Company Leadership Changes - Trimble announced the retirement of Chief Accounting Officer (CAO) Julie Shepard in early 2026 after over 18 years of service, with Kenny Bement appointed as the new CAO effective September 2025 [1] - Julie Shepard and Kenny Bement will collaborate for six to eight months to ensure a smooth transition, with Shepard continuing to support the auditor transition for the 2025 financial statements [1] New Appointments - Kenny Bement brings over two decades of experience in financial reporting, controls, compliance, and finance operations, having previously served as CAO for multiple companies and worked at the Financial Accounting Standards Board [2] - Jim Palermo has been hired as Chief Information Officer (CIO), a newly created position aimed at enhancing IT infrastructure to support Trimble's digital transformation efforts [3] Strategic Focus - The company aims to simplify and focus its operations to deliver on its "Connect and Scale" strategy, with leadership changes expected to support this initiative [4] - Phil Sawarynski, CFO at Trimble, acknowledged Julie Shepard's significant contributions, particularly in transitioning to subscription licensing models [4] Company Overview - Trimble is a global technology company that integrates the physical and digital worlds, driving innovation in various essential industries such as construction, geospatial, and transportation [5]

Summary of Key Points from the Conference Call Industry Overview - **Industry**: U.S. Machinery and Electricals - **Focus**: Impact of recent policy changes by the Trump Administration on various sub-sectors including electricals, construction, agriculture, and trucks [1][11] Core Insights and Arguments 1. Policy Impact on Renewables - The Trump Administration's policies are de-prioritizing renewables, negatively impacting companies like Quanta (PWR) which derives 30% of sales from this sector [2][49] - The OBBBA cuts tax credits for renewables, shortening the eligibility timeframe from 2032 to 2027, leading to a projected slowdown in construction activity post-2025 [16][54] - Construction costs are rising due to stricter domestic content requirements and tariffs, which could drive renewables to ex-growth from 2025-2030 [2][18] 2. Construction Sector Stimulus - The reinstatement of 100% bonus depreciation for qualified property under the OBBBA is expected to stimulate construction activity, unlocking nearly $90 billion in additional non-residential construction spending, a 7% increase compared to 2024 levels [3][67] - This change is anticipated to benefit construction OEMs such as OSK, URI, ETN, CAT, TRMB, HUBB, DE, and J [3][12] 3. Agriculture Equipment Demand - Changes in biofuels policy, including a 75% increase in biomass-based diesel production mandated by the EPA, could lead to a 10% increase in agricultural equipment demand [4][84] - The extension of clean fuel tax credits from 2027 to 2029 and increased subsidies for biofuels are expected to positively impact companies like Deere, AGCO, and CNH [4][101] 4. Truck OEM Competitive Landscape - The Section 232 investigation into commercial vehicle manufacturing is likely to favor U.S.-based manufacturers like PACCAR (PCAR) by reversing the current tariff structure that disadvantages U.S. manufacturers [5][104] - Current tariffs create a cost disadvantage for U.S. truck manufacturers, as they face higher costs due to imported components [107][110] Additional Important Insights - The overall economic reorientation towards investment rather than consumption is expected to benefit the machinery and electrical sectors [13] - The anticipated slowdown in renewable energy construction does not imply a complete decline, as electricity demand continues to grow at a CAGR of 1.5-2% [28][40] - Historical context indicates that previous cuts to renewable tax credits led to significant underperformance in the sector, suggesting potential risks ahead [46] - The bonus depreciation changes are expected to lead to mid-single-digit earnings growth for companies like Oshkosh, Eaton, and United Rentals [79][82] Company Ratings and Price Targets - **Outperform Ratings**: Trimble (TP $99), Jacobs (TP $163), PACCAR (TP $118), Eaton (TP $410), Hubbell (TP $511) [7][8] - **Market-Perform Ratings**: AGCO (TP $118), Caterpillar (TP $447), Deere (TP $548), Cummins (TP $385), United Rentals (TP $885), Titan America (TP $15), Oshkosh (TP $132), Quanta (TP $410) [7][8] This summary encapsulates the key points discussed in the conference call, highlighting the implications of policy changes on various sectors and companies within the U.S. Machinery and Electricals industry.

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Overview: Trimble Navigation (TRMB) - Trimble Navigation currently holds a Momentum Style Score of B, indicating a favorable momentum characteristic [2] - The company has a Zacks Rank of 2 (Buy), suggesting strong potential for outperformance in the market [3] Performance Metrics - Over the past week, TRMB shares increased by 1.37%, outperforming the Zacks Manufacturing - General Industrial industry, which rose by 0.73% [5] - In the last month, TRMB's price change was 5.21%, significantly better than the industry's 1.82% [5] - Over the past quarter, TRMB shares have risen by 15.63%, and over the last year, they have gained 58.83%, compared to the S&P 500's increases of 10.57% and 21.94%, respectively [6] Trading Volume - TRMB's average 20-day trading volume is 2,067,114 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Outlook - In the past two months, two earnings estimates for TRMB have been revised upwards, with no downward revisions, leading to an increase in the consensus estimate from $2.90 to $2.93 [9] - For the next fiscal year, two estimates have also moved upwards without any downward revisions [9] Conclusion - Considering the positive momentum indicators and earnings outlook, TRMB is positioned as a 2 (Buy) stock with a Momentum Score of B, making it a strong candidate for near-term investment [11]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents Trimble Inc.'s unaudited financial statements and management's analysis for the second quarter and first two quarters of 2025 and 2024 [ITEM 1. Financial Statements (Unaudited)](index=4&type=section&id=ITEM%201.%20Financial%20Statements%20(Unaudited)) This section presents Trimble Inc.'s unaudited condensed consolidated financial statements and detailed notes for Q2 and YTD 2025 and 2024 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a summary of Trimble Inc.'s financial position as of the second quarter of 2025 and year-end 2024 Condensed Consolidated Balance Sheet Highlights (In millions) | Metric | As of Second Quarter 2025 | As of Year End 2024 | | :-------------------------------- | :------------------------ | :------------------ | | Total assets | $9,099.2 | $9,488.3 | | Total liabilities | $3,411.1 | $3,743.0 | | Total stockholders' equity | $5,688.1 | $5,745.3 | | Cash and cash equivalents | $265.9 | $738.8 | | Goodwill | $5,247.6 | $4,988.4 | | Long-term debt | $1,441.4 | $1,390.6 | - Total assets decreased by **$389.1 million (4.1%)** from year-end 2024 to the second quarter of 2025, primarily driven by a significant reduction in **cash and cash equivalents**[12](index=12&type=chunk) - Cash and cash equivalents decreased by **$472.9 million (64%)** from year-end 2024 to the second quarter of 2025[12](index=12&type=chunk) [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section details Trimble Inc.'s financial performance, including revenue, gross margin, operating income, and net income for Q2 and YTD 2025 and 2024 Condensed Consolidated Statements of Income Highlights (In millions, except per share amounts) | Metric | Second Quarter 2025 | Second Quarter 2024 | First Two Quarters 2025 | First Two Quarters 2024 | | :-------------------------------- | :------------------ | :------------------ | :---------------------- | :---------------------- | | Total revenue | $875.7 | $870.8 | $1,716.3 | $1,824.1 | | Product revenue | $292.8 | $320.4 | $564.4 | $687.5 | | Subscription and services revenue | $582.9 | $550.4 | $1,151.9 | $1,136.6 | | Gross margin | $597.9 | $545.9 | $1,158.7 | $1,139.5 | | Operating income | $127.8 | $61.6 | $225.3 | $170.8 | | Net income | $89.2 | $1,316.4 | $155.9 | $1,373.6 | | Diluted EPS | $0.37 | $5.34 | $0.64 | $5.56 | - Total revenue for Q2 2025 increased by **1% YoY to $875.7 million**, driven by a **6% increase in subscription and services revenue**, partially offset by a **9% decrease in product revenue**[14](index=14&type=chunk) - Operating income for Q2 2025 significantly increased by **107% YoY to $127.8 million**, while net income decreased by **93% YoY to $89.2 million**, primarily due to a large divestiture gain in Q2 2024[14](index=14&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section outlines Trimble Inc.'s comprehensive income, including net income and other comprehensive income components, for Q2 and YTD 2025 and 2024 Condensed Consolidated Statements of Comprehensive Income Highlights (In millions) | Metric | Second Quarter 2025 | Second Quarter 2024 | First Two Quarters 2025 | First Two Quarters 2024 | | :-------------------------------- | :------------------ | :------------------ | :---------------------- | :---------------------- | | Net income | $89.2 | $1,316.4 | $155.9 | $1,373.6 | | Foreign currency translation adjustments, net of tax | $228.0 | $(36.7) | $411.8 | $(117.0) | | Comprehensive income | $317.1 | $1,278.6 | $567.3 | $1,255.3 | - Comprehensive income for Q2 2025 was **$317.1 million**, a decrease from **$1,278.6 million** in Q2 2024, largely influenced by the significant net income difference due to prior year divestiture gains[16](index=16&type=chunk) - Foreign currency translation adjustments positively impacted comprehensive income by **$228.0 million** in Q2 2025, a significant reversal from a **$(36.7) million loss** in Q2 2024[16](index=16&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in Trimble Inc.'s stockholders' equity, including retained earnings and accumulated other comprehensive income, as of July 2025 and January 2025 Condensed Consolidated Statements of Stockholders' Equity Highlights (In millions) | Metric | As of July 4, 2025 | As of January 3, 2025 | | :-------------------------------- | :----------------- | :-------------------- | | Total stockholders' equity | $5,688.1 | $5,745.3 | | Retained earnings | $3,293.6 | $3,757.6 | | Accumulated other comprehensive income (loss) | $29.5 | $(381.9) | | Stock repurchases (First Two Quarters) | $(682.5) | N/A | | Net income (First Two Quarters) | $155.9 | N/A | - Total stockholders' equity decreased slightly from **$5,745.3 million** at January 3, 2025, to **$5,688.1 million** at July 4, 2025, primarily due to significant stock repurchases totaling **$682.5 million** in the first two quarters of 2025[18](index=18&type=chunk) - Accumulated other comprehensive income (loss) improved significantly from a loss of **$(381.9) million** at January 3, 2025, to an income of **$29.5 million** at July 4, 2025, largely due to foreign currency translation adjustments[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents Trimble Inc.'s cash flow activities from operations, investing, and financing for the first two quarters of 2025 and 2024 Condensed Consolidated Statements of Cash Flows Highlights (In millions) | Metric | First Two Quarters 2025 | First Two Quarters 2024 | | :-------------------------------- | :---------------------- | :---------------------- | | Net cash provided by operating activities | $102.1 | $321.4 | | Net cash (used in) provided by investing activities | $(27.2) | $1,871.1 | | Net cash used in financing activities | $(582.6) | $(1,479.9) | | Net (decrease) increase in cash and cash equivalents | $(481.9) | $705.2 | | Cash and cash equivalents - end of period | $265.9 | $944.1 | - Net cash provided by operating activities decreased by **68% to $102.1 million** in the first two quarters of 2025, primarily due to higher tax payments related to the Ag divestiture and increased incentive bonus payments[22](index=22&type=chunk)[116](index=116&type=chunk) - Net cash used in investing activities was **$(27.2) million** in the first two quarters of 2025, a significant change from **$1,871.1 million** provided in the prior year, mainly due to the **$1.9 billion** proceeds from the Ag divestiture in 2024[22](index=22&type=chunk)[117](index=117&type=chunk) - Net cash used in financing activities decreased by **61% to $(582.6) million** in the first two quarters of 2025, driven by a **$1.3 billion** debt repayment in the prior year, partially offset by **$677.4 million** in stock repurchases in the current year[22](index=22&type=chunk)[118](index=118&type=chunk) [Note 1. Overview and Accounting Policies](index=12&type=section&id=Note%201.%20Overview%20and%20Accounting%20Policies) This note provides an overview of Trimble Inc.'s interim financial statements and details its significant accounting policies and recent pronouncements - The interim financial statements are unaudited and prepared in conformity with U.S. GAAP, consistent with the 2024 Form 10-K[25](index=25&type=chunk)[26](index=26&type=chunk) - The company uses a 52- to 53-week fiscal year, with the second quarter of 2025 ending on July 4, 2025, and 2024 ending on June 28, 2024[26](index=26&type=chunk) - New accounting pronouncements issued by FASB include ASU 2025-05 (Credit Losses), ASU 2024-03 (Income Statement Expense Disaggregation), and ASU 2023-09 (Income Tax Disclosures), with effective dates ranging from 2025 to 2027, and the company is currently evaluating their impact[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) [Note 2. Common Stock Repurchase](index=13&type=section&id=Note%202.%20Common%20Stock%20Repurchase) This note details Trimble Inc.'s common stock repurchase programs and activity for the second quarter and first two quarters of 2025 and 2024 - In Q1 2025, the Board approved a new **$1.0 billion** stock repurchase program, replacing the 2024 program[32](index=32&type=chunk) Stock Repurchase Activity (In millions) | Period | Shares Repurchased | Total Cost | | :-------------------------------- | :----------------- | :--------- | | Second Quarter 2025 | 0.7 | $50.0 | | First Two Quarters 2025 | 9.7 | $677.4 | | First Two Quarters 2024 | 2.9 | $175.0 | - As of the end of Q2 2025, **$322.6 million** remained authorized under the new stock repurchase program[33](index=33&type=chunk) [Note 3. Divestitures](index=13&type=section&id=Note%203.%20Divestitures) This note outlines Trimble Inc.'s divestiture activities, including the sale of its Mobility and Ag businesses, and their financial impacts - On February 8, 2025, Trimble completed the sale of its Mobility business to Platform Science for equity ownership interests valued at **$253.9 million**, resulting in a pre-tax loss of **$30.6 million**[37](index=37&type=chunk)[38](index=38&type=chunk) - On April 1, 2024, Trimble sold its Ag business to AGCO for **$1.9 billion cash** and a **15% equity interest** in the PTx Trimble joint venture, valued at **$275.6 million**, recognizing a pre-tax gain of **$1.7 billion**[40](index=40&type=chunk)[41](index=41&type=chunk) - The Mobility divestiture was part of the T&L segment, and the Ag divestiture was part of the Field Systems segment[38](index=38&type=chunk)[41](index=41&type=chunk) [Note 4. Equity Investments](index=14&type=section&id=Note%204.%20Equity%20Investments) This note provides details on Trimble Inc.'s equity investments, including equity method and other investments, as of Q2 2025 and year-end 2024 Equity Investments (In millions) | Type of Investment | As of Second Quarter 2025 | As of Year End 2024 | | :-------------------------------- | :------------------------ | :------------------ | | Equity method investments | $345.8 | $334.6 | | Other investments | $284.9 | $26.4 | | Total equity investments | $630.7 | $361.0 | - Equity method investments primarily represent joint operating ventures (5% to 50% ownership), with the **15% investment in PTx Trimble** valued at **$222.2 million** as of Q2 2025[44](index=44&type=chunk)[45](index=45&type=chunk) - Other investments, measured at initial cost less impairments, include a **32.5% investment in Platform Science** valued at **$253.9 million** as of Q2 2025[46](index=46&type=chunk)[47](index=47&type=chunk) [Note 5. Intangible Assets and Goodwill](index=14&type=section&id=Note%205.%20Intangible%20Assets%20and%20Goodwill) This note details Trimble Inc.'s intangible assets and goodwill, categorized by type and segment, as of Q2 2025 and year-end 2024 Intangible Assets, Net (In millions) | Category | As of Second Quarter 2025 | As of Year End 2024 | | :-------------------------------- | :------------------------ | :------------------ | | Developed product technology | $246.1 | $257.8 | | Customer relationships | $764.3 | $735.3 | | Trade names and other intellectual properties | $4.4 | $5.0 | | Total other purchased intangible assets, net | $1,014.8 | $998.1 | Goodwill by Segment (In millions) | Segment | As of Year End 2024 | As of Second Quarter 2025 | | :-------------------------------- | :------------------ | :------------------------ | | AECO | $1,986.1 | $2,039.8 | | Field Systems | $958.2 | $976.2 | | T&L | $2,044.1 | $2,231.6 | | Total Goodwill | $4,988.4 | $5,247.6 | - Goodwill increased by **$259.2 million to $5,247.6 million** in the first two quarters of 2025, primarily due to foreign currency translation and other adjustments, partially offset by divestitures[49](index=49&type=chunk) [Note 6. Inventories](index=15&type=section&id=Note%206.%20Inventories) This note provides a breakdown of Trimble Inc.'s inventories, including raw materials, work-in-process, and finished goods, as of Q2 2025 and year-end 2024 Inventories, Net (In millions) | Component | As of Second Quarter 2025 | As of Year End 2024 | | :-------------------------------- | :------------------------ | :------------------ | | Raw materials | $67.1 | $71.7 | | Work-in-process | $5.8 | $5.2 | | Finished goods | $106.8 | $117.4 | | Total inventories | $179.7 | $194.3 | - Total inventories decreased by **$14.6 million (7.5%)** from year-end 2024 to the second quarter of 2025, mainly due to reductions in raw materials and finished goods[50](index=50&type=chunk) [Note 7. Reporting Segment and Geographic Information](index=15&type=section&id=Note%207.%20Reporting%20Segment%20and%20Geographic%20Information) This note outlines Trimble Inc.'s reportable segments and provides a detailed breakdown of revenue and operating income by segment and geographic region - Trimble operates through three reportable segments: AECO (Architects, Engineers, Construction and Owners), Field Systems, and T&L (Transportation and Logistics)[53](index=53&type=chunk) Segment Revenue and Operating Income (Second Quarter, In millions) | Segment | Q2 2025 Revenue | Q2 2024 Revenue | Q2 2025 Operating Income | Q2 2024 Operating Income | | :-------------------------------- | :-------------- | :-------------- | :----------------------- | :----------------------- | | AECO | $350.3 | $299.7 | $106.4 | $79.1 | | Field Systems | $392.7 | $379.3 | $121.0 | $109.8 | | T&L | $132.7 | $191.8 | $28.6 | $35.9 | | Total Segment Revenue | $875.7 | $870.8 | N/A | N/A | - AECO segment revenue increased by **17% YoY** in Q2 2025, while T&L segment revenue decreased by **31% YoY**, largely due to the Mobility divestiture[54](index=54&type=chunk) Geographic Revenue Distribution (Second Quarter 2025, In millions) | Region | AECO | Field Systems | T&L | Total | | :-------------------------------- | :----- | :------------ | :---- | :---- | | North America | $223.9 | $216.5 | $70.5 | $510.9 | | Europe | $86.2 | $105.5 | $58.0 | $249.7 | | Asia Pacific | $30.5 | $47.7 | $3.3 | $81.5 | | Rest of World | $9.7 | $23.0 | $0.9 | $33.6 | | Total | $350.3 | $392.7 | $132.7 | $875.7 | [Note 8. Debt](index=18&type=section&id=Note%208.%20Debt) This note details Trimble Inc.'s debt composition and maturity schedule as of Q2 2025 and year-end 2024 Debt Composition (In millions) | Instrument | As of Second Quarter 2025 | As of Year End 2024 | | :-------------------------------- | :------------------------ | :------------------ | | Senior Notes, 4.90%, due June 2028 | $600.0 | $600.0 | | Senior Notes, 6.10%, due March 2033 | $800.0 | $800.0 | | 2022 Revolving Credit Facility | $50.0 | $0.0 | | Uncommitted Credit Facilities | $71.0 | $0.0 | | Total debt | $1,512.4 | $1,390.6 | | Total long-term debt | $1,441.4 | $1,390.6 | - Total debt increased by **$121.8 million to $1,512.4 million** as of Q2 2025, primarily due to new borrowings under the 2022 Revolving Credit Facility and Uncommitted Credit Facilities[58](index=58&type=chunk) Debt Maturities (In millions) | Year Payable | Amount | | :-------------------------------- | :----- | | 2025 (Remaining) | $71.0 | | 2026 | $0.0 | | 2027 | $50.0 | | 2028 | $600.0 | | 2029 | $0.0 | | Thereafter | $800.0 | | Total | $1,521.0 | [Note 9. Fair Value Measurements](index=19&type=section&id=Note%209.%20Fair%20Value%20Measurements) This note describes Trimble Inc.'s fair value measurements for financial instruments, including the deferred compensation plan and debt - Financial instruments recorded at fair value include the deferred compensation plan, valued at **$30.5 million** as of Q2 2025, measured using quoted prices in active markets[65](index=65&type=chunk) - Debt, not recorded at fair value on a recurring basis, had an estimated fair value of **$1.6 billion** as of Q2 2025, determined based on observable market prices in less active markets[66](index=66&type=chunk) [Note 10. Deferred Revenue and Remaining Performance Obligations](index=19&type=section&id=Note%2010.%20Deferred%20Revenue%20and%20Remaining%20Performance%20Obligations) This note provides details on Trimble Inc.'s deferred revenue and the expected recognition of revenue from remaining performance obligations Deferred Revenue (In millions) | Period | Beginning Balance | Revenue Recognized from Prior Year-End | Billings Net of Revenue Recognized from Current Year and Other | Ending Balance | | :-------------------------------- | :---------------- | :------------------------------------- | :------------------------------------------------------------- | :------------- | | Second Quarter 2025 | $892.8 | $(218.5) | $207.9 | $882.2 | | First Two Quarters 2025 | $896.0 | $(546.0) | $532.2 | $882.2 | - As of Q2 2025, approximately **$1.7 billion** of revenue is expected to be recognized from remaining performance obligations, with about **70% ($1.2 billion)** expected within the next 12 months[68](index=68&type=chunk) [Note 11. Earnings per Share](index=19&type=section&id=Note%2011.%20Earnings%20per%20Share) This note presents Trimble Inc.'s basic and diluted earnings per share calculations for Q2 and YTD 2025 and 2024 Earnings Per Share (In millions, except per share amounts) | Metric | Second Quarter 2025 | Second Quarter 2024 | First Two Quarters 2025 | First Two Quarters 2024 | | :-------------------------------- | :------------------ | :------------------ | :---------------------- | :---------------------- | | Net income | $89.2 | $1,316.4 | $155.9 | $1,373.6 | | Weighted-average shares outstanding - basic | 238.1 | 245.1 | 240.7 | 245.3 | | Weighted-average shares outstanding - diluted | 239.6 | 246.4 | 242.9 | 246.9 | | Basic earnings per share | $0.37 | $5.37 | $0.65 | $5.60 | | Diluted earnings per share | $0.37 | $5.34 | $0.64 | $5.56 | - Diluted EPS decreased significantly from **$5.34** in Q2 2024 to **$0.37** in Q2 2025, primarily due to the large divestiture gain recognized in the prior year[70](index=70&type=chunk) [Note 12. Income Taxes](index=20&type=section&id=Note%2012.%20Income%20Taxes) This note discusses Trimble Inc.'s effective income tax rates and the impact of recent tax legislation for Q2 and YTD 2025 and 2024 Effective Income Tax Rate | Period | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Second Quarter | 21.3% | 25.3% | | First Two Quarters | 21.9% | 25.1% | - The effective income tax rate decreased in both the second quarter and first two quarters of 2025 compared to 2024, primarily due to gains from the Ag divestiture in 2024[71](index=71&type=chunk) - The recently enacted One Big Beautiful Bill Act (OBBBA) permanently repeals the domestic R&D capitalization requirement, expected to result in cash tax reductions of approximately **$32 million** in 2025 and **$80 million** in subsequent years, with an immaterial impact on the effective tax rate for Q2 2025[73](index=73&type=chunk) [Note 13. Commitments and Contingencies](index=20&type=section&id=Note%2013.%20Commitments%20and%20Contingencies) This note outlines Trimble Inc.'s unconditional purchase obligations and involvement in routine legal proceedings as of Q2 2025 - As of Q2 2025, Trimble had unconditional purchase obligations of approximately **$408.3 million**, primarily for non-cancellable agreements with service providers and open purchase orders for inventory[74](index=74&type=chunk) - The company is involved in routine litigation arising in the ordinary course of business, but there are no material legal proceedings[75](index=75&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an in-depth analysis of Trimble's financial performance, condition, and operational results for Q2 and YTD 2025 compared to 2024 [Critical Accounting Policies and Estimates](index=21&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms that there have been no material changes to Trimble Inc.'s critical accounting policies and estimates during the first two quarters of 2025 - There have been no material changes to critical accounting policies and estimates during the first two quarters of 2025[76](index=76&type=chunk) [Recent Accounting Pronouncements](index=21&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 1 for a summary of recent accounting pronouncements applicable to the Condensed Consolidated Financial Statements - A summary of recent accounting pronouncements applicable to the Condensed Consolidated Financial Statements is provided in Note 1[77](index=77&type=chunk) [Executive Level Overview](index=21&type=section&id=Executive%20Level%20Overview) This section provides an executive summary of Trimble Inc.'s business, growth strategy, and key financial highlights, including recurring revenue trends - Trimble is a leading provider of technology solutions for professionals and field mobile workers across industries like architecture, construction, civil engineering, geospatial, and transportation[78](index=78&type=chunk) - The company's growth strategy focuses on the 'Connect & Scale' strategy, delivering customer outcomes, emphasizing software and services, addressing attractive markets, leveraging domain knowledge, driving geographic expansion, optimizing go-to-market strategies, and pursuing strategic M&A[79](index=79&type=chunk)[83](index=83&type=chunk) Annualized Recurring Revenue (ARR) Growth | Metric | Q2 2025 | YoY Growth | | :-------------------------------- | :-------- | :--------- | | ARR | $2,210.4 million | 5% | | Organic ARR Growth | N/A | 13% | - Software, services, and recurring revenue constituted **79% of total revenue** in Q2 2025, up from **75%** in Q2 2024, indicating a shift towards a higher-margin recurring revenue mix, accelerated by recent divestitures[79](index=79&type=chunk) [Impact of Recent Events on Our Business](index=21&type=section&id=Impact%20of%20Recent%20Events%20on%20Our%20Business) This section discusses the impact of recent acquisitions, divestitures, and macroeconomic conditions on Trimble Inc.'s business operations and financial strategy [Acquisitions and Divestitures](index=21&type=section&id=Acquisitions%20and%20Divestitures) This subsection details Trimble Inc.'s recent divestitures of its Mobility and Ag businesses and their strategic rationale - Trimble completed the sale of its Mobility business to Platform Science on February 8, 2025, for equity ownership (**32.5%**), resulting in a pre-tax loss of **$30.6 million**[84](index=84&type=chunk)[85](index=85&type=chunk) - The Ag business was sold to AGCO on April 1, 2024, for **$1.9 billion cash** and a **15% equity interest** in the PTx Trimble joint venture, generating a pre-tax gain of **$1.7 billion**[87](index=87&type=chunk)[88](index=88&type=chunk) - These divestitures are part of a strategy to align with long-term growth, focusing on software and services, and have accelerated the shift towards higher-margin recurring revenue[79](index=79&type=chunk)[82](index=82&type=chunk) [Macroeconomic Conditions](index=22&type=section&id=Macroeconomic%20Conditions) This subsection addresses the challenges posed by global macroeconomic conditions and Trimble Inc.'s strategies to mitigate potential impacts - Global macroeconomic conditions, including geopolitical tensions, tariffs, exchange rate and interest rate volatility, and inflationary pressures, continue to pose significant challenges[90](index=90&type=chunk) - The company is monitoring global trade developments and has contingency plans to address potential market scenarios, as a deterioration in the global economy could decrease demand for products and services[90](index=90&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of Trimble Inc.'s financial results, covering revenue, gross margin, operating expenses, non-operating items, and income taxes [Overview of Financial Performance](index=23&type=section&id=Overview%20of%20Financial%20Performance) This subsection summarizes Trimble Inc.'s key financial performance metrics for Q2 and YTD 2025 and 2024, including GAAP and non-GAAP figures Key Financial Performance Metrics (In millions, except per share amounts) | Metric | Q2 2025 | Q2 2024 | % Change (QoQ) | YTD 2025 | YTD 2024 | % Change (YoY) | | :-------------------------------- | :------ | :------ | :------------- | :------- | :------- | :------------- | | Total Revenue | $875.7 | $870.8 | 1% | $1,716.3 | $1,824.1 | (6)% | | Gross Margin | $597.9 | $545.9 | 10% | $1,158.7 | $1,139.5 | 2% | | Gross Margin % of Revenue | 68.3% | 62.7% | 5.6 pp | 67.5% | 62.5% | 5.0 pp | | Operating Income | $127.8 | $61.6 | 107% | $225.3 | $170.8 | 32% | | Operating Income % of Revenue | 14.6% | 7.1% | 7.5 pp | 13.1% | 9.4% | 3.7 pp | | Diluted EPS | $0.37 | $5.34 | (93)% | $0.64 | $5.56 | (88)% | | Non-GAAP Operating Income | $222.6 | $194.4 | 15% | $420.8 | $428.8 | (2)% | | Non-GAAP Diluted EPS | $0.71 | $0.62 | 15% | $1.32 | $1.26 | 5% | | Annualized Recurring Revenue (ARR) | $2,210.4 | $2,113.0 | 5% | N/A | N/A | N/A | [Revenue Analysis](index=24&type=section&id=Revenue%20Analysis) This subsection analyzes Trimble Inc.'s revenue changes, breaking down the impact of acquisitions, divestitures, foreign currency, and organic growth Revenue Change Breakdown (YoY % Change) | Category | Q2 2025 Product | Q2 2025 Subscription & Services | Q2 2025 Total Revenue | YTD 2025 Product | YTD 2025 Subscription & Services | YTD 2025 Total Revenue | | :-------------------------------- | :-------------- | :------------------------------ | :-------------------- | :--------------- | :------------------------------- | :--------------------- | | Change in Revenue | (9)% | 6% | 1% | (18)% | 1% | (6)% | | Acquisitions | —% | 1% | 1% | 1% | 1% | 1% | | Divestitures | (7)% | (10)% | (9)% | (17)% | (8)% | (12)% | | Foreign currency exchange | 1% | 1% | 1% | —% | (1)% | —% | | Organic growth | (3)% | 14% | 8% | (2)% | 9% | 5% | - Total organic revenue increased by **8%** in Q2 2025 and **5%** in the first two quarters of 2025, driven by strong subscription and services growth, partially offset by decreased product revenue[93](index=93&type=chunk) - Organic product revenue decreased due to an unusually large Surveying order in the prior year and the conversion of perpetual software licenses to term licenses[94](index=94&type=chunk) - Organic subscription and services revenue increased due to strong subscription growth and software term license growth, particularly in AECO[95](index=95&type=chunk) [Gross Margin Analysis](index=24&type=section&id=Gross%20Margin%20Analysis) This subsection examines the factors contributing to changes in Trimble Inc.'s gross margin and gross margin as a percentage of revenue - Gross margin and gross margin as a percentage of revenue increased for both the second quarter and first two quarters of 2025, primarily due to an improved mix of higher-margin subscription and software term license sales, lower intangible amortization costs, and the divestiture of lower-margin businesses[96](index=96&type=chunk) [Operating Expenses Analysis](index=25&type=section&id=Operating%20Expenses%20Analysis) This section analyzes Trimble Inc.'s operating expenses, including research and development, sales and marketing, general and administrative, and amortization of purchased intangible assets [Research and Development, Sales and Marketing, and General and Administrative Expense](index=25&type=section&id=Research%20and%20Development,%20Sales%20and%20Marketing,%20and%20General%20and%20Administrative%20Expense) This subsection details the trends and drivers behind Trimble Inc.'s R&D, S&M, and G&A expenses for Q2 and YTD 2025 and 2024 Operating Expenses (In millions) | Expense Category | Q2 2025 | Q2 2024 | % Change (QoQ) | YTD 2025 | YTD 2024 | % Change (YoY) | | :-------------------------------- | :------ | :------ | :------------- | :------- | :------- | :------------- | | Research and development | $163.3 | $161.5 | 1% | $321.8 | $331.7 | (3)% | | Sales and marketing | $158.4 | $142.5 | 11% | $311.6 | $289.3 | 8% | | General and administrative | $117.6 | $148.7 | (21)% | $239.1 | $282.8 | (15)% | | Total | $439.3 | $452.7 | (3)% | $872.5 | $903.8 | (3)% | - R&D expense slightly increased in Q2 2025 due to higher compensation, but decreased for the first two quarters due to divestitures[98](index=98&type=chunk) - S&M expense increased in both periods due to higher compensation (including commissions) and increased marketing/consulting costs related to revenue growth, partially offset by divestitures[99](index=99&type=chunk) - G&A expense decreased due to lower consulting and transaction costs in the prior year and divestitures, partially offset by higher investment costs for the Connect & Scale strategy and incentive compensation[100](index=100&type=chunk) [Amortization of Purchased Intangible Assets](index=25&type=section&id=Amortization%20of%20Purchased%20Intangible%20Assets) This subsection analyzes the amortization expense of Trimble Inc.'s purchased intangible assets for Q2 and YTD 2025 and 2024 Amortization Expense of Purchased Intangibles (In millions) | Category | Q2 2025 | Q2 2024 | % Change (QoQ) | YTD 2025 | YTD 2024 | % Change (YoY) | | :-------------------------------- | :------ | :------ | :------------- | :------- | :------- | :------------- | | Cost of sales | $16.1 | $28.0 | (43)% | $32.5 | $55.8 | (42)% | | Operating expenses | $26.8 | $26.5 | 1% | $52.4 | $53.2 | (2)% | | Total amortization expense | $42.9 | $54.5 | (21)% | $84.9 | $109.0 | (22)% | - Total amortization expense of purchased intangibles decreased by **21%** in Q2 2025 and **22%** in the first two quarters of 2025, primarily due to the expiration of amortization for prior years' acquisitions[101](index=101&type=chunk) [Non-Operating (Expense) Income, Net](index=26&type=section&id=Non-Operating%20(Expense)%20Income,%20Net) This subsection details Trimble Inc.'s non-operating income and expenses, including divestiture gains, interest, and equity method investments Non-Operating (Expense) Income, Net (In millions) | Category | Q2 2025 | Q2 2024 | % Change (QoQ) | YTD 2025 | YTD 2024 | % Change (YoY) | | :-------------------------------- | :------ | :------ | :------------- | :------- | :------- | :------------- | | Divestitures gain, net | $2.6 | $1,714.1 | (100)% | $4.8 | $1,717.6 | (100)% | | Interest expense, net | $(19.4) | $(18.1) | 7% | $(35.0) | $(63.3) | (45)% | | Income from equity method investments, net | $2.3 | $4.3 | (47)% | $3.3 | $9.9 | (67)% | | Total non-operating (expense) income, net | $(14.5) | $1,700.4 | (101)% | $(25.6) | $1,664.2 | (102)% | - Non-operating expense, net, increased significantly for both periods, primarily due to the large Ag divestiture gain recognized in the prior year (Q2 2024)[103](index=103&type=chunk) [Income Tax Provision](index=26&type=section&id=Income%20Tax%20Provision) This subsection analyzes Trimble Inc.'s effective income tax rate and the impact of the OBBBA on cash taxes for Q2 and YTD 2025 and 2024 Effective Income Tax Rate | Period | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Second Quarter | 21.3% | 25.3% | | First Two Quarters | 21.9% | 25.1% | - The effective income tax rate decreased in Q2 2025 and the first two quarters of 2025 compared to 2024, mainly due to the gains from the Ag divestiture in 2024[104](index=104&type=chunk) - The OBBBA's repeal of the domestic R&D capitalization requirement is expected to reduce cash taxes by approximately **$32 million** in 2025 and **$80 million** in subsequent years, with an immaterial impact on the Q2 2025 tax rate[105](index=105&type=chunk) [Results by Segment](index=26&type=section&id=Results%20by%20Segment) This section provides a detailed breakdown of Trimble Inc.'s revenue and operating income performance for each of its reportable segments [AECO Segment](index=28&type=section&id=AECO%20Segment) This subsection analyzes the financial performance of Trimble Inc.'s AECO segment, including revenue and operating income trends AECO Segment Performance (In millions) | Metric | Q2 2025 | Q2 2024 | % Change (QoQ) | YTD 2025 | YTD 2024 | % Change (YoY) | | :-------------------------------- | :------ | :------ | :------------- | :------- | :------- | :------------- | | Segment revenue | $350.3 | $299.7 | 17% | $685.7 | $638.8 | 7% | | Segment operating income | $106.4 | $79.1 | 35% | $198.0 | $205.8 | (4)% | | Operating income % | 30% | 26% | 4 pp | 29% | 32% | (3) pp | - AECO organic revenue increased by **16%** in Q2 2025 and **7%** in the first two quarters, driven by strong subscription and software term license growth, particularly in Construction Management Systems, Architecture & Design, MEP, and Structures solutions[109](index=109&type=chunk) - Operating income for AECO increased by **35%** in Q2 2025 due to increased revenue and gross margin expansion, but decreased by **4%** for the first two quarters due to the impact of prior year software renewals[110](index=110&type=chunk) [Field Systems Segment](index=28&type=section&id=Field%20Systems%20Segment) This subsection analyzes the financial performance of Trimble Inc.'s Field Systems segment, including revenue and operating income trends Field Systems Segment Performance (In millions) | Metric | Q2 2025 | Q2 2024 | % Change (QoQ) | YTD 2025 | YTD 2024 | % Change (YoY) | | :-------------------------------- | :------ | :------ | :------------- | :------- | :------- | :------------- | | Segment revenue | $392.7 | $379.3 | 4% | $751.9 | $798.5 | (6)% | | Segment operating income | $121.0 | $109.8 | 10% | $227.6 | $208.1 | 9% | | Operating income % | 31% | 29% | 2 pp | 30% | 26% | 4 pp | - Field Systems organic revenue increased by **3%** in Q2 2025 and **4%** in the first two quarters, driven by strong end-user demand for Civil Construction solutions, partially offset by a decline in Surveying due to large prior-year orders and conversion to term licenses[111](index=111&type=chunk) - Operating income for Field Systems increased by **10%** in Q2 2025 and **9%** for the first two quarters, benefiting from organic revenue and gross margin expansion, with the latter period also impacted by the loss of lower-margin Ag divestiture income[112](index=112&type=chunk) [T&L Segment](index=28&type=section&id=T%26L%20Segment) This subsection analyzes the financial performance of Trimble Inc.'s T&L segment, including revenue and operating income trends T&L Segment Performance (In millions) | Metric | Q2 2025 | Q2 2024 | % Change (QoQ) | YTD 2025 | YTD 2024 | % Change (YoY) | | :-------------------------------- | :------ | :------ | :------------- | :------- | :------- | :------------- | | Segment revenue | $132.7 | $191.8 | (31)% | $278.7 | $386.8 | (28)% | | Segment operating income | $28.6 | $35.9 | (20)% | $54.7 | $72.2 | (24)% | | Operating income % | 22% | 19% | 3 pp | 20% | 19% | 1 pp | - T&L organic revenue increased by **5%** in Q2 2025 and **3%** in the first two quarters, driven by MAPS and Transporeon subscription revenue growth[113](index=113&type=chunk) - Operating income for T&L decreased by **20%** in Q2 2025 and **24%** for the first two quarters, primarily due to the loss of Mobility divestiture income, however, operating income as a percentage of revenue increased due to the loss of lower-margin Mobility income[114](index=114&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) This section evaluates Trimble Inc.'s liquidity and capital resources, focusing on cash flows from operating, investing, and financing activities [Operating Activities](index=29&type=section&id=Operating%20Activities) This subsection analyzes the net cash provided by Trimble Inc.'s operating activities and the factors influencing its changes - Net cash provided by operating activities decreased by **68% to $102.1 million** in the first two quarters of 2025, primarily due to higher tax payments related to the Ag divestiture and increased incentive bonus payments, partially offset by lower interest payments[115](index=115&type=chunk)[116](index=116&type=chunk) [Investing Activities](index=29&type=section&id=Investing%20Activities) This subsection examines the net cash used in or provided by Trimble Inc.'s investing activities, highlighting the impact of divestitures - Net cash used in investing activities was **$(27.2) million** in the first two quarters of 2025, a significant change from **$1,871.1 million** provided in the prior year, mainly due to the **$1.9 billion** proceeds received from the Ag divestiture in 2024[115](index=115&type=chunk)[117](index=117&type=chunk) [Financing Activities](index=29&type=section&id=Financing%20Activities) This subsection analyzes the net cash used in Trimble Inc.'s financing activities, including debt repayments and stock repurchases - Net cash used in financing activities decreased by **61% to $(582.6) million** in the first two quarters of 2025, driven by a **$1.3 billion** debt repayment in the prior year, partially offset by **$677.4 million** in stock repurchases in the current year[115](index=115&type=chunk)[118](index=118&type=chunk) [Cash and Cash Equivalents](index=29&type=section&id=Cash%20and%20Cash%20Equivalents) This subsection provides an overview of Trimble Inc.'s cash and cash equivalents balance and its sufficiency to meet future financial obligations - Cash and cash equivalents decreased by **$481.9 million to $265.9 million** as of Q2 2025[115](index=115&type=chunk) - The company believes current cash, equivalents, and available borrowing capacity, along with operating cash flow, will be sufficient to meet anticipated operating needs, including Connect & Scale strategy expenditures, debt service, acquisitions, and stock repurchases[119](index=119&type=chunk) - Approximately half of the **$1.9 billion** Ag divestiture proceeds received in 2024 were used to pay down debt and taxes in 2024, with the remaining used in 2025 for stock repurchases and the final **$277.4 million** tax payment for the divestiture[121](index=121&type=chunk) [Supplemental Disclosure of Non-GAAP Financial Measures and Annualized Recurring Revenue](index=30&type=section&id=Supplemental%20Disclosure%20of%20Non-GAAP%20Financial%20Measures%20and%20Annualized%20Recurring%20Revenue) This section provides supplemental disclosures on Trimble Inc.'s non-GAAP financial measures and Annualized Recurring Revenue (ARR) - Non-GAAP financial measures are provided to supplement GAAP information, focusing on 'core operating performance' by excluding non-cash items, certain variable charges, and non-recurring transactions[123](index=123&type=chunk) - Organic revenue growth is a non-GAAP measure that excludes the impacts of foreign currency translation and acquisitions/divestitures from the prior 12 months[124](index=124&type=chunk) - Annualized Recurring Revenue (ARR) represents the estimated annualized value of recurring revenue, calculated from subscription, maintenance, and support revenue, plus the current quarter's portion of term licenses[125](index=125&type=chunk) [Non-GAAP Definitions](index=31&type=section&id=Non-GAAP%20Definitions) This subsection defines the specific adjustments made to derive Trimble Inc.'s non-GAAP gross margin, operating income, and Adjusted EBITDA - Non-GAAP gross margin excludes amortization of purchased intangibles, stock-based compensation, deferred compensation, and restructuring costs[128](index=128&type=chunk) - Non-GAAP operating income excludes amortization of purchased intangibles, acquisition/divestiture items, stock-based compensation, deferred compensation, and restructuring costs[130](index=130&type=chunk) - Adjusted EBITDA is defined as non-GAAP operating income plus depreciation, cloud computing amortization, and income from equity method investments, with specific exclusions for goodwill impairment, purchased intangibles amortization, stock-based compensation, and restructuring costs[135](index=135&type=chunk) [Explanations of Non-GAAP adjustments](index=32&type=section&id=Explanations%20of%20Non-GAAP%20adjustments) This subsection provides detailed explanations for the various adjustments made to reconcile GAAP to non-GAAP financial measures - Acquisition/divestiture items excluded from non-GAAP measures include external and incremental costs directly from M&A activities, such as legal, due diligence, integration, and one-time gains/losses[136](index=136&type=chunk) - Stock-based compensation and income/expense from non-qualified deferred compensation plan liabilities are excluded from non-GAAP gross margin and operating expenses[136](index=136&type=chunk) - Restructuring and other costs, including termination benefits and expenses from the 2023 re-audit, are excluded from non-GAAP gross margin and operating expenses[136](index=136&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details Trimble's exposure to market risks, specifically related to changes in interest rates and foreign currency exchange rates, and outlines the strategies and derivative financial instruments used to manage these risks - Trimble is exposed to market risk from changes in interest rates and foreign currency exchange rates, using derivative financial instruments to manage these risks without engaging in speculative purposes[138](index=138&type=chunk) [Market Interest Rate Risk](index=34&type=section&id=Market%20Interest%20Rate%20Risk) This subsection discusses Trimble Inc.'s exposure to market interest rate risk, particularly concerning cash equivalents and debt - Cash equivalents primarily consist of interest and non-interest bearing bank deposits and time deposits, with the main objective being safety of principal and liquidity[139](index=139&type=chunk) - Due to the readily convertible nature of cash equivalents, no material effect on the portfolio is anticipated from interest rate fluctuations[139](index=139&type=chunk) [Foreign Currency Exchange Rate Risk](index=34&type=section&id=Foreign%20Currency%20Exchange%20Rate%20Risk) This subsection details Trimble Inc.'s exposure to foreign currency exchange rate fluctuations and the use of derivative instruments to mitigate these risks - International operations expose Trimble to foreign currency exchange rate fluctuations, primarily between the U.S. Dollar and the Euro, affecting revenue and operating income[140](index=140&type=chunk)[141](index=141&type=chunk) - In Q2 2025, revenue was favorably impacted by **$6.7 million**, while operating income was unfavorably impacted by **$2.8 million** due to exchange rate changes[142](index=142&type=chunk) - The company uses foreign currency forward contracts, typically with one to two-month maturities, to minimize short-term impacts on cash, debt, and certain receivables/payables, primarily in Euro, NZD, CAD, AUD, and GBP[143](index=143&type=chunk)[144](index=144&type=chunk) [ITEM 4. Controls and Procedures](index=35&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section addresses the effectiveness of Trimble's disclosure controls and procedures, reporting material weaknesses in internal controls, ongoing remediation efforts, and potential impacts from implementing a new customer relationship management tool [Evaluation of Disclosure Controls and Procedures](index=35&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This subsection presents management's conclusion on the effectiveness of Trimble Inc.'s disclosure controls and procedures - Management concluded that disclosure controls and procedures were not effective as of the end of the reporting period due to previously reported material weaknesses in internal controls[146](index=146&type=chunk) [Remediation of Previously Reported Material Weaknesses](index=35&type=section&id=Remediation%20of%20Previously%20Reported%20Material%20Weaknesses) This subsection outlines Trimble Inc.'s ongoing efforts to remediate previously reported material weaknesses in internal controls over financial reporting - Remediation efforts include finalizing the design and implementation of controls for certain IT General Controls (ITGCs) related to financial reporting systems[147](index=147&type=chunk)[149](index=149&type=chunk) - The company is updating policies and practices for maintaining evidence of business process control reviews and finalizing controls over the evaluation of standalone selling prices for revenue accounting[147](index=147&type=chunk)[149](index=149&type=chunk) - Material weaknesses will be considered remediated only after remedial controls operate effectively for a sufficient period and are tested by management[147](index=147&type=chunk) [Changes in Internal Control over Financial Reporting](index=35&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This subsection discusses potential changes to Trimble Inc.'s internal control over financial reporting due to the implementation of a new CRM tool - The implementation of a new customer relationship management tool is a strategic initiative that will replace many legacy systems and could materially affect internal control over financial reporting[148](index=148&type=chunk) [PART II. OTHER INFORMATION](index=36&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information including legal proceedings, risk factors, equity sales, defaults, mine safety, other disclosures, and exhibits [ITEM 1. Legal Proceedings](index=36&type=section&id=ITEM%201.%20Legal%20Proceedings) This section states that Trimble is involved in routine litigation but has no material legal proceedings beyond the ordinary course of business - Trimble is involved in litigation arising in the ordinary course of business, but there are no material legal proceedings[150](index=150&type=chunk) [ITEM 1A. Risk Factors](index=36&type=section&id=ITEM%201A.%20Risk%20Factors) This section indicates that there have been no material changes to the risk factors previously disclosed in the 2024 Form 10-K, and reminds readers that additional unknown or immaterial risks could still adversely affect the business - There have been no material changes to the risk factor disclosures since the 2024 Form 10-K[151](index=151&type=chunk) - Additional risks and uncertainties not currently known or deemed immaterial could still materially and adversely affect the business[151](index=151&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's common stock repurchase program, including the new **$1.0 billion** authorization in Q1 2025 and the repurchase activity during the second quarter of 2025 [Issuer Purchase of Equity Securities](index=36&type=section&id=Issuer%20Purchase%20of%20Equity%20Securities) This subsection provides details on Trimble Inc.'s common stock repurchase activity during the second quarter of 2025 - In Q1 2025, the Board approved a new **$1.0 billion** stock repurchase program, replacing the prior 2024 program[153](index=153&type=chunk) Issuer Purchases of Equity Securities (Second Quarter 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program | | :-------------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------------- | | April 5, 2025 – May 9, 2025 | — | $— | $372,642,173 | | May 10, 2025 – June 6, 2025 | 700,009 | $71.43 | $322,642,502 | | June 7, 2025 – July 4, 2025 | — | $— | $322,642,502 | | Total | 700,009 | N/A | N/A | - The program allows repurchases through various means and can be suspended, modified, or discontinued at any time without prior notice[154](index=154&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=36&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[156](index=156&type=chunk) [ITEM 4. Mine Safety Disclosures](index=36&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This section indicates that there are no mine safety disclosures to report - There are no mine safety disclosures[157](index=157&type=chunk) [ITEM 5. Other Information](index=36&type=section&id=ITEM%205.%20Other%20Information) This section provides information on Rule 10b5-1 trading arrangements adopted by Section 16 officers and directors during the second quarter of 2025 [Rule 10b5-1 Trading Arrangements](index=36&type=section&id=Rule%2010b5-1%20Trading%20Arrangements) This subsection details the Rule 10b5-1 trading arrangements adopted by Trimble Inc.'s Section 16 officers and directors - Peter Large, Senior Vice President, adopted a Rule 10b5-1 trading arrangement on May 29, 2025, for potential sales of up to **25,563 shares** between August 27, 2025, and May 22, 2026[158](index=158&type=chunk) - Philip Sawarynski, Chief Financial Officer, adopted a Rule 10b5-1 trading arrangement on June 6, 2025, for potential sales of up to **12,000 shares** between September 9, 2025, and August 31, 2026[158](index=158&type=chunk) [ITEM 6. Exhibits](index=38&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed or furnished with the report, including various agreements, corporate documents, certifications, and financial statements formatted in Inline XBRL - The report includes an index of exhibits, such as the Amended and Restated Sale and Contribution Agreement, Certificate of Incorporation, Amended and Restated By-Laws, Trimble One Bonus Plan Description, and CEO/CFO certifications[159](index=159&type=chunk)[161](index=161&type=chunk) - Financial statements and notes are formatted in Inline XBRL with detailed tags[161](index=161&type=chunk) [SIGNATURES](index=39&type=section&id=SIGNATURES) This section contains the signature of the authorized officer, Phillip Sawarynski, Chief Financial Officer, certifying the filing of the report on behalf of Trimble Inc - The report is signed by Phillip Sawarynski, Chief Financial Officer, on behalf of Trimble Inc. on August 6, 2025[165](index=165&type=chunk)

Financial Data and Key Metrics Changes - Revenue for the quarter was $876 million, up 9% organically [6] - Annual Recurring Revenue (ARR) reached $2.21 billion, up 14% organically [6] - Earnings per share (EPS) was $0.71, reflecting a 15% year-over-year increase [6][22] - Gross margins expanded by 210 basis points to 70.6% [22] - EBITDA margins increased by 170 basis points year-over-year to 27.4% [22] Business Line Data and Key Metrics Changes - AECO segment reported ARR of $1.36 billion and revenue of $350 million, both up 16% [10][23] - Field Systems revenue increased by 3% to $393 million, with ARR up 17% to $358 million [13][24] - Transportation and Logistics segment saw revenue and ARR both rise by 8% [16][25] Market Data and Key Metrics Changes - The construction market remains strong, with healthy backlogs and hiring activity among customers [19] - The transportation market is stabilizing, with more upward catalysts than downward [19] - The public sector is experiencing mixed performance, with state-level departments of transportation showing strength while federal business is down significantly [60][62] Company Strategy and Development Direction - The company is focused on its "Connect and Scale" strategy, which aims to bundle solutions and enhance customer access to technology [4][3] - There is a strong emphasis on AI capabilities, with ongoing efforts to integrate AI across various functions and products [5][8] - The company aims to achieve $3 billion in ARR, $4 billion in revenue, and a 30% EBITDA margin by 2027 [7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing rollout of AI and its potential to unlock efficiency and customer value [8][19] - Customer sentiment remains stable, with positive pockets of growth in energy infrastructure and civil construction [44] - The company is navigating macroeconomic uncertainties, including tariffs and inflation, but sees opportunities outweighing risks [18][20] Other Important Information - The company repurchased $50 million of shares in the second quarter, with $323 million of authorization remaining [21] - The repeal of Section 174 is expected to provide a cash flow benefit of approximately $50 million in 2025 [20] Q&A Session Summary Question: Can you talk about how Trimble's platform benefits from adding AI capabilities? - Management believes the quality of AI correlates with the quantity and quality of underlying data, expressing optimism about a data-forward future [31][32] Question: Where is the traction coming from in bundling products together? - About two-thirds of bookings are from existing customers, indicating strong cross-sell opportunities [35] Question: What is the update on customer sentiment and cycle times? - Overall customer sentiment remains similar to previous quarters, with strength noted in data centers and civil infrastructure [44] Question: How is the model transition in Field Systems performing? - ARR in Field Systems was up 17%, indicating strong customer adoption of the subscription model [49] Question: What is the outlook for the public sector? - Federal business is down significantly, but state-level departments of transportation are performing well [60][62] Question: How is the rollout of TC1 in Europe progressing? - TC1 bookings have nearly doubled year-over-year, with positive early reception in Europe [66] Question: How is the SMB market performing in AECO? - The SMB market continues to show relative strength, with many larger contractors working with SMBs to execute projects [71]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $876 million, up 9% organically compared to the previous year [6] - Annual Recurring Revenue (ARR) reached $2.21 billion, up 14% organically [6] - Earnings per share (EPS) was $0.71, reflecting a 15% year-over-year increase [6][23] - Gross margins expanded by 210 basis points to 70.6% [23] - EBITDA margins increased by 170 basis points year-over-year to 27.4% [23] Business Line Data and Key Metrics Changes - AECO segment reported ARR of $1.36 billion and revenue of $350 million, both up 16% [11][24] - Field Systems revenue was $393 million, up 3%, with ARR at $358 million, up 17% [14][25] - Transportation and Logistics revenue and ARR both increased by 8% [16][26] Market Data and Key Metrics Changes - The construction market remains strong, with healthy backlogs and hiring activity among customers [19] - The transportation market is stabilizing, with more upward catalysts than downward [19] - The public sector showed mixed results, with federal business down significantly while state-level departments of transportation are performing well [62] Company Strategy and Development Direction - The company is focused on its "Connect and Scale" strategy, which aims to integrate workflows and enhance customer access to technology [4][3] - There is a strong emphasis on AI capabilities, with ongoing training and deployment across various functions [9][10] - The company aims to achieve $3 billion in ARR, $4 billion in revenue, and a 30% EBITDA margin by 2027 [7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the AI-driven future and the company's readiness to leverage its unique dataset [9][34] - Customer sentiment remains stable, with positive pockets of growth in energy infrastructure and civil construction [44] - The company is navigating macroeconomic uncertainties, including tariffs and inflation, but sees opportunities outweighing risks [18][21] Other Important Information - The company repurchased $50 million in shares during the quarter, with $323 million remaining in authorization [22] - The repeal of Section 174 is expected to provide a cash flow benefit of approximately $50 million in 2025 [21] Q&A Session Summary Question: Can you talk about how Trimble's platform benefits from adding AI capabilities? - Management believes the quality of AI correlates with the quantity and quality of underlying data, expressing optimism about a data-forward future [31][32] Question: Where is the traction coming from in bundling products together? - About two-thirds of bookings are from existing customers, indicating strong cross-sell opportunities [36] Question: What is the update on customer sentiment and cycle times? - Customer sentiment remains similar to Q1, with strength noted in energy infrastructure and civil construction [43][44] Question: How is the public sector performing? - Federal business is down significantly, while state-level departments of transportation are strong due to infrastructure spending [62] Question: How is the adoption of recurring revenue models in field systems? - The company has seen a 17% year-over-year increase in ARR for field systems, indicating strong customer adoption [49][50]

Q2'25 Financial Performance - Trimble's Q2'25 as-adjusted revenue reached $876 million, reflecting a 9% organic growth compared to Q2'24[17] - The company's ARR (Annual Recurring Revenue) stood at $2,210 million, demonstrating a 14% organic increase year-over-year[13, 17] - Non-GAAP Gross Margin improved to 706%, a 210 bps increase from 685% in Q2'24[17] - Non-GAAP Operating Income Margin also saw a 210 bps rise, reaching 254% compared to 233% in the previous year[17] - Adjusted EBITDA Margin expanded by 170 bps to 274% from 257% in Q2'24[17] Segment Performance - AECO (Architects, Engineers, Construction, Owners) segment revenue was $350 million, with a 16% organic growth[23] and ARR of $1,360 million, also up by 16% organically[23] - Field Systems segment revenue reached $393 million, showing a 3% organic increase[26], and ARR grew by 17% organically to $358 million[26] - Transportation & Logistics (T&L) segment revenue was $133 million, reflecting an 8% organic growth[30], with ARR at $492 million, also up by 8% organically[30] FY'25 Outlook - The company updated its FY'25 revenue guidance to $346 to $354 billion, an increase of $100 million at the midpoint[34] - Organic revenue growth for FY'25 is projected to be between 6% and 9%[34]

[Executive Summary & Business Overview](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Overview) [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) Trimble announced strong financial results for the second quarter of 2025, exceeding expectations with record annualized recurring revenue (ARR) and gross margin, reflecting ongoing business momentum and successful execution of its Connect & Scale strategy - Trimble delivered record annualized recurring revenue of **$2.21 billion** and surpassed expectations on both the top and bottom lines, reflecting ongoing momentum and validation of the Connect & Scale strategy[3](index=3&type=chunk) Second Quarter 2025 Financial Highlights | Metric | Value | | :-------------------------------- | :------------------- | | Revenue | $875.7 million (up 1% YoY, 8% organic) | | Annualized Recurring Revenue (ARR) | $2.21 billion (up 5% YoY, 13% organic) | | GAAP Operating Income | $127.8 million (14.6% of revenue) | | Non-GAAP Operating Income | $222.6 million (25.4% of revenue) | | GAAP Net Income | $89.2 million | | Non-GAAP Net Income | $169.4 million | | GAAP Diluted EPS | $0.37 | | Non-GAAP Diluted EPS | $0.71 | | Adjusted EBITDA | $239.9 million (27.4% of revenue) | | Share Repurchase (Q2) | $50.0 million | | Share Repurchase (YTD) | $677.4 million | [Executive Commentary](index=1&type=section&id=Executive%20Commentary) Rob Painter, President and CEO, highlighted the record ARR and exceeding financial expectations, attributing success to business momentum and the Connect & Scale strategy, leading to an upward revision of full-year 2025 guidance - CEO Rob Painter stated that record annualized recurring revenue of **$2.21 billion** and exceeding top and bottom-line expectations validate the Connect & Scale strategy[3](index=3&type=chunk) - The company is raising its full-year 2025 guidance based on first-half performance and underlying business momentum[3](index=3&type=chunk) [Company Overview](index=1&type=section&id=Company%20Overview) Trimble is a global technology company that bridges the physical and digital worlds through innovation in precise positioning, modeling, and data analytics, serving essential industries like construction, geospatial, and transportation to enhance productivity and progress - Trimble is a global technology company connecting physical and digital worlds, transforming work through precise positioning, modeling, and data analytics[7](index=7&type=chunk) - The company serves essential industries including construction, geospatial, and transportation, focusing on infrastructure, building design, supply chain optimization, and mapping[7](index=7&type=chunk) [Forward-Looking Guidance](index=1&type=section&id=Forward-Looking%20Guidance) Trimble has raised its full-year 2025 financial guidance and provided expectations for the third quarter of 2025, reflecting strong performance and the impact of the Mobility divestiture Full-Year 2025 Guidance | Metric | Low End (Millions) | High End (Millions) | | :-------------------- | :-------- | :------- | | Revenue | $3,480 | $3,560 | | GAAP EPS | $1.55 | $1.70 | | Non-GAAP EPS | $2.90 | $3.06 | | GAAP Tax Rate | 21.0% | | | Non-GAAP Tax Rate | 17.4% | | | Shares Outstanding | ~242 million | | Third Quarter 2025 Guidance | Metric | Low End (Millions) | High End (Millions) | | :-------------------- | :-------- | :------- | | Revenue | $850 | $890 | | GAAP EPS | $0.34 | $0.43 | | Non-GAAP EPS | $0.67 | $0.75 | | GAAP Tax Rate | 19.0% | | | Non-GAAP Tax Rate | 17.5% | | | Shares Outstanding | ~240 million | | - Full-year 2025 guidance incorporates the closing of the Mobility divestiture on February 8, 2025[5](index=5&type=chunk) [Investor Relations Information](index=1&type=section&id=Investor%20Relations%20Information) Trimble will host a conference call and webcast on August 6, 2025, to discuss its second quarter 2025 results, with details provided for access and replay - A conference call to review Q2 2025 results will be held on August 6, 2025, at 8:00 a.m. ET[6](index=6&type=chunk) - An accompanying slide presentation and live webcast will be available on Trimble's investor relations website, with registration required for dial-in access[6](index=6&type=chunk) [Safe Harbor Statement](index=2&type=section&id=Safe%20Harbor%20Statement) This section provides a safe harbor statement, cautioning that forward-looking statements are subject to risks and uncertainties, including macroeconomic conditions, supply chain issues, geopolitical developments, and business model transitions, which could cause actual results to differ materially - Statements in the press release are forward-looking and subject to change, with actual results potentially differing due to various risks and uncertainties[9](index=9&type=chunk) - Risks include inability to market new products, integrate acquisitions, macroeconomic weakness, supply chain disruptions, geopolitical developments, foreign exchange fluctuations, and the transition to a subscription model[9](index=9&type=chunk) - Undue reliance should not be placed on forward-looking statements, and the company disclaims any undertaking to update or revise them[9](index=9&type=chunk) [Condensed Consolidated Financial Statements](index=3&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Statements of Income](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) Trimble's income statement shows a slight increase in total revenue for Q2 2025 year-over-year, driven by subscription and services growth, leading to a significant rise in GAAP operating income and gross margin percentage, despite a lower net income primarily due to a large divestiture gain in the prior year Condensed Consolidated Statements of Income (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (YoY) | | :---------------------------------- | :------------------ | :------------------ | :------------- | | Total Revenue | $875.7 | $870.8 | +0.6% | | Product Revenue | $292.8 | $320.4 | -8.6% | | Subscription and Services Revenue | $582.9 | $550.4 | +5.9% | | Total Cost of Sales | $277.8 | $324.9 | -14.5% | | Gross Margin | $597.9 | $545.9 | +9.5% | | Gross Margin (%) | 68.3% | 62.7% | +5.6 pp | | Total Operating Expense | $470.1 | $484.3 | -2.9% | | Operating Income | $127.8 | $61.6 | +107.5% | | Divestitures Gain, net | $2.6 | $1,714.1 | -99.8% | | Net Income | $89.2 | $1,316.4 | -93.2% | | Diluted EPS | $0.37 | $5.34 | -93.1% | Condensed Consolidated Statements of Income (First Two Quarters 2025 vs 2024) | Metric | YTD 2025 (Millions) | YTD 2024 (Millions) | Change (YoY) | | :---------------------------------- | :------------------ | :------------------ | :------------- | | Total Revenue | $1,716.3 | $1,824.1 | -5.9% | | Product Revenue | $564.4 | $687.5 | -17.9% | | Subscription and Services Revenue | $1,151.9 | $1,136.6 | +1.3% | | Total Cost of Sales | $557.6 | $684.6 | -18.5% | | Gross Margin | $1,158.7 | $1,139.5 | +1.7% | | Gross Margin (%) | 67.5% | 62.5% | +5.0 pp | | Total Operating Expense | $933.4 | $968.7 | -3.6% | | Operating Income | $225.3 | $170.8 | +31.9% | | Divestitures Gain, net | $4.8 | $1,717.6 | -99.7% | | Net Income | $155.9 | $1,373.6 | -88.7% | | Diluted EPS | $0.64 | $5.56 | -88.5% | [Condensed Consolidated Balance Sheets](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Trimble's balance sheet as of Q2 2025 shows a decrease in total assets and current assets compared to year-end 2024, primarily due to a significant reduction in cash and cash equivalents and the divestiture of assets held for sale. Total liabilities also decreased, while stockholders' equity remained relatively stable Condensed Consolidated Balance Sheets (As of Q2 2025 vs Year End 2024) | Metric | Q2 2025 (Millions) | Year End 2024 (Millions) | Change (Millions) | | :-------------------------------- | :------------------ | :----------------------- | :------- | | Cash and Cash Equivalents | $265.9 | $738.8 | -$472.9 | | Accounts Receivable, net | $539.5 | $725.8 | -$186.3 | | Assets Held for Sale | — | $312.0 | -$312.0 | | Total Current Assets | $1,289.6 | $2,270.4 | -$980.8 | | Goodwill | $5,247.6 | $4,988.4 | +$259.2 | | Equity Investments | $630.7 | $361.0 | +$269.7 | | Total Assets | $9,099.2 | $9,488.3 | -$389.1 | | Short-term Debt | $71.0 | — | +$71.0 | | Deferred Revenue | $781.2 | $800.4 | -$19.2 | | Income Taxes Payable | $18.8 | $325.0 | -$306.2 | | Liabilities Held for Sale | — | $62.6 | -$62.6 | | Total Current Liabilities | $1,377.1 | $1,788.0 | -$410.9 | | Long-term Debt | $1,441.4 | $1,390.6 | +$50.8 | | Total Liabilities | $3,411.1 | $3,743.0 | -$331.9 | | Total Stockholders' Equity | $5,688.1 | $5,745.3 | -$57.2 | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the first two quarters of 2025, Trimble experienced a significant decrease in net cash provided by operating activities and a net cash outflow from investing activities, largely due to the absence of a major divestiture gain seen in the prior year. Financing activities also resulted in a substantial cash outflow, primarily driven by share repurchases and debt payments, leading to an overall net decrease in cash and cash equivalents Condensed Consolidated Statements of Cash Flows (First Two Quarters 2025 vs 2024) | Metric | YTD 2025 (Millions) | YTD 2024 (Millions) | Change (Millions) | | :------------------------------------------ | :------------------ | :------------------ | :------- | | Net Income | $155.9 | $1,373.6 | -$1,217.7 | | Divestitures Gain, net (Operating Adjustments) | -$4.8 | -$1,717.6 | +$1,712.8 | | Net Cash Provided by Operating Activities | $102.1 | $321.4 | -$219.3 | | Divestiture of Businesses, net of cash divested | -$7.3 | $1,927.0 | -$1,934.3 | | Net Cash (Used in) Provided by Investing Activities | -$27.2 | $1,871.1 | -$1,898.3 | | Repurchases of Common Stock | -$677.4 | -$175.0 | -$502.4 | | Payments on Debt and Revolving Credit Lines | -$227.3 | -$1,799.3 | +$1,572.0 | | Net Cash Used in Financing Activities | -$582.6 | -$1,479.9 | +$897.3 | | Net (Decrease) Increase in Cash and Cash Equivalents | -$481.9 | $705.2 | -$1,187.1 | | Cash and Cash Equivalents - End of Period | $265.9 | $944.1 | -$678.2 | [Reporting Segments](index=6&type=section&id=Reporting%20Segments) [Segment Performance Overview](index=6&type=section&id=Segment%20Performance%20Overview) In Q2 2025, the AECO and Field Systems segments demonstrated revenue growth and improved operating income percentages year-over-year, while the T&L segment experienced a decline in both revenue and operating income, reflecting varied performance across Trimble's business areas Segment Performance (Second Quarter 2025 vs 2024) | Segment | Q2 2025 Revenue (Millions) | Q2 2024 Revenue (Millions) | YoY Change (Revenue) | Q2 2025 Operating Income (Millions) | Q2 2024 Operating Income (Millions) | YoY Change (Operating Income) | Q2 2025 Operating Income % | Q2 2024 Operating Income % | | :---------------- | :------------------------ | :------------------------ | :------------------- | :-------------------------- | :-------------------------- | :---------------------------- | :------------------------- | :------------------------- | | AECO | $350.3 | $299.7 | +16.9% | $106.4 | $79.1 | +34.5% | 30.4% | 26.4% | | Field Systems | $392.7 | $379.3 | +3.5% | $121.0 | $109.8 | +10.2% | 30.8% | 28.9% | | T&L | $132.7 | $191.8 | -30.8% | $28.6 | $35.9 | -20.4% | 21.6% | 18.7% | Segment Performance (First Two Quarters 2025 vs 2024) | Segment | YTD 2025 Revenue (Millions) | YTD 2024 Revenue (Millions) | YoY Change (Revenue) | YTD 2025 Operating Income (Millions) | YTD 2024 Operating Income (Millions) | YoY Change (Operating Income) | YTD 2025 Operating Income % | YTD 2024 Operating Income % | | :---------------- | :------------------------ | :------------------------ | :------------------- | :-------------------------- | :-------------------------- | :---------------------------- | :------------------------- | :------------------------- | | AECO | $685.7 | $638.8 | +7.3% | $198.0 | $205.8 | -3.8% | 28.9% | 32.2% | | Field Systems | $751.9 | $798.5 | -5.8% | $227.6 | $208.1 | +9.4% | 30.3% | 26.1% | | T&L | $278.7 | $386.8 | -27.9% | $54.7 | $72.2 | -24.2% | 19.6% | 18.7% | [Non-GAAP Financial Measures & Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) [GAAP to Non-GAAP Reconciliation Tables](index=7&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliation%20Tables) Trimble provides detailed reconciliations from GAAP to non-GAAP measures for key financial metrics, including gross margin, operating income, net income, diluted EPS, Adjusted EBITDA, and free cash flow, for both the second quarter and year-to-date periods of 2025 and 2024, as well as forecasted diluted EPS GAAP to Non-GAAP Gross Margin Reconciliation (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | | :------------------------------------ | :------------------ | :------------------ | | GAAP Gross Margin | $597.9 | $545.9 | | Amortization of purchased intangible assets | $16.1 | $28.0 | | Stock-based compensation / deferred compensation | $4.2 | $4.2 | | Restructuring and other costs | $0.4 | $0.6 | | Non-GAAP Gross Margin | $618.6 | $578.7 | | Non-GAAP Gross Margin % | 70.6% | 66.5% | GAAP to Non-GAAP Operating Income Reconciliation (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | | :------------------------------------ | :------------------ | :------------------ | | GAAP Operating Income | $127.8 | $61.6 | | Amortization of purchased intangible assets | $42.9 | $54.5 | | Acquisition / divestiture items | $2.7 | $33.9 | | Stock-based compensation / deferred compensation | $40.8 | $38.1 | | Restructuring and other costs | $8.4 | $6.3 | | Non-GAAP Operating Income | $222.6 | $194.4 | | Non-GAAP Operating Income % | 25.4% | 22.3% | GAAP to Non-GAAP Diluted Net Income Per Share Reconciliation (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (Per Share) | Q2 2024 (Per Share) | | :------------------------------------ | :------------------ | :------------------ | | GAAP Diluted Net Income Per Share | $0.37 | $5.34 | | Amortization of purchased intangible assets | $0.18 | $0.22 | | Acquisition / divestiture items | — | -$6.82 | | Stock-based compensation | $0.16 | $0.15 | | Restructuring and other costs | $0.05 | $0.05 | | Non-GAAP tax adjustments | -$0.05 | $1.68 | | Non-GAAP Diluted Net Income Per Share | $0.71 | $0.62 | Forecasted GAAP to Non-GAAP Diluted Net Income Per Share (Q3 2025 & Full Year 2025) | Metric | Q3 2025 Low End (Per Share) | Q3 2025 High End (Per Share) | FY 2025 Low End (Per Share) | FY 2025 High End (Per Share) | | :------------------------------------ | :-------------- | :--------------- | :-------------- | :--------------- | | Forecasted GAAP Diluted Net Income Per Share | $0.34 | $0.43 | $1.55 | $1.70 | | Amortization of purchased intangible assets | $0.18 | $0.18 | $0.71 | $0.71 | | Acquisition / divestiture items | $0.02 | $0.02 | $0.05 | $0.05 | | Stock-based compensation | $0.15 | $0.15 | $0.61 | $0.61 | | Restructuring and other costs | $0.04 | $0.04 | $0.17 | $0.17 | | Non-GAAP tax adjustments | -$0.06 | -$0.07 | -$0.19 | -$0.18 | | Forecasted Non-GAAP Diluted Net Income Per Share | $0.67 | $0.75 | $2.90 | $3.06 | [Non-GAAP Definitions and Explanations](index=10&type=section&id=Non-GAAP%20Definitions%20and%20Explanations) This section clarifies Trimble's non-GAAP financial measures, explaining their purpose in providing insight into core operating performance by excluding non-cash items, non-recurring charges, and transactions not reflective of ongoing results. It details the specific adjustments made for non-GAAP gross margin, operating expenses, operating income, non-operating expense, income tax provision, net income, diluted EPS, and Adjusted EBITDA - Non-GAAP financial measures provide useful information for understanding 'core operating performance' by excluding non-cash items, certain variable charges not expected to recur, and transactions not meaningful for period-to-period comparisons[23](index=23&type=chunk) - Non-GAAP gross margin excludes amortization of purchased intangible assets, stock-based compensation, deferred compensation, and restructuring and other costs[24](index=24&type=chunk) - Adjusted EBITDA is defined as non-GAAP operating income plus depreciation expense, cloud computing amortization, and income from equity method investments, net, excluding specific non-operating items[31](index=31&type=chunk) - Non-GAAP adjustments (A) through (G) include amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation/deferred compensation, restructuring and other costs, non-GAAP items tax effected, and differences in GAAP and non-GAAP tax rates[36](index=36&type=chunk) [Non-GAAP Gross Margin](index=10&type=section&id=Non-GAAP%20Gross%20Margin) - Non-GAAP gross margin excludes amortization of purchased intangible assets, stock-based compensation, deferred compensation, and restructuring and other costs to understand product mix, pricing, and manufacturing cost influence[24](index=24&type=chunk) [Non-GAAP Operating Expenses](index=10&type=section&id=Non-GAAP%20Operating%20Expenses) - Non-GAAP operating expenses exclude amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation, deferred compensation, and restructuring and other costs to evaluate non-GAAP spending relative to revenue[25](index=25&type=chunk) [Non-GAAP Operating Income](index=10&type=section&id=Non-GAAP%20Operating%20Income) - Non-GAAP operating income excludes amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation, deferred compensation, and restructuring and other costs to understand operating income trends driven by revenue, gross margin, and spending[26](index=26&type=chunk) [Non-GAAP Non-Operating Expense, Net](index=10&type=section&id=Non-GAAP%20Non-Operating%20Expense%2C%20Net) - Non-GAAP non-operating expense, net, excludes acquisition/divestiture items, deferred compensation, and restructuring and other costs to help evaluate non-operating expense trends[27](index=27&type=chunk) [Non-GAAP Income Tax Provision](index=10&type=section&id=Non-GAAP%20Income%20Tax%20Provision) - Non-GAAP income tax provision excludes specific charges and benefits like deferred tax impacts from intercompany IP transfers, global intangible low-taxed income, and significant reserve releases to provide consistent treatment of excluded items[28](index=28&type=chunk) [Non-GAAP Net Income](index=10&type=section&id=Non-GAAP%20Net%20Income) - Non-GAAP net income excludes amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation, restructuring and other costs, and non-GAAP tax adjustments to provide a supplemental view of net income trends[29](index=29&type=chunk) [Non-GAAP Diluted Net Income Per Share](index=10&type=section&id=Non-GAAP%20Diluted%20Net%20Income%20Per%20Share) - Non-GAAP diluted net income per share excludes amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation, restructuring and other costs, and non-GAAP tax adjustments to measure non-GAAP operating performance per share[30](index=30&type=chunk) [Adjusted EBITDA](index=11&type=section&id=Adjusted%20EBITDA) - Adjusted EBITDA is defined as non-GAAP operating income plus depreciation expense, cloud computing amortization, and income from equity method investments, net, excluding specific items like goodwill impairment and amortization of purchased intangibles[31](index=31&type=chunk) - Adjusted EBITDA offers a useful view of overall business operations by removing differences caused by variations unrelated to operating performance, such as capital structures, income taxes, and depreciation[31](index=31&type=chunk) [Free Cash Flow](index=11&type=section&id=Free%20Cash%20Flow) - Free cash flow is defined as cash flow from operating activities minus capital expenditures, serving as an important measure for investors evaluating cash flow generation[32](index=32&type=chunk) [Explanations of Non-GAAP Adjustments (A-G)](index=11&type=section&id=Explanations%20of%20Non-GAAP%20Adjustments%20(A-G)) - Amortization of purchased intangible assets (A) is excluded from non-GAAP gross margin and operating expenses[36](index=36&type=chunk) - Acquisition/divestiture items (B) are external and incremental costs directly from M&A activities, including legal, due diligence, integration, and one-time charges, which are excluded as they are not indicative of core operating performance[36](index=36&type=chunk) - Stock-based compensation/deferred compensation (C) and restructuring and other costs (D) are also excluded from non-GAAP measures[36](index=36&type=chunk) - Non-GAAP tax adjustments (E) and the difference in GAAP and non-GAAP tax rates (F) are applied to reflect the tax effect of non-GAAP items and exclude specific deferred tax impacts[36](index=36&type=chunk) [Other Key Metrics](index=11&type=section&id=Other%20Key%20Metrics) Trimble defines additional key performance indicators beyond traditional financial measures, including Annualized Recurring Revenue (ARR), Organic Annualized Recurring Revenue, and Organic Revenue, to provide investors with supplementary insights into the company's recurring revenue streams and underlying business growth - Annualized Recurring Revenue (ARR) is a supplementary indicator representing the estimated annualized value of recurring revenue, calculated from subscription and maintenance/support revenue plus term license contract value[35](index=35&type=chunk) - Organic annualized recurring revenue excludes the impacts of foreign currency translation and acquisitions/divestitures that closed in the prior 12 months[37](index=37&type=chunk) - Organic revenue refers to revenue excluding the impacts of foreign currency translation and acquisitions/divestitures that closed in the prior 12 months[38](index=38&type=chunk)

Core Insights - Trimble Inc. reported record annualized recurring revenue of $2.21 billion for Q2 2025, exceeding expectations on both revenue and earnings, indicating strong business momentum and validation of its Connect & Scale strategy [2][9] - The company raised its full-year 2025 revenue guidance to a range of $3,480 million to $3,560 million, reflecting positive performance in the first half of the year [3][9] Financial Performance - Q2 2025 revenue was $875.7 million, a 1% increase year-over-year and an 8% increase on an organic basis [9] - GAAP operating income for Q2 2025 was $127.8 million, representing 14.6% of revenue, while non-GAAP operating income was $222.6 million, or 25.4% of revenue [9] - GAAP net income was $89.2 million, with diluted earnings per share (EPS) of $0.37; non-GAAP net income was $169.4 million, with non-GAAP diluted EPS of $0.71 [9] Guidance and Expectations - For Q3 2025, Trimble expects revenue between $850 million and $890 million, with GAAP EPS projected at $0.34 to $0.43 and non-GAAP EPS at $0.67 to $0.75 [4] - The full-year 2025 guidance assumes a tax rate of 21.0% for GAAP and 17.4% for non-GAAP, with approximately 242 million shares outstanding [3][4] Segment Performance - The company reported segment revenues of $350.3 million for AECO, $392.7 million for Field Systems, and $132.7 million for T&L in Q2 2025 [15] - Operating income percentages for segments were 30.4% for AECO, 30.8% for Field Systems, and 21.6% for T&L [15] Cash Flow and Capital Management - Trimble generated $102.1 million in net cash from operating activities in the first half of 2025, with free cash flow of $89.6 million [14][28] - The company repurchased $50 million of its common stock in Q2 2025, totaling $677.4 million year-to-date [9]

Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for Trimble Navigation (TRMB) despite lower revenues, with a focus on how actual results will compare to estimates [1][2]. Earnings Expectations - Trimble is expected to report quarterly earnings of $0.63 per share, reflecting a year-over-year increase of +1.6%, while revenues are projected to be $836.98 million, down 3.9% from the previous year [3]. - The earnings report is scheduled for release on August 6, and better-than-expected results could lead to a stock price increase, whereas disappointing results may cause a decline [2]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analyst expectations [4]. - The Most Accurate Estimate for Trimble is higher than the Zacks Consensus Estimate, resulting in a positive Earnings ESP of +0.64%, suggesting a bullish outlook from analysts [12]. Earnings Surprise History - Trimble has a history of beating consensus EPS estimates, having surpassed expectations in the last four quarters, including a +3.39% surprise in the most recent quarter [13][14]. Industry Context - In comparison, Oshkosh (OSK), another player in the manufacturing sector, is expected to report earnings of $2.98 per share, indicating a year-over-year decline of -10.8%, with revenues projected at $2.65 billion, down 7% [18]. - Oshkosh's consensus EPS estimate has been revised 0.3% higher recently, but a lower Most Accurate Estimate results in a negative Earnings ESP of -0.91%, complicating predictions for an earnings beat [19].