Tom Deitrich, Itron's President and Chief Executive Officer, and Joan Hooper, Senior Vice President and Chief Financial Officer, will review Itron's second quarter results and provide a general business update and outlook. Before Tom begins, a reminder that our earnings release and financial presentation include non-GAAP financial information that we believe enhances the overall understanding of our. Reconciliations of differences between GAAP and non-GAAP financial measures are available in our earnings release and on our Investor Relations website. The team performed well, achieving revenue in line with expectations and earnings above.
Turning to Slide 5, Itron set new quarterly records for margins, profitability, and cash flow. Our differentiated Outcomes segment continued to drive growth, reinforcing our market leadership in agile distribution infrastructure. The long-term market outlook remains positive, driven by rising electricity demand, increased resiliency and reliability requirements, and ongoing focus on efficiency and safety. Consequently, we are lowering our full year revenue outlook midpoint by approximately 3%.
At the same time, growing customer demand for high-value solutions along with operational efficiencies has raised our full year EPS outlook midpoint by 13%. We maintain our outlook for the full year book-to-bill ratio of one to one or higher. Now Joan will provide details about our second quarter and our outlook for the third quarter and the full year. Second quarter revenue of $607 million was within the range we expected and slightly lower than the prior year, which included a significant amount of constrained revenue catch up.
| Metric | Period | Current guidance |
|---|---|---|
| Revenue (full year) | FY2025 | $2.35B-$2.4B (Midpoint down ~3% vs initial outlook and vs 2024) |
| Non-GAAP EPS (full year) | FY2025 | $6.00-$6.20 (Midpoint up 13% vs prior guidance and up 9% vs 2024) |
| Effective tax rate | FY2025 | 22% |
| Revenue | Q3 2025 | $570M-$585M (Midpoint down 6% vs Q3 2024) |
| Non-GAAP EPS | Q3 2025 | $1.45-$1.55 (Midpoint down 18% vs Q3 2024 (up 4% normalized for a 25% tax rate)) |
| Book-to-bill ratio (full year) | FY2025 | 1:1 or higher (Maintained) |
| 2027 revenue target | FY2027 | $2.6B-$2.8B (Unchanged) |
| Metric | YoY | Note |
|---|---|---|
| Revenue | Slightly lower to $607M | Prior year included a significant amount of constrained revenue catch-up |
| Gross margin | +230 bps to 36.9% (record) | Favorable mix |
| Non-GAAP operating income | +19% to $82M (record) | Strong operational performance |
| Adjusted EBITDA | +16% to $90M (14.8% of revenue, record) | Operational earnings growth |
| Non-GAAP EPS | +$0.41 to $1.62 | Primarily $0.39 from strong pre-tax operational performance |
| Free cash flow | +$46M to $91M (record) | Operational earnings growth, higher interest income, and lower tax payments |
| Device Solutions revenue | -8% constant currency | Expected decline in legacy electric product sales, partly offset by Water growth |
| Network Solutions revenue | -1% | Non-recurrence of prior-year revenue catch-up |
| Outcomes revenue | +9% | Continued growth of recurring revenue and software licenses |
| Device Solutions gross margin | +350 bps to 29.8% | Favorable change in product mix (water vs legacy electric) |
| Network Solutions gross margin | +160 bps to 38.5% | Improved products and customer mix |
| Outcomes gross margin | +370 bps to 38.5% | Higher margin revenue mix |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Customer/regulator slowdown | Not flagged as a constraint | More deliberate decision making and slower project deployments amid trade-policy and macro uncertainty, driving a ~3% revenue midpoint cut | Emerging headwind |
| Margin expansion on lower revenue | — | Record gross margin (36.9%) and EBITDA near 15% achieved on lower revenue via structural device changes (France factory closure) and portfolio pruning | Improving |
| Distributed intelligence / Grid Edge | 14.4M DI endpoints at end of Q1 | Over 15.3M DI endpoints shipped; DI-capable endpoints up 36% YoY; licensed apps up ~140% YoY | Growing |
| Backlog vs book-and-ship | — | Slowdown concentrated in longer-term backlog (project sequencing/labor constraints), not book-and-ship; no cancellations | Temporal delay |
| M&A appetite | Active, software/services oriented | Unchanged by regulatory environment; remains active and disciplined, targeting Outcomes-oriented (software/services) accretive assets | Steady |
| European Grid Edge opportunity | — | Reemergence of interest beyond AMI 1.0; selling complete solutions for the right margin profile; Western Europe seen as more active | Growing |
| 2027 targets | Revenue $2.6B-$2.8B; EBITDA 15%-17% | Reaffirmed; confident despite near-term uncertainty | Steady |