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Item 7. Management’s Discussion and Analysis

2025-04-25 compared with 2024-02-26 · 145 added, 168 removed, 303 unchanged (51% of the section changed)

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Our actual results could differ materially from those discussed in the forward-looking statements.

Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and those listed under “Risks Factors.” This section of this report generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.

Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and those listed under “Risk Factors.” This section of this report generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.

Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this report can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K, for the year ended December 29, 2023.

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We are a leading provider of technology solutions that enable professionals and field mobile workers to improve or transform their work processes.

Our comprehensive work process solutions are used across a range of industries including architecture, building construction, civil engineering, geospatial, survey and mapping, agriculture, natural resources, utilities, transportation, and government.

Our representative customers include construction owners, contractors, engineering and construction firms, surveying companies, farmers and agricultural companies, energy and utility companies, trucking companies, and state, federal, and municipal governments.

Our comprehensive work process solutions are used across a range of industries including architecture, building construction, civil engineering, geospatial, survey and mapping, natural resources, utilities, transportation, and government.

Our representative customers include construction owners, contractors, engineering and construction firms, surveying companies, energy and utility companies, trucking companies, and state, federal, and municipal governments.

Further information on our business is presented in Part I, Item 1 , “Business” of this report.

Our growth strategy is centered on multiple elements:

• Executing on our Connect and Scale strategy;

• Increasing focus on software and services;

• Focus on attractive markets with significant growth and profitability potential;

• Domain knowledge and technological innovation that benefits a diverse customer base;

• Geographic expansion with a localization strategy;

• Optimized go-to-market strategies to best access our markets;

• Strategic and targeted acquisitions, joint ventures, and investments;

• Sustainability.

• Execute on our Connect & Scale strategy;

• Deliver customer outcomes that can enable productivity, quality, safety, transparency, and environmental sustainability;

• Focus on software and services;

• Address attractive markets with significant growth and profitability potential;

• Capitalize on domain knowledge and technological innovation that benefit a diverse customer base;

• Drive geographic expansion with a localization strategy;

• Optimize go-to-market strategies to best access our markets;

• Pursue strategic and targeted acquisitions, divestitures, joint ventures, and investments.

Our focus on these growth drivers has led over time to growth in revenue and profitability and an increasingly diversified business model.

We continue to experience a shift toward a more significant mix of recurring revenue as demonstrated by our success in driving annualized recurring revenue (“ARR”) of $2,257.8 million, which represents growth of 14% year-over-year at the end of 2024 .

Excluding the impact of foreign currency, acquisitions, and divestitures, ARR organic growth was 13% .

This shift toward recurring revenue h as positively impacted our revenue mix and growth over time and is leading to improved visibility in our businesses.

Excluding the impact of foreign currency, acquisitions, and divestitures, organic ARR growth was 14% .

This shift toward recurring revenue h as positively impacted our revenue mix, growth, and profitability over time and is leading to improved visibility in our businesses.

Our software, services, and recurring revenue represented 76% and 67% of total revenue for 2024 and 2023.

Additionally, we continue to maintain focus on new product introductions and transitions to recurring revenue as evidenced by the Transporeon business and the pending Trimble Ag JV Transaction (as described below).

Additionally, we continue to maintain focus on increasing our mix of recurring revenue, which is accelerated by the Transporeon acquisition that closed in the second quarter of 2023 and the Ag divestiture that closed in the second quarter of 2024 .

As our solutions have expanded, our go-to-market model has also evolved with a balanced mix between direct, distribution, and OEM customers as well as enterprise-level customer relationships.

Throughout this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we refer to organic revenue growth, which is a non-GAAP measure.

Throughout this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section, we refer to organic revenue growth, which is a non-GAAP measure.

For a full definition of ARR, organic ARR, and organic revenue growth as used in this discussion and analysis, refer to the “Supplemental Disclosure of Non-GAAP Financial Measures and Annualized Recurring Revenue” found later in this Item 7.

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We acquire businesses that align with our long-term growth strategies including our strategic product roadmap and, conversely, we divest certain businesses that no longer fit those strategies.

On September 28, 2023, we executed a definitive agreement with AGCO that provides for the formation of a JV with AGCO in the mixed fleet precision agriculture market.

Under the terms of the agreement, we will contribute the Trimble Ag business, excluding certain GNSS and guidance technologies, and AGCO will contribute its JCA Technologies business to the JV.

We will sell an interest in the JV to AGCO for $2.0 billion in pre-tax cash proceeds, subject to working capital adjustments.

Immediately following the closing of this proposed transaction, we will own 15% of the JV and AGCO will own 85% of the JV.

Additionally, we plan to enter into the following agreements with AGCO as part of the overall proposed transaction:

• a seven-year, renewable Supply Agreement through which we will provide key GNSS and guidance technologies to the JV for use in professional agriculture machines sold by AGCO, on an exclusive basis with limited exceptions;

• a Technology Transfer and License Agreement to govern the licensing of certain non-divested intellectual property and technology for use by the JV in the agriculture field and, upon expiration of the Supply Agreement, to govern fixed and variable royalty payments made to us by the JV;

• a Trademark License Agreement to govern the licensing of certain Trimble trademarks for use by the JV in the agriculture field;

• a Positioning Services Agreement through which the JV will serve as our channel partner for the positioning services in the agriculture market;

• a Transition Services Agreement to provide contract manufacturing services for the divested products for two years following closing of the proposed transaction.

The formation of the JV is expected to better serve farmers with factory fit and aftermarket applications in the mixed fleet precision agriculture market to help farmers drive productivity, efficiency, and sustainability.

Additionally, the proposed transaction is expected to (i) simplify our Connect and Scale strategy, (ii) reduce risk of channel transition in the agriculture market, and (iii) enhance our financial profile and flexibility with a resulting higher mix of software, services, and recurring revenue, as well allowing us to repurchase stock and repay $1.1 billion of our debt through use of the net proceeds.

The proposed transaction is expected to close in the first half of 2024 and is subject to customary closing conditions, including regulatory approvals.

Trimble Ag is reported as a part of our Resources and Utilities segment.

The assets and liabilities of Trimble Ag that are subject to the proposed transaction were classified as held for sale at the end of 2023.

See Note 4 “ Divestitures ” of this report.

On April 3, 2023, we acquired all of the outstanding shares of Transporeon in an all-cash transaction valued at €1.9 billion or $2.1 billion.

Transporeon is a Germany-based company and leading cloud-based transportation management software platform that connects key stakeholders across the industry lifecycle to positively impact the optimization of global supply chains, which aligns with our Connect and Scale strategy.

By combining Transporeon’s operations with ours, we expect economies of scale, growth, such as acceleration of recurring revenue, expansion of the addressable market, cross-sell opportunities, and enhanced productivity and sustainability solutions for our customers.

Transporeon is reported in our Transportation segment.

We have included the financial results of Transporeon in our Consolidated Financial Statements starting in the second quarter of 2023.

This is demonstrated by the 12 acquisitions and 23 divestitures that we have completed since 2020, including the Transporeon acquisition, the Ag divestiture, and the Mobility divestiture.

Mobility Divestiture

On September 14, 2024, we entered into a definitive agreement with Platform Science to sell our Mobility business.

Subsequent to the end of the year 2024, the transaction closed on February 8, 2025 resulting in our ownership , or rights to acquire ownership of 32.5% of Platform Science’s expanded business with an approximate fair value of $248.7 million.

The approximate fair value was determined based on unobservable inputs, including discounted cash flow projections, market comparables, and an option pricing model.

We received (i) shares of preferred stock of Platform Science, with

certain liquidation preferences, that represent 28.5% of Platform Science’s expanded business and (ii) warrants allowing us the rights to acquire 4% of Platform Science’s expanded business.

The combined businesses aim to enhance driver experience, fleet safety, efficiency, and compliance by combining two cutting-edge in-cab commercial vehicle ecosystems, which gives customers access to more applications and offerings.

The assets and liabilities of Mobility were classified as held for sale beginning in the third quarter of 2024.

A valuation allowance was established to reduce the carrying value of the disposal group assets to the approximate fair value of the consideration we would receive.

As a result, we recorded a pre-tax loss of approximately $32.9 million included within Divestitures gain, net in our Consolidated Statements of Income in 2024.

Upon the closing of the transaction in the first quarter of 2025, we derecognized the assets and liabilities that were transferred and recorded our equity investment at its cost.

Mobility was reported as a part of our T&L segment.

See Note 4 “Divestitures” in Item 8 of this report.

Ag Divestiture

On September 28, 2023, we executed a Sale and Contribution Agreement with AGCO that provided for the formation of a joint venture, called PTx Trimble, that operates in the mixed fleet precision agriculture market.

The agreement was amended and restated on March 31, 2024, and the transaction closed on April 1, 2024.

Under the terms of the agreement, we contributed our Ag business, excluding certain GNSS and guidance technologies, in exchange for $1.9 billion in cash proceeds, subject to working capital adjustments.

Following the closing of this transaction, we own 15% and AGCO owns 85% of PTx Trimble.

In addition to forming PTx Trimble, the parties concurrently entered into agreements that include the following:

(i) long-term supply agreement for key GNSS and guidance technologies, (ii) technology transfer and license agreement, (iii) trademark license agreement, (iv) master sale and distribution agreement for positioning services, and (v) transition services agreement.

Ag was reported as a part of our Field Systems segment.

Upon closing of the transaction in the second quarter of 2024, we recognized a pre-tax gain of $1.7 billion.

The gain included $275.6 million for our retained 15% ownership interest in PTx Trimble, an LLC, which is reported as an equity method investment.

The formation of PTx Trimble is expected to better serve farmers with factory fit and aftermarket applications in the mixed fleet precision agriculture market to help farmers drive productivity, efficiency, and sustainability.

Additionally, the transaction is expected to (i) simplify our Connect & Scale strategy, (ii) reduce risk of channel transition in the agriculture market, and (iii) enhance our financial profile and flexibility with a resulting higher mix of software, services, and recurring revenue.

We repaid $1.0 billion of our variable-rate debt through use of the net proceeds and expect to use the majority of the remaining proceeds after tax to repurchase stock.

Macroeconomic Conditions

Macroeconomic conditions, including geopolitical tensions, such as the ongoing military conflicts in the Middle East and between Russia and Ukraine and related sanctions, exchange rate and interest rate volatility, and inflationary pressures, will continue to evolve globally.

Global inflation rates rose in 2022 and continued into early 2023.

As a result, interest rates increased over 2022 and 2023 in an effort to curb inflation.

These macroeconomic conditions have had and are expected to have a negative impact on our results of operations.

We may experience higher borrowing costs on our variable-rate debt.

At the end of 2023, our outstanding balance of variable-rate debt was $1.3 billion.

See Note 8 “Debt” of this report for additional information regarding our debt.

In 2023, as compared to the prior year, our organic hardware sales declined and bookings moderated as dealers moved toward lower levels of inventories due to improved product lead times and reduced end user demand.

Buildings and Infrastructure, Geospatial, and Resources and Utilities all had stronger hardware sales in the prior year.

Macroeconomic conditions continue to present significant challenges globally, driven by geopolitical tensions, tariff and trade policies, exchange rate and interest rate volatility, and persistent inflationary pressures.

The heightened trade tensions and related imposition of tariffs between the United States and its trading partners, the extent and duration of these tariffs, and their impact on global economic conditions remain uncertain and depend on various factors, including international negotiations, policy responses, potential exemptions, and shifts in global supply and demand.

These evolving dynamics may have a negative impact on our business operations.

In response, we are closely monitoring global trade developments and considering ways to mitigate potential impacts on our business.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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These critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the consolidated financial statements, and actual results could differ materially from the amounts reported based on these policies.

Our accounting policies are more fully described in Note 1 “Description of Business and Accounting Policies” of this report.

Our accounting policies are more fully described in Note 1 “Description of Business and Accounting Policies” in Item 8 of this report.

Revenue Recognition

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration that we expect to receive in exchange for those products or services.

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services.

Revenue is recognized net of allowance for returns and any taxes collected from customers.

We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations;

We enter into contracts that may include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations;

determining whether products or services are considered distinct performance obligations that should be accounted for separately versus together may sometimes require significant judgment.

Judgment is required to determine stand-alone selling price (“SSP”) for each performance obligation.

We use a range of amounts to estimate SSP when products and services are sold separately and determine whether there is a discount to be allocated based on the relative SSP of the various products and services.

In instances where SSP is not directly observable, we estimate SSP considering multiple factors including but not limited to, our internal cost, pricing practices, sales channel, competitive positioning, and overall market and business environments.

We use a range of amounts to estimate SSP and determine whether there is a discount to be allocated based on the relative SSP of the various products and services.

We estimate SSP considering multiple factors including but not limited to, our internal cost, pricing practices, sales channel, competitive positioning, and overall market and business environments.

As our offerings and markets change, we may be required to reassess our estimated SSP and, as a result, the timing and classification of our revenue could be affected.

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We regularly assess the likelihood of adverse outcomes from these examinations in determining the adequacy of our provision for income taxes.

Business Combinations and Valuation of Goodwill and Purchased Intangible Assets

For business combinations, we allocate the purchase consideration to the assets acquired, liabilities assumed, and any noncontrolling interest based on their fair values at the acquisition date.

Business Combinations, Divestitures, and Goodwill and Purchased Intangible Assets

For business combinations, we allocate the purchase consideration to the assets acquired and liabilities assumed based on their fair values at the acquisition date.

When determining the fair values, we make significant estimates and assumptions, especially concerning intangible assets.

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Any purchase consideration in excess of the fair values of the net assets acquired is recorded as goodwill.

When divesting a business, a significant portion of the gain or loss may be impacted by the goodwill allocated to the divested business and the fair value of any equity interests acquired in exchange for the disposal group.

We allocate a portion of the applicable reporting unit’s goodwill to the divested business using the ratio of the fair value of the divested business compared to the fair value of the reporting unit.

The fair value of the reporting units, divested businesses, and acquired equity interests is generally determined using a combination of the discounted cash flow method and the guideline company method.

The significant assumptions used in the discounted cash flow model to estimate the fair values include certain assumptions that form the basis of the forecasted results, specifically, revenue, revenue growth rates, and discount rates.

These significant assumptions are forward looking and could be affected by future economic and market conditions.

We evaluate goodwill on an annual basis in our fourth quarter or more frequently if indicators of potential impairment exist.

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Basis of Presentation

We use a 52–53 week fiscal year ending on the Friday nearest to December 31, which for 2023 was December 29, 2023.

Both 2023 and 2022 were 52–week years.

We use a 52–53 week fiscal year ending on the Friday nearest to December 31, which for 2024 was January 3, 2025.

2024 was a 53 -week year and 2023 was a 52 -week year .

2025 will be a 52-week year.

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Organic growth (9) % 17 % 5 %

Organic total revenue was up 1%.

Organic subscription and services revenue was up primarily due to strong growth in subscription and software term licenses in Buildings and Infrastructure, and to a lesser extent, positioning services in Resources and Utilities, and enterprise and MAPS in Transportation.

Organic product revenue decreased due to reductions in dealer inventory levels as a result of improved product lead times and reduced end user demand.

These decreases impacted sales in Buildings and Infrastructure, Geospatial, and Resources and Utilities.

Gross margin and gross margin as a percentage of revenue increased due to an increased mix of higher margin software and subscription sales including organic growth and the Transporeon acquisition, and declines in hardware sales, as well as lower supply chain costs.

Organic total revenue increased due to the increased mix of subscription and services revenue and the impact of the additional week in fiscal 2024.

Organic product revenue decreased due to lower Ag demand in the first quarter and higher U.S.

federal government sales of Surveying hardware in the prior year.

Organic subscription and services revenue increased primarily due to strong growth in subscription and software term licenses in all segments, primarily AECO, and to a lesser extent, the impact of the additional week.

Gross margin increased due to the organic growth of higher margin software and subscription sales, including the impact of the additional week, partially offset by the divestiture of Ag margin hardware sales.

Gross margin as a percentage of revenue increased due to the organic growth of higher margin software and subscription sales and the divestiture of Ag’s lower margin hardware sales.

Operating Income

Operating income decreased slightly primarily due to increased operating expense, partially offset by revenue and gross margin expansion.

Operating expense increased due to the Transporeon acquisition, higher research and development, and general and administrative costs, including investments related to our Connect and Scale strategy and increased amortization of purchased intangibles.

In addition, we incurred higher acquisition and divestiture transaction costs.

Operating income as a percentage of revenue decreased primarily due to increased operating expense, partially offset by gross margin expansion as a percentage of revenue.

We had cost reductions in 2023 and will continue to focus on further reductions.

Operating income and operating income as a percentage of revenue increased primarily due to organic growth and associated gross margin expansion and to a lesser extent, the impact of the additional week.

The increase was partially offset by the Ag divestiture and higher acquisition and divestiture transaction costs.

Research and Development, Sales and Marketing, and General and Administrative Expense

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Total $ 1,814.0 $ 1,734.8 $ 79.2 5%

R&D expense increased primarily due to higher compensation expense, including incentive compensation, and to a lesser extent, the Transporeon acquisition.

R&D expense decreased primarily due to the impact of the divestiture, partially offset by expense related to Transporeon, and to a lesser extent, the impact of the additional week.

We believe that the development and introduction of new solutions are critical to our future success, and we expect to continue the active development of new products.

S&M expense increased slightly primarily due to the Transporeon acquisition.

G&A expense increased primarily due to higher acquisition and divestiture transaction costs, the Transporeon acquisition, and to a lesser extent, increased compensation expense, including incentive compensation.

S&M expense increased slightly primarily due to higher compensation expense, including commissions, and the impact of the additional week, partially offset by the impact of the Ag divestiture.

G&A expense increased primarily due to divestiture transaction costs, and to a lesser extent, investments related to our Connect & Scale strategy and the impact of the additional week.

The increase was partially offset by the impact of the Ag divestiture.

Amortization of Purchased Intangible Assets

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Total amortization expense of purchased intangibles as a percentage of revenue 5 % 6 %

In 2023, total amortization expense of purchased intangibles increased primarily due to amortization of intangibles acquired from the Transporeon acquisition, which were not applicable in the prior year .

In 2024, total amortization expense of purchased intangibles decreased primarily due to the expiration of prior years’ acquisition amortization, partially offset by the amortization of intangibles acquired from the Transporeon acquisition, which was not applicable in the first quarter of 2023.

Non-Operating Income (Expense), Net

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Interest expense, net (90.7) (161.0) 70.3 (44)%

Income from equity method investments, net 28.1 31.1 (3.0) (10)%

Other income (expense), net 31.9 (0.8) 32.7 (4088)%

(Loss) income from equity method investments, net (48.1) 28.1 (76.2) (271)%

Other (loss) income, net (3.9) 31.9 (35.8) (112)%

Total non-operating income (expense), net $ 1,545.2 $ (91.8) $ 1,637.0 (1783)%

Non-operatin g expense, net in creased primarily due to lower net gains from divestitures and higher interest expense from the new debt associated with the Transporeon acquisition, partially offset by foreign currency hedging gains associated with the Transporeon acquisition and fluctuations in the deferred compensation plan assets, both included in Other income (expense), net.

Non-operating income, net increased primarily due to the Ag divestiture gain and lower interest expense.

These increases were partially offset by lower joint-venture profitability, including $52.7 million of our proportionate share of PTx Trimble’s goodwill impairment and a prior year foreign currency hedging gain associated with the acquisition of Transporeon that was included in Other (loss) income, net.

Income Tax Provision

Our provision for income taxes in 2024 increased by $455.8 million compared to 2023, primarily due to the gain from the Ag divestiture.

Our effective income tax rate for 2024 and 2023 were 25.0% and 12.8%.

The decrease was primarily due to an increases in tax benefit from U.S.

federal R&D credit and foreign-derived intangible income (“FDII”) in 2023, and change in geographic mix of earnings, partially offset by lower stock-based compensation deductions in the current year.

The increase in the tax rate was primarily due to gains from the Ag divestiture.

Results by Segment

We report our financial performance, including revenue and operating income, based on four reportable segments:

Buildings and Infrastructure, Geospatial, Resources and Utilities, and Transportation.

We report our financial performance, including revenue and operating income, based on three reportable segments:

AECO, Field Systems, and T&L.

Our Chief Executive Officer, who is our Chief Operating Decision Maker (“CODM”) views and evaluates operations based on the results of our reportable operating segments under our management reporting system.

These results are not necessarily in conformance with U.S.

For additional discussion of our segments, refer to Note 7 “Segment Information” of this report.

For additional discussion of our segments, refer to Note 7 “ Reporting Segment and Geographic Information” in Item 8 of this report.

The following table is a summary of revenue and operating income by segment compared for the periods indicated:

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(In millions)

Buildings and Infrastructure

Segment revenue $ 1,358.6 $ 1,110.5 $ 248.1 22%

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Segment operating income as a % of segment revenue 34.1 % 29.6 %

Segment revenue $ 695.5 $ 756.5 $ (61.0) (8)%

Segment revenue as a % of total revenue 18 % 21 %

Segment operating income $ 209.1 $ 221.4 $ (12.3) (6)%

Segment operating income as a % of segment revenue 30.1 % 29.3 %

Resources and Utilities

Field Systems

Segment revenue $ 1,535.9 $ 1,967.9 $ (432.0) (22)%

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Segment operating income as a % of segment revenue 28.8 % 30.7 %

Transportation

Segment revenue $ 788.8 $ 720.3 $ 68.5 10%

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(In millions)

Consolidated segment operating income $ 1,050.7 $ 964.8

Total segment operating income

$ 1,060.7 $ 1,050.7

Unallocated general corporate expenses (123.5) (116.0)

Purchase accounting adjustments (212.3) (131.6)

Amortization of purchased intangible assets (199.0) (212.3)

Acquisition / divestiture items (81.6) (72.4)

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Consolidated income before taxes $ 2,005.9 $ 357.0

Buildings and Infrastructure

Change versus 2023 2024

Change in Revenue - Buildings and Infrastructure

Acquisitions 2 %

Change in Revenue - AECO

Divestitures (1) %

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Organic growth

Organic revenue increased due to strong demand for our subscription and term license software.

The increases resulted from higher sales to new and existing customers as well as cumulative conversions from perpetual software to recurring offerings.

The increase was offset by lower civil construction hardware sales due to reductions in dealer inventory levels as a result of improved lead times and reduced end user demand.

Operating income and operating income as a percentage of revenue increased primarily from gross margin expansion due to increased sales and a higher mix of software and subscription revenue, partially offset by increased operating expense.

Operating expense increased due to increased compensation expense and investments, including our Connect and Scale strategy.

Change versus 2022 2023

Change in Revenue - Geospatial (8) %

Divestitures (4) %

Organic growth (4) %

Organic revenue decreased due to lower surveying hardware sales due to reductions in dealer inventory levels as a result of improved lead times and reduced end user demand.

The declines were partially offset by higher U.S.

Federal government sales in the current year;

the timing of government sales can fluctuate from period to period.

Operating income decreased due to reduced revenue, partially offset by gross margin expansion driven by product mix and lower hardware supply chain costs.

Operating income as a percentage of revenue was relative flat.

Resources and Utilities

Organic revenue increased due to strong demand for subscription offerings, particularly for Viewpoint, Architecture and Design, and to a lesser extent, MEP and Structures offerings.

Additionally, the increase was driven by the impact of the

additional week of subscription and term license revenue in the fourth quarter, including Structures annual term license renewals on January 1, 2025.

Operating income and operating income as a percentage of revenue increased primarily due to strong organic revenue growth and gross margin expansion, partially offset by increased operating expense associated with double digit revenue growth.

Field Systems

Change versus 2023 2024

Change in Revenue - Resources and Utilities

Change in Revenue - Field Systems

Acquisitions 1 %

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Organic growth (4) %

Organic revenue decreased due to reductions in channel inventory levels as a result of improved lead times and slowing demand in agriculture markets, as well as impacts related to changes in our distribution network.

The decrease was partially offset by higher subscription revenue in positioning services.

Operating income decreased slightly due to reduced revenue and higher operating expense, largely offset by gross margin expansion.

Operating income as a percentage of revenue was up primarily due to gross margin expansion driven by a higher mix of software and subscription revenue and lower hardware supply chain costs.

Transportation

Organic revenue decreased primarily due to higher U.S.

federal government sales of Surveying products in the prior year, partially offset by Civil Construction and Advanced Positioning sales growth in the current year.

Additionally, the decrease was due to slower Ag demand in the first quarter of 2024, before the business was divested in the second quarter of 2024.

Operating income and operating income as a percentage of revenue decreased primarily due to the impact of the Ag divestiture.

Change versus 2023 2024

Change in Revenue - Transportation

Change in Revenue - T&L

Acquisitions 6 %

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Organic growth 5 %

Organic revenue increased primarily driven by enterprise and MAPS subscription revenue growth.

Additionally, North American mobility hardware sales increased in 2023.

Operating income and operating income as a percentage of revenue increased primarily due to gross margin expansion, driven by a higher mix of subscription revenue, including the impact of the Transporeon acquisition.

We continue to maintain focus on new product introductions and transitions to recurring revenue.

Organic revenue increased primarily driven by Transporeon, MAPS, and Enterprise subscription revenue growth, partially offset by lower Mobility sales.

Operating income and operating income as a percentage of revenue increased primarily due to organic revenue growth and gross margin expansion.

The increase was also driven by the impact of the Transporeon acquisition, which closed in the second quarter of 2023.

LIQUIDITY AND CAPITAL RESOURCES

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Net cash provided by operating activities $ 531.4 $ 597.1 $ (65.7) (11) %

Net cash used in investing activities (2,068.1) (226.3) (1,841.8) 814 %

Net cash provided by (used in) financing activities 1,431.5 (199.0) 1,630.5 (819) %

Net cash provided by (used in) investing activities 1,861.1 (2,068.1) 3,929.2 (190) %

Net cash (used in) provided by financing activities (1,864.2) 1,431.5 (3,295.7) (230) %

Effect of exchange rate changes on cash and cash equivalents (19.4) 7.4 (26.8) (362) %

Net (decrease) increase in cash and cash equivalents $ (32.1) $ (54.7)

(1) Includes $9.1 million of cash and cash equivalents classified as held for sale as of December 29, 2023.

Net increase (decrease) in cash and cash equivalents $ 508.9 $ (32.1)

(1) Includes $9.0 million and $9.1 million of cash and cash equivalents classified as held for sale as of January 3, 2025 and December 29, 2023.

Operating Activities

The increase in cash provided by operating activities was primarily driven by lower inventory purchases and reduced bonus payouts.

The increase was partially offset by a decrease in deferred revenue due to the timing of billings and higher interest payments.

The decrease in cash provided by operating activities was primarily driven by higher tax payments associated with the Ag divestiture gain, and higher accounts receivable due to the impact of the additional week in the fourth quarter of 2024.

The decrease was partially offset by lower net working capital requirements associated with a greater mix of subscription and services revenue and higher deferred revenue due to the impact of the additional week.

Investing Activities

The increase in cash used in investing activities was primarily due to acquisition activities in the current year, including the Transporeon acquisition, and higher proceeds from divestitures in the prior year.

The increase in cash provided by investing activities was primarily due to the $1.9 billion of proceeds received from the Ag divestiture in the current year, as compared to the $2.0 billion payment in the prior year for the acquisition of Transporeon.

Financing Activities

The increase in cash provided by financing activities was primarily driven by proceeds from our $800.0 million issuance of 2033 Senior Notes and $1.0 billion term loans in the current year, and higher common stock repurchases in the prior year.

The increase was partially offset by the repayment of the 2023 Senior Notes that matured in the current year.

The increase in cash used in financing activities was primarily driven by the $1.7 billion repayment of debt in the current year, as compared to the prior year’s $2.0 billion of proceeds from the issuance of debt for the acquisition of Transporeon, partially offset by the $500.0 million repayment of debt.

Cash and Cash Equivalents

We believe that our cash and cash equivalents and available borrowing capacity under our existing lines of credit, along with cash provided by operations will be sufficient in the foreseeable future to meet our anticipated operating cash needs, including expenditures related to our Connect and Scale strategy, debt service, acquisitions, and any stock repurchases under the stock repurchase program.

We believe that our cash and cash equivalents and available borrowing capacity under our existing lines of credit, along with cash provided by operations, will be sufficient in the foreseeable future to meet our anticipated operating cash needs, including expenditures related to our Connect & Scale strategy, debt service, acquisitions, and any stock repurchases under the stock repurchase program.

Our 2022 credit facility allows us to borrow up to $1.25 billion, with an option to increase the borrowings up to $1.75 billion with lender approval.

As of December 29, 2023, $150.0 million was outstanding under the 2022 Credit Facility.

Our 2023 Senior Notes totaling $300.0 million matured and were paid in June 2023.

Our 2024 Senior Notes totaling $400.0 million are maturing in December 2024.

We anticipate using a combination of cash on hand, borrowing from our existing revolvers, or new debt to repay the 2024 Senior Notes.

In the second quarter of 2023, we acquired Transporeon, which was funded through a combination of $1.0 billion of term loans, $225.0 million drawn on the 2022 credit facility, as amended, and the 2033 senior notes, see Note 3 “Acquisition s ” of this report.

In the third quarter of 2023, we executed a definitive agreement to contribute our Trimble Ag business to a newly formed JV with AGCO and sell 85% of the stake in the JV to AGCO for $2.0 billion in pre-tax cash proceeds, subject to certain adjustments.

See Note 4 “ Divestitures ” of this report.

Although we will continue to evaluate the optimal capital structure for our business following the completion of the pending sale, we expect to use the $1.5 billion of estimated proceeds after tax to repurchase stock and repay approximately $1.1 billion in debt.

As of January 3, 2025, there was no outstanding debt under the 2022 credit facility.

Our 2024 senior notes totaling $400.0 million matured and were paid in December 2024.

In the second quarter of 2024, we completed the Ag divestiture and received $1.9 billion of cash proceeds, subject to working capital adjustments.

The total tax payment for the transaction is $367.8 million, of which $122.0 million was paid in 2024, with the remaining amount to be paid in 2025.

We used a portion of the proceeds to repay $1.0 billion of term loans and expect to use the majority of the remaining proceeds after tax to repurchase stock.

Our material cash requirements include the following contractual and other obligations and cash needs:

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At the end of 2024, we had fixed lease payment obligations of $182.1 million, with $39.4 million payable within the next 12 months.

Refer to Note 9 “Leases” of this report for additional information regarding our leases.

At the end of 2023, we had income taxes payable of $62.4 million, with $39.7 million payable within the next 12 months.

The amount payable within the next 12 months includes $18.2 million representing a one-time transition tax liability as a result of the 2017 Tax Cuts and Jobs Act (the “Tax Act”).

Refer to Note 9 “Leases” in Item 8 of this report for additional information regarding our leases.

At the end of 2024, we had income taxes payable of $325.0 million, which are payable within the next 12 months.

In addition, we have unrecognized tax benefits of $78.2 million included in Other non-current liabilities, including interest and penalties.

At this time, we cannot make a reasonably reliable estimate of the period of cash settlement with tax authorities regarding this liability.

Refer to Note 1 3 “Income Taxes” of this report for additional information regarding our taxes.

Refer to Note 13 “Income Taxes” in Item 8 of this report for additional information regarding our taxes.

Other Purchase Obligations and Commitments

Purchase obligations and commitments primarily relate to investments in our platform associated with our Connect and Scale strategy and non-cancellable inventory commitments.

Purchase obligations and commitments primarily relate to investments in our platform associated with our Connect & Scale strategy and non-cancellable inventory commitments.

At the end of 2024, we had operating purchase obligations and commitments of $470.7 million, with $235.4 million payable within the next 12 months.

Refer to Note 10 “Commitments and Contingencies” of this report for additional information regarding our purchase obligations and commitments.

Other than the items discussed above, we do not have any off-balance sheet financing arrangements or liabilities.

At the end of 2023, we had outstanding fixed-rate senior notes and floating credit facilities with varying maturities for an aggregate principal amount of approximately $3.1 billion.

At the end of 2024, we had outstanding fixed-rate senior notes with varying maturities for an aggregate principal amount of $1.4 billion.

Future interest payments total $517.7 million, with $78.2 million payable within the next 12 months.

We anticipate repaying $1.1 billion of our debt through the use of the net proceeds from the proposed AGCO JV transaction.

Refer to Note 4 “ Divestitures ” of this report for additional information.

During 2023, we had $1.6 billion of proceeds from debt, net of the payments.

Refer to Note 8 “Debt” of this report for additional information regarding our debt.

During 2024, we made $1.7 billion in debt payments through the use of the net proceeds from the Ag divestiture and cash on hand.

Refer to Note 8 “Debt” in Item 8 of this report for additional information regarding our debt.

Stock Repurchase Program

At the end of 2023, we had a 2021 Stock Repurchase Program authorized by our Board of Directors that allowed us to repurchase stocks from time to time, subject to business and market conditions and other investment opportunities, through open market transactions, privately-negotiated transactions, accelerated stock repurchase plans, or by other means for up to $750.0 million.

On January 28, 2024, our Board of Directors approved a 2024 Stock Repurchase Program that allows us to repurchase stock from time to time, through accelerated stock repurchase plans, open market transactions, privately negotiated transactions, block purchases, tender offers, or by other means for up to $800.0 million.

Subsequent to the end of the year 2024, the Board of Directors authorized a common stock repurchase authorization of up to $1.0 billion, which replaces the existing 2024 Stock Repurchase Program in the first quarter of 2025.

We may repurchase stock from time to time through accelerated stock repurchase programs, open market transactions, privately negotiated transactions, block purchases, tender offers, or other means.

The stock repurchase program does not obligate us to acquire any specific number of shares.

The 2024 Stock Repurchase Program replaced the 2021 Stock Repurchase Program, which was cancelled.

Refer to Note 1 5 “Common Stock Repurchase” of this report for additional information regarding our 2021 Stock Repurchase Program and 2024 Stock Repurchase Program.

Refer to Note 15 “Common Stock Repurchase” in Item 8 of this report for additional information regarding our stock repurchase program.

EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS

The impact of recent accounting pronouncements is disclosed in Note 1 “Description of Business and Accounting Policies” of this report.

The impact of recent accounting pronouncements is disclosed in Note 1 “Description of Business and Accounting Policies” in Item 8 of this report.

SUPPLEMENTAL DISCLOSURE OF NON-GAAP FINANCIAL MEASURES AND ANNUALIZED RECURRING REVENUE

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Lastly, we believe that our core operating performance offers a supplemental measure for period-to-period comparisons and can be used to evaluate our historical and prospective financial performance, as well as our performance relative to competitors.

Organic revenue growth is a non-GAAP measure that refers to revenue excluding the impacts of (i) foreign currency translation, and (ii) acquisitions and divestitures.

Organic revenue growth is a non-GAAP measure that refers to revenue excluding the impacts of (i) foreign currency translation, and (ii) acquisitions and divestitures that closed in the prior 12 months.

We believe organic revenue growth provides useful information in evaluating the results of our business because it excludes items that are not indicative of ongoing performance or impact comparability with the prior year.

We provide reconciliation tables showing the change in revenue growth to organic revenue growth in the “ Results of Operations ” section found earlier in this Item 7.

In addition to providing non-GAAP financial measures, we disclose Annualized Recurring Revenue (“ARR”) to give the investors supplementary indicators of the value of our current recurring revenue contracts.

In addition to providing non-GAAP financial measures, we disclose ARR to give the investors supplementary indicators of the value of our current recurring revenue contracts.

ARR represents the estimated annualized value of recurring revenue.

ARR is calculated by taking our subscription, maintenance and support, and recurring transaction revenue for the current quarter and adding the portion of the contract value of all our term licenses attributable to the current quarter, then dividing that sum by the number of days in the quarter and then multiplying that quotient by 365.

Organic ARR refers to annualized recurring revenue excluding the impacts of (i) foreign currency translation, and (ii) acquisitions and divestitures.

ARR is calculated by taking our subscription and maintenance and support for the current quarter and adding the portion of the contract value of all our term licenses attributable to the current quarter, then dividing that sum by the number of days in the quarter and then multiplying that quotient by 365.

Organic ARR refers to annualized recurring revenue excluding the impacts of (i) foreign currency translation, and (ii) acquisitions and divestitures that closed in the prior 12 months.

ARR and organic ARR should be viewed independently of revenue and deferred revenue as they are performance measures and are not intended to be combined with or to replace either of those items.

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$ 937.2 25.4 % $ 934.7 24.6 %

NON-OPERATING INCOME (EXPENSE), NET:

GAAP non-operating income (expense), net:

NON-OPERATING (EXPENSE) INCOME, NET:

GAAP non-operating (expense) income, net:

$ 1,545.2 $ (91.8)

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Acquisition / divestiture items (B) (1,606.9) 35.9

Stock-based compensation / deferred compensation (C) 145.3 120.5

Stock-based compensation (C) 158.6 145.3

Restructuring and other costs (D) 96.5 51.4

Non-GAAP tax adjustments (E) - (F)

(92.5) (27.0)

Non-GAAP net income:

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Acquisition / divestiture items (B) (6.50) 0.14

Stock-based compensation / deferred compensation (C) 0.58 0.48

Dollar % of Dollar % of

(In millions, except per share amounts) Amount Revenue Amount Revenue

Stock-based compensation (C) 0.64 0.58

Restructuring and other costs (D) 0.39 0.21

Non-GAAP tax adjustments (E) - (F)

(0.37) (0.11)

Non-GAAP diluted net income per share:

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Acquisition / divestiture items (B) 81.6 72.4

Stock-based compensation / deferred compensation (C) 151.1 112.0

Stock-based compensation (C) 163.5 151.1

Restructuring and other costs (D) 32.4 50.1

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We define Non-GAAP income tax provision as GAAP income tax provision, excluding charges and benefits such as net deferred tax impacts resulting from the non-U.S.

intercompany transfer of intellectual property, tax law changes, and significant one-time reserve releases upon the statute of limitations expirations.

intercompany transfer of intellectual property, deferred tax impacts from global intangible low-taxed income, and significant reserve releases upon the statute of limitations expirations.

We believe this measure helps investors because it provides for consistent treatment of excluded items in our non-GAAP presentation and a difference in the GAAP and non-GAAP tax rates.

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Adjusted EBITDA

We define Adjusted EBITDA as non-GAAP operating income plus depreciation expense, cloud computing amortization, and income from equity method investments, net.

We define Adjusted EBITDA as non-GAAP operating income plus depreciation expense, cloud computing amortization, and income from equity method investments, net, excluding our proportionate share of items such as goodwill impairment, amortization of purchased intangibles, stock-based compensation, and restructuring costs.

Other companies may define Adjusted EBITDA differently.

Adjusted EBITDA is not intended to purport to be an alternative to net income or operating income as a measure of operating performance or cash flow from operating activities as a measure of liquidity.

Adjusted EBITDA is a performance measure that we believe offers a useful view of the overall operations of our business because it facilitates operating performance comparisons by removing potential differences caused by variations unrelated to operating performance, such as capital structures (interest expense), income taxes, depreciation, and amortization of purchased intangibles and cloud computing costs.

Adjusted EBITDA is a performance measure that we believe offers a useful view of the overall operations of our business because it facilitates operating performance comparisons by removing potential differences caused by variations unrelated to operating performance, such as capital structures (interest expense, net), income taxes, depreciation, amortization of purchased intangibles and cloud computing costs, and income from equity method investments, net.

Explanations of Non-GAAP adjustments

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Non-GAAP gross margin and operating expenses exclude costs consisting of external and incremental costs resulting directly from acquisitions, divestitures, and strategic investment activities such as legal, due diligence, integration, and other closing costs, including the acceleration of acquisition stock awards and adjustments to the fair value of earn-out liabilities.

Non-GAAP non-operating expense, net, excludes unusual one-time acquisition/divestiture charges, including foreign currency exchange rate gains/losses related to an acquisition, divestiture gains/losses, and strategic investment impairments.

Non-GAAP non-operating expense, net, excludes one-time acquisition/divestiture charges, including foreign currency exchange rate gains/losses related to an acquisition, divestiture gains/losses, and strategic investment gains/losses.

These are one-time costs that vary significantly in amount and timing and are not indicative of our core operating performance.

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Restructuring and other costs.

Non-GAAP gross margin and operating expenses exclude restructuring and other costs comprised of termination benefits related to reductions in employee headcount and closure or exit of facilities, executive severance agreements, business exit costs, as well as a $20 million commitment to donate to the Trimble Foundation that was paid over four quarters ending in the first quarter of 2023.

Non-GAAP gross margin and operating expenses exclude restructuring and other costs comprised of termination benefits related to reductions in employee headcount and closure or exit of facilities, expenses related to the 2023 re-audit, as well as a $20 million commitment to donate to the Trimble Foundation that was paid over four quarters ending in the first quarter of 2023.

Non-GAAP non-operating expense net, excludes our proportionate share of items recorded in income from equity method investment items, such as goodwill impairment, amortization of purchased intangibles, stock-based compensation, and restructuring costs.

Non-GAAP items tax effected .

This amount adjusts the provision for income taxes to reflect the effect of the non-GAAP items (A) - (D) on non-GAAP net income.

This amount adjusts the provision for income taxes to reflect the effect of the non-GAAP items (A) through (D) on non-GAAP net income.

Difference in GAAP and non-GAAP tax rate .

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The non-GAAP tax rate excludes charges and benefits such as (i) deferred tax impacts from tax amortization relating to a non-U.S.

intercompany transfer of intellectual property and R&D cost capitalization impact to global intangible low-taxed income ("GILTI"), and (ii) significant one-time reserve releases upon statute of limitations expirations.

intercompany transfer of intellectual property, (ii) deferred tax impacts from global intangible low-taxed income, and (iii) significant reserve releases upon statute of limitations expirations.

GAAP and non-GAAP tax rate percentages .

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis