ITRI Q2 Earnings Beat, Sales Lag, Stock Sinks 10% on Mixed Outlook

Core Insights - Itron Inc. reported non-GAAP EPS of $1.62 for Q2 2025, exceeding the Zacks Consensus Estimate by 21.8% and surpassing management's guidance of $1.30-$1.40 [1][9] - Revenue for the quarter was $607 million, nearly flat compared to $609 million in the prior-year quarter, and came in at the upper end of the guided range [2][9] - The company adjusted its full-year revenue outlook downward by nearly 3%, projecting revenue of $2.35-$2.4 billion, while raising its EPS forecast midpoint by 13% to $6.00-$6.20 [3][4] Revenue Breakdown - Product revenues were $517.2 million, accounting for 85.2% of total revenues, down 3% year over year, while service revenues increased by 17.6% to $89.6 million [5] - The Device Solutions segment saw a 5% decline in revenue to $113 million, while the Networked Solutions segment's revenue dipped 1% to $409 million [7] - Outcomes revenue rose 9% to $85 million, driven by growth in recurring revenue and software licenses [10] Operational Performance - Itron's gross margin improved to 36.9%, a 230 basis point increase year over year, attributed to a favorable product and customer mix [11] - Non-GAAP operating income reached a record high of $82 million, marking a 19% year-over-year increase, with adjusted EBITDA also hitting a new record at $90 million [11] Financial Position - As of June 30, 2025, cash and cash equivalents totaled $1.224 billion, with net long-term debt at $787 million [12] - The company generated strong cash flow, with net cash from operations totaling $97 million and free cash flow of $91 million, nearly doubling the prior year's performance [13] Future Outlook - For Q3 2025, Itron expects revenues between $570 million and $585 million, representing a 6% year-over-year decline at the midpoint, with non-GAAP EPS anticipated in the range of $1.45-$1.55 [14]