John Deere makes money by selling large, expensive machines to farmers and construction companies, then lending those same customers the money to pay for them. The equipment side covers four-wheel-drive tractors, combine harvesters, cotton pickers, excavators, road-building machines, and lawn equipment. The financial services side, called John Deere Financial, earns interest by financing the purchases of those machines through loans and leases. When a farmer buys a new row-crop tractor, Deere often sells them the machine and then collects monthly payments on it for years. That double revenue stream, equipment plus financing, is what makes this business unusual among manufacturers. The diagram below traces where the money goes.
Five years of financial data tell a story with a clear peak in the middle and a sharp drop on both sides. Revenue climbed from $44.0 billion in 2021 to $61.3 billion in 2023, then fell back to $45.7 billion by 2025. That is nearly the same level as 2021, suggesting the boom years were driven by an unusual surge in farm demand rather than permanent growth.
One number held up better than revenue during the downturn: gross margin. When revenue was rising fast in 2021 and 2022, gross margin was around 33 to 34 cents on every dollar of sales. By 2024, even as revenue fell sharply, gross margin had climbed to over 40 cents on the dollar. That means the company was keeping more profit from each sale even while selling fewer machines. In 2025 it slipped back slightly to about 38 cents, but still well above where it started.
Free cash flow, which is the actual cash the business generates after paying for its operations and equipment upkeep, stayed remarkably stable through the cycle. It was $6.9 billion in 2021, dropped to $3.6 billion in 2022 when costs surged, recovered to $7.1 billion in 2023, and remained at $6.1 billion in 2025 even as revenue fell hard. That resilience partly reflects the financial services division collecting loan repayments steadily regardless of whether new machine sales are up or down.
Net debt improved dramatically over the period. In 2021, net debt sat at $35.8 billion. By 2025, it had fallen to $5.5 billion. Much of that 2021 figure reflected the financial services division carrying large loan portfolios on its books, so the comparison is not straightforward. Still, the direction is clear: the balance sheet is in better shape today than it was four years ago.
The risks facing this business right now are specific and documented, not vague. The first is tariffs. New tariffs imposed on imports cost the company approximately $600 million in fiscal 2025. Additional tariffs were placed on skid steer loaders and compact track loaders imported from Mexico, and the company has no guarantee it will receive exemptions. Other countries may respond with their own tariffs on products Deere exports, squeezing profits from both directions.
The second risk is the farm cycle itself. Weak farm conditions in 2025 caused lower sales, higher dealer discounts, and more customers falling behind on loan payments. The company expects these problems to continue into 2026. A third risk sits inside the supply chain: rare earth minerals used in motors and batteries come mainly from China. Losing access to those materials could delay production and raise costs significantly.
The fourth documented risk is a legal one. The Federal Trade Commission and five state attorneys general filed a lawsuit claiming Deere illegally controls the repair market by restricting parts and repair information to authorized dealers. A separate class action lawsuit makes similar claims. If Deere loses, it may be forced to open up its repair network and could face substantial financial penalties. This matters because the parts and service business is a steadier source of revenue than new equipment sales.
John Deere has been pushing hard into precision agriculture technology, including automated tractors, computer-vision sprayers that target individual weeds, and a digital platform called the John Deere Operations Center that connects machines in real time. The company calls this its Smart Industrial Operating Model and has set long-term goals it refers to as Leap Ambitions, targeting growth through automation, data services, and software sold on a recurring subscription basis. The idea is to move beyond pure equipment sales, which swing wildly with farm cycles, toward technology revenue that keeps coming in year after year.