Itron Inc.
02/17/2026 | Press release | Distributed by Public on 02/17/2026 14:07
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis compares the change in the consolidated financial statements for fiscal years 2025 and 2024 and should be read in conjunction with Item 8: Financial Statements and Supplementary Data. For comparisons of fiscal years 2024 and 2023, see our Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2024 Annual Report on Form 10-K, filed with the Securities and Exchange Commission (SEC) on February 25, 2025, and incorporated herein by reference.
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.
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 four reportable segments: Device Solutions, Networked Solutions, Outcomes, and Resiliency Solutions. Resiliency Solutions is a new reportable segment starting in the fourth quarter of 2025. The product and operating definitions of the four segments are as follows:
Device Solutions - This segment primarily includes hardware products used for measurement, control, or sensing. 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 designed to operate outside of Itron end-to-end solutions and designed to meet market requirements; and the implementation and installation of associated devices.
Networked Solutions - This segment primarily includes a combination of communicating endpoints (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 endpoints and data networks. The Industrial Internet of Things (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 utilize distributed compute to manage, organize, analyze, and interpret raw, anonymized data using artificial intelligence, machine learning, statistical modeling, and other analytics. This delivers new value for utilities, municipalities, and cities through improving decision making, maximizing operational profitability, engaging consumers, ensuring safety, enhancing resource efficiency, and improving grid resiliency and reliability. Outcomes supports high-value use cases, such as data management, grid planning and operations, AMI operations, gas distribution safety, non-revenue water reduction, revenue assurance, distributed energy resources (DER) management, energy forecasting, consumer engagement, and smart payment. 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 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.
Resiliency Solutions - This segment primarily includes software and services focused on worker safety, emergency preparedness and response, and damage prevention for critical infrastructure providers and their supporting contractors. These solutions are enhanced through the use of artificial intelligence-based models to predict events to aid in compliance, incident remedy, and prevention.
We use adjusted operating income (margin) as the primary measure of segment performance. In addition, we believe adjusted gross profit (margin) provides further understanding of our segments' performance. Intersegment revenues are minimal. Certain operating expenses are allocated to the reportable 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, adjusted gross profit, adjusted operating income, 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 43-46 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 year ended December 31, 2025 compared with the year ended December 31, 2024
•Revenues were $2.4 billion in both periods
•Gross margin was 37.7%compared with 34.4%last year
•Operating expenses increased $3.8 million,or 1%, compared with 2024
•Net income attributable to Itron, Inc. was $301.1 million compared with $239.1 million in 2024
•GAAP diluted EPS was $6.50 compared with $5.18 in 2024
•Non-GAAP net income attributable to Itron, Inc. was $330.4 million compared with $259.8 million in 2024
•Non-GAAP diluted EPS was $7.13 compared with $5.62 in 2024
•Adjusted EBITDA increased $50.2 million, or 16%, to $373.8 million compared with $323.6 million in 2024
•Total backlog was $4.5 billion and twelve-month backlog was $1.6 billion at December 31, 2025, compared with $4.7 billion and $1.8 billion at December 31, 2024
Business Acquisitions
On November 14, 2025, we entered into a Share Purchase Agreement (the Agreement) to acquire 100%of the outstanding equity of Locusview, Ltd. and subsidiaries (collectively, Locusview) a privately held utility-focused software and services company that is based in the United States and Israel. The acquisition provides value to Itron through the leverage of Locusview's digital construction management solutions to enhance Itron's Resiliency Solutions offerings to its customers. The acquisition closed on January 5, 2026. The preliminary purchase price for the acquisition was $525 million, with adjustment for final working capital and other closing considerations to be determined following the transaction's close. The purchase was funded through cash on hand.
On November 3, 2025, we completed the acquisition of 100% of the outstanding equity of Urbint, Inc. (Urbint), a privately held software and services company, based in Florida, serving utilities. The acquisition provides value to Itron through the leverage of Urbint's artificial intelligence (AI)-powered operational resilience solutions to enhance our offerings to our customers. Upon acquisition, Urbint became a wholly owned subsidiary of Itron and operates within the Resiliency Solutions segment. The preliminary purchase price allocated to acquired assets and liabilities was $330.7 million, which was funded through cash on hand. The purchase price is subject to further adjustment based on final working capital and other closing considerations to be determined following the transaction's close. Refer to Item 8: Financial Statements and Supplementary Data, Note 18: Business Combinations for further details.
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 8: Financial Statements and Supplementary Data, Note 6: Debt for further details.
Stock Repurchase Programs
Effective November 10, 2025, Itron's Board of Directors authorized a repurchase up to $250 million of our common stock over an 18-month period (the 2025 Stock Repurchase Program). Repurchases will be made in the open market and pursuant to the terms of any Rule 10b5-1 plans that Itron may enter into, and in accordance with applicable securities laws. The repurchase program is intended to comply with Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended. Depending on market conditions and other factors, these repurchases may be commenced or suspended from time to time without prior notice. We repurchased no shares under the 2025 Stock Repurchase Program.
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. From November 3 through November 6, 2025, Itron repurchased 942,577 shares of its common stock for a total of $100 million, fully utilizing the authorized capacity under the 2024 Stock Repurchase Program.
Total Company GAAP, Non-GAAP Highlights, and Annual Recurring Revenue:
| Year Ended December 31, | |||||||||||||||||
| In thousands, except margin and per share data | 2025 | % Change | 2024 | ||||||||||||||
| GAAP | |||||||||||||||||
| Revenues | |||||||||||||||||
| Product revenues | $ | 2,008,976 | (6)% | $ | 2,131,379 | ||||||||||||
| Service revenues | 358,218 | 16% | 309,458 | ||||||||||||||
| Total revenues | 2,367,194 | (3)% | 2,440,837 | ||||||||||||||
| Gross profit | 892,118 | 6% | 839,317 | ||||||||||||||
| Operating expenses | 579,050 | 1% | 575,207 | ||||||||||||||
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Operating income
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313,068 | 19% | 264,110 | ||||||||||||||
| Other income (expense) | 29,199 | 43% | 20,421 | ||||||||||||||
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Income tax provision
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(38,932) | (10)% | (43,407) | ||||||||||||||
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Net income attributable to Itron, Inc.
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301,055 | 26% | 239,105 | ||||||||||||||
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Non-GAAP(1)
|
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| Non-GAAP operating expenses | $ | 550,837 | -% | $ | 553,380 | ||||||||||||
| Non-GAAP operating income | 342,359 | 20% | 285,937 | ||||||||||||||
| Non-GAAP net income attributable to Itron, Inc. | 330,391 | 27% | 259,800 | ||||||||||||||
| Adjusted EBITDA | 373,758 | 16% | 323,590 | ||||||||||||||
| GAAP Margins and EPS | |||||||||||||||||
| Gross margin | |||||||||||||||||
| Product gross margin | 35.7 | % | 32.9 | % | |||||||||||||
| Service gross margin | 49.0 | % | 44.6 | % | |||||||||||||
| Total gross margin | 37.7 | % | 34.4 | % | |||||||||||||
| Operating margin | 13.2 | % | 10.8 | % | |||||||||||||
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Net income per common share - Basic
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$ | 6.62 | $ | 5.27 | |||||||||||||
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Net income per common share - Diluted
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$ | 6.50 | $ | 5.18 | |||||||||||||
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Non-GAAP EPS (1)
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| Non-GAAP diluted EPS | $ | 7.13 | $ | 5.62 | |||||||||||||
(1)These measures exclude certain expenses that we do not believe are indicative of our core operating results. See pages 43-46 for information about these non-GAAP measures and reconciliations to the most comparable GAAP measures.
Effective with this Annual Report on Form 10-K, we transitioned our reported performance metric below from endpoints under management to annual recurring revenue (ARR). ARR is not evenly distributed across endpoints under management, and this change is intended to provide a more accurate and transparent view of our ongoing operations by highlighting predictable, subscription-based revenue streams.
ARR is a widely recognized indicator of long-term financial stability and growth and offers improved comparability, transparency, and insight into revenue sustainability. Endpoints under management does not reflect the flexibility afforded to our customers to deploy multiple applications, services, outcomes, and higher margin recurring offerings that can be associated with an endpoint over its useful life. The adoption of ARR better reflects the value of ongoing customer relationships across all of our solutions, including those offered by our new Resiliency Solutions segment.
Definition of Annual Recurring Revenue
ARR is an operating metric and represents an annualized calculation of quarterly recurring revenue. This metric primarily includes subscription and maintenance revenues (see examples of ARR components below). ARR should be viewed
independently of revenueand deferred revenueas ARR is an operating metric and is not intended to be combined with or replace these items. ARR is not a forecast of future revenue, which can be impacted by contract start and end dates, cancellation and renewal rates, upgrades or downgrades, foreign exchange rate fluctuations, acquisitions or divestitures, and does not include revenue from appliance hardware, perpetual software, or professional services. Our calculation of ARR does not give effect to the impact of any anticipated future price increases or decreases. We consider ARR a useful measure of the value of the recurring components of our business because it reflects both our ability to attract new customers for our solutions and our success at retaining and expanding our relationships with existing customers. Our measure of ARR may be different than similarly titled metrics used by other companies.
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Three Months Ended December 31,
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In millions
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2025 | 2024 | 2023 | |||||||||||||||||
| Annual recurring revenue | $ | 368 | $ | 306 | $ | 296 | ||||||||||||||
ARR component examples:
•subscription-based SaaS contracts
•term-based subscription license contracts
•managed services subscriptions
•maintenance or other support contracts
•PaaS subscriptions (platform-as-a-service)
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 | |||||||||||||||||||||||||||
| Year Ended December 31, | |||||||||||||||||||||||||||||
| In thousands | 2025 | 2024 | |||||||||||||||||||||||||||
| Total Company | |||||||||||||||||||||||||||||
| Revenues | $ | 2,367,194 | $ | 2,440,837 | $ | 9,992 | $ | (83,635) | $ | (73,643) | |||||||||||||||||||
| Gross profit | 892,118 | 839,317 | 1,125 | 51,676 | 52,801 | ||||||||||||||||||||||||
Revenues
Revenues decreased $73.6 million in 2025 compared with 2024. Product revenues decreased $122.4 million in 2025, and service revenues increased $48.8 million. Device Solutions decreased by $29.5 million; Networked Solutions decreased by $92.8 million; and Outcomes increased by $45.6 million when compared with the same period last year. Resiliency Solutions revenues were $3.0 million in 2025.
No single customer represented more than 10% of total revenues for the years ended December 31, 2025 and 2024. Our 10 largest customers accounted for 32% of total revenues in 2025 and 33% of total revenues in 2024.
Gross Margin
Gross margin was 37.7% for 2025, compared with 34.4% in 2024. We were favorably impacted by product and solution mix and manufacturing efficiencies. Product sales gross margin increased to 35.7% in 2025 from 32.9% in 2024. Gross margin on service revenues increased to 49.0% from 44.6%.
Refer to Reportable 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 | |||||||||||||||||||||||||||
| Year Ended December 31, | |||||||||||||||||||||||||||||
| In thousands | 2025 | 2024 | |||||||||||||||||||||||||||
| Total Company | |||||||||||||||||||||||||||||
| Sales, general and administrative | $ | 352,965 | $ | 339,069 | $ | 1,636 | $ | 12,260 | $ | 13,896 | |||||||||||||||||||
| Research and development | 207,041 | 215,034 | (332) | (7,661) | (7,993) | ||||||||||||||||||||||||
| Amortization of intangible assets | 18,034 | 17,828 | 116 | 90 | 206 | ||||||||||||||||||||||||
| Restructuring | 931 | 2,679 | 82 | (1,830) | (1,748) | ||||||||||||||||||||||||
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Loss on sale of business
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79 | 597 | (24) | (494) | (518) | ||||||||||||||||||||||||
| Total operating expenses | $ | 579,050 | $ | 575,207 | $ | 1,478 | $ | 2,365 | $ | 3,843 | |||||||||||||||||||
Operating expenses increased $3.8 million for the year ended December 31, 2025 as compared with the same period in 2024. This was primarily the result of a $13.9 million increase in sales, general and administrative expenses driven by increased labor costs. The increase was partially offset by a $8.0 million decrease in research and development expenses driven by reduced professional service expenses as compared with 2024, as well as a $1.7 million decrease in restructuring costs and a $0.6 million loss on sale of business recognized in 2024. Refer to Item 8: Financial Statements and Supplementary Data, Note 13: Restructuring for more details.
Other Income (Expense)
The following table shows the components of other income (expense):
| Year Ended December 31, | |||||||||||||||||
| In thousands | 2025 | % Change | 2024 | ||||||||||||||
| Interest income | $ | 48,376 | 40% | $ | 34,577 | ||||||||||||
| Amortization of prepaid debt fees | (7,077) | 29% | (5,489) | ||||||||||||||
| Other interest expense | (15,374) | 55% | (9,890) | ||||||||||||||
| Interest expense | (22,451) | 46% | (15,379) | ||||||||||||||
| Other income (expense), net | 3,274 | 168% | 1,223 | ||||||||||||||
| Total other income (expense) | $ | 29,199 | 43% | $ | 20,421 | ||||||||||||
Total other income (expense) for the year ended December 31, 2025 was net other income of $29.2 million compared with net other income of $20.4 million in 2024. The net increase was driven by a $13.8 million increase in interest income primarily due to interest earned from the cash proceeds of the 2024 Notes, as well as increased other income due to a $2.1 million pension expense credit recognized in 2025. This increase was offset by $5.2 million additional interest expense related to the 2024 Notes, which were outstanding throughout 2025 compared with June 21 through December 31 of 2024, and a $1.6 million increase in amortization of prepaid debt fees.
Income Tax Provision
Our income tax expense was $38.9 million and $43.4 million for the years ended December 31, 2025 and 2024. Our tax rate for the year ended December 31, 2025 differed from the U.S. federal statutory tax rate of 21% due to changes in valuation allowances, the level of profit or losses in domestic and international jurisdictions, stock-based compensation, tax credits, expiration of statute of limitations, and uncertain tax positions.
For additional discussion related to income taxes, refer to Item 8: Financial Statements and Supplementary Data, Note 11: Income Taxes.
Reportable Segment Results
For a description of our reportable segments, refer to Part I, Item 1: Business, Our Reportable Segments included in this Annual Report on Form 10-K and the Overview section above. The following tables and discussion highlight significant changes in trends or components of each reportable segment:
| Year Ended December 31, | |||||||||||||||||||||||
| In thousands | 2025 | % Change | 2024 | ||||||||||||||||||||
| Segment revenues | |||||||||||||||||||||||
| Device Solutions | $ | 447,081 | (6)% | $ | 476,577 | ||||||||||||||||||
| Networked Solutions | 1,557,321 | (6)% | 1,650,075 | ||||||||||||||||||||
| Outcomes | 359,743 | 15% | 314,185 | ||||||||||||||||||||
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Resiliency Solutions
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3,049 | NM | - | ||||||||||||||||||||
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Total revenues
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$ | 2,367,194 | (3)% | $ | 2,440,837 | ||||||||||||||||||
| Year Ended December 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| In thousands |
Adjusted Gross
Profit
|
Adjusted Gross
Margin
|
Adjusted Gross
Profit
|
Adjusted Gross
Margin
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Segment adjusted gross profit and margin
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| Device Solutions | $ | 139,399 | 31.2% | $ | 123,464 | 25.9% | |||||||||||||||||
| Networked Solutions | 608,576 | 39.1% | 597,780 | 36.2% | |||||||||||||||||||
| Outcomes | 142,904 | 39.7% | 118,073 | 37.6% | |||||||||||||||||||
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Resiliency Solutions
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2,317 | 76.0% | - | NM | |||||||||||||||||||
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Total adjusted gross profit and margin (1)
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$ | 893,196 | 37.7% | $ | 839,317 | 34.4% | |||||||||||||||||
| Year Ended December 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| In thousands |
Adjusted Operating
Income (loss)
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Adjusted Operating
Margin
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Adjusted Operating
Income (loss)
|
Adjusted Operating
Margin
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Segment adjusted operating income (loss) and operating margin
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| Device Solutions | $ | 108,717 | 24.3% | $ | 93,522 | 19.6% | |||||||||||||||||
| Networked Solutions | 472,400 | 30.3% | 456,662 | 27.7% | |||||||||||||||||||
| Outcomes | 76,992 | 21.4% | 51,730 | 16.5% | |||||||||||||||||||
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Resiliency Solutions
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(109) | (3.6)% | - | NM | |||||||||||||||||||
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Total segment adjusted operating income (loss) and operating margin
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$ | 658,000 | 27.8% | $ | 601,914 | 24.7% | |||||||||||||||||
(1)Refer to the Non-GAAP Measuressection below on pages 43-46 for additional information on adjusted gross profit and margin.
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 | |||||||||||||||||||||||||||
| Year Ended December 31, | |||||||||||||||||||||||||||||
| In thousands | 2025 | 2024 | |||||||||||||||||||||||||||
| Device Solutions Segment | |||||||||||||||||||||||||||||
| Revenues | $ | 447,081 | $ | 476,577 | $ | 8,839 | $ | (38,335) | $ | (29,496) | |||||||||||||||||||
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Adjusted gross profit
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139,399 | 123,464 | 1,691 | 14,244 | 15,935 | ||||||||||||||||||||||||
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Adjusted operating income
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108,717 | 93,522 | 1,471 | 13,724 | 15,195 | ||||||||||||||||||||||||
Revenues
Revenues decreased by $29.5 million in 2025, or 6%, compared with 2024. Changes in foreign currency exchange rates favorably impacted revenues by $8.8 million. Revenues were lower due to the planned decrease in electric residential sales in Europe, Middle East, and Africa (EMEA) and water meter sales, partially offset by higher smart water shipments.
Adjusted Gross Margin
Adjusted gross margin was 31.2% in 2025 compared with 25.9% in 2024. The 530 basis point increase over the prior year was primarily due to an improved customer and product mix as a result of the end-of-life of certain lower margin products.
Adjusted Operating Income
Adjusted operating income increased $15.2 million, or 16%, in 2025 compared with 2024. The increase was a result of increased adjusted gross profit, slightly offset by increased product development 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 | |||||||||||||||||||||||||||
| Year Ended December 31, | |||||||||||||||||||||||||||||
| In thousands | 2025 | 2024 | |||||||||||||||||||||||||||
| Networked Solutions Segment | |||||||||||||||||||||||||||||
| Revenues | $ | 1,557,321 | $ | 1,650,075 | $ | 115 | $ | (92,869) | $ | (92,754) | |||||||||||||||||||
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Adjusted gross profit
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608,576 | 597,780 | (443) | 11,239 | 10,796 | ||||||||||||||||||||||||
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Adjusted operating income
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472,400 | 456,662 | (445) | 16,183 | 15,738 | ||||||||||||||||||||||||
Revenues
Revenues decreased by $92.8 million, or 6%, in 2025 compared with 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.
Adjusted Gross Margin
Adjusted gross margin was 39.1% in 2025 compared with 36.2% in 2024. The 290 basis point increase was primarily related to favorable customer mix.
Adjusted Operating Income
Adjusted operating income increased by $15.7 million, or 3%, in 2025 compared with 2024. The increase was a result of increased adjusted gross profit, along with reduced 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 | |||||||||||||||||||||||||||
| Year Ended December 31, | |||||||||||||||||||||||||||||
| In thousands | 2025 | 2024 | |||||||||||||||||||||||||||
| Outcomes Segment | |||||||||||||||||||||||||||||
| Revenues | $ | 359,743 | $ | 314,185 | $ | 1,038 | $ | 44,520 | $ | 45,558 | |||||||||||||||||||
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Adjusted gross profit
|
142,904 | 118,073 | (124) | 24,955 | 24,831 | ||||||||||||||||||||||||
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Adjusted operating income
|
76,992 | 51,730 | (201) | 25,463 | 25,262 | ||||||||||||||||||||||||
Revenues
Revenues increased $45.6 million, or 15%, in 2025 compared with 2024. This increase was driven by higher recurring revenue, as well as professional services and hardware sales. Changes in foreign currency exchange rates favorably impacted revenues by $1.0 million.
Adjusted Gross Margin
Adjusted gross margin increased to 39.7% in 2025 compared with 37.6% for last year. The 210 basis point increase was driven by improved revenue mix and lower costs.
Adjusted Operating Income
Adjusted operating income increased $25.3 million, or 49%, in 2025 compared with 2024. The increase was a result of increased adjusted gross profit and lower product development costs.
Resiliency Solutions
The effects of changes in foreign currency exchange rates and the constant currency changes in certain Resiliency Solutions segment financial results (November 3 through December 31, 2025) were as follows:
| Effect of Changes in Foreign Currency Exchange Rates | Constant Currency Change | Total Change | |||||||||||||||||||||||||||
| Year Ended December 31, | |||||||||||||||||||||||||||||
| In thousands | 2025 | 2024 | |||||||||||||||||||||||||||
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Resiliency Solutions Segment
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| Revenues | $ | 3,049 | $ | - | $ | - | $ | 3,049 | $ | 3,049 | |||||||||||||||||||
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Adjusted gross profit
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2,317 | - | - | 2,317 | 2,317 | ||||||||||||||||||||||||
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Adjusted operating loss
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(109) | - | - | (109) | (109) | ||||||||||||||||||||||||
Revenues
Revenues were $3.0 million in 2025. Revenues consisted primarily of managed services revenue and some professional services related to deploying customer environments.
Adjusted Gross Margin
Adjusted gross margin was 76.0% in 2025. Costs included in calculating gross margin primarily consist of hosting fees and labor costs for managed services and professional services delivery.
Adjusted Operating Loss
Adjusted operating loss was $0.1 million in 2025.
Corporate unallocated
Operating expenses not directly associated with a reportable segment are classified as Corporate unallocated. These expenses increased $6.1 million in 2025 as compared with 2024. This was due to an increase of $11.9 million in sales, general and administrative expenses primarily driven by increased labor costs. The increase was partially offset by a $3.8 million decrease in product development expenses driven by reduced professional service expenses as compared with 2024, as well as a $1.7 million decrease in restructuring costs and a $0.6 million loss on sale of business recognized in 2024. Refer to Item 8: Financial Statements and Supplementary Data, Note 13: Restructuring for more details.
Financial Condition
Cash Flow Information
| Year Ended December 31, | |||||||||||||||||
| In thousands | 2025 | 2024 | 2023 | ||||||||||||||
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Net cash provided by operating activities
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$ | 405,952 | $ | 238,175 | $ | 124,971 | |||||||||||
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Net cash used in investing activities
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(349,652) | (63,412) | (23,308) | ||||||||||||||
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Net cash provided by (used in) financing activities
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(97,462) | 579,573 | (3,508) | ||||||||||||||
| Effect of exchange rates on cash and cash equivalents | 10,322 | (5,148) | 1,887 | ||||||||||||||
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(Decrease) increase in cash and cash equivalents
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$ | (30,840) | $ | 749,188 | $ | 100,042 | |||||||||||
Cash and cash equivalents at December 31, 2025 was $1.02 billion compared with $1.05 billion at December 31, 2024. The $30.8 million decrease in cash and cash equivalents in the 2025 period was primarily driven by cash used in investing activities for the acquisition of Urbint, Inc. (Urbint) and in financing activities for the common stock repurchase partially offset by net cash provided by operating activities as a result of higher earnings and increased working capital conversion.
Operating activities
Cash provided by operating activities in 2025 was $167.8 million higher than in 2024. This increase was primarily due to increased earnings and working capital conversion.
Investing activities
Net cash used in investing activities in 2025 was $349.7 million, compared with net cash used in investing activities in 2024 of $63.4 million. This movement was primarily related to net cash used for the acquisition of Urbint of $325.0 million in 2025 and compared with the acquisition of Elpis Squared for $34.1 million in 2024, along with $7.7 million decreased purchases of property, plant, and equipment in 2025.
Financing activities
Net cash used by financing activities during 2025 was $97.5 million, compared with $579.6 million provided in 2024. In 2025, cash used to repurchase common stock totaling $100.0 million, partially offset by cash received from issuance of common stock of $7.3 million. In 2024, cash provided by financing activities is due primarily to the issuance of the 2024 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 resulted in an increase of $10.3 million in 2025 and a decrease of $5.1 million 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:
| Year Ended December 31, | |||||||||||
| In thousands | 2025 | 2024 | |||||||||
| Cash provided by operating activities | $ | 405,952 | $ | 238,175 | |||||||
| Acquisitions of property, plant, and equipment | (22,891) | (30,562) | |||||||||
| Free cash flow | $ | 383,061 | $ | 207,613 | |||||||
Free cash flow increased due to higher operating cash flow, as well as decreased spending for 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 December 31, 2025 and 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 December 31, 2025, no amount was outstanding under the 2025 credit facility, and $43.8 millionwas utilized by outstanding standby letters of credit, resulting in $706.2 millionavailable for borrowing. As of December 31, 2025, $256.2 millionwas 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 we do not settle or extend a sufficient portion of our 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 2024 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 8: Financial Statements and Supplementary Data, Note 6: Debt. Refer to Item 8: Financial Statements and Supplementary Data, Note 2: Earnings Per Share and Note 14: Shareholders' Equity for further details of the convertible note hedge transactions and warrant transactions.
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 8: Financial Statements and Supplementary Data, Note 12: Commitments and Contingencies.
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 year ended December 31, 2025, we paid out $26.4 million related to all our restructuring projects. As of December 31, 2025, $19.0 million was accrued for these restructuring projects, of which $15.0 million is expected to be paid within the next 12 months.
For further details regarding our restructuring activities, refer to Item 8: Financial Statements and Supplementary Data, Note 13: Restructuring.
Stock Repurchase Programs
Effective November 10, 2025, Itron's Board of Directors authorized a repurchase up to $250 million of our common stock over an 18-month period (the 2025 Stock Repurchase Program). Repurchases will be made in the open market and pursuant to the terms of any Rule 10b5-1 plans that Itron may enter into, and in accordance with applicable securities laws. The repurchase program is intended to comply with Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended. Depending on market conditions and other factors, these repurchases may be commenced or suspended from time to time without prior notice. We repurchased no shares under the 2025 Stock Repurchase Program.
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. From November 3 through November 6, 2025, Itron repurchased 942,577 shares of its common stock for a total of $100 million, fully utilizing the authorized capacity under the 2024 Stock Repurchase Program.
Locusview, Ltd. Acquisition
On November 14, 2025, we entered into a Share Purchase Agreement (the Agreement) to acquire 100%of the outstanding equity of Locusview, Ltd. and subsidiaries (collectively, Locusview) a privately held utility-focused software and services company that is based in the United States and Israel. The acquisition provides value to Itron through the leverage of Locusview's digital construction management solutions to enhance Itron's Resiliency Solutions offerings to its customers. The acquisition closed on January 5, 2026. The preliminary purchase price for the acquisition was $525 million, with adjustment for final working capital and other closing considerations to be determined following the transaction's close. The purchase was funded through cash on hand.
Other contractual obligations and commitments
Operating lease obligations are disclosed in Item 8: Financial Statements and Supplementary Data, Note 19: Leases and do not include common area maintenance charges, real estate taxes, and insurance charges for which we are obligated. Amounts due under operating lease liabilities during 2026 are $16.8 million and are $21.6 million for 2027 and beyond.
We regularly enter into standard purchase orders in the ordinary course of business that may obligate us to purchase materials and other items but may not yet qualify for recognition in our Consolidated Balance Sheets. Purchase orders and other purchase obligations can include open-ended agreements that provide for estimated quantities over an extended delivery period. At December 31, 2025, purchase orders and other purchase obligations were $391.9 million, which includes capital expenditures of $8.4 million. The purchase orders may include durations longer than one year, but these long-term agreements generally contain termination clauses that could require payment if the commitments were canceled, and as such the total above is considered short-term as of December 31, 2025.
Other long-term contractual obligations consist of warranty obligations and estimated pension benefit payments. Estimated pension benefit payments include amounts to be paid from our assets for unfunded plans and reflect expected future service.
The following table summarizes our known obligations to make future payments pursuant to certain contracts as of December 31, 2025.
| In thousands | Next 12 months |
Beyond the next 12 months |
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| Warranty obligations | $ | 10,868 | $ | 7,350 | ||||||||||
| Estimated pension benefit payments | 4,874 | 61,998 | ||||||||||||
The period of cash settlement for long-term unrecognized tax benefits, which include accrued interest and penalties, cannot be reasonably estimated with the respective taxing authorities. For further information on defined benefit pension plans, income taxes, and warranty obligations, refer to Item 8: Financial Statements and Supplementary Data, Note 8: Defined Benefit Pension Plans, Note 11: Income Taxes, and Note 12: Commitments and Contingencies.
Income Tax
Our tax provision as a percentage of income before tax typically differs from the U.S. federal statutory rate of 21%. Changes in our actual tax rate are subject to several factors, including fluctuations in operating results, new or revised tax legislation and accounting pronouncements, changes in the level of business in domestic and foreign jurisdictions, research and development tax credits, state income taxes, adjustments to valuation allowances, settlement of tax audits, and uncertain tax positions, among other items. Changes in tax laws, valuation allowances, and unanticipated tax liabilities could significantly impact our tax rate.
Our cash income tax payments were as follows:
| Year Ended December 31, | |||||||||||
| In thousands | 2025 | 2024 | |||||||||
| U.S. federal taxes paid | $ | 29,000 | $ | 42,224 | |||||||
| State income taxes paid | 8,595 | 9,250 | |||||||||
| Foreign and local income taxes paid | 18,721 | 28,698 | |||||||||
| Total income taxes paid | $ | 56,316 | $ | 80,172 | |||||||
Based on current projections, we expect to pay, net of refunds, approximately $6 million in U.S. state taxes and $18 million in foreign and local income taxes in 2026. We expect net refunds of approximately $25 million in U.S. federal taxes.
As of December 31, 2025, there was $70.3 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.
Other Liquidity Considerations
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 December 31, 2025, $4.2 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.
As of December 31, 2025, we expect to make cash payments of approximately $49 million for variable compensation during the first quarter of 2026.
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, as well as Item 7A: Quantitative and Qualitative Disclosures About Market Risk.
Contingencies
Refer to Item 8: Financial Statements and Supplementary Data, Note 12: Commitments and Contingencies.
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 include revenue recognition, warranty, restructuring, income taxes, goodwill and intangible assets, defined benefit pension plans, contingencies, and stock-based compensation. Refer to Item 8: Financial Statements and Supplementary Data, Note 1: Summary of Significant Accounting Policies for further disclosures regarding accounting policies and new accounting pronouncements.
Revenue Recognition
Many of our revenue arrangements involve multiple performance obligations, consisting of hardware, software, and professional services such as implementation, project management, installation, consulting services, cloud services, and SaaS. These arrangements require us to determine the standalone selling price of the promised goods or services underlying each performance obligation and then allocate the total arrangement consideration among the separate performance obligations based on their relative standalone selling price. Revenues for each performance obligation are then recognized upon transfer of control to the customer at a point in time as products are shipped or received by a customer, or over time as services are delivered. The majority of our revenue is recognized at a point in time when products are shipped to or received by a customer. Certain contracts that contain multiple performance obligations may contain customer-specific terms and conditions that govern service level commitments, transfer of control, and variable consideration that may involve complex accounting considerations.
Professional services revenues are recognized over time. We measure progress towards satisfying these performance obligations using input methods, most commonly based on the costs incurred in relation to the total expected costs to provide the service. The estimate of expected costs to provide services requires judgment. Cost estimates take into consideration past history and the specific scope requested by the customer and are updated quarterly. Other variables impacting our estimate of costs to complete include length of time to complete, changes in wages, subcontractor performance, supplier information, and business volume assumptions. Changes in underlying assumptions and estimates may adversely or favorably affect financial performance.
If we estimate that the completion of a performance obligation will result in a loss, then the loss is recognized in the period in which the loss becomes evident. We reevaluate the estimated loss through the completion of the performance obligation and adjust the estimated loss for changes in facts and circumstances.
Many of our contracts with customers include variable consideration, which can include liquidated damage provisions, rebates and volume and early payment discounts, or software licenses sold where the amount of consideration is dependent on the number of endpoints deployed. We estimate variable consideration using the expected value method, taking into consideration contract terms, historical customer behavior, and historical sales. Some of our contracts with customers contain clauses for liquidated damages related to the timing of delivery or milestone accomplishments, which could become material in the event of failure to meet the contractual deadlines. At the inception of the arrangement and on an ongoing basis, we evaluate the probability of having to pay liquidated damages and the magnitude of such damages. In the case of liquidated damages, we also take into consideration progress towards meeting contractual milestones, including whether milestones have not been achieved, specified rates, if applicable, stated in the contract, and history of paying liquidated damages to the customer or similar customers.
Certain of our revenue arrangements include an extended or customer-specific warranty provision that covers all or a portion of a customer's replacement or repair costs beyond the standard warranty period. Whether or not the extended warranty is
separately priced in the arrangement, a portion of the arrangement's total consideration is allocated to this extended warranty deliverable. This revenue is deferred and recognized over the extended warranty coverage period. Extended or customer-specific warranties do not represent a significant portion of our revenue.
We allocate consideration to each performance obligation in an arrangement based on its relative standalone selling price. For goods or services where we have observable standalone sales, the observable standalone sales are used to determine the standalone selling price. Where we do not have standalone sales, we estimate the standalone selling price using either the adjusted market assessment approach or the expected cost plus a margin approach. Approaches used to estimate the standalone selling price for a given good or service maximize the use of observable inputs and consider several factors, including our pricing practices, costs to provide a good or service, the type of good or service, and availability of other transactional data, among others.
We determine the estimated standalone selling prices of goods or services used in our allocation of arrangement consideration on an annual basis or more frequently if there is a significant change in our business or if we experience significant variances in our transaction prices.
Our contracts may be modified to add, remove, or change existing performance obligations or change the contract price. The accounting for modifications to our contracts involves assessing whether the products or services added to an existing contract are distinct and whether the pricing is at the standalone selling price. Products or services added that are not distinct are accounted for as if it were part of the existing contract. The effect of the modification on the transaction price and on the measure of progress is recognized as an adjustment to revenue as of the date of the modification (i.e., on a cumulative catch-up basis). Those products or services that are distinct are accounted for prospectively, either as a separate contract if the additional services are priced at the standalone selling price, or as a termination of the existing contract and creation of a new contract if not priced at the standalone selling price.
Warranty
We offer standard warranties on our hardware products and large application software products. We accrue the estimated cost of product warranties based on historical and projected product performance trends and costs during the warranty period. Testing of new products in the development stage helps identify and correct potential warranty issues prior to manufacturing. Quality control efforts during manufacturing reduce our exposure to warranty claims. When testing or quality control efforts fail to detect a fault in our products, we may experience an increase in warranty claims. We track warranty claims to identify potential warranty trends. If an unusual trend is identified, an additional warranty accrual would be recognized if a failure event is probable and the cost can be reasonably estimated. When new products are introduced, our process relies on historical averages of similar products until sufficient data are available. As actual experience on new products becomes available, it is used to modify the historical averages to ensure the expected warranty costs are within a range of likely outcomes. Management regularly evaluates the sufficiency of the warranty provisions and makes adjustments when necessary. The warranty allowances may fluctuate due to changes in estimates for material, labor, and other costs we may incur to repair or replace projected product failures, and we may incur additional warranty and related expenses in the future with respect to new or established products, which could adversely affect our financial position and results of operations.
Restructuring
We recognize a liability for costs associated with an exit or disposal activity under a restructuring project at its fair value in the period in which the liability is incurred. Employee termination benefits considered post-employment benefits are accrued when the obligation is probable and estimable, such as benefits stipulated by human resource policies and practices or statutory requirements. If the employee must provide future service, such benefits are recognized ratably over the future service period. For contract termination costs, we recognize a liability upon the later of when we terminate a contract in accordance with the contract terms or when we cease using the rights conveyed by the contract, whichever occurs later.
Asset impairments associated with a restructuring project are determined at the asset group level. An impairment may be recognized for assets that are to be abandoned, are to be sold for less than net book value, or are held for sale in which the estimated proceeds are less than the net book value less costs to sell. We may also recognize impairment on an asset group, which is held and used, when the carrying value is not recoverable and exceeds the asset group's fair value. If an asset group is considered a business, a portion of our goodwill balance is allocated to it based on relative fair value. If the sale of an asset group under a restructuring project results in proceeds that exceed the net book value of the asset group, the resulting gain is recognized within restructuring expense in the Consolidated Statements of Operations.
In determining restructuring charges, we analyze our future operating requirements, including the required headcount by business functions and facility space requirements. Our restructuring costs and any resulting accruals involve significant estimates using the best information available at the time the estimates are made. Our estimates involve a number of risks and
uncertainties, some of which are beyond our control, including real estate market conditions and local labor and employment laws, rules, and regulations. If the amounts and timing of cash flows from restructuring activities are significantly different from what we have estimated, the actual amount of restructuring and asset impairment charges could be materially different, either higher or lower, than those we have recognized.
Income Taxes
We estimate income tax expense in each of the taxing jurisdictions in which we operate. Changes in our actual tax rate are subject to several factors, including fluctuations in operating results, new or revised tax legislation and accounting pronouncements, changes in the level of business in domestic and foreign jurisdictions, research and development tax credits, state income taxes, adjustments to valuation allowances, settlement of tax audits, and uncertain tax positions, among other items. Changes in tax laws, valuation allowances, and unanticipated tax liabilities could significantly impact our tax rate.
We recognize valuation allowances to reduce deferred tax assets to the extent we believe it is more likely than not that a portion of such assets will not be realized. In making such determinations, we consider all available favorable and unfavorable evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and our ability to carry back losses to prior years. We are required to make assumptions and judgments about potential outcomes that lie outside our control. Our most sensitive and critical factors are the projection, source, and character of future taxable income. Although realization is not assured, management believes it is more likely than not that deferred tax assets, net of valuation allowance, will be realized. The amount of deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward periods are reduced.
We are subject to audits in multiple taxing jurisdictions in which we operate. These audits may involve complex issues, which may require an extended period of time to resolve. We believe we have recognized adequate income tax provisions and reserves for uncertain tax positions.
In evaluating uncertain tax positions, we consider the relative risks and merits of positions taken in tax returns filed and to be filed, considering statutory, judicial, and regulatory guidance applicable to those positions. We make assumptions and judgments about potential outcomes that lie outside management's control. To the extent the tax authorities disagree with our conclusions and depending on the final resolution of those disagreements, our actual tax rate may be materially affected in the period of final settlement with the tax authorities.
Goodwill and Intangible Assets
Goodwill and intangible assets may result from our business acquisitions. Intangible assets may also result from the purchase of assets and intellectual property where we do not acquire a business. We use estimates, including estimates of useful lives of intangible assets, the amount and timing of related future cash flows, and fair values of the related operations, in determining the value assigned to goodwill and intangible assets. Our finite-lived intangible assets are amortized over their estimated useful lives based on estimated discounted cash flows. Fully amortized finite-lived intangible assets are evaluated for write off based on Itron's internal process. The evaluation is completed if these intangibles expire, become obsolete, or are determined to have no further value to the Company. In-process research and development is considered an indefinite-lived intangible asset and is not subject to amortization until the associated projects are completed or terminated. Finite-lived intangible assets are tested for impairment at the asset group level when events or changes in circumstances indicate the carrying value may not be recoverable. Indefinite-lived intangible assets are tested for impairment annually, when events or changes in circumstances indicate the asset may be impaired, or when their useful lives are determined to be no longer indefinite.
Goodwill is assigned to our reporting units based on the expected benefit from the synergies arising from each business combination, determined by using certain financial metrics, including the forecast discounted cash flows associated with each reporting unit. Each reporting unit corresponds with its respective operating segment.
We test goodwill for impairment each year as of October 1, or more frequently should a significant impairment indicator occur. As part of the impairment test, we may elect to perform an assessment of qualitative factors. If this qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit, including goodwill, is less than its carrying amount, or if we elect to bypass the qualitative assessment, we would then proceed with the impairment test. The impairment test involves comparing the fair values of the reporting units to their carrying amounts. If the carrying amount of a reporting unit exceeds its fair value, we first evaluate the long-lived assets within the reporting unit for impairment and then recognize a goodwill impairment loss in an amount equal to any excess. For the current year, the fair value of each reporting unit exceeded its carrying amount. As a result, none of our reporting units are considered at risk of failing the quantitative impairment test, and no goodwill impairment was recognized.
Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. We forecast discounted future cash flows at the reporting unit level using risk-adjusted discount rates and estimated future revenues and operating costs, which take into consideration factors such as existing backlog, expected future orders, supplier contracts, and expectations of competitive, business and economic environments. We also identify similar publicly traded companies and develop a correlation, referred to as a multiple, to apply to the operating results of the reporting units. These combined fair values are then reconciled to the aggregate market value of our common stock on the date of valuation, while considering a reasonable control premium.
Changes in market demand, fluctuations in the markets in which we operate, the volatility and decline in the worldwide equity markets, and a decline in our market capitalization could unfavorably impact the remaining carrying value of our goodwill, which could have a significant effect on our current and future results of operations and financial position.
Defined Benefit Pension Plans
We sponsor both funded and unfunded defined benefit pension plans for our international employees, primarily in Germany, France, India, and Indonesia. We recognize a liability for the projected benefit obligation in excess of plan assets or an asset for plan assets in excess of the projected benefit obligation. We also recognize the funded status of our defined benefit pension plans on our Consolidated Balance Sheets and recognize as a component of other comprehensive income (loss) (OCI), net of tax, the actuarial gains or losses and prior service costs or credits, if any, which arise during the period but are not recognized as components of net periodic benefit cost.
Several economic assumptions and actuarial data are used in calculating the expense and obligations related to these plans. The assumptions are updated annually at December 31 and include the discount rate, the expected remaining service life, the expected rate of return on plan assets, and the rate of future compensation increases. The discount rate is a significant assumption used to value our pension benefit obligation. We determine a discount rate for our plans based on the estimated duration of each plan's liabilities. For euro denominated defined benefit pension plans, which represent 80% of our projected benefit obligation, we use discount rates with consideration of the duration of each of the plans, using a hypothetical yield curve developed from euro-denominated AA-rated corporate bond issues. These bonds are assigned different weights to adjust their relative influence on the yield curve, and the highest and lowest yielding 10% of bonds are excluded within each maturity group. The discount rates used, depending on the duration of the plans, were between 3.00% and 4.00%. The weighted average discount rate used to measure the projected benefit obligation for all of the plans at December 31, 2025 was 4.42%. A change of 100 basis points in the discount rate would change our projected benefit obligation by approximately $9.0 million. The financial and actuarial assumptions used at December 31, 2025 may differ materially from actual results due to changing market and economic conditions and other factors. These differences could result in a significant change in the amount of pension expense recognized in future periods.
Contingencies
A loss contingency is recognized if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. We evaluate, among other factors, the degree of probability of an unfavorable outcome and our ability to make a reasonable estimate of the amount of the ultimate loss. Loss contingencies that we determine to be reasonably possible, but not probable, are disclosed but not recognized. Changes in these factors and related estimates could materially affect our financial position and results of operations. Legal costs to defend against contingent liabilities are recognized as incurred.
Stock-Based Compensation
We grant various stock-based compensation awards to our officers, employees, and Board of Directors with service, performance, and market vesting conditions, including restricted stock units, phantom stock units, and unrestricted stock units (awards). Prior to December 31, 2020, stock options were also granted as part of the stock-based compensation awards. We measure and recognize compensation expense for all awards based on estimated fair values. For awards with only a service condition, we expense stock-based compensation using the straight-line method over the requisite service period for the entire award. For awards with service and performance conditions, if vesting is probable, we expense the stock-based compensation on a straight-line basis over the requisite service period for each separately vesting portion of the award. For awards with a market condition, we expense the fair value over the requisite service period.
We measure and recognize compensation expense for all stock-based compensation based on estimated fair values. The fair value of unrestricted stock awards with no market conditions is the market close price of our common stock on the date of grant. For restricted stock units with market conditions, the fair value is estimated at the date of award using a Monte Carlo simulation model, which includes assumptions for dividend yield and expected volatility for our common stock and the common stock for companies within the Russell 3000 index, as well as the risk-free interest rate and expected term of the awards. For phantom stock units, fair value is the market close price of our common stock at the end of each reporting period.
For stock options, the fair value was estimated at the date of grant using the Black-Scholes option-pricing model, which included assumptions for the expected volatility, risk-free interest rate, expected term and dividend yield.
In valuing our restricted stock units with a market condition and stock options, significant judgment is required in determining the expected volatility of our common stock and the expected life that individuals will hold their stock options prior to exercising. The volatility for our restricted stock units with a market condition is based on the historical volatility of our own stock and the stock for companies comprising the market index within the market condition. The expected volatility for stock options was based on the historical and implied volatility of our own common stock. The expected life of stock option grants was derived from the historical actual term of option grants and an estimate of future exercises during the remaining contractual period of the option. While volatility and estimated life are assumptions that do not bear the risk of change subsequent to the grant date, these assumptions may be difficult to measure as they represent future expectations based on historical experience. Further, our expected volatility and expected life may change in the future, which could substantially change the grant-date fair value of future awards and ultimately the expense we recognize. Actual results and future estimates may differ substantially from our current estimates.
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, adjusted gross profit, adjusted operating income, 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 depreciation of property, plant, an equipment 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; employee severance; 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.
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.
Adjusted gross profit - We define adjusted gross profit as gross profit excluding the amortization expense of core-developed technology intangible assets.
Adjusted operating income- We define adjusted operating income as operating income excluding the amortization of core-developed technology intangible assets.
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 | Year Ended December 31, | ||||||||||||||||
| In thousands, except per share data | 2025 | 2024 | |||||||||||||||
| NON-GAAP OPERATING EXPENSES | |||||||||||||||||
| GAAP operating expenses | $ | 579,050 | $ | 575,207 | |||||||||||||
|
Amortization of intangible assets (1)
|
(18,034) | (17,828) | |||||||||||||||
| Restructuring | (931) | (2,679) | |||||||||||||||
| Loss on sale of business | (79) | (597) | |||||||||||||||
| Strategic initiative | (1,736) | - | |||||||||||||||
| Acquisition and integration | (7,433) | (723) | |||||||||||||||
| Non-GAAP operating expenses | $ | 550,837 | $ | 553,380 | |||||||||||||
| NON-GAAP OPERATING INCOME | |||||||||||||||||
|
GAAP operating income
|
$ | 313,068 | $ | 264,110 | |||||||||||||
| Amortization of intangible assets | 19,112 | 17,828 | |||||||||||||||
| Restructuring | 931 | 2,679 | |||||||||||||||
| Loss on sale of business | 79 | 597 | |||||||||||||||
| Strategic initiative | 1,736 | - | |||||||||||||||
| Acquisition and integration | 7,433 | 723 | |||||||||||||||
| Non-GAAP operating income | $ | 342,359 | $ | 285,937 | |||||||||||||
| NON-GAAP NET INCOME & DILUTED EPS | |||||||||||||||||
|
GAAP net income attributable to Itron, Inc.
|
$ | 301,055 | $ | 239,105 | |||||||||||||
| Amortization of intangible assets | 19,112 | 17,828 | |||||||||||||||
| Amortization of debt placement fees | 6,928 | 5,314 | |||||||||||||||
| Restructuring | 931 | 2,679 | |||||||||||||||
| Loss on sale of business | 79 | 597 | |||||||||||||||
| Strategic initiative | 1,736 | - | |||||||||||||||
| Acquisition and integration | 7,433 | 723 | |||||||||||||||
|
Income tax effect of non-GAAP adjustments (2)
|
(6,883) | (6,446) | |||||||||||||||
| Non-GAAP net income attributable to Itron, Inc. | $ | 330,391 | $ | 259,800 | |||||||||||||
| Non-GAAP diluted EPS | $ | 7.13 | $ | 5.62 | |||||||||||||
| GAAP weighted average common shares outstanding - Diluted | 46,323 | 46,187 | |||||||||||||||
| Effect of call option transaction - 2021 Notes | (8) | - | |||||||||||||||
| Non-GAAP weighted average common shares outstanding - Diluted | 46,315 | 46,187 | |||||||||||||||
| TOTAL COMPANY RECONCILIATIONS | Year Ended December 31, | ||||||||||||||||
| In thousands | 2025 | 2024 | |||||||||||||||
| ADJUSTED EBITDA | |||||||||||||||||
|
GAAP net income attributable to Itron, Inc.
|
$ | 301,055 | $ | 239,105 | |||||||||||||
| Interest income | (48,376) | (34,577) | |||||||||||||||
| Interest expense | 22,451 | 15,379 | |||||||||||||||
| Income tax provision | 38,932 | 43,407 | |||||||||||||||
| Depreciation and amortization | 49,517 | 56,277 | |||||||||||||||
| Restructuring | 931 | 2,679 | |||||||||||||||
| Loss on sale of business | 79 | 597 | |||||||||||||||
| Strategic initiative | 1,736 | - | |||||||||||||||
| Acquisition and integration | 7,433 | 723 | |||||||||||||||
| Adjusted EBITDA | $ | 373,758 | $ | 323,590 | |||||||||||||
| FREE CASH FLOW | |||||||||||||||||
| Net cash provided by operating activities | $ | 405,952 | $ | 238,175 | |||||||||||||
| Acquisitions of property, plant, and equipment | (22,891) | (30,562) | |||||||||||||||
| Free Cash Flow | $ | 383,061 | $ | 207,613 | |||||||||||||
(1)Excludes amortization of core-developed technology intangible assets.
(2)The income tax effect of non-GAAP adjustments is calculated using the statutory tax rates for the relevant jurisdictions if no valuation allowance exists for each reconciling item. If a valuation allowance exists, there is no tax impact to the non-GAAP adjustment.
The table below reconciles the non-GAAP financial measure of adjusted gross profit with the most directly comparable GAAP financial measure.
| Year Ended December 31, 2025 | ||||||||||||||||||||||||||||||||
|
In thousands
|
Device Solutions | Networked Solutions | Outcomes | Resiliency Solutions | Segments Subtotal | |||||||||||||||||||||||||||
|
Total revenues
|
$ | 447,081 | $ | 1,557,321 | $ | 359,743 | $ | 3,049 | $ | 2,367,194 | ||||||||||||||||||||||
|
Total cost of revenues
|
307,682 | 948,745 | 217,464 | 1,185 | 1,475,076 | |||||||||||||||||||||||||||
|
Gross profit
|
139,399 | 608,576 | 142,279 | 1,864 | 892,118 | |||||||||||||||||||||||||||
|
Gross margin
|
31.2 | % | 39.1 | % | 39.6 | % | 61.1 | % | 37.7 | % | ||||||||||||||||||||||
|
Amortization of core-developed technology intangible assets
|
$ | - | $ | - | $ | 625 | $ | 453 | $ | 1,078 | ||||||||||||||||||||||
|
Adjusted gross profit
|
139,399 | 608,576 | 142,904 | 2,317 | 893,196 | |||||||||||||||||||||||||||
|
Adjusted gross margin
|
31.2 | % | 39.1 | % | 39.7 | % | 76.0 | % | 37.7 | % | ||||||||||||||||||||||
| Year Ended December 31, 2024 | ||||||||||||||||||||||||||
|
In thousands
|
Device Solutions | Networked Solutions | Outcomes | Segments Subtotal | ||||||||||||||||||||||
| Total revenues | $ | 476,577 | $ | 1,650,075 | $ | 314,185 | $ | 2,440,837 | ||||||||||||||||||
| Total cost of revenues | 353,113 | 1,052,295 | 196,112 | 1,601,520 | ||||||||||||||||||||||
| Gross profit | 123,464 | 597,780 | 118,073 | 839,317 | ||||||||||||||||||||||
| Gross margin | 25.9 | % | 36.2 | % | 37.6 | % | 34.4 | % | ||||||||||||||||||
| Amortization of core-developed technology intangible assets | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||
| Adjusted gross profit | 123,464 | 597,780 | 118,073 | 839,317 | ||||||||||||||||||||||
| Adjusted gross margin | 25.9 | % | 36.2 | % | 37.6 | % | 34.4 | % | ||||||||||||||||||
Itron Inc. published this content on February 17, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 17, 2026 at 20:07 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]