Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $582 million, with adjusted EBITDA of $97 million and non-GAAP earnings per share of $1.54, reflecting a decrease in revenue compared to the previous year due to planned portfolio changes and project timing [4][9] - Gross margin reached a record 37.7%, up 360 basis points year over year, while GAAP net income was $66 million, down from $78 million in the prior year due to higher tax expenses [9][10] - Free cash flow was a record $113 million, representing 19.5% of revenue, compared to $59 million a year ago, attributed to improved working capital and operational earnings growth [10][13] Business Line Data and Key Metrics Changes - Device Solutions revenue decreased by 19% on a constant currency basis, primarily due to a decline in legacy electricity products in EMEA and lower water volumes in North America [11] - Network Solutions revenue decreased by 6% year over year, mainly due to the timing of project deployments [11] - Outcomes revenue increased by 10% on a constant currency basis, driven by growth in recurring revenue [11][12] Market Data and Key Metrics Changes - The total backlog at the end of Q3 was $4.3 billion, with Q3 bookings at $380 million [4][9] - The company noted that while there is a slower pace on some projects, there have been no project cancellations or declines in customer interest, although market uncertainty has increased [5][6] Company Strategy and Development Direction - The company is focused on enhancing grid performance and reliability through the adoption of grid edge technology, which is expected to drive future growth [5][17] - The recent acquisition of Urbant is expected to complement the company's portfolio and address critical infrastructure needs, with a focus on operational resilience solutions [6][8][17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that while current dynamics may temper year-end booking expectations, the long-term growth trajectory remains unchanged [6][17] - The company anticipates Q4 revenue to be between $555 million to $565 million, representing a decline of 9% year over year, but expects non-GAAP earnings per share to increase due to favorable tax items [14][15] Other Important Information - The company has seen a 25% expansion in its opportunity pipeline since the start of the year, indicating strong market demand despite current challenges [6][17] - The company’s total debt at the end of Q3 was $1.265 billion, with cash and equivalents at $1.332 billion [13] Q&A Session Summary Question: Clarification on revenue decline and gross margins - Management indicated that the biggest weakness was in Network Solutions due to slower project deployments, but gross margins for Q4 are expected to be similar to Q3 [22][24] Question: Insights on project delays and demand environment - Management confirmed that while there are delays in hardware-oriented projects, recurring revenue bookings are strong, and the overall demand remains robust [25][28] Question: Details on Network Solutions revenue decline - The decline was attributed to the completion of major deployments and customers spreading projects over longer periods due to budget constraints [34][36] Question: Backlog and delivery times - Management noted that some projects are being extended over longer periods, but this does not indicate a loss of backlog or revenue [67][68] Question: Future growth trajectory and Urbant acquisition - Management stated it is too early to provide guidance for 2026, but growth is expected, and the Urbant acquisition is anticipated to enhance service offerings and customer engagement [50][55]

Financial Data and Key Metrics Changes - Itron reported second quarter revenue of $607 million, adjusted EBITDA of $90 million, non-GAAP earnings per share of $1.62, and free cash flow of $91 million, achieving earnings above expectations despite macroeconomic uncertainties [5][11][12] - Gross margin reached an all-time quarterly record of 36.9%, an increase of 230 basis points year-over-year, driven by a favorable product mix [11][12] - Non-GAAP operating income was $82 million, a 19% increase year-over-year, while adjusted EBITDA increased 16% year-over-year [12] Business Segment Data and Key Metrics Changes - Device Solutions revenue decreased by 8% on a constant currency basis, primarily due to a decline in legacy electric product sales, partially offset by growth in water [13] - Network Solutions revenue decreased by 1% year-over-year, attributed to the non-recurrence of revenue catch-up from the previous year [13] - Outcomes revenue increased by 9% year-over-year, driven by growth in recurring revenue and software licenses [13][15] Market Data and Key Metrics Changes - Second quarter bookings totaled $454 million, primarily driven by Network Solutions and Outcomes segments, with expectations for annual bookings to be weighted towards the second half of the year [9] - The company anticipates a full-year revenue range of $2.35 billion to $2.4 billion, reflecting a 3% decline from initial guidance [18] Company Strategy and Development Direction - Itron's strategy focuses on expanding customer infrastructure and enhancing margins, with a strong emphasis on high-value solutions [6][21] - The company is actively pursuing mergers and acquisitions, particularly in software services, to enhance its portfolio [48] Management's Comments on Operating Environment and Future Outlook - Management noted that while the long-term market outlook remains positive, short-term project deployments are slowing due to complex customer and regulatory environments [7][20] - The company is adjusting its full-year revenue outlook midpoint down by approximately 3%, while increasing its EPS outlook midpoint by 13% [7][19] Other Important Information - Total debt stood at $1.265 billion, with net leverage at 0.1 times and cash and equivalents at $1.2 billion as of June 30 [16] - The company is experiencing a push towards higher-margin solutions, particularly in grid efficiency and reliability [31] Q&A Session Summary Question: Insights on margin expectations - Management indicated that the EBITDA margin is higher than expected due to structural changes in the device business, which have improved margins [25][26] Question: Near-term revenue outlook - The slowdown is attributed more to backlog delays rather than book and ship issues, with customers facing constraints in project sequencing and capital budgets [30][31] Question: Regulatory approval timelines - The pace of regulatory approvals is normal, with some projects experiencing delays due to sequencing issues [39][44] Question: M&A strategy amidst regulatory changes - The regulatory environment has not altered the company's M&A strategy, which remains focused on acquiring software services that enhance the portfolio [48] Question: Future revenue growth expectations - Management expects growth year-over-year for 2026, contingent on the trajectory of bookings in the second half of the year [52] Question: Complexity of projects affecting regulatory approvals - The complexity of projects is not a significant factor; regulators are primarily focused on balancing consumer costs with utility needs [58][60]