ITRON, INC. Q4 FY2025 earnings call

• Itron delivered record earnings and profitability in Q4 with revenue $572M, adjusted EBITDA $99M, non-GAAP EPS $2.46, and free cash flow $112M. • Fourth quarter bookings were $737M with total backlog at quarter end $4.5B, with momentum in grid edge intelligence demand. • Won new multiyear agreements with Exelon, collaborated with large AMI customer, expanded partnership with Canadian utility. • Acquired Urbint and LocusView, introduced Resiliency Solutions segment which will contribute $65M - $70M in 2026 with ~70% gross margins. • Outcomes revenue up 22% on constant currency basis in Q4.

Fourth quarter revenue was $572,000,000. Device Solutions revenue was $105,000,000 with adjusted gross margin 34.4% and operating margin 26.6%. Network Solutions revenue was $352,000,000 with adjusted gross margin 42% and operating margin 32.2%. Outcomes revenue was $112,000,000 with adjusted gross margin 41.7% and operating margin 27%. New Resiliency Solutions segment had revenue of $3,000,000 from November 3 when Urbint acquisition closed. Full year 2025 revenue was $2,370,000,000, ARR ended at approximately $368,000,000.

• Anticipates 2026 revenue in range $2,350M - $2,450M (midpoint 1% growth vs 2025). • 2026 non-GAAP EPS in range $5.75 - $6.25, midpoint down ~$0.32 from 2025 due to acquisitions. • Resiliency Solutions expected to be immediately accretive to revenue growth, gross margins, EBITDA but dilutive to 2026 EPS. • Q1 2026 revenue expected in range $565M - $575M, down 6% vs Q1 last year. • Q1 non-GAAP EPS expected in range $1.20 - $1.30, midpoint down ~$0.27 vs last year, lower interest income from acquisitions reduces EPS by ~$0.13.

Q: Good morning. Thanks for taking the questions. I have a lot to get to, but I will keep it to two in consideration of others. I think the key question here in terms of the market environment and the behavior you are seeing, Tom, is maybe to get an update on how utility demand and behavior are trending now. You talked in past quarters about some shifting dynamics in terms of how utilities go to market. I guess, to what extent are you seeing some of that stabilize or inflect here? Kind of give us an update on the pipeline and what KPIs you are really paying attention to to understand the shape of the demand environment from here.

A: Thanks, Noah. The fourth quarter bookings were strong as we had expected. $737,000,000, and that is composed of several hundred unique wins. So the market is very constructive and moving forward. Second point I would make is around some of the slips or the delays that we saw back in the middle of last year. We have not seen any further movement. Those things did move out of the year as we expect, but 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. It is still there on those individual projects, but it has not caused additional slips. So what we see today is bookings moving at a much more normalized pace. It is lumpy, but it is always lumpy, so call it normal. There are always some customer-specific phasing types of things inside of there. Relative to the metrics or the KPIs that you ask about there, I would say pipeline growth is certainly a key metric. That was up 27% from 2024 to 2025. We continue to see that pace thus far into 2026. We looked at Outcomes backlog growth, which was up 58% year over year and now over $1,000,000,000. And certainly, we are really focused on the stability of revenue and revenue growth for the future with ARR as the metric and the way to think about that. So $368,000,000 ARR at the end of Q4, that is up 20% year over year from the end of 2024. So there is a lot of really good stuff happening underneath all of that. And I would say the environment continues to be really constructive for us through fourth quarter and into 2026 and beyond.

Q: just on this ARR metric. So just so we all understood, this is an ARR run rate that you were at at the end of Q4? The $368,000,000?

A: So that was a fourth quarter annualized number.

Q: Right. And, as we think about what the 2026 guide implies, where do you think that could be at the midpoint as we get into the end of this year?

A: Operator: You mean, specifically, what does it mean for ARR?

Q: Yep.

A: Yeah. I would expect we would still see mid-teens to maybe up to 20% growth. And, again, that would be calculated from year-end 2025 to year-end 2026.

Q: Good morning. Thank you for taking our questions. I wanted to ask, we have seen some investor concerns lately about AI disrupting traditional software companies. I am curious when you look at your Resiliency Solutions business and your Outcomes business, can you talk about the barriers to entry and, at a high level, what you see as your right to win within those markets? And then I have a quick follow-up.

A: Both of the components inside of Resiliency Solutions, digital construction management as well as the protection solutions that we have, both of those components really rely on field service tools and the usage of those tools. So when you have thousands and thousands of workers in the field using the tool to capture the data, you have a really, really sticky solution overall. So我会给你一个例子。美国经历的大冬季风暴“费恩”，大概两周前，从德克萨斯州到缅因州全境都覆盖了冰雪。我们看到的是，我们用于应急准备和响应的解决方案有350万小时的恢复使用量。这种数据捕获、现场服务使用以及这些工具具有极强的粘性。从客户获得的价值来看，有一个关于南方公司首席执行官谈论使用人工智能模型预测人员部署位置以及了解天气模式对其业务意义的有趣片段。这很好地说明了我们的工具如何通过现场使用和数据捕获的粘性产生实际价值，例如减少恢复时间并提高社区和客户的性能。所以这就是我们拥有的工具以及应用人工智能的原因，归根结底是关于数据如何被捕获、处理以及确保结果被信任，而我们的客户显然信任这些。Q: Great. I will turn it over. Thank you.

Q: Hey, good morning. Thank you for taking my question. Lots of questions recently from investors about utility ordering patterns and if it is structural disruption versus just lots of woody chop in the near term and wondering specifically if you could talk about what you are seeing in the book-and-ship business trends, maybe how much is assumed for this year or how we think about the bookings needed throughout this year to set up and underpin your 2027 targets? And then我有一个简短的后续问题。A: Yeah. I would say that the trends in terms of ordering patterns have really started to normalize. Some of the delays that we saw in the middle of last year, which were exogenous events, those have played through. We have not seen any cancellations because of those types of things, maybe some project timelines stretching out. But I would consider it much more normalized today. On the book-and-ship business, we definitely continue to see good book-and-ship business as customers are coping with some of the environment that they operate in. Book-and-ship oftentimes tends to be a go-to tool that customers have to cope with uncertainty in their business model if they do not have the right things in place from a regulatory standpoint. For example, the ability that we have to bridge our customers through a transition in terms of technology is really important. I referenced that in some of the prepared remarks of working with customers to smooth transitions of technology so they do not have to do a rip and replace, but more find ways to grow the capability over time. So certainly in the electricity space, I would say book-and-ship alive and well. Water in the US probably has slowed down a little bit. You have seen that in probably some of the competitive landscape that is out there, but that is probably a less important trend for us. Book-and-ship in Europe continues to operate on a normalized level. So again, overall market very constructive in terms of what to expect in the year ahead.

Q: Maybe just a follow-up. I appreciate the commentary you gave qualitatively about the Distributed Intelligence, some of the new offerings, the commentary from Southern and what you are seeing there and from customers out there in the market. But wondering if you could give any more color on penetration of these and maybe attach rates, which I know is not a formal metric. But thinking about core customers and adopting some of these new things, maybe the endpoints that you could see converted over, I guess, I do not know the time frame, but thinking about how this may trend in the near to longer term and the rate of adoption specifically?

A: Yeah. The trend for DI adoption continues to be very good and very strong. So endpoints up 25% year over year. The number of apps up 70% year over year. So it continues absolutely at the pace we would have expected. We still have $10,000,000 in backlog ready to move out the door approximately. So things are continuing to be normalized in that area. And if you happen to be at Distributech, a large show, you certainly would have seen the notion of grid edge intelligence everywhere across the industry. So this is not an if, it is inevitable. It is absolutely happening. It is the way our customers need to cope with the world around them and the complexity of the environment that they operate in. We have seen particular growth in things like distributed energy resource management. So we are over 3,000,000 devices, things like thermostats and load control switches and that sort of thing that are connected up, dispatching about 70 gigawatt-hours a year in terms of activity, things like VPPs and other programs to manage it. We have seen tremendous growth in analytics as to how to make sense of all of the data. Those are the things that really do underpin the growth. And I think the right way to think about it from a financial perspective is ARR. There are lots of different models that our customers use to procure these types of solutions, and that is why we think ARR is a meaningful metric for the business, something to watch.

Q: Hey. Good morning. Thanks for taking the question. I wanted to ask another on the normalization you are seeing on project activity. Just maybe, understanding it is inherently lumpy, but is there a way to help us think about, if you did not see those slips last year, how we might be thinking about organic growth here in 2026, mid- to high-single digits still the right way to think about that?

A: Yeah. I would take a step back and focus on the bigger picture. The business structure is fundamentally different now than what it used to be. We clearly still have a significant portion of our business which is large project deployments and networking overall. And that absolutely has some level of lumpiness to it in terms of the bookings. How that flows through is generally over the next three to four years in terms of how it expresses itself for the revenue itself. But the piece of the business which clearly is growing nicely for us, we continue to see good pace of growth, 20% year over year in Outcomes, for example, in Q4. And the notion of annual recurring revenue that is most of Resiliency Solutions, a good portion of Outcomes, and a sliver of the Networks business falls into that category. That really is a significant structural difference in our business overall. So that is how我会专注于此并思考业务本身。我们将继续受益于电网部署在结构上不可避免地会增长的市场。除非配电支出继续保持一定速度，否则现代社会根本无法实现数据中心、制造业回流和一切电气化方面的资金投入。Q: Very helpful, Tom. And I think you called out surging ARR in the prepared remarks. Help us think about where that could be going as we get more normalization, and perhaps changes in rate-making dynamics. Where could Outcomes—how much has that been held back, and where could that go?

A: Well, we certainly, what we saw in some of the network slowdown, I am going back a couple of years now when we had component constraints, the Outcomes business would still grow, call it 10% year over year. As those components became available and we did fulfill that networking revenue, you saw Outcomes growth rates pick up. And certainly, the 20% plus year over year in Q4 is good evidence of that. We are confident Outcomes can continue to grow, and now we have a new leg in the stool with Resiliency Solutions, adding another tool in the toolbox to help our customers cope with some of the real challenges that are out there. If we are going to see grid deployment, you are going to have to figure out how to build this stuff faster, and that is where digital construction management helps. If you are going to have more floods and fires and storms, you are going to have to respond to disasters. And again, that is where Resiliency Solutions really helps. We can move it to a much more proactive environment that is absolutely going to benefit what our business can and will be in the future.

Q: Maybe just one last follow-up to that, Tom. Just on those new capabilities, is there a way to help us think competitively? Is this helping you to land new proposals? Obviously, there is more TAM there. And then competitively, some of your competitors, I think, are backing down on some of the more complex deployments. Just a broader update.

A: Sure. Maybe take a perspective on the customer concentration specifically. Itron, Inc. has 8,000 customers worldwide. Urbint and LocusView, think of it as tens of customers each. So we clearly有能力利用我们拥有的销售渠道将这些解决方案推广到更广泛的领域，真正帮助我们的客户解决全球不同的问题。关于我们如何更好地协同工作——投资者资料中的一张幻灯片展示了那个圆形图——但想想从规划到建设过程再到运营阶段帮助客户贯穿资产生命周期的能力。Itron, Inc.长期以来一直知道管道和电线内有什么。现在我们知道管道和电线在哪里。所以我们可以提供恢复解决方案并改进整体服务。所以这些是我认为将继续推动我们业务增长以及我们如何相对于其他一些产品受益的类型的东西。我们对我们的竞争地位感到非常满意，并期望能够使用它来支持我们的客户。Q: Hey. Good morning, and thanks for taking the question. I only have one. Tom, you have talked about lead times for the business kind of marching out a bit. Historically, when you did disclose it more precisely, your twelve-month backlog had been around 35% or so of the total backlog. I am wondering if you can give us some color on that currently.

A: The twelve-month backlog is right around $1,600,000,000 right now. That will be in the 10-K when it is published. That is up meaningfully over where it was at the end of Q3, so I think it is roughly, from the prior quarter, $150,000,000 or so higher. As I commented earlier, business is structurally different now. We do expect book-and-ship is a bit higher during the interim period overall. So what I would say is it is very difficult to try to come up with a historical compare that is meaningful just because there has been so much noise in how things have flowed through from the COVID days to the post-COVID supply constraints to where we are today. Our guidance absolutely reflects the best view that we have for the year, and we feel really good about the trajectory of the business.

Q: Hi, and thanks for taking my question. I only have one. Tom, you have talked about lead times for the business kind of marching out a bit. Historically, when you did disclose it more precisely, your twelve-month backlog had been around 35% or so of the total backlog. I am wondering if you can give us some color on that currently.

A: The twelve-month backlog is right around $1,600,000,000 right now. That will be in the 10-K when it is published. That is up meaningfully over where it was at the end of Q3, so I think it is roughly, from the prior quarter, $150,000,000 or so higher. As I commented earlier, business is structurally different now. We do expect book-and-ship is a bit higher during the interim period overall. So what I would say is it is very difficult to try to come up with a historical compare that is meaningful just because there has been so much noise in how things have flowed through from the COVID days to the post-COVID supply constraints to where we are today. Our guidance absolutely reflects the best view that we have for the year, and we feel really good about the trajectory of the business.