TRMB - Earnings call transcript Q1 2024

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Operator

Thank you for standing by. My name is Krista and I will be your conference operator today. At this time, I would like to welcome everyone to the Trimble First Quarter 2024 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Rob Painter, President and Chief Executive Officer. Rob, you may begin your conference.

Robert Painter

everyone. Welcome,

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

comparisons performance commentary last of otherwise including reflect financial unless to non-GAAP Our organic corresponding will year, growth which noted. period refer the metrics,

as-adjusted reflecting addition, a Trimble In our go-forward P&L our exclude basis. will commentary which our on agriculture emphasize primarily numbers, business, better

X. Starting on Slide

connecting we quarter, through strategy, continued to within Connect and our segments Scale digitally shared Trimble first advance which & creating involves the workflows platforms. across industry targeted During scale technology

as strategy of ARR of flow convey in performed where all points organically, customers our record our Our at $X.XX with key million. in ahead XXX margin detailed outcomes creation grew We the quarter, grew was of $XXX shareholders. delivers starting and the gross expanded XX% XX.X%, performance margins Slides X on unique X% X. value to free cash revenue solid a segments XX.X% value sustainable and were EBITDA as-adjusted form as-adjusted billion X strong X as-adjusted messages to to expectations to want today, and organically, a basis

despite confirming call update unfavorable We year provide confidence ahead. we moves total our in will are build on and we previous as currency next guidance an our the months

allocation a focus vision. high precision the team XXst and we our in highlight. at have cash Trimble first X, our this we quarter, character to sheet our These and PTx moves venture. divestiture venture water joint team This X AGCO. on the assets, strategic In his capital proud message joint #X is and our support ag portfolio to our is and Eric a Key organization divested balance certain strengthen strategy. years. established provide simplify closed monitoring Hansotia I'm a bold April with last with And

this are on to X amount to in to is structure. takes reporting historical Trimble our segments will focus enormous that It new courage thereby affect place, XX. reset of organizational and provided full our our sum to on their our segments We on investors aim align our enabling and to I'm scale April we colleagues The new to dedication. actions potential. work simplify change us and better the business, #X message these new and to Slide of a baseline as grateful Key perform an which to on data for

and as-reported our quarter XX% and an recurring. on recurring software, evidenced basis, first services As was revenue XX%

our and basis, software, first was quarter and as-adjusted an services on recurring XX% While XX% recurring.

Turning to segments. the

motion AECO working. Let's life users, data, Scale start cycle and on Connect is stakeholders & across is Slide well the X with is about in here continuum. Connect workflow our industry connecting segment. and it

our win systems Construction Trimble model. breadth, go-to-market our the we with our insights physical starts expanded worlds. new offerings to the right about next team One of In Our business an prepackage connectedness enabling into version to effective depth do Scale account-based customers. we to is growth. our It with and digital bookends and solutions offerings. making by delivering easier the and to connect Trimble efficient and is that transformation, providing selling quarter, our and moved which We us of released

as the years. the have the gives now last segment XXX of transforming ARR structure visibility and success. $X.X billion multiyear is ARR basis in first we emphasize over Schwartz To enhanced been point, a conveyed trust margin new renewable new reporting plants, overnight This XX% quality this record our and with and Mark team increase data physical business Market is few energy his an bookings, business, of And with business plus quarter conditions in delivered a side the the operating to we strength in such largely points. of expansion is business battery quarter. of XX subsegments X. EV of on centers of and Field manufacturing, The the the a our moment onshoring key Systems Rule Rule highlights plus in reshoring projects. as at Slide fact, and in reporting XX remain a segment favorable scaled

monetize approximately XX-XX increasingly his as-adjusted where recurring This this the ability increasing predominantly this industrial X%, and software. business, business physical by and to the of segment we that agriculture word we hardware digital business physical On provides hardware data transform worlds. is continuing as and selling as revenue. the solution moving basis IoT, to our Think node points basis, models, Thus, team hybrid strategy. excludes the towards discrete in Bisio which by collection importance as while revenue XX.X%. our aspects us of grew business, the margins XXX splits to the operating this that models Ron connect but underplays the revenue world are to an In our of

recurring grew XX% and business and XX%, are Software, in in evidence services Scale this ARR & Connect our segment. revenue of motion of strategy

and AECO, see conditions infrastructure same strength including overall slightly the positive. spend. remain We mixed in Market subsegments as

continued side, economic weakness in through weakness in we see pockets notably most cautious of OEM unit lower Asia retail Pacific, the residential sales Europe On and and construction.

how global that along monitoring U.S. rate with impact dynamics GDP will capital purchases. closely are and We interest growth,

commentary the Transportation excluded in is comparison a on quarter. with began the from Logistics last Slide Thus, and acquisition year segment Transporeon Closing it the first the We organic our start. April. solid XX. closed

and and innovation, delivering the and autonomous bookings, team go-to-market team Transporeon bookings. focus. product On in releases process organizational procurement most autonomous have also quarter fit. which product of record strategy and a their excellence found his the They quarter fourth Keating to first AI-driven notably through are quotation, market heels delivered recommitted record reorganized Chris

into generate tough thousand They a that delivered results contract backing dollar freight predominantly can a environment. value demonstrating a improvement positive a innovation that cross-sell region in thus European with and value multi-hundred They selling process win, this a it annualized in winning global also enables to North proposition is cross-selling continues also our a deliver with to business begun growth exciting customer map to that recession, bookings selling even an experience series and of customer up market an procurement Trimble product-led this opportunities. a We've compelling attractive notably growth autonomous an We model business enterprise and win solutions Transporeon's that confident existing base. right is European remain software and America. in land expand

our digit. ARR organic and each which In our we Maps the of the continue expansion. Enterprise revenue to capital driven go-to-market context rest and allocate of by the to the In teams, X% segment, growth, was bookings growth grew double will

expansion the end consistent Including XXXX. margin basis quarter. Excluding by of points XXX segment the expanded Transporeon the Transporeon, delivered since we margins have in

CFO, it Before David last few years. Phil, let first once over you. my for gratitude as to our me call his I for to turn incoming again over Barnes over his service express to and these Phil partnership

Phil Sawarynski

believe shareholder is in Rob. term, function of We Scale cumulative maximizing flow. you, aims our cash to Thank to engine, flow. value the a deliver long which long-term free & mid recurring ultimately cash is Connect free

sheet coming flow in or Free non-GAAP Slide and million cash at flow quarter, in quarter. in income. dynamics the cash X.Xx $XXX was the net strong XX highlights balance

at model working under the Pro revenue billion our with beginning the the asset-light X. and expenditures debt-to-EBITDA after net capital. cash paying after debt X% our AGCO forma of about venture transaction, quarter, $X second capital credit negative have at outstanding of the Post we We the agriculture continue in less of and even balances term facilities. close the the on just down close stands our than of joint

the balance cash us strong we issue good to puts buyback Our share resume position in XX-Q. our activity after a

Now allocation. comments capital a about few

Our see priority for our which invest the where the business to opportunities returns. remains highest back same, is into we

digital the demonstrated the fruits in been of investing we in last For transformation, AECO. being which example, years, over have few are

continue rest expand AECO. and transform processes We will of company. we throughout time, systems this over to the the work our And in

debt over executed early And retired promised, In million quarter, buybacks. an $XXX of $XXX we we April. As January, we announced repurchase authorization. million in the first billion share in $X

where a expand can On fit capabilities the front, Trimble tuck-in opportunistically we the merger and with land will acquisition inside acquisitions toward with offerings. One and AECO we bias Construction segment, pursue the that

quarter strategy resources This customer enabled few the the ownership. acquired was we As third doubled and an our XXXX [indiscernible] in under Connect months our first example, human by the of count application in to run Scale intend sellers. that offerings forward. same product the bundled via put & we as think We of our in about we hands strategy playbook the going acquisition our

filing. Before guidance, the an I of the timing on XX-Q our of turn to release expected update

that EY, Our PCAOB's the weeks selected several of was work. inspection Trimble informed of ago the XXXX EY's as auditors, of part us audit

other EY During to preparation nor EY revenue-related certain systems processes. and the had that concluded PCAOB Trimble related documentation sufficient and neither for for controls IT review,

few over that XX-Q Unfortunately, to effective revenue audit at subsequent over deemed their additional disclosures the of has our weeks had filing, conclusion. we changed the amend the after review to our EY's will time EY revise completion Trimble's and last EY's is result internal internal XX-K XX-K While delayed will controls need the be of control the filing the procedures.

shareholders our to has important their EY opinion. is work. until not financial emphasize have auditors and to XXXX decided withdrawn We annual have delay meeting It their first that our foremost, completed note and audit

in working We out to our manner. are with auditors expeditious to this committed close an

the of let's the quarter that, for guidance turn and remainder second year. With to the

puts for are our the we factors year. negative our XXXX Rob influence guidance global moves are currency with in reaffirming given quarters environments dynamic. market the some earlier, year our of are takes and prudence, between noted and for that As elements early still all we outlook end and with Several despite initial

very second the quarter, think would previously a quarter way half. through got term second from the is of license year start in mind, outperformance best the in the strong at come first we and a anticipated understand off we half quarter With of or by year. trends our versus first we in this in came that to first hardware lens our While revenue in looking to the later the some dynamic

with what quarter for Overall, first you half ago. outlook shared consistent remains a our with the we

organic of first with half revenue extra in the of second fourth growth the be the in after as-adjusted will that expect year the half week quarter. impact We for consistent adjusting the the

to information corporate detailed Let's I that to our we now also more guidance slides appendix on presentation excluding agriculture. as-adjusted the in that move segment view, note provide Please on assumptions. our Slide XX. focus and will our on included our have again

Our prior the enables we which as-adjusted removes consistent in venture happened. which way. the historical the a at current April X, growth closed guidance of in view is our exactly assumed looking what The portfolio joint agriculture on periods, agriculture dynamics

for XX% to mid- of the high-teens continued expectations to is ARR growth outlook Our This in organic the strong growth XX% growth year. ARR. expectation by for driven for remained with primarily AECO

This single range. growth X% revenue organic total company year the flat to remains teens XXs, high systems low low in revenue single the the to driven to in full digits. digits by field the in outlook low is AECO Our up transportation down growth X% growth flat to in

As fiscal million $XX by is a the includes reminder, our weeks, of million year XXXX increases which and approximately full approximately fourth segment. $XX quarter which revenue in AECO XX year

week to Excluding up revenue the this mid-teens. AECO, growth is to be expected in low extra in

the of improvement extra is outlook XXX represents XX be on and growth basis XX.X% construction invest support basis with margins, AECO while for about be for between EBITDA points. both and basis software This points, of opportunities. gross approximately margin range in growth businesses measures to year-over-year expected week. to and the XXX points margin future to Our expansion in This in adjusted of XX% XX% XX.X%. strong XXX up our unchanged in range margin margins margin expected the also are of the operating year reflects the both high to by excluding with the to continuing non-GAAP year

In and to are due approximately customer to Field points XXX changes mix. down be Systems, basis in margins expected product

margins expect with in up XXX improve to points our Transporeon margins for with we to margin basis transportation, continued year Enterprise, the continue in and expansion businesses. Finally, approximately Maps

purposes. transaction. $X.XX and research expect continue expense reflect We've the over lower from course already will debt by to share up to net flow offset that From sheet, of free $X.XX our due the cash cash we prior all redeployment is we increased assume paid our to X.XXx continues we proceeds net of repurchases does down joint of full EPS year. and our on from prepayable to relates of tax approximately of cash the the the income. perspective, venture for equity expensing balance development of benefits anticipate non-GAAP the EPS Relative a lower to will guidance, continue $XXX year million a capital execute to to interest and income. outlook change This Our it benefit as to on unchanged forecast not flow of

deal acquisition net flow forecast in that XXrd the of expect impact year. quarter year roughly cash flow be is free Xx non-GAAP cash the of for Excluding the week, and lowest expenses our free to the Note second the we income. the

quarter costs flow taxes. will the venture Second well as for in second seasonally joint cash transition and quarter, is as to acquisition-related higher see expenses low normally and high the agriculture cash closing related the we

finish I'll on a quarter. for breaks by guidance offering comments XXXX by our few how out

our assumes discussed, half the of first consistent we as-adjusted overall that week, As organic growth relatively our second between the is guidance the year. half excluding XXrd and

which reflects revenue between we as-adjusted quarter, flat organic second year-over-year. the For expect revenue million approximately $XXX and $XXX million,

of In is dynamics timing and of term segment calculation, under accounting license quarter. the are considered be AECO, quarter. upfront segments recognized expected the growth sales than organic first which as As-adjusted part X all ARR impacted revenue our rules the positively in the to these lower the reflect year-over-year although the in first

and many point both illustrate normal within license expect To Then our third be the the which quarter will week term XXXX, revenue the fourth and this quarter, levels above term term of XXrd second AECO AECO, first when in of million, $XX year, quarter, quarter $XX timing renewals. renew. is part in January license inclusion the in to to licenses term first of million in recognized due license the we large term of revenue in approximately the approximately fiscal in increase due we in revenue to the the X, quarter XXXX license further, that again

license it second highest in the revenue term note is evens It's revenue third profitability to at growth quarter the segment measure term first ARR company we measure in Our fourth and out lower the is best level and believe so the of in that lumpy the be of the important quarter nature quarters. AECO. profitable, and AECO and highly and our will in license

geospatial assisted customers the of segment, will revenue lower In total company revenues quarter we expect be these second revenue third the $XX point, quarter and in quarter, to year technology of to do in Systems Transportation second our high growth low-margin Field at reduced quarter. second American and the event we Day first drivers you to the to XXXX in revenue sales At week. EBITDA the look this in million we point sales with same economics modestly from more for the expect with of of are We expected fourth business. hardware quarter the on quarter second primarily organic in XXXX, will similar repeat quarter be not the Operating strong revenue, had for both providing to which North by the December. XXrd margins and the the reflecting government mobility forward in follow trends. segments Investor in and details our these year,

turn you. it to back I'll Rob,

Robert Painter

as continue at our most our strategy, to in the Scale strategy strategy continuums. connect industry uniquely we as the our can of digital all insights our our pursuits, work turn we Thanks in of transform for the a how platform data sets one transform competitive in as platform our successful Trimble strategy. that complete and and will Connect the strategy, start moat our industries, believe world we a building users work resilience and physical solid bring across flywheel If connectivity, business. they an how collect can creating demonstrating so workflow we Thanks, together a data to are thereby When enhanced across transform delivering conviction our we worlds is a to right how we works. between think we Trimble, customers enabling and while industry win Phil. to to about & and data colleagues and around for year we

questions. Operator, we line now to the open can

Operator

from the comes Your of with first Dillard Instructions] Chad [Operator question line Bernstein.

Charles Albert Dillard

my on financial detail of guess, into more controls I wanted just a you in impact to IT do guess I I give was bit just, dig then, the could question, impact I now, what statement? guess, in And happened hoping So like least more the terms little the first to if revenue on recognition. at you how the like thinking and income And of right about I potentially think this timing the extent, are could what just resolution? you issue.

Robert Painter

David see conclusion. to going I'm to through its to turn to David us on staying with is it Barnes. this

why don't David, And so you?

David Barnes

been XX-K that takes -- through we're What's timing. at EY It's -- as companies happening EY probably predict have working and to well. our reason we will inconvenient have will confirm with numbers an will cooperatively and gone or it is was as the no And of XX-K their by to looked audit side PCAOB audit through EY at work we point, financials the so internal have to issue is more believe control Chad, EY February just process is then get controls. out they that procedures month, EY we, our which than the it. This our and -- us. the about enable of that Chad, we've of the through with for team but was controls. the unchanged. in going you hard this thing change is, This support And to standards the internal the this internal and EY's would I'd X the review. No not the concluded issue of looked to over they the as Trimble XX-Q identified their to on had our to us enhanced numbers amended point go issues filed, numbers selected the audit sufficient documentation things, and meet papers is know, the of is

Charles Albert Dillard

And you to helpful. about bookings the moving a That's the AECO. what bit take And during you more just if can, little detail business, your on bundled that on Great. like talk just give offering? is for Can quarter? rate

Robert Painter

So continued bookings in strong. be the to quarter

years The in -- put bookings of a over the really progression bookings. of strong quarter. couple bookings now So growth in the the together ACV were XX%

So a than that, say, grew there. an of The One faster in clearly Trimble last, years. within the been what progression One. Trimble Construction X.X terms we've seeing over Within talking year, we we're offering the lot X that about that is bookings like Construction

Trimble that our selling adoption increase to the the continuing systems and transformed organization Construction and with through as to along we're level we've go So of One, processes the that.

So North I'll example, bookings give of level growth year-over-year those the XX% of think within grew America, Xx you I in a One about and bookings the an were quarter level Trimble on at a our basis. bookings almost Construction

strong progression, Chad. So

Operator

next [Operator line Celino from comes Instructions] of from Your question the Jason KeyBanc.

Jason Celino

clicking and go double growth When a you on on that if Maybe you're versus step AECO TCX? there Is think seeing maybe that about little expansion? about new deeper net think you versus way a it in the bit. can a to

Robert Painter

is existing on X/X, the X/X that breakdown X/X Jason, logos. logos, about new X/X,

job to that market We logos, than is a And the we growth. I'd executing. we it, think offering the let's ecosystem. is to market, amount some new if mid-sized an take a addressable upper cases, with us Team end the of the into go, the good end what we continue that's to offering. driving the more has buy of great to see the mid- then So done of In customers small, the, see expanding market. on allowing that's the say, wanting call

Jason Celino

know is that maybe demand an macro ago, But quite it it how end us to of you that the you're seems make days give kind relative Yes. just I sentiment can doesn't executing easy. or of segment? mean within maybe update market environment on some well. I like XX

Robert Painter

good question. Yes,

a macro that. the we North these you America those and what the other the see also, and Jason, that on our with manufacturing, a rate North side is good aspect more that. So challenged. of and onshoring, on, data of Trade, ARR within in actually and Renewables, Europe on see centers, bookings bit of interest side in comment AECO, data quite reshoring Residential, America. We growth strong are growers -- see growth have of is within own I supports bit would that is that in we market systems. environment

As managing through know, construction you we're U.S. of our X/X nearly systems.

is the the Midwest, space. And can Southeast in that can there's Carolinas see Florida, growth here in North We America the up market been in so the the we hiring see Georgia. that nonresidential geographically largest and by with in followed

Operator

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

Jonathan Ho

question. start with wanted of a bit Just a more little high-level to

little at moving forward, As point revenue Trimble total just converge and at model we and expect what given changes look to a growth ARR we mix the more? should here, bit

Robert Painter

it's see already Good question. Jonathan, Rob. in We actually that AECO.

growth can you the ARR in the XX% XX% as the the see quarter, And revenue. as well for was on so example,

phenomenon revenue If you for up total X% look you have -- actually logistics, ]. and same in transportation the up [ ARR

a So it's it that think, would number for, The in that. hardware be remain amount years disconnected of which correlates and predominantly systems, I would recurring, of will one is a business. field the be so to

I recurring, as the it, I in think range that. recall XX% on they

the and So at remain those level. separation a will total company thus, leave separated

Jonathan Ho

more much maybe changed a Got on you drive the what us as to Transporeon detail follow-up, it. And improved and can there a little just give bit results?

Robert Painter

Yes, question well. a good as

bookings quarter is, a records there's of row and strong well. a say add for the record What in things that. on That's a as then with to quarters another I record would growth. of business, a QX to So few X QX the

maps into successfully go-to-market both existing and were Those solutions growth bookings team customers. European North the with began customers and Trimble market. synergies of getting think been to the selling shippers just we've we're exemplifies we some started. the Transportation So cross-selling Conversely, which solutions America, our here carrier in Transporeon

the products and from continue the -- autonomous and procurement logos management grow autonomous development team of of of participants I quarter. in transportation well seeing quotation. the Dozens to were the the buyers what we're is with all on important sides as new freight. And that's sellers new added network like continuing we platform, connects which because effectively

things team I'd still economic So well doubly together. a so Europe. say executing in difficult economy, quite number freight or of in very The is difficult a coming is market which

Operator

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

Jerry Revich

if the XQ wondering I'm could just you margin Yes, outlook. about talk

So understand term sales comments that historically, type guiding the you have folks versus the I to about an license had just but of outstanding quarter down XQ you and you're step first don't XQ. the margin

making just so sure beat performance can of want the this And I the that that really is, obviously, of business make the how sure quarter to much versus understand part quarter a we in we numbers any in like we did slowdown strong. because, meaningful was

Phil Sawarynski

our Jerry, good lot there's it's I know question Phil. moving And in thanks a because parts of and outlook.

you to and if as QX QX. dynamic drop that's licenses, about are the a talked term million that about yes, So, I QX, largely QX from $XX think

So -- at margin bit more think I basis, if you look a the drop. XXX-point a it's than around XXX little

is of into I'll actually large or buckets, half license. dynamic the little over of because that, that of that put a it term X the part half of So the of

If you as licenses all recognized get upfront. the actually term remember,

revenue. you take the effect are, our move QX, merit high-margin X into So as in we one, raises then that that's pieces have And other April.

drive that growth and points sales and some basis we're the basis XXX OpEx about engine. the business continue to -- spend incremental and there to that's marketing and additional about talked then points so that primarily we've XXX another And around is R&D spend AECO

is points. then XXX -- that remainder So to bridge the license the term and

Jerry Revich

the across nice separately acceleration segments. quarter then in performance the Okay. on ARR, ask I in really can And the

could rolling think segments, it putting organic we outlook the an teens an together company, in the basis standpoint, As into we high what year full and pieces the for accelerating mix based the like across the in across look like looking rate guide. Slide about the to feels on XX, will ARR the an from on mid- the see you're acceleration Transporeon whole exit beyond

might XQ like look what the that slides? in given you about thinking the Just cadence described

Robert Painter

growth the of Well, terms bringing them the ARR certainly so in the company Transporeon up help potential. level at will

The other that business. the is side of mobility

Jerry. net And the put the that so of to we forward, guide gets that

Jerry Revich

say Rob, And full acceleration is that to fair ARR an XQ the guide? year it above though there's

Robert Painter

-- No, At we're mean, outlook guide point, above has us more now. than it no. mid going are It leave but right the that this that. I to maintaining would where to on buy we're the we

Operator

next of Oppenheimer. comes with the from question Your line Owen Kristen

Kristen Owen

XX I think you XXX to AECO. reinvestment out Rob, business. the And basis Rule had this just question in previous about points called of in for balance going that

Just wondering balancing that if to business? customer your versus you talk cost, in can the that growth about of acquisition about customer build think set opportunity versus sort you out value how investment lifetime

Robert Painter

Kristen, great question.

twofold. Let me take that

it, is the with the than of investment More First, segment referenced. the, call XXX OpEx level. bps Phil marketing -- sales half that that the AECO investment into of and at

continue are well the remainder happen. into capabilities G&A, to and systems investments to connectivity of as is between putting the which of that making on R&D go systems in we street, is X/X drive lot that's which there. And About this it the investments really So and a interoperability driving is enabling in feet the to sellers as workflow we're the get AI the business the solutions products. as we think is then investments,

us and above call well and that think we as the a the when X, level we're And of our to it, that's making We're customer as thinking. of, invest is, above the return So at lean forward that when ratio floor heuristic then into telling business. we're into at we a look on the easy cost. about lifetime to put the the business, value at investment acquisition that over

we the and market, especially should delivering Gap]. in investing when the into fact, this a when the above is be this that so in XX, -- And of we're in business leaning Rule it's of XX pretty to do actually, say go we math, straightforward to Rule [Audio exercise well after above

Kristen Owen

I business the market of going is Okay. starting that transformation this to ramp. think at That's a time, through -- in obviously, opportunity, about size just overall mean, helpful. When the we really I TCX point

in As what the think of a existing Is AECO. market how Trimble, X-year Is continuing mix new help your Is do logos? opportunity growth Just basis? you your sort us model for go-forward products? understand this new it it we of growth on base? look customer within about for it at sustains

Robert Painter

great question. a it's Yes,

to at horizontal that's frame more multiyear global, continuum on more as you playing buy service. that large, tasks construction. the would construction. of the right challenges like industry data-driven, if have I world know can, a our we into customers to productivity where We're begins we global our this We breadth in size of this it's data-centric, a wanting the life So vertical from has underserved, market notion both win, and sustainability, solutions We is to positively intersection the of we touch underpenetrated, market We affect. to and know the Furthermore, more a dollar optimizing which to the TAM think that multitrillion basis, subscribe solutions move largest construction, cycle. depth we becoming of ecosystems see available points believe, we will have the across and have across productivity with then we you optimizing with more and the systems.

think logos. With think do existing about to we we're respect new versus we So positioned well so. to then and uniquely how

and of have, hundreds that cross-sell there's installed millions we we of the Within through that we think dollars existing base have. ARR the given of mine untapped to customer base of that upsell, breadth

more go the investments to market. we're efficient it making, that to With becomes systems

for starting are e-commerce the market. a to motion turn, to customers self-provision more to starting creates investments end of those go-to-market create to licenses, into market. smaller the come ability of Some capabilities in That, the efficient creating more are --

we of unlock another the model the market. be go the so can and to which we of And efficiency that, TAM would nature we think, through business that

for in logos overall market the the the to come continue to think as we motion. land of that along years to way X revenue the sure would existing and digitize. and this that customers continues win I within expand base can We and new that continues that adopt would majority through expect

want to there. expectation set So I'd that's the

like about the think we'd in we're that So the continue to this feel very, just very progress making we're and and work getting started. positive to business that

Operator

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

Justin Pellegrino

for downside downturn? at look I I we what equipment way now? versus a the side normal on be the in like we're most to where think helpful. just into Rob. of Pellegrino would Justin This color Are the wanted side is any Just and at equipment typical a does there look

Robert Painter

following Thanks and retail a Well, on within are wholesale their sales, correlation we both we there's a have unit certainly for OEMs reporting sure at the business Systems a OEM. what for are question. the and level. And the Field demand side

of the What the field exposure have we we X in systems construction, own much more we don't first let's is economy have the So would through well nearly in our that that see interestingly is some in segments in business. Europe as quite numbers on the there out really European OEM our challenged say, let's of quarter. the seen of enough, and systems performed in we've say, well, relatively although Europe, in, units other prints field business

the the mixed So and let's aftermarket a on say, to perfect, architected that. serve also fundamentally it's to fleet within not We're R-squared correlation. serve that

I'd call on units as to do technology. new sales, are say, machine benefit technology So another, we by on like types of to new is single-digit unit Trimble penetrated although low obviously driven it, that we sell of with many, from not we machines have would what excavators see and of remain be many mindset having also the thousands millions hundreds that there's

civil think technology business. base into drive to machines enormous opportunities we so the there. there's the side adoption And out construction are That's just that of of the

could and for provide work that important is national and cadastral business surveyor sales And a Systems, the say creates could world, there, physical Field could of be It we from be of application. survey, an applications an machinery hope residential that manufacturers. would a There's the in workflow, out market, the unit digital be color. I in model wide variety independent in our could fundamentally mapping in that would some that So surveying I coming units. be be disconnect machine parks. which gas of and us oil a of helps

Operator

Your the comes from line question from Rob next Mason of Baird.

Robert Mason

bring I'm there now noted when bought America. the business, that win commercial about on perhaps the at was, I'm predicated any just curious business it Transporeon, not of just curious, the well? owned comment to you've year, Transporeon least around for sure North if America you're North opportunity you sizing think was penetration. efforts on that how about thesis I Transporeon up had you heavily Rob, America that And X any North and have parts But in you I'm as a the to

Robert Painter

Rob, thanks for the question.

as applications We do You're additive our we North on right didn't, model that fundamentally it didn't fundamental the opportunities deal for and that sure into say, that we the we create saw predicate of saw could about is, thesis. just the the around America. We being original thesis European it. let's bringing

it's And about good dollar the that's is thousand quotation yes, that remarks, So ARR it about we customer a well. multi-hundred talked using product that have. the, earlier news the actually autonomous talked in hey, the the I prepared or win we as example,

so application even, had it, the one to it's or new call business, very let's interesting in -- say, capabilities think So older we let's existing we the actually and the not about. a find that

special unique customers. and about about is the carrier-centric, America of we what What's the North our it's installed nature have most base,

So when on quotation transactions. carrier bring into autonomous that to creating capabilities around at we it's automation spot and the look America like look side, would really North

for to base. our that that's the sellers able to to something sense introduce So customer makes existing be

global In what's or America team talked in North that. together around create -- global X about to teams in opportunity before We those global a organizations Europe. addition, and Lane the we've and scale marketplace brought those called Engage into

and is So real-time as that's We're doing visibility. X now, example example. not North in America. And separately third another then business Europe the that

here be the would we and additional those to -- capabilities, want penetrate would yes. North that into so then And America

Robert Mason

Okay.

ag year, I XX% on a how But trend. and as this to over go-forward the first quarter, in on Again, we months. lower had XX year? gross business do through without my through software recalibrated does I we the Just -- that get last guess to look ag. perpetual trended as segments follow-up. margin suspicion, something new we'll a just At that. ag the the But particular hardware the the and as this in go get curious with It's go-forward without basis was

Robert Painter

Rob, question, numbers have And in was an there good that you're in a And will a and to addition I of set can revenue. of think that But into we in ag up. about naturally models chime right, more the hardware gross transitioning those you Phil after [indiscernible] recurring see. it's impact. margin that, this Yes, there element an

a call might $X,XXX say us sold let's a, traditionally that. accounting think perspective, that $XX,XXX So it, and for call And I'll has a hardware sale. of of from it, have system it gross $XX,XXX call element now and That software and we'd that system so an that, the and $XX,XXX convert to and for, of for that about year. headwinds will splitting, case, that And that in let's that's hardware the in hardware was to $XX,XXX software, of might subscription $XX,XXX upfront have margins. a near-term

the quarter, Now model direction, we're it and in going that can flipping towards. was a growth Rob. XX% a moving switch not from the that ARR growth that are is that first we you XXX% see ARR But

on to So a of basis, that headwind. XXX basis a points XXX be longer-term could

to anything to Phil, that? add you want do

Phil Sawarynski

that's I think right, Rob. No,

Operator

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

Joshua Tilton

hear me? Can you

Robert Painter

Yes.

Joshua Tilton

my all component kind appreciate line a something guess just to just licenses can because always that revenue of will renewals first week each will item in is And why in of will or basically, in those to so I of year. around bunch you that of the to reason extra I'm AECO have Am you impact because of be about just time week renew what new as term there So quarter, a one land is, a deal? extra then this I AECO. understand accounting, correctly? thinking the sign tied segment a clarification. the term I we follow-up much every rev term color the renewals my trying the because extra AECO the clarification the the is a there's XXX have

Phil Sawarynski

Phil. Josh, Yes. it's

is -- answer I'll So easy thinking correctly. it you the your question one. about are second Yes,

encompasses licenses around Our of large XXXX date. that January our term renew XXrd X, and week a portion

-- are that the business. And have that XXrd yes, an within and to this the thinking largely week so continue term $XX -- of we is renew. we'll you million $XX AECO there in of On there element first we've that choice our that's in are million correct in had your continue licenses the roughly question, the structures

it's challenging to horsepower has with into of some and offering where to that it the move the complexity And the the do more around itself cloud.

going see future. at So the you least for forward, dynamic that will foreseeable

Joshua Tilton

in just some tied them? So contracts clear, AECO, be term is to to of all just not

Phil Sawarynski

total the Correct. It's of AECO limited subset a offerings.

Joshua Tilton

definitely you going guys investors about forward behind the this been usual guys there? that understand given Okay. change since high the very you Super guys as on positive table I the business of Or the guess of then my for about plan better how scenes? segmentation? anything I like inbound new thinking have when is us guess And We've it lot this right more what's business with business And just are of helpful. think just there, had segmentation. for you already segmentation going is aligns kind level. follow-up you a and But did sitting is on about terms guys around in this

Robert Painter

Josh, it's Rob. this take I'll one.

across It's really the of good in great provides question. really some creation opportunities and at move If business over ARR and doing not how the thinking business now change the that were enables the the that how segment ARR. to It that think software at focus at take, simplify does It's does of as operating for systems a This scaled as the an what is in value in this capabilities the previously. business. the a assets company about it's executing This it forward broader AECO than we we're swath we team unlocks. I business, business think in us say, is business baseline example, I in mandate usual. the this as a and processes $X new let's billion -- we're strategy. a look least just a the running we

terms our and survey this business providing hardware through being in that driving a and outcomes That our It's sharing decades the dealer to the and better under we've competency we our civil hardware in level is is had at thoughtful the focus as survey in X similar civil If this put, a within business accountability importantly, go-to-market I technologies across our more things them selling, And like sell that selling construction then a there, of attaching look Systems, frankly, capabilities, business using we're first how an within a example, sharper time super positioning and the leadership. simply positioning R&D services construction. Field channel. global of level, business. is about to

and X is efficiency say, in market. to leader That in have European to bringing go X Asia Pacific, X the more region we're in we in we Americas. how So the

civil. leaders regions X would X. from survey people these instead been we in have So the scope and that of overseeing Previously, of do what X

and can providing and dealers and to is about consistent us, number. some the think then their allocation arguably the to it of market to better the business plan short a help and we the their them work feel for make put those that, help way long-term at dealers different resources strategies So health management least enables where more would identify and of usual. the and there, amount capital Transportation a term bit it more had business opportunities complement like probably they're the as doing change the in to

Joshua Tilton

of Super last tie that kind all guess to one just helpful. I together.

this see in change the the change segmentation. see -- we we investors, As

business this see on you Like better to judging the told usual. looking made. going months? the of like changes through to should we you at, come Maybe on. to are numbers? investors say, that going much talked XX all metric all over how too we what exciting definitely was and -- we this see what XX in new it's time not us where going the soon, because You it's you be Like as frame, in X-year positivity There is months are things are at the to

Robert Painter

the is X,XXX Yes. success. & remarks XXXX. This We launched I multiyear prepared journey January question. overnight steps. like of Scale about in the a used No, I little And the Connect words

billion We at also let's fact we have should I new I But of say. -- had QX think ARR. at now baseline. billion what closed the a base, XXXX, $X.XX the look we ARR. of In creates We $X.X facts revenue in in QX, XXXX. XX% XX.X%. In margins business, at EBITDA were XXXX, QX XX.X%. closed recurring in adjusted as-adjusted Structurally, XX% QX XX.X% ARR. of XX% we were in had our a in as were XXXX to We gross

operating last X the we XX% years, leverage. produced Over

that that We of a this is years. haven't direction just for on number We've the decided this we're going. been working

that resegmentation the outcome baseline, that. XX, I first positive So produced this in the transparency that to see community, I'm think income of and to is business is now that in the high as ARR they've on better as a in above of accomplished you're Rule obvious AECO very proud now. of is as This and teens, is emphatically an the we of investment growing and highlighting. team the take operating which ARR visibility one of It quarter. the the what probably what things the well XX.X% one scaled business that operating

not looking bookends, frame, the the So to that I -- talk biggest the of we're we they're To look are big bookends but the those forward free me, flow. time value. only about in cash and have drive ARR X X-year bookends we

structural driving remarks, is the software frame, for to say gross I'd you ARR hardware would as to flow in cash game. And the improvement that continued of structural We So drive continue as an increased Phil over gross then looking operating EBITDA. able The leverage, be we're in said enabler means time levels progress expect, in growth. be should the of long-term free margin cumulative think prepared time his X-year frame. I We should is drive that operating outgrow would I an ability the to margins, game leverage.

helps. we'd I'd the that. income be free have. cash That's to that so flow quantitative business around have And to Hope in that looking progress we framework the the relative net the to continue

Joshua Tilton

It definitely did.

Sounds fired up.

Operator

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

Tami Zakaria

the Trimble solution the have sold Basically, solution, Transporeon trying can The the existing the salesperson you So in all how on rep new go of the my sell customer American selling this cetera. I'm port each to terms was of up the comment. the customer, same understand does X follow-up end the after then autonomous -- customer? Transporeon selling of et how solution back North I currently billing, for a ACV it versus the And before? did work to the to this what a solutions, of

Robert Painter

one. I'll is that take This Rob.

ARR, as therefore, in over the multi-hundred -- a was dollar is that over it's well. so ARR I thousand it ACV used, So $XXX,XXX $XXX,XXX example a $XXX,XXX that yes, -- the it's

say, bringing who account the In knows the think it with engineer who for often go-to-market and is a sales responsible of of the can then specialist very sales a that to North to similar, we we value -- what make seller terms be Transporeon, have functionality it's customer of bring can out a to specialists Tami, the do value your it. to of the as most depth use get technical solution the question? -- America, or in in really to, to of sure of have that Did from proposition that's named now the I'd Trimble Construction that. motion, in One specialist when selling answer we're given actually we customer a And account know the breadth how and be conversant And the the depth able account -- offerings, named we'll sellers.

Tami Zakaria

it Yes, does.

streamlined Trimble, question, to time that whether you you the refresh think Basically, potential second to the now right know the view portfolio PTx have? curious how growth you of organic do So after target. I'm of it's algo this formation this new the XXXX

Robert Painter

Okay.

hey, Day remarks. in And on we're Investor -- what's that prepared mentioned targets, going multiyear his the in December. the an So to have Phil

saying the that we have been year think to I narrowing half second December. but we're of

be or color you in growth. think -- we So appreciate business of the will take the formal guiding of can of that quarter for They're we XX.X%. EBITDA year, the I from think the for know baseline provide update. the We the that. talked the and next about But And the a highlight where say, baseline company ARR XX% already -- in do the calls. to I questions interim what XX% can of the the between we XX.X% guiding is how to model. know to level we we're the and that actually progression We've organic. want couple that's on about and at have there that I continue

multiyear to So on that could expect have we it's you the you leverage that growth forward take apply operating a if of and then plays then a you that, apply -- if that through, minus the play [Audio the that margin wherever in we'll sorry, set not details the that December we next around frame gross [Audio in see can we EBITDA for the year. hard continue improvement to Gap] you and And or Gap] the and to decide put or -- mark. points we to plus in a finer get XXXX XXXX and if

Operator

now and participation for may with our concludes And that, that call. question-and-answer you your session. conference today's That you Thank disconnect. concludes

Trimble (TRMB) 3 May 242024 Q1 Earnings call transcript