Trimble (TRMB) 5 Aug 222022 Q2 Earnings call transcript

Good day, and welcome to the Trimble Incorporated Financial Results Conference Call. Please note, today's conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to your host, Rob Painter, Chief Executive Officer. Mr. Painter, you may begin your conference.

everyone. Welcome,

lead started, organic the that available safe commentary our on you the I get will reflect and our harbor handle the presentation us as back. ask head in today thereby on the Jim we refer will back today our end I of at COVID and on is performance, website, FP&A at Todd, growth the David room acquisitions of Before is and call quarantine. Q&A. home the to My our X is of with revenue ARR me, and and currency foreign excluding the will divestitures movements. the

our messages. X begin Page Let's key on with

as congratulations revenue team Annualized record ARR. to through global partners. margin our system Our billion was XX% at grew of gross our The our exceeding delivered Trimble team people of up balances record flowed This My was second Trimble. operating and recurring strategy, a expectations, a and we XX.X%, revenue of to on for EPS. quarter, execution. ahead $X.XX also expectations X%, now and Total stand exceeding expectations. our own level

tried such and offering more last proposition construction on software and momentum this baseline, to demonstrating our solutions will currently basis. we new our few on segment we and other start expand busy and of towards proof One as progression From to the offering, as We side. points with global out Construction Trimble designers We this been on seeing we our solid the architects customers a and have construction have bundled and a Trimble owners, roll many of we will offering value the personas strategy, On with fronts. months, are progress which contractors. is targeted

We businesses. will our this approach other extend then across applicable

average with cycles Trimble increasing. deal our becoming shorter us telling win our sales our Construction and are are going Our up, indicators One, size are that rates is

of from the with our progress quarter, penetration where revenue in capital of was hardware the connected in is X included we cross-sell the installed made a in was profile the which core than exit and rotating to We also base. not own From greater lines Russian than million and market goods, bookings our XX% efforts quarter, share the value safety lasers. scales shares. XX% land such in quarter, of perspective, cross-selling clouds. to that driving divested best, second our product businesses the we as This wallet In see industry and our into XXX our decision more coming construction software allocation repurchased increasing we

back acquisitions. investing our business remains into priority and Our pursuing

moment, culture acquisition named global company were pipeline is top we have people, the at survey and Comparably. a relatively Our On recently act. a in we full to and leadership for by firepower the

offerings. is of biggest We oversee market. business. overall years. focus the also veteran, portfolio in customers XX-year to actions and simplify excellent On Langley execution, number James needs execute continue the appointed area Ron and numbers to our leader will transformation growth as part redirect of our and which of his over such our transportation and mandate logistics his understanding his Ron our the the strength, and last reducing faster. we is has Ron an to of Bisio the through product to a business is few of his led survey Trimble is strategy

Construction One of systems with scalability order need have hardware process the resilience offerings on Trimble are of more capabilities increase efforts. in I we to our delivery components. front, products to and respect We the digital and new the for designing building velocity transformation, With and on cross-selling pleased sourcing to dual key future our cadence of by which our am

Our is market. in Benelux France and test current technology a stack deployed as

a in release customers add our from our ability Our us truth. other most on customer I year. refine ability to well entire of a the customers, will portfolio KPIs and geographies, multiple source which products and buy the including will Europe. and single breadth across few more including the Changing continue gives over the system and visibility X-week gives half a than we to investors next contract, go-to-market Trimble North to weeks, across accurate of visit extend our driving single with of add a metrics throughout providing dozen sell functionality happen gives have from few the From recent the and sellers in prospect first and base, view team. This America, XXX single gears, a last us many a and X,XXX release met true X employees and the here, customer

grateful and Our and am to in to I team us believes they connect-and-scale that execute better our journey, are challenge faster. willing

direction. inflationary their to are the to our term. in and at business they and as help be to insights workflows with even efficiency are technology. near broadly to to for agendas, our with access unlock They integrate sustainability and more along also digital They more to do asking to data want easier multiple qualified pressures labor and us manage access to top products of value. across Our customers have asking They validating the drive are more

all, & that On the a on been On almost the it strong concern. backlog, an markets Inflation systems. absolute In Index, environment remain Dodge our speaking, such seems and is topic indicators Architectural as remain clouds. basis. is cyclical the is prices. more favorable Billing off demand from sales, let's signals breath own singular, relative we and look X, construction basis, end and Page investor Trimble their inventory indicators has basis. more net and After quality capacity secular are commodity are business income. efficiency Broadly our top In an high rates Momentum needed and well equipment investors facts signals catching the resilience Transportation, challenging than let front, in that market productivity as farm macroeconomic and the These markets. Index, we absolute recessionary as coming to the demand, a nature. towards the look help and levels freight To a much bit In turn at of prices, on freight than watch ever of utilization, fuel Agriculture, speak Engineering of Construction, Overall, model. Trimble we to point. a appreciate the in Trimble,

we the moved XX% streams represents Over over that our Over differentiated and digital worlds. revenue. these XX revenue have software years, today connect billion enable us the and last to services from uniquely in XX% That recurring revenue business we $X of physical million XX% $X.XX to at most to grow of and period, continues time to have moved double-digit this of same our CAGR. billion believe $XXX from a the healthy it resilient streams, that We is ARR a ARR, level.

and expanded from here this business time over The XX.X% a negative overall working we were operates frame, we EBITDA margins never an Finally, to with have is recession, increasingly simple: asset-light if point positioned to capital. this navigate. better enter XX.X% have we doing model that with been we

execute is to this Our our strategy. to therefore, environment, mindset continue in

long the with prudent we are We our game, be expenses. managing playing will also and

with we remain sets. the of and capital our year most Our the manage allocate our organically, to since in our vigilant approximately beginning has compelling operating and up will opportunity headcount line X% by gone expenses

divestitures and by I'll patterns adverse the quarterly incomplete quarter are movements numbers now and to seasonality that have and X. point pandemic recent making a as historical our comparisons supply have chain normal our the on as bit shortages the FX. start Turning year-over-year in Page and altered

aided was we offerings. Second across and driven rate our up margin XXX favorable the software quarter by XX.X%, shift in our offerings Gross strong impact in cost. were and product hardware the X% chain of through and eased The inflation reduce revenue modestly mix pricing $XXX expectations. was by Revenue quarter expanded net supply basis cost towards by to hardware million, to quarter year-on-year better backlog most in performance than points able lead came times of of organically. and our the a improve as

parts. quarters us have reduce allowed As supply implemented transportation our to the scarce reliance last and expensive over both on for chain initiatives expedited market the broker several

were our remain, issues a normalized to faced until a issues reduced modestly the fully improvement our expectations. We and number our margins reliability We the by both demand of are and XXXX. expenses both for of shortages initiatives. normalization year of of were to versus XX.X% critical but the growth ability into are income EPS Net seeing prior respectively. ahead meet chain, meaningful grew environment against XXXX. quarter levels, well making overall in we driven expect significant don't supply and year those for constrain chain that levels, Operating revenue remainder yet and we supply of travel ago strategic our and gradual and the customer by costs XX.X%, quarter, the our will lower in investments operating than part planned second EBITDA continue the

our to cash impacting inventory, last below generated R&D upfront of of chain expensing the $XXX we non-GAAP million just disruptions of of U.S. have over in of by the net of cash tax of first the and driven payments cash second $XXX flow The XX elimination of main generating factors we Over both free cash X are related flow half income. build-up XXXX, are goal in and the of generated excess which flow, supply months, through the million our tax flow, free quarter costs long-term

normalize both Meanwhile, are negative we operating expect over with items We these of capital. time. to working

modestly, and conversion reflects software software and of driven of Page the revenue strength was North grew conversions. X%. growth of is which in Hardware reduced were to very part perpetual X. while Russia up a in ARR, points. of our metric by The versus America our revenues quarter X ago, business model XX% up revenue rate year revenue Geographically, continued retention was X%. a at high Turning the perpetual ongoing in The second down percentage strong loss Europe by X% bookings, Europe highlight a offerings. net Ukraine growth in

of up Pacific was world and X% up XX%. Asia was rest

I'll execution. $X.X of half our divestitures on about million on million the half of billion highlighted hardware. the backlog which chain is stands at quarter, covered these we from from have approximately Hardware approximately comment and in which Looking supply backlog, at down metrics $XXX Page improving $XXX by X, many came already.

around typically a our still Before was $XXX disruption, distance dynamics. million, backlog hardware the supply backlog good are we COVID-induced from so normal chain

program of returned share invest net and powder leaving slightly provides dry through XX-month ample with trailing have over capital with against our million strategy. to to We debt the quarter ended We the XXX EBITDA, resilience a also basis. both on us share shareholders cash Xx repurchase repurchases with structure, which just our

organic XX% We strong ARR growth. on X. & XX% quarter to segment our had revenue offerings across trends and very Page with now Buildings retention strong Infrastructure net a software over had organic and We in sector. Turning bookings growth in this

last driven growing and combination for at strong segment, Civil resulted supply has sales second execution. expectations, of on both chain strong, elevated primarily Utilities the a supply business, improving our American organic significantly lower by Construction hardware came an in Resource into below a customers. most organic which hardware chain chain agriculture in the we basis North meaningful benefited quarter expectation of organic demand Our and and with bookings an and year-on-year In from was Geospatial situation component, unprecedented of to X% was down the some quarter. revenue X% strength reflecting backlog to a due the Transportation the remaining lower comps year. comparison revenue quarter, offerings by component growth both quarter of for Organic second level tough survey and year-over-year revenue was challenges our in our acute our grew shortages. with products. and the supply reflecting remains Demand XX% down through improved the

position the remained that transportation expectations, the growth. in XXXX quarter of positive and trends beyond. financial business sequential rate our number improvement While at in in were in for below a the our the representing grew improved developments of for a mid-single-digit ARR results have there quarter rate,

software performance The mobility quarter in lower the has customers our any of ELD quarter churn customer is improved since and in satisfaction late now Our second strong very of XXXX. was significantly. than

logos. announced I'll have We product new Page market engaging outlook turn X. to are with XXXX and both to on actively our our existing and new mobility now for the customers

of for as drivers guidance the to conviction We the growth our XX% on increased. underlying our are raising on year growth has ARR

XX more U.S. days a The metrics the total has the X X/X FX last of and the the revenue cautious project and lead supply EPS, demand. FX, and of demand. weighs significant. dollar over factors For This chain to approximately full for outlook X/X obviously appreciation supply us year: chain and been

exposure quite natural only our base modest leaving a margins. residual and with on a us Fortunately, operating foreign global exchange cost is to creates hedge,

better, hold it margin our improvement from X our chains are to and that we second of gross product facing Utilities we Resources half on the year, a supply impact component in demonstrably shortages previous While critical we conviction prevent are shipping, and takes and and geospatial the component only segments. believe will some

front, in growth. recurring demand high the sentiment transportation are sectors. increased revenue in in by of costs. revenue moderated of expected are quarter. driven quarters. and and improve and divestitures ordering across for that we be the expect fourth third and outlook pricing second revenue are sustain X% impact our If now, by of total agriculture an year, sequentially the input revenue to face the full negative primarily -- remain modestly in approximately margins also the to quarter increased the the Gross will the software Farmer to are the the pricing fourth lower-than-expected half the of approximately $X.XX and a but in cost improvement Incorporating quarter rates Overall the organic both Note range On we impact quarters, the third has chain primarily our and X% revenue where expected expect in foreign inflation. growth moderating from these second second reflects X% we fourth quarter third they XX%. factors, through which revenue to billion, growth on we on year exchange of seeing supply of reflecting saw the $X.XX organic billion growth into the X% and

expected remains full XX.X%. year fourth margin margins XX% The is outlook at the in and quarter. to the point to year for gross be Our margin for operating for high operating both

$X.XX range EPS to Our year revised $X.XX. full is

we impacted free the R&D inventory the around and X.Xx expect for We expensing ARR story revenue, code cash aforementioned Conclusion, second in of year, ratio and come factors is was net income to in likely well the under will free non-GAAP these It net would for change reverse, and outperformance. gross the tax above XXXX. the to flow cash expect income quarter to non-GAAP flow the deliver financial margin by dynamics. U.S.

ARR the XX% our organic margin second year, revenue our in raising half quarter of movements, macro to For divestitures the and the growth we between improvements quarters. expect choppiness of to is sequential year, third momentum to we and growth through the gross highlight stronger the to seeing and resilience organic ever. speaking, XX%. some X% the punchline that currency business is through the our on second fourth environment are in than guiding view on Strategically growth build both with and In

to connect with questions. the This line this committed and technologies. are of moment at our inflecting journey. markets to let's we remain the open Our adoption digital to is Operator, scale,

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

platform, are to the most upgrade seeing performance. Is where you it customers you hear the Construction talked prepared is or looking So potentially with One expand with some the I'm to net in curious, that Rob, strong though, and current remarks? about your new the traction. wins it of nice

done there's the The when from that's our would work is enormous coming existing We majority to logical customer within our customer the from pretty own say, we've cross-sell base. I and of the And portfolio. actually at base. perspective moment the within the upsell think growth, opportunity

new perspective, job well. customers new consuming net on-ramp of logo of the a offerings Construction So got has the is more team technology. contract One they've the things At that existing an team winning to the excellent logos net that of to as one an done such Trimble moving

existing So that showing moment. -- is the and signs from the customers majority it's I -- think at bulk early success. But the some of is

to And other sweet style then is your the the that bundling to mentioned beginning of the at I of or type think approach you logic this take premise some segments.

Jason. exactly, Yes,

right building designers. then and -- actually So specifically, look actually within really the we'll construction architects construction, within persona the we're and in working most towards contractor even now,

the play with contract. parallel, business we're as singular with our have where owners. in we'll we Civil will a connect then can we persona, suite agriculture a bundled also some to out but a on office Construction Trimble One field to a business, a what a bit in suite transportation doing targeted to level, more them than serially, And targeted our at As and the little with offering TCX, apply business.

absolutely have strategy. we it's business mindset this pursue across So as the consistent we platform

Wertheimer Your question with Rob from Melius Research. next comes

may a lot past. kind a and your the in as the dynamic have you people of projects X where were of scaling, kind a you whether question. X mega highly or And construction is in radically. actually kind portfolio that out strategic a or you be years if next moment I they happening mean, offerings or to assess want, on is wonder fast There's competition? that of your of higher-level get that change could needs X this now you of Do anticipate get had the for not as to I that I infrastructure are Rob, and landscape just going. to there bunch there's the competitors, that evolving protecting range see a necessarily acquisitions collection are

how assess versus construction just you're competitors in the could you if really Just evolving your landscape.

mega a both some of a a customers we on The my actually a question have they we've on that them know, our you everything think uniquely deliver we big projects think as customers and give There's no to competitors as throughout more are construction, the these number got do we're We and some projects, I project positioned meet with who chance do at technologies level the U.S. construction, recently or that of as and with to data a environment. much from these a size of working looking and in common to environment in me multiple is take by perspective have do our I Europe. able nor together had don't level broadest the in Because -- with mega industry. engineering met segmentation the reality customer big are I meet customers to customers. mean, of let you this we be a largest there's the I with into perspective, and Well common view largest bring peers. data portfolio the the customer. to

open So an as through our the owners. data own that together. that contractors, And the their I'd Customers these a able we're top bring set of the are through through their we that mindset the putting of is disparate serve concern the at moment, major top is They're system of technology the large from projects. have these that digitization can inflation labor and being putting sustainability agenda. our engineers, availability through agenda. the to architects informed is, of sources at At large customers for say, by

that M&A the field again around probably expect in reasonably expect see tech of part space. the I to there. and has companies where of construction to rather I years. Then the put second I that last a the suspect think are the time, over your infrastructure, into if question context into acquisitive. in of us now well, you markets So bigger I companies investment be will -- going into would continued the over would active few would industry that context out of with the all put might money And go I been the have

relevant out rather this in lot the we're of if the technology for we think companies lot in look and features a largest, peers size are world. If combined the technology in probably at not that our largest of that scaled companies infrastructure of there fit There's are than construction a not Trimble. Trimble businesses parts our business, of of the industry. of buildings of Geospatial and would really there's the submit I that I businesses one better reality

that impact something on inflation, are touched inflation, stop guess Rob. or or seeing people is are you project since just delays you And I it there, any evaluating? pacing cancellations or on I'll from

up do say cancellations the I'll would -- some raw materials delays seeing so I because see be say more much we And but are significantly. not and we this, I U.S.-centric when having the of delays. a cost few gone

chewed it is -- that there up At more to like a inflation. of flow amount infrastructure now to money the bill. the good that of starting is out So getting moment, through looks is

more I'd a it's the a how I it's take put money past. it. we've we've in so being say some Transportation, bit And longer of -- Department than construction to to place of think figure the through back or And seen doing seen some in -- we delay reassessment, longer stepping has DOT, a out lag the and and trying to a working work as

own Trimble, that to we put its attention of owners Now inflation is context greener, project better, faster, which of to the pay the into value value are technology. these getting of proposition safer, cheaper,

I'm encouraged So that. by

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

So to a on Construction about time to it your portfolio. your plan I little One roll spend comments into construction Trimble out of broader and bit wanted

mean to what talk make map? how you much to So I plan to road of of can you many then So get do to portfolio planning there? you how One? are that scale? to investment get about to just just need years And within Trimble Construction you the scale sort And that do take

Yes.

want then the portfolio segment, XXX%, a I of September. more infrastructure time think this for in as both I'll early it you're to that. something will part Chad, So in an I'll than the our bit ask good have reality, how Day what a to answer you from of, maybe -- my into give of would that level, I The you think off could see to to and understand everything go we that the be almost how back approach this is business apply ambition rarely part that's that of of an goal we terms Trimble okay, One in what in me in mindset, I'll to this detail in and now, be perspective, And going saying you, But everything Investor market. buy would Construction in for want them I topic not if just they product. to We're a make less only of is, in buy order say, me us SketchUp. small -- take to that can some to we is XXX% see SketchUp to our it's buy go example, SketchUp some if customers hey, have buildings asking say, architects, much we'll product. use a our applying

it So can customer sense. wherever to apply

in to goal then of about construction. construction prepared Our And as is as to that, we construction contractor of side the civil business. I the do in and building terms the remarks, the and with started both well the persona rollout the side different the rollout, personas, in talked

really work to first of that are I'll is then thing the that say, out. with I'd underlying personas that -- product this an of year we're And into, the doing. roll to additional come half transformation digital parallel out year, work those the enabler. year, the that first see along end the start And the we the goes half persona that much roll and next These As of very in next is say say linked. we're of we'll systems

very of rate all recurring across associated much Construction transformation our business that $XX Trimble. driving talk over and Trimble investments the and with about -- we're run with increases when revenue say, So into been digital that I'd is is over, we our million One making incremental a has year, in

and we're we systems underlying projects talking in as So will Construction approach work, along. scale transportation we efficiently to and but have this TCX effectively really about agriculture. To come these need the One, the

making early releases. the revenue. hey, of We've Benelux in first about but North on the -- remarks of talked we're it's release to a that we America is right in now. think prepared France amount next where get We'll I the course, half got second North in have largest and America of the progress So year, I that nice and only

effective plan delivering hope and acceleration to our efficient business Construction expect can see One. we we Trimble my there, the is So actually be and as really more in we that and

a I certainly So gives many you How on on perspective, Chad. journey. -- a I a we're hope years? that we're little think multiyear

In different focused Right I different about rolling the Trimble. now, on side trial within we're talked also our business. industries to of fact, businesses within out direct

through as doing also partner of transacts work about have indirect well We channels, will half channels, the enablement over systems time. they're partner be Trimble on that and

just question, going as stress and Trimble flow can talk And we model of recurring recessionary we ebb your test then think that my that should environment? about the second revenues you sort for about the revenues, how And scenarios, in just software of forward?

best the Yes, the data of will presentation X script. give on along be the Chad, Page I can you that, went on that with

book to XX XX the lot in companies flow a of ago, and we we of resilient guide software ARR. Trimble the of this when is percent like at there's more have so grew We the in to, billion a most ARR, ago, in years margin stand compared That's grow company hardware in do look We and $X.XX We thinking XX% we quite the were have at quarter, at believe And took in have, ago. a that say, we which the streams we would it's that or that which, XX% now, on the of something to in compared $X.XX amount let's and the grown about backlog compared longitudinal that let's the time that revenue normal years ARR basis cash XX logical that were I has million not look ARR hardware call, recurring a thought we a continued it be say, to revenue of ARR. of over normal up years times to as We billion businesses, ARR. the frame. quarter expansion and the as over well $XXX that had times have ARR constructive right for burn look to year business. because XX%. amount the

in But this test, XXXX, 'XX business. back the go well that cyclical the of point we've and is end well have had XXXX and the few stress ARR looked our the So last And go that done forward the as and the different there you the we've COVID thesis financial on in at to And also business secular as We the looked commodity variability time years. we we back early revenue hardware frame. stress 'XX, put we could to in back, at see as the a stress when all a side on could revenue. is major XXXX, shift the time undertone in We frame tested. over markets, informs on crisis tested the we software how as streams. of crash view looking

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

wondering pick I'm up we could that Rob, discussion. if just

could into year? pretty on I'm early what So do about measurement because you wondering we XX%. at like that ARR Can interesting continuing a that you guidance exit touch looks talk visibility. you see exiting gives about entering your has organic you you what's XX%, mechanism as essentially driving if the have just 'XX? And you I know pipeline at good the acceleration just it's growth pipeline acceleration? this folks year that

aspects be the to bookings of of retention going growth. ARR drivers The net ARR the Yes. say, I'd is X are major and the growth

in the expect fourth the to the So let's in by fourth ARR ARR. say, of in you're see the math, -- the -- growth, me, at the, see would a right, quarter excuse growth tick-up Jerry, yes, -- by that we

before and good And running, half I'd over after I'd look we the both XXX% first of retention Our on say, year, in Trimble businesses. say, at underlying if net across that. have well bookings. to then Bookings pricing solid pricing view quite the is been, the the

communicate not just that's is I'll think I it's So our from important growth say, on probably to a, one common is thing a coming count. pricing unit

So the we are when business, that. well actually and penetration driving as really say I both hardware into software

I visibility would best hold in it commenting the to this I'd Okay, growth, double-digit I of next point, XXXX view on, but Jerry, I so be as ARR to that -- say, and that in what think for I we math year XXXX -- terms would growth your and the that's view to growth, point. And a on answer pipeline off ARR ARR. on the is expect a on into it relates just say could can way coming we at in is the I'd specificity see

given shift to the you Can from that little on perpetual the to, just platforms update be approach? gears in you are that here. bit you as for transitioning us of the the Can towards update your businesses spoke from prepared just to just on moving perpetual then you folks Rob, for platform plans And size a looking subscription subscription to us license you transitioning license the remarks? should

Yes, good question, Jerry.

in look So the licenses moment. if Trimble TTM on the we got a moment, at at million over perpetual $XXX at we've revenue

Now associated that that if break majority the we of we is with then we down, $XXX the million hardware that sell.

but team. value basis quite example. the it, call stand-alone the that when revenue, buying small line through with -- that having that's a Increasingly, Jerry, associated also the So say, it this revenue, is of the has the set that Structures of to of the recurring conversion I'd guidance of the that, see acceleration to most months, more transitions, this industries receivers, is software ones continue unlocks to software can I'd that say, also software over we ARR hardware, do the part from the I'll done we intention in, some Tekla And becoming automotive, is is our some a gone that's software is GNSS business the our say, then what of move midterm recently that the top in to And capability I'd teams last our through is from some actually to XX because one which a part want lot of been at like think what's near What if you're provide to the you kudos straight-up say, to look let's the sell of we of overall updates, solution. other firmware, revenue over-the-air throttled quite, year, the some been in a we within for increase today. to or customers of perpetual of

we've to we provide hardware that hey, for as want and where as to on technology out watch for assurance subscription to also that. we businesses update us say those I'd And offering a can over along move time little our more then, towards further with move So customers. talked of we bit a about our

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

of on that thinking like? recurring attach your addressable the top you breadth that maybe in for Geospatial I And rates could given the about place. recurring look noted wanted on Can just of total hardware be hardware rates in you question just you Geospatial. what have sales? the about streams market revenue about I'm talk is what that wondering in I'm last ask the coming piggyback actually specifically that and to

Geospatial that least dollar the revenue has the is recurring. we more an of have. they -- amount hardware-centric software to have -- most has the level. of of of What the in recurring least moved of revenue team the on is therefore, absolute software, And the some more So business it businesses done amount is the

So on in in basis, off transition. it's a Geospatial smaller nicely earlier ARR the I'd the is growing and percentage growing a say base as

total as little that percentages. I'm math. segment, a If a That that at of there's the looking at So level. the only result dilutes of company that bit

it. we hardware dollars a more So it seeing look given product, and that it are levels describe it's best future company okay, Trimble have think it's of of more which I'd in the called that is software-centric question, really GNSS businesses good asked say positioning-as-a-service. a other driving positioning-as-a-service. the this have and amount could Catalyst the the It's soft in And way probably we that yes. of we're it total interesting ARR really definitively, And adoption some to we of as unlocks? But call business, you the that forward. One have example is,

see some taking wouldn't where it's like up. traditional applications before. GIS expected some cases, it's that some we to markets market, In have And

seen, an is customer couple across a where have a you also business. the this in just of But we've giving We did the of and a the Florida examples, we to I state got a competitive wouldn't entirely say hardware move white it and that we glove as-a-service service that of Think like everything. everything, customer switch, software, customer. the basis as to

the for the of So I we the there's do good really is that. and do say, actually, team think I'll have. to I interesting one And things is that that team consolidating that as that of, software think number we're opportunity the the doing, products team -- very

taking and And microservices, mindset. a a of we're just really to mindset So many couple. from architecture we're going

So image take Trimble sold that's such photogrammetry as as or platform capabilities micro software our recognition, we Geospatial. Business service Center a on within

does recurring some I and so over revenue And upsell for time. make interesting that opportunities think

Now have besides be by solution. -- still Kristen, we the lower market, nature think, underlying markets of other will our the what of in I just addressable fundamental than the

platform? different up business ultimately So that the that of where more using thinking about with a just Or look needs, just what be you One flex you that we subscription thinking Construction about like this on the approach Construction like as your that's first based, about looks could and maybe are then should model? thinking something based mean, the models iteration this, I towards models could you consumption and typical thinking like One moving as down

of the let's I more more in a on that basis. businesses consumption a a be basis our terrific basis, a farm like really typical it say, question, cycle will model. seasonal But on It on subscription Kristen. In consumption say Tekla a are it's look It's today. business. Yes, have Structures short could we will the term, a couple

We for the buy have a of customers who duration project. will

to consumption. So that is closer something

to don't pick know, I number, we I were years. fast I'll think if a forward, XX

in longitudinal at you the on start about recurring is time. have you to metric really to then ask, think the revenue should the And point, a shift subscription does I what to basis. that at you model point, typical be it -- that revenue after are talking over -- comes look or like consumption total

of next typical majority few years have we'll bit a look will But like subscription that So model. consumption. a vast the little the in

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

us pricing can way you absolute out you're realization, little provide are to wanted as bit and start levels, inflationary just your pressure with actions thoughts the taking. maybe as I a in pressures of Is FX a of your the that with there some given facing? of customers terms the around well just color that

different in unit the bit have whatnot. more a second little There's higher quantify trying the unit half the volume. But first in of is year. We about answer. that underlying can of half it's that construction the the and say, here think the and of so bit XX/XX a a this, you, give can half precision ag, differences Jonathan, We totally we'll wait XX% there's that's think best is I'll the price, direction some to in the in probably false you but weighted pricing, I and businesses, a volume year, on XX%, bit on half.

these acquisitions? hearing to terms of preserving maybe than I are about of budget more secular it with bit little some spend guess over comes about cyclical, customers a their more and their comments of what Trimble And from can you prioritization cyclical traditional customers talk Trimble? conversations your just you Yes, large when with then play much that being And in you had

from I there we to hear the OpEx, a customers when have to customers is that -- you you model. mean the So previously the of you can things CapEx move when one of business are weren't you set relative that reach reaching. from

moved our the of in that model over our of was XX% I'll what I that shout-out a we one row to that in growth. to we So Structures say thought quarters when in we're business, possible. team, Tekla before. customers getting we've exceeding SketchUp seeing job. weren't subscription. ARR that's product, done And transition They've far they're We're seen terrific and things a a the XX year-over-year

a market. That's I'd is, thing. very say, size of addressable attractive it So the increasing the

the so of these companies, already at -- like the to with working specific the one they that's the technology jobs. cost the attach largest were Okay, of many things about the to companies. ability we What they -- is not of

technology. So the billing out of

are attracted that reason. are who some there for So that to customers

something provides on and -- and depending -- user or the that or our that's is if down, of down ability flex something to up top can that they can and to the will we're flex licenses. licenses because on customers, named mind. they up moving that value more that like If customers Some be more their

say and challenge One. the Trimble move looking Construction the big this is part I to of we customers, one met conditions these Europe let's is things one for were able effectiveness. of paradigms buy customers One of act see looking and essentially and corporate not to let's of to agreement Trimble. we and agreement of of them and terms talk in versus customers see contract, the trying projects big but have on to And individual decisions to frame like one really just customers drive, in about are of set say, more addition old frame where with company our some one some customers, the some I'll we efficiency be all, technology made more the

consume easier larger it we as Trimble subscription to the move them, for -- move amount we as them so of it And offering, makes a for technology.

want customers us weeks I felt direction to that So this the the much validated is very quite I've go. met the last with over with they

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

So little better. to growth your a organic understand guide wanted I

end think your lowered in your I several markets. which relatively modest seems moderation X% about when guide contrasting comment by you to that about

So but X? delivered outlook growth is of growth order be Is it expected your slowdown? fiscal, you're that this backlog the a supporting after more can you're new help you your is seeing sizable us that bridge to year, this seeing

million, time -- down European Russia Ukraine we decision at that's leave inflection. the I'll the quite made take of that back to this. strong X, the like that quite out level market well dynamics the that strong And the start, I little well, my that market agriculture optimistic too of was It revenue. so that and year. exit the on backlog. was a for of done months could want up X at commentary. ag I ago I same that Europe -- had X quarter. is I the still the at the I Resources growth my belief the million David, war. lost on business to business. looking absorb segment, in at ago, don't well, And segment, expect the be that first actually half Utilities we of point can year, was beginning shut the of first jump at if it quarter, we on in I really Between the if second look out and come later, out, I business the $XX I'd double-digit the And if that was $XX months in was through organic say, given effectively X second and a you to the A something that. The of If couple had the that moment to months look the

business for of growth from was And one and -- few delta majority ago it. was should view I And Ukraine commentary our see double-digit the agriculture. agriculture, just less majority is the into So me, a to of to that that which deltas of Russia of say, business Russia a a also system. get strong months organic maintaining I the absorbed ability we're the the in

other part if typically are longitudinal backlog million backlog, back on backlog the running question that's, we're a a looking of your say, where we the to $XXX connect see basis. Now still of would we I'd ahead good on

connects we level higher in a did and different I expected anything months Trimble, I around of think of we'll end that the the supply the by with X some to commentary out? different than businesses ago, chain. year leave David, backlog

sort look revenue issues demand our Rob There’s the said. business of at new are Rob, and that’s said some ago in chain that that the half guide didn’t if of the overall. an supply quarter in of The of pinch mix supply. context rest and $XX anticipate Geospatial. a actually supply a improving million, just down what numbers, you I’ll resource actually midpoint is that There No, currency, will component we of as you

expiring. will that is demand said, that Rob -- as So not

has more been residual than up We’re really then Europe The there’s with backlog in those just business little for end some a going products And demand. tough. ag to we expected.

Rob fuel. not inflation, are There of the they’ve all had mentioned. availability productivity. with epic heat high issues constrained only with reasons but of lack So There’s

the So more it ag the we demand in see was quarter sentiment the is definitely of the Europe. ago, and small. a part But adjustment is business quite globally in guide less

quickly, And in us segments, remind your markets? and you to across exposure market the end slowdown any the can you’re whether X revenue the seeing residential

high me, do of geospatial and construction. and said, to exposure; not no excuse negative engineering an and want exposure. residential inflected, number. over existential no still last exposure. have And an kind the while businesses say residential. absolute very utilities a transportation, those, I’d are It’s months of let’s couple Okay, is we I the it’s resources the exposure on what In B&I worse yes, to of basis, agriculture up-level kind -- or say,

haven’t business, so meaningful any our down seen And we from at in -- this inflections in our residential business point.

We business. haven’t. the And an I’ll in give you construction example civil

last of into of it’s the That excavators, the years in and towards machine done moved more being Over developments. the the the number penetration. largest more on count work last more level world, lowest of couple on we putting bigger years, over of translated residential the has technology the

you're developments, people many not take but going for the In guess okay, types multiple larger the that a house, level I’d you’re surveyors of most use are vertical of on don’t the technology it’s -- they going to single-family and using construction I my survey a yet, are minor site starting X going of is geospatial to do think we to mean use Just to you technology you’re or -- work. the preparation. I say business, exposure business, side have. our --not

that a completely many residential down Florida. like way of residential. seeing not type entertainment our of residential. do as in was was But who in that. who wouldn’t would me the partners anecdote, surveyors time, do go what on there’s they offsetting or park surveyors he down one they X going I’m at were same the told that only at to Florida, would, dealer theme were seeing work, up they least work and there only aware many I the talking business, I only do -- So say An of

here residential the work. movements does well we’ve seen are So as through the clearly to States attention attention to as Europe, They’ve it. on move the got as the around. work and need well working they’re as We both in contractors pay then pay in it, But busy. our regionally backlog,

what me, going work, end infrastructure, think a We the that about we the to think we markets these. the question as are backlog about of So it’s commercial happens of served. to EPC follow to of in in know these We about you all obviously different size such segments trends more and think be -- residential. think about we

of question line Morgan Lapinski next comes from Your the with Erik Stanley.

in any talked mix that hardware have touch related the of the the quarter. to Maybe did much on some portfolio is a bundle is not that if you selling wondering, just traction seeing didn't solutions ask that. like then with just was And the business I guess of just question definitely performance North past. on the for but you a since. Congrats you I within too reduce subscription sales or about part of in improvement? hardware looks businesses on I you're We transportation It America. as the improving, where could

Just wondering too. any factor if has that

our the with yes, it's is it mobility business. this telematics call associated We sales primarily hardware So subscription. hardware essentially

the as -- an that's an you basis. an computer OEM sell per felt truck buy tail technology have aftermarket subscription, We well the on enabling long as I'll a So we for we call and business onboard it business.

primarily aftermarket business. We an are

saw but business was fluctuating we in we been supply down OEM taking partner, fluctuations inflections the the the got because down And partners case, they've that's ourselves, this Trimble. anticipated. volume an we of both hardware in know, own OEM of less our chain up One as independent than and of quarter in one their

the for well. in And So had than aftermarket, say was that we anticipated was that the hardware on the I'd then one as lower inflection quarter.

our biggest an which roll that about is launched remarks. prepared I'd we've say, it best that doing to our, X.X got talked the about say, user in in business. what have our starts, conference I'd in venue we're And out updated I weeks offering. We

maybe the in first then attractive stream Trimble. the eye to that revenue into ARR is drive stream. point, of -- months lost where sequential I'd ARR, quarter and from business. It's driving important But we've then at quarter the Well, pick growth most attractive revenue as to most attractive in behind ARR and couple the new is pipeline I thing in if I be and in you the that's keep the the of are ARR few like within second up the on growth around stream at therefore And it's the point this didn't which we continuing growth we a -- and thought say be you have that the seeing to we're might and we Transportation. the months our forward look the to commentary to that me it's So and in it. got the business. ARR, a growth me noted on want is sequential most growth the And the where

case, selling One are Construction form customers both Trimble telematics transportation but So our this on also able a very say, discrete to multiple solutions. that, in at let's them be subscription, eyes product that buy the level, for much for to of

as buy transportation.” will ERP solutions So plus plus our plus solutions and mobility you and solutions. “the mile at One customers It's Construction today absence not say, positioned mapping plus our got a having our So our in video our final frame we've who enterprise of is around to it's I'd plus solutions to have like sell, Trimble house it, go solutions the moment. even well wait maintenance

top an have those not are attractive So very, from opportunity majority cross-sell We'll of be that we from little Trimble today the -- the And and everything to our but at all businesses, companies upsell trucking those are about bit XXX we like Investor more buying buying a customers, it majority and very XX% who more in Transportation customers customers, think us. base. today Day, the that us. are there's America strong buying North than talk of could of other Trimble of within they

so penetration need and segment. deliver to the level the increase work to that we at I'll So level to the, product can say, the into customer market that value go-to-market continue most we get of

turn over at the for no further are to closing questions the this call speakers I'll There remarks. time. any

Thank for you next all. to to Thank look forward the talking call. you We you quarter. attending

you make conference. on today's it. and X, hope Day can an having September This be concludes will Investor Trimble

this at disconnect may You time.