John Deere 2024 Annual Report Highlights and Analysis
John Deere 2024 Annual Report
Index
Introduction
Business and Strategy Overview
Smart Industrial Strategy
2024 Performance
Outlook for 2025
StarLink Partnership Follow Up
Leaps Ambitions Progress
See & Spray Update
John Deere Dealers and Right to Repair
Employees
Inventory
Financial Services
Research and Development
Dealer Incentives
Other Interesting Quotes and Images
Final Comments
Follow Up Resources
Introduction
John Deere continues to be a most compelling organization in agriculture.
Not only are the color and branding iconic, but they continue to innovate internally, acquire strategically (e.g., Bear Flag Robotics, Blue River Technology), and evolve the how farmers tackle agronomic and precision challenges within agriculture, even at close to 200 years old.
Even with a tough 2024, John Deere stock was up year over year:
Business and Strategy Overview
John Deere’s business is broken up into four segments:
Smart Industrial Strategy
John Deere's Smart Industrial Strategy focuses on aligning its operations and innovations with three core areas:
Production Systems — Strategically aligning products and solutions to support customers' end-to-end production systems. This includes all operational steps necessary for growing agricultural products, ensuring optimal efficiency and integration across the farming cycle.
Technology Stack — Investing in technologies such as connectivity, automation, machine learning, and autonomy to deliver intelligent solutions. These include hardware, embedded software, data platforms, and applications aimed at optimizing operations, improving decision-making, and connecting production steps seamlessly.
Lifecycle Solutions — Providing integrated support for customers throughout the lifecycle of John Deere products. This encompasses services, precision upgrades, and value-added offerings designed to enhance ownership experiences and product longevity.
The strategy is underpinned by Leap Ambitions which provide measurable goals to drive economic value (more on their progress later).
2024 Performance
John Deere’s total revenue shrunk by almost $10 billion in 2024 from 2023.
Their revenue in 2024 was slightly below 2022 levels:
Operating margins declined YoY to 18.3%:
The most significant portion of Deere’s business continues to be the large-scale production and precision ag pillar of their business, accounting for $20.8 billion or 41% of their $51.7 billion in revenue. Production and Precision Ag was down 22% overall:
In the Production and Precision Ag business, sales volumes decreased 17% in the U.S. and Canada, 40% in Brazil, and 30% in Europe. Price realization in the U.S. and Canada was up 3% driven by inflation, but was partially offset by an increase in retail and pool funds sales incentives. Margins were down from over 26% to 21.7% in the segment.
The US and Canada remain the most significant portion of Deere’s business at 66%:
Margins were down in 2024, presumably much to do with lower operational efficiency of their manufacturing facilities.
One thing that could be a contributor in the short/medium term for Deere as well is their evolution towards recurring revenue models, from their 2023 Annual Report:
Integration of technology into equipment is a persistent market trend. Our Smart Industrial Operating Model and Leap Ambitions are intended to capitalize on this market trend. These technologies are incorporated into products within each of our operating segments. We expect this trend to persist for the foreseeable future. The investments in these technologies and in establishing a Solutions as a Service business model might increase our operating costs and may decrease operating margins during the transition period.
For example, as we look at pricing of their JDLink Boost, it seems like they are prioritizing uptake to support growth in other precision ag products over pricing it at a high level. A smart move.
Deere’s SG&A as a percentage of revenue has increased to it’s highest quarterly level in the last 3 years:
Their 2024 SG&A came in at 7.2% of revenue.
2025 Outlook
Agriculture and turf equipment sales are projected to decline globally in 2025 due to weaker farm fundamentals, high interest rates, and elevated used equipment inventory levels.
Deere expects a continued contraction of ag markets globally to result in ag equipment demand being challenged out to 2026.
In the U.S. and Canada, demand is expected to soften further as liquidity concerns and weak fundamentals weigh on farmers. Small agricultural equipment sales will likely decrease, although the dairy and livestock markets are set to remain profitable thanks to strong livestock and hay prices combined with low feed costs. Deere anticipates Production & Precision Ag sales to be down ~15% in FY2025. U.S. and Canadian large agriculture markets expected to contract by ~30%.
In Europe, equipment demand is expected to stay low, affected by depressed yields from adverse weather, reduced commodity prices driven by Ukrainian grain inflows and global pricing pressures, elevated input costs, and unfavorable agricultural policies.
South America offers a more mixed outlook, with Brazilian farmers benefiting from lower input costs, improving yields, and expanding acreage, even as crop prices decline. Argentina is expected to recover with currency stabilization supporting the agricultural sector.
In Asia, while foundational technology adoption and improved agricultural fundamentals in India support some demand, overall sales in the region are projected to see a slight decline.
StarLink Partnership Follow Up
In January 2024, John Deere announced a partnership with Starlink.
For 2025, Deere announced the release of JDLink Boost, which should augment their recurring revenue and and precision ag offerings in the years to come:
John Deere Brings Enhanced Machine Connectivity to Farms with the Release of JDLink® Boost - John Deere
JDLink Boost enhances connectivity in fields with limited cellular coverage, providing secure, faster access to machine and agronomic data. This real-time connection supports timely agronomic, while powering precision ag technologies like in-field data sharing for optimized resource use, AutoPath, and remote monitoring to address inefficiencies. Solutions like See & Spray can now do immediate data analysis and action. Connected support tools, including Expert Alerts™ and Remote Display Access, improve collaboration between farmers and dealers for faster issue resolution.
Last year I stated the following around their pricing:
I suspect the aim isn’t charge a significant sum for the hardware, and in fact, might even include the hardware on all new pieces of equipment without a significant cost so that they can ensure the option for that farmer to turn on connectivity in the future….because that will ultimately drive other service/product revenue in the future.
The price for JDLink Boost is $1,000 up front for the hardware and then 3-years of license. The price will be $200/year per unit after that.
For context, typical Starlink hardware ranges in price:
Starlink generally has a per month rate of:
That feeds into:
Leaps Ambition Progress
In 2022 John Deere laid out its Leaps Ambition:
These ambitions are designed to boost economic value and sustainability for our customers. The ambitions align across our customers’ production systems seeking to optimize their operations to deliver better outcomes with fewer resources.
I covered the John Deere Leaps Unlocked event in 2022, breaking down many of their targets.
The Leap Ambitions framework has three components: