Itron Inc.
10/30/2025 | Press release | Distributed by Public on 10/30/2025 10:00
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and notes included in this report and with the consolidated financial statements and the notes thereto for the fiscal year ended December 31, 2024 filed with the Securities and Exchange Commission (SEC) in our Annual Report on Form 10-K on February 25, 2025 (2024 Annual Report).
The objective of Management's Discussion and Analysis is to provide our assessment of the financial condition and results of operations, including an evaluation of our liquidity and capital resources along with material events occurring during the year. The discussion and analysis focuses on material events and uncertainties known to management that are reasonably likely to cause reported financial information not to be necessarily indicative of future operating results or of future financial condition. In addition, we address matters that are reasonably likely, based on management's assessment, to have a material impact on future operations. We expect the analysis will enhance a reader's understanding of our financial condition, cash flows, and other changes in financial condition and results of operations.
Documents we provide to the SEC are available free of charge under the Investors section of our website at www.itron.comas soon as practicable after they are filed with or furnished to the SEC. In addition, these documents are available at the SEC's website (http://www.sec.gov).
Certain Forward-Looking Statements
This report contains, and our officers and representatives may from time to time make, "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical factors nor assurances of future performance. These statements are based on our expectations about, among others, revenues, operations, financial performance, earnings, liquidity, earnings per share, cash flows and restructuring activities including headcount reductions and other cost savings initiatives. This document reflects our current strategy, plans and expectations and is based on information currently available as of the date of this Quarterly Report on Form 10-Q. When we use words such as "expect", "intend", "anticipate", "believe", "plan", "goal", "seek", "project", "estimate", "future", "strategy", "objective", "may", "likely", "should", "will", "will continue", and similar expressions, including related to future periods, they are intended to identify forward-looking statements. Forward-looking statements rely on a number of assumptions and estimates. Although we believe the estimates and assumptions upon which these forward-looking statements are based are reasonable, any of these estimates or assumptions could prove to be inaccurate and the forward-looking statements based on these estimates and assumptions could be incorrect. Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Actual results and trends in the future may differ materially from those suggested or implied by the forward-looking statements depending on a variety of
factors. Therefore, you should not rely on any of these forward-looking statements. Some of the factors that we believe could affect our results include our ability to execute on our restructuring plans, our ability to achieve estimated cost savings, the rate and timing of customer demand for our products, rescheduling of current customer orders, changes in estimated liabilities for product warranties, adverse impacts of litigation, changes in laws, regulations, tariffs, sanctions, trade policies and retaliatory responses, our dependence on new product development and intellectual property, future acquisitions, changes in estimates for stock-based and bonus compensation, increasing volatility in foreign exchange rates, international business risks, uncertainties caused by adverse economic conditions, including without limitation those resulting from extraordinary events or circumstances and other factors that are more fully described in Part I, Item 1A: Risk Factors included in our 2024 Annual Report and other reports on file with the SEC. We undertake no obligation to update or revise any forward-looking statement, whether written or oral.
Overview
We are a technology, solutions, and service company, and we are a leader in the Industrial Internet of Things (IIoT). We offer solutions that enable utilities and municipalities to safely, securely, and reliably operate their critical infrastructure. Our solutions include the deployment of smart networks, software, services, devices, sensors, and data analytics that allow our customers to manage assets, secure revenue, lower operational costs, improve customer service, improve safety, and enable efficient management of valuable resources. Our comprehensive solutions and data analytics address the unique challenges facing the energy, water, and municipality sectors, including increasing demand on resources, non-technical loss, leak detection, environmental and regulatory compliance, and improved operational reliability.
We operate under the Itron brand worldwide and manage and report under three operating segments: Device Solutions, Networked Solutions, and Outcomes. The product and operating definitions of the three segments are as follows:
Device Solutions- This segment primarily includes hardware products used for measurement, control, or sensing that can have communications capability embedded for use with our broader Itron systems, i.e., hardware-based products that may be part of a complete end-to-end solution. Examples from the Device Solutions portfolio include: standard endpoints that are shipped without Itron communications, such as our standard electricity, gas, and water meters for a variety of global markets and adhering to regulations and standards within those markets, as well as our heat and allocation products; communicating meters that may be sold as part of an Itron end-to-end solution and designed to meet market requirements; and the implementation and installation of communicating and non-communicating devices.
Networked Solutions- This segment primarily includes a combination of communicating devices (e.g., smart meters, modules, endpoints, and sensors), network infrastructure, network design services, and associated headend management and application software designed and sold as a complete solution for acquiring and transporting robust application-specific data. Networked Solutions includes products, software and services for the implementation, installation, and management of communicating devices and data networks. The IIoT solutions supported by this segment include automated meter reading (AMR) and advanced metering infrastructure (AMI) for electricity, water, and gas; distributed energy resource management (DERMs); grid edge devices; distribution automation communications; smart lighting; and smart city sensors and applications. Our IIoT platform allows utility and smart city applications to be run and managed on a flexible, secure, and interoperable multi-purpose network.
Outcomes- This segment primarily includes our value-added, enhanced software and services in which we enable grid edge intelligence and manage, organize, analyze, and interpret raw, anonymized data using artificial intelligence, machine learning, statistical modeling, and other analytics. This delivers new value for utilities and smart cities through improving decision making, maximizing operational profitability, engaging consumers, enhancing resource efficiency, and improving grid resiliency and reliability. Outcomes supports high-value use cases, such as data management, grid operations, distributed intelligence, AMI operations, gas distribution and safety, water operations management, revenue assurance, DERMs, energy forecasting, consumer engagement, smart payment, and fleet energy resource management. Utilities leverage these outcomes to unlock the capabilities of their networks and devices, improve the productivity of their workforce, increase the reliability of their operations, manage and optimize the proliferation of distributed energy resources (DERs), address grid complexity, and enhance the customer experience. Revenue from these offerings are primarily recurring in nature and would include any direct management of Device Solutions, Networked Solutions, and other third-parties' products on behalf of our end customers.
We have three measures of segment performance: revenues, gross profit (margin), and operating income (margin). Intersegment revenues are minimal. Certain operating expenses are allocated to the operating segments based upon internally established allocation methodologies. Interest income, interest expense, other income (expense), the income tax provision (benefit), and certain corporate operating expenses are neither allocated to the segments nor included in the measures of segment performance.
Non-GAAP Measures
To supplement our consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States (GAAP), we use certain adjusted or non-GAAP financial measures, including non-GAAP operating expense, non-GAAP operating income, non-GAAP net income, non-GAAP diluted earnings per share (EPS), adjusted EBITDA, free cash flow, and constant currency. We provide these non-GAAP financial measures because we believe they provide greater transparency and represent supplemental information used by management in its financial and operational decision making. We exclude certain costs in our non-GAAP financial measures as we believe the net result is a measure of our core business. We believe these measures facilitate operating performance comparisons from period to period by eliminating potential differences caused by the existence and timing of certain expense items that would not otherwise be apparent on a GAAP basis. Non-GAAP performance measures should be considered in addition to, and not as a substitute for, results prepared in accordance with GAAP. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. Our non-GAAP financial measures may be different from those reported by other companies.
In our discussions of the operating results below, we may refer to the impact of foreign currency exchange rate fluctuations, which are references to the differences between the foreign currency exchange rates we use to convert operating results from local currencies into U.S. dollars for reporting purposes. We also use the term "constant currency",which represents results adjusted to exclude foreign currency exchange rate impacts. We calculate the constant currency change as the difference between the current period results translated using the current period currency exchange rates and the comparable prior period's results restated using current period currency exchange rates. We believe the reconciliations of changes in constant currency provide useful supplementary information to investors in light of fluctuations in foreign currency exchange rates.
Refer to the Non-GAAP Measuressection below on pages 45-48 for information about these non-GAAP measures and the detailed reconciliation of items that impacted non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP diluted EPS, adjusted EBITDA, and free cash flow in the periods presented.
Total Company Highlights
Highlights and significant developments for the three months ended September 30, 2025 compared with the three months ended September 30, 2024
•Revenues were $581.6 million compared with $615.5 million in 2024
•Gross margin was 37.7%, compared with 34.1% in 2024
•Operating expenses increased $2.1 million, or 2%, compared with 2024
•Net income attributable to Itron, Inc. was $65.6 million compared with net income of $78.0 million in 2024
•GAAP diluted EPS decreased by $0.29to $1.41 in 2025
•Non-GAAP net income attributable to Itron, Inc. was $71.8 million compared with $84.3 million in 2024
•Non-GAAP diluted EPS was $1.54, a decrease of $0.30 compared with 2024
•Adjusted EBITDA was $97.2 million compared with $88.6 million in 2024
•Total backlog was $4.3 billion, and twelve-month backlog was $1.5 billion at September 30, 2025, compared with $4.0 billionand $1.7 billionat September 30, 2024
Highlights and significant developments for the ninemonths ended September 30, 2025 compared with the nine months ended September 30, 2024
•Revenues were $1.8 billion in both periods.
•Gross margin was 36.8% compared with 34.2% in 2024
•Operating expenses increased $1.9 million compared with 2024
•Net income attributable to Itron, Inc. was $199.4 million compared with net income of $181.0 million in 2024
•GAAP diluted EPS increased by $0.39 to $4.30 in 2025
•Non-GAAP net income attributable to Itron, Inc. was $217.0 millioncompared with $197.6 millionin 2024
•Non-GAAP diluted EPS was $4.68, an increase of $0.41 compared with 2024
•Adjusted EBITDA was $275.0 million compared with $242.2 million in 2024
Urbint, Inc. Acquisition
On October 6, 2025, we entered into an Agreement and Plan of Merger to acquire 100 percent of the outstanding equity of Urbint, Inc., a privately held software and services company, based in Florida, serving utilities. The acquisition provides value to Itron through the leverage of Urbint's AI-powered operational resilience solutions to enhance our offerings to our customers. The acquisition is expected to close in the fourth quarter of 2025. The purchase price for the acquisition is $325 million, with adjustment for final working capital and other closing considerations to be determined following the transaction's close. The purchase will be funded through cash on hand.
2025 Credit Facility
On September 25, 2025, we entered into a third amended and restated credit agreement (the 2025 credit facility) providing for committed credit facilities in the amount of $750 million. The 2025 credit facility consists of a multi-currency revolving line of credit (the revolver) in the amount of $750 million. The revolver includes a standby letter of credit sub-facility in the amount of $300 million, and a swingline sub-facility in the amount of $50 million. The 2025 credit facility amends and restates, in its entirety, our amended and restated credit agreement dated January 5, 2018 (the 2018 credit facility).
Any outstanding principal under the revolver is due at maturity on September 25, 2030. Principal amounts paid prior to the maturity date may be reborrowed prior to such date. However, that date may be advanced to April 15, 2030 if we do not settle or extend a sufficient portion of our outstanding convertible notes, as detailed in the credit agreement.Refer to Item 1: Financial Statements (Unaudited), Note 6: Debt included in this Quarterly Report on Form 10-Q for further details.
Stock Repurchase Programs
Effective September 19, 2024, Itron's Board of Directors authorized a repurchase up to $100 million of our common stock over an 18-month period (the 2024 Stock Repurchase Program). The repurchase program is intended to comply with Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended. We have repurchased no shares under the 2024 Stock Repurchase Program.
Total Company GAAP and Non-GAAP Highlights and Endpoints Under Management:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| In thousands, except margin and per share data | 2025 | 2024 | % Change | 2025 | 2024 | % Change | |||||||||||||||||||||||||||||
| GAAP | |||||||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||||
| Product revenues | $ | 494,323 | $ | 538,249 | (8)% | $ | 1,534,648 | $ | 1,598,978 | (4)% | |||||||||||||||||||||||||
| Service revenues | 87,302 | 77,213 | 13% | 260,889 | 228,995 | 14% | |||||||||||||||||||||||||||||
| Total revenues | 581,625 | 615,462 | (5)% | 1,795,537 | 1,827,973 | (2)% | |||||||||||||||||||||||||||||
| Gross profit | 219,545 | 209,598 | 5% | 660,382 | 625,437 | 6% | |||||||||||||||||||||||||||||
| Operating expenses | 137,762 | 135,665 | 2% | 425,973 | 424,057 | -% | |||||||||||||||||||||||||||||
| Operating income | 81,783 | 73,933 | 11% | 234,409 | 201,380 | 16% | |||||||||||||||||||||||||||||
| Other income (expense) | 8,918 | 8,492 | 5% | 22,053 | 13,301 | 66% | |||||||||||||||||||||||||||||
| Income tax provision | (24,478) | (3,515) | 596% | (56,137) | (32,124) | 75% | |||||||||||||||||||||||||||||
| Net income attributable to Itron, Inc. | 65,613 | 77,959 | (16)% | 199,427 | 180,998 | 10% | |||||||||||||||||||||||||||||
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Non-GAAP(1)
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| Non-GAAP operating expenses | $ | 130,319 | $ | 130,628 | -% | $ | 408,661 | $ | 410,058 | -% | |||||||||||||||||||||||||
| Non-GAAP operating income | 89,226 | 78,970 | 13% | 251,721 | 215,379 | 17% | |||||||||||||||||||||||||||||
| Non-GAAP net income attributable to Itron, Inc. | 71,812 | 84,251 | (15)% | 217,036 | 197,644 | 10% | |||||||||||||||||||||||||||||
| Adjusted EBITDA | 97,248 | 88,598 | 10% | 274,978 | 242,183 | 14% | |||||||||||||||||||||||||||||
| GAAP Margins and EPS | |||||||||||||||||||||||||||||||||||
| Gross margin | |||||||||||||||||||||||||||||||||||
| Product gross margin | 35.4 | % | 32.6 | % | 34.6 | % | 32.7 | % | |||||||||||||||||||||||||||
| Service gross margin | 50.9 | % | 43.9 | % | 49.4 | % | 44.8 | % | |||||||||||||||||||||||||||
| Total gross margin | 37.7 | % | 34.1 | % | 36.8 | % | 34.2 | % | |||||||||||||||||||||||||||
| Operating margin | 14.1 | % | 12.0 | % | 13.1 | % | 11.0 | % | |||||||||||||||||||||||||||
| Net income per common share - Basic | $ | 1.43 | $ | 1.73 | $ | 4.38 | $ | 3.98 | |||||||||||||||||||||||||||
| Net income per common share - Diluted | $ | 1.41 | $ | 1.70 | $ | 4.30 | $ | 3.91 | |||||||||||||||||||||||||||
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Non-GAAP EPS (1)
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| Non-GAAP diluted EPS | $ | 1.54 | $ | 1.84 | $ | 4.68 | $ | 4.27 | |||||||||||||||||||||||||||
(1)These measures exclude certain expenses that we do not believe are indicative of our core operating results. See pages 45-48 for information about these non-GAAP measures and reconciliations to the most comparable GAAP measures.
Definition of an Endpoint Under Management
An "endpoint under management" is a unique endpoint, or data from that endpoint, which Itron manages via our networked platform or a third party's platform that is connected to one or multiple types of endpoints. Itron's management of an endpoint occurs when, on behalf of our client, we manage one or more of the physical endpoints, operating system, data, application, data analytics, and/or outcome deriving from this unique endpoint. Itron has the ability to monitor and/or manage endpoints or the data from the endpoints via Network-as-a-Service (NaaS), Software-as-a-Service (SaaS), and/or a licensed offering at a remote location designated by our client. Our offerings typically, but not exclusively, provide an Itron product or Itron certified partner product to our clients that has the capability of one-way communication or two-way communication of data that may include remote product configuration and upgradability. Examples of these offerings include our Temetra, OpenWay®, OpenWay® Riva, and Gen X.
This metric primarily includes Itron or third-party endpoints deployed within the electricity, water, and gas utility industries, as well as within cities and municipalities around the globe. Endpoints under management also include smart communication
modules and network interface cards (NICs) within Itron's platforms. At times, these NICs are communicating modules that were sold separately from an Itron product directly to our customers or to third party manufacturers for use in endpoints such as electric, water, and gas meters; streetlights and other types of IIoT sensors and actuators; sensors and other capabilities that the end customer would like Itron to connect and manage on its behalf.
The endpoints under management metric only accounts for the specific, unique endpoint itself, though that endpoint may have multiple applications, services, outcomes, and higher margin recurring offerings associated with it. This metric does not reflect the multi-application value that can be derived from the individual endpoint itself. Additionally, this metric excludes those endpoints that are non-communicating, non-Itron system hardware component sales or licensed applications for which Itron does not manage the unit or the data from that unit directly.
While the one-time sale of the platform and endpoints is primarily delivered via our Networked Solutions segment, our enhanced solutions, on-going monitoring, maintenance, software, analytics, and distributed intelligent applications are predominantly recognized in our Outcomes segment. We anticipate the opportunity to increase our penetration of Outcomes applications, software, and managed applications will increase as our endpoints under management increases. Management believes using the endpoints under management metric enhances insight of the strategic and operational direction of our Networked Solutions and Outcomes segments to serve clients for years following their one-time installation of an endpoint.
A summary of our endpoints under management is as follows:
| As of September 30, | |||||||||||
| Units in thousands | 2025 | 2024 | |||||||||
| Endpoints under management | 115,466 | 100,999 | |||||||||
Results of Operations
Revenues and Gross Margin
The actual results of and effects of changes in foreign currency exchange rates on revenues and gross profit were as follows:
| Effect of Changes in Foreign Currency Exchange Rates | Constant Currency Change | Total Change | ||||||||||||||||||||||||||||||
| Three Months Ended September 30, | ||||||||||||||||||||||||||||||||
| In thousands | 2025 | 2024 | ||||||||||||||||||||||||||||||
| Total Company | ||||||||||||||||||||||||||||||||
| Revenues | $ | 581,625 | $ | 615,462 | $ | 4,831 | $ | (38,668) | $ | (33,837) | ||||||||||||||||||||||
| Gross profit | 219,545 | 209,598 | 1,060 | 8,887 | 9,947 | |||||||||||||||||||||||||||
| Effect of Changes in Foreign Currency Exchange Rates | Constant Currency Change | Total Change | ||||||||||||||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||
| In thousands | 2025 | 2024 | ||||||||||||||||||||||||||||||
| Total Company | ||||||||||||||||||||||||||||||||
| Revenues | $ | 1,795,537 | $ | 1,827,973 | $ | 4,016 | $ | (36,452) | $ | (32,436) | ||||||||||||||||||||||
| Gross profit | 660,382 | 625,437 | 1,109 | 33,836 | 34,945 | |||||||||||||||||||||||||||
Revenues - Three months ended September 30, 2025 vs. Three months ended September 30, 2024
Total revenues decreased $33.8 million in the current 2025 quarter, compared with the same period in 2024. Product revenues decreased by $43.9 million, and service revenues increased $10.1 million. Device Solutions decreased by $19.1 million; Networked Solutions decreased by $23.0 million; and Outcomes increased by $8.3 million when compared with the same period last year. Changes in exchange rates favorably impacted total revenues by $4.8 million, of which $4.2 million favorably impacted Device Solutions.
Revenues - Nine months ended September 30, 2025 vs. Nine months ended September 30, 2024
Total revenues decreased $32.4 million compared with the same period in 2024. Product revenues decreased by $64.3 million, and service revenues increased by $31.9 million. Device Solutions decreased by $25.8 million; Networked Solutions decreased by $31.6 million; and Outcomes increased by $24.9 million when compared with the same period last year. Changes in
exchange rates favorably impacted total revenues by $4.0 million, of which $4.7 million favorably impacted Device Solutions and $1.2 million unfavorably impacted Networked Solutions.
Gross Margin - Three months ended September 30, 2025 vs. Three months ended September 30, 2024
Gross margin in the 2025period was 37.7%, compared with 34.1% in 2024. Product sales gross margin increased to 35.4% for the quarter in 2025, compared with 32.6% in 2024. Gross margin on service revenues increased to 50.9% in 2025, compared with 43.9% in 2024.
Gross Margin - Nine months ended September 30, 2025 vs. Nine months ended September 30, 2024
Gross margin was 36.8%, compared with 34.2% in 2024. Product sales gross margin increased to 34.6%, compared with 32.7% in 2024,and gross margin on service revenues increased to 49.4%, compared with 44.8% in 2024.
Refer to Operating Segment Results section below for further detail on total company revenues and gross margin.
Operating Expenses
The actual results of and effects of changes in foreign currency exchange rates on operating expenses were as follows:
| Effect of Changes in Foreign Currency Exchange Rates | Constant Currency Change | Total Change | |||||||||||||||||||||||||||||||||
| Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||
| In thousands | 2025 | 2024 | |||||||||||||||||||||||||||||||||
| Total Company | |||||||||||||||||||||||||||||||||||
| Sales, general and administrative | $ | 83,139 | $ | 79,639 | $ | 434 | $ | 3,066 | $ | 3,500 | |||||||||||||||||||||||||
| Research and development | 50,032 | 51,237 | 54 | (1,259) | (1,205) | ||||||||||||||||||||||||||||||
| Amortization of intangible assets | 4,403 | 4,814 | 41 | (452) | (411) | ||||||||||||||||||||||||||||||
| Restructuring | 188 | (723) | 17 | 894 | 911 | ||||||||||||||||||||||||||||||
| Loss on sale of business | - | 698 | 24 | (722) | (698) | ||||||||||||||||||||||||||||||
| Total operating expenses | $ | 137,762 | $ | 135,665 | $ | 570 | $ | 1,527 | $ | 2,097 | |||||||||||||||||||||||||
| Effect of Changes in Foreign Currency Exchange Rates | Constant Currency Change | Total Change | |||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||
| In thousands | 2025 | 2024 | |||||||||||||||||||||||||||||||||
| Total Company | |||||||||||||||||||||||||||||||||||
| Sales, general and administrative | $ | 257,665 | $ | 254,023 | $ | 958 | $ | 2,684 | $ | 3,642 | |||||||||||||||||||||||||
| Research and development | 153,932 | 156,691 | (106) | (2,653) | (2,759) | ||||||||||||||||||||||||||||||
| Amortization of intangible assets | 13,425 | 13,311 | 62 | 52 | 114 | ||||||||||||||||||||||||||||||
| Restructuring | 872 | (624) | 11 | 1,485 | 1,496 | ||||||||||||||||||||||||||||||
| Loss on sale of business | 79 | 656 | (10) | (567) | (577) | ||||||||||||||||||||||||||||||
| Total operating expenses | $ | 425,973 | $ | 424,057 | $ | 915 | $ | 1,001 | $ | 1,916 | |||||||||||||||||||||||||
Operating expenses increased $2.1 million for the third quarter of 2025 as compared with the same period in 2024. This was primarily the result of a $3.5 million increase in sales, general and administrative expenses and a $0.9 million increase in restructuring expenses partially offset by a $1.2 million decrease in research and development expenses and a $0.7 million loss on sale of business recognized in 2024.
Operating expenses increased $1.9 million for the nine months ended September 30, 2025 as compared with the same period in 2024. This was primarily the result of a $3.6 million increase in sales, general and administrative expenses, primarily driven by increased labor costs, and a $1.5 million increase in restructuring expenses, partially offset by a $2.8 million decrease in research and development expenses driven by reduced professional service costs and a $0.7 million loss on sale of business recognized in 2024. Refer to Item 1: Financial Statements (Unaudited), Note 12: Restructuring included in this Quarterly Report on Form 10-Q for additional information.
Other Income (Expense)
The following table shows the components of other income (expense):
| Three Months Ended September 30, | % Change | Nine Months Ended September 30, | % Change | ||||||||||||||||||||||||||||||||
| In thousands | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||
| Interest income | $ | 13,569 | $ | 13,420 | 1% | $ | 37,582 | $ | 22,394 | 68% | |||||||||||||||||||||||||
| Amortization of prepaid debt fees | (1,820) | (1,802) | 1% | (5,401) | (3,669) | 47% | |||||||||||||||||||||||||||||
| Other interest expense | (3,827) | (3,803) | 1% | (11,487) | (6,119) | 88% | |||||||||||||||||||||||||||||
| Interest expense | (5,647) | (5,605) | 1% | (16,888) | (9,788) | 73% | |||||||||||||||||||||||||||||
| Other income (expense), net | 996 | 677 | 47% | 1,359 | 695 | 96% | |||||||||||||||||||||||||||||
| Total other income (expense) | $ | 8,918 | $ | 8,492 | 5% | $ | 22,053 | $ | 13,301 | 66% | |||||||||||||||||||||||||
Total other income (expense) for the three and nine months ended September 30, 2025 was income of $8.9 million and $22.1 million, compared with income of $8.5 million and $13.3 million in the same period in 2024.
The net other income for the three months ended September 30, 2025 was substantially flat as compared with the same period in 2024.
The increase in net other income for the nine months ended September 30, 2025, as compared with the same period in 2024, was driven by the $15.2 million increase in interest income, primarily due to interest earned on the invested proceeds from the 2024 convertible notes (the 2024 Notes). Additionally, interest expense increased by $5.2 million in 2025 as the 2024 Notes were outstanding for the entire nine-month period, and amortization of prepaid debt fees increased by $1.7 million compared with the same period in 2024. Refer to Item 1: Financial Statements (Unaudited), Note 6: Debt included in this Quarterly Report on Form 10-Q for additional information.
Income Tax Provision
For the three and nine months ended September 30, 2025, our income tax expense was $24.5 million and $56.1 million, compared with income tax expense of $3.5 million and $32.1 million for the same period in 2024. Our tax rate for the three and nine months ended September 30, 2025 of 27% and 22% differed from the federal statutory rate of 21% due to the impact of valuation allowances on deferred tax assets, the forecasted mix of earnings in domestic and international jurisdictions, the effect of cross-border tax laws, nondeductible executive compensation, a benefit related to stock-based compensation, tax credits, state taxes, and uncertain tax positions. Our tax rate for the three and nine months ended September 30, 2024 of 4% and 15% differed from the federal statutory rate of 21% due to the impact of valuation allowances on deferred tax assets, the forecasted mix of earnings in domestic and international jurisdictions, U.S. taxation of foreign earnings including GILTI (Global Intangible Low-Taxed Income), net of Section 250 deduction, Subpart F income, a benefit related to stock-based compensation, tax credits, state taxes, and uncertain tax positions. Approximately $14 million in discrete tax benefits were recorded related to the favorable resolution of a foreign tax audit in the three months ended September 30, 2024.
A sweeping legislative package formally titled "An act to provide for reconciliation pursuant to title II of H. Con. Res. 14" (the "Act"), and commonly referred to as the One Big Beautiful Bill Act, was signed into law on July 4, 2025. Since ASC 740 requires the income tax effects of a change in tax law to be recognized in the period of enactment, this Act is incorporated into our annual effective tax rate and current and expected cash taxes as of September 30, 2025. Included in our effective tax rate this quarter is an increase of approximately $4 million in full year tax expense, and a reduction in forecasted cash taxes of approximately $45 million from amounts calculated before passage of the Act. These results are driven by numerous changes to existing tax law that are retroactive to 2025, including provisions for the current deductibility of certain property additions and deductibility of current and previously capitalized domestic research and development costs. Additionally, multiple changes are effective beginning in 2026 and we are continuing to evaluate the impacts they will have on our subsequent consolidated financial statements and related disclosures.
The Organization for Economic Cooperation and Development (OECD) guidance under the Base Erosion and Profit Shifting (BEPS) initiative aims to minimize perceived tax abuses and modernize global tax policy, including the implementation of a global minimum effective tax rate of 15%. In December 2022, the Council of the European Union adopted OECD Pillar 2 for implementation by European Union member states by December 31, 2023. The resulting legislation in most countries where Itron has significant operations took effect for calendar year 2024. The OECD continues to release more guidance on these rules and framework, and we are evaluating the impact to our financial position. These enactments or amendments could adversely affect our tax rate and ultimately result in a negative impact on our operating results and cash flows. Consistent with calculations for calendar year 2024, the Company anticipates it will meet the safe harbors in most jurisdictions in 2025, and any remaining top-up tax should be immaterial.
For additional discussion related to income taxes, see Item 1: Financial Statements (Unaudited), Note 10: Income Taxes included in this Quarterly Report on Form 10-Q.
Operating Segment Results
For a description of our operating segments, refer to Item 1: Financial Statements (Unaudited), Note 15: Segment Information included in this Quarterly Report on Form 10-Q. The following tables and discussion highlight significant changes in trends or components of each operating segment:
| Three Months Ended September 30, |
Nine Months Ended September 30, |
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| In thousands | 2025 | 2024 | % Change | 2025 | 2024 | % Change | |||||||||||||||||||||||||||||||||||||||||
| Segment revenues | |||||||||||||||||||||||||||||||||||||||||||||||
| Device Solutions | $ | 103,622 | $ | 122,738 | (16)% | $ | 342,253 | $ | 368,040 | (7)% | |||||||||||||||||||||||||||||||||||||
| Networked Solutions | 393,702 | 416,713 | (6)% | 1,205,368 | 1,236,933 | (3)% | |||||||||||||||||||||||||||||||||||||||||
| Outcomes | 84,301 | 76,011 | 11% | 247,916 | 223,000 | 11% | |||||||||||||||||||||||||||||||||||||||||
|
Total revenues
|
$ | 581,625 | $ | 615,462 | (5)% | $ | 1,795,537 | $ | 1,827,973 | (2)% | |||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| In thousands |
Gross Profit |
Gross Margin |
Gross Profit |
Gross Margin |
Gross Profit |
Gross Margin |
Gross Profit |
Gross Margin |
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| Segment gross profit and margin | |||||||||||||||||||||||||||||||||||||||||||||||
| Device Solutions | $ | 32,007 | 30.9% | $ | 33,342 | 27.2% | $ | 103,351 | 30.2% | $ | 94,637 | 25.7% | |||||||||||||||||||||||||||||||||||
| Networked Solutions | 154,761 | 39.3% | 149,648 | 35.9% | 460,718 | 38.2% | 452,830 | 36.6% | |||||||||||||||||||||||||||||||||||||||
| Outcomes | 32,777 | 38.9% | 26,608 | 35.0% | 96,313 | 38.8% | 77,970 | 35.0% | |||||||||||||||||||||||||||||||||||||||
|
Total gross profit and margin
|
$ | 219,545 | 37.7% | $ | 209,598 | 34.1% | $ | 660,382 | 36.8% | $ | 625,437 | 34.2% | |||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, |
Nine Months Ended September 30, |
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| In thousands | 2025 | 2024 | % Change | 2025 | 2024 | % Change | |||||||||||||||||||||||||||||||||||||||||
| Segment operating expenses | |||||||||||||||||||||||||||||||||||||||||||||||
| Device Solutions | $ | 7,132 | $ | 6,857 | 4% | $ | 22,551 | $ | 22,724 | (1)% | |||||||||||||||||||||||||||||||||||||
| Networked Solutions | 32,881 | 34,417 | (4)% | 101,730 | 103,477 | (2)% | |||||||||||||||||||||||||||||||||||||||||
| Outcomes | 15,971 | 15,422 | 4% | 49,490 | 47,042 | 5% | |||||||||||||||||||||||||||||||||||||||||
| Corporate unallocated | 81,778 | 78,969 | 4% | 252,202 | 250,814 | 1% | |||||||||||||||||||||||||||||||||||||||||
| Total operating expenses | $ | 137,762 | $ | 135,665 | 2% | $ | 425,973 | $ | 424,057 | -% | |||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| In thousands |
Operating
Income
|
Operating Margin |
Operating
Income
|
Operating Margin |
Operating
Income
|
Operating Margin |
Operating
Income
|
Operating Margin |
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Segment operating income and operating margin
|
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| Device Solutions | $ | 24,875 | 24.0% | $ | 26,485 | 21.6% | $ | 80,800 | 23.6% | $ | 71,913 | 19.5% | |||||||||||||||||||||||||||||||||||
| Networked Solutions | 121,880 | 31.0% | 115,231 | 27.7% | 358,988 | 29.8% | 349,353 | 28.2% | |||||||||||||||||||||||||||||||||||||||
| Outcomes | 16,806 | 19.9% | 11,186 | 14.7% | 46,823 | 18.9% | 30,928 | 13.9% | |||||||||||||||||||||||||||||||||||||||
| Corporate unallocated | (81,778) | NM | (78,969) | NM | (252,202) | NM | (250,814) | NM | |||||||||||||||||||||||||||||||||||||||
|
Total operating income and operating margin
|
$ | 81,783 | 14.1% | $ | 73,933 | 12.0% | $ | 234,409 | 13.1% | $ | 201,380 | 11.0% | |||||||||||||||||||||||||||||||||||
Device Solutions
The effects of changes in foreign currency exchange rates and the constant currency changes in certain Device Solutions segment financial results were as follows:
| Effect of Changes in Foreign Currency Exchange Rates | Constant Currency Change | Total Change | ||||||||||||||||||||||||||||||
| Three Months Ended September 30, | ||||||||||||||||||||||||||||||||
| In thousands | 2025 | 2024 | ||||||||||||||||||||||||||||||
| Device Solutions Segment | ||||||||||||||||||||||||||||||||
| Revenues | $ | 103,622 | $ | 122,738 | $ | 4,215 | $ | (23,331) | $ | (19,116) | ||||||||||||||||||||||
| Gross profit | 32,007 | 33,342 | 714 | (2,049) | (1,335) | |||||||||||||||||||||||||||
| Operating expenses | 7,132 | 6,857 | 62 | 213 | 275 | |||||||||||||||||||||||||||
| Effect of Changes in Foreign Currency Exchange Rates | Constant Currency Change | Total Change | ||||||||||||||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||
| In thousands | 2025 | 2024 | ||||||||||||||||||||||||||||||
| Device Solutions Segment | ||||||||||||||||||||||||||||||||
| Revenues | $ | 342,253 | $ | 368,040 | $ | 4,737 | $ | (30,524) | $ | (25,787) | ||||||||||||||||||||||
| Gross profit | 103,351 | 94,637 | 837 | 7,877 | 8,714 | |||||||||||||||||||||||||||
| Operating expenses | 22,551 | 22,724 | 76 | (249) | (173) | |||||||||||||||||||||||||||
Revenues - Three months ended September 30, 2025 vs. Three months ended September 30, 2024
Revenues decreased $19.1 million, or 16%. Changes in foreign currency exchange rates favorably impacted revenues by $4.2 million. Revenues were lower due to decreased shipments in Europe, the Middle East and Africa and North America.
Revenues - Nine months ended September 30, 2025 vs. Nine months ended September 30, 2024
Revenues decreased $25.8 million, or 7%. Changes in foreign currency exchange rates favorably impacted revenues by $4.7 million. Revenues were lower due to the decreased legacy product shipments, partially offset by higher smart water shipments.
Gross Margin - Three months ended September 30, 2025 vs. Three months ended September 30, 2024
For the three months ended September 30, 2025, gross margin was 30.9%, compared with 27.2% for the same period in 2024. The 370 basis point increase over the prior year was primarily due to an improved customer and product mix.
Gross Margin - Nine months ended September 30, 2025 vs. Nine months ended September 30, 2024
For the nine months ended September 30, 2025, gross margin was 30.2%, compared with 25.7% for the same period in 2024. The 450 basis point increase over the prior year was primarily due to an improved customer and product mix.
Operating Expenses - Three months ended September 30, 2025 vs. Three months ended September 30, 2024
Operating expenses increased $0.3 million, or 4%, compared with 2024. The minor increase was primarily due to higher product development costs.
Operating Expenses - Nine months ended September 30, 2025 vs. Nine months ended September 30, 2024
Operating expenses decreased $0.2 million, or 1%, for the first nine months of 2025, compared with the same period in 2024. The minor decrease was primarily due to lower product marketing costs.
Networked Solutions
The effects of changes in foreign currency exchange rates and the constant currency changes in certain Networked Solutions segment financial results were as follows:
| Effect of Changes in Foreign Currency Exchange Rates | Constant Currency Change | Total Change | ||||||||||||||||||||||||||||||
| Three Months Ended September 30, | ||||||||||||||||||||||||||||||||
| In thousands | 2025 | 2024 | ||||||||||||||||||||||||||||||
| Networked Solutions Segment | ||||||||||||||||||||||||||||||||
| Revenues | $ | 393,702 | $ | 416,713 | $ | 275 | $ | (23,286) | $ | (23,011) | ||||||||||||||||||||||
| Gross profit | 154,761 | 149,648 | 126 | 4,987 | 5,113 | |||||||||||||||||||||||||||
| Operating expenses | 32,881 | 34,417 | 3 | (1,539) | (1,536) | |||||||||||||||||||||||||||
| Effect of Changes in Foreign Currency Exchange Rates | Constant Currency Change | Total Change | ||||||||||||||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||
| In thousands | 2025 | 2024 | ||||||||||||||||||||||||||||||
| Networked Solutions Segment | ||||||||||||||||||||||||||||||||
| Revenues | $ | 1,205,368 | $ | 1,236,933 | $ | (1,189) | $ | (30,376) | $ | (31,565) | ||||||||||||||||||||||
| Gross profit | 460,718 | 452,830 | (121) | 8,009 | 7,888 | |||||||||||||||||||||||||||
| Operating expenses | 101,730 | 103,477 | (11) | (1,736) | (1,747) | |||||||||||||||||||||||||||
Revenues - Three months ended September 30, 2025 vs. Three months ended September 30, 2024
Revenues decreased $23.0 million, or 6%, in 2025 compared with 2024. The decline was primarily due to timing of customer deployments.
Revenues - Nine months ended September 30, 2025 vs. Nine months ended September 30, 2024
Revenues decreased $31.6 million, or 3%, for the first nine months of 2025, compared with the same period in 2024. The decline was primarily due to timing of customer deployments and an unusually large first half 2024 volume, which included a significant amount of catch-up of previously supply chain constrained revenue. Changes in foreign currency exchange rates unfavorably impacted revenues by $1.2 million.
Gross Margin - Three months ended September 30, 2025 vs. Three months ended September 30, 2024
Gross margin was 39.3% for the period ending September 30, 2025, compared with 35.9% in 2024. The 340 basis point increase was primarily related to a favorable customer and product mix.
Gross Margin - Nine months ended September 30, 2025 vs. Nine months ended September 30, 2024
Gross margin was 38.2% for the 2025 period, compared with 36.6% in 2024. The 160 basis point increase was primarily related to a favorable customer and product mix.
Operating Expenses - Three months ended September 30, 2025 vs. Three months ended September 30, 2024
Operating expenses decreased $1.5 million, or 4%, for the quarter in 2025, compared with the same period in 2024. The decrease was primarily related to lower product development costs.
Operating Expenses - Nine months ended September 30, 2025 vs. Nine months ended September 30, 2024
Operating expenses decreased $1.7 million, or 2%, for the first nine months of 2025, compared with the same period in 2024. The decrease was primarily related to lower product development costs.
Outcomes
The effects of changes in foreign currency exchange rates and the constant currency changes in certain Outcomes segment financial results were as follows:
| Effect of Changes in Foreign Currency Exchange Rates | Constant Currency Change | Total Change | ||||||||||||||||||||||||||||||
| Three Months Ended September 30, | ||||||||||||||||||||||||||||||||
| In thousands | 2025 | 2024 | ||||||||||||||||||||||||||||||
| Outcomes Segment | ||||||||||||||||||||||||||||||||
| Revenues | $ | 84,301 | $ | 76,011 | $ | 341 | $ | 7,949 | $ | 8,290 | ||||||||||||||||||||||
| Gross profit | 32,777 | 26,608 | 222 | 5,947 | 6,169 | |||||||||||||||||||||||||||
| Operating expenses | 15,971 | 15,422 | - | 549 | 549 | |||||||||||||||||||||||||||
| Effect of Changes in Foreign Currency Exchange Rates | Constant Currency Change | Total Change | ||||||||||||||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||
| In thousands | 2025 | 2024 | ||||||||||||||||||||||||||||||
| Outcomes Segment | ||||||||||||||||||||||||||||||||
| Revenues | $ | 247,916 | $ | 223,000 | $ | 467 | $ | 24,449 | $ | 24,916 | ||||||||||||||||||||||
| Gross profit | 96,313 | 77,970 | 394 | 17,949 | 18,343 | |||||||||||||||||||||||||||
| Operating expenses | 49,490 | 47,042 | (11) | 2,459 | 2,448 | |||||||||||||||||||||||||||
Revenues - Three months ended September 30, 2025 vs. Three months ended September 30, 2024
For the 2025 period, revenues increased $8.3 million, or 11%, compared with the 2024 period. This increase was driven by higher recurring revenue.
Revenues - Nine months ended September 30, 2025 vs. Nine months ended September 30, 2024
Revenues increased $24.9 million, or 11%, for the first nine months of 2025, compared with 2024. This increase was driven by higher recurring revenue, as well as software licenses.
Gross Margin - Three months ended September 30, 2025 vs. Three months ended September 30, 2024
Gross margin increased to 38.9% for the third quarter of 2025, compared with 35.0% for the same period last year. The 390 basis point increase was driven by an improved revenue mix.
Gross Margin - Nine months ended September 30, 2025 vs. Nine months ended September 30, 2024
Gross margin increased to 38.8% for the period ending in 2025, compared with 35.0% for last year. The 380 basis point increase was driven by improved revenue mix and lower costs.
Operating Expenses - Three months ended September 30, 2025 vs. Three months ended September 30, 2024
Operating expenses for the 2025 period increased $0.5 million, or 4%, compared with the same period last year. This was primarily related to increased product development costs.
Operating Expenses - Nine months ended September 30, 2025 vs. Nine months ended September 30, 2024
Operating expenses for the first nine months of 2025 increased $2.4 million, or 5%, compared with the same period last year. This was primarily related to increased product development and marketing costs.
Corporate Unallocated
Corporate Unallocated Expenses - Three months ended September 30, 2025 vs. Three months ended September 30, 2024
Operating expenses not directly associated with an operating segment are classified as Corporate unallocated. These expenses increased $2.8 million, or 4%, for the three months ended September 30, 2025 compared with the same period in 2024. This increase was primarily the result of a $4.1 million increase in sales, general and administrative expenses driven by increased labor costs and a $0.9 million increase in restructuring expenses, partially offset by a $1.1 million decrease in product development expenses and a $0.7 million loss on sale of business recognized in 2024.
Corporate Unallocated Expenses - Nine months ended September 30, 2025 vs. Nine months ended September 30, 2024
For the first nine months of 2025, Corporate unallocated expenses increased $1.4 million, or 1%, compared with the 2024 period. This increase was primarily the result of a $2.9 million increase in sales, general and administrative expenses driven by increased labor costs and a $1.5 million increase in restructuring expenses, partially offset by a $2.5 million decrease in product development expenses and a $0.7 million loss on sale of business recognized in 2024. Refer to Item 1: Financial Statements (Unaudited), Note 12: Restructuring included in this Quarterly Report on Form 10-Q for additional information.
Bookings and Backlog of Orders
Bookings for a reported period represent customer contracts and purchase orders received during the period for hardware, software, and services that have met certain conditions, such as regulatory and/or contractual approval. Total backlog represents committed but undelivered products and services for contracts and purchase orders at period-end. Twelve-month backlog represents the portion of total backlog that reflects our understanding of customer's desired deployment over the next 12 months. The actual revenue recognized and timing of revenue earned from backlog will vary based on actual currency rates at the time of shipment, availability of critical supply components, and adjusted customer project timing. Backlog is not a complete measure of our future revenues as we also receive book-and-ship orders and frame contracts. Bookings and backlog vary from period to period primarily due to the timing of large project awards. In addition, annual or multi-year contracts are subject to rescheduling due to the long-term nature of the contracts. Certain of our customers have the right to cancel contracts, but we do not have a history of any significant cancellations. Beginning total backlog, plus bookings, minus revenues, will not equal ending total backlog due to miscellaneous contract adjustments, foreign currency fluctuations, and other factors. Total bookings and backlog include certain contracts with a termination for convenience clause, which will not agree to the total transaction price allocated to the remaining performance obligations disclosed in Item 1: Financial Statements (Unaudited), Note 16: Revenues included in this Quarterly Report on Form 10-Q.
| Quarter Ended |
Quarterly Bookings |
Ending Total Backlog |
Ending 12-Month Backlog |
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| In millions | |||||||||||||||||
| September 30, 2025 | $ | 380 | $ | 4,311 | $ | 1,475 | |||||||||||
| June 30, 2025 | 454 | 4,514 | 1,544 | ||||||||||||||
| March 31, 2025 | 530 | 4,659 | 1,593 | ||||||||||||||
| December 31, 2024 | 1,403 | 4,734 | 1,767 | ||||||||||||||
| September 30, 2024 | 487 | 3,970 | 1,716 | ||||||||||||||
Financial Condition
Cash Flow Information
| Nine Months Ended September 30, | |||||||||||
| In thousands | 2025 | 2024 | |||||||||
| Net cash provided by operating activities | $ | 286,631 | $ | 158,326 | |||||||
| Net cash used in investing activities | (16,794) | (54,387) | |||||||||
| Net cash provided by financing activities | 1,837 | 576,085 | |||||||||
| Effect of foreign exchange rate changes on cash and cash equivalents | 9,033 | 434 | |||||||||
| Increase in cash and cash equivalents | $ | 280,707 | $ | 680,458 | |||||||
Cash and cash equivalents were $1.33 billion at September 30, 2025, compared with $1.05 billion at December 31, 2024. The $280.7 million increase in cash and cash equivalents during the 2025 period was primarily net cash provided by operations as a result of higher earnings.
Operating activities
Cash provided by operating activities during the nine months in 2025 was $286.6 million compared with $158.3 million during the same period in 2024. The increase was primarily due to increased earnings in 2025, an increase in working capital (current assets less current liabilities) conversion compared with the same period in 2024, and lower income tax payments in 2025.
Investing activities
During the nine months ended September 30, 2025, net cash used in investing activities was $16.8 million compared with $54.4 million in 2024, resulting in a change of $37.6 million. The movement was primarily related to net cash used for the acquisition of Elpis Squared for $34.1 million in 2024, along with $5.8 million in reduced purchases of property, plant, and equipment in 2025 compared with the same period in 2024.
Financing activities
Net cash provided by financing activities during the nine months in 2025 was $1.8 million, compared with $576.1 million for the same period in 2024. The change is due primarily to the issuance in 2024 of the convertible notes, net of total debt issuance cost, totaling $784 million, partially offset by the purchase of the capped call for the convertible offering of $109.0 million and common stock repurchased totaling $100.0 million.
Effect of exchange rates on cash and cash equivalents
The effect of exchange rates on the cash balances of currencies held in foreign denominations at September 30, 2025 was an increase of $9.0 million, compared with an increase of $0.4 million for the same period in 2024. Our foreign currency exposure relates to non-U.S. dollar denominated balances in our international subsidiary operations.
Free cash flow (Non-GAAP)
To supplement our Consolidated Statements of Cash Flows presented on a GAAP basis, we use the non-GAAP measure of free cash flow to analyze cash flows generated from our operations. The presentation of non-GAAP free cash flow is not meant to be considered in isolation or as an alternative to net income as an indicator of our performance, or as an alternative to cash flows from operating activities as a measure of liquidity. We calculate free cash flows, using amounts from our Consolidated Statements of Cash Flows, as follows:
| Nine Months Ended September 30, | |||||||||||
| In thousands | 2025 | 2024 | |||||||||
| Net cash provided by operating activities | $ | 286,631 | $ | 158,326 | |||||||
| Acquisitions of property, plant, and equipment | (15,077) | (20,878) | |||||||||
| Free cash flow | $ | 271,554 | $ | 137,448 | |||||||
Free cash flow increased due to higher operating cash flow and reduced spending on property, plant, and equipment. See the cash flow discussion of operating and investing activities above.
Off-balance sheet arrangements
We have no off-balance sheet financing agreements or guarantees as defined by Item 303 of Regulation S-K at September 30, 2025 and December 31, 2024 that we believe could reasonably likely have a current or future effect on our financial condition, results of operations, or cash flows.
Liquidity and Capital Resources
Our principal sources of liquidity are cash flows from operations, borrowings, and the sale of our common stock. Cash flows may fluctuate and are sensitive to many factors including changes in working capital and the timing and magnitude of capital expenditures and payments of debt. Working capital, which represents current assets less current liabilities, continues to be in a net favorable position. We expect existing cash, cash flows from operations, and access to capital markets to continue to be sufficient to fund our operating activities and cash commitments, such as material capital expenditures and debt obligations, for at least the next 12 months and into the foreseeable future.
Borrowings
On September 25, 2025, we entered into a third amended and restated credit agreement (the 2025 credit facility) providing for committed credit facilities in the amount of $750 million. The 2025 credit facility consists of a multi-currency revolving line of credit (the revolver) in the amount of $750 million. The revolver includes a standby letter of credit sub-facility in the amount of $300 million, and a swingline sub-facility in the amount of $50 million. As of September 30, 2025, no amount was outstanding under the 2025 credit facility, and $45.1 million was utilized by outstanding standby letters of credit, resulting in $704.9 million available for borrowing. As of September 30, 2025, $254.9 million was available for additional standby letters of credit under the letter of credit sub-facility, and no amounts were outstanding under the swingline sub-facility. Any outstanding principal under the revolver is due at maturity on September 25, 2030. Principal amounts paid prior to the maturity date may be reborrowed prior to such date. However, that date may be advanced to April 15, 2030 if Itron does not settle or extend a sufficient portion of its outstanding convertible notes, as detailed in the 2025 credit facility.
On March 12, 2021, we closed the sale of $460 million in convertible notes (the 2021 Notes) in a private placement to qualified institutional buyers. These convertible notes do not bear regular interest, and the principal amount does not accrete. The convertible notes will mature on March 15, 2026, unless earlier repurchased, redeemed, or converted in accordance with their terms.
On June 21, 2024, we closed the sale of $805 million in convertible notes (the 2024 Notes) in a private placement to qualified institutional buyers. These convertible notes accrue interest at a rate of 1.375% per annum, payable semi-annually in arrears on January 15 and July 15 of each year, with the first payment made January 15, 2025. The notes will mature on July 15, 2030, unless earlier repurchased, redeemed, or converted in accordance with their terms.
For further description of our borrowings, refer to Item 1: Financial Statements (Unaudited), Note 6: Debt included in this Quarterly Report on Form 10-Q.
For a description of our letters of credit and performance bonds, and the amounts available for additional borrowings or letters of credit under our lines of credit, including the revolver that is part of our 2025 credit facility, refer to Item 1: Financial Statements (Unaudited), Note 11: Commitments and Contingencies included in this Quarterly Report on Form 10-Q.
Restructuring
On February 23, 2023, our Board of Directors approved a restructuring plan (the 2023 Projects). The 2023 Projects include activities that continue Itron's efforts to optimize its global supply chain and manufacturing operations, sales and marketing organizations, and other overhead. These projects were substantially complete as of March 31, 2025. For the nine months ended September 30, 2025, we paid out $20.4 million related to all our restructuring projects. As of September 30, 2025, $24.9 million was accrued for all restructuring projects, of which $18.1 million is expected to be paid within the next 12 months and the remainder through 2027.
For further details regarding our restructuring activities, refer to Item 1: Financial Statements (Unaudited), Note 12: Restructuring included in this Quarterly Report on Form 10-Q.
Stock Repurchase Programs
Effective September 19, 2024, Itron's Board of Directors authorized a repurchase up to $100 million of our common stock over an 18-month period (the 2024 Stock Repurchase Program). The repurchase program is intended to comply with Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended. We have repurchased no shares under the 2024 Stock Repurchase Program.
Urbint, Inc. Acquisition
On October 6, 2025, we entered into an Agreement and Plan of Merger to acquire 100 percent of the outstanding equity of Urbint, Inc., a privately held software and services company, based in Florida, serving utilities. The acquisition provides value to Itron through the leverage of Urbint's AI-powered operational resilience solutions to enhance our offerings to our customers. The acquisition is expected to close in the fourth quarter of 2025. The purchase price for the acquisition is $325 million, with adjustment for final working capital and other closing considerations to be determined following the transaction's close. The purchase will be funded through cash on hand.
Other Liquidity Considerations
We have tax credits and net operating loss carryforwards in various jurisdictions that are available to reduce cash taxes. However, utilization of tax credits and net operating losses are limited in certain jurisdictions. Based on current projections, including anticipated impacts of the Act, we expect to pay, net of refunds, approximately $6 million in U.S federal taxes, $7 million in state taxes, and $16 million in local and foreign taxes during 2025. For a discussion of our tax provision and unrecognized tax benefits, see Item 1: Financial Statements (Unaudited), Note 10: Income Taxes included in this Quarterly Report on Form 10-Q.
As of September 30, 2025, we are under examination by certain tax authorities. We believe we have appropriately accrued for the expected outcome of all tax matters and do not currently anticipate that the ultimate resolution of these examinations will have a material adverse effect on our financial condition, future results of operations, or liquidity.
As of September 30, 2025, there was $59.1 million of cash and short-term investments held by certain foreign subsidiaries in which we are permanently reinvested for tax purposes. As a result of recent changes in U.S. tax legislation, any repatriation in the future would not result in U.S. federal income tax. Accordingly, there is no provision for U.S. deferred taxes on this cash. If this cash were repatriated to fund U.S. operations, additional withholding tax costs may be incurred. Tax is only one of the many factors that we consider in the management of global cash. Accordingly, the amount of taxes that we would need to accrue and pay to repatriate foreign cash could vary significantly.
In certain of our consolidated international subsidiaries, we have joint venture partners who are minority shareholders. Although these entities are not wholly-owned by Itron, Inc., we consolidate them because we have a greater than 50% ownership interest and/or because we exercise control over the operations. The noncontrolling interest balance in our Consolidated Balance Sheets represents the proportional share of the equity of the joint venture entities, which is attributable to the minority shareholders. At September 30, 2025, $3.9 million of our consolidated cash balance was held in our joint venture entities. As a result, the minority shareholders of these entities have rights to their proportional share of this cash balance, and there may be limitations on our ability to repatriate cash to the United States from these entities.
General Liquidity Overview
We expect to grow through a combination of internal new research and development, licensing technology from and to others, distribution agreements, partnering arrangements, and acquisitions of technology or other companies. We expect these activities to be funded with existing cash, cash flow from operations, borrowings, or the sale of our common stock or other securities. We believe existing sources of liquidity will be sufficient to fund our existing operations and obligations for the next 12 months and into the foreseeable future, but offer no assurances. Our liquidity could be affected by the stability of the electricity, gas, and water utility industries, competitive pressures, our dependence on certain key vendors and components, changes in estimated liabilities for product warranties and/or litigation, supply constraints, future business combinations, capital market fluctuations, international risks, and other factors described under Part I, Item 1A: Risk Factors of our 2024 Annual Report, as well as Part I, Item 3: Quantitative and Qualitative Disclosures About Market Risk included in this Quarterly Report on Form 10-Q.
Contingencies
Refer to Item 1: Financial Statements (Unaudited), Note 11: Commitments and Contingencies included in this Quarterly Report on Form 10-Q.
Critical Accounting Estimates
Our consolidated financial statements and accompanying notes are prepared in accordance with GAAP. Preparing consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates and assumptions are affected by management's application of accounting policies. Our critical accounting policies that require the use of estimates and assumptions were discussed in detail in the 2024 Annual Report and have not changed materially.
Refer to Item 1: Financial Statements (Unaudited), Note 1: Summary of Significant Accounting Policies included in this Quarterly Report on Form 10-Q for further disclosures regarding new accounting pronouncements.
Non-GAAP Measures
To supplement our consolidated financial statements, which are prepared in accordance with GAAP, we use certain non-GAAP financial measures, including non-GAAP operating expense, non-GAAP operating income, non-GAAP net income, non-GAAP diluted EPS, adjusted EBITDA, free cash flow, and constant currency. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and other companies may define such measures differently. For a reconciliation of each non-GAAP measure to the most comparable financial measure prepared and presented in accordance with GAAP, please see the table captioned Reconciliations of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures.
We use these non-GAAP financial measures for financial and operational decision making and/or as a means for determining executive compensation. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and ability to service debt by excluding certain expenses that may not be indicative of our recurring core operating results. These non-GAAP financial measures facilitate management's internal comparisons to our historical performance, as well as comparisons to our competitors' operating results. Our executive compensation plans exclude non-cash charges related to amortization of intangibles and certain discrete cash and non-cash charges, such as restructuring, loss on sale of business, strategic initiative expenses, or acquisition and integration related expenses. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. We believe these non-GAAP financial measures are useful to investors because they provide greater transparency with respect to key metrics used by management in its financial and operational decision making and because they are used by our institutional investors and the analyst community to analyze the health of our business.
Non-GAAP operating expensesand non-GAAP operating income- We define non-GAAP operating expenses as operating expenses excluding certain expenses related to the amortization of intangible assets, restructuring, loss on sale of business, strategic initiative expenses, and acquisition and integration related expenses. We define non-GAAP operating income as operating income excluding the expenses related to the amortization of intangible assets, restructuring, loss on sale of business, strategic initiative expenses, and acquisition and integration related expenses. Acquisition and integration related expenses include costs, which are incurred to affect and integrate business combinations, such as professional fees, certain employee retention and salaries related to integration, severances, contract terminations, travel costs related to knowledge transfer, system conversion costs, and asset impairment charges. We consider these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of expenses that are not related to our core operating results. By excluding these expenses, we believe that it is easier for management and investors to compare our financial results over multiple periods and analyze trends in our operations. For example, in certain periods, expenses related to amortization of intangible assets may decrease, which would improve GAAP operating margins, yet the improvement in GAAP operating margins due to this lower expense is not necessarily reflective of an improvement in our core business. There are some limitations related to the use of non-GAAP operating expenses and non-GAAP operating income versus operating expenses and operating income calculated in accordance with GAAP. We compensate for these limitations by providing specific information about the GAAP amounts excluded from non-GAAP operating expense and non-GAAP operating income and evaluating non-GAAP operating expense and non-GAAP operating income together with GAAP operating expense and operating income.
Non-GAAP net incomeand non-GAAP diluted EPS- We define non-GAAP net income as net income attributable to Itron, Inc. excluding the expenses associated with amortization of intangible assets, amortization of debt placement fees, restructuring, loss on sale of business, strategic initiative expenses, acquisition and integration related expenses, and the tax effect of excluding these expenses. We define non-GAAP diluted EPS as non-GAAP net income divided by diluted weighted-average shares outstanding during the period calculated on a GAAP basis and then reduced to reflect any anti-dilutive impact of the convertible notes hedge transactions. We consider these financial measures to be useful metrics for management and investors for the same reasons that we use non-GAAP operating income. The same limitations described above regarding our use of non-GAAP operating income apply to our use of non-GAAP net income and non-GAAP diluted EPS. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP measures and evaluating non-GAAP net income and non-GAAP diluted EPS together with GAAP net income attributable to Itron, Inc. and GAAP diluted EPS.
For interim periods the budgeted annual effective tax rate (AETR) is used, adjusted for any discrete items, as defined in Accounting Standards Codification (ASC) 740 - Income Taxes. The budgeted AETR is determined at the beginning of the fiscal year. The AETR is revised throughout the year based on changes to our full-year forecast. If the revised AETR increases or decreases by 200 basis points or more from the budgeted AETR due to changes in the full-year forecast during the year, the revised AETR is used in place of the budgeted AETR beginning with the quarter the 200 basis point threshold is exceeded and going forward for all subsequent interim quarters in the year. We continue to assess the AETR based on latest forecast
throughout the year and use the most recent AETR anytime it increases or decreases by 200 basis points or more from the prior interim period.
Adjusted EBITDA- We define adjusted EBITDA as net income (a) minus interest income, (b) plus interest expense, depreciation and amortization, restructuring, loss on sale of business, strategic initiative expenses, acquisition and integration related expenses, and (c) excluding income tax provision or benefit. Management uses adjusted EBITDA as a performance measure for executive compensation. A limitation to using adjusted EBITDA is that it does not represent the total increase or decrease in the cash balance for the period and the measure includes some non-cash items and excludes other non-cash items. Additionally, the items that we exclude in our calculation of adjusted EBITDA may differ from the items that our peer companies exclude when they report their results. We compensate for these limitations by providing a reconciliation of this measure to GAAP net income.
Free cash flow- We define free cash flow as net cash provided by operating activities less cash used for acquisitions of property, plant and equipment. We believe free cash flow provides investors with a relevant measure of liquidity and a useful basis for assessing our ability to fund our operations and repay our debt. The same limitations described above regarding our use of adjusted EBITDA apply to our use of free cash flow. We compensate for these limitations by providing specific information regarding the GAAP amounts in the reconciliation.
Constant currency- We refer to the impact of foreign currency exchange rate fluctuations in our discussions of financial results, which references the differences between the foreign currency exchange rates used to translate operating results from the entity's functional currency into U.S. dollars for financial reporting purposes. We also use the term "constant currency", which represents financial results adjusted to exclude changes in foreign currency exchange rates as compared with the rates in the comparable prior year period. We calculate the constant currency change as the difference between the current period results and the comparable prior period's results restated using current period foreign currency exchange rates.
Reconciliations of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures
The tables below reconcile the non-GAAP financial measures of operating expenses, operating income, net income, diluted EPS, adjusted EBITDA, and free cash flow with the most directly comparable GAAP financial measures.
| TOTAL COMPANY RECONCILIATIONS | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||
| In thousands, except per share data | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||
| NON-GAAP OPERATING EXPENSES | ||||||||||||||||||||||||||||||||
| GAAP operating expenses | $ | 137,762 | $ | 135,665 | $ | 425,973 | $ | 424,057 | ||||||||||||||||||||||||
| Amortization of intangible assets | (4,403) | (4,814) | (13,425) | (13,311) | ||||||||||||||||||||||||||||
| Restructuring | (188) | 723 | (872) | 624 | ||||||||||||||||||||||||||||
| Loss on sale of business | - | (698) | (79) | (656) | ||||||||||||||||||||||||||||
| Strategic initiative | (1,566) | - | (1,566) | - | ||||||||||||||||||||||||||||
| Acquisition and integration | (1,286) | (248) | (1,370) | (656) | ||||||||||||||||||||||||||||
| Non-GAAP operating expenses | $ | 130,319 | $ | 130,628 | $ | 408,661 | $ | 410,058 | ||||||||||||||||||||||||
| NON-GAAP OPERATING INCOME | ||||||||||||||||||||||||||||||||
| GAAP operating income | $ | 81,783 | $ | 73,933 | $ | 234,409 | $ | 201,380 | ||||||||||||||||||||||||
| Amortization of intangible assets | 4,403 | 4,814 | 13,425 | 13,311 | ||||||||||||||||||||||||||||
| Restructuring | 188 | (723) | 872 | (624) | ||||||||||||||||||||||||||||
| Loss on sale of business | - | 698 | 79 | 656 | ||||||||||||||||||||||||||||
| Strategic initiative | 1,566 | - | 1,566 | - | ||||||||||||||||||||||||||||
| Acquisition and integration | 1,286 | 248 | 1,370 | 656 | ||||||||||||||||||||||||||||
| Non-GAAP operating income | $ | 89,226 | $ | 78,970 | $ | 251,721 | $ | 215,379 | ||||||||||||||||||||||||
| NON-GAAP NET INCOME & DILUTED EPS | ||||||||||||||||||||||||||||||||
| GAAP net income attributable to Itron, Inc. | $ | 65,613 | $ | 77,959 | $ | 199,427 | $ | 180,998 | ||||||||||||||||||||||||
| Amortization of intangible assets | 4,403 | 4,814 | 13,425 | 13,311 | ||||||||||||||||||||||||||||
| Amortization of debt placement fees | 1,777 | 1,759 | 5,271 | 3,538 | ||||||||||||||||||||||||||||
| Restructuring | 188 | (723) | 872 | (624) | ||||||||||||||||||||||||||||
| Loss on sale of business | - | 698 | 79 | 656 | ||||||||||||||||||||||||||||
| Strategic initiative | 1,566 | - | 1,566 | - | ||||||||||||||||||||||||||||
| Acquisition and integration | 1,286 | 248 | 1,370 | 656 | ||||||||||||||||||||||||||||
| Income tax effect of non-GAAP adjustments | (3,021) | (504) | (4,974) | (891) | ||||||||||||||||||||||||||||
| Non-GAAP net income attributable to Itron, Inc. | $ | 71,812 | $ | 84,251 | $ | 217,036 | $ | 197,644 | ||||||||||||||||||||||||
| Non-GAAP diluted EPS | $ | 1.54 | $ | 1.84 | $ | 4.68 | $ | 4.27 | ||||||||||||||||||||||||
| GAAP weighted average common shares outstanding - Diluted | 46,660 | 45,839 | 46,405 | 46,239 | ||||||||||||||||||||||||||||
| Effect of call option transaction - 2021 Notes | (34) | - | (11) | - | ||||||||||||||||||||||||||||
| Non-GAAP weighted average common shares outstanding - Diluted | 46,626 | 45,839 | 46,394 | 46,239 | ||||||||||||||||||||||||||||
| TOTAL COMPANY RECONCILIATIONS | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||
|
In thousands
|
2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||
| ADJUSTED EBITDA | ||||||||||||||||||||||||||||||||
| GAAP net income attributable to Itron, Inc. | $ | 65,613 | $ | 77,959 | $ | 199,427 | $ | 180,998 | ||||||||||||||||||||||||
| Interest income | (13,569) | (13,420) | (37,582) | (22,394) | ||||||||||||||||||||||||||||
| Interest expense | 5,647 | 5,605 | 16,888 | 9,788 | ||||||||||||||||||||||||||||
| Income tax provision | 24,478 | 3,515 | 56,137 | 32,124 | ||||||||||||||||||||||||||||
| Depreciation and amortization | 12,039 | 14,716 | 36,221 | 40,979 | ||||||||||||||||||||||||||||
| Restructuring | 188 | (723) | 872 | (624) | ||||||||||||||||||||||||||||
| Loss on sale of business | - | 698 | 79 | 656 | ||||||||||||||||||||||||||||
| Strategic initiative | 1,566 | - | 1,566 | - | ||||||||||||||||||||||||||||
| Acquisition and integration | 1,286 | 248 | 1,370 | 656 | ||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 97,248 | $ | 88,598 | $ | 274,978 | $ | 242,183 | ||||||||||||||||||||||||
| FREE CASH FLOW | ||||||||||||||||||||||||||||||||
| Net cash provided by operating activities | $ | 117,829 | $ | 65,301 | $ | 286,631 | $ | 158,326 | ||||||||||||||||||||||||
| Acquisitions of property, plant, and equipment | (4,421) | (6,623) | (15,077) | (20,878) | ||||||||||||||||||||||||||||
| Free Cash Flow | $ | 113,408 | $ | 58,678 | $ | 271,554 | $ | 137,448 | ||||||||||||||||||||||||
Itron Inc. published this content on October 30, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on October 30, 2025 at 16:00 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]