# TRIMBLE INC. (TRMB) FY 2025 MD&A

Verbatim Item 7 Management's Discussion and Analysis from TRIMBLE INC.'s 10-K for fiscal year 2025.

SEC filing source: https://www.sec.gov/Archives/edgar/data/864749/000086474925000090/trmb-20250103.htm
Accession: 0000864749-25-000090
Filing date: 2025-04-25
Report date: 2025-01-03
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/TRMB/
All MD&A years: /company/TRMB/mda/
Previous year: /company/TRMB/mda/fy2023/ (FY 2023)
Next year: /company/TRMB/mda/fy2026/ (FY 2026)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements and the related notes. The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. 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 “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.

EXECUTIVE LEVEL OVERVIEW

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, 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:

•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; and

•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, organic ARR growth was 14%. This shift toward recurring revenue has 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 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” 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.

Impact of Recent Events on Our Business

Acquisitions and Divestitures

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. 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

28

Table of Contents

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 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

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires us to make judgments, assumptions, and estimates that affect the reported amounts of assets, liabilities, revenue, costs of sales, operating expenses, and related disclosures. We consider the accounting polices described below to be our critical accounting policies. 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” 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 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 may include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations; however,

29

Table of Contents

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 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.

Income Taxes

We are a U.S. based multinational company operating in multiple U.S. and foreign jurisdictions. Judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and may not accurately forecast actual tax audit outcomes. Determining whether an uncertain tax position is effectively settled requires judgment. Changes in recognition or measurement of our uncertain tax positions would result in the recognition of a tax benefit or an additional charge to the tax provision.

Income taxes are accounted for under the liability method, whereby deferred tax assets or liability account balances are calculated at the balance sheet date using current tax laws and rates in effect for the year in which the differences are expected to affect taxable income. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets if we believe it is more likely than not such assets will not be realized.

We are subject to the periodic examination of our domestic and foreign tax returns by the IRS, state, local, and foreign tax authorities who may challenge our tax positions. We regularly assess the likelihood of adverse outcomes from these examinations in determining the adequacy of our provision for income taxes.

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. Critical estimates when valuing intangible assets include expected future cash flows based on consideration of revenue and revenue growth rates and margins, customer attrition rates, future changes in technology and brand awareness, loyalty and position, and discount rates. 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. To determine whether goodwill is impaired, we first assess qualitative factors. Qualitative factors include but are not limited to macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, or other relevant company-specific events. If it is determined more likely than not that the fair value of a goodwill reporting unit is less than its carrying amount, we perform a quantitative analysis. Alternatively, we may bypass the qualitative assessment and perform a quantitative impairment test.

When performing a quantitative approach, we compare the reporting unit’s carrying amount, including goodwill, to the reporting unit's fair value. The estimation of a reporting unit's fair value involves using estimates and assumptions, including expected future operating performance using risk-adjusted discount rates. If the reporting unit's carrying amount exceeds its fair value, an impairment loss is recognized.

We review intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of those assets may not be recoverable based on their future cash flows. The estimated future cash flows are primarily based on assumptions about expected future operating performance.

30

Table of Contents

RESULTS OF OPERATIONS

Overview

The following table shows revenue by category, gross margin and gross margin as a percentage of revenue, operating income and operating income as a percentage of revenue, diluted earnings per share, and annualized recurring revenue compared for the periods indicated:

[[GREPCENT_TABLE]]
[["","2024","","2023","","Dollar Change","","% Change"],["(In millions, except per share amounts)"],["Revenue:"],["Product","$","1,284.0","","","$","1,771.7","","","$","(487.7)","","","(28)%"],["Subscription and services","2,399.3","","","2,027.0","","","372.3","","","18%"],["Total revenue","$","3,683.3","","","$","3,798.7","","","$","(115.4)","","","(3)%"],["Gross margin","$","2,396.3","","","$","2,332.8","","","$","63.5","","","3%"],["Gross margin as a % of revenue","65.1","%","","61.4","%"],["Operating income","$","460.7","","","$","448.8","","","$","11.9","","","3%"],["Operating income as a % of revenue","12.5","%","","11.8","%"],["Diluted earnings per share","$","6.09","","","$","1.25","","","$","4.84","","","387%"],["Non-GAAP operating income (1)","$","937.2","","","$","934.7","","","$","2.5","","","\u2014%"],["Non-GAAP operating income as a % of revenue (1)","25.4","%","","24.6","%"],["Non-GAAP diluted earnings per share (1)","$","2.85","","","$","2.66","","","$","0.19","","","7%"],["Annualized Recurring Revenue (\u201cARR\u201d) (1)","$","2,257.8","","","$","1,982.3","","","$","275.5","","","14%"]]
[[/GREPCENT_TABLE]]

(1)    Refer to “Supplemental Disclosure of Non-GAAP Financial Measures and Annualized Recurring Revenue” of this report for definitions.

Basis of Presentation

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.

Year 2024 Compared with Year 2023

Revenue

[[GREPCENT_TABLE]]
[["","","2024"],["Change versus 2023","","% Change"],["","","Product","","Subscription and Services","","Total Revenue"],["Change in Revenue","","(28)","%","","18","%","","(3)","%"],["Acquisitions","","2","%","","2","%","","2","%"],["Divestitures","","(21)","%","","(1)","%","","(10)","%"],["Organic growth","","(9)","%","","17","%","","5","%"]]
[[/GREPCENT_TABLE]]

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

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.

31

Table of Contents

Operating Income

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

The following table shows research and development (“R&D”), sales and marketing (“S&M”), and general and administrative (“G&A”) expense along with these expenses as a percentage of revenue for the periods indicated:

[[GREPCENT_TABLE]]
[["","2024","","2023","","Dollar Change","","% Change"],["(In millions)"],["Research and development","$","662.3","","","$","664.3","","","$","(2.0)","","","\u2014%"],["Percentage of revenue","18.0","%","","17.5","%"],["Sales and marketing","$","603.8","","","$","583.0","","","$","20.8","","","4%"],["Percentage of revenue","16.4","%","","15.3","%"],["General and administrative","$","547.9","","","$","487.5","","","$","60.4","","","12%"],["Percentage of revenue","14.9","%","","12.8","%"],["Total","$","1,814.0","","","$","1,734.8","","","$","79.2","","","5%"]]
[[/GREPCENT_TABLE]]

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 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

The following table shows amortization of purchased intangible assets for the periods indicated:

[[GREPCENT_TABLE]]
[["","2024","","2023","","Dollar Change","","% Change"],["(In millions)"],["Cost of sales","$","93.3","","","$","108.7","","","$","(15.4)","","","(14)%"],["Operating expenses","105.7","","","103.6","","","2.1","","","2%"],["Total amortization expense of purchased intangibles","$","199.0","","","$","212.3","","","$","(13.3)","","","(6)%"],["Total amortization expense of purchased intangibles as a percentage of revenue","5","%","","6","%"]]
[[/GREPCENT_TABLE]]

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

The following table shows non-operating income (expense), net for the periods indicated:

[[GREPCENT_TABLE]]
[["","2024","","2023","","Dollar Change","","% Change"],["(In millions)"],["Divestitures gain, net","$","1,687.9","","","$","9.2","","","$","1,678.7","","","18247%"],["Interest expense, net","(90.7)","","","(161.0)","","","70.3","","","(44)%"],["(Loss) income from equity method investments, net","(48.1)","","","28.1","","","(76.2)","","","(271)%"],["Other (loss) income, net","(3.9)","","","31.9","","","(35.8)","","","(112)%"],["Total non-operating income (expense), net","$","1,545.2","","","$","(91.8)","","","$","1,637.0","","","(1783)%"]]
[[/GREPCENT_TABLE]]

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.

32

Table of Contents

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 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 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. GAAP. 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:

[[GREPCENT_TABLE]]
[["","","","","","","","","","2024","","2023","","Dollar Change","","% Change"],["(In millions)"],["AECO"],["Segment revenue","","","","","","","","","$","1,358.6","","","$","1,110.5","","","$","248.1","","","22%"],["Segment revenue as a % of total revenue","","","","","","","","","37","%","","29","%"],["Segment operating income","","","","","","","","","$","463.6","","","$","329.0","","","$","134.6","","","41%"],["Segment operating income as a % of segment revenue","","","","","","","","","34.1","%","","29.6","%"],["Field Systems"],["Segment revenue","","","","","","","","","$","1,535.9","","","$","1,967.9","","","$","(432.0)","","","(22)%"],["Segment revenue as a % of total revenue","","","","","","","","","42","%","","52","%"],["Segment operating income","","","","","","","","","$","442.0","","","$","603.5","","","$","(161.5)","","","(27)%"],["Segment operating income as a % of segment revenue","","","","","","","","","28.8","%","","30.7","%"],["T&L"],["Segment revenue","","","","","","","","","$","788.8","","","$","720.3","","","$","68.5","","","10%"],["Segment revenue as a % of total revenue","","","","","","","","","21","%","","19","%"],["Segment operating income","","","","","","","","","$","155.1","","","$","118.2","","","$","36.9","","","31%"],["Segment operating income as a % of segment revenue","","","","","","","","","19.7","%","","16.4","%"]]
[[/GREPCENT_TABLE]]

The following table is a reconciliation of our consolidated segment operating income to consolidated income before taxes:

[[GREPCENT_TABLE]]
[["","2024","","2023"],["(In millions)"],["Total segment operating income","$","1,060.7","","","$","1,050.7"],["Unallocated general corporate expenses","(123.5)","","","(116.0)"],["Amortization of purchased intangible assets","(199.0)","","","(212.3)"],["Acquisition / divestiture items","(81.6)","","","(72.4)"],["Stock-based compensation / deferred compensation","(163.5)","","","(151.1)"],["Restructuring and other costs","(32.4)","","","(50.1)"],["Consolidated operating income","460.7","","","448.8"],["Total non-operating income (expense), net","1,545.2","","","(91.8)"],["Consolidated income before taxes","$","2,005.9","","","$","357.0"]]
[[/GREPCENT_TABLE]]

AECO

[[GREPCENT_TABLE]]
[["Change versus 2023","","","","2024"],["","","","","% Change"],["Change in Revenue - AECO","","","","22","%"],["Divestitures","","","","(1)","%"],["Foreign currency exchange","","","","1","%"],["Organic growth","","","","22","%"]]
[[/GREPCENT_TABLE]]

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

33

Table of Contents

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

[[GREPCENT_TABLE]]
[["Change versus 2023","","","","2024"],["","","","","% Change"],["Change in Revenue - Field Systems","","","","(22)","%"],["Acquisitions","","","","1","%"],["Divestitures","","","","(19)","%"],["Organic growth","","","","(4)","%"]]
[[/GREPCENT_TABLE]]

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.

T&L

[[GREPCENT_TABLE]]
[["Change versus 2023","","","","2024"],["","","","","% Change"],["Change in Revenue - T&L","","","","10","%"],["Acquisitions","","","","6","%"],["Divestitures","","","","(1)","%"],["Organic growth","","","","5","%"]]
[[/GREPCENT_TABLE]]

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.

34

Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

[[GREPCENT_TABLE]]
[["At the End of Year","2024","","2023","","Dollar Change","","% Change"],["(In millions, except percentages)"],["Cash and cash equivalents (1)","$","747.8","","","$","238.9","","","$","508.9","","","213","%"],["As a percentage of total assets","7.9","%","","2.5","%"],["Principal balance of outstanding debt","$","1,400.0","","","$","3,080.4","","","$","(1,680.4)","","","(55)","%"],["Years","2024","","2023","","Dollar Change","","% Change"],["(In millions)"],["Net cash provided by operating activities","$","531.4","","","$","597.1","","","$","(65.7)","","","(11)","%"],["Net cash provided by (used in) investing activities","1,861.1","","","(2,068.1)","","","3,929.2","","","(190)","%"],["Net cash (used in) provided by financing activities","(1,864.2)","","","1,431.5","","","(3,295.7)","","","(230)","%"],["Effect of exchange rate changes on cash and cash equivalents","(19.4)","","","7.4","","","(26.8)","","","(362)","%"],["Net increase (decrease) in cash and cash equivalents","$","508.9","","","$","(32.1)"]]
[[/GREPCENT_TABLE]]

(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 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 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 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 & 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 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:

Leases

We have operating leases primarily for certain of our major facilities including corporate offices, research and development facilities, and manufacturing facilities. Operating leases represent undiscounted lease payments and include short-term leases. 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” in Item 8 of this report for additional information regarding our leases.

Tax Payable

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

35

Table of Contents

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

Debt

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. 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

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. 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” in Item 8 of this report.

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

To supplement our consolidated financial information, we included non-GAAP financial measures, which are not meant to be considered in isolation or as a substitute for comparable GAAP. We believe non-GAAP financial measures provide useful information to investors and others in understanding our “core operating performance”, which excludes (i) the effect of non-cash items and certain variable charges not expected to recur; and (ii) transactions that are not meaningful in comparison to our past operating performance or not reflective of ongoing financial results. 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 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 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 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.

36

Table of Contents

The non-GAAP financial measures, definitions, and explanations to the adjustments to comparable GAAP measures are included below:

[[GREPCENT_TABLE]]
[["","","Years"],["","","2024","","2023"],["","","Dollar","% of","","Dollar","% of"],["(In millions, except per share amounts)","","Amount","Revenue","","Amount","Revenue"],["REVENUE:"],["GAAP revenue:","","$","3,683.3","","","","$","3,798.7"],["GROSS MARGIN:"],["GAAP gross margin:","","$","2,396.3","","65.1","%","","$","2,332.8","","61.4","%"],["Amortization of purchased intangible assets","(A)","93.3","","","","108.7"],["Acquisition / divestiture items","(B)","\u2014","","","","0.5"],["Stock-based compensation / deferred compensation","(C)","17.4","","","","15.0"],["Restructuring and other costs","(D)","3.6","","","","(0.1)"],["Non-GAAP gross margin:","","$","2,510.6","","68.2","%","","$","2,456.9","","64.7","%"],["OPERATING EXPENSES:"],["GAAP operating expenses:","","$","1,935.6","","52.6","%","","$","1,884.0","","49.6","%"],["Amortization of purchased intangible assets","(A)","(105.7)","","","","(103.6)"],["Acquisition / divestiture items","(B)","(81.6)","","","","(71.9)"],["Stock-based compensation / deferred compensation","(C)","(146.1)","","","","(136.1)"],["Restructuring and other costs","(D)","(28.8)","","","","(50.2)"],["Non-GAAP operating expenses:","","$","1,573.4","","42.7","%","","$","1,522.2","","40.1","%"],["OPERATING INCOME:"],["GAAP operating income:","","$","460.7","","12.5","%","","$","448.8","","11.8","%"],["Amortization of purchased intangible assets","(A)","199.0","","","","212.3"],["Acquisition / divestiture items","(B)","81.6","","","","72.4"],["Stock-based compensation / deferred compensation","(C)","163.5","","","","151.1"],["Restructuring and other costs","(D)","32.4","","","","50.1"],["Non-GAAP operating income:","","$","937.2","","25.4","%","","$","934.7","","24.6","%"],["NON-OPERATING (EXPENSE) INCOME, NET:"],["GAAP non-operating (expense) income, net:","$","1,545.2","","","","$","(91.8)"],["Acquisition / divestiture items","(B)","(1,688.5)","","","","(36.5)"],["Deferred compensation","(C)","(4.9)","","","","(5.8)"],["Restructuring and other costs","(D)","64.1","","","","1.3"],["Non-GAAP non-operating expense, net:","$","(84.1)","","","","$","(132.8)"],["","","","GAAP and Non-GAAP Tax Rate %","","","GAAP and Non-GAAP Tax Rate %"],["","","","(G)","","","(G)"],["INCOME TAX PROVISION:"],["GAAP income tax provision:","","$","501.5","","25.0","%","","$","45.7","","12.8","%"],["Non-GAAP items tax effected","(E)","(288.1)","","","","56.9"],["Difference in GAAP and Non-GAAP tax rate","(F)","(64.7)","","","","35.6"],["Non-GAAP income tax provision:","","$","148.7","","17.4","%","","$","138.2","","17.2","%"],["NET INCOME:"],["GAAP net income:","","$","1,504.4","","","","$","311.3"],["Amortization of purchased intangible assets","(A)","199.0","","","","212.3"],["Acquisition / divestiture items","(B)","(1,606.9)","","","","35.9"],["Stock-based compensation","(C)","158.6","","","","145.3"],["Restructuring and other costs","(D)","96.5","","","","51.4"],["Non-GAAP tax adjustments","(E) - (F)","352.8","","","","(92.5)"],["Non-GAAP net income:","","$","704.4","","","","$","663.7"],["DILUTED NET INCOME PER SHARE:"],["GAAP diluted net income per share:","","$","6.09","","","","$","1.25"],["Amortization of purchased intangible assets","(A)","0.80","","","","0.85"],["Acquisition / divestiture items","(B)","(6.50)","","","","0.14"]]
[[/GREPCENT_TABLE]]

37

Table of Contents

[[GREPCENT_TABLE]]
[["","","Years"],["","","2024","","2023"],["","","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)","1.43","","","","(0.37)"],["Non-GAAP diluted net income per share:","","$","2.85","","","","$","2.66"],["ADJUSTED EBITDA:"],["GAAP operating income:","","$","460.7","","12.5","%","","$","448.8","","11.8","%"],["Amortization of purchased intangible assets","(A)","199.0","","","","212.3"],["Acquisition / divestiture items","(B)","81.6","","","","72.4"],["Stock-based compensation","(C)","163.5","","","","151.1"],["Restructuring and other costs","(D)","32.4","","","","50.1"],["Non-GAAP operating income:","","937.2","","25.4","%","","934.7","","24.6","%"],["Depreciation expense and cloud computing amortization","","49.3","","","","46.9"],["Income from equity method investments, net","","13.9","","","","28.1"],["Adjusted EBITDA","","$","1,000.4","","27.2","%","","$","1,009.7","","26.6","%"]]
[[/GREPCENT_TABLE]]

Non-GAAP Definitions

Non-GAAP gross margin

We define Non-GAAP gross margin as GAAP gross margin, excluding the effects of amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation, deferred compensation, and restructuring and other costs. We believe our investors benefit by understanding our non-GAAP gross margin as a way of understanding how product mix, pricing decisions, and manufacturing costs influence our business.

Non-GAAP operating expenses

We define Non-GAAP operating expenses as GAAP operating expenses, excluding the effects of amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation, deferred compensation, and restructuring and other costs. We believe this measure is important to investors evaluating our non-GAAP spending in relation to revenue.

Non-GAAP operating income

We define Non-GAAP operating income as GAAP operating income, excluding the effects of amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation, deferred compensation, and restructuring and other costs. We believe our investors benefit by understanding our non-GAAP operating income trends, which are driven by revenue, gross margin, and spending.

Non-GAAP non-operating expense, net

We define Non-GAAP non-operating expense, net as GAAP non-operating income (expense), net, excluding acquisition/divestiture items, deferred compensation, and restructuring and other costs. We believe this measure helps investors evaluate our non-operating expense trends.

Non-GAAP income tax provision

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, 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.

Non-GAAP net income

We define Non-GAAP net income as GAAP net income, excluding the effects of amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation, restructuring and other costs, and non-GAAP tax adjustments. This measure provides a supplemental view of net income trends, which are driven by non-GAAP income before taxes and our non-GAAP tax rate.

38

Table of Contents

Non-GAAP diluted net income per share

We define Non-GAAP diluted net income per share as GAAP diluted net income per share, excluding the effects of amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation, restructuring and other costs, and non-GAAP tax adjustments. We believe our investors benefit by understanding our non-GAAP operating performance as reflected in a per share calculation as a way of measuring non-GAAP operating performance by ownership in the Company.

Adjusted EBITDA

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 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

(A).Amortization of purchased intangible assets. Non-GAAP gross margin and operating expenses exclude the amortization of purchased intangible assets, which primarily represents technology and/or customer relationships already developed.

(B).Acquisition / divestiture items. 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 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.

(C).Stock-based compensation / deferred compensation. Non-GAAP gross margin and operating expenses exclude stock-based compensation and income or expense associated with movement in our non-qualified deferred compensation plan liabilities. Changes in non-qualified deferred compensation plan assets, included in non-operating expense, net, offset the income or expense in the plan liabilities.

(D).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, 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.

(E).Non-GAAP items tax effected. 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.

(F).Difference in GAAP and non-GAAP tax rate. This amount represents the difference between the GAAP and non-GAAP tax rates applied to the non-GAAP operating income plus the non-GAAP non-operating expense, net. 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, (ii) deferred tax impacts from global intangible low-taxed income, and (iii) significant reserve releases upon statute of limitations expirations.

(G).GAAP and non-GAAP tax rate percentages. These percentages are defined as GAAP income tax provision as a percentage of GAAP income before taxes and non-GAAP income tax provision as a percentage of non-GAAP income before taxes.

39

Table of Contents