Deere is offering farmers more financing options for the company's precision agriculture technology as lower equipment demand weighs on profits.
The world's largest seller of agriculture equipment launched a Solutions-as-a-Service approach for some of its technology offerings, executives said on an earnings call Thursday. The new business model essentially gives farmers a pay-as-you-go option, lowering upfront costs.
"Our initial experiences have been extremely favorable, as we engage a broader range of customers with our technology," Aaron Wetzel, vice president of production systems for production and precision ag, said on the call.
The manufacturer has used the pay-as-you-go approach for its precision ag essentials kit, which allows farmers to upgrade their current equipment. Orders for the kit "exceeded our expectations," CFO Josh Jepsen told investors.
Solutions-as-a-Service will also likely be a key component in Deere's recent partnership to link its farm equipment up with SpaceX satellites, Jepsen said. Satellite connectivity for farmers in remote areas opens the door for them to use even more precision tools down the line.
"As you enable automation and enable autonomy, that comes with the combination of hardware and the potential for more of a SaaS solution as these things are getting better over time," Jepsen said.
Deere is working to establish more recurring streams of revenue as demand for traditional farm equipment sours. The company on Thursday cut its annual earnings guidance and is expecting a 15% reduction in net sales for 2024.
