TRMB 10-K & 10-Q changes, risk factors and insider trading

A significant trade disruption or the establishment or increase of any trade barrier in any area where we do business – —such as through increased tariffs imposed on imports into the U.S. and any resulting retaliatory actions taken by other countries – —could increase the cost of our products, which could adversely impact the margin that we earn on sales, make our products more expensive for customerscustomers, or create uncertainty around demand for certain types of products, which could make our products less competitive and reduce customer demand or result in supply chain delays. TheUncertainty persists around the ongoing heightened trade tensions and related imposition of tariffs between the U.S. and its trading partners, the extentresulting threats and durationimposition of thesetariffs tariffs,(including those intended for foreign policy objectives), and their impactimpacts on global economic conditions remain uncertain and depend on various factors, including international negotiations, policy responses, potential exemptions, and shifts inthe global supply and demand.economy. If there were to be a deterioration in the global economy, the economies of the countries or regions where our customers are located or do business, or the industries that we or our customers serve, the demand for our products and services would likely decrease. In addition, government or customer efforts, attitudes, laws, or policies may lead to non-U.S. customers favoring domestic suppliers that could compete with or replace our products, which would also have an adverse effect on our business. Changes in economic conditions and political uncertainty surrounding international trade also make it difficult to make financial forecasts. Any of the foregoing factors could adversely affect our business, financial condition, and results of operations.

We are dependent upon a limited number of contract manufacturers for the manufacture, testing, and assembly of certain products and specific suppliers for a number of our critical components. These arrangements can generally be terminated with a limited notice. We are also dependent on a number of suppliers as the sole source of certain materials. Our current reliance on a limited group of contract manufacturers and suppliers involves risks, including the potential inability to obtain products or components to meet customers’ delivery requirements, reduced control over pricing and delivery schedules, and discontinuation of or increased prices for certain components. In addition, substantial increases in demand for certain commodities and components by major AI companies, who are able to pay high prices and acquire significant portions of the available supply, have made it difficult and more expensive to obtain certain commodities and components, and such challenges could continue unless there are increases in supply or decreases in demand by such companies for the affected commodities and components.

TheGeopolitical geopolitical conditions, such as the developments in the conflict between Russia and Ukraine and related eventsconditions and their impact on our suppliers and on international trade in general,general have previously led to shortfalls in available components we need to make products as well as increased costs to obtain components, to make products, and to transport components and products. The disruptions included extended delivery times for certain components of our hardware products and increased freight costs. Catastrophic events, such as pandemics, acts of war, or natural disasters, and their resulting impacts can also cause shortfalls in available components, as we experienced during the global supply chain shortage in 2021 and 2022. These disruptions had an adverse effect on our ability to meet customer demand, which resulted in delays in shipping products to customers and dealers.

•third partythird-party interference in the integrity of the products sourced through the supply chain;

•severe weather conditions or natural disasters; and

•civil unrest, military conflicts, geopolitical developments, war, or terrorism; andterrorism.

Because our operations are geographically diverse and complex, our personnel resources and infrastructure could become strained, and our reputation in the market and our ability to successfully manage and grow our business may be adversely affected. The size, complexity, and diverse nature of our business and the expansion of our product lines and customer base have placed increased demands on our management and operations, and future growth may place additional strains on our resources in the future. Our ability to effectively compete and to manage our planned future growth will depend on, among other things, the following:

•improving our operational, financial, and management controls; and

•improving our information reporting systems and procedures.procedures; and

Pursuant to our Connect & Scale strategy, we are investingcontinuing to invest substantial resources in integrating our product offerings and transitioning our businesses to common core services and systems to achieve economies of scale, simplify our operations, and improve the customer experience. These efforts may result in disruptions to our operations, which could have an adverse effect on our customers, may cost more than we anticipate increasing our expenses, and take longer than planned.

An increasing portion of our revenue is generated through software maintenance and subscription revenue, which includes Software as a Service (“SaaS”) and new subscription services for integrated solutions. Our customers have no obligation to renew their agreements for our software maintenance or subscription services after the expiration of their initial contract period, which typically ranges from one to three years.years, Thisso shiftwe reflectsmust ancontinually increasingprovide usecompelling ofsolutions, subscription models for new products,improvements, and acustomer transitionsupport forto someretain existingcustomer products from perpetual license sales and distribution in favor of SaaS or other subscription offerings, as well as divestitures of some of our legacy businesses.subscriptions.

Our customer acquisition and renewal rates may decline or fluctuate as a result of a number of factors, including customer preferences and budgetary constraints, overall economic conditions, thecompetitive healthproducts ofand theiremerging businesses, competitiveAI offerings, and customer satisfaction or dissatisfaction with our products and services. Customer satisfaction with our products and services is affected by a variety of factors, such as security, reliability, performance, concerns about data privacy, current subscription terms, customer preference, and industry adoption. If customers do not renew their contracts for our products, our maintenance and subscription revenue will decline, and our financial results will suffer.

WeIn hadthe firstcourse identifiedof material weaknesses inpreparing our internal control overconsolidated financial reportingstatements as of and for the fiscal year ended December 29, 2023.2023, as included in the Annual Report on Form 10-K for the period ended December 29, 2023 (the “2023 Form 10-K”), we had identified a material weakness related to business combination accounting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

AsAfter previously disclosed,filing the 2023 Form 10-K with the SEC, management re-evaluated the effectiveness of our internal control over financial reporting and identified additional material weaknesses in internal control over financial reporting. The Company had delayed the filing of its Quarterly Reports on Form 10-Q for the first, second, and third quarters of 2024 until the assessment of the impacts of the matters described above was complete. As a result of the delayed filings, the Company had received notices from the Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) (the “Listing Rule”), which requires listed companies to timely file all required periodic financial reports with the SEC. Subsequently, the Company had delayed the filing of this report for the fiscal year ended January 3, 2025 dueDue to the time required to prepare and file the prior delayed reports.reports, the Company delayed the filing of its Annual Report on Form 10-K for the fiscal year ended January 3, 2025 (the “2024 Form 10-K”).

AfterThe filingCompany filed its Amendment No. 1 on Form 10-K/A to the 2023 Form 10-K and its Quarterly Reports on Form 10-Q for the first, second, and third quarters of 2024 with the SEC on January 16, 2025, and subsequently, this report for the fiscal2024 yearForm ended January 3, 202510-K with the SEC,SEC on April 25, 2025. Those filings disclosed additional material weaknesses as described more fully therein. After the filings, the Company has since regained compliance with the Listing Rule. As a result of our previous failure to timely meet our SEC reporting obligations, we are unable to use Form S-3 for the twelve months after that date.date, which will end in April 2026. This could make accessing the capital markets during this period more costly or less efficient.

Additionally, ourOur management, under the oversight of the Audit Committee, has been taking actions to addressremediate the material weaknesses in our internal control over financial reporting for the fiscal year ended January 3, 2025 and implement our remediation plan, in each case,; as described more fully in Part II, Item 9A, “Controls and Procedures” of this report. Unless otherwise described herein, the material weaknesses will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded through testing that these controls are operating effectively. If we are not able to successfully remediate these material weaknesses, there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be presentedprevented or detected on a timely basis. Moreover, if we uncover additional material weaknesses, our financial statements may be inaccurate, and we may be unable to comply with our SEC filing obligations, which could prevent us from using Form S-3 or result in a Nasdaq delisting. In addition, we may be unable to access the capital markets or repurchase our stock if we are not current with our SEC filing obligations.

ToContinuing to develop and expand ourrobust distribution channels,channels is important for maintaining and increasing sales in our dynamic and evolving markets. To do so successfully, we mustmust, together with our partners, continue to expandinvest in developing the sales, marketing, support, and improveinfrastructure ourrequirements processesfor anda procedures that support ourrobust distribution channels, including our investment in systems and training, and those processes and procedures may become increasingly complex and difficult to manage.channel. The time and expense required for sales and marketing organizations of our channel partners to become familiar with our product offerings, including our new product developments, and newer types of offering, such as subscription programs for integrated solutions that include hardware, software maintenance, and other recurring services, may make it more difficult to introduce those products to end users and delay end-user adoption, which could result in lower revenue.

As market conditions and our business strategies evolve, we must also evolve our distribution and go to marketgo-to-market strategies. Our efforts to further develop and expand dealer networks may not be successful, and could cause conflict in our channels or disrupt dealer coverage within specific geographic or end-user markets, which could cause difficulties in marketing, selling, or servicing our products and have an adverse effect on our business, financial condition, and results of operations. We utilize dealer networks to market, sell, and service many of our products.products in our Field Systems segment. Dealers who carry products that compete with our products may focus their inventory purchases and sales efforts on goods provided by competitors due to industry demand or profitability. Such sourcing decisions can adversely impact our business, financial condition, and results of operations.

From time to time, we have divested businesses, including the sale of our agricultural business to a joint venture with AGCO and the sale of our Mobility business.business to Platform Science. We expect to undertake moreadditional divestitures from time to time in the future. Any such divestiture may result in:

For significant divestitures, these transitional services can take up considerable corporate resources and attention, which may adversely affect our other businesses, operations, and results. In some cases, we have retained an equity position in the entities to which we divest our business units. We have limited control over such entities,entities and the value of such equity stake could decline over time.

As a result of acquisitions, we have significant assets that include goodwill and other purchased intangibles. The testing of goodwill and intangibles for impairment under generally accepted accounting principles (“GAAP”) requires us to make significant judgments and assumptions. Changes in business conditions or in the prospects or results of operations of the acquired business could require adjustments to the valuation of these assets resulting in impairments that would adversely affect our results. In addition, changes in the operating results or the valuation of companies in which we have investments may have a direct impact on our financial statements or could result in our having to write down the value of such investment.

TheWe contributionhave ofnon-controlling Agstakes toand ongoing commercial relationships with businesses that we have divested, including a newly formed joint venture (JV), andwith theAGCO, sale of a majority interest in the JV,which are subject to substantialvarious risks, including the failure to realize the intended benefits, unanticipated challenges, and other uncertainties

In April 2024, we contributed our precision agriculture business (“Ag business,”), excluding certain Global Navigation Satellite System (“GNSS”) and guidance technologies, to a JV with AGCO, of which we retained a 15% stake. The risks and uncertainties associated with the new JV include that (i) we may fail to realize the anticipated benefits of our non-controlling stake in the JV, (ii) the benefits from the various agreements entered into concurrently with forming the JV (specifically, aincluding long-term supply agreement, a technology transfer and license agreement, a trademark license agreement, and a transition services agreementagreements) will be dependent upon the JV’s ability to successfully developdevelop, market and marketdistribute products, (iii) unanticipated factors may arise that affect the cost of operating the JV as a standalone business, (iv) we may be unable to successfully integrate AGCO’s JCA Technologies business into the JV, and (viv) the development of technology synergies will depend on the level of research and development spending and the success of future innovation.

Our markets are highly competitive, and we expect that both direct and indirect competition will increase in the future. Our overall competitive position depends on a number of factors including the price, quality, and performance of our products, the effectiveness of our distribution channel and direct sales force, the level of customer service, the development of new technology, and our ability to participate in emerging markets. AI functionality is becoming increasingly important, and if we do not develop and expand our AI capabilities on pace with our competitors, our product offerings may fall behind. Generative AI may also enable other parties to rapidly develop products and functionality that compete with our product offerings. Within each of our markets, we encounter direct competition from other GNSS, software, optical, and laser suppliers, and competition may intensify from various larger U.S. and non-U.S. competitors and new market entrants. Our products, which commonly use GNSS for basic location information, may be subject to competition from alternative location technologies such as simultaneous location and mapping technology. In our software and subscription services businesses, we face competition from a group of large, well-established companies, particularly in the areas of design software, enterprise resource planning (“ERP”) solutions, and collaboration and project management offerings. Our integrated hardware and software products may be subject to increasing competition from mass market devices such as smartphones and tablets used in conjunction with relatively inexpensive applications, which have not been heavily used for commercial applications in the past.

These competitive developments may require us to rapidly adapt to technological and customer preference changes, including those related to cloud computing, mobile devices, new computing platforms, andand, increasingly, AI technology. Such competition hascan in the past resulted, and in the future may result,result in price reductions, reduced margins, or loss of market share, any of which could decrease our revenue and growth rates. We believe that our ability to compete successfully in the future against existing and additional competitors will depend largely on our ability to execute our strategy to provide products with significantly differentiated features compared to currently available products. We may not be able to implement this strategy successfully, and our products may not be competitive with other technologies or products that may be developed by our competitors, many of whom have significantly greater financial, technical, manufacturing, marketing, sales, and other resources than we do.

Our continued success depends, in part, on our ability to hire and retain qualified personnel, advance our corporate strategy, and preserve the key aspects of our corporate culture. Because our future success is dependent on our ability to continue to enhance and introduce new products, we are particularly dependent on our ability to hire and retain qualified engineers, including in areas of technology such as GNSS, software programming, information systems, data analytics, and AI. In addition, to increase revenues, we willmay be required to increase the size and productivity of our sales and channel management groups. Competition for qualified employees in our major locations iscan be intense. Our inability to hire and retain qualified management and skilled personnel, particularly engineers, salespeople, and key executive management, could disrupt our development efforts, sales results, business relationships, and our ability to execute our business plan and strategy on a timely basis and could materially and adversely affect our business, financial condition, and results of operations. In addition, any future reductions in force or other restructuring intended to improve operational efficiencies and operating costs, may adversely affect our ability to attract and retain qualified personnel.

Our products, including our software products,products are highly technical and complex and, when deployed, may contain errors, defects, or security vulnerabilities. We must develop our products quickly to keep pace with the rapidly changing market, and we have a history of frequently introducing new products. Products and services as sophisticated as ours could contain undetected errors or defects, especially when first introduced or when new models or versions are released. Such occurrences could result in damage to our reputation, lost revenue, diverted development resources, increased customer service and support costs, warranty claims, and litigation.

We warrant that our products will be free of defectdefects for various periods of time, depending on the product. In addition, certain of our contracts include epidemic failure clauses. If invoked, these clauses may entitle the customer to return or obtain credits for products and inventory, or to cancel outstanding purchase orders even if the products themselves are not defective.

A cybersecurity incident in our own systems or the systems of our third-party providers may compromise the confidentiality, integrity, or availability of our own internal data, the availability of our products and websites designed to support our customers, or our customer data. Computer hackers, foreign governments, cybercriminals, or cyber terrorists may attempt to or succeed in penetrating our network security and our website. The growing availability and use of AI-enabledAI technologiestools alsohas increaseincreased the sophistication of attacks, enabling more convincing phishing schemes, automated vulnerability discovery, and threatthe posedrapid bycreation suchof actors.novel malware. Additionally, due to geopolitical tensions, such as the developments in the conflict between Russia and Ukraine and other geopolitical tensions, we and our third-party vendors may be vulnerable to a heightened risk of cybersecurity attacks, phishing attacks, viruses, malware, ransomware, hacking, or similar breaches and incidents from nation-state actors or affiliated actors, including attacks that could materially disrupt our systems and operations, supply chain, and ability to produce, sell, and distribute our products and services. Unauthorized access to our proprietary business information or customer data may be obtained through break-ins, sabotage, breach of our secure network by an unauthorized party, computer viruses, computer denial-of-service attacks, exploitation of zero-day vulnerabilities, employee theft or misuse, breach of the security of the networks of our third-party providers, or other misconduct. Additionally, outside parties may attempt to fraudulently induce employees or users to disclose user credentials or other sensitive or confidential information to gain access to data.

We have experienced security breaches in the past, and despite our efforts to maintain the security and integrity of our systems, it is impossible to eliminate this risk. Because the techniques used by computer hackers who may attempt to penetrate and sabotage our network security or our website change frequently, they may take advantage of weaknesses and vulnerabilities in third-party software, hardware and other technology or standardsstandards, of which we are unaware or that we do not controlcontrol, and these weaknesses may not be recognized until after theysuch attempts have been launched against a target. We may be unable to anticipate or counter these techniques. It is also possible that unauthorized access to customer data or confidential information may be obtained through inadequate useor ofineffective security controls used by our customers, vendors, or business partners. Efforts to prevent hackers from disrupting our service or otherwise accessing our systems are expensive to develop, implement, and maintain. Such efforts require ongoing monitoring and updating as technologies change, and efforts to overcome security measures become more sophisticated, and may limit the functionality of, or otherwise adversely impact our service offering and systems. A cybersecurity incident affecting our systems may also result in theft of our intellectual property, proprietary data, or trade secrets, which would compromise our competitive position, reputation, and operating results. We also may be required to notify regulators about any actual or perceived personal data breach (including the EU Lead Data Protection Authority) as well as the individuals who are affected by the incident within strict time periods.

Our future revenue stream depends to a large degree on our ability to bring new products and services to market on a timely basis. We must continue to make significant investments in research and development to continue to develop new products and services, enhance existing products, and achieve market acceptance of such products and services. AI functionality is becoming increasingly important, and we must continue to develop and expand our AI capabilities. We may encounter problems in the future in innovating and introducing new products and services. Our development-stage products may not be successfully completed or, if developed, may not achieve significant customer acceptance. Development and manufacturing schedules for technology products are difficult to predict, and we might not achieve our goals as to the timing of introducing new technology products, or we could encounter increased costs. The timely availability and cost-effective production of these products in volume and their acceptance by customers are important to our future success. This was negatively impacted, for example, by the global supply chain shortage in 2021 and 2022. If we are unable to introduce new products and services, if other companies develop competing technology products and services, or if we do not develop compelling new products and services, our number of customers may not grow as anticipated, or may decline, which could harm our operating results.

We use AI and generative AI tools in certain of our products, services, and operations, including customer service, data analytics, product development, and code creation. AI is a rapidly evolving and disruptive technology, and the long-term implications of its use are still uncertain. We expect that the increasing adoption and use of AI technologies will continue to accelerate and have significant impacts on our business and the industries we serve. AlthoughOur weuse continueof AI exposes us to investa in AI, there can be no assurance that our investments will be beneficial to our business. Our competitors may incorporate AI more quickly or successfully,unique and ourrapidly solutionsevolving couldset becomeof lessrisks, competitive as a result. AI-related laws and regulations inincluding the U.S.following:

•AI-related laws and regulations in the U.S. and other countries are rapidly evolving and are subject to significant uncertainty, and could impose significant compliance costs, restrict certain AI applications, or require us to alter our AI-related practices.

•AI may also produce erroneous or misleading content, and outputs that infringe on the IP or data privacy rights of others. Although we take measures to address the accuracy and appropriate use of generative AI content, including through internal AI policies and training, these efforts may not always be successful. Any failure by our personnel, contractors, or partners to adhere to our AI policies, or otherwise use AI in an inappropriate manner, could result in violations of confidentiality obligations and laws or regulations, jeopardize our IP rights, or expose our products or business systems to defects and malware, any of which could damage our business and result in reputational, technical, or competitive harm.

We license software, technologies, and intellectual property underlying some of our software from third parties. The third-party licenses we rely upon may not continue to be available to us on commercially reasonable terms, or at all, and the software and technologies may not be appropriately supported, maintained, or enhanced by the licensors, resulting in development delays. Some software licenses are subject to annual renewals at the discretion of the licensors. In some cases, if we were to breach a provision of these license agreements, the licensor could terminate the agreement immediately. TheTo the extent that the licensed software or technology is embedded in our products, the loss of licenses to,or a substantial increase in the cost of the license for, or inabilitythe tolack support,of maintain,support and enhance,maintenance anyof, such third-party software or technology could result in increased costs, or delays in software releases or updates, or suspension of sales, until such issues have been resolved.

Any ITU or local reallocation of radio frequency bands, including frequency band segmentation and sharing of spectrum, or other modifications of the permitted uses of relevant frequency bands, may materially and adversely affect the utility and reliability of our products and have significant adverse impacts on our customers, both of which could reduce demand for our products. For example, in 2020 the FCC approved a proposal by a private party to repurpose spectrum adjacent to the authorized GNSS bands for terrestrial wireless operations throughout the United States.States, which would have created harmful interference to GNSS receivers. The company hasCompany opposed and continues to oppose this proposal, along with a wide range ofother participants in commercial and governmental sectors that rely on the use of GNSS in their critical activities. The FCC’sprivate actionparty isinvolved subjectultimately disclaimed any plans to furtherimplement review as well as potential legislative action. If the FCC’s action continues in effect andsuch terrestrial operationsoperations, arebut implementedthis proposal or similar ones could be revived in the affected spectrum, these operations could create harmful interference to GNSS receivers in proximity to such operationsfuture and impose costs to retrofit or replace affected receivers. Similarly, other countries have considered proposals for use of frequencies used by our products as well as adjacent bands that could cause harmful interference to our products. Such interference could degrade our product performance, damage our customer relationships, and require us to make expensive changes to our network of receivers.

GNSS technology, GPS satellites, and their ground support systems are complex electronic systems subject to electronic and mechanical failures and possible intentional disruption. Many of the GPS satellites currently in orbit have outlived their expected lifespans and are subject to damage by the hostile space environment in which they operate. Repair of damaged or malfunctioning satellites is currently not economically feasible. If a significant number of satellites were to become inoperable, there could be a substantial delay before they are replaced with new satellites. A reduction in the number of operating satellites below the 24-satellite standard established for GPS may impair the utility of the GPS system and the growth of current and additional market opportunities. In addition, natural phenomena such as solar storms, software updates to GPS satellites and ground control segments, and infrequent known constellation-related events, such as GPS week number rollover, may adversely affect our products and customers. We depend on public access to open technical specifications in advance of system updates to mitigate these problems, which may not be available or complete.

We are dependent on the continued operation of GPS, which is one of the principal GNSS currently in operation. The GPS constellation is operated by the U. S. government, which is committed to maintenance and improvement of GPS. If supporting policies were to change, or if user fees were imposed, it could have an adverse effect on our business, financial condition, and results of operations.

Many of our products use satellite signals available globally from the Russian GLONASS, China’s BeiDou, and the European Galileo GNSS Systems. Other countries have developed regional GNSS systems, such as India’s NavIC and Japan's QZSS, which we support in some products. National or European authorities may provide preferential access to signals to companies associated with their markets, including our competitors, which could harm our competitive position. Geopolitical tensions could also result in the restriction of our usage of such satellite signals. Use of non-U.S. GNSS signals are also subject to FCC regulation and to restrictions based upon international trade or geopolitical considerations. CertainFrom time to time, government officials and other interested parties have questioned whether continued use of the Russian GLONASS and Chinese BeiDou GNSS signals violates FCC rules and policies. If use of these signals was restricted by the U.S. Government,government, we would be unable to develop and offer timely and competitive commercial products using these systems, or obtain timely and equal access to service signals, this could impact the performance of our products, harm our competitive position, and result in lost revenue.

These laws and regulations include data privacy requirements, labor relations laws, tax laws, anti-competition regulations, import and trade restrictions or sanctions, export control laws, and laws that prohibit corrupt payments to governmental officials or certain payments or remunerations to customers, including the U.S. Foreign Corrupt Practices Act (“FCPA”), the U.K. Bribery Act, and other anti-corruption laws, that have been the subject of a substantial increase in global enforcement. Many of our products are subject to U.S. export law restrictions that limit the destinations and types of customers to which our products may be sold or that require an export license in connection with sales outside the United States. Given the high level of complexity of these laws, there is a heightened risk that some provisions may be inadvertentlybreached, either intentionally or intentionally breached, for example through fraudulent or negligent behavior of individual employees, our failure to comply with certain formal documentation requirements, or otherwise.inadvertently. Also, we may be held liable for actions taken by our local dealers and partners. Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers,us or our employees, and prohibitions or conditions on the conduct of our business. Any such violations could include prohibitionsbusiness or conditions on our ability to offer our products in one or more countries and could materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain employees, our business, financial conditions, and results of operations.countries.

We operate in many parts of the world that have experienced significant governmental corruption to some degreedegree. and,In inresponse to foreign corruption, some countries have adopted anti-corruption and anti-bribery laws, such as the U.S. Foreign Corrupt Practices Act (FCPA) and the U.K. Bribery Act. In certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices. We may be subject to competitive disadvantages to the extent that our competitors are able to secure business, licenses, or other preferential treatment by making payments to government officials and others in positions of influence or through other methods that relevant law and regulations prohibit us from using. Our success depends, in part, on our ability to anticipate these risks and manage these difficulties.

We are subject to evolving and potentially conflicting data privacy and data security laws in the United States and other jurisdictions, which could involve substantial costs and adversely impact our business and require that we incur substantial costs

The following discussion should be read in conjunction with the consolidated financial statements and the related notes. The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and those listed under “Risk Factors.” This section of this report generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023. Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this report can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K, for the year ended DecemberJanuary 29,3, 2023.2025.

We are a leading provider of technology solutions that enable professionals and field mobile workers to improve or transform their work processes. Our comprehensive work process solutions are used across a range of industries including architecture, building construction, civil engineering, geospatial, survey and mapping, natural resources, utilities, transportation, and government. Our representative customers include constructionasset owners,owners; contractors, engineeringgeneral and constructionspecialty firms,contractors; surveyingarchitects, companies,engineers and designers; surveyors; energy and utility companies,companies; truckingtransportation companies,shippers and carriers, as well as state, federal, and municipal governments. Further information on our business is presented in Part I, Item 1, “Business” of this report.

•ExecuteContinue to execute on our Connect & Scale strategy;

Our focus on these growth drivers has led over time to growth insustained revenue and profitabilityprofitability, evolving into a more streamlined and an increasingly diversifiedresilient business model. We continue to experience a shift toward a more significant mix of recurring revenue as demonstrated by our success in driving annualized recurring revenue (“ARR”) of $2,257.8$2,392.3 million, which represents growth of 14%6% year-over-year at the end of 2024.2025. Excluding the impact of foreign currency, acquisitions, and divestitures, organic ARR growth was 14%. This shift toward recurring revenue has positively impacted our revenue mix, growth, and profitability over time and is leading to improved visibility in our businesses. Our software, services, and recurring revenue represented 76%79% and 67%76% of total revenue for 20242025 and 2023.2024. Additionally, we continue to maintain focus on increasing our mix of higher margin recurring revenue, which iswas accelerated by the Transporeon acquisition that closed in the second quarter of 2023 and the Ag divestiture that closed in the second quarter of 2024.2024 and the Mobility divestiture that closed in the first quarter of 2025.

We acquire businesses that align with our long-term growth strategies including our strategic product roadmap and, conversely, we divest certain businesses that no longer fit those strategies. This is demonstrated by the 1213 acquisitions and 23 divestitures that we have completed since 2020, including the Transporeon acquisition, the Ag divestiture, and the Mobility divestiture.2020.

On SeptemberFebruary 14,8, 2024,2025, we enteredcompleted intothe asale definitiveof agreementour withMobility business to Platform Science to sell our Mobility business. Subsequent to the end of the year 2024, the transaction closed on February 8, 2025 resulting in ourexchange ownership,for or rights to acquireequity ownership of 32.5% of Platform Science’s expanded businessinterests with an approximatea fair value of $248.7$253.9 million. The approximate fair value was determined based on unobservable inputs, including discounted cash flow projections, market comparables, and an option pricing model. WeFollowing receivedthe closing of the transaction, we own, or have rights to acquire, 32.5% of Platform Science’s expanded business comprised of (i) shares of preferred stock of Platform Science,stock, with certain liquidation preferences, that represent 28.5% of Platform Science’s expanded businessownership, and (ii) common stock warrants allowing us the rights to acquire 4% of Platformadditional Science’s expanded business. The combined businesses aim to enhance driver experience, fleet safety, efficiency, and compliance by combining two cutting-edge in-cab commercial vehicle ecosystems, which gives customers access to more applications and offerings.ownership.

Macroeconomic conditions continue to present significant challenges globally, driven by geopolitical tensions, tariff and trade policies, exchange rate and interest rate volatility, and persistent inflationary pressures. The heightened trade tensions and related imposition of tariffs and export control restrictions between the United States and its trading partners, the extent and duration of these tariffs, and their impact on global economic conditions remain uncertain and depend on various factors, including international negotiations, policy responses, potential exemptions, and shifts in global supply and demand. TheseIf evolvingthere dynamicswas a deterioration in the global economy, the economies of the countries or regions where our customers are located or do business, or the industries that we or our customers serve, the demand for our products and services may havedecrease. a negative impact on our business operations. In response, weWe are closely monitoring global trade developmentsdevelopments. andOur consideringstrategy waysto shift away from a hardware-centric businesses towards a more significant mix of recurring revenue is intended to mitigate any potential negative impacts on our business.business operations.

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires us to make judgments, assumptions, and estimates that affect the reported amounts of assets, liabilities, revenue, costs of sales, operating expenses, and related disclosures. We consider the accounting policespolicies described below to be our critical accounting policies. These critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the consolidated financial statements, and actual results could differ materially from the amounts reported based on these policies. Our accounting policies are more fully described in Note 1 “Description of Business and Accounting Policies” in Item 8 of this report.

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. Revenue is recognized net of allowance for returns and any taxes collected from customers. We enter into contracts that may include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations; however, determining whether promised products or services are consideredaccounted distinctfor as separate performance obligations that should be accounted for separately versus together may sometimes require significant judgment.

Judgment is also required to determine stand-alonestandalone selling priceprices (“SSP”) for eachpromised performancegoods obligation.or services. We use a range of amounts to estimate SSP and determine whether there is a discount to be allocated based on the relative SSP of the various products and services. We estimate SSP considering multiple factors including but not limited to, our internal cost, pricing practices, sales channel, competitive positioning, and overall market and business environments. As our offerings and markets change, we may be required to reassess our estimated SSP and, as a result, the timing and classification of our revenue could be affected.

We are a U.S. basedU.S.-based multinational company operating in multiple U.S. and foreign jurisdictions. Judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and may not accurately forecast actual tax audit outcomes. Determining whether an uncertain tax position is effectively settled requires judgment. Changes in recognition or measurement of our uncertain tax positions would result in the recognition of a tax benefit or an additional charge to the tax provision.

Business Combinations,Goodwill, Divestitures, and Goodwill and Purchased Intangible Assets

ForWhen businessacquiring combinations,a business, we allocate the purchase consideration to the assets acquired (including intangible assets) and liabilities assumed based on their fair values at the acquisition date. When determining the fair values, we make significant estimates and assumptions, especially concerning intangible assets. Critical estimates when valuing intangible assets include expected future cash flows based on consideration of revenue and revenue growth rates and margins, customer attrition rates, future changes in technology and brand awareness, loyalty and position, and discount rates. Any purchase consideration in excess of the fair values of the net assets acquired is recorded as goodwill.

We evaluate goodwill on an annual basis in our fourth quarter or more frequently if indicators of potential impairment exist. To determine whether goodwill is impaired, we first assess qualitative factors. Qualitative factors includeinclude, but are not limited toto, macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, or other relevant company-specific events. If it is determined more likely than not that the fair value of a goodwill reporting unit is less than its carrying amount, we perform a quantitative analysis. Alternatively, we may bypass the qualitative assessment and perform a quantitative impairment test.

We use a 52–53 weekto 53-week fiscal year ending on the Friday nearest to December 31, which for 20242025 was January 3,2, 2025.2026. 2025 was a 52-week year, and 2024 was a 53-week year and 2023 was a 52-week year. 20252026 will be a 52-week year.

Year 20242025 Compared withto Year 20232024

OrganicTotal totalorganic revenue increased due to the increased mix of subscription and services revenuegrowth, partially offset by the January 1 software renewals and the impact of the additional week in fiscal 2024.week.

Organic subscription and services revenue increased primarily due to strong growth in subscription and software term licenseslicense inand subscription growth across all segments, primarilyparticularly AECO,in andAECO. toThe aincrease lesserwas extent,partially offset by the impact offrom the January 1 software renewals and the additional week.

Gross margin and gross margin as a percentage of revenue increased due to the organicimproved growthmix of higher margin softwaresubscription and subscriptionsoftware salesterm andlicense sales, lower intangible amortization expense due to fully amortized intangibles, as well as the divestiture of Ag’s lower margin hardware sales.businesses.

Operating income and operating income as a percentage of revenue increased primarily due to organic growthrevenue and associated gross margin expansionexpansion, and to a lesser extent, thelower impactacquisition ofand thedivestiture additionaltransaction week. The increase wasexpenses, partially offset by the Agloss of divestiture andincome. higherIn acquisitionaddition to organic revenue and gross margin expansion, operating income as a percentage of revenue was favorably impacted by the loss of lower margin divestiture transaction costs.income.

R&D expense decreased primarily due to the impact of the divestiture,divestitures, partially offset by expenseincreased relatedcompensation to Transporeon, and to a lesser extent, the impact of the additional week.expenses. We believe that the developmentdeveloping and introduction ofintroducing new solutions are critical to our future success, and we expect to continue the active development of new products.

S&M expense increased slightly primarily due to higher marketing and consulting expenses related to revenue growth, as well as higher compensation expense, including commissions, and the impact of the additional week, partially offset by the impact of the Ag divestiture.divestitures.

In 2024,2025, total amortization expense of purchased intangibles decreased primarily due to the expiration of prior years’ acquisition amortization, partially offset by the amortization of intangibles acquired from the Transporeon acquisition, which was not applicable in the first quarter of 2023.amortization.

Non-Operating Income (Expense), Income, Net

The following table shows non-operating income (expense), income, net for the periods indicated:

Our provision for income taxes in 2024 increased by $455.8 million compared to 2023, primarily due to the gain from the Ag divestiture. Our effective income tax rate for 20242025 and 20232024 were 25.0%16.8% and 12.8%.25.0%. The increasedecrease in the tax rate was primarily due to gains from the Ag divestiture.divestiture in 2024.

Our Chiefchief Executiveoperating Officer,decision who is our Chief Operating Decision Makermaker (“CODM”) views and evaluates operations based on the results of our reportable operating segments under our management reporting system. These results are not necessarily in conformance with U.S. GAAP. For additional discussion of our segments, refer to Note 78 “Reporting Segment and Geographic Information” in Item 8 of this report.

Operating income and operating income as a percentage of revenue increased primarily due to strong organic revenue growth and gross margin expansion, partially offset by increasedthe operatingJanuary expense1 associatedsoftware withrenewals doubleand digitadditional week. Operating income as a percentage of revenue growth.for 2025 was relatively flat.

Organic revenue increased primarily drivendue byto Transporeon,strong MAPS,end-user demand and Enterprisecompetitive subscriptionwins revenuefor growth,Civil Construction solutions. The increase was partially offset by lower Mobilitydemand sales.in Surveying.

Operating income and operating income as a percentage of revenue increased primarily due to organic revenue growthand gross margin expansion, partially offset by the loss of Ag divestiture income. In addition to organic revenue and gross margin expansion.expansion, Theoperating increaseincome as a percentage of revenue was alsofavorably drivenimpacted by the impactloss of thelower Transporeonmargin acquisition,Ag whichdivestiture closed in the second quarter of 2023.income.

(1) Includes $9.0 million and $9.1 million of cash and cash equivalents classified as held for sale as of January 3, 2025 and December 29, 2023.2025.

The decrease in cash provided by operating activities was primarily driven by higher tax payments associatedrelated withto the Ag divestiture gain,divestiture, and to a lesser extent, higher accountsincentive receivablebonus due to the impact of the additional week in the fourth quarter of 2024.payments. The decrease was partially offset by lower netinterest working capital requirements associated with a greater mix of subscription and services revenue and higher deferred revenue due to the impact of the additional week.payments.

The increase in cash providedused byin investing activities was primarily duerelated to the $1.9 billion of proceeds received from the Ag divestiture in the current year, as compared to the $2.0 billion payment in the prior year for the acquisition of Transporeon.year.

The increasedecrease in cash used in financing activities was primarily driven by the $1.7 billion repayment of debt in the currentprior year, asoffset by $688.4 million higher cash paid in repurchases of common stock compared to the prior year’s $2.0 billion of proceeds from the issuance of debt for the acquisition of Transporeon, partially offset by the $500.0 million repayment of debt.year.

There have been no material changes to our critical accounting policies and estimates during the first quartertwo quarters of 2026. For a complete discussion of our critical accounting policies and estimates, refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the 2025 Form 10-K.

Our focus on these growth drivers has led to sustained growth in revenue and profitability, evolving into a more streamlined and resilient business model. We continue to experience a shift toward a more significant mix of recurring revenue as demonstrated by our success in driving annualized recurring revenue (“ARR”) of $2.4$2.5 billion, which represents growth of 12%14% year-over-year at the end of the firstsecond quarter of 2026. Excluding the impact of foreign currency, acquisitions, and divestitures, organic ARR growth was 12%. This shift toward recurring revenue has positively impacted our revenue mix, growth, and profitability over time and is leading to improved visibility in our businesses. Our software, services, and recurring revenue represented 78%77% of total revenue for both the second quarter and the first quartertwo quarters of both 2026 and 2025.2026. Additionally, we continue to maintain focus on increasing our mix of higher margin recurring revenue, which was accelerated by recent acquisitions and divestitures.

The recent conflict in the Middle East may result in increased inflationary pressure and economic uncertainty. Additionally, the heightened trade tensions and related uncertainty of tariffs, potential refunds of certain tariffs,tariffs and imposed export control restrictions between the United States and its trading partners create additional volatility. The extent and duration of the Middle East conflict and tariffs, and their impact on global economic conditions remain uncertain and depend on various factors, including international negotiations, policy responses, potential exemptions, and shifts in global supply and demand.

If there waswere to be a deterioration in the global economy, the economies of the countries or regions where our customers are located or do business, or the industries that we or our customers serve, the demand for our products and services may decrease. We are closely monitoring global developments.

Second Quarter and First QuarterTwo Quarters of 2026 as Compared to 2025

Total organic revenue increased for the second quarter and first quartertwo quarters from both strong product demand and subscription and services growth.

Organic product revenue increased for the second quarter and first quartertwo quarters primarily due to strong end-user demand for civil construction solutions and revenue growth in surveying products.

Organic subscription and services revenue increased for the second quarter and first quartertwo quarters due to subscription growth across all segments, most notably, in AECO.

Gross margin and gross margin as a percentage of revenue increased for the second quarter and first quartertwo quarters primarily due to revenue growth and the improved mix of higher margin subscription and software term license sales, as well as the divestiture of lower margin businesses.sales.

R&D expense increased for the second quarter and first quartertwo quarters primarily due to foreignincreased exchangesoftware rateand fluctuation,cloud increasedusage, compensation expenses, software costs, and professional service costs, and foreign exchange rate fluctuation. The R&D expense increase for the first two quarters was partially offset by the impact ofprevious divestitures. We believe that developing and introducing new solutions, including AI, are critical to our future success, and we expect to continue the active development of new products.

S&M expense increased for the second quarter and first quartertwo quarters primarily due to marketing and consultingtravel expenses related to revenue growth, as well as higher compensation expenses including commissions, partially offset by the impact of the divestitures.commissions.

G&A expense increased for the second quarter and first quartertwo quarters primarily due to increased transaction costs, higher compensation expenses including incentives, partially offset by lower professional servicesexpenses, and transactionsoftware expenses.expenditures.

Total amortization expense of purchased intangibles slightly increased for the second quarter and first quartertwo quarters primarily due to foreign currency exchange impacts, partially offset by the expirationaddition of priorintangible years’assets acquisitionfrom amortization.acquisitions.

Organic revenue increased for the second quarter and first quartertwo quarters due to strong demand for subscription offerings and, to a lesser extent, software term licenses.offerings. Revenue growth benefited from cumulative growth along with an expansion of customers across many products, with the largest impacts resulting from Construction Management Systems, Structures, and Architecture & Design.Design, and Mechanical, Electrical, and Plumbing Solutions (“MEP”).

Operating income and operating income as a percentage of revenue increased for the second quarter and first quartertwo quarters primarily due to organic revenue and gross margin expansion.

Organic revenue increased for the firstsecond quarter and first two quarters primarily driven by hardware sales growth in Civil Construction and Surveying solutions due to strong end-user demand forand Civilcompetitive Constructionwins, and Surveyingto solutions.a lesser extent, term license growth.

Organic revenue increased for the second quarter and first quartertwo quarters primarily driven by subscription revenue growth from Transporeon and MAPS.Transporeon.

Operating income and operating income as a percentage of revenue increased for the second quarter and first quartertwo quarters primarily due to organic recurringrevenue revenuegrowth and gross margin expansion. Operating income as a percentage of revenue for the first two quarters was favorably impacted by the divestiture of lower operating income margin business.

The increase in cash provided by operating activities was primarily driven by higher operating income, lower cash taxes paid,paid and lowerhigher incentiveoperating bonus payments.income.

The decreaseincrease in cash used in investing activities was primarily due to higherpayments cashfor divestedthe Document Crunch acquisition, which closed in the priorsecond year as partquarter of the Mobility divestiture.2026.

The decrease in cash used in financing activities was primarily driven by $304.6 million in lower cash paid for repurchases of common stock compared to the prior year.

In December 2025, we entered into the 2025 Credit Facility, which replaced the 2022 Credit Facility. The 2025 Credit Facility contains an option to increase the borrowing from $1.25 billion up to $1.75 billion with lender approval. In April 2026, we borrowed $250.0 million from our credit facilities to finance the acquisition of Document Crunch (see Note 9, Debt). As of AprilJuly 3, 2026, $10.0$66.4 million was outstanding under theour 2025credit Credit Facility.facilities.

We define Non-GAAP non-operating expense, net as GAAP non-operating (expense) income,expense, net, excluding goodwill impairment, acquisition/divestiture items, deferred compensation, and restructuring and other costs. We believe this measure helps investors evaluate our non-operating expense trends.

We define non-GAAP income tax provision as the GAAP income tax provision adjusted for the tax effects of the non-GAAP pre-tax adjustments (A) through (DE), excluding certain tax charges and benefits such as net deferred tax impacts resulting from tax amortization related to a non-U.S. intercompany transfer of intellectual property and certain acquisitions, deferred tax impacts from net CFC tested income, significant reserve releases upon the expiration of statute of limitations and audit closures, and tax law changes. We believe this measure helps investors because it provides for consistent treatment of excluded items in our non-GAAP presentation.

We define Non-GAAP net income as GAAP net (loss) income, excluding the effects of goodwill impairment, amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation, restructuring and other costs, and non-GAAP tax adjustments. This measure provides a supplemental view of net income trends, which are driven by non-GAAP income before taxes and our non-GAAP tax rate.

We define Non-GAAP diluted net income per share as GAAP diluted net (loss) income per share, excluding the effects of goodwill impairment, amortization of purchased intangible assets, acquisition/divestiture items, stock-based compensation, restructuring and other costs, and non-GAAP tax adjustments. We believe our investors benefit by understanding our non-GAAP operating performance as reflected in a per share calculation as a way of measuring non-GAAP operating performance by ownership in the Company.

We define Adjusted EBITDA as non-GAAP operating income plus depreciation expense, cloud computing amortization, and income from equity method investments, net, excludingwhich excludes our proportionate share of items such as goodwill impairment, amortization of purchased intangibles, stock-based compensation, and restructuring costs. Other companies may define Adjusted EBITDA differently. Adjusted EBITDA is a performance measure that we believe offers a useful view of the overall operations of our business because it facilitates operating performance comparisons by removing potential differences caused by variations unrelated to operating performance, such as capital structures (interest expense), income taxes, depreciation, amortization of purchased intangibles and cloud computing costs, and income from equity method investments, net.

(D).Restructuring and other costs. Non-GAAP gross margin and operating expenses exclude restructuring costs composed of termination benefits related to reductions in employee headcount,headcount and other cost-saving initiatives, closure or exit of facilities, and cancellation of certain contracts, and other costs composed of one-time incremental expenses resulting from the re-audit and related remediation of control deficiencies. Non-GAAP non-operating expense net, excludes our proportionate share of items recorded in income from equity method investment items, such as goodwill impairment, amortization of purchased intangibles, stock-based compensation, and restructuring costs.

(EF).Non-GAAP items tax effected. This amount represents the income tax effect of non-GAAP pre-tax adjustments, excluding certain tax charges and benefits, which reconcile the GAAP income tax provision to the non-GAAP income tax provision.

(FG).Tax rate percentages. These percentages are defined as GAAP income tax provision as a percentage of GAAP income before taxes and non-GAAP income tax provision as a percentage of non-GAAP income before taxes.