Closing Bell - Manifest Space: Trimble’s Trillion Dollar Space Data with Trimble CEO Rob Painter 5/16/25

Episode Date: May 16, 2025

Trimble is one of the biggest software companies in the S&P 500 you’ve never heard of. Getting its start 50 years ago with what would become GPS, the company is now implementing AI to manage over a trillion dollars’ worth of construction, freight & more contract work. Following the Nasdaq’s Space Capital Conference, Trimble CEO Rob Painter joins Morgan Brennan to discuss how his company is harnessing technology from space to drive innovation and productivity on earth.

Trimble is one of the biggest software players you may not have heard of. A $17 billion stock in the S&P 500 that got its start nearly five decades ago with a nascent technology that would become GPS. CEO Rob Painter says Trimble has been transforming ever since, on the forefront of precision agriculture and then the industrial Internet of Things. Yeah, so I think of Trimble as the application layer in the space economy. We're not the infrastructure company sending the signals from space. We're turning those signals into actionable intelligence here in the real world,

in the physical world, in industries such as construction and transportation and agriculture. The company sells software and hardware and has snapped up 150 acquisitions along the way. Now, it's leveraging artificial intelligence. So through the use of AI indexed against the base we have of customers and users at Trimble today, we manage over a trillion dollars of construction through our systems. We have tens of billions of freight

that move through Trimble today. We have millions of users and customers of our software, and hundreds of thousands of instruments and machines in the world operate on Trimble. So in an AI context, with this unique corpus of data that we have access to at Trimble, we think we're going to be able to create differential outcomes for our customers. On this episode, CEO Rob Painter on how Trimble is harnessing technology from space to drive innovation on Earth. I'm Morgan Brennan and this is Manifest Space. Joining me now, Rob Painter, the CEO of Trimble.

We're here at the NASAC. We were just upstairs at the Space Capitol Conference where you and I had a conversation. So I just want to sort of re-traverse some of that ground with you. And maybe the first place to start is specifically where Trimble plays when we talk about the space economy and the intersection of that with innovation on Earth. Yeah, so I think of Trimble as the application layer in the space economy. We're not the infrastructure company sending the signals from space. We're turning those signals into actionable intelligence here in the real world, in the physical world, in industries such as construction and transportation and agriculture.

Those end markets, what's growing? What's growing the fastest? So the engineering construction space for Trimble is the fastest growing market we have today. It's the largest addressable market that we serve. It's an industry that suffers from projects being over budget and from being late and the application of technology is fundamentally digitizing and there's a secular, fundamentally digitizing the industry and there's a

secular adoption of the technology taking place both in the hardware and software of Trimble that is transforming the work of construction. And so what you enable is data, mapping, surveying, basically getting the tools into workers' hands, hearkening back to GPS and other types of space infrastructure and the data that we're getting from space. Yes, so if you think about the life cycle of construction, you move from plan to a design to the build to the operational phase. It's a fragmented landscape of architects, engineers, surveyors, contractors, and owners who come together to make our projects, whether it's linear infrastructure or the buildings like we're in today. And in this world, a

surveyor starts by creating a digital model of the physical earth and then that data turns into a construction workflow. It could be the design of that road or the design of that building. We make those designs constructable, and then we bring those highly accurate models that we make with the software of Trimble back out into the world world, into that built environment. And we help our customers manage their projects, manage the back office systems and turn those designs and those ideas into reality.

And now you lay AI over that. What does that enable? So the AI, what it's going to do for us and our customers, for us it's going to bring more productivity, more quality. It's ability for us to innovate at a faster scale. For the customers, think actionable intelligence, think outcomes that they're trying to achieve. Our customers are looking to do their work better,

faster, safer, cheaper, and greener. So through the use of AI, indexed against the base we have of customers and users of Trimble today, we manage over a trillion dollars of construction through our systems. We have tens of billions of freight that move through Trimble today. We have millions of users, customers of our software, and hundreds

of thousands of instruments and machines in the world operate on Trimble. So in an AI context, with this unique corpus of data that we have access to at Trimble, we think we're going to be able to create differential outcomes for our customers. You recently reported earnings. You maintained your guidance for 2025. What gives you the confidence to do that? We exited 2024 with a great deal of momentum. And as we came into the first quarter, I really thought about three things.

I think about clarity in the business, momentum that we have as well that we're carrying forward from 2024. And I think about the performance of the business. So with the clarity, we have a simplified and focused portfolio today. When I look at the transformation we've had in the company today, we're three quarter software company. Our revenue is two thirds ARR, recurring revenue today.

Over the last five years, we've had a 1200 basis point improvement in the gross margins, so a today. Over the last five years we've had a 1,200 basis point improvement in the gross margin, so a structural transformation of the business. It's translated into over 500 basis points increase in the EBITDA in the company. We finished the first quarter with 17% growth in our ARR with double-digit growth and the total revenue of the company. So I see that momentum playing through in the business here in the first quarter. And that gave us confidence to hold the guide, which really was a bit of a de-risk of the look forward because we have such a degree of visibility into our business that we've

never had before. How are you navigating what I will call rapidly evolving trade policy? Yeah, so there's opportunity and uncertainty. Uncertainty, certainly in the form of understanding, okay, where's the policy going to land? This morning, we learned about some of the policies changing in a good way. So that's a good thing for us, but hey,

there is some uncertainty, and so that can cause some pause in some of the buying cycles from customers. At the same time, there's a great deal of opportunities. So we look in markets such as Germany that are talking about a half a trillion euro spent on infrastructure, which is new for a market like that to be talking about. We look here in the US. Data centers continue to be very strong in market for us. If we're going to have reshoring and manufacturing in the United States,

that's a positive catalyst for us. We still have the infrastructure bill, the bipartisan infrastructure law, that's a positive for construction. And then I go back to the fundamentals of this market being large global underserved and under penetrating and it's fundamentally digitizing in a manner that creates a lot of opportunities for our business and for our customers. So given that fact, I mean you have a very unique vantage point, not only on the US economy and certain industries as you operate with them and work with them in the US economy, but globally as well.

So we talk about slowing economic growth. Is that what you're seeing or do you see a situation where, especially depending on how policies interact with markets and industry right now, this could end up being stronger and better than ever? Yeah, so we work in about 175 countries today, so I probably have 175 different answers to a question like that, depending where in the world that we're talking about. You know, what we've seen, I go back to this uncertainty and opportunity. You know, when we're growing our end markets and construction and the mid teens The construction market is not growing in the mid teens. These are markets that are having a secular adoption of the technology

We sell productivity and sustainability We make companies more competitive We can bring more confidence to the work that they do and that's something that sells across any cycle. In fact, if you're going to have a tougher economic environment, you need to be more productive. You need to be more efficient and that's the business that we're in a selling that ROI to our customers. So we believe we can transcend any economic environment and we're certainly seeing that at the moment. At the same time, when you do have challenges in economies,

often you may have a government stimulus. We see that in the form of infrastructure at times. If we have that happening around the world, that's a good thing for Trimble. If money is being put to work in our built environment, we can make that work be done better. I wanna go back to the space infrastructure piece of this because you're not a satellite operator,

but you do get data and you do work with satellite operators and engage with the GPS constellation, et cetera. We talk a lot about geopolitical risk and sort of what that landscape looks like right now. There is money going towards securing what I would call space infrastructure. We talk a lot about geopolitical risk and sort of what that landscape looks like right now. There is money going towards securing what I would call space infrastructure. How do you think about that and what does that mean in terms of navigating some of these world dynamics?

Yes, so think about spoofing and jamming are two threats to our satellites. The GPS signal is a whisper. It's a very light signal. And so it's one that's susceptible to these threats of spoofing and jamming. So we continue to increase our own capabilities to have better receivers, to have the IP that we have underlying that to be able to read through the signals. I mean, today we can correct for errors in the ionosphere and the troposphere to bring position down to a level of centimeter accuracy to correct for errors that are happening from the solar cycle that we're in right now.

We think about redundancy in the form of what low earth orbiting satellites can bring. So additional signals that can bring additional geometry, that can bring redundancy to the system. That's an exciting place. And then there's the overlay of technology with the GPS or the GNSS signals. So think about inertials, think about laser optical systems, and AI has a role in here as well as we're looking for patterns from the signals. Looking for when something doesn't make sense with where a satellite might be, you know, we're able to detect that more and more in real time and adjust for those errors.

What are the technologies or innovations that you're most excited about you see on the rise and you're adopting? Well, I'm certainly thinking a lot about data and AI these days. To me, this is a progression of the technology wave. You know, the early days of Tremble, we moved from single frequency receivers to dual frequency receivers. We were able to get to a highly accurate position by the, call it in the early 90s. Then came the wave of personal computing and communication. So you started to have bidirectional flow of that data.

Now we get into more connected world, a more data-driven world, an AI-forward world. To me, this is all building upon itself, these various technologies, and each of these begets a new opportunity. And so, in this world of data and AI-forward posture that we see out there, we see exciting opportunities to connect the data, to connect to the stakeholders, to connect our customers

across these industry lifecycle continuums that we're serving, and move from optimizing tasks, individual tasks, to optimizing systems. That we see as the end game, to really bring fundamental change to these markets that we serve, is you have to connect all the data and all the participants across

this life cycle that we serve in order to drive this higher level productivity. And I think it's really fascinating to get insights like that from you because Trimble's been around for almost five decades. It's been through every phase of this. And IoT, precision agriculture, you were on the forefront. I mean, I could just go down the list and that's just in the last handful of decades. You've acquired 150 companies, are you still acquisitive? And I guess how are you thinking about that portfolio as this next stage of technological evolution unfolds?

Yeah, so I mean, we see a lot of opportunity in the world. We see the idea we have to connect construction or to connect supply chains. That's a big idea. We see the idea we have to connect construction or to connect supply chains. That's a big idea. We think about gaps that we have in the product portfolio. We think about geographies that we serve and we think about how we can better meet the need of our customers at any given point in time. And so then we work backwards from that and we'll think about organic growth opportunities. We invest about $600 million a year back into our own research and development. So we first start with that.

As capital allocators, I believe that I'm paid to be a capital allocator on behalf of the shareholders. So we think about what's the best and highest use of that capital. Where can we drive profitable growth for ourselves and for the shareholders of Trimble? So when we look at that spectrum of acquisitions out there in the world, there's a category

of what we would call tuck-in acquisitions. And we have a very powerful product platforms that we can take to market today. Those are the ones that we favor the most, are these tuck-in acquisitions, because we can bring in the product capability as a feature into a solution or a suite of solutions that we're selling and run it through the

go-to-market motions we have on a global basis. Every few years we've done more of the transformative type of acquisitions at the company. Those are a little harder at the moment given the cost of debt that's out there, but you know we always want to be in that an arena and participating and listening and engaging with the partners, the competitors, and the customers, really trying to discern where's the direction of travel going in the market so that we're there to lead. Who do you see as your competitors? What's your main competition?

So we compete against companies that do parts of the hardware of Trimble and we compete against companies who do software. I tend to think of us all as more peers in the industry because actually all of us, almost all of us, have been growing in the industry. I think that speaks to the secular adoption of the technology. So like many markets or like many technology markets, often your competitors are also your partners. So, we have an open posture and we want to be interoperable with the ecosystem that is out there.

Some of the competitors are global, some of them are regional. So it really just depends on which part of the portfolio we're talking about and where in the world we're talking about. Rob Painter, CEO of Trimble, thank you so much for joining me. Morgan, thank you. That does it for this episode of Manifest Space. Make sure you never miss a launch by following us wherever you get your podcasts and by watching our coverage on Closing Bell Overtime. I'm Morgan Brennan.