ITRON (ITRI)·Q4 2025 Earnings Summary
Itron Crushes Q4: Non-GAAP EPS Beats by 12%, Stock Pops 6% Aftermarket
February 17, 2026 · by Fintool AI Agent
Itron delivered a strong fourth quarter, beating on both revenue and earnings while posting record results in its high-margin Outcomes segment. Non-GAAP EPS of $2.46 crushed the Street's $2.19 estimate by 12.3%, marking the company's ninth consecutive quarterly beat. Shares jumped 5.8% in aftermarket trading to $94.51 following the release.
Did Itron Beat Earnings?
Yes, decisively. Itron beat on both top and bottom lines:
The 12% EPS beat is particularly notable given Itron's already elevated beat rate—the company has exceeded EPS estimates in every quarter for the past two years.
Ask Fintool AI AgentWhat Changed From Last Quarter?
Several notable shifts from Q3 2025:
Margin expansion accelerated. Gross margin hit 40.5%, up from 37.7% in Q3 2025 and 34.9% a year ago. Management attributed this to favorable customer and product mix—higher-margin software and services revenue is growing while lower-margin hardware sales decline.
Outcomes segment hit a record. Revenue of $112M was up 23% YoY, driven by delivery services and recurring revenue growth. This segment now represents 20% of total revenue, up from 15% a year ago.
New segment emerged. The Resiliency Solutions segment contributed $3M in Q4 following the Urbint acquisition in November. This is a new growth vector focused on AI-enhanced utility software.
Free cash flow surged. Q4 FCF of $112M was up 60% YoY, driven by improved working capital and higher earnings. Full-year FCF hit $383M, up 85% from $208M in FY 2024.
What Did Management Say?
CEO Tom Deitrich emphasized the strategic shift toward software and recurring revenue:
"Grid Edge Intelligence platform adoption drove strong financial results in the fourth quarter. We achieved numerous financial records, led by Outcomes growth of 23% which is a record level of revenue for that segment. The modern grid cannot operate without real-time intelligence, and Itron is the intelligence layer of the grid."
On acquisitions and the strategic vision:
"Grid transformation is structural, not cyclical, and it requires trusted data, secure networks, and operational intelligence embedded directly into the grid. This is where Itron competes and Itron wins."
"Our heritage is rooted in hardware and networks, and our future combines high-growth, durable, annual recurring revenue driven by data, AI, software, and services."
Key Customer Wins in Q4:
- Exelon — New multiyear, multi-application agreement expanding a long-standing relationship
- Large Canadian utility — Expanded partnership for distributed intelligence, real-time grid visibility, analytics, and control
- Large early adopter AMI customer — Collaboration to address operational continuity, business risk, and affordability using Utility IQ solution
What Did Management Guide?
Itron provided the following outlook:
Q1 2026 Guidance:
- Revenue: $565-575M
- Non-GAAP EPS: $1.20-1.30
Full Year 2026 Guidance:
- Revenue: $2.35-2.45B
- Non-GAAP EPS: $5.75-6.25
The FY 2026 guidance midpoint implies:
- Revenue roughly flat vs FY 2025's $2.37B (up 1% at midpoint)
- Non-GAAP EPS down 16% from FY 2025's $7.13
Why is EPS guidance lower? Two key factors:
- Tax rate normalization - FY 2025 benefited from a ~12% effective tax rate; FY 2026 assumes a normalized 22% rate. Adjusting both years to 22%, the EPS decline is only ~5% at midpoint.
- Acquisition dilution - Urbint and Locusview drive ~$0.38 EPS reduction due to lower interest income (cash deployed for acquisitions) and investment in growth.
Guidance assumptions: Euro/USD of $1.16, 22% non-GAAP tax rate, ~46.2M diluted shares, stable trade policies as of January 2026.
Ask Fintool AI AgentHow Did the Stock React?
Itron shares jumped 5.8% in aftermarket trading to $94.51 from the $89.36 close.
The stock had pulled back significantly heading into earnings:
- Down 37% from 52-week high of $142
- Trading below both 50-day ($97.89) and 200-day ($115.22) moving averages
The aftermarket pop suggests the Street was positioned cautiously heading into the print, and the beat—particularly the margin expansion and Outcomes strength—exceeded expectations.
Segment Deep Dive
The revenue decline is intentional—Itron is shifting away from lower-margin legacy electricity products toward higher-margin software and services. Segment margin expansion was broad-based:
Device Solutions and Networked Solutions set record quarterly gross margins due to favorable customer and product mix. The Outcomes segment margin dipped slightly due to lower software license mix, though operating margin still expanded 420 bps on operating leverage.
Bookings and Demand Trends
The Q4 book-to-bill of 1.29x was notably strong, signaling improved order momentum after a softer mid-year period. CEO Deitrich noted the company enters quarters with approximately 80% of revenue in backlog, with a slightly higher portion of book-and-ship expected in FY 2026.
Annual Recurring Revenue (ARR) — New Metric
Itron introduced ARR as a new KPI this quarter, signaling the strategic shift toward software and services:
ARR comprises most of Resiliency Solutions, a significant portion of Outcomes, and a sliver of Networks. Management views ARR as the key metric to track the business's structural transformation toward recurring revenue.
Key KPIs and Financial Health
Balance Sheet Highlights (Dec 31, 2025):
- Cash & Equivalents: $1.02B
- Total Debt: $1.265B
- $460M 0% convertible notes (2026 maturity)
- $805M 1.375% convertible notes (2030 maturity)
- Net Leverage: 0.7x
- Undrawn Revolver: $750M (2030 maturity)
M&A Activity
Itron executed two acquisitions to accelerate its software and AI capabilities:
Urbint (Closed November 3, 2025)
- AI-powered infrastructure safety platform
- Enables predictive risk assessment for utilities
- Contributing to new Resiliency Solutions segment
Locusview (Signed November 17, 2025; Closed January 2026)
- Digital construction management solutions
- Automates planning through closeout, field-based capture of as-built infrastructure
- Purchase price: $525M, funded with cash on hand
FY 2026 Impact of Acquisitions:
The combined $850M spent on both acquisitions will reduce interest income, driving the near-term EPS dilution. Management emphasized the strategic rationale: expanding from 8,000 customers globally (Itron) to tens of additional customers each from Urbint and Locusview, with significant cross-sell opportunity.
Ask Fintool AI AgentQ&A Highlights
On utility ordering patterns (Noah Kaye, Oppenheimer): CEO Deitrich noted the mid-2025 project delays have not continued: "The externalities that really caused that, some of the froth around data center siting and government programs slipping out or funding being uncertain, that stuff has not continued on." Bookings are now moving at a "much more normalized pace."
On AI disruption concerns (Mark Strauss, J.P. Morgan): Asked about AI disrupting traditional software companies, Deitrich pointed to field service stickiness: "When you have thousands and thousands of workers in the field using the tool to capture the data, you've got a really, really sticky solution." He cited Winter Storm Erin as an example—3.5 million hours of restoration usage of their emergency preparedness solution.
On 2027 revenue targets (Scott Graham, Seaport Research): Deitrich confirmed the 2027 revenue target ($2.6-2.8B range) "still stands," though likely at the lower end depending on network deployment pace. Importantly, gross margin, EBITDA, and FCF targets were already achieved in 2025. An investor day is planned "sometime in the next year" to reset long-term targets.
On Distributed Intelligence adoption (David Sunderland, Baird):
- DI endpoints up 25% YoY
- Number of apps up 70% YoY
- 10 million DI units in backlog
- Over 3 million connected devices (thermostats, load control switches)
- Dispatching ~70 GWh/year for VPPs and demand response programs
On market share (Jeff Osborne, TD Cowen): "In the U.S. specifically and in the electricity space... the big are getting bigger and the smaller are definitely getting squeezed, and we being the largest, are clearly a beneficiary there."
Forward Catalysts
- Q1 2026 Earnings (~May 2026) - First full quarter including Locusview; watch for integration updates
- Resiliency Solutions Ramp - New segment could grow meaningfully as Urbint and Locusview scale
- Margin Expansion - Software/services mix shift should continue driving gross margin improvement
- Grid Modernization Spending - Utility capex on smart grid infrastructure remains strong
- AI/ML Product Launches - Grid Edge Intelligence platform adoption and new AI-enhanced features
Risks and Concerns
- Revenue decline - Top line contracted 7% YoY in Q4 and 3% for FY 2025
- Lumpy bookings - Total backlog of $4.5B is down from $4.7B YoY; management acknowledges "the business will never move in a straight line in the short term"
- Integration risk - Two acquisitions ($850M combined) in quick succession; Urbint and Locusview each have only "tens of customers" versus Itron's 8,000
- FY 2026 EPS guide-down - $5.75-6.25 midpoint is 16% below FY 2025's $7.13, driven by tax normalization and acquisition dilution
- Water market softness - CEO noted "Water in the U.S. probably has slowed down a little bit"
The Bottom Line
Itron delivered a clean beat with record Outcomes segment performance and significant margin expansion. The stock's 6% aftermarket pop reflects relief after a challenging lead-in—shares had fallen 37% from highs. While FY 2026 guidance implies earnings normalization, the underlying business transformation toward higher-margin software and recurring revenue is progressing—ARR of $368M growing 20% YoY tells that story clearly.
The two recent acquisitions add AI and analytics capabilities that strengthen Itron's position as the "intelligence layer of the grid." Management's confidence is evident: 2027 targets remain intact (with gross margin, EBITDA, and FCF metrics already achieved), and an investor day is planned to reset long-term goals. As CEO Deitrich put it: "Grid scaling and transformation is structurally unavoidable and cannot happen without greater intelligence."
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