Itron Q3 Earnings Call Highlights

Key Points

• Third-quarter results exceeded expectations: Revenue rose 3% year over year to $599 million, while non-GAAP EPS increased to $1.94 and adjusted EBITDA reached a record $115 million. Gross margin expanded 320 basis points to 41%.
• Recurring revenue and demand strengthened: Annual recurring revenue grew 25% to $423 million, bookings increased 27% to $482 million, and backlog reached $4.3 billion, supported by utility grid modernization and resiliency projects.
• Itron raised its full-year outlook: The company now expects 2026 revenue of $2.37 billion to $2.385 billion and non-GAAP EPS of $6.72 to $6.82, while forecasting fourth-quarter revenue growth of 10% at the midpoint.

Itron NASDAQ: ITRI reported third-quarter 2026 revenue at the top end of its outlook range, alongside record adjusted EBITDA and stronger profitability, as demand for utility intelligence, grid modernization and resiliency tools continued to support its business.

Revenue rose 3% year over year to $599 million. GAAP net income was $71 million, or $1.61 per diluted share, compared with $66 million, or $1.41 per share, a year earlier. On a non-GAAP basis, net income increased to $86 million, or $1.94 per diluted share, from $72 million, or $1.54 per share, in the prior-year quarter.

“Revenue returned to year-over-year growth at the top end of our outlook,” President and Chief Executive Officer Tom Deitrich said. “Adjusted EBITDA set a new quarterly record, and non-GAAP earnings per share were well ahead of our expectations.”

Margins Expand as Revenue Mix Shifts

Third-quarter gross margin was 41%, up 320 basis points from a year earlier, which Chief Financial Officer Joan Hooper attributed to favorable mix, operational efficiencies and cost discipline. Adjusted gross margin was 41.3%, up 350 basis points year over year.

Non-GAAP operating income increased 20% to $107 million, while adjusted EBITDA reached a record $115 million, or 19% of revenue. Deitrich said the company’s earnings performance reflected commercial and operational work rather than an industrial cycle.

Free cash flow totaled $96 million, down from $113 million in the third quarter of 2025. Hooper said the decline primarily reflected working-capital growth, higher tax payments and lower interest income.

• Device Solutions revenue was $102 million, down 1% on a constant-currency basis, while adjusted gross margin rose 450 basis points to 35%.
• Networked Solutions revenue was $390 million, also down 1% on a constant-currency basis. Adjusted gross margin was about 42% and operating margin was roughly 34%.
• Outcomes revenue increased 9% to $92 million, driven by higher services revenue.
• Resiliency Solutions contributed $16 million in revenue, with adjusted gross margin of 74% and operating margin of 26%.

Itron ended the quarter with total debt of $1.6 billion, net leverage of 1.9 times, and approximately $1.6 billion in liquidity. That included $840 million of cash and equivalents and $722 million available under its revolving credit line.

Recurring Revenue and Grid Intelligence Gain Traction

Annual recurring revenue reached $423 million and grew about 25% year over year, accelerating from 21% growth in the prior quarter. Deitrich said the company has shipped more than 19.4 million distributed-intelligence-enabled endpoints and is seeing adoption broaden into the mid-market.

The company’s third-quarter bookings were $482 million, up 27% from a year earlier. Total backlog stood at $4.3 billion at quarter-end. Itron said its Outcomes and Resiliency Solutions segments, which carry a greater concentration of software and services, represented more than 25% of backlog combined.

Management did not provide a specific booking or book-to-bill outlook for the fourth quarter, though Hooper said the period is historically Itron’s strongest for bookings. Deitrich added that October bookings had started well and that the company likes the pipeline of opportunities in front of it.

Deitrich said Itron sees expanding opportunities tied to non-wires alternatives, reliability, distributed energy resources, gas distribution modernization and grid-edge intelligence. He said the gas endpoint opportunity expected to be awarded over the next two to three years is “multiples higher” than normal historical run rates, though the opportunity has not yet meaningfully appeared in bookings or revenue.

Customer Deployments and Resiliency Applications

During the quarter, Pepco Holdings, an Exelon company, selected Itron to expand its distributed energy resource program. According to Itron, the initiative is intended to provide real-time operational data and increase flexible load available to support the constrained PJM region.

The company also cited expansion of its OpenWay Forward program with a large Western U.S. utility. Deitrich described the program as a way for utilities to maintain compatibility between older installed assets and newer capabilities, allowing customers to add functionality without replacing all undepreciated equipment at once.

Itron’s Resiliency Solutions business added customers for worker safety, damage prevention and digital construction management applications. The company said one utility expanded a worker-safety deployment into a five-year enterprise agreement covering operations in Pennsylvania, Kentucky and Rhode Island.

Deitrich also highlighted Itron’s expanded collaboration with PG&E to deploy thousands of Grid Edge endpoints in high-risk areas. The devices are designed to use distributed intelligence and waveform analytics to identify fault indicators, including downed live conductors, that could create wildfire risks.

On artificial intelligence, Deitrich said the company uses AI-based capabilities in weather modeling, storm response, worker safety, digital construction management, forecasting, anomaly detection and wildfire-related grid applications. He said Itron is integrating edge data with SCADA data at higher levels of the grid and sees a potential future opportunity to move further toward transmission applications.

Fourth-Quarter and Full-Year Outlook Raised

Itron forecast fourth-quarter revenue of $621 million to $636 million, representing 10% year-over-year growth at the midpoint and 5% sequential growth. The company narrowed its full-year revenue outlook to $2.37 billion to $2.385 billion.

The company expects fourth-quarter non-GAAP earnings per share of $1.70 to $1.80 and raised its full-year non-GAAP EPS outlook to $6.72 to $6.82.

Hooper said operating expenses were lower than expected as a percentage of revenue in the third quarter due partly to timing, but should increase in the fourth quarter. She cited costs associated with Itron’s customer event as well as potentially higher sales compensation tied to the seasonally stronger bookings period.

“The modernization of energy and water infrastructure is a long-term structural trend,” Deitrich said. “Quarterly timing may move. The underlying need will not.”

About Itron (NASDAQ:ITRI)

Itron, Inc is a technology company that provides solutions to utilities and cities for managing electricity, natural gas, and water resources. Its offerings help organizations measure consumption, collect and analyze data, improve operational efficiency, and support more reliable and sustainable delivery of essential services.

The company's portfolio includes smart meters, advanced metering infrastructure, communications networks, sensors, data management systems, and utility software.

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