Trimble (TRMB) 3 May 232023 Q1 Earnings call transcript

Good day and welcome to the Trimble First Quarter 2023 Results Conference. All lines have been placed on mute to prevent any background noise. [Operator Instructions] And finally, I would like to advise all participants, this call is being recorded. Thank you.

I’d now like to welcome Rob Painter, Chief Executive Officer to begin the conference. you. to over Rob,

everyone. Welcome,

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

Slide line metric Trimble. Annualized on Let's key at with our top is messages. begin key recurring X revenue our

in our Our led expectations. growth construction XXX basis achieved XX% software team quarter, group points our organic by the ahead of

in X.XX X.X Connect the stand worked at XXXX. billion and journey billion and on execute we now which of to hard transformation. of so million We compares Trimble XXX our when began Scale beginning have at XXXX under ARR, to our team the who to Kudos

our other EBITDA by delivered metric, driven of XX.X%. expectations, record key gross we margins of and which P&L is of was XX.X%, our EBITDA ahead also slightly

For expectations. XXXX perspective, XX.X% ahead Free cash XX.X% was conversion in of XXXX. and also gross of X.XXx in flow our were margins

the recognize focus and I both revenue consensus total EPS. still on that numbers trading algorithm and

While to investor these which closely set above the important, more we relevance in in back Revenue much are cash secondary tied ARR expectations are and value margins to were flow, creation. with and both figures February. community fundamental they are

delta consensus against the our quarters was our function simply mapped annual a the believe We to correctly challenge figures of in getting guidance.

transparency, navigating Despite sustainability. sell commentary. As productivity, signal uncertainty a are result, environment heightened to customers the what through the economic respect With quarter macro, environmental to safety, noise, we with be the most trying more second we the sense we quality, an is will with our find like and companies, noise. to prescriptive of a

industries transform. secular large strong and serve. They digitally term they to we will global industries in mid-to-long the are remain and underpenetrated underserved are continue tailwinds that The

us to opportunities. while Our most structure to the in our cost invest of long-term be continuing in compels mindful our strategy short-term, attractive

main are points. to respect three capital allocation, there With

first the XX bringing quarter, businesses XXXX. divested we in since to the First, small three total

performing BXW expectations. off deals our and are of ahead and start strong Second, both recent Ryvit to a

Third, been of software the in X.XX growing in quality as are point proof business capital our our ARR billion towards double-digit allocation. has of initially we a businesses. high making this investment transformation climate focused

our of company motions effectively to our deliver about systems level, which transforming represents and think to while of connected to our and go ARR building are EBITDA we and solutions, We business. XX and growth margin, market processes the At bundled our the bar. efficiently scale sum as Rule aspirational the

businesses others software direction. this are while this have cleared Many already hurdle, of steering our

this at continues felt channel chain make you to stabilization, at our is best. and which the supply to whipsaw Looking multi-year at a businesses, look hardware the view. of our inventory numbers have have incomplete comparisons where To find quarterly availability signal, we of

construction agriculture significantly quarter, largest demand down, quarter Our first the collectively geospatial, the first and inventories from draw a the demand. grew quarter businesses and of thus through wholesale XXXX. hardware In revenues rate of to exceeded retail at civil continued channel mid-single-digit XXXX

of progression construction healthy. on manufacturing, in our and and we America, North segments the buildings centers, In of Market slightly reporting Moving lens Connect strength our infrastructure. let's pressure and the remains with energy, as generally offset X, strategy Slide and at infrastructure backdrop see Scale renewable residential. non-residential data to look through beginning such by

excess grew By to growth bookings worker plan, and backlogs quarter the numbers, address rate. technology of the shortage. double-digits ARR the grew in skilled ahead while helps company the and Customer healthy remain of ACB in

released systems our in will Trimble cross-sell weeks. be automation next wave few One new Our next commercial and Construction is offering logo the to and grow of helping bookings

At Administration demonstrate fleet. relevance CONEXPO, progression, of and our OEM the Trimble offerings. was Through mix on continued technology Norwegian National England's wins want at strategic Roads of the present the Highways customer Public booths, the integrated XX lens demonstrating customers

on insight an guidance is addressable system categories. the of the headwind. reaching geospatial, In of with the market all-in-one introduction expand and generally for of residential mix a serving, by machine new as can of demonstrates our exposure, virtue size machine the excavator buildings infrastructure presents continue market a In higher that to backdrop same we which

the see By priority in from to internal farmer U.S. quarter. Transportation levels speaking, dropping, inventory in see of product showing lines Department channel solid continue has fundamentals the strong utilities, expectations as ahead and Managing growth. revenue mapping numbers, sentiment is healthy. we of we the continue a this our segment. be to mobile and such while State market been resources Strategically was demand In

technology standards input their direct and relationship. giving have dealers are out prices We speaking, in of believe historical in the building path are distribution independent high the platforms we the and by aftermarket we on technology moderating. we agriculture. in our farmers choice power where Strategically costs Commodity remain a and believe towards

a ahead channel construction manage there's build our in geospatial initiative studies feedback current work While our us, and model a SITECH channel how lot positive, and is similar of of reference and partners case to know prospective of from that and a We channel development. excellence civil as in

which a numbers, In is live quarter. is advanced driver technology. Scale, of and announced Trimble By the that existing assist we by positioning across announced Trimble Connect another This new for verticals. were a core equipment technology industries. which date, the this In on enabled and has toward the we unplanned the our technology, applying it positioning taking to quarter, largely system of with and autonomous example advanced further business, services planning path us most we step path fully Nissan variety a also takes gone

as with income market a operating in delivered a softening we and new which met By very our find address. freight the In dynamic of transportation, quarter percent five help expectations increases backdrop pressuring to can the technology market carriers we is quarterly the efficiency revenue. of frontiers numbers, sequential and have

time which making our that operational industry open efficiency. platform additional which technology been metrics we including customers to they fleet new management, dwell customers progress the asking quarter, delivers speaking, functionality for in can their have new We are launched improve metrics Strategically with the with for. use platform, In-Cab our provides first the

annual over scheduling XXX,XXX Transporeon over transacting network XXX,XXX day, The on carriers X. for transportation of The appointments strategy. closing comes platform. the in news perfect deal and I've this €XX on approximately over in a of us Transporeon April shippers a of an within transports Every the on and freight as business a docs XXX,XXX described play our over biggest the was managed billion of are basis. of platform example X,XXX why, form

mix overview The complementary the franchise. together a customers, coming a fundamentally create based model are on Slide has Transporeon is summary how an contract of monetized the slowed. in model And array of of geographic reach. demand to In Europe transaction lower deal December, we rate. shifted X form a announced fees. transactions, see we of consumption based greater in and the of at business capabilities, percentage towards provides a has the Since complementary which aspects stronger spot a over

denominated level Our below is dollar de-risked December. revenue, XXXX communicated a in XX% guidance what believe we reflects approximately we what of

the are Trimble disappointing are did this XX% holding, opportunities few they churn is also still improved assumption almost well stronger with and customer year. non-existent just tax ago. and rate is cross-selling positive Market grow Bookings While looking for is expected signals. share there than our a are over to months

Let to take through numbers. to me us call turn the now over the David

Rob. you, X. Thank Slide I'll on start

were challenges that the supply First revenues to I'll coming chain expectations bring quarter exceptionally strong we million as worked our year and into was XXX remind down quarter. recovered revenue of you above backlog. early last our from

this So, our quarter were comps difficult.

Our decline to attributable entirely revenue in in is dealer quarter organic inventories. the first reductions

exceptionally the were margins in Gross quarter. strong

are our realization our reflecting accelerated both and net of higher history XX.X% margins gross and lower positive an margin costs record software hardware a in the input of impact mentioned, price the Rob mix products. offerings toward for As Trimble

Gross the moderation so quarters. renewals we the our some quarter in from level several of high level software in term expect this margins coming benefited from businesses of license a high first in

XXX our our points respectively prior we performance XXX initiatives, strategic quarter in led on strong to up year. the While basis to EBITDA points spend margin gross versus margins, basis continued against line operating higher and and the

drive ability in we We and business. margins high invest are with even as in a pleased tough environment our to our

the in excess significantly flow free flow year-on-year non-GAAP Cash of quarter operations from improved with income. cash in and both cash net flow

quarter Our and suspension the did a a will and we that improved the reflects raised the purchases hardware any have reduction debt the cash generation in outflow down component cash continue Note lower repurchases Transporeon compensation. portion in paid meaningful shares of fund repurchase until acquisition. share of not for incentive we

to our drivers a we for on statements. Turning some of breakout now the our perspective like I'd our of trends. attention X underlying to made revenue presentation have call to the your Slide on change financial revenue in

components. revenue Going forward, will two our out be broken in

while is is products, category first The the services. category subscriptions second and

Product our our is recurring. new in consists responsive aligned We being with growth offerings, and investors of revenue increasingly is software, recurring presenting revenue while and non-recurring think of hardware predominantly subscription we this In are going perpetual revenue this non-recurring strategy our in to better services way, think presentation and our revenues. who separately forward.

we first supply software was this quarter. including first a chain quarter when working XXXX, through down tough and XX% quarter freeing decline revenue was revenue, perpetual in reflects organically backlog. were our high hardware the the product with Product and up The in comparison extraordinarily of

impacts XXXX To of to back we the accounted and was Our nearly into Subscription dealer swings. XX% XX half revenue dealers first COVID perspective, inventory this a instructive inventories the and look up the of product million to basis. and that first revenue it in quarter on growth reduced longitudinal quarter their for roughly before compound of organic at year chain estimate revenue an as our expected performance supply or services put decline. reductions our is

business. down North quarter XXXX were a to rest total Pacific, from strong in essentially in in the exit perspective, revenue demand quarter revenue the customers was X% decision in flat, versus Russia to geographic our revenues driven half our world and of From In by Europe Asia attributed In grew decline view, XXXX. Nearly of America the this while a first Latin in can revenue X% compounded the be our of America. X% Europe. agriculture at revenue organically rate

year-over-year, related software million recurring XXX X.XX at up by X.X growing our related XXX and backlog X, X.X year of year-over-year of was ARR quarter solutions. versus to bookings billion, and Hardware XX down a Slide ended over was up first to was now and Turning million with backlog up lead billion Backlog quarter ago. due our perpetual the million dramatically sequentially improved down driven billion prior Recurring up organically. slightly XX% times. the from we

of XX% basis represents our On a basis, recurring ago year revenue software from of billion revenue, levels. rolling up and our XXX XX-month services X.X points

the X.Xx so we we the of strong position with acquisition, completion EBITDA. As balance at near net Transporeon sheet did from approximately debt a

by our buildings Turning organically the are which segment X, revenue results on worked civil quarter infrastructure predominantly by had down now Slide up in expected a and with were our dealers of customers, as portfolio software ARR, and inventories. strong down made our Segment year-on-year XX%. quarter approximately construction to to hardware, as up their

inventory infrastructure infrastructure operating of impact environment buildings over that investment. a changes, we a growth our revenue and for high-single-digit the quarter in dealer XX%. retail margins up civil sales X% offerings the total, rate, with construction Excluding of reflecting organic at In were saw estimate favorable

margins operating Transportation in while revenues quarter, year-on-year segment exceeded XX%. grew organically the

rate mid-single-digit this margins. Importantly continuous we The our the is of the ARR growth, turnaround underway and a and improvement operating encouraged at business quarter ARR revenue by growth, are grew in transportation segment. for in

Like chain In and first of our Resources revenue bring R&U expected. businesses, XXXX, centric we revenues impacted and freed Utilities XX% up worked grew backlog. down was tough our down as the other revenue segment, quarter significantly the with organically prior. by supply trends organically In were R&U to comps hardware as

geospatial up in margins [full-year On strong the input first revenues [ph], reflecting of the just organic the an in were Segment on quarter a dependent segment, cost quarter, we better down of X%. and a compound rate were at basis] our lower extremely is XX% over annual on also higher heavily growth saw than forecast. revenue benefit quarter, but which In realization. price hardware, modestly the basis

last dealers year-on-year than dynamics backlog. first year. for revenues dealer Geospatial of to we inventory as half of brought XX% this year overall decline More by over their in organically the inventory grew revenue relates segment levels as the the quarter reduce organic down

felt has the of impacted business geospatial construction, our residential which in slowdown Our customers. survey many home has

pieces. we I'll to now of Slide a on moving number X, turn guidance where have

for Transporeon remainder our are addition the the bridge We guidance updating annual of of to the year.

our quarter also Transporeon. being the more in of second addition are view prescriptive We with the with

expect where pre-Transporeon guidance annual of ARR start revenue the the organic with Let's and including by year. business, the to in X% the and X%. growth view we of outlook Incorporating of ARR revenues Transporeon, growth over for the our approximately for the balance year organic our million million confirming we baseline full-year XXX approximately end of mid-teens addition of the are XXX outlook

full-year we range revenue We of our of the X.XXX to Transporeon in X billion approximately be X.XXX to that now at expect As the such, project ARR, end be including will billion XXXX. billion.

up margins will of the XXXX, in the XXX down sequentially for in expand We of then coming quarter range continue to the in again basis expect year half the the gross second and year. second progressing points the versus

of to range the in be to margins operating non-GAAP XX% XX%. expect We

rate a rate the forecast than favorable Transporeon last on outlook guidance tax now our more our more assumes tax favorable on acquisition. Our based a from

for $X.XX, Transporeon earnings is related expense, the in to percentage mid-single-digit in is December. we reflecting per $X.XX outlook which with interest range updated what indicated and dilution a share of Our from in-line

to will thereafter. neutral be continue Transporeon and the accretive We to EPS XXXX expect roughly

after with acquisition was the debt $X.X projection in approximately stood pro rate part an expectations free The forma approximately our deal at income, announced. our non-GAAP in-line Shortly in for approximately X.X%, our plan X.XXx with to in net Transporeon at connection interest of we the the the acquisition, billion our our flow debt. cash inventory approximately of affirm year Xx with time We raised reduce of leverage net reflecting close the net carries levels. Transporeon

cash restore XX we the leverage current of with that within to under announcement XXXX following below leverage our we to XX flow expected months projections, to expect We in said Transporeon end Given months our X.Xx acquisition. Xx. acquisition to the

than we original will our line. suggest able time Our that updated de-lever that sooner to X.Xx to projections be goal

revenue second and organic EPS revenue million to Turning quarter. growth $X.XX. of between guidance our to the $X.XX and of $XXX million range midpoint the with The return a reflects $XXX in to

additional levels the by reductions quarter near of end impact levels half the will rate with about in of be the at expect dealer of second or first We inventory normal quarter the the stocking June.

of also reflecting XX%, gross gross our from to quarter, in Operating hardware. license margin higher higher down be margins annual will sequentially salary second We lower expect and that percentage increases. revenue expense term to due will sequentially lower the margins be and lower a approximately operating share both

revenue at higher back we half Looking growth. the of year, the expect rates of ARR and

the to growth, revenue, We through that expect increase and project fourth best We the the of revenue will second organic sequentially margins. financial across quarter revenue including the ARR metrics year quarter. key the fourth performance, total of our from quarter operating be growth,

segment our segments improves sustain solid dealer organic as and the normalized while growth expect through software rest hardware relates civil of remain it recurring business our sequential, Buildings all of the As will ARR, our with segment businesses to inventories. balance revenue on more our throughout four our performance view expect we post year, improving, of and growth the fastest-growing we XXXX. Infrastructure to to

growth We year, positive down return expect our the full-year. to half to for of in the but remain the geospatial segment modestly second organic

We half expect an aftermarket channels. of the utilities return the pickup resources by expected second driven growth year, and late to our in to in

Over you, Rob. to

at connect uniquely we win across to and workflow and think our about can right Trimble, Connect worlds When physical together industry bring digital strategy. is users our Scale continuums. and we we the believe between

in turn platform The platform strategy data Our is strategy. strategy a strategy. a is

model. in data creating AI of connectivity. and of successful our We across will industries, sets world's has believe the and corpus long-term enhanced pursuits, our too. data industry-specific a most attention, ours and one our flywheel creation we accelerate of are we insights captured the If in collect will complete unlock data value

As helped cancer. Sandra's condolences a I contributor greatly Board entire company. our long a to take battle team, of me away of for success. Trimble a the a moment business to Sandra who honor with a year's deepest extend behalf better conclude member support our become company's leader. my our ones. to loved MacQuillan, and Sandra's family Trimble a our the She I after remarks, dedicated to passed She was was to of insight, memory week last better valuable and missed. Sandra On and make be will courage, helped I want

Operator, let's open the line to questions.

[Operator comes Instructions] from Goldman Jerry question Sachs. first And the of your line Revich of

Your line open. is

Yes. morning, Hi, everyone. good

Jerry. Hi,

ARR in Can quarter. cadence ARR if your Infrastructure, looks maybe touch you growth the of the to please? I'm about outlook from and it just the talk total growth in to wondering, and you the like this for slowed drivers, XX% you then might of Rob, rest the David, about is that just quarter have Can company through mid-teens just Buildings the year? drivers accelerate a step talk

momentum fundamental recurring business when in Infrastructure. Jerry, it's term no happens There licenses quarter, Sure. the that's case David. of – the the the Buildings first that change It in in be renew. to and the business

if so, that we And for that's to XX% Buildings ARR. north and end the of factor when churn, you're to going it. abate year actually have and have a And will expect you Infrastructure little

So, is the solid. momentum

a is finer your to just that. And point on David, – put

for to obviously, for XX% finer from the XX% just total So, to acceleration since put in is full-year, point you're pretty mid-teens looking ARR a a on wide an that range?

too I'll right, mid-teens. to of specific, not it's but XX%. Yes, be north try you're

will balance accelerate year. for So we of the yes, ARR project that the growth

quarters on three that just here? we're higher rate, Previously, right, than guidance just revenue ask because to be of make expectations revenue revenue the your these in I Transporeon decline The sure the to Transporeon. profile margin seem does XX% at you I seeing touch does compare I for that how versus that the caught expectations? a run that can a want then level, was And and full-year it Super. Okay. lower sales

Yes.

So than from we we've I we fixed first, about directional It's XX%. a EBITDA still indicated could have extrapolated the gave more of indication be expect. XX% perspective, margin – long-term just little a slowly than less project leverage. in we cost bit that's the that still XX% From but It's margins refers lost you little would we'd the will growing. to think have growing revenue trend, a December.

and Trimble Probably levels think higher growth. or be business the to that the about will Transporeon growth pretty back Jerry, the year of for gets to is simplest higher close way to this as year, average margins the then

Got it. you, David. Thank

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

open. is line Your

thanks. Hi, Good morning everybody.

of ,the So and in I software quite mix of is it that reinvest a my you think the anything up interesting, function continues question gross it more should breakout that margin taken and was guess shifting favorable growing. understand as Or mix I there hardware having business? is, is and is R&D? step a about really we decline is

gross One Yes. that hardware important factors was the our we're quarter. business There's favorable two was equally way factor down software our said, of in significantly you but is because very and up, is, big the margin hardware that cycle is our the business as an shift drove in up the mix hump inflationary past businesses.

We in year-on-year, dependent input parts are costs fact, and market the more for we've our expedited year realization. price got on were a ago, In broker freight heavily down.

have the we margins seen a improvement our portfolio. pretty within So, hardware important in

a sustainable consciously in being think we then way should being then, that R&D? as reinvested in And about and more

dealer the for comments our the We'll the guidance grow mix because our will the the below businesses The the past for even high and we're partly in in look, they stay gross level as reductions. reflect. the at a expense, if OpEx hump QX that, be our We of comes look think hardware with investing revenue. the operating to outlook, modestly Well, year. you faster will rest don't script – of year's back were business. at But inventory we get mix normalized more than margins

business. digital but the is it of is against of investing that, like Part the against our platforms. don't do of creation R&D. normally we're Part transformation, We to it

noise the margins the and helps So, are we us the we through that. higher gross even while supply investing do get of chain against business the

are just much. channel destock? headwind the destock, very you could the And channel anything you. from So, doing we're maybe And I'm stop us there? last On the you one. broadly about Thank thinking Okay. [ph]? X moves to ag just and when months will in Thank if increase happened then I [destock the has there. X last one OEMs through tell pulse] or

out that so thought we'll I'd the destock We're and think we plan by quarter Sure. our a on be it mid-year. a that's the ag businesses And it way pace inventory, say for your quarter of is essentially we the destocking that yes, answers aggregate, what the all business. ago. in on exactly be ago, question. laid through including And I true would

it. Got you. Thank

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

Your line is open.

Thank on the the Good I transformation. prepared the digital about specifically you. morning. to about David, reinvestment, data talking wanted flywheel. your comment remarks up Great. closed the follow you about Rob,

make just How yes, So, what are where intend talk just you that of utilization better reinvestment journey that to systems us can in that support? in, we stage are the to at And you back-end sort to for data? about we of journey?

on pacing comment add strategy. data the can on and I'll Rob

for of for put selling the next [indiscernible] production, that to in the that And enables our digital milestone North is about go bundles a TCX does, been that systematically we're way software sort into an what will business backbone the enterprise where to important Kristen, So, week. industry, date. so American cross we've we've live construction

to bundles This we've people the on. in journey we're sell in part to one consume. the with of are cross call what but accessible and is for our an success more And milestone we and our Trimble had that digitally-enabled we're approach, about to customers [indiscernible] easier important construction

benefit business. rollout whole our that over years digital our the the of additional will couple of transformation for scheduled have We next

the tangible we're investments going transformation. benefits more – digital tangible some to from see we've been much on So, making

of data $X corpus manage million XXX geospatial I of road, on projects at over and the construction, technology couple start pre-Transporeon, model over physical our we and comment a strategy, and fundamentally earth. a of creating vehicles your the and the on add even is construction of we million Trimble of trillion manage question. over I'll with digital And data manage farmland ag, of transportation. acres the Kristen, business and and We a about that's part

a opportunities. I'd of profound say, corpus data there's, So

digital part transformation, opportunity thinking you've a a about that information. is cloud. big I the quite fun. while, Once into in when into cloud, that it then getting quite this of Our unlocking it been take we're data, playing exciting. for in to actually data it's And a got the have artificial intelligence, It's also we've arena

will predictive already say, and workflows a covering We're developing are solutions the and of covering number that. I markets generative in very, early end very we of journey. AI-based within And all our still

instead you like that spring, enable construction, and field on level of level technology the in [ph] with natural to invoicing selective the we're agriculture, be workflows. we processing business we're Bilberry a deep So, to plant our at and applying at the processing acquisition market to applying take learning spraying automate identify if did Viewpoint able [weeds] language

on point transportation sets business. automatically semantic in then assets the and from and so Geospatial segmentation we're working cloud business, large data In you extract classify our can already

of at We distraction we're and can have the that just detect this. and solutions video intelligence and driver the beginning improve fatigue safety, therefore,

you've some competitive I of about tenure, shift partners, investor suggests technology all made by certainly, made there's your of very And your trends shifts that think helpful. really about is technology on over that follow-up me announcements the the my maybe recent the of the talked seen in happening I that But sentiment of seen side. we've a And one those that to you have the you mean some question, competitive That's lot which suggest and that environment. a space. the in environment. leads some

how just can competitive Any you. speak positioning to That would be disintermediation your So, or of that? today? Thank helpful. you view discussion you

our is competitive the our standpoint, is win of right physical markets the singularly Trimble, think a basis to most our about forms ability thing in digital to and and unique the I the From that world. connect

office we're So, the field. connecting the respect, singularly connecting And unique. and Trimble. the means that think I in the in it's work work of with software hardware in That

think we a And aftermarket, they're is contractor, operate about company. to going is to proprietary that of don't technology? I see disintermediation, a have a for it's often multiple more it's we a changing technology, they if go and saying, hear across that looking mixed When a neutral trucking OEM remember, this customers mixed farmer, for technology the fundamentally OEM the in potential customer More than to I work customer, proprietary fleets. operate OEM provider fleet. me Because how I not,

How does customer? and field, path. that the it feedback on the from out conviction hear we're in benefit a right That's we me what gives that

the to last and why connection hardware have That's between we innovate XX faster creating We a and years, of show create will let's that XX to able just that, strategy, and be integrated mean that software would not. world. course, the the that that value does that physical OEMs around ecosystem years, to – Now, not, been that say, the for these a pursue we've connected of have workflows. I'd digital say,

apply what to this from aspect unlock that's the market, you Not go-to-market And you models of insights this. technology how actually take the you are where data it. to you side around are can the that then it, mention the actually of monetize business

competitive there that is of large, to say, woke competitive these lot a yes, XX, versus markets of XX environment think attractiveness global, underpenetrated. world the the say, X, exists serving let's up I'd certainly today different And that years are we're a ago. I and So, that underserved

stand Kristen. we that feel in about environment, good So, we where

so you much. Thank Great.

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

open. is line Your

morning. good Hi,

a changed larger a It's cause expectation? the And paid reduction impact of reduction Transporeon the macro for would company? to have With maybe than acquisition, more incrementally little bit a you can given bit the in the on growth thought what price us in little color we the give rate? just to that the

of is as morning. the of So the accretive business, the change. whether I platform – if From, our shippers. bookings overall the And in to we has and business margins, is more in look the Trimble then that's growth business, at the it model of and mid-term Good be see I'd of say, the and business carriers those to business, the growth even the Jonathan, business, will of given the the density and view nature to be growth Rob. that ARR gross the financials the beyond, the that overall continues at doesn't the the this significantly look accretive

I'd To disappointing view. as a couple the factors, second say, When and we we to from underlying looked and things well. question it's on absolutely, three mention. yes, what of things, down my saw changed And the in perspective maybe break macro the

the when first is And the look retail, business. gone three overall CPG, chemicals down relatively Europe. for The has at markets markets like big the in or we end transactions markets, level of

slowed one volume transaction at look I that we eat. The one people is more than going to that are CPG, still expected.

lose conviction phenomenon business. temporary that don't I this a So, is a in the

the also higher. the have The and second really which differentially the are is come monetizes when relates down spot to business third spot prices aspect, probably rates

down. So, if will transaction down come spot rates volume comes

at trucks transaction if truck Europe though, piece, you that prices. went capacity is which spot same pressuring Europe, third the follow in up unit spot hitting increased and market actually the time that back new in capacity connects prices, so further to The as slowed the

me note in see that But now year. this not those the business let we be expect on would me note, the that the on end growth XX% So, end three factors. bookings let to

no accelerated fundamentally in prior at the look customers. out this loss a those economic It's of we business, When each business. has business transaction-oriented There's cycles. of of cycles

quarter rates when the fact, owned strong onboarded the are customers we platform in new before it. ever, first onto XX were In as

fundamentals of would it business believe bounce I quality, the there. the poised are the as the we back So, And a would when underlying improve. of say, be to markets

Got it. that retention of us And sort dollar-based ARR? your to Thank We're sense in a versus of follow-up. new you. Can of a you is your customers? just terms quick looks from existing trying for just how ARR of like understand what net coming give much

as talking the whole? you're Jonathan, about for company a

Company as whole? a

for outlook Yes. the I'll year. focus on the

XXX% the of varies digits. our XXX%. new and code upsell in business businesses mid-single Our structurally gets low of north but low and cross-sell to high-single-digits recurring churn generate retention the net the offerings. of ZIP higher low than net in strong, expect by What the We us retention that, churn and is pushing be through to there? most very we of is positive churn SketchUp at very

And really having as traction Viewpoint and offerings. and MEP we're ]Technostructures] Rob mentioned, of offering, uniqueness the [ph] building in portfolio cross-selling, our breadth our software the of the of

into single-digit range. high so, net that's digits. high single And gets the what retention XXX-plus

that is to technology Trimble And thing the of nature I'd the that it's at Jonathan, the mission-critical. is add

day. using get it You're the the It's software a have not of you of. rid that can easily most nice to on shelf-type

you. Thank

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

Your line is open.

Hi, morning good guys.

Hi, Chad.

ARR So, earlier Infrastructure the an I to in question back to Building and go about want business.

about any driving Maybe growth? I you can think driving XX%. XX% you some from, Rob And curious talked kind you are you products was of seeing extent sight some have of to cross-sell about I of what about are about, line talk key that? going that? the what that to than to do that just of greater

Hey, Chad. Rob. is this Sure,

So the ARR we faster the year. year going rest to Buildings that of we If level And and the Infrastructure, been company Buildings expect that throughout and growth specifically, grows, at up XX% that and see go than was the organic the into the average. Infrastructure. Buildings through has grow well of in Infrastructure ARR as company growing we

on which up $X.XX things the of And through And higher. would the ARR about revenue going first end the billion you at When obligations. wake contracted the view don't next second the model closed that's the the But that we of we've up be performance is, great and of by ARR. quarter, take for reviews, to quarter view sight show the of say, $X.XX got remaining forward billion is, one We way, at I'd ARR. the we conservative a that the line an can in business we of go of see year. quarter, in business day of the ARR and

at can get look the get analysis. when a scientific it do can so, because businesses, a And bit and go we go you you about

or year whether you're or in a multi-year revenue understand the You it's walking period. a with quarter

delta, conversion hit deferred close it's pipeline look order a delta have you versus pipeline get can forecast. become over time. what that then ARR that you know that at bookings in hit Against the ratio to to ARR of a pipeline You will and have bookings that monetized a to that's you short-term revenue

bringing through seeing from Construction seeing Now, What We're Tekla. is we new We're to significantly offering. seeing and between from that Trimble the Viewpoint have. are we're within Trimble of as as the Viewpoint market it logos we're acquisition bookings we seeing this that, business. business. One Viewpoint bid-to-win and We're if us, and MEP that cross-sell I go take our our business and Buildings and it One upsell Infrastructure, for on specifically, business driving cross-sell

I'm it have the who's – that life. behind Trimble, shorter deal easy work organize we and in seeing business sales to higher scenes to right and model happens proof market as the a the the just to that here. go-to-market vision. a We're deals define efforts of it. And sales market. on track proud behind It's team the to we bring seeing to rates larger in actually the to work points enablement We're the deliver in One on put execute we're really when the The sizes team we're cycles seeing to go is to do when win continues the offerings the division.

setup. like the I So,

strong software think making and I the efforts successful say I the strong taking that our And of for and the as is, last to the within strong, template the of that putting percentages. business and Buildings the expect not behind spear for that, These dollars bank, Infrastructure the rest at say the tip of ultimately, transformation a would using continue bigger majority bigger. We really construction thing to that's we're get organization. to to continue numbers Trimble. and see growth. I'd the We're

on comments and mentioned his be think, noting, of in So, worth David, I I base, the ARR that. and billion of Infrastructure year $X of to end the by presumably posting would think see Buildings half about strong is larger double-digit a growth that we expect could

second just channels, your got is right? you've My the channel aftermarket. two about OEM question That's core helpful. So,

seeing just more you you're the in secondly, And just you down expecting talk mix growth the then can balance Can you between break year? there? through XQ? of two? about OEM. are the what First, the was And What specific the to then what

Sorry, level? do segment at at you Chad, a Or level? mean mean you a do company

be about level that give detail, to can curious B&I you company with, and but I'll segment if mean resource. begin most I

Well, a and we segment OEMs. Resource perspective, Utilities. It's little goes actually percentage of in single-digit from very – the Resources and outside the Utilities through in

about I And agriculture. said we've that's course, XX%. think Of

through It was that a XXXX business our higher strong. in OEMs particularly because actually, little than was

our it third So, well, say. it's a up of I'll about And held was segment. R&U

So, OEMs our right business with is strong now.

you. Okay. Thank

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

Your line is open.

Good gentlemen. Hi morning.

software but licenses. one bit. minor, sounds business better you Your term But can of construction far. so of I know to QX questions you little performing a like a of in It segments, additional continues bit clarify today it's little be if mentioned lot churn a some your David, this don't for seeing

we're just trend. Yes. January all don't a the it's the digital think bit terms any licenses, our infrastructure, actually on old improving factor our but It's additional term I X. coincide with that of a of longer-term it's that technology versus new

X. you're to churn if churn So, you going January on as a customer,

recur coming solid Infrastructure. ARR a blip. sustained trend And Buildings any growth and think we That won't – So, call I in quarters. on that for of it's we're of the the factor

said, Rob in a will than XX%, more think about we it was year and little As end were QX. where we it the

Okay.

for sounds this be like solutions. older some it your So, of might

we our flexible solutions. our licensing we models terms time, infrastructure, some be of could or by for we roll-out our situation that all work, us the older more even in digital and wouldn't I in at our our It's are have say it's customers. which enabled how convenient older the for solutions infrastructure won't where same as technology isn't

how things that's will So, improve.

second much the ramp is way but that that on any million, through think, might then I anything seasonality And the perfect. to should realized XXX contributing? know I that Okay, year? Transporeon is how full about Thanks. quarter clarifying or year specifically, we how

Yes.

$XXX that. of QX. million it's three So Around than a than QX third quarters, a a XX% a corresponding in the have little for more and third you'll be less will in little

Perfect. Thank you.

Welcome.

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

open. is line Your

questions. Hi. my Good Thank much you morning. so for taking

is question transportation on So, my the segment. first

single device telematics tools, stuff. an third for on ELV So, we've apps developing heard runs partnering platform OEMs and that Chuck some install open with a parties to is and

new So, Trimble what emerging risks narrative? are or opportunities in the this for

with change this Hi, but in business, space aftermarket, we've transportation good that working OEM as the Rob. It's both our long don't a we for the predominantly know short-term, in Well, one a in we Tami. the partner. morning, see business in you been time, have OEM our to with

transportation the multiple types. in is mid-to-long even conversation the open exact the multiple fleet our term, customers we're Back looking earlier – making for. the platform mix engine with OEMs upgrades to operating nature actually their that the happens to technology Q&A within or in deliver different been aftermarket Long-term truck companies most trucking having we're an in are of on have business the on yes, same fleets. The even dynamic

configuration machine a better What can better different in performed country. different is perform different have the of here or country. would say you parts it need you is configurations, different I'd optimized So, than different and a different quite Colorado a the – is of really at part in the mountains here truck

And to so, to continue see mixed we integrate customers looking fleets.

on can technology user in a the open you have competitor you openness, they Trimble top of that have that come and out platform when put of that. a interface OEMs, or When that can Trimble

think I it's in an the So, market. equalizer

very That's it. helpful. Got

me. quick quarters? ratably we just we allocate seasonality should should any from Transporeon from million three Another or expect revenue from next the one incremental Is there XXX over the

There in But – Historically, seasonality David. a the lot quarter. also There's that holiday the goods the flow don't it's is it's fourth season. Tami, I business. some Yes. closer in of growth. there's some underlying to strongest

and QX the in a XXX I little is in XX% the way look a more it So, roughly we third of at of third QX, a would suggest the way million, QX. it have we'll you at than look

you. Thank it. Got

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

is line Your open.

you of here. me half numbers? us the [current rest help business? the just you're but second. you want only gives the squeezing the step in the Hey, guys. just reducing macro] that in-light back talk maybe for back revenue to for I you Can for have you confidence And of a [ph], visibility hitting year? what guidance to Thanks for the why the in just Transporeon you're Can understand maybe the reiterating of rest expectations,

Hey, Josh, I'll Barnes. start. David

mentioned, So a Rob transaction-based, is not the Transporeon business subscription. model, principally as

ongoing of offerings, software for to discussed susceptible are in business. and customers end are ongoing the short-term our mission-critical less trend So, or level much our transaction customers as any earlier, Rob

and changed Our the view but the is takes, business not that days. there's demand over we has for some puts last XX our aggregate see

their their our sentiment. We than do We few improving. we some feeling assess of are the Input that a in abating. business. markets, dealers were. at of better little the overall macro in is talked instance, end I signs some for they outlook costs Geospatial, see for actually, They're survey our look a customers to

of a of business quarter we rest articulated impacted and by the Europe macros they very outlook that we're ago. confident for with the particular end serve. the overall, the markets is Transporeon So, the

from businesses can that software the little I encourage I businesses add separate the and a analysis. color that. to hardware you to

have or there's If gives that's which that's our software X.XX of of obligations us and view ARR. the remaining as a the billion submit even And rest reasons at because higher well than I backlog that, conviction be of ARR, visibility. the business. the not again, billion performance you year, look X.X in to those would contracted that's

bookings a revenue. bit into of recognized translate to bookings know have. the to It's a We the science really we

walked revenue dealer We've been David through of and then our our dynamics hardware highest. to through. And that So, the take on separately the conviction you stream businesses, going think which you our be stabilization. of is predictability inventory I the

the farm bill let's [ph] it. we We the year. this. to [Take think tailwind conviction question see this agriculture,] North infrastructure Now, on America income the macros test being around at we business. our being a see I And take healthy construction, fair and look a that's providing

would rest the the And and are of certainly that go that those year. So, quarter. the our next on then to we'll update view kind become you again watch the of into then have we factors things for

guys more one you helpful. me. I'm of maybe a questions one And lot portfolios I your are and going know little are maybe Building of a peers Infrastructure. more, kind weaker, for then it's and to ask are it's that on of exactly construction customers' believe got Super unusual. which although lot know given diversified. A hard their stronger which markets to very

all, that worse better peers question gives of appreciate strength. than to unique is guess, have? guess So, I performing are my is markets you something maybe But disclosure we or I first really like, don't infrastructure the there residential on your the into your business the visibility which

data – users' to a and architects, and across is strategy the – there life design industry we've engineers, built to continuums. workflow owners across to contractors, work cycle build from connect construction, fundamentally we with think is I our operate. In what

have say, a engineering plumbing, we mechanical, let's business that construction. and in We electrical, steel, and focuses concrete, contractors. with architects So, work on designers,

civil in construction of an ERP. as those MEP. system trades both record. and inside construction as the we chain It's that We can you the you work look and visibility our to digital the components buy transact and the out building we actually well the create connect It's model So, into – at estimates. ultimately software. construction In of to we Viewpoint side, the obviously as supply have estimate design a

businesses at side, owners the of that what programs get the are employees have chain, the And work that describing in last one a of asset they in, that a and meta backlog as we they we know the are of that then and management we're the even the of though the and capital chain, permitting. customers have we businesses can our view the doing. and So, have are on owner managing I'm the of kind actually of beginning set

across compared we how any in given Trimble the think to specific life view I industry as the unique has we more have a cycle. personas So, serve other peer that industry

a specificity of we be I see so, activity at quite And think that unique. can level would

Thank guys so much. you Much appreciated.

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

line Your is open.

Yes, effect to positive work taking the neutral about good you you transition transition dealers. this morning. be Thanks you'll of we that should net I be or we ag independent year track or XXXX? would channel of to to of question. your that on guess, this for that negative can markers leading year some transition expect the be progress the watching, Rob, to more And How the talked your what channel? or up that doing

is see year. the would to quite I I in would I positive. this positive. the little market feedback the you a we can characterize Well, getting qualitatively, guess neutral perhaps we're tell transition as

We early signing who new of up having dealers good are and work to with here. dealers Trimble existing want success who opportunities dealers both business see success, good

about have to what able unique do that. you about If kits think different an from as perspective darn pretty we be available what's machines. That's unique can XX,XXX do in we for to aftermarket

but they in from are time When the and I from spend how support I iron for support people technology. – technology not support looking from mean know and field support. Like farmers, out it with works, and the who with dealers

know you how with it. work because And to know We – get you so, – you with how we technology, feedback to know you. support getting to need very very good work we we're want that you to

machine You're the types. on

We full by do do steering you and just the have water And a portfolio. way, controls. don't do implement management. portfolio, we broader We Trimble, guidance, the technology

software. have We

spring. We have selective

creating that transition the us we as so And good positives been so, progress for have far, are those I'd channel. say, the

To proof that. of the investor as can you track question an about points progress analyst, your and

that color a us progression would sense margin that. us what but for forward. what revenue the more of as quantitative we're we're topic make how what let take that provide around the saying, you'll Let – Obviously, and take financials action face see of item and additional we against an can going as against disclosure

That's helpful. helpful. That's

that ability outside other Obviously, particular, Just geographies would And guess? approach it Europe America, your versus in to I the what Europe? they pace how of ability have of necessarily should to if maybe North in as your leverage need network done platform penetrate a to How differ we and a follow-up European-centric. would and think build it's around Transporeon. about in

Sure.

in Europe. start So, I'll actually

acquisition, small prior relatively we to carrier So, a had we the business. had

So, mobility business for carriers.

that business sense. we carriers, a working European can together. with because That carrier think make combine businesses if shippers and will are One, business with obviously those stronger We get Transporeon. works we will Transporeon

of within technology Within a parties that Europe, which been us business I that the they're of can companies may saying, Hey, we've in underlying surprises it's synergy already see because positive we and have with we to actually, Europe, replace Europe. amount within third help some Trimble the And need phone forestry. from technology with been modest interesting got, of some forestry have calls really to bring cost working

that to visibility the We've thing with for job logistics, are understand with with chain help same to transportation construction components construction where need looking show when and this We the up site. a we you're supply can forestry. to how heard going connect building

early that within received So, inquiry we're that we've encouraged some Europe.

revenue and Now, obvious be let's Europe the that would America. of in already we have go North given place outside of centricity to the go North America

market couple North actively teams U.S. around procurement quick of say, or some this autonomous those the working are opportunities. procurement into Transporeon win-type And American to together of so, year, I'd the bring aspects or technology market automated of a

has January. I a business has in. or – geography in that that was something audit, becomes we already together connect in in And Brazil, the what our operation given can Trimble freight mobility Brazil we already in there a have doing telematics small we're business is, we Transporeon discovered Brazil

an not, slower capabilities be capital. the my new, allocate where geography, So, harder to to easier and be that's and in, those tend together. where already priority, we're this geographies new would first in I'd say play bring environment, to

Thank That’s you. helpful. Appreciate response. the

further now no our are you I today's and conference. all today's thank presentation, for speakers This for would concludes questions, joining to there thank like us. As

now disconnect. You may