Trimble (NASDAQ: $TRMB) Reports Solid Fourth Quarter Results, Issues Weak Guidance

Trimble Inc. (NASDAQ: $TRMB)

Trimble Inc. (NASDAQ: $TRMB) is an industrial tech company that produces software and hardware to support global industries in various sectors, including utilities, agriculture, construction, natural resources, and geospatial. The company, based in Westminster, CO, provides technology geared towards improving the accuracy of industrial-scale operations.

On February 12, 2024, before markets opened, Trimble released its Q4 and full-year results for fiscal 2023.

Trimble’s Fourth Quarter Results

For the fourth quarter, Trimble reported revenue of $932.4 million, a 9% increase from last year and above estimates of $911.71 million. Its net income for the quarter was $156.6 million, a 4% increase from last year. Diluted EPS for the quarter grew 5% to $0.63, above the consensus estimate of $0.60.

Full-year revenue grew 3% to $3.80 billion, while full-year diluted EPS and net income both grew 1% to $2.66 and $663.7 million, respectively.

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Revenue Sources by Type and Region

During the fourth quarter, the revenue from  Products, which includes hardware and perpetual software licenses, declined 3% year-over-year to $402.8 million.

Trimble’s Subscription and Services revenue, which includes SaaS, maintenance, term licenses, professional services, and transactions, grew 20% to $529.6 million.

Its top source of revenue for the quarter was North America, which brought in $492.8 million, an 8% increase from last year. Europe increased 11% from last year to $265 million. The largest percentage increase was in the Asia Pacific region, which saw a 17% increase to $109.2 million. All other regions of the world saw a combined 4% year-over-year decline to $65.4 million.

Segment Performance

Trimble has four segments, which are Buildings & Infrastructure, Geospatial, Resources & Utilities, and Transportation. The segments all saw an over 20% increase in operating income, with the Resources & Utilities segment seeing the largest percentage increase of 34% to $61 million.

In terms of revenue, Buildings & Infrastructure was the best performer, bringing in $388.5 million, an 11% increase Y/Y. The Geospatial segment brought in $169.5 million, a 1% decline Y/Y; Resources & Utilities brought in $179.6 million, a 3% Y/Y decline, and Transportation saw the largest Y/Y percentage increase of 30% to $194.8 million.

Financial Highlights

Trimble had many financial highlights for 2023. Its full-year GAAP gross margin came in at 61.4%, while non-GAAP gross margin was 64.7%, highlighting efficiency. Its full-year GAAP operating income came in at $444.8 million, 11.5% of revenue, while non-GAAP operating income was $934.7 million, which was 24.6% of full-year revenue. Another highlight was its adjusted EBITDA of $1 billion, which was 26.6% of FY revenue.

First Quarter and Full Year Outlook

For Q1 fiscal 2024, Trimble expects Annualized Recurring Revenue (ARR) to grow 11%-13%, compared to the $1.65 billion reported the previous year. Trimble projects revenue will grow -1%-2% to $905-935 million in Q124, compared to the $915 million in revenue reported in Q123.

It expects an adjusted EBITDA margin of 25% to 26%, compared to 27.2% in Q123. Additionally, it is projecting a non-GAAP EPS of $0.57 to $0.62, compared to $0.72 in Q123.

For fiscal 2024, Trimble expects revenue to decline 6%-3% to $3.57-$3.67 billion, compared to $3.8 billion in FY23. It projects a full-year adjusted EBITDA margin of 26% to 27%, compared to 26.6% in FY23. Full-year non-GAAP EPS is expected to be $2.60 to $2.80, compared to $2.66 in FY23.

Its 2024 FY non-GAAP EPS projection is in line with consensus estimates of $$2.72. However, the revenue guidance is below estimates of $3.84 billion.

Trimble (TRMB) Stock Performance

Following the release of the report, TRMB stock declined 5.35% to $49.70 on Monday, February 12, 2024, a few minutes before the opening bell on a disappointing full-year guidance. Additionally, the projected decline in Q1 margins compared to the same time last year led to additional selling pressure. That is in contrast to the 0.83% gain it experienced at the close of trading on Friday, February 9, 2024.

As of Friday’s closing price, the stock is down 6.33% in the past 12 months. Year-to-date, the stock has gained 0.11%, with a market cap of $13.063 billion.

Trimble (NASDAQ: $TRMB)

Trimble Stock Forecast

According to four Wall Street analysts, Trimble’s average stock price is projected to be $57.50, a 9.50% based on its last closing price. They have set a broad target, with a high of $63 and a low of $51. The overall rating for the stock is a moderate buy.

Is TRMB a Buy?

Trimble had a great year in fiscal 2023. Margins expanded, revenue grew, and cash flow generation was robust. The company’s Q1 and FY24 guidance reflects its cautiousness in light of expected macroeconomic challenges. However, its strong balance sheet positions it perfectly to face any upcoming challenges. In light of that, the moderate buy rating by analysts is an accurate representation of its likely performance in the next 12 months.

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