So, if I look and apply it against the portfolio, one of the things, if I take Field Systems as an example, within that, going back to the financial crisis back in 2008, there was a time when we had to step in and be the ballast for some of the dealers at the company. And we came in and we acquired a few of the dealers. But we’re not ultimately long-term the best owners of a distribution business. We really think that belongs with entrepreneurs out in the field, very, very local businesses. So that would be an example of the divestiture we talked about here in just actually the last few weeks, as an example. So, we would look for parts of the business like that, that really we don’t see ourselves as the best owner. So, I’ll comment there as opposed to specifics within each of the businesses.
But I think we can demonstrably say that we’ve had the courage to take a look in the mirror, as evidenced by 21 of the divestitures in the last few years driving this simplification and this focus, because we think that that drives the efficiency and the output and the outcomes for the company.
Joshua Tilton: Very helpful. And then, it also sounds like we’re going to get a little more color around the ’24 guidance in context of these new reporting segments when you give us that additional disclosure. But maybe if I just step back and take a little bit longer view, like how do you guys think or how should investors think about the different growth rates across those three segments over the next, call it, three to five years?
Rob Painter: Yeah. So I’m going to stay pretty high level on that because, I think, it’ll be more appropriate to take that view when we do the next Investor Day. On the slide, I think it’s Slide 5 in the presentation that was attached to the prepared remarks, we did give a sizing of AECO Field Systems and Transportation and Logistics, sizing from a view, and it’s plus or minus on the revenue for 2024, and maybe more instructively, at the — with the software breakdown and the recurring revenue breakdown within each of those segments that we’ll have. What I can say on top of that, at company level and what we’ve talked about in the past is we think we can continue to drive the double-digit level of growth of the annualized recurring revenue.
And so, that’s number one or two on the top strategic priorities I’ve got for the company. Field Systems makes up the hardware businesses. That’s one, I think is instructive to look back to 2019. And if you look at that longitudinal growth of the CAGR over that timeframe, it is in the range of what we have put forward at prior Investor Days in terms of, call it, at a four to 6%, depending on which part of the business, the survey business we’ve historically talked about at 4% to 6% level, with some of the other hardware being a little bit higher. But that’s what compromises that. So you could look at that past data and I think that 2019 to 2023, or you could extend it into 2024 view, fits within the range. We’ve got that. And obviously, it’s been up or down and the standard deviations have been high within a quarter-to-quarter view.
That’s why we think it’s instructed to look at a long baseline view. And then, you’d come to the Transportation business and what’s new of course, since the last time we would have done in — an analyst model or an Investor Day, would have been the addition of Transporeon into the portfolio. So, I’ll give you that view to start with, and let’s stay tuned. But maybe one thing that’s — an additional thing I’ll say that could be interesting is when we last did the Investor Day, we said by — if you did the math by 2027, that we would be a 60% recurring revenue business. And if you take David’s prepared remarks and guide at a pro forma level, we think we’ll be there in 2024. I’ll leave you with that.
Joshua Tilton: Super helpful. Thank you.
Operator: Your final question comes from the line of Rob Wertheimer from Melius Research. Your line is open.
Rob Wertheimer: Yes. Hi. So, I wanted to ask two on the Transportation market, if I may, and you touched on this earlier, Rob, on Transporeon, where you had a good bookings quarter in the midst of, I assume, a pretty weak European market. So, any further commentary on what you changed there, or if anything changed to drive that growth? And given that business is levered to spot transactions and rates, any insight as to what the sustainable growth might be when that market comes back? And then just the second question will be simply on the idea of de-emphasizing hardware sales to OEMs in Transportation, and focusing on the flow of data. Is there any strategic link there? Do you get less flow of data if you don’t have as much in the field on devices? And could you just talk around that issue? Thank you.
Rob Painter: Yeah, Rob, thanks for the question. So, let’s take them in order with the bookings growth in the fourth quarter, and what is still a difficult market overlay. I think it demonstrates the value proposition that the technology provides, and I had a chance to go to our customer conference in Barcelona in September, and what you see in a room like that, and what you can see on the PowerPoint slides are some of the very largest logos in the world who use our Transporeon technology. It’s really quite impressive, whether it’s retail or CPG, or packaging or building construction materials. When you look through the different verticals, it’s really an impressive array of companies and a difficult market environment while companies can be reluctant to either spend the money or to spend the organizational effort to make a change, to do something different, the fact of the matter is that we can drive efficiencies and productivities — productivity into our customers.
What we see is that our win rates are as high as they’ve ever been. And so to us, that’s an important factor in how we think about the business. And the control of what you can control, and not losing market share is an important metric. And we think that the bookings, while they’re less than we would like on an overall annualized basis, I’ll be clear on that, within what we’ve got, that they are showing that we’re holding, if not gaining share in the market. So, I do have my gratitude to the team for delivering that and fighting it out every day. And you asked about the spot contract mix and what could that look like on the other side. It’s like I heard Jamie Dimon, when asked what’s the definition of a recession, he said, it’s something that happens every seven years.
So, take some version of that quote. If it was actually true, take some version of that quote. We know that the freight markets go up and down. So, the market will — and it does show signs of having stabilized. Now stabilized is different from increasing. What we can see over a long baseline is that the business out of freight recessions has accelerated strongly coming out of that. And it makes sense, and it’s a consumption-based model, is that we would expect if the market inflects, and I’m not making a call that it will inflect in 2024, to be clear, as it inflects, the business just naturally can significantly increase the level of revenue that comes through. And I’d say at a strong double-digit level is what I would expect that to move to.
And then, last you asked about at the OEM level and the de-emphasizing of the hardware. I’d say the hardware in the Transportation segment is quite different than the hardware around the rest of Trimble. There is less differentiation in that onboard compute, and these days even more of our own in call them, in-cab hardware devices are close to commercial off the shelf tablets. So, making our own hardware years ago was a unique, differentiated factor and it seamlessly integrated into our full software offering, and you are kind of like one throat to choke, offer the full solution. As that technology landscape changed, it’s just not a great place to be. We refer to it internally as the lower calorie — low-calorie revenue, because there’s just not attractive margins or [indiscernible] margins with all of the hardware.
Not all of the hardware is equal, but at that OEM level, if OEM wants to value engineer the lowest cost hardware, it’s just not a place, I think we’re going to ever be the best doing that at some kind of global scale. Thus, looking at the data integration. When we look at the data, OEMs have one set of data that they’re interested in, which is frankly different than what customers are interested in to run their businesses. That is to say that data on machine health is extraordinarily valuable to the OEMs. And by the way, it is important to customers, but it usually comes to customer service agreements, whereas customers operate mixed fleets of equipment and the customers are trying to drive their own productivity and efficiency and safety and visibility, and to operate within whatever installed base of technology that they’ve got.
And so, we think that data feed will continue to be necessary both at the — for the OEM level, but also you need to be able to provide a gateway, so to speak, to be able to bring the customers on to a more fully functional, in this case, telematic solution. And by the way, whether that’s Trimble or not Trimble solutions, I think that would be true for the market to have that flexibility. So Rob, I hope that helps provide some color.
Operator: And this concludes today’s conference call. We thank you for joining us today. You may now disconnect.
