Financial Data and Key Metrics Changes - The company reported revenue of $607 million for Q2 2025, slightly lower than the previous year due to constrained revenue catch-up [11] - Adjusted EBITDA reached $90 million, marking a 16% year-over-year increase [12] - Non-GAAP earnings per share (EPS) increased to $1.62, up from $1.21 a year ago, reflecting strong operational performance [12] - Free cash flow was a record $91 million, compared to $45 million in the prior year [12] Business Segment Data and Key Metrics Changes - Device Solutions revenue decreased by 8% year-over-year, 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, mainly due 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] Market Data and Key Metrics Changes - The company shipped over 15.3 million distributed intelligence endpoints by the end of Q2, up from 14.4 million at the end of Q1 [7] - The long-term market outlook remains positive, driven by rising electricity demand and a focus on efficiency and safety, despite short-term project delays [8] Company Strategy and Development Direction - The company is focused on expanding its differentiated Outcomes segment and maintaining market leadership in agile distribution infrastructure [7] - Itron 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 acknowledged ongoing macroeconomic and trade policy uncertainties affecting project deployments and decision-making [8] - The full-year revenue outlook midpoint was lowered by approximately 3%, while the EPS outlook midpoint was raised by 13% due to growing customer demand for high-value solutions [8][20] - Management remains confident in the long-term market growth despite short-term challenges [22] Other Important Information - Total debt stood at $1.265 billion, with net debt at $41 million as of June 30 [17] - The company anticipates Q3 revenue between $570 million to $585 million, reflecting a 6% decrease compared to the previous year [18] Q&A Session Summary Question: Margin outlook and factors affecting it - Management indicated that the EBITDA margin is higher than expected due to structural changes in the device business, which improved margins [26][28] Question: Near-term revenue outlook and backlog - Management clarified that the slowdown is more related to backlog deployment rather than book and ship business, with no project cancellations [31][32] Question: Regulatory approval pace and its impact - Management noted that the pace of regulatory approvals is normal, with some projects experiencing delays due to sequencing and labor constraints [38][43] Question: M&A strategy in light of regulatory changes - Management confirmed that the regulatory environment has not changed their M&A strategy, remaining active in seeking accretive acquisitions [48] Question: Earnings growth versus revenue growth - Management expects growth in earnings year-over-year, but the trajectory will depend on the timing of bookings in the second half of the year [51] Question: Complexity of projects and regulatory pushback - Management stated that the complexity of projects is not a significant factor in delays, as regulators focus on balancing consumer costs with utility needs [56][58] Question: European market opportunities - Management expressed optimism about the European market, noting increased interest in edge intelligence solutions [64][66] Question: Aspirational sales targets for 2027 - Management confirmed that there is no change to the 2027 sales targets despite near-term uncertainties [70]

Financial Data and Key Metrics Changes - Revenue for the first quarter was $607 million, a 1% increase year over year, with adjusted EBITDA of $88 million and non-GAAP earnings per share of $1.52 [5][12] - Free cash flow improved to $67 million from $34 million a year ago, reflecting strong operational earnings growth [14] - GAAP net income was $65 million or $1.42 per diluted share, compared to $52 million or $1.12 per share in the prior year [13] Business Segment Data and Key Metrics Changes - Device Solutions revenue decreased by 1% year over year to $126 million, but increased by 2% on a constant currency basis, with gross margin at 30% and operating margin at 24.2% [14][16] - Network Solutions revenue was $403 million, with a gross margin of 36.9% and operating margin of 28.8%, showing a slight decrease in gross margin due to product mix [16] - Outcomes revenue grew by 14% year over year to $79 million, with gross margin at 39.2% and operating margin at 18.2% [17] Market Data and Key Metrics Changes - Bookings for the quarter resulted in a book-to-bill ratio of 0.9, with a backlog of $4.7 billion, remaining near record levels [6][7] - Customer demand is driven by the adoption of Itron's Great Edge Intelligence platform, enhancing distribution capacity and infrastructure agility [5][6] Company Strategy and Development Direction - The company is focused on optimizing its factory footprint, strengthening supply chain resilience, and growing recurring revenue to capitalize on future opportunities [19][20] - Itron aims to maintain its industry leadership through the deployment of innovative solutions, positioning itself as a partner of choice for utilities and cities [19][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased macroeconomic and trade policy uncertainty but expressed confidence in navigating near-term challenges [19] - The company expects Q2 revenue to be in the range of $605 million to $615 million, with non-GAAP earnings per share anticipated to grow approximately 12% year over year [18] Other Important Information - The estimated EBITDA impact from tariffs for the year is approximately $15 million, net of mitigation measures [10][42] - The regulatory environment remains constructive for customers, with various mechanisms allowing software purchases to be included in rate bases [38] Q&A Session Summary Question: Impact of tariffs on full year guidance - Management stated it is premature to update full year guidance but noted strong performance in Q1 and expectations for Q2 [24][26] Question: Device Solutions segment margins - Management expressed satisfaction with current margins but indicated variability may occur due to seasonal factors [28][29] Question: Twelve-month backlog removal - Management clarified that the removal was to avoid confusion and stated that the demand environment remains positive [32][33] Question: Regulatory environment for software capitalization - Management noted that the regulatory environment is supportive, with various mechanisms in place for software purchases [36][38] Question: Tariff mitigation efforts - Management explained that the $15 million estimate includes current tariffs and mitigation measures, with most impacts expected in the latter half of the year [62] Question: M&A activity and capital deployment - The priority remains finding acquisitions that enhance software content, with ongoing activity in the M&A space [71][72] Question: Recurring revenue mix in Outcomes segment - Management reported approximately 70% recurring revenue in Q1, with a goal of reaching closer to 80% in the future [75]

Core Insights - Itron, Inc. reported financial results for Q1 2025, showing margin expansion and earnings growth ahead of expectations due to a favorable product mix and strong execution [1][2][4] Revenue Performance - Total revenue for Q1 2025 increased by 1% to $607 million, including a catch-up of previously constrained revenue from Q1 2024 [2] - Device Solutions revenue decreased by 1%, but increased by 2% in constant currency, driven by higher smart water sales offset by lower legacy electricity sales [2] - Networked Solutions revenue also decreased by 1% due to shipment timing and project deployment delays [3] - Outcomes revenue increased by 14%, attributed to higher recurring revenue and software licenses [3] Profitability Metrics - Gross margin for Q1 2025 was 35.8%, an increase of 180 basis points from the previous year, due to product mix and operational efficiencies [4] - GAAP operating income rose to $76 million, a $13 million increase from the prior year, while non-GAAP operating income also increased by $13 million to $80 million [5] Net Income and Earnings Per Share - Net income attributable to Itron, Inc. for the quarter was $65 million, or $1.42 per diluted share, compared to $52 million, or $1.12 per diluted share in 2024 [6] - Non-GAAP net income was $70 million, or $1.52 per diluted share, up from $57 million, or $1.24 per diluted share in the previous year [7] Cash Flow and Backlog - Net cash provided by operating activities was $72 million, compared to $41 million in the prior year, while free cash flow increased to $67 million from $34 million [8][9] - Total backlog at the end of the quarter was $4.7 billion, up from $4.3 billion in the prior year, with bookings totaling $530 million [10]