Trimble(TRMB) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION 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) 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 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] - Cash and cash equivalents decreased by $472.9 million (64%) from year-end 2024 to the second quarter of 2025[12] Condensed Consolidated Statements of Income 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] - 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] Condensed Consolidated Statements of Comprehensive Income 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] - 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] Condensed Consolidated Statements of Stockholders' Equity 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] - 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] Condensed Consolidated Statements of Cash Flows 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][116] - 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][117] - 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][118] Note 1. Overview and Accounting Policies 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][26] - 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] - 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][29][30] Note 2. Common Stock Repurchase 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] 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] Note 3. Divestitures 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][38] - 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][41] - The Mobility divestiture was part of the T&L segment, and the Ag divestiture was part of the Field Systems segment[38][41] Note 4. Equity Investments 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][45] - 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][47] Note 5. Intangible Assets and Goodwill 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] Note 6. Inventories 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] Note 7. Reporting Segment and Geographic Information 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] 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] 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 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] 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 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] - 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] Note 10. Deferred Revenue and Remaining Performance Obligations 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] Note 11. Earnings per Share 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] Note 12. Income Taxes 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] - 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] Note 13. Commitments and Contingencies 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] - The company is involved in routine litigation arising in the ordinary course of business, but there are no material legal proceedings[75] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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] Recent Accounting Pronouncements 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] Executive Level Overview 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] - 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][83] 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] Impact of Recent Events on Our Business This section discusses the impact of recent acquisitions, divestitures, and macroeconomic conditions on Trimble Inc.'s business operations and financial strategy Acquisitions and Divestitures 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][85] - 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][88] - 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][82] Macroeconomic Conditions 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] - 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] Results of Operations 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 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 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] - 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] - Organic subscription and services revenue increased due to strong subscription growth and software term license growth, particularly in AECO[95] Gross Margin Analysis 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] Operating Expenses Analysis 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 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] - 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] - 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] Amortization of Purchased Intangible Assets 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] Non-Operating (Expense) Income, Net 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] Income Tax Provision 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] - 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] Results by Segment This section provides a detailed breakdown of Trimble Inc.'s revenue and operating income performance for each of its reportable segments AECO Segment 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] - 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] Field Systems Segment 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] - 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] T&L Segment 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] - 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] Liquidity and Capital Resources This section evaluates Trimble Inc.'s liquidity and capital resources, focusing on cash flows from operating, investing, and financing activities Operating Activities 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][116] Investing Activities 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][117] Financing Activities 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][118] Cash and Cash Equivalents 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] - 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] - 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] Supplemental Disclosure of Non-GAAP Financial Measures and Annualized Recurring Revenue 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] - 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] - 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] Non-GAAP Definitions 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] - Non-GAAP operating income excludes amortization of purchased intangibles, acquisition/divestiture items, stock-based compensation, deferred compensation, and restructuring costs[130] - 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] Explanations of Non-GAAP adjustments 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] - Stock-based compensation and income/expense from non-qualified deferred compensation plan liabilities are excluded from non-GAAP gross margin and operating expenses[136] - 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] ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 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] Market Interest Rate Risk 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] - Due to the readily convertible nature of cash equivalents, no material effect on the portfolio is anticipated from interest rate fluctuations[139] Foreign Currency Exchange Rate Risk 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][141] - 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] - 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][144] ITEM 4. Controls and Procedures 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 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] Remediation of Previously Reported Material Weaknesses 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][149] - 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][149] - Material weaknesses will be considered remediated only after remedial controls operate effectively for a sufficient period and are tested by management[147] Changes in Internal Control over Financial Reporting 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] PART II. OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, defaults, mine safety, other disclosures, and exhibits ITEM 1. Legal Proceedings 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] ITEM 1A. Risk Factors 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] - Additional risks and uncertainties not currently known or deemed immaterial could still materially and adversely affect the business[151] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 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 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] 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] ITEM 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[156] ITEM 4. Mine Safety Disclosures This section indicates that there are no mine safety disclosures to report - There are no mine safety disclosures[157] ITEM 5. Other Information 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 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] - 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] ITEM 6. Exhibits 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][161] - Financial statements and notes are formatted in Inline XBRL with detailed tags[161] 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]