Trimble Inc. (TRMB) Q4 2025 Earnings Call Transcript
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Overview
The earnings call summary indicates positive financial performance with increased revenue and EPS guidance, strong ARR growth, and strategic AI integration. The Q&A session further supports this with insights into market expansion and AI positioning. Despite some concerns over management's lack of specificity on certain issues, the overall sentiment leans positive due to optimistic guidance and strategic growth plans, suggesting a likely positive stock price movement.
Key Financial Performance
Revenue (Q4 2025) $970 million, up 9% year-over-year. Growth attributed to strong performance in AECO and Field Systems segments.
Revenue (Full Year 2025) $3.57 billion, up 10% year-over-year. Growth driven by recurring revenue expansion and strong segment performance.
ARR (Annual Recurring Revenue) $2.39 billion, up 14% year-over-year. Growth led by 16% increase in AECO and 20% increase in Field Systems.
Earnings Per Share (Q4 2025) $1, up 12% year-over-year. Growth supported by strong revenue and margin expansion.
Earnings Per Share (Full Year 2025) $3.13, up 10% year-over-year. Growth driven by revenue increase and operational efficiency.
Gross Margins (Full Year 2025) 71.7%, expanded by 150 basis points year-over-year. Improvement due to operational efficiencies and recurring revenue growth.
EBITDA Margins (Full Year 2025) 29.3%, expanded by 150 basis points year-over-year. Growth attributed to disciplined execution and revenue growth.
Free Cash Flow (Full Year 2025) $361 million, impacted by $307 million in tax payments and divestiture-related costs.
AECO Revenue (Q4 2025) $454 million, up 15% year-over-year. Growth driven by strong ARR and cross-sell/upsell momentum.
AECO ARR (Q4 2025) $1.48 billion, up 16% year-over-year. Growth supported by project management and AI-driven solutions.
Field Systems Revenue (Q4 2025) $379 million, up 4% year-over-year. Growth driven by innovation and execution in Civil Construction.
Field Systems ARR (Q4 2025) $409 million, up 20% year-over-year. Growth attributed to recurring revenue model conversions and new customer acquisitions.
Transportation & Logistics Revenue (Q4 2025) $136 million, up 4% year-over-year. Growth achieved despite a constrained freight market.
Transportation & Logistics ARR (Q4 2025) $508 million, up 7% year-over-year. Growth supported by cross-selling and marketplace expansion.
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Operating Highlights
ARR growth in AECO segment: ARR grew 16% to $1.48 billion, with revenue up 15%. Project management bookings grew over 40%, ARR grew over 50%, and hundreds of new customers were added.
AI integration in products: AI is being used in project management, MEP estimating, and other areas, delivering productivity gains of over 50% and generating millions in incremental ARR.
Field Systems innovation: Field Systems revenue grew 4%, ARR grew 20%, and new workflows like piling automation for solar farms and mass hall workflows for infrastructure were introduced.
Geographic expansion: AECO began international expansion, and Field Systems expanded its global reach with new product and distribution developments.
Cross-selling opportunities: Only 20% of customers buy more than one product, but customers with more than three products grew 18%, showing potential for market penetration.
Recurring revenue growth: Recurring revenue expanded from 40% to 65% of total revenue since 2020, with software and services now representing 79% of total revenue.
Gross margin improvement: Gross margins expanded by 1,300 basis points since 2020, enabling investments in growth and a 400 basis point increase in EBITDA margins.
Connect & Scale strategy: This strategy focuses on integrating hardware and software to connect physical and digital workflows, driving customer outcomes and network effects.
AI as a force multiplier: AI is being leveraged across workflows to enhance productivity, optimize decisions, and create value in construction and transportation.
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Risk or Challenges
Market Conditions: The transportation segment continues to face challenges in a muted freight market, which could impact revenue growth and ARR growth in this segment.
Regulatory Hurdles: Stranded costs related to the Mobility divestiture have slightly impacted operating margins in the Transportation & Logistics segment.
Strategic Execution Risks: The company is heavily reliant on its Connect & Scale strategy and AI integration for future growth. Any delays or inefficiencies in executing this strategy could adversely affect financial and operational performance.
Economic Uncertainties: The constrained freight market and potential economic fluctuations could impact the Transportation & Logistics segment's performance.
Supply Chain Disruptions: No explicit mention of supply chain disruptions, but the reliance on physical and digital integration in Field Systems could be vulnerable to such risks.
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Guidance & Outlook
Revenue Growth: The company projects revenue growth of approximately 7.5% for 2026, reaching $3.86 billion.
ARR Growth: Annual Recurring Revenue (ARR) is expected to grow by 13% in 2026.
EBITDA Margins: EBITDA margins are projected to expand by approximately 50 basis points to 29.8% in 2026.
EPS Growth: Earnings per share (EPS) is expected to reach $3.52 for 2026.
Free Cash Flow: Free cash flow is expected to be approximately 1x net income in 2026, with long-term expectations of exceeding non-GAAP net income.
Segment Projections: All three business segments (AECO, Field Systems, and Transportation & Logistics) are aligned to deliver the company’s 2027 targets.
First Quarter 2026 Outlook: Revenue midpoint is projected at $905 million (approximately 8% growth), EPS midpoint at $0.71, ARR growth at 13%, and EBITDA margins at 26.6% (70 basis points expansion year-over-year).
Long-Term Targets for 2027: The company aims to achieve $3 billion in ARR, $4 billion in revenue, and 30% EBITDA margins by 2027.
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Shareholder Return Plan
Share Repurchase: During the fourth quarter, Trimble repurchased approximately $148 million worth of shares. The company retains $925 million under its current repurchase authorization, providing flexibility for opportunistic buybacks. Longer term, Trimble expects at least one-third of its free cash flow to be used for repurchasing shares as part of its commitment to delivering shareholder returns.
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Key Q&A
Q:Can you discuss the impressive 20% Field Systems ARR growth and the expected deceleration to low to mid-teens in 2026?
A:The growth was driven by strong performance in machine control guidance as a service, automotive market corrections, and Geospatial growth in Catalyst. The deceleration is due to a natural lapping effect from early conversions, but strong growth is still expected. Field Systems crossed a threshold of over 50% software and services for the year.
Q:How do you see the construction and architecture industry adopting agentic AI, and how will Trimble monetize these features?
A:Trimble platforms are well-suited for agentic workflows due to their unique data sets and trusted relationships with customers. Adoption will be accelerated by integrating AI into existing platforms. Monetization includes introducing credits for AI agents and moving towards a consumption-based model.
Q:What are the key assumptions for the 2026 guidance, including macroeconomic factors and market trends?
A:The guidance assumes a consistent macro environment, muted U.S. federal government business in Transportation, a challenged freight market, and strength in data centers, infrastructure, shipbuilding, and reshoring of manufacturing. The strategy includes room for reinvestment and focuses on ARR and revenue growth.
Q:Where are the new AECO customers coming from, and why are they choosing Trimble?
A:New customers come from geographic expansion outside North America and product-level offerings like project management. Trimble's 48 years of best-in-class solutions, integrated workflows, and ability to connect office and field work drive customer adoption.
Q:How do the KPIs like net retention and new logos contribute to the mid-teens ARR growth guidance for 2026?
A:Mid-single-digit churn, 70% ACV bookings with existing customers (higher upsell than cross-sell), and modest pricing increases contribute to net retention. Growth in customers using multiple products supports cross-sell and upsell opportunities.
Q:How would increased construction or infrastructure activity impact the ARR growth algorithm?
A:Positive inflections in new construction would benefit bookings first, with ARR impact likely in 2027. Potential growth areas include infrastructure in Germany and residential markets if interest rates decrease.
Q:How does Trimble position itself in the AI landscape, especially with large enterprise customers developing their own AI solutions?
A:Trimble's extensive data and global presence make it a logical extension for customers' AI ambitions. The company focuses on enabling customers to unlock data potential through Trimble's platforms while being open to third-party solutions. Trimble also builds agentic workflows to reduce customers' need for independent AI development.
Q:How does the shift to recurring revenue impact the convergence of ARR and overall revenue growth?
A:AECO and Transportation & Logistics have converged ARR and revenue growth rates. Field Systems still shows a spread due to ongoing software and hardware conversions, with ARR at 25% of total revenue. Conversions are expected to continue into 2026 and 2027.
Q:Will 2026 be a turning point for agentic AI adoption, and how does its margin structure compare to SaaS revenue?
A:2026 is expected to see increased adoption due to accelerated releases of agentic AI capabilities. Monetization includes consumption and tiered offerings. AI has variable costs, but Trimble's experience with consumption models like Transporeon positions it well.
Q:What areas within the software portfolio will the agentic AI rollout focus on, and what is the technology infrastructure readiness?
A:The rollout will focus broadly across AECO and Transportation & Logistics. Trimble has been investing in infrastructure and is well-positioned to scale agentic workflows in 2026, having built much of the necessary technology stack in 2025.
Q:What is the status of Trimble Construction One (TC1) and its impact on AECO growth?
A:TC1 is a strong growth driver, with most AECO ARR under TC1 agreements. It has been rolled out in Europe and is expanding in Asia Pacific. TC1 simplifies cross-sell opportunities and reduces friction for customers and sellers.
Q:How did the Caterpillar JV changes and machine control performance impact Field Systems in 2025, and what is expected for 2026?
A:The JV changes played out as expected, with strong machine control performance, including 50% of wins from new logos. Model conversions drive customer and usage expansion, enabling bundled offerings across office and field workflows.
Q:Why is there more margin expansion expected in Transportation & Logistics compared to Field Systems in 2026?
A:Transportation & Logistics benefits from growth and reduced stranded costs. Field Systems has ongoing investments and headwinds from software and hardware conversions, limiting margin expansion.
Q:What is the contribution of AI products to ARR or ACV, and how is AI used internally for efficiency?
A:AI-enabled revenue exceeds $100 million, with products like autonomous procurement and SketchUp AI agents contributing. Internally, AI improves customer support, R&D productivity, sales, marketing, and G&A efficiency, with double-digit productivity gains in R&D.
Q:What drives the significant free cash flow growth in 2026, and how will it be deployed?
A:Free cash flow growth is driven by profit growth, reduced cash tax payments, and benefits from the repeal of Section 174. Cash will be allocated to repurchases or M&A, focusing on shareholder returns.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the specific margin structure of agentic AI compared to SaaS revenue, providing only general comments about variable costs and consumption models. Additionally, they did not provide detailed breakdowns of ARR growth components or specific geographic timelines for TC1 rollout in Asia Pacific.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AECO
AI force
ARR margin
Connect Scale
Field Systems
Investor Day
Slide refresh
TMS
base
capability
carrier
cash flow
customer
end
example
freight
license renewal
million dollar
motion
navigation
number
office field
opportunity
outlook
platform
progression Slide
project
record
refresh segment
segment composition
set progression
shipper
term
workflow
world
TRMB Transcript
Trimble Inc. (TRMB) Q4 2025 Earnings Call Transcript
Positive2-10
The earnings call summary indicates positive financial performance with increased revenue and EPS guidance, strong ARR growth, and strategic AI integration. The Q&A session further supports this with insights into market expansion and AI positioning. Despite some concerns over management's lack of specificity on certain issues, the overall sentiment leans positive due to optimistic guidance and strategic growth plans, suggesting a likely positive stock price movement.
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Trimble Inc. (TRMB) Q3 2025 Earnings Call Transcript
Positive11-5
Trimble's earnings call highlights strong financial performance, increased revenue and EPS guidance, and a positive outlook on AI and innovation. The Q&A section reveals analyst confidence in growth strategies, though some uncertainties remain regarding 2026 margins and specific EPS details. New OEM partnerships and focus on ARR growth are positive indicators. Overall, the sentiment is positive, with potential for stock price appreciation.
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