Itron Announces Second Quarter 2026 Financial Results
Rhea-AI Summary
Itron (NASDAQ: ITRI) reported second quarter 2026 revenue of $563 million, down 7% year over year, with annual recurring revenue of $417 million, up 21%. GAAP net income attributable to Itron was $53 million, or $1.19 per diluted share; non-GAAP diluted EPS was $1.59. Adjusted EBITDA rose 8% to $97 million, free cash flow was $81 million, and adjusted gross margin expanded to 41.4%, up 460 basis points.
Device Solutions revenue slipped 1%, Networked Solutions declined 17% on deployment timing and volumes, while Outcomes grew 13%; Resiliency Solutions contributed $16 million. Quarterly bookings were $550 million and backlog was $4.4 billion. For Q3 2026, Itron guides revenue of $590–$600 million and non-GAAP EPS of $1.50–$1.60, and now expects full-year 2026 revenue of $2.37–$2.41 billion and non-GAAP EPS of $6.30–$6.50, reflecting a raised earnings outlook.
Positive
- Adjusted gross margin 41.4%, up 460 bps year over year
- Adjusted EBITDA $97 million, up 8% versus Q2 2025
- Annual recurring revenue $417 million, up 21% year over year
- Q2 free cash flow $81 million and operating cash flow $88 million
- Backlog $4.4 billion and quarterly bookings of $550 million
- Raised 2026 non-GAAP EPS outlook to $6.30–$6.50 on revenue of $2.37–$2.41 billion
Negative
- Total revenue $563 million, down 7% year over year
- Networked Solutions revenue down 17% on project timing and lower volumes
- GAAP net income $53 million and diluted EPS $1.19, below 2025 levels
- Free cash flow $81 million, down $9 million from Q2 2025
- Backlog $4.4 billion, slightly below $4.5 billion prior year
- Long-term debt $1.58 billion, up from $0.79 billion at year-end 2025, partly funding acquisitions
News Explained
Acquisition spending was accompanied by reported long-term debt; the release does not quantify ownership dilution.
Under the supplied dilution definition, issuing additional shares increases total share count and reduces an existing holder’s percentage ownership absent offsetting changes; the release’s dollar-denominated issuance line does not quantify that effect.
Market reaction after 2Q26 earnings report: ITRI +26.29%
Following this news, ITRI has gained 26.29%, reflecting a significant positive market reaction. Our momentum scanner has triggered 91 alerts so far, indicating high trading interest and price volatility. The stock is currently trading at $107.07. Trading volume is exceptionally heavy at 6.5x the average, suggesting very strong buying interest.
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Key Figures
Previous Earnings Reports
| Date | Event | Sentiment | 24h Move | Catalyst |
|---|---|---|---|---|
| Apr 28 | Q1 earnings report | Negative | +0.1% | Revenue and GAAP earnings declined while gross margin and free cash flow improved |
| Feb 17 | Q4 earnings report | Positive | +7.9% | Adjusted EBITDA and free cash flow increased alongside full-year financial results |
| Oct 30 | Q3 earnings report | Negative | -21.1% | Revenue and earnings declined amid project timing and portfolio optimization pressures |
| Jul 31 | Q2 earnings report | Positive | -10.0% | Strong quarterly results and raised full-year outlook preceded a negative price reaction |
| May 01 | Q1 earnings report | Positive | -2.9% | Revenue, earnings, gross margin, cash flow and backlog improved year over year |
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Tag-specific earnings events recorded an average 24-hour move of -5.21%, with three divergent reactions and two aligned reactions.
Key Terms
annual recurring revenue financial
adjusted ebitda financial
non-gaap diluted eps financial
adjusted gross margin financial
basis points financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
LIBERTY LAKE, Wash, July 28, 2026 (GLOBE NEWSWIRE) -- Itron, Inc. (NASDAQ: ITRI), which is innovating new ways for utilities and cities to manage energy and water, announced today financial results for its second quarter ended June 30, 2026. Key results for the quarter include (compared with the second quarter of 2025):
- Revenue of
$563 million , decreased7% ; - Annual recurring revenue of
$417 million , increased21% ; - GAAP net income attributable to Itron, Inc. of
$53 million , decreased$15 million ; - GAAP diluted earnings per share of
$1.19 , decreased$0.28 per share; - Non-GAAP diluted EPS of
$1.59 , decreased$0.03 per share; - Adjusted EBITDA of
$97 million , increased8% ; and - Free cash flow of
$81 million , decreased$9 million .
"Itron delivered record gross margin, earnings well ahead of our expectations, and strong free cash flow in the second quarter, with revenue in line with our outlook — clear evidence of the structurally better earnings power this team has built," said Tom Deitrich, Itron's President and CEO. "The demand environment remains constructive, supported by durable needs across grid expansion, resiliency, and affordability — and by the industry's intensifying focus on time-to-power. A stronger operating model in a durable demand environment is why we are raising our full-year earnings outlook."
Summary of Second Quarter Consolidated Financial Results
(All comparisons made are against the prior year period unless otherwise noted)
Revenue
Total second quarter revenue of
Device Solutions revenue decreased
Networked Solutions revenue decreased
Outcomes revenue increased
Resiliency Solutions revenue was
Adjusted Gross Margin
Itron's second quarter adjusted gross margin of
Operating Expenses and Operating Income
GAAP operating expenses of
GAAP operating income of
Non-GAAP operating income of
Net Income and Earnings per Share (EPS)
Net income attributable to Itron, Inc. for the quarter was
Non-GAAP net income attributable to Itron, Inc., which excludes the expenses associated with amortization of intangible assets, amortization of debt placement fees, restructuring, loss on sale of business, strategic initiative expense, acquisition and integration related expenses, gain on the sale of equity method investments, and the tax effect of excluding these expenses, was
Cash Flow
Net cash provided by operating activities was
Other Measures
Total backlog at quarter end was
Q3 and Updated Full Year 2026 Outlook
Third quarter 2026 financial outlook:
- Revenue between
$590 and$600 million - Non-GAAP diluted EPS between
$1.50 and$1.60
Updated full year 2026 financial outlook:
- Revenue between
$2.37 and$2.41 billion - Non-GAAP diluted EPS between
$6.30 -$6.50
Earnings Conference Call
Itron will host a conference call to discuss the financial results contained in this release at 10:00 a.m. EDT on July 28, 2026. Interested parties may listen to the conference call on a live webcast. The webcast, along with a supplemental presentation, may be accessed from the company’s website at https://investors.itron.com/events-presentations. Participants should access the webcast 10 minutes prior to the start of the call. A webcast replay of the conference call will be available may be accessed on the company's website at https://investors.itron.com/events-presentations.
About Itron
Itron is a proven global leader in energy, water, smart city, IIoT and intelligent infrastructure services. For utilities, cities and society, we build innovative systems, create new efficiencies, connect communities, encourage conservation and increase resourcefulness. By safeguarding our invaluable natural resources today and tomorrow, we improve the quality of life for people around the world. Join us: www.itron.com
Itron® and the Itron Logo are registered trademarks of Itron, Inc. in the United States and other countries and regions. All third-party trademarks are property of their respective owners and any usage herein does not suggest or imply any relationship between Itron and the third party unless expressly stated.
Cautionary Note Regarding Forward Looking Statements
This release contains, and our officers and representatives may from time to time make, "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical factors nor assurances of future performance. These statements are based on our expectations about, among others, revenues, operations, financial performance, earnings, liquidity, earnings per share, cash flows and restructuring activities including headcount reductions and other cost savings initiatives. This document reflects our current strategy, plans and expectations and is based on information currently available as of the date of this release. When we use words such as "expect", "intend", "anticipate", "believe", "plan", "goal", "seek", "project", "estimate", "future", "strategy", "objective", "may", "likely", "should", "will", "will continue", and similar expressions, including related to future periods, they are intended to identify forward-looking statements. Forward-looking statements rely on a number of assumptions and estimates. Although we believe the estimates and assumptions upon which these forward-looking statements are based are reasonable, any of these estimates or assumptions could prove to be inaccurate and the forward-looking statements based on these estimates and assumptions could be incorrect. Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Actual results and trends in the future may differ materially from those suggested or implied by the forward-looking statements depending on a variety of factors. Therefore, you should not rely on any of these forward-looking statements. Some of the factors that we believe could affect our results include our ability to execute on our restructuring plans, our ability to achieve estimated cost savings, the rate and timing of customer demand for our products, rescheduling of current customer orders, changes in estimated liabilities for product warranties, adverse impacts of litigation, changes in laws, regulations, tariffs, sanctions, trade policies and retaliatory responses, our dependence on new product development and intellectual property, future acquisitions, changes in estimates for stock-based and bonus compensation, increasing volatility in foreign exchange rates, international business risks, uncertainties caused by adverse economic conditions, including without limitation those resulting from extraordinary events or circumstances and other factors that are more fully described in Part I, Item 1A: Risk Factors included in our Annual Report on Form 10-K for the year ended Dec 31, 2025 and other reports on file with the Securities and Exchange Commission. Itron undertakes no obligation to update or revise any information in this press release.
Non-GAAP Financial Information
To supplement our consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States (GAAP), we use certain adjusted or non-GAAP financial measures, including non-GAAP operating expense, non-GAAP operating income, non-GAAP net income, non-GAAP diluted earnings per share (EPS), adjusted EBITDA, free cash flow, adjusted gross profit, adjusted operating income, and constant currency. We provide these non-GAAP financial measures because we believe they provide greater transparency and represent supplemental information used by management in its financial and operational decision making. We exclude certain costs in our non-GAAP financial measures as we believe the net result is a measure of our core business. We believe these measures facilitate operating performance comparisons from period to period by eliminating potential differences caused by the existence and timing of certain expense items that would not otherwise be apparent on a GAAP basis. Non-GAAP performance measures should be considered in addition to, and not as a substitute for, results prepared in accordance with GAAP. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. Our non-GAAP financial measures may be different from those reported by other companies. When providing future outlooks and/or earnings guidance, a reconciliation of forward-looking non-GAAP diluted EPS to the GAAP diluted EPS has not been provided because we are unable to predict with reasonable certainty the potential amount or timing of restructuring related expenses and their related tax effects without unreasonable effort. These costs are uncertain, depend on various factors and could have a material impact on GAAP results for the guidance period. A more detailed discussion of why we use non-GAAP financial measures, the limitations of using such measures, and reconciliations between non-GAAP and the nearest GAAP financial measures are included in this press release.
For additional information, contact:
Itron, Inc.
Paul Vincent
Vice President, Investor Relations
(512) 560-1172
Stephanie Tarlton, CFA
Principal, Investor Relations
(512) 676-8365
Investors@itron.com
Itron, Inc.
- LinkedIn: https://www.linkedin.com/company/itroninc
- X: https://x.com/ItronInc
- Newsroom: https://na.itron.com/newsroom
- Blog: https://blogs.itron.com
| ITRON, INC. | |||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
| (Unaudited, in thousands, except per share data) | |||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||
| Revenues | |||||||||||||
| Product revenues | $ | 453,462 | $ | 517,184 | $ | 931,263 | $ | 1,040,325 | |||||
| Service revenues | 109,440 | 89,577 | 218,621 | 173,587 | |||||||||
| Total revenues | 562,902 | 606,761 | 1,149,884 | 1,213,912 | |||||||||
| Cost of revenues | |||||||||||||
| Product cost of revenues | 280,692 | 337,394 | 580,901 | 683,836 | |||||||||
| Service cost of revenues | 51,570 | 45,749 | 102,024 | 89,239 | |||||||||
| Total cost of revenues | 332,262 | 383,143 | 682,925 | 773,075 | |||||||||
| Gross profit | 230,640 | 223,618 | 466,959 | 440,837 | |||||||||
| Operating expenses | |||||||||||||
| Sales, general and administrative | 89,722 | 87,615 | 195,079 | 174,526 | |||||||||
| Research and development | 56,141 | 53,810 | 111,140 | 103,900 | |||||||||
| Amortization of intangible assets | 8,478 | 4,543 | 16,650 | 9,022 | |||||||||
| Restructuring | 233 | 1,237 | 447 | 684 | |||||||||
| Loss on sale of business | — | — | — | 79 | |||||||||
| Total operating expenses | 154,574 | 147,205 | 323,316 | 288,211 | |||||||||
| Operating income | 76,066 | 76,413 | 143,643 | 152,626 | |||||||||
| Other income (expense) | |||||||||||||
| Interest income | 6,253 | 12,303 | 11,913 | 24,013 | |||||||||
| Interest expense | (5,768 | ) | (5,648 | ) | (11,577 | ) | (11,241 | ) | |||||
| Other income (expense), net | 3,655 | 414 | 3,422 | 363 | |||||||||
| Total other income (expense) | 4,140 | 7,069 | 3,758 | 13,135 | |||||||||
| Income before income taxes | 80,206 | 83,482 | 147,401 | 165,761 | |||||||||
| Income tax provision | (26,733 | ) | (14,730 | ) | (40,342 | ) | (31,659 | ) | |||||
| Net income | 53,473 | 68,752 | 107,059 | 134,102 | |||||||||
| Net income attributable to noncontrolling interests | 201 | 412 | 328 | 288 | |||||||||
| Net income attributable to Itron, Inc. | $ | 53,272 | $ | 68,340 | $ | 106,731 | $ | 133,814 | |||||
| Net income per common share - Basic | $ | 1.21 | $ | 1.50 | $ | 2.40 | $ | 2.94 | |||||
| Net income per common share - Diluted | $ | 1.19 | $ | 1.47 | $ | 2.37 | $ | 2.89 | |||||
| Weighted average common shares outstanding - Basic | 44,095 | 45,633 | 44,412 | 45,486 | |||||||||
| Weighted average common shares outstanding - Diluted | 44,608 | 46,380 | 45,038 | 46,276 | |||||||||
| ITRON, INC. | |||||||||||||
| SEGMENT INFORMATION | |||||||||||||
| (Unaudited, in thousands) | |||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||
| Product revenues | |||||||||||||
| Device Solutions | $ | 110,940 | $ | 111,939 | $ | 234,668 | $ | 237,326 | |||||
| Networked Solutions | 309,201 | 379,481 | 630,348 | 754,003 | |||||||||
| Outcomes | 32,883 | 25,764 | 64,755 | 48,996 | |||||||||
| Resiliency Solutions | 438 | — | 1,492 | — | |||||||||
| Total Company | $ | 453,462 | $ | 517,184 | $ | 931,263 | $ | 1,040,325 | |||||
| Service revenues | |||||||||||||
| Device Solutions | $ | 505 | $ | 821 | $ | 1,154 | $ | 1,305 | |||||
| Networked Solutions | 30,037 | 29,453 | 59,553 | 57,663 | |||||||||
| Outcomes | 63,516 | 59,303 | 127,554 | 114,619 | |||||||||
| Resiliency Solutions | 15,382 | — | 30,360 | — | |||||||||
| Total Company | $ | 109,440 | $ | 89,577 | $ | 218,621 | $ | 173,587 | |||||
| Total revenues | |||||||||||||
| Device Solutions | $ | 111,445 | $ | 112,760 | $ | 235,822 | $ | 238,631 | |||||
| Networked Solutions | 339,238 | 408,934 | 689,901 | 811,666 | |||||||||
| Outcomes | 96,399 | 85,067 | 192,309 | 163,615 | |||||||||
| Resiliency Solutions | 15,820 | — | 31,852 | — | |||||||||
| Total Company | $ | 562,902 | $ | 606,761 | $ | 1,149,884 | $ | 1,213,912 | |||||
| Adjusted gross profit | |||||||||||||
| Device Solutions | $ | 38,759 | $ | 33,591 | $ | 82,778 | $ | 71,344 | |||||
| Networked Solutions | 145,154 | 157,243 | 288,227 | 305,957 | |||||||||
| Outcomes | 37,380 | 32,784 | 77,404 | 63,536 | |||||||||
| Resiliency Solutions | $ | 11,917 | $ | — | 23,615 | — | |||||||
| Total Company | $ | 233,210 | $ | 223,618 | $ | 472,024 | $ | 440,837 | |||||
| Adjusted segment operating income | |||||||||||||
| Device Solutions | $ | 31,521 | $ | 25,454 | $ | 68,413 | $ | 55,925 | |||||
| Networked Solutions | 112,061 | 120,999 | 222,197 | 237,108 | |||||||||
| Outcomes | 20,542 | 15,687 | 42,897 | 30,017 | |||||||||
| Resiliency Solutions | 4,376 | — | 8,707 | — | |||||||||
| Total Company | $ | 168,500 | $ | 162,140 | $ | 342,214 | $ | 323,050 | |||||
| Adjusted Gross Margin | 41.4 | % | 36.9 | % | 41.0 | % | 36.3 | % | |||||
| ITRON, INC. | |||||||
| CONSOLIDATED BALANCE SHEETS | |||||||
| (Unaudited, in thousands) | June 30, 2026 | December 31, 2025 | |||||
| ASSETS | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 745,229 | $ | 1,020,397 | |||
| Accounts receivable, net | 351,109 | 367,794 | |||||
| Inventories | 258,727 | 242,886 | |||||
| Other current assets | 194,456 | 191,241 | |||||
| Total current assets | 1,549,521 | 1,822,318 | |||||
| Property, plant, and equipment, net | 121,590 | 112,193 | |||||
| Deferred tax assets, net | 271,513 | 265,183 | |||||
| Other long-term assets | 60,694 | 63,352 | |||||
| Operating lease right-of-use assets, net | 33,359 | 29,341 | |||||
| Intangible assets, net | 266,076 | 83,337 | |||||
| Goodwill | 1,690,791 | 1,344,983 | |||||
| Total assets | $ | 3,993,544 | $ | 3,720,707 | |||
| LIABILITIES AND EQUITY | |||||||
| Current liabilities | |||||||
| Accounts payable | $ | 146,726 | $ | 156,288 | |||
| Other current liabilities | 55,135 | 58,864 | |||||
| Wages and benefits payable | 96,649 | 122,245 | |||||
| Taxes payable | 24,746 | 16,618 | |||||
| Current portion of debt, net | — | 459,522 | |||||
| Current portion of warranty | 10,871 | 10,868 | |||||
| Unearned revenue | 230,098 | 187,822 | |||||
| Total current liabilities | 564,225 | 1,012,227 | |||||
| Long-term debt, net | 1,575,242 | 788,805 | |||||
| Long-term warranty | 7,078 | 7,350 | |||||
| Pension benefit obligation | 59,874 | 61,998 | |||||
| Deferred tax liabilities, net | 1,387 | 623 | |||||
| Operating lease liabilities | 26,092 | 19,623 | |||||
| Other long-term obligations | 121,519 | 91,885 | |||||
| Total liabilities | 2,355,417 | 1,982,511 | |||||
| Equity | |||||||
| Common stock | 1,472,138 | 1,661,350 | |||||
| Accumulated other comprehensive loss, net | (74,421 | ) | (56,505 | ) | |||
| Retained earnings | 218,482 | 111,751 | |||||
| Total Itron, Inc. shareholders' equity | 1,616,199 | 1,716,596 | |||||
| Noncontrolling interests | 21,928 | 21,600 | |||||
| Total equity | 1,638,127 | 1,738,196 | |||||
| Total liabilities and equity | $ | 3,993,544 | $ | 3,720,707 | |||
| ITRON, INC. | |||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (Unaudited, in thousands) | Six Months Ended June 30, | ||||||
| 2026 | 2025 | ||||||
| Operating activities | |||||||
| Net income | $ | 107,059 | $ | 134,102 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization of intangible assets | 37,162 | 24,182 | |||||
| Non-cash operating lease expense | 6,576 | 5,843 | |||||
| Stock-based compensation | 32,316 | 33,396 | |||||
| Amortization of prepaid debt fees | 3,791 | 3,581 | |||||
| Deferred taxes, net | (18,684 | ) | (9,664 | ) | |||
| Loss on sale of business | — | 79 | |||||
| Restructuring, non-cash | 462 | (25 | ) | ||||
| Other adjustments, net | (3,538 | ) | (354 | ) | |||
| Changes in operating assets and liabilities, net of acquisition and sale of business: | |||||||
| Accounts receivable | 23,280 | 18,789 | |||||
| Inventories | (17,956 | ) | (7,413 | ) | |||
| Other current assets | (5,295 | ) | 6,409 | ||||
| Other long-term assets | 3,117 | 3,479 | |||||
| Accounts payable, other current liabilities, and taxes payable | (9,259 | ) | (31,868 | ) | |||
| Wages and benefits payable | (28,092 | ) | (34,884 | ) | |||
| Unearned revenue | 50,859 | 46,431 | |||||
| Warranty | (243 | ) | (1,876 | ) | |||
| Restructuring | (6,921 | ) | (10,252 | ) | |||
| Other operating, net | (1,042 | ) | (11,153 | ) | |||
| Net cash provided by operating activities | 173,592 | 168,802 | |||||
| Investing activities | |||||||
| Acquisitions of property, plant, and equipment | (13,132 | ) | (10,656 | ) | |||
| Business acquisitions, net of cash and cash equivalents acquired | (515,055 | ) | — | ||||
| Other investing, net | 3,088 | 5 | |||||
| Net cash used in investing activities | (525,099 | ) | (10,651 | ) | |||
| Financing activities | |||||||
| Proceeds from borrowings | 805,000 | — | |||||
| Payments on debt | (460,000 | ) | — | ||||
| Issuance of common stock | 1,969 | 5,436 | |||||
| Payments on call spread for convertible offering | (92,817 | ) | — | ||||
| Repurchase of common stock | (152,234 | ) | — | ||||
| Prepaid debt fees | (21,525 | ) | (178 | ) | |||
| Other financing, net | (514 | ) | (507 | ) | |||
| Net cash provided by financing activities | 79,879 | 4,751 | |||||
| Effect of foreign exchange rate changes on cash and cash equivalents | (3,540 | ) | 10,118 | ||||
| Increase (decrease) in cash and cash equivalents | (275,168 | ) | 173,020 | ||||
| Cash and cash equivalents at beginning of period | 1,020,397 | 1,051,237 | |||||
| Cash and cash equivalents at end of period | $ | 745,229 | $ | 1,224,257 | |||
About Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared in accordance with GAAP, we use certain non-GAAP financial measures, including non-GAAP operating expense, non-GAAP operating income, non-GAAP net income, non-GAAP diluted EPS, adjusted EBITDA, free cash flow, adjusted gross profit, adjusted operating income, and constant currency. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and other companies may define such measures differently. For a reconciliation of each non-GAAP measure to the most comparable financial measure prepared and presented in accordance with GAAP, please see the table captioned Reconciliations of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures.
We use these non-GAAP financial measures for financial and operational decision making and/or as a means for determining executive compensation. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and ability to service debt by excluding certain expenses that may not be indicative of our recurring core operating results. These non-GAAP financial measures facilitate management's internal comparisons to our historical performance, as well as comparisons to our competitors' operating results. Our executive compensation plans exclude non-cash charges related to amortization of intangibles and depreciation of property, plant, and equipment and certain discrete cash and non-cash charges, such as restructuring, loss on sale of business, strategic initiative expenses, or acquisition and integration related expenses. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. We believe these non-GAAP financial measures are useful to investors because they provide greater transparency with respect to key metrics used by management in its financial and operational decision making and because they are used by our institutional investors and the analyst community to analyze the health of our business.
Non-GAAP operating expenses and non-GAAP operating income – We define non-GAAP operating expenses as operating expenses excluding certain expenses related to the amortization of intangible assets, restructuring, loss on sale of business, strategic initiative expenses, and acquisition and integration related expenses. We define non-GAAP operating income as operating income excluding the expenses related to the amortization of intangible assets, restructuring, loss on sale of business, strategic initiative expenses, and acquisition and integration related expenses. Acquisition and integration related expenses include costs, which are incurred to affect and integrate business combinations, such as professional fees; certain employee retention and salaries related to integration; employee severance; contract terminations; travel costs related to knowledge transfer; system conversion costs; and asset impairment charges. We consider these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of expenses that are not related to our core operating results. By excluding these expenses, we believe that it is easier for management and investors to compare our financial results over multiple periods and analyze trends in our operations. For example, in certain periods, expenses related to amortization of intangible assets may decrease, which would improve GAAP operating margins, yet the improvement in GAAP operating margins due to this lower expense is not necessarily reflective of an improvement in our core business. There are some limitations related to the use of non-GAAP operating expenses and non-GAAP operating income versus operating expenses and operating income calculated in accordance with GAAP. We compensate for these limitations by providing specific information about the GAAP amounts excluded from non-GAAP operating expense and non-GAAP operating income and evaluating non-GAAP operating expense and non-GAAP operating income together with GAAP operating expense and operating income.
Non-GAAP net income and non-GAAP diluted EPS – We define non-GAAP net income as net income attributable to Itron, Inc. excluding the expenses associated with amortization of intangible assets, amortization of debt placement fees, restructuring, loss on sale of business, strategic initiative expenses, acquisition and integration related expenses, gain on sale of equity method investment, and the tax effect of excluding these expenses. We define non-GAAP diluted EPS as non-GAAP net income divided by diluted weighted-average shares outstanding during the period calculated on a GAAP basis and then reduced to reflect any anti-dilutive impact of the convertible notes hedge transactions. We consider these financial measures to be useful metrics for management and investors for the same reasons that we use non-GAAP operating income. The same limitations described above regarding our use of non-GAAP operating income apply to our use of non-GAAP net income and non-GAAP diluted EPS. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP measures and evaluating non-GAAP net income and non-GAAP diluted EPS together with GAAP net income attributable to Itron, Inc. and GAAP diluted EPS.
For interim periods the budgeted annual effective tax rate (AETR) is used, adjusted for any discrete items, as defined in Accounting Standards Codification (ASC) 740 - Income Taxes. The budgeted AETR is determined at the beginning of the fiscal year. The AETR is revised throughout the year based on changes to our full-year forecast. If the revised AETR increases or decreases by 200 basis points or more from the budgeted AETR due to changes in the full-year forecast during the year, the revised AETR is used in place of the budgeted AETR beginning with the quarter the 200 basis point threshold is exceeded and going forward for all subsequent interim quarters in the year. We continue to assess the AETR based on latest forecast throughout the year and use the most recent AETR any time it increases or decreases by 200 basis points or more from the prior interim period.
Adjusted EBITDA – We define adjusted EBITDA as net income (a) minus interest income and gain on sale of equity method investment, (b) plus interest expense, depreciation and amortization, restructuring, loss on sale of business, strategic initiative expenses, acquisition and integration related expenses, and (c) excluding income tax provision or benefit. Management uses adjusted EBITDA as a performance measure for executive compensation. A limitation to using adjusted EBITDA is that it does not represent the total increase or decrease in the cash balance for the period and the measure includes some non-cash items and excludes other non-cash items. Additionally, the items that we exclude in our calculation of adjusted EBITDA may differ from the items that our peer companies exclude when they report their results. We compensate for these limitations by providing a reconciliation of this measure to GAAP net income.
Free cash flow – We define free cash flow as net cash provided by operating activities less cash used for acquisitions of property, plant and equipment. We believe free cash flow provides investors with a relevant measure of liquidity and a useful basis for assessing our ability to fund our operations and repay our debt. The same limitations described above regarding our use of adjusted EBITDA apply to our use of free cash flow. We compensate for these limitations by providing specific information regarding the GAAP amounts in the reconciliation.
Adjusted gross profit – We define adjusted gross profit as gross profit excluding the amortization expense of core-developed technology intangible assets.
Adjusted operating income – We define adjusted operating income as operating income excluding the amortization of core-developed technology intangible assets.
Constant currency – We refer to the impact of foreign currency exchange rate fluctuations in our discussions of financial results, which references the differences between the foreign currency exchange rates used to translate operating results from the entity's functional currency into U.S. dollars for financial reporting purposes. We also use the term "constant currency", which represents financial results adjusted to exclude changes in foreign currency exchange rates as compared with the rates in the comparable prior year period. We calculate the constant currency change as the difference between the current period results and the comparable prior period's results restated using current period foreign currency exchange rates.
The tables below reconcile the non-GAAP financial measures of operating expenses, operating income, net income, diluted EPS, adjusted EBITDA, and free cash flow with the most directly comparable GAAP financial measures.
| ITRON, INC. | |||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES | |||||||||||||
| TO THE MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES | |||||||||||||
| (Unaudited, in thousands, except per share data) | |||||||||||||
| TOTAL COMPANY RECONCILIATIONS | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||
| NON-GAAP OPERATING EXPENSES | |||||||||||||
| GAAP operating expenses | $ | 154,574 | $ | 147,205 | $ | 323,316 | $ | 288,211 | |||||
| Amortization of intangible assets(1) | (8,478 | ) | (4,543 | ) | (16,650 | ) | (9,022 | ) | |||||
| Restructuring | (233 | ) | (1,237 | ) | (447 | ) | (684 | ) | |||||
| Loss on sale of business | — | — | — | (79 | ) | ||||||||
| Strategic initiative | (455 | ) | — | (475 | ) | — | |||||||
| Acquisition and integration | (1,252 | ) | (33 | ) | (7,229 | ) | (84 | ) | |||||
| Non-GAAP operating expenses | $ | 144,156 | $ | 141,392 | $ | 298,515 | $ | 278,342 | |||||
| NON-GAAP OPERATING INCOME | |||||||||||||
| GAAP operating income | $ | 76,066 | $ | 76,413 | $ | 143,643 | $ | 152,626 | |||||
| Amortization of intangible assets | 11,048 | 4,543 | 21,715 | 9,022 | |||||||||
| Restructuring | 233 | 1,237 | 447 | 684 | |||||||||
| Loss on sale of business | — | — | — | 79 | |||||||||
| Strategic initiative | 455 | — | 475 | — | |||||||||
| Acquisition and integration | 1,252 | 33 | 7,229 | 84 | |||||||||
| Non-GAAP operating income | $ | 89,054 | $ | 82,226 | $ | 173,509 | $ | 162,495 | |||||
| NON-GAAP NET INCOME & DILUTED EPS | |||||||||||||
| GAAP net income attributable to Itron, Inc. | $ | 53,272 | $ | 68,340 | $ | 106,731 | $ | 133,814 | |||||
| Amortization of intangible assets | 11,048 | 4,543 | 21,715 | 9,022 | |||||||||
| Amortization of debt placement fees | 1,925 | 1,757 | 3,755 | 3,494 | |||||||||
| Restructuring | 233 | 1,237 | 447 | 684 | |||||||||
| Loss on sale of business | — | — | — | 79 | |||||||||
| Strategic initiative | 455 | — | 475 | — | |||||||||
| Gain on sale of equity method investment | (3,249 | ) | — | (3,249 | ) | — | |||||||
| Acquisition and integration | 1,252 | 33 | 7,229 | 84 | |||||||||
| Income tax effect of non-GAAP adjustments | 5,791 | (796 | ) | 1,316 | (1,953 | ) | |||||||
| Non-GAAP net income attributable to Itron, Inc. | $ | 70,727 | $ | 75,114 | $ | 138,419 | $ | 145,224 | |||||
| Non-GAAP diluted EPS | $ | 1.59 | $ | 1.62 | $ | 3.07 | $ | 3.14 | |||||
| Non-GAAP weighted average common shares outstanding - Diluted | 44,608 | 46,380 | 45,038 | 46,276 | |||||||||
(1) Excludes amortization of core-developed technology intangible assets.
| ITRON, INC. | |||||||||||||
| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES | |||||||||||||
| TO THE MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES | |||||||||||||
| (Unaudited, in thousands) | |||||||||||||
| TOTAL COMPANY RECONCILIATIONS | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||
| ADJUSTED EBITDA | |||||||||||||
| GAAP net income attributable to Itron, Inc. | $ | 53,272 | $ | 68,340 | $ | 106,731 | $ | 133,814 | |||||
| Interest income | (6,253 | ) | (12,303 | ) | (11,913 | ) | (24,013 | ) | |||||
| Interest expense | 5,768 | 5,648 | 11,577 | 11,241 | |||||||||
| Income tax provision | 26,733 | 14,730 | 40,342 | 31,659 | |||||||||
| Depreciation and amortization | 18,626 | 12,114 | 37,162 | 24,182 | |||||||||
| Restructuring | 233 | 1,237 | 447 | 684 | |||||||||
| Loss on sale of business | — | — | — | 79 | |||||||||
| Strategic initiative | 455 | — | 475 | — | |||||||||
| Acquisition and integration | 1,252 | 33 | 7,229 | 84 | |||||||||
| Gain on sale of equity method investment | (3,249 | ) | — | (3,249 | ) | — | |||||||
| Adjusted EBITDA | $ | 96,837 | $ | 89,799 | $ | 188,801 | $ | 177,730 | |||||
| FREE CASH FLOW | |||||||||||||
| Net cash provided by operating activities | $ | 88,091 | $ | 96,685 | $ | 173,592 | $ | 168,802 | |||||
| Acquisitions of property, plant, and equipment | (6,605 | ) | (6,017 | ) | (13,132 | ) | (10,656 | ) | |||||
| Free Cash Flow | $ | 81,486 | $ | 90,668 | $ | 160,460 | $ | 158,146 | |||||
The tables below reconcile the non-GAAP financial measure of adjusted gross profit with the most directly comparable GAAP financial measure.
| TOTAL COMPANY RECONCILIATIONS | Three months ended June 30, 2026 | |||||||||||||||||||
| (Unaudited, in thousands) | Device Solutions | Networked Solutions | Outcomes | Resiliency Solutions | Segments Subtotal | |||||||||||||||
| Total revenues | $ | 111,445 | $ | 339,238 | $ | 96,399 | $ | 15,820 | $ | 562,902 | ||||||||||
| Total cost of revenues | 72,686 | 194,084 | 59,644 | 5,848 | 332,262 | |||||||||||||||
| Gross profit | 38,759 | 145,154 | 36,755 | 9,972 | 230,640 | |||||||||||||||
| Gross margin | 34.8 | % | 42.8 | % | 38.1 | % | 63.0 | % | 41.0 | % | ||||||||||
| Amortization of core-developed technology intangible assets | $ | — | $ | — | $ | 625 | $ | 1,945 | $ | 2,570 | ||||||||||
| Adjusted gross profit | 38,759 | 145,154 | 37,380 | 11,917 | 233,210 | |||||||||||||||
| Adjusted gross margin | 34.8 | % | 42.8 | % | 38.8 | % | 75.3 | % | 41.4 | % | ||||||||||
| Three Months Ended June 30, 2025 | ||||||||||||||||||||
| (Unaudited, in thousands) | Device Solutions | Networked Solutions | Outcomes | Segments Subtotal | ||||||||||||||||
| Total revenues | $ | 112,760 | $ | 408,934 | $ | 85,067 | $ | 606,761 | ||||||||||||
| Total cost of revenues | 79,169 | 251,691 | 52,283 | 383,143 | ||||||||||||||||
| Gross profit | 33,591 | 157,243 | 32,784 | 223,618 | ||||||||||||||||
| Gross margin | 29.8 | % | 38.5 | % | 38.5 | % | 36.9 | % | ||||||||||||
| Amortization of core-developed technology intangible assets | $ | — | $ | — | $ | — | $ | — | ||||||||||||
| Adjusted gross profit | 33,591 | 157,243 | 32,784 | 223,618 | ||||||||||||||||
| Adjusted gross margin | 29.8 | % | 38.5 | % | 38.5 | % | 36.9 | % | ||||||||||||
| TOTAL COMPANY RECONCILIATIONS | Six months ended June 30, 2026 | |||||||||||||||||||
| (Unaudited, in thousands) | Device Solutions | Networked Solutions | Outcomes | Resiliency Solutions | Segments Subtotal | |||||||||||||||
| Total revenues | $ | 235,822 | $ | 689,901 | $ | 192,309 | $ | 31,852 | $ | 1,149,884 | ||||||||||
| Total cost of revenues | 153,044 | 401,674 | 116,155 | 12,052 | 682,925 | |||||||||||||||
| Gross profit | 82,778 | 288,227 | 76,154 | 19,800 | 466,959 | |||||||||||||||
| Gross margin | 35.1 | % | 41.8 | % | 39.6 | % | 62.2 | % | 40.6 | % | ||||||||||
| Amortization of core-developed technology intangible assets | $ | — | $ | — | $ | 1,250 | $ | 3,815 | $ | 5,065 | ||||||||||
| Adjusted gross profit | 82,778 | 288,227 | 77,404 | 23,615 | 472,024 | |||||||||||||||
| Adjusted gross margin | 35.1 | % | 41.8 | % | 40.2 | % | 74.1 | % | 41.0 | % | ||||||||||
| Six Months Ended June 30, 2025 | ||||||||||||||||||||
| (Unaudited, in thousands) | Device Solutions | Networked Solutions | Outcomes | Segments Subtotal | ||||||||||||||||
| Total revenues | $ | 238,631 | $ | 811,666 | $ | 163,615 | $ | 1,213,912 | ||||||||||||
| Total cost of revenues | 167,287 | 505,709 | 100,079 | 773,075 | ||||||||||||||||
| Gross profit | 71,344 | 305,957 | 63,536 | 440,837 | ||||||||||||||||
| Gross margin | 29.9 | % | 37.7 | % | 38.8 | % | 36.3 | % | ||||||||||||
| Amortization of core-developed technology intangible assets | $ | — | $ | — | $ | — | $ | — | ||||||||||||
| Adjusted gross profit | 71,344 | 305,957 | 63,536 | 440,837 | ||||||||||||||||
| Adjusted gross margin | 29.9 | % | 37.7 | % | 38.8 | % | 36.3 | % | ||||||||||||
