Earnings call transcript: Itron Q2 2025 beats EPS estimates, stock declines

Itron Inc., with a market capitalization of $5.67 billion, reported strong earnings for the second quarter of 2025, exceeding analyst expectations with an EPS of $1.62, compared to the forecasted $1.32. Despite this earnings beat, the company’s revenue slightly missed projections, coming in at $607 million against an expected $609 million. The market reacted negatively, with Itron’s stock dropping 10.19% in pre-market trading. According to InvestingPro data, the company maintains strong financial health with an overall score of 3.09 out of 5.

Key Takeaways

• Itron’s Q2 EPS of $1.62 surpassed expectations by 22.73%.
• Revenue fell short of forecasts, reaching $607 million against a $609 million estimate.
• The stock price fell by 10.19% in pre-market trading.
• Record gross margin of 36.9% was achieved.
• Strong demand for GridEdge Intelligence platform noted.

Company Performance

Itron demonstrated robust performance in the second quarter, with significant improvements in profitability metrics. The company achieved an all-time high gross margin of 36.9% and a record free cash flow of $91 million. InvestingPro analysis shows the company operates with a healthy current ratio of 1.93, indicating strong liquidity. Despite a slight decline in revenue compared to the prior year, Itron’s operational efficiency and focus on high-value solutions contributed to the improved earnings per share. The company’s PEG ratio of 0.43 suggests attractive valuation relative to its growth prospects.

Financial Highlights

• Revenue: $607 million, slightly below expectations.
• Earnings per share: $1.62, up from $1.21 in the previous year.
• Adjusted EBITDA: $90 million, representing 14.8% of revenue.
• Free Cash Flow: $91 million, marking a record high.

Earnings vs. Forecast

Itron’s EPS of $1.62 exceeded the forecast of $1.32, representing a 22.73% positive surprise. This performance marks a significant improvement from previous quarters and highlights the company’s operational strengths. However, the revenue of $607 million slightly missed the forecasted $609 million, resulting in a minor negative surprise of -0.37%.

Market Reaction

Following the earnings announcement, Itron’s stock experienced a notable decline of 10.19% in pre-market trading, with the price dropping to $131. This movement comes despite the positive EPS surprise, indicating investor concerns over the revenue miss and broader market conditions. InvestingPro analysis indicates the stock is currently overbought, with additional insights available through their comprehensive Pro Research Report, which covers over 1,400 US stocks with detailed analysis and actionable intelligence.

Outlook & Guidance

Looking forward, Itron has set a full-year revenue outlook of $2.350 to $2.400 billion, representing a 3% decline. However, the company expects a 9% increase in non-GAAP EPS, projecting between $6.00 and $6.20. With a P/E ratio of 22.24 and strong revenue growth of 7.1% over the last twelve months, InvestingPro data suggests the company is well-positioned for future growth. Itron remains confident in achieving a book-to-bill ratio of 1:1 or higher, underscoring its optimism about long-term market growth.

Executive Commentary

Joan Hooper, CFO, expressed pride in the company’s margin improvements, stating, "We are proud of the work we have done to improve the margin profile of the business." CEO Tom Dietrich highlighted the company’s market position, saying, "The outlook for market growth remains strong." He also noted ongoing M&A efforts: "We remain very active in this space and are looking for the right asset to add to our portfolio."

Risks and Challenges

• Regulatory Approvals: Lengthy processes, now taking closer to 12 months, could delay project timelines.
• Macroeconomic Uncertainties: Potential slowdowns in near-term project deployments.
• European Market Dynamics: Renewed interest in advanced grid technologies may require strategic adjustments.
• Supply Chain Issues: Ongoing challenges could impact production and delivery schedules.
• Competitive Pressures: Maintaining leadership in a rapidly evolving market requires continuous innovation.

Q&A

During the earnings call, analysts inquired about the impact of regulatory delays and the company’s M&A strategy. Management reassured that no project cancellations have occurred, although deployment is slower. The company’s focus on outcomes-oriented acquisitions was also emphasized, aligning with its strategic goals.

Full transcript - Itron Inc (ITRI) Q2 2025:

Conference Operator: Good day, and thank you for standing by. Welcome to Itron’s Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. Please note that today’s conference is being recorded.

I will now hand the conference over to your speaker host, Paul Vincent, Vice President of Investor Relations. Please go ahead.

Paul Vincent, Vice President of Investor Relations, Itron: Good morning, and welcome to Itron’s Second Quarter twenty twenty five Earnings Conference Call. Tom Dietrich, Itron’s President and Chief Executive Officer and Joan Hooper, Senior Vice President and Chief Financial Officer, will review Itron’s second quarter results and provide a general business update and outlook. Earlier today, the company issued a press release announcing its results. This release also includes details related to the conference call and webcast replay information. Accompanying today’s call is a presentation that is available through the webcast and on our corporate website under the Investor Relations tab.

Following prepared remarks, the call will open for questions using the process the operator described. Before Tom begins, a reminder that our earnings release and financial presentation include non GAAP financial information that we believe enhances the overall understanding of our current and future performance. Reconciliations of differences between GAAP and non GAAP financial measures are available in our earnings release and on our Investor Relations website. We will be making statements during this call that are forward looking. These statements are based on current expectations and assumptions that are subject to risks and uncertainties.

Actual results could differ materially from these expectations because of factors that were presented in today’s earnings release and comments made during this conference call, as well as those presented in the Risk Factors section of our Form 10 ks and other reports and filings with the Securities and Exchange Commission. All company comments, estimates or forward looking statements are made in a good faith attempt to provide appropriate insight to our current and future operating and financial environment. Materials discussed today, 07/31/2025, may materially change, and we do not undertake any duty to update any of our forward looking statements. Now please turn to Page four of our presentation as our CEO, Tom Dietrich, begins his remarks.

Tom Dietrich, President and Chief Executive Officer, Itron: Thank you, Paul. Good morning, and thank you for joining our call. Itron delivered solid second quarter results despite ongoing macroeconomic and trade policy uncertainties. The team performed well, achieving revenue in line with expectations and earnings above the outlook. Financial highlights for the second quarter are detailed on slide four and include revenue of $6.00 $7,000,000 adjusted EBITDA of $90,000,000 non GAAP earnings per share of $1.62 and free cash flow of $91,000,000 Turning to slide five, Itron set new quarterly records for margins, profitability and cash flow.

This improved financial performance resulted from the continued execution of our strategy and the expansion of our customers’ infrastructure. Our differentiated Outcomes segment continued to drive growth, reinforcing our market leadership in agile distribution infrastructure. During 2Q, demand for Itron’s GridEdge Intelligence platform remained strong. By the end of the second quarter, we had shipped over 15,300,000 distributed intelligence endpoints, up from 14,400,000 at the end of Q1. The ongoing adoption of DI capable technology underscores its importance for utilities seeking flexible infrastructure with real time data capture and analytics.

The long term market outlook remains positive, driven by rising electricity demand, increased resiliency and reliability requirements, and ongoing focus on efficiency and safety. However, in the near term, customers and regulators face a more complex environment, leading to slower project deployments and delayed decisions in certain areas. Consequently, we are lowering our full year revenue outlook midpoint by approximately 3%. At the same time, growing customer demand for high value solutions along with operational efficiencies has raised our full year EPS outlook midpoint by 13%. Despite more deliberate customer and regulatory decision making in the short term, Itron continues to secure business from forward looking customers adopting new solutions to address emerging challenges.

Our second quarter bookings of $454,000,000 are shown on slide six and primarily driven by our Network Solutions and Outcomes segments. As in recent years, we expect annual bookings to be weighted towards the second half of the year. We maintain our outlook for the full year book to bill ratio of one to one or higher. Some of the key bookings for the quarter include a large European utility, Greece’s Hellenic Electricity Distribution Network Operator or HEDNO selected Itron to assist its efforts to enhance consumer experience, improve operational efficiency and support Greece’s goal of net zero emissions by 2,050. Itron’s solution will help HEDNO future proof its infrastructure and enable the adoption of grid edge intelligence platforms while establishing a strong operational foundation.

Tucson, Arizona selected I Tron for a large scale initiative that will support the city’s critical water conservation goals. This network as a service deployment will enable the city to efficiently collect and manage water consumption data without the burden of maintaining additional infrastructure. Now, Joan will provide details about our second quarter and our outlook for the third quarter and the full year.

Joan Hooper, Senior Vice President and Chief Financial Officer, Itron: Thank you, Tom. Please turn to slide seven for a summary of consolidated GAAP results. Second quarter revenue of $6.00 $7,000,000 was within the range we expected and slightly lower than the prior year, which included a significant amount of constrained revenue catch up. Gross margin of 36.9% is an all time quarterly record and was two thirty basis points higher than last year due to favorable mix. GAAP net income of $68,000,000 or $1.47 per diluted share compares to 51,000,000 or a dollar 10¢ per share in the prior year.

The improvement was driven by higher levels of operating and interest income. Regarding non GAAP metrics on slide eight, non GAAP operating income of $82,000,000 was an all time record and increased 19% year over year. Adjusted EBITDA of $90,000,000 or 14.8% of revenue was also a new record and increased 16% year over year. Non GAAP net income for the quarter was $75,000,000 or $1.62 per diluted share versus $1.21 a year ago. Q2 free cash flow of $91,000,000 was a new record and compares to $45,000,000 a year ago.

This improvement reflects strong year over year operational earnings growth, higher interest income and lower tax payments. Year over year revenue growth by business segment is on slide nine. Device solutions revenue decreased 8% on a constant currency basis, primarily due to the expected decline in legacy electric product sales, partially offset by continued growth in water. Network solutions revenue decreased 1% year over year, primarily due to the non recurrence of revenue catch up that occurred in Q2 of last year. Outcomes revenue increased 9% year over year due to continued growth of recurring revenue and software licenses.

Moving to the non GAAP year over year EPS bridge on slide 10. Our Q2 non GAAP EPS increased $0.41 year over year to $1.62 per diluted share. This was primarily driven by strong pre tax operational performance, which contributed $0.39 year over year improvement. Turning to slides 11 through 13, I’ll review Q2 segment results compared with the prior year. Device solutions revenue was $113,000,000 with gross margin of 29.8% and operating margin of 22.6%.

Gross margin increased three fifty basis points year over year and operating margin was up two sixty basis points due to the favorable change in product mix. Network solutions revenue was four zero nine million with gross margin of 38.5% and operating margin of 29.6%. Gross margin increased 160 basis points year over year and operating margin was up 110 basis points due to improved products and customer mix. Outcomes revenue was $85,000,000 Gross margin was 38.5% and operating margin was 18.4%. Gross margin increased three seventy basis points year over year and operating margin was up four seventy basis points due to a higher margin revenue mix.

Turning to slide 14, I’ll review liquidity and debt at the end of the second quarter. Total debt was $1,265,000,000 and net debt was $41,000,000 As of June 30, leverage was 0.1 times and cash and equivalents were 1,200,000,000 Now please turn to slide 15 for our third quarter outlook. As Tom noted, our customers are becoming more deliberate in their decision making and slowing their activity levels in response to economic uncertainty, driven in part by the evolving trade policies. Although our long term market expectations remain unchanged, we now anticipate a period of slower activity levels in the near term, as our customers take time to assess the impact of emerging macroeconomic crosswinds on their business. Given this background, we now anticipate third quarter revenue to be between $570,000,000 to $585,000,000 The midpoint of this range is down 6% versus 2024.

For non GAAP earnings per share, we expect a range of a 1.45 to $1.55 per diluted share. At the midpoint, this is a decrease of 18% versus Q3 of last year, which had an unusually low effective tax rate of just 4.5%. Normalized for a 25% effective tax rate, the midpoint of this range is up 4% versus Q3 of last year. Now, please turn to slide 16 for an update to our annual 2025 outlook. We now anticipate 2025 full year revenue to be within a range of $2,350,000,000 to 2,400,000,000.0 versus the 2.4 to 2,500,000,000.0 range we provided in February.

At the midpoint, this represents a 3% decline versus our initial full year outlook. It also represents a 3% decrease versus 2024, which had approximately 125,000,000 of catch up revenue. Normalizing for the 2024 catch up revenue, the midpoint of our updated guidance is approximately 3% year over year growth. Our non GAAP earnings per share full year outlook range is increasing versus prior estimates. Our current expectations for 2025 non GAAP earnings per share is a range of $6 to $6.2 per diluted share versus our February outlook of $5.2 to $5.6 per share.

At the midpoint, the updated non GAAP earnings per share estimate is up 9% versus 202413% versus prior guidance. We are proud of the work we have done to improve the margin profile of the business, which has allowed us to drive higher profitability on lower revenue. The revised full year guidance assumes a 22% effective tax rate. The actual tax rate could fluctuate based on jurisdictional mix and the timing of tax settlements. Clearly, there has been more uncertainty in the market environment than expected when we started this year.

Our teams have and will continue to make the tactical adjustments necessary to support our customers priorities as we maintain our long term strategic course. Now, I’ll turn the call back to Tom.

Tom Dietrich, President and Chief Executive Officer, Itron: Thank you, Joan. Our teams effectively managed macroeconomic and trade policies uncertainty in the second quarter, achieving expansion in both margins and free cash flow. Our intelligent connectivity and Great Edge intelligence offerings continue to scale in line with our strategic objectives. Although customers and regulators have recently slowed their activity to address increased decision complexity and policy uncertainty alongside their existing operational priorities, the outlook for market growth remains strong. Itron remains confident in delivering value for stakeholders through disciplined capital allocation and sustainable returns.

Thank you for joining our call today. Operator, please open the line for some Q and A.

Conference Operator: Our first question coming from the line of Noah Kaye with Oppenheimer. Your line is now open.

Noah Kaye, Analyst, Oppenheimer: Hi, folks. Thanks for taking the questions. I do want to get to the revenue outlook, but I have to start with margins. I think the I know you don’t guide the EBITDA margins, but backing into something like 15% for the year. So you’d be seeing almost a couple of 100 bps expansion on lower revs.

And you commented some on it, Tom and Joan, in prepared remarks. But just want to understand, is there anything atypically beneficial to kind of the mix this year? Or do you think these are kind of the right margins as a jumping off point as we look at next year?

Joan Hooper, Senior Vice President and Chief Financial Officer, Itron: I would say the EBITDA margin is a little bit higher than we would have expected when we started the year. We have definitely benefited from the structural changes we made in the device business. So we shut an electric factory in France at the end of last year. Those products and the customers that were supported out of that factory were lower than average margins for the segment. And obviously, we’ve done some things over the years, whether it was sell the Latin America business or sell the business we did a couple years ago, the gas business.

Structurally, we have been very focused on getting device margins up. They being close to 30% is certainly ahead of what we would have expected, but at this point, that’s probably a good level for them. Networks margins will tend to vary quarter to quarter, depending on the specific deployment and the phase of the deployment. So, again, they’re on their path to hitting the margins we expect this quarter a little bit higher than we would have expected. And outcomes, as we’ve talked about, is going to fluctuate quarter to quarter based on the software mix.

So we feel really good about the gross margin trajectory that we’re on, still stand behind the 27 targets. And obviously that had an EPS range of 15% to 17%. And as you say, we’re already close to 15% now.

Noah Kaye, Analyst, Oppenheimer: Yes, yes. I did want to ask about the near term outlook. Is the implication here that some of the kind of faster book and ship business is just really what’s seeing the slowing? Or is there anything in kind of the backlog and networks where there’s some delay whether it’s sort of funding availability for projects, government funding or the like? Just give us a little bit of color on kind of whether this is push out of backlog or kind of more book and ship?

Tom Dietrich, President and Chief Executive Officer, Itron: Yes. It’s more the backlog portion rather than the book and ship portion of the business. Book and ship is, at least through 2Q, has been humming along at the level that we would expect, plus or minus. On the project side of things, meaning the things that flow through longer term backlog, customers are really bumping into some constraints here and there, whether it’s labor constraints or project sequencing, they got to finish this before they start that. And they’re stretching out time lines on projects a bit to live within a constrained capital budget for the year.

So none of the backlog is going away. That’s not the point. We’re not seeing any project cancellations at all. I would say, it’s just more of a little bit slower deployment pace than what we saw in the first half of the year. That said, the things that they are prioritizing, the things that they are buying and driving through are grid efficiency, resiliency, reliability types of solutions, which tends to accrue towards the higher margin portfolio portion of our portfolio.

So again, we feel good about what customers are buying. We’re working with them as they manage through some of the constraints on their side of the business, Not slowing down the outlook for the market longer term, I think this is a temporal thing that will roll through the business.

Noah Kaye, Analyst, Oppenheimer: Right. And I guess just a final observation to make sure I got it right is that if this is just sort of a push out of revenues that are kind of in the bag that sets up an easier comp moving into next year. Is that a fair way to think about it?

Tom Dietrich, President and Chief Executive Officer, Itron: Yes. I think it’s a little too early to get ahead of where we will land next year. It will depend a little bit on what the trajectory of bookings are for the back half of the year as to where 2026 will ultimately go. But your view of the revenue wasn’t going away. It’s just phased out in time.

We do still expect growth over the year ahead.

Noah Kaye, Analyst, Oppenheimer: Okay. Thank you. I’ll turn it over.

Conference Operator: Thank you. Our next question coming from the line of Jeff Osborne with TD Cowen. Your line is now open.

Jeff Osborne, Analyst, TD Cowen: Thank you. Good morning. Maybe just a follow-up to Noah’s line of questioning, Tom. I think you count backlog when you get regulatory approval. Can you just talk about the sequencing or the pace of technical approval, which oftentimes has a lag between when you’re receiving that notification versus when the regulator approves it?

Tom Dietrich, President and Chief Executive Officer, Itron: Yeah, I would say that we’re in the normal ish range for things that have been awarded but not yet regulatory approved. So it is not yet in our backlog. Sometimes that number gets to be very, very large. As I had talked about towards the back end of last year. There’s usually a couple of $100,000,000 plus or minus that is in the category of awarded not yet approved nor in backlog.

And that’s kind of the level that we’re sitting at now. The opportunities that are planned for the back half of the year to ultimately come into bookings, there are some reasonable sized projects that are inside of there that will require regulatory approval. So pace of regulatory approvals continuing to move forward is important for the back half of the year, but things look to be lined up to achieve a book to bill for the full year of one to one or greater, as I mentioned in the prepared remarks.

Jeff Osborne, Analyst, TD Cowen: Got it. And then maybe just reconciling your answers to Noah’s question relative to the prepared remarks. In the prepared remarks, you seem to blame the delays and the lower revenue guidance on tariffs and trade uncertainty and sort of think macro political things was the way I interpreted it. I think the majority of your customers are actually increasing their CapEx budgets. And then in response to Noah, you mentioned more reprioritization of projects, things taking a bit longer, and labor availability.

Can you just sort of weigh the two, like big picture macro things versus micro things at the utility level as to what the delays are?

Tom Dietrich, President and Chief Executive Officer, Itron: Yeah. So take it one step at a time. It’s I agree with you that as a general rule, CapEx budgets for our customer base at large are increasing. Those CapEx budgets and we see those announcements, they tend to be multiyear types of things. Hey, we used to have X, now we have X plus Y over the next three years.

What causes slowdowns or constraints relative to budgets that I was mentioning when it comes to revenue in the next quarter or two really has more to do with CapEx budget for this year. So they tend to live within that annualized bucket. So I think that there’s a difference there in terms of a dividing line of folks having to live within their means for this year, even though that the total bucket is going up over a multiyear period. That gives us confidence in the long term trajectory of the marketplace, for sure. We have confidence in the strength of the portfolio based on the prioritization that we see customers making around the constraints that they are living within.

They’re buying the margin accretive portion of the portfolio.

Jeff Osborne, Analyst, TD Cowen: My last one is just I think in the past, you gave a rule of thumb of nine to twelve months lag between regulatory approval and the start of revenue recognition for Itron. Just given that this is highly complex stuff, requires a lot of IT modernization. Are you seeing any lengthening out of that timeline, just as people work with consultants and handle what data will be done at the enterprise level versus the cloud, etcetera?

Tom Dietrich, President and Chief Executive Officer, Itron: We’ve seen that in certainly some isolated cases. And I kind of mentioned that, I think, in response to Noah’s question where projects are getting sequenced. If you do have a delay in an IT project, for example, you may not want to start the next one until you finished up the prior. So there is some sequencing that we have seen going on overall. So I think that general rule in the air some of nine to twelve months, we’re probably pushing more towards the twelve than the nine based on the pace of what we see in the marketplace today.

Jeff Osborne, Analyst, TD Cowen: Great. Thanks for the detailed response. That’s all I

: had. Sure.

Conference Operator: Thank you. Our next question coming from the line of Ben Keller with Baird. Your line is now open.

Ben Keller, Analyst, Baird: Hey, good morning, guys. Thanks for taking my question. Maybe just following along the previous questions. On the M and A front, has the regulatory stuff changed your view on M and A and as you build up more cash, maybe you could just remind us priorities of capital deployment right now? Thank you.

Tom Dietrich, President and Chief Executive Officer, Itron: Sure. So regulatory environment hasn’t changed our view on M and A at all. We remain very active in this space and are looking for the right asset to add to our portfolio. Consistent with comments that I have made in the past, we’re looking for something that is accretive towards our software services portion of the portfolio. I more outcomes oriented types of acquisitions is what we are looking for.

Count on us to be disciplined with the capital allocation that we would make, but still an area that we’re very active in.

Ben Keller, Analyst, Baird: And then maybe a follow-up just as we look at the backlog and then into next year, how do we think about your ability to grow earnings, guess more than and revenue, I guess. We just have a twelve month backlog, but just how if you can give us any kind of thoughts on into next year.

Joan Hooper, Senior Vice President and Chief Financial Officer, Itron: Yeah, we stopped talking about on the call the twelve month backlog a quarter ago because we thought it was actually getting confusing to investors because it is essentially a snapshot in time of the timing the customer wants in terms of the deployment, and it changes all the time. If I think about the broader question, kind of what’s the trajectory going into next year, as Tom said, it’s a little too soon to say, here’s what we expect for ’twenty six. We do expect growth year over year from ’26 over the 25 numbers we’ve just provided. A lot is going to depend on how back end loaded the bookings are this year. So obviously, last year was very back end loaded with by far the biggest percentage of our bookings in Q4.

If that were to repeat itself, that tends to push the revenue out a little bit. If Q3 is a really strong bookings quarter, that tends to make it more potentially more growth in 2026. But again, a little too soon to talk about that. We’re comfortable. We’ve got a good pipeline of opportunities to get to the one to one bookings that Tom mentioned.

Ben Keller, Analyst, Baird: Thanks, Joe. Thanks, Tom.

Conference Operator: Thank you. Our next question coming from the line of Joseph Osham with Guggenheim Partners. Your line is open.

Joseph Osham, Analyst, Guggenheim Partners: Thank you. Good morning. Two questions. First, I’m wondering if some of this greater complexity that regulators are talking about might reflect a change in the nature of the projects themselves, the services and products that you’re delivering becoming more complicated and perhaps a little more difficult for regulators to understand. Is that maybe part of what’s going on here?

Tom Dietrich, President and Chief Executive Officer, Itron: No, I don’t think so. I would look at it in a broader context, Joe. It’s the regulators are primarily focused on what is the rate that ultimately would be flowing through to the consumers in their territory. They’re primarily economic regulators. So they’re trying to balance the pressure that consumers are under from a cost perspective with the needs of new technology that utilities are trying to deploy to achieve their mandate of more resilient and reliable service overall.

So it is that natural push and pull, if you will, that is present on the minds of the regulators. The value that we provide our customers is what we work on to make sure that we help the customer put the right rate case forward to make sure that the regulator can clearly see the return on any investment they would make. And generally, rate cases are being approved when they’re put forward. So I haven’t seen the process stall. That isn’t the point that we wanted to make.

But it is a bit more complicated just in a general sense as utilities are trying to juggle some pretty big CapEx deployment to be able to keep up with demand as well as cope with the supply constraints that are out there. Regulators are trying to make sure that it is a reasonable deal with the right return on investment and it isn’t going to cause undue consumer spending constraints overall. So that’s more of the environment. It has less to do with Itron’s specific portfolio.

Joseph Osham, Analyst, Guggenheim Partners: Okay. Well, that’s interesting because I feel like there’s another point coming out here. If I go back to I think it was Jess point earlier about utility CapEx generally going up, which it is. It sounds like you’re saying, yes, is. But you’re getting some PUC pushback because of ratepayer and political unhappiness with retail rates.

Is that part of it? It’s just this intersection of the need to spend money with, I think, what we all know are very, very high retail rates at the moment? Yes. Okay. That’s interesting.

Thank you very much.

Tom Dietrich, President and Chief Executive Officer, Itron: Sure.

Conference Operator: Thank you. And our next question coming from the line of chip Moore with Roth Capital Partners. Your line is now open.

Tom Dietrich, President and Chief Executive Officer, Itron: Morning. Thanks for taking the question.

: Maybe just on a little bit more on Europe. It looks like you’re starting to see some early traction, at least on edge intelligence over there. Just how to think about that opportunity over the next call it four to five years.

Tom Dietrich, President and Chief Executive Officer, Itron: You’re correct. We have seen a reemergence of interest on the European side of things where they had gotten through their original, call it AMI one point zero deployment, which was a pretty basic meter to cache kind of setup. And they absolutely are understanding the need now to get more value out of the distribution network with things like distributed intelligence and just edge intelligence overall. So we have been mindful of making sure we are getting the right margin profile associated with these things. We’re focused on selling complete solutions rather than individual piece parts to make sure that it does generate the right return.

And as we work with customers on that, we absolutely have seen more success in this particular area. I would say it’s important for us to keep the right balance here. We want to make sure that the associated value that we create for our shareholders and our customers is well aligned when we do those arrangements. But I do see, Mark, the European market, Western Europe specifically as a more active place for us in the years to come. That’s on top of the water business, which, yes, just I don’t want to gloss over it.

It is on top of the water business, which continues to along at a pretty nice clip for us.

: Thanks, Tom. Appreciate it. Sure.

Conference Operator: Thank you. Our next question coming from the line of Scott Graham with Seaport Research Partners. Your line is now open.

Chip Moore, Analyst, Roth Capital Partners: Yes. Hi. Good morning. I want to see if you’re able to answer this question. Your ’27 aspirational goal of 2,600,000,000.0 to $2,800,000,000 in sales.

Does this sort of near term couple three quarters of uncertainty change that?

Joan Hooper, Senior Vice President and Chief Financial Officer, Itron: No, there’s no change to the targets we have for ’27. Know, we never expected when we set these in early twenty four that it would be a straight line, but we still feel very confident in the ’27 targets.

Chip Moore, Analyst, Roth Capital Partners: Got it. Thank you for that. And then while I have you, Joan, the mix factors, obviously mix played a big role. Could you maybe isolate the one, two, three mix factors across the businesses which drove the gross margin largest ones?

Joan Hooper, Senior Vice President and Chief Financial Officer, Itron: Well, again, in my earlier comments I kind of made by segment, they’re really different in each segment. In the case of devices versus a year ago, we had some low margin electricity products that we essentially end of life when we closed that factory. So, the device business has done really well with water in general, the water margins are higher than the electric product margins. So structurally, that has taken place as we expected and in fact, a little faster than we expected. In the case of networks, there’s a lot going on under networks.

It’s different customers with different price points of their deployments, different stages of their deployments. But in general, all of our segments have been focused on pruning their portfolio to accelerate margin growth. And I think they’ve all done a really nice job of doing that. Outcomes margins has more room to go up. And as we’ve talked about in the past, you get a higher software content quarter, you’ll end up with higher margins.

But I think they’re on their pace to hit the margin targets for ’27 as well.

Chip Moore, Analyst, Roth Capital Partners: Great. Thank you. And if I may just sneak this last one in the outcome sales, sub 10% for the first time in number of quarters. Is there anything we should read into that? Because that as you’ve talked about is led by Networks on the delay there and Networks was really strong for up until fourth quarter double digit.

Is the second half outlook for outcomes kind of the same high single or do we get back to double digit?

Joan Hooper, Senior Vice President and Chief Financial Officer, Itron: So again, we don’t guide by segment. But I would say, I don’t think there’s anything structurally different with the outcomes business and to the extent it’s been continuing to grow year over year, we would continue to see that.

Tom Dietrich, President and Chief Executive Officer, Itron: Right. The real drivers inside of that things like DI capable endpoints being up 36% year over year. We still have 10 plus million in backlog. We’ve got 18 plus million applications that have been licensed. That’s up about 140% year over year.

So the business is still ticking along as we would like. I wouldn’t read into one point below the 10% threshold as anything other than just normal ebb and flow on a quarterly basis.

Chip Moore, Analyst, Roth Capital Partners: Appreciate your responses. Thank you.

Conference Operator: Thank you. I’m showing no further questions in the Q and A queue at this time.

: I will now turn the call back over

Conference Operator: to Mr. Tom Dietrich for any closing remarks.

Tom Dietrich, President and Chief Executive Officer, Itron: Thank you, Libby. Thank you all for joining our call, and we look forward to updating you again next quarter.

Conference Operator: This concludes today’s conference. Thank you for your participation, and you may now disconnect.

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