Itron delivered record fourth-quarter profitability, with revenue of $572 million above its range, non-GAAP EPS of $2.46, a record 40.7% adjusted gross margin (up 580 basis points), and strong bookings of $737 million, even as revenue declined year-over-year on planned portfolio changes and project-deployment timing. The company introduced a new annual recurring revenue metric of about $368 million (up 20%), closed the Urbint and Locusview acquisitions to form a new Resiliency Solutions segment, and set full-year records for margin, EBITDA, EPS, and free cash flow. Its FY2026 outlook implies roughly flat revenue and lower EPS, with the two acquisitions dilutive by about $0.38, while the $2.6B-$2.8B 2027 revenue target was reaffirmed at likely the lower end.
Good morning, and welcome to Itron's fourth quarter 2025 earnings conference call. Tom Deitrich, Itron's President and Chief Executive Officer, and Joan Hooper, Senior Vice President and Chief Financial Officer, will review Itron's fourth quarter results and provide a general business update and outlook. Earlier today, the company issued a press release announcing its results. This release also includes details related to the conference call and webcast replay information. Accompanying today's call is a presentation that is available through the webcast and on our corporate website under the Investor Relations tab. Following prepared remarks, the call will open for questions using the process the operator described. 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 current and future performance.
Reconciliations of differences between GAAP and non-GAAP financial measures are available in our earnings release and on our investor relations website. We will be making statements during this call that are forward-looking. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from these expectations because of factors that were presented in today's earnings release and comments made during this conference call, as well as those presented in the Risk Factors section of our Form 10-K and other reports and filings with the Securities and Exchange Commission. All company comments, estimates, or forward-looking statements are made in a good-faith attempt to provide appropriate insight to our current and future operating and financial environment. Materials discussed today, February 17, 2026, may materially change, and we do not undertake any duty to update any of our forward-looking statements.
Now, please turn to page four of our presentation as our CEO, Tom Deitrich, begins his remarks.
Thank you, Paul. Good morning, and thank you for joining our call. Itron delivered another quarter of record earnings and profitability, underscoring the durability of our model and accelerating demand for Grid Edge Intelligence. Highlights on slide 4 include revenue of $572 million, adjusted EBITDA of $99 million, non-GAAP EPS of $2.46, and free cash flow of $112 million. These financial results reflect strong execution as our customers modernize the grid and rely more heavily on Itron solutions. Modern civilization depends on energy and water systems that cannot fail, and increasingly, those systems depend on intelligence. Itron is the provider of intelligent infrastructure that underpins reliability, resilience, and safety.
Our value has grown significantly, as demonstrated by increased adoption of Grid Edge Intelligence, Outcomes growth, record financial results, surging annual recurring revenue, and the expansion of our offerings through strategic acquisitions. Turning to slide 6, our fourth quarter bookings were $737 million, with a total backlog at quarter end of $4.5 billion. Continued momentum in Grid Edge Intelligence demand resulted in a record backlog for our Outcomes segment. Our fourth quarter bookings were driven by numerous Grid Edge solutions, supporting grid modernization and reliability of infrastructure. These include the expansion of a long-standing relationship with Exelon through a new multiyear, multi-application agreement. This extension underscores the business benefits, technical flexibility, and proven value of our solutions, including security, consumer privacy, and operations optimization.
Another meaningful fourth quarter win involves collaboration with a large early adopter AMI customer to responsibly address operational continuity, business risk, and affordability. Aging legacy systems and readiness for next-generation technologies are often misaligned, and our customers turn to us to help them bridge this gap. Itron's UtilityIQ solution reinforces our commitment to open ecosystems, and customer flexibility is designed around interoperability across technologies. Our product and service offerings provide a clear path forward to simultaneously maintain an aging system while smoothly transitioning to more capable and consumer-oriented services. Additionally, we are expanding our partnership with a large Canadian utility by providing additional Grid Edge capabilities focused on distributed intelligence, enabling real-time grid visibility, analytics, and control.
As an expansion to our commitment to utility resiliency, we announced during the quarter the acquisition of Urbint, a provider of AI-enhanced solutions for emergency preparedness and response, damage prevention, and worker safety. We also announced the acquisition of Locusview, a provider of solutions for digital construction management, which automates the process from planning to closeout, deploying field-based capture of as-built infrastructure to enhance the speed and integrity of grid build-out. With both acquisitions now closed, we are introducing a new reporting segment named Resiliency Solutions. We are thrilled to welcome these teams to Itron. Resiliency Solutions expands our reach, allowing Itron to support our customers through every step of the asset lifecycle, from planning, to build-out, to operations, to maintenance and protection.... Itron is a long-standing industry anchor in the operations space, providing grid edge technology.
Additionally, our leading energy forecasting products are used by 90% of the independent system operators and over 70% of the electricity operators in North America. Over the past years, we have added power flow analysis and planning software solutions to support detailed grid planning and interconnect analysis. The addition of Urbint's emergency preparedness and response, worker safety, and damage prevention solution augments our planning, maintenance, and protection offerings. Most recently, Locusview provides leading digital construction management solutions. In total, Itron supports our customers through the asset lifecycle. Proactive resiliency is a top priority for our customers, which aligns well with our strategic investments and drives higher margins and recurring revenue growth in 2026 and beyond. I will now pass on to Joan to cover the financial results for the company.
Thank you, Tom. I'll review Itron's fourth quarter and full year 2025 results before discussing our financial outlook for 2026. Financial performance was strong in the fourth quarter and set company records for gross margin, non-GAAP earnings per share, EBITDA, and free cash flow as a percentage of revenue. Please turn to slide 8 for a summary of consolidated GAAP results. Fourth quarter revenue of $572 million was higher than the range we expected and lower than the prior year due to planned portfolio changes and the timing of large project deployments. Gross margin was 560 basis points higher than last year due to favorable customer and product mix. GAAP net income of $102 million, or $2.21 per diluted share, compared to $58 million, or $1.26 in the prior year.
The improvement was driven by higher operating income and lower tax expense. Regarding non-GAAP metrics on slide 9, adjusted gross margin of 40.7% was a record and increased 580 basis points versus Q4 2024. Non-GAAP operating income of $91 million increased 28% year-over-year. Adjusted EBITDA of $99 million increased 21%, and both the dollar amount and the percentage of revenue at 17% were new records. Non-GAAP net income for the quarter was $113 million, or $2.46 per diluted share, versus $1.35 a year ago. This is a new quarterly record for the company. Free cash flow was $112 million in Q4 versus $70 million a year ago. The increase reflects year-over-year earnings growth and improved working capital.
Year-over-year revenue growth by business segment is on slide 10. Device Solutions revenue decreased 7% on a constant currency basis due to the expected decline in legacy electricity products in EMEA and the timing of project deployments in North America. Network Solutions revenue decreased 15% year-over-year, primarily due to the timing of project deployments. Outcomes revenue increased 22% on a constant currency basis due to an increase in delivery services and the continued growth of recurring revenue. Our new segment, Resiliency Solutions, which includes revenue from November third, when our acquisition of Urbint closed, contributed $3 million of revenue. Beginning with the Q1 reporting, the combined Locusview and Urbint results will be reported in this segment.
Moving to the non-GAAP year-over-year EPS bridge on slide 11, our Q4 non-GAAP EPS of $2.46 per diluted share increased $1.11 year over year. Pre-tax operating performance contributed a $0.45 per share increase, driven by the fall through of higher gross profit. Lower tax expense had a positive year-over-year impact of $0.69 per share. Turning to slides 12 through 15, I'll review Q4 segment results compared with the prior year. Device Solutions revenue was $105 million. Adjusted gross margin was 34.4%, and operating margin was 26.6%. Both margin results are segment quarterly records. Adjusted gross margin increased 780 basis points year over year due to favorable customer and product mix, and operating margin was up 670 basis points.
Network Solutions revenue was $352 million, with adjusted gross margin of 42% and operating margin of 32.2%. Adjusted gross margin increased 690 basis points year-over-year due to favorable customer and product mix, and operating margin was up 620 basis points. Outcomes revenue was a record $112 million, with adjusted gross margin of 41.7% and operating margin of 27%. Adjusted gross margin decreased 230 basis points year-over-year due to lower software license mix, but operating margin increased 420 basis points due to higher operating leverage. Resiliency Solutions with revenue of $3 million, an adjusted gross margin of 76%, and a negative operating margin of 3.6%.
For a recap of full year 2025 results, please turn to slide 16. Revenue of $2.37 billion was down 3% year-over-year. Recall, 2024 results included catch-up of previously constrained revenue that did not occur in 2025. As our business continues to evolve, we are introducing a new metric of annual recurring revenue, or ARR. For 2025, we ended the year with approximately $368 million of ARR. Profitability and cash generation performance were very strong in 2025, and we set several new annual records. They were a gross margin of 37.7%.
adjusted EBITDA of $374 million, or 15.8% of revenue, non-GAAP earnings per share of $7.13 per share, and free cash flow of $383 million, or 16.2% of revenue. Turning to Slide 17, I'll review liquidity and debt at the end of the fourth quarter. Total debt was $1.265 billion, and cash and equivalents were $1.02 billion. Our cash balance was down $312 million versus last quarter, due to the acquisition of Urbint for $325 million and $100 million of stock buyback, partially offset by Q4 free cash flow of $112 million.
The previously announced $525 million acquisition of Locusview closed during the first quarter of 2026, and therefore is not reflected in this balance. As of December 31, net leverage was 0.7 times. Please turn to Slide 18 for our full year 2026 financial outlook. We anticipate 2026 revenue to be within a range of $2.35 billion-$2.45 billion. The midpoint of this range represents 1% growth versus 2025. We currently anticipate 2026 non-GAAP earnings per share to fall within a range of $5.75-$6.25 per diluted share. The EPS outlook assumes an effective tax rate of 22% for the full year. Quarterly rates could fluctuate based on jurisdictional mix and the timing of tax settlements.
At the midpoint of this EPS range, and after normalizing the tax rate to 22% for both years, we expect 2026 year-over-year earnings to be down by approximately $0.32, which is driven by our two recent acquisitions. Although we do not issue forward outlooks by segment, we are providing some information on the size of our two recent acquisitions, which will make up our new Resiliency Solutions segment. In the full year 2026 range I just provided, we included a revenue contribution of approximately $65 million-$70 million, with gross margins of approximately 70% for this new segment. Resiliency Solutions is expected to be immediately accretive to Itron's revenue growth, gross margins, and EBITDA, but will be dilutive to 2026 earnings per share due to less interest income, given the $850 million we spent for the two companies.
In the full year outlook I just provided, the dilutive impact to earnings per share from the two acquisitions is approximately $0.38 per share. We expect the two acquisitions will be earnings per share accretive by the end of 2027. Now, please turn to Slide 19 for our first quarter outlook. We anticipate Q1 revenue to be within a range of $565 million-$575 million, down 6% versus Q1 of last year. We anticipate first quarter non-GAAP earnings per share to be within a range of $1.20-$1.30 per diluted share, which at the midpoint is down approximately $0.27 versus last year. Lower interest income, driven by the two acquisitions, is reducing Q1 2026 earnings per share by approximately $0.13 per share.
As Tom noted, the environment our customers operate in is evolving rapidly, which creates new opportunities, but also new challenges and complexity. Our teams are working collaboratively with our customers to keep up with the pace of change, and we are executing on our strategy. Although our business will never move in a straight line in the short term, the future looks very bright, and we are confident in the course we are on. Now I'll turn the call back to Tom.
Thank you, Joan. Utilities today are no longer simply asset operators. They are real-time system managers balancing electrification, decentralization, affordability, and resilience. 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. Intelligence only matters when it is built on trusted data that is tightly integrated into operations. Itron provides that foundation, helping customers move from reaction to visibility, automation, and prediction. We remain focused on backlog quality, revenue growth, margin expansion, and cash generation. Our strategy delivers durable earnings growth and compound shareholder value through customer trust and solution relevance. Grid scaling and transformation is structurally unavoidable and cannot happen without greater intelligence.
Itron is the intelligent infrastructure provider of modern energy and water systems. We provide real-time intelligence our customers require to operate efficiently. With more than $1 billion of durable outcomes backlog, rapidly growing annual recurring revenue, and expanding solutions for critical customer problems, Itron is well-positioned for the multiyear grid build-out in the years ahead. Thank you for joining our call today. Operator, please open the line for some questions.