Trimble Inc. (TRMB) Earnings Call Transcript & Summary

I think we're going to get started here. Are we ready? All right. Good morning. Come on. Good morning. All right. Hey, welcome to Trimble Investor Day. Thank you all for being here. Those of you who are attending virtually and especially those of you who made the effort to be here with us in person today. Trimble is in the early innings of a tremendous opportunity. And on behalf of our team, we are glad to be here, and we are excited to be able to share our story with you today. Our story, it's based on our Connect & Scale strategy, and we launched Connect and Scale in 2020 and Connect & Scale guides everything that we do here at Trimble. And so as we begin our time together, I'm going to reference some forward-looking statements. So please read this slide and consider yourself safe harbored. We are recording this call, and all of our slides are available now on investor.trimble.com, and I think you can look under events on the sub-tab there to see all the presentation material. In addition, the numbers that we're going to discuss throughout the day will be presented pro forma. That is they're adjusted to exclude our agriculture business, the 53rd week that we have in 2024 as well as the mobility divestiture that we announced in September and that we continue to expect to close in the first quarter of 2025. Okay. Let's talk about our agenda. We had a chance over the last few weeks and months to talk to a number of you. A number of you actually in the room here today as well. Thank you for that. You -- your feedback helps shape what we're going to talk about today. I'm going to get us started. Phil will book and the time that we have together with the numbers before we then move to Q&A. In between, you're going to meet Mark, Ron and Chris. These are our 3 segment leaders who bring Connect & Scale to life, and they're going to walk you through each of their businesses. There's also a number of our key leaders who are not here today, and I'm grateful for everybody on this team. The 9 people on the screen have over 160 collective years of Trimble experience. Now before I get started with an overview of the company and the strategy, I want to update you on the status of our EY audit procedures. This morning -- yes, this morning, we released an 8-K with some incremental good news. We affirmed what we've said from the beginning is that no material weakness -- no material changes have been identified that would result in any kind of restatement of our numbers. The new news is that we expect to be refiled in the next couple of weeks. The best news that I can relate to you on this topic this morning is an animation that was made by both Trimble and EY and that we will be done here in the next couple of weeks. That part is different because throughout the year, I've been making assessment on time based on my best judgment at any given point in time. So we are as anxious to put this behind us as you are. So let's get back to Investor Day, where we're obviously going to talk about the business model, our growth algorithm and our financials. And I presume that's why most of you are here is to hear this story. Yet, let's consider that these numbers are the outputs. They're the scoreboard in the game. The vision, the strategy and the executional tactics, those are the inputs. And those inputs form the basis of what we think of as our right to win, and that's fundamentally based on our Connect & Scale strategy. And we believe our right to win happens at the intersection of 3 things, which represent a set of key takeaways that we'd like you to leave with today. First, you have to be pursuing an attractive and compelling market. I trust we can agree that it generally does one little good to have a great strategy a lousy market. The good news is that our markets are large, global, underserved and underpenetrated. The better news is that we have simplified and focused our organization to go after a secular digitization opportunity. And against this backdrop, Connect & Scale is a winning strategy at the intersection of product, go-to-market and technology. And as such, the second key takeaway is that our product strategy is built on the basis of the incredible breadth and depth of our solution portfolio, doing things that only we can do to move from point solutions to workflow to ecosystem offerings. And we believe that we are uniquely positioned to be a winner in an AI forward world with this strategy. The third key takeaway happens with leveraging our differentiated go-to-market approach that is leveraging the investments we've been making to harmonize our back-office systems and processes. So in summary, it's the intersection of these 3 things that form the basis of a right to win and have designed us to deliver compelling and compounding financial returns. And you can see this most notably today in our AECO segment. And that's my intention. It's not by accident because that is precisely where we have focused our efforts over the last few years to develop and refine our Connect & Scale playbook. You can think of Connect & Scale as an equivalent of a Trimble business system or a Trimble operating system. Now to understand where we were going, starts with the baseline understanding of where we are today. And we recognize there's been a lot of moving pieces here over the last year -- over the last couple of years. We operate with 3 reporting segments that primarily serve 2 end markets: engineering and construction and Transportation & Logistics. With the software forward business models, business model that addresses a global market opportunity as evidenced by us doing business in over 175 different countries. You can think of AECO as construction software. You can think of Field Systems as mix software and hardware solutions in Geospatial and Construction markets. And think of Transportation & Logistics as pure-play software. So while we will focus mostly on our strategy and our team today -- our strategy and our financials today, excuse me, that doesn't happen without a great global team. And our team is on awards for best global company culture and the best workplace for innovators. Our sustainability journey continues to positively progress as well and the footnote on the slide links to our most recent sustainability report, which I'm really proud of. So let's double-click on this baseline of understanding where we are today by looking at the qualitative and quantitative progression of Trimble over the last 5 years. So when we launched Connect & Scale, we began making significant investments in our enabling systems and processes to drive our own digital transformation. We then focus on our product strategies, including business model transformations before moving on to our go-to-market transformation work. And along the way, we became more intentional with our capital allocation, focusing our efforts where we believe we have the strongest right to win. And that led us to a period where we've had significantly more divestitures than acquisitions. From there, we then use the net capital proceeds and ongoing free cash flow generation to delever and to initiate incremental stock buybacks. At the beginning of 2024, we resegmented the company, and that has acted to simplify our story and simplify and focus our organization. And the 3 operators that you'll hear from today run businesses that perfectly line up to these reporting segments. So the takeaway here is that we have simplified, focused and strengthened the company. Now to put a more quantitative lens on all of this, let's look at the results. The strategy has generated over the last 5 years. And by the math, we've divested over $1 billion of revenue. At the same time, we organically grew over $700 million of revenue at a 40% operating leverage clip. We have structurally transformed to become better and stronger. So let's look at it. The ARR has increased from $1.2 billion to over $2 billion, growing double digit organically. We think that's pretty rare air territory. Recurring revenue has nearly doubled as a percent of total revenue to 62%. Our software and services now stand at 77% of total revenue. The other place where we've structurally transformed us in our gross margins, and those have gone up over 1,200 basis points, and they've got a 7 in front of it now at 70%. And that has translated into over 500 bps of EBITDA improvement at 28%. The takeaway here, our transformation has been strategic and deliberate. This leadership team that you'll meet today and our 12,000-plus colleagues around the world, they've been doing the hard work. And like I said upfront, we're not done. We think we are in the early innings of a tremendous opportunity. So to put a finer point on that, let's give you our ambition upfront. 3, 4, 30, our ambition through 2027, $3 billion of ARR, $4 billion of revenue, 30% EBITDA margins. And this is what we're here today to discuss. Now as I put forward in our right to win construct, 3, 4, 30 is the outcome. It's the scoreboard. So let's start with the data on the first of our 3 key assertions. The first of which is that the markets we serve are large, global, underserved and underpenetrated. And they have secular growth tailwinds as these industries digitize, for those of you who don't know us that well, I want to talk briefly about what we do and why we do it. For those of you who do know us well, consider this the connective tissue across all of Trimble. So our technology connects hardware and software to connect work in the field and work in the office, thereby uniquely connecting the physical and the digital worlds. In the engineering and construction end markets, AECO is a software business with 3D design software for architects with BIM and engineering software focused on the highest value trades, so think mechanical, electrical, plumbing, steel and concrete, which in a building like we're in today represent 2/3 of the cost of this construction. For contractors, we offer construction management solutions and project management solutions. And then finally, we have a software business that focuses on the owners to help them manage their capital programs and their asset management. In Field Systems, surveyors are the primary users of our Geospatial solutions, which create digital models of the physical earth. Most of you know our machine control and guidance solutions that automate construction equipment for civil contractors. Then you have the origin story of Trimble that's largely captured in our set of advanced positioning solutions that are used in a variety of applications to deliver high-accuracy positioning outcomes. In Transportation & Logistics, we serve carriers, shippers and brokers. All of them can use our mapping, routing and navigation software. All of them can benefit from transportation management platform. That's our Transporeon business. And then we also developed ERP and maintenance solutions primarily for carriers. So let's talk about why we do it. Our customers and our markets, they face profound productivity and sustainability challenges. One of the privileges of my job is to be able to spend time around the world with our customers and they're validating the importance and the need for them to digitize. They want to mine their data and turn that data into information. And by extension, they are at validating the direction of our Connect & Scale strategy. So an AECO, if we look at that, we help build virtually before physically. By designing and engineering in 3D, you can drive profound savings. When you fabricate off of a highly precise 3D model, you can reduce waste because you're building it right the first time. By linking a 3D design to our pricing estimate procurement engines, we're digitizing construction supply chains and bringing efficiency to those workflows. And these aren't incremental improvements, these are transformational outcomes that customers generate. In Field Systems, we continue to innovate in GPS and GNSS technologies to bring that high accuracy to difficult environments and to do things like correcting for errors and AI -- in the ionosphere that come from solar storm cycles. With our reality capture solutions, we can make field crews safer when they do their survey work because they can do it now for more of a distance. And in civil construction, when you use machine control and guidance, you can drive up to 40% efficiency gains. What that's doing is putting that high-precision GPS technology and putting it on the blade of the construction equipment. We control the hydraulics, and what we do is we turn a 3D design model into a 3D machine model, and that automates the equipment and moves the dirt right the first time, thereby delivering extraordinary value. In Transportation & Logistics, we're reducing empty miles by helping to optimize networks and to better connect capacity to demand. Our fuel solutions can deliver double-digit savings. We have AI deployments and things like autonomous procurement that can reduce significantly spot market spend. And when customers execute their transportation loads on our platform, they can reduce stock and yard waiting times by using our scheduling solutions. So the lie of what we do is profound, and we're proud that we can help enable our customers to do their life's work better. And that leads us to Connect & Scale. It's the guiding heartbeat of our company. Now to deeply understand Connect & Scale, you have to know the origin story of vision we had almost 25 years ago to connect stakeholders across industry life cycle continuums by integrating workflow from A to Z. And from that moment, up until just a few years ago, we arguably focused our efforts on assembling the pieces and the capabilities, both organically and inorganically. Our pivot to Connect & Scale is an obvious pivot in many ways. We had the ingredients. The Connect in Connect & Scale is about connecting those data, the users and the workflow. And once we set down that path, we had to do the scale in Connect & Scale, changing how we productize, changing how we go to market, thus making it easier to do business with us and enabling us to more efficiently and effectively grow. So Connect & scale, we think it's the right strategy at the right time. And it's built on the unique breadth and depth that we have in our served industries, and it positions us to win in a data-centric and AI forward world. So I hit a few of the statistics on the page, trillions, billions, millions and thousands. We manage trillions of dollars of capital programs through Trimble. We manage tens of billions of dollars of freight that run through our systems. And we have hundreds of billions of construction volume that run through our construction ERP. We've got millions of customers. We have tens of millions of users generating tens of millions of models and projects in Trimble. We manage millions of miles of our roads and highways, and we've developed millions of proprietary locations in our mapping solutions. And then we have thousands because we have hundreds of thousands of instruments and machines out in the real world that are operated by Trimble technology. We are leading and we are expanding the scope that we have with this unique position that we hold in the world today. Now our strategy, it's customer-driven, and that's why the second and the third of our 3 right-to-win takeaways come at the intersection of product, technology and go to market. You're going to hear that throughout the day, product, technology, go to market. Connect & Scale begins with having the best point solutions to take to market. We're incrementally selling them in bundled offerings. And when you do that, you reduce friction in the buying process, and you make it easier to access everything we do in our portfolio. So if you know me, you know I love bundles. What do I like better than a bundle? I like the Rundle, I like the recurring revenue bundle. What do I like better than the Rundle, I like the Trundle, I like the Trimble recurring revenue bundle. And as we've transformed more of our businesses to subscription, we've consistently seen that when you move from CapEx to OpEx, we're increasing the size of the addressable market. So from point solutions and bundles, that begets the opportunity to connect workflows. When you're doing that, you're addressing higher order problems, and this is what our customers are increasingly talking to us about. So to give you a personal example of workflow, I had a flight a few weeks ago. We landed about 30 minutes early and as a person who travels a lot. I was very excited to get back to Denver 30 minutes early. I'm going to get home 30 minutes early. We're on the Tarmac and we had a 45-minute delay to get to the gate because there was no gate agent available. My workflow was getting from the point of landing to getting off the airplane. My workflow was suboptimized. They might have optimized the task, but the workflow is suboptimized. That's the kind of thing we're talking about is workflow, and you're going to hear examples of that from my colleagues in their presentations. At the point you're connecting workflows, you beget the opportunity to build integrated ecosystems. So think about third-party developers building on top of our solutions, helping unlock more value of that embedded technology. Think about multisided marketplaces. This makes it nearly impossible to replace what we're doing for our customers. And so that represents product and then next, you have go-to-market. And we're going to talk about our revamped go-to-market motions, both at a direct level at an indirect channel level as well as e-commerce motions that we have. And all of this is increasingly leveraging the underlying systems and process investments that we've been making. And what that is also doing is delivering more 360-degree insights that we did not previously have. And that is unlock this flywheel. And at the center of this flywheel is customer success because net retention is everything in a subscription business model. And you only get that by ensuring your customers are successful with unlocking the ROI potential when they use our technology. Now at a competitive differentiation level, we must uniquely differentiate at the intersection of the physical and the digital. And on this slide, I'm intentionally using the word peers, and that's because our ecosystems are complex. They're often fragmented, meaning that we cooperate as much as we compete to drive integration between Trimble and non-Trimble solutions. And yes, of course, we pursue outcomes that are better when you have Trimble, on-Trimble technology. But the reality is that very often, we're helping customers integrate data. And that's why we think about building common and connected data environments. Now our technology and our AI leadership is also a key takeaway. Over the last 5 years, we spent -- invested over $2.5 billion in research and development. We're also investing in AI. Inside our own walls, nearly 90% of the engineers who can benefit from using GitHub Copilot are using the tool. We have over 7,000 unique users of Trimble Assistant, and that's our own secure enterprise-grade AI agent. The customer-facing AI applications are starting to get exciting, and you're going to hear about that today as well. From generative design to attracting features out of dense 3D point cloud, automating quotation and procurement of freight, that's an exciting time to be at Trimble on working on this stuff. Now to make a link back to the scale and scope of Trimble, our view on AI is that it's only as good as the underlying data feeding that engine. And that's why we think the trillions, billions, millions and thousands matter. Said a different way, the more unique the data set, the higher the right to monetize the data set. So let's now transition to talk about how our strategy is poised to deliver long-term profitable growth. I'm going to set it up at the company level, and then the team will walk through their respective growth algorithms that sum together to create what I will share. So I'll start with our growth drivers. From addressable market expansion, they're winning new logos to innovation to go to market, we've got clarities on these drivers of growth. I ask you to pay extra attention in the next presentations to the long-term cross-sell opportunities that are embedded in our business. We also think about strategic initiatives that overlay these growth drivers. And that's why I spend a lot of my time is thinking about capital allocation at the portfolio level, capital defined as time people and money. So let's walk through these on the right-hand side of the slide. I've talked about the investments that we've been making in the AECO for the last years -- a few years and the results, we believe that they're self-evident. We're in the early middle innings of our transformation in AECO. And Mark is going to talk about his ongoing global growth algorithm in more detail. In fact, we actually allocated Mark and the AECO business the largest amount of time that we have today throughout the presentation so that you can hear more about this. Because to understand what we're doing in the AECO business with Connect & Scale and the playbook that we have is to understand where we are taking this playbook across the rest of the company. Our team has done a great job converting business models to subscription over the last few years, second or third bullet point talks about ongoing model conversion. And where we believe we have the most room for ongoing model conversion is in our field systems business. And Ron is going to talk about what they are doing to unlock that in his presentation. Also listen for Mark and Ron to talk about points of connection between the AECO and the Field Systems business. And when Chris talks us through transportation and logistics, I ask you to think about the consumption business model that we now have with Transporeon. And I think that provides an embedded opportunity for the rest of the company to pursue and monetize multisided marketplaces. Both Mark and Phil are going to talk about that fourth bullet point about M&A and the high ROI discipline we have around that. And then finally, we will differentially invest in AI throughout the company but with an eye towards practical applications, not the hype. And then you have the financial punch line, that's the 3, 4, 30. We're talking -- we're taking our expected growth rates up from our last Investor Day, high single-digit revenue growth, double-digit ARR growth, compounding EPS. And between our growth and our incremental gross margins, we're expanding our operating leverage range from 30% up to 40%. And that range with operating leverage, it does have intention because we are willing to invest in high-quality organic growth opportunities when it meets our hurdle rates on aspects such as a lifetime value to customer acquisition cost, balance between a Rule of 40 framework that we think provides a healthy tension between the growth and profitability. And then, of course, there's free cash flow, which I think is often underappreciated in our story, we are an asset-light business. You're going to hear about less than 1% of revenue and CapEx, negative working capital. Add this up, you get 3, 4, 30. So to summarize, the outcome is a set of compelling and compounding financial returns. That's the scoreboard and it reflects our right to win at the intersection of product technology and go-to-market, apply to a set of fundamentally attractive markets. So we're going to start with our AECO business. I'm going to hand it over now to Mark Schwartz. Thank you, everyone.

Good morning, everyone. Really happy to be here today. I absolutely love talking about our AECO journey. And I swear Ron and I did not plant the excavators outside that are hammering away and disturbing the background noise, although we do hear cross-sell when we hear that noise. So it's okay. My name is Mark Schwartz. I lead our AECO software segment, serving our architects, our engineers, our contractors and construction professionals in our owner and public sector. I came to ThingMagic -- I came to Trimble via an acquisition ThingMagic in 2010, and I've led several of our AECO businesses over my time here. I led one of our joint ventures with Caterpillar and most recently served as our Chief Digital Officer, writing these playbooks that we're executing today within AECO. Our right to win is focused on 3 core pillars. First, we are architected to serve a large and underpenetrated market. We've simplified our organization. We put in a functional alignment for scale and synergy. And we've aligned our go-to-market to the customers that we serve, the architects, designers, engineers, contractors and the owners in public sector. Second, we are delivering differentiated product strategy through technology, not just built around data, but data with context. The context comes from our deep domain experience in construction with years of boots in the dirt. This is the key to Trimble monetizing AI and what sets us apart is this deep domain experience. And it positions us to be an AI winner. Third, our investments in our digital transformation are paying off. They're powering our omnichannel go-to-market. They're enabling our ability to go up and down market simultaneously and selling in all digital motions. This is backed by our transformed next-generation marketing capability that I'll talk to later. AECO is living proof that the Connect & Scale strategy is working. We're delivering compounding results with a defensible moat built on the breadth and depth of our global best-in-suite offerings. With a balanced distribution of revenue of over $200 million of ARR in each of our core pillars across the construction continuum and the asset life cycle with over $1.25 billion of ARR, we're operating well north of the Rule of 40 and growing in the high mid-teens. We have a diversified asset base, less exposed to downside risk than our industry peers. And while our portfolio is more concentrated in North America, we do maintain capabilities globally, and we've converted 94% of our revenue to recur. The remainder of 5% is professional services to help our customers be more successful in their transformational journeys. And then with the last small piece of perpetual that still needs to be converted. As Rob mentioned earlier, the markets we serve are large. They're underpenetrated and they're growing. We expect to grow materially faster than the market cap disproportionate share of this expansion. And this market expansion is led by on-shoring and near-shoring efforts, the data residency requirements that are popping up all over the world, driving data centers in every country, the global housing shortage and we still believe there is considerable white space in constructible design for prefabrication where Trimble is very well positioned to win. We expect this market to grow to $60 billion by 2027 with only slightly increased penetration. Our unique strategic advantage is having both the digital and physical worlds. These 2 worlds are bridged together by Trimble Connect. and that creates unique workflow opportunities that only Trimble can do. It builds a deep, wide and defensible moat to our competition. Connect is where stakeholders all around the world come together to collaborate on projects in real time. It drives workflows built by customers, partners all over the world. On a recent trip that Rob and I took to Austin, Texas, to a top 10 in our 400 customer. He said, if you took Trimble away for -- if you took Trimble Connect away from us, it would send the industry back years. Another customer told us that while using concrete take off on a high-rise port, it was coming within 7 yards of concrete every time. If you think about what that means to order one less concrete truck to every floor over 50 stories, the savings are phenomenal. And Connect, which is powering a lot of these workflows is largely not monetized today outside of our bundles with over 900,000 monthly active users, and the recent addition of our new reality capture service, which Ron will talk about later, we're adding petabytes of data to power these workflows. Our AECO capabilities are uniquely built to address the life cycle of the built world, including the asset life cycle maintenance, where most of the spend on an asset happens. I'm kind of a simple person and I like to dumb it down. So I use this graphic to explain it because for me, what we're doing strategically is like a solar system. With Trimble Connect and the data at the center, that is our son, these capabilities we have that serve the entire built world are a constellation of Stars. Well, the owner, the architects, the engineers and the construction professionals are planets orbiting that sun. The way we connect those stars to form constellations matters to our customers and only Trimble can do that. Nobody in the world has this breadth of capabilities to connect data and drive workflows. To do this, we had to go on a journey of reducing duplication in our development efforts. We, by putting our development teams together and based on capabilities and not products, we are able to reduce duplicative development and realize cost synergies. This is one reason the headcount in AECO has stayed relatively flat this year, even with substantial growth. So let me show you what that journey looks like. On the left-hand side of your screen, you see our historic product portfolio. We were organized this way. We were product sellers, right? We've moved to the right side of the screen over the last year, organized around these capabilities that serve different phases of the connections that we intend to drive with data. Those connections and capabilities are what drive the workflows on the right. And simply, we deliver those workflows to the customer though 2 main mechanisms. Trimble Construction, one, which many of you have heard about, for our AEC customers and Trimble Unity recently released in October that serves our operators and public sector -- our owners in public sector. We had to keep it simple to be successful, simplicity, focus and execution. So I regularly get asked by many of you that I've met in this room, how long can this growth continue? I think about it in terms of 5 vectors. We have to execute a cross-sell and upsell motions. That drives net retention. We have to integrate our data and our workflows, capture new logos and expand territory grow our ecosystem through partners and developers and execute our programmatic and strategic M&A strategy. So let's talk about what that means. The first growth factor is we have cross-sell opportunities of up to $1 billion identified and growing. This opportunity resides the intersection of the personas we serve and the capabilities where the data comes together. We've prioritized our go-to-market playbook to address the biggest near-term opportunities, which is selling ERP and project management into our civil base, which is almost a $300 million opportunity on its own, and selling ERP and project management into our large and growing MEP base, our mechanical engineers and plumbers, trades, electrical trades, that represents almost a $200 million opportunity. And with still hundreds of millions of opportunity beyond that between our engineering design and bidding and estimating customers, execution on this cross-sell is our focus. We regularly review and modify this analysis as part of our ongoing operating cadence, and we deploy our capital to meet the customers where they are in this journey. So while we've achieved some pretty amazing results so far, we are just getting started. This is early. Let me show you. Our year-to-date 2024 results show great progress meaningful bookings progression from cross-sell, which is up 60% year-over-year. If you look to the left side of the screen, over the course of this year, we've actually decreased the number of customers with only one product by 8% while increasing the number of customers we have with 2 products by 9%. The really amazing thing is we have increased the number of customers with 5 or more of our capabilities by 35%. As you look to the right side of the screen, you see what this means for us monetarily why it's so important strategically for us to execute this play. When we can move someone from 1 to 3 plus products, we see a 3.2x increase in that customer ARR. With 5 or 6 capabilities, it's 6 to 7x increase in ARR. And if we can get people all the way on board to the right side of this stack, it's 12.8x increase in ARR. That is a tremendous flywheel of growth that we have in front of us. I mean it's really amazing stuff. And believe me, it is easy for our team to get up every single day when you're staring at this type of opportunity and know it's right there to go take. So to do this effectively, we had to transform our go-to-market. This started with our digital transformation. It was people, process and technology. So let's look at some of the people aspects we had to become C-suite sellers. We started on the bottom of this graph, selling to departments projects, people in the field and users. We had to be effective at selling to the C-suite and that meant understanding the plight of the CEO. This was a different problem to solve than what a user might want from our technology. They were looking to us to solve labor shortages. They were looking for us to solve productivity problem and how to burn their backlog down. They were looking for a strategic advantage of cost in their bidding process. That's how they drive and grow their business. That was different from the users that wanted a button, a widget, a wall tool, a chart. When we understood that flight effectively, we saw a 1.4x greater win rate and a 1.7x size deal size increase with a 40% reduction in sales cycle. This was sales efficiency happening in real time. And as I mentioned before, this led to a 60% increase year-over-year in cross-sell bookings, which is incredible. So let's look at a few real customer examples out of thousands that we've executed already. First, a European Construction Company, which we converted to TC1 for Design & Engineering. This is an extremely common play for us in Europe, where we have 6 of the top design engineering firms in all of Europe. We are able to do that because our engineering capabilities and our design capabilities in Europe are extremely strong, and they lead the way for us in that region. We're able to add our MEP capabilities to this customer and grow the ARR base by 1.6x. Then we expanded the engineering penetration, an upsell of another 1.4x and now that customer is looking at ERP and field solutions to integrate into this package through our TC1 offering for a potential of another 1.2x. If we take a look at a North American Trade Contractor, these were an existing bid and estimate customer. We're able to displace a competitor by deploying a TC1 ERP bundle with estimating. And that led to a 5.3x increase in ARR with still room to grow beyond that. Lastly, let's look at a Civil Contractor. This is in our sweet spot at the heart of some of these $1 billion plays. We are able to cross-sell civil estimating, track and maintain our field packages that came to us through our B2W acquisition for a 2.4x increase in ARR. And now they're evaluating our project management tools and our design for what could be another 4x ARR lift, that is just awesome. For our second growth factor, let's look at the workflows in action, like what are we actually talking about here in terms of moving the data around. Connecting the data creates value for our customers. And they're really focused in the field, particularly our civil customers, on the productive deployment of their expensive assets. Similar to Trimble and software companies, one of these is people, right? And then they have the excavators, the dozers and other equipment sitting outside. Connecting that data via the ERP to the field through Ron's technology to manage the progress in real time and the ability to dispatch those assets in a more effective manner digitally leads to productivity and cost reduction. Through Trimble, we're able to capture that progress in real time through the instruments we have in the field and the software and bring that back to the ERP in real-time integrated into our ERP systems to create real-time progress reporting and real-time performance management in the office of the jobs. That drives performance and productivity and only Trimble can do this. So let's look at a large contractor customer of ours DPR, great customer on the West Coast, obviously, nationally. They leverage Trimble workflows to drive productivity in their business. They use Trimble to connect their data for estimating, planning and the coordination of their trades. They use our estimating capability, our engineering capability, but most importantly, they also use our Trimble Connect data capability. This is enhanced collaboration across the trades and allowed for better scheduling and planning on the job site. It's reduced risks and delays. This workflow alone saves $750,000 in rebar costs on a single job. Trust me, the next cross-sell opportunity DPR is going to be a lot easier when we're backing it up with results like this. These workflows penetrate the entire ecosystem of the construction cycle, and as such, they are extremely sticky. Now let's look at my favorite example as a Boston native, I lived 3 years in Cleveland Circle and commuted probably on that train every day to work for the first 3 years of my career. Carl, who runs a lot of the digitization efforts for the MBTA is a great customer. He's a big Trimble supporter. And he's really leading the way in digitizing field office through digital project delivery. They deployed some of our Unity field workflows, eliminating paper, improving quality and empowering faster and better decision making in the field. And this led to efficiency gains of 40%. This is so successful in the field with the MBTA, they're now quickly looking at our Unity maintain offerings because they see the potential in realizing these returns and what it could mean from them. and how they're able to shift their capital onto rider experience versus infrastructure. If I turn to our third growth vector. We have to remember where Trimble came from, a fragmented history of division's products and go to markets. So to transform our development efforts and our capabilities, we had to go through an intensive review of how we were actually building, deploying and selling our products from the ground up. We had to look at every region of the world we were operating in and where we had what capabilities because only understanding that could lead to us driving Trimble Construction One and Trimble Unity effectively into a market. We had to make sure when we went into a new territory, we had the correct go-to-market. And most importantly now, with TC1 being our leader, we have to have a robust collection of capabilities, not just 1 or 2 to be effective in that market. We've rationalized every place we're doing business. And we've moved our organization around to effectively operate under these conditions. This will power TC1 and Unity and most importantly, keep the flywheel going on our cross-sell and upsell motion as more capabilities in a territory to drive penetration. For our fourth factor, we'll look at how we grow our ecosystem. We do that today through App Xchange, our low-code and no-code integration and workflow platform that we acquired through Ryvit. App Xchange is over 50 connectors and hundreds of integrations today that are available to be consumed at marketplace.trimble.com, which we launched at our Dimensions annual user conference this year in November, where we had record attendance. App Xchange is quickly becoming one of the most critical ecosystem enablers in the construction tech market, connecting data from inside and outside of Trimble, our industry peers globally and making workflows work for our customers. This is how we move data around in a seamless manner without a heavy lift of implementation that can be done by a system administrator on the site. Our fifth growth vector is executing our M&A playbook. First, let's look back at Viewpoint, an example of a larger strategic M&A deal that we did in 2018 for $1.2 billion.when it was $180 million of revenue and early in its subscription model conversion. Within Trimble, we focused on our execution of this transformation and the acceleration of the business model. We used ERP to complete a better together story within our AECO market and grew ARR from $140 million to almost $400 million today. With net retention rates, over 110 in accretive operating margins. We also added through this acquisition, the capability and rigor of C-suite selling that an ERP requires, and we're able to extrapolate that and take it across our entire go-to-market. Viewpoint's returning double-digit ROIC today in year 6. Continuing on our fifth vector, we'll take a look at some of the programmatic M&A we've been working on. These deals tend to be smaller, less than $500 million, tuck-ins that are easily integrated into one of our pillar capabilities of design, engineering or financials, where we can take immediate go-to-market leverage. Flashtract, now Trimble Pay and Traqspera were both day 1 integrations under this model, selling across our entire go-to-market teams within 90 days or less. By taking advantage of those go-to-market teams within the first 12 months, we were able to double the customer account and ARR for Trimble Pay and triple the ARR for Traqspera with 4x the customer account in the first 12 months. With Traqspera, we actually doubled the customer count in the first 90 days. Our main limiting factor to executing this model faster has been the availability of quality assets in the market. We say no to a lot of things. It has to fit a tight criteria. Ideally, I'd like to do 4 of these a year, but they have to be their opportunities. These work and create cross-sell and upsell opportunities for the team and drive a stickiness as we expand our capability set within the pillars that we serve. So I want to pivot now to tech and innovation. This has been a huge year from us. We take amazing advantage with well over 90% of our developers using AI. I believe that in order to build AI capabilities, you have to use it to understand it to know what it's capable of. I talked about the importance of understanding the context of your data, something Trimble brings. It's not just screening the Internet and returning search results in a different manner. We understand why the dirt has moved. We understand the cost of the dirt being moved. We understand the people on that job site moving dirt. That context is what creates value in this model. We released several AI-based capabilities this year, including live count automated takeoff, which quantifies and classifies data from drawings. We've launched submittal scribe, which uses large language models to automate the creation of submittal logs from PDFs and other word documents. We've released our SketchUp AI assistant to create an enhanced models through text prompts. And most importantly and what I'm most proud of this year is we released ProjectSight at Dimensions, our user conference, which was built from the ground up in a functionally different manner than her historic development efforts. Instead of looking at features and functionalities, the team to a completely different look at the market to put this product in the hands of our customers. Instead of what a project managers need, they took a step back and said, how do I make a project manager functional and operating on a digital project management system in 90 seconds or less. Think about how we learn today, via videos and YouTube and self-onboarding with things we do around the house. This was a fundamental different approach to putting technology in the hands of our customers across the entire pyramid. We also backed this up with the launch of our new headless commerce system that's connected to our website and available effective yesterday morning that will drive cross-sell and upsell in this market starting today. Why is that important? We added over 1,000 accounts to our ProjectSight system in the last 4 weeks because we're putting project management in the hands of everyone. We'll use our digital motion to drive cross-sell and upsell in this market and drive these conversions into upsell into other capabilities around the company. This is an incredible transformation for Trimble. It's fundamentally different than the approach that anyone has in the market. Finally, for years, we've been working on monetizing -- modernizing our go-to-market, driving sales efficiency, driving our lifetime value to customer acquisition cost ratios. We have a global reach. To do this, we needed to create more self-service capabilities inside of applications and outside. That's why we rebuilt the commerce system, and that's why we put a new website in the market in the last few weeks. These drive our digital motion. They're built on a brand-new marketing technology stack that gives us a full 360-degree profile of the customer. It allows us to put agents into the process for scale. It allows us to digitize this process and allows for micro segmentation and more effective use of our marketing dollars and capital. This creates multiple digital touch points. In 2025, we'll add agents to drive cross-sell and lead development as well as customer support and customer experience on the digital engagement side. This will increase the productivity of our direct sellers. Because of the size and scale we have, we cannot create enough direct sellers every year to capture the quota on the street. We have to do more efficiently and more through digital means and become less dependent on our direct selling enterprise. Finally, AECO is delivering consistent growth. We deliver a compelling value proposition for our customers.and have been growing in the mid- to high teens for a couple of years. We're really proud of what we've accomplished, but we're not even close to satisfied. Our new marketing and sales capabilities that we talked about will power a hungry and motivated team that's attacking a compelling and buoyant underpenetrated market. So we feel incredibly good about where we are and where we're going. The rule of 40 is a metric we love internally. We have a management team within AECO of over 100 years of Trimble experience. So we have growth and profit in our DNA. It's how we think. We're not learning how to grow profitably. Like this is what we do. It's how we grew up. We continue to operate this business well north of a Rule of 40. And I think of it as a grounding point in our capital allocation strategy. And we hold ourselves to high standards, and the team has done a good job of driving this business responsibly. We realize with numbers like this, we're in some pretty unique company. So we take that responsibility pretty seriously. We intend to keep these numbers where they are. So looking at some different metrics. Excluding our SketchUp B2C business, which has over 1 million paid subscribers today, we have over 60,000 customers within our AECO business. We have over 17,000 customers with over 10,000 in ARR. We have 30,000 or more customers with less than 2 products. We talked about how important that is. That's the engine that we're going to cross-sell and upsell into. If you take a look at that number and you correlate it back to what I was talking about, the $1 billion opportunity, that's only $33,000 of cross-sell per customer in that pool to achieve $1 billion of additional ARR. Through the last year, we've increased our new logo deal volume by 2.5x. As I mentioned we crossed 1 million paid subscribers in SketchUp, that's amazing. We've created 4 million projects in Connect year-to-date, housing data that our customers use to drive workflows and productivity. Remember, this is the tool that our customers said would set the industry back years. And I'm really proud of our net retention that excluding our consumer level business SketchUp, maintains north of 110%. We have an efficient and scalable go-to-market team, adding $4 of net new ARR for every $1 of additional sales and marketing expense. I look at this heavily as we look to become more digitally enabled, more agent base as we scale our go-to-market. So it can be more effective with our most expensive capital, our enterprise selling team to attack this cross-sell and upsell opportunity in a meaningful way. So I'll close this out by looking back at our 5 factors of growth. Remember, the cross-sell and upsell, the $1 billion opportunity that's built on these data and workflows that we're putting together every day. We're going to approach our regional expansion and white space capture method methodically. We're going to grow our ecosystem in connections through our partners and we're going to execute our M&A playbook with intention and responsibly. That will yield compounding and compelling financial returns of over the mid-teens organic ARR with 80% gross margin, operating north of a Rule of 45%. We'll continue to drive strong operating leverage throughout this journey. So with that, I'll turn it over to my partner in the field and fellow Boston native, Ron Bisio.

Thanks, Mark. Good morning, everyone. So my name is Ron Bisio. And as Mark said, I lead our Field Systems segment. So I joined Trimble in the early days of the Clinton administration back in the 1996. And so I've been with the company developing, marketing and selling our field solutions for quite a bit of my career. Beyond that, I actually have about 30 years in the Geospatial industry, starting with a degree in cartography and geographic information systems, which most people didn't realize you could study and then leading into time I spent working with -- working at Esri and Autodesk. Of relevance to this audience, I also sit on the Board of Directors for a couple of joint ventures. Our joint venture with Caterpillar, which is really important for us, as I stay very close to our development activities that we do with Caterpillar. And I also sit on the Board of Directors for our joint venture with Nikon, which allows me to stay very close to our Japanese market. So let's take a look at some of the key takeaways and our right to win in Field Systems. So you're hearing a lot today about the intersection of physical and digital and how Trimble's unique combination of the Field Systems segment and the AECO segment allow us to uniquely address this compelling market opportunity. Uniquely is an easy word to say. But what's interesting is we are the only ones doing this. We're the only ones on the physical side and the digital side and intersecting those 2, and you're going to hear a lot about that today. Field Systems is the foundation of Trimble. We have decades of experience developing best-in-class point solutions that are relied upon every day by civil contractors, engineering firms and government agencies around the globe. But the point solutions really Mark talked a lot about workflows. The point solutions are really the beginning of the next chapter. Now we're focused on developing workflows that are going to fulfill the promise of physical to digital. We have a goal of leading an integrated ecosystem with our joint venture, OEM and industry partners. And underpinning all of this is really the reason why we wake up every day, which is the continuous drive for innovation, began 45 years ago, with Charlie Trimble and is now moving to leveraging artificial intelligence to increase the speed at which our reality capture solutions can deliver value for our customers. But what's different nowadays is in Field Systems, we're delivering this innovation with new business models driving recurring revenue. We've also cultivated world-class network of distribution partners across the globe. The breadth and depth of our distribution network is unmatched in the industry. It's truly, truly a real competitive advantage. These distribution partners are responsible for moving $1 billion of Trimble solutions to our customers every year. I'm going to talk about our next chapter in our go-to-market playbook, however, and this is where we're going to add additional outlets to address the mixed fleet opportunity that exists on construction machines on the site. And if you need any more proof of a mixed fleet construction site, those of you in the room, I encourage you during the break, take a look at the window. They've taken a break for us right now, so the hammering has stopped a bit. But you'll see that there's 2 Komatsu excavators and a CAT excavator that we did not put there sitting right outside, again, showing the mixed fleet opportunity and none of them have Trimble technology on them, showing the addressable market opportunity we have. So also, the other thing you're going to hear about, and you heard that from Mark and from myself, you'll hear as well is our tighter collaboration with AECO. This is focused on our enterprise customers. We're delivering more bundled solutions that meet the needs of these large construction companies, large construction joint ventures. And what this provides us in Trimble is a large cross-sell and upsell opportunity. The bottom line is applying the Connect & Scale strategy to field systems has increased our gross margins, driving higher operating margins, all the while, we've shifted the significant growing percentage of our revenue to recurring revenue that is growing in the mid-teens organically. Let's take a look at field systems at a glance here. Okay. So November 2023, we brought together the geospatial sector, the civil construction and advanced positioning and probably what is the largest reorganization that the company has done since -- probably since I joined the company. What we've done is we've really simplified how we approach this really compelling opportunity. In Field Systems, we're very focused on providing these point solutions and workflows to the engineering and construction market highly aligned with our AECO colleagues. We're increasingly geographically diverse. In North America, we're the leading provider of technology solutions to the majority of the state DOTs. We provide -- we're the leading provider of technology to U.S. government agencies. But increasingly, we're winning tenders in major projects across Europe, especially road and rail projects, Japan, Australia. And where I'm really pleased to see is our growth in the emerging markets, and you're going to -- and I'm going to talk about how we've taken Technology-as-a-Service, a new business model and helped us open emerging markets in India, help us win utility companies in Brazil you'll hear quite a bit more about that. Our revenue by type, that has evolved. I know some of you in this room have been with us for quite a while. That is now has evolved to be 50% software and subscriptions and 50% hardware. That is a significant shift from even 3 to 5 years ago when this was a predominantly hardware business. And of course, as we move to the software and subscription, that's a much higher value, higher margin for our -- for the Field Systems segment. Taking a look at the growth drivers, innovation to drive the replacement cycle. In North America, your average surveyor is going to replace their technology about every 7 years. So what we need to do is we need to provide that survey with a compelling reason to want to upgrade their technology. So what we've done is we've launched R980 GPS surveying system. What that does is it provides 30% more productivity in places they can work. That's a compelling reason to upgrade our receiver. We've introduced reality capture solutions essentially scanners, 3D scanners, which can capture massive point clouds. That's a new business opportunity for that surveying company. They can now go out and generate revenue from new business opportunities. That's a compelling reason for them to upgrade technology, shortening the replacement cycle. Everything we're doing on the survey side is helping us shorten that replacement cycle. We'll also do hardware and software model conversion to subscription. This allows us to do 2 things. One, allows us to offer our field and office software, under subscription models, which help more people get into our technology, and we're introducing Technology-as-a-Service. So for example, our Positioning-as-a-Service solution called Catalyst. What catalyst is -- it's the use of a subscription-based positioning technology in place of traditional hardware combined with field and office software, all subscription model. What this has allowed us to do is open emerging markets, compete against low-cost competitors, developing a significant competitive mode, especially in these emerging markets, and it's driving real recurring revenue as well. Another growth driver that's really important for the business is the channel expansion. This is probably the most important strategic initiative and the one I'm personally spending my most time on now, which is we're going to address the mixed fleet opportunity with non-CAT machines by bringing on new distribution outlets, and I'll talk about that in a couple of minutes. The addressable market Rob mentioned that this market is large. It's global. It's underserved and it's underpenetrated. And we have that growth tailwind because this industry -- the entire construction industry digitizing. Looking at this addressable market. In the civil construction area, we're going to address more machine types. Traditionally, we've been on bulldozers, we've been on motor graders. Now we're going to address more exhibitors and compact machines. Recently, I was visiting one of our Caterpillar dealers, and they said they're increasing the amount of these compact machines that they're selling into construction sites. We have now just introduced technology for these compact machines, expanding the addressable market. It's -- I was recently driving into Boston and I went to visit one of our a SITECH civil dealers there. And I was at the intersection of 495 and Mass Turnpike. And if any of you have driven into Boston community and you've probably been stuck at that intersection for quite a while. At that intersection, there were multiple Caterpillar D6 dozers with Trimble technology on the blades. And what I was really pleased to see is right next to them were John Deere excavators also with Trimble technology on the blades. So I went and I got to our SITECH dealer in Milford Mass and I plotted them, I said, it's great to see the CAT stuff has Trimble on it, but I was really pleased to see the John Deere stuff. And they said, in typical Mass fashion, and I can say this -- they said, "Yes, if you drive it up 495 north, you have seen another 14 Deere excavators with our stuff on it." So they're out there winning the mixed fleet addressing and really increasing that addressable market. The other thing that's really important for us is we're focusing on more applications in the civil construction space. We're doing more guiding of pile drivers for solar farm construction more paving and intelligent compaction and road construction projects as well as more marine construction solutions for critical ports, harbors and waterways. In Geospatial, I mentioned we're supplementing our traditional survey with more reality capture, more of the 3D scanning. This is really important because in the past, a surveying customer might have gone out taken a few survey points of an aging bridge that's going to be replaced. Now they're capturing 3D point cloud, which can be used in the design process, increasing their business. In advanced positioning, we're bundling our correction services, which makes the GPS positions more accurate with our hardware from civil construction and geospatial. This is a bundling opportunity, which increases the subscription. The correction services is the largest contributor to the ARR that's growing inside the Field Systems segment. In addition, in the advanced positioning space, we've got really exciting opportunities with correction services and our precise positioning software in the automotive space. So that's a space definitely to watch. You would have seen this graphic in Mark's presentation. It's a pretty simple graphic talking about our unique compelling advantage and our ability to operate in both the physical and digital world. There's a lot of power in this graphic because it truly tells the story of Trimble's Field Systems business on the physical side and Trimble's AECO business on the digital side and how Trimble Connect is that glue in the middle, which customers' data is flowing. Tons of customer data is flowing. So imagine a point's, a surveyor goes out to a site that's where there's going to be construction. They're capturing the existing conditions. That data then flows through Trimble Connect to the architects and the engineers that are on the right-hand side. architects and engineers are designing and engineering building what the foundation is going to look like. That data then flows back as a 3D model back onto our machine control technology, as Rob talked about, turns that into a 3D model for the dozer that dose is shaping the physical earth by moving the dirt around. Then an as-built is captured, that data goes back through connect back to the right-hand side, back to the solutions for architects for the engineers and then eventually for the owners of the property as well. So you can see how massive amounts of customer data is moving through this ecosystem all the time. Trimble is an integral part of this. We're leading this ecosystem because we're on both sides, we've developed Connect, Trimble Connect in the middle. I'm going to double-click a little bit on the -- just the point solutions just for a moment because it sets up for the talking about the workflows and the ecosystem. We were the first to provide GPS for high accuracy real-time surveying. We were the first to provide GPS for -- to build a GIS spatial database. And we were the first to provide GPS grade control for construction. We lead in these point solutions. Our customers are leveraging these point solutions every day to capture data and have that 2-way flow that I talked about. Our innovation now is being spent on additional workflows to allow us to move data back and forth more easily and address some of the specific needs of individual customers, and I'll talk about those a couple of flows in a moment. You would have seen one from Mark a minute ago. And as we leverage artificial intelligence as we drive more Technology-as-a-Service, and we focus on these workflows. Quite frankly, I would actually say we're probably 2 generations ahead of our competitors who are busy trying to catch up with the capabilities that we've developed in these point solutions. This is providing a nice competitive advantage. And again, I think let's talk -- let's move right into looking at one of these customer workflows. I really like this one as well. We happen to see it when we were up in New Hampshire recently visiting a customer. This is a workload we launched at Trimble Dimensions, our user conference out in Las Vegas. And it's a very simple workflow, but it's really powerful. So starting on the left here, what you'll see is you imagine you're a project manager working for a civil contractor. And your job is to update the status of the project and to pay out the subcontractors who get paid based upon a percentage of work completed. So you're using Trimble's B2W track software. And now what you're going to do is you're going to send a request out to Trimble's Siteworks software. That survey or out in the field, he's out there working. He gets an update and says, "I need the updated quantity information on how much earth has been moved on this particular project in this particular site." He uses Trimble Sitework software, captures that information, and then transfers it back to Trimble B2W Track software to update that. So now what happens is the project manager back in the office could be anywhere in the world, updates the status of the project, trues up the amount with accurate data and then actually pays out the subcontractors. Really simple workflow that's really, really, this is all Trimble technology that's delivering on this and this prevents multiple calls, e-mails, text back and forth, confusion, surveying in the wrong spot. All of this is really, really important. Again, a great example of when we take solutions from Field Systems an AECO and combine them together with a simple workflow, the value we drive for customers. You can imagine, once you're using this kind of workflow, you want to continue to use Trimble solutions in the field, you want to use trimble-to-use -- Trimble solutions inside the office. Okay. So I've talked about our best-in-class point solutions. I've talked about how we're -- the innovation we're investing into our workflows. And really now what I want to talk about is the strategic partnerships we have that are leading with leaders across the construction ecosystem. So I mentioned we lead from the center of an integrated physical to digital ecosystem. And we're doing this with some of the largest players in the construction industry. We have joint ventures with Caterpillar, Hilti, Nikon and AGCO. That's an impressive list of companies to have joint ventures with. And we've had these joint ventures for years. These are really important for us because this extends our development resources and allows us to focus. Imagine you're working on a technology to help guide a Caterpillar excavator, who better to work on than having a joint venture with Caterpillar, allowing us to work on that technology together. We bring the positioning technology, the technology mindset Caterpillar brings the experience with the machine. It's a winning combination. Same thing with Nikon. They bring a great experience in brand in Japan. We bring industry-leading technology, put the 2 of them together, and we're -- it's a great, great way for us to move into the Japanese market with Hilti. Our focus on our positioning technology, our communications technology, their knowledge of tools allows us to develop the next generation of intelligent tools. Again, very impressive list. On October 2, we listed -- we released a really important press release. We announced a renewed and strengthened joint venture with Caterpillar, which is going to allow us to do 3 things: one, accelerate grade control innovation, again, bringing in what both sides bring, both sides set out of the table and came up with a really, really great framework for us moving forward, where we're going to accelerate grade control innovation. We're going to be able to increase customer adoption across the construction sector, making the technology available to more so that, that CAT excavator has technology on it. And we're going to see -- have deeper penetration into CAT machines on the site. So this announcement on October 2 was incredibly important for us. Next step for us is to address the entire mix fleet opportunity so that we get those Motto excavators as well. This is going to allow us to expand the addressable market. We're accelerating partnerships with other top OEM manufacturers and is an early proof point on October 22, we announced a strategic partnership with John Deere construction so that we're going to integrate our earthworks technology with John Deere construction smart grade platform, bringing the technology to all the John Deere dozers, graders, and excavators out there in the market, expanding that addressable market and getting us into yet another machine technology company. Okay. Let's talk more about how we're transforming our go-to-market -- Sorry, before I do that, actually, I want to talk about the industry partners. So Trimble's unique ability to operate in the physical to digital space has us working with a lot of industry partners as well. So in addition to our AECO solutions, we work with all these other AECO partners as well that are critical to a site. An example of this, I was in Santiago -- Santiago, Chile on an airport construction project. They were developing a new terminal and Trimble scanners are used to capture the as built of what's been constructed. The data from the scanners flows through Trimble's office software into Connect, then it's being fed back to design companies. This joint venture that's developing this airport terminal in Chile, is actually has the engineers and architects working on it in Europe in multiple solutions you see here from our industry partners. This is an industry that -- this is an ecosystem that we lead because we start with the physical data out in the field, we move it through Connect, we move it to multiple industry partners, really critical for us to be at the center of in leading this ecosystem. Again, we're providing that only Trimble connection back because we're the ones standing in the terminal, we are the ones looking at what's been constructed and we're capturing the data. Okay. Looking at our go-to-market. If you've been with us for years, you know that Field Systems go to market through a global geospatial distribution channel. We've been doing this since the 1990s but what's interesting is this channel has grown, consolidated and evolved with us. Really, they are the envy of the industry. Any of our competitors would do anything to have the breadth and depth of channel that we have at Trimble, it's a true competitive advantage. In 2008, we supplemented our geospatial channel in collaboration with Caterpillar by developing a network of partners called SITECHs. These SITECHs the technology that is developed by Trimble and Caterpillar in the joint venture. The next chapter for us addressing the mixed fleet that's common on the sites. So what we're going to do is we're going to set up something called Trimble technology outlets. These may be Komatsu dealers, maybe Hitachi dealers, maybe Deere dealers, we're going to bring these on as a new distribution channel to reach this mixed fleet. This is going to be in concert with our focus on developing strategic partnerships at a corporate level with companies like John Deere construction that I mentioned before. In addition to this, we're also going to continue to strengthen our AllTerra or our geospatial channel. They're shifting to offer more subscription-based bundles. They're offering more Technology-as-a-Service to their customers. And finally, the last pillar here, Mark talked about this. This is going to be our collaboration with AECO to address the needs of the enterprise customers. If you look now, if you look at the major road, rail, airport construction. Typically, large construction joint ventures, bringing multiple companies together, this is an opportunity for Trimble AECO business in Trimble's Field Systems businesses to come together, single point of contact for these organizations to buy technology across this entire project. This is a huge upsell and cross-sell opportunity for us at trouble, both within my segment as well as across the segments. So again, this is a major area of focus for us. These 3 pillars: supplementing our existing SITECHs with the Trimble technology outlets, strengthening our geospatial channel and the AllTerra and focusing directly on enterprise customers, where we bring in technology from AECO and Field Systems. Innovation, this is an area that's obviously near and dear to our heart. We're focusing on innovation that helps customers improve safety and productivity, shortening that replacement cycle. And all of this underpins the reliable growth projections you're seeing from Field Systems. Our biggest area of focus is on leveraging artificial intelligence to increase the speed with which customer data moves from our reality capture solutions so that the customers can take that data and use it to make decisions about the critical infrastructure that they're building and managing. We use machine learning to classify data and automate digitization. So you take point clouds capture with our reality capture solutions. We're taking machine learning and making it so that customers can quickly and easily classify that data, automate the digitization and then start making decisions with that data. We were doing this machine learning -- this use of machine learning well before it was called artificial intelligence. And I think this is something that we will continue to lead from this area, as you see. The other area of real focus for us, and Rob hit on this as well, underpinning much of the transformative work that our customers do is positioning technology. It's where Trimble began. And so this is an area where we spend a lot of our time. I would argue that we have some of the world's best GPS scientists working inside Trimble. We're helping our customers mitigate the impacts of solar storms, address GPS spoofing and jamming, all things which can impact the use of positions in the transformative work that they're doing. You would have seen from the Infinity loop slide, that core to our mission is Trimble Connect. You can see how much customer data is moving through there. How many different stakeholders are using data that's flowing through Connect. That is a big area of joint development. And the nice thing is now with Field Systems at AECO, we're jointly developing Connect, better leveraging our resources. We've also developed something called the Trimble Reality Capture platform. This is essentially an on-ramp for bringing point cloud data into Trimble Connect, making all of that customer data, whether it's point clouds, designs, all of that available to multiple stakeholders, whether they're on a phone, iPad or on their computer. So how are we going to fund this innovation? We've consolidated the geospatial the civil and the advanced positioning sectors together into a single segment. This allows us to more effectively allocate resources to deliver the innovation. If you think about it, before this, we would have been developing multiple total stations for multiple businesses, multiple GPS receivers, multiple field and office software. Now we're able to bring all of that together common platforms for all of these hardware-based businesses in one place. We're also increasing the velocity because we're not developing these multiple platforms. And it gives us a great opportunity to leverage AI to drive the productivity and speed of our resources in research and development. This was an important move. I can't say it enough how important this reorganization was because it allowed us to put all this together and better leverage our resources, our people, the collaboration within the teams is greatly improved -- it's been a really great change at Trimble. Okay. I mentioned one of the things that I'm most proud of, which is that we've evolved the Field Systems segment from a predominantly hardware business to now 50% software and services and subscriptions and 50% hardware. We've taken the Connect & Scale strategy and drive transition to subscription-based services. This is opening up new market opportunities because we're able to address customers with new business models that are less capital-intensive, more OpEx and this is driving ARR. So let's look at -- there's a couple of things. Let's look at the stand-alone contributors to the ARR and Field Systems and then we'll talk about some of the model conversions we're developing. The largest stand-alone contributor is our GPS correction services. These enable the accurate positions that are required in the agriculture, construction and automotive industry. In the area of model conversion, this is an area that I'm really excited about, and I'm going to double-click on this model conversion in a second here. We've had strong growth in our subscription-based bundles for contractors, which is called Works Plus. And we've had strong growth in our Positioning-as-a-Service that I mentioned called Catalyst for surveys and mappers, and I'm going to talk about that in a moment. We have additional product development initiatives underway to drive additional conversion of our solutions from perpetual, our field and office software, to more term licensing and more subscription. And we're going to be attaching these GPS corrections to even more of our hardware in the civil and geospatial space. Let's take a look at a couple of really strong proof points on our commitment and success in this model conversion, Works Plus and Catalyst. I'll start with Catalyst on the left. Just prior to the 2022 Investors Day, we announced the first subscription-based Positioning-as-a-Service technology that was suitable for the surveying and engineering market. We stated we were going to use this technology to open new emerging market opportunities and compete against low-cost competitors. You can see from the growth of users since that period that we're leveraging this Technology-as-a-Service to win the top 2 utility companies in Brazil to a major land record tenders in India and to win business across the globe with this new model. This Technology-as-a-Service provides us a significant competitive advantage when we're competing against low-cost competitors from other regions, especially in these price-sensitive regions such as India and Brazil. On Works Plus, we offer -- Works Plus has 2 subscription-based bundles, one's for on machine. It's the GPS machine control, field to office connectivity and then tech assurance. The second bundle is an off-machine bundle, and that's GPS Rovers and bundles in the field office. You can see from the slide here, we brought on 500 new customers -- over 500 new customers with this new technology, the offering. 60% of these were new logos or new customers to Trimble. And what's even more exciting is 50% of those new logos, those new customers to us, we're also new to technology. So they weren't buying the technology before this new business model was offered. This was a compelling way for them to get into the technology. So again, 60% new logos, but even more important than that is 50% weren't using the technology before. So you can see from these charts, they're demonstrating the progress that we're making in both new users and new bookings, which is underpinning that mid-teens ARR growth that you would have seen in 2024. Okay. In summary, you'll see how we -- the streamlined simplified Field Systems segment is going to continue to drive growth as part of that unique ability to lead in a physical to digital world. So what we're going to do going forward is we will leverage our proven ability to lead in innovation to drive the replacement cycle. We're going to move more customer data, more workflows, all through Trimble Connect. We're going to harness the power of artificial intelligence to streamline more of these workflows for our customers, and we're going to increase our innovation velocity and our R&D velocity. We're going to leverage these new business models and the new technology, the service offerings to continue to penetrate emerging market opportunities. We're going to expand our distribution channel through these new Trimble technology outlets, which again increases the addressable market by bringing on new machine types and new machine OEMs. Finally, we're going to continue to deliver compelling value for our customers, our partners and our shareholders. And with that, I'm going to give you guys a 10-minute break, and then we're going to come back, and Chris Keating is going to take us through the Transportation & Logistics segment. Thank you very much, everyone. [Break]

Welcome back from the break, everybody. Good morning. My name is Chris Keating, and I'm the SVP of the Transportation & Logistics Group. For the past year, I've been running our Transporeon business. And just like by show of hands, how many people -- when I say transporting, how many people in here know what I'm talking about, know of Transporeon? Oh wow, this group really pays attention. Yes. Just to introduce them really quickly. It's a business based in Ulm, Germany, and they brought to us an amazing platform known as the transportation management platform and highly capable point solutions. And I'm going to weave Transporeon in and out of the story as I talk. So I mentioned I've been leading the Transporeon team for the past year. However, I came to Trimble from Google when Trimble acquired SketchUp, and I ran SketchUp as a business for about 8 years, including taking it through the transformation from a perpetual software business to a subscription SaaS business, as we know and love it today, right, Mark? So I spent the vast majority of my Trimble time as an operator in the AECO business, and I now find myself in Transportation $ Logistics. So I'm in a really unique position to tell you all that Connect & Scale is the exact right strategy for this segment as well. So let's talk about our right to win and key takeaways for Transportation & Logistics. So we're executing the same strategy here that we're proving in other segments, the other 2 segments that you heard about from Ron and Mark today. And with the acquisition of Transporeon and the announced divestiture of our mobility business, we've architected this segment to serve a compelling market with a simplified and more focused structure. This time, targeting carriers or shippers, brokers and carriers who are, in turn, fundamentally digitizing their operations. We all -- you heard this morning that we all share the same vision to connect the digital and physical worlds. This will position us, all of us, to be an AI leader and for us to be an AI leader in transportation. And in terms of this segment, in particular, we're leveraging our own AECO playbook to transform our go-to-market strategy and deliver a mix of recurring revenue software models. And finally, our capital allocation strategy has transformed this into a recurring revenue business with growth and profit momentum. And as Rob mentioned earlier, it's a 100% software business going forward now with the mobility -- the announced mobility divestiture. Again, in order to talk about where we're going with this segment, let's start with where we are today. So this is a 90-plus percent recurring revenue, geographically diverse business with substantial expansion opportunity. Our revenue is diversified and split almost evenly between the businesses and between North America and Europe. And we have a diversified mix of revenue types making it highly repeatable and resilient. Our growth drivers include cross-selling in North America and Europe and a tighter integration of our products, much like you heard from Mark and Ron earlier this morning. And this is how we'll capture unpenetrated portions of the market. Speaking of the market, you've heard this a couple of times already today about the transportation market that we serve is also large, global, underserved and underpenetrated with secular tailwinds as the industry digitizes. With an addressable market of $8 billion and a tech penetration rate of just 40%, we have significant headroom for growth, and we're well positioned to grow faster than the market. We'll capture the white space as we evolve for point solutions to connected workflows to a collaborative transportation ecosystem. In the near term, we're expanding this Transporeon business that you all seem to know about into North America by integrating their products with our installed base of carrier customers here. We'll continue to improve the fidelity of our MAPS business, our MAPS data for even more connected ground truth workflows. And we can now improve MAPS even in Europe by integrating MAPS with transporting products over there. That will help us improve MAPS' data on the other side of the pond going forward. Finally, we're modernizing our carrier transportation system to a cloud-native freight delivery solution and in turn, migrating our customers from on-prem solutions to the cloud. We've seen the Infinity loop a couple of times today already. So in our business -- in all of our businesses, I should say, we planted the seed over 20 years ago at Trimble. Certainly, in the entire time I've been at Trimble -- oops, I shouldn't tap my chest to connect the office to the field or the digital to the physical, as we call it today. And this purposeful vision that we've all had is what led to organic development and acquisitions of point solutions, including the acquisition of Transporeon. So Transporeon for us completes the Infinity loop as it's a shipper centric European-centric business to complement our North American-centric carrier-centric business and legacy. And additionally, Transporeon has been working on a platform strategy for years when we acquired them, they were doing their own Connect & Scale thing for a few years. So it brought -- we also acquired an amazing team to accelerate Connect & Scale on our side. In fact, Transporeon has helped us leapfrog into new areas such as marketplace capabilities where we're literally connecting shippers and carriers to make deals, which is really important in this circuitous freight economy that you see here. Business is also grounded in a long history of high ROI best-in-class point solutions that we can now integrate and we do integrate to connect people, data, workflows and ecosystem. Again, this time for participants in the transportation life cycle. Evolving from our solutions, our unique differentiation will come from solving the problems in the white space between shippers, brokers and carriers. Our transportation management platform, which you see in the middle here again came from the Transporeon acquisition, connects an ecosystem of customers and partners and we deliver transport intelligence to all participants equally. And by integrating the capabilities around the circle, and these are also our point solutions, our users gained significant insights for better decision-making, and we can up-level them from individual task improvements that they get from an individual capability to system-wide enterprise improvements. And our customers agree. So let's take a look at a couple of customer examples here. So first of all, covenant logistics, they operate a large fleet in North America, and they're long-time users of Trimble Point solutions. Our partnership with them began in 1994 when they adopted our mileage and routing product. In 2009, the Integrated Transportation Management for improved order to cash efficiency. And by 2022, they implemented commercial navigation for highly accurate turn-by-turn GPS directions this time for 60,000-pound trucks. And just this year, they further enhanced their operations with our weather intelligence workload. We now provide real-time predictive weather data to their dispatchers and their drivers. This created a safer working environment for their drivers and enables business continuity no matter what's happening with the stochastic dynamic weather environment in the world. This partnership showcases our commitment to move from Point Solutions to connected workflows and for us, a flywheel of expansion within a customer. Like Covenant, Heniff is another long-time user of Trimble Point Solutions. Heniff is a North American carrier specializing in liquid bulk shipments. Our partnership with them began in 2002, rather, with transportation management. And over the years, they've adopted mileage in routing, asset maintenance, fleet management and commercial navigation. And just this year, they adopted Transporeon's real-time visibility workflows to improve their customer service and their operational efficiency. Our visibility solution gives Heniff the ability to notify customers of exceptions and delays while their shipments are on route in real time before they arrive at their destination. So now Heniff can differentiate themselves in their world by providing accurate transport KPIs to their ecosystem and also reduce downtime of their drivers and improve their optional excellence. This is yet another illustration of our evolution from point products to connected workflows that only Trimble can do and a proof point for Transporeon expansion into North America. Again, that was just this year. We have hundreds of customers like these where we're deepening relationships as their neutral technology partner. So a little deeper dive on Transporeon. I know this slide is very busy, so I'll slow down and take some time to go through it with you. Hopefully, I'm successful. The acquisition of Transporeon closed in April of last year, and again, it's critical to our strategy, and it's now the largest business in this segment. So as promised, let's take a closer look at the business with a specific focus on the underlying transactional model. So the pie chart in the top left shows you that 60% of revenue comes from transactions. And by transactions, these are transactions that are happening on the Transporeon platform, but they also represent real transports happening out in the real world, a shipment moving from point A to point B. The graph on the right shows the transactions per Workday on the Transporeon platform from 2018 to present that you can see grew 15% CAGR until the recession hit and then it flattened to 1%. That's how to read this graph, right? So it's important to understand in the bottom left of this slide that the business has been performing well despite the freight recession with organic growth, high margins and high retention. And as the freight recession improves, this revenue -- this transactional revenue algorithm will reap the benefits, right? So specifically, transport volumes increase, and that's what's kind of meant by the white line and the yellow line out there. The white line is the continuation of the baseline 1% CAGR and the yellow line is where it will go when the freight economy improves. So we also plan to continue to diversify our revenue into more subscription products beyond these transactional products to provide a smoother path through the next freight recession. This is a cyclical industry. We don't know when it's going to happen, but it will happen again, so we'll diversify our revenue streams in advance of that. In fact, subscriptions have grown from 20% of Transporeon revenue since we acquired them to about 35% of revenue today. There's also a large opportunity for cross-sell just within Transporeon. And again, I'm sticking with a little deeper dive on Transporeon. So Transporeon has 5 product areas if you consider like a product taxonomy shown here in the middle with subscription products below the line and transactional products above the line. And Transporeon customers have typically adopt only 2 of these product areas on average and there's many more that can be adopted just within their own customer -- within our own customer base here. So we can flexibly sell cross-sell subscriptions or these transactional products, which are mass micro monetized to diversify our revenue even more going forward. Let's take a look at a customer -- Transporeon customer example, an example of them, us expanding within a customer. So Nestle, who I'm sure you all know very well, has been a Transporeon customer for 10 years, and it's one of our biggest customers. today still. They use Transporeon products in more than 50 countries to support movement of their roughly 2,000 brands. Starting in 2012, they adopted our transport assignment products for automated transport strategies and time slot management products for automated time slot booking to improve their warehouse logistics. In the following years, they expanded with us into real-time visibility, market insights and fleet planning. And by 2022, Nestle became early adopters of autonomous procurement for AI-based procurement workflows, spot procurement workflows to achieve better prices and streamline deal making. Nestle now makes more informed decisions based on unique data insights that only we can provide from our platform in areas such as the current market capacity and pricing by region or by lane. This has been key to Nestle's own supply chain transformation demonstrating the value of integrated solutions and keeping them on the cutting edge of AI, for example, with us as their technology partner Okay. When I talk about ecosystem, so extending our data and capabilities from the platform to the entire ecosystem, this is the gift that keeps on giving for Connect & Scale for our Connect & Scale platform strategy with an underlying data strategy. So in this segment, we'll also continue to broaden our base of industry partners, particularly technology providers for shippers and carriers. Our vast connected ecosystem includes hundreds of integration partners and they provide additional avenues for growth for us. Through partner integrations, we extend our platform to their customers, now our common customers and we unlock additional monetization opportunity and make our platform stickier. That's what I mean by the gift that keeps on giving. And we're deepening these relationships across the entire ecosystem. Like Mark and Ron talked about earlier, AI is also at the core of the innovation strategy. Well, it is for all of us at Trimble. It enables us to deliver cutting-edge solutions and ensure that we stay differentiated. So let's look at some examples in this space. So on the top left, our Freight Delivery Solution uses AI to balance orders with available drivers to optimize the network and ensure the most efficient freight delivery. On the top right, our AI-based dealmaking products leverage our own transactional data, that same transactional data I described before with AI to match counterparties to strike fair agreements at the best prices and streamline freight procurement. Trimble MAPS on the bottom left uses AI to extract automatically extract map features from imagery, enhancing our leading map content and providing more accurate navigation and routing for trucks. And by using a natural -- and then finally on the bottom right, Trimble Compass, we use a natural language interface in Trimble Compass, which quickly delivers precise customer support information ensuring that our customers receive the right -- the correct assistance they need when they need it. This commitment will position us as an AI leader in the transportation industry as well and drive continued growth. Turning our attention to our go-to-market strategy. Our approach is -- well, it's multifaceted and it ensures that we reach our diverse customer base in this case as well. So again, specific to this segment with our direct sellers, we're going to follow the AECO playbook as we evolve from product selling to account-based selling, building more strategic relationships and elevating ourselves to enterprise C-suite conversations. We'll continue to leverage our distribution ecosystem to expand our geographic reach, as I mentioned, and we'll deepen our presence with local value-added partners and distributors to drive further adoption. And finally, we'll leverage the same digital marketing and e-commerce infrastructure investments that we've already made at Trimble that we've already made for the tip of the spear AECO so that we can reach a long tail of customers in this segment as well with a lower customer acquisition cost. So by following AECO, again, that tip of the spear, as Rob describes it, we're very fortunate in this segment to be able to leverage those prior investments and not reinvent the wheel in these areas. Another way to say that is we know what to do because we're following the playbook, it's just a matter of execution for this business, and that's what we're going to do. Okay. With the announced divestiture of our mobility business, the ARR in the segment will -- ARR growth will be higher, especially with MAPS and Transporeon representing a larger share of the segment, the ARR headwind we get rid of some ARR headwinds. So the chart on the right that you see here, it's a side-by-side -- it shows a side-by-side impact of with mobility and without mobility. I think everybody probably figured that, but I want to take a second to describe it. But it does show improvements in organic revenue and ARR growth and as well as operating margin. Okay. Historically, we've operated as divisions in this segment, whereas now we're evolving to a more integrated segment and go-to-market motions. So the KPIs you see here, these illustrate primarily our opportunities where we're going to focus even in the near term and where we're going to focus on cross-sell within our divisions and across our divisions. You can see in each of the divisions KPIs that our customers average using only 1 to 2 products per customer. So there's a natural opportunity to expand within our customer -- our current customer base. And then over on the right, you'll see that over 95% of our enterprise installed base have at least one integrated MAPS product. So the door is open there, and we can go cross-sell additional products into those accounts. So these KPIs highlight in general, our cross-sell opportunities that we're going to capitalize on from here. Speaking of cross-sell, AECO presented a similar slide today, but also around our last Investor Day a couple of years ago, they presented something similar to this, and they've been expanding successfully in their customer base ever since. So although in the early innings, we have a similar opportunity in this business. And like AECO, we're going to start with our carrier customers in our case, with their installed base of sticky, Trimble ERPs. They're just known -- ERPs are just known as TMSs in this industry. And those will be the anchor products that we expand upon. Our cross-sell opportunities will continue to grow, of course, as we deliver more product and platform integrations like I described. However, we have several products that are available today representing low-hanging fruit to expand our existing -- expand within our existing customer base now, especially here in North America. And you can see kind of the top 5 or 6 products on the left side of the screen here. These are applicable now to cross-sell into the personas across the row on the top. And we've assessed this opportunity to be more than $400 million in the long-term cross-sell opportunity within our own customer base with the current product portfolio that we have, and we can get started on that today. So looking ahead, we have a compelling outlook driven by several key factors. We're targeting organic growth revenue and ARR growth in the high single-digit range. We expect to achieve operating leverage between 35% and 40%. And our growth drivers include, well, primarily a tighter integration of all of our products and the cross-sell that I described, enhancing our value proposition and creating significant, again, cross-sell opportunities. By capturing unpenetrated portions of the market will drive substantial growth in margin expansion. So in summary, our strategy, Connect & Scale, same strategy, and our market position provide a strong foundation for continued success in this segment, and we're confident in our ability to continue to deliver value to our customers and long-term shareholder value. to all of you and all of us. And with that, I'll turn it over to our CFO, Phil Sarisky, who will take us out of here.

Thank you. All right. Thanks, Chris. I think you heard from my colleagues, we have a great story, right? I'm really excited, and I hope all of you are excited about the opportunities we have in front of us to continue to grow the company. So by way of introduction, my name is Phil Sawarynski. I'm the CFO here at Trimble, I was named a little over a year ago to the role. I've had 15 years here at Trimble. Throughout my career, I've been headed up finance for our Geospatial Group, our ag business and also our Transportation & Logistics group. Longline, I ran our optical and imaging business and manage our corporate development team, I helped start and was a co-lead of our corporate venture fund. And recently, I was a treasurer before moving a full role. So how do I think about what I focus on going forward? So first of all, it's continuing to execute our strategy. You've seen up here in some of the numbers, and I'll show you some numbers as we go forward. The strategy is working. We're going to continue to execute it. How do we efficiently and effectively scale the company as we continue to grow. Continue to have a disciplined capital allocation framework that's ROI-focused and continuing to deliver additional shareholder value as we go forward. Okay. So when I think about how do we deliver shareholder value? I'm a math guy, so I think around algorithms. So where you start, there's a lot of the hard work over the years. Rob talked about, we started our Connect journey around the year 2000. The team has worked really hard to continue to evolve the business, make conscious decisions and improve the financial model. We've done this through our model conversions, organic growth, our portfolio moves and how we allocate capital. So that resulted in a financial model that's more resilient, more predictable, delivering higher margins and more free cash flow. My colleagues talked about the opportunities in the market. We believe we have the right strategy in the right markets. We have the right products and solutions and workflows, and we have the right people to deliver. Talked about our growth levers, which are our products and solutions, our technology, including AI, our go-to-market evolution. And that allows us to access more of the addressable as we go forward. So we believe we are set up for long-term growth. Our capital allocation framework is disciplined and ROI-based, which includes returning capital to shareholders. So putting it all together, with the combined -- you combine the evolved financial and business model, we continue to execute our strategy. We have disciplined capital allocation, returning capital to shareholders, we believe that, that's the recipe that leads to margin expansion, free cash flow growth, compounded EPS in the low to mid-teens and ultimately, additional shareholder value creation. So get into the forward-looking numbers. I think it's important to make sure that we have the right baseline. And Rob showed this before around the 2024 numbers. We've had a lot of moving parts in 2024, divested the ag business. We announced the divestiture of the mobility business. We have the 53rd week. We need to adjust for those impacts. And that will result in approximately $3.18 billion revenue, $2 billion in ARR, op margins at 26%, EBITDA margins at 28%. We adjust for the pro forma impacts that I just talked about on an EPS basis, that would actually reduce the number -- the guided number that we've done for 2024 by about $0.35. So as we go forward and we guide around EPS, the right baseline is to actually remove those effects as well. So I want to point that out. But this is, again, the start point for the numbers that I'm going to talk about. So before I talk about the forward-looking numbers, let's talk about where we've been. So teams continue to execute the strategy. Rob mentioned 2023 at Connect & Scale. So I thought the right baseline here is the 2029 -- 2019 numbers, excuse me. So in that time frame, when you think about 2019 to the 2024 pro forma, if you look on the left-hand side, starting at about $3.3 billion of revenue. We've had about $300 million of revenue from acquisitions. $700 million from our organic growth and about $1.1 billion in divestitures, the reduction to revenue, which gets us to a similar revenue number, around $3.2 billion. What the revenue doesn't tell you is that the composition of the revenue is very different. So with a similar revenue from 2019 to 2024, our ARR, which is the most important revenue stream we have. Why? Give us more visibility, more reliability, more predictability in our model. And that ARR has grown from a little over $1 billion to over $2 billion in that time frame. The company is in rare territory with profitable growth at scale. Now if I turn to the margins over the same time frame. So from 2019 to 2024, the conscious choices, the hard work from the Trimble team expanded our non-GAAP gross margins 1,200 basis points. If I look at the adjusted EBITDA margins, they've grown 500 basis points. That's the team executing and delivering the strategy. So you've seen these graphs before. These are the mixes within the -- they're in each of the segment slides as well. But I wanted to put them together to show the mix of the company as it looks now. So AECO, Transportation & Logistics or software businesses. The vast majority of the revenue is recurring. Field Systems Almost 50% of the business now is software services and recurring. Ron talked about continuing the model conversions within field systems. So we expect that mix to continue to improve over time. So we talk about cash flow, we believe that shareholder value is a function of free cash flow generation. So we talked about the profits that are generated from the businesses. You combine that with our negative working capital and CapEx at 1% of revenue, low CapEx company. We're an asset-light model, and that yields free cash flow growth. If you look at the right-hand side, our guide would say for 2024, it's roughly $520 million of free cash flow. But if you look, there's almost $200 million of free cash flow related to taxes and M&A expenses primarily for the ag divestiture into the JV with AGCO. So if you adjust for that relative to 2019, that's almost a 40% improvement in free cash flow. So we understand our responsibility to allocate capital to the highest ROI projects. Our priority is focused on our organic ARR growth. And we're allocating our resources to that. In fact, in 2024, more than all of the incremental OpEx at the company level is pivoted towards AECO. But it's not just about AECO. A lot of that spend is also in our digital infrastructure, and that sets ourselves up as we roll out the Connect & Scale strategy to the other businesses. M&A has and continues -- will continue to have a role in Trimble. Its role is to accelerate our strategy. We'll be selective and strategic in our decisions. We're focused on our existing industries. We're focused on tuck-ins. We're focused on getting fast ROI. We also expect to return at least 1/3 of our free cash flow over the years to our shareholders. It's consistent with what we've done in the last 5 years. And we anticipate being able to do this while maintaining our investment-grade rating for credit. So let me talk a little bit more about M&A. And we make sure that as we go forward, you understand our framework because we don't want any surprises. Again, our priority is around investing in the organic growth of the business and strategically using M&A. We have been an acquisitive company. And throughout the years, the products and solutions have given us the depth and breadth to be able to execute our Connect & Scale strategy. When we look at M&A through a couple of lenses. First of all, it's got to fit our strategy. So Mark talked about the programmatic tuck-ins. We plan to replicate that playbook as we go forward where the opportunities are to cross-sell to upsell with quick ROI within 3 years, in fact. The ability to execute. We look at the products, we look at the team, we look at our ability to quickly integrate. The financial profile, we look at being accretive to Trimble. We look at synergies for revenue, for ARR and OpEx. Again, we expect these smaller tuck-ins to have a cash ROI within less than 3 years. For larger M&A, we look at platform plays. So Mark talked about the Viewpoint example. So where we look at platforms, and this is where we can, again, have opportunities to cross-sell, to upsell, to add additional small tuck-ins and recycle the playbook. And then we look across the entire ecosystem and how we get ROI. So let me move to the long term. And again, I'm going to base this on the 2024 pro forma numbers that I've showed you earlier. So I'll restate what Rob showed you, the 3, 40, 30, $3 billion in ARR, $4 billion in revenue, 30% EBITDA in approximately 3 years. To get there, again, based on the pro forma, that means low to mid-teens organic ARR growth, a 7% to 9% organic revenue growth which is an improvement from the 5% to 8% from the last Investor Day. And with our continued execution, we believe we're well positioned for sustained growth. And when you add the operating leverage to get to compounded low to mid-teens EPS growth. If you look over the longer horizon and apply the same algorithm, and here you can see we went up to 10 years, we could see that, that math would lead us to approximately 80% recurring revenue in that time. And then if you apply the same math to the gross margin, that would imply almost 80% gross margin in that time frame. Here's a breakdown by the segments. And again, I'll summarize. So AECO, mid-teens ARR and revenue growth. Field Systems, low to mid-teens ARR growth, low mid-single-digit revenue growth. And I'll remind you, I think Ron mentioned this earlier, that includes about a 200 to 300 basis point headwind for the model conversions we're doing with infield systems. Transportation and the high single-digit ARR and revenue growth with MAPS and Transporeon being above this. This is an organic model and doesn't include acquisitions. So acquisitions will be incremental to this model. So I just talked about the growth. Let's talk about how that flows through the rest of the financials. So the ARR and the software growing faster that will improve the mix and expand our gross margins and operating leverage in the 30% to 40% range, and with more or less, depending on the investments as Rob talked about earlier, where we see additional long-term value. That, combined with an asset-light model, where we expect free cash flow at 1x non-GAAP net income, but expanding over time, you combine that, you deliver the model, we return the capital to shareholders. And again, this is how we see in the long term, compounded EPS growth in the low to mid-teens. Okay. So last earnings call, now that we're in December, we gave a little bit of an early look on 2025. At the time of the earnings call, I said we were biased above the midpoint of our 5% to 8% growth, which is what we talked about at the last Investor Day. So I'm going to give a little more details here on this. But on an organic basis, we're still in the same spot. No change there. What has changed a little bit is the dollar subsequent to the U.S. election has gotten stronger. And so that could use into 2025, provide a bit of a headwind on our revenue. But we also have a big cost base in euro denominated, it's primarily the euro, that's euro-denominated. So on an EPS basis, we don't believe it's going to have a material impact. Another point that I want to call out is our equity investment income. So with the ag market continuing to be a bit challenged, and some of the changes in the economics with our CAT JV, we're not expecting any meaningful contribution from our equity investment income for next year. So let me summarize. We believe that we're in the right markets. We have the product solutions and workflows with the right people, and we have the right strategy for long-term growth. We have and continue to have -- to execute our strategy. We've delivered their financial model progression, and we will return capital to shareholders. So if you put it all together with the continued execution, which yields financial progression. You combine that with an asset-light model and that yields free cash flow growth. You combine that with disciplined capital allocation and returning capital to shareholders, and that yields low to mid-teens EPS growth. This is the algorithm to continue to create shareholder value creation. So I'm going to stop here, and I'm going to invite my colleagues up and we'll move to the Q&A session.

Okay. We've set aside about 50 or so minutes for Q&A. And then will be available as well for the lunch after this. Joining the 5 of us as well on the stage is Michael Kornhauser, he lives here in New York City. He looks after the transportation businesses that we have throughout mobility, enterprise and MAPS. And so we wanted them to be up here with us as well. So let's get to it. Kristen, let's start with you and Michael and Grace will have the mic So if you could use those, please. And then for those of you online, we'll -- if we have time, we'll capture questions from you as well.

Kristen Owen from Oppenheimer. Mark, I want to ask you first, you talked about the $1 billion in cross-sell, upsell opportunity. You mentioned some of the lower-hanging fruit coming from ERP to project management, some of the wins you've had since you've launched ProjectSight. Wondering if you can maybe just double-click on that selling motion, how you anticipate ProjectSight to sort of lead some of that ARR growth? And then I have a follow-up as that lay book relates to the transportation business.

Sure. Good to see you again, Kristen. So there's 2 things that are shifting in the market that we see. One is the buying power has shifted from the field to the office within our customer base. So we had a very fragmented operating environment for a while where our customers had budgets in the field to buy tools and apply to jobs. That shifted back to an environment where CIOs and CFOs have wanted to control the expansion of their cost base on tools. And that has fallen right into the sweet spot of our go-to-market motion where we already have those relationships at that level. And so our customers are looking to us to be more strategic in our relationship with them and provide the full suite of capabilities. And that's allowed things like ProjectSight to lead the way, specifically in our ERP base or in other -- where we have other tools in the field.

So then maybe leaning into the transportation side. How do you take that playbook and address that, whether it's through the TMS or the ERP system, given the fraction of the transportation market, how fungible is that business model? And do you need to maybe overinvest in some sales and marketing to be able to unlock that opportunity?

Yes. So I'll start by saying that we have some proof points from this year 2024, where we are cross-selling between our divisions in transportation, especially here in North America, especially Transporeon products here in North America. So we know that there is viability now. I'll also repeat that we're in the early innings of this that I mentioned during my presentation. So we have done the analysis of pulling all the customer databases together from the 4 divisions, analyzing which products they have, which products we have applicable now to go sell into the base that already has at least one product from us. And then, of course, that's going to inform product integrations like first and foremost. That's where the rubber meets the road here. Yes. And then, again, transitioning or evolving our go-to-market team from product-based sellers to sellers that are selling the house, which comes selling the house, selling the platform, selling everything we have, right, just like TC1 but that comes with a lot of product training for our sales team, folks and sales enablement and a lot of marketing lead generation and stuff and one message from us. Anything to add to that, Michael?

No, I think...

So why don't we go kind of where I can see my right to left. All the analysts got the memo to be right here.

Maybe just a couple of quick ones. We're all really good at math. So if we looked at that Viewpoint slide, it looks like you guys have expanded that like a high teens CAGR since you bought it, which is quite impressive. I understand that there's a lot of cross-sell portion of that, but wondering if we can unpack it from like an on-prem to cloud uplift, how much was that growth? And then maybe share gains I think when we think about your construction opportunity, there are a couple of big players in this space, but that's really not what your main competitors are, I think it's probably a lot of point solution consolidation. So curious where some of that share gain opportunities come from and maybe where it's going?

Mark, why don't you take that?

Yes. When we look at the Viewpoint base, we had to migrate most of the customers from an on-prem environment to the cloud that's happened over the last few years. We're probably about 85% through that migration. Those migrations usually look like a 2 to 3x uplift in ARR. I think when we look at that across the market, obviously, on the ERP side, it's mostly a North American product base. We believe we have probably a 35% to 40% share of that market in the ERP base. But where we've seen tremendous success, particularly recently with that is going down market. SMB companies are looking to put more technology in play. It's been a big leader for us to get that technology in place, in fact, so much so that when we switch to an account-based selling model, we had to actually move more quota online down into the SMB market this year than we had anticipated by a factor of 2. And that's what I talked about earlier, that marketing transformation, 360-degree profile the customer earlier I was talking about, it's been so effective in giving us a total view of the landscape. Because we actually -- we have some pretty broad penetration, especially through our MEP offerings across that space where someone is using something and then we're able to use that data and information to be able to hunt away there. So it's been a really effective play for us.

Why don't we go to Jonathan and since you're also good at math, I look forward to seeing the quality of this model show up in the valuation.

Excellent. Jonathan Ho from William Blair. You have a compelling solution-oriented vision. How far along are your customers in that journey? And what has to kind of happen for this broader platform adoption to accelerate?

Do you want to take that at a company level or a segment level?

At a company level, yes.

So in terms of -- Jonathan, I think you're asking how far are customers along the adoption journey and how far do we have to go with that motion. Punchline early innings in terms of where we are in that journey, and it's supported by the lack of penetration in the market. So there is a rising tide aspect to this with the peers in the industry, we all have been growing, and we believe we're differentially growing, have a differential value proposition, which can grow then faster than -- enable us to grow faster than the market is growing. We see that opportunity on a global basis, not just a regional basis. And when we look at the value proposition mapped against the challenges that the customers have in the respective segments we sell, it lines up well to be able to generate those productivity outcomes. Think about a lot of our markets that are having trouble attracting new people into the industry. They need to be more productive. You're managing risk in these industries. You need to have transparency and visibility in the work that you're doing. Depending on where we are around the world, we're differentially talking about sustainability and how can you actually design and engineer for sustainable outcomes upfront. So that's just a set of catalysts that drive that adoption. I think the examples we were able to give on the KPI slides, you saw them probably most notably in Mark's slides and Chris' slides, it's just how a few of the customers are adopting the entirety of the portfolio. And many customers are adopting more than one. So it's not just starting from a basis of one. And you can see these motions as you go to 1 to 2 to 3, how much more business that's enabling us to do with our customers. And we all would understand the customer acquisition, the cost of that motion to an existing customer as compared to a new logo acquisition. So hope that gives you the color.

That's perfect. And then in terms of the slide that showed that for every sort of dollar spend on the sales and marketing organization, you're seeing $4 worth of net new ARR. How do you think about the balance between spend? And this seems like a very great return if you're able to get sort of that type of result? Why not spend more? Or why not sort of accelerate that?

Yes. I think that's a great point. It's one we wrestle with internally as, again, I would say, a team of operators that want to grow the business responsibly. We look at 2 things. So we will make a conscious decision to trade for growth, right, if we thought we could do so efficiently. At the size and scale that we are, when we talk about one point, you're talking about a lot of money. And so to do that efficiently and effectively is the balance. And so we have pushed the boundaries of what we can do efficiently to make sure we're doing it responsibly and getting the most return and we don't want to get over our skis on that. And I think the company, I've been fortunate to be the recipient of the company's investment in AECO and how we're disproportionately allocating capital there, but we want to make sure we treat that responsibly. So yes, we'll go throttle down when we think we have an efficient horse to ride there, but we take that very seriously.

Arsenije?

Arsenije for Josh Tilton from Wolfe Research. First things, for the presentation guys, it really simplified things, conveyed a clear message on each segment. So just in the AECO space, some competitors are going currently through go-to-market changes, and it seems Trimble gotten ahead of that and there's been some improvements in win rates. It's clearly still a focus with incremental OpEx allocation in AECO. So I guess how much of a benefit do you think that provides in gaining new logos from existing customers from other competitors or just capturing new business? And then for I guess, Rob and Phil, when we're thinking about, all right, if macro improves, clearly, in any segment really for talking spot in Europe improving, transporting on revenue, there's going to be a lot, I think, of upside on that segment. And where would you think about allocating that type of gain? Are you going to look to invest more in growth maybe in AECO or even in field systems? Or would you be looking more for like optimization in that margin in transportation or transport?

Good question. Mark, why don't you start with the first?

Yes. I mean I would say on the go-to-market stuff, we were either good or even a little bit lucky that we got way ahead of this in terms of refactoring our go-to-market teams and our strategy and our systems and our process and our people to be able to be ready for what I'd call a buoyant market, but more importantly, a customer base. It's going through a digital transformation that comes from an existential threat in their market to be better and more profitable and more aggressive in their bidding strategies. They're still operating with large backlogs. They're trying to be more selective. I was talking to a recent customer, top 10, another top 10 E&R customer that said they turned down $17 billion in bids last year, right? So they're being selective. They're picking and choosing their profitable path, and they're using our technology to guarantee a better outcome for them in that process. So I would say we've been fortunate to be ahead of that to be ready for that in the change in buying behavior. And then -- and that has us positioned to not be dealing with organizational design, while the market is hitting an inflection point, which we've been fortunate to be part of for the last couple of years.

Phil, why don't you take how we think about spending differential capital?

Sure. So look, I think we -- Rob and I started at the company level, right? When we look at the incremental margins that we're getting in if that's growing -- if that's higher than what we're expecting, right? Then it looks -- we look at, again, where the biggest opportunities are for the ROI. So we mentioned this year in 2024 as we pivoted that capital toward the AECO. That's an intersection where we see the opportunities today and then also setting ourselves up for the long-term growth. In your hypothetical situation, I think, with Transporeon, as Chris noted in one of his slides, if the market comes back and the transactional volumes come back and we see significant growth there, which delivers incremental margin, I think we would say that there's an opportunity there. But again, we start with sort of the company and where we'd allocate that capital and then we look at the segments, when we look at the opportunities and the geographies, et cetera. And we pivot our capital where we believe the highest returns are.

Let's go to Tammy and then to Chad. Go to Chad.

Chad Dillard from Bernstein. So my question is about the cross-sell opportunity that you guys laid out for both AECO and the Fuel Systems business. So in that 7% to 9% top line CAGR, what's embedded in that in terms of the cross-sell? And then, I guess, secondly, you guys have done a lot of investment to get to the point we can actually do a lot of cross-sell, how much more is needed? And then if you can comment on a personnel level, what sort of investment you need to make to fully realize that?

Why don't you start with the cross-sell?

Yes. So I think it's probably easier to double-click on that within the segments of the 7% to 9% because that's the buildup of the numbers that I showed you. And maybe, Mark and Chris, you can talk a little bit more specifically around the cross-sells within your segment what those opportunities are. I think you've said on the macro numbers, right, the $400 million and the $1 billion. I don't know if you want to add.

The question was for Mark and Rob.

Yes. I mean within AECO, we'd like to get to a balanced approach. I think of the spread of our bookings from cross-sell to up-sell to new logo, and we're adding the digital motion. It's too early to know how much of an impact that will make, although the new commerce store that was released, the new project side, I talked about earlier today, has already transacted 2 new logos this morning and it's first day live. So that's a good plus story for us. So I don't know how much that will play. So I'll leave that out to the side for a second. But like we see a pretty balanced approach. We're about excluding the B2C motion. About 2/3 of our bookings are cross-sell, upsell today. We think that has legs for a while longer, given the opportunity. But we look in the mirror, right, it's about effective execution of our go-to-market model. And if we can do that, we'll hold that on the growth pattern and there's plenty of room to run there given the 30,000 customers we have to mine that we talked about earlier.

And that would be consistent across the portfolio and you can see it most notably in the ARR aspect of the cross-sell. We'll go to Jerry.

Jerry Revich, Goldman Sachs. I'm wondering if I can ask just 2 questions. One, on the connected data side, you folks are getting incrementally more data each and every day. Can you just talk about, is there an opportunity at some point to monetize it, consulting type arrangement. You folks know exactly how long it takes to pour a yard of concrete, right? What's best-in-class? Is there an opportunity across the enterprise to leverage the data more. Same thing on the T&L routing side. And separately, can we just talk about the consistency of performance and net retention rates are consistently at 110% for you folks? Can you just talk about the sales force process that you folks have developed over time that enables you to have that consistency of performance because it feels like we're talking about the same stats every quarter even as the organization grows?

Yes, I'll start with -- Jerry, with the data question. I feel like owning a share of Trimble is owning a call option on a data company. Exactly how that data, let's call it data/AI, exactly how that's going to monetize over time. I don't fully know the answer to that. I'm not sure that anybody fully knows the answer to that. And if you do, I'd love to hear that before you leave here today. What I know is that we set upon a unique corpus of data. We've got a conviction set that we're at that intersection of the physical and digital worlds. We had the sensors out in the real world, collecting that data. I would submit that if I had my phone with me, I have an iPhone, is that company, the same company without that physical device. I submit the answer would be no, like that's super special and unique. And so that ability to capture that data out in the real world and integrate that into the workflows like Mark and Ron described with the Infinity chart as that data can move, that is super unique. We live in a world where the LLMs, I think, will commoditize, and I think what will differentiate will be the vertical on top of that. And so that vertical represented by the industry knowledge we have, that vertical represented by the customers' unique amount of data. The amount of conversations I'm in with customers these days and they're looking for help to unlock the data they have much less unlock what you could use across an ecosystem, I think, is -- really portends a tremendous opportunity for us in the future, given that scale and scope of what we're doing. We are monetizing -- this isn't just futures. We are monetizing some of the AI applications today. I don't see it moving the company revenue or ARR needle at this point. I do believe, though, it's part of why customers want to do business with us, because they can see that you're not just buying something for us for the moment or a transaction at a point in time, you're actually entering into a relationship with a company and you're buying into a vision and a future. And so we do see that differentially positive whether we're winning new logos or selling the Trimble Construction One suite, for example, is that it is a positive of why customers -- we see them different -- we see them talking to us in a different way and talking about different things and wanting a different type of relationship with us that I think we are poised to deliver into the future. So that's the data question. On the net retention and you asked -- I think you're asking Jerry, what is it in the sales model or the motion that's driving that retention. I think it actually is a bit similar to Chad's question in so far as that breakdown of net retention, we all know, you're all good at math, I hear, is going to start with the gross retention, i.e., post churn. And from that gross retention, you have pricing, which would be a function of the value that you're delivering -- ongoing value you're delivering to customers, and then you have the cross-sell, upsell motions and that's going to get to your net retention, right? New logo would be separate in that chart. Customer success. The way we think about customer success is absolutely critical because the thing you got to first prevent is a leaky bucket when you have the starting base of customers. So to better understand the telemetry, what are they using? How are they using it? How can you help them unlock that value from it? That's super important to hold on to those customers. The insights that we're getting now through the marketing stacks and -- particularly probably the marketing stacks that are most notably being used in Mark's business today, those allow us to do the digital marketing motions. So if we can see what technology we're using. It's not hard to draw a heuristic to know that other common customers might be able to benefit from a common set of products as compared to other customers who are like. And that can drive a set of motion, that can drive a set of trial behavior. And for those of you who were with us a couple of years ago, probably some of what I was talking a lot about then probably sounded somewhat theoretical or pretty technical in terms of -- I was talking about the incremental spend we were making in the digital infrastructure, that's finally delivering because as common licensing entitlement engines remove a lot of the friction in that buying process. And so that's super important to be able to efficiently and effectively reach those customers as we work through the motions. I hope that helps.

Super. And Phil, can I ask the preliminary outlook that you laid out for '25? Depending on the below-the-line assumptions, it feels like you're guiding to about $2.80 in earnings, $2.90 if we were to add back the mobility divestiture. Is that about right? Or do you want to put a finer point on some of the share count, interest expense items, et cetera, underpinning the outlook?

Yes. I think you're pretty close. So we guided to $2.83 for this year. And then if you do the math in the algorithm, I gave you, you should get a little bit north of that number. And then obviously, what I tried to do is talk about the $0.35, if you adjust that, then you get to sort of mid-teens EPS growth in '25 over '24.

Clarke Jeffries, Piper Sandler. First and foremost, prior Analyst Days, you've given a 5-year outlook. What prompted thinking about this in 3-year terms, I think especially coming off of the fact that Phil, you sort of teased the fact that gross margin accretion is happening in the model. And even beyond the 3-year time frame, there'll be more gross margin accretions. So why not go out to 5 years again and talk about more operating leverage or the continuation of that operation operating leverage? And then just to maybe add to that, could we maybe talk about the narrative behind the operating leverages behind the -- within the different segments? So 30% to 40% is a pretty wide range. You said allocation of capital and appetite of organic investment. But is model transformation also kind of that leeway or wiggle room in operating leverage where there might be offsets to revenue in the short term?

I'll start and then Phil take the model. Hey, 3 versus 5, it's not really that complicated. It's hard enough to see 3 weeks ahead these days, 3 months, 3 years, 5. So that's a little -- that's certainly a little part of that. I feel like the longer -- by the way, we went into a 5-year model, I feel like it becomes a little more theoretical. And I felt like 3 years can be more tangible. And I think from the feedback I've gotten from the room, you want more tangible. What is it? And so that was the aim of that.

Yes, I think Rob answered that question. And we also included -- I include the slide that showed the 10-year. So you can sort of bridge linear. But as Rob said, the 3 years is a little bit closer and probably a little more real. The other thing is in the past Investor Day, I think we took out to about 2027. We've had so many moving parts of the portfolio changes. I think it was just -- it was important to actually be able to see what all those deltas were right, relative to the prior Investor Day and then...

Operating leverage.

Yes. Maybe to clarify, Transportation is coming from a lower margin operating profile. So it's surprising to see them all within this sort of similar range. And so I'm trying to understand AECO 35% to 40% is status quo, field systems, 30% to 40% status quo, but then maybe only in the last year, you might have been able to achieve 30% to 40% in transportation. Is that kind of right? Or are there other factors to consider about why the operating leverage is so similar within the range of all 3?

Well, I think the model now with the portfolio changes, right? We've had some headwinds within the -- because of the mobility business of the few years and especially with some of the churn this year, right? So now as I showed you, I mean, transportation is -- the bulk of all the revenue is going to be recurring, right? So the model shifted. Chris has shown you in the one slide, right, once you take mobility out what those adjustments are. And so we believe that now with being closer to -- or being a pure software play, right, those incremental gross margins can be a lot higher and deliver that higher operating leverage.

And just to put a finer point on that, the last Investor Day, we said 30% to 35%. This has a 4% in front of it on the book ends with the 30% to 40%. So take the gross margin progression. We, too, can do the math that at that gross margin progression level. We have an embedded opportunity to be able to drop more to the bottom line. And then it's getting the balance on those OpEx investments, which I think Arsenio was asking about where we differentially think about investing the OpEx. And as we know, when you're building the sales force, particularly the direct sales force out to go get those, we can say the new logos, as you're investing in that sales force before you get a return on that, and so we believe that it's leaving us the room to do that. You clearly have a similar gross margin profile in AECO and transportation and logistics. And Ron's business will have a path to increase the gross margin as well. I mean it's 50-50 soft software and hardware in that business. That was not the case a few years ago. So not surprising to me that it's a pretty tight range. Let's go to Tami.

This is Tami Zakaria from JPMorgan. I think I heard you talk about opening technology outlets to expand distribution for Field Systems. So I wanted to get some color on that. Are you talking about stand-alone physical outlets by Trimble or let's say, are you working with some Deere dealer, for example, to have an outlet within their location. And how many of these outlets are we talking about per year over how many years? Any color there would be helpful.

Ron?

Yes. So thanks for the question. And the question was really around these Trimble technology outlets we're going to be setting up, and that's going to be set up on a regional basis based upon where we see the opportunities. So for example, in the Scandic region, we really want to bring on Trimble technology outlets to focus on the Volvo opportunity, right? In the other parts of the world, we'll address those opportunities based upon who the players are. We don't have a set number for a number of new ones we're going to be bringing on. We've actually got a -- we're managing this pipeline through Salesforce like we would in any other projects, and we're starting the process now. We actually have multiple that are in progress. And as your question about standalone, they would be offering the technology inside that Deere dealership or that Volvo dealership. Does that answer your question?

It does. And then one question on Transporeon. I think I saw in one of your charts, 1% CAGR in transactions per day if freight markets stay at these levels. Did you embed any potential lift in that 1% from selling Transporeon, let's say, in North America? Because I think you could leverage your geographic exposure to buck the ongoing freight market weakness in Europe, but I would love to hear your thoughts on what made you talk about that 1%? And could there be upside to it?

Chris?

Yes, just to clarify, the 1% is actuals through the freight recession. So 1% CAGR through the freight recession for these past couple of years in average daily transactions on the Transporeon platform. If you look at the kind of drop from 15% to 1% and then consider that the business is performing well through this freight recession, it is for reasons like you're mentioning. It's for -- our expansion into North America, our more cross-sell and upsell than new logo these days, more subscription products, those types of strategies. So we're scratching and crawling as we wait for this recession to end.

So Tami, also to put a quantum over top of that, if the transaction volumes got that 1% CAGR, that bottom left of that slide talked about the high single-digit, low double-digit ARR revenue growth. So obviously, there's a delta. That delta is for virtuous reasons because we've moved more to subscription, there's land and expand plays across that accordion that Chris showed of other products and services and not to mention the new logo bookings, which the team has done a really nice job growing year-to-date, which positions us well as once then you get the volume coming back in addition to the growth we've already had, that's the 1, 2 that would be the real opportunity. Now that we did not embed a full recovery into the outlook assumptions to be fair because we need to see it really play through first. We've got about 15 more minutes. Over here, and then we can go to Jennifer.

Mark, maybe you could talk a little bit about win rates that you see in your business. I know you go to market with multiple different products. But just -- how much of it is greenfield? How much is it competing with some of the bigger known competitors? And are there particular combinations, particularly in the upsells, where if you start with Viewpoint, you have a much higher success rate?

Yes. I mean it's a great question, but unfortunately, we need more than the 19 minutes remaining to answer because it really depends on what part of the business we're talking about. We run into -- what makes us so unique is the breadth and depth of our capabilities. What makes it harder to explain is who are we competing with where and when. And that varies depending on what segment or what region or what part of the world. If I dig into the ERP, which I think is where you're going, I think when we go down market, like we're oftentimes competing against spreadsheets or napkins or QuickBooks. When we lead with the ERP there, we're giving a company a fair bit of a capability set that they don't have to run their business. And we're typically not up against a domain-specific player in that environment, except in the trades, where we see some domain specific at the lower end of the market. In the mid-market, particularly in North America, we run around not really going head-to-head against major players until we get to a level that I call graduating our customer base when we start to see dynamics, occasionally NetSuite, SAP and others that come into that segment of the upper tiers. But we have a differentiated strategy from them as well with the domain specific workflows and tying it back to the data. So it really depends on where we go. Of course, in design, we are very confident. Peers in that space, sign engineering. And then I think SketchUp speaks for itself in that segment of the market, and we continue to see an expanding addressable market, but I'm not actually sure where it ends at this point given the new things we see it being used for every day. So I guess it's a really complicated scenario there.

But I think I can simplify it a little bit. So I'll sub ask the question -- I'm going to ask a question, too. But talk about win rates when you're selling TC1 before/after? Talk about a win rate on project management discretely when it's part of the bundle? I think that's what we are heading.

Yes. No. I mean -- sorry, that's a great point. I think when we go head-to-head in a point solution, Trimble has a stable of point solutions that are best-in-class. We win our fair share of those deals going head to head. We often times are told, like you have the best tool in the market and then maybe pick on some of the features and functionality here and there. But I think head-to-head, we definitely win our fair share. Where it becomes disproportion is when we bring the house. When we're bringing TC1, we see above-average win rates. We see -- we look at things like on the owner -- on the owner side of project management will win north of 6 for 10 deals. When we go head-to-head against our peers in that space, we see some pretty good win rates when we're bringing more capabilities than just than just the point. But it is different, again, in every segment. And in design engineering, we have a pretty high percentage win rate. What we're seeing now is a disproportionate high win rate as our key -- the top 50, 100 customers are really looking to consolidate that footprint, which I talked about earlier. They want less vendors with more strategic relationships and a more one-to-one personal relationship with the vendor that can provide capabilities across their entire -- their kind of data stream as they're trying to simplify their data model, which is not dissimilar from what we did as part of our digital transformation. We try to lean as much on one data model as possible, and that's now happening in our customer base. So that gives TC1 a very strong advantage there.

Great. And then just one math question since we're all doing that. I think your sort of medium term would imply something like $2.5 billion plus of deployable capital. You talked about returning 1/3 of that at minimum. I think the framework you've given was on an organic basis. So as we think about you guys deploying something along -- over $1.5 billion into M&A or something like that, is it fair to sort of take your 10% cash-on-cash, 3-year return and sort of stack that on top of what you've given us?

Yes. The way I think about it is, again, we've said at least 1/3, right? And so the way we've built the model in that time frame is the rest sort of goes into a cash buildup. And we sort of see that with the M&A as effectively netting against each other as we think about the growth. So if the cash gets pivoted towards the M&A and then the ROIs within a 3-year time frame, right, that roughly equates from a -- the EPS growth to about the same number. And if we do larger platform M&A that I was alluding to, that probably has a longer time frame as far as an ROI. So that's how we're thinking about it.

Jennifer?

I actually have one question just burning off of that last one and then one more about the transportation business. But just going off, I think the consolidating customer spend with more bundling is a great opportunity to cross-sell. The trade-off of why customers want to do that, I often see is discounting on their side, right, that they ask for that. And so just wondering how you think about balancing both that opportunity and a little bit of [indiscernible] as well?

So Jennifer, I would see that -- yes, there can be that consolidation of spend is you say discounting. To take it a different way is if you're buying Trimble Construction One from us compared to -- by the way, it will be more like enterprise, very, very large customers who might be considering, do I want to buy what they may consider to be a best of breed and they're willing to stitch together the outcomes. They're going to have to often spend extra money to then actually link and connect the data. So it's even above the purchase price. And we do believe that if you're buying from us that your -- not only your total cost -- your total cost of ownership is lower and we believe your total cost upfront is lower as well. Okay, why would that make sense for us? Or how do we think about it? Well, the selling motion has a lot less friction and is less costly as well, that customer acquisition cost. So it's a pretty easy equation for us in that respect and rarely is a challenge for us to work through internally.

Especially, we deal in systems of record, right? So as part of that net retention buildup as we're running that motion, there are pricing dynamics in there that are pretty strong on systems of record, low churn rates. And that gives us the ability to operate that model as we stay grounded in that lifetime value. Like if we're looking at a customer adding a ton of capabilities on top of an ERP, we know that, that ERP has a lifetime value that's pretty long out there. So we have a lot more degrees of freedom to work around that pricing dynamic when we had that system in record embedded, right? We don't have to worry about a 1-month or a 3-month churn scenario when we're running that play.

That makes a lot of sense. And then a quick question about the Transporeon business. When you first acquired that, you spoken about it being more European-centric, partially due to the market structure. And so it's exciting to hear about the potential to expand in North America. But wondering if you could speak to perhaps what's changed either with the product or with the market that you now see that be more of a geographic opportunity?

Yes. So I was pleasantly surprised at their portfolio and especially some of the newer products that are just coming out now, right? New product development, a lot of them are AI-based. And it's the newer products in the Transporeon portfolio that are almost by design, more applicable to go international, right? They're already -- they're easier to localize. And those are the opportunities to bring the Transporeon portfolio to North America. A couple of other things we did were there were 2 redundancies, not major redundancies, but we had 2 real-time visibility teams, and we combine those teams into one. So now there's one real-time visibility team, the internal divisional ownership as it's with the Transporeon team and then same thing with Marketplace. We had 2 marketplace teams -- freight marketplace teams, and we combine them into one. I think we call it engage lane on the Trimble side and freight marketplace on the Transporeon side. So now it's just the Transporeon freight marketplace team. Both of those products are available and being sold here in North America as well. And then lastly, Transporeon came with a transportation management platform. This thing we're quoting all these daily transactions against. We had been developing a Trimble Transportation cloud. We don't need 2 industry platforms for transportation. So they're coming together as well too, and they're highly complementary. One kind of is kind of the core services infrastructure and from the Transporeon side is the higher order capabilities like deal making, right? Like literally brokering -- I shouldn't use the term brokering, but hooking up shippers and carriers so that they can make their own deals, and we get a cut of that transaction. Anything to add there, Mike?

Well, yes. And just like Mark said in the AECO space, for carriers in North America, we deal in the system of record with the transportation management system or their ERP. And so it's very sticky. And we have customers that want to partner with us, that want to do more business with us. And so when we start to then bring in a couple of pieces from Transporeon that they can take advantage of and then connect those customers of ours with their customers being the shippers in North America, it creates a nice, again, kind of flywheel dynamic for us to build the Transporeon business in North America. So again, it's about connecting the capacity that we have through our TMS applications with the demand that can be brought in from the Transporeon applications and then doing that to not only improve our existing customers kind of operations within their 4 walls, but also connect them outside to their customers and improve their businesses.

And that's that ecosystem build that we've all been talking about, the gift that keeps on giving.

Let's go back to Jonathan.

You emphasized the importance of the Field Solutions reorganization. And I just wanted to maybe get some illustrations of some of the efficiency and productivity enhancements that you benefited from?

Yes. So that's a great question. It's around the efficiencies from bringing together all those segments. So first off, I talked about the innovation efficiencies, developing one set of total stations, one set of optical instruments, one set of GPS receivers. I have a consolidated GPS team that's serving the geospatial, civil construction and advanced positioning. The other side of it that I didn't actually mention is I've consolidated our worldwide sales team. So I now have -- so for example, Asia Pacific now has a single Vice President responsible for civil, geospatial and advanced positioning. Same thing with the Europe, Middle East, Africa and the Americas. That's allowed me to bring together this team and come to our distribution partners with a better message more consistent. So I've seen benefits in both the go-to-market side and the innovation side. Does that answer?

I think we can go behind you to the right. Your right, yes.

Maybe partly following up on this question, right, is about like your go-to-market motion. So like, in one of the previous calls, you talked about like unifying into an account selling motion, right? And so now I'm trying to tie this with what each of you are saying, is it still separated by business segment? How should we think about -- I think like Jeff Ford who you hired from Procore is leading that initiative. How do we think about kind of that consolidation into account selling as well as maybe some indicators of like initial successes and wins? And then maybe a third question tied to sales incentives, right? As you switch these go-to-market motions, you tend to have a movement in the sales team. And so maybe it's too early to say, but kind of like any indications in terms of stability of the sales team?

Let me start with that one. So the playbook, I would call it the same playbook across the company where we have direct selling motions or indirect selling motions for that matter. Like for us to learn how to do channel selling isn't something new for us. We've been doing it for decades. I mean we do well over $1 billion through channels. So that's not a new motion to us as we develop new channels. And by the way, when we develop channels or sales motions, we think about segmenting markets. So we segment the construction software and AECO, that's a selling team. In transportation, we have a selling team with Chris and with Michael. And the same thing with Enron. So they are segmented. It's not one global sales team across all of Trimble. We leave them in the 3 -- it's essentially 3 teams. And then where we have the linkages, then we run the motions in the plays to make sure that we're doing the right things for the customer so that the lane doesn't get in the way of the pool of the opportunity. So you have overlay motion. So we don't let direct/indirect get in the way of one another or find excluding one another in that respect. So that's the linkage common playbook. Essentially think of it -- easiest think of it as 3 different plays in terms of, let's say, you asked about incentives as well, Mark, and then how it's going so far? I think, Mark, why don't you add on that?

Yes. I mean so we consolidated 5 or 6 sales teams together at the beginning of the year into an account-based model. And we had Bill Crawford join us to lead that effort the AECO CRO. So he's responsible for my whole go-to-market team within the segment. And by bringing everybody together and then by bringing in that playbook and the technology, so the people, the process and the technology together, we have a good 360-degree view of the customer that we can now put that account-based model to work. So we understand better now than we ever have, the full breadth of our accounts, the full breadth of the unpenetrated accounts that we're looking at. And then we built it up in a hub-and-spoke model, where we have these account owners that own their list of accounts. And then we have industry specialists that operate around them to come in and back up that team on engineering capabilities, on cost capabilities, on project management. And so we can mix and match that industry team to an account to make sure we're addressing the full breadth of capabilities that, that account specifically would use. And that has been -- it was a painful transition, right? I'd say we did it at the beginning of the year. I think we got an 80% right. We fine-tuned it probably in the middle of the year. We moved quota downstream, we moved quota upstream. We added some quota online to get to about 90%. And then hopefully, we've got it near 100% right going into next year. We had to modify similar to moving that online quota around, we did have to modify the compensation structure. We took a specific segmentation of GAR. We had to move those a little bit, right? So we originally said SMB was $0 million to $5 million. We actually expanded it $0 million to $10 million and then $0 to $25 million because actually, that turned out to be an extremely robust market for us. So we've made those adjustments. But with all the technology and process behind the scenes, it was really easy for us to move around and dial it as we need it throughout the year. So I think we set ourselves up to be pretty strong there and flexible to move within an account-based structure. So we've got time for one more question. Kristen did you have one or Jason? Jason, go ahead.

I'll ask us for the benefit of everybody because analysts are also really get a ring footnotes. So Phil, on the preliminary FY '25 guide, the seasonality that you included that's new. One, is it new? And then two, is it based on visibility you have as of December 10? Or is it just typical seasonality that you expect given the lumpiness you're just helping us out?

Yes, we have normal seasonality in the business, and I know on field system business, obviously, has some seasonality too. We also have some seasonality with the term license renewals. And so there is some normal seasonality in the business. And we're basing 2025 off of what we guided for 2024.

Kristen, did you have one?

So a little bit zooming out, talking about the portfolio on whole. I mean the last 12 months have been absolutely transformed your portfolio. So I guess the first part of that question is what's still to come? Where do you still see inefficiencies in the structure and the number of P&Ls you're running? So what gets us excited about Investor Day of 2026? And then as you've identified some of the personas and started to go to market in a more holistic way, M&A pipeline, where you feel like there might be some opportunities to fill in to more holistically serve the persona?

Yes. The message I'd want to telegraph from here is one more of stability and running the playbook. We don't need another reorganization. We don't need a transformational divestiture or to use the word, we don't need a transformational acquisition to run the strategy. We're going to do it if it makes sense to accelerate the strategy and benefit the strategy and it comes at the right price. So run the Connect and Scale playbook that we laid out at that intersection of product technology and go-to-market. And that's what I'd want you to hear. There is a real focus on the organic growth performance. And then where we have opportunity to overlay, we'll certainly look at that within an ROI lens. What I want you to look forward to in 2026 is hopefully, we'll do this in Las Vegas at our user event where you can actually get on the -- you don't have to listen to just construction equipment, you actually get on it there with the team. So with that, we're at time. Thank you all for making such an investment to be here. We've got another, I think, 45 minutes with the lunch where we can continue more informal conversations, and I think that's it. So thank you.