Teleconferência de Resultados do 2º Trimestre Fiscal de 2026 da Trimble (TRMB): Guidance Elevado, Revisão de T&L Anunciada

A Trimble (NASDAQ: TRMB) relatou um forte crescimento no segundo trimestre fiscal de 2026, elevou suas projeções de receita e lucro para o ano todo e autorizou um novo programa de recompra de ações de US$ 1 bilhão. A administração também anunciou uma revisão estratégica do negócio de Transporte e Logística após o interesse recebido de diversas partes.

Destaques

• A receita atingiu US$ 972 milhões, representando um crescimento orgânico de 10% e superando o teto das projeções da Trimble. O lucro por ação reportado foi de US$ 0,86.
• A receita recorrente anualizada (ARR) subiu 12%, atingindo o recorde de US$ 2,509 bilhões, impulsionada pelo crescimento de 14% no segmento AECO e de 12% no Field Systems.
• A margem bruta se expandiu em 120 pontos-base, para 71,8%, enquanto a margem EBITDA avançou 120 pontos-base, para 28,6%.
• A administração elevou o ponto médio da projeção de receita para o ano fiscal de 2026 em US$ 50 milhões, para US$ 3,925 bilhões, e aumentou o ponto médio do LPA em US$ 0,10, para US$ 3,65.
• A Trimble agora espera uma margem EBITDA de aproximadamente 30% no ano completo, atingindo sua meta do Dia do Investidor de 2027 com um ano de antecedência.
• O conselho de administração revisará o interesse de terceiros na divisão de Transporte e Logística. A administração enfatizou que não há um resultado nem um cronograma predeterminados.

Principais Dados Financeiros

Desempenho Operacional e dos Negócios

AECO

A receita do segmento AECO cresceu 9%, para US$ 389 milhões. A ARR subiu 14%, atingindo o recorde de US$ 1,577 bilhão, sustentada por vendas cruzadas e vendas adicionais. A margem operacional do segmento foi de 30,6%, e a administração afirmou que continua no caminho certo para atingir aproximadamente 35% no acumulado do ano.

A Document Crunch, aquisição da Trimble voltada para inteligência de risco contratual baseada em IA, foi descrita como tendo superado as expectativas. A administração citou um forte interesse tanto de clientes quanto da organização de vendas da Trimble.

A Trimble também expandiu as funcionalidades práticas de IA nos fluxos de trabalho de construção. Suas ferramentas de levantamento quantitativo para MEP com recursos de IA geraram economias iniciais de tempo de até 60% em relação aos levantamentos manuais dos clientes, segundo a empresa.

Field Systems

A receita do Field Systems subiu 12%, para US$ 442 milhões, enquanto a ARR aumentou 12%, para US$ 399 milhões. A demanda foi abrangente, com força particular em data centers, serviços públicos, infraestrutura de energia e construção civil.

O crescimento da receita incluiu um impacto negativo de aproximadamente 300 pontos-base decorrente do reembolso de tarifas. A Trimble afirmou que a compensação correspondente no custo dos produtos vendidos resultou em nenhum impacto no lucro operacional, e a administração não espera um efeito material nos próximos trimestres.

A empresa está substituindo um produto de processamento de dados de campo em marca branca (white-label) de baixa margem por uma solução desenvolvida internamente. Espera-se que a mudança reduza o crescimento da ARR do Field Systems em cerca de 400 a 500 pontos-base nos próximos trimestres, o equivalente a aproximadamente US$ 16 milhões a US$ 20 milhões de ARR em 2026. A administração prevê que a substituição proprietária se integrará de forma mais estreita ao portfólio mais amplo de produtos da Trimble e sustentará margens mais elevadas ao longo do tempo.

Transporte e Logística

A receita de Transporte e Logística aumentou 5%, para US$ 141 milhões. A ARR subiu 7%, para US$ 533 milhões, e a margem operacional se expandiu em 240 pontos-base, para 24%.

A administração observou sinais iniciais de melhora no mercado de frete, incluindo tarifas spot e taxas de rejeição de ofertas mais altas. A Transporeon cresceu na faixa de 15% e registrou um bom volume de reservas trimestrais.

A Trimble lançou o ARC Agent, um agente de IA corporativo com controles de proteção e de intervenção humana (human-in-the-loop). A rede de transporte subjacente atinge mais de 1 milhão de caminhões e 1.500 embarcadores e varejistas.

Após o recente interesse recebido de diversas partes, a Trimble e o Goldman Sachs conduzirão uma revisão estratégica do negócio de Transporte e Logística. A empresa declarou que avaliará potenciais alternativas sob a perspectiva de valor para o acionista, enquanto continua a executar a estratégia existente do segmento.

Trimble Connect e Adoção de IA

O Trimble Connect permaneceu central para a estratégia Connect & Scale da empresa. Mais de 3,7 milhões de usuários ativos mensais confiam nas soluções de construção da Trimble em modelagem, gestão de projetos, controle de máquinas e captura da realidade.

Durante o trimestre, o Trimble Connect adicionou mais de 1 milhão de projetos, processou quase 30 bilhões de chamadas de API e conectou 60.000 dispositivos IoT ativos. A ingestão de dados de captura da realidade aumentou 68% em relação ao mesmo período do ano anterior, e a plataforma está adicionando mais de um petabyte de dados de construção do mundo real a cada trimestre.

A administração afirmou que sua prioridade de curto prazo para IA é a adoção e o engajamento no fluxo de trabalho. A monetização já está ocorrendo por meio de produtos independentes e modelos híbridos de licença e consumo. O empacotamento futuro poderá incluir assinaturas em níveis e uma tarifação mais ampla baseada no uso à medida que a adoção pelos clientes aumente.

Projeções da Administração

A administração atribuiu a menor perspectiva de conversão de fluxo de caixa livre no ano a custos adicionais de reestruturação e outros custos não recorrentes. A empresa continua esperando que o fluxo de caixa livre supere o lucro líquido não GAAP no longo prazo.

A empresa prevê que o crescimento da ARR para o ano completo fique na parte inferior a média da sua faixa anterior, devido à transição de produtos no Field Systems. Excluindo essa mudança pontual, a administração disse que teria reiterado a faixa de ARR projetada anteriormente para a empresa.

Riscos e Pontos de Atenção

• O encerramento do produto marca branca do Field Systems criará um impacto negativo temporário na ARR antes que a solução substituta desenvolvida internamente ganhe escala em 2027.
• O segmento de Transporte e Logística continua a operar em um ambiente de frete pressionado, apesar dos primeiros sinais de melhora nas condições de oferta e demanda.
• A conversão do fluxo de caixa livre para o ano completo foi reduzida devido a custos de reestruturação e outros custos não recorrentes.
• A revisão estratégica de Transporte e Logística não tem resultado nem cronograma predeterminados.
• A monetização de IA continua sendo um processo de aprendizado contínuo, com expectativa de evolução na precificação e no empacotamento com base na adoção, no engajamento e no valor medido para o cliente.

Destaques da Sessão de Perguntas e Respostas com Analistas

A administração afirmou que data centers, infraestrutura de energia, reshoring e onshoring continuam sendo importantes fatores de demanda, com a América do Norte liderando em escala e força. A região Ásia-Pacífico também entregou um trimestre sólido.

Sobre a alocação de capital, a Trimble continua priorizando investimentos orgânicos, retorno aos acionistas e aquisições seletivas. A administração disse que a IA permite à empresa desenvolver internamente mais recursos que antes poderiam ter sido adquiridos, enquanto as avaliações no mercado privado não caíram fundamentalmente.

Em relação ao conector do Claude para o SketchUp, a Trimble registrou mais de 25.000 usuários únicos. A administração disse que ainda é cedo para conclusões definitivas, mas destacou que o conector está apoiando o aprendizado sobre o produto, a análise de adoção e os esforços de conversão de clientes, enquanto protege a propriedade intelectual da Trimble.

A Trimble afirmou que mais de US$ 150 milhões da receita da Transporeon já utilizam um modelo baseado em transações. O SketchUp também lançou um modelo híbrido de licença e uso de IA no quarto trimestre do ano anterior. Os principais indicadores operacionais de IA incluem adoção, uso ativo diário e semanal, retenção bruta e retenção líquida.

A administração espera que o segmento de software cresça mais rápido do que o de hardware no longo prazo, sustentando a contínua expansão da margem bruta no nível da empresa por meio de um mix de receita mais favorável.

Transcrição Completa da Teleconferência de Resultados

Transcrição completa da teleconferência de resultados

Comentários da administração

Operator

Hello, everyone. Thank you for joining us, and welcome to the Trimble Second Quarter 2026 Financial Results Call. [Operator Instructions]

I will now hand the conference over to Rob Painter, President and Chief Executive Officer. Please go ahead.

Robert Painter

Welcome, everyone, and thanks for joining us today. Before I get started, our presentation and safe harbor statements are available on our website. Our financial review will focus on year-over-year non-GAAP performance metrics on an organic basis.

Let's start on Slide 5 with our 3 key messages for our second quarter call. First, performance. Driven by organic execution, the Trimble team delivered a top and bottom line beat. We are raising our full year guidance and reinforcing our capital allocation strategy with a new $1 billion share repurchase authorization. Second, momentum. Our Connect & Scale strategy is accelerating as connected data and workflows compound value across our Trimble-led ecosystem. Third, transformation. Our AI transformation is hitting its stride. Building on a connected data foundation, we are deploying agentic workflows that unlock step function productivity for our customers while driving structural efficiencies inside our own walls.

Turning to Slide 6. The second quarter performance was exceptional. Organic revenue growth of 10% and EBITDA margins of 28.6%, both beat the midpoint of our guidance range. Total organic ARR grew 12% with AECO up 14%, Field Systems up 12% and Transportation up 7%. This strong execution, combined with our outlook for the second half of the year, gives us the confidence to raise the midpoint of our full year guidance for revenue by $50 million and for earnings per share by $0.10, representing 17% year-over-year earnings growth. My sincere thanks go out to the Trimble team and our global partners for their dedication and customer focus.

Turning to Slide 7. I'm going to take some focused time today to talk about our engineering and construction business and how AI accelerates our Connect & Scale strategy, thereby reinforcing our right to win for decades to come. Trimble sits at the very center of engineering and construction workflows. Our customers deploy our software and hardware solutions in one connected ecosystem where our unique advantage lies in closing the loop between the physical and digital worlds. Our investors see this value through our AECO and Field Systems segments. Let's review both segments before tying the full picture together.

In AECO, revenue was $389 million, up 9% and ARR reached a record $1.577 billion, up 14%. Cross-sell and upsell motions continue to drive outperformance. Our recent acquisition of Document Crunch, which delivers AI-based contract risk intelligence, is outperforming expectations and has significant momentum. We also accelerated practical AI releases for our customers across many of our products. For example, targeting small subcontractors, we launched a new AI-enhanced construction job costing and financial management solution.

In MEP estimating, we extended AI takeoff capabilities to automate the tedious manual task of measuring a project's blueprints, models or digital plans to generate a complete itemized list of all the materials needed for construction. Early customer data shows time savings of up to 60% on manual takeoffs, allowing contractors to expand bid volume and accuracy without adding head count. In addition, AI is reshaping our software product development life cycle, and we are leaning in aggressively to embrace this change at scale within AECO and across the entire company.

In Field Systems, revenue was $442 million, up 12% and ARR reached $399 million, up 12%, marking a terrific and record-setting quarter. Global end markets demonstrate broad strength, notably in data centers, utilities and energy infrastructure. Our Civil Construction team continues to drive mixed fleet technology adoption and market expansion through our bundled subscription offerings.

In Geospatial, our latest software releases incorporate AI feature extraction, turning massive unstructured field data sets into actionable intelligence. Across both AECO and Field Systems, we are building specialized agents on our agentic platform to unlock customer productivity. These agents execute work, validating specifications, detecting exceptions, matching transactions and triggering downstream actions across customer workflows.

We are disciplined in our approach, building, learning and putting in place the underlying capabilities to scale and monetize, which we expect to happen through a combination of subscriptions and usage-based consumption. Our near-term focus is driving adoption and deepening engagement across an expanded workflow surface area. We leverage telemetry to measure real-world value creation. And as usage scales, we will adapt our pricing and packaging to match the value we unlock.

In addition, several marquee customers are now actively pulling in Trimble domain experts to help them connect disparate data and rearchitect core processes around our AI-enabled solutions. Trimble Connect sits at the core of this strategy. It serves as the connective tissue between the office and the field and between the physical and digital worlds. Today, more than 3.7 million monthly active users rely on Trimble construction solutions across modeling, project management, machine control and reality capture with Trimble Connect at the center.

Trimble Connect is far more than a common data environment. It is the collaboration platform that enables the world's leading construction firms to orchestrate complex projects on a model and digital-first paradigm, not 2D drawings. This level of sophistication requires a solution that brings together models and reality, providing a continuous up-to-date digital representation of the construction site.

In the second quarter alone, Trimble Connect added over 1 million projects, handled nearly 30 billion API calls and connected 60,000 active IoT devices. Our reality capture platform service grew ingested data volume by 68% year-over-year. We are now adding over a petabyte of real-world construction data to Trimble Connect every quarter. However, data volume alone is not the end goal. It's merely an indicator of how critical data from the field has become that, when made available in Trimble Connect, enables the entire project team to understand progress. The data volume managed by Trimble Connect becomes the foundation for an agentic experience designed for demanding construction environments that must manage risk along with speed, quality and outcomes.

To see how Connect & Scale compounds value in the real world, let's look at 4 concrete customer examples, starting with the data center opportunity on Slide 8. Mission-critical data center construction demands millimeter accuracy, tight coordination and delivery of reliable as-builts. Trimble connects concept to construction workflows by linking models from the office to field layout and by incorporating our scanning and augmented reality solutions. In this market, there is no tolerance for rework that can delay the opening of a data center. Construction teams leverage our technology to derisk every pour, rack install and wall penetration long before rework threatens schedules.

Turning to Slide 9. Scaffold Studio in Australia runs an end-to-end digital design to delivery workflow using Trimble 3D laser scanners in the field, Trimble SketchUp for design, Trimble Tekla for steel detailing and Trimble Connect for project coordination and model sharing. 3D laser scanning generates massive unstructured data sets. Our AI now extracts the exact structural data needed in minutes rather than hours. Adopting the full Trimble workflow enables them to finish jobs weeks ahead of schedule while driving profit-enhancing labor productivity.

Turning to Slide 10. R.F. Meeh is a mechanical, electrical and plumbing contractor based out of Missouri. On a recent hospital project where an HVAC inspection failure posed severe contamination risks, R.F. Meeh built a constructible 3D model with Trimble. They deployed our AI tools to parse complex specification books and validate the model in minutes instead of hours. The fabrication shop then leveraged the model to automate the fabrication, while back-office systems synced live data for job costing.

In the field, augmented reality verified installed components against the model in real time, automatically triggering invoice approvals. All of these design to fabrication and field verification workflows were enabled by Trimble Connect.

Turning to Slide 11. Chandler Construction Services is an underground utility contractor in South Carolina. Working on complex water and sewer projects, Chandler previously logged field labor, equipment time and material receipts on paper. This was a slow process and prone to error. Today, field crews log data live on mobile tablets synced directly into their financial system.

On the back end, AI reads incoming vendor invoices, flags discrepancies and executes a 3-way match against purchase orders and field receiving logs in seconds. All of this data runs through Trimble Connect, powering field to financial workflows. These outcomes reflect decades of targeted domain investment. We were an early mover in practical AI and commercial momentum confirms we are on the right trajectory. We are investing aggressively to capture the steep slope of the S-curve. This is still early, but the pace is accelerating, and that excites all of us at Trimble.

Moving to Transportation & Logistics. Revenue was $141 million, up 5% and ARR reached $533 million, up 7%, both in line with expectations. After 4 years of freight recession, we are seeing initial green shoots in the market. Spot rates and tender rejection rates are trending upward, signaling that supply and demand are rebalancing. Transporeon grew in the mid-teens and healthy quarterly bookings reinforces our midterm growth expectations.

On innovation, the T&L team is pioneering some of our most advanced AI capabilities. We launched ARC Agent, which consolidates fragmented tasks into a single high-performance AI agent backed by an expanding skills catalog. But with safety and reliability by design, it incorporates enterprise-grade guardrails and human-in-the-loop controls to ensure automated decisions are fully explainable, auditable and supportable. Deployed across a global network touching over 1 million trucks and 1,500 shippers and retailers, ARC Agent replaces multi-agent friction with enterprise-grade automated execution.

Furthermore, our AI-native autonomous procurement solution secured key wins in North America, demonstrating the international expansion power of the Transporeon platform. These innovation wins and commercial proof points demonstrate a business operating from a position of strength, highlighting the core strategic value of the platform we have built across transportation.

With that backdrop, I want to turn to our portfolio. We recently received credible inbound interest in our Transportation & Logistics business from multiple parties. This is not surprising. T&L is a high-quality strategic asset with a compelling growth trajectory and a bright future. We are always reviewing our strategy and our portfolio to maximize value. In response to this interest, our Board and management team, together with our long-time financial adviser, Goldman Sachs, will undertake a strategic review to evaluate third-party interest while remaining fully focused on executing our strategy within the Trimble platform. Phil, over to you.

Phillip Sawarynski

Thanks, Rob. Let me start with reviewing our second quarter numbers on Slide 13. We posted revenue of $972 million and 10% organic growth, which were above the high end of our guidance. This performance was driven by the strength of AECO and Field Systems, while Transportation & Logistics continues to deliver positive growth in a constrained freight market.

ARR was in line with our outlook at 12% to a record $2.509 billion. The continued growth in our recurring revenue base provides a predictable and resilient foundation for our business. Gross margins expanded 120 basis points to 71.8% and we achieved EBITDA margins of 28.6%, which is a 120 basis point expansion compared to the prior year. Reported earnings per share was $0.86 for the quarter, $0.06 better than the midpoint and above the high end of our guidance.

Moving to the balance sheet and cash flow items on Slide 14, our reported free cash flow remains strong at $502 million through the first 2 quarters. Our balance sheet provides financial flexibility with $214 million of cash and a leverage ratio of 1.1x, which is well below our long-term target ratio of 2.5x. We announced a new $1 billion share repurchase authorization and continue to expect to deliver at least 1/3 of our free cash flow back to shareholders along with being opportunistic with our buybacks as demonstrated by our almost $1.2 billion of repurchases since the beginning of 2025.

Next is our segment review on Slide 15. AECO delivered another strong quarter, performing in line with expectations. It achieved a record $1.577 billion of ARR, posting 14% ARR growth and 9% revenue growth for the quarter. Operating margin was 30.6% and on track to deliver approximately 35% operating margin for the year.

Field Systems revenue was up 12% in the quarter despite a headwind of approximately 300 basis points due to tariff refunds, which we do not expect to materially impact future quarters. Note that there is a corresponding offset in cost of goods sold for the tariff refunds, which results in no impact to operating income. Transportation & Logistics continues to perform with 7% ARR growth, 5% revenue growth and 240 basis point operating margin expansion to 24%.

Turning to Slide 17, let's review our updated outlook for the year. With the strong first half performance and momentum, we are raising the midpoint of our 2026 full year revenue guidance by $50 million to $3.925 billion, which represents approximately 9% growth. We are also increasing the midpoint of our EPS guidance by $0.10 to $3.65, which represents approximately 17% growth. We expect ARR growth toward the low to mid end of our range due to Field Systems that I will talk about in the segment slide.

We now expect EBITDA margins at approximately 30%, which is the high end of our previous guidance. We targeted 30% margins for 2027 Investor Day, so we now expect this to be achieved 1 year early. We expect free cash flow to be approximately 0.9x non-GAAP net income, down from approximately 1x we guided last quarter due to incremental restructuring and other onetime costs. We expect free cash flow will be greater than non-GAAP net income over the long term.

Slide 18 breaks down the full year metrics by segment. The trajectory for AECO and T&L are consistent with our prior guidance. We are adjusting the Field Systems ARR guidance to high single digits to low double-digit growth due to our decision to replace a white label product with an internally developed solution. This creates an approximately 400 to 500 basis point headwind to Field Systems ARR and to a lesser degree, the company for several quarters. This was a low-margin product, so the change will positively impact profitability over the medium to long term. We continue to see strong underlying momentum in Field Systems and remain confident in our Investor Day targets through 2027.

Finally, regarding our third quarter outlook on Slide 19. We're setting the midpoints of our guidance at $965 million for revenue, which is approximately 7% growth, earnings per share at $0.85, and ARR growth at 12%. We expect EBITDA margins at 28.6%. Back to you, Rob.

Robert Painter

Thanks, Phil. Overall, I am pleased with our second quarter execution and energized by the compounding momentum of our workflow ecosystem and AI efforts, all of which are built on a foundation of decades of proprietary data.

On September 22 and 23, we'll be hosting our European Transportation User Conference in Brussels. On September 27 through 29, we'll be hosting our North American Transportation User Conference in San Diego. And on November 9 through 11, we'll be hosting our Trimble Dimensions Engineering and Construction User Conference in Las Vegas.

Thank you to our Trimble team, our global partners and our shareholders for your ongoing support. Operator, let's open the line to questions.

Operator

[Operator Instructions] Your first question comes from the line of Jason Celino with KeyBanc.

Perguntas e respostas

Jason Celino

I think I heard you kind of explain why the Field Systems ARR was coming down a little bit. Maybe can you -- maybe just retouch on that a little? And then specifically, when we look at your ARR performance as a whole, excluding Field Systems, how do you think that performed in the quarter?

Robert Painter

Jason, it's Rob. I'll start with this. We made the move from a position of strength within Field Systems. So it's a onetime decision, discrete decision to move from a white label provider to a proprietary version that comes online soon. That existing revenue is low-margin revenue. And with the new revenue, that's going to be higher-margin revenue. And importantly, that technology will natively integrate into our larger solution suite.

And given that position of strength we have in Field Systems, and you see that in that revenue growth for the quarter. For us, this was actually a relatively straightforward decision to make to accelerate.

You asked about ARR at the overall company level and at the segments. I feel really good about that. AECO, up 14%. ARR performing at $1.577 billion. So that 14% to get to that is an impressive amount of net new ARR. And within the Transportation & Logistics business, we were on point there with the 7% growth in the ARR. So I'd say all according to plan and from that position of strength, made that decision in Field Systems.

Jason Celino

All right. And then when we look at like the AECO segment specifically, I guess what are you hearing from the different segments as it relates to macro and tailwinds and headwinds? And maybe just go a little deeper there.

Robert Painter

Sure, Jason. At the macro level, I continue to like what we see. End market strength won't surprise you, data centers, energy, reshoring, onshoring of manufacturing are all particularly strong. Infrastructure strength overall, which we see play through in Field Systems even more so. So broad-based strength at the macro level. North America, I'd say, leading the way, obviously, in terms of the size and the continued strength. We also had a good quarter out of the Asia Pacific region.

Operator

Your next question comes from the line of Jerry Revich with Wells Fargo.

Jerry Revich

Nice quarter. Rob, I wanted to ask you. Can you just expand on the prepared remarks you made on Transportation & Logistics and what that might look like? Are you thinking about the whole segment, just a piece of it? And can you just give us a rough sense of expectations for valuation if you're able and willing to share what the initial conversations have been so far?

Robert Painter

Jerry, thanks for the question. So let me say the interest started inbound. That interest was recent. We take our fiduciary obligation seriously, and thus, we communicated that we will undertake the review. I also want to emphatically say that we remain fully focused on executing our strategy within the Trimble platform. This is a great business. It's got a bright future. And so I'm not surprised that we got the calls.

To close the loop, there is no predetermined outcome. There's no predetermined time line. And the solve that we'll have in this work is through the lens of shareholder value. And that's the fiduciary obligation.

Jerry Revich

Okay. I appreciate that. And then can we shift gears? In Heavy Civil and Geospatial, you had a nice pickup in demand. Can you talk about the supply side of the equation? So we're seeing an acceleration in machine deliveries and tightness on the used market in particular. I'm wondering to what extent can your supply base ramp up given the demand picture into the back half of the year and beyond.

Robert Painter

Jerry, I'm going to first shout out to our team, both in Civil and Geospatial. They've just done a terrific job with this business over the last few years. That outperformance in the quarter is on a pretty long string now of outperformance in the business. And it's more than the macros. The macros are certainly healthy, particularly in the infrastructure side and data centers, energy. So we see that playing through the market, and it's pretty global in nature.

At an execution level within the business to control what we can control, the team continues to innovate. We're expanding the network of the mixed fleet that we're able to support and we're expanding our points of distribution into the market. We're expanding the ecosystem development. So that translates into third-party extensibility built on top of our Earthworks platform within the Civil business.

In Geospatial, new product launches are driving business, and we're going to see even more as we move into the second half of the year and particularly as you -- we come into the conference season with INTERGEO in September and Trimble Dimensions in November.

Operator

Your next question comes from the line of Rob Wertheimer with Melius Research.

Robert Wertheimer

Rob, I had a question on just how you're thinking about capital allocation broadly. Obviously, it's incredibly dynamic. You're seeing, I guess, a lot of opportunities from AI. The market sees some threats and so some assets are cheaper. So just in general, do you find it to be a more fruitful kind of search if you're looking at acquisitions? And then do you feel any different strategic need to assemble any other assets in the portfolio than you did a year or 2 ago?

Robert Painter

Rob, great question. Broadly speaking, on the capital allocation front, we see it the same as ever. We focus first on investing back into the business organically. Phil put forward the model we have on buyback. And then, of course, we have been an acquisitive company over time.

If you look at the acquisition front, one of the dynamics we see at play at the moment in an AI-forward world is there's more opportunity for us to create our own features and capabilities. So in the past, where we might have looked for some tuck-in capabilities, we think we can do more of those ourselves today. So that actually would be one different commentary I have on the acquisition front.

To the extent that we can build new sets of competencies or the new, let's say, markets to enter, we remain open to that. So we'll be active. I'd say we're always active on the M&A front scanning the landscape. We actually have a venture arm in Trimble. So we pay attention, and we're actively engaged. I would not say that the valuation environment has come down in the private market in any sort of fundamental way. And so we certainly weigh that against the buyback opportunity that Phil highlighted with the $1 billion reauthorization.

Operator

Your next question comes from the line of Josh Tilton with Wolfe Research.

Joshua Tilton

Two quick ones for me. First one, maybe to follow up on Celino's question. And again, I apologize if I missed this, and I also didn't run the math. So again, I apologize if it was clear that way. But had we not encountered this ARR divestiture in Field Systems, would we be reiterating the ARR guide for the full year at the midpoint? Or would we be raising the ARR guide for the full year at the midpoint?

Phillip Sawarynski

Josh, it's Phil. Let me take that one. So yes, the Field Systems impact for this very discrete item is about 400 to 500 basis points over the next few quarters for Field Systems specifically. It's about, call it, a little under 100 basis points at the company level. So aside for those issues, we would be reiterating the range that we have.

Joshua Tilton

Super helpful. And then maybe just a quick follow-up. I appreciate the incremental color on acknowledging the potential sale in transportation. I have to imagine that the inbounds that you're getting is because these buyers, I don't want to say, see this as the bottom, right? But they must see a better environment in the future, hence wanting to buy the asset now and ride that positivity up as opposed to missing out on that opportunity.

Can you maybe just dive one level deeper on like what are they seeing that we should be seeing or paying attention to that maybe gives them hope that there is a better environment in your transportation market over the next, call it, 12 to 24 months than we saw over the last 12 months?

Robert Painter

Jason, great question. This is Rob. I'll take it. This is a great business. So this business has great potential. We believe in the opportunity. With the inbound, we have a fiduciary obligation, and we take our fiduciary obligation seriously. And we compare that to our own plan to execute our own strategy within the Trimble platform. And that's why I say we remain fully focused on executing the strategy because I go back to this being a great business with great potential. The solve is actually pretty easy in the end is what do we see as the highest shareholder value creation. And so we look at the stakeholders between our customers, our employees and our shareholders, and we make the decision accordingly. And by the way, if there's a decision to make because there is no predetermined outcome and there's no predetermined time line.

Operator

Your next question comes from the line of Quinn Fredrickson with Baird.

Quinn Fredrickson

First question just on AECO. Could you unpack the difference between organic revenue growth and ARR growth in the segment this quarter? It was just a little wider than I would have thought. I'm not sure if that's all the conversion uplift going away or if there's any other factors.

Phillip Sawarynski

Quinn, it's Phil. Thanks for the question. So in AECO, we have some term licenses and multiyear term and also some ProServe as well. The revenue is recognized upfront with those items generally. And so the timing of those in any given quarter could be up or down and create a delta between the revenue and ARR. If you actually go and look in our past and particularly in Q2, we've seen this dynamic before. So it's nothing new. And this is why we focus on the ARR metric. And the 14% growth has been consistent in that range and in line with what our expectations are this year. And there's no change to our outlook or guide for AECO with that.

Quinn Fredrickson

That's helpful. Second question, we're a few months into the Claude partnership. Is there any data you could share on new SketchUp user licenses and how that's trending relative to what you had hoped for at this point in time?

Robert Painter

Quinn, this is Rob. Good question. It is early to have any definitive conclusions. But there are 4 things that I can say based on over 25,000 unique users that we've seen in Claude using the connector. The first is around learning. We're learning how to build skills to make the connector even better.

The second is that we're following the telemetry to generate the marketing motions to drive adoption to turn a user into a customer. The third, what we're confirming is what we expected is that this is not going to replace the current workflows, professional, call it, grade work that's done, the deterministic analysis that could be daylight modeling, structural analysis, energy modeling that's still happening within SketchUp itself.

And the fourth, as we said originally and as we still know today is that importantly, our IP is protected. And we're building these same capabilities into the SketchUp user interface itself, and that's been launched in what we call our Trimble Labs program. So it's out there with some early users. So I would say in line with the expectations we had, Quinn. So thanks for asking.

Operator

Your next question comes from the line of Tami Zakaria with JPMorgan.

Tami Zakaria

Very nice quarter. I wanted to follow up on Slide 8 of your presentation where you show how Trimble delivers value to data centers. Can you help us understand what is the duration of a typical data center project where you can stay involved? And is there a revenue curve that follows that has a phase when Trimble's value contribution peaks? Or is it pretty consistent from breaking the ground to handing over the project?

Robert Painter

Tami, it's Rob. I'll take your question, and it's an interesting one. So if you think about a project life cycle, it often starts with capital program management, the owner of making a decision to invest in the capital into the data center itself. And we can service that need through Trimble Technology with an O in AECO, and we do that today. So that happens before there's ever even any surveyors out in the field. And guess what, after you've decided to make the capital investment, you send the surveyors out at some point after that to actually create the digital model of the physical earth to have that topographic map, but the as is conditions.

Once you have that work, you now need to send that digital model into a set of engineering and construction workflows because you need to do site preparation, which is an opportunity for our Civil Construction business to move the dirt and move it right the first time.

As you lay that foundation, the concrete pad, Trimble is involved in that, not only in the design, but in the layout and the verification of that as you move from the pad into the, let's call it, the building itself and into the interiors through the structural shell, through the mechanical electrical rough-in, through the full fit-out. We're involved in that from design solutions to estimating solutions to project coordination to field layout as well.

And then at the end, with the commissioning and the handover and then the whole quality control loop, we end up there as well. So from that concept to completion, Trimble is relevant, involved and engaged in a data center. To answer the other part of your question about the, let's say, the duration and how that flows in over time, I would say that it can cover that full life cycle of a project. So it doesn't all hit immediately at once. There does tend to be some months of, you'd say, lag between when that's -- it could be months or quarters, by the way, from when the project is commissioned and approved all the way through when the various trades are taking on our technology. It's hard to see it in the numbers today because our customers have a very healthy amount -- or most of our customers have a very healthy amount of backlog, obviously, those who are serving data centers have healthy backlog. And so we see it in the business that we're already doing with them today. So great question. Thank you.

Tami Zakaria

Understood. And my second question, I think I heard you say you are going to reach the EBITDA target of 30% a year early. So what's next? Is it time to maybe renew the 2027 target and extend to maybe 2029, '30? How are you thinking about it?

Robert Painter

Tami, I expect that we'll do an Investor Day next year. I mean that would be the right amount of timing, and it's not -- we're not going to -- not ready to talk about 2027 guides. But what I would say to address the comment you made is that I would emphatically say I am proud of this team for delivering the EBITDA target, which could potentially be a year ahead of what we put forward. That's a big deal. That's a big deal for us, and I hope our shareholders see that as a big deal as well that this business is performing and performing [Technical Difficulty] expectations.

And it is extremely reasonable to assume that we will continue to drive operating leverage going forward and expand upon that as we move the business into 2027 and beyond. So it's a great place to be and gives us optimistic about the ongoing upside potential.

Operator

Your next question comes from the line of Nay Soe Naing with Berenberg.

Nay Soe Naing

My first one is on -- I appreciate the fact that your AI strategy today is primarily focusing on customer adoption today. But I would love to get an update on how you're thinking about your monetization strategies going forward. I asked that because last week, one of your peers mentioned that they're looking to monetize AI features starting from next year and another peer recently came out with AI-specific supporting packages as well. So any directional update that we could have on your monetization strategy would be very helpful.

Robert Painter

Thanks for the question. This is Rob. I'll take it. And it was a little hard to hear you, but I think you're asking about the AI monetization. And I'll start by saying it's definitely a learning journey. And I can tell you that we're monetizing today. We're monetizing on a stand-alone basis, and we're monetizing through hybrid license and consumption models. It just takes time to show up when you're a scaled company like Trimble. The near-term priority we have is to drive adoption, to drive workflow engagement across our expanded surface area and then to leverage telemetry to measure the real-world value that we're creating for our customers.

And as that usage continues to scale, we're going to learn. Like we're going to adapt our pricing. We'll adapt our packaging, and we expect to see that through a combination of tiered subscription bundles that looks like the good, better, best offerings that we've talked about before. We definitely expect to see hybrid models with license and consumption-based -- those consumption-based usage models on a go-forward basis. Like we have in the Transporeon business today, it's already a transaction-based model that we have. So we're building capabilities and those capabilities give us optionality. I like where we are on this journey right now.

Operator

Your next question comes from the line of Chad Dillard with Bernstein.

Charles Albert Dillard

Just wanted to revisit that product change in Field Systems. So first of all, what was the product? And then if I look at the run rate, it seems like it's a $75 million headwind. So just trying to figure out like what the denominator is, like what's the total size? And then if you could unpack that 400 to 500 basis points impact over the next couple of quarters, what's churn? What else is it?

Robert Painter

Chad, thanks for the question. This is Rob. I'll start and then Phil will give you the quantitative, which is different than what you put forward. I mean at the qualitative level, within the Civil business, we have a lot of different technologies. Here, we're talking about essentially field data processing. And that is a service -- that's the specific service that we're bringing in-house with proprietary technology.

And again, doing this from a position of strength with the momentum we have in the business, we always had a plan, and we've been developing this ourselves as we decided to bring it forward. Phil, why don't you take the quant?

Phillip Sawarynski

Yes. Thanks, Chad. Yes. So when I talked about the 400 to 500, that's specific to the Field Systems ARR. So the ARR Field Systems last year was about $400 million. So the 400 to 500 basis points affects the growth rate. So that implies, call it, $16 million to $20 million on the ARR this year, and then you can extrapolate that obviously to the impact on the company.

Charles Albert Dillard

Got it. And then I was hoping you can give some color in terms of your revenue that comes from usage-based consumption. And then just maybe more broadly, like how are your KPIs for managing the business changing as you lean more into AI and more usage-based consumption?

Robert Painter

Great question, Chad. So when you ask about revenue from usage-based models, let me give you an example within the Transporeon business. We're talking over $150 million of transaction-based revenue that we have in that business today. That is a usage-based model. So when I talk about having the DNA and building on the DNA that we have, it's not just a future thing because we have it -- we already have that today. When we have the SketchUp in the fourth quarter of last year, launched a hybrid model with the license and then AI-based usage on top of that. That is -- again, that's -- it's in the market. It's not a futures thing that comes. So it's important for me, hopefully, to be able to communicate well here that the usage-based revenue is something that we already know how to do.

As we take this more broadly, let's say, with AI, let's call it, AI pure consumption-based, we also are building the underlying engines to be able to do the -- all the billing mechanisms and to be able to do that on a global level. That is a lot of work to put that forward. When we think about the KPIs and how they're changing in the business, some of the KPIs -- actually, a lot of the KPIs are the same as they ever were. The KPIs such as net retention. We pay a lot of attention to the net retention.

We see our gross retention holding where it was. We're not losing customers. So that -- and then so the net retention, the bridge from gross to net gets into the cross-sell, the upsell, the pricing and beyond. That's exactly where it has been. When we get into the, I'll say, specifically on the AI capabilities and features that we're adding, we're paying a lot of attention to the adoption, which is to say, how are they being used, the telemetry helps us with that.

So getting that indication that the discovery is happening, that the usage is happening and not just that it's used once, you track the daily or the weekly active usage. That's a measure of engagement. And that -- those would be the -- let's call those the predictive indicators for where we go forward as it starts to get, I'd say, revenue of a size and ARR of a size that we can report on.

Operator

Your next question comes from the line of Kristen Owen with Oppenheimer.

Kristen Owen

Just wanted to follow up on back half guidance. You've got a couple of moving pieces here between the tariff refunds here in Q2 and then the ARR transition in Field Systems. So I just wanted to understand, did anything change in the back half assumptions for the year? Just help bridge that gap for us, please.

Phillip Sawarynski

Kristen, it's Phil. So the tariff refund, that's more of a Q2 issue, not an issue. It was a bit of a -- it was a headwind on the revenue for Field Systems. That's really more discrete to Q2 and the bulk of our refunds coming in, in Q2. So we really don't expect a material impact on that going forward. So effectively, think about that as behind us. As I think about the back half of the year, so no change to how we're thinking about the back half of the year when we started the year.

And actually, in fact, the raise in the guide, the $50 million on the revenue and the $0.10 on the EPS would actually imply that we are raising the back half of the guide relative to the flow-through from Q2. So we see a lot of strong momentum in the business and as we enter the second half of the year.

Kristen Owen

That's super helpful. And then if I could ask you, you showed some really interesting data points on AECO growth. And the one that stood out to me is the 1 million incremental projects that you're seeing in Trimble Connect. Can you maybe help us understand like what's filling the top of the funnel there? What's the sales motion? You talked about some of the MCP early indicators, but just help us understand what's driving that incremental growth in Trimble Connect.

Robert Painter

Kristen, thanks for the question. It's Rob, and I'm glad you asked because it is a great statistic for us. The users that we have that come in to Connect and those -- and the projects that come in, come through our modeling solutions, they come in through project management solutions. They come in the field from our machine control users, our surveyors, folks doing reality capture out in the field. So the users create projects. Those projects are initiated and managed in Trimble Connect. That is indicative of the network effects that we see in the business. It's just -- it's really compelling to see the adoption of this common and connected data environment and to see it globally. I mean this is not even -- it's not a regional topic. It's a global topic. And then the projects get added, that drives those API calls, the 30 billion API calls.

There's an intensity of that usage and the collaboration and the coordination that happens amongst stakeholders leveraging the Connect -- Trimble Connect environment. So -- and by the way, that is both serving AECO and Field Systems. That was why I wanted to set up as an overall engineering and construction commentary early in the prepared remarks. So really great things happening for us. It's something that is, we believe, very uniquely Trimble, that ability to link the work in the office and the field, the hardware and the software of Trimble, thereby connecting the physical and the digital world.

Operator

Your next question comes from the line of Nicholas Igneri with Barclays.

Nicholas Igneri

So product revenue grew faster than subscription and services for the second straight quarter, which is sort of a reversal from the software-led narrative investors have become accustomed to. Can you just help us understand what specifically drove the stronger product performance? And should we view this as a temporary trend or something more structural?

Phillip Sawarynski

Nicholas, it's Phil. Let me take this one. Yes. So this is really driven by the performance in our Field Systems. Our AECO business is, aside from the ProServe, virtually all software. The Field Systems is the one that has more of the product revenue of it. And just with the strong performance of that business, the mix of that has changed where the product revenue is a little bit more and continue to see the momentum in that business and team has done a really good job.

Nicholas Igneri

Okay. Great. And then just Document Crunch has now been part of the portfolio for a few months. And I think Slide 15 noted strong performance in the quarter. I was just hoping you can further unpack that performance there and maybe just tell us what you guys have learned so far about customer demand.

Robert Painter

Thanks for the question. This is Rob. I appreciate you asking about Document Crunch. This is a great team, great energy, great engagement I see between the teams. So just come in and just in a really perfect way. Our sellers have a lot of interest. I mean it's such a natural fit within the Trimble Construction One, bundled set of solutions, the commercial framework that we have. So we've got a lot of seller interest. We've got a lot of customer interest.

On the product front, the Document Crunch team came out with their next-generation solution that is being very well received in the market and by customers. It's just -- it's really -- and when you put -- when we think about this area of contract management and the risk intelligence around those contracts and really get your head around the data of just how litigious the industry can be and what the cost of those claims can be when they arise, the value proposition for having this AI-based risk management approach is a really incredible value proposition and then tie that into the proprietary set of data we have at Trimble through from project management into the financials, into that awareness of what's happening in the field, and it just really brings things together very nicely.

The other thing we love about this team coming into the Trimble family is that we're putting more capital into this business in the form of people. This is an AI-native team. We're leveraging this team and the DNA they have to develop new features and capabilities that we may have in the past gone out and looked to acquire into some new categories where we think we can do it ourselves, leveraging this team. And that is one of the things we always look out for in acquisitions like this. So thanks for the opportunity to put color around that.

Operator

Your next question comes from the line of Clarke Jeffries with Piper Sandler.

Clarke Jeffries

I just wanted to clarify around the timing or how the behavior of the replacing of the white label products, the internal solution will develop? Will that be on renewal? Or is there just kind of a cutover point at some point in time during the second half? Just wondering if there are -- if the impacts are completely contained to second half or if it's even some into '27 on renewal?

Phillip Sawarynski

Clarke, this is Phil. Yes. So think about it in terms of effectively exiting a product. So it's winding down this year through this year, which is why it has a bigger impact on the second half of this year. We're building the new product. We should have that released soon. And then there's going to be a ramp-up as we start to sell that product. So that's why there's a bit of a lagging effect between the time right now where there's the wind down and then we build up into 2027 with the replacement product.

Clarke Jeffries

Perfect. And then just a question on the comment around it being higher-margin revenue. Does that -- is that going to be manifested in the gross margin line? Is that where most of the margin benefit comes from?

And then just -- and maybe getting ahead of ourselves, if there's an Analyst Day plan in the future, but certainly, one of the biggest parts of the margin story over the past few years has been the gross margin accretion, the growing recurring revenue in the base. T&L had been one of the biggest sources of gross margin improvement. When you think about what the portfolio is and Field Systems and AECO gross margin trajectories, do you feel -- still feel strongly about the gross margin story looking beyond 2026? And anything we should consider when thinking about the margin drivers just into '27 with the early achievement on the EBITDA line?

Phillip Sawarynski

Yes. Clarke, so I don't think we're ready to guide on specifically on 2027, but let me talk a little more generally on the questions. So for the specific product, the answer is, yes, I would expect that when we launch that product as it builds up that, that would be accretive to gross margin.

Now again, sizing that on the -- a very large-scale business is -- it will have a positive impact, but it may not be materially picked up in the gross margin as we think about the size of the Field Systems business. And then as I think about more broadly speaking, on the gross margin, our software is certainly growing faster generally. Obviously, the Field Systems products, as we talked about earlier, has been doing really well and has a lot of momentum to it. But as I think about the Investor Day targets and over the longer term, software is growing faster. That naturally has higher gross margin. So if nothing else, with just the mix change with the software growing faster than hardware over the long term, I would expect a continued expansion in the gross margin at the company level.

Operator

We have reached the end of the Q&A session, and that does conclude today's call. Thank you all for attending. You may now disconnect.