TRMB - Earnings call 4 2023

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Operator

Good morning, and welcome to the Trimble Fourth Quarter and Full Year 2023 Results Conference Call. [Operator Instructions] Rob Painter, Chief Executive Officer of Trimble.

You may begin your conference.

Robert Painter

Welcome, everyone.

Before I get started, our presentation is available on our website, and we ask that you refer to the safe harbor at the back.

represent place reflect to metrics, last punctuated the otherwise progression will comparisons, organic year, by commentary of noted. Strategic refer series events, which portfolio, larger year, corresponding agriculture and acquisition the takes in nonlinear financial of moves non-GAAP the on the steps, a of reflecting year Transporeon XXXX including performance the our quarter the for growth unless the transformative venture X,XXX and Our little X with the history AGCO joint represented moves and a Trimble, of periodically is period within the company. of announcement of strategy structural few last work by on up Connect business a over our and the years Reflecting and recurring partners. Annualized billion, lever colleagues $X.XX at value. X-year XX% increase result we time the self-evident XXXX over organically improvement and revenue represents shareholder methodical in have record biggest to frame, finished the Scale the is our and the a single is $X.X ARR compares with ago. years billion X This of XX% XX% was and in XXXX versus the XXXX. fourth total quarter revenue revenue of XX% our in Recurring in Remaining performance billion. at obligations year closed $X.X the up closed compares record a margin in basis ago. XX.X% this Gross over points XXXX, to XXXX, years at X XX% XXX This XX.X% margin is definitive closed year. structural record for the improvement. EBITDA at a crossed threshold we EBITDA. of the dollars, In $X billion of years This to ago. XX.X% of compares X EBITDA X-year a over frame. XX% been time has leverage Operating

cash flow million, running are $XXX and with we We of negative free working XX% with year. over closed up prior capital

punctuate and industrial. capital Our technology ARR and the difference intensity industrial between low

now to with of our takeaway is the better intersection company digital positions our been future. Trimble been our during The growing address transformation today and solutions bigger help evolution position has the the of the a never the While and succeed this in physical in have customers worlds. that financial for success metrics how compelling.

believe plan to and profitable technology-enabled showcase growth a to expand market structural to in X leverage industrial believe and eager winning unique and that strong into framework returns margins services the turn technology increase formula company's company, allow through context, Framework to against shareholders. With sustainably XXXX to we position are the We and capital capital is Trimble talk on unlock let's software that value forward to compound about for a for and overall allocation Slide will assets executing this allocation. We looking to our and our our guides priorities, XXXX. threefold ability back drive continued and world-class smart this

committed First, we strategy. Connect Scale remain to & executing our

heavily years, driven secular the investments is towards size owners, several our been last AECO. as and and immediacy engineering, the architecture, by software P&L refer our biased have opportunity. which focus assets the This and Over we to of construction

a operate Our and the provides will transformation of all AECO the for increasingly spear for tip of we company Trimble. across how the software of represents template

Looking proof Trimble we were vertical fourth learn, the product TCX, our start commercial or will and framework a prepackaged In We at tactical more points our and half of can doubled across strategy. segments. with these the prepackaged fourth AECO thought these adapt number users by offerings Nearly offerings. expand Construction bookings portfolio, we of TCX as be let's XXXX offerings. more into the quarter, around of bundled progression, in quarter strong a serving of with come bookings. X

expand advanced to of marketing motion and more can and that hard efficient cost-effective. couple transformation. After years of investments underlying by more a systems the [indiscernible] powered with of continue will to strategies marketing see offerings which selling insights go-to-market enhance more work, our we and in connect process our these As workflows, and our and now are of we set, have our unlocks making been customer by we our enhanced we data selling

product, in to will order of in organization it possibility the process an aligned the a to further out turn and portfolio product link capabilities and go-to-market into because reality. to have geographies We and and functionality more goes will XXXX, across we continue systems more expand work roll to

value, transformation. than acceleration As cross-sell more fourth measured business AECO XX% the lines by of enabled quarter, number solutions our activity, a happen XXXX cross-sell bookings is annualized from packaging didn't by ACV or and XX%. across over to this accident. accelerated contract In by bookings. of digital and were The This comes

quarter. Slide of number [indiscernible] AECO fourth We feedback about delivered into capability. breadth this from direction. had give context, to further shows our a continue XXXX are over and teams To put quotes ACV a of growth in winning on the customers. us X XX% record the bookings our positive

and value easier making cycle life delivering are ourselves connecting uniquely while workflows, with. to all do We business is

we has our that towards come construction strategy cross-sell TCX by the sell X. successful XX and into align around on is we Slide M&A As last are capital account-based will continuum an model, is been allocation which over to XXXX, and working the moving to ourselves built selling further accelerated This years. Back offerings.

that metering sustainable priorities simplify X we XXXX, last our while and ability divested business and connect connected the we and businesses XX water meet namely have capital our the business. a owned [indiscernible] further years, [ of divested allocation is further X solution delivering did that must-have a small second a scale to of results. the to focus threshold financial and The Germany not we ]. business In compelling in early business, In industry

continue we simplify further divestitures. We beyond look which portfolio, can where areas goes to our for

and we focus how the within turned million bundled an million our joint of we organization. couple announced turn, September, we led us that could We needed number XXXX, recognizing to into solutions. In larger no us of cost run have which $XX commitment second venture reduced undertook ability naturally further teams. say with our more in our AGCO, that thousands of focus rethink to which, in the ahead so ourselves, features In rate simplify last reductions, to of we in and November, stand-alone to further we products for a of half SKUs organize $XX years unlocked of the things

JV ability naturally and went the X together, officially AECO, to able the will the you our seamlessly. our of we Given view achieve structure reflect provides to we in the an similar the segments, start with we scale pillars: deliver providing we to reorganized of these Returning systems And X in Slide our are logistics. X do businesses the color on good simultaneously changes when pending to increased with and while of organization organizational for is level going the already brings structure January, and new growth. The on direction This to models the that into off and field transportation to business seeking. Slide effect new these a an X. under that enhancing executing software AGCO quarter, segment. Beginning hats recurring first will resegment been have results be a reporting off again many revenue place business. and we bit business clarity overview team way of each this, our centricity we and of

of down has quarter, the remains shareholders markets tuck-in executed our we global Board have to seeing and speaking, markets we January transportation within overcapacity million, our on The allocation authorization in to of of of JV, and shareholders. what challenged. context Let's the are place. intention and replacing in of capital the pay of business, billion what M&A a Transporeon of a enduring the prior a construction debt to debt to the in proved to priorities, X deliver $XXX new buyback. and announced buyback. On that opportunities. the of prices approved software sustainability. September, return durability Europe remaining on over capital priorities agriculture operating authority across business. David, million and plan theme returned safety, end bookings markets has been control also in against We buyback to result capital such we the pay face backdrop The environmental day-to-day engineering intentions when plan. America $X.X XX, the we of In focus to be headwinds, and reiterated in overall our economy. Geographically allocation sit capital trucking. and takes the North communicated with set the resilient Control quite They near-term macro parts and talk communicated $XXX fourth are proposition you. across under commodity the our form puts down more the via quality, demonstrate productivity, an AECO subsegments. our as transparency the our is third which about of Record execution. our In We we healthy. These value

David Barnes

revenue Organic plus for highlights and was X X quarter Thank plus the you, the fourth Rob. cover year in Slide quarter X% for and year. financial the was the and the X%. X, growth

for bring and and Transporeon metrics we at was million ahead down. With net of to our agriculture of business, place margin the Excluding X% success improvement $X.X $XXX acquisition. a in include the quarter time growth X% year. the the growth inventory flow, put plan remain efforts Standout deleverage at levels gross profit free the for the billion, enabled basis in in point by XXX debt the and of we in XXXX cash fourth

JV only the our have leverage $XXX is AGCO with deal. expect half that long-range and of the million the transaction in pending of year. above close approval, net to incurred X.Xx. We this with finance ended will target the debt to we The We of year paid down X.Xx the regulatory of first modestly continue

the deal below up our by business year-on-year. billion up AGCO the debt following close, X% revenues, and covers For software have trends With year-on-year hardware modeling which will on the early ARR XX% paydown were revenue organic second leverage bundled assumed X and standout are highlight, down we in Product JD nonrecurring model. predominantly Xx. Slide basis. quarter. the is and an purposes, of and geography $X.XX that perpetual XX% transaction closes be our

principally the by offerings. the relatively driven driven both in performance, in fixed has control by XX%, performance, than across mix in and with and year-on-year, XXX business ARR down growth by in quarter seen. Segment Excluding sales in referenced construction machine the this trends civil are highlight year-on-year increased & business XX%. X%, early XX% North we by of earlier. with revenues Rob XXXX. Dealer trends. many leverage now Bookings end software resulting basis the agriculture, highest grew at year-on-year, Buildings performance conditions mentioned outlook revenues earlier. up less APAC the underlying down driven by America that organically over the flat in revenue these recurring the were for growth Revenues segment expected serve from reflecting well customers By and broadly shift peak Aided were our nonrecurring at inventories TCX strong points by up offerings. In part reflecting challenging over Geospatial, come track their forward were cross-sell have total of India. offerings product demand markets margins businesses, inventories net strength relative in and toward and our segment under breaks performance our Australia going bookings the organically Rob are revenue there. Slide the businesses revenues organically the X%. the by Segment Infrastructure, just the by cost stabilization dealer geography, level. strong, of down software in revenues in AECO was were strong of segment line higher-margin macroeconomic dealers' year-on-year XXX% levels by to retention were now grew down Europe, In XX reflects which

year-on-year Offsetting and Our business. revenue healthier to were OEM and the costs Resources of large end OEMs levels. In the products down lower government breaks by growth users mapping we year versus revenue ago. users, Utilities, the unusually to was some segment organic by quarter our Sales a across X points, ago and component driven down dealer to XXX broad Field reflecting strong inventories market improving basis meaningful user underlying conditions. a sales growth, end X%. in survey lapped component business this as year input in state sales were down shipments quarter up Segment and of margins core returned categories. for to by principally

were XX% lower MEPs principally versus points, revenues level up organic In and a and were software record was Excluding XX%. X% sales ARR North and operating of over offerings. Transporeon Segment XXX by organically. enterprise mid-single up and was transportation impact in our year-on-year by anticipated for in by an offset digit mobility margins the of remains bookings, of to products our the in the American achieving basis approximately the was growth inorganic Utilities businesses agriculture customers, prior transportation, revenue. up highlight quarter churn Transporeon driven comparison Resources year. revenue Segment lower as up

of market. encouraged increased the the light in margin the sales difficult margins by XXX balance performance and dynamics are of We macro Segment of points, European Transporeon reflecting team margins of by segment. Transporeon the basis core the progression higher in the in year-on-year

guidance a limited JV. Ag Let's agriculture move more owner Slide go-forward XXXX performance I supplier and a on products on excluding now on JV to focus XX% to to will the our the including of exposure as business, and or our a basis, the XX. of

JV. our Page strong, agriculture For reported by The remained and the the businesses. view Ag business, X software XX, first sake without will our be quarter as-adjusted outlook on with of business across XXXX which ultimately of AECO included the growth momentum ARR completeness, we views driven operated show view the for an within the through

full to our XX% XXXX $X.XX We year-end the of in range expect levels rates billion. XX% growth of year organic

As full margin year perspective, year-on-year basis This XX.X%. $XX weeks between quarter a year and to and range. are flow took for approximately an the points. The a From Please cash cost the come basis, expect and net of we adjusted On expect fourth increase extra coming X.XXx include million. margin we with the improve X% will as-adjusted and actions mix XXXX. expected margins impact improvement of margins will organic to week by cash fiscal EBITDA in grow revenues flow between we improved XX non-GAAP of year of and XXX XXXX that XX.X% software of the the full to income. our improvement approximately represents out X% will from combination revenues note XXX

be Excluding our Free the net week, AGCO cash to and to non-GAAP to income. approximately is costs JV estimated flow equal the the transaction of XXrd relating impact

immediate A outlook assumes for million. for change forecast If R&D restore in past Our if purposes. would tax base flow incrementally, tax expensing case will, cash moving enacted, improve no the the by cash Congress through legislation. our bill $XXX XXXX U.S. legislation approximately this of

Our impact the ICO of following close beneficial repurchase. $XXX year JV for of of to and planned EPS the deleveraging the up the forecast our million reflects share

and for segment. EPS breaks the offering year range $X.XX finish by on expect for XXXX few out We a guidance by $X.XX. I'll in of comments to quarter the our by

in and growth We Buildings to organic expect revenue be strongest Infrastructure.

are sales with software year. to to tends civil perpetual field be federal lumpy business. Geospatial business from year offset our customers, slightly expected & grow of to with for with Software plan conversions down businesses from XXrd growth in product-related million in to mid- between where to an XX% expected high to in the construction teens in hardware sales organic Buildings $XX model businesses the and Buildings subscription lower revenue organic basis, is in leading be XX%. to Infrastructure on revenue We slightly, to up growth includes to organic by week. growth approximately Survey, Infrastructure year the accelerate and from tied full U.S.

North accelerate perpetual in the organic organic survey to by American as positioning up software business. Transportation flat [indiscernible] from single our an model the up expected growth by are continued digits, in services relatively adjusted year offset mobility on for in business. conversions Utilities to mapping lower primarily and Resources We led will our digits growth revenues high Transporeon and mid in with in be will basis, revenue. growth subscription also the be and

revenue margin segments. Transportation focusing margin data to value-added expect perspective, from are We pivoting flows. the we lower on From expect an business hardware sales intentionally reduced as operating OEMs, mobility hardware in instead that we away Resources higher are and segment and slightly Utilities Geospatial the to grow up mix. margins to in to Buildings will be while & customer Infrastructure year-over-year year-over-year due changes down expected product and be margins margins in

XX%. between quarter, in most let's additional for growth expect first EBITDA X% an in basis, is Slide and and the XX% For growth color. with drive we quarter margin low of as-adjusted first organic X%, and Geospatial. XX Infrastructure the expected single-digit to the organic to turn & between growth Buildings On

growth post is utilities single-digit to quarter. and resources expected the adjusted first high As revenue in

Weakness bigger factor, to see market inclusion the be During but the conditions in our expect transition down organic in segment the basis. Overall, our quarter. modestly quarter market on is quarter, we Ag. impact to an in end global the driver organic of Transporeon in progresses, of organic as the gradually improving sequential growth Transportation we the in a rates expected improvement first by the second year trends, driven beginning in is strategy. and distribution the the are in expect Ag Transportation softness expected certainly revenues

As Rob allocate structure and our way going segment that implement we mentioned earlier, the organization businesses reporting reflects our and new forward. to updated evaluate moving we are a will capital

segment back publish the the our structure segments. cascades our perspective new Our later plan is to X more XXXX with on and quarter first details the in new guidance to annual going reporting financials on how years

separate information back investors We is that when it a to have review conference I'll with it call turn to you. will available. Rob, over

Robert Painter

to the in Ron by including plan financial moment end questions. Operator, later host to year now targets. I were numbers into reorganize We conferences additions. we reduction, We Trimble at Board. Sprague fantastic and prepared evolution to recommitted the undertook ourselves fourth September, Trimble to XXXX the our a with line for in of over and October will We We to David. quarter Two priorities, more provide cost with Kara Day preparing the to in the allocation come welcome to detail, and Thanks, capital discuss open customers company to a running Nersesian November. and business were quarter. user busy with taking the XX,XXX an start. our made Investor investors the updated to the can

Operator

comes Oppenheimer. of from Instructions] Owen the from first Kristen question [Operator line Your

Kristen Owen

start I maybe some what XX, maybe when looks driver we there's would wanted pieces at it And like expected. guide. outline in between growth you that on provided numbers I moving like and really QX It to there have with Slide there. look the is sounds the the this revenue Ag

be just help we understand us any the could parts the like you XQ what if growth QX? other So for just in underlying the should looks moving that And in assets guidance? JV considering

Robert Painter

Kristen, Rob, for and Good thanks this morning, the is question.

other with specifically the Utility segment, within coming supply thinking hardware [indiscernible] and that, the the throughout is of want market overall at the overall consider. One at the a hear the which business, is about would call to is the within what the stabilization you this and then company relationship. So have respect chains As guide the current business of and the there's And we level, some sentiment of then dynamics a with X in QX guide, ARR to into the we most and topic. the Ag when within is the momentum transition and I level, the market it within reflects businesses, the to resources total quarter, year of double-click first the so specifically,

level. overall So market, at Ag the

the see the what statistics and U.S. You farmer from Europe their that from market OEM some from into on can of some Coming of and sentiment the unit posts year. expectations. and in seen numbers we've the

a X corporate had new JV a transition, the relationship of the prior topic. more into the, that then there's relationship. So the in that's the and aftermarket gap. -- side, is we've natural transition we're And time, it, with in part the the in And call other

was so transition linear we as never to be transition. that been making And a perfectly this expected, we've distribution going

at a the annual really about just at think to really we comparison the track So progress. quarter-to-quarter level, not it

particularly the planning, [indiscernible] underway So from is the well the integration in work aftermarket. from

to get to up dealers. you revenue got aftermarket we've that the be signing So and before

to And business you before bookings it's looking get at got the you that to like and booking so compared get the software ARR.

color that helps you, hope I Kristin. So

Kristen Owen

Yes.

sort areas look you do momentum some in other that maybe you as Saco seeing that's use the a of that how particularly is question framework the you're going business outlined, other TCX bit term model you forward? revenue. driving services we go existing I you how some with around business, of the areas JV, you've can of the The If how these have field that as the growth outline a the seen through where at platform, when like of success And use those areas? the longer customers, in that little some TCX that can post you cross-sell any transitions, in

Robert Painter

success as of And really, for see that's the a lot There's have hear Yes, very There's question is you'll the to that within I'm the because construction systems proof doing of it it talking B&I company. that gone see along way, template TCX learnings forward, bookings spear. software, this within glad We that asked good about work work the see we've what transformation the of been the tip work also in years. around overall And vastly undertaking, really soon you we're owners. mean the a it that of architects, rest strategy and that business. And moving -- that it. AECO with me been of point the as and to the demonstrable segment, currently over -- those the construction work come the works. engineers, proportionate people, it. last we digital in construction into few the of process, It's part I with be we lot a

that What quarter think clip in future into the parts we is businesses. about taking at the business, in say, growing part a other the that double-digit and we look field let's we double-digit saw as systems forward, company. ARR we're So into those of

the transitions with hardware And term have top and hardware that. can to services products underlying around and some been our of the the take and of model TCX between services parts of or can other business, some example, that subscription businesses we On a we the -- where for license. so correction value undergoing of hardware bundling ideas positioning then already separate some in of have. We've we the frameworks

the serial, that side us, but that things AECO for sure, is on perfectly for has software the not So and happen business, great parallel. of template in the It's so been -- it working certainly there a far. it's are

Operator

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

Jerry Revich

talk Rob, sounds just restructuring, just about, like the changes you has there shifted beyond P&L more how at expand Can cost beyond savings. could you Obviously, savings and restructuring laid what on just out I'm change. you responsibility comment the are given It on that. the you organizational if just wondering all? opportunities.

alluded You cutting beyond think, cost ROI some projects. to of about on realignment you about I just back, more the opportunities lower the talk Can savings?

Robert Painter

Sure, Jerry. Thanks at for after AECO that that. looking the field question. [indiscernible] The looking of -- for I'll Vizio now at systems Schwartz give examples is segment Mark is us you the after a the couple leadership, and level

where of baseline examples Ron's long we leaders, hardware reoriented X So is within businesses history dealer our is expertise. and Trimble channel of history

all up the consolidated a job across just we and hardware-centric spent the businesses the in done all that it's and the have been baton accelerating space, we bulk has software under growth Ron that Schwartz taking business. of his AECO And terrific in Mark now and under business picking his so the has Trimble have leadership, forward the of here career actually

realignment, the of people So couple that's on of side the examples. a

midterm cost the from to near to was to at some revenue was that One out where bigger this. the we couple looked we term. mid lenses to side, Jerry, took long more areas On saw we potential pushing

view realignment autonomy a of capital say, where that, took reprioritization we of on example and So did view that an allocation. chunk a of is I'd bigger

corporate making investments investments of were closer fair to we platform X doing coal other the move amount at face the and the what a cloud to level we to closer was those business. were we decided was the do The

that spear of the coal given for face efficiency leadership trade-offs, the out see tip capital what have and those closer the I that are to that. you some at the work, comes allocation where manifested move that it make So of as organizational AECO AECO the transformation to to they closer

we more a So we side those on How get get we And a execute working I'm do really of I look working. and how simpler? couple place focused. the come that we at got QX we've We've are XXXX, come got in do took sharper right a saying, on those the right cost QX clip. when examples are think moves the as was that evidence And confident into org things. into to

Jerry Revich

you can Transporeon folks growth to were expand And quarter of was on some -- mentioned the trouble 'XX. bookings separately, rates? the I just logo for good. the You the us just on Can retention out what organic performance flesh performance quantitative entering exiting you fourth of the growth, numbers

Robert Painter

Sure. do that. Happy to

mostly as model. just So a transaction a model, business consumption that model reminder, is a

And centric The the still it's -- and so at improved. European macro level, the hasn't let's say, European business. predominantly economy

I think about we that. say understand that Europe I when

compared that's business some of and there's the headwind as the control. contract, though, So a is to which transactions, to model. Within we less control that unfavorable spot to think about can what we

the Russia, team get do history level quarter out exclude numbers. and elected business operating essentially itself is I to The deal some where to that had, job in high a the the bookings single a margins we that on in business is cost Russia. fourth the Gross of the good not XXX%. some in retention record company's the of So give example. working we come digits, in you ARR at and proposition a model single business, X feature XX% together that above which the integration line. means was the doing business bookings had global working part that bringing are the level, already we we at growth new have such products teams for And customers. to for real-time single visibility, procurement, just technology, to MEPs driving are transport which level, product product our a a already to Trimble into introduction autonomous that's the beyond the we reason that as delivered of the new driving value

a are quantitative for those So qualitative statistics Jerry. you, few and

Operator

from Blair. from next Ho Jonathan the question line Your comes of William

Jonathan Ho

macro on year? thoughts to more impact the you look start outlook guess, wanted a guidance the your color environment next the as guess, around, Just and it organic as to growth relates to bit little to your get I potential to, I

Robert Painter

it's Jonathan, Rob.

is a America throughout think outlook, with Well, On a strongest geographically, Europe still the will I and start North the remain overall North geographies. challenge, XXXX. I'll macro challenge -- of is the America

geos steady say are she a those I that bit little major as business. X would So the more goes Asia the Pacific context. overall that feels impact within

really challenged Within does impact see so our the we such strength a as we I data centers, the subsegments Residential I would remains overlay that. that we coming how you compared reshoring, see the is thing in as different already it won't on our bookings. well. agriculture, which businesses quite just onshoring those for old. think and surprise I'd structurally bit freight would renewables, of business construction, more globally global I markets, transportation vertical commented macros Trimble globally as of on markets top to about say little infrastructure, drive level more challenged on more positive in Europe. The XXXX in momentum Jonathan, The as -- challenged. that a overall on say into remain and

think averaged with. way, do I we fourth that the instructive about that's across -- way that closed we by ARR the that it's the the so calculation. And year think billion It's so $X.X And of quarter.

be even what the took would AR, higher. really with, So if we that you ended contracted

quarter predictability with we visibility fourth that the up that January that accelerate know we that and growth bookings business. we And So woke how coming the from on into closed in. into X the with helps

year. guide then on view to to geographic segments X the our models other axis think business the a on the important when So on of support and an it's we axis come business model view on overlay axis, market that look for and overlay the macros X the I on of end the at point the

Jonathan Ho

in just the maybe distribution coming divestiture does the like are Excellent. terms of And what look And up a realignment? where you can your us given understand within as we and just the changing nature what the space. follow-up, the opportunity of partnership help just positioning

Robert Painter

do Jonathan, mean across distribution realignment with you you agriculture, Trimble. specifically mean do all

Jonathan Ho

segment agriculture The of it.

Robert Painter

Okay.

dealers. vantage that and the alongside what our few is to continue the that refer is realignment able there's CNH to So a with work we the we internally aftermarket to levers sign One there themselves, work. we up as retail those from full-line be on distribution, outlets dealers

work sign-ups say coming say, goes I'd addition that, the So I'd part with of got new with clear integration into that's of sight we've coming how in in now And that the into of to mix. a with to with team the planning been AGCO the according and going realignment we're partners to got that the we've the coming then line that, dealers, work those plan. to

So it's underway, We well need see in the to and get off business it to get to what the to I we start. would say, planning the do terms of would off to. like work, it's

Operator

Zakaria Tami question next the JPMorgan. from of line Your from comes

Tami Zakaria

Day revenues Investor by by last Analyst another a I think up I expected you hosting that you're through the to XX% the at by you XXXX digital about XX% had XX% transacted and and go would year. So probably of platform this know 'XX slide, Day, connected XXXX.

So now where are you in in getting journey terms platform? through of that revenues that

David Barnes

interact XX hardware We'll our go the and so involves from our here -- to really expanding AECO ended experience are right process of it's software best as XX% Cityworks Barnes. principally of X XX% American bringing process probably next digital the the hard, our the and We're and about more revenue transformation. effort rethinking e-Builder going in platform North the of businesses. We've digital the phase XXXX no then closer scope transportation. just focus with is that's how our new big XXXX, suites and context over projects We in all thing of the businesses rethinking We're our and and early I'll system platform, say our that through with globe. and David now Tami, different. and with businesses, is to of digital digital been transformations including

off the be giving forecast from on go a hold we I'll in how of XX% more to I'll business. -- So

think informed I we now, and rethinking have a more and priorities. our smarter approach we're

Robert Painter

can build continue these And if that for software the to sure to as for David's is add on comment the businesses on priority to the priorities, -- I work.

David Barnes

tip transformation the Yes, selling bundles. highest, in earlier business is the where It's and commentary his the the we most of that's spear. and right. early said that returns TCX through direct AECO digital see the Rob

So at moment. is that's where our focus the

Tami Zakaria

Got David it. Rob. and That's very helpful.

to question this I second guidance wanted better. margin The is year, operating have just understand -- I for the

this really What week do it of the year. you XX like of at seems if -- improvement any excluding margin the basis expect How to about what guide? you also is think impact Ag XXrd operating I points get JV, margin that there? of building what that? XXX blocks the on And the really is are all,

Robert Painter

X-year the I'll and driven the the years just of gross have we that that company, perspective about David over that. with ARR XX%. on at start the from year to contracted leverage at year ending frame let's ago. is -- the have at margin and into progression start QX we've structural given bookings that at that We adds your If ARR would level XX.X% build this talked ended year. is to Rob. we look coming and compared the X I'll the start in XX% I operating with the time then

table to level the would margins gross in versus a product you the businesses. the gross business. at is continue to between subscription of the how just is business versus level, the at and And the gross see level in So of the higher software-centric to and the much able the increase the at businesses baseline the structural as the poised we be margin level product software web gross margin grow difference

us can alone, So up. primary enable gross I'm perspective a what that driver from gross drive straight mix that margin because of margin about And drive expansion. structural a you operating margin that talking to is

is the another which about costs the on talked want of build also in side the management equation. David, We do remarks, that? prepared to you

David Barnes

Yes.

revenue businesses are structurally, said, Rob margin. as higher recurring so -- gross our Just

from product gross versus that see on the revenue the on streams XX% disclosure stream. XX% to margin the can about You recurring

The shift the XXX from XXX mix So flows improvement With that, roughly basis point a XXrd lot of of quantified the the ongoing to a margin we to week, our impacting I'll is have not business. that's about million discrete will in factor last that's $XX the year benefit for only thing an say, the though, X the quarter. revenue directly become the regard that business.

in our XXXX. federal being in particularly lumpy remarks, As my that is good year-to-year. I from the big government as business talked factor earlier with a U.S. We about customers, mentioned government

will doing on with bundled And hardware. the that's software work model us. focused we're then that against So conversions

model you and business the they roughly actually XXrd if take impact federal offset other. So the conversions added in each the the week, of to change the the

of underlying week looking XXrd relatively at the my neutral. I So positive. would that and other growth the Those say a is offset way factors momentum of they're positive the business.

Operator

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

Devin Au

the is on growth to can it of today. us software traction for Devin XX% strong than seems Jason Nice TCX bookings would How subproduct maybe to give be results. could really at macro additional And there. improving kind like -- actually want year? is to hear perform exiting how This thinking with strong construction really about there start the Maybe any I of seeing growth the put business. picks more and for at bookings over on XXXX, group XXXX? kind trend of you for different are some kind looking you

Robert Painter

Devin, this Rob. is

the within in thoughts start is my year bookings ARR billion and on a of opportunity $X you into have range we the comes the the business. it, give And this me of with. call now with, to Let that perspective business software

So billion of it, company's $X the of ARR. call

law of large ARR healthy double-digit continue and of into book able numbers quarter that some to XXXX. level. clip, So that And XXXX we all the of was of to to fourth we're be to grow continue talking evidence have to even a accelerated at at

that. That, putting the our some So around easily offerings unlocks that needs. around a in the that bundles and framework with us, allows place momentum customers Trimble to our color put by I'd Construction we with that One in and cross-sell the like upsell is meet unlocks with customers' in and that confidence scale The come to it turn,

the that deals. We're when out we agreements have up TCX then those And into an the to basis to into remarks of that ecosystem. have we'll that of inside had wallet And customers' XXXX, usage to fourth in penetration continue company, up a creates would where new that we're a more in we're out bookings example, faster the the XX% close times Pacific, friction and fourth [indiscernible] the accelerated we'll to the the more in that it our bookings greater enters And that and seeing of quarter. the we cross-sell now make of had seeing powers our X a our of prepared rolling was working XX% lot it said agreements are the made help past. share with of Asia together regions, things And expand to that we portfolio. and capture share less products environment scale they quarter so than had. Coming for the TCX by roll

that's AECO. example, For O the the and

that So double-digit AECO play we belief those the to We've healthy those a level. at we factors a grow continue bookings forward. quite can got set space in

Devin Au

customers existing Got it. to then up you I seeing And are adoptions customers things seems like TCX? kind of still of Xx among that uplift you the Or highlighted of picking then that product? Are TCX? ask, in over you ASP for more just on your X from seeing quick adopting really there. terms you mainly No, It that's kind Day very TCX. follow-up seeing the still Analyst color. of at a want that new of kind helpful are And opportunity? kind to are opting are

Robert Painter

On is the our just offer And so than customers. We call or that because a you new data we see and lift are cloud. both. the solutions access then what picking It's customers. fifth, a it customers see are from us the continued wins and the you to see not transition make buying for from new uplift who of cloud, customers straight At to a the Devin. cross-sell they're continuing Xx the are a certainly of us. It's we customers third, uplifts that a just construction to -- to space, to and it's mechanism of value-based customers. that have And array the actually And of bundle shift to on conversions buying then make get from existing exact mechanism. then rate. from that blur X the on Yes. more sort existing And conversions can there's the we don't logo to new actually those doing we've the depending changing customers, the on-prem as ERP are continue What from we above a predominantly new Good between within question, X existing those customers. in that up the -- the and drive logos offering. pricing fourth, healthy sure, basis, a on-prem new it's do -- from well, broader can on nature nature when

revenue. It's customers, of course, the have you uplift new in not new of it's When an the equation. straight all new really, all answer. there's above So

Operator

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

Charles Albert Dillard

of trying So the I and I margins, wanted just understand hoping your adjusted moving leverage to parts you to go the back was about 'XX of ad operating more like the bridge cost to divestiture? 'XX, to and question could savings, impact operating from specifically, mix, the

David Barnes

Okay.

point. Let with me last start the

operating the to 'XX Ag the forma XX announced points we of impact a ag that on of basis when pro said about negative So margins. we deal, was the divestiture basis

to as-adjusted can 'XX there, in on our which way principal see mentioned we're to natural I One basis, i.e., the think drivers from is that, gross all improvement. is planning outlook in where XXX an as basis XXX business the a mix. margin essentially impact it without earlier, of of margin table. The Ag that's we So the base, as-adjusted is you the points of started. Chad, And of in improvement,

If driving down do -- reduction, resources it's we a cost where we are drill adding you but benefit the more of little growth. have

our ARR allocating than in all XX% we on about we is had more coal over growth, AECO capital OpEx to year-on-year on business. our fact, bookings the XX% and In where really are that business, pour have or growth, we operating that of all slightly our

and growth the taking reductions it the to reallocating return, can highest you taken it cost we've of So think as business. highest

Robert Painter

And comment, if on in I allocation exactly is which right build can cost. David's that capital

the So continue go-to-market OpEx to -- that allocation put AECO the space. the within into capital to P&L call

continue terrific, at is net XXX% We One said of the Devin's data instructive And is terrific is tells that that is customer to lifetime outcome an telling look the the in in we questions response that we're what's driving. costs. divided into. to AECO value X what It's of that should have when customer for retention acquisition business. look the us of by near was looking is a I the above part team the well to X -- us that at to place things that we're on OpEx measurement put us for is the the ratio,

You don't in that OpEx get an ROI X. on year

the long-term call is continue a long-term growth, ARR there's, generate will we're playing and, sustainable trade-off that there bookings overall game So to revenue growth. it, to of growth which course, fuel that

Charles Albert Dillard

versus on then now operational go-to-market? just segment better what do That's guess under like I trying to can before here you on helpful. in And like old you the can understand the the Just your reorg, about structure? talk changes distribution the impact

Robert Painter

Chad, a the are we I'm good glad now. asked That's let's what Yes, field that. calling And question. systems take you

business you'll gone think distributes the control So -- the traditionally and that our have X the the have the tech businesses we old the Geospatial predominantly as side in then that that segment. segmentation, have, survey of we best know through that machine is through the B&I

a around a already you demonstrable So come under looking made. and of give systems that those together field evidence after Vizios that we change

Africa. and all for Europe, now East X in X have Middle sales for the in and and and systems Americas We person APAC on X in responsible the field

in you money to have months that time and allocation on some use the does us that What just that of dealer a to that just ongoing expect. duplicated into that efficiencies we some few driving is So and also be X and would resources. because could It would that rethink how just ago. one for we capability us put had to is X people each have person actually call and development. frees allows up been people That effort

Chad, cover for that help midterm numbers, about dealers can beyond businesses short In some a to have we long-term So the our multiple chase is cases, having think Trimble. resources business. actually the dealers who

at SKUs more between I'd about will have. I'll do trade-offs I of hardware we some that make accountability the what of one both civil set ag the one product, And eyes go-to it do measuring the happen at those survey, Ag set we that how how If and civil. natural and over surveys of portfolios. I Some look we efficiency side, and the that's all we make If with one is market. in think cogent to about product is, the survey look can unlocks say, say, and decisions more or

the SKUs Over That drives the the underlying by systems. years, reduced in last and XX% simplification company. few we've

multiple portfolio, goes the on One parts that view be We on now example, of have view across scanners used stations of the one portfolio. the for GNSS can and across business. point that total our the

So just I lens. we portfolio sharper look a product it drives when the at at lot thinking it think

So that us lens that think we put lens. And I with product well. together positions a go-to-market

that announcement the it. and did an by the they've I team, think JV team aligned quarter, of been things say, they the businesses. teams to planning fast to here each as this reason is move all of these in the I'd us OKRs, -- a we've objectives strong defined -- I fourth to think of And did it place. time was a to we key rethink do gave put And and really set come the how it gate, work results defined in major as a out of and quite with the

Operator

Tilton from question Wolfe of comes Research. from line the Your next Joshua

Joshua Tilton

where remarks, divest you divest new your across the talked X prepared months When over simplify to most you you the opportunity portfolio? reporting the the continue look to business. see and to maybe aspects guys XX about do the continuing being certain of In to open next segments,

Robert Painter

for the I the Thanks This I'll give lens on have question. it. you Rob. is

a axis axis, is then call about it let's lot there's the it profile sits can doesn't business, of making on or the on its and the individual say, profile an think the whole And One of And business that strategic the but expectation own, EBITDA also or it something invested businesses capability of financial at we if it looks isn't at position, we'll product, whole other stronger, it's the or on of view accretion to have, make so the whether I'm profile on meet the could Then -- growth on a the a the stronger. contribute competitive this out it's attractiveness business. favorable stronger a of there's not involve I let's say, the level. favorable an side or that returns a transportation laying the it's on in, business stronger the capital for at and view business on speaks long-term short-term a at yes, that axis look that to on financial one. it construction and a less ARR X/X. one itself return

be businesses. out the it the ballast to of systems and if XXXX, So and we if distribution few best the was of portfolio, a at entrepreneurs we in a I apply back an within acquired back as against think not for the example, when financial the I the some a with time take very, to that term, look company, going of the we very there came in we're field we and things, in that, really in But of had long step one local field, ultimately where dealers the the dealers. and belongs business, owners crisis

here about be would we that So the weeks, few an example. the divestiture as last in actually just talked example an of

see would don't as the for owner. of parts look we that ourselves So best really we business like that, the

a businesses, I mirror take the we've specifics to I'll each had by outcomes So opposed the XX that's the because but that drives a there we as that, can driving and evidenced that efficiency in last think think comment within the the output divestitures to years, the and implication of company. few the in this the we courage the for and of as look demonstrably say focus

Joshua Tilton

we're it -- how like additional years? when over should guys just you to view, longer growth But little more if bit then give the those like of think disclosure. call new I guidance the segments And context get going different about around maybe little a rates think color to helpful. that these do us next, take reporting Very it, across also 'XX in you sounds segments or X X and X the back how investors step a

Robert Painter

Yes.

When that going we I'm be I that level stay will Day. just because -- high next more the to So Investor think view. do appropriate pretty take on it to

instructively that prepared the X did was On the revenue and transportation and think software the revenue breakdown say slide, sizing with of breakdown each Slide growth of it's sizing we double-digit or XXXX in we'll past can within a those maybe of I view field the presentation from drive the recurring to I talked and attached what for segments the it's AECO and company level and give of of at minus recurring more to is revenue. about on a the We on the think annualized in logistics, that plus a we and remarks. continue the that have. What can top level we systems

a over instructive so up makes you I X of have field the some at of X% But is put got about talked the growth Days little systems the we've look for frame. that businesses. hardware prior look with in if the hardware It a at the business, strategic priorities bit to of CAGR a what that business, we company terms the is XXXX. Investor That's that. depending the And X% I've that's which Longitudinal when time #X to part of X% to top forward level think or other on survey compromises back higher. to the And it, that call of the range on X%, in what being historically

data, think quarter-to-quarter And it the analyst or instructive you've up portfolio. a the the And at then look and have what's been to within you baseline we extend time Day, come or done within of deviations to past Transporeon think transportation that down obviously, been I have the at you it's long an That's to or been of would got XXXX view. So since a could addition and the why model and look course, that. could that we into Investor the have fits we've new, range XXXX high you XXXX would standard last it's business view. into it

But when give interesting I'll did Investor maybe stay thing additional that's the I'll start and -- take at could view we would X with leave let's if Day, prepared we'll tuned. guide if business. you last that XX% say thing we remarks a by and pro that to forma we level, So be that David's XX I'll you did -- is and be XXXX, the be there recurring you in you math with revenue that. by And said we think XXXX.

Operator

from Your line final Wertheimer comes from question Rob Melius the of Research.

Robert Wertheimer

may. X, weak quarter good ask, the on you to had a European market. wanted the market, I on on a I bookings midst So in transportation of, where touched this pretty I And earlier, Transporeon you if Rob, assume,

then comes to sustainable the growth to So transactions And if you idea insight any commentary spot second changed anything that might And further back? market be what just will when and business rates, question that growth? be on as changed levered drive what there strategic any or around of to to Is given of is transportation that focusing the could don't data simply have talk there that devices? as there less do on data. the if you sales you link the hardware and issue? of in any and OEMs flow the And deemphasizing lower get much on you field just

Robert Painter

thanks for Rob, question. the Yes,

in fourth order a the what the still let's difficult is market with overlay. take bookings and them So growth in quarter

Barcelona I like you something matter productivity who it's impressive into construction the that proposition a go technology or or that and a a what had packaging materials see our market demonstrates world September. quite conference the in through a win the it's be different of money in verticals, either and to And really logos our think I value is in room the spend PowerPoint they've as look spend the to to an transporeon different, array customer whether that our as to or reluctant rates the the organizational the what you chance fact environment, a efficiencies make it retail very CPG difficult slides change use building some the you of on when or the we can see see we impressive, are largest in technology. It's provides. can really to drive ever customers. What companies while effort do companies that and is can of are high been. to are

metric. that want us, so on control overall that's that they're in can about an within important got is we're while would we not basis, of important bookings not to we've the gaining the like holding, think be showing share share market think than that, less And market. we control, are an they And to I we what business. factor clear losing in an what if on annualized you the that how And the

the team every side? have said asked definition happens out a it's the and my And contract and heard fighting what's I that years. what So mix that to it I like you asked X day. it's the do that recession. something I when the other Dimon delivering of spot on Jamie for about gratitude every Well, could like look

markets down. freight of version quote that was it true. up know some that actually the we version some take quote go So if Take of and that as

it inflects see long increasing. What strongly we of accelerated consumption-based clear. I'm makes expect market business can out call So over we the a having is not and that would signs and has show a it a making the stabilized recessions if And that freight them. it of different that will is from baseline of -- model market does be out sense, is will XXXX to the coming it's in inflect

would -- the of Trimble. segment close these at -- even the level that the of I move call that hardware. I'd commercial it OEM strong say what devices tablet. that in around say, compute quite last, rest the business to is off-the-shelf days, And hardware comes to less naturally in differentiation hardware and than level and the increase onboard the of I more the As is different you hardware our is through. are own significantly and the then them, can in-cab transportation There just double-digit deemphasizing to revenue expect asked would a of inflects level at

our seamlessly a software and ago into was unique solution. integrated a full years own full making offering the factor offer choke through hardware our in differentiated to So went

[indiscernible] or technology to landscape really great be. margins it's We that the -- at just cost a because just As the calorie OEM hardware attractive there's if revenue not not lower engineer just a of changed, refer wants the all as not it low-calorie all just not place internally the OEM to is with of to equal. hardware that But lowest level, or value -- place.

look the operate form own is trying the have within kind of in, in data their at data and run think integration. When scale, extraordinarily equipment comes agreements, going OEMs. valuable are they've interested machine the that their X global and and mixed customer which on we usually the best interested are say fleets in different to operate of the some thus, That installed got. but health to way, important the base than data, frankly it data that customers global efficiency technology productivity customers, that and is we're to of customers what and service to that be drive visibility at doing businesses. it is whereas to set of And I whatever to at by of OEMs safety looking they're to the is the customers ever

think the level, market the a Trimble to case, to fully will that's we more to also in And be for functional be feed solutions, provide true to I to this the you so need OEM would think be And telematics not bring that to flexibility. the the solution. customers whether both that on way, have that able by or for Trimble to to necessary, continue -- so data at be a but speak, able gateway,

I hope So some Rob, that helps color. provide

Operator

thank today's us today. joining this And concludes for conference call. you We

now disconnect. may You

Trimble (TRMB) 12 Feb 242023 Q4 Earnings call transcript