Itron targets $6.84–$6.94 EPS for 2025 as margin records set and Urbint acquisition advances

Earnings Call Insights: Itron, Inc. (ITRI) Q3 2025

MANAGEMENT VIEW

* CEO Thomas Deitrich opened by stating Itron set new records for margins, profit, and free cash flow on revenue in line with expectations, with revenue of $582 million, adjusted EBITDA of $97 million, non-GAAP earnings per share of $1.54, and free cash flow of $113 million. Deitrich highlighted "Utilities are operating in an increasingly complex environment marked by accelerating load growth, rising costs, heightened regulatory scrutiny and greater technical demands." He noted distributed intelligence-enabled endpoints topped 16 million, with more than 10 million additional units in backlog, and licensed DI applications grew 119% year-over-year to $20 million. The Outcomes segment grew 11% year-over-year, led by higher recurring revenue.
* Deitrich shared that "lower-than-expected Q3 bookings and heightened uncertainty have tempered our year-end booking expectations," clarifying that "achieving a 1:1 book-to-bill ratio for 2025 remains possible," but bookings are expected below that target for the year. He emphasized "these changes are not due to competitive dynamics nor fundamental changes in the market. Our opportunity pipeline has expanded by over 25% since the start of the year."
* On strategic moves, Deitrich announced the Urbint acquisition, expected to close in Q4 2025, stating "Urbint's SaaS business model delivers solutions for emergency preparedness and response, damage prevention and worker safety."
* CFO Joan Hooper stated, "Third quarter revenue of $582 million was near the top end of the range we provided and lower than the prior year due to planned portfolio changes and the timing of large project deployments." Hooper highlighted, "Gross margin of 37.7% set a company record for the second consecutive quarter and was 360 basis points higher than last year due to favorable customer and product mix."
* Hooper further noted, "Q3 free cash flow of $113 million or 19.5% of revenue is a new company record and compares to $59 million a year ago. This increase reflects improved working capital, lower tax payments and higher operational earnings growth."

OUTLOOK

* Itron anticipates fourth quarter revenue to be between $555 million to $565 million, with the midpoint representing a decline of 9% year-over-year.
* Non-GAAP earnings per share for Q4 are expected in the range of $2.15 to $2.25 per diluted share, with a negative effective tax rate of approximately 19% due to a favorable tax resolution.
* For full year 2025, Itron now projects revenue within a range of $2.35 billion to $2.36 billion, with a midpoint down 3% versus 2024. Normalizing for 2024 catch-up revenue, this implies approximately 2% year-over-year growth.
* Full year 2025 non-GAAP EPS outlook is increased to a range of $6.84 to $6.94 per diluted share, with an expected annual effective tax rate of approximately 12%.
* Management maintained that "our fourth quarter outlook does not include any impact from the Urbint acquisition."

FINANCIAL RESULTS

* Itron reported revenue of $582 million, adjusted EBITDA of $97 million, and non-GAAP earnings per share of $1.54 for Q3 2025.
* Gross margin reached 37.7%, setting a company record for the second consecutive quarter.
* Free cash flow was $113 million, a new record, attributed to improved working capital, lower tax payments, and higher operational earnings growth.
* By segment, Device Solutions revenue was $104 million with gross margin of 30.9%, Network Solutions revenue was $394 million with gross margin of 39.3%, and Outcomes revenue was $84 million with gross margin of 38.9%.
* Total debt at the end of the quarter was $1.265 billion, and cash and equivalents were $1.332 billion.

Q&A

* Noah Kaye, Oppenheimer: Asked about revenue delta versus prior implied guidance and gross margin trajectory. Joan Hooper responded, "I would say the biggest weakness is in networks...they're going a little slower than we would have expected...From a standpoint of gross margin, I would expect Q4 to look pretty close to what Q3 is."
* Kaye followed up on booking conversion delays. Deitrich responded, "the demand is coming. That record pipeline...is pretty clearly a strong signal of where the market is going...Where we have seen some delays in decisions...is on the more hardware-oriented projects...I still see the environment as very robust. Our '27 targets are clearly on track."
* Jeffrey Osborne, TD Cowen: Inquired about the 6% decline in networks. Deitrich explained, "What we saw...is the catch-up of the constrained revenue from prior years when you lap it year-over-year. We also had...a completion of a major deployment in the networks business that rolled off."
* Osborne asked about visibility into customer deployment schedules. Deitrich stated, "We know what their deployment rates are and those get reprofiled...No projects have stopped."
* Osborne requested clarification on outcomes segment backlog duration. Deitrich clarified, "The backlog is generally 3, 4 years in length overall."
* Alfred Moore, ROTH Capital Partners: Asked about 2026 growth trajectory. Deitrich said, "I think there will be growth. It's just a question of what level it would be."
* Moore asked about Urbint synergies. Deitrich highlighted, "tremendous overlap between the customers that they have and that we have."
* Scott Graham, Seaport Research Partners: Asked if 2027 targets could be revisited. Deitrich replied, "No, I don't anticipate that we're going to be revisiting the 2027 targets."
* Graham inquired about backlog delivery times. Deitrich noted, "If you had a project that you were planning on doing the deployment over 3 years, maybe you're now profiling it over 4 years in some particular cases."

SENTIMENT ANALYSIS

* Analysts adopted a slightly negative tone, repeatedly probing on revenue softness, the pace of bookings, and the risk to guidance, with questions centered on network segment delays, backlog conversion, and future growth visibility.
* Management maintained a confident but defensive tone, frequently reiterating long-term targets and using phrases such as "I still see the environment as very robust" and "I don't anticipate that we're going to be revisiting the 2027 targets."
* Compared to the previous quarter, analysts exhibited more skepticism about near-term revenue and bookings, while management showed increased emphasis on margin gains and reiterated confidence in strategic objectives.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for full year 2025 revenue was narrowed to $2.35 billion to $2.36 billion from the prior quarter's range of $2.35 billion to $2.4 billion, reflecting persistent deployment delays and lower bookings.
* Management increased the full year non-GAAP EPS outlook to $6.84 to $6.94, up from the prior quarter's $6 to $6.20, driven by a favorable tax adjustment.
* Margin records were set again, with gross margin climbing further from the previous quarter's 36.9% to 37.7%, reflecting ongoing product and customer mix improvements.
* Analysts' focus shifted toward the sustainability of margin gains and the risk that softer bookings could impact growth in 2026, while recurring themes included project delays and the pace of backlog conversion.
* Management's tone remained confident on strategic direction but more frequently addressed near-term uncertainty and defended the robustness of long-term targets.

RISKS AND CONCERNS

* Management acknowledged lower-than-expected bookings and heightened market uncertainty, with deployment schedules extended by customers facing regulatory and capital constraints.
* The risk of near-term market uncertainty is heightened by recent federal funding actions, though management reported "no project cancellations, stoppages or decline in customer interest."
* Analysts raised concerns about network segment weakness and the potential for further delays in backlog conversion affecting 2026 growth.
* Management's mitigation strategies included emphasizing higher-margin recurring revenue, expanding the opportunity pipeline, and maintaining focus on long-term targets.

FINAL TAKEAWAY

Itron management underscored record profitability and margin achievements, even as revenue growth was challenged by slower project deployments and cautious customer behavior. The company increased its full year non-GAAP EPS guidance to a range of $6.84 to $6.94, reflecting improved operational execution and a favorable tax outcome, while narrowing revenue expectations. The Urbint acquisition is set to expand Itron’s software offerings and customer overlap, supporting longer-term strategic goals. Despite near-term volatility and a tempered bookings outlook, management reaffirmed confidence in achieving 2027 targets and highlighted the growing recurring revenue base as a stabilizing factor for future performance.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/itri/earnings/transcripts]

MORE ON ITRON

* Itron, Inc. (ITRI) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4836043-itron-inc-itri-q3-2025-earnings-call-transcript]
* Itron: Look Beyond Top-Line Miss And Focus On Cash Flow [https://seekingalpha.com/article/4822934-itron-look-beyond-topline-miss-and-focus-on-cashflow]
* Itron: Delivering On Margins, Now Looking For Sales Growth [https://seekingalpha.com/article/4822888-itron-delivering-on-margins-now-looking-for-sales-growth]
* Itron Q3 2025 Earnings Preview [https://seekingalpha.com/news/4510341-itron-q3-2025-earnings-preview]
* Seeking Alpha’s Quant Rating on Itron [https://seekingalpha.com/symbol/ITRI/ratings/quant-ratings]