Trimble Inc.
11/05/2025 | Press release | Distributed by Public on 11/05/2025 16:27
Quarterly Report for Quarter Ending October 3, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There have been no material changes to our critical accounting policies and estimates during the first three quarters of 2025. For a complete discussion of our critical accounting policies and estimates, refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of the 2024 Form 10-K.
RECENT ACCOUNTING PRONOUNCEMENTS
For a summary of recent accounting pronouncements applicable to our Condensed Consolidated Financial Statements, refer to Note 1 "Overview and Accounting Policies"of this report.
EXECUTIVE LEVEL OVERVIEW
We are a leading provider of technology solutions that enable professionals and field mobile workers to improve or transform their work processes. Our comprehensive work process solutions are used across a range of industries, including architecture, building construction, civil engineering, geospatial, survey and mapping, natural resources, utilities, transportation, and government. Our representative customers include construction owners, contractors, engineering and construction firms, surveying companies, energy and utility companies, trucking companies, and state, federal, and municipal governments.
Our growth strategy is centered on multiple elements:
•Execute on our Connect & Scale strategy;
•Deliver customer outcomes that can enable productivity, quality, safety, transparency, and environmental sustainability;
•Focus on software and services;
•Address attractive markets with significant growth and profitability potential;
•Capitalize on domain knowledge and technological innovation that benefit a diverse customer base;
•Drive geographic expansion with a localization strategy;
•Optimize go-to-market strategies to best access our markets; and
•Pursue strategic and targeted acquisitions, divestitures, joint ventures, and investments.
Our focus on these growth drivers has led over time to growth in revenue and profitability and an increasingly diversified business model. We continue to experience a shift toward a more significant mix of recurring revenue as demonstrated by our success in driving annualized recurring revenue ("ARR") of $2,310.3 million, which represents growth of 6% year-over-year at the end of the third quarter of 2025. Excluding the impact of foreign currency, acquisitions, and divestitures, organic ARR growth was 14%. This shift toward recurring revenue has positively impacted our revenue mix, growth, and profitability over time and is leading to improved visibility in our businesses. Our software, services, and recurring revenue represented 78% and 76% of total revenue for the third quarter of 2025 and 2024, and 78% and 75% of total revenue for the first three quarters of 2025 and 2024. Additionally, we continue to maintain focus on increasing our mix of higher margin recurring revenue, which was accelerated by the Ag divestiture that closed in the second quarter of 2024 and the Mobility divestiture that closed in the first quarter of 2025.
As our solutions have expanded, our go-to-market model has also evolved with a balanced mix between direct, distribution, and OEM customers as well as enterprise-level customer relationships.
Throughout this "Management's Discussion and Analysis of Financial Condition and Results of Operations" section, we refer to organic revenue growth, which is a non-GAAP measure. For a full definition of ARR, organic ARR, and organic revenue growth as used in this discussion and analysis, refer to the "Supplemental Disclosure of Non-GAAP Financial Measures and Annualized Recurring Revenue"below in this Item 2.
Impact of Recent Events on Our Business
Acquisitions and Divestitures
We acquire businesses that align with our long-term growth strategies, including our strategic product roadmap and, conversely, we divest certain businesses that no longer fit those strategies. This is demonstrated by the 13 acquisitions and 23 divestitures that we have completed since 2020.
Mobility Divestiture
On February 8, 2025, we completed the sale of our Mobility business to Platform Science in exchange for equity ownership interests with a fair value of $253.9 million. The fair value was based on unobservable inputs, including discounted cash flow projections, market comparables, and an option pricing model. Following the closing of the transaction, we own, orhave rights to acquire, 32.5% of Platform Science's expanded business comprised of (i) shares of preferred stock, with certain liquidation preferences, that represent 28.5% ownership, and (ii) common stock warrants allowing us the rights to acquire 4% of additional ownership.
Upon closing of the transaction, we deconsolidated $277.3 million of net assets including $145.3 million of goodwill, and we recorded our equity investment at its fair value under the measurement alternative election, which represents a non-cash investing activity. As a result, we recognized a cumulative, pre-tax loss of $30.6 million from the held for sale date in the third quarter of 2024 to the closing date. Mobility was reported as a part of our T&L segment.
The combined business aims to enhance driver experience, fleet safety, efficiency, and compliance by combining two cutting-edge in-cab commercial vehicle ecosystems.
Ag Divestiture
On April 1, 2024, we completed the sale and contribution of our Ag business to AGCO in exchange for $1.9 billion of cash proceeds and an equity ownership interest in PTx Trimble, a JV that was formed by Trimble and AGCO, with a fair value of $275.6 million. The fair value was based on a combination of the equity value, primarily the transaction price, and an option pricing model for a put and call option. Following the closing of the transaction, we own 15% of the JV.
Upon closing of the transaction, we deconsolidated $457.3 million of net assets, including $357.4 million of goodwill, and we recorded our equity investment at its fair value under the equity method of accounting, which represents a non-cash investing activity. As a result, we recognized a pre-tax gain of $1.7 billion in the second quarter of 2024, which includes the gain for our retained 15% ownership interest in the JV. The sale and contribution of the Ag business excluded certain GNSS and guidance technologies. Ag was reported as a part of our Field Systems segment.
The formation of the JV is expected to better serve farmers with factory-fit and aftermarket applications in the mixed fleet precision agriculture market to help farmers drive productivity, efficiency, and sustainability.
Macroeconomic Conditions
Macroeconomic conditions continue to present significant challenges globally, driven by geopolitical tensions, tariff and trade policies, exchange rate and interest rate volatility, and persistent inflationary pressures. The heightened trade tensions and related imposition of tariffs and export control restrictions between the United States and its trading partners, the extent and duration of these tariffs, and their impact on global economic conditions remain uncertain and depend on various factors, including international negotiations, policy responses, potential exemptions, and shifts in global supply and demand. If there were to be a deterioration in the global economy, the economies of the countries or regions where our customers are located or do business, or the industries that we or our customers serve, the demand for our products and services may decrease. We are closely monitoring global trade developments and have contingency plans in place to respond to a variety of potential market scenarios. We are also monitoring the impact of the U.S. federal government shutdown, which has not had a material impact on our business to date.
RESULTS OF OPERATIONS
Overview
The following table shows revenue by category, gross margin and gross margin as a percentage of revenue, operating income and operating income as a percentage of revenue, diluted earnings per share, and annualized recurring revenue compared for the periods indicated:
| Third Quarter of | First Three Quarters of | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Dollar Change | % Change | 2025 | 2024 | Dollar Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (In millions, except per share amounts) | |||||||||||||||||||||||||||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||||||||||||||||||||||||||
| Product | $ | 302.5 | $ | 307.6 | $ | (5.1) | (2)% | $ | 866.9 | $ | 995.1 | $ | (128.2) | (13)% | |||||||||||||||||||||||||||||||||
| Subscription and services | 598.7 | 568.2 | 30.5 | 5% | 1,750.6 | 1,704.8 | 45.8 | 3% | |||||||||||||||||||||||||||||||||||||||
| Total revenue | $ | 901.2 | $ | 875.8 | $ | 25.4 | 3% | $ | 2,617.5 | $ | 2,699.9 | $ | (82.4) | (3)% | |||||||||||||||||||||||||||||||||
| Gross margin | $ | 621.1 | $ | 575.6 | $ | 45.5 | 8% | $ | 1,779.8 | $ | 1,715.1 | $ | 64.7 | 4% | |||||||||||||||||||||||||||||||||
| Gross margin as a % of revenue | 68.9 | % | 65.7 | % | 68.0 | % | 63.5 | % | |||||||||||||||||||||||||||||||||||||||
| Operating income | $ | 150.5 | $ | 116.4 | $ | 34.1 | 29% | $ | 375.8 | $ | 287.2 | $ | 88.6 | 31% | |||||||||||||||||||||||||||||||||
| Operating income as a % of revenue | 16.7 | % | 13.3 | % | 14.4 | % | 10.6 | % | |||||||||||||||||||||||||||||||||||||||
| Diluted earnings per share | $ | 0.46 | $ | 0.16 | $ | 0.30 | 188% | $ | 1.10 | $ | 5.73 | $ | (4.63) | (81)% | |||||||||||||||||||||||||||||||||
|
Non-GAAP operating income (1)
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$ | 254.2 | $ | 224.8 | $ | 29.4 | 13% | $ | 675.0 | $ | 653.6 | $ | 21.4 | 3% | |||||||||||||||||||||||||||||||||
|
Non-GAAP operating income as a % of revenue (1)
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28.2 | % | 25.7 | % | 25.8 | % | 24.2 | % | |||||||||||||||||||||||||||||||||||||||
|
Non-GAAP diluted earnings per share (1)
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$ | 0.81 | $ | 0.70 | $ | 0.11 | 16% | $ | 2.13 | $ | 1.96 | $ | 0.17 | 9% | |||||||||||||||||||||||||||||||||
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Annualized Recurring Revenue ("ARR")(1)
|
$ | 2,310.3 | $ | 2,186.7 | $ | 123.6 | 6% | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||
(1) Refer to "Supplemental Disclosure of Non-GAAP Financial Measures and Annualized Recurring Revenue"of this report for definitions.
Third Quarter and First Three Quarters of 2025 as Compared to 2024
Revenue
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Change versus the corresponding period in 2024
|
Third Quarter of 2025 | First Three Quarters of 2025 | |||||||||||||||||||||||||||||||||||||||
| % Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| Product | Subscription and Services | Total Revenue | Product | Subscription and Services | Total Revenue | ||||||||||||||||||||||||||||||||||||
| Change in Revenue | (2) | % | 5 | % | 3 | % | (13) | % | 3 | % | (3) | % | |||||||||||||||||||||||||||||
| Acquisitions | - | % | - | % | - | % | 1 | % | 1 | % | 1 | % | |||||||||||||||||||||||||||||
| Divestitures | (7) | % | (9) | % | (8) | % | (14) | % | (8) | % | (11) | % | |||||||||||||||||||||||||||||
| Foreign currency exchange | 1 | % | 1 | % | 1 | % | - | % | - | % | - | % | |||||||||||||||||||||||||||||
| Organic growth | 4 | % | 13 | % | 10 | % | - | % | 10 | % | 7 | % | |||||||||||||||||||||||||||||
Note that the fiscal year of 2025 began on January 4, 2025 compared to the fiscal year of 2024, which began on December 30, 2023. This significantly impacted overall Company and AECO year-over-year comparisons in the first quarter and first three quarters due to the timing of revenue recognition for January 1 annual software term license renewals ("software renewals"). For the total Company, the estimated impact of the software renewals was $49.6 million or a 2% negative impact on revenue growth for the first three quarters. For AECO, the estimated impact was $49.0 million or a 5% negative impact on AECO segment revenue growth for the first three quarters.
Total organic revenue increased for the third quarter and the first three quarters primarily due to subscription and services growth. In addition, the revenue increase for the first three quarters was partially offset by the timing impact of prior year AECO software renewals.
Organic product revenue increased for the third quarter primarily due to strong end-user demand for Civil Construction solutions. Organic product revenue was flat for the first three quarters due to strong end-user demand for Civil Construction solutions, mostly offset by lower demand in surveying.
Organic subscription and services revenue increased for the third quarter and the first three quarters primarily due to strong subscription growth across all segments, with particular strength in both AECO and Field Systems and, to a lesser extent, software term license growth. The increase for the first three quarters was partially offset by the impact of prior year AECO software renewals.
Gross Margin
Gross margin and gross margin as a percentage of revenue increased for the third quarter and first three quarters primarily due to the improved mix of higher margin subscription and software term license sales, lower intangible amortization cost due to fully amortized intangibles, as well as the divestiture of lower margin businesses.
Operating Income
Operating income increased for the third quarter and first three quarters primarily due to organic revenue and gross margin expansion, partially offset by the loss of divestiture income and higher operating expenses related to higher compensation costs. In addition to organic revenue and gross margin expansion, operating income as a percentage of revenue was favorably impacted by the loss of lower margin divestiture income.
Research and Development, Sales and Marketing, and General and Administrative Expense
The following table shows research and development ("R&D"), sales and marketing ("S&M"), and general and administrative ("G&A") expense, along with these expenses as a percentage of revenue for the periods indicated:
| Third Quarter of | First Three Quarters of | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Dollar Change | % Change | 2025 | 2024 | Dollar Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||
| Research and development | $ | 152.9 | $ | 155.6 | $ | (2.7) | (2)% | $ | 474.7 | $ | 487.3 | $ | (12.6) | (3)% | |||||||||||||||||||||||||||||||||
| Percentage of revenue | 17.0 | % | 17.8 | % | 18.1 | % | 18.0 | % | |||||||||||||||||||||||||||||||||||||||
| Sales and marketing | $ | 158.8 | $ | 147.1 | $ | 11.7 | 8% | $ | 470.4 | $ | 436.4 | $ | 34.0 | 8% | |||||||||||||||||||||||||||||||||
| Percentage of revenue | 17.6 | % | 16.8 | % | 18.0 | % | 16.2 | % | |||||||||||||||||||||||||||||||||||||||
| General and administrative | $ | 117.5 | $ | 127.6 | $ | (10.1) | (8)% | $ | 356.6 | $ | 410.4 | $ | (53.8) | (13)% | |||||||||||||||||||||||||||||||||
| Percentage of revenue | 13.0 | % | 14.6 | % | 13.6 | % | 15.2 | % | |||||||||||||||||||||||||||||||||||||||
| Total | $ | 429.2 | $ | 430.3 | $ | (1.1) | -% | $ | 1,301.7 | $ | 1,334.1 | $ | (32.4) | (2)% | |||||||||||||||||||||||||||||||||
R&D expense slightly decreased for the third quarter and first three quarters primarily due to the impact of the divestitures, partially offset by increased compensation expenses. We believe that the development and introduction of new solutions are critical to our future success, and we expect to continue the active development of new products.
S&M expense increased for the third quarter and first three quarters primarily due to higher compensation expense, including commissions, as well as higher marketing and consulting costs related to revenue growth, partially offset by the impact of the divestitures.
G&A expense decreased for the third quarter and first three quarters primarily due to higher consulting and transaction costs in the prior year and the impact of the divestitures, partially offset by higher investment costs associated with our Connect & Scale strategy and higher compensation expense.
Amortization of Purchased Intangible Assets
| Third Quarter of | First Three Quarters of | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Dollar Change | % Change | 2025 | 2024 | Dollar Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||
| Cost of sales | $ | 16.4 | $ | 18.9 | $ | (2.5) | (13)% | $ | 48.9 | $ | 74.7 | $ | (25.8) | (35)% | |||||||||||||||||||||||||||||||||
| Operating expenses | 27.2 | 26.5 | 0.7 | 3% | 79.6 | 79.7 | (0.1) | -% | |||||||||||||||||||||||||||||||||||||||
| Total amortization expense of purchased intangibles | $ | 43.6 | $ | 45.4 | $ | (1.8) | (4)% | $ | 128.5 | $ | 154.4 | $ | (25.9) | (17)% | |||||||||||||||||||||||||||||||||
| Total amortization expense of purchased intangibles as a percentage of revenue | 5 | % | 5 | % | 5 | % | 6 | % | |||||||||||||||||||||||||||||||||||||||
Total amortization expense of purchased intangibles decreased for the third quarter and first three quarters primarily due to the expiration of prior years' acquisition amortization.
Non-Operating (Expense) Income, Net
The components of non-operating (expense) income, net, were as follows:
| Third Quarter of | First Three Quarters of | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Dollar Change | % Change | 2025 | 2024 | Dollar Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||
| Divestitures (loss) gain, net | $ | (0.6) | $ | (22.6) | $ | 22.0 | (97)% | $ | 4.2 | $ | 1,695.0 | $ | (1,690.8) | (100)% | |||||||||||||||||||||||||||||||||
| Interest expense, net | (20.7) | (14.1) | (6.6) | 47% | (55.7) | (77.4) | 21.7 | (28)% | |||||||||||||||||||||||||||||||||||||||
| (Loss) income from equity method investments, net | (0.5) | (0.6) | 0.1 | (17)% | 2.8 | 9.3 | (6.5) | (70)% | |||||||||||||||||||||||||||||||||||||||
| Other loss, net | (3.6) | (6.0) | 2.4 | (40)% | (2.3) | (6.0) | 3.7 | (62)% | |||||||||||||||||||||||||||||||||||||||
| Total non-operating (expense) income, net | $ | (25.4) | $ | (43.3) | $ | 17.9 | (41)% | $ | (51.0) | $ | 1,620.9 | $ | (1,671.9) | (103)% | |||||||||||||||||||||||||||||||||
Non-operating expense, net decreased for the third quarter primarily due to the held for sale loss in the prior year. Non-operating expense, net increased for the first three quarters primarily due to the Ag divestiture gain in the prior year.
Income Tax Provision
For the third quarter of 2025, our effective income tax rate was 10.9%, as compared to 44.5% in the corresponding period in 2024. The decrease was primarily due to certain disallowed losses in 2024 related to the Mobility divestiture and, to a lesser extent, a one-time benefit from the revaluation of deferred tax liabilities resulting from the German tax rate decrease in the current quarter. For the first three quarters, our effective income tax rate was 17.7%, as compared to 25.9% in the prior year. The decrease was primarily due to gains from the Ag divestiture in 2024 and, to a lesser extent, the one-time deferred tax benefit mentioned above.
The OBBBA, signed into law on July 4, 2025, includes changes to U.S. federal tax regulations. We have accounted for its tax implications during the second and third quarters based on our current interpretation of the legislation, and the impact to our tax rate for this period is immaterial. The Company continues to evaluate the impact of the OBBBA and believes it will not have a material impact on our effective income tax rate.
Results by Segment
We report our financial performance, including revenue and operating income, based on three reportable segments: AECO, Field Systems, and T&L.
Our CODM views and evaluates operations based on the results of our reportable operating segments under our management reporting system. For additional discussion of our segments, refer to Note 7 "Segment and Geographic Information"of this report.
The following table is a summary of revenue and operating income by segment compared for the periods indicated:
| Third Quarter of | First Three Quarters of | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Dollar Change | % Change | 2025 | 2024 | Dollar Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||
| AECO | |||||||||||||||||||||||||||||||||||||||||||||||
| Segment revenue | $ | 358.5 | $ | 306.0 | $ | 52.5 | 17% | $ | 1,044.2 | $ | 944.8 | $ | 99.4 | 11% | |||||||||||||||||||||||||||||||||
| Segment revenue as a % of total revenue | 40 | % | 35 | % | 40 | % | 35 | % | |||||||||||||||||||||||||||||||||||||||
| Segment operating income | $ | 113.9 | $ | 89.0 | 24.9 | 28% | $ | 311.9 | $ | 294.8 | 17.1 | 6% | |||||||||||||||||||||||||||||||||||
| Segment operating income as a % of segment revenue | 32 | % | 29 | % | 30 | % | 31 | % | |||||||||||||||||||||||||||||||||||||||
| Field Systems | |||||||||||||||||||||||||||||||||||||||||||||||
| Segment revenue | $ | 408.7 | $ | 374.6 | 34.1 | 9% | $ | 1,160.6 | $ | 1,173.1 | (12.5) | (1)% | |||||||||||||||||||||||||||||||||||
| Segment revenue as a % of total revenue | 45 | % | 43 | % | 44 | % | 43 | % | |||||||||||||||||||||||||||||||||||||||
| Segment operating income | $ | 136.7 | $ | 123.7 | 13.0 | 11% | $ | 364.3 | $ | 331.8 | 32.5 | 10% | |||||||||||||||||||||||||||||||||||
| Segment operating income as a % of segment revenue | 33 | % | 33 | % | 31 | % | 28 | % | |||||||||||||||||||||||||||||||||||||||
| T&L | |||||||||||||||||||||||||||||||||||||||||||||||
| Segment revenue | $ | 134.0 | $ | 195.2 | (61.2) | (31)% | $ | 412.7 | $ | 582.0 | (169.3) | (29)% | |||||||||||||||||||||||||||||||||||
| Segment revenue as a % of total revenue | 15 | % | 22 | % | 16 | % | 22 | % | |||||||||||||||||||||||||||||||||||||||
| Segment operating income | $ | 34.6 | $ | 41.0 | (6.4) | (16)% | $ | 89.3 | $ | 113.2 | (23.9) | (21)% | |||||||||||||||||||||||||||||||||||
| Segment operating income as a % of segment revenue | 26 | % | 21 | % | 22 | % | 19 | % | |||||||||||||||||||||||||||||||||||||||
The following table is a reconciliation of our consolidated segment operating income to consolidated income before taxes:
| Third Quarter of | First Three Quarters of | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
|
Total segment operating income
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$ | 285.2 | $ | 253.7 | $ | 765.5 | $ | 739.8 | |||||||||||||||
| Unallocated general corporate expenses | (31.0) | (28.9) | (90.5) | (86.2) | |||||||||||||||||||
| Amortization of purchased intangible assets | (43.6) | (45.4) | (128.5) | (154.4) | |||||||||||||||||||
| Acquisition / divestiture items | (1.3) | (17.4) | (12.9) | (75.2) | |||||||||||||||||||
| Stock-based compensation / deferred compensation | (36.6) | (38.1) | (114.9) | (115.0) | |||||||||||||||||||
| Restructuring and other costs | (22.2) | (7.5) | (42.9) | (21.8) | |||||||||||||||||||
| Consolidated operating income | 150.5 | 116.4 | 375.8 | 287.2 | |||||||||||||||||||
| Total non-operating (expense) income, net | (25.4) | (43.3) | (51.0) | 1,620.9 | |||||||||||||||||||
| Consolidated income before taxes | $ | 125.1 | $ | 73.1 | $ | 324.8 | $ | 1,908.1 | |||||||||||||||
AECO
| Third Quarter of 2025 | First Three Quarters of 2025 | |||||||||||||
| Change versus the corresponding period in 2024 | % Change | % Change | ||||||||||||
|
Change in Revenue - AECO
|
17 | % | 11 | % | ||||||||||
| Foreign currency exchange | - | % | 1 | % | ||||||||||
|
Organic growth
|
17 | % | 10 | % | ||||||||||
Organic revenue increased for the third quarter and the first three quarters primarily due to strong subscription revenue and, to a lesser extent, software term licenses. Revenue benefited from cumulative growth along with an expansion of customers across many products, with the largest impacts resulting from Construction Management Systems, Architecture & Design, MEP, and Structures solutions. The increase for the first three quarters was partially offset by the impact of prior year software renewals for Structures products.
Operating income and operating income as a percentage of revenue increased for the third quarter primarily due to increased revenue and gross margin expansion. Operating income increased for the first three quarters primarily due to revenue and gross margin expansion, partially offset by the impact of prior year software renewals. Operating income as a percentage of revenue for the first three quarters was relatively flat.
Field Systems
| Third Quarter of 2025 | First Three Quarters of 2025 | |||||||||||||
| Change versus the corresponding period in 2024 | % Change | % Change | ||||||||||||
|
Change in Revenue - Field Systems
|
9 | % | (1) | % | ||||||||||
| Acquisitions | - | % | 1 | % | ||||||||||
| Divestitures | - | % | (7) | % | ||||||||||
| Foreign currency exchange | 1 | % | - | % | ||||||||||
| Organic growth | 8 | % | 5 | % | ||||||||||
Organic revenue increased for the third quarter and first three quarters primarily due to strong end-user demand and competitive wins for Civil Construction solutions. The increase for the first three quarters was partially offset by lower demand in surveying.
Operating income increased for the third quarter due to organic revenue expansion. Operating income as a percentage of revenue for the third quarter was relatively flat. Operating income and operating income as a percentage of revenue increased for the first three quarters due to organic revenue and gross margin expansion, partially offset by the loss of Ag divestiture income. In addition to organic revenue and gross margin expansion, operating income as a percentage of revenue was favorably impacted by the loss of lower margin Ag divestiture income.
T&L
| Third Quarter of 2025 | First Three Quarters of 2025 | |||||||||||||
| Change versus the corresponding period in 2024 | % Change | % Change | ||||||||||||
|
Change in Revenue - T&L
|
(31) | % | (29) | % | ||||||||||
| Acquisitions | 2 | % | 2 | % | ||||||||||
| Divestitures | (37) | % | (34) | % | ||||||||||
| Foreign currency exchange | 1 | % | - | % | ||||||||||
| Organic growth | 3 | % | 3 | % | ||||||||||
Organic revenue increased for the third quarter and first three quarters primarily driven by MAPS and Transporeon subscription revenue growth.
Operating income decreased for the third quarter and first three quarters primarily due to the loss of the Mobility divestiture income. Operating income as a percentage of revenue increased for the third quarter and first three quarters primarily due to the loss of lower margin Mobility divestiture income.
LIQUIDITY AND CAPITAL RESOURCES
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As of
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| Third Quarter of | Year End | ||||||||||||||||||||||
| 2025 | 2024 | Dollar Change | % Change | ||||||||||||||||||||
| (In millions, except percentages) | |||||||||||||||||||||||
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Cash and cash equivalents(1)
|
$ | 232.7 | $ | 747.8 | $ | (515.1) | (69) | % | |||||||||||||||
| As a percentage of total assets | 2.6 | % | 7.9 | % | |||||||||||||||||||
| Principal balance of outstanding debt | $ | 1,400.0 | $ | 1,400.0 | $ | - | - | % | |||||||||||||||
| First Three Quarters of | |||||||||||||||||||||||
| 2025 | 2024 | Dollar Change | % Change | ||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
| Net cash provided by operating activities | $ | 225.9 | $ | 416.3 | $ | (190.4) | (46) | % | |||||||||||||||
| Net cash (used in) provided by investing activities | (36.1) | 1,860.0 | (1,896.1) | (102) | % | ||||||||||||||||||
| Net cash used in financing activities | (729.3) | (1,463.7) | 734.4 | (50) | % | ||||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 24.4 | 2.5 | 21.9 | 876 | % | ||||||||||||||||||
| Net (decrease) increase in cash and cash equivalents | $ | (515.1) | $ | 815.1 | |||||||||||||||||||
(1) Includes $9.0 million of cash and cash equivalents classified as held for sale as of year end 2024.
Operating Activities
The decrease in cash provided by operating activities was primarily driven by higher tax payments related to the Ag divestiture, and to a lesser extent, higher incentive bonus payments. The decrease was partially offset by lower interest payments.
Investing Activities
The increase in cash used in investing activities was primarily related to the $1.9 billion of proceeds received from the Ag divestiture in the prior year.
Financing Activities
The decrease in cash used in financing activities was primarily driven by the $1.3 billion repayment of debt in the prior year, offset by $727.4 million in repurchases of common stock in the current year, as compared to $175.0 million of repurchases in the prior year.
Cash and Cash Equivalents
We believe that our cash and cash equivalents and available borrowing capacity under our existing lines of credit, along with cash provided by operations, will be sufficient in the foreseeable future to meet our anticipated operating cash needs, including expenditures related to our Connect & Scale strategy, debt service, acquisitions, and any stock repurchases under the stock repurchase program.
Our 2022 credit facility allows us to borrow up to $1.25 billion, with an option to increase the borrowings for up to $1.75 billion with lender approval. As of October 3, 2025, there was no outstanding debt under the 2022 credit facility.
In the second quarter of 2024, we completed the Ag divestiture and received $1.9 billion of cash proceeds, subject to working capital adjustments. Approximately half of the proceeds were used in 2024 to pay down debt and make a tax payment of $122.0 million related to the divestiture transaction. The remaining proceeds were used in 2025 to repurchase stock and to pay the remaining $277.4 million final tax payment for the Ag divestiture, which was made during the second quarter of 2025.
The recently enacted OBBBA permanently repeals the domestic R&D capitalization requirement. As a result, we expect cash tax reductions of approximately $32 million in 2025 and approximately $80 million in subsequent years.
Our cash requirements have not otherwise materially changed since the 2024 Form 10-K.
SUPPLEMENTAL DISCLOSURE OF NON-GAAP FINANCIAL MEASURES AND ANNUALIZED RECURRING REVENUE
To supplement our consolidated financial information, we included non-GAAP financial measures, which are not meant to be considered in isolation or as a substitute for comparable GAAP measures. We believe non-GAAP financial measures provide useful information to investors and others in understanding our "core operating performance", which excludes (i) the effect of non-cash items and certain variable charges not expected to recur; and (ii) transactions that are not meaningful in comparison to our past operating performance or not reflective of ongoing financial results. Lastly, we believe that our core operating performance offers a supplemental measure for period-to-period comparisons and can be used to evaluate our historical and prospective financial performance, as well as our performance relative to competitors.
Organic revenue growth is a non-GAAP measure that refers to revenue excluding the impacts of (i) foreign currency translation and (ii) acquisitions and divestitures that closed in the prior 12 months. We believe organic revenue growth provides useful information in evaluating the results of our business, because it excludes items that are not indicative of ongoing performance or impact comparability with the prior year. We provide reconciliation tables showing the change in revenue growth to organic revenue growth in the "Results of Operations" section found earlier in this Item 2.
In addition to providing non-GAAP financial measures, we disclose ARR to give the investors supplementary indicators of the value of our current recurring revenue contracts. ARR represents the estimated annualized value of recurring revenue. ARR is calculated by taking our subscription and maintenance and support revenue for the current quarter and adding the portion of the contract value of all our term licenses attributable to the current quarter, then dividing that sum by the number of days in the quarter and then multiplying that quotient by 365. Organic ARR refers to annualized recurring revenue excluding the impacts of (i) foreign currency translation, and (ii) acquisitions and divestitures that closed in the prior 12 months. ARR and organic ARR should be viewed independently of revenue and deferred revenue as they are performance measures and are not intended to be combined with or to replace either of those items.
The non-GAAP financial measures, definitions, and explanations to the adjustments to comparable GAAP measures are included below:
| Third Quarter of | First Three Quarters of | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||
| Dollar | % of | Dollar | % of | Dollar | % of | Dollar | % of | |||||||||||||||||||||||||||||||
| (In millions, except per share amounts) | Amount | Revenue | Amount | Revenue | Amount | Revenue | Amount | Revenue | ||||||||||||||||||||||||||||||
| REVENUE: | ||||||||||||||||||||||||||||||||||||||
| GAAP revenue: | $ | 901.2 | $ | 875.8 | $ | 2,617.5 | $ | 2,699.9 | ||||||||||||||||||||||||||||||
| GROSS MARGIN: | ||||||||||||||||||||||||||||||||||||||
| GAAP gross margin: | $ | 621.1 | 68.9 | % | $ | 575.6 | 65.7 | % | $ | 1,779.8 | 68.0 | % | $ | 1,715.1 | 63.5 | % | ||||||||||||||||||||||
| Amortization of purchased intangible assets | (A) | 16.4 | 18.9 | 48.9 | 74.7 | |||||||||||||||||||||||||||||||||
| Stock-based compensation / deferred compensation | (C) | 3.7 | 4.2 | 12.2 | 12.7 | |||||||||||||||||||||||||||||||||
| Restructuring and other costs | (D) | 0.8 | 0.9 | 1.4 | 2.9 | |||||||||||||||||||||||||||||||||
| Non-GAAP gross margin: | $ | 642.0 | 71.2 | % | $ | 599.6 | 68.5 | % | $ | 1,842.3 | 70.4 | % | $ | 1,805.4 | 66.9 | % | ||||||||||||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||||||||||||||||||||||||
| GAAP operating expenses: | $ | 470.6 | 52.2 | % | $ | 459.2 | 52.4 | % | $ | 1,404.0 | 53.6 | % | $ | 1,427.9 | 52.9 | % | ||||||||||||||||||||||
| Amortization of purchased intangible assets | (A) | (27.2) | (26.5) | (79.6) | (79.7) | |||||||||||||||||||||||||||||||||
| Acquisition / divestiture items | (B) | (1.3) | (17.4) | (12.9) | (75.2) | |||||||||||||||||||||||||||||||||
| Stock-based compensation / deferred compensation | (C) | (32.9) | (33.9) | (102.7) | (102.3) | |||||||||||||||||||||||||||||||||
| Restructuring and other costs | (D) | (21.4) | (6.6) | (41.5) | (18.9) | |||||||||||||||||||||||||||||||||
| Non-GAAP operating expenses: | $ | 387.8 | 43.0 | % | $ | 374.8 | 42.8 | % | $ | 1,167.3 | 44.6 | % | $ | 1,151.8 | 42.7 | % | ||||||||||||||||||||||
| OPERATING INCOME: | ||||||||||||||||||||||||||||||||||||||
| GAAP operating income: | $ | 150.5 | 16.7 | % | $ | 116.4 | 13.3 | % | $ | 375.8 | 14.4 | % | $ | 287.2 | 10.6 | % | ||||||||||||||||||||||
| Amortization of purchased intangible assets | (A) | 43.6 | 45.4 | 128.5 | 154.4 | |||||||||||||||||||||||||||||||||
| Acquisition / divestiture items | (B) | 1.3 | 17.4 | 12.9 | 75.2 | |||||||||||||||||||||||||||||||||
| Stock-based compensation / deferred compensation | (C) | 36.6 | 38.1 | 114.9 | 115.0 | |||||||||||||||||||||||||||||||||
| Restructuring and other costs | (D) | 22.2 | 7.5 | 42.9 | 21.8 | |||||||||||||||||||||||||||||||||
| Non-GAAP operating income: | $ | 254.2 | 28.2 | % | $ | 224.8 | 25.7 | % | $ | 675.0 | 25.8 | % | $ | 653.6 | 24.2 | % | ||||||||||||||||||||||
| Third Quarter of | First Three Quarters of | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||
| NON-OPERATING (EXPENSE) INCOME, NET: | ||||||||||||||||||||||||||||||||||||||
| GAAP non-operating (expense) income, net: | $ | (25.4) | $ | (43.3) | $ | (51.0) | $ | 1,620.9 | ||||||||||||||||||||||||||||||
| Acquisition / divestiture items | (B) | 6.2 | 26.8 | (1.7) | (1,692.7) | |||||||||||||||||||||||||||||||||
| Deferred compensation | (C) | (1.9) | (1.6) | (3.9) | (4.7) | |||||||||||||||||||||||||||||||||
| Restructuring and other costs | (D) | 2.9 | 1.4 | 5.8 | 6.8 | |||||||||||||||||||||||||||||||||
| Non-GAAP non-operating expense, net: | $ | (18.2) | $ | (16.7) | $ | (50.8) | $ | (69.7) | ||||||||||||||||||||||||||||||
|
Tax Rate %
|
Tax Rate %
|
Tax Rate %
|
Tax Rate %
|
|||||||||||||||||||||||||||||||||||
| (G) | (G) | (G) | (G) | |||||||||||||||||||||||||||||||||||
| INCOME TAX PROVISION: | ||||||||||||||||||||||||||||||||||||||
| GAAP income tax provision: | $ | 13.6 | 10.9 | % | $ | 32.5 | 44.5 | % | $ | 57.4 | 17.7 | % | $ | 493.9 | 25.9 | % | ||||||||||||||||||||||
| Non-GAAP items tax effected | (E) | 12.1 | 60.1 | 53.7 | (313.5) | |||||||||||||||||||||||||||||||||
| Difference in GAAP and Non-GAAP tax rate | (F) | 15.6 | (56.4) | (2.4) | (79.4) | |||||||||||||||||||||||||||||||||
| Non-GAAP income tax provision: | $ | 41.3 | 17.5 | % | $ | 36.2 | 17.4 | % | $ | 108.7 | 17.4 | % | $ | 101.0 | 17.3 | % | ||||||||||||||||||||||
| NET INCOME: | ||||||||||||||||||||||||||||||||||||||
| GAAP net income: | $ | 111.5 | $ | 40.6 | $ | 267.4 | $ | 1,414.2 | ||||||||||||||||||||||||||||||
| Amortization of purchased intangible assets | (A) | 43.6 | 45.4 | 128.5 | 154.4 | |||||||||||||||||||||||||||||||||
| Acquisition / divestiture items | (B) | 7.5 | 44.2 | 11.2 | (1,617.5) | |||||||||||||||||||||||||||||||||
| Stock-based compensation | (C) | 34.7 | 36.5 | 111.0 | 110.3 | |||||||||||||||||||||||||||||||||
| Restructuring and other costs | (D) | 25.1 | 8.9 | 48.7 | 28.6 | |||||||||||||||||||||||||||||||||
| Non-GAAP tax adjustments | (E) - (F) | (27.7) | (3.7) | (51.3) | 392.9 | |||||||||||||||||||||||||||||||||
| Non-GAAP net income: | $ | 194.7 | $ | 171.9 | $ | 515.5 | $ | 482.9 | ||||||||||||||||||||||||||||||
| DILUTED NET INCOME PER SHARE: | ||||||||||||||||||||||||||||||||||||||
| GAAP diluted net income per share: | $ | 0.46 | $ | 0.16 | $ | 1.10 | $ | 5.73 | ||||||||||||||||||||||||||||||
| Amortization of purchased intangible assets | (A) | 0.18 | 0.18 | 0.53 | 0.63 | |||||||||||||||||||||||||||||||||
| Acquisition / divestiture items | (B) | 0.03 | 0.18 | 0.05 | (6.56) | |||||||||||||||||||||||||||||||||
| Stock-based compensation | (C) | 0.15 | 0.15 | 0.46 | 0.45 | |||||||||||||||||||||||||||||||||
| Restructuring and other costs | (D) | 0.10 | 0.04 | 0.20 | 0.12 | |||||||||||||||||||||||||||||||||
| Non-GAAP tax adjustments | (E) - (F) | (0.11) | (0.01) | (0.21) | 1.59 | |||||||||||||||||||||||||||||||||
| Non-GAAP diluted net income per share: | $ | 0.81 | $ | 0.70 | $ | 2.13 | $ | 1.96 | ||||||||||||||||||||||||||||||
| ADJUSTED EBITDA: | ||||||||||||||||||||||||||||||||||||||
| GAAP operating income: | $ | 150.5 | 16.7 | % | $ | 116.4 | 13.3 | % | $ | 375.8 | 14.4 | % | $ | 287.2 | 10.6 | % | ||||||||||||||||||||||
| Amortization of purchased intangible assets | (A) | 43.6 | 45.4 | 128.5 | 154.4 | |||||||||||||||||||||||||||||||||
| Acquisition / divestiture items | (B) | 1.3 | 17.4 | 12.9 | 75.2 | |||||||||||||||||||||||||||||||||
| Stock-based compensation | (C) | 36.6 | 38.1 | 114.9 | 115.0 | |||||||||||||||||||||||||||||||||
| Restructuring and other costs | (D) | 22.2 | 7.5 | 42.9 | 21.8 | |||||||||||||||||||||||||||||||||
| Non-GAAP operating income: | 254.2 | 28.2 | % | 224.8 | 25.7 | % | 675.0 | 25.8 | % | 653.6 | 24.2 | % | ||||||||||||||||||||||||||
| Depreciation expense and cloud computing amortization | 12.3 | 11.8 | 36.6 | 34.8 | ||||||||||||||||||||||||||||||||||
|
Income from equity method investments, net
|
2.9 | 0.8 | 9.8 | 13.9 | ||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 269.4 | 29.9 | % | $ | 237.4 | 27.1 | % | $ | 721.4 | 27.6 | % | $ | 702.3 | 26.0 | % | ||||||||||||||||||||||
Non-GAAP Definitions
Non-GAAP gross margin
We define Non-GAAP gross margin as GAAP gross margin, excluding the effects of amortization of purchased intangible assets, stock-based compensation, deferred compensation, and restructuring and other costs. We believe our investors benefit by understanding our non-GAAP gross margin as a way of understanding how product mix, pricing decisions, and manufacturing costs influence our business.
Non-GAAP operating expenses
We define Non-GAAP operating expenses as GAAP operating expenses, excluding the effects of amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation, deferred compensation, and restructuring and other costs. We believe this measure is important to investors evaluating our non-GAAP spending in relation to revenue.
Non-GAAP operating income
We define Non-GAAP operating income as GAAP operating income, excluding the effects of amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation, deferred compensation, and restructuring and other costs. We believe our investors benefit by understanding our non-GAAP operating income trends, which are driven by revenue, gross margin, and spending.
Non-GAAP non-operating expense, net
We define Non-GAAP non-operating expense, net as GAAP non-operating (expense) income, net, excluding acquisition/divestiture items, deferred compensation, and restructuring and other costs. We believe this measure helps investors evaluate our non-operating expense trends.
Non-GAAP income tax provision
We define Non-GAAP income tax provision as GAAP income tax provision, excluding charges and benefits such as net deferred tax impacts resulting from the non-U.S. intercompany transfer of intellectual property, deferred tax impacts from global intangible low-taxed income, and significant reserve releases upon the statute of limitations expirations. We believe this measure helps investors because it provides for consistent treatment of excluded items in our non-GAAP presentation and a difference in the GAAP and non-GAAP tax rates.
Non-GAAP net income
We define Non-GAAP net income as GAAP net income, excluding the effects of amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation, restructuring and other costs, and non-GAAP tax adjustments. This measure provides a supplemental view of net income trends, which are driven by non-GAAP income before taxes and our non-GAAP tax rate.
Non-GAAP diluted net income per share
We define Non-GAAP diluted net income per share as GAAP diluted net income per share, excluding the effects of amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation, restructuring and other costs, and non-GAAP tax adjustments. We believe our investors benefit by understanding our non-GAAP operating performance as reflected in a per share calculation as a way of measuring non-GAAP operating performance by ownership in the Company.
Adjusted EBITDA
We define Adjusted EBITDA as non-GAAP operating income plus depreciation expense, cloud computing amortization, and income from equity method investments, net, excluding our proportionate share of items such as goodwill impairment, amortization of purchased intangibles, stock-based compensation, and restructuring costs. Other companies may define Adjusted EBITDA differently. Adjusted EBITDA is a performance measure that we believe offers a useful view of the overall operations of our business because it facilitates operating performance comparisons by removing potential differences caused by variations unrelated to operating performance, such as capital structures (interest expense), income taxes, depreciation, amortization of purchased intangibles and cloud computing costs, and income from equity method investments, net.
Explanations of Non-GAAP adjustments
(A).Amortization of purchased intangible assets.Non-GAAP gross margin and operating expenses exclude the amortization of purchased intangible assets, which primarily represents technology and/or customer relationships already developed.
(B).Acquisition / divestiture items.Non-GAAP gross margin and operating expenses exclude costs consisting of external and incremental costs resulting directly from acquisitions, divestitures, and strategic investment activities such as legal, due diligence, integration, and other closing costs, including the acceleration of acquisition stock awards and adjustments to the fair value of earn-out liabilities. Non-GAAP non-operating expense, net, excludes one-time acquisition/divestiture charges, including foreign currency exchange rate gains/losses related to an acquisition, divestiture gains/losses, and strategic investment gains/losses. These are one-time costs that vary significantly in amount and timing and are not indicative of our core operating performance.
(C).Stock-based compensation / deferred compensation.Non-GAAP gross margin and operating expenses exclude stock-based compensation and income or expense associated with movement in our non-qualified deferred compensation plan liabilities. Changes in non-qualified deferred compensation plan assets, included in non-operating expense, net, offset the income or expense in the plan liabilities.
(D).Restructuring and other costs.Non-GAAP gross margin and operating expenses exclude restructuring costs composed of termination benefits related to reductions in employee headcount and closure or exit of facilities; and other costs composed of one-time incremental expenses resulting from the re-audit and related remediation of control deficiencies.
Non-GAAP non-operating expense net, excludes our proportionate share of items recorded in income from equity method investment items, such as goodwill impairment, amortization of purchased intangibles, stock-based compensation, and restructuring costs.
(E).Non-GAAP items tax effected.This amount adjusts the provision for income taxes to reflect the effect of the non-GAAP items (A) through (D) on non-GAAP net income.
(F).Difference in GAAP and non-GAAP tax rate.This amount represents the difference between the GAAP and non-GAAP tax rates applied to the non-GAAP operating income plus the non-GAAP non-operating expense, net. The non-GAAP tax rate excludes charges and benefits such as (i) deferred tax impacts from tax amortization relating to a non-U.S. intercompany transfer of intellectual property, (ii) deferred tax impacts from global intangible low-taxed income, and (iii) significant reserve releases upon statute of limitations expirations and audit closures.
(G).Tax rate percentages.These percentages are defined as GAAP income tax provision as a percentage of GAAP income before taxes and non-GAAP income tax provision as a percentage of non-GAAP income before taxes.
Trimble Inc. published this content on November 05, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 05, 2025 at 22:27 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]