In This Article:
We came across a bullish thesis on Trimble Inc. (TRMB) on Substack by Hidden Market Gems. In this article, we will summarize the bulls’ thesis on TRMB. Trimble Inc. (TRMB)'s share was trading at $66.49 as of March 11th. TRMB’s trailing and forward P/E were 10.92 and 23.04 respectively according to Yahoo Finance.
A computer engineer in front of his screen monitoring a 3D model of a building, representing the company's open modeling and open simulation applications.
Trimble Inc. (TRMB) is a global leader in positioning, mapping, and data analytics, providing hardware, software, and services that integrate the physical and digital worlds. Operating across geospatial, construction, agriculture, and transportation industries, the company has strategically transitioned toward a software-driven business model. In 2023, Trimble reported revenue of $3.80 billion, a 3% increase year-over-year, with a notable shift toward software and recurring revenue, which now comprises 69% of total sales. This transformation is evident in its annualized recurring revenue (ARR) reaching $1.98 billion, a 24% increase, reinforcing the company’s pivot from hardware to high-margin, subscription-based solutions.
Trimble’s four core segments contribute significantly to its financial strength. Buildings & Infrastructure remains the largest, while Transportation has seen accelerated growth following acquisitions, including Transporeon. Resources & Utilities, particularly in precision agriculture, and Geospatial, which provides mapping and surveying solutions, round out the portfolio. The company’s gross margins have expanded due to this revenue mix shift, reaching a GAAP gross margin of 61.4% and a non-GAAP margin of 64.7% in 2023. Adjusted EBITDA was approximately $1.0 billion, representing a 26.6% margin, up from 25.0% in 2022, with management targeting further expansion toward 30%, aligning with software-focused peers.
Despite higher interest and amortization costs from acquisitions, Trimble remains financially sound. While GAAP net income declined to $311 million (an 8.2% net margin) in 2023, its non-GAAP net income stood at $663.7 million, reflecting a robust 17% adjusted net margin. The company’s aggressive investment in research and development underscores its long-term vision. R&D expenses surged 22% to $664 million in 2023, representing 17.5% of revenue, highlighting Trimble’s commitment to innovation in connected construction workflows, precision agriculture, and geospatial analytics.
Trimble operates in high-growth industries with strong tailwinds. The global construction market is projected to expand from $10.4 trillion in 2023 to $16.1 trillion by 2030, while precision agriculture is expected to grow at a 12.8% CAGR, reaching $15.8 billion by 2028. Similarly, the transportation and logistics sector, driven by demand for fleet management and supply chain visibility, is set to grow to $14.1 trillion by 2028. The geospatial industry is also experiencing rapid digital transformation, with projections nearing $1.06 trillion by 2028. Given these macroeconomic trends, Trimble is well-positioned for sustained growth, making it an attractive long-term investment with significant upside potential.