My name is Jason Celino, and I'm the vertical software analyst at KeyBanc. I have the great pleasure of introducing today, Trimble's CEO, Rob Painter. With that, let's go ahead and begin. Maybe just a warm-up question, an icebreaker for those in the audience or the webcast who may not be familiar with the story. Can you just spend a few minutes on what Trimble does? Yeah, feed the world, move the world, build the world. That's the why of Trimble. Our technology is comprised of hardware and software that's connecting the physical and digital worlds. Think about connecting work in the office and work in the field. We're a company with 45-year history. These days, we're applying our technology to end markets, mostly around engineering and construction, agriculture, and transportation. These are markets that are all undergoing fundamental aspects of digital transformation. They've got a common secular thesis, large markets that are underserved, under-penetrated, who have needs to drive productivity, efficiency, safety, quality, and sustainability. That's the common connection point between these industries that we serve. Okay, excellent. You know, Trimble, you have several businesses, and they're affected by macro in different ways. You reported earnings, I think, on Thursday, right? It's still pretty fresh. Just to recap, you know, how are your four different segments doing, and what do they see in terms of the macro environment? Well, the headline metric for the overall company, and then I can talk about at the segment level. The headline number I would talk to, we'll talk to is the $1.88 billion of annualized recurring revenue. That was up 14% organically. We think we've got a path to 2 billion of ARR by the end of the year. Posting EBITDA in the mid-20s%. We've gotten working capital at zero, CapEx, 1%-2% of revenue. The model produces cash flow. It's an asset-light business model. We're today about 60% software and services at Trimble, and about 40% hardware. You know, the guide overall for the year is in, call it, in about 3.8 billion range of revenue. Clearly, we've been putting a lot more emphasis into the recurring aspects of the Trimble model. If I break that down into the four reporting segments, just give a quick flyby on that. The first one in Buildings and Infrastructure is the, let's say, is the biggest point of light and has the most momentum behind that. The ARR in that group was up 20% organically, year-over-year, and we're benefiting both from a macro, but also the competitive position that we've taken with our strategy in that in that marketplace. Our Geospatial business, I think of that as a surveyor, surveyors who use our technology, that person standing behind a, a tripod on the side of the road, that's often Trimble kit. It's a very hardware-centric part of the business. That business performed ahead of our expectations in the quarter, in our agriculture business, that's part of our Resources and Utilities segment, because we also have a utility business and a forestry business, but agriculture is the majority of that business. A little bit more mixed signals in that in that segment where our OEM sales were strong and the aftermarket revenue is down, but that's mostly as expected because we're lapping some big comps from the prior year. In the transportation segment at Trimble, the big news there was the acquisition we did and closed in April of Transporeon, is the that's the big move that we've made in that business. Organically, so ignoring Transporeon, we're at six quarters in a row of increasing operating income% every quarter, seven quarters in a row of ARR growth as well. That's a business or a segment that we want to get to the company average performance metrics. That's the quick flyby. Okay, nice. Maybe if we start, we'll go by segment, but we'll start with construct or the B&I segment. I think for investors, it's quite debated on kind of the dynamics that are going on in construction. You had, you know, financing, you had, you know, backlog commentary, et cetera, but in the last quarter, you, you actually accelerated your bookings to 30%, I think, in the quarter before, or something, maybe like mid-teens or 20, whatever, but it, it accelerated. Can you just unpack that? Because you, you said you're benefiting from macro, but you're also got some other changes. I guess let's start there. Yeah. At the, at the macro level, you know, a positive catalyst for us, let's say the tailwinds, are in the form of infrastructure. In the U.S., you could point to the infrastructure bill, you have European economies, other economies around the world. On the back end of COVID, we're putting money into infrastructure. You've got mega projects, whether it's NEOM in Saudi Arabia or Grand Paris or in France or HS2. You've got nuclear projects on in parts of the world. We look at many parts of the world, including North America, you see a reshoring of manufacturing. You see catalysts around EVs, you know, battery plants, data centers, renewable projects. Those have all been positive, I would put that in that category of the macro that's more than offsetting the hit that residential is taking on the, on the, on the back of interest rates. There's a positive, there's a positive trend there, a positive macro, positive winds. for that part of the business. I'd say on top of that, then, is I think we're executing at a very strong level inside of that business. What we, what we're talking a lot about in this context with investors, is our go-to-market model. We have an offering, it's really more of a framework of how we do business, called Trimble Construction One. To the extent that you know Trimble, you know we've been an acquisitive company over time, putting together many assets across the variety of industries that we serve. What this does, let's say in the construction context, is has us showing up like one face to our customers. Its ability to deliver the variety of solutions that we have on a much easier basis for our customers to consume, to learn, to trial. Then behind the scenes, it's much more integrated so that we actually move the data across this industry lifecycle continuum. It's more than just a go-to-market motion. We actually are also able to deliver a more integrated offering so that you can move data across stakeholders in this industry, because this is a very fragmented industry in terms of the players that come to work in construction. What we're seeing as proof points behind what we're doing with Trimble Construction One, is we're seeing cross-sell and upsell. Almost a third of our bookings in the quarter were from cross-sell. That says that it's working, it's got resonance with the customers. What we're seeing is when we're selling Trimble Construction One, is we're seeing bigger ACV bookings, we're seeing sales cycles reduce, and we're seeing our win rates increase. It's a pretty good trifecta that I think that, combined with the macro, is producing those kind of results. Okay. When we think about TC1, is it mostly targeted at your existing Trimble construction customers? I think it's always, think we would all agree that it's easier, cheaper, faster to penetrate existing customers than to chart territory into new, new logos. However, we are doing both. We believe we're sitting on hundreds of millions of upsell opportunity within the customer base that we have, and a big part of the point of TC1 and all the underlying investments we've been making in the plumbing under, and the wiring of Trimble underneath, is to give us the visibility to that so that we can unlock that and put the go-to-market motions around that. For sure, we see growth happening through the cross-sell into existing customers, and we are getting the new logos. Where we're getting the new logos, and where we're seeing those sales cycles reduce in time, is that we're going together with a bundle of Trimble solutions. On the hardware side, on the equipment side? More on the software side. Okay. What we'll go from here, is we've first been targeting the top of the pyramid, the enterprise-level customers. The next motions that we'll make will start to take us in more to the mid-market, which is actually where we have the most number of customers today. We can create persona-based offerings, whether you're an architect, an engineering firm, whether you're a contractor, whether you're a civil contractor. If you're that civil contractor, now we can bring in the hardware and combine that with the software into a bundled offering. Okay. You said bigger ACVs, and you also said, you know, more bundling, more cross-sell. Is there an inherent, like, ARR prop uplift just on the base, or is the ARR uplift driven from those cross-sells? Well, there's a little bit of both. I mean, where we can get, where you can get an upsell motion is when you convert a customers on support maintenance into a subscription. You know, for one thing, in many cases, your customer can retire IT assets they would have had, and so there's a value proposition that turns into an ability to price and get value for what you're bringing to the customer. That's one way of monetization and uplift in a conversion from a support maintenance base into a subscription base. That's good, but great, the difference between good and great is when you can bring in another set of offerings. Think of it as a land and expand, an ability to bundle more into a value proposition to create an uplift. That's really the ultimate game we have, is not to have financial engineering to flip from one revenue stream to the other, but to actually deliver more value. There, I'd see, I feel like we're having good success. Okay. Okay. Okay. Before I move on to ag, any questions on construction? Perfect. And then, you know, switching gears a little bit. No, sorry, let me start over. On the ag side, you made a recent change to your go-to-market and some of your partnerships. Can you just speak to, why that was and how it's going? Yeah. In our, if you look at our agriculture business, I would put this in context of our strategy. Our strategy, we call it Connect and Scale. We want to connect more of the solutions we have at Trimble together. We want to show up to our customers as such, and the scale is about making ourselves easier to do business with. I apply that to the agriculture context. We have three primary ways which we go to market today. The first is through OEM business. We work with over 100 OEMs in agriculture today. I'd say steady as she goes, is the path we're on with that. It's the aftermarket side, which looks different. In that aftermarket, we have two ways we go to market. One is through Trimble distributors, and the other is through CNH or Case New Holland distributors. The Trimble distributors, I would call that more or less steady, as, as she goes, and those Trimble distributors we work with today have access to the full portfolio of what we do, in Trimble ag. If we look at the CNH dealers that we work through, historically, we've worked through CNH Corporate, who then works with the CNH dealers. Our strategy compels us to be closer to the dealers and the end users of our technology. At the same time that the OEMs, many of the OEMs are looking to vertically integrate more of the technology stack themselves. What we saw was, a future that would be better positioned if we made the relationships directly with the dealers and get closer to the actual end users of our technology. That's the major change we have in the distribution.... It's a lot of work to do that. The good news is, we've done this before. We've got civil distribution, we've got Geospatial distribution. Our hardware primarily sells through dealer channels, and our software is primarily direct. We've built and rebuilt these channels before, so we have the muscle to do it. It takes a lot of muscle 'cause it is a lot of work to do it. I'm happy with the reception that we're getting in the market today. You know, farmers use Trimble, and they still want Trimble. They still have a pull- Mm-hmm. for Trimble. When they're going to the dealer that they work with today, they're still asking for Trimble, and those dealers want to be able to meet that. Okay. market need. Okay, perfect. That kind of leads me to my next question is, we get a lot of questions on the competitive environment within ag, and, you know, obviously, with, with CNH, you're making the change. Was that a result of changes in the competitive landscape, or I guess, how would you frame the competitive landscape that you're seeing today? Well, the competitive landscape is for sure changing. I mean, I'd say what you see at the OEM level is more OEMs wanting to vertically integrate, particularly the guidance. The guidance technology that we... We created this space 25 years ago, and it's become so well adopted and over, kind of, call it over 120 horsepower tractors, that OEMs increasingly look to say: Okay, we think it's better if we put the guidance in at the factory. Now, in many cases, we sell that guidance, and it's installed at the factory, and then the biggest of the OEMs will say, "Actually, we want to do more of this as components and put them together, ourselves." There's nothing wrong with that per se, and then that is different. What I would say is the technology landscape and the competitive landscape is not just a guidance business, and that has been historically the biggest thing we do within ag. We see more and more, the following: think about a tractor, and think about what a tractor does. A tractor is a powered unit, and that powered unit actually has an implement behind it, and that implement sprays, it spreads, it seeds. An average farmer has six-seven implements. The implements is where the world, work is happening. The tractor is a powered unit with, you know, low to high horsepower, moving the implement. We see more of the technology moving to the implement. In an implement world, there's thousands of implement manufacturers in the world, and we see the technology moving actually to the individual nozzles on those implements. We do a variable rate application today, where you can control the flow on that individual nozzle. We have the digital prescription for the farm. We know the weak part of the soil, the strong part of the soil, we're going to put more fertilizer here, less there. Now think about how you're reducing high-cost inputs. Think about the sustainability benefits that happen with this, and you're doing it by individually controlling each nozzle. That's a place where we see continued investment. We're now in selective spraying. That's when you spray the weed instead of the crop, and when you do that, you can reduce the herbicide usage by up to 80%. Think about the sustainability and the cost impact for the farmer. Our, I'd say our lens is broadening for how we think about the technology landscape and how we think about competing in that. When we work directly with dealers, we're giving them access to the full portfolio. Mm. If we were going through, like, say, the, the historical relationship on the CNH side, they only worked with guidance. We're setting up a channel now where you can work with the full technology portfolio. Okay. that we bring. The, the competitive landscape changes both as, I'd say, incumbents change the way they do business, but also you have product categories that emerge at the same, at the same time. We may see a lower growth rate in guidance and higher at the variable rate and the select spraying. Interesting. Interesting. If I think about before and after the change, would you say that your overall distribution capacity is going to be much greater, or is it going to be the same? I would say it would be. I want to say it'd be better. Maybe the, the answer I, I come back with, it may not be terribly different in terms of the count or the number. It'll be much better organized if we execute according to the plan that we have. Much more symmetry with how the dealers work in the markets today. A little bit of a sub-distribution model we want to bring to this as well. Yeah. Okay, perfect. Any questions on the ag side before I move to transportation? I did want to touch on transportation. You made an acquisition with Transporeon earlier this year within your transportation segment. It's kind of a new product, right? It's, it's new type of TMS, right? I guess, why make the acquisition? How does it fit in your existing portfolio, and how's it going? If I think about owning a share of Trimble stock today, I think if you own a share of our stock, you own a call option on a data company. And I was saying this before, I could spell ChatGPT. We manage over $1 trillion of construction programs through our software systems today. We manage millions of assets on our roads today. This is before Transporeon. We manage over 180 million acres of farmland today. We have tens of millions of customers around the world. You're driving by, walking by Trimble every day, and you don't know it. We're not going to win any awards for marketing company, I realize that. I wish we were much more of a known name. I live here in Colorado. I drove by projects on I-70 this morning that are where our technology is used, as I drove by farms that are using our technology, as I drove by trucks that are using our technology, and that's just getting here this morning, and I get to do that all around the world. When I look at Transporeon, it's a business that connects carriers and shippers. The business model is really fundamentally, we call it a mass micro monetization. The shippers join the platform, and they actually, in Europe, it's the carriers who pay, and they pay EUR cents per transaction. Last year, through Transporeon systems, over 25 million loads, transports were managed. Over 48 billion in freight was moved through that platform, over 150,000 carriers and over 1,400 shippers. It brings a massive density of scale to a platform that fits in to me, very nicely with what we want to do in the rest of the business. As, you know, you'll know this with your Portland lens on, is the Viewpoint acquisition we did a few years ago, back in 2018, I think it makes a good analog for this, because that's been the basis and the catalyst for a lot of the Trimble Construction One offering around that nucleus. I see that capability inside the Transporeon business. We call it a transportation management platform. It's not the TMS or the transportation- so the TMS or the telematics, those can actually be inputs into this network, so it actually sits above all those systems and can manage the matching of freight, and then there's a land and expand aspect to that, where you can drive more autonomous procurement of the freight, you can drive carbon visibility. Companies, ship- whether it's the shipper or the carrier, can plan their routes according to a carbon footprint load, or they can do it for, for a cost. There's a set of capabilities that build on, on top of that. It's 85% a Europe business, 15% North America. The basic thesis was the Trimble business, pre-Transporeon, is North American-centric and carrier-centric, and Transporeon is European-centric and shipper, shipper-centric. It's bringing together the best of that on a global basis. Now, for global companies that we work with, this is the first port of call in terms of how we can bring some symmetry to what we're to what we're doing. We're going to be, I'd say, somewhat slow and methodical about how we integrate, because this wasn't fundamental. There was nothing in the fundamentals here about cost takeout. Sure. It's really about the mid to long-term growth, potential. Okay. We want to get it right out of the gate. I mean, that's a good point. As investors, as analysts, are there any milestones that we should be thinking of? Not, maybe not from an integration standpoint, but how are we going to measure whether the acquisition is going well or not? You'll measure it if... I, I honestly, I think if I hit the commitments that I say we're going to make, and I deserve to hit, I took, we're three months or, yeah, call it three months after we announced the acquisition, we took the number down for 2023, and it's basically, it's fundamentally a consumption-based model. I believe this is where the world's going to go after SaaS. We're going to be talking about consumption-based models more and more. They already exist in the Snowflake and in the cloud computing companies. It's a business model I'm, I'm attracted to. What we saw was the freight market contracted more in Europe than I predicted at the time of the underwrite of the deal. Haven't lost customers. Have effectively no churn in the business, so it's purely, we see lower transactions. We think the spot market bottomed out in Q2. Time will tell if that's accurate or not. I think if we post the double-digit growth and op margin expansion, then I don't think I'll get the questions, but I've certainly deserved the questions we're getting now. Okay, perfect. Just have a couple of minutes left. There are some questions we're trying to ask all of our companies in the conference. Informal survey, if you want to call it. Yes or no answer. Exiting Q2, you just reported, versus exiting Q1, would you say business has improved? Yes. Then, generative AI, do you think Trimble can directly monetize it? Well, it's a binary yes. Okay. I think the interesting question is, in what form does it get monetized, standalone or through the existing products and services? I think it's through the existing business, how we continue to differentiate and how we sell when we sell bundle, bundled offerings, that you get, you get those capabilities when you're buying that. Okay. Then if, since you do think you can monetize it, will we be seeing any revenues this year, next year, or, or time will tell? This is a fun one because I think we're going to see the benefits on the cost side before we probably see them on the revenue side. From using Copilot, for an example, the productivity we've seen from we did a test with over 200 developers, some strong double-digit increases in productivity, and like, why is this not the standard way that we code and do business? I'm a believer that we'll see it there first. You know, I get, I, I get there's an aspect of the, the hoopla and the hype, and by the way, I talked about it in the, the script last week, and I put a slide on it, yeah, I'm, I'm there too. Can I ask you, you, you said you were using Copilot, and you saw a double-digit improvement. I guess, where did you see the improvement? Just how did you measure it, and I don't know if you have any- Yeah, it's through the, it's, it's basically through the lines of code. Okay, interesting. Yeah. By the way, it was 30%. 30%? Wow. It wasn't 10, you know, 9.99, round it up. Like, it's a real double-digit increase in productivity. Now, did we- They were able to write the code faster or more accurately? You were able to write the code faster. You see developers saying they're more satisfied with their work when they're doing it, and you've got better documentation in the code. Now, what we need to be careful of is that the developers are also more confident in what the AI is producing, and that could be dangerous if it's actually not better. Okay. That's going to be the potential trap that we all have to watch out for as we do that. You know, I think you said generative AI. I would say we've already been doing AI and ML for years, and we've been selling that as part of the solutions. I would say, well, that's already here, and I see that's... We haven't had success in the past, selling that as its own separate standalone product. I've seen us have better success when it's bundled in with the core offerings, and you can get a price premium. That's our experience. You didn't ask about AI and ML, you asked about generative. Sure, sure. We'll lump it in. That one, I go, oof! There, I think we need to see what time's going to bring to that. Got it. Okay. I'll revise your answers for our survey. Okay. Last question, just to close it out: You know, I live in Oregon, college football. Any thoughts on CU Boulder or Boulder going to the Big 12? I live in Boulder, Colorado. Big 12, sorry. How many Bigs? I, I, I live in Boulder, Colorado. You know, Coach Prime's bringing it. He's coming, if you listen to him, and I am originally from West Virginia, who is in the Big 12, suddenly West Virginia and Colorado are in the same place. I'm a big fan, of, of this, and I don't feel bad for, Oregon. Okay, great. With that, I want to thank Rob for coming and everyone, for joining us in Vail, and hope everyone has a good week. Thank you, everyone.