Trimble Inc.: A Software Revolution Awaits a 30% EBITDA Milestone—Here's Why Now is the Time to Buy

The construction and logistics industries are undergoing a digital transformation, and Trimble Inc. (NASDAQ: TRMB) is positioned to capitalize on it. With a strategic pivot toward software-driven recurring revenue and a laser focus on operational efficiency, Trimble is on track to hit its ambitious 30% EBITDA margin target by 2027—even amid macroeconomic headwinds. Here's why this stock deserves a spot in your portfolio now.

The Strategic Shift: From Hardware to Software Supremacy

Trimble's transformation is clear: it aims to generate 80% of revenue from software and recurring streams by 2025, up from 60% in 2021. This shift is already bearing fruit. Annual Recurring Revenue (ARR) hit a record $2.26 billion in Q4 2024, growing 14% year-over-year, with a clear path to its $3 billion ARR target by 2027. The company's “Connect & Scale” strategy is the engine behind this growth. By leveraging its existing customer base—$1.4 billion in potential cross-selling opportunities—it's unlocking synergies across its AECO (architecture, engineering, construction, and operations), Field Systems, and Transportation Logistics segments.

Consider this: in Q1 2025, AECO software ARR grew 19% year-over-year, driven by SMB adoption of tools like the free version of ProjectSite. Meanwhile, Field Systems ARR surged 25% as perpetual licenses transition to subscriptions. Even with temporary revenue headwinds from the shift to subscriptions (estimated to slow growth by 200-300 basis points), the long-term margin accretion is undeniable.

The EBITDA Margin Play: From 25% to 30%—Is It Realistic?

Trimble's Q1 2025 EBITDA margin of 25.2% dipped slightly from 26.3% in Q1 2024 due to divestiture impacts and segment-specific costs. However, management reaffirmed its full-year 2025 guidance of 27.8%–28.8%, signaling confidence in its operational playbook.

The path to 30% by 2027 hinges on three pillars:
1. Software Gross Margin Leverage: Software carries higher margins than hardware. As recurring revenue grows, fixed costs are spread over a larger base.
2. Cost Rationalization: The Mobility divestiture ($175 million in annual savings post-2025) and ongoing simplification of its ERP systems will reduce overhead.
3. Cross-Selling Synergies: The Trimble Construction One (TC1) platform, which unifies contracts and workflows, could boost EBITDA by streamlining sales processes and reducing customer churn.

Risks? Yes. Mitigated? Absolutely.

Tariffs and macroeconomic slowdowns are real threats. Tariffs alone cost Trimble $10 million per quarter, and elongated sales cycles in large enterprise and public sector deals are causing short-term pain. However, Trimble's strategy is built to weather these storms.

• Geographic Diversification: While North America remains a stronghold, Europe's Transportation Logistics segment (e.g., Transporium) is booming, and APAC expansion is on track.
• E-commerce Innovation: Self-service portals are reducing sales friction, while AI-enhanced tools (e.g., reality capture devices) keep Trimble's solutions differentiated.

A Stock Undervalued by Shortsightedness

Trimble's stock price has lagged its peers this year, trading at just 13x 2025E non-GAAP EPS, despite its high ARR growth and margin trajectory. Compare this to software peers like Autodesk (20x) or PTC (18x), and Trimble looks like a bargain.

The $1 billion share repurchase authorization further underscores management's confidence. With $627 million already repurchased in Q1 2025, Trimble is aggressively returning capital to shareholders while executing its growth plan.

Final Call: Buy Trimble Now—The Software Flywheel Is Spinning

Trimble's transition is no longer a gamble—it's a proven model. With ARR compounding at 15%+ organically, cross-selling unlocking hidden value, and a clear path to 30% EBITDA, this stock is primed for a revaluation.

Investment Thesis:
- Buy for the long-term: Trimble's software flywheel is accelerating.
- Hold through macro noise: The recurring revenue model provides stability in downturns.
- Target price: 18x 2027E EPS (assuming $3.5 billion ARR and 30% EBITDA) could push shares to $65+ from current $42—a 57% upside.

The market is underestimating Trimble's potential. Act now before the 30% EBITDA milestone becomes common knowledge.

Bottom Line: Trimble isn't just a construction tech player—it's a software giant in the making. The time to buy is now.