Trimble’s transportation revenue jumps 35% in Q3

Despite a challenging freight market, Trimble Inc. said its transportation segment performed well during the most recent quarter but could face “adverse” results in the next fiscal period.

The Westminster, Colorado-based company on Wednesday reported its transportation revenue rose 35% year over year (y/y) in the third quarter to $196.6 million.

“While our ARR (annual recurring revenue) has been looking better recently, we do think that the churn we have in our North American mobility business will adversely affect transportation ARR growth in Q4 and going into next year by somewhere around 200 basis points,” Trimble Chief Financial Officer David Barnes said during a call with analysts Wednesday. “Now, we want to emphasize that the rest of the transportation ARR base is doing really well.”

Trimble (NASDAQ: TRMB) is a provider of technology solutions for trucking companies, freight brokerages and 3PLs. In addition to transportation, the company also operates in industries such as buildings and infrastructure, geospatial hardware and software, and resources and utilities.

Trimble posted third-quarter total revenue of $957.3 million, an 8% y/y increase. The company’s third-quarter revenue fell short of Wall Street forecasts, which predicted revenue of $964.4 million.

Third-quarter earnings were 68 cents per share, a y/y increase of 3%. Trimble’s third-quarter earnings beat Wall Street expectations, which had forecast earnings of 59 cents per share.

Trimble’s guidance for full-year 2023 reports revenue between $3.75 billion and $3.79 billion, with adjusted EPS of $2.58 to $2.66.

For the fourth quarter of 2023, Trimble expects revenue between $890 million and $930 million and adjusted EPS of 55 cents to 63 cents.

North America remained Trimble’s largest market by revenue during the third quarter at $518.4 million, a 6% increase compared with the same quarter in 2022. The second-largest market was Europe at $260.7 million, a 19% y/y increase.

Barnes said transportation revenue will likely be slowed during the fourth quarter as the freight industry seeks to recover from shipping lower volumes over the last several quarters.

“Transportation segment revenues will be flat or down modestly as the impact of higher customer churn in our North American mobility business offsets the growth across the rest of our transportation offerings,” Barnes said.

Trimble officials also provided an update on Transporeon, a Germany-based logistics provider the company acquired in December 2022 for about $1.98 billion.

Transporeon uses a cloud-based transportation management system to connect carriers, logistics service providers and shippers.

“Transporeon’s top line trends remained below our expectations when we bought the business, driven almost entirely by a contraction in the overall industry, lower shipment volumes and the depressed spot market,” Barnes said. “This outlook assumes no meaningful improvement for Transporean in its core European transportation market in the fourth quarter.”

Trimble Inc.	Q3/23	Q3/22	Y/Y % Change
Total revenue	$957.3	$884.9	8%
Transportation revenue	$196.6	$145.4	35%
Buildings/infrastructure revenue	$395.1	$363.6	9%
Geospatial revenue	$180.7	$184.2	(2%)
Resources/utilities revenue	$184.9	$191.7	(3.5%)
Adjusted EBITDA	$268.2	$228.1	17.5%
Operating income	$121.3	$122.4	(1%)
Adjusted earnings per share	$0.68	$0.66	3%