Trimble
TRMB
has entered into an agreement to take over a cloud-based transportation management software platform provider, Transporeon, for €1.88 billion.
Transporeon’s platform offers an integrated suite of sourcing, planning, execution, monitoring and settlement tools.
Its open platform incorporates with more than 3000 global ERP and transportation management systems to help customers solve complex freight issues, reduce costs and waste, and enhance competitiveness.
Upon closing, Transporeon will be reported as part of Trimble’s transportation segment.
The acquisition is expected to be complete in the first half of 2023.
Acquisition Benefits
Transporeon caters to the needs of more than 1,300 industrial shippers, 100 large retailers, and 145,000 carriers and logistics service providers. Transporeon’s wide freight network will add strength to TRMB’s customer base.
The transportation management software provider majorly operates in Europe, and in developed markets across Americas and Asia. On the back of Transporeon’s large total addressable market (TAM), Trimble will expand its global presence with widening TRMB’s TAM by $5 million, and strong footprint in the European market.
Transporeon has strong financials with recurring revenues constituting more than 90% of total revenues. Moreover, the company has net retention of 110% with extremely low churn rate.
Transporeon expects to generate revenues of €190 million in 2023, with 25% year-over-year growth. It also expects non-GAAP gross margin of 80% and adjusted EBITDA margin of 30% after buyout completion.
Post-acquisition, Transporeon’s strong fundamentals will drive Trimble’s top-line growth and profit margin.
Consequently, this will help Trimble win the confidence of the investors in the near term as well as long haul.
Shares of TRMB have plunged 32.6% in the year-to-date period compared with the
Computer and Technology
sector’s decline of 23.2%.
Strong Efforts to Boost Transportation Segment
The robustness of the transportation management software platform will be a huge positive for Trimble. With the Transporeon buyout, Trimble aims to expand its portfolio of transportation solutions and thereby bolster the transportation segment. Notably, the segment generated revenues of $145.4 million, accounting for 16% of total third-quarter 2022 revenues.
Apart from the recent initiative, Trimble is making strong efforts to boost prospects of the transportation segment by delivering advanced technological solutions for the long-haul trucking, field service management, and rail and construction logistics industries to create a fully integrated supply chain.
TRMB has been consistently taking innovative measures to focus more on connecting all aspects of transportation and logistics such as trucks, drivers, back office, freight and assets.
Further, Trimble’s operational strategies in transportation are helping it in gaining solid traction across drivers, carriers, intermediaries and shippers.
We believe Trimble’s comprehensive fleet and transportation management, analytics, routing, mapping, reporting, and predictive modeling offerings will continue to help it sustain momentum in the transportation industry.
However, Trimble is witnessing weak momentum in North America due to reduced hardware sales which remains a headwind for the transportation segment.
Zacks Rank & Stocks to Consider
Currently, Trimble carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader Zacks Computer & Technology sector are
Arista Networks
ANET
,
Airbnb
ABNB
and
Asure Software
ASUR
. While Arista Networks and Asure Software sport a Zacks Rank #1 (Strong Buy), Airbnb carries a Zacks Rank #2 (Buy) at present. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
Arista Networks has lost 8.9% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 17.5%.
Airbnb has lost 42.6% in the year-to-date period. ABNB’s long-term earnings growth rate is currently projected at 20.7%.
Asure Software has gained 3.7% in the year-to-date period. The long-term earnings growth rate for ASUR is currently projected at 23%.
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