Trimble Navigation Ltd. (NASDAQ: TRMB) reported on Wednesday second quarter transportation revenue of $150.9 million, down 24%, compared to the second quarter of 2019.
Overall, the company produced $733.6 million in revenue, with an earnings per share of 52 cents, topping analysts’s expectations. Wall Street’s outlook was for earnings of 37 cents per share and revenue of $694.6 million.
Company officials attributed the better than expected results to the strength of its “financial model.”
“Annual recurring revenue (ARR) of $1.21 billion, adjusted EBITDA margins at 25.7% and deferred revenue at $531 million we’re clear highlights,” said Robert Painter, Trimble’s CEO. “Our shift to a more hardware connected, software-centric and recurring revenue business model is paying off.”
Sunnyvale, Calif.-based Trimble is a provider of technology solutions for trucking companies, freight brokerages and third-party logistics providers.
Painter said the company’s transportation segment was impacted by the continued global economic uncertainty.
“While we remain convinced of both the long term market opportunity of our supply chain strategy, as well as the viability of our strategy, we are currently performing below our potential in the transportation segment,” Painter said.
Painter added that an economic recovery “will take longer than anticipated” because the transportation sector has “suppressed demand.” As such, Trimble is not providing a financial outlook for the remainder of 2020.
“When I think about the macro of the end-markets we serve, specifically North America, transportation is certainly the most challenged at the moment,” Painter said. “There is a supply-demand imbalance, which is creating pricing pressure on the carriers.”
Other factors affecting Trimble’s transportation segment included its acquisition of Kuebix, as well as executing a subscription business model transition in the company’s enterprise business.
Painter also said the company is working through its ELD product delivery commitments and an incentive program for customers of its mobility business to upgrade older technology.
“The Kuebix acquisition remains strategically important, but it is currently diluted,” Painter said. “Kuebix takes us to the shipper market, which is key to our connected supply chain strategy.”’
In February, Trimble announced it was acquiring Kuebix, a Maynard, Mass.-based TMS provider. The acquisition would enable Trimble to merge its private fleet and commercial carrier customer network of North America-based commercial trucks, with Kuebix’s shipping community.
A purchase price has not been disclosed. Trimble had expected to close the deal during the first quarter.