving on there that improved to in I I do that April, signals we on the we

and to last start the if few they're some research at well And I the the Transportation, year, with eight think we secular unit in they saw Class in right certainly we're go place. had improved that could last sales below but I you the clearly probably So of level, months. we actually the

So utilization investments. we some higher do capital spot see improved and increasing prices asset

your it's So it answered place pause there, in ago. question. better was see a few Transportation months at if bit does a a look and like, level quite macro than I'll I

Ann Duignan

perspective No, good the the feet helpful. had get us talked you're more your side, you that's contribution. a kind It's margin quarter, on what street. from on and last on then seeing lower you to Yeah. always the margins And again, about gave of Transportation

subscription then qualitative X% X% you you it also kind back margin much was macro, much be was was subscription then us think And restructuring of Kuebix the to to was you and think rest I Kuebix? X% how of any are today XX% much How of Could the kind actually write-off? inventory of in and terms conversion of how much decline going the – the just the provide get to conversion? self-help. the and margin was macro? was How where

David Barnes

take all one David going third the similar. business. is did through that those mobility Barnes. plan which we an quarter. the quarter quarter operating that, our side inventory of forward in updated running we and second of new I'd it's Hey, And the Ann, talked The are the charge, essentially about the last numbers, we on say, margin the factors between explains delta the

Ann Duignan

I think was the inventory restructuring? restructuring Or the But you also. you took write-down Okay. charges some said,

David Barnes

restructuring the workforce a up in Ann that charges. did shows we But No, reduction. non-GAAP

Ann Duignan

Okay.

Okay. Thank I appreciate that. That's you. helpful.

Rob Painter

Thanks, Ann.

Operator

Your from Rusch next Colin the comes of from question line Oppenheimer.

Your line is now open.

Colin Rusch

Thanks so much.

early working talk long business be at some in of the customers that you're you of As offering, can the transition receptivity? and we transition on about the you looking from worked the should have restructuring changes in terms feedback generally and thinking ELD is through this returns T&L to through think kind going a in this progress? do you and How about terms how of period? And of engagement

Rob Painter

that with the to next the then second the a really I'll and level. Colin, to strategic I'll more flow-through from is At than of financial the anchor the of the in level the improvement first setup financial XXXX. half expect to year line we that see at So, in the quarter pivot last of narrative the start similar level, bottom half

that we're success means to financial for a the – At shippers. long-term we're So Transportation in now progression. At moves the pursuing the strategy business chain. and answer. position That connected taking connecting the the strategy supply is level, that's carriers connecting the long-term of

So changing. that isn't

And fleet. driver, I truck, call connecting we which are the our as on telematics, the our business it's and that back to the mobility; And mapping think way. enterprise, of the the legs side means a which positive for navigation stack then routing engine. business; in technology three we mapping we the the refer the progressing office In fact, believe carrier that

because because And we customers in something Kuebix so in we why bring the to those the -- into terms carriers who can year. the of us were that of is stack. And I aspects if together as we one-stop do of we that's the got the connecting pieces can we're example parallel a all intersection And to do of feel business carriers. believe or these then and want at like we use tech beginning the that in at the customer and work shippers some three be shop with can seeing we unique addition Trimble to connecting

Colin Rusch

automotive Level look is driving solutions? some to GM reviews us and on that That's more those for give ADAS is actually getting Level and how five that open in point. color doors adjacent super you And reviews if Can Super the to pretty folks you market hands-free guys into helping the Cruise are of as a four bit at push just relationship helpful. good this that deep

Rob Painter

and kudos very Well with. and And OEMs GM. construction like to for saying also the been by supportive. a agriculture. doors across yes to with to with has in program markets has They've the Tier doors heavy been catalyst I'd had start us work to they've open their been other one They've OEMs been with automotive relevant good and success opening clearly suppliers equipment

quick million be now that high accuracy time the in provide that the is to the point high our customers. really over third miles. connection North our quarter footprint for with And to of to And over acquisitions with business America that to one size announced one expanded positioning accuracy sort of services we that the ubiquitous square acquisition the in convergence was that

Operator

Your question comes Dillard from Chad line of the Bernstein. from next

is line Your now open.

Chad Dillard

terms So can distribution one And framework How do and today for this to it years? to next Infrastructure? goal? over do versus in achieve strategy the could Building is bundling bundled in a the provide you where what think just need like to how opportunities about of you go three to much

Rob Painter

-- I'll the start I'd with the the -- of at there's So there's product strategy. go-to-market the say strategy and well happens a it intersection

is product user a persona the level this that segments understanding persona. market our about our buying understanding So at understanding customers

when success & so talk very Scale our we customer cycle success And Connect customer about life strategy much strategy. strategy a it's customer

I'll is. say we it's What that much bundle to bundle to continue of customer is to consume. that the making technology by driven work easier on So very persona logical what understand

So type think better framework. good of a best

make a with that a customer this product because happens it you emphasis simpler have simplicity actually the that the of go-to-market segmentation. At Just through of level side -- think we I again do lot as on is elegance of can -- clearly point really product things. the offering. if we manifest is And complexity. start

the account. single on having customer for mid take the the And larger-sized of so the are size the contact the looks specialists under a let's person of depending of that that point then customers that owns opportunity like having customer to wings one who and

So in different We'll individual level doing account the partners a and and point key at reps or strategic business a both selling we'll account then both solutions way. have have the strategy.

one a fits all. size not there's So

ourselves I'll we manipulate meet ourselves position say and they are. where really So the or to the opportunity customer meet

Chad Dillard

next you a do see similar of of as it. how go to And you the guidance helpful. margin stood then costs that one the thing coming through just takes into about thinking to back like quarter? for are like next the positive think the then side margin for recognize supportive we're give quarter. out can what's framework a that right margins your mix a Got me we just this perspective, and but now, that past was just you're from levels to received year? That's about temporary as year And give to And not in prepared I think to probably the definitely trying and backlog some puts third you

David Barnes

with so it's Chad, a uncertainty, give Hey, David. next we're thinking I'll not start much really saying start as clear is of we that on of predicted, you and to by but if grow a a year. seen yet projections XXXX in lot it that be framework go back There's in will to that's world. the to or lot the the economy I've whether back the in where position say U.S. XXXX going

the better if hope that From And a our to driving to overall mix -- story at perspective, megatrend margins continue. margin trends. we principally to economic beat looks so follow revenue and a least not the gross ought is

will that gross the support So level. to ought continued at improvement -- margin

next grow We faster revenue will see costs year. operating than

not the of Some I want our year prepared with cost remarks to mentioned as things my are customers this had just some hard are reductions meeting in sustainable. to that and we've We be do. logistically that

how where little an try with are that's cover to But giving those at up framework. a planning to operating early close some hold year the the bit. us they the We'll out? margins line So now go the to up expense going into just gross operating do net for margins to going

Chad Dillard

you. Thank helpful. That's

Operator

of the KeyBanc from line Jason comes question next Celino Capital from Markets. Your

now line is open. Your

Jason Celino

& with on the Scale One question. Hi. question. But last go-to-market talked Thanks the my this your maybe for Connect for some and XXXX initiatives. Rob taking you changes builds of about

one would customers. this You partner larger sit for work you I to rep smaller level? guess your point more single and much for this and Where your maybe contact customers does to of maybe today? how talked model to kind of about And do a need get

Rob Painter

of a as game. early thing, a Hi, this because good that mean, of to I I first view second in have or get the that we're learnings. And nine-inning I'd We're journey. definitely the in inning lot say Jason. to we're able

more thus the push success Some a Trimble far, of of than customer. had pull see we've that really a the customer I to as

that responding to what when customers it's right do. things doing our asking and we're to I'd they're we're the just validation say, early us So really, listening to

customers ago certain we better -- named be We the find of sets basic and the just different, products we overlapping a who's the can named one to customers I'll have is I mean at the Trimble. the that think I of have the logical of we already -- And Trimble get some Officer. of analytics bundles a to identify sense been customer or be things the Chief we it's Think Data a be but a you how able intelligence, compare to about leverage artificial could to frankly using year could an opportunity to data -- across draw that and businesses say, for circles solutions type. multiple exciting

point within basis. in this I scope think we It's across of there's mention we way basis -- and in point majority So business. our mining variety a we think billion that business us mine we we existing use there's TTM teams I a just don't an us point marketing talked we're a a think, serving to those that proposition operating stakeholders on about that at go-to-market as the opportunity a that and that just -- call then to segment, the there's a our the the great of to a scale heck side $X.X own serve revenue we're strong emphasize, have to to and today. reporting and today the base direction. on want by And software of I a of own to data opportunity over value a global data, Overall, the right way is really would not that

Jason Celino

went recent some It trends? going the we maybe you Okay, like better time, speak lockdown, then, quarter. engagement? next And are feel back in do some any looks ago? you in to regions, improvement question. six more Europe can the saw these this nice Maybe, with great. And just prepared months positive at it maybe maybe since any But businesses through maybe then,

David Barnes

see the the Jason, first operation you a to it's seeing teams our in what many for do countries sort tell I'll were David. And do, they our Europe project work, that accommodating them are around. of from what see Hey, – spring. like different is that out while, in you do you of, most time customers lockdowns while around are feel of

and our second this been So even have in might you work it their customers say able But down. to end never never, that remarkably tighten distributors our surprisingly, do wave.

Jason Celino

appreciate I No. Thank Great. that. you.

Operator

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

is now line open. Your

Jerry Revich

and afternoon everyone. Good Hi. evening, good

Rob Painter

Jerry. Hi,

Jerry Revich

the you could talk Viewpoint see the organic performed how so we if could can I'm you bookings and about through here. the talk e-Builder the wondering downturn And and just, growth about growth performance businesses pipeline. if

just heard think, Rob, you Viewpoint say I I on growth you points? reaccelerated. those Can expand

Rob Painter

combination the give you in up was of Viewpoint high we data in in look if a couple the quarter, and Yes. e-Builder To ARR the teens points quarter. in Jerry, at

XXX%. over So, net businesses clearly, both was The retention progression. a in nice

good give news, financials, could clearly, financials on of line I definitive top the the you, So, so results most from probably good businesses there. business. the news That's the

as was Viewpoint solid side, bookings the was the it QX clearly construction take in a well. I'll aggregate. for -- bookings up-level the It it quarter businesses. On in software

So the recurring ACV increase. is strong double-digits

QX some that that, of didn't business into is course, moving QX. and happen Now of

I overstate So to nice those also really the businesses. from execution want But to that. teams just be not careful in

Jerry Revich

of to SketchUp, user its And second nice posting hear year consecutive XX% growth. about over

around spoke initiatives earlier One organization I much you at is that how over about on talk of the than Analyst line Can you're of comment it towards have is numbers mind. from pushing items SketchUp the about subscription accelerate maybe your Day, efforts can OpEx the time to past subscription. you the big the David, or we the cited push maybe folks bet shift the so, think of a don't the into accelerating discussion, that and call those you year earlier but you that in I XXXX? thought if elsewhere seeing probably side are you the what for

Rob Painter

about we've we And perform we Well, ahead at composition that that recurring that Analyst aspect revenue where pandemic through. talked composition pushes had than Day. Day. the of talked the seen revenue at of of is a certainly Analyst an we've there the as is influenced Clearly, about earlier the what

the say secular talk direction. think creates tailwind we us us. the given right more to of validates Connect really I've The in -- would When we're Scale, in Connect calls. for the these heading about I & about So the moment talked context I that a a side

quarter. the the that On leadership third in have the a We Chief across provide place journey. it's we look important and Digital us to it's really systems processes the Officer I organization the and that this great on across in at think have I'm we to side, business. this Scale the going happy named

We are investing.

the architecture to business call to to transact through CapEx spend underlying the when the we -- need additional enable bundles architecture conversions look on the free clearly, put need see underlying because the I'll at enable flow do scalable happen. level. We to we enable that and it the at in we flow, to behind can you So this, cash will CapEx the a

have I a happen Analyst scale in of also might want little would I while slope at caution we think of won't talked Day, -- faster about this to I need terms the to there bit because create the continue goes it So -- architecture things think enabling opportunity. will we where than these to to

Jerry Revich

you. Thank Okay.

Rob Painter

Jerry. Thanks,

Operator

Rob from Wertheimer from question Your comes Research. Melius next

Your line open. is now

Rob Wertheimer

I had I kind may. everybody. a of couple if strategic questions, of Hi,

your broaden shaping valuable would maybe the yourself how people a finding first finding that some investments is different yourself you each partner dynamic make and you're little or facets reach? That's more as my as in of automation? with your really more potential OEM question, you out up competition just side bit of construction a or On partner say on that automation, customers as different

Rob Painter

Rob. Hi,

I answer. a little bit And organization. could segmentation it's honest happens of size of the easiest think is you the I the -- at think both the

clearly then make talking more clearly mixed And would always about it OEM fleet. try X-sized believe by the it with we If Tier in-house. you're scaled start investments to a work create a provider sense those we to technology -- X- and

So mixed fundamentally important. fleet so is

running on autonomous work have going of communicating isn't another. site you an equipment multitudes proprietary with proprietary a if to around So not one -- together site

we very that understanding we deep technologies positioning of strategy the when have fact, have work autonomous look of relevant a autonomy, without to in value very equipment. automated But that In has a that's out. be has little movement strategy the and the an to -- yes, at carried we

the strategy. develop that plans brain physical world of think that or the the these farm. for important be ability the the the to And machine site optimal and we tasks by So a aspect operates that's for have the in understanding really which we we hand Trimble that to really think at that

about of And steering full that that Level autonomy. working be automation autonomy. is workflows aspect that Well sort for to at and automation. what We and guidance agriculture. guidance it optimization years And for are towards and to would and X we've operational machine spectrum make Level construction call in -- we types mixed make into up Level a an we specific We keep lend X. between we that So of machine center then look will will then that relevant perception, the workflows the civil the work spectrum And strategy. X what get call that of then think control tech we got cloud important that's we've It's an control and themselves sense. stack, and technologies autonomous situation here. sense, in we do that fleet when is talked

Rob Wertheimer

Thank you. area. Okay. Fascinating

the the you're the in and just traction I'm ramp and up a lines made question just for you product And how anyway? I’ll it? Are sort do of then just you production? there ability you stop. to about replacing truck exiting back with customer Thanks. product feel you you exiting to able, inventory -- the extent write-down other clarify sorry that and but transport can decisions clarification, decision for The

David Barnes

Hey, Rob, it's David Barnes.

business we're So as line revenue can look you see that is going of down. the at serving you the volume

we're the replacing has streamlining supportable with working So lot simply was. strategy and than the restructuring technologies satisfaction is business customer that improve customer A through technology more forward. to old going recognizes it about contracted in the part smaller retention of and the product offering,

less the resource healthy And inventory were reflect that business need that you plan. customer write-down regard worked platforms, recognized fewer support through inventory when products bigger about we've to you and updated our to The -- and time. and specifically we've to that more committed valuation was targeting the pricing. we've it when with was So over strategy

a second se. any growth we're the for and point in get got on looks and So aiming we've metrics of as ARR can business not toward exited year. of optimizing like we where key next margins Trimble momentum inflection in business said, – revenue good the businesses all we half haven't that what Rob We're and per the the

Rob Wertheimer

Okay.

you right exiting So the business I the don't trying for to with less or XX-XX guys, such clarity a just that's you're product if is of the not to kind time. serve set and like know diverse you're for but right way state to it customers what a led

David Barnes

No we that's the doing customers' No haven't right. products exited just We're for fit it more still are that any with the business. serving efficiently future. needs

Rob Wertheimer

you much. Perfect. so Thank

Operator

question from line from Blake Gendron the comes of Your Wolfe next Research.

Your line is now open.

Blake Gendron

here. Thanks Yes. Hi, squeezing on thanks. for

and large transition that the was stakeholders interplay the sign wanted have for specifically aspects and that customers of any noticing subscription to better customers talk maybe is transition the and maybe on the if I So on idea there? the noticed of segments. get as further. basis smaller by signing your are any some size follow network digging wondering into subscription you Are a start of to effect you relative transition the software then between well where relative And the in B&I on to interplay accelerates of I that just to of get transition a that sign then presumably and on, B&I, transition subscription first sort some the drives other up on

Rob Painter

innings So middle maybe software transition. innings middle innings I that one. probably we on on the I'll the we in in that more solid on late middle early would software the maybe I think we're transition. are on and in say Transportation, start that where with B&I describe would innings middle the In business

we executing software, are in rest of and model businesses are really a business. subscription Transportation. to subscription already transition business the that back-office which the Our a is The enterprise

little So of be. ahead it. than that's a small aspect B&I mathematically say Geospatial further a would very I'd is

along. but looking early those. and rethinking one have lower on of dollar of And a Blake be at far might some the it And So Resources and strategies amount. models business we reasonably the hardware is also then businesses Utilities it's the

just machine business So civil while think launched to and a new bundle the about technology as what where asking service construction that way hardware assurance I also to I want providing for the support you're of the control we comment if it that's we software of we with the monetize take Platform-as-a-Service the Trimble the ongoing software call and quarter business, a customer. with in think

over So we of functionality the can lifetime upgrade that.

you level. see capital can the the that the the dollars that the is whether construction is general waterfall and set we – the that taking – done a the owners we owner at we have And really subscriptions look volume, business think level a that use of it's hearts and you've you talk most then GC, or where could of and guess about all belief we say we're that into some the hundreds to manage customer the if with of ask business, catalyst interplay could look catalyst billions owners contractors some manage when I of the Department win mechanism e-Builder Transportation I'll the have. it as our of of as some the we minds once models So at a such. programs as when that a then we actually subcontractor business the the that about the field. or owner and fresh you technology our And the and at win sizes, And of through that's promote is about at one committed we say,

Blake Gendron

Logistics pretty appreciate and Or divestiture away in light answer to in owner then that contextualize you in compelling? sort follow-up gaps the the I from Is strategic WorksOS? which light on the And maybe particularly And of maybe just more could of there. of of Really construction portfolio what smaller that behind trying or in B&I the chain? was contract the one on driver could seems WorksOS inputs the the M&A. stakeholder or you're business launch, exist, subcontractor that? if the Any it focus

Rob Painter

reasonably served therefore who And I with It's the the business at in long when construction was we've I'll start ago. From of divestiture with I'll foray we we the better that of first logistics our a telematics buyer. Alkon and that a say we it part business. the great for the years had future penetrated. into felt of It's of arguably a It look -- at was from or maybe time. many think individuals how I be future the the business the standpoint to Command business to that's It's business even was that landscape concentrated its logistics wish Command capital when efficiently. management financial And paid a allocate look construction the the think allocate and we're best future work -- business, it a in capital standpoint, success. it combined as governance was business. was of And Alkon. to served we

a So logistics business. acquisitions a the rather think the thought the see seller strategic connected about & about it than the was that making doesn't our construction be asked Scale to of be might optimally to we intent view level you or was seller. conviction change strategic of the we on shift whatsoever. gaps, nature capital It any then a of Connect better at of the we And to where imperative. signal I our a side, And a advance specific allocate nor say I buyer as think, we would a such I either maybe be that on acquisition strategy -- on would market needed

say have across that life the of a businesses of connect on -- in to out opportunities stakeholders inside -- the and be construction about Trimble. futures be we that think I'll and long-term cases tail In company that tuck-in additional tech may serve. long such are tech businesses certainly as where we'll there. to across So feature cycle There's look side, we many their there's construction larger a arguably activity which a and

the of think that workflow could elements data additional us there be that be or that some tighten So are bring compelling. -- aspects really help could that we

think we about how that's side. So acquisition the

Blake Gendron

you. the appreciate Thank comment. Really Understood.

Operator

And Faucette your comes question James next from Morgan from Stanley.

Your line is now open.

James Faucette

are as we you get transition product would that Where done I Great. to is lot standpoint? divestitures as already? about commentary to as the think et as model there of are largely are the is acquisitions kind just the looking of some you you into period to business? you want doing, doing -- in do you the of pricing portfolio like they Thanks. Is Or quickly that the going the -- and for business the cetera think to from be there now? far on a them be pull them portfolio. as just there and examination acquisitions more there? And M&A How well do up follow you're want Rob you to feel

Rob Painter

and one. probably repeat to I'll that divestiture all on make ask the quite start of me Let you question out. the didn't acquisition to I have

On to the the at continue look divestiture we portfolio. side,

the And think the business in and us signal the and Trimble efficiently think and right okay and position transportation, trunks axes we it's back those have my the to just effort. the be And a of are see construction doing opportunities there. we're share, something continue It's -- allocate I effectively. that -- say, to And to fit being a context to that in be where of think in paid -- potential time don't just so view something there's, performance basis, suboptimal want wouldn't of strategic always that we're branches portfolio. has I we looking major about at financial if are we'll ongoing -- we that the that the two on to us, that the win, I go at. comment axes I'd capital we're we're exercise. our core execute or to be do And say our ongoing have be strategic want fit. point we and if diligent right in of own for about The front feel, and a we I effectively we strategy. where of gain any business, an if of certainly say relative I in market survey -- agriculture, a the well would to opportunities to an in should looking to buyer.

the So but missed question. divestiture I a answer, acquisition that's

James Faucette

clear are already there likely et subscription just looking wasn't Sorry, over asking, I to periods especially doing there. makes of are are model cetera, them that to if it Or to be where in acquisitions terms or those go-to-market. sense? you structure, businesses at, transition was that kind the of move in I

Rob Painter

could I'd more look fair. to Okay. in up the an two Good that accounting would show call ones, Got flavors. the related. One autonomy acquisition. I be question. be would it, second And likely a are That's from hardware. would really perspective, it. like And software-centric say more, autonomy

monetize okay, say remains they seen. we'll time how to that Now be over

be And already, two would that's things not one for criteria the don't a it that's better think those that transition, -- make than subscription hard being dogma a, good acquisition we screening. a it's we software we the James. to if things equal, for in a But equal, thing. cutoff be in has that All about all don't So vectors on says business have that ones, at already a all.

James Faucette

a lot. Thanks Great.

Rob Painter

James. Thanks,

Operator

And at remarks. would there further closing time. are this our I now any to no the questions like call over presenters, turn to for

Michael Leyba

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

Operator

Thank your Ladies much for so and this concludes gentlemen, conference you call. participation. today's

now disconnect. may You

Trimble (TRMB) 4 Nov 202020 Q3 Earnings call transcript