Trimble Inc. (NASDAQ:TRMB) Q2 2024 Earnings Conference Call August 6, 2024 8:00 AM ET
Company Participants
Rob Painter - President & CEO
Phil Sawarynski - CFO
Conference Call Participants
Kristen Owen - Oppenheimer
Zane Meehan - KeyBanc Capital Markets
Jerry Revich - Goldman Sachs
Jonathan Hull - William Blair
Rob Mason - Robert W. Baird
Tami Zakaria - J.P. Morgan
Arsenije Matovic - Wolfe Research
Operator
Thank you for standing by, and welcome to the Trimble Second Quarter 2024 financial results conference call. [Operator Instructions] I would now like to turn the conference over to Rob Painter, Trimble President and CEO. Please go ahead.
Rob Painter
Welcome, everyone. Before I get started, our presentation is available on our website, and we ask that you refer to the safe harbor at the back. Our financial commentary will reflect non-GAAP performance metrics, including organic growth comparisons, which refer to the corresponding period of last year, unless otherwise noted. In addition, our P&L commentary will emphasize comparables on an as-adjusted basis, which excludes our agriculture business. Let's start on Slide 4.
During the second quarter, we continued to advance our connect and scale strategy, which involves digitally connecting the workflows within targeted industry segments and creating scale across Trimble through shared technology platforms. Our strategy delivers outcomes in the form of unique value to our customers and sustainable value creation to our shareholders. We want to convey three key messages today; the strategy is working, the numbers reflect the execution, and the execution reflects our simplified and focused organization.
Slides 5 and 6 detail some highlight metrics. $2.11 billion of ARR grew 14%. Revenue grew 1%. Gross margins were a record 66.5%. EBITDA margin expanded 40 basis points to 24.6%, and free cash flow was strong. Revenue in the quarter was 75% software services recurring, and 60% overall recurring revenue, both records for Trimble, reflecting our portfolio transformation and continued organic mix shift driven by ARR growth. Based on the solid first half year performance, we are raising our guidance for the year.
Before we turn to the performance of the segments, let me provide an update on the status of our financial audit. By way of reminder, the need for EY’s re-audit over 2023 financials stems from concerns about the comprehensiveness and documentation of a number of our internal controls, especially around our IT systems. These concerns arose as EY prepared for a PCAOB inspection of their audit of Trimble. In April, EY began additional audit procedures relating to our 2023 financial statements using a more detailed substantive approach. We are working collaboratively with EY, and provided them with the substantial majority of the information they need. EY’s work is nearing completion and we expect it to wrap up within the next month or so. To date, the audit has not identified any issues which would result in a change of our financial statements. When EY’s work is complete, we will reissue our annual report for 2023 and file Forms 10-Q for the first and second quarter of 2024. Based on the work to date, we anticipate that the financial results will be the same as what we have previously reported.