In November 2023, Deere posted record results and, in the same call, warned that agricultural demand would decline the following year — a self-predicted peak. Net income guidance was then cut three times in a single year, and it wasn't until Q1 FY2026 that management explicitly called the cycle's bottom for the first time.
The story
November 2023: a record year, with a warning inside it
Deere closed FY2023 with what management called "an excellent fourth quarter" — revenue up 16% to $61.3B, operating margin near 22%. But the very same call contained the first crack: "looking to 2024, we expect agricultural market conditions to shift and demand to decline." The company called its own peak, in real time, at the moment of its best results.
Three guidance cuts in one year
2024 net income guidance was cut three times: from $7.75-8.25B (Nov 2023) to $7.0-7.5B (Feb 2024) to about $7.0B (May 2024). The 10-K's "Company Outlook" language grew more specific and darker each year — 2024's outlook said simply "demand is expected to decline," while 2025's outlook listed detailed causes: farmer near-term liquidity concerns, high interest rates, elevated used-equipment inventory.
Refining the language instead of changing the story
Rather than reversing course, Deere adjusted how it talked about two specific risks. The Right to Repair issue escalated from "the FTC is investigating" (FY2023, FY2024 10-Ks) to, in the FY2025 10-K: "on January 15, 2025, the FTC... filed a lawsuit against us," joined by five state governments — investigation to actual litigation, a completely different weight. Tariff risk went from an abstract "could potentially affect costs" to, for the first time in the FY2025 10-K, a concrete figure: "direct tariff-related costs in 2025 were approximately $600 million."
The first "bottom" call
Q1 FY2026 (February 2026) finally broke the pattern. Management said explicitly, for the first time: "the trends of the past three months have strengthened our conviction that 2026 is the bottom of this cycle." 2026 net income guidance was raised for the first time in two years, from $4.0-4.75B to $4.5-5.0B. The Q2 call (May 2026) added a caveat, though — "customer sentiment remains constrained" — signaling this wasn't yet full conviction.
Guidance scorecard
| Year | Initial guidance | Final guidance | Actual | Result |
|---|---|---|---|---|
| FY2023 | — | $9.75-10.0B (raised, Q3) | $10.17B | Beat |
| FY2024 | $7.75-8.25B | ~$7.0B (cut twice) | $7.10B | Met final, -14% vs. initial |
| FY2025 | $5.0-5.5B | $4.75-5.25B (widened, then narrowed) | $5.03B | Met within range |
| FY2026 | $4.0-4.75B | $4.5-5.0B (raised, Q1 — first raise in 2 years) | In progress | Pending |
Final guidance was met or beaten in 3 of 4 years. But comparing initial to actual tells a different story in the two down years — FY2024 and FY2025 both landed well below what was first promised, a classic downcycle pattern of starting optimistic then repeatedly cutting, until FY2026 finally reversed direction.
Source: earnings call guidance commentary from Q3 FY2023 through Q1/Q2 FY2026, checked against 10-K FY2023-FY2025 reported figures.
Timeline
- Nov 2023Q4 FY2023 earnings: record results, but 2024 demand decline forecast in the same call.
- Feb-May 20242024 net income guidance cut twice, from $7.75-8.25B to ~$7.0B.
- Jan 2025FTC and five states file a Right to Repair lawsuit — the risk escalates from investigation to litigation.
- 202510-K discloses direct tariff costs (~$600M) for the first time; analysts ask about the cycle bottom for five straight quarters.
- Feb 2026Q1 FY2026 earnings: management calls 2026 the cycle bottom for the first time; guidance raised for the first time in two years.
- May 2026Q2 FY2026 earnings: guidance held, but "customer sentiment remains constrained."
Our read
The clearest thread across these three years is how directly Deere named its own downturn — calling the top in the same call as its record results, then cutting guidance three times over the following year without ever obscuring the pattern. That transparency doesn't guarantee the FY2026 bottom call is correct, but it does mean the company's track record of disclosure has been unusually direct through a difficult cycle.
What we still don't know
- Whether FY2026 truly marks the cycle bottom isn't confirmed — the fiscal year ends in November 2026, and Q3 results (due August 2026) weren't available at the time of this analysis.
- The outcome of the FTC's Right to Repair lawsuit (settlement vs. trial) and its impact on parts/repair revenue is unknown.
- Equipment-only net debt, excluding the financial arm isn't separately disclosed.
- The exact timing of a large-ag demand recovery can't be predicted — management itself says only that "customer sentiment remains constrained" (Q2 FY2026 call, May 2026).
Frequently asked questions
Did Deere predict its own downturn?
Yes — in November 2023, Deere posted record results and, in the same call, warned that agricultural demand would decline the following year, effectively calling its own peak before the downturn arrived.
When did Deere call the bottom of the ag downcycle?
Not until Q1 FY2026 — after cutting net income guidance three times in a single year, management explicitly called the cycle's bottom for the first time that quarter.
What sources does this analysis draw from?
This piece is built from Deere's 10-K filings for FY2023 through FY2025 and 12 quarters of earnings call transcripts from August 2023 to May 2026.