Resource management provider Itron (NASDAQ: ITRI) reported Q4 CY2025 results exceeding the market’s revenue expectations, but sales fell by 6.7% year on year to $571.7 million. On the other hand, next quarter’s revenue guidance of $570 million was less impressive, coming in 1.8% below analysts’ estimates. Its non-GAAP profit of $2.46 per share was 12.4% above analysts’ consensus estimates.
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Itron (ITRI) Q4 CY2025 Highlights:
- Revenue: $571.7 million vs analyst estimates of $562 million (6.7% year-on-year decline, 1.7% beat)
- Adjusted EPS: $2.46 vs analyst estimates of $2.19 (12.4% beat)
- Adjusted EBITDA: $98.78 million vs analyst estimates of $85.67 million (17.3% margin, 15.3% beat)
- Revenue Guidance for Q1 CY2026 is $570 million at the midpoint, below analyst estimates of $580.6 million
- Adjusted EPS guidance for the upcoming financial year 2026 is $6 at the midpoint, beating analyst estimates by 1.3%
- Operating Margin: 13.8%, up from 10.2% in the same quarter last year
- Market Capitalization: $4.33 billion
StockStory’s Take
Itron’s fourth quarter results drew a strong positive reaction from the market, as management emphasized robust execution amid a shifting utility landscape. CEO Thomas Deitrich attributed performance to accelerating adoption of grid edge intelligence and expanding customer demand for outcomes-based solutions, citing a 27% increase in pipeline growth and a 58% rise in Outcomes backlog year over year. Deitrich noted, “The environment continues to be really constructive for us through fourth quarter and into 2026 and beyond,” highlighting the role of recurring revenue streams and a record financial performance in profitability and free cash flow. Management pointed to favorable customer and product mix and the impact of planned portfolio changes as key factors behind margin expansion, despite a year-on-year revenue decline.
Looking forward, Itron’s guidance is shaped by a stronger focus on high-margin, recurring revenue streams and the integration of new resiliency solutions. Management expects continued growth in annual recurring revenue (ARR), with CFO Joan Hooper stating, “We would still see mid-teens to maybe up to 20% growth,” reflecting expanding customer adoption of subscription-based offerings. The company’s recently acquired Urbint and LocusView businesses are anticipated to be immediately accretive to revenue and gross margins, though somewhat dilutive to earnings per share in the near term due to acquisition costs. Management highlighted proactive investments in digital construction management and emergency preparedness as foundational to future growth, while acknowledging potential near-term headwinds from lower interest income and evolving utility ordering patterns.
Key Insights from Management’s Remarks
Management attributed the quarter’s profitability and margin strength to the shift toward recurring revenue, successful integration of new acquisitions, and increasing demand for grid modernization solutions.
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Recurring revenue momentum: Itron’s annual recurring revenue (ARR) reached $368 million at year-end, up 20% year over year, supporting improved earnings quality and predictability. Management emphasized the strategic importance of ARR as a key financial metric, reflecting broader adoption of software, analytics, and services.
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Outcomes segment growth: Outcomes, which includes delivery services and recurring revenues, saw backlog growth of 58% and a 22% revenue increase, driven by utilities’ demand for real-time grid intelligence. Deitrich described distributed intelligence adoption as “very good and very strong,” with endpoints up 25% and applications up 70% year over year.
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Portfolio mix and margin expansion: Favorable customer and product mix contributed to record adjusted gross margins across Device Solutions and Network Solutions. Both segments posted substantial margin improvements, attributed to a focus on higher-value offerings and disciplined project execution.
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Resiliency Solutions launch: The acquisitions of Urbint and LocusView resulted in a new Resiliency Solutions segment, expanding Itron’s capabilities into digital construction management, emergency preparedness, and worker safety. Management expects this segment to be immediately accretive to gross margin and recurring revenue, but dilutive to earnings per share in 2026 due to acquisition-related interest impacts.
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Utility market normalization: After prior delays in large deployments, management reported normalization in utility ordering and project timelines. Deitrich explained that “book-and-ship” business patterns remain robust, particularly in electricity, while acknowledging some softness in U.S. water markets. He underscored the company’s ability to help utilities transition legacy systems to more advanced solutions without major disruptions.
Drivers of Future Performance
Management’s outlook centers on growing recurring revenue, successful integration of new segments, and steady utility infrastructure investment despite acquisition-related headwinds.
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ARR as primary growth driver: The company expects mid-teens to 20% growth in annual recurring revenue, reflecting continued demand for Outcomes and Resiliency Solutions. Management sees this metric as underpinning both top-line stability and margin durability, especially as utilities prioritize software, analytics, and cloud-based services.
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Integration of new acquisitions: Urbint and LocusView are anticipated to expand Itron’s addressable market, offering digital construction management and AI-powered emergency response tools. While these acquisitions should be immediately accretive to gross margins and EBITDA, management cautions they will be dilutive to non-GAAP earnings per share in 2026, with accretion expected by 2027 as recurring revenue ramps.
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Shifting utility procurement patterns: Management highlighted a more normalized utility project environment, but noted ongoing lumpiness in large deployments and the potential for timing-related revenue swings. The company’s ability to bridge legacy and next-generation systems is viewed as a competitive advantage in winning new business, though softness in certain water markets remains a watch point.
Catalysts in Upcoming Quarters
Over the coming quarters, the StockStory team will be monitoring (1) the pace of recurring revenue growth and customer adoption of new Resiliency Solutions, (2) the stability and ramp-up of utility project deployments as market conditions normalize, and (3) the successful integration of Urbint and LocusView, including margin realization and the transition to earnings accretion. Additional attention will be paid to shifts in utility procurement and uptake of distributed intelligence applications.
Itron currently trades at $96.05, up from $89.36 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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