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DEERE & CO (DE)·Q3 2025 Earnings Summary

Executive Summary

  • Deere delivered a revenue and EPS beat amid a challenging backdrop: Q3 net sales and revenues were $12.02B and diluted EPS $4.75, versus $13.15B and $6.29 last year and above S&P Global consensus; management emphasized disciplined inventory execution and technology adoption as offsets to macro and tariff pressures .
  • Consensus vs actual: EPS $4.75 vs $4.63 estimate*; revenue $12.02B vs $10.33B estimate* — a broad-based beat driven by Financial Services strength and resilient Small Ag & Turf margins despite lower shipments .
  • Guidance narrowed: FY25 net income now $4.75–$5.25B (from $4.75–$5.50B), effective tax rate cut to 19–21%, and Financial Services raised to ~$770M, reflecting higher tariff costs and improved credit loss provisioning outlook .
  • Stock reaction catalyst: Clear beat and narrowed guidance with explicit tariff headwinds; tactical pricing/incentives in Large Ag and C&F and accelerating adoption of See & Spray/automation should frame estimate revisions and near‑term narrative .

What Went Well and What Went Wrong

What Went Well

  • Broad beat vs consensus: EPS and revenue beat S&P Global estimates as disciplined execution and inventory management supported results while Financial Services net income rose 34% YoY to $205M .
  • Resilient margins in Small Ag & Turf: Operating margin held at 16.0% (vs 16.2% LY) despite lower volumes; tariff pressure was offset by lower warranty and production costs .
  • Technology adoption and utilization rising: “We’re seeing…increasing utilization and proven in-field effectiveness of advanced technologies—such as See & Spray and Harvest Settings Automation” (CEO John May), with >5,000 JDLink Boost orders and 30% more acres run on See & Spray 2024 units this season .

What Went Wrong

  • Segment pressure, especially Large Ag and C&F: Production & Precision Ag margins compressed to 13.6% (22.8% LY), and Construction & Forestry margins fell to 7.7% (13.8% LY) on lower volumes, negative price realization, and higher tariffs .
  • Tariff headwinds escalated: ~$200M impact in Q3; ~$300M YTD through Q3; FY25 pretax impact now ~ $600M, reflecting higher reciprocal rates and steel/aluminum tariffs .
  • Customers remain cautious, particularly in North America: Elevated used inventory, higher rates, and trade uncertainty dampened ordering; price incentives were deployed in earthmoving to counter competitive pressure .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Net sales and revenues ($USD Billions)$13.152 $12.763 $12.018
Net sales – Equipment Operations ($USD Billions)$11.387 $11.171 $10.357
Net Income ($USD Billions)$1.734 $1.804 $1.289
Diluted EPS ($USD)$6.29 $6.64 $4.75
Consolidated Operating Margin (%)——12.6%

Consensus vs Actual (S&P Global):

MetricQ3 2025 EstimateQ3 2025 Actual
Revenue ($USD Billions)$10.33*$12.02
EPS ($USD)$4.63*$4.75
# of Estimates (Revenue / EPS)9* / 16*—

Values retrieved from S&P Global*

Segment performance (Q3 2025 vs Q3 2024):

SegmentNet Sales ($USD Billions)Operating Profit ($USD Millions)Operating Margin (%)
Production & Precision Ag$4.27 vs $5.10 $580 vs $1,162 13.6% vs 22.8%
Small Ag & Turf$3.03 vs $3.05 $485 vs $496 16.0% vs 16.2%
Construction & Forestry$3.06 vs $3.24 $237 vs $448 7.7% vs 13.8%
Financial Services (net income)$0.205 vs $0.153 ——

KPIs and operational indicators:

KPIQ3 2025Prior Period
Tariff expense (pretax)~$200M in Q3; ~$300M YTD through Q3; FY25 ~ $600M Q2 tariff cost embedded; FY25 guide increased from ~$500M
Dealer inventories (U.S./Canada, % of TTM retail)2WD Tractors (100+ hp): 31%; Combines: 26% 32% / 22% (2024 comps)
Effective tax rate (FY25 guidance)19–21% 20–22% (Q2 guide)
Equipment Ops Net Operating Cash Flow (FY25 guide)$4.5–$5.5B $4.5–$5.5B

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Income (attributable to Deere & Co.)FY 2025$4.75–$5.50B $4.75–$5.25B Narrowed (lowered top)
Effective Tax RateFY 202520–22% 19–21% Lowered
Equipment Ops Net Operating Cash FlowFY 2025$4.5–$5.5B $4.5–$5.5B Maintained
PPA Net SalesFY 2025Down 15–20% Down 15–20% Maintained
PPA Operating MarginFY 202515.5–17.0% 15.5–17.0% Maintained
Small Ag & Turf Net SalesFY 2025Down 10–15% Down ~10% Raised (less down)
Small Ag & Turf Operating MarginFY 202511.5–13.5% 12.0–13.5% Raised lower bound
C&F Net SalesFY 2025Down 10–15% Down 10–15% Maintained
C&F Operating MarginFY 20258.5–11.5% 8.5–10.0% Lowered top end
Financial Services Net IncomeFY 2025~$750M ~$770M Raised
DividendNext payable—$1.62 per share payable Nov 10, 2025 Announced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1/Q2 2025)Current Period (Q3 2025)Trend
Tariffs/macroQ1 outlook excluded potential tariffs; Q2 included tariffs in outlook amid uncertainty Quantified: ~$200M Q3, ~$300M YTD, FY25 ~$600M; higher reciprocal rates and steel/aluminum tariffs Intensifying headwind; better quantified
Pricing/discountsQ2: negative price in C&F; incentives used; competitive pressure Negative price in Large Ag (used inventory pool funds) and C&F; Q4 price moderation expected; Model Year ’26 list price +2–4% Tactical pricing and incentive mix evolving
Inventory & productionQ1: streamlining field inventory; Q2: disciplined execution Significant reductions across segments; intent to build to retail demand in 2026, SAT and C&F underproduced ~10% in FY25 Constructive setup into 2026
Technology initiativesLimited detail in Q1/Q2 slidesJDLink Boost orders >5,000; See & Spray acres +30%; Harvest Settings Automation: +30% throughput, +20% productivity Accelerating adoption/utilization
Regional trendsQ1/Q2: Large Ag down ~30% U.S./Canada; Europe down ~5%; South America flat Europe improving (flat to down 5%), Asia flat–up 5%; South America cautious optimism; NA cautious Mixed; ex-NA improving
Regulatory/legalFTC self-repair lawsuit noted in risk factors Continued disclosure in forward-looking/risk statements Ongoing backdrop

Management Commentary

  • “By proactively managing inventory, we’ve matched production to retail demand…addressing high levels of used equipment…even in these challenging times.” — John May, Chairman & CEO .
  • “Tariff costs in the quarter were approximately $200 million…forecast for the pretax impact…now adjusted to nearly $600 million.” — Josh Beal, Director IR .
  • “We’ve intentionally and proactively responded to this downturn faster and more aggressively than ever before…positioned to respond as end markets inflect.” — Cory Reed, President (PPA) .
  • “We’ve surpassed 5,000 global orders [JDLink Boost]…Precision Essentials has driven engagement…See & Spray units running on 30% more acres this year.” — Josh Beal .
  • “Harvest Settings Automation…over 30% increase in throughput…more than 20% increase in machine productivity.” — Cory Reed .
  • “We remain incredibly well positioned and committed to delivering long term value…structurally improved the business…” — Josh Jepsen, CFO .

Q&A Highlights

  • Building to retail demand in 2026: Large Ag near retail in FY25; SAT and C&F underproduced ~10% this year — tailwind to build inline next year .
  • Early order programs: Sprayers EOP down ~20% YoY; customers preserving optionality amid uncertainty; combines early signs positive .
  • Pricing outlook: Accrued incentives in Q3 imply moderation in Q4; earthmoving benefited from incentives; bonus depreciation could support demand .
  • Cash flow guide range: Maintained wide range due to uncertainty; inventory reductions underpin confidence; midpoint unchanged .
  • Tariff breakdown: Europe and steel ~50% of impact; India/Japan add to ~2/3 of FY25 impact; mitigation via USMCA certification and sourcing actions .
  • Used equipment financing: Pool funds and split-rate financing from John Deere Financial aiding rate buy-downs and used movement .

Estimates Context

  • Q3 2025 EPS: $4.75 vs S&P Global consensus $4.63* (beat).
  • Q3 2025 Revenue: $12.02B vs S&P Global consensus $10.33B* (beat).
  • Forward context: 16 EPS estimates and 9 revenue estimates underpin Q3; consensus target price ~$525.78* .

Values retrieved from S&P Global*

Key Takeaways for Investors

  • Results beat consensus on both EPS and revenue; breadth of beat and narrowed FY25 guide should support near-term sentiment, though tariff headwinds temper the top end .
  • Segment mix matters: Large Ag and C&F margins compressed on price/tariffs; Small Ag & Turf margins resilient; watch for price moderation in Q4 and list price uplift in 2026 .
  • Tariffs are the swing factor: FY25 pretax impact now ~$600M; clarity on regimes will influence pricing actions and margins; mitigation efforts underway .
  • Inventory positioning is constructive: Material reductions and strategy to build to retail demand in 2026 create a production tailwind in SAT and C&F .
  • Technology adoption accelerating: See & Spray and automation driving measurable productivity gains — a medium-term margin and share catalyst .
  • Financial Services improved: Net income raised to ~$770M FY25; credit provisioning and SA&G trends supportive .
  • Upcoming event: 4Q 2025 earnings call scheduled Nov 26, 2025 — watch early order program developments and tariff/pricing updates .