Itron (ITRI -1.09%), a global leader in grid edge intelligence and metering technology, released its second quarter 2025 earnings on July 31, 2025. The most notable news from the release was a significant earnings beat, as non-GAAP earnings per share reached $1.62, compared to analyst estimates of $1.35. However, the company’s GAAP revenue came in slightly below expectations at $607 million, slightly down from last year and from the consensus GAAP revenue forecast of $608.82 million. Despite the minor revenue shortfall, Itron reported record gross margins for Q2 2025 and strong free cash flow, underpinned by continued improvements in its product mix and operational execution. Overall, the quarter was characterized by robust profitability, disciplined cost management, and a growing focus on software and recurring revenue, even as total revenue growth remained subdued.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.62 | $1.35 | $1.21 | 33.9% |
| Revenue (GAAP) | $607 million | $608.82 million | $609 million | (0.3%) |
| Gross Margin | 36.9% | 34.6% | 2.3 pp | |
| Free Cash Flow (Non-GAAP) | $91 million | $45 million | 102.2% | |
| Adjusted EBITDA | $90 million | $77 million | 16.9% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Company Overview and Strategic Focus
Itron is recognized for its advanced solutions in resource management for utilities and cities. Its core business spans smart meters, industrial sensors, data analytics, and software platforms that connect and manage energy and water infrastructure. The company’s primary customers include electric, gas, and water utilities as well as municipal operators seeking to optimize their grids and distribution networks.
Recently, Itron has intensified efforts in technological innovation, investing heavily in research and development to drive the next generation of edge intelligence hardware, grid automation, and software applications. Management has identified software and recurring Outcomes revenue, along with supply chain strength and strategic partnerships, as pivotal to its value proposition, proactively managing global supply chain risks, and building interoperable, software-centric product platforms.
Key Developments in the Quarter
Second quarter results displayed margin strength and disciplined cost management, even as GAAP revenue remained virtually flat at $607 million compared to $609 million in Q2 2024. Device Solutions revenue, which covers legacy electricity meters and smart water metering hardware, declined 5% due to lower legacy electricity product sales related to portfolio optimization, partially offset by increased water sales. However, Networked Solutions, responsible for communications modules and connected grid devices, posted a 1% decline in revenue compared to Q2 2024, mainly tied to shipment timing and the absence of one-time “catch-up” revenue recognized in Q2 2024.
Outcomes, Itron’s segment for utility software, data analytics, and recurring service contracts, grew 9% year over year. The Outcomes segment's revenue is primarily recurring in nature, though no explicit percentage is provided for the most recent period. Outcomes gross margin was 39.2% in Q1 2025, reflecting the segment’s increasing mix of software and high-value services. Management targets a mid-40% gross margin for the Outcomes segment as this trend continues.
but continued to flag trade policies and tariffs as potential challenges. Its “regional supply strategy” is helping limit risk, with most manufacturing sites close to end markets. Mexico remains a significant source of imports for Itron’s U.S. operations and most imports from this region are currently exempt from tariffs. Management estimates about $15 million in EBITDA exposure to tariffs for FY2025, with most of the impact coming in the back half of the year -- a notable risk as policy remains fluid.
Operationally, the company reported record profitability in Q2 2025. Gross margin (GAAP) expanded by 2.3 percentage points to 36.9% in Q2 2025, attributed to a more favorable product and customer mix. Adjusted EBITDA grew 16% year over year, and Free cash flow more than doubled compared to Q2 2024. In parallel, Cash and equivalents increased year-to-date for the six months ended June 30, 2025, while total long-term debt was reduced, strengthening the balance sheet. The company’s backlog rose by $0.4 billion over the past year to $4.5 billion as of Q2 2025, offering medium-term revenue visibility despite bookings being lower than in Q1 at $454 million.
Looking Ahead: Financial Outlook and Watch Points
Itron provided updated full-year FY2025 guidance, including revenue between $2.35 billion and $2.4 billion, and non-GAAP diluted EPS between $6.00 and $6.20. For Q3 2025, management expects revenue between $570 million and $585 million, and non-GAAP diluted EPS between $1.45 and $1.55. Looking at the full year, guidance was updated to revenue of $2.35 billion to $2.40 billion for the full year and non-GAAP diluted EPS of $6.00 to $6.20 for FY2025, and management cautioned that further policy changes could alter the trajectory for the back half of the year.
In the months ahead, investors may want to follow additional progress in growing recurring software revenue within the Outcomes segment, as well as ongoing margin performance in Device Solutions. Tariff exposure, supply chain resiliency, and macroeconomic developments remain key uncertainties.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
